Opinion ID: 2582211
Heading Depth: 3
Heading Rank: 1

Heading: The Plaintiffs' First Amended Complaint and the State's Motion to Dismiss

Text: The plaintiffs filed a complaint against the State on July 21, 2003. On August 26, 2003, they filed a first amended complaint [hereinafter, first amended complaint or complaint]. Therein, the plaintiffs alleged that the Forgiveness Act would not have become law if the State had properly challenged the FAA Memorandum and thus there would not have been a federal law in conflict with Act 304[.] The plaintiffs asserted that the State breached its trust duties by refusing to challenge the FAA Memorandum and that such breach was a substantial factor[ ] that resulted in the passing of the Forgiveness Act and the Hawai`i Supreme Court's opinion rendered in [ OHA I, ] which invalidated Act 304. As a result of Act 304's invalidation, the plaintiffs could no longer recover airport-related revenues from the State. Additionally, because the plaintiffs believe that Act 304 constituted a contract and settlement agreement between the State and OHA, they alleged that the State breached the Act 304 settlement and violated the Contract Clause of the United States Constitution [9] by allowing the Forgiveness Act to invalidate Act 304. The first amended complaint set forth plaintiffs' claims and prayer for relief as follows: 34. The State breached fiduciary duties as trustee of the native Hawaiian public trust, breached the Act 304 settlement, violated H.R.S. Chapter 10, violated Article XII, Sections 4-6 of the Constitution of the State of Hawaii, violated the Contract Clause of the United States Constitution, Article I, Section 10, clause 1, and is liable for misrepresentation and non-disclosure by the acts and omissions set forth above including but not limited to: (1) failing to challenge the positions set forth in the FAA Memorandum; (2) resolving its dispute with the FAA by obtaining a forgiveness of the prior $30 million payment in exchange for a promise not to make future airport revenue payments to OHA and not to appeal the positions set forth in the FAA Memorandum; (3) breaching the trust duty of impartiality by not challenging the positions set forth in the FAA Memorandum in order to use them as a sword in [ OHA I ] and subsequent appeal; (4) failing to timely advise OHA that the State was not going to continue to challenge the positions set forth in the FAA Memorandum or IG Report, and that it was planning to settle with the federal government, in order to provide OHA with a fair opportunity to take measures to step into the State's position to oppose the FAA; and, (5) failing to obtain instructions from the Court on how to proceed given its conflict position of defending the State against OHA in OHA I and having a duty to challenge the positions set forth in the FAA Memorandum. 35. The State's breaches, errors and omissions as set forth above were substantial factors that resulted in the passing of the Forgiveness Act and the Hawaii Supreme Court's opinion rendered in [ OHA I ]. Accordingly, the State is liable to OHA for an accounting, restitution and/or damages including but not limited to: (1) relief alleged by OHA in [ OHA I ]; and, (2) amounts payable under Act 304 that have not been paid, including but not limited to, airport landing fees. 36. OHA is entitled to a declaratory judgment that: (1) orders the State to reinstate Act 304 on the grounds that the Forgiveness Act would not have become law if the State had properly challenged the FAA Memorandum and thus there would not have been a federal law in conflict with Act 304; (2) orders the State to pay airport-related income, proceeds, funds and/or revenues to OHA from sources other than airport revenues; (3) appoints an independent trustee to temporarily replace the State as trustee of the native Hawaiian public trust with respect to matters relating to reinstatement of Act 304 and the payment of airport-related revenues to OHA from sources other than airport revenues; and (4) determines whether disputed items should be included as income, proceeds, funds and/or revenues owed to OHA. 37. OHA is also entitled to injunctive relief that bars the State and its agents, employees and officials from opposing steps to reinstate Act 304 and to pay airport-related income, proceeds, funds and/or revenues to OHA from sources other than airport revenues. WHEREFORE, Plaintiffs pray for judgment against the State for: (1) accounting, restitution and/or damages; (2) declaratory relief set forth above; (3) injunctive relief set forth above; (4) attorneys' fees and costs; pre-judgment and post-judgment interest; and (5) such other relief as deemed fair and equitable to the [c]ourt. (Emphasis added.) In sum, the plaintiffs asserted claims for (1) breach of fiduciary duties as trustee, flowing from violations of HRS chapter 10, the Admission Act, and the Hawai`i State Constitution, (2) breach of the Act 304 settlement agreement, (3) violation of the Contract Clause, and (4) misrepresentation and non-disclosure. The plaintiffs requested relief in the form of (1) accounting, restitution, and/or damages, (2) declaratory relief, (3) injunctive relief, (4) attorneys' fees and costs, (5) pre- and postjudgment interest, and (6) such other relief deemed fair and equitable to the court. In response to the plaintiffs' first amended complaint, the State filed a motion to dismiss the complaint on September 15, 2003. Therein, the State argued that the circuit court lacked subject matter jurisdiction over the case and that the complaint failed