Kalima v. State

• Citation: 468 P.3d 143
• Decision Date: 30 June 2020
• Docket Number: SCAP-18-0000068
• Parties: Leona KALIMA; Diane Boner; Raynette Nalani Ah Chong, Special Administrator of the Estate of Joseph Ching, Deceased; Caroline Bright; Donna Kuehu; Irene Cordeiro-Vierra; and James Akiona, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees-Cross-Appellants, v. STATE of Hawai‘i; State of Hawai‘i Department of Hawaiian Home Lands; State of Hawai‘i Hawaiian Home Lands Trust Individual Claims Review Panel; David Y. Ige, in his official capacity as Governor of the State of Hawai‘i, Defendants-Appellants-Cross-Appellees.
• Court: Supreme Court of Hawai'i

468 P.3d 143

Leona KALIMA; Diane Boner; Raynette Nalani Ah Chong, Special Administrator of the Estate of Joseph Ching, Deceased; Caroline Bright; Donna Kuehu; Irene Cordeiro-Vierra; and James Akiona, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees-Cross-Appellants,

v.STATE of Hawai‘i; State of Hawai‘i Department of Hawaiian Home Lands; State of Hawai‘i Hawaiian Home Lands Trust Individual Claims Review Panel; David Y. Ige, in his official capacity as Governor of the State of Hawai‘i, Defendants-Appellants-Cross-Appellees.

SCAP-18-0000068

Supreme Court of Hawai‘i.

JUNE 30, 2020

Clyde J. Wadsworth, Kimberly T. Guidry, Robert T. Nakatsuji, Honolulu, and Kaliko‘onalani D. Fernandes for Defendants-Appellants/ Cross-Appellees

Carl M. Varady and Thomas R. Grande, Honolulu, for Plaintiffs-Appellees/ Cross-Appellants

RECKTENWALD, C.J., NAKAYAMA, POLLACK, AND WILSON, JJ., AND CIRCUIT JUDGE VIOLA, IN PLACE OF McKENNA, J., RECUSED

OPINION OF THE COURT BY NAKAYAMA, J.

I. INTRODUCTION

In 1990, Sena tor Michael Crozier observed, "[b]oth the length of the list and the length of the wait make the vast majority of Native Hawaiian people despair of ever receiving an award of land." Senator Michael Crozier, Testimony Before the Hawai‘i Advisory Committee, United States Commission on Civil Rights (Aug. 2, 1990). In the thirty years since Senator Crozier's statement, the State of Hawai‘i has done little to address the ever-lengthening waitlist for lease awards of Hawaiian home lands.

In light of the Circuit Court of the First Circuit's (circuit court) 2009 ruling that the State breached its duties as trustee of the Hawaiian Home Lands Trust (the Trust), we are now tasked with reviewing the circuit court's decision granting and apportioning monetary damages to those Native Hawaiian beneficiaries who, as a result of the State's mismanagement of the Trust, have languished on the waitlist – some for decades.

Constrained by the provisions of Hawai‘i Revised Statutes (HRS) Chapter 674 (Supp. 1991), entitled "Individual Claims Resolution Under the Hawaiian Home Lands Trust," the circuit court adopted a Fair Market Rental Value model (FMRV model) by which the circuit court can estimate the actual loss each individual beneficiary incurred. The interests of justice and the extent of the State's wrongful conduct support a liberal interpretation of HRS Chapter 674 and a generous construal of the circuit court's damages model. We hold that the FMRV model is an adequate method for approximating actual damages.

For the reasons discussed below, we affirm in part and vacate in part the circuit court's January 9, 2018 final judgment and remand for further proceedings consistent with this opinion.

II. BACKGROUND

Plaintiffs-Appellees Cross-Appellants Leona Kalima, Diane Boner, Raynette Nalani Ah Chong, special administrator of the Estate of Joseph Ching, deceased, Caroline Bright, Donna Kuehu, Irene Cordeiro-Vierra, and James Akiona, on behalf of themselves and all similarly situated (collectively "Plaintiffs") are a group of Native Hawaiian Trust beneficiaries who claim that they incurred damages while on the waitlist to receive homestead land as a result of breaches of trust duties by Defendants-Appellants Cross-Appellees the State of Hawai‘i, the State of Hawai‘i Department of Hawaiian Home Lands (DHHL), the State of Hawai‘i Home Lands Trust Individual Claims Review Panel (the Panel), and Governor David Y. Ige (collectively "the State"). Both Plaintiffs and the State appealed the circuit court's January 9, 2018 final judgment.

A. Trust History

In 1920, Congress enacted the Hawaiian Homes Commission Act (HHCA), which created a land trust intended to rehabilitate displaced Native Hawaiian people by enabling them to lease residential, agricultural, or pastoral homestead land from the Trust for one dollar per year. Kalima v. State (Kalima I ), 111 Hawai‘i 84, 87, 137 P.3d 990, 993 (2006) ; Hawaiian Homes Commission Act, ch. 42, sec. 207, 42 Stat. 108, 48-49 (1920). When the Territory of Hawai‘i became a state in 1959, the State took over the management and disposition of the Trust. Kalima I, 111 Hawai‘i at 87, 137 P.3d at 993. In the years that followed, the State struggled to carry out its duties and obligations as trustee. The State began efforts in 1983 to resolve issues relating to the HHCA and to the Trust. Id. at 87-88, 137 P.3d at 993-94.

