Sunday, November 21, 2010

Benefits-for-Life Provisions Deemed Permissible (under old law)

First Insurance Co. v. Dayoan (ICA November 18, 2010)

Background. Dayoan was injured in a motor vehicle accident in 1998. He was 60 years old. He had an insurance policy with First Insurance. The accident left Dayoan disabled and unable to work as a kitchen helper and dishwasher at Jimmy's Drive Inn in Hilo as well as growing produce for additional income. Dayoan applied for benefits pursuant to his insurance policy. First insurance paid Dayoan $1,500 a month. The policy stated that wage loss benefits could continue "only if the treating health care provider determines the 'insured' is disabled from employment to which the 'insured' is suited by education, training and experience." The wage loss benefits would expire upon Dayon's death. Dayoan's inability to work is not in dispute.

After paying wage loss benefits for about seven years, First Insurance brought a declaratory judgment action. The action sought the circuit court to interpret the policy so that First Insurance would no longer be obligated to pay the wage loss benefits. Dayoan filed a motion for summary judgment, which was granted. Dayoan then filed a motion seeking $10,885.35 in fees and $659.99 in costs. The circuit court granted the motion in part and awarded $10,450.00 in fees and $695.00 in costs. First Insurance appealed.

The Statute. HRS § 431:10C-302 regulates optional benefits (i.e., coverage benefits that the insurer chooses to make available). Wage loss benefits are optional benefits. Nothing in the statute prohibits the insurer from paying wage loss benefits from the time of the accident to the death of the insured. Rather, First Insurance argued that interpreting HRS § 431:10C-302 to allow benefit payments for the rest of the insured's life leads to an unjust and absurd result.

Nothing Absurd, Unjust, or Illogical. "Where the language of the statute is plain and unambiguous, our only duty is to give effect to its plain and obvious meaning." Liberty Mut. Fire Ins. Co. v. Dennison, 108 Hawai'i 380, 384, 120 P.3d 1115, 1119 (2005). "Departure from the literal construction of a statute is justified only if such a construction yields an absurd and unjust result obviously inconsistent with the purposes and policies of the statute." Leslie v. Bd. of Appeals, 109 Hawai'i 384, 393, 126 P.3d 1071, 1086 (2006). The ICA held that the circuit court did not err in ruling for Dayoan. The ICA explained that HRS § 431:10C-302 was amended in 1997 so that wage loss benefits were optional ones rather than mandatory ones. The cost-saving purposes was the fact that it was optional rather than mandatory. Simply because it was possible that wage loss benefits could be payable until the death of the insured, did not mean that it was absurd, unjust, or illogical.

Tricky Statute to Interpret. The tricky part about interpreting this statute was that the language of the statute was nowhere to be found in this opinion.

The Later Amendments do not come into the Picture. The ICA also rejected First Insurance's arguments that the subsequent amendments to HRS §431:10C-302 should have been considered in interpreting the policy. After 1997, argued First Insurance, the statute was amended to reflect a cap in the total of wage loss benefits. The ICA disagreed. "[T]he statute in effect at issue as of the policy's effective date, governs the policy at issue and is part of the contract with full binding effect upon each party." Allstate Ins. Co. v. Kaneshiro, 93 Hawai'i 210, 214, 998 P.2d 490, 494 (2000). The ICA found no reason to depart from this general rule.

Subsequent Amendments Should be Weighed Carefully when Interpreting the Older Statute. First Insurance also argued that the subsequent amendments to the statute effectively capping wage loss benefits should be considered because they were amended to "clarify the intent" of the 1997 statute. The ICA formulated this rule of statutory construction based on two HSC cases: "Although we look to subsequent legislative history to confirm our interpretation of earlier statutory provisions, Macabio v. TIG Ins. Co., 87 Hawai'i 307, 317, 955 P.2d 100, 110 (1998), we weigh such arguments with 'extreme care.' Hawaii Providers Network, Inc. v. AIG Hawaii Ins. Co., 105 Hawai'i 362, 370 n. 19, 98 P.3d 233, 241 n. 19 (2004)." The ICA noted that although it did not reject "subsequent legislative action as a basis for interpreting a previously adopted statute," a single conference committee report is a slender reed for First Insurance's argument. Ultimately, the ICA held that the fact that the Legislature capped wage loss benefits in 1998 did not signify that it meant to cap them in 1997.

