Bridge Aina Le'a, LLC v. Hawaii, State of , Land Use Commission et al

Filing 131

ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SUMMARY JUDGMENT re 105 - Signed by JUDGE SUSAN OKI MOLLWAY on 2/29/2016. "The court grants Defendants' motion for summary judgment with respect to Count I V and Count VIII. The court denies the motion with respect to the takings claims in Count I and Count II, to the extent asserted against the LUC and Official Capacity Commissioners. Those takings claims in Counts I and II are the only claims rem aining for further adjudication." (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
)
)
)
Plaintiff,
)
)
vs.
)
)
STATE OF HAWAII LAND USE
)
COMMISSION; VLADIMIR P.
DEVENS, in his individual and )
)
official capacity; KYLE
CHOCK, in his individual and )
)
official capacity; THOMAS
CONTRADES, in his individual )
)
and official capacity; LISA
)
M. JUDGE, in his individual
)
and official capacity;
)
NORMAND R. LEZY, in his
)
individual and official
capacity; NICHOLAS W. TEVES, )
)
in his individual and
official capacity; RONALD I. )
)
HELLER, in his official
)
capacity; DUANE KANUHA, in
)
his official capacity;
)
CHARLES JENCKS, in his
official capacity; JOHN DOES )
)
1-10; JANE DOES 1-10; DOE
)
PARTNERSHIPS 1-10; DOE
)
CORPORATIONS 1-10; DOE
ENTITIES 2-10 and DOE,
)
)
)
Defendants.
)
BRIDGE AINA LE’A, LLC,

CIVIL NO. 11-00414 SOM-BMK
ORDER GRANTING IN PART AND
DENYING IN PART MOTION FOR
SUMMARY JUDGMENT

ORDER GRANTING IN PART AND DENYING IN PART
MOTION FOR SUMMARY JUDGMENT
I.

INTRODUCTION.
This case arises out of a decision by Defendant State

of Hawaii Land Use Commission (the “LUC”) to reclassify a parcel
of land from urban use to agricultural use.

Plaintiff Bridge

Aina Le’a, LLC, the owner of the parcel, claims that, in
reclassifying the land, the LUC and certain commissioners
violated Bridge’s rights under the United States Constitution,
the Hawaii constitution, and various Hawaii laws.

The Hawaii

Supreme Court has upheld the state trial court’s invalidation of
the LUC’s reclassification ruling.
Defendants now move for summary judgment as to Bridge’s
takings claims for just compensation in Counts I, II, and VIII,
and Bridge’s vested-rights claim in Count IV.

The motion is

granted with respect to Counts IV and VIII, but denied with
respect to Counts I and II.
II.

BACKGROUND.
The subject parcel of land consists of 1,060 acres in

South Kohala, on the island of Hawaii.

ECF No. 1, PageID # 15.

On November 25, 1987, the parcel was purchased by a private
company that sought to develop a large residential community.
Id.

Toward that end, the purchaser petitioned to reclassify the

land from “agricultural use” to “urban use.”

Id.

The LUC

approved the petition on condition that 60 percent of the homes
built would be “affordable” units.

Id.

During the next two decades, the property changed
ownership.
16-17.

Eventually, Bridge became the owner.

Id., PageID #s

When Bridge acquired the property, it was classified for

“urban use” and subject to an amended affordable housing

2

condition that still required sixty percent of the homes to be
affordable, but that also set a minimum of 1,000 affordable
homes.

Id., PageID # 17.
After various proceedings, including proceedings that

resulted in amendments to the condition, see id., PageID #s 2028, the LUC, in September 2009, ordered Bridge and DW Aina Le’a
Development (“DW”), the company to which Bridge intended to
assign the project, to complete sixteen affordable units by March
31, 2010, id., PageID # 29.

The sixteen units, as well as other

work on the project, were allegedly completed by June 2010.
PageID # 30.

Id.,

However, allegedly because the affordable homes

were not completed by the deadline of March 31, 2010, the LUC
determined that Bridge and DW had not satisfied the applicable
condition.

Id., PageID # 76.

In January 2011, the LUC voted to

reclassify the land back to agricultural use.

Id., PageID # 37.

Bridge filed two actions challenging the LUC’s decision
to reclassify the land to agricultural use.

Bridge not only

sought judicial review of the LUC’s decision through an
administrative appeal, Bridge also filed a separate action in
state court.

See ECF No. 1–2.

It is that separate action that

was removed to this court on June 27, 2011.

See ECF No. 1.

