Allen, Jr. v. Planning Department of the County of Kauai

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
07-AUG-2024
08:23 AM
Dkt. 90 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

GREG ALLEN, JR. and JOANNE B. ALLEN, Appellants-Appellees/Cross-
Appellants, v. PLANNING DEPARTMENT OF THE COUNTY OF
KAUAI/PLANNING COMMISSION OF THE COUNTY OF KAUAI; DONNA APISA, in
her official capacity as Chairperson of the Planning Commission,
Appellees-Appellants/Cross-Appellees

APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT
(CASE NO. 5CC191000036)

SUMMARY DISPOSITION ORDER
(By: Leonard, Acting Chief Judge, Hiraoka and Wadsworth, JJ.)

The County of Kaua#i, its Planning Department and
Planning Commission, and Donna Apisa, in her official capacity as
Chair of the Commission,1 (collectively, the County) appeal, and
Greg Allen, Jr. and Joanne B. Allen (the Allens) cross-appeal,
from the Final Judgment entered by the Circuit Court of the Fifth
Circuit on April 1, 2020.2 The Final Judgment reversed the
Commission's "Findings of Fact, Conclusions of Law, [and]
Decision and Order" issued on February 7, 2019. For the reasons
explained below, we vacate the Final Judgment, vacate the
Decision and Order in part, and remand this case to the circuit

1
Donna Apisa, the current chair of the Kaua#i County Planning
Commission, is substituted for former chairs Sean Mahoney and Glenda Nogami-
Streufert under Hawai#i Rules of Appellate Procedure Rule 43(c)(1).
2
The Honorable Kathleen N.A. Watanabe presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

court for further proceedings consistent with this summary
disposition order.
The Allens own a single-family home (the Wailua River
House) on the island of Kaua#i. On June 9, 2017, the Department
issued the Allens a Zoning Compliance Notice. The Allens were
told they were operating a transient vacation rental3 outside a
Visitor Destination Area4 in violation of Kaua#i County Code
(KCC) § 8-17.8(a) (1987). They were directed to stop using the
property as a transient rental and to cancel all transient
accommodation commitments for the property.
On August 22, 2017, the Department issued the Allens a
Notice of Violation & Order to Pay Fines. It determined that the
Allens continued to illegally offer the Wailua River House as a
transient vacation rental after they received the Zoning
Compliance Notice. The Allens were fined $10,000 and ordered to
correct their violation within 15 days, or face additional fines
of $1,000 per day.
The Allens appealed the Order to Pay Fines to the
Commission. A hearings officer conducted a contested case
hearing on October 15, 2018. The Department requested a fine of
$130,000. The hearings officer's report and recommendation was
filed with the Commission on January 3, 2019.
The Commission issued the Decision and Order on
February 7, 2019. The Commission found that the Allens had a
state Transient Accommodation Tax License, but their property was
not in a Visitor Destination Area and did not have a
Nonconforming Use Certificate. The Commission concluded that the
Allens received notice of their violation and that they would be

3
"'Transient vacation rental' means a dwelling unit which is
provided to transient occupants for compensation or fees, including club fees,
or as part of interval ownership involving persons unrelated by blood, with a
duration of occupancy of 180 days or less." Kaua#i County Code § 8-1.5
(1987).
4
"'Visitor destination area (VDA)' means those areas designated as
Visitor Destination Areas on County of Kaua#i Zoning Maps." Kaua#i County Code
§ 8-1.5.

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subject to civil fines for continued violations. The Commission
affirmed the Zoning Compliance Notice and the Order to Pay Fines
and imposed a fine of $130,000.
The Allens appealed to the circuit court on March 8,
2019. The circuit court entered "Amended Findings of Fact,
Conclusions of Law, [and a] Decision and Order" on March 19,
2020. The court reversed the Commission's Decision and Order and
vacated the Allens' fines. The Final Judgment was entered on
April 1, 2020. This appeal by the County and cross-appeal by the
Allens followed.

The County's Appeal

The County makes two arguments:5 (1) the Commission's
conclusion that the Allens unlawfully ran a transient vacation
rental in violation of the Kaua#i Comprehensive Zoning Ordinance
was supported by substantial evidence; and (2) the Commission's
conclusion that the Allens' continuing violation supported the
imposition of an initial $10,000 fine and $120,000 in additional
fines was supported by substantial evidence.
In this Hawaii Revised Statutes (HRS) § 91-14 secondary
appeal, we review the Commission's decision to determine whether
the circuit court was right or wrong to reverse the decision.
Dao v. Zoning Bd. of Appeals, 144 Hawai#i 28, 38, 434 P.3d 1223,
1233 (App. 2019). The determinations at issue are mixed findings
of fact and conclusions of law. We review mixed findings and
conclusion under the clearly erroneous standard because they
depend on the facts and circumstances of the case before the
Commission. Id. at 39, 434 P.3d at 1234. A conclusion supported

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The County's statement of the points of error challenges a number
of the circuit court's findings of fact. A circuit court reviewing an
agency's decision and order in a contested case under Hawaii Revised Statutes
§ 91-14 acts as an appellate court; it does not review the evidence in the
agency record to make its own findings of fact. Sierra Club v. Bd. of Land &
Nat. Res., 154 Hawai#i 264, 284, 550 P.3d 230, 250 (App. 2024), cert. granted,
No. SCWC-XX-XXXXXXX, 2024 WL 3378462 (July 11, 2024). We decline to review
the circuit court's findings of fact and instead analyze the issues presented
by the County's arguments.

