Price v. Akaka, 89-15169

• Decision Date: 25 September 1990
• Docket Number: No. 89-15169,89-15169
• Citation: 915 F.2d 469
• Parties: Nui Loa PRICE, Dr., aka Maui Loa, individually and in his capacity as chief of Hou Hawaiians; The Hou Hawaiians, a native Hawaiian Ohana; Kamuela Price, individually and in his capacity as member of elder council of the Hou Hawaiians, Plaintiffs-Appellants, v. Moanikeala AKAKA; Rod Burgess; Clarence Ching; Frenchy Desoto; Louis Hao et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 469

915 F.2d 469

Nui Loa PRICE, Dr., aka Maui Loa, individually and in his capacity as chief of Hou Hawaiians; The Hou Hawaiians, a native Hawaiian Ohana; Kamuela Price, individually and in his capacity as member of elder council of the Hou Hawaiians, Plaintiffs-Appellants, v. Moanikeala AKAKA; Rod Burgess; Clarence Ching; Frenchy Desoto; Louis Hao et al., Defendants-Appellees.

No. 89-15169.

United States Court of Appeals Ninth Circuit.

Argued and Submitted May 16, 1990.

Decided Sept. 25, 1990.

Kamuela Price, Haleiwa, Hawaii, pro se.

Walter R. Schoettle, Honolulu, Hawaii, for Dr. Nui Loa Price and the Hou Hawaiians.

Charlotte E. Libman, Deputy Atty. Gen., Honolulu, Hawaii, for defendants-appellees.

Appeal from the United States District Court for the District of Hawaii.

Before SCHROEDER and CANBY, Circuit Judges, and KEEP, ^* District Judge.

CANBY, Circuit Judge:

Nui Loa Price, Kamuela Price and the Hou Hawaiians (hereinafter "Price"), all native Hawaiians, appeal from the district court's dismissal of their action, brought under 42 U.S.C. Sec. 1983, for damages against the trustees of the Office of Hawaiian Affairs. Price alleges that the defendants contravened federal law restricting the management of Hawaiian lands previously held by the United States. The district court dismissed the action for failure to state a claim and for lack of subject matter jurisdiction. We reverse and remand the case to the district court.

FACTS

When Hawaii achieved statehood, the United States ceded to the new State almost all of the Hawaiian lands to which the federal government held title. See Hawaii Admission Act, Pub.L. No. 86-3 (hereinafter the "Admission Act") Sec. 5(b), 73 Stat. 5 (1959), as amended by the Hawaiian Omnibus Act, Pub.L. No. 86-624, 74 Stat. 411 (1960). At the same time, the United States imposed obligations upon Hawaii with respect to these lands. In particular, it specified that such lands, and the income from them

shall be held by [Hawaii] as a public trust for the support of the public schools and other public educational institutions, for the betterment of the conditions of native Hawaiians ... for the development of farm and home ownership ..., and for the provision of lands for public use. Such lands, proceeds, and income shall be managed and disposed of for one or more of the foregoing purposes in such manner as the constitution and laws of [Hawaii] may provide, and their use for any other object shall constitute a breach of trust for which suit may be brought by the United States.

See Admission Act Sec. 5(f).

In its constitution, Hawaii declared that it would hold a portion of the lands conveyed by Sec. 5(b) as a "public trust for native Hawaiians and the general public." Haw. Const. art. XII, Sec. 4. Subsequently, the Hawaiian legislature established the Office of Hawaiian Affairs (hereinafter the "OHA") to serve "native Hawaiians and Hawaiians." Haw. Const., art. XII, Sec. 6. The state funded the OHA in part by granting it a share of the income produced by the "public land trust" created out of the Sec. 5(b) lands. Haw.Rev.Stat. Sec. 10-3. ¹

In this suit, filed under 42 U.S.C. Sec. 1983, Price alleges that the trustees of the OHA have violated the Admission Act by managing income derived from Sec. 5(b) lands in a manner that contravenes Sec. 5(f) of the Act. More specifically, he contends that the trustees have comingled OHA's share of that income with other OHA funds; that they have expended none of it for the benefit of native Hawaiians; and that they have used it instead for purposes other than those listed in Sec. 5(f). See Complaint, pp 15, 14, 16.

Without filing an Answer to Price's Complaint, the trustees moved to dismiss the action. The district court granted the motion on the grounds that (A) the court lacks subject matter jurisdiction, and (B) the Complaint does not state a claim upon which relief can be granted. On appeal, Price takes issue with both of these rulings.

DISCUSSION

Having accepted the Complaint's allegations as true, and having construed the Complaint in the light most favorable to Price, see Baker v. McNeil Island Corrections Ctr., 859 F.2d 124, 127 (9th Cir.1988), we hold that Price has stated a claim and that the district court has jurisdiction to hear it. We conclude therefore that the court's dismissal was erroneous.

A. Failure To State A Claim

The district court found that Price has not stated a claim because the Admission Act does not impose the obligations that Price asserts the trustees have violated. This ruling is one of law and we review it de novo. See Thomas v. Carpenter, 881 F.2d 828, 829 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 1475, 108 L.Ed.2d 612 (1990).

