Opinion ID: 2550107
Heading Depth: 3
Heading Rank: 3

Heading: The Trustees' October 3, 2003 Motions for Partial Summary Judgment

Text: As previously noted, the Trustees filed three motions for partial summary judgment on October 3, 2003. The Trustees argued that they were entitled to summary judgment because: (1) the DCS Rules § 2-14, which allows the practice of tacking, was inconsistent with ROH chapter 38; (2) lessees Henry Paul Weber and Charles Cooke Spalding were not qualified to participate in the condemnation proceedings; (3) the administrative rule allowing exceptions to the owner-occupant requirements was inconsistent with ROH chapter 38; and (4) there were fewer than 25 qualified applicants. The Trustees' three motions were heard on October 22, 2003, along with the City's motions for partial summary judgment.
DCS Rules § 2-14 provides in full: Any person who acquires the lease of an applicant may be substituted for the withdrawing applicant, provided that the substituted applicant meets all the applicable requirements of Chapter 38, ROH and these rules, except the requirement that the substituted applicant be a resident of the condominium unit for a continuous and uninterrupted period of one year prior to the application. If the substitution occurs after the commencement of the condemnation action, it shall require the consent of the court. The director shall allow a substituted applicant a reasonable time to meet all the requirements for final approval. In the event there is no application for substitution within 60 days following a withdrawal, the director shall request the corporation counsel to dismiss the withdrawing applicant as a party to the condemnation action. The Trustees argued that DCS Rules § 2-14 allows an applicant who has satisfied the requirements to sell their position in the litigation to someone who would not otherwise meet the requirements of being an `owner occupant.' Thus, the Trustees claimed that DCS Rules § 2-14 directly conflicted with ROH chapter 38. The Trustees further explained: This rule, in effect, sanctions tacking on to the previous owner-occupant without having lived in the unit for the requisite time period to become an owner-occupant under [ROH § 38-1.2]. Here, a number of the litigants are people who have tacked on. They have not met the requirements of ROH § 38-1.2, and in some cases, they did not even live in Hawai`i at the time they applied. The circuit court denied the Trustees' motion, orally ruling: And when I look at the ordinance, it's silent on tacking. To that extent, it's not clear. It's ambiguous. When I look at the rule, we're talking rule 2-14, the Court understands the rule to mean, because it says I think clearly by its plain words, and I'm quoting it as follows, any person who acquires the lease of an applicant may be substituted for the withdrawing applicant provided that the substituted applicant meets all the applicable requirements of chapter 38 ROH in these rules, except for the requirement that the substituted applicant be a resident of the condominium for a continuous and uninterrupted period of one year prior to the application. So to me that means, obviously, that if the person who was the applicant was an owner-occupant and had resided there continuously for one year before the date of the application, and thereafter sells the condominium, then the person who can be substituted, who obviously couldn't possibly have lived there for one year before the date of substitution because they're just purchasing, gets the benefit of the time that the original applicant had been there. That does not mean that a person can be an applicant and have lived there only two months and get the benefit of the 10 or 20 years that the person they bought it from was there, unless the person they bought it from was the original applicant for the applicable condemnation proceeding. So what I am saying is that I do not think the rule is inconsistent with the ordinance, and that I do think the rule is narrow. And, therefore, you can only tack if you take after the person who lived there, for at least one year, had already made an application. And as to the argument that it makes a substantive difference, the Court finds that the rule does not create a substantive difference. Because when you look at whether there were 25, it's 25 at the date of the filing of the condemnation proceeding, it's 25, I ought say, and the date of determination. And so you look at 25, and if you  always still have to have 25. And if it happens that you make 25, and then one of those 25 later sells, the person to whom they sold gets the benefit of the original 25. But I don't see how that is a substantive difference to the landlord, because the landlord as the fee owner can always dispute that the original applicant wasn't there for the 12 year period. So this motion is denied. But the Court will apply its interpretation to the undisputed facts later. The court's written order was filed on December 5, 2003, stating in pertinent part that, [a]s [DCS] Rules § 2-14 allows tacking if the substituted applicant substitutes in for a withdrawing original applicant for the applicable condemnation proceeding who has lived in the unit for at least one year, the Court finds that the rule is narrow and not inconsistent with ROH Chapter 38.
The Trustees moved for partial summary judgment against lessees Weber and Spalding and for the dismissal of their units from the condemnation proceeding because both applicants had sold their interests in The Kahala Beach. The circuit court granted the Trustees' motion as to the individual lessees and denied the motion as to the two units. The court essentially ruled that the named applicants were no longer part of the proceedings and could not be counted towards the minimum number of applicants necessary to proceed, but that their units could remain in the condemnation action subject to subsequent application of its ruling on the issue of tacking. The court's ruling was expressly made without prejudice to hear[ing] the City's pending Motion to Amend the First Amended Complaint consistent with the Court's interpretation regarding tacking.
Both ROH § 38-1.2 and DCS Rules § 1-2 define owner-occupant for purposes of qualifying to participate in condemnation proceedings under ROH chapter 38. The definition contained in the administrative rule allows the Department of Housing and Community Development [hereinafter, the department], see ROH § 38-1.2; DCS Rules § 1-2 (2000), to consider exceptions to the occupancy requirements for participation in condemnation proceedings. The Trustees argued that the definition of owner-occupant in DCS Rules § 1-2 conflicted with ROH § 38-1.2. The circuit court orally ruled: Again, the Court is compelled wherever possible to reconcile the rule with the ordinance, and I believe that this part of the rule which deals with exceptions modifies the principal place of residence language of the ordinance. And, as Mr. Smith has argued, I[d]o not believe, for an example, if you're in the hospital, surgery, or in a bad accident, or you're in the hospital and then you're transferred to Rehab Hospital of the Pacific, or something like that, that that would deprive you of claiming that your leasehold condominium is your principal place of residence. Nor do I believe, as Mr. Smith has argued, that if you're assigned to Iraq that that means your principal place of business [sic] is in Iraq, or wherever else the military sends you. .... I do not think that those aforesaid exceptions contained in the rule modify the owner-part of the owner-occupant definition and do not in any way create an exception for or controvert the ordinance which makes it clear that you have to have complete possessory control and that you do not have complete possessory control of the premises if the individual rents, leases, or assigns the premises for any period of time to any other person in whose name legal title is not held. And that is how I reconcile the rule with the statute. Therefore, a motion for partial summary judgment on the issue of ad hoc exceptions is denied in part, and to the extent that it was argued that the exceptions could be used to invalidate the ordinance and the rule's own language that you have to have complete possessory control and you do not if you rent, lease, or assign, it is granted. The court's written order was filed on December 5, 2003 and stated in pertinent part: 1. The Department of Community Services may grant exceptions to Revised Ordinances of Honolulu (1990)(ROH) Section 38-1.2's occupancy requirement for serious illness, employment requirements, military obligations, and educational sabbatical, as provided under Rule 1-2 of the Rules for Residential Condominium, Cooperative and Planned Development Leasehold Conversion, as amended (Rules). The definitions of owner-occupant contained in Rule 1-2 and ROH § 38-1.2 can be reconciled. Rule 1-2's exception modifies the principal place of residence language of ROH § 38-1.2. 2. Applicants granted an exception to the occupancy requirement under Rule 1-2 of the Rules must still comply with the other qualification requirements of Revised Ordinances of Honolulu [] § 38-1.2, and may not rent, lease or assign their unit for any period of time to any other person in whose name legal title is not held.