Pavsek v. Sandvold

Decision Date13 June 2012
Docket NumberNo. 29179.,29179.
Citation127 Hawai'i 390,279 P.3d 55
Parties Joseph PAVSEK and Ikuyo Pavsek, Plaintiffs–Appellants, v. Todd W. SANDVOLD; Juliana C. Sandvold; Kent Sather ; Joan Sather; Waialua Oceanview LLC; Hawaii Beach Homes, Inc. ; Hawaii Beach Travel, Inc.; and Hawaii on the Beach, Inc., Defendants–Appellees, and John Does 1–10; Jane Does 1–10; Doe Partnerships 1–10; Doe Corporations 1–10 and Doe Entities 1–10, Defendants.
CourtHawaii Court of Appeals

Paul Alston, Thomas E. Bush (Alston Hunt Floyd & Ing), Ken T. Kuniyuki, on the briefs and argument, for plaintiffs-appellants.

Gregory W. Kugle, Noelle B. Catalan (Damon Key Leong Kupchak Hastert), on the briefs and argument, for defendants-appellees, Todd W. Sandvold, Juliana C. Sandvold, and Hawaii Beach Homes, Inc.

David B. Rosen (The Law Office of David B. Rosen, ALC), on the briefs and argument, for defendants-appellees, Waialua Oceanview, LLC, Hawaii Beach Travel, Inc., and Hawaii on the Beach, Inc.

Rosemary T. Fazio, Francis P. Hogan, Zachary J. Antalis, Ashford & Wriston, on the briefs and argument, for defendants-appellees, Kent Sather and Joan Sather.

NAKAMURA, C.J., and FUJISE and REIFURTH, JJ.

Opinion of the Court by NAKAMURA, C.J.

This case arises out of a dispute over the alleged illegal rental and use of residential properties as bed and breakfast homes or transient vacation units. PlaintiffsAppellants Joseph Pavsek and Ikuyo Pavsek (collectively, the Pavseks) live on Papailoa Road on the North Shore of O‘'ahu. The Pavseksfiled a lawsuit in the Circuit Court of the First Circuit (Circuit Court) against the owners of three residential properties on Papailoa Road and companies involved in managing and arranging rentals for those properties. In their complaint, the Pavseks alleged that the three properties were being used for short-term rentals in violation of the Land Use Ordinance (LUO) of the City and County of Honolulu (City), and sought injunctive relief and damages. The Circuit Court dismissed the complaint with prejudice.1

This appeal presents the question of whether Hawaii Revised Statutes (HRS) § 46–4(a) (Supp. 2011)2 creates a private right of action that authorizes a "directly affected" private real estate owner to seek judicial enforcement of the LUO, without first bringing his or her claim before the administrative agency charged with enforcing the LUO. We hold that: (1) HRS § 46–4(a) does create a private right of action in favor of a real estate owner directly affected by an alleged LUO zoning violation, but that the owner's action is subject to the doctrine of primary jurisdiction; (2) under the doctrine of primary jurisdiction, the Pavseks are required to seek an administrative determination of their claim that their neighbors have been violating the LUO before proceeding with their suit to obtain judicial enforcement of the LUO; (3) the nuisance claims raised by the Pavseks in their complaint were derived from their claim of the LUO violation and therefore are also subject to the primary jurisdiction doctrine; (4) the Circuit Court properly dismissed the claims alleging breach of fiduciary duty and unjust enrichment for failure to state a claim for relief; and (5) the Circuit Court's remedy of dismissal with prejudice of the claims subject to the primary jurisdiction doctrine is not consistent with the remedies applicable to that doctrine. Accordingly, we vacate the Circuit Court's dismissal of the claims that are subject to the primary jurisdiction doctrine; we remand the case with instructions that as to those claims, the Circuit Court consider the appropriate remedy under the primary jurisdiction doctrine; and we affirm the Circuit Court's dismissal of the claims for breach of fiduciary duty and unjust enrichment.

BACKGROUND
I.

The Pavseks are owner-occupants of a residence on Papailoa Road. Papailoa Road runs parallel to the beach and is near two tourist attractions, Laniakea Beach, known for the presence of sea turtles, and the beach that served as the set of the ABC television show "Lost." DefendantsAppellees Todd W. Sandvold and Juliana C. Sandvold (Sandvolds), Kent Sather and Joan Sather (Sathers), and Waialua Oceanview LLC (Waialua Oceanview) (collectively, Owner Defendants) own residences on Papailoa Road. In their complaint, the Pavseks alleged that DefendantAppellee Hawaii Beach Homes, Inc. (HBH) "acts as a booking agent and/or property manager for rentals" of the Sandvolds' and the Sathers' properties, and that DefendantsAppellees Hawaii Beach Travel, Inc. (HBT) and Hawaii on the Beach, Inc. (HOB) act, respectively, as "a booking agent for rentals" and "a booking agent and property manager for rentals" of Waialua Oceanview's property.3 The Pavseks' property is near, but not adjacent to, Owner Defendants' properties. The Pavseks, the Sandvolds, and certain other lot owners on Papailoa Road are co-tenants in a private right of way that provides beach access from Papailoa Road.