Section 5(f) of the Admission Act directed unequivocally that the lands conveyed to Hawaii in Sec. 5(b), and the income produced by them, "shall be managed and disposed of for one or more" of five stated purposes. Admission Act, Sec. 5(f). Because the OHA share of "public trust" income at issue in this case derives directly from the Sec. 5(b) lands, Sec. 5(f)'s limitation on uses applies to that income. In his Complaint, Price alleges that the trustees have expended the income on purposes other than those listed in Sec. 5(f). See Complaint, pp 14, 16. Thus, the Complaint states a claim to enforce the provisions of Sec. 5(f) of the Admission Act.

The fact that the trustees may, consistently with Sec. 5(f), spend the income for purposes other than to benefit native Hawaiians does not deprive Price of standing to bring his claim. We recently considered this very question, and determined that allegations such as those Price has made are sufficient to show an "injury in fact". See Price, 764 F.2d at 630. ² In addition, allowing Price to enforce Sec. 5(f) is consistent with the common law of trusts, in which one whose status as a beneficiary depends upon the discretion of the trustee nevertheless may sue to compel the trustee to abide The trustees argue that they may not be held liable for breaching the terms of Sec. 5(f) because the "OHA trust," which they manage and into which the OHA share of Sec. 5(f) income was placed, is distinct from the trust created by Sec. 5(f). Transferring a portion of the Sec. 5(f) trust income to a state agency, however, did not dissolve or dilute the restrictions on how that income may be spent. So long as Sec. 5(f) trust income remained in the hands of the state, as it did when transferred from the Sec. 5(f) corpus to the OHA corpus, the Sec. 5(f) obligations applied. Naturally, we accept that once the income has been "disposed of" or "use[d]" by the state, there are no Sec. 5(f) limitations on subsequent use; however, we reject the trustees' suggestion that Hawaii "disposed of" or "used" Sec. 5(f) trust income simply by transferring it to the OHA. Admission Act Sec. 5(f). Because the funds are still in state hands, Sec. 5(f)'s restrictions apply to the use or disposal of the income by OHA.

by the terms of the trust. See Restatement 2d of the Law of Trusts, Sec. 214(1), comment a; see also id. at Sec. 391 (stating that plaintiff with "special interest," beyond that of ordinary citizen, may sue to enforce public charitable trust).

The trustees also maintain that, although Hawaii itself may be bound by Sec. 5(f), the trustees' obligations with respect to spending OHA funds are to state law alone. The trustees' position is squarely at odds with the principle of Sec. 1983 in general, and our recent Admission Act decisions in particular. Any ordinary policeman sued under Sec. 1983 defendant is, in his official function, a creature of the state, and his primary obligations are to state law; yet, he is not thereby relieved of the duty not to deprive persons of their federal rights. In a similar vein, the fourteenth amendment addresses itself to "states," but that does not mean that entities and agents inferior to states are incapable of violating the amendment by depriving citizens of due process and equal protection. See, e.g., Sheuer v. Rhoads, 416 U.S. 232, 235, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974) (holding that state governor and state university president were sueable under Sec. 1983 for due process violations). Furthermore, the defendants in Keaukaha II, officers of the Hawaiian Homes Commission, also answered to state law in the execution of their official functions; yet, they were held properly subject to a Sec. 1983 suit for breach of Sec. 5(f). See 739 F.2d at 1472.

B. Subject Matter Jurisdiction

The district court concluded that it lacks jurisdiction to hear Price's suit for two independent reasons: first, Price's claim is state rather than federal in nature, and therefore Sec. 1983, the asserted basis of jurisdiction, is unavailable; second, Price's suit is against the trustees in their official capacities, and therefore barred by the eleventh amendment. These issues are reviewable de novo. See Keaukaha I, 588 F.2d at 1224-27 (federal nature of claim); Keaukaha II, 739 F.2d at 1471-72 (same); BV Engineering v. University of California at Los Angeles, 858 F.2d 1394, 1395 (9th Cir.1988) (eleventh amendment immunity), cert. denied, --- U.S. ----, 109 S.Ct. 1557, 103 L.Ed.2d 859 (1989).

1. Nature of Price's claim

The right Price claims is indeed federal; thus, he has not failed to meet this requirement of Sec. 1983. See 42 U.S.C. Sec. 1983; Parratt v. Taylor, 451 U.S. 527, 536, 101 S.Ct. 1908, 1913, 68 L.Ed.2d 420 (1981) (Sec. 1983 plaintiff must allege deprivation of federal, not state, right). In Keaukaha II, we held that the right asserted by the plaintiffs was federal because it was "specifically protected by an Act of Congress, the Admission Act, Sec. 5(f)." 739 F.2d at 1472. The Sec. 5(f) trust obligation, we said, was "rooted in federal law." Id. Moreover, we recently have characterized Keaukaha II as holding that "Sec. 5(f) of the Admission Act creates a federal 'right' enforceable under 42 U.S.C. Sec. 1983." Price...