University of Hawaii School of Law Library - Jon Van …...ruling on such issues at this time, and...

•

I

• • • • • • • • • • • • • • • • • •

/ ./

, 'FUJIY~~ DqFFY & FUJIYAMA

JAMES , E-:/ DUFFY, JR. 775-0 LESLIE E. KOBAYASHI 3378-0 Suite 2700, Pauahi Tower Bishop Square 1001 Bishop Street Honolulu, Hawai'i 96813 Telephone No. 536-0802

Attorneys for Plaintiffs OFFICE OF HAWAIIAN AFFAIRS and the BOARD OF TRUSTEES OF THE OFFICE OF HAWAIIAN AFFAIRS

:.. .... . : . I, . . ~. ", ',; I

I, .. . '

IN THE CIRCUIT COURT OF THE FIRST CIRCUIT

STATE OF HAWAI'I

OFFICE OF HAWAIIAN ~FFAIRS and the BOARD OF TRUSTEES 02 TPy.

OFFICE OF F-AWAIIAN .~FAIRS,

Plaintiffs,

vs.

STATE OF HAWAI . I, JOHN DOES 1-10, JANE DOES 1-10, DOE PARTNERSHIPS 1-10, DOE CORPORATIONS 1 -10, ROE "NONPROFIT" CORPORATION 1-10, and ROE GOVERNMENTAL ENTITIES 1-10

Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

---------------------------)

CIVIL NO . 94-0205-01 [Other Civil Action]

ORDER GRANTING PLAINTIFFS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT

HEARING DATES / TIMES:

June 26, 1996 - 9:30 a.m. June 27, 1996 - 9:00 a.m.

Judge : The Honorable Daniel G. Heely

Trial: November 18, 1996

ORDER GRANTING PLAINTIFFS' MOTIONS !'OR P.Zl.RTIAL SUMMARY JUDGMENT

On June 26, 1996 and June 27, 1996 the following

motions came on for hearing before the Honorable DANIEL G. HEELY:

1. Plaintiffs' Motion For partial Summary Judgment On

The Issue Of Whether The Revenues From The Waikiki

Duty Free Store Fall Within Act 304, filed May 7,

1996 ( "Duty Free Motion").

•

I

• • • • • • • • • • • • • • • • • •

/ ./




:.. .... . : . I, . . ~. ", ',; I

I, .. . '


STATE OF HAWAI'I



Plaintiffs,

vs.


Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

---------------------------)




June 26, 1996 - 9:30 a.m. June 27, 1996 - 9:00 a.m.










•

I

• • • • • • • • • • • • • • • • • •

/ ./




:.. .... . : . I, . . ~. ", ',; I

I, .. . '


STATE OF HAWAI'I



Plaintiffs,

vs.


Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

---------------------------)




June 26, 1996 - 9:30 a.m. June 27, 1996 - 9:00 a.m.










•

I

• • • • • • • • • • • • • • • • • •

/ ./




:.. .... . : . I, . . ~. ", ',; I

I, .. . '


STATE OF HAWAI'I



Plaintiffs,

vs.


Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

---------------------------)




June 26, 1996 - 9:30 a.m. June 27, 1996 - 9:00 a.m.










•

I

• • • • • • • • • • • • • • • • • •

/ ./




:.. .... . : . I, . . ~. ", ',; I

I, .. . '


STATE OF HAWAI'I



Plaintiffs,

vs.


Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

---------------------------)




June 26, 1996 - 9:30 a.m. June 27, 1996 - 9:00 a.m.










University of Hawaii School of Law Library - Jon Van Dyke Archives Collection

I I I

• • • • • • • • i

• -• • j

• •

2.

3 .

4.

Plaintiffs' Motion For Partial Summary Judgment On The Issue Of Revenues From The Hilo Hospital, filed May 7, 1996 (nHospital Motionn ).

Plaintiffs' Motion For Partial Summary Judgment On The Issue Of Interest Income, filed May 7, 1996

( "Interest Motion ") . .

Plaintiffs' Motion For Partial Summary Judgment On The Issue Of Revenues From The Housing Finance And Development Corporation And Hawai'i Housing Authority, filed May 7, 1996 (nHFDC