Richardson v. City and County of Honolulu
| Decision Date | 13 March 1991 |
| Docket Number | Civ. No. 90-00856 DAE. |
| Citation | 759 F. Supp. 1477 |
| Parties | William S. RICHARDSON, Henry H. Peters, Oswald K. Stender, Myron B. Thompson, and Matsuo Takabuki, in their capacities as Trustees of the Kamehameha Schools/Bernice Pauahi Bishop Estate, Plaintiffs, v. CITY AND COUNTY OF HONOLULU, a Hawaii municipal corporation, Defendant. |
| Court | U.S. District Court — District of Hawaii |
C. Michael Hare, Gail M.M. Tamashiro, Ernest H. Nomura, Cades, Schutte, Fleming & Wright, Honolulu, Hawaii, for plaintiffs.
James K. Mee, Ashford & Wriston, Honolulu, Hawaii, for intervening plaintiff.
Ronald B. Mun, Donna M. Woo, Deputy Corp. Counsel, City and County of Honolulu, Honolulu, Hawaii, for City and County of Honolulu.
ORDER GRANTING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING DEFENDANT'S COUNTER-MOTION TO DISMISS OR ABSTAIN OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT, OR, IN THE FURTHER ALTERNATIVE, FOR RELIEF UNDER FEDERAL RULE OF CIVIL PROCEDURE 56(f)
Plaintiffs William S. Richardson, Henry H. Peters, Oswald K. Stender, Myron B. Thompson, and Matsuo Takabuki ("plaintiffs") bring this motion for partial summary judgment1 pursuant to Federal Rule of Civil Procedure 56. The defendant City and County of Honolulu ("City") brings a counter-motion to dismiss or abstain or, in the alternative, for summary judgment, or in the further alternative, for relief under Rule 56(f). Both motions came on for hearing before this court on March 4, 1991.
C. Michael Hare, Esq. and Gail M. Tamashiro, Esq. appeared on behalf of the plaintiffs; Donna M. Woo, Esq. appeared on behalf of the City; and James K. Mee, Esq. appeared on behalf of intervenors Small Landowners of Oahu ("SLO").2 The court, having heard oral arguments and having read the memoranda submitted in support of and in opposition to both parties' motions, and being fully apprised as to the premises therein, grants plaintiffs' motion for partial summary judgment and denies the City's motion to dismiss or abstain or, in the alternative, for summary judgment or, in the further alternative, for Rule 56(f) relief.
Careful review and analysis of constitutional law and precedent convinces this court that a properly crafted ordinance, the purpose of which is to limit lease rent increases, can pass constitutional muster. Ordinance 90-95, however, fails to meet constitutional requirements in several important respects, amounts to a taking of property without just compensation, and is therefore unconstitutional on its face.
On November 15, 1990, the Honolulu City Council passed Bill 81 (1990) ("Bill"), which was entitled, "A Bill for an Ordinance Relating to the Renegotiation of Residential Lease Rents for Real Property Situated in the City and County of Honolulu." The Bill was presented to Mayor Frank F. Fasi, who returned it to the City Council unsigned.3 On November 23, 1990, Bill 81 (1990) became effective as Ordinance 90-95 ("Ordinance") without the mayor's signature.
The Ordinance purports to impose a maximum ceiling on renegotiated lease rents for residential condominiums only in the City and County of Honolulu.4 Specifically, the Ordinance provides that the "renegotiated annual ground rent" shall not exceed the initial lease rent paid at the beginning of the lease multiplied by a "rent factor." The "rent factor" is determined by averaging an "inflation factor" and an "income factor."5
The "inflation factor" is defined as the value of the Consumer Price Index ("CPI") for Honolulu on the renegotiation date divided by the value of the CPI on the effective date of the lease. The Ordinance does not define which of several CPI's is to be used in the calculations.6 The "income factor" is defined as the value of the Disposable Income per Capita ("DIC") for Hawaii on the renegotiation date divided by the value of the DIC on the effective date of the lease.
