Opinion ID: 2561872
Heading Depth: 2
Heading Rank: 3

Heading: The Leiali`i Parcel

Text: The trial court determined that the plaintiffs' claims with regard to the Leiali`i parcel were barred by sovereign immunity because title to the Leiali`i parcel had already been transferred to the HFDC. The trial court reasoned that, in order to return the Leiali`i parcel to the public lands trust, it would be required to `turn back the clock and examine actions already taken by the State.' Thus, the trial court concluded: The Leali`i [sic] [parcel is] no longer in the [p]ublic [l]ands [t]rust. Although the [p]laintiffs argue that the [parcel was] merely transferred to another State entity and that sovereign immunity therefore does not apply, the facts show that the State of Hawaii received payment for the transfer of [this parcel] to the HFDC. [HRS § 171-2 specifically exempts from the definition of public lands those lands to which the HFDC holds title in its corporate capacity. To return the [parcel] at Leali`i [sic] to the [p]ublic [l]ands [t]rust, the DLNR would have to expend moneys from the State treasury. Moreover, the HFDC has already spent millions of dollars improving those properties. Accordingly, this court cannot compel HFDC to return the [parcel] at. Leali`i [sic] to the [p]ublic [l]ands [t]rust, without directly affecting the state treasury. Pursuant to Pele Defense Fund v. Paty, [73 Haw. 578, 837 P.2d 1247 (1992),] [the p]laintiffs' request for injunctive relief . . . with respect to Leali`i [sic] is, therefore, barred by sovereign immunity. On appeal, the plaintiffs argue that the trial court erred in concluding that their claim with regard to the Leiali`i parcel was barred by the doctrine of sovereign immunity. Specifically, the plaintiffs take issue with the trial court's reliance on Pele Defense Fund. The plaintiffs assert that their claim regarding the Leiali`i parcel was not barred by sovereign immunity because the claim is for prospective injunctive relief. Additionally, the OHA plaintiffs contend that: (1) the requested injunction would not directly affect the State treasury inasmuch as the transfer from DLNR to HFDC was a paper transaction shifting title from one State agency to another for which DLNR received a mere $1[.00]; and (2) the dispute over the Leiali`i [parcel] involves governmental agencies rather than private parties. Consequently, the OHA plaintiffs argue that the case at bar is distinguishable from Pele Defense Fund. The defendants, on the other hand, believeas did the trial courtthat the State has already, transferred the Leiali`i [parcel] to HFDC and, therefore, to return the parcel to the public lands trust, DLNR would have to expend moneys from the State treasury. The defendants, therefore, maintain that the trial court correctly determined that Pete Defense Fund mandates the conclusion that the plaintiffs' claim is barred by sovereign immunity. Moreover, the defendants argue that the exception to sovereign immunity recognized in Pete Defense Fund for the limited purpose of enjoining state officials' breach of trust by disposal of trust assets in violation of the Hawai`i constitutional and statutory provisions governing the public land trustis inapplicable in this case because the Admission Act and state constitutional and statutory provisions explicitly authorize the State to sell ceded lands. The doctrine of sovereign immunity dictates that the State cannot be sued without its consent or waiver of its immunity in matters involving the enforcement of contracts, treasury liability for tort, and the adjudication of interest in property which has become unsullied by tort into the bosom of government. However, sovereign immunity may not be invoked as a defense by state officials who comprise an executive department of government when their action is attacked as being unconstitutional. Nor will sovereign immunity bar suits to enjoin state officials from violating state statutes. Pele Defense Fund, 73 Haw. at 607; 837 P.2d at 1265 (emphasis added) (internal brackets, ellipsis, and citations omitted) (format altered). Additionally, this court has adopted the rule from Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), which makes an important distinction between prospective and retrospective relief. Id. at 609, 837 P.2d at 1266. If the relief sought against a state official is prospective in nature, then the relief may be allowed regardless of the state's sovereign immunity. This is true even though accompanied by a substantial ancillary effect on the state treasury. However, relief that is tantamount to an award of damages for a past violation of law, even though styled as something else, is barred by sovereign immunity. Id. at 609-10, 837 P.2d at 1266 (emphasis added) (citations, ellipsis, footnote, and internal quotation marks omitted). The burden is on the State to prove with specific facts that the effect on the State treasury will be directly, substantially, and quantifiably impacted. OHA II, 110 Hawai`i at 357, 133 P.3d at 786 (footnote omitted). Pele Defense Fund involved a claim brought by a non-profit corporation comprised of native Hawaiian beneficiaries of the section 5(f) Admission Act trust, challenging the exchange of ceded lands in Puna on the island of Hawai`i for privately owned lands. 