This case has a long history that includes a stay while
the appeal from the LUC decision made its way through the state
courts, and an appeal to the Ninth Circuit challenging this

3

court’s stay.

Upon completion of proceedings in the Hawaii

Supreme Court in connection with the appeal from the LUC
decision, the Ninth Circuit, while approving this court’s earlier
stay, found the reason for the stay no longer in issue, vacated
the stay, and remanded the case to this court.

Bridge Aina Le’a,

LLC v. Chock, 590 Fed. Appx. 705 (9th Cir. 2014).

Following

proceedings on remand, this court is left with only Bridge’s
takings claims for just compensation in Counts I, II, and VIII,
to the extent asserted against the LUC and Official Capacity
Commissioners, and Count IV, to the extent seeking damages
against the LUC and Official Capacity Commissioners.

See ECF No.

93.
On December 31, 2015, Defendants filed the present
motion seeking summary judgment as to Bridge’s remaining claims.
See ECF No. 105.
III.

STANDARD.
The burden initially falls on the moving party to

identify for the court those “portions of the materials on file
that it believes demonstrate the absence of any genuine issue of
material fact.”

T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors

Ass’n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Celotex Corp.,
477 U.S. at 323).

“When the moving party has carried its burden

under Rule 56(c), its opponent must do more than simply show that
there is some metaphysical doubt as to the material facts.”

4

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986) (footnote omitted).
The nonmoving party must set forth specific facts
showing that there is a genuine issue for trial.
Serv., Inc., 809 F.2d at 630.

T.W. Elec.

At least some “‘significant

probative evidence tending to support the complaint’” must be
produced.

Id. (quoting First Nat’l Bank of Ariz. v. Cities Serv.

Co., 391 U.S. 253, 290 (1968)).

See Addisu, 198 F.3d at 1134 (“A

scintilla of evidence or evidence that is merely colorable or not
significantly probative does not present a genuine issue of
material fact.”).

“[I]f the factual context makes the non-moving

party’s claim implausible, that party must come forward with more
persuasive evidence than would otherwise be necessary to show
that there is a genuine issue for trial.”

Cal. Arch’l Bldg.

Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468
(9th Cir. 1987) (citing Matsushita Elec. Indus. Co., 475 U.S. at
587).

Accord Addisu, 198 F.3d at 1134 (“There must be enough

doubt for a ‘reasonable trier of fact’ to find for plaintiffs in
order to defeat the summary judgment motion.”).
All evidence and inferences must be construed in the
light most favorable to the nonmoving party.
Inc., 809 F.2d at 631.

T.W. Elec. Serv.,

Inferences may be drawn from underlying

facts not in dispute, as well as from disputed facts that the
judge is required to resolve in favor of the nonmoving party.

5

Id.

When “direct evidence” produced by the moving party

conflicts with “direct evidence” produced by the party opposing
summary judgment, “the judge must assume the truth of the
evidence set forth by the nonmoving party with respect to that
fact.”

Id.

IV.

ANALYSIS.
Defendants move for summary judgment as to Bridge’s

takings claims in Count I (Denial of Due Process of Law), Count
II (Inverse Condemnation), and Count VIII (Unconstitutional Land
Development Conditions), and Bridge’s vested-rights claim in
Count IV.

See ECF Nos. 105, 116.
A.

Bridge’s Takings Claims.

“The Takings Clause of the Fifth Amendment, made
applicable to the States through the Fourteenth, provides that
private property shall not ‘be taken for public use, without just
compensation.’”

Lingle v. Chevron U.S.A. Inc., 544 U.S. 528,

536-37 (2005) (citing Chicago, B. & Q.R. Co. v. Chicago, 166 U.S.
226 (1897)).

The Takings Clause “does not prohibit the taking of

private property, but instead places a condition on the exercise
of that power.”

First English Evangelical Lutheran Church of

Glendale v. Cnty. of Los Angeles, 482 U.S. 304, 314 (1987).

The

Takings Clause “is designed not to limit the governmental
interference with property rights per se, but rather to secure
compensation in the event of otherwise proper interference

6

amounting to a taking.”

Id. at 315.

Prior to Pennsylvania Coal Co. v. Mahon, 260 U.S. 393
(1922), “the Takings Clause was understood to provide protection
only against a direct appropriation of property--personal or
real.”

Horne v. Dep’t of Agric., 135 S.Ct. 2419, 2427 (2015).

“Beginning with Mahon, however, the Court recognized that
government regulation of private property may, in some instances,
be so onerous that its effect is tantamount to a direct
appropriation or ouster--and that such ‘regulatory takings’ may
be compensable under the Fifth Amendment” if the “‘regulation
goes too far.’”