The average of the "inflation factor" and the "income factor" equals the "rent factor." In order to determine the maximum amount of rent that may be charged upon renegotiation, the rent paid by the lessee at the commencement of the lease is multiplied by the "rent factor." The lessors are bound by this formula whether or not the initial rent paid by the lessee reflected the market value of the property at the time the lease was entered into.7
The maximum renegotiated rents mandated by the Ordinance apply for the full renegotiated rent period and are not read-justed to reflect changes in the CPI or DIC which might occur during that time. The Ordinance does not take into consideration the location or any other unique or particular characteristics of the property. There is no administrative procedure for appeal, and no governmental body has been established or designated in the Ordinance for the purpose of interpreting and applying the Ordinance's provisions.
Plaintiffs claim that the Ordinance is facially unconstitutional. In bringing the present motion, plaintiffs have asked the court to consider (1) whether the Ordinance constitutes a taking without just compensation; (2) whether the Ordinance violates plaintiffs' substantive due process rights; (3) whether the Ordinance violates the Contracts Clause; (4) whether the Ordinance is unconstitutionally vague and ambiguous; (5) whether the City infringed upon plaintiffs' civil rights in violation of 42 U.S.C. § 1983; and (6) whether the Ordinance is preempted by state law.
A complaint should not be dismissed "`unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Baker v. McNeil Island Corrections Center, 859 F.2d 124, 127 (9th Cir. 1988), quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). All allegations of material fact are to be taken as true and construed in a light most favorable to the non-moving party. Id., citing Western Reserve Oil & Gas Co. v. New, 765 F.2d 1428, 1430 (9th Cir.1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 773 (1986).
The City contends that this court lacks subject matter jurisdiction over plaintiffs' facial takings clause challenge of Ordinance 90-95 because the claim is unripe. In support of its argument, the City cites Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985).
In Williamson, the United States Supreme Court held that an as-applied takings claim was not ripe for adjudication because the Williamson County Regional Planning Commission had not yet issued a final decision regarding the application of a zoning ordinance to the developer's property, nor had the developer utilized procedures available under Tennessee law to seek just compensation. 473 U.S. at 186, 105 S.Ct. at 3116. The court held that the economic impact of the challenged action and the extent to which it interferes with reasonable investment-backed expectations "simply cannot be evaluated until the administrative agency has arrived at a final, definitive position regarding how it will apply the regulations at issue to the particular land in question."8 Id. at 191, 105 S.Ct. at 3119.
In two cases originating in this court, as-applied takings claims were dismissed as unripe pursuant to Williamson. In Austin v. City and County of Honolulu, the appellant challenged a zoning ordinance on the ground that it failed to provide just compensation. 840 F.2d 678 (9th Cir.1988). The district court found a taking which required just compensation. The Ninth Circuit reversed the district court's finding on the ground that the claim was unripe because the appellant had failed to seek compensation through adequate state remedies.
For one, the appellant in Austin had failed to seek a variance from the City Planning Department. 840 F.2d at 680. In addition, the Ninth Circuit held that the appellant had a cause of action under the Hawaii constitution, art. I, § 20, for just compensation,9 and that this remedy should be pursued in state court before bringing an action in federal court. Id. at 681.
Until the state courts establish that landowners may not obtain just compensation through an inverse condemnation action under any circumstances, Hawaii procedures are adequate within the terms of Williamson County and Austin's failure to use them cannot be excused.
Id. Because the appellant had not brought an action in state court asserting his right to just compensation under the Hawaii constitution, his federal claims were not ripe. Id.
Similarly, in Lai v. City and County of Honolulu, the Ninth Circuit reversed a district court finding that a zoning ordinance resulted in a compensable taking on the ground that the developer's claim was not ripe for review in federal court. 841 F.2d 301 (9th Cir.1988). First, the Ninth Circuit noted that the developer had failed to seek a variance from the City. Second, the court held that the developer had an obligation to "`seek compensation through the procedures the State has provided for doing so.'" Id. at 303, quoting Williamson, 473 U.S. at 194, 105 S.Ct. at 3121.
A plaintiff's claim is not ripe until "the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue."
Id., quoting Williamson, 473 U.S. at 186-88, 105 S.Ct. at 3117.
A recent Ninth Circuit opinion applied the Williamson ripeness requirements to a facial takings claim. In Southern Pacific Transp. Co. v. City of Los Angeles, the court held that a facial challenge, alleging that the mere enactment of a statute effects an unconstitutional taking, is unripe unless and until it is known what, if any, compensation is available. 922 F.2d 498, 505-06 (9th Cir.1990). "Even facial challenges must overcome the just compensation ripeness hurdle." Id. at 506.
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