Here's a big development in a case we've been following for a while (and in which we filed an amicus brief in support of the prevailing property owner).
In DW Aina Lea Dev., LLC v. State of Hawaii Land Use Comm'n, No. SCCQ-19-156 (Dec. 17, 2020), the unanimous Hawaii Supreme Court held that the statute of limitations governing a regulatory takings claim under the Hawaii Constitution's "takings or damagings" clause is six years.
The case started out in a Hawaii state court, and was removed to the U.S. District Court by the State Land Use Commission. The district court dismissed the state takings claim for missing the limitations cut-off. Hawaii has not adopted a statute of limitations expressly for takings or inverse condemnation claims. Thus, the question is what is the closest analogue claim. If there isn't one, Hawaii has a "catch all" statute (six years) for civil claims. When the case reached the Ninth Circuit, that court certified the state law question limitations to the Hawaii Supreme Court.
Here's how the Ninth Circuit described it:
On February 23, 2017, DW filed a complaint in Hawai‘i state court against the Commission and the State of Hawai‘i asserting takings claims under both the United States Constitution and the Hawai‘i Constitution. DW alleged that the Commission’s reclassification of the property as agricultural constituted a regulatory taking of DW’s property without just compensation. Specifically, DW alleged that the reclassification increased the purchase price of the property after DW had agreed to purchase it, destroyed DW’s “sophisticated funding arrangement [with] Asia” for developing the property, and caused DW to sustain other increased costs and losses in business opportunities. The State removed the case to federal court and moved to dismiss the complaint as barred by the applicable statute of limitations.
Ninth Circuit Order at 5-6.
Everyone agreed the takings claim accrued on April 25, 2011, more than two years -- but less than six -- before the property owner filed the complaint in state court. The parties and the amicus (us) staked out their positions about when the limitations period expired:
Parties and amicus curiae advocate three different positions on this question: the State of Hawai‘i Land Use Commission and other defendants (collectively LUC) argue that the limitations period is two years; DW Aina Le‘a Development, LLC (DW) six years; and amicus curiae Owners’ Counsel of America (OCA) twenty years.
Slip op. at 2-3 (footnotes omitted).
Answering the question required the Supreme Court to ask whether takings are like torts, like breaches of implied contract, are property claims, or are sui generis. We argued the latter, that takings are self-executing constitutional claims. As the court described our argument:
OCA begins with the premise that article I, section 20 of the Hawai‘i Constitution is self-executing. Consequently, an inverse condemnation action does not seek damages for a taking; instead, such an action seeks to compel the government to recognize that there has been a taking. Once the government recognizes that there has been a taking, just compensation for that taking is automatically warranted.
Slip op. at 15.
The court agreed: a Hawaii takings claim is "a direct constitutional claim rather than a claim based on an implied contract with the State." Slip op. at 18. "[T]he Takings Clause of the Hawaii Constitution contains self-executing language, enabling suits based on the provision itself without implementing legislation." Slip op. at 19.
The rule that the State may not take or damage private property without just compensation provides a triggering event (taking or damage to private property), a remedy (compensation), and a metric for the remedy. “As provided by law” does not appear in article I, section 20. The Takings Clause thus contains language that is self-executing and needs no further legislation to facilitate a private right of action.
Slip op. at 20.
The court rejected the State's argument that the takings clause establishes a form of implied contract (if we take, we promise to pay just compensation) like some states (see, e.g., Virginia), and instead found the view of other states -- like Kansas -- "particularly persuasive." The right to compensation if your property is taken or damaged is a "vested constitutional right," not an implied contract.
Nor is it a tort-like "injury to persons or property." Takings claims do not seek redress for injury in the usual sense, but "[a] takings claim seeks compensation for something the government is entitled to do; a taking is not a legal injury, but rather an entitlement to just compensation." Slip op. at 23.
Here, too, although DW’s claims allege diminution in the value of their property, the true nature of the claim is not that the LUC physically injured property, but that the property was taken without just compensation.
Slip op. at 24.
The court also declined to adopt the adverse possession statute of limitations (under Hawaii law, 20 years) to all takings claims, instead reserving it for physical takings. Regulatory takings like those presented in this case, by contrast, are not the same as physical invasion takings, and the court agreed "with the United States Supreme Court’s observation that the "'longstanding distinction between acquisitions of property for public use, on the one hand, and regulations prohibiting private uses, on the other, makes it inappropriate to treat cases involving physical takings as controlling precedents for the evaluation of a claim that there has been a 'regulatory taking[.]'" Slip op. at 26-27 (quoting Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 323 (2002)).
Finally, the court held that the "catch-all" six year statute of limitations applicable to civil claims for which there is not a more specific statute applied. That statute covers "[p]ersonal actions of any nature whatsoever not specifically covered by the laws of the State." This refers to in personam actions, which the court concluded applies because "[a]lthough a takings claim necessarily involves property, the action is personal because the Takings Clause 'is designed to secure compensation, not to limit governmental interference with property rights.' A takings claim brought against the State – a legal person – in order to impose a financial obligation is therefore a personal action within the meaning of [the statute]" Slip op. at 28 (citations omitted).
So here are your takeaways:
- Hawaii Takings Clause: self-executing
- Takings claims are in personam, not in rem.
- The obligation to provide just compensation when property is taken or damaged isn't some kind of implied promise; but rather a constitutional obligation. And that's different.
- When property is taken or damaged, it's not a tort.
- Physical takings are subject to a longer statute of limitations (dicta).
- Want more details? Read our amicus brief.
Now, the property owner gets to pursue their Hawaii-law takings claim in federal court (remember, the State removed).
Stay tuned.
DW Aina Lea Dev., LLC v. State of Hawaii Land Use Comm'n, No. SCCQ-19-156 (Haw. Dec. 17, 2020)