II.

The lots on Papailoa Road owned by the Pavseks and Owner Defendants are located in a residential district and are zoned "R–5." LUO § 21–3.30, Zoning Map 17. Under the LUO, properties zoned R–5 are generally limited in use to detached one-family dwellings, detached two-family dwellings, and public uses and structures. LUO Table 21–3.

Property that is zoned R–5 cannot be used as a bed and breakfast home or a transient vacation unit unless a nonconforming use certificate has been obtained. See LUO §§ 21–4.110–1, 21–4.110–2.4 The LUO defines a "bed and breakfast home" as "a use in which overnight accommodations are provided to guests for compensation, for periods of less than 30 days, in the same detached dwelling as that occupied by an owner, lessee, operator or proprietor of the detached dwelling." LUO § 21–10.1. The LUO defines a "transient vacation unit" as "a dwelling unit or lodging unit which is provided for compensation to transient occupants for less than 30 days, other than a bed and breakfast home." Id. Owner Defendants do not claim that they have a nonconforming use certificate that authorizes them to use their properties as a bed and breakfast home or a transient vacation unit.

III.

The Pavseks filed a complaint against Defendants in the Circuit Court. In Count I, which sought enforcement of the LUO against all Defendants, the Pavseks alleged that Defendants have been advertising and renting Owner Defendants' properties as transient vacation units or bed and breakfast homes in violation of the LUO. The Pavseks stated that the "illegal" rentals have caused irreparable injury to them in the form of

increased traffic noise and congestion in this residential neighborhood; negatively affected the value of [their] property; prevented or interfered with [their] use and enjoyment of [their] lot for residential purposes; imperiled and/or destroyed the residential character of the neighborhood in violation of the intent of the zoning ordinances; overburdened a private right of way easement providing beach access for [their] lot; and has created increased noise levels, trash, litter, discarded cigarette but[t]s, beer bottles and drug paraphernalia in this residential neighborhood and the beach in front of this neighborhood.

The Pavseks further asserted in Count I that they have complained about the "illegal activities" to the City's Department of Planning and Permitting (DPP) on numerous occasions "to no avail." Based on the DPP's investigations arising out of their complaints, the Pavseks alleged "upon information and belief" that the DPP had issued one citation to the Sathers and two citations to Waialua Oceanview, and the Pavseks indicated that the DPP apparently had not issued any citations to the Sandvolds. The Pavseks cited HRS § 46–4 as the basis for their entitlement to bring their lawsuit to enforce the LUO, and they requested injunctive relief to permanently bar Defendants from any further and continued violation of the LUO.

In addition to Count I, the Pavseks asserted the following counts:

Count II—Nuisance against Owner Defendants for allowing their properties to be used for illegal rentals;
Count III—Conspiracy and/or Aiding and Abetting a Nuisance against HBH, the Sandvolds, and the Sathers;
Count IV—Conspiracy and/or Aiding and Abetting a Nuisance against HBT, HOB, and Waialua Oceanview;
Count V—Breach of Fiduciary Duty against the Sandvolds for overburdening the right of way jointly owned with the Pavseks as a result of the Sandvolds' illegal rentals;
Count VI—Aiding and Abetting a Breach of Fiduciary–Duty against HBH; and
Count VII—Unjust Enrichment against all Defendants for profiting at the expense of the Pavseks from the illegal rentals of Owner Defendants' lots.

The Pavseks filed a motion for preliminary injunction to prohibit Defendants from advertising and renting Owner Defendants' properties as transient vacation units or bed and breakfast homes. Defendants filed memoranda in opposition to the motion for preliminary injunction. Owner Defendants denied that they were illegally using their properties as bed and breakfast homes or transient vacation units. They asserted that they were in compliance with the LUO because they rent their properties for thirty days or more, even though the renters may not occupy the property for a full thirty days.

Defendants also filed motions to dismiss the complaint, in which they argued, among other things, that: (1) that the Circuit Court lacked subject matter jurisdiction over Count I because HRS § 46–4(a) does not grant the Pavseks a private right of action to sue to enforce the LUO; (2) the Circuit Court lacked subject matter jurisdiction over Count I under the doctrines of exhaustion of administrative remedies and primary jurisdiction; (3) the complaint should be dismissed for failure to name the City, which is an indispensable party as to Count I; (4) the nuisance counts (Counts II, III, and IV) are dependent on proof of the LUO violation alleged in Count I and fail to...

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