Kaiser Dev. Co. v. City and County of Honolulu, Civ. No. 84-0389.

• Decision Date: 25 September 1986
• Docket Number: Civ. No. 84-0389.
• Citation: 649 F. Supp. 926
• Parties: KAISER DEVELOPMENT CO., also known as Kacor Development Corp., a California corporation, Kaiser Hawaii Kai Development Co., a Nevada corporation, Plaintiffs, and Richard Lyman, Jr., Matsuo Takabuki, Myron B. Thompson, William S. Richardson, and Henry H. Peters, Jr., Trustees of the Kamehameha Schools/Bishop Estate, Plaintiffs/Intervenors, v. CITY AND COUNTY OF HONOLULU, Defendant.
• Court: U.S. District Court — District of Hawaii

649 F. Supp. 926

KAISER DEVELOPMENT CO., also known as Kacor Development Corp., a California corporation, Kaiser Hawaii Kai Development Co., a Nevada corporation, Plaintiffs and Richard Lyman, Jr., Matsuo Takabuki, Myron B. Thompson, William S. Richardson, and Henry H. Peters, Jr., Trustees of the Kamehameha Schools/Bishop Estate, Plaintiffs/Intervenors, v. CITY AND COUNTY OF HONOLULU, Defendant.

Civ. No. 84-0389.

United States District Court, D. Hawaii.

September 25, 1986.

Jess S. Jackson, Barbara R. Banke, Jackson, Jacobsen and Banke, San Francisco, Cal., for plaintiffs; R. Charles Bocken, Damon Key Char & Bocken, Honolulu, Hawaii, of counsel.

H. Bissell Carey, III, Steven L. Richards, Robinson & Cole, Hartford, Conn., Richard D. Wurdeman, Acting Corp. Counsel, City and County of Honolulu, Honolulu, Hawaii, for defendant.

Anthony Kim, Cheryl Nakamura, Rush Moore Craven Kim & Stricklin, Honolulu, Hawaii, for plaintiffs/intervenors.

DECISION ON MOTIONS FOR SUMMARY JUDGMENT

SAMUEL P. KING, Senior District Judge.

Plaintiffs Kaiser Development Co. (Kaiser)¹ and plaintiffs/intervenors Bishop Estate (Bishop)² sued defendant City and County of Honolulu (City) for various actions taken by the City affecting a parcel of property known as Queen's Beach, which Kaiser and Bishop had sought to develop. Plaintiffs argued, inter alia, that the City's regulations and other actions rise to the level of a "taking" of their property and that the City has engaged in inequitable precondemnation activities for which they are entitled to compensation. The City brought motions for summary judgment against both plaintiffs on all claims. As discussed herein, defendant's motions are GRANTED IN PART and DENIED IN PART, the net result being to dismiss Kaiser from this lawsuit, and to allow Bishop to pursue only its claims for inequitable precondemnation activities.

I BACKGROUND

A. Facts

The Bernice Pauahi Bishop Estate (Bishop) owns approximately 6000 acres situated at Maunalua, in the City and County of Honolulu, on the Island of Oahu. In 1961, Bishop entered into a development agreement with Kaiser Hawaii Kai Development Co. (Kaiser)³ to develop this land into a new urban community. Much of this new community, Hawaii Kai, is now completed.

The subject of this dispute, however, is a large hotel/resort complex that Kaiser had hoped to build at Queen's Beach, a 210-acre parcel of land at the northeasterly end of Hawaii Kai. Kaiser alleges that it considered this resort its "crown jewel" and economic reward from the vast community development project. According to various affidavits, Kaiser spent over $8 million in building the Hawaii Kai infrastructure "oversized" to accommodate the anticipated development at Queen's Beach. However, Kaiser made no attempt to develop Queen's Beach until 1971.

The 1959 Honolulu City Charter required the adoption of a general plan for the long-range development of the city. Under both the first General Plan of 1960 and a second General Plan of 1964, Queen's Beach was designated as a resort and commercial area. Similarly, in both the 1964 and 1966 Detailed Land Use Maps (DLUMs), which were adopted for numerous areas of Honolulu to accompany the General Plan, Queen's Beach was designated as a resort and commercial area. In 1973, the Revised Charter for the City and County of Honolulu supplanted the previous Charter, and a new General Plan became effective in 1977, which also listed Queen's Beach as a potential resort site. In 1982, however, the City adopted a revised General Plan, which modified the population densities and eliminated Queen's Beach as a future resort site. As required by the 1973 Charter, in 1977, the City began to formulate development plans for all areas of the city, including East Honolulu, the area of Hawaii Kai. In 1983, the City enacted a new Development Plan for East Honolulu, which changed the previous resort designation on the 1966 DLUM to preservation and park uses.