Lingle, 544 U.S. at 537 (quoting Mahon, 260 U.S.

at 415).
Supreme Court precedent identifies two categories of
regulatory action that will be deemed per se takings under the
Fifth Amendment:
First, where government requires an owner to
suffer a permanent physical invasion of her
property--however minor--it must provide just
compensation. See Loretto v. Teleprompter
Manhattan CATV Corp., 458 U.S. 419 (1982)
(state law requiring landlords to permit
cable companies to install cable facilities
in apartment buildings effected a taking). A
second categorical rule applies to
regulations that completely deprive an owner
of “all economically beneficial us[e]” of her
property. [Lucas v. S. Carolina Coastal
Council, 505 U.S. 1003, 1019 (1992).] We
held in Lucas that the government must pay
just compensation for such “total regulatory
takings,” except to the extent that
“background principles of nuisance and
property law” independently restrict the
7

owner’s intended use of the property.
at 1026-1032.

Id.,

Lingle, 544 U.S. at 538.
“Outside these two relatively narrow categories . . .
regulatory takings challenges are governed by the standards set
forth in Penn Central Transp. Co. v. New York City, 438 U.S. 104
(1978).”

Lingle, 544 U.S. at 538.

The Court in Penn Central

identified several factors of significance.

438 U.S. at 124.

Those factors include the “economic impact of the regulation on
the claimant and, particularly, the extent to which the
regulation has interfered with distinct investment-backed
expectations.”

Id.

An additional factor is the “character of

the governmental action.”

For example, “[a] ‘taking’ may more

readily be found when the interference with property can be
characterized as a physical invasion by government than when
interference arises from some public program adjusting the
benefits and burdens of economic life to promote the common
good.”

Id. (citation omitted).
Defendants argue that Bridge’s takings claims fail for

three reasons: (1) the LUC’s imposition of an affordable housing
condition does not constitute an unconstitutional condition as a
matter of law; (2) Bridge’s takings claims are time-barred; and
(3) Bridge’s failure to obtain a valid environmental impact
statement independently precludes its takings claims, pursuant to
Lucas, 505 U.S. at 1026–32.

See ECF No. 116, PageID # 3014.
8

1.

Unconstitutional Condition.
a.

Issue Preclusion Bars Relitigation of
Count VIII.

Defendants are entitled to summary judgment as to Count
VIII because issue preclusion bars relitigation of whether the
affordable housing condition was unconstitutional.
Issue preclusion, a doctrine distinct from the doctrine
of claim preclusion, “applies to a subsequent suit between the
parties or their privies on a different cause of action and
prevents the parties or their privies from relitigating any issue
that was actually litigated and finally decided in the earlier
action.”
(2004).

Bremer v. Weeks, 104 Haw. 43, 54, 85 P.3d 150, 161
Issue preclusion applies when:
(1) the issue decided in the prior
adjudication is identical to the one
presented in the action in question; (2)
there is a final judgment on the merits; (3)
the issue decided in the prior adjudication
was essential to the final judgment; and (4)
the party against whom [issue preclusion] is
asserted was a party or in privity with a
party to the prior adjudication.

Id.
Count VIII challenges the constitutionality of the
affordable housing condition:
209. The United States Supreme Court has
dictated heightened scrutiny of land
development conditions, under Nollan v.
California Coastal Comm’n, 483 U.S. 825
(1987) and Dolan v. City of Tigard, 512 U.S.
374 (1994). Hawaii is a Nollan/Dolan state
by decision of the Hawaii Supreme Court. See
9

Public Access Shoreline Hawaii v. Hawaii
Planning Comm’n (PASFH), 79 Hawai’i 425, 452,
903 P.2d 1246, 1273 (1995).
210. Under applicable law, any conditions
attached to governmental land development
approvals require, first, that there be a
direct connection or nexus between what
public facility needs a land development will
generate or what public problems it will
cause, on the one hand, and the land
development conditions government imposes to
satisfy those needs or ameliorate those
problems, on the other, and second, that the
conditions be proportional to those specific
needs and problems. There was no study, and
no finding, by the Commission in 2005
that the Project would create such an impact
as to require completion of 385 affordable
houses by November 17, 2010, nor can there be
such a finding because there is no nexus
between a residential housing project and
affordable housing.
211. A Land Use Commission boundary
amendment is the “wrong place, wrong time” to
impose a development condition requiring a
specific number of affordable houses be built
by a specific time, as the Commission did in
Condition 1 of its 2005 Order. The
Commission lacks the authority under
Nollan/Dolan to impose land development
conditions on that simple boundary amendment
reclassification decision because a boundary
amendment does not trigger a need for
affordable housing or any need whatsoever for
land development conditions at the boundary
amendment level.
212. Having received Professor Callies’
report, Commissioners had actual knowledge
that Condition 1 of the 2005 Order was an
unconstitutional and thus unenforceable land
development condition. Commissioners
nonetheless chose to base their Final Order
on Condition 1 of the 2005 Order, in willful
disregard of their obligations under the
United States and Hawaii constitutions.
10

