SCR158

WHEREAS, Act 395, Session Laws of Hawaii 1988, codified as chapter 673, Hawaii Revised Statutes, specifically waived the State’s sovereign immunity and allowed the beneficiaries of the Hawaiian Homes Commission Act, to sue the State for breaches of trust or fiduciary duty and to restore the trust for any depletion a breach may have caused; and

WHEREAS, Act 14, Session Laws of Hawaii Special Session 1995, transferred certain lands, and $600 million (twenty annual deposits) to the Hawaiian Home Lands Trust Fund, as established by the Act; and

WHEREAS, moneys in the Hawaiian Home Lands Trust Fund (section 213.6, Hawaiian Homes Commission Act, 1920) is expended by the Department of Hawaiian Home Lands for:

(1) Capital improvements and other purposes undertaken in furtherance of the Hawaiian Homes Commission Act;

(2) Restoration of the trust for any depletions caused by any act or omission of a state employee in the management and disposition of the resources of the Hawaiian Home Lands Trust between August 21, 1959, and June 30, 1988; and

(3) Settle all claims retroactively; and

WHEREAS, Act 323, Session Laws of Hawaii 1991, codified as chapter 674, Hawaii Revised Statutes, allows individual beneficiaries to recover actual out-of-pocket monetary losses for past breaches of the Hawaiian Homes Lands Trust between August 21, 1959, and June 30, 1988, again waiving the State’s sovereign immunity, and establishing a two-step administrative and judicial process for that purpose; and

WHEREAS, under chapter 674, Hawaii Revised Statutes, the Hawaiian Home Lands Trust Individual Claims Review Panel was to review and evaluate the merits of all claims filed by August 31, 1995, and submit its recommendations as to damages or corrective actions for every claim to the Legislature for action; and

WHEREAS, section 674-17, Hawaii Revised Statutes, permits claimants to reject the Legislature’s action, and to sue the State to recover out-of-pocket monetary losses they suffered as a result of a breach of the Hawaiian Home Lands Trust caused by an act or omission of a state employee in the management and the disposition of the trust's resources that occurred between August 21, 1959, and June 30, 1988, by filing with the Hawaiian Home Lands Trust Individual Claims Review Panel a notice rejecting the Legislature’s action by October 1, 1999, and filing suit pursuant thereto in the circuit court no later than December 31, 1999 (section 674-19, Hawaii Revised Statutes); and

WHEREAS, according to the Final Report to the Governor and the Hawaii State Legislature submitted by the Hawaiian Home Lands Trust Individual Claims Review Panel soon before it ceased its operations after October 1, 1999:

(1) Approximately 2,800 beneficiaries mailed or submitted 4,327 claims by August 31, 1995;

(2) Fifty-three per cent of the claims received were reviewed and evaluated;

(3) The Panel recommended damage awards for 578 claims totaling $17,970,822.74, found 38 claims to have no merit, and closed or dismissed 1,644 other claims; and

(4) Forty claims were settled by the claimants and the Department of Hawaiian Home Lands; and

WHEREAS, according to that same Final Report, claims were found to be non-meritorious because claimants withdrew their claims; were not beneficiaries of the Hawaiian Home Lands Trust; were beneficiaries but were not injured as a result of an act or omission that occurred in the thirty-year period specified in chapter 674, Hawaii Revised Statutes, or were unable to prove their claims by a preponderance of the evidence they presented; and

WHEREAS, claims were closed or dismissed because claimants did not appear at the hearing scheduled on their claim and did not ask to have the hearing rescheduled or the dismissal reconsidered; and

WHEREAS, according to records maintained by the Hawaiian Home Lands Trust Individual Claims Review Panel, no more than 1,650 claimants or their attorneys or representatives filed Notices for Judicial Relief developed by the Panel, to document their rejection of any action by the Legislature on their claims, by October 1, 1999; 43 claimants returned completed notices to the Panel after October 1, 1999; and 30 claimants returned the forms or wrote separate letters to the Panel to expressly indicate that they did not wish to pursue their claims any further; and

WHEREAS, on December 29, 1999, three claimants filed a class action lawsuit, Kalima et al., v. State of Hawaii, et al., Civ. No. 99-4771-12, in the First Circuit Court on behalf of themselves and all claimants who filed timely claims and Notices for Judicial Review with the Panel; and

WHEREAS, by an order filed August 30, 2000, the Circuit Court ruled that the three claimants and all other similarly situated claimants were entitled to pursue their chapter 674, Hawaii Revised Statutes, breach of trust claims against the State, irrespective of whether their claims had been reviewed by the Panel or acted upon by the Legislature as described in chapter 674, Hawaii Revised Statutes; and