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by the agency's findings of fact and applying the correct rule of
law will not be overturned. See Est. of Klink ex rel. Klink v.
State, 113 Hawai#i 332, 351, 152 P.3d 504, 523 (2007).
(1) The Kaua#i County Code provides:

Single Family Transient Vacation Rentals.

(a) . . . [S]ingle family transient vacation rentals are
prohibited in all areas not designated as Visitor
Destination Areas.

KCC § 8-17.8 (1987).
The KCC also provides:

Enforcement Against Illegal Transient Vacation Rentals.

. . . .

(b) Advertising of any sort which offers a property as a
transient vacation rental shall constitute prima facie
evidence of the operation of a transient vacation
rental on said property and the burden of proof shall
be on the owner, operator, or lessee to establish that
the subject property is not being used as a transient
vacation rental or that it is being used for such
purpose legally. . . .

KCC § 8-17.11 (1987).
The Department presented evidence that the Allens owned
the Wailua River House; the house was advertised as a per-night
rental on VRBO.com and wailuariverhouse.com; and the house was
located outside a mapped Visitor Destination Area. The
Department also presented evidence that on August 2, 2017 (two
months after the Zoning Compliance Notice was issued), the Allens
offered to rent the Wailua River House to an undercover
investigator for 8 days for $6,731.24, sending a rental agreement
and a credit card authorization. The Allens presented no
evidence that the Wailua River House was not being used as a
transient vacation rental or that they had a Nonconforming Use
Certificate. The record contains substantial evidence supporting
the Commission's finding and conclusion that the Allens "have not
overcome the [rebuttable] presumption that they operated the
[Wailua River House] as a Transient Vacation Rental outside of a

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Visitor Destination Area without a [Nonconforming Use
Certificate.]"
The Allens argue the Department did not submit a map
showing the Visitor Destination Area to the hearings officer.
But a Department enforcement inspector testified she reviewed the
Department map and determined the Wailua River House was outside
a Visitor Destination Area. The Allens offered no evidence to
the contrary.
The Allens cite Dao and argue the Department did not
present "evidence of an actual rental to a transient occupant."
Dao involved the City and County of Honolulu's Land Use Ordinance
(LUO). The LUO defined "transient vacation unit" as a dwelling
unit "provided for compensation to transient occupants for less
than 30 days[.]" 144 Hawai#i at 29 n.1, 434 P.3d at 1224 n.1
(emphasis added). In Dao, a City inspector testified that an
unidentified man said he was renting Dao's property for three
days. Id. at 30, 434 P.3d at 1225. We held the evidence was
insufficient to establish an LUO violation because "[t]here are
no details of a monetary transaction or other indicia of
compensation or any other supporting details or evidence of any
kind." Id. at 44, 434 P.3d at 1239. The Dao opinion does not
say whether the LUO contained an evidentiary presumption similar
to KCC § 8-17.11(b).
Here, the Department presented evidence sufficient to
establish a prima facie presumption of a violation under KCC
§ 8-17.11(b). The burden then shifted to the Allens to show that
the Wailua River House "is not being used as a transient vacation
rental or that it is being used for such purpose legally." Id.
The Allens presented no such evidence. Under these
circumstances, the Commission's finding and conclusion that the
Allens violated KCC § 8-17.8(a) was not clearly erroneous.
(2) The Kaua#i County Code provides:

Enforcement, Legal Procedures and Penalties.

. . . .

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(b) Civil Fines.

(1) If the Director of the Planning Department
determines that any person, firm or corporation
is not complying with a notice of violation, the
Director may have the party responsible for the
violation served . . . with an order pursuant to
this Section. The order may require the party
responsible for the violation to do any or all
of the following: (A) correct the violation
within the time specified in the order; (B) pay
a civil fine not to exceed $10,000 in the
manner, at the place, and before the date
specified in the order; (C) pay a civil fine up
to $10,000 per day for each day in which the
violation persists, in the manner and at the
time and place specified in the order. . . .

KCC § 8-3.5 (1987) (emphasis added).
The Kaua#i County Code also provides, in relevant part:

Penalty.

An owner of any unit which is operated in violation of this
Article, and/or any other person, firm, company,
association, partnership or corporation violating any
provision of this Article, shall each be fined not less than
$500 nor more than $10,000 for each offense. . . . If any
person fails to cease such violation within one month, such
person shall be subject to a new and separate violation for
each day the violation continues to exist.