ECF No. 1-2, PageID #s 62-64.
The Hawaii Supreme Court addressed the
constitutionality of the condition in the state administrative
appeal.

See Bridge Aina Lea, 134 Haw. at 214 n.17, 339 P.3d at

712 n.17.

Bridge, the party against whom issue preclusion is

asserted, was a party in the state case.

The Hawaii Supreme

Court held:
Bridge argues that the affordable housing
condition was an “unconstitutional land
development condition.” However, as noted
above, HRS § 205-4(g) gives the LUC broad
authority to impose conditions, including
those necessary “to assure substantial
compliance with representations made by the
petitioner.” Given this broad authority and
Bridge’s representations to the LUC, the
affordable housing condition and its included
deadline were valid. Bridge cites no
authority that would prevent the LUC from
imposing benchmarks or deadlines on
development schedules.
Bridge argues the above footnote should not preclude the
relitigation of the issue here because the Hawaii Supreme Court
never addressed Bridge’s argument regarding the effect of Nollan
v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan
v. City of Tigard, 512 U.S. 374 (1994).

See ECF No. 113, PageID

# 1636.
Nollan held that the government may not condition the
approval of a land-use permit on the owner’s relinquishment of a
portion of his property unless there is an “essential nexus”

11

between the “legitimate state interest” and the permit condition
exacted by the city.

483 U.S. at 837.

Dolan further refined the

regulatory takings test articulated in Nollan by holding that an
adjudicative exaction requiring dedication of private property
must also be “‘rough[ly] proportiona[l]’ . . . both in nature and
extent to the impact of the proposed development.”

512 U.S. at

391.
As Defendants point out, Bridge’s Answering Brief filed
with the Hawaii Supreme Court presented the very matters raised
by Count VIII of the instant Complaint, including Bridge’s
arguments regarding Nollan and Dolan.
#s 1461-68.

See ECF No. 106-9, PageID

The Hawaii Supreme Court, therefore, had occasion to

consider Bridge’s arguments regarding Nollan and Dolan, was
ultimately unpersuaded, and, in characterizing the affordable
housing condition as “valid,” found it constitutional.
Turning to the other elements of issue preclusion, this
court concludes that this issue was also essential to the final
judgment.

Under Hawaii law, an issue decided in a prior

adjudication is essential to the final judgment when the final
determination of the litigation would have changed if the issue
had been decided differently.

See Matsuura v. E.I. du Pont De

Nemours & Co., Civ. No. 00–00328 SOM/LEK, 2007 WL 30600, at *5
(D. Haw. Jan. 4, 2007); see also Keahole Def. Coal., Inc. v. Bd.
of Land & Natural Res., 110 Haw. 419, 430, 134 P.3d 585, 596

12

(2006) (holding that issue was essential to final judgment
because it ultimately led to court’s determination).

With

respect to the present case, the Hawaii Supreme Court’s final
determination would have changed had it determined that the
affordable housing condition was unconstitutional.

The

determination of this issue led directly to the Hawaii Supreme
Court’s decision affirming in part and vacating in part the
circuit court’s judgment.
The doctrine of issue preclusion therefore prohibits
Bridge from litigating in this case the very assertions rejected
by the Hawaii Supreme Court in the state administrative appeal.
b.

The “Unconstitutional Condition” Framework Is
Inapplicable to Counts I and II.

Defendants contend that, because the LUC’s affordable
housing requirement is not, as a matter of law, an
unconstitutional condition, the takings claims in Counts I and II
also fail.

See ECF No. 116, PageID # 3021.
In the land use context, the “unconstitutional

condition” doctrine provides that “the government may not require
a person to give up a constitutional right--here the right to
receive just compensation when property is taken for a public
use--in exchange for a discretionary benefit conferred by the
government where the benefit sought has little or no relationship
to the property.”

Dolan, 512 U.S. at 385.

