We're not going to go into very much detail or provide commentary on the Hawaii Supreme Court's unanimous 88-page opinion in an eminent domain case we've been following, City and County of Honolulu v. Victoria Ward, Ltd., No. SCAP-22-0000335 (Dec. 29, 2023), because before we departed private practice for public interest law a couple of years ago, this was our client and our case (so we still have a bias).
Update: more on the decision from Jesse Souki, "Hawai'i Court Holds that Consideration of Severance Damages in Honolulu Rail Case Should be Left to the Jury" ("The HSCT was critical of the circuit court’s granting of summary judgment motions where there were genuine issues of material fact that should be decided by the jury[.]").
Short story: the Honolulu rail agency (we're still calling it "HART" and not the weird "Skyline" although the latter is accurate because the elevated like really does block the ... skyline) is employing eminent domain to take several easements on several properties which are in the middle of being developed by Victoria Ward as part of a long-term, multi-parcel, multi-structure residential and mixed-use project. In the run-up to the trial, the trial court disposed of a slew of issues by granting 12 (yes, twelve) motions for summary judgment. The losers of those motions sought and were granted interlocutory review, and the appeal was later transferred from the Intermediate Court of Appeals to the Hawaii Supreme Court, which heard oral arguments in June 2023.
On the last business day of the year, the Supreme Court dropped the opinion. Here's how the Judiciary's web site described the issues:
These interlocutory appeals arise out of a condemnation action filed in 2018 by HART against Victoria Ward to take several acres of Victoria Ward’s mixed-use development community located in the Kakaʻako neighborhood of Honolulu (Ward Village). The purpose of HART’s taking was to construct a segment of railway and the Kakaʻako Station within Ward Village.
A number of the appeals at issue concern Victoria Ward’s claims for severance damages. The Hawaiʻi Community Development Authority (HCDA) issued Victoria Ward a Master Plan Permit in 2009. The Master Plan Permit states, in part: “a more detailed transit route and station location shall be addressed and incorporated.” The parties disagree as to whether this language in the Master Plan Permit, together with Victoria Ward’s conduct, preclude Victoria Ward from recovering severance damages for impacts to non-taken property.
The circuit court issued a number of summary judgment orders precluding Victoria Ward from seeking severance damages. The circuit court also ruled on several related matters, specifying that “blight of summons” interest accrual would be paused during the pendency of the interlocutory appeals, and that Victoria Ward may not recover for loss of a luxury tower that allegedly could have been built on the site of the Kakaʻako station, for relocation of units from that tower to less valuable locations, for severance damages to property stipulated to be distinct from those where condemnations took place, or for replacing lost parking if replacement costs exceed loss in value. HART appeals from other circuit court rulings, including those specifying that some of Victoria Ward’s damages may not be offset by certain alleged “special benefits” flowing from the rail project.
We granted transfer and consolidated HART and Victoria Ward’s appeals for all purposes including oral argument and disposition.
The unanimous opinion authored by Chief Justice Recktenwald summarized the specific issues:
The circuit court granted a dozen summary judgment motions, which are the subject of this interlocutory appeal. These summary judgment orders touch on a wide variety of disputes. Most importantly, the circuit court ruled that Victoria Ward is estopped from seeking severance damages, though the orders also address such issues as the appropriate valuation methodology for lost parking spaces, the extent to which a party may be entitled to just compensation for a speculative construction project, and the effect of pre-dispute communications and local ordinances on a condemnee’s ability to seek just compensation. In addition to appealing the partial summary judgment orders, the parties appeal an order pausing the accrual of blight of summons interest, and two orders denying or denying in part motions to strike.Slip op. at 2-3 (footnote omitted).
The court next acknowledged the "factual and legal complexity of this case, and the circuit court's legitimate concern with narrowing the issues for trial," slip op. at 3, which should give you a clue that this one was headed more for Rule 56 territory than substantive eminent domain.
Indeed, on each of the most important issues, the arguments ended more with a whimper than a bang: resist the temptation to resolve these questions by a judge when there remain genuine factual disputes which preclude the granting of summary judgment.