Re-enter the Hierarchy of Legislative History. This is not the first time the ICA treaded lightly in evaluating legislative history. In State v. Vierra, the ICA noted that a single conference committee report did not have the same weight as the reports of the whole. Here, the ICA seems to be taking a similar approach. A single conference committee report in 1998 had no bearing on the interpretation of the 1997 statute. Vierra was not cited by the ICA here.

Subsequent Amendments did not Apply Retroactively Either. The ICA also rejected First Insurance's argument that the subsequent amendment should apply retroactively. "No law has any retroactive operation, unless otherwise expressed or obviously intended." HRS § 1-3. That statute, however, "is only a rule of statutory construction and where the legislative intent may be ascertained, it is no longer determinative." State v. Nguyen, 81 Hawai'i 279, 290, 916 P.2d 689, 670 (1996). After combing the legislative record, the ICA held that there was no indication that the Legislature intended on the post-1997 amendments to apply retroactively.

The Attorneys' Fees Issue. The ICA also held that there was no abuse of discretion in awarding attorney's fees and costs to Dayoan's lawyers.

Saturday, November 20, 2010

Jurisdiction Hinges on the Statute, not the Rules

In re Tax Appeal of Aregger (ICA November 18, 2010)

Background. The Board of Taxation Review ruled on October 1, 2008, in favor of the Director of Taxation against the Areggers in an amount of $7,308.37. The Areggers filed a notice of appeal to the tax court on October 29, 2008. The certificate of service showed that a copy of the notice was mailed to the tax assessor. No copy was sent to the Director of Taxation. Notice of entry was filed by the clerk of the tax court on October 30. The notice was mailed to the Director. The Director challenged subject matter jurisdiction in his answer and later filed a motion to dismiss based on a lack of jurisdiction. The tax court granted the motion. The Areggers appealed.

Statutes Require Service on Director. Tax appeals are "properly commenced by the filing . . . of a written notice of appeal in the office of the tax appeal court within thirty days after the filing of the decision of the state board of review . . . and service of the notice of appeal on the director of taxation." HRS § 232-17. That did not happen here. The Director contends that because that did not happen here, there was no subject matter jurisdiction. The "failure to file a timely notice of appeal is a jurisdictional defect that can neither be waived by the parties nor disregarded by the court in the exercise of judicial discretion." Bacon v. Karlin, 68 Haw. 648, 650, 727 P.2d 1127, 1129 (1986).

That "Shall" is Mandatory. The ICA agreed with the Director that the statute is mandatory rather than directory. HRS § 232-17 used to read that the taxpayer-appellant "shall also file a copy of the notice of appeal in the assessor's office[.]" The HSC held that that "shall" was directory and that noncompliance was not a jurisdictional defect. Namore v. Kawafuchi, 112 Hawai'i 69, 71, 82, 143 P.3d 1271, 1273, 1284 (2006). In response to Namore, the Legislature amended the statute to its current state. In light of this history, the ICA agreed with the Director that this current statute is mandatory. The legislative fix rendered the statute mandatory and so the Areggers were required to serve a copy with the Director rather than the assessor.

The Mandatory-Directory Problem. This is a common problem that arises in statutory construction. Generally, "a statute is directory rather than mandatory if the provisions of the statute do not relate to the essence of the thing to be done or where no substantial rights depend on compliance with the particular provisions and no injury can result from ignoring them." Jack Endo Elec., Inc. v. Lear Siegler, Inc., 59 Haw. 612, 617, 585 P.2d 1265, 1269 (1978). In determining the mandatory or directory nature of the "shall," "the intention of the legislature must be ascertained." Id.

