Opinion ID: 2633532
Heading Depth: 2
Heading Rank: 2

Heading: History of the State's Efforts to Provide Redress for Breaches of the Hawaiian Home Lands Trust

Text: In 1988, the Hawai`i State Legislature attempted to address the criticisms of the Hawaiian home lands program and provide redress to its beneficiaries through the passage of The Native Hawaiian Judicial Trusts Relief Act, 1988 Haw. Sess. L. Act 395, §§ 1-7 at 942-945 (Act 395), later codified as HRS chapter 673 (Supp.1988). Act 395 provided a limited waiver of sovereign immunity for beneficiaries of the trust to bring suits, prospectively, for money damages relating to breaches of the State's trust responsibilities occurring after July 1, 1988. 1988 Haw. Sess. L. Act 395, § 3 at 945. In addition, section 5 of Act 395 provided an unfettered right to sue for actual damages for past breaches of trust ( i.e., between August 21, 1959 and June 30, 1988) [hereinafter, retroactive claims] and directed that all suits must be brought prior to June 30, 1993. 1988 Haw. Sess. L. Act 395, § 5 at 945. [7] However, the act also provided an opportunity for the governor to present a proposal for resolution of such claims to accommodate the attorney general's concern about the impact of such claims on the State treasury. In the event that the governor failed to present such a proposal to the 1991 Legislature or the proposal was rejected, the right-to-sue provision would remain. [8] 1988 Haw. Sess. L. Act 395, § 5 at 945.
In 1991, then-Governor John Waihe`e submitted to the legislature An Action Plan to Address Controversies Under the Hawaiian Home Lands Trust and the Public Land Trust [hereinafter, Governor's Action Plan or Action Plan], which proposed the creation of a Board of Individual Claims Resolution to hear claims of losses suffered by individual beneficiaries of the trust as a result of the State's breaches of fiduciary duties occurring prior to 1988. The legislature declared that the Governor's Action Plan me[t] the intent of Section 5 of Act 395, Sen. Con. Res. No. 185, S.D. 1, H.D. 1, and accepted the Action Plan with modifications. Thereafter, the individual beneficiaries' right-to-sue provision became a source of debate in the legislature. The House Committee on Water, Land Use and Hawaiian Affairs submitted proposed amendments to chapter 673 in House Bill No. 895 (H.B. No. 895), which replaced entirely the previous right-to-sue provision with a completely administrative process to handle the individual claims. Hse. Stand. Comm. Rep. No. 202, in 1991 House Journal, at 911. The administrative process was intended to address the legislature's belief that the traditional court process [was] a slow, costly, time-consuming investment on the part of the individual beneficiary and that, [f]rom the small number of suits versus the large number of controversies, it appear[ed] that the judicial process ha[d] not been accessible to native Hawaiians. Hse. Stand. Comm. Rep. No. 202, in 1991 House Journal, at 911. The House Committee proposed several amendments to the bill, including, inter alia, the addition of an appeal process by changing `Orders and decisions of the board shall be final and not subject to judicial review' to `(b) Orders and decisions of the board may be appealed through the procedures in section 91-14.' Hse. Stand. Comm. Rep. No. 202, in 1991 House Journal, at 912. When H.B. No. 895 reached the Senate, it raised concerns about having an administrative entity adjudicating individual claims. The Senate Committees on Housing and Hawaiian Programs and Judiciary (Senate Committees) noted that the type of potential suits and the amount of potential damages could not be adequately described or predicted by testifiers. Sen. Stand. Comm. Rep. No. 969, in 1991 Senate Journal, at 1094. The Senate Committees warned that such uncertainty could lead the State into a vast, uncharted area of law, and ... that authorizing the board to make these decisions would be inappropriate. Sen. Stand. Comm. Rep. No. 969, in 1991 Senate Journal, at 1094. The Senate Committees further noted that [t]he courts are better equipped to settle disputes of this kind and to set standards which are uniform and consistent throughout the State. Sen. Stand. Comm. Rep. No. 969, in 1991 Senate Journal, at 1094. The Senate Committees, therefore, jointly proposed an amendment to the bill to grant individuals affected by the Hawaiian home lands trust to settle their individually affected controversies ... by suing directly in circuit court. Sen. Stand. Comm. Rep. No. 969, in 1991 Senate Journal, at 1094. Eventually, the House and Senate agreed on a compromise, which was described as having the following steps: (1) First, the establishment of a [the Panel] to receive, review, and evaluate the merits of an individual beneficiary's claim, and to submit a summary of the findings and an advisory opinion regarding the merits of each claim filed with the Panel, including an estimate of the probable award of actual damages or recommended corrective action to the 1993 and 1994 Legislatures. In order to enable the Panel to reach an advisory opinion regarding the [merits] of each claim filed with the Panel, hearings officers may be authorized to undertake a rendering of the findings on which the advisory opinions will be based. The potential volume of claims may require the use of this procedure to ensure that all claims are considered within the time allowed. (2) Second, legislative consideration of the reports submitted by the Panel; (3) Third, disbursement by the Panel of any compensation awarded or implementation or corrective action provided by law; or (4) Fourth, if an action taken by the 1993 or 1994 Legislature is not accepted by an individual beneficiary claimant, then the claimant shall have the right to bring an action to recover actual damages for breach of trust in the circuit courts of the State of Hawai`i. Hse. Conf. Comm. Rep. No. 64, in 1991 House Journal, at 801.