WHEREAS, the State was allowed to file an interlocutory appeal from the Circuit Court’s to the Hawaii Supreme Court, and in a decision filed on June 30, 2006, the Hawaii Supreme Court ruled that "the plaintiffs [were] entitled to pursue their claims under HRS chapter 674;" and remanded the case to the Circuit Court to allow the plaintiffs to prove their breach of trust claims at trial, Kalima v. State, 111 Hawaii 84, 112-113 (2006); and

WHEREAS, upon the case’s return to the Circuit Court, the plaintiffs moved to amend their original complaint, and pursuant to an order filed on January 24, 2007, amended their complaint to include:

(1) Nine additional named plaintiffs;

(2) A "liability class" consisting of 2,721 claimants who are alleged to be making 4,327 claims defined as all Hawaiian Home Lands Trust beneficiaries who timely filed a claim with the Hawaiian Home Lands Trust Individual Claims Review Panel, gave notice of intent to sue by October 1, 1999, and filed suit by December 31, 1999, excluding any beneficiaries whose claims were either approved by the Legislature or settled;

(3) Nine "liability subclasses" "for the purposes of establishing liability, causation, and damages" for the following types of claims: Waiting List; Ultra Vires Qualifications; Uninhabitable Awards; Lost Application; Construction Claims; Successor Rights; Loans; Leases; and Other Claims; and

(4) Three additional counts for claims for breach of trust, breach of fiduciary duty, and restitution or other equitable relief, separate from the claims brought pursuant to chapter 674, Hawaii Revised Statutes; and

WHEREAS, trial in the case, presently estimated to last at least eight days, is scheduled to begin the week of October 1, 2007; and

WHEREAS, continued litigation is likely to be complicated and expensive for all of the parties, with no guarantee that the claims of the claimants who filed claims with the Panel on or before August 31, 1995, will be heard and satisfactorily resolved in their favor, or that the total amount awarded as actual damages at the conclusion of the trial would be twice the $17,970,822.74 the Panel recommended for the 578 claims it heard and found meritorious or would even be based upon that amount; and

WHEREAS, while approximately 2,800 beneficiaries of the Hawaiian Home Lands Trust filed claims under chapter 674, Hawaii Revised Statutes, more than four times as many other beneficiaries did not file claims, even though they had yet to receive a Hawaiian Home Lands lease, or waited as long, or longer than those who had filed claims to receive a lease; and

WHEREAS, after an effort that has been on-going for more than fifteen years, it is in the best interest of the claimants and the State of Hawaii, as well as all of the beneficiaries of the Hawaiian Home Lands Trust and the citizens of the State of Hawaii, that there be closure for all of the claims brought under chapter 674, Hawaii Revised Statutes; and

WHEREAS, a non-judicial settlement of the claims will increase the resources and broaden the options that can be used and considered to devise a fair and just settlement of all of the claims brought under chapter 674, Hawaii Revised Statutes; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-fourth Legislature of the State of Hawaii, Regular Session of 2007, the House of Representatives concurring, that the parties to Kalima, et al., v. State of Hawaii, et al., are urged to agree to stay all proceedings presently pending in the court so that they may focus instead on developing a mutually agreeable proposal to settle the plaintiffs’ claims legislatively, without further judicial action; and

BE IT FURTHER RESOLVED the parties and their counsel develop a settlement proposal for the Legislature to consider effectuating that is not confined solely to cash payments to claimants, but relies also on the use of public lands and other state resources to increase the opportunities claimants and all other beneficiaries of the Hawaiian Home Lands Trust have to a homestead award; and

BE IT FURTHER RESOLVED that if a settlement is not possible, then the Attorney General and the attorneys for plaintiffs are requested to prepare and submit a report, which shall be deemed confidential and not a public record, of their progress, to the Legislature by December 1, 2007, or if a joint report is not possible then the Attorney General alone, with details, to the extent the Attorney General deems prudent:

(1) The nature and amounts of a proposed settlement or, if no agreement has yet been reached, the type of settlement each side proposes;

(2) Non-cash state resources proposed to be used to implement any settlement, and the manner in which each resource is proposed to be used;

(3) The extent to which establishing loan programs, improving infrastructure for existing homestead areas, rehabilitating existing homesteads, increasing the number of group living arrangements, and other forms of beneficiary assistance have been considered for settling claims under chapter 674, Hawaii Revised Statutes;

(4) Amounts for attorneys’ fees and costs;

(5) Prerequisites and underlying conditions and premises for the settlement, including language concerning waivers; and

(6) Recommended actions to implement the settlement, and if appropriate, proposed enabling legislation; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor, the President of the Senate, the Speaker of the House of Representatives, the Chairperson of the Hawaiian Homes Commission, and the Attorney General.

	OFFERED BY:	_____________________________

Report Title:

Hawaiian Home Lands Claims; Settlement

THE SENATE	S.C.R. NO.	158
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII