Opinion ID: 2518920
Heading Depth: 3
Heading Rank: 4

Heading: Plaintiffs' claim against the State for negligent training must fail because it is dependent upon a breach of duty by the Trustees.

Text: Plaintiffs also assert that their claim against the State for negligent training or advice is not barred by the State's sovereign immunity. HRS § 87A-9 (Supp.2001) states that [t]he attorney general shall serve as legal adviser to the board. . . . Plaintiffs allege that the Attorney General negligently performed its duties as [the EUTF's] adviser with respect to the fiduciary duties of the . . . trustees, which resulted in a breach of fiduciary duty owed by the Trustees to Plaintiffs and others similarly situated. Plaintiffs further allege that [w]hen a person in a fiduciary relationship to another violates his duty as a fiduciary, a third person who has notice that the trustee is committing a breach of trust and participates in the violation of duty is liable to the beneficiary. (Citing Restatement (Second) of Trusts § 326 (1959)). Thus, Plaintiffs contend, if the Attorney General knew or should have known that the [T]rustees were ignoring or were ignorant of their fiduciary duties to Plaintiffs and sat silent, and if that advice or lack of advice/training was a substantial factor contributing to the [T]rustees' breach of their fiduciary duties, . . . the State is liable for the Attorney General's misconduct or lack of training. . . . Plaintiffs' assertions are premised on the conclusion that the Trustees breached a fiduciary duty. Because, as discussed in Section III.A, supra, the Trustees did not breach a fiduciary duty, Plaintiffs' claim against the State for negligent training or advice must fail. Thus, the circuit court did not err in awarding summary judgment on this claim in favor of Defendants. D. Although Plaintiffs' Claims for Declaratory and Prospective Relief are Not Barred by Sovereign Immunity, Such Relief is Not Warranted Because the Trustees' Did Not Abuse Their Discretion in Adopting the Two-Tier Rate Structure. Plaintiffs' Second Amended Complaint sought, inter alia, declaratory and injunctive relief prohibiting the two-tier rate structure and requiring the Trustees to solicit proposals for multi-tier health plans, to adopt the most advantageous proposal, and to obtain training on the nature of their fiduciary duties. Defendants concede that Plaintiffs' claims for declaratory and injunctive relief are not barred by either sovereign immunity, see Office of Hawaiian Affairs v. State, 110 Hawai`i 338, 357, 133 P.3d 767, 786 (2006) ([S]overeign immunity may not be invoked by the State if the suit seeks `prospective,' i.e., injunctive, relief and the State fails to carry its burden of proving with specific facts that the effect on the State treasury will be directly, substantially, and quantifiably impacted.), or the Trustees' HRS § 26-35.5(b) immunity. Because, as discussed in Section III.A, supra, the Trustees did not abuse their discretion in adopting the two-tier structure, Plaintiffs' arguments that the Trustees should be (1) prohibited from adopting a two-tier system, (2) required to solicit proposals for multi-tier health plans, and (3) required to obtain training on the nature of their fiduciary duties, are unavailing.