Your takeaway: even where the issues are multitudinous, the case complex (neither unexpected when this much is at stake), at heart (ha) the question of just compensation is a fact determination to be decided by the jury. The judge may want the case simplified, but in the end the jury gets to decide. And that means the jury gets to hear all the evidence, even if the judge ain't buying it.
For example, HART contended that the location of the rail line and train station was "established" by HART's submissions of a "locally preferred alternative" to the federal transit agency (yes, mainland taxpayers, you are paying a significant portion of this project's price tag), and therefore, Victoria Ward could not recover just compensation for any planned development in that footprint because it was obligated to design its residential project around the footprint. The court held that this was a fact dispute:
The parties dispute the extent to which the LPA “established” the location of the guideway and station, as opposed to simply expressing a preference. HART asserts that, although the rail alignment changed slightly since Ordinance 07-001 was enacted, the Ordinance and LPA made clear — at least two years prior to the grant of the Master Plan Permit in 2009 — that the rail guideway and Kaka‘ako Station would be constructed within Ward Village in a manner consistent with the LPA. Consequently, HART argues that HCDA was under a legal obligation to require any Ward Village structures to “accommodate, and not conflict with,” rail as set out in the LPA. As a result of HCDA’s alleged obligation to ensure that all structures were in accord with the LPA, HART asserts that HCDA could not legally approve any projects that conflicted with the LPA. Thus, under HART’s theory, Victoria Ward is precluded from recovering severance damages for any projects that would otherwise conflict with the rail line or Kaka‘ako Station location, as defined by the LPA.
We disagree with HART’s position. There is a dispute of fact as to whether the LPA established definite plans to build the Kaka‘ako Station within Ward Village, or if the LPA instead contemplated a station near, but outside of, Ward Village.
Slip op. at 17-18. As the opinion noted, "[t]he Ordinance's test does not reflect certainty as to a rail route or station location." Slip op. at 18.
To emphasize the jury-centric approach to just compensation, a search of the opinion reveals the word "jury" at least 33 times.
In another related example, the court noted that indeed, the master plan for the overall residential project that Victoria Ward obtained permission from the state agency that regulates land uses in this district, does require Victoria Ward to "address and incorporate Rail." Slip op. at 20. But that doesn't necessarily mean that by accepting this permit condition, Victoria Ward was agreeing to "plan around" rail, and thus had voluntarily surrendered its rights to just compensation. What the term "address and incorporate" means is a fact question:
There is a genuine issue of material fact as to the meaning of the Master Plan Permit requirement that future rail plans be “addressed and incorporated,” and there is a dispute as to the contemporaneous intentions of the parties. A factfinder should have the opportunity to ascertain the parties’ understanding of the phrase “addressed and incorporated” in light of the parties’ representations and actions both at the time the Master Plan Permit was granted and after the fact. Given the existence of a genuine dispute of material fact, the circuit court erred in granting the MPSJ, thereby depriving Victoria Ward of the opportunity to have the matter of severance damages decided by a jury.Slip op. at 21. As the court put it earlier in the opinion:
We hold that, by entering into the Master Plan Permit and Development Agreement, Victoria Ward is obligated to address and incorporate rail. But it is the province of the jury to determine the contours of this obligation and to calculate the amount of severance damages, if any, to which Victoria Ward is entitled.Slip op. at 14.
Here's the opinion's money quote, in our view:
We acknowledge the factual and legal complexity of this case, and the circuit court’s legitimate concern with narrowing the issues for trial. However, we conclude that in several circumstances, the circuit court incorrectly used summary judgment to resolve disputed factual issues. Most notably, the question of whether Victoria Ward is estopped from seeking severance damages involves disputed questions of fact and should be presented to a jury.Slip op. at 3.
There's a good lesson here, especially since just compensation is often a very technical issue: judges should not limiting the appraisal theories or imposing their own views of what is the "best" way to value property, and just compensation cases are not subject to any extraordinary "gatekeeping" efforts by trial courts. Apply the usual Rule 56 and evidentiary rules, and you'll be fine.
City and Cnty. of Honolulu v. Victoria Ward, Ltd., No. SCAP-22-0000335 (Haw. Dec. 29, 2023)
