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Hawaii State Bar Association Real Property and Financial Services Section's Real Estate Litigation Update 2019

Every year, the Hawaii State Bar Association's Real Property and Financial Services Sections asks my partner Greg Kugle and me to present a Litigation Update for its members.  We review the recent national and Hawaii court decisions impacting real estate, ranging from land use litigation, real estate closings, foreclosures, CC&R interpretation and more.

Our presentation, moderated by Professor David Callies of the University of Hawaii School of Law is now on YouTube.  Our handout (with links to the cases) is below. 

Links to the cases:

Hawaii Supreme Court

Admin Law:  Thirty Meter Telescope.  Opinion, Concurrence, Dissent. 

Admin Law:  Tax Foundation of Hawaii v. State of Hawaii

Admin Law: Clarabal v. Dep’t of Education (Opinion, Concurrence, Dissent)

Admin Law:  In re HELCO

Admin Law:  City and County of Honolulu v. State of Hawaii

Public Trust:  Ching v. Case

Real Estate Transactions:  Calipjo v. Purdy

 

Intermediate Court of Appeals

Admin Law: Kokua Council for Senior Citizens v. Director, Dep’t of Health

Admin Law:  Keauhou Canoe Club v. DLNR

Boundaries/Plants:  Spittler v. Charbonneau

CC&R Interpretation:  Bruno v. AOAO of Waikiki Marina Condo; Crowe

CC&R Interpretation:  Sandomire v. Brown

Easements:  Ching v. Dung

Fences:  Yin v. Aguiar

Foreclosure:  American Savings Bank v. Chan

Foreclosure:  American Savings Bank v. AOAO of the Hanohano Hale

Foreclosure:  First Hawaiian Bank v. AOAO of Sun Rise, Inc.

Foreclosure:  Malabe v. AOAO Executive Centre  (SCT argument 9/19/19)

Land Court:  In Re Nomura

Land Use:  Dao v. Zoning Board of Appeals

Lease:  Ebbo v. SGG, LLC

Lease:  Kahawaiolaa v. Hawaiian Sun Investments, Inc.

License:  Blake v. Alexander & Baldwin

Liens:  Joslin v. Ota Camp-Makibaka Assn, Inc.

Public Nuisance:  Haynes v. Haas (SCT cert granted)

Quiet Title:  Kualoa Ranch, Inc. v. Mitchell

Real Property Tax:  Auyoung v. Dep’t of Budget and Fiscal Services

Trespass:  Grinpas v. Kulana Prop

Water Rights:  Carmichael v. BLNR

National

Regulatory Takings:  Knick v. Township of Scott

Vacation Rentals:  Homeaway.com v. City of Santa Monica, (9^th Cir. 2019)

Whitesell Revisited - Hawaii Courts Tackle The Neighbor's Tree Issue

Our most viewed post was on the topic of bananas.  Strange fare for a law blog, but yes, there is law on bananas that are on my neighbor's tree but that are on my side of the property line.  Good fences make good neighbors (Mr. Frost may disagree), but free bananas mean banana bread!  

My bananas post discusses the very famous (and short) decision from the brand new Intermediate Court of Appeals in the case of Whitesell v. Houlton.

In Whitesell, the Intermediate Court of Appeals had to opine on the legalities associated with a banyan tree near the property line.  In resolving the case, the court said:

We hold that non-noxious plants ordinarily are not nuisances; that overhanging branches which merely cast shade or drop leaves, flowers, or fruit are not nuisances; that roots which interfere only with other plant life are not nuisances; that overhanging branches or protruding roots constitute a nuisance only when they actually cause, or there is imminent danger of them causing, sensible harm to property other than plant life, in ways other than by casting shade or dropping leaves, flowers, or fruit; that when overhanging branches or protruding roots actually cause, or there is imminent danger of them causing, sensible harm to property other than plant life, in ways other than by casting shade or dropping leaves, flowers, or fruit, the damaged or imminently endangered neighbor may require the owner of the tree to pay for the damages and to cut back the endangering branches or roots and, if such is not done within a reasonable time, the damaged or imminently endangered neighbor may cause the cutback to be done at the tree owner's expense.