In 1988, the Hawai‘i State Legislature (the Legislature) passed "The Native Hawaiian Judicial Trusts Relief Act," which provided for limited waiver of the State's sovereign immunity to enable beneficiaries of the Trust to bring suits for past breaches of the Trust and prospective suits for damages related to breaches of the Trust after 1988. Id. at 88, 137 P.3d at 994 ; 1988 Haw. Sess. L. Act 395, § 3 at 945.

In 1991, the Legislature passed the "Individual Claims Resolution Under the Hawaiian Home Lands Trust Act." 1991 Haw. Sess. L. Act 323, § 1 at 990 (Act 323). Act 323 was codified as HRS Chapter 674. HRS Chapter 674 established a process for resolving claims for damages by individual beneficiaries of the Trust caused by the State's breaches of the Trust which occurred between August 21, 1959, and June 30, 1988. HRS § 674-1 (1993). We described the process for resolving claims under HRS Chapter 674 as follows:

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).

Kalima I, 111 Hawai‘i at 90, 137 P.3d at 996.

Part III of Chapter 674, entitled "Judicial Relief for Retroactive Claims by Individual Native Hawaiians," provides,

[t]he State waives its immunity from liability for actual damages suffered by an individual beneficiary arising out of or resulting from a breach of trust or fiduciary duty, which occurred between August 21, 1959, to 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 § 674-16 (1993) (emphasis added). Chapter 674 defines "actual damages" as

direct, monetary out-of-pocket loss, excluding noneconomic damages as defined in section 663-8.5 and consequential damages, sustained by the claimant individually rather than the beneficiary class generally, 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 by an employee of the State with respect to an individual beneficiary in the management and disposition of trust resources.

HRS § 674-2 (1993).

Meanwhile, the State was taking steps to better perform its duties as trustee by recovering alienated land and compensating the Trust for non-beneficiary use of that land. In 1994, with the passage of Act 352, the State transferred 16,518 acres of trust lands from the Department of Land and Natural Resources (DLNR) to DHHL and paid DHHL $12 million for uncompensated use of those lands.

B. 1999 Litigation

On December 29, 1999, representative plaintiffs Leona Kalima, Diane Boner, and Joseph Ching filed a class action complaint against the State alleging breaches of the HHCA's trust obligations between 1959 and 1988 and claiming that the plaintiffs were entitled to damages under HRS Chapter 674.

On August 29, 2000, following Plaintiffs’ motion for class certification as to Count I of the Plaintiffs’ complaint, the circuit court¹ entered an order granting the motion and defining the class in Count I:

All Hawaiian home land trust beneficiaries who timely filed a claim with the Hawaiian Home Lands Trust Individual Claims Review Panel, gave notice of intent to sue by October 1, 1999 and filed suit by December 31, 1999, excluding any beneficiaries whose claims were either approved by the Legislature or settled.

The circuit court also granted Plaintiffs’ motion for partial summary judgment as to Count 1.

The State brought an interlocutory appeal of the circuit court's order granting partial summary judgment before this court. Kalima I, 111 Hawai‘i 84, 137 P.3d 990 (2006). In Kalima I, this court held that sovereign immunity did not bar Plaintiffs’ right to sue under HRS Chapter 674. Id. at 112-13, 137 P.3d at 1018-19. This court affirmed in part and vacated in part the circuit court's 2001 judgment, and held:

(1) [we] affirm the circuit court's determination that the plaintiffs are entitled to pursue their claims under HRS chapter 674; (2) [we] reverse the circuit court's determination that Act 14 is a settlement agreement and that the plaintiffs have a right to sue under HRS chapter 661; and (3) [we] remand this case to the circuit court for further proceedings consistent with this opinion.

Id.

In addition, this court held that Chapter 674 should be "liberally construed to suppress the perceived evil and advance the enacted remedy" and should not be narrowly interpreted to "impede rather than advance the remedies" provided by the statute. Id. at 100, 137 P.3d at 1006 (quoting Flores v. United Air Lines, Inc., 70 Haw. 1, 12, 757 P.2d 641, 647 (1988) ).

C. Post-Kalima I Litigation

The subject of this appeal is the litigation that followed this court's holding in Kalima I that Plaintiffs were permitted to sue for damages under HRS Chapter 674.

1. Class Certification on Liability

Following Kalima I, Plaintiffs moved for certification of various subclasses on the issue of liability (Motion for Class Certification on Liability). The circuit court granted the Motion for Class Certification on Liability on June 6, 2007 and certified the following subclasses for purposes of liability – Subclass 1:

Waiting List Subclass, Subclass 2: Ultra Vires Qualifications Subclass,...