Office of Hawaiian Affairs v. State

• Decision Date: 28 April 2006
• Docket Number: No. 26615.,26615.
• Citation: 133 P.3d 767
• Parties: OFFICE OF HAWAIIAN AFFAIRS, Trustees of the Office of Hawaiian Affairs, Plaintiffs-Appellants/Cross-Appellees, v. STATE of Hawai'i, Defendant-Appellee/Cross-Appellant.
• Court: Hawaii Supreme Court

Page 767

133 P.3d 767

OFFICE OF HAWAIIAN AFFAIRS, Trustees of the Office of Hawaiian Affairs, Plaintiffs-Appellants/Cross-Appellees, v. STATE of Hawai'i, Defendant-Appellee/Cross-Appellant.

No. 26615.

Supreme Court of Hawai'i.

April 28, 2006.

COPYRIGHT MATERIAL OMITTED

Robert G. Klein (Nadine Y. Ando and Christopher J. Cole, with him on the briefs, of McCorriston Miller Mukai MacKinnon), Honolulu, and William Meheula and David F. Fasi, with him on the briefs, of Winer Meheula & Devens, Honolulu, for plaintiffs-appellants/cross-appellees.

Dorothy Sellers (Charleen M. Aina, Girard D. Lau, and William J. Wynhoff, with her on the brief, Deputy Attorneys General), Honolulu, for defendant-appellee/cross-appellant.

MOON, C.J., LEVINSON, and NAKAYAMA, JJ., and Circuit Judge HARA, in place of DUFFY, J., recused.

Opinion of the Court by MOON, C.J.¹

Plaintiffs-appellants the Office of Hawaiian Affairs (OHA) and the Board of Trustees of OHA (the trustees) [hereinafter, collectively, the plaintiffs] appeal from the Circuit Court of the First Circuit's² May 19, 2004 final judgment in favor of defendant-appellee State of Hawai`i (the State). On appeal, the plaintiffs contend that the circuit court erred in: (1) granting the State's motion to dismiss their first amended complaint [hereinafter, motion to dismiss]; (2) denying the plaintiffs' motion for leave to amend the first amended complaint [hereinafter, motion to amend]; and (3) denying the plaintiffs' motion to bifurcate the justiciable and nonjusticiable issues presented in this case [hereinafter, motion to bifurcate]. For the following reasons, we affirm the circuit court's final judgment.

I. BACKGROUND

Due to the procedural posture of this case, the material facts presented by the plaintiffs are accepted as true and are relatively brief. The underlying contextual background, however, is complex, arising out of nearly three decades of effort to resolve longstanding issues regarding the State's trust obligations to native Hawaiians. Much of this historical background was detailed in Trustees of Office of Hawaiian Affairs v. Yamasaki (Yamasaki), 69 Haw. 154, 158-65, 737 P.2d 446, 449-53, cert. denied, 484 U.S. 898, 108 S.Ct. 234, 98 L.Ed.2d 192 (1987), and Office of Hawaiian Affairs v. State (OHA I), 96 Hawai`i 388, 390, 31 P.3d 901, 903 (2001). As the instant case is substantially related to and intertwined with Yamasaki and OHA I, we trace the prior history and decisions of this court, as well as provide additional background of the federal legislative scheme regarding airport grants and revenues to properly address the issues raised herein.

A. The Creation of OHA³

As this court detailed in Yamasaki and OHA I, the State holds ceded lands⁴ in a public land trust for five purposes, one of which is "for the betterment of the conditions of native Hawaiians[.]" OHA I, 96 Hawai`i at 390, 31 P.3d at 903 (citing Admission Act § 5(f)) (emphasis omitted). In 1978, the people of Hawai`i clarified the State's trust obligation to native Hawaiians during a Constitutional Convention, as set forth in various provisions of the Hawai`i Constitution, including article XII, sections 4 through 6, see infra note 15, wherein OHA was created and charged with managing proceeds derived from the ceded lands and designated for the benefit of native Hawaiians. Id. Additionally, article XVI, section 7 of the Hawai`i Constitution requires the State to enact legislation regarding its trust obligations. Id. (citing Haw. Const. art. XVI, § 7). Thus, in 1979, legislation was enacted that set forth the purposes of OHA and described the powers and duties of the trustees. Id. at 391, 31 P.3d at 904 (citing 1979 Haw. Sess. L. Act 196, § 2 at 398-99, § 8 at 406 (codified at HRS chapter 10)). In 1980, the legislature amended HRS chapter 10 by adding HRS § 10-13.5, which provided that "[t]wenty per cent of all funds derived from the public land trust . . . shall be expended by [OHA] for the purposes of this chapter." Id. (citing 1980 Haw. Sess. L. Act 273, § 1 at 525) (emphasis added) (brackets and ellipsis in original). However, "[b]etween 1980 and 1983, OHA became increasingly dissatisfied with the State's lack of progress in fulfilling its obligations." Id.