However, we also hold that a landowner may always, at his own expense, cut away only to his property line above or below the surface of the ground any part of the adjoining owner's trees or other plant life.

In Whitesell, the ICA did not define what it meant by "noxious", but just last week, the ICA went back to Whitesell to do just that. 

The case is Spittler v. Charbonneau and arises from Kapoho on the Island of Hawaii.  In this case, the boundary between the neighbor's properties was disputed.  One owner had planted several trees on the wrong side of the property line.  The trees were ubiquitous in Hawaii:  the Ironwood, the Loulu Palm and the Coconut Palm. After a tree branch fell and caused property damage, the neighbor relationship failed and litigation ensued.

First, the Ironwood (pictured below):

The complaint led to a counterclaim with claims of trespassing, killing trees, loud music, gunfire and profanities exchanged on the disputed border.  Ultimately, all the claims were settled except for the trespass claim and the nuisance claim.  

Under Whitesell, non-noxious plants were not nuisances, so the appeals court had to decide whether the Ironwood was noxious.  Without a definition, the ICA turned to Old Mr. Webster, the Hawaii Administrative Rules, the Hawaii Pacific Weed Risk Assessment website.  The Ironwood is not listed as a "noxious weed" in the Hawaii Administrative Rules.  But, the failing of the term "noxious" is that it didn't accurately label the problem:  risk to humans.  So, the ICA said:  

Our use of the word "non-noxious" in Whitesell was superfluous. A noxious plant - i.e., one that is "physically harmful or destructive to living beings" - is one that actually causes, or that could pose an imminent danger of causing, material harm to persons or to property other than plant life; conversely, a plant that actually causes, or that poses an imminent danger of causing, material harm to persons or property other than plant life may be considered noxious. We note that certain plants, such as coconut palms, are capable of causing material injury to persons or to property other than plant life just by dropping fronds or nuts. We also note that tree roots can, under some circumstances, pose imminent trip hazards without damaging property other than plant life. We therefore modify our holding in Whitesell for when a plant can be considered a nuisance. Plants whose overhanging branches cast shade or drop leaves, flowers, or fruit, or whose roots interfere only with other plant life, are not nuisances. Overhanging branches or protruding roots constitute a nuisance when they actually cause, or there is imminent danger of them causing, material harm to a person or to property other than plant life. When overhanging branches or protruding roots actually cause, or there is imminent danger of them causing, harm to a person or to property other than plant life, the damaged or imminently endangered neighbor may require the tree's owner to pay for the damage and to cutback the endangering branches or roots and, if that is not done within a reasonable time, the damaged or imminently endangered neighbor may cause the cutback to be done at the tree owner's expense. And as we stated in Whitesell, "a landowner may always, at [their] own expense, cut away only to [their] property line above or below the surface of the ground any part of the adjoining owner's trees or other plant life." 2 Haw. App. at 368, 632 P.2d at 1079.

So, a nuisance (which carries the remedial power of injunction) can flow from an overhanging plant when there is actual harm to body or property or imminent danger of the harm.

So, what to do about that pesky ironwood.

[Photo courtesy of Professor Gerald Carr]

On trespass, the court began with an acknowledgement that no Hawaii appellate court had ever adopted the elements of the tort of trespass, so, after referencing the Restatement, it did so.  Under Hawaii law (now):

Restatement§ 158 states: One is subject to liability to another for trespass, irrespective of whether [they] thereby cause[] harm to any legally protected interest of the other, if [they] intentionally

(a) enter land in the possession of the other, or cause[] a thing or a third person to do so, or

(b) remain on the land, or

(c) fail to remove from the land a thing which [they are] under a duty to remove.

Restatement§ 161 states:

(1) A trespass may be committed by the continued presence on the land of a structure, chattel, or other thing which the actor has tortiously placed there, whether or not the  actor has the ability to remove it.