Here, the ICA went straight to the legislative record and found that the new language was a legislative fix for an earlier holding that the "shall" was directory. That was enough evidence for the ICA that the new language was intended to be mandatory. The ICA did not examine whether the newly amended statute "relate[d] to the essence of the thing to be done or . . . substantial rights depend[ed] on compliance." It seemed to be satisfied with the Legislative record. This raises an interesting question: can a statute be directory even if the Legislative history reflected showed an attempt to make it mandatory? Or, in broader terms, does a legislative fix always work in these kinds of cases?

But Rules Require Service on Assessor. Under the rules, an appeal is initiated by filing a notice of appeal with the clerk of the Tax Court. Rules of the Tax Appeal Court Rule 2(a). "The appellant shall file a copy of the notice with the assessor[.]" Id. The Areggers argued that the rules of the tax court--which were not amended to track to the statute--were controlling. The ICA rejected this argument. When there is a conflict between a rule and a statute, the statute prevails. In re Doe Children, 94 Hawai'i 485, 485, 17 P.3d 217, 218 (2008). The ICA further explained that while the Judiciary's rules "for all courts relating to process, practice, procedure and appeals . . . shall have the force and effect of law," Haw. Const. Art. VI, Sec. 7, these "rules shall not abridge, enlarge, or modify the substantive rights of any litigant, nor the jurisdiction of any of the courts, nor affect any statute of limitations." HRS § 602-11.

Native Hawaiian Rights--Once Proven--still must be Weighed Against State Interest

