Opinion ID: 1166817
Heading Depth: 2
Heading Rank: 2

Heading: Appellants' counterclaim stated a claim for negligent investigation.

Text: Though pleadings should be construed liberally and not technically and a motion to dismiss for failure to state a claim should rarely be granted, a complaint may be dismissed if it appears beyond a doubt that the plaintiff can prove no set of facts entitling the plaintiff to relief. Mendes v. Hawai`i Ins. Guar. Ass'n, 87 Hawai`i 14, 17, 950 P.2d 1214, 1217 (1998) (citation omitted). Appellants' counterclaim for negligent investigation alleged that: 3. On or about August 27, 1993, Counterclaimant Albert Jeyte, acting pro se, informed the Commission in writing that the cottage at issue was too small to rent to four people and that an occupancy limits [sic] which prohibit rental of the cottage to four persons was reasonable and not discriminatory. The Commission ignored this obvious defense and found reasonable cause to conclude that the Counterclaimants had committed housing discrimination on the basis of familial status. 4. After the Commission asserted reasonable cause to conclude that discrimination had occurred, Defendants retained counsel. On or about March 9, 1994, counsel for Defendants met with counsel for the Commission in a conciliation meeting. Counsel for Counterclaimants referred counsel for the Commission directly to the Housing Code for the City and County of Honolulu which was enacted to prohibit overcrowding in rental premises. Counsel for Counterclaimants specifically cited Code Section 27-4.3(b) which governs occupancy limits and superficial floor area requirements for rooms used for sleeping purposes. Counsel for Counterclaimants pointed out that rental of the subject premises for occupancy by four persons would violate the express provisions of the Housing Code and that compliance with the Housing Code is expressly recognized as a defense in the Commission's own regulations governing discrimination in real property transactions. Reference Administrative Rule 12-46-301 et seq. We hold that, by alleging that the HCRC ignored governing law that provided a clear defense to the reasonable cause determination that Appellants engaged in unlawful discrimination, Appellants stated a claim for negligent investigation for which relief could be granted. HCRC argues that this is a novel cause of action that should not be recognized. We disagree. We construe the counterclaim as a common law tort action for negligence. [T]he elements of a cause of action founded on negligence are: 1. A duty or obligation, recognized by the law, requiring the defendant to conform to a certain standard of conduct, for the protection of others against unreasonable risks; 2. A failure on the defendant's part to conform to the standard required: a breach of the duty; 3. A reasonably close causal connection between the conduct and the resulting injury and[;] 4. Actual loss or damage resulting to the interests of another. Knodle v. Waikiki Gateway Hotel, Inc., 69 Haw. 376, 385, 742 P.2d 377, 383 (1987) (citations, ellipsis points, and internal brackets omitted). The HCRC is subject to a duty to follow its own administrative rules, utilizing reasonable care, and it is potentially negligent to institute legal action if the basis for relief is unlawful. The HCRC is obligated to recognize the governing statutes of other state agencies. The administrative rules promulgated by the HCRC provide that: It is a discriminatory practice for an owner or any person engaging in a real estate transaction ... to: . . . . (3) Impose occupancy limits on a housing accommodation sought by a person because of familial status, unless such limits are justified by establishing a business necessity; Example: A person with children seeking a housing accommodation cannot be denied the accommodation on the basis of an occupancy limit unless it is based upon a compelling and well established public purpose, such as a county building code established to promote public safety [.] HAR § 12-46-307 (emphasis added). The Housing Code of the City and County of Honolulu provides in pertinent part that: [Sec. 27-4.3(b) ] Superficial Floor Area. Every dwelling unit shall have at least one room which shall have not less than 150 square feet of superficial floor area. Other habitable rooms except kitchens shall have a superficial floor area of not less than 70 square feet. Where more than two persons occupy a room used for sleeping purposes the required floor area shall be increased at the rate of 50 square feet for each occupant in excess of two. [Sec. 27-9.1 Substandard Buildings Definition] (b) Inadequate sanitation shall include but not be limited to the following: . . . . (8) room and space dimensions less than required by this code; .... ( o ) Improper Occupancy. All buildings or portions thereof occupied for ... sleeping... purposes which were not designed or intended to be used for such occupancies. Appellants submitted a floor plan for the rental cottage showing that the single bedroom has a floor area of 112 square feet. Under the plain language of the Housing Code, a bedroom for four persons must have a minimum floor area of 170 square feet. Based on that plain language, Appellants raised a potentially legitimate defense that placing four persons in the single bedroom would violate the provisions of the code. [3] Therefore, it may have been negligent for the HCRC to bring legal action clearly barred by its own administrative rules; which provide that violation of a county building code justifies an occupancy limit. [4] We do not, by this opinion, intend to imply that all instances in which there is a valid defense to a complaint render the filing of a complaint actionable negligence. However, there exists a duty of reasonable care in the exercise of statutorily granted authority, and it was erroneous to grant a motion to dismiss the counterclaim. We are unable to say that there is no set of facts under which appellants could show that it was negligent for the HCRC to bring the complaint in violation of its own administrative regulations.