(2) A trespass may be committed by the continued presence on the land of a structure, chattel, or other thing which the actor's predecessor in legal interest therein has tortiously placed there, if the actor, having acquired [their] legal interest in the thing with knowledge of such tortious conduct or having thereafter learned of it, fails to remove the thing.

Restatement§ 6 (Am. Law Inst. 1965) states:

The word "tortious" is used throughout the Restatement of this Subject to denote the fact that conduct whether of act or omission is of such a character as to subject the actor to liability under the principles of the law of Torts.

Finally, Restatement§ 166 (Am. Law Inst. 1965) states:

Except where the actor is engaged in an abnormally dangerous activity, an unintentional and non-negligent entry on land in the possession of another, or causing a thing or third person to enter the land, does not subject the actor to liability to the possessor, even though the entry causes harm to the possessor or to a thing or third person in whose security the possessor has a legally protected interest.

Applying this law to the facts of this case, the court held:

Accordingly, we hold that a person whose plant, located on the person's property, drops leaves, flowers, or fruit onto neighboring property, or whose plant's roots interfere only with other plant life on neighboring property, is not liable to the neighboring property owner for trespass.

So, leaves, flowers and fruit falling onto your neighbor's property is NOT common law trespass.  If they cause damage to person or property on the way down, the court noted that you could be liable in "tort". 

If City Doesn't Fund Improvements, Should You and Your Neighbors?

Of late, residents in Kailua have bemoaned the state of public facilities to cope with an increasing tourist population.  Public facilities created haphazardly over the last century can easily be overwhelmed with the increased traffic stemming from the ease of information about those facilities.  "If you build it, they will come" gives way to "if you put it on yelp, brace for impact".

The City and County of Honolulu plainly have the power to build roads, improve facilities, repair bathrooms, and manage traffic, but if it does not do so, we wondered if property owners and business owners have the ability to act.

Turns out, they do.

Under the Revised Ordinances of Honolulu, residents can petition the City for the creation of a Community Facility District. A slightly different entity called a Special Improvement District can be created to for improvement of community infrastructure to improve the business environment.

Under Chapter 34, a Community Facility District can be created at the request of the Mayor, the action of the City Council or by petition.  It may be established to finance the acquisition, planning, design, construction, installation, improvement, or rehabilitation of any real property or structure.  Such improvements can be streets, roads, bikeways, public parking facilities, park or recreation facilities, cultural facilities, undergrounding utilities, etc. A nonprofit corporation is established, bond financing is available and the District has the power to assess properties in the district to pay for such improvements.

Under Chapter 36, a Special Improvement District can be created to provide financing and administration for improvements like, services to enhance the security of persons and property within the district, landscaping services, enhanced sanitation services; services promoting and advertising activities within the district; Marketing education for businesses within the district; and decorations and lighting for seasonal and holiday purposes.

These districts are valid creations of the municipal government.  See Von Damm v. Conkling, 23 Haw. 487 (1916)(City and County of Honolulu's improvement districts do not violate 5th Amendment).

We aren't sure whether it was Thomas Jefferson or Lyndon Johnson, but government is best which is closest to the people.  While Honolulu Hale is not that far from Kailua, these districts provide a way for a community to improve the public facilities in their own neighborhood.

 

 

A Mayor's Take on Home Rule - Hawaiian Style

We came across this video on the National Park Service's attempt to obtain a "ground water management area designation" for the Keauhou Aquifer System Area on Hawaii Island.  The petition and supporting exhibits can be found here.  

The County of Hawaii objects to such a designation which would keep the regulation of the water resource with the County and not the statewide Commission on Water Resource Management.

Mayor Billy Kenoi testified at the Commission's public hearing.  Home rule, Big Island-style for sure.

 

My partner Robert Thomas has a great post on home rule here. 

Are Cruise Ships Public or Private Nuisances? S. Carolina SCT Says No Standing to Challenge

It is a rare day that my legal interests of zoning law and ocean governance are discussed in a single case, but thanks to the South Carolina Supreme Court, I must say:

 

The case is Carnival Corporation v. Historic Ansonborough Neighborhood Association and the original opinion can be found here.