73 Haw. at 584-85, 837 P.2d at, 1253. The plaintiff prayed for, inter alia, injunctive relief to restore the Puna parcel to the public lands trust, arguing that the transfer constituted a breach of the trust created under section 5(f) and article XII, section 4 of the Hawaii Constitution. Id. This court held that, although the plaintiff's claim was couched as a claim for prospective injunctive relief, its request that the trust status of the exchanged lands be restored by means of a constructive trust [was] essentially equivalent to a nullification of the exchange and the return of the exchanged lands to the trust res. Id. at 611, 837 P.2d at 1267 (internal quotation marks omitted). This court, therefore, concluded that the effect on the state treasury would be direct and unavoidable, rather than ancillary, because imposing a constructive trust on lands [then privately owned] would require . . . the State to compensate [the purchaser] for its property. Id. at 611, 837 P.2d at 1267 (citations omitted). Consequently, we held that the plaintiff's requested relief [was], in effect, a request for compensation for the past actions of the [State] and was, accordingly, barred by sovereign immunity. Id. Subsequent cases decided by this court have reaffirmed the continued viability of the analysis articulated in Pele Defense Fund. See, e.g., OHA II, 110 Hawai`i at 356-57, 133 P.3d at 785-86 (holding that, under Pele Defense Fund, plaintiffs' claims alleging a breach of the State's fiduciary duties were barred by sovereign immunity because the plaintiffs requested reliefa share of revenues that the State had collected from the ceded lands trustwas essentially a request for past monetary damages, and, therefore, the relief requested was retrospective); Bush v. Watson, 81 Hawai`i 474, 481-82, 918 P.2d 1130, 1137-38 (1996) (holding that claims by native Hawaiian homestead lessees, challenging the validity of third-party agreements (TPAs) between other lessees and non-Hawaiian farmers as violating the Hawaiian Homes Commission Act, were not barred by sovereign immunity because they sought declaratory and injunctive relief that would void existing TPAs and enjoin the Hawaiian Homes Commission from approving future TPAs); Aged Hawaiians v. Hawaiian Homes Comm'n, 78 Hawai`i 192, 208 n. 26, 891 P.2d 279, 295 n. 26 (1995) (noting that, with respect to claims against state officials, claimants cannot recover money damages or the equivalent for past violations of law; nevertheless, relief that is prospective in nature may be allowed regardless of the state's sovereign immunity). Most recently, this court affirmed the Pele Defense Fund analysis in Kaho`ohanohano v. State, 114 Hawai`i 302, 162 P.3d 696 (2007). Kaho`ohanohano involved a class action lawsuit brought by members of the Employees' Retirement System of the State of Hawai`i (ERS), the State of Hawaii Organization of Police Officers, and the trustees of ERS [hereinafter, the plaintiffs] against the State alleging a breach of trust. Id. at 310, 162 P.3d at 704. The plaintiffs sought declaratory and injunctive relief based on a challenge to a statute that authorized the diversion of $346.9 million from the ERS fund, which the plaintiffs alleged violated the State's constitutional and contractual obligations to ERS members. Id. at 315, 162 P.3d at 709. This court determined that, inasmuch as the State had not expressly waived sovereign immunity and the plaintiffs did not claim money damages, the relevant inquiry [was] whether the relief sought for a past violation of law [was] `tantamount to an award of damages' or would merely have an `ancillary' effect on the state treasury, Id. at 337, 162 P:3d at 731 (citation and other internal quotation marks omitted). [18] Ultimately, this court concluded that, by granting the plaintiffs' requested relief, the effect on the state treasury, if any, would be only ancillary inasmuch as the state would be prohibited from