NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 15-APR-2024 08:08 AM Dkt. 86 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAIʻI
STATE OF HAWAIʻI, by its Attorney General, Plaintiff-Counterclaim Defendant-Appellee, v. DON HOWARD WILLIAMS, JR., TRUSTEE OF THE WILLIAMS OPPORTUNITY TRUST; et al., Defendant-Counterclaimant-Appellant, AMERUS LIFE INSURANCE COMPANY, an Iowa corporation; Defendant-Appellee, JOHN DOES 1–100; MARY ROES 1–100; DOE PARTNERSHIPS 1–100; DOE TRUST 1–100; DOE ENTITIES 1–100; DOE ESTATES 1–100; and DOE CORPORATIONS 1–100, Defendants.
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CASE NO. 2CC131000724)
SUMMARY DISPOSITION ORDER (By: Hiraoka, Presiding Judge, Nakasone and McCullen, JJ.)
Defendant-Counterclaimant-Appellant Don Howard
Williams, Jr., as Trustee of the Williams Opportunity Trust NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
(Williams) 1 appeals from the Circuit Court of the Second
Circuit's October 10, 2018 Final Judgment. 2
On appeal, Williams contends the circuit court erred
in (1) denying his motion in limine to exclude evidence of the
condemned property's valuation on a date other than the date of
summons and (2) granting Plaintiff-Counterclaim Defendant-
Appellee State of Hawaii's (State) motion in limine to value
property solely on the basis of the undivided fee rule.
As a brief background, in 1994, the State Department
of Land and Natural Resources' Division of Boating and Ocean
Recreation (DOBOR) and Williams as an individual entered into a
thirty-year lease covering his Mā‘alaea property (Property)
located adjacent to the Mā‘alaea Small Boat Harbor. The lease
stated DOBOR would occupy and use the Property "for marine and
ocean recreation purposes, including: a staging area during
[Mā‘alaea] Boat Harbor improvements, a maintenance baseyard, fish
processing center, Marine Patrol operations, boat repair and dry
storage of vessels and marine equipment." (Emphasis omitted.)
1 Don Howard Williams, Jr. filed his answer and counterclaim as an individual in the Circuit Court of the Second Circuit. The parties later filed a stipulation to substitute "Don Howard Williams, Jr., as Trustee of the Williams Opportunity Trust" as the real party in interest in place of Don Howard Williams, Jr. (Formatting altered.) 2 The Honorable Rhonda I.L. Loo presided.
2 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
In 2013, the State filed a "Complaint in Eminent
Domain" (Complaint) in circuit court, seeking to condemn the
Property. It noted "[t]he public use to be served by the
condemnation of the Property is the construction, preservation,
and improvement of a public harbor to wit: [Mā‘alaea] Small Boat
Harbor development expansion at [Waikapū], Wailuku, Maui,
[Hawaiʻi]." A summons date stamped June 27, 2013 was also
appended to the Complaint.
The case, however, never went to trial. Instead, the
parties settled after the circuit court ruled on two motions in
limine.
In the first motion in limine, the State asked the
circuit court to "(1) determine . . . the appropriate valuation
procedure in this condemnation proceeding is based on Hawaii's
undivided fee rule; and (2) exclude evidence or testimony of
valuation based on the divided fee interests in the subject
property." The circuit court granted the State's motion.
In the second motion in limine, Williams asked the
circuit court to limit evidence of valuation under Hawaiʻi
Revised Statutes § 101-24 (2012) to the date of the summons,
June 27, 2013. Williams asked the circuit court to exclude the
testimony of the State's appraiser, James Hallstrom (Hallstrom),
because his valuation was dated fourteen days before the date of
3 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
summons. The circuit court granted in part and denied in part
Williams' motion, concluding the date of summons was the date of
valuation, but Hallstrom could testify as a valuation witness.
