Kono v. Abercrombie
| Decision Date | 24 April 2013 |
| Docket Number | NO. CAAP-11-0000755,CAAP-11-0000755 |
| Parties | GAIL KONO, and WRAY JOSE, each individually and on behalf of those persons similarly situated, and TERRIE SIMPSON, LIANE AUYONG-IMAMURA, PETER NAKASHIMA, CATHERINE KALEHUAWEHE, JOAN LEWIS, BEVERLEE CHIP, JUSTIN WONG, ROBERT GILMORE and GAYLE ENRIQUEZ, each in his or her official capacity as TRUSTEE of the HAWAI'I STATE TEACHERS ASSOCIATION VOLUNTARY EMPLOYEES' BENEFICIARY TRUST, Plaintiffs-Appellees/Cross-Appellants, v. NEIL ABERCROMBIE, Governor, State of Hawai'i, in his official capacity, STATE OF HAWAI'I, DOES 1-10, Defendants-Appellants/Cross-Appellees |
| Court | Hawaii Court of Appeals |
NOT FOR PUBLICATION IN WEST'S HAWAI'I REPORTS AND PACIFIC REPORTER
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 10-1-1966)
(
Defendants/Appellants/Cross-Appellees Neil Abercrombie, Governor, State of Hawai'i, in his official capacity, and the State of Hawai'i (collectively, State) appeal from the followingorders and judgments entered in the Circuit Court of the First Circuit1 (circuit court):
(1) the March 15, 2011 "Order Denying State Defendants' Motion for Judgment on the Pleadings, Filed October 12, 2010" (Order Denying State's MJP);
(2) the March 15, 2011 "Order Denying [Plaintiffs'] Motion for Preliminary Injunction, Filed November 4, 2010" (Order Denying Plaintiffs' MPI);
(3) the March 15, 2011 "Final Judgment Partly in Favor of Plaintiffs and Partly in Favor of Defendants" (Final Judgment);
(4) the May 17, 2011 "Order Denying State Defendants' Motion for Award of Attorneys' Fees, Filed March 29, 2011"; and
(5) the October 6, 2011 "Amended Final Judgment Partly in Favor of Plaintiffs and Partly in Favor of Defendants" (Amended Final Judgment).
Plaintiffs/Appellees/Cross-Appellants Gail Kono and Wray Jose, each individually and on behalf of a class of persons similarly situated; and Terrie Simpson, Liane Auyong-Imamura, Peter Nakashima, Catherine Kalehuawehe, Joan Lewis, Beverlee Chip, Justin Wong, Robert Gilmore, and Gayle Enriquez, each in his or her official capacity as Trustee of the Hawai'i State Teachers Association Voluntary Employees' Beneficiary Association Trust (collectively, Plaintiffs) cross-appeal from:
(1) the Order Denying Plaintiffs' MPI;
(2) the Final Judgment;
(3) the Amended Final Judgment;
(4) the July 20, 2011 "Order Summarily Denying Plaintiffs' Motion For Leave to File First Amended Complaint Without Hearing" (Order Denying Amendment); and (5) the December 1, 2011 "Order Denying Plaintiffs' Motion for Attorneys' Fees and Costs filed October 20, 2011."2
Pursuant to its Amended Final Judgment, the circuit court entered judgment partly in favor of Plaintiffs and partly in favor of the State on all counts of Plaintiffs' complaint.
On September 14, 2010, Plaintiffs filed a complaint challenging the State's transfer of approximately 15,200 active and retired public school teachers and their dependants (collectively, Teachers) into the Employer-Union Health Benefits Trust Fund (EUTF).
In 2005, the Hawai'i State Legislature (Legislature) enacted Act 245 (partially codified in HRS Chapter 87D (2005), repealed by 2010 Haw. Sess. L. Act 106, §§ 1-2 at 198). Act 245 authorized the Voluntary Employees' Beneficiary Association Trust (VEBA Trust) to provide health benefits to teachers, beginning on March 1, 2006. However, on December 31, 2010, Act 245 terminated pursuant to its sunset provision. See 2005 Haw. Sess. L. Act 245, § 8 at 767. As a result, the Teachers were transferred from the VEBA Trust into the EUTF.
Based on the transfer and on the State's allegedly wrongful taking of surplus funds from the VEBA Trust, Plaintiffs filed the underlying complaint against the State on the Teachers' behalf. The complaint alleged claims for violations of article XVI, section 2 of the Hawai'i Constitution (), breach of contract, unjust enrichment, and injunctive anddeclaratory relief. The State filed its answer on October 4, 2010.
On October 12, 2010, the State filed a motion for judgment on the pleadings pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rule 12(c) (MJP). On November 4, 2010, Plaintiffs filed a motion for preliminary injunction (MPI), seeking to maintain the status quo and prevent the transfer of Teachers from the VEBA Trust to the EUTF.
The circuit court heard both parties' motions on December 7, 2010. After hearing arguments, the court announced it was denying both motions. The court also issued extensive oral rulings that appeared to resolve the merits of the complaint partly in Plaintiffs' favor and partly in the State's favor. The Amended Final Judgment (discussed further below) summarizes the court's oral rulings. At the end of the hearing, Plaintiffs' counsel volunteered to prepare the order denying the MJP and the MPI, and the court agreed. The court did not, however, order either party to prepare a judgment, nor did it give any indication it intended to enter a judgment at that time.
The parties participated in a status conference on January 6, 2011, during which the circuit court apparently indicated its view that it had resolved all issues and that the case was appropriate for final judgment. Plaintiffs submitted a proposed order, to which the State objected. The State then twice submitted proposed orders "granting in part and denying in part" the State's MJP. In its second submission, the State also included a proposed final judgment. Plaintiffs opposed both submissions, objecting to the form of the proposed orders and arguing that entry of a final judgment was procedurally improper.
On March 15, 2011, the circuit court entered its (1) Order Denying State's MJP; (2) Order Denying Plaintiffs' MPI; and (3) Final Judgment. The Final Judgment stated "[a]ny remainingparties and/or claims are dismissed," but it failed to specifically identify the claim or claims on which the circuit court intended to enter judgment. At the time the circuit court entered the Final Judgment, there were no pending motions from either party.
On April 11, 2011, the State filed a notice of appeal from the Final Judgment. On June 30, 2011, this court dismissed the appeal for lack of jurisdiction because the Final Judgment failed to satisfy the requirements of HRCP Rule 58 or the holding in Jenkins v. Cades Schutte Fleming & Wright, 76 Hawai'i 115, 869 P.2d 1334 (1994).
On July 11, 2011, Plaintiffs filed "Plaintiffs' Motion for Leave to File First Amended Complaint." On July 20, 2011, the circuit court entered its Order Denying Amendment, concluding the motion was "untimely" because all the claims had been resolved pursuant to its Final Judgment.
On October 6, 2011, the circuit court entered its Amended Final Judgment, pursuant to its December 7, 2010 oral rulings. In its Amended Final Judgment, the circuit court set forth the following:
Based on the above, the circuit court entered judgment partly in favor of Plaintiffs and partly in favor of the State on all counts.
The circuit court also entered an "Order Denying [State's] Motion for Award of Attorneys' Fees, Filed March 29, 2011" on May 17, 2011, and a post-judgment "Order Denying Plaintiffs' Motion for Attorneys' Fees and Costs Filed October 20, 2011" on December 1, 2011.
On October 14, 2011, the State filed a timely notice of appeal from the Amended Judgment, and Plaintiffs filed a notice of cross-appeal on November 4, 2011.
On appeal, the State contends the circuit court erred:
(1) in holding that "the teachers in the VEBA Trust have constitutionally protected accrued benefits based on their past service" and are entitled to maintain the same standard of coverage benefits in their EUTF health benefits plans;
(2) in ordering the VEBA Trust surplus funds be used to ensure the Teachers maintain the same standard of coverage benefits; and (3) in entering its MJP Denial Order and its order denying the State's motion for attorneys' fees.
On cross-appeal, Plaintiffs contend the circuit court erred:
(1) in determining Act 245 (and its subsequent amendments) and the State's taking of the VEBA Trust surplus did not violate article XVI, section 2 of the Hawai'i Constitution;
(2) in determining Act 245 and the taking of the surplus did not violate the Teachers' contractual rights;
(3) in entering its MPI Denial Order, its Order Denying Amendment, and its order denying Plaintiffs' motion for attorneys' fees and costs; and
(4) in issuing the Amended Final Judgment after denying the State's MJP.
Questions of law are reviewed upon appeal under the right/wrong standard of review. Maile Sky Court Co., Ltd. v. City & Cnty. of Honolulu, 85 Hawai'i 36, 39, 936 P.2d 672, 675 (1997).
Plaintiffs raise a challenge to the procedural propriety of the circuit...
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