With all that has been going on lately (SCOTUS arguments in the judicial takings case, New York's courts issuing two big eminent domain decisions, etc.), we haven't had the opportunity to summarize the oral argument in a very important Hawaii case.
Last month, the Hawaii Intermediate Court of Appeals heard arguments in the case about the taking of beachfront property, Maunalua Bay Beach Ohana 28 v. State of Hawaii, No. 28175.[Disclosure: we filed an amicus brief supporting the property owners, available here.]
Since there's no official written transcript of Hawaii state court appellate arguments, only an audio recording, we're going to experiment with a different approach than we've taken before, and embed snippets of the recording into our written commentary, rather than attempt to transcribe the recording.
This is a rather long post, so if you'd rather just listen to our analysis along with the snippets, stop reading now and download the podcast here (26 MB mp3) or just listen here (19 minutes):
Internet Explorer users: we've discovered that the embedded audio streams may not function in your browser. If that's the case with you, just download the podcast here.
The issue in the case is whether littoral property owners are entitled to ownership of accreted lands. In 2003, in "Act 73," (codifed here and here) the legislature declared that title to shoreline land naturally accreted cannot be registered by anyone except the State, and that only the State could quiet title to accreted lands. Most critically, the Act declared that all accretion not registered was State property.
The Act overturned the age-old rules of shoreline accretion and erosion, which held that beachfront owners lose ownership of land when it erodes, but gain it when it accretes. Instead of these balanced rules, Act 73 made the erosion/accretion equation one-sided: the State gets it every time.
Earlier, in 1985, in "Act 221," the legislature established a 20 year permanency requirement for accretion. If an owner could prove the accretion was natural and fixed for twenty years, she could register or quiet title. See Haw. Rev. Stat. §§ 501-33, 669-1 (1993).
Trial Court Found A Taking
In 2005, two years after the adoption of Act 73, a group of littoral property owners filed a class action lawsuit in state court, alleging that the Act took their already-accreted land as well as their right to future accretion.
The trial court agreed, and invalidated the statute because "Act 73 represented a sudden change in the common law and effected an uncompensated taking of, and injury to" presently accreted lands and the right to future accretions. The court also held that Act 221 did not alter the common law of ownership of accreted lands, only registration. The trial court's order finding a taking is posted here.
State Appealed To The ICA
The State appealed, and on November 10, 2009, the ICA panel consisting of Judges Nakamura, Watanabe and Foley, heard oral arguments.
- State of Hawaii's Reply Brief (to be posted)
The biggest revelation of the arguments was that the State finally articulated its theory of the case clearly. Its theory rests on three points.
First, it relies on a classification of accreted lands by the date they were formed; second, the State asserts Act 73 did not take property because that property had already been taken 18 years earlier when Act 221 changed the common law; and finally, that the legislature's readjustment of the shoreline boundary of littoral parcels did not effect a per se physical taking.
"Classes" of Accreted Lands
The State's theory starts with the assumption that Act 221 and Act 73 divided up accreted lands into three "classes," which the State labels "Class 1," "Class 2," and "Class 3" Accreted Lands. Before trying to explain what the State asserts these classes are supposed to mean, remember that neither Act 73 nor Act 221 mentioned "classes" of land, and neither purported to classify anything. The first time this terminology appeared was in the litigation.
"Class 1" accreted lands, according to the State's theory, are those subject to the pre-Act 221 common law. In Halstead v. Gay, 7 Haw. 587 (1889), the Supreme Court of the Kingdom of Hawaii defined accretion as:
Land formed by alluvion, or the gradual and imperceptible accretion from the water, and land gained by reliction, or the gradual and imperceptible recession of the water, belong to the owner of the contiguous land to which the addition is made.
This principle was affirmed after statehood by the Hawaii Supreme Court in both State ex rel. Kobayashi v. Zimring, 566 P.2d 725 (1977), and In re Banning, 832 P.2d 724 (1992). The purpose of the accretion and erosion doctrines was to preserve the littoral owner's access to the ocean. Zimring, 58 Haw. at 119, 566 P.2d at 734. This is a recognition that perhaps the most important feature of oceanfront property is that it remain oceanfront property, where ever the ocean happens to move.
In the face of this clear authority, the State had to concede that accretion in place before 1985 was the property of the littoral owner. Listen to this response to a question from Judge Watanabe:
Under the common law, there was no requirement that the accretion remain in place for any fixed time to establish ownership in the littoral property owner.
"Class 2" accreted lands are those which accreted between the adoption of Act 221, and the adoption of Act 73 in 2003. Under the State's theory, these accretions are owned by the State, because Act 221 changed the common law and imposed what amounts to a prescription period of 20 years.