The 1991 Legislature passed Act 323, 1991 Haw. Sess. L. Act 323, § 1 at 990 (Act 323), entitled Individual Claims Resolution Under the Hawaiian Home Lands Trust Act, which incorporated the compromised amendments to H.B. 895. Although H.B. 895 had proposed amendments to HRS chapter 673, Act 323 was later codified as HRS chapter 674 (Supp.1991). Chapter 674 establishes the Panel and a claims review process under which individual beneficiaries under the Hawaiian home lands trust may resolve claims for actual damages arising out of or resulting from a breach of trust, which occurred between August 21, 1959, and June 30, 1988, and was caused by an act or omission of an employee of the State in the management and disposition of trust resources[.] HRS § 674-1 (1993). Chapter 674 authorizes the Panel to review and evaluate the merits of claims brought by individual beneficiaries, render findings, and recommend monetary damages and other relief. HRS § 674-1. After reviewing an individual's claims, the Panel is then required to render an advisory opinion to the legislature regarding the merits of each claim, including an estimate of the probable compensation or any recommended corrective action for legislative action[.] HRS § 674-1(c). Chapter 674 set the following deadlines: (1) submission of claims to the Panel under HRS § 674-7 by August 31, 1993; (2) filing a written notice with the Panel that the claimant does not accept legislative action on his or her claim under HRS § 674-17(b) by October 1, 1994; and (3) filing an action in circuit court under HRS § 674-19 by September 30, 1996. Chapter 674 also directed the Panel to submit a final report to the 1994 Legislature, including: (1) a summary of each claim brought; (2) the Panel's findings and advisory opinion regarding the merits of each claim; and (3) an estimate of the probable compensation or recommended corrective action. HRS § 674-14 (1993).
Because of delays in creating the Panel, the 1993 Legislature extended the Act 323-filing deadlines in chapter 674 as follows: (1) an additional two years for filing claims with the Panel ( i.e., by August 31, 1995), HRS § 674-7; (2) an additional three years to file written notice with the Panel that the claimant does not accept legislative action ( i.e., by October 1, 1997), HRS § 674-17(b); and (3) an additional three years for filing an action in circuit court ( i.e., by September 30, 1999), HRS § 674-19. 1993 Haw. Sess. L. Act 351, § 1 at 991 (Act 351); The deadline for the Panel's final report to the legislature was extended from 1994 to 1997. 1993 Haw. Sess. L. Act 351, § 9 at 994. In 1994, the legislature considered and approved the Panel's recommendation to dismiss the claims of two individual beneficiaries. 1994 Haw. Sess. L. Act 129, § 1 at 298 (Act 129).
Due to uncertainties regarding land titles arising out of claims related to trust lands and breaches of the trust that affected the trust as a whole, Act 14, which was based on the Governor's Action Plan and Section 5 of Act 395, was promulgated by the 1995 Legislature. 1995 Haw. Sp. Sess. L. Act 14, § 1 at 696. Act 14 expressly stated its intent to settle all retroactive claims, but left intact the Chapter 674 claims. Act 14, inter alia, created a trust fund to settle all title-related trust claims arising from the State's misuse of trust lands and precluded all retroactive claims, including those governed by HRS chapter 674, from creating clouds on existing land titles. Act 14 stated that its effect was res judicata as to all retroactive claims, except for those claims related to federal government reparations, as well as Chapter 673 and Chapter 674 claims. 1995 Haw. Sp. Sess. L. Act 14, § 4 at 699. Act 14 also shortened the time to file suit in court under HRS chapter 674 by one year to September 30, 1998 to ensure the resolution of the individual claims in a fair, complete, and timely manner. 1995 Haw. Sp. Sess. L. Act 14, § 2 at 698; see also 1995 Haw. Sp. Sess. L. Act 14, § 15 at 702. Thus, the remedies under Act 14 and chapter 674 are complementary: Act 14 seeks to cure fiduciary breaches affecting the trust as a whole, whereas chapter 674 is preserved as the remedy by which individual beneficiaries can pursue claims against the State defendants for personal losses or harm suffered through breaches of the State's fiduciary obligations between 1959 and 1988.