any future skimming from the ERS fund. Id. Accordingly, this court held that the plaintiffs' claims were not barred by sovereign immunity. Id. at 337-38, 162 P.3d at 731-32. In this case, the plaintiffs seek to enjoin the actions of state executive officials from transferring the Leiali`i parcel because they believe such transfer would further diminish the corpus of the public lands trust in violation of the State's constitutional and statutory fiduciary dutiesbefore their unrelinquished claims to the ceded lands could be resolved. As in Kaho`ohanohano, the State, here, has not expressly waived sovereign immunity, and the plaintiffs do not claim money damages. Although the plaintiffs characterize their claim with respect to the. Leaili`i parcel as being one for prospective injunctive relief, i e., enjoining the transfer of the Leiali`i parcel, the parcel was, in fact, transferred from DLNR to HFDC on the same day the plaintiffs filed suit. Accordingly, in this case, as in Kaho`ohanohano, the relevant inquiry is whether the relief sought for a past violation of law[, i.e., the transfer of property,] is `tantamount to an award of damages' or would merely have an `ancillary' effect on the state treasury. Kaho`ohanohano, 114 Hawai`i at 337, 162 P.3d at 731 (some internal quotation marks and citation omitted). Unlike Pele Defense Fund, in which ceded lands were exchanged for privately owned lands, the Leiali`i parcel was transferred from one state agency to another, i e., from DLNR to HFDC. Moreover, the consideration of $1.00 was also paid from one state agency to another. In other words, the return of the property and purchase price between both state agencies effectively changes nothing. Both the parcel and the $1.00 would remain within the control of the State. To the contrary, because the lands at issue in Pele Defense Fund had been transferred to a private third-party, this court concluded that the State would have to compensate the private third-party for the return of the property in the public lands trust. 73 Haw. at 611, 837 P.2d at 1267. In that regard, Pele Defense Fund is distinguishable from the instant case because the Leiali`i parcel would remain within the control of the State. Returning the parcel to the public lands trust would require only that the HFDC transfer title back to DLNR and that DLNR pay only $1.00 for such transfer. As such, the effect on the State treasury, if any, would be only ancillary. However, in concluding that sovereign immunity barred the plaintiffs' claims with regard to the Leiali`i parcel, the trial court additionally relied upon the fact that, prior to the transfer of the Leiali`i parcel, HFDC had spent $31 million developing infrastructure on the property. In so doing, the trial court did not provide any explanation as to how the expenditure of $31 million prior to the plaintiffs' filing of the present lawsuit resulted in a direct as opposed to ancillary effect on the state treasury. We further observe that the parties do not any present argument on this issue. Although we recognize that $31 million dollars is a significant sum of money, that fact alone is insufficient to support a conclusion that such past expenditure constitutes a direct future effect on the state treasury. Indeed, as previously stated, sovereign immunity does not bar a claim for prospective injunctive relief even though accompanied by a substantial ancillary effect on the state treasury. Pele Defense Fund, 73 Haw. at 609, 837 P.2d at 1266 (emphasis added) (internal quotation marks, citation, and footnote omitted). In the case at bar, the plaintiffs are not asking that the $31 million be returned to them or even to the state treasury. Moreover, the benefit of the $31 million expenditure by HFDC on infrastructure remains with the State. Thus the plaintiffs' requested relief i.e., an injunctionis not tantamount to an award of damages for a past violation of law. Id. at 609-10, 837 P.2d at 1266 (internal quotation marks, citation, and ellipsis omitted). As such, the effect of the expenditure of $31 million on the state treasury is ancillaryalbeit a substantial one. We, therefore, hold that the plaintiffs' claim for injunctive relief with regard to the Leiali`i parcel is not barred by sovereign immunity. Accordingly, we also hold that the trial court erred in determining otherwise.
The plaintiffs argue that the trial court erred in determining that the defenses of waiver and estoppel barred the plaintiffs' request for injunctive relief with respect to the Leiali`i parcel. Because waiver and estoppel are distinct doctrines, we analyze them separately below.