This is the appropriate framework, in Defendant’s view,
13

for all of Bridge’s takings claims “[b]ecause the takings claims
all arise from a conditional grant of an amendment to district
boundaries.”

See ECF No. 116, PageID #s 3021-22.

This court disagrees.

Unlike Count VIII, which alleges

that the affordable housing condition itself was
unconstitutional, Counts I and II assert takings claims under
different theories of liability.

Counts I and II assert takings

claims based on the LUC’s decision to reclassify the property in
issue as agricultural.

Counts I and II are not premised on the

imposition of the affordable housing condition itself.
No. 1-2, PageID #s 46-50.
Count I alleges:
142. Further, Bridge’s property rights have
been arbitrarily, wrongfully and unlawfully
restricted in its use and development, and
reclassified from urban to agricultural use
in violation of Bridge’s right to substantive
due process of law under Article I, Section 5
and 20 of the Hawaii Constitution and the
Fifth and Fourteenth Amendments of the
Constitution of the United States.
. . .
143. The egregious and illegal actions of
Defendants have divested the Property of
substantially all of its economic use,
rendering it unmarketable, and forbidden
substantially all practical, beneficial or
economic use of the Property, constituting a
de facto and regulatory taking without just
compensation, or any compensation whatsoever,
all in violation of Article I, Section 5 and
20 of the Hawaii Constitution and the Fifth
and Fourteenth Amendment of the Constitution
of the United States of America.
14

See ECF

ECF No. 1-2, PageID # 47 (emphasis in the original).
Count II alleges:
149. Bridge further has a legitimate
property interest in the designation of its
Property as urban, based upon the 1989
Decision and Order as amended.
150. Defendants’ acts, as described herein,
form an integrated and continuing course of
conduct toward Bridge.
151. Defendants have denied Bridge of all
economically viable use of Bridge’s Property.
152. Defendants’ actions do not
substantially advance a legitimate state
interest.
153. Defendants have never made any offer to
Bridge to purchase the Property, or any part
thereof or interest therein, or to pay
damages for the taking Defendants have
effected, nor have Defendants instituted
eminent domain proceedings to acquire it, or
any part thereof or interest therein.
154. State law does not provide a
reasonable, certain and adequate provision
for obtaining compensation.
155. In terminating Bridge’s development
rights as set forth herein, Defendants have
attempted to accomplish indirectly what they
cannot accomplish directly, confiscation of
property interests belonging to Bridge,
without just compensation, for the use and
benefit of the public.
156. Bridge has received no just
compensation for the taking of its property.
ECF No. 1-2, PageID #s 48-49.
In accordance with these allegations, Counts I and II
claim that the LUC’s decision to revert the boundary
15

classification constituted a Lucas per se taking, or, in the
alternative, a Penn Central regulatory taking.
PageID #s 1625-26.

See ECF No. 113,

In short, these counts do not challenge the

affordable housing condition itself.

Rather, Counts I and II

challenge the LUC’s response to Defendants’ alleged failure to
timely satisfy the condition.
Defendants fail to address the merits of Bridge’s
takings claims under Penn Central or Lucas and are not entitled
to summary judgment as to Counts I and II.
This conclusion makes it unnecessary for this court to
address Defendants’ reliance on the decision in California
Bulding Industry Association v. City of San Jose, 351 P.3d 974,
988 (Cal. 2015).

Defendants rely on San Jose to bolster their

argument that, for example, “It is clear, however, that before
even considering whether an exaction can satisfy the
‘substantially advances’ and ‘roughly proportional’ standards [of
Nollan/Dolan], the inquiry must begin with a preliminary
question--‘whether government imposition of the exaction would
constitute a taking.”

ECF No. 116, PageID #s 3017-18.

Counts I

and II are not pled as challenges to the imposition of an
“exaction” in the form of the affordable housing condition.
2.

Statute of Limitations.

According to Defendants, Bridge’s takings claims are
time-barred.

See ECF No. 116, PageID # 3014.

16

This argument

requires this court to examine two issues: (1) which Hawaii
statute of limitations applies to Bridge’s remaining takings
claims, Counts I and II; and (2) when the claims accrued, thereby
triggering the running of the statute of limitations.
A statute of limitations generally does not begin to
run until the claim ripens or accrues.

See, e.g., Bay Area

Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp., 522
U.S. 192, 201 (1997).

“[T]he standard rule [is] that the

limitation period commences when the plaintiff has ‘a complete
and present’ cause of action.”
U.S. 96, 97 (1941)).

