DW Aina Le‘a Dev., LLC v. State

• Decision Date: 07 March 2019
• Docket Number: No. 17-16280,17-16280
• Citation: 918 F.3d 602
• Parties: DW AINA LE‘A DEVELOPMENT, LLC, Plaintiff-Appellant, v. STATE OF HAWAI‘I LAND USE COMMISSION; Does, Governmental Units, 1–10; State of Hawai‘i, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

918 F.3d 602

DW AINA LE‘A DEVELOPMENT, LLC, Plaintiff-Appellant,

v.STATE OF HAWAI‘I LAND USE COMMISSION; Does, Governmental Units, 1–10; State of Hawai‘i, Defendants-Appellees.

No. 17-16280

United States Court of Appeals, Ninth Circuit.

Filed March 7, 2019

Sang J. Peter Sim, Sim & Record LLP, Bayside, New York, for Plaintiff-Appellant.

Ewan Christopher Ravner, Deputy Solicitor General; Clyde J. Wadsworth, Solicitor General; Douglas S. Chin, Attorney General; Department of the Attorney General, Honolulu, Hawai‘i; for Defendants-Appellees.

Before: Richard C. Tallman, Jay S. Bybee, and N. Randy Smith, Circuit Judges.

ORDER

Jay S. Bybee, Presiding Judge U.S. Court of Appeals for the Ninth Circuit

Pursuant to Haw. Rev. Stat. § 602-5(a)(2) and Hawai‘i Rule of Appellate Procedure 13, we respectfully certify the following question to the Hawai‘i Supreme Court:

What is the applicable statute of limitations for a claim against the State of Hawai‘i alleging an unlawful taking of "[p]rivate property ... for public use without just compensation," Haw. Const. art. I, § 20 ?

This significant question of law is "determinative of the cause" in this court and is not answered by statute or any "clear controlling precedent in the Hawai‘i judicial decisions." Haw. R. App. P. 13(a). We therefore respectfully ask the Hawai‘i Supreme Court to exercise its discretion to accept and decide it.

Below we provide a "statement of facts showing the nature of the cause," a "statement of prior proceedings in the case," the "circumstances out of which the [certified] question arises," and the "question of law to be answered." Haw. R. App. P. 13(b).

I. STATEMENT OF FACTS

This appeal arises out of a dispute over the classification of approximately 1,060 acres of land in South Kohala on Hawai‘i Island. The facts of the underlying dispute are detailed in DW Aina Le‘a Development, LLC v. Bridge Aina Le‘a, LLC , 134 Hawai'i 187, 339 P.3d 685, 689–703 (2014). We briefly review them here along with the factual allegations contained in the complaint, which we accept as true for purposes of this appeal. See Wadsworth v. Talmage , 911 F.3d 994, 995 (9th Cir. 2018).

In 1989, the State of Hawai‘i Land Use Commission ("Commission") reclassified the land in South Kohala from "agricultural" use to "urban" use in order to allow for the development of a residential community. The reclassification was subject to several conditions, including a condition that a certain percentage of the newly constructed residential units be affordable. The Commission amended that condition over the years as ownership of the land changed hands, and by 2005, the Commission required the landowner, Bridge Aina Le‘a, LLC ("Bridge"), to construct no fewer than 385 affordable units, which constituted 20% of the total units to be constructed.

In December 2008, the Commission issued a show cause order requiring Bridge to explain why the land should not revert to its former agricultural use classification. The Commission believed that Bridge and its predecessors-in-interest had failed "to perform according to the conditions imposed and to the representations and commitments made to the [Commission] in obtaining reclassification" of the property. In addition to responding to the show cause order, Bridge informed the Commission in February 2009 that it had entered into a purchase agreement with DW Aina Le‘a Development, LLC ("DW") that gave DW the right to develop the residential community. DW then invested more than $28 million developing the property, constructing more than a dozen townhouses and grading the site for roads, utilities, and additional townhouses.

Nevertheless, in April 2009, the Commission voted unanimously to return the land to its former agricultural use classification. Bridge sought reconsideration, with DW now on board as a co-petitioner before the Commission, but those efforts failed. Following numerous hearings, the Commission issued a final, written order on April 25, 2011, reclassifying the property as agricultural. Shortly thereafter, Bridge and DW sought judicial review of the Commission’s order in state court. The Hawai‘i Supreme Court ultimately vacated the Commission’s order, concluding that, because use of the property had "substantially commenced," the Commission improperly reclassified the property without complying with certain statutory requirements for doing so. DW Aina Le‘a , 339 P.3d at 711–14 (discussing the requirements set forth in Haw. Rev. Stat. § 205-4 ).¹

II. STATEMENT OF PRIOR PROCEEDINGS

On February 23, 2017, DW filed a complaint in Hawai‘i state court against the Commission and the State of Hawai‘i asserting takings claims under both the United States Constitution and the Hawai‘i Constitution. DW alleged that the Commission’s reclassification of the property as agricultural constituted a regulatory taking of DW’s property without just compensation. Specifically, DW alleged that the reclassification increased the purchase price of the property after DW had agreed to purchase it, destroyed DW’s "sophisticated funding arrangement [with] Asia" for developing the property, and caused DW to sustain other increased costs and losses in business opportunities. The State removed the case to federal court and moved to dismiss the complaint as barred by the applicable statute of limitations.