More, if that wasn't clear enough, in response to a question from Judge Foley:
"Class 3" accreted lands are those which came into being after the adoption of Act 73. These accretions, the state asserts, were not affected by Act 73's declaration that they belonged to the public since Act 221 had already taken away any private rights in presently existing accretions (since the time between Act 221 and Act 73 was only 18 years, it would be impossible for any littoral owner to register title to accretion), and the future accretions were just inchoate expectations, which the State can destroy (or confiscate) without consequence.
Act 73 Not a Taking of Accreted Lands, Because Act 221 Already Took Them
The State's classification of accretions is the cornerstone of its legal theory. Building on the notion that the two Acts collectively changed the common law, the State argued that Act 73 was not a taking because earlier, in Act 221, the State had, in effect, already taken the common law right to gain ownership of accreted lands. Listen to this snippet of the State's argument for confirmation:
The State asserted that the purpose of Act 221 was to change the common law of accretion by adding a time requirement of 20 years before a littoral owner could register or quiet title:
In case that wasn't clear enough, here's more:
The State's argument takes issue with the trial court's determination that Act 221 did not alter the common law of ownership of accreted lands, and only set limits on the ability of littoral owners to quiet title and to register accreted lands. The State's argument seems to conflate registration and the ability to quiet title to accreted land, with ownership. The property owners have a different view of Act 221:
It was the provision in Act 73 that declared all unregistered accreted lands to be public property that took property, not Act 221's virtual prohibition on private registration, according to the property owners.
The State's argument to save Act 73 is dependent on the idea that the earlier Act 221 was a taking because it altered the littoral owners' common law rights. In other words, the one-two punch of Acts 221 and 73 add up to a taking of rights by legal erosion. But what the Legislature cannot do in one fell swoop, it should not be able to accomplish just becase it broke it up into two pieces.
In this next snippet, the State argues that the purpose of Act 221 was to prevent littoral owners "from grabbing newly accreted land," something which legislation is incapable of accomplishing unless by the exercise of eminent domain.
Note also that the State seems to misunderstand the nature of private ownership of beachfront land, when it claims that in Act 221, the Legislature was trying to prevent littoral owners from excluding the public from newly accreted land. This hardly seems like a permissible or rational goal for the Legislature to attempt to accomplish, since newly accreted land that is privately owned under the common law is, by definition, landward of the upper reaches of the wash of the waves (the boundary between public beaches and private property in Hawaii), and the public has no expectation that it should be able to use this land.
If the ICA does not buy the State's argument that Act 221 affected ownership -- and in reading the Act and the legislative history surrounding it, the State's position is a stretch -- then the State's argument collapses, because all that needs to be compared is the common law in Halstead with Act 73's declaration that lands accreted before 2003 but which were not registerable, and all land accreted after 2003, are public domain.
And that is a taking because when a regulation either alters an owner's legal rights in property, or invites the public to occupy it, the courts find that the regulation "goes too far" without regard to its economic impact.
Physical Taking vs Penn Central Analysis
This takes us to the third pillar of the State's argument. It asserted that even if Act 73 wiped out the right to accreted land, it is not a taking because it didn't wipe out the value of the littoral owners' parcels.
The State also asserted there was no taking because the right to accretion is simply a contingent future interest.
But that's not what is going on here. Act 73 was not a typical regulation readjusting the benefits and burdens of civic life or regulating property, but was the literal dispossession of one of the most essential sticks in a littoral owner's bundle of property rights -- the right to have her parcel remain in contact with the water. When legislation transfers valuable legal rights from an owner to the State (even when those interests are future interests), the courts find a taking. For example, when the Florida legislature adopted a law which reassigned interests on monies which litigants deposited in the courts from the owners of the funds to the state, the U.S. Supreme Court invalidated the statute. See Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980). The Court also struck down a federal statute in which Congress determined that small interests in Indian land would escheat to the tribe and could not be passed to heirs by descent or devise. Babbitt v. Youpee, 519 U.S. 234 (1977).
There was more to the oral argument -- including questions on the "notice" defense, the methods of proving accretion, and the State's unusual claim that land in Conservation districts is worthless -- but the parts I've highlighted above seemed to be the most interesting parts. For the rest of the argument, which is definitely worth a listen, see below.
To listen to the entirety of the State's argument, start here:
To listen to the entirety of the property owners' argument, start here:
Here's the State's rebuttal:
Finally, if you'd rather just download the entire oral argument in one massive 88 MB mp3 file, it is posted here.