In early 1997, the Panel prepared and submitted its Report to the Governor and the 1997 Hawai`i Legislature (1997 Report). Therein, the Panel reported that it had received 4,327 claims brought by 2,752 claimants prior to the August 31, 1995 filing deadline. [9] The Panel stated that, of the 4,327 claims filed, 396 claims were closed and 3,931 had been accepted for investigation. Further, of the 3,931 claims being investigated, 601 claims were concluded and in various stages of disposition, i.e., recommended award, dismissal, pending hearing, or on remand to the hearings officer. By the end of 1996, the Panel had issued final decisions in 172 claims, affecting 147 claimants, finding 165 [of those] claims meritorious. [10] The 1997 Report also recommended damage awards for 162 claims, totaling approximately $6.7 million. However, the Panel requested a two-year extension to investigate and hear claims in order to complete the distribution of any damage awards by December 1999 because of the large number of claims and the Panel's limited staff and resources. The Panel categorized all of the claims and determined that waiting list claims, i.e., those claims involving claimants who had been waiting an unreasonable amount of time for a homestead award, comprised forty-two percent of all claims. Twenty-five percent of all of the claims were waiting list claims with other issues, such as determinations of blood quantum and claimants affected by DHHL's preference policies. In other words, sixty-seven percent of all claims were waiting list claims. After the 1997 Report was submitted, the 1997 Legislature found that there was disagreement between the parties over the formula utilized by the [Panel] to arrive at award amounts and that [t]his disagreement, coupled with the legislature's belief that [the] claims should be handled together, rather than in a piecemeal fashion, necessitated the enactment of Act 382, discussed infra. 1997 Haw. Sess. L. Act 382, § 1 at 1209. The legislature, therefore, declined to appropriate the requested funding, stating: In light of the ambiguities inherent in the claims currently on submission to the Legislature and addressed in this measure, and the advisability of deliberating on all submitted claims in one package, your Committee declines to recommend funding any portion of the $6.8 million requested appropriation at this time. Your Committee emphasizes that this is not an action by the Legislature triggering a claimant's right to sue . . ., but a deferral of such action and referral of submitted claims back to the Panel for reconsideration in light of the clarifications set forth in this measure. Hse. Stand. Comm. Rep. No. 603, in 1997 House Journal, at 1349 (emphasis added).
As previously stated, the Panel was established via Act 323 in 1991 and its existence was extended via Act 351 from 1994 to 1997. The 1997 Legislature agreed to again extend the Panel's existence for an additional two years until 1999 through the passage of Act 382. 1997 Haw. Sess. L. Act 382, § 4 at 1210. Act 382 did not modify the deadline to file claims with the Panel (previously revised via Act 351 in 1993); however, it did extend the deadline for claimants to (1) file a written notice with the Panel rejecting legislative action upon their claims from October 1, 1997 to October 1, 1999 and (2) bring an action in circuit court from September 30, 1998 to December 31, 1999. 1997 Haw. Sess. L. Act 382 §§ 6 and 7, at 1210 (amending HRS chapter 674). In order to resolve the disagreement over the formula used to determine damage awards, Act 382 also created a working group (Working Group) comprised of the Attorney General, the Director of Budget and Finance, the Chair of the Hawaiian Homes Commission, and the Panel Chair to determine a formula and any criteria necessary to qualify and resolve claims filed under HRS chapter 674. The Working Group ultimately submitted an interpretation of chapter 674 that proposed to significantly change the Panel's formula for calculating actual damages and thereby effectively eliminated nearly sixty percent of the claims from consideration. In response to the Working Group's proposed formula, certain claimants brought suit in circuit court in Apa v. Cayetano, Civil No. 97-4641-11, alleging that Act 382 was unconstitutional. Specifically, the claimants asserted that the Working Group was biased and its proposed formula, inter alia, violated their right to due process of law under the United States Constitution. The first circuit court agreed, finding that the members of the Working Group appeared to be biased as a result of (1) their official positions and (2) the fact that several of them had testified before the legislature against the types of claims they later found to be non-compensable, i.e., the waiting list claims, which, as previously