to state a claim upon which relief could be granted. Specifically, the State maintained that the plaintiffs' claims were barred by: (1) lack of justiciability; (2) sovereign immunity; (3) statute of limitations and various notice requirements; (4) res judicata; and (5) collateral attack. On October 13, 2003, the plaintiffs filed a memorandum in opposition to the State's motion to dismiss. Therein, the plaintiffs alleged that the State waived its sovereign immunity in HRS § 661-1(1) (1993) [10] and HRS chapter 673, entitled Native Hawaiian Trusts Judicial Relief Act. [11] The plaintiffs also argued that their claims were not barred by the statute of limitations because the instant action was timely filed and that the notice requirements alleged by the State were not applicable in this case. Further, the plaintiffs contended that their claims were not barred by res judicata and did not seek to improperly collaterally attack OHA I. On October 17, 2003, the State filed its reply memorandum, in which it reiterated arguments advanced in the motion to dismiss. On November 10 and 12, 2003, the circuit court held hearings on the State's motion to dismiss. At the hearings, the parties reasserted arguments raised in their pleadings. After indicating its inclination to grant the motion, the circuit court stated: this [c]ourt is still of the mind that there has been no legislation since OHA I was handed down, and in order for [the plaintiffs] to successfully prosecute any claim [they] may have against the State for breach of fiduciary duty, there has to be a measure of damages, and that's where the [c]ourt is struggling, is to find the measure of damages. I don't know how [the plaintiffs] can successfully prosecute [their] claim without relying on [Act 304], and so I still think we are in the realm of non-justiciability, because the fight over what revenues would have formed the basis for the percentage to be taken out and awarded to [the plaintiffs] still remains unclear[.] Nevertheless, at the close of the November 12, 2003 hearing, the circuit court set a schedule for further briefing because it needed to have further education on some of these issues[.] On November 17, 2003 and in response to the court's request for further briefing, the plaintiffs filed a supplemental memorandum in opposition to the State's motion to dismiss. In addition to arguments they previously asserted, the plaintiffs posited that, even if the measurement of compensatory damages presents a political question, dismissal of the case is not warranted. Specifically, the plaintiffs argued that [t]he measurement-of-damages-using-Act 304 [issue] does not `inextricably' require dismissal here because it is clear that the liability issues are justiciable and the [c]ourt has the power to formulate whatever appropriate remedies should flow from a finding of wrongdoing[,] such as: (1) nominal damages; (2) an accounting; and (3) attorneys' fees. The plaintiffs further noted that, regardless of whether the damages issue presents a political question, the [c]ourt can appropriately resolve the liability issue and leave the remedy for the legislature to enact. In other words, the plaintiffs maintained that the liability issues can be bifurcated in order that litigation may proceed. On November 21, 2003, the State filed a supplemental memorandum in support of its motion to dismiss. In addition to reiterating arguments it had previously made, the State, in response to the plaintiffs' suggestion of bifurcation, posited that such a suggestion[ ] constitute[s] a roadmap for waste of judicial resources. On November 25, 2003, the circuit court held another hearing on the State's motion to dismiss. After the parties presented oral argument, the court noted that the State's arguments regarding the statute of limitations, sovereign immunity, and res judicata did not warrant dismissal of the complaint. However, the circuit court ruled: Turning finally to the question of justiciability and the political question. That's where this [c]ourt believes the crux of the fight is on this matter. I think that there is no question that the Supreme Court in OHA I made a determination that the dispute should go back to the legislature for redefinition of what constitutes revenues under chapter 10, and without that guidance the [c]ourt could not address the question of damages or the judicially manageable standard by which OHA's share can be determined. . . . . . . . [P]ermeating everything that has been asserted in connection with this  the case at bar, it seems to always go back to the legislature can ultimately provide the remedy. Even if at the legislature the [sic] OHA is faced with the comment by the legislature that oh, you lost . . . the case at bar, it still comes down to a legislative determination, and the [c]ourt simply could not get that out of its mind, notwithstanding the quality of briefing that OHA submitted. So the [c]ourt does conclude that we still have at the crux of the case at bar a political question, one that seeks to collaterally attack the ruling and the holding of OHA I. We are still left with judicially unmanageable standards or the lack of a judicially manageable standard for determining damages [.] . . . So we still come back to the political arena as being the arena in which this debate should take place. So for these and any other good causes shown in the record, the [c]ourt will respectfully grant the motion to dismiss. (Emphases added.) The circuit court entered a written order dismissing the first amended complaint on December 26, 2003.