The trial court concluded that the [p]laintiffs, by their actions and inactions during the seven years between 1987 and 1994 . . . waived any right they may have had to contest the sale of [the Leiali`i parcel] to HFDC as illegal. . . . The [i]ndividual [p]laintiffs argue that they and their counsel relied on Congress's 1993 Apology Resolution and the Legislature's Act 359 of 1993 as central bases to seek an injunction in the fall of 1994 on the sale of ceded lands, pending resolution of the Hawaiians' claim to ownership of the ceded lands. Mr. Meheula's discussions with the OHA Board did cause OHA to insist in the fall of 1994 that a disclaimer be placed in the HFDC agreements. As a practical matter, however, neither OHA nor the [i]ndividual [p]laintiffs objected to the sale of the [Leiali`i parcel] until the fall of 1994. In any event, even if the [p]laintiffs did not consider challenging the State's power to sell ceded lands until after the Apology Resolution was adopted in 1993, OHA's continuing to negotiate for market value after the Apology Resolution was passed is also conduct from which an intention to waive may reasonably be inferred. [The p]laintiffs' failure to object to the development plan, which included market homes, before the LUC and Legislature in testimony relating to Act 318 is wholly inconsistent with any dissatisfaction with the development plan, also suggesting waiver of any right to challenge them. [ Goo v. Hee Fat, 34 Haw. 123, 129 (1997) [(1937)], overruled on other grounds by Goo v. Goo, 36 Haw. 530 (1943).] Moreover, HFDC and the State were prejudiced by their reliance on [p]laintiffs' acquiescence in the development plan to sell [the Leiali`i parcel]. As testified to by the project managers for both Leali`i [sic] and La`i`opua, there were no objections from OHA as to the State's power to sell public trust lands for those projects until November 1994. By that time, however, $31 million had already been invested in Leali`i [sic]. (Footnotes omitted.) The plaintiffs argue that they did not waive their claim with regard to the Leiali`i parcel. The OHA plaintiffs' maintain that, [a]fter the passage of the Apology Resolution, and as the full import of the congressional finding's that [c]rown, [g]overnment and [p]ublic lands were ceded to the United States without the consent of or compensation to the [n]ative Hawaiian people of Hawaii or their sovereign government and that the indigenous Hawaiian people never directly relinquished their claims to their inherent sovereignty as a people or over their national lands to the United States[ ] became evident, the OHA Trustees took appropriate action to assure that the claim to the national lands of the [n]ative Hawaiian people was properly asserted. As indicated by the trial court, the individual plaintiffs posit that, [a]lthough OHA did not earlier object to the transfer of ceded lands for tile ultimate sale to homeowners in the Leiali`i project, the 1993 legislation [ ( i.e., the Apology Resolution, as well as, Acts 359 and 329, discussed supra )] and Mr. Meheula's discussions with the OHA Board in [September 1994] were new events that justified their objection in [September 1994]. Relying on the ruling and rationale of the trial court, the defendants maintain that the plaintiffs waived their claims regarding the Leiali`i parcel because the [p]laintiffs' failure to object to the development plan at the LUC and before the Legislature in testimony relating to Act 318 [ (setting forth a formula to compensate OHA for the `villages of Leiali`i, Maui and villages of La`i`opua, Hawai`i') ] is `wholly inconsistent with any dissatisfaction' with the development plan . . . and[,therefore,] clearly waived any right to challenge the plan. The defendants further maintain that, [e]ven if plaintiffs did not think to challenge the State's power to sell [c]eded lands until after the Apology Resolution, OHA's continuing to negotiate for `market value' after the Apology Resolution was passed is clearly `conduct from which an intention to waive may reasonably be inferred.' This court has defined waiver as an intentional relinquishment of a known right, a voluntary relinquishment of rights, and the relinquishment or refusal to use a right. Coon v. City & County of Honolulu, `98 Hawai`i 233, 261, 47 P.3d 348, 376 (2002) (emphasis added) (citation omitted). To constitute a waiver, there must have existed a right claimed to have been waived and the waiving party must have had knowledge, actual or constructive, of the existence of such a right at the time of the purported waiver. While the question whether a valid waiver exists is generally a question of fact, when the facts are undisputed it may become a question of law. Hawaiian Homes Comm'n v. Bush, 43 Haw. 281, 286 (1959) (citations omitted); see also Stewart v. Spalding, 23 Haw. 502, 517 (1916) (The question of waiver