Id. (citing Rawlings v. Ray, 312

“[A] cause of action does not become

‘complete and present’ until the plaintiff can file suit and
obtain relief.”

Ferbar Corp., 522 U.S. at 201.

“While state law determines the period of limitations,
federal law determines when a cause of action accrues” or ripens.
Cline v. Brusett, 661 F.2d 108, 110 (9th Cir. 1981).
Under federal law, a regulatory takings claim does not
ripen until (1) “the government entity charged with implementing
the regulations has reached a final decision regarding the
application of the regulations to the property at issue,”
Williamson County Regional Planning Commission v. Hamilton Bank,
473 U.S. 172, 186 (1985), and (2) “the owner has unsuccessfully
attempted to obtain just compensation through the procedures
provided by the State for obtaining such compensation,” id. at

17

195.

See also City of New Pulaski Co. v. Mayor and City Council

of Baltimore, 217 F.3d 840, 843 (4th Cir. 2000) (“[A] takings
claim is not ripe and the statute of limitations does not begin
to run, unless the property owner has exhausted any available . .
. compensation procedures.”).
Under Williamson, Bridge’s takings claims ripened on
June 7, 2011, when Bridge satisfied the second prong by availing
itself of state procedures for seeking just compensation.

On

that date, Bridge filed its Complaint in state court, which
included its state and federal takings claims.
The first prong of Williamson was earlier satisfied on
April 25, 2011, when the LUC entered an order adopting the
proposed findings of fact, conclusions of law, and decision and
order reverting the land to its agricultural use classification.1

1

Bridge contends that its claims accrued on April 30, 2009,
the date of the LUC’s “voice vote” to revert the land. See ECF
No. 113, PageID # 1640. The LUC’s voice vote was not a final
order to revert the land to agricultural use. After the vote, on
June 5, 2009, the LUC granted Bridge’s motion to stay entry of
the decision and order and scheduled a one-day hearing for the
submission of additional evidence on the order to show cause. DW
Aina Lea Dev., 134 Haw. at 198, 339 P.3d at 696. On August 27,
2009, the LUC decided to rescind and vacate the order to show
cause, conditioning this decision on Bridge’s satisfaction of
several conditions. Id. at 199, 339 P.3d at 697. However,
during a hearing on July 1, 2010, the LUC voted, among other
things, to keep the order to show cause pending. Id. at 201, 339
P.3d at 699. At a hearing on the order to show cause on January
20, 2011, the LUC again voted to revert the property, but it did
not at that time issue any written order. It was not until the
LUC entered an order on April 25, 2011, that, pursuant to
Williamson, the LUC could be said to have “reached a final
decision regarding the application of the regulations to the
18

DW Aina Lea Dev., 134 Haw. at 203, 339 P.3d at 701.
Because Bridge’s takings claims ripened at the same
time that it filed its Complaint, this court need not determine
whether the applicable statute of limitations for Bridge’s
federal and state takings claims is Haw. Rev. Stat. § 657-7, as
Defendants suggest, or Haw. Rev. Stat. §§ 657-1(3) or (4), which
Bridge urges the court to apply.
ECF No. 113, PageID #s 1636-39.

See ECF No. 116, PageID # 3023;
Under any of these statutes of

limitations, Bridge’s takings claims have been timely asserted.
3.

Defendants Do Not Show That Bridge’s Failure
to Obtain a Valid EIS Independently Precludes
Its Takings Claims.

Relying on passages in Lingle, 544 U.S. at 538, and
Lucas, 505 U.S. at 1026–32, Defendants argue that Bridge’s
failure to obtain a valid EIS independently precludes its takings
claims as a matter of law.

See ECF No. 116, PageID # 3014.

In Lingle, the Court, summarizing its precedents on
regulatory takings, stated, “We held in Lucas that the government
must pay just compensation for such ‘total regulatory takings,’
except to the extent that ‘background principles of nuisance and
property law’ independently restrict the owner’s intended use of
the property.”

Lingle, 544 U.S. at 1026-1032.

According to

Defendants, “The requirement of obtaining a valid EIS was a
background principle of Hawai‘i property law.

property at issue.”

See 473 U.S. at 186.
19

Bridge’s failure

to obtain a valid EIS independently restricted Bridge’s intended
use of its property.”

See ECF No. 116, PageID # 3029.

In Lucas, a landowner alleged that the application of
the South Carolina Beachfront Management Act to his beachfront
property prevented him from erecting any permanent habitable
structures on his parcels of land.

505 U.S. at 1006-09.

Lucas

argued that the regulation deprived him of all economially
beneficial use of his property, thereby effectuating a taking.
Id.