The district court granted the State’s motion to dismiss.² The parties agreed that DW’s takings claims accrued when the Commission issued its order on April 25, 2011. Regarding the federal takings claim, the court determined that, although this claim was not (and could not be) brought against the State under 42 U.S.C. § 1983, see Will v. Mich. Dep’t of State Police , 491 U.S. 58, 71, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989), the statute of limitations that ordinarily governs § 1983 actions—the statute of limitations for general personal injury torts, see Wilson v. Garcia , 471 U.S. 261, 276–79, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985) —applies. The limitations period for personal injury torts in Hawai‘i is two years. Haw. Rev. Stat. § 657-7. The court thus concluded that DW’s federal takings claim is time-barred. The court also concluded in the alternative that DW’s federal takings claim is time-barred under Haw. Rev. Stat. § 661-5, which provides a two-year limitations period for "[e]very claim against the State, cognizable under [Part I of Chapter 661]." In light of these two statutes, the court rejected DW’s reliance on the six-year "catch-all" statute of limitations, Haw. Rev. Stat. § 657-1(4). Finally, the court concluded that, like the federal takings claim, DW’s state takings claim under the Hawai‘i Constitution is time-barred under either Haw. Rev. Stat. §§ 657-7 or 661-5. The court thus dismissed this action in its entirety, and DW filed a timely notice of appeal.

III. LEGAL CIRCUMSTANCES

On appeal, the parties do not dispute the relevant dates for limitations purposes—DW’s takings claims accrued on April 25, 2011, and DW filed its complaint on February 23, 2017, more than five years later. The only issue is identifying the applicable statute of limitations. And although the parties focus on DW’s federal takings claim, DW’s state takings claim remains at issue, and the applicable limitations period may control its federal takings claim as well.³ Accordingly, in all events, determining the correct statute of limitations for DW’s state takings claim is outcome determinative for some, and perhaps all, of DW’s claims.

Under the Hawai‘i Constitution, "[p]rivate property shall not be taken or damaged for public use without just compensation." Haw. Const. art. I, § 20. Although proceedings for the condemnation of private property are governed by statute, see Haw. Rev. Stat. § 101-1 et seq. , an "inverse condemnation" action—i.e., an action by a property owner "to recover the value of property that has been taken by the government ... without exercising the power of eminent domain"—is "not specifically provided by statute," Leone v. County of Maui , 128 Hawai'i 183, 284 P.3d 956, 962 (Haw. Ct. App. 2012). Nor do the Hawai‘i statutes prescribe a limitations period for bringing an inverse condemnation action. DW argues that the six-year "catch-all" limitations period in Haw. Rev. Stat. § 657-1(4) applies, while the State argues that the two-year limitations periods in either Haw. Rev. Stat. §§ 657-7 or 661-5 applies.

The Hawai‘i Supreme Court has not had occasion to decide this issue, and other states that have addressed it have taken various approaches in doing so. See, e.g. , Klumpp v. Borough of Avalon , 202 N.J. 390, 997 A.2d 967, 977 (2010) (describing the divergent views among states in which "there is no statute of limitations on point" for inverse condemnation actions); see also 27 Am. Jur. 2d Eminent Domain § 732 (Feb. 2019) ; Charles C. Marvel, Annotation, State Statute of Limitations Applicable to Inverse Condemnation or Similar Proceedings by Landowner to Obtain Compensation for Direct Appropriation of Land Without the Institution or Conclusion of Formal Proceedings Against Specific Owner , 26 A.L.R.4th 68 (1983 & Supp. 2018). Ordinarily, "[w]hen the highest court of a state has not directly spoken on a matter of state law," we "use [our] ‘own best judgment in predicting how the state’s highest court would decide the case.’ " T-Mobile USA Inc. v. Selective Ins. Co. of Am. , 908 F.3d 581, 586 (9th Cir. 2018) (quoting Fiorito Bros. v. Fruehauf Corp. , 747 F.2d 1309, 1314 (9th Cir. 1984) ). But given the sparse Hawai‘i case law and the variety of approaches taken in other jurisdictions, we are unable to conclude with any certainty which statute of limitations the Hawai‘i Supreme Court would apply.

A. Section 657-1(4)

According to DW, the applicable statute of limitations is Haw. Rev. Stat. § 657-1(4), which imposes a six-year limitations period on "[p]ersonal actions of any nature whatsoever not specifically covered by the laws of the State." But for this "catch-all" provision to...