Tran v. Department of Planning For the County of Maui

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
20-MAR-2025
08:31 AM
Dkt. 64 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

THINH TRAN, an individual; and SEAN KADING, an individual,
Plaintiffs-Appellants,
v.
DEPARTMENT OF PLANNING FOR THE COUNTY OF MAUI; COUNTY OF MAUI;
MAYOR RICHARD BISSEN,1 successor in interest; KATE BLYSTONE,2 in
her capacity as DIRECTOR OF THE DEPARTMENT OF PLANNING,
Defendants-Appellees, and DOES 1-20, Defendants

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
(CASE NO. 2CCV-XX-XXXXXXX)

SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Wadsworth and McCullen, JJ.)

Thinh Tran and Sean Kading appeal from the September 2,
2022 Amended Final Judgment for the Maui County Department of
Planning and its Director and the County of Maui and its Mayor
(collectively, the County) entered by the Circuit Court of the
Second Circuit.3 They challenge the order dismissing their
second amended complaint for lack of subject matter jurisdiction.

1
Richard Bissen, the current Mayor of the County of Maui, is
substituted for former Mayor Michael Victorino under Hawai#i Rules of
Appellate Procedure (HRAP) Rule 43(c)(1).
2
Under HRAP Rule 43(c)(1), Kate Blystone has been substituted for
former Director of the Department of Planning Michele McLean.
3
The Honorable Peter T. Cahill presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

We vacate the Amended Final Judgment and remand for further
proceedings.
Tran and Kading filed the second amended complaint on
April 1, 2021. It made these allegations: Tran owned two
houses, and Kading owned one house, in Kaanapali Golf Estates
(KGE). KGE's 1990 supplemental Declaration allowed owners to
rent units to tenants for 30-day periods. In 2012 the County
adopted Ord. 3941, which created a new permitted-use category
called short-term rental home (STRH). See Maui County Code (MCC)
Chapter 19.65. It required an owner to obtain an STRH permit to
rent a house to a tenant for less than 180 days. MCC
§ 19.65.050.
According to the second amended complaint, Tran rented
his houses to tenants for 30-day periods before Ord. 3941 was
adopted. Kading bought a lot in 2012 (the year Ord. 3941 was
adopted) "with the intent and expectation" based on the
Declaration that he could build a house and rent it to tenants
for 30-day periods. Kading applied for an STRH permit. The Maui
Planning Commission conducted a contested case hearing, then
denied the application. After the second amended complaint was
filed, Kading filed a Hawaii Revised Statutes (HRS) § 91-14
appeal from the Planning Commission's decision, Kading v. Maui
Planning Commission, Judiciary Information Management System Case
No. 2CCV-XX-XXXXXXX (the Agency Appeal).4 The circuit court
hearing the Agency Appeal entered a decision and order affirming
the Planning Commission decision. The Agency Appeal remains
pending because no Hawai#i Rules of Civil Procedure (HRCP)
Rule 72(k) judgment has been entered.
Tran did not apply for an STRH permit but if he did, he
claims it would probably be denied because the people who opposed
Kading's application would probably oppose his application.

4
We take judicial notice of Kading's agency appeal under Hawaii
Rules of Evidence Rule 201.

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The second amended complaint's first count alleged that
Tran's and Kading's property was unconstitutionally taken by the
County without compensation.5 The second count alleged the
County should be estopped from enforcing Ord. 3941 against Tran
and Kading because they bought their respective properties in
reliance on the County having approved the Declaration, which
allowed 30-day rentals within KGE.
The County moved to dismiss the second amended
complaint for lack of subject matter jurisdiction. The circuit
court entered findings of fact, conclusions of law, and an order
dismissing the second amended complaint with prejudice on July 7,
2021. Judgment was entered on September 21, 2021. This appeal
followed. After a temporary remand, the Amended Final Judgment
was entered on September 2, 2022.
The County's motion to dismiss challenged the circuit
court's subject matter jurisdiction. We review questions of
jurisdiction de novo. Hawaii Government Employees Association,
Local 152 v. Lingle, 124 Hawai#i 197, 201, 239 P.3d 1, 5 (2010).
A circuit court deciding an HRCP Rule 12(b)(1) motion to dismiss
for lack of subject matter jurisdiction is not restricted to the
pleadings, and may receive evidence to resolve factual disputes
over jurisdiction. Davis v. Bissen, 154 Hawai#i 68, 77, 545 P.3d
557, 566 (2024).
Tran and Kading's statement of the points of error
challenges the circuit court's findings of fact (FOF) nos. 2, 5,
and 6, and conclusions of law (COL) nos. 5, 6, 10, and 17. We
review findings of fact under the clearly erroneous standard, and
conclusions of law under the right/wrong standard. Est. of Klink
ex rel. Klink v. State, 113 Hawai#i 332, 351, 152 P.3d 504, 523
(2007). We review a mixed finding of fact and conclusion of law

