Opinion ID: 2582211
Heading Depth: 4
Heading Rank: 1

Heading: the plaintiffs' claim for breach of settlement

Text: As previously indicated, the plaintiffs claimed that the State breached the Act 304 Settlement by failing to challenge the FAA Memorandum. A claim alleging breach of settlement requires that the plaintiffs establish that a settlement agreement, or contract, existed between the parties. See Harris v. DeSoto, 80 Hawai`i 425, 432, 911 P.2d 60, 67 (1996) (a settlement agreement is a contract). Therefore, the plaintiffs' claim for breach of settlement requires that they first establish that a contract or settlement agreement existed between them and the State. In the instant case, because the plaintiffs suggest that legislation  i.e., Act 304  constituted a contract or settlement agreement, this court must review the language of the act and the circumstances surrounding its enactment. See Koster v. City of Davenport, Iowa, 183 F.3d 762, 766 (8th Cir.1999) (citations omitted). The United States Supreme Court provides further explanation on the determination of whether legislation contractually binds government: For many decades, this Court has maintained that absent some clear indication that the legislature intends to bind itself contractually, the presumption is that a law is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise. Dodge v. Board of Education, 302 U.S. 74, 79, 58 S.Ct. 98, 100, 82 L.Ed. 57 (1937). See also Rector of Christ Church v. County of Philadelphia, 24 How. 300, 302, 16 L.Ed. 602 (1861) (Such an interpretation is not to be favored). This well-established presumption is grounded in the elementary proposition that the principal function of a legislature is not to make contracts, but to make laws that establish the policy of the state. Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 104-105, 58 S.Ct. 443, 447-448, 82 L.Ed. 685 (1938). Policies, unlike contracts, are inherently subject to revision and repeal, and to construe laws as contracts when the obligation is not clearly and unequivocally expressed would be to limit drastically the essential powers of a legislative body. Indeed, `[t]he continued existence of a government would be of no great value, if by implications and presumptions, it was disarmed of the powers necessary to accomplish the ends of its creation.' Keefe v. Clark, 322 U.S. 393, 397, 64 S.Ct. 1072, 1074, 88 L.Ed. 1346 (1944) (quoting Charles River Bridge v. Warren Bridge, 11 Pet. 420, 548, 9 L.Ed. 773 (1837)). Thus, the party asserting the creation of a contract must overcome this well-founded presumption, Dodge, supra, 302 U.S., at 79, 58 S.Ct., at 100, and we proceed cautiously both in identifying a contract within the language of a regulatory statute and in defining the contours of any contractual obligation. In determining whether a particular statute gives rise to a contractual obligation, it is of first importance to examine the language of the statute. Dodge v. Board of Education, supra, at 78, 58 S.Ct., at 100. See also Indiana ex rel. Anderson v. Brand, supra, 303 U.S., at 104, 58 S.Ct., at 447 (Where the claim is that the State's policy embodied in a statute is to bind its instrumentalities by contract, the cardinal inquiry is as to the terms of the statute supposed to create such a contract). If it provides for the execution of a written contract on behalf of the state the case for an obligation binding upon the state is clear. 302 U.S., at 78, 58 S.Ct., at 100 (emphasis supplied). But absent an adequate expression of an actual intent  of the State to bind itself, Wisconsin & Michigan R. Co. v. Powers, 191 U.S. 379, 386-387, 24 S.Ct. 107, 108-109, 48 L.Ed. 229 (1903), this Court simply will not lightly construe that which is undoubtedly a scheme of public regulation to be, in addition, a private contract to which the State is a party. Nat'l R.R. Passenger Corp. v. Atchison Topeka & Santa Fe Ry. Co., 470 U.S. 451, 465-67, 105 S.Ct. 1441, 84 L.Ed.2d 432 (1985) (some emphases in original, some added) (brackets in original); see also United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 18 n. 14, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977) (In general, a statute is itself treated as a contract when the language and circumstances evince a legislative intent to create private rights of a contractual nature enforceable against the State.). Courts proceed cautiously in identifying those