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Wednesday, July 27, 2016
Hawaii Supreme Court: Hanalei Boatyard Connected to Area 51?
By Robert Thomas @ 4:20 PM :: 3839 Views :: Kauai County, Land Use

Kauaipark

Hawaii Supreme Court Amicus Brief: In Eminent Domain, Parcels Need Not Abut In Order To Be Considered Part Of A Larger Tract

by Robert Thomas, InverseCondemnation, July 27, 2016

Here's the latest in that case we told you about a couple of months ago, a published ruling in an eminent domain case from the Hawaii Intermediate Court of Appeals. We wrote that in our view, the court got it really wrong on one of the three issues in the case, whether two parcels which the condemnee alleged he used together could be considered the "larger tract" for purposes of severance damages.

The case involves three parcels on Kauai -- one of which is owned by a fellow who has been a thorn in the County's side -- which were condemned by the County for the expansion of a public beach park. The County was taking Parcels 49, 33, and 34. Sheehan owned 49, and HRH, a corporation, owned 33 and 34. Sheehan asserted his use of Parcel 49 stretched across 33, 34, and Area 51 -- a portion of another Parcel but not a separate record lot. He claimed to use Area 51 pursuant to an easement.

Lotmap

Parcel 49 (green)
Parcel 33 (pink)
Parcel 34 (yellow)
Area 51 (blue)

The court of appeals held that Hawaii law requires that two parcels abut before a jury can consider them part of a larger parcel. The property owned by the condemnee was separated from the other parcel he claimed to use, and not physically connected. The condemnee claimed he used the two parcels together as a boat yard, and therefore the taking of his property damaged his use of the other.

The ICA held that the owner "cannot satisfy the physical unity requirement” because the two parcels Petitioners claim to use together are separated by two others. County of Kauai v. Hanalei River Holdings, Ltd., No. CAAP-14-0000828, slip op. at 31; 2016 Haw. App. LEXIS 224, at *10 (2016). The ICA asserted the "must touch" test was established by the Hawaii Supreme Court in City and County of Honolulu v. Bonded Investment Co., Ltd., 54 Haw. 523, 511 P.2d 163 (1973), which, in the ICA's view, required "that all of the pertinent lots abut one another." Slip op. at 20.

The property owner applied for cert (we don't call them "petitions" in Hawaii, but rather "applications for certiorari"), and the first of the three Questions Presented asks, "[m]ust two parcels physically abut in order for the jury to consider whether they are part of a larger parcel?" The County opposed the application.

We thought the erroneous larger parcel analysis by the court of appeals was too important an issue to let it go, especially in a published opinion that would control future cases. So yesterday, on behalf of the Owner's Counsel of America and the National Federation of Independent Business Small Business Legal Center, we filed an amici brief in support of the property owner on the first Question Presented.

We'll let you read the briefs, but to give you a flavor, here's the Summary of Argument. In short, we're asking the Supreme Court do one of two things: either accept cert and overturn the ICA's "must touch" holding, or partially depublish the portion of the ICA's opinion which sets out the faulty analysis:

SUMMARY OF ARGUMENT

Two parcels need not abut in order for an eminent domain jury to consider whether they are components of a larger parent tract. This court endorsed the national majority rule when it held that separate use, and not separate location, is the “factor [which] is controlling here on the question of whether [the three lots in that case] constituted one tract of land.” Id. at 527, 511 P.2d at 166 (“It is clear to us that the owners not only by choice and design had separated the use of Lot 65 from Lots 59 and 60 . . .”). The overwhelming weight of authority nationwide similarly rejects per se rules, and is in accord with Bonded Investment’s approach.

The ICA, however, concluded that Petitioners “cannot satisfy the physical unity requirement” because the two parcels Petitioners claim to use together are separated by two others. Cnty of Kauai v. Hanalei River Holdings, Ltd., No. CAAP-14-0000828, slip op. at 31; 2016 Haw. App. LEXIS 224, at *10 (2016) (Petitioners’ Parcel 49 “is not adjacent to [Petitioners’] ‘Area 51.’”). The court established a bright-line requirement never before seen in Hawaii law, concluding that two parcels claimed by a property owner to be parts of a larger parcel must “abut one another.” Id., slip op. at 32, 2016 Haw. App. LEXIS at *10 (“we reject Sheehan’s argument that under Bonded Inv. II there is no requirement that all of the pertinent lots abut one another”). Unless this court corrects this ruling, the physical contiguity requirement adopted by the ICA is precedential, and will be applied by the lower courts to the detriment of property owners, by depriving them of their right to have a jury consider all evidence of the economic damages caused by a taking.