State v. Pratt (ICA November 18, 2010)
Background. The State charged Lloyd Pratt with three violations of camping in a closed area within the Kalalau State Park. HAR § 13-146-04(a). Pratt filed a motion to dismiss the prosecution on the grounds that he was a Native Hawaiian engaged in a constitutionally-protected traditional and cultural practice. Pratt argued that he was a kahu or religious practitioner who was a caretaker of the land and, as part of his traditional practices, goes into the Kalalau Valley to tend to the heiau there and perform cultural ceremonies.
At the hearing on the motion, Pratt presented evidence that he was 75% Hawaiian through genealogical records. He did not have any genealogical records establishing that his ancestors came from Kalalau Valley. Pratt also presented evidence that he was a kahu, a religious practitioner whose duties include cleaning and repairing ancient heiau. Other duties include planting trees and clearing debris.
Pratt also had Dr. Davianna Pomaikai McGregor testify as an expert in cultural practices. Dr. McGregor testified that she developed a legal standard for recognizing a traditional and cultural practice. Dr. McGregor identified six essential elements. Dr. McGregor ultimately concluded that Pratt was engaged in a traditional and cultural practice. Wayne Souza, Parks District Superintendent for Kauai at the DLNR, testified for the State. Souza testified that the regulations are there to protect the wilderness areas within the park. He also testified that people can volunteer on a day-to-day basis and participate in a curatorship program that addresses cultural and archaeological resources. Souza did not know how to resolve conflicts with Native Hawaiian practices.
The district court denied the motion. At the trial, the State conceded that Pratt established that his conduct was constitutionally protected, but argued that in balancing the interests, Pratt must be found guilty. The district court agreed and Pratt was found guilty as charged. Pratt appealed.
Three Sources of law for Native Hawaiian Rights. The Hawai'i Constitution recognizes and protects the cultural and traditional rights of Native Hawaiians:
The State reaffirms and shall protect all rights, customarily and traditionally exercised for subsistence, cultural and religious purposes and possessed by ahupua'a tenants who are descendants of native Hawaiians who inhabited the Hawaiian Islands prior to 1778, subject to the right of the State to regulate such rights.
Haw. Const. Art. XII, Sec. 7. In addition to the constitution, there are two old statues. HRS § 7-1 protects enumerated gathering rights. For rights that are not specifically enumerated by HRS §7-1, there are the traditional gathering rights that are protected by HRS § 1-1.
Three Factors Needed in Showing Constitutionally-Protected Native Hawaiian Rights. The Native Hawaiian practitioner--in response to a criminal prosecution--has the burden of showing that his or her conduct was a constitutionally-protected traditional or customary practice. State v. Hanapi, 89 Hawai'i 177, 970 P.2d 485 (1998). The practitioner must establish three prongs: (1) the practitioner must be a "Native Hawaiian"; (2) the claimed right is constitutionally protected as a customary or traditional Native Hawaiian practice under the three sources of law; and (3) the exercised right occurred on undeveloped or less than fully developed property. Id.
at 816-87, 970 P.2d at 494-95. Finally, the exercise of constitutionally-protected rights must be reasonable. Id. at 184-85, 970 P.2d at 492-93.
Applying Hanapi: First and Third Factors Fine . . . Judge Leonard, in a plurality opinion, wrote that Pratt presented sufficient evidence establishing that he was a Native Hawaiian, that is, a descendant of the inhabitants of the Hawaiian Islands prior to 1778. Blood quantum is not a determinant in establishing this first factor. Public Access Shoreline Hawai'i v. Hawai'i County Planning Comm'n, 79 Hawai'i 425, n. 40 and 41, 448-49, 903 P.2d 1246, n. 40 and 41, 1269-70. The third factor had been met because the Kalalau Valley is undeveloped.
. . . but not the Second Factor. The second factor--that the conduct of camping, clearing land, and planting crops within the Kalalau Valley constituted a recognized customary and traditional practice--was not established. Pratt's conduct, according to the ICA, did not fall into any of the enumerated rights listed in HRS § 7-1. Whether a practice that is not enumerated under HRS § 7-1 nonetheless is protected under the broader HRS § 1-1 depends on the particular circumstances of the case. Kalipi v. Hawaiian Trust Co., Ltd., 66 Haw. 1, 12, 656 P.2d 745, 752 (1982). Moreover, according to the ICA, there must be "a foundational connection between the claimed right and a firmly rooted traditional and customary native Hawaiian practice." See Hanapi, 89 Hawai'i at 187, 970 P.2d at 495. This can be established through expert testimony. Id.
The plurality closely examined Dr. McGregor's testimony. Of her six factors, the ICA pointed out that a few were consistent with the law. The practice must be related to extended family needs. The practice must be "associated with the ancient way of life," Kalipi, 66 Haw. at 10, 656 P.2d at 751, and it must be a "customarily and traditionally held by ancient Hawaiians," Pele Defense Fund v. Paty, 73 Haw. 578, 619, 837 P.2d 1247, 1271 (1992), but it must also be a practice that "has continued in a particular area." PASH, 79 Hawai'i at 442, 903 P.2d at 1263. Moreover, the practice must not only be handed down from an elder, it must be a tradition or custom that predates 1892--the year HRS § 1-1 was originally promulgated. There were no findings that established Pratt's conduct was a practice going back to a time prior to 1892. The practice cannot be for commercial purposes. Kalipi, 66 Haw. at 8-9, 656 P.2d at 749-50.