statutes which contractually bind the government to its terms because: Finding a public contractual obligation has considerable effect. It means that a subsequent legislature is not free to significantly impair that obligation for merely rational reasons. Because of this constraint on subsequent legislatures, and thus on subsequent decisions by those who represent the public, there is . . . a higher burden to establish that a contractual obligation has been created. Parella v. Ret. Bd. of R.I. Employees' Ret. Sys., 173 F.3d 46, 60 (1st Cir.1999). Based on the foregoing principles, this court must, with regard to Act 304, first examine the language of the statute to determine whether it provides for the execution of a written contract on behalf of the state or otherwise evinces clear intent to bind the State to its terms. Nat'l R.R. Passenger Corp., 470 U.S. at 466-67, 105 S.Ct. 1441 (citations and emphasis omitted). The plaintiffs fail  as they did before the circuit court  to point to any language in Act 304 showing legislative intent to enter into a contract. Indeed, nowhere in Act 304 does it provide for the execution of a written contract or utilize language indicating an intent to create a contract. Nevertheless, the plaintiffs urge this court to look to the circumstances of Act 304's passage, including the legislative history reflecting its characterization as a negotiated `settlement' and `conclusion' or `resolution[.]' Specifically, the plaintiffs contended in their complaint that: The State executive and legislative branches and OHA entered into negotiations to clarify OHA's income and proceeds from that pro rata portion of the trust referred to in Article XII, Section 4 of the Constitution of the State of Hawaii. The settlement agreement they reached was documented as Act 304 (1990), hereinafter referred to as the Act 304 Settlement. In virtually every committee report or comment on Act 304, the term settlement or resolution is used to characterize the agreement reached. In addition, the legislative history surrounding Act 304 clearly demonstrates a legislative commitment not to unilaterally repeal or modify Act 304. (Some brackets in original.) We acknowledge that the legislative history behind Act 304 utilizes the terms settlement and resolution. However, the stated purpose of the Act was: to clarify the basis for determining the revenue due to [OHA] for the betterment of the conditions of native Hawaiians under provisions of the State Constitution and Chapter 10, [HRS]. More specifically, this bill amends the definitions of public land trust and revenues to clarify which lands make up the public land trust for native Hawaiians and the general public and which revenues derived from those lands will be used in determining the income and proceeds to be transferred to [OHA] to be used for the betterment of native Hawaiians. Hse. Stand. Comm. Rep. No. 648-90, in 1990 House Journal, at 1082 (1990) (emphases added). Further, the legislative history indicates that Act 304 was meant to be the first step in the resolution of a series of complex questions about what constitutes the extent of the trust holdings and the trust obligations of the State to the native Hawaiians, Hse. Stand. Comm. Rep. No. 306-90, in 1990 House Journal, at 960 (emphasis added), and  leaves open for future negotiations the question of entitlements for Hawaiians with less than fifty per cent Hawaiian blood and the question of establishing a separate trust fund to benefit all Hawaiians regardless of blood quantum. Hse. Conf. Comm. Rep. No. 91, in 1990 House Journal, at 801 (emphasis added); see also Hse. Stand. Comm. Rep. No. 648-90, in 1990 House Journal, at 1082; Sen. Stand. Comm. Rep. No. 3073, in 1990 Senate Journal, at 1253. Therefore, we believe that the clear and specific stated purpose of the Act reveals that the legislature did not intend, as the plaintiffs urge, to enter into an enforceable contract with the plaintiffs or restrict successive legislatures from modifying or repealing any language therein. Accordingly, absent the clear and unambiguous intent required to contractually bind the State, we hold that Act 304 does not constitute a valid and enforceable contract or settlement agreement between the parties. We, therefore, conclude that the plaintiffs' claim for breach of settlement was properly dismissed inasmuch as it failed to state a claim upon which any relief could be granted.