is usually a mixed one of law and fact but where the facts are undisputed and are susceptible of but one reasonable inference it becomes one of law for the court. (Citations omitted.)). Id. at 261-62, 47 P.3d at 376-77 (some citations and original ellipsis omitted) (emphasis added). Furthermore, [w]aiver must be intentional. Such intention may be indicated by language or conduct, may be either express or implied but does not necessarily imply that one has been misled to his prejudice or into an altered position. Waiver depends upon the intention of the party who is charged with the waiver. . . . It may be proven by an express declaration of the party charged with the waiver. It may also be proved by the existence of acts or language so inconsistent with the purpose of the person charged to stand upon his rights as to leave no opportunity for a reasonable inference to the contrary. Hewahewa v. Lalakea, 35 Haw. 213, 218-19 (1939) (emphasis added) (internal quotation marks and citations omitted). In this case, the record indicates that the first time that OHA had knowledge that DLNR intended to alienate the Leiali`i parcel from the public lands trust for the purposes of residential development was in December 1989 when HFDC filed a petition with the LUC to reclassify the Leiali`i parcel from agriculture to urban use. It is undisputed that OHA did not object to the transfer of the Leiali`i parcel and participated in negotiations with HFDC regarding the parcel's fair market value, pursuant to Act 318: As previously stated, it was not until the adoption of the Apology Resolution that OHA requested the disclaimer that its acceptance of funds would not affect any further claim the native Hawaiian people may have to the Leiai`i parcel. When HFDC declined to honor their request, the plaintiffs filed suit. In support of their position that they did not waive their claim with regard to the Leiali`i parcel, the plaintiffs essentially maintain that the Apology Resolution gave rise to their breach of trust claim. Pointing to language in the Apology Resolution that the indigenous Hawaiian people never directly relinquished their claims to their inherent sovereignty as a people or over their national lands to the United States, Apology Resolution, Pub.L. No. 103-150, 107 Stat. 1510, the plaintiffs submit that title to the ceded lands is now clouded. Having held that the Apology Resolution and related state legislation give rise to a fiduciary duty by the State, as trustee, to preserve the corpus of the public lands trust, specifically, the ceded lands, until such time as the unrelinquished claims of the native Hawaiians have been resolved, it necessarily follows that it was not until at least November 23, 1993, when the Apology Resolution was signed into law by President Clinton, that the plaintiffs had knowledge, actual or constructive, of the existence of . . . a right [claimed to have been waived] at the time of the purported waiver. Coon, 98 Hawai`i at 261, 47 P.3d at 376 (citation omitted). Consequently, we cannot say that the plaintiffs' purported waiver was intentional, expressly or impliedly. Hewahewa, 35 Haw. at 218. Accordingly, we hold that the trial court's conclusion that OHA's actions between 1987 and 1994 constituted a waiver of the plaintiffs' claims was clearly erroneous and that, therefore, the trial court erred in determining that the plaintiffs waived their claim for injunctive relief with regard to the Leiali`i parcel. [19]
The trial court ruled that, [f]or the same reasons that [the p]laintiffs waived any challenge to the legality of the sales of Leali`i [sic] lands, [the p]laintiffs are estopped from making that challenge. Specifically, the trial court found that, [a]pplying equitable estoppel and quasi estoppel principles to the case at hand, during the years of negotiations and planning for Leali`i [sic] before [the p]laintiffs filed this lawsuit, [the p]laintiffs did not suggest that they would file a lawsuit challenging the right to sell the [Leiali`i parcel] to HFDC and in turn to third parties for their homes. During these same five years, the [p]laintiffs had notice of the planned development at Leali`i [sic], but chose not to challenge it. The State spent substantial amounts of time and money developing [the parcel] before November 1994 when [the p]laintiffs first filed suit. By their action (or inaction with respect to the [i]ndividuai [p]laintiffs) and conduct . . . [the p]laintiffs caused the HFDC to believe that no one would challenge its acquisition of the [Leiali`i parcel] as long as OHA and DLNR received fair monetary compensation for the lands. [The p]laintiffs' acquiescence in the development of Lealig [sic] and HFDC's expenditure of funds for infrastructure, and OHA's active participation in negotiations for an appraised value for the ceded lands induced the State to continue moving forward