On top of all of that, the plurality rejected Dr. McGregor's conclusions. Although some of Pratt's activities were indeed use of the land for subsistence purposes, the issue--according to the ICA--was "whether ancient Hawaiians who resided elsewhere on . . . Kaua'i customarily and traditionally conducted such activities, without permission, on the land of others in Kalalau Valley." There was also no evidence establishing that an "ancient Hawaiian person of lesser rank could simply take such responsibilities [of rebuilding a heiau] onto himself or herself."
Balancing Interests on Top of the Three-Factor Analysis. The plurality rejected Pratt's argument that a balancing test is needed when the practitioner establishes the three Hanapi factors. According to the plurality, under Hanapi, "evidence in support of the three factors are at the minimum a defendant has to show in support of a claim that his or her conduct is constitutionally protected[.]" The plurality also noted that the protection of these rights is "subject to the right of the State to regulate such rights." Haw. Const. Art. XII, Sec. 7. This meant, according to the plurality, that on top of the three-factors, the court must also balance the practitioner's interests against the State's interests in regulating the practice.
And so, even if Pratt showed that setting up a camp, clearing the land, and planting crops in the Kalalau Valley without permission constituted a customary and traditional Native Hawaiian practice, the district court was still required to balance the interests between the practitioner and the State. The plurality noted that the State must allow Native Hawaiians reasonable access to conduct customary or traditional practices, but it is not unreasonable to require a permit to do so. Here, according to the plurality, there was evidence that the Kalalau Valley is a fragile environment and that the State has an interest in preserving this ecosystem. There was also no evidence that Pratt attempted to get a camping permit or that he tried to become a curator through the DLNR.
Judge Fujise's Concurrence. Judge Fujise agreed with the plurality opinion--written by Judge Leonard--that once the three Hanapi factors are established, the district court was required to balance Pratt's interests against the State's and that the district court did not err in ruling in favor of the State. Judge Fujise, however, wrote separately because she believed that the dispositive issue was the balancing test--and there was no need to examine whether Pratt established the three prongs at all.
Judge Nakamura's Concurrence and Dissent. Judge Nakamura agreed that once the three Hanapi factors are established by the practitioner, the practice must be weighed against the State's interest in regulating the practice. However, Judge Nakamura believed that the district court erred in balancing the interests in favor of the State. He noted that the HSC has "upheld the rights of native Hawaiians to enter undeveloped lands owned by others to practice continually exercised access and gathering rights necessary for subsistence, cultural or religious purposes so long as no actual harm was done by the practice." Pele Defense Fund v. Paty, 73 Haw. at 619, 837 P.2d at 1247. So for Judge Nakamura, that meant the district court in balancing the interests of the State to regulate conduct within the Kalalau Valley against Pratt's conduct, it had to see if there would be actual harm. For Judge Nakamura, there was none. Accordingly, Judge Nakamura believed that the district court erred and that Pratt's convictions should be reversed.
What's the Precedent? This is the 2d badly-divided ICA opinion in recent times. That leaves us with an interesting, but not unusual question: what is the precedent in this case?
All three judges believe that a balancing test applies after the practitioner establishes that his or her conduct is constitutionally protected. So that is firm. Two judges--Judges Leonard and Fujise--believe that the district court did not err in applying this balancing test with a view towards a reasonable exercise of the constitutionally-protected right. So Pratt's conviction is affirmed. Judge Nakamura wrote that the balancing test should be with a view toward the actual harm done by the practitioner.
Only one judge--Judge Leonard--characterized the State's concession that Pratt met his Hanapi burden as a stipulation on a legal point requiring further analysis. See Beclar Corp. v. Young, 7 Haw. App. 183, 750 P.2d 934 (1988); State v. Tangalin, 66 Haw. 100, 101, 657 P.2d 1025, 1026 (1983). Judge Leonard ultimately concluded that Pratt failed to establish that his conduct was constitutionally protected (and even if he did, the balancing test applied.). The other two declined to address that issue. Judge Leonard stands alone in her Hanapi analysis.
And to Further Complicate Things . . . Judge Leonard concluded first that Pratt failed to meet his Hanapi burden and, even if he did, the district court should have and correctly balanced in the interests in favor of the State. But it would seem that if Pratt had not met his burden, then there would be no need to engage in the balancing test. Shouldn't Judge Leonard's opinion have ended without moving on to the balancing test? Does that make her balancing test analysis advisory? What does that do to Judge Fujise's concurrence, where she agrees with Judge Leonard's balancing test analysis?