KCC § 8-17.6 (1987).
The Zoning Compliance Notice told the Allens that they
could be fined "up to $10,000.00 and/or up to $10,000.00 per day,
should the violation(s) persist." The Order to Pay Fines imposed
a civil fine of $10,000 and ordered the Allens to correct their
violation within 15 days, or "[a]n additional fine of $1,000 per
violation, per day, for each day in which such violation persists
shall be levied." The Commission's conclusion affirming the
$10,000 fine for the Allens' violation was supported by
substantial evidence, consistent with KCC §§ 8-3.5 and 8-17.6,
and not clearly erroneous.
A week before the October 15, 2018 contested case
hearing, the Department discovered the Allens were still
advertising the Wailua River House as a transient vacation
rental. According to the Department, the VRBO.com "website now

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contains 12 separate visitor reviews indicating visitors that
stayed in the Allen's [sic] property subsequent to them receiving
the zoning compliance notice and cease and desist order." The
Department asked that the $10,000 fine be increased "to $130,000
to encompass the continued violation." But the Order to Pay
Fines, which imposed the $10,000 fine for the advertising
violation, told the Allens that "[a]n additional fine of $1,000
per violation, per day, for each day in which such violation
persists shall be levied." (Emphasis added.)
The record does not support a finding or conclusion
that the additional $120,000 in fines was based on $1,000 per day
for each day the Allens continued to advertise the Wailua River
House transient vacation rental beginning 15 days after the Order
to Pay Fines was served. Instead, the record indicates that the
Department requested an additional $10,000 fine for each of the
12 visitor reviews. But the Department did not issue a zoning
compliance notice or a notice of violation and order to pay fines
for any of those 12 transient rentals. KCC § 8-3.5(b)(1). The
Commission thus exceeded its statutory authority by imposing the
additional $120,000 civil fine. HRS § 91–14(g)(2) (Supp. 2018).

The Allens' Cross-Appeal

The Allens argue that the 180-day period in the KCC's
definitions of Transient and Transient Vacation Rental "is unduly
burdensome and unreasonably restricts the free use of [their]
property" and is "arbitrary and does not bear a reasonable
relation to the public health, safety, morals or general
welfare." They cite the Hawai#i Landlord-Tenant Code, which
allows month-to-month rentals,6 and provisions in the Revised
Ordinances of Honolulu7 and the Hawai#i County Code8 that specify

6
HRS § 521-71 (2018).
7
Revised Ordinances of Honolulu § 21-10.1 (1990 & Supp. No. 31).
The Revised Ordinances of Honolulu was amended effective November 18, 2022 to
specify 90-day periods for transient accommodations, occupants, and vacation
(continued...)

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30-day periods for transient or short-term vacation rentals.
They cite no provision in the Hawai#i Constitution or the United
States Constitution. We nevertheless construe their argument as
an attack on the County's police power. See Lum Yip Kee, Ltd. v.
City & Cnty. of Honolulu, 70 Haw. 179, 190, 767 P.2d 815, 822
(1989) (noting that "the power to zone is an exercise of the
police power of a municipality").
The Allens made their argument to the Commission. The
Commission made no finding or conclusion on the 180-day issue,
nor could it have. See HOH Corp. v. Motor Vehicle Licensing Bd.,
69 Haw. 135, 143, 736 P.2d 1271, 1276 (1987) ("The administrative
agency is not empowered to pass on the validity of the statute
. . . ."). The circuit court did not address the issue.
Accordingly, we remand this case to the circuit court to decide
whether the KCC's 180-day minimum rental period for single-family
homes outside a Visitor Destination Area was a proper exercise of
the County's police power. See id. at 143, 736 P.2d at 1276
(remanding to circuit court to determine constitutionality of
regulatory statute).

Disposition

The circuit court's April 1, 2020 Final Judgment is
vacated. The February 7, 2019 Decision and Order is affirmed to
the extent it vacated the additional $120,000 fine. This case is
remanded for the circuit court to decide whether the KCC's 180-
day minimum rental period for single-family homes outside a
Visitor Destination Area was a proper exercise of the County's
police power. If the circuit court concludes it was, it should
affirm the Commission's finding of a violation and imposition of
the $10,000 fine; if the circuit court concludes it was not, it

7
(...continued)
units. Revised Ordinances of Honolulu § 21-10.1 (2021).
8
Hawai#i County Code § 25-1-5 (eff. Apr. 1, 2019).

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should reverse the Commission's February 7, 2019 Decision and
Order on that basis.
DATED: Honolulu, Hawai#i, August 7, 2024.

On the briefs:
/s/ Katherine G. Leonard
Chris Donahoe, Acting Chief Judge
Deputy County Attorney,
for Planning Department of /s/ Keith K. Hiraoka
the County of Kaua#i/ Associate Judge
Planning Commission of
the County of Kaua#i; /s/ Clyde J. Wadsworth
Donna Apisa, in her official Associate Judge
capacity as Chairperson of
the Planning Commission.

Gregory W. Kugle,
Joanna C. Zeigler,
for Greg Allen, Jr.
and Joanne B. Allen.

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