5
The Fifth Amendment to the United States Constitution, made
applicable to the states by the Fourteenth Amendment, provides that "private
property [shall not] be taken for public use, without just compensation."
Article I, section 20 of the Hawai#i Constitution similarly provides: "Private
property shall not be taken or damaged for public use without just
compensation."

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under the clearly erroneous standard because it implicates the
facts and circumstances of the specific case. Id. Unchallenged
findings of fact are binding on appeal. Okada Trucking Co. v.
Bd. of Water Supply, 97 Hawai#i 450, 459, 40 P.3d 73, 82 (2002).
Tran and Kading's argument does not follow their points
of error. They argue — incorrectly — that the circuit court had
to assume the truth of the allegations in their second amended
complaint or, alternatively, that there were genuine issues of
material fact. Neither standard applies to an HRCP Rule 12(b)(1)
motion to dismiss for lack of jurisdiction. Davis, 154 Hawai#i
at 77, 545 P.3d at 566. Accordingly, we first review the
challenged FOFs and COLs.
The circuit court found:

2. [Tran and Kading's] properties, and KGE, are
zoned within a residential R-3 zoning district, which under
current law requires a minimum rental period of 180 days,
unless the owner obtains a Short Term Rental Permit (STRH
Permit).

FOF no. 2 is a mixed finding and conclusion. The
second amended complaint alleged that KGE was zoned R-3. The
circuit court did not err by making that finding. FOF no. 2
referred to "current law" — that is, after Ord. 3941 was adopted.
For residential-zoned property, "bed and breakfast home" and STRH
were the only permitted uses allowing rentals of less than
180 days. MCC § 19.08.020. The bed and breakfast use is not at
issue here. FOF no. 2 is not clearly erroneous under the
circumstances of this case.
The circuit court found:

5. [Kading] did not communicate with the Director,
or anyone within the Department of Planning regarding a
finding of non-conforming use on his own, specific
properties within KGE.
6. [Tran] did not communicate with the Director, or
anyone within the Department of Planning, regarding the
status of KGE or his own specific properties within KGE.

(Citations to record omitted).

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These findings were supported by then-planning director
Michele McLean's declaration and the email thread between McLean
and Kading. FOF nos. 5 and 6 are not clearly erroneous.
The circuit court concluded:

5. [Tran] never communicated with the Department of
Planning on the status of KGE or his own properties, and
never made a request that the Director provide him with a
non-conforming use finding of his property.
6. [Tran] never received a final decision from the
Department as to the effect of the regulations on his
property.

COL nos. 5 and 6 are actually findings of fact. They
were supported by McLean's declaration. They are not clearly
erroneous.
The circuit court concluded:

10. [Kading] did communicate with the Director
regarding the status of KGE as a whole, but not the status
of his own property within KGE. The Department's response
to [Kading]'s request does not qualify as a final decision
on his own property, and thus cannot sustain a takings
claim.

COL no. 10 is a mixed finding and conclusion. The
first sentence is a finding that is consistent with FOF no. 5,
supported by McLean's declaration and the email thread, and not
clearly erroneous. The second sentence is a conclusion of law.
It is not wrong. The Department's response to Kading's request
was: "Our response hasn't changed from the previous responses we
have given. The property [KGE] has never been zoned to allows
[sic] short-term rental." (Emphasis added.) It was an email,
not a letter on Department letterhead. The email subject line
was "Re: KGE Grandfathering Request - follow up". Even if this
email was a "final decision," it could not have supported a
regulatory taking claim because Kading never applied for a

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nonconforming use exception for his own "structure or zoning
lot."6 MCC § 19.04.040.
The circuit court concluded:

17. Plaintiffs had the option to appeal the
Director's decision regarding KGE as a whole as "person[s]
aggrieved" to the [Board of Variances and Appeals] (despite
not establishing standing to do so, herein). However,
neither [Tran nor Kading] appealed the Director's decision
regarding KGE.