Thursday, November 18, 2010

Only one Award is Subject to Review--the Final one.

Background. UPW brought two class-action grievances against the employer, the City and County of Honolulu, based on violations of the collective bargaining agreement. The grievances were denied by the City's human resources department. The parties agreed to arbitrate pursuant to the CBA and the circuit court consolidated the grievances and appointed Keith Hunter to arbitrate.

The City contested whether these grievances could be arbitrated at all. The arbitrator held a hearing on the issue and concluded that the grievances were subject to arbitration--in other words, that he had jurisdiction. The UPW filed in the circuit court a motion to confirm the decision and "award" by the arbitrator. The motion was granted and the City appealed.

The Arbitration Statute Confers Appellate Jurisdiction to "Awards." Appeals in arbitrations may be taken from "[a]n order confirming or denying confirmation of an award[.]" HRS § 658A-28(a)(3). According to the ICA, the issue here was whether the order granting UPW's motion to confirm was an "award" that vested appellate jurisdiction.

Only Final Awards can be "Awards" The word "award" is not defined by HRS chapter 658A, and the ICA found "no Hawai'i case construing the phrase." The ICA then turned to Black's Law Dictionary, which defined "award" as a "final judgment or decision, esp. one by an arbitrator." Black's Law Dictionary, 147 (8th ed. 2004). The ICA also looked to cases from other jurisdictions. In Connecticut, "[t] he principal characteristic of an arbitration award is its finality as to the matters submitted so that the rights and obligations of the parties may be definitely fixed." Coldwell Banker Manning Realty, Inc. v. Cushman & Wakefield of Connecticut, Inc., 293 Conn. 582, 980 A.2d 819, 825-26 (Conn. 2009). The ICA agreed with a Texas appeals court and held that appellate review is limited to "the final arbitration award and not merely any . . . intermediate decision labeled award." John O'Quinn v. Wood, 244 S.W.3d 549, 553 (Tex. Ct. App. 2007). The ICA underscored its importation of the Texas holding, with Hawai'i's strong public policy of encouraging arbitration. See Kona Village Realty, Inc. v. Sunstone Realty Partners, XIV, LLC, 123 Hawai'i 476, 489, 236 P.3d 456, 469 (2010). According to the ICA, prohibiting a party from appealing intermediate decisions promotes the arbitration process itself.

Without a Final Award, there is no Appellate Jurisdiction. Because this decision by the arbitrator did not resolve the merits of the grievances, it cannot be considered a final award. And because it cannot be a final award, the circuit court's order granting UPW's motion is not it is not "[a]n order confirming or denying confirmation of an award[.]" HRS § 658A-28(a)(3). Thus, there was no jurisdiction for the ICA to hear the appeal. "When we perceive a jurisdictional defect in appeal, we must, sua sponte, dismiss that appeal." Brooks v. Dana Nance & Co., 113 Hawai'i 406, 412, 153 P.3d 1091, 1097 (2007). The ICA did just that.

So is the City out of luck? Of course not. The City could always win on the merits. And if it does not, then the arbitrator makes his award, the UPW has the circuit court confirm the award, and then it can appeal and argue that the grievances were not subject to arbitration in the first place. It just might take a bit longer.

A Consistent Holding with the Final-Judgment rule (for now) The ICA's holding is consistent with the law of judgments. Generally, the appellate court can only review judgments entered by the courts that are "final." Jenkins v. Cades Schutte Fleming & Wright, 76 Hawai'i 115, 119, 869 P.2d 1334, 1338 (1994). It would make sense for the ICA to rule consistently with appeals from arbitration decisions and orders. But there are a number of exceptions to this final-judgment rule. See, e.g., Ciesla v. Reddish, 78 Hawai'i 18, 20, 889 P.2d 702, 704 (1995). Perhaps the appellate courts will have to some day revisit this holding to find exceptions for arbitration awards.

Rules Statutory Construction. In arriving to its holding, the ICA followed well-established rules of statutory construction. First, there was the word "award." It was not defined by the statute nor by existing Hawai'i case law. So it turned to the law dictionary and cases from other jurisdictions. This is a faithful application of one of our rules of statutory construction: "Ordinary meanings are attached to terms not given a statutory definition and one may resort to legal or other well accepted dictionaries as one way to determine the ordinary meanings of certain terms." State v. Cooley, 123 Hawai'i 293, 296, 233 P.3d 713, 716 (App. 2010). What is interesting, is that the ICA declined to cite this particular rule. It just, well, did it.