Determination of just compensation and damages is not one-size-fits-all, but requires legal rules that accommodate the facts specific to each case. For example, in State ex rel. Symms v. Nelson Sand & Gravel, 468 P.2d 306 (Idaho 1970), the court recognized that the condemnation of a gravel pit resulted in severance damages to the owner’s gravel processing plant. After all, the owner no longer had use for a plant to process gravel, because after his pit was condemned, he no longer had any gravel to process. The ICA would have cut off that inquiry, however, merely because the processing plant was located four and a half miles away. Id. at 309. Categorical rules ignore the facts in each case, and emphasize the efficiency of summary judgment over the reality that property owners very often use separate parcels of land as a single economic unit. But if an intervening river doesn’t prohibit the jury determining that the condemnation of one parcel damaged another, then neither should being separated by Parcels 33 and 34. See Town of Jupiter v. Alexander, 747 So.2d 395 (Fla. Dist. Ct. App. 1998) (parcels separated by Loxahatchee River). If seventeen nautical miles of open ocean aren’t a categorical bar, neither are the few yards in the case at bar. See Baetjer v. United States, 143 F.2d 391, 395 (1st Cir.) (condemnation on island of Vieques caused severance damages to parcels on Puerto Rico), cert. denied, 323 U.S. 772 (1944).

We are in the midst of the Honolulu rail, the largest transportation project in Hawaii’s history, in which the condemnation of private property is an essential component. The court must ensure that the governing law correctly guides the lower courts, and protects the rights of property owners who are entitled to just compensation—“the full and perfect equivalent” of the property taken. See United States v. Klamath & Moadoc Tribes, 304 U.S. 119, 123 (1938). Condemnors must also provide damages under article I, section 20 of the Hawaii Constitution, including severance damages to the remaining property when only a portion is taken. See Terr. v. Honolulu Plantation Co. 34 Haw. 859 (Terr. 1939) (severance damages mandated by Hawaii Constitution).

This brief makes two points. First, the three unities are not inflexible, as the ICA concluded. There is no need for parcels to touch. The ICA’s ruling is contrary to both Bonded Investment and the overwhelming majority of other courts nationwide. Second, having been published, the ICA’s opinion is precedent. If left unreviewed by this court, the ICA’s erroneous larger parcel analysis will be applied in future eminent domain actions; if this court rejects certiorari, it should nevertheless ensure the ICA ruling has no precedential effect.

For its part, the County's opposition brief doesn't really focus on the ICA's "must touch" ruling, instead arguing that the property owner couldn't show severance damages, because he didn't introduce any proof that he used the two parcels together.

The ICA's emphasis on the physical unity prong of the test is clearly understandable in light of the fact that it had maps in front of it that showed Parcel 49 was physically remote from Area 51, and Petitioners had put nothing in the record showing that there was a unity of use of the two parcels. While Petitioners now argue that the ICA erred because the more modern trend is to emphasize unity of use over physical unity (e.g., App. at 5-6), in fact there was no evidence in the record as to unity of use.

Opp. at 8.

Indeed, the County was going to get summary judgment anyway, since the owner had no right to use the separate parcel because the County had earlier revoked his boatyard permits:

As already demonstrated in this response, Sheehan could not use Parcel 49 or Area 51 as a boatyard. His permits had been revoked by the Kauai Planning Commission, and that revocation was subsequently upheld by the Circuit Court of the Fifth Circuit and he ICA, and certiorari review was subsequently denied by this Court. Although the revocation was technically not final at the time of the condemnation trial because it was being appealed, there is now no question that Petitioners could not have legally used Parcel 49 and Area 51 for a boatyard, and thus there was no unity of use.

Opp. at 9.

Stay tuned. In certiorari proceedings, the parties usually do not file additional briefs, unless the Supreme Court asks for them. We'll let you know what happens. 

Motion of Owners' Counsel of America and Nat'l Federation of Independent Business Small Business...

Application for Writ of Certiorari in the Supreme Court, County of Kauai v. Hanalei River Holdings, Ltd., N...

Plaintiff/Appellee/Respondent County of Kauai's Response to Defendants/Appellants/Petitioners' Ap...

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