A state trial court ruled in Lucas’s favor, concluding that

Lucas’s property had been “taken” as a result of the Act that
rendered his land “valueless.”

Id. at 1009.

The South Carolina

Supreme Court reversed, holding that no compensation is owed
under the Takings Clause for the deprivation of property value
when the regulation is designed “to prevent serious public harm.”
Id. at 1010.
The United States Supreme Court, reversing the South
Carolina Supreme Court, stated, “Where the State seeks to sustain
regulation that deprives land of all economically beneficial use,
we think it may resist compensation only if the logically
antecedent inquiry into the nature of the owner’s estate shows
that the proscribed use interests were not part of his title to
begin with.”

Id. at 1027.

The Court reasoned:

Any limitation so severe cannot be newly
legislated or decreed (without compensation),
but must inhere in the title itself, in the
restrictions that background principles of
20

the State’s law of property and nuisance
already place upon land ownership. A law or
decree with such an effect must, in other
words, do no more than duplicate the result
that could have been achieved in the courts-by adjacent landowners (or other uniquely
affected persons) under the State’s law of
private nuisance, or by the State under its
complementary power to abate nuisances that
affect the public generally, or otherwise.
Id. at 1029.
The Court added, “The principal ‘otherwise’ that we
have in mind is litigation absolving the State (or private
parties) of liability for the destruction of ‘real and personal
property, in cases of actual necessity, to prevent the spreading
of a fire’ or to forestall other grave threats to the lives and
property of others.”

Id. at 1029 n.16 (citation omitted).

The

Lucas Court recognized as other examples the denial of a permit
to the owner of a lake-bed seeking to engage in a landfilling
operation that would result in the flooding of others’ land, or a
requirement that the owner of a nuclear generating plant remove
the plant when it is discovered that it sits on an earthquake
fault line.

Id. at 1029.

The Court explained:

Such regulatory action may well have the
effect of eliminating the land’s only
economically productive use, but it does not
proscribe a productive use that was
previously permissible under relevant
property and nuisance principles. The use of
these properties for what are now expressly
prohibited purposes was always unlawful, and
(subject to other constitutional limitations)
it was open to the State at any point to make
the implication of those background
21

principles of nuisance and property law
explicit.
Id. at 1029-30.
The principle espoused by Lucas is that a landowner is
not entitled to compensation under the Takings Clause for the
deprivation of a right the landowner never possessed in the first
place.

A regulation that merely formalizes a prohibition already

inherent in a state’s background principles of nuisance and
property law, therefore, does not take anything.

Id. at 1032

(holding that state must “identify background principles of
nuisance and property law that prohibit the [proposed] uses”
before state can “fairly claim that, in proscribing all such
beneficial uses, the [regulation] is taking nothing”).
In light of Lucas, “courts have ruled that the law of
public trust and the law of custom are background principles
because land held in public trust or by custom was never part of
a landowner’s title.”

Pascoag Reservoir & Dam, LLC v. Rhode

Island, 217 F. Supp. 2d 206, 220-21 (D.R.I. 2002), aff’d, 337
F.3d 87 (1st Cir. 2003) (citing Stevens v. City of Cannon Beach,
854 P.2d 449, 456 (Or. 1993), and Orion Corp. v. State, 747 P.2d
1062, 1073 (Wash. 1987)).

The mere enactment of a regulation

does not transform it into a background principle of law.

Cf.

Palazzolo v. Rhode Island, 533 U.S. 606, 630 (2001) (rejecting
proposition that “Lucas stands for the proposition that any new
regulation, once enacted, becomes a background principle of
22

property law which cannot be challenged by those who acquire
title after the enactment”).
Defendants bear the burden of establishing that the EIS
requirement, codified as Haw. Rev. Stat. § 343-5, is a
“background principle of nuisance and property law.”

See, e.g.,

Cebe Farms, Inc. v. United States, 116 Fed. Cl. 179, 196 (2014)
(“the government bears the burden of ‘identify[ing] background
principles of nuisance and property law that prohibit’ the
plaintiff’s use of the property” (quoting Lucas, 505 U.S. at
1031)).

Defendants do not carry their burden, as they offer no

support for their argument that “[t]he requirement of obtaining a
valid EIS was a background principle of Hawai‘i property law.”
See ECF No. 116, PageID # 3029.

In short, Defendants fail to

show that the EIS requirement is the type of proscriptive
regulation that qualifies as a background principle of state
nuisance or property law under Lucas.