Thursday, November 11, 2010

Pretext Defense may Exist, but Tough to Prove

County of Hawai'i v. C & J Coupe Family Ltd. Partnership (HSC November 10, 2010)

Background. A development company wanted to build a large housing subdivision straddling North and South Kona on the Big Island. The company and the County entered into a Development Agreement requiring the company to build a bypass highway between Keauhou and Captain Cook. The County would exercise eminent domain to condemn the land of property owners who refused to sell. The company tried to buy out all of the landowners necessary to construct the highway, but the Coupe family refused to sell. Pursuant to the Development Agreement, the County Council authorized the condemnation of the 2.9 acres of Coupe land, and brought the appropriate lawsuit. The Coupes argued that the condemnation was not for public use. While that was pending, the County condemned another 3.348 acres of Coupe land on the grounds that the bypass would provide "a regional benefit for the public purpose and use which will benefit the" County. Both actions were consolidated into a single bench trial.

The circuit court concluded that the first condemnation based on the agreement was an invalid delegation of County powers and dismissed the suit. The second condemnation, however, was valid because was for a public use. The circuit court refused to recognize Coupe's defense that the public use was a mere pretext to private benefit. The circuit court also determined that the just compensation for the 3.348 acres came to $162,203.83. The Coupes appealed. The HSC, in Coupe I, 119 Hawai'i 352, 198 P.3d 615 (2008), held that "where there is evidence that the asserted [public] purpose is pretextual, courts should consider a landowner's defense of pretext." Id. at 372, 198 P.3d at 635. The HSC remanded the case for the circuit court to determine "whether the asserted public purpose was pretextual." Id. at 390, 198 P.3d at 653. The HSC also remanded the case for the circuit court to determine attorneys fees and various costs for the first condemnation suit.

On remand, the circuit court--based on numerous traffic studies and plans--determined that there was an important public need for traffic alleviation in light of the proposed development. The circuit court concluded that the public purpose was not "irrational" and was rationally related to the need for the bypass highway. The Coupes filed a motion to alter the final judgment on the grounds that the just compensation amount for the 2d condemnation was incorrect. The motion was denied on the grounds that it was not raised on appeal and there was no mathematical error. The Coupes appealed again.

No Per Se Rule for Condemnation Contracts. "Private property shall not be taken or damaged for public use without just compensation." Haw. Const. Art. I § 20. "Where the exercise of the eminent domain power is rationally related to a conceivable public purpose, a compensated taking is not proscribed by the public use clause." Haw. Housing Auth. v. Lyman, 68 Haw. 55, 68, 704 P.2d 888, 896 (1985). When the government asserts a public purpose, the trial court "may look behind the government's stated public purpose" to determine if it is a mere pretext and that the "actual purpose was to bestow a private benefit." Coupe I, at 375, 379, 198 P.3d at 638, 642. But "legislative findings and declarations of public use" are afforded "great weight" and constitute "prima facie acceptance of correctness." Id. at 374-75, 198 P.3d at 637-38. To overcome the prima facie acceptance, the landowner must show that the finding of public use is "manifestly wrong." Id. at 375, 198 P.3d at 638.

The HSC rejected Coupes' argument that Hawai'i should adopt a per se rule that condemnations initiated pursuant to a contract delegating eminent domain powers are invalid. The pretext defense is enough of a chance for the landowner to prove a constitutional violation.

No Evidence of Pretext here . . . The Coupes argued that the stated public use--building a traffic corridor for the people in Kona District--was a pretext for the enforcement of a contract between the developer and the County and that the sole beneficiary of the bypass would be the developer. The circuit court rejected these arguments and the HSC agreed.