This litany of plans is made somewhat more confusing by the fact that the zoning codes were not updated when new general plans were adopted. From 1960 to 1969, the zoning for Queen's Beach was residential. In 1969, the Comprehensive Zoning Code also zoned Queen's Beach for single family residential homes. This zoning remained in effect until 1984, when it was changed to P-1, or preservation/park.⁴

Kaiser first actively sought to develop Queen's Beach in 1971 when it applied to rezone the property from residential to resort in accordance with the 1964 and 1966 DLUMs. Kaiser later withdrew the request, it alleges, because of confusion engendered by the City's activities to acquire the area as a park. Kaiser did not again seek a zoning change until May 1983. This request was turned down and the denial was upheld by the zoning board of appeals.

Kaiser and Bishop allege, with some support, that the City has been on a mission to acquire the land since 1970. They contend that the City tried to impose unreasonable exactions as a prerequisite for hotel development at Queen's Beach, such as dedication of the oceanfront as a public park; that the City downzoned Queen's Beach and downgraded the density in the area to depress the acquisition price of the land; and that the City's policy has been to freeze development at Queen's Beach until it could be acquired as a park.

B. Complaint

Kaiser's and Bishop Estate's complaints are nearly identical and allege violations of their civil and constitutional rights under 42 U.S.C. § 1983, the Fourteenth Amendment, the Fifth Amendment, and the Contracts Clause. Kaiser alleges that it has property rights in Queen's Beach pursuant to its development agreement with the Bishop Estate. Bishop alleges that it dedicated lands to long term uses in anticipation of realizing rental income from the development of the property under the agreement with Kaiser.

Plaintiffs allege a violation of their due process rights under two takings theories. First, they allege, under principles of inverse condemnation, that the City's wrongful imposition of confiscatory land use regulations deprived them of all economically viable use of their property without just compensation.⁵ Second, plaintiffs allege a taking under a "precondemnation blight" theory. They argue that the City's intent all along has been to acquire Queen's Beach as a park, that the City restricted development of the property, attempted to force dedication of a substantial portion of the property, and has otherwise engaged in such inequitable precondemnation activities as to result in "planning blight" for which they are entitled to compensation. See, e.g., Martino v. Santa Clara Valley Water District, 703 F.2d 1141, 1147 (9th Cir.1983), cert. denied, 464 U.S. 847, 104 S.Ct. 151, 78 L.Ed.2d 141 (1983); Washington Water & Light Co. v. East Yolo Community Services District, 120 Cal.App.3d 389, 174 Cal. Rptr. 612, 616-17 (1981); Taper v. City of Long Beach, 129 Cal.App.3d 590, 181 Cal. Rptr. 169, 176-77 (1982).

Their additional substantive due process claims are that the regulations have deprived them of their "vested property rights" to develop Queen's Beach in accordance with the 1966 DLUM, and that the zoning regulations themselves violate due process.

Their complaint also alleges a violation of their procedural due process rights, that is, a notice and opportunity to be heard on the decision to downzone Queen's Beach.

Finally, Bishop and Kaiser claim that the City's actions have violated their constitutional rights under the Contract Clause.⁶

Kaiser and Bishop pray for just compensation for their various takings claims, consequential damages, and declaratory relief.

C. Defendant's Motion for Summary Judgment

The City makes the following arguments in support of its motions for summary judgment:

— Kaiser does not have a protected property interest in Queen's Beach;

— Kaiser lacks standing;

— Kaiser's and Bishop's claims are not ripe for review;

— Kaiser and Bishop have not been denied substantive due process;

— Kaiser and Bishop have not been denied procedural due process;

— The City's regulations do not violate the fifth amendment because Bishop has already earned a significant return from its Hawaii Kai development; and

— Kaiser and Bishop have not suffered an impairment of contract.

The City recognizes that there are genuine issues of material fact in dispute, particularly as to whether the City engaged in inequitable precondemnation activities and whether there exists any economically viable use to Queen's Beach under the present zoning. The City stresses that it is not seeking summary judgment on these issues, per se, but rather that there are other reasons, not involving disputed facts, that entitle it to summary judgment on all counts.

D. Applicable Legal Standard

The standard this court must apply in reviewing the instant motions is well established. Under Fed.R.Civ.P. 56, a motion for summary judgment may only be granted if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. The City has the heavy burden of showing the absence of any material facts; the underlying facts must be viewed in the light most favorable to Kaiser and Bishop, and all inferences must be drawn in their favor. E.g., Adickes v. S.H. Kress & Co., 398 U.S. 144, 157-59, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970).

Plaintiffs appear to assert that actions involving land use designations are per se unsuitable for resolution by summary judgment. The Ninth Circuit has recently admonished that summary dismissals must be viewed with "particular skepticism" in cases involving inverse condemnation, because a court must often resort to "essentially ad hoc factual inquiries" to determine whether compensation is due. Hall v. City of Santa Barbara, 797 F.2d 1493, 1497 (9th Cir.1986). Nevertheless, such a disposition "is not always inappropriate." Id. at 1497. There is no special summary...