indicated, are those claims involving claimants who had been waiting an unreasonable amount of time for a homestead award. The circuit court ruled that, [b]ecause Act 382 and the composition of the Working Group create[d] a significant appearance that the fairness of the claims process under HRS chapter 674 has been abrogated, certain provisions of Act 382 were an unconstitutional denial of due process and delegation of legislative power. The circuit court further noted that: Act 382 violate[d] Plaintiffs' rights to equal protection. For those similarly situated, i.e. those who filed claims under HRS § 674, the relief accorded to them will be determined by whether or not they were included in the Panel's 1997 report to the Legislature and entitled to nonmonetary remedial relief or excluded from any relief, if their claims were determined to be ineligible under the Working Group's formula and criteria. The court finds that the distinction between the [waiting list claims and non-waiting list claims] is arbitrary and capricious, as there is no rational basis to treat them differently. The circuit court, thus, enjoined the members of the Working Group from taking any further action in determining the formula for compensation. [11] The portions of Act 382 that were left intact subsequent to the circuit court's ruling included the extensions of: (1) the life of the Panel by two years, mandating a final report to the 1999 Legislature; (2) the deadline for claimant to file a written notice rejecting the legislative action to October 1, 1999; and (3) the time for filing suit in the circuit court until December 31, 1999.
In 1999, the Panel submitted to the legislature its Report to the Governor and the 1999 Hawai`i Legislature. Therein, the Panel reported that: Despite losing almost a year of productive time due to Act 382[, which created the Working Group,] and the [W]orking [G]roup's recommendations, the Panel has made significant progress in reviewing claims. As of December 31, 1998, the Panel and its staff had either closed or issued recommendations on 2,050 claims, representing 47% of the total number of claims filed. The Panel's cumulative recommended damages awards for all years totals $16,434,675.75. While the claims process has moved forward, 53% of the claims filed with the Panel still remain to be reviewed. Consequently, the Panel anticipates asking the 1999 Legislature for another extension of time to complete the review of all claims. (Emphasis in original.) The 1999 Legislature rejected proposals from the Attorney General and other State officials to amend chapter 674 to implement the limitations on awards recommended by the Working Group, i.e., to exclude the waiting list claims. Instead, the Legislature passed House Bill No. 1675 (H.B. 1675), which extended the notice, filing, and Panel report deadlines by one year, to allow additional time for all claims to be reviewed. However, then-Governor Benjamin Cayetano vetoed the bill. Gov. Msg. No. 241, Statement of Objections to [H.B.] 1675, in 1999 House Journal, at 882. In vetoing H.B. 1675, Governor Cayetano essentially concluded that the administrative process was not working and that it would take more than an additional year for the Panel to complete its work, which he deemed totally unacceptable.
In late 1999, the Panel submitted a Final Report to the Governor and the Hawai`i State Legislature. Therein, the Panel reported that, from January through June 1999, it had issued decisions in an additional 70 claims, affecting 53 claimants. The Panel found merit in 69 claims, recommending damages totaling $1,536,146.99, and dismissed 180 additional claims from the claims process. As a result of the additional decisions and dismissals, the Final Report stated that, by the end of June 1999, the Panel and its staff had either closed or made recommendations on 53% of all claims, thereby reducing the number of pending claims from 53% to 47%. The Final Report also stated that, at a meeting on June 22, 1999, the Panel had decided to cease its investigation and review of claims in light of the veto of H.B. 1675. Instead, the Panel concentrated its efforts on notifying claimants of the October 1, 1999 notice-filing deadline. As of October 1, 1999, the Panel had received the required written notices in 2,592 claims. The Panel also received from the Native Hawaiian Legal Corporation a written notice, dated September 30, 1999, on behalf of all claimants who had timely filed claims with the Panel but who had not yet filed notices of rejection of legislative action by the September 30, 1999 deadline. The Panel officially closed its doors on October 29, 1999 even though the Panel members' terms continued until December 31, 1999. Three staff members remained through October to answer claimant-inquiries and close the claimants' files.