Based on these rulings, Williams noted "it's kind of
pointless to go to trial." The parties settled and stipulated
as follows:
1. Williams was the owner of the Property;
2. the public use to be served by the condemnation of the
Property was "the construction, preservation and
protection of" the Mā‘alaea Small Boat Harbor
development expansion;
3. the public use required "the taking of the Property in
fee simple absolute, free and clear of all liens and
encumbrances";
4. total just compensation and any damages "for the
condemnation of the undivided fee simple estate of the
Property on June 27, 2013 was $4,165,000.00";
5. stipulated valuation of the undivided fee simple
estate was based on the $4,165,000.00 estimated just
compensation the State deposited with the Clerk of
Court on July 2, 2013;
6. following the "Stipulation and Order to Disburse Funds
on Deposit with the Clerk of the Court" Aviva, a
4 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
mortgagee of the Property, received $2,510,857.61 and
Williams received $1,654,142.39, "which together
constitute all payments . . . required by the final
judgment to be entered in this case";
7. there were "no other outstanding or unresolved
claims"; and
8. final judgment would "be entered as to all claims,
counterclaims, and parties, in favor of" the State and
against all defendants.
In the stipulation, Williams reserved his right to appeal:
Williams shall have the right to appeal the Judgment to seek reversal or vacatur of the Judgment and the court's orders and rulings, and in the event that such appeal results in a remand of these proceedings to this court, the parties, otherwise bound by the rulings of this court which are not reversed or vacated by an appellate court, shall not be bound by their stipulation herein that the total just compensation, and damages if any, for the condemnation of the undivided fee simple estate of the Property on June 27, 2013 was $4,165,000.00.
The circuit court entered final judgment in favor of
the State and against Williams, dismissing "[a]ll other claims,
cross-claims, . . . counterclaims, and . . . parties[.]" The
circuit court determined the $4,165,000.00 "deposited with the
Chief Clerk of this Court" was the total just compensation and
damages payable for the taking; and the Williams Opportunity
Trust with Williams as trustee was the owner of the Property.
The circuit court also entered the Final Order of
Condemnation in the case pursuant to the final judgment and
5 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
provided the Property was "condemned for the construction,
preservation, and protection of a public harbor, to wit:
[Mā‘alaea] Small Boat Harbor development expansion . . . and
title to [the Property] is hereby vested in the State[.]"
Williams timely appealed.
Upon careful review of the record and the briefs
submitted by the parties and having given due consideration to
the issues raised and the arguments advanced, we resolve the
points of error as discussed below.
Free access — add to your briefcase to read the full text and ask questions with AI
NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 15-APR-2024 08:08 AM Dkt. 86 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAIʻI
STATE OF HAWAIʻI, by its Attorney General, Plaintiff-Counterclaim Defendant-Appellee, v. DON HOWARD WILLIAMS, JR., TRUSTEE OF THE WILLIAMS OPPORTUNITY TRUST; et al., Defendant-Counterclaimant-Appellant, AMERUS LIFE INSURANCE COMPANY, an Iowa corporation; Defendant-Appellee, JOHN DOES 1–100; MARY ROES 1–100; DOE PARTNERSHIPS 1–100; DOE TRUST 1–100; DOE ENTITIES 1–100; DOE ESTATES 1–100; and DOE CORPORATIONS 1–100, Defendants.
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CASE NO. 2CC131000724)
SUMMARY DISPOSITION ORDER (By: Hiraoka, Presiding Judge, Nakasone and McCullen, JJ.)
Defendant-Counterclaimant-Appellant Don Howard
Williams, Jr., as Trustee of the Williams Opportunity Trust NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
(Williams) 1 appeals from the Circuit Court of the Second
Circuit's October 10, 2018 Final Judgment. 2
On appeal, Williams contends the circuit court erred
in (1) denying his motion in limine to exclude evidence of the
condemned property's valuation on a date other than the date of
summons and (2) granting Plaintiff-Counterclaim Defendant-
Appellee State of Hawaii's (State) motion in limine to value
property solely on the basis of the undivided fee rule.