B. Yamasaki

In 1983, the trustees, due to their dissatisfaction, initiated the action in Yamasaki against the State based on the State's alleged failure to fulfill its obligation to allocate "twenty per cent of all funds derived from the public land trust to OHA as required by HRS § 10-13.5 [(1985)]." 69 Haw. at 165, 737 P.2d at 453. The dispute centered on a claim against the attorney general, the Chairman of the Board of Land and Natural Resources (BLNR), and the Director of Finance regarding illegal sand-mining on ceded land at Papohaku Beach that resulted in royalty payments to a private party and land conveyed to the State in lieu of damages. Id. at 166, 737 P.2d at 453. On interlocutory appeal, this court held that it was unable to determine the parameters of HRS § 10-13.5 "because the seemingly clear language of HRS § 10-13.5 actually provides no judicially discoverable and manageable standards for resolving the disputes and they cannot be decided without initial policy determinations of a kind clearly for nonjudicial discretion." Id. at 173, 737 P.2d at 457 (citation, brackets, and internal quotation marks omitted). Stated differently, this court "concluded that the construction of the term `funds' [as used in HRS § 10-13.5] . . . constituted a non-justiciable political question because the legislature had not provided judicially manageable standards." OHA I, 96 Hawai`i at 393 n. 6, 31 P.3d at 906 n. 6 (citing Yamasaki, 69 Haw. at 172-73, 737 P.2d at 457). This court held that, due to the nonjusticiable nature of the issues, no ruling could be made as to whether OHA was entitled to damages for the illegal mining of sand or that a pro rata portion of the land conveyed to the State should be turned over to OHA. Yamasaki, 69 Haw. at 174-74, 737 P.2d at 458.

C. Post-Yamasaki Legislation

In response to this court's decision in Yamasaki, the legislature enacted Act 304 as "the first step in the resolution of a series of complex questions about what constitutes the extent of the trust holdings and the trust obligations of the State to the native Hawaiians." Hse. Stand. Comm. Rep. No. 306-90, in 1990 House Journal, at 960; see also Sen. Stand. Comm. Rep. No. 2778, in 1990 Senate Journal, at 1150-51. Act 304, inter alia, amended HRS § 10-13.5 to provide "a clear definition of `public land trust' and `revenues,'" in order to "resolve the issue for the future." Id. In doing so, the legislature believed that the measure would "enable the State to fulfill its trust obligations to the Hawaiians and w[ould] signal a new era for the native Hawaiian community." Id. Specifically, Act 304 provided that: "Twenty per cent of all revenue[⁵] derived from the public land trust shall be expended by [OHA] for the betterment of the conditions of native Hawaiians." OHA I, 96 Hawai`i at 391-92, 31 P.3d at 904-05 (citing 1990 Haw. Sess. L. Act 304, § 7 at 951 and HRS § 10-13.5 (1993)) (emphasis and some brackets in original). Additionally, section 8 of Act 304 provided a mechanism whereby the State and OHA were to determine the amounts owed to OHA for the period of June 16, 1980 through June 30, 1991. Id. at 392, 31 P.3d at 905 (citing 1990 Haw. Sess. L. Act 304, § 8 at 951). Thus, pursuant to section 8, the legislature appropriated funds for the payment of approximately $130 million to OHA on April 16, 1993. Id. (citing 1993 Haw. Sess. L. Act 35, at 41). However, the $130 million appropriation "[did] not include several matters regarding revenue which OHA [had] asserted [was] due OHA and which [the State had] not accepted and agreed to." Id. (quotation marks omitted).

D. OHA I

1. Circuit Court Proceedings

Based on the State's refusal to appropriate funds for "several matters regarding revenue which OHA [had] asserted [was] due," OHA initiated the action in OHA I on January 14, 1994, alleging that the State had failed to pay OHA its full share of "revenues" that the State had collected from ceded lands since June 16, 1980. Id. OHA sought an accounting, restitution or damages, prejudgment interest, attorneys' fees and costs, and such other relief as the court deemed just and proper. Id.

The State moved to dismiss the case on the following grounds: (1) lack of justiciability; (2) sovereign immunity; (3) statute of limitations; and (4) waiver/estoppel. Id. The circuit court orally denied the State's motion to dismiss and ruled that OHA was entitled to revenues from each of the eleven enumerated sources. Id. Thereafter, the State filed its notice of appeal on November 22, 1996. Id.

2. Federal Legislation Enacted While OHA I Was Pending Appeal

During the pendency of the appeal in OHA I, an issue arose between the Federal Aviation Administration (FAA) and the State of Hawai`i regarding the State's use of airport revenues to fulfill its obligations as trustee of the ceded lands. The FAA viewed such use of airport revenues as contrary to the policies and conditions of grants provided under the Airport Improvement Program (AIP) created under the Airport and Airway Improvement Act of 1982, Pub.L. No. 97-248, § 511(a)(12), 96 Stat. 676, (1982) (codified, as subsequently amended, at 49 U.S.C. § 47107(b)(1)), which requires airport revenues to be spent for airport purposes only in order to promote the self-sufficiency of airports. Under the AIP,

[a]s originally enacted in 1982, the revenue retention assurance [under 49 U.S.C. § 47107(b)] required airport owners to use "all revenue generated by the airport for the capital or operating costs of the airport, the local airport system, or other local facilities which are owned or operated by the owner or operator of the airport and directly related to the actual transportation of passengers or property." The plain...