First, there was no question that at the time of the 2d condemnation, there was a contract between the developer and the County. That fact alone, according to the HSC, "does not in and of itself require a finding of pretext." Other than the Coupes' assertions, the HSC held that there is no evidence that complying with the Development Agreement predominated over the public purpose.

There are Roads and then there are Public Roads. The HSC also examined whether the developer was the sole beneficiary of the condemnation. The Coupes presented evidence that the developer invested over $90 million in the area and it was required to build the bypass as a condition of the zoning change. The HSC examined whether condemnation for a road constitutes a "public use." In a footnote from Coupe I, the HSC noted that "the character of the proposed public use, i.e., a public road, is itself strong evidence mitigating in favor of the presumption of validity." Id. at 380 n. 32, 198 P.3d at 643 n. 32. "Indisputably, public roads have long been recognized as a public purpose for which private property may be condemned." Id. But--and here's the rub--that does not mean every project for a road is a public road. Id.

Surveying courts from other jurisdictions, the HSC noted that many factors determine whether a road is a public road. On one hand, a road open for the public--even when it is convenient for a few individuals--still cuts toward a road for public use. Road Dist. No. 4 v. Frailey, 146 N.E. 195, 197 (Ill. 1924); Sturgill v. Commonwealth, Dept. of Highways, 384 S.W. 2d 89, 91 (Ky. 1964); City of Novi v. Robert Adell Children's Funded Trust, 701 N.W.2d 144, 151 (Mich. 2005). On the other hand, when the road is not a public highway or when it's not open to the public, it is not for public use. Tolksdorf v. Griffiff, 626 N.W.2d 163, 169 (Mich. 2001); Thorton, 156 S.E.2d 248, 260 (N. C. 1967). Here, the HSC held that there was ample evidence showing that this bypass was going to be used by the public and that even though the developer would benefit from it, that alone did not detract from the finding of a public purpose or use.

Is Proving Pretext the same as Overcoming the Rational Basis test? Since adopting the defense in Coupe I, this is the first time the HSC examined the evidence needed in proving pretext. Given the "great weight" to the legislative purpose and the deference to the government here, it seems rather hard to prove. That might account for the Coupes' invitation to adopt a per se rule. So what is the pretext defense turning into? It's too early to be certain. But in this case, it seemed like the HSC approved of the circuit court's application of a rational-basis test, which ironically, was urged by Chief Justice Moon--a dissenter in Coupe I.

Valuation Issue Beyond the Scope of Remand . . . The HSC addressed the issue of remand. When the circuit court first concluded that the condemnation of the 3.348 acres, the 2d condemnation, was valid, it calculated the "just compensation" for it. After the case was remanded by the HSC, the Coupes argued that the just compensation was incorrect and needed to be adjusted. The HSC agreed with the circuit court that the issue was untimely raised. "Coupe had the opportunity to challenge the evidentiary valuation of the property in its first appeal to this court, but did not do so."

The case, according to the HSC, was remanded to determine the pretext issue and to rule on the motion for attorneys' fees/costs. It did not reopen the case for litigation the "just compensation" of the 3.348 acres. "[R]emand for a specific act does not reopen the entire case; the lower tribunal only has the authority to carry out the appellate court's mandate." Standard Mgmt. Inc. v. Kekona, 99 Hawai'i 125, 137, 53 P.3d 264, 276 (App. 2001).

. . . And not Plain Error Either. In a civil case, plain error is based on three factors: "whether consideration of the issue requires additional facts, whether the resolution of the question will affect the integrity of the findings of fact of the trial court[,] and whether the question is of great public import." Fujioka v. Kam, 55 Haw. 7, 9, 514 P.2d 568, 570 (1973). The HSC held that the valuation of 3.348 acres on the Big Island is not of "great public import" and declined review of whether the circuit court correctly calculated just compensation.

Other Issues. The HSC examined whether the circuit court correctly calculated the requested fees, costs, and interest pursuant to the specific language of the eminent domain statutes in HRS chapter 101.

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