Kauai County v. Pacific Standard Life Ins. Co., 8267

• Decision Date: 14 October 1982
• Docket Number: No. 8267,8267
• Citation: 65 Haw. 318,653 P.2d 766
• Parties: COUNTY OF KAUAI, Petitioner-Appellee, v. PACIFIC STANDARD LIFE INSURANCE COMPANY, Graham Beach Partners, Respondents-Appellees. COMMITTEE TO SAVE NUKOLII, Respondent-Appellant, v. Eduardo E. MALAPIT, in his capacity as Mayor of the County of Kauai, Third Party Defendant-Appellee.
• Court: Hawaii Supreme Court

Page 766

653 P.2d 766

65 Haw. 318

COUNTY OF KAUAI, Petitioner-Appellee, v. PACIFIC STANDARD LIFE INSURANCE COMPANY, Graham Beach

Partners, Respondents-Appellees.

COMMITTEE TO SAVE NUKOLII, Respondent-Appellant, v. Eduardo E. MALAPIT, in his capacity as Mayor of the County

of Kauai, Third Party Defendant-Appellee.

No. 8267.

Supreme Court of Hawai'i.

Oct. 14, 1982.

Reconsideration Denied Dec. 6, 1982.

Syllabus by the Court

1. Kauai County Charter provision empowering voters to approve or reject ordinances by referendum is a clear exception to the general reservation of legislative power to the county council and, subject to certain exceptions, all ordinances, including zoning changes, enacted after January 2, 1977 are subject to the referendum power.

2. Kauai county charter provision providing that a referendum shall not affect any vested rights or any action taken or expenditure made up to the date of the referendum is primarily an embodiment of equitable estoppel theory.

3. Even in the absence of statutory ambiguity, departure from literal construction is justified when such construction would produce an absurd and unjust result and the literal construction in the particular action is clearly inconsistent with the purposes and policies of the act.

4. The doctrine of equitable estoppel is based on a change of position on the part of a land developer by substantial expenditure of money in connection with his project in reliance, not solely on existing zoning laws or on good faith expectancy that his development will be permitted, but an official assurance on which he has a right to rely that his project has met zoning requirements, that necessary approval will be forthcoming in due course, and he may safely proceed with the project.

5. Final discretionary action on the part of government constitutes official assurance which may reasonably be relied upon for zoning estoppel purposes.

6. If a developer has not received final discretionary action under the permit system before the certification of a referendum to alter the underlying zoning, estoppel analysis will recognize that timely intervention of the referendum procedure has made discretionary approval or disapproval of underlying zoning an integral part of the development process as applied to that project.

7. Developers who had not yet obtained final discretionary governmental action on their project prior to the filing of a referendum to alter underlying zoning had, for the purposes of equitable estoppel, no right to rely upon any governmental assurances made before the referendum vote.

8. Zoning estoppel is not intended to protect speculative business risks, thus, an expenditure made in compliance with underlying zoning but before final discretionary action by government will be disregarded for estoppel purposes.

9. There can be no estoppel effect to deny permit revocation where claimed substantial expenditures are not made in good faith.

10. Vested rights analysis focuses upon whether the owner or developer acquired real property rights which cannot be taken away by governmental regulation.

11. When a property owner has actually proceeded toward development pursuant to then existing zoning, the initial inquiry in determining whether his development rights have vested is whether his actions constituting irrevocable commitments were reasonably made or were merely speculative business risks.

Sidney M. Wolinsky, San Francisco, Cal. (Karen M. Holt and Lawrence D. McCreery, San Francisco, Cal., on briefs), for respondent-appellant.

Walton D.Y. Hong, Lihue (Masuoka & Hong, Lihue, of counsel), for respondents-appellees.

Michael J. Belles, Deputy County Atty., Lihue, County of Kauai, for petitioner-appellee and third-party defendant-appellee.

Morris Shinsato, County Atty., and Michael K. Abe, Second Deputy County Atty., County of Kauai, for petitioner-appellee, County of Kauai, and third-party defendant-appellee Eduardo E. Malapit, in his capacity as Mayor of the County of Kauai, on the motions.

Edward A. Jaffee, Richard R. Clifton and Milton M. Yasunaga, Honolulu (Cades Schutte Fleming & Wright, Honolulu, of counsel), Walton D. Y. Hong, Lihue (Masuoka & Hong, Lihue, of counsel), Leon Silverman and Sheldon Raab, New York City, (Fried, Frank, Harris, Shriver & Jacobson, New York City, of counsel), and Fred P. Bosselman, Chicago, Ill., (Ross, Hardies, O'Keefe, Babcock & Parsons, Chicago, Ill., of counsel), for respondents-appellees Pacific Standard Life Insurance Company and Graham Beach Partners, on the motions.