As a brief background, in 1994, the State Department
of Land and Natural Resources' Division of Boating and Ocean
Recreation (DOBOR) and Williams as an individual entered into a
thirty-year lease covering his Mā‘alaea property (Property)
located adjacent to the Mā‘alaea Small Boat Harbor. The lease
stated DOBOR would occupy and use the Property "for marine and
ocean recreation purposes, including: a staging area during
[Mā‘alaea] Boat Harbor improvements, a maintenance baseyard, fish
processing center, Marine Patrol operations, boat repair and dry
storage of vessels and marine equipment." (Emphasis omitted.)
1 Don Howard Williams, Jr. filed his answer and counterclaim as an individual in the Circuit Court of the Second Circuit. The parties later filed a stipulation to substitute "Don Howard Williams, Jr., as Trustee of the Williams Opportunity Trust" as the real party in interest in place of Don Howard Williams, Jr. (Formatting altered.) 2 The Honorable Rhonda I.L. Loo presided.
2 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
In 2013, the State filed a "Complaint in Eminent
Domain" (Complaint) in circuit court, seeking to condemn the
Property. It noted "[t]he public use to be served by the
condemnation of the Property is the construction, preservation,
and improvement of a public harbor to wit: [Mā‘alaea] Small Boat
Harbor development expansion at [Waikapū], Wailuku, Maui,
[Hawaiʻi]." A summons date stamped June 27, 2013 was also
appended to the Complaint.
The case, however, never went to trial. Instead, the
parties settled after the circuit court ruled on two motions in
limine.
In the first motion in limine, the State asked the
circuit court to "(1) determine . . . the appropriate valuation
procedure in this condemnation proceeding is based on Hawaii's
undivided fee rule; and (2) exclude evidence or testimony of
valuation based on the divided fee interests in the subject
property." The circuit court granted the State's motion.
In the second motion in limine, Williams asked the
circuit court to limit evidence of valuation under Hawaiʻi
Revised Statutes § 101-24 (2012) to the date of the summons,
June 27, 2013. Williams asked the circuit court to exclude the
testimony of the State's appraiser, James Hallstrom (Hallstrom),
because his valuation was dated fourteen days before the date of
3 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
summons. The circuit court granted in part and denied in part
Williams' motion, concluding the date of summons was the date of
valuation, but Hallstrom could testify as a valuation witness.
Based on these rulings, Williams noted "it's kind of
pointless to go to trial." The parties settled and stipulated
as follows:
1. Williams was the owner of the Property;
2. the public use to be served by the condemnation of the
Property was "the construction, preservation and
protection of" the Mā‘alaea Small Boat Harbor
development expansion;
3. the public use required "the taking of the Property in
fee simple absolute, free and clear of all liens and
encumbrances";
4. total just compensation and any damages "for the
condemnation of the undivided fee simple estate of the
Property on June 27, 2013 was $4,165,000.00";
5. stipulated valuation of the undivided fee simple
estate was based on the $4,165,000.00 estimated just
compensation the State deposited with the Clerk of
Court on July 2, 2013;
6. following the "Stipulation and Order to Disburse Funds
on Deposit with the Clerk of the Court" Aviva, a
4 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
mortgagee of the Property, received $2,510,857.61 and
Williams received $1,654,142.39, "which together
constitute all payments . . . required by the final
judgment to be entered in this case";
7. there were "no other outstanding or unresolved
claims"; and
8. final judgment would "be entered as to all claims,
counterclaims, and parties, in favor of" the State and
against all defendants.
In the stipulation, Williams reserved his right to appeal:
Williams shall have the right to appeal the Judgment to seek reversal or vacatur of the Judgment and the court's orders and rulings, and in the event that such appeal results in a remand of these proceedings to this court, the parties, otherwise bound by the rulings of this court which are not reversed or vacated by an appellate court, shall not be bound by their stipulation herein that the total just compensation, and damages if any, for the condemnation of the undivided fee simple estate of the Property on June 27, 2013 was $4,165,000.00.
The circuit court entered final judgment in favor of
the State and against Williams, dismissing "[a]ll other claims,
cross-claims, . . . counterclaims, and . . . parties[.]" The
circuit court determined the $4,165,000.00 "deposited with the
Chief Clerk of this Court" was the total just compensation and
damages payable for the taking; and the Williams Opportunity
Trust with Williams as trustee was the owner of the Property.