In South Carolina, several citizen's groups and interested associations brought a suit against a cruise ship operator alleging nuisance and zoning violations and sought an injunction.  The groups complain about the use of Charleston's terminal to berth the Fantasy.  The groups alleged that the noise pollution and passenger operations disrupted the historic district where it berthed.

Carnival (and the municipal defendants) filed a motion to dismiss asserting that the plaintiffs failed to state a claim because they lack standing and that the cruise ship operations were not governed by the zoning ordinances asserted.  

Strangely, before the trial court decided the motion, the case was transferred to the South Carolina Supreme Court, invoking the court's original jurisdiction.    That court ordered a special referee to conduct a hearing and then make a recommendation on the motion to dismiss.

The court, reviewing the special referee's recommendation, found that the plaintiffs lacked standing to assert any of the claims brought.  The court found that the plaintiffs claimed only generalized grievances and not particularized harm, which is fatal to a party's standing to proceed.  All of the environmental impacts, traffic, smokestacks, soot, zoning, other environmental laws are suffered by the public at large and are not particular to any one person or group.  [Under S. Carolina law, typically the State itself makes these claims].

As to the zoning claims, S. Carolina law did provide for standing for violations of zoning ordinances, but only for adjacent property owners.  Added to the lack of particular damage to any person or group, the court found standing lacking to make these claims.

The court concludes by imploring the plaintiffs to seek redress elsewhere:

In our constitutional system of government with its separation of powers, courts exercise the limited constitutional function of the "judicial power." S.C. Const. art. V, § 1. Accordingly, courts are limited to resolving cases and the powers inherent in that function. Courts are not bodies for the resolution of public policy and generalized grievances. Harms suffered by the public at large, like those Plaintiffs allege here, are to be remedied by the legislative and executive branches. If existing laws and regulations or their enforcement fail to protect the public from harm, it is incumbent upon the public to seek reform through their elected officials or failing that, at the ballot box.

Sound advice.

Thinking Out Loud: Property Rights After Natural Disasters

I am pleased to announce that the Condemnation Committee of the American Bar Association's Section on Litigation is presenting a teleconference "roundtable" on the timely subject of natural disasters and property rights.

The talk is entitled "Thinking Out Loud: Property Rights After Natural Disasters".  Register here.

A synopsis:

Over one-half of the people in the United States live within 50 miles of the coastline.  Hurricanes and similar types of natural disasters have caused billions of dollars in damage in recent years, particularly in coastal communities, and some scientists warn that global warming and rising sea levels will increase the frequency or severity of these types of natural disasters.  Private property rights in the wake of natural disasters are an important issue not only to property owners, but also to their lenders and to the recovery and viability of the region in the wake of natural disaster.  We have assembled a geographically diverse group of property rights attorneys from coastal communities to discuss their experiences with property rights in the aftermath of natural disasters.  The moderator will be Mark M. Murakami of the Damon Key firm in Honolulu.  From New Jersey, we have invited Anthony Della Pelle and Tom Olson of the McKirdy & Riskin firm. Ed Thomas of the National Hazard Mitigation Association is invited as is Robert H. Thomas of inversecondemnation.com.  Geographically rounding out the panel will be Casey Pipes of the Helmsing, Leach law firm in Mobile, Alabama.

No CLE credit, but it is free to any one interested, even non-ABA members, so join in.

Meeting Ms. Kelo.....

During a recent trip to New London, we stopped by to visit Ms. Kelo's property that was the subject of the Kelo v. New London litigation.

Land Use, Shorelines, Substantive Due Process....Oh My

It isn't often my day job doing land use and condemnation litigation overlaps with my maritime interests, but the Ninth Circuit just published a decision that comes awfully close.

The case is Samson v. City of Bainbridge Island and the opinion can be found here.

The facts: the City of Bainbridge Island issued a moratorium on building piers that a property owner sought to build. The property owner battled the City in state courts finally obtaining a judgment that the moratorium violated the Washington constitution. During the pendency of that litigation, the City passed a permanent prohibition on the construction of piers and docks. The property owners filed a civil rights lawsuit in state court and the City removed the suit to federal court. There, the City prevailed on a summary judgment motion.