Any error in COL no. 17 was harmless, because Kading's
failure to request a nonconforming use exception for his
structure or zoning lot renders his regulatory taking claim
unripe.
We next review the substantive issues. The County's
motion to dismiss argued that the circuit court lacked
jurisdiction because Tran and Kading didn't exhaust their
administrative remedies, and their regulatory taking claims were
not ripe.
(1) The exhaustion doctrine applies when a party seeks
judicial review of the substance of an adverse administrative
decision. Leone v. Cnty. of Maui, 128 Hawai#i 183, 192, 284 P.3d
956, 965 (App. 2012). "Thus, exhaustion of any appeals permitted
within the administrative process is required before seeking
relief from the courts." Id. The second amended complaint did
not seek judicial review of an adverse administrative decision.
Count I sought compensation for a regulatory taking, and Count II
sought to estop the County from enforcing Ord. 3941 against Tran

6
Tran and Kading's brief uses the term "grandfathered," but the MCC
uses the term "nonconforming uses":

"Nonconforming uses" means any use of a structure or
zoning lot which was previously lawful but which does not
conform to the applicable use regulations of the district in
which it is located, either on the effective date of the
ordinance codified in this article or as a result of any
subsequent amendment.

MCC § 19.04.040 (2021) (emphasis added). The current definition applied
during the time material to this appeal.

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and Kading. Exhaustion of administrative remedies does not apply
here.
The ripeness doctrine applies to Count I. "[B]efore a
property owner may initiate a suit seeking compensation for a
taking, the claim must be ripe." Leone, 128 Hawai#i at 190, 284
P.3d at 963. "[R]ipeness is an issue of subject matter
jurisdiction." Id. at 189, 284 P.3d at 962. A regulatory taking
claim "becomes ripe when the government entity charged with
implementing the regulations has reached a final decision
regarding the application of the regulations to the property at
issue." Id. at 190, 284 P.3d at 963 (cleaned up).
Tran did not apply for approval of a nonconforming use
under MCC §§ 19.500.110 & 19.510.10. His regulatory taking claim
was not ripe. The circuit court did not err by dismissing
Count I of the second amended complaint as to Tran. But the
dismissal should have been without prejudice because there was no
decision on the merits.
Kading applied for an STRH permit. The Planning
Commission denied his application. That decision is the subject
of the Agency Appeal, which seeks review of the substance of that
administrative decision. Relevant to the ripeness analysis for
this case, Kading did not apply for a nonconforming use exception
for his own structure or zoning lot. Kading's regulatory taking
claim was not ripe because there has been no final decision
foreclosing him from getting a nonconforming use exception. Cf.
Leone, 128 Hawai#i at 192, 284 P.3d at 965. The circuit court
did not err by dismissing Count I of the second amended complaint
as to Kading. But again, the dismissal should have been without
prejudice because there was no decision on the merits.
(2) Count II of the second amended complaint claims
the County should be equitably estopped from enforcing Ord. 3941
against Tran and Kading. "The theory of equitable estoppel
requires proof that one person wilfully caused another person to
erroneously believe a certain state of things, and that person
reasonably relied on this erroneous belief to his or her

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detriment." Maria v. Freitas, 73 Haw. 266, 273, 832 P.2d 259,
264 (1992). Tran and Kading argue they "relied on the County's
prior approvals" of the 1990 supplemental Declaration, which let
KGE owners rent their units to tenants for 30-day periods. The
circuit court had subject matter jurisdiction over the equitable
estoppel claim under HRS § 603-21.5(a)(3) (2016). The doctrines
of ripeness and exhaustion of administrative remedies do not
apply to Count II. We express no opinion on the merits of that
claim.
The September 2, 2022 Amended Final Judgment is
vacated, and this case is remanded to the circuit court. On
remand, the circuit court should enter an order dismissing
Count I of the second amended complaint without prejudice, and
adjudicate Count II on the merits.
DATED: Honolulu, Hawai#i, March 20, 2025.

On the briefs:
/s/ Keith K. Hiraoka
Terrance M. Revere, Presiding Judge
Amanda L. Dutcher,
for Plaintiffs-Appellants. /s/ Clyde J. Wadsworth
Associate Judge
Kristin K. Tarnstrom,
Brian A. Bilberry, /s/ Sonja M.P. McCullen
Deputies Corporation Counsel, Associate Judge
County of Maui,
for Defendants-Appellees.

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