The circuit court also entered the Final Order of
Condemnation in the case pursuant to the final judgment and
5 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
provided the Property was "condemned for the construction,
preservation, and protection of a public harbor, to wit:
[Mā‘alaea] Small Boat Harbor development expansion . . . and
title to [the Property] is hereby vested in the State[.]"
Williams timely appealed.
Upon careful review of the record and the briefs
submitted by the parties and having given due consideration to
the issues raised and the arguments advanced, we resolve the
points of error as discussed below.
(1) Williams contends the circuit court erred in
denying his motion in limine to exclude evidence of the
condemned property's valuation on a date other than the date of
summons. Williams argues "[t]he circuit court should have
precluded the State from presenting to the jury evidence about
the value of the property on any date but June 27, 2013," the
date of summons.
The circuit court held a hearing on Williams' motion
in limine on June 1, 2017, and its order granting in part and
denying in part Williams' motion in limine particularly relied
on the grounds announced during that hearing. But a transcript
of the June 1, 2017 hearing was not included in the record on
appeal before this court. As Williams is the appellant in this
case and contends error with the circuit court's decision on his
6 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
motion in limine, he bore the burden of requesting the
transcript or including the transcript in the record. Hawai‘i
Rules of Appellate Procedure Rule 10(b)(1)(A) and (b)(4); Hous.
Fin. & Dev. Corp. v. Ferguson, 91 Hawai‘i 81, 92, 979 P.2d 1107,
1118 (1999) (leaving the trial court's decision in an eminent
domain case undisturbed where appellant did not provide a
relevant transcript, noting "the burden is upon appellant in an
appeal to show error by reference to matters in the record, and
[appellant] has the responsibility of providing an adequate
transcript") (citation and bracket omitted).
With no transcript of the relevant hearing in the
record on appeal, we will not conclude the circuit court's
denial of Williams' motion in limine was reversable error.
(2) Williams also contends the circuit court erred in
granting the State's motion in limine to value the Property
solely on the basis of the undivided fee rule. Williams argues
"the circuit court overlooked that valuing the income stream is
valuing the fee simple estate." He further maintains the
condemnation clause in the lease is "irrelevant to the
calculation of compensation." 3
3 In its answer, the State argues inter alia that "[t]here can be no harm from the Court's preliminary rulings and no reversible error until the State's challenged evidence is actually offered to a jury[.]"
(continued . . .)
7 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
In its order granting the State's motion in limine,
the circuit court found "the Undivided Fee Rule is the
applicable valuation procedure under Hawaii law and the facts of
this condemnation proceeding, and evidence or testimony of
valuation based on the value of the divided fee interests in the
subject property is excluded from the jury[.]"
Williams moved for reconsideration. In denying his
motion for reconsideration, the circuit court found that "the
condemnation clause in the lease is binding, and City and County
of Honolulu v. Market Place, Ltd., 55 Haw. 226, 517 P.2d 7
(1973) makes clear that the State is only obligated to pay the
fair market value of the unencumbered fee value."
In Market Place, the City and County of Honolulu
initiated eminent domain proceedings for oceanfront land in
order to extend Kapi‘olani Park. 55 Haw. at 227, 517 P.2d at 11.
As compensation for the taking, the circuit court ordered
$86,373.61 payable to the lessee of the property and $950,198.00
(. . . continued)
Although the State correctly recites the law, the State's argument is disingenuous because as part of the settlement to avoid trial it stipulated Williams shall have a right to appeal for reversal or vacatur of the judgment and rulings of the circuit court. See supra at 5.
The State is cautioned that it has a duty of candor towards this court. See Hawai‘i Rules of Professional Conduct Rule 3.3; 7 C.J.S. Attorney & Client § 87 (2024) (explaining "[t]he requirement of candor goes beyond simply telling a portion of the truth; it requires every attorney to be fully honest and forthright").