The Ninth Circuit affirmed the decision, but peppered the decision with language that it was sympathetic to the property owners' plight. 

Substantive Due Process: the property owner asserted that the moratorium constituted a substantive due process violation. The first inquiry: what is the property right being impacted by the offending governmental conduct? The City contended that the right was merely the "abstract need or desire"to build a single use dock. The owners contended that the right to build a dock was a "vested right" which, under Washington law, gives owners the vested right to have their building permit applications governed by the then-existing law governing such applications. The court did not resolve this issue because it found that even if there were a cognizable property interest at stake, the moratorium did not infringe upon it.

As the Samsons conceded, the moratorium did not impinge on their fundamental right. See Jackson Water Works, Inc. v. Pub. Utils. Comm’n, 793 F.2d 1090, 1093 (9th Cir. 1986) (noting that government action that “affects only economic” interests does not implicate fundamental rights). “The Supreme Court has ‘long eschewed . . . heightened [means-ends] scrutiny when addressing substantive due process challenges to government regulation’ that does not impinge on fundamental rights.” Shanks v. Dressel, 540 F.3d 1082, 1088 (9th Cir. 2008) (alterations in original) (quoting Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 545 (2005)). Hence, to establish a substantive due process violation, the Samsons must show that Bainbridge’s ordinances establishing and extending the moratorium were “clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals or general welfare.” Kawaoka v. City of Arroyo Grande, 17 F.3d 1227, 1234 (9th Cir. 1994) (internal quotation marks omitted). The ordinances are “presumed valid, and this presumption is overcome only by a clear showing of arbitrariness and irrationality.” Id. (internal quotation marks omitted). The Samsons have not met this “exceedingly high burden.” Shanks, 540 F.3d at 1088 (internal quotation marks omitted).

The Court found that the moratorium was in the government interest to avoid the flood of applicants that foreshadow a change in governmental regulation.  The City's aim to avoid owners "vesting" was legitimate and that the City's action was not "arbitrary".

Procedural Due Process:  the property owners also brought a procedural due process challenge to the moratorium, alleging it was passed without any hearing.  The Ninth Circuit found that the moratorium was a "legislative act" and there was no evidence that it was targeted to any property owner.

Procedural due process entitles citizens to a legislative body that “performs its responsibilities in the normal manner prescribed by law.” Id. at 1260 (internal quotation mark omitted). The Bainbridge City Council hewed to its ordinary protocols when it passed the moratorium ordinances. The Samsons’ rights were thus “protected in the only way that they can be in a complex society, by their power, immediate or remote, over those who make the rule.” Bi-Metallic Inv. Co. v. State Bd. of Equalization, 239 U.S. 441, 445 (1915).

The court concluded: 

It is surely vexing to the Samsons that they and their co-plaintiffs successfully challenged the moratorium in state court, but received no damages for their efforts. And it must be more vexing still that they won the battle, but lost the war: the state courts struck down the temporary moratorium, but upheld the permanent ban on shoreline development. But the federal courts do not exist to satisfy litigants who are unhappy with what they received in state court. Nor do they exist to second-guess the manner in which city officials promote the public welfare.

Cold solace indeed.

Seminar on Eminent Domain, Land Use and Honolulu's Rail Project

Yesterday, I was honored to chair a program in Honolulu covering eminent domain, land use and Honolulu's rail project.

Topics covered included public use, Kelo, burial law, bid protests, transit oriented development, valuation in condemnations and ethics for condemnation practitioners.

Co-presenters included Hawaii law bloggers, Robert H. Thomas, Anna H. Oshiro and Jesse Souki.

Update: Development Exactions Case

I put together a quick Legal Alert update on the West Linn Corporate Park v. City of West Linn case which is being appealed to the U.S. Supreme Court.  It will be about two weeks until we receive word if the Supreme Court agrees to hear the case.

In the meantime,

Damon Key Legal Alert: Development Exactions 10-26-2011