Notably, Haw. Rev. Stat.

§ 343-5 is not a prohibition on land use based on principles of
nuisance or property law.

The statute instead merely requires

that an owner seek an assessment of the proposed use’s potential
environmental impact.
Lucas does not automatically preclude a landowner from
recovering under a takings claim just because other regulations
or requirements must be satisfied.

Bridge’s failure to obtain a

valid EIS may affect any analysis regarding what damages, if any,

23

it is entitled to as a result of the alleged taking.

See

Palazzolo, 533 U.S. at 625 (“The mere allegation of entitlement
to the value of an intensive use will not avail the landowner if
the project would not have been allowed under other existing,
legitimate land-use limitations.

When a taking has occurred,

under accepted condemnation principles the owner’s damages will
be based upon the property’s fair market value,--an inquiry which
will turn, in part, on restrictions on use imposed by legitimate
zoning or other regulatory limitations.” (citations omitted)).
However, those fact-based arguments are not before the court on
the present motion.
Defendants have failed to carry their burden of showing
entitlement to summary judgment as a matter of law on Bridge’s
takings claims based on Bridge’s failure to prepare a valid EIS.
B.

Bridge’s Vested-Rights Claim.

Defendants argue that Bridge’s vested-rights claim for
money damages is precluded by Allen v. City & County of Honolulu,
58 Haw. 432, 571 P.2d 328 (1977).
3030-32.

See ECF No. 116, PageID #s

This court agrees.
In Allen, the plaintiffs purchased oceanfront property

intending to build a highrise condominium.

Plaintiffs spent

substantial money on work necessary to obtain a building permit.
58 Haw. at 433-34, 571 P.2d at 328-29.

However, the City

Council, in response to political pressure from nearby residents

24

to prevent the highrise construction, passed a zoning amendment,
which reduced the maximum building height from 350 feet to 40
feet and effectively prohibited plaintiffs from developing the
condominium.

Id. at 434 n.1, 571 P.2d at 329 n.1.

The plaintiffs brought claims for damages claiming
vested rights and zoning estoppel, and arguing that they had
incurred substantial nonrecoverable costs in reliance on the
existing zoning and the reasonable probability that they would be
issued a building permit.

Id. at 434, 571 P.2d at 329.

The

Hawaii Supreme Court held that an award of money damages was not
the proper remedy for either theory.

Id. at 437, 571 P.2d at 330

(“The remedy is to allow continued construction, not award
damages.”).

Given Allen, Bridge may not maintain a vested-rights

claim for damages.
Bridge contends that Allen was abrogated by First
English Evangelical Lutheran Church of Glendale v. County of Los
Angeles, California, 482 U.S. 304 (1987).

In First English, a

landowner filed a complaint in state court seeking damages based
on allegations that an ordinance denied it “all use” of its land.
482 U.S. at 311.

The state court dismissed the regulatory

takings claim for damages based on Agins v. Tiburon, 598 P.2d 25,
26 (Cal. 1979), which held that a landowner may challenge the
constitutionality of the ordinance but “may not recover damages
on the theory of inverse condemnation.”

25

First English, 482 U.S.

at 309-10.

The state appellate courts affirmed.

Id. at 309.

The United States Supreme Court reversed, holding that the remedy
of just compensation is constitutionally required for a temporary
taking, even if the government subsequently rescinds the
regulation.

Id. at 321.

First English’s holding is specific to takings claims.
First English does not abrogate Allen, which addressed claims
based on vested rights.

First English included no claim for

vested rights; vested rights support a separate theory under
state common law.

Consistent with First English, Bridge can, and

is, pursuing damages under its takings claims.

Under Allen,

however, Bridge cannot also seek monetary damages under the law
of vested rights.

Applying Allen, this court grants summary

judgment in favor of Defendants as to Bridge’s vested-rights
claim for damages.
V.

CONCLUSION.
The court grants Defendants’ motion for summary

judgment with respect to Count IV and Count VIII.

The court

denies the motion with respect to the takings claims in Count I
and Count II, to the extent asserted against the LUC and Official
Capacity Commissioners.

Those takings claims in Counts I and II

are the only claims remaining for further adjudication.

26

IT IS SO ORDERED.
DATED: Honolulu, Hawaii, February 29, 2016.

/s/ Susan Oki Mollway
Susan Oki Mollway
United States District Judge

Bridge Aina Le’a, LLC, v. State of Hawaii Land Use Commission, Civil No. 11
00414 SOM/BMK; ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SUMMARY
JUDGMENT

27