with the housing development. The State obtained necessary land use changes, entered into agreements with developers, made agreements with county officials and spent `over $31 million for infrastructure at Lealig [sic] alone. The State significantly altered its position because of the statements and conduct of OHA, as well as the inaction of the [i]ndividual [p]laintiffs. [The plaintiffs are, therefore, also estopped from challenging the State's sale of public trust lands at Leali`i [sic]. It is true, as argued by the OHA [p]laintiffs, that the doctrine of equitable estoppel cannot be invoked against a governmental agency such as OHA in the absence of overt detrimental reliance and manifest injustice. The law recognizes that governmental bodies must be able to change their minds in some circumstances. Thus, a mere change of mind by the government does not invoke estoppel unless the other. party had detrimentally relied upon the agency's earlier position to such an extent that it would constitute a manifest injustice to fail to invoke and apply the doctrine. In this case, however, based on the facts above, the requisite showings of extensive detrimental reliance by and manifest injustice to the [d]efendants have been satisfied to invoke equitable estoppel against the OHA plaintiffs. Thus, the doctrine of estoppel prohibits both sets of [p]laintiffs from seeking injunctive relief with respect to the sale of [the Leiali`i parcel]. (Internal footnotes omitted.) (Format altered.) The OHA plaintiffs argue that the trial court erred in concluding that the doctrine of estoppel barred the plaintiffs claims because it is manifestly unjust to [n]ative Hawaiians to allow alienation of [c]eded [l]andstheir national landsprior to a final resolution of the [n]ative Hawaiian land claim. Additionally, the OHA plaintiffs argue that the application of the doctrine of equitable estoppel against the government is not favored, and, furthermore, there can be no suggestion here that OHA wilfully misled the HFDC in its earlier position on the Leiali`i [parcel] or acted in bad faith. The individual plaintiffs appear to contend that estoppel is not applicable in this case because it is an equitable defense, which cannot be raised against the plaintiffs because the 1993 Legislation obligated the State to seek instructions from the [c]ourt before selling ceded lands without prompting by [the pllaintiffs. The defendants insist that the trial court correctly determined that the plaintiffs were estopped from challenging the transfer of the Leiali`i parcel because the unchallenged findings of facts show that HFDC spent more than $31 million at Leiali`i over a seven-year period in reliance on OHA's failure to object to the project. Accordingly, the defendants assert that [t]hese facts squarely raise the defense of equitable estoppel[.] The theory of equitable estoppel requires proof that one person wilfully caused another person to erroneously believe a certain state of things, and that person reasonably relied on this erroneous belief to his or her detriment. Potter v. Hawai`i Newspaper Agency, 89 Hawai`i 411, 419, 974 P.2d 51, 59 (1999) (citation omitted). A species of equitable estoppel, the principle of quasi estoppel, precludes a party from asserting to another's disadvantage, a right inconsistent with a position previously taken. Id. at 420, 974 P.2d at 60 (internal brackets and citation omitted). As the OHA plaintiffs correctly point out, [t]he application of the doctrine of equitable estoppel against the government is not favored. Turner v. Chandler, 87 Hawai`i 330, 333, 955 P.2d 1062, 1065 (App.1998) (citations omitted). However, this court has also stated that the doctrine is fully applicable against the government if it is necessary to invoke it to prevent manifest injustice. State ex rel. Kobayashi v. Zimring, 58 Haw. 106, 126, 566 P.2d 725, 737 (1977) (internal quotation marks and citation omitted). As previously discussed, it was not until the Apology Resolution was signed into law on November 23, 1993 that the plaintiffs' claim regarding the State's explicit fiduciary duty to preserve the corpus of the public lands trust arose. As such, it was not until that time that the plaintiffs' lawsuit could have been grounded upon such a basis. Consequently, the plaintiffs cannot be deemed to have wilfully caused [the defendants] to erroneously believe a certain state of things, Potter, 89 Hawai`i at 419, 974 P.2d at 59, upon which the defendants relied to their detriment. Accordingly, we conclude that the trial court incorrectly determined that the plaintiffs were estopped from challenging the transfer of the Leiali'i parcel based on their pre-1993 actions and hold that the plaintiffs' claims are not barred by the principles of equitable and quasi estoppel. We now turn to the plaintiffs' arguments as they relate to the ceded lands in general.