8 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
payable to the owner, which were two separate entities. 55 Haw.
at 229, 517 P.2d at 12.
On appeal, the Hawai‘i Supreme Court explained the
general rule "of determining just compensation for property
subject to several, independently held interests is to value it
as an unencumbered freehold estate, with allocation of fair
market value thus determined to be made thereafter among the
various interests." 55 Haw. at 233, 517 P.2d at 14. This is
the "undivided fee" rule. Id.
The supreme court held it was wrong for the circuit
court to award $86,373.61 to the lessee as compensation for
damages for developing the property. 55 Haw. at 234, 517 P.2d
at 15. And it explained, "[t]hese expenditures are, at best,
admissible as evidence of the land's enhanced value in the sense
that the anticipated condominium project may have been brought
closer to fruition thereby." Id.
The supreme court also explained that "market value is
not limited to the value for the use to which the land is
actually devoted, but it may have a potential use value." 55
Haw. at 242, 517 P.2d at 19 (cleaned up). "In determining
potential use value, any competent evidence of matters, not
merely speculative, which would be considered by a prospective
vendor or purchaser or which tend[s] to enhance or depreciate
9 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
the value of property is admissible." Id. (cleaned up). "As
the foregoing principles suggest, the general aim of proceedings
in eminent domain is to arrive at an amount of just compensation
which as nearly as possible approximates the value which a free
market would attach to the taken property." Id.
If there is a reasonable argument for a probable use,
"competent evidence tending to show the value of that use should
be admitted." 55 Haw. at 243, 517 P.2d 20. "Perhaps the most
important consideration in the valuation of income-producing
property is the anticipated income from that property." Id.
Although the proposed use in Market Place was in the planning
stages, the supreme court opined "this factor alone should not
operate to exclude competent evidence of the value . . . the
market would apply to the enterprise in light of its chances of
success; rather, it should affect the weight . . . the jury may
properly give to such evidence." Id.
Unlike Market Place, here there is no separate lessee
seeking an order for "damages." But the supreme court's
analysis regarding admissible evidence remains on point.
Williams attached a portion of R.W. Spangler's
(Spangler) appraisal of the leased fee interest in the Property
to his opposition to the State's motion in limine. 4 At the
4 Spangler's entire appraisal was attached to Williams' motion in limine.
10 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
hearing on the State's motion in limine, the circuit court
stated it would grant the motion because the lease was
terminated "so there [was] no property interest to be
compensated for."
Spangler's appraisal was not rendered inadmissible
simply because it was based on the leased fee interest the
condemnation action ultimately terminated. The supreme court
has explained, a condemnee "is permitted to 'advance any
reasonable argument for a probable future use' when calculating
just compensation for a taking." City & Cnty. of Honolulu by &
through Honolulu Auth. for Rapid Transp. v. Victoria Ward, Ltd.,
153 Hawai‘i 462, 488, 541 P.3d 1225, 1251 (2023) (citation
omitted). And, Market Place established a condemnee's asserted
use "may be presented to a jury even if the asserted use is
hypothetical and disputed." Id. Therefore, a future income
stream from leasing the Property would not be speculative
because Williams had received actual income from leasing the
Property and appraisal of the leased interest could have been
presented to a jury.
Thus, to the extent the circuit court's granting of
the State's motion in limine precluded admission of possible
future lease income as evidence in determining the value of just
11 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
compensation for taking Williams' property, the circuit court
abused its discretion.
For the above reasons, we vacate the circuit court's
October 10, 2018 Final Judgment, and remand this case for
further proceedings consistent with this summary disposition
order.
DATED: Honolulu, Hawai‘i, April 15, 2024.
On the briefs: /s/ Keith K. Hiraoka Presiding Judge Robert H. Thomas, (Damon Key Leong Kupchak /s/ Karen T. Nakasone Hastert), Associate Judge for Defendant- Counterclaimant-Appellant. /s/ Sonja M.P. McCullen Associate Judge Daniel A. Morris, Fawn Y.J. Yamada, Deputy Attorneys General, for Plaintiff-Counterclaim Defendant-Appellee.