Before RICHARDSON, C.J., LUM, J., GREIG, Circuit Judge, in place of NAKAMURA, J., Recused, and OGATA and MENOR, Retired Justices, Assigned Temporarily.

RICHARDSON, Chief Justice.

This appeal considers the effect of a county referendum nullifying a zoning ordinance that had authorized resort development at Nukolii, Kauai, when (1) the referendum petition drive began before the developers applied for any government permits, (2) the referendum issue was certified before any permits were issued, and (3) the referendum vote occurred after the county government had approved the developers' resort plans and had issued building permits. The parties involved as Appellees are Pacific Standard Life Insurance Co. and Graham Beach Partners (hereafter referred to as the Developers) and the County of Kauai and its mayor (hereafter referred to as the County). Appellant is Committee to Save Nukolii, an unincorporated association of Kauai County residents who represent the referendum petitioners and oppose resort development at the Nukolii site.

On the day the referendum results were certified, the County filed this action for declaratory judgment and injunctive relief, asking the circuit court to determine the relative legal rights and duties of the respective parties pursuant to the initiative and referendum article of the county charter. In granting the Developers' motion for summary judgment, the lower court ruled that they had acquired vested rights to the resort development and that the County was equitably estopped from prohibiting the development notwithstanding that the electorate had, by a nearly 2-1 margin, disapproved the rezoning ordinance. We reverse.

I.

We agree with the lower court that there is no genuine issue of material fact to be determined. On appeal from summary judgment, our function therefore is to resolve questions of law applicable to the undisputed facts contained in the record.

General comprehension of the controversy may be obtained from the following chronological outline of events:

1. In 1974, the Developers purchased the subject shoreline property, comprising 60.425 acres located at Hanamaulu, Kauai, and known as Nukolii. The land use classification then was open space and agriculture, which did not allow resort development. ¹

2. In November 1977, the Kauai County General Plan was amended to designate the parcel as "resort." The Developers subsequently sought an amendment to the Comprehensive Zoning Code, proposing to build three hotels of 500 rooms each on the 60.425-acre parcel. On February 1, 1979, the Kauai County Council amended the zoning code from "open/agriculture" to "resort", but the ordinance scaled down the original proposal to first-phase development of 150 condominium units and one 350-room hotel on 25 acres plus payment to the County of an "in lieu" fee for recreational facilities totalling $500,000. The mayor approved the ordinance on February 2, 1979. A month later, Appellant circulated the petition to repeal the resort zoning ordinance pursuant to the referendum provisions of the county charter.

3. On December 27, 1979, Developers applied for a Special Management Area use permit. Thereafter, on January 15, 1980, Appellant submitted the referendum petition to the County and on January 23 was allowed to intervene in the planning commission proceedings on the Developers' permit application.

4. On January 30, 1980, the county clerk certified the referendum petition, containing more than 4,000 signatures, as sufficient under the pertinent charter provisions. On February 5, 1980, the Kauai County Council sustained the resort zoning ordinance and placed the referendum question on the 1980 general election ballot.

5. On April 9, 1980, being advised by legal counsel that certification of the petition did not suspend the resort zoning ordinance, the Kauai County Planning Commission approved the Developers' application for a Special Management Area use permit. Appellant timely appealed the planning commission's decision and the no-suspension ruling. The circuit court affirmed both decisions on July 7, 1980, and the judgment in that proceeding was appealed to this court but later withdrawn.

6. On August 4, 1980, the Developers applied for building permits for the hotel and condominium structures. The County issued permits covering the 150 condominium units the next day.

7. On August 27, 1980, Appellant sought an injunction to prohibit construction pursuant to the condominium building permits, alleging they were not validly issued. The circuit court denied the request for injunctive relief on September 5.

8. On November 3, 1980, the County issued a building permit for construction of a 350-room hotel on the Nukolii site. Four of the six departmental signatures necessary for the permit were obtained this day.

9. On November 4, 1980, the electorate approved the referendum to repeal the resort zoning ordinance by a vote of 10,794 to 5,618. The election results were certified by the county clerk on November 25.

The County filed this action on November 25, 1980, naming the Developers and Appellant as parties, and later supported the Developers' motion for summary judgment. Appellant filed several counterclaims, cross-claims, and third-party complaints against the mayor. The lower court dismissed these claims and Appellant's related motion for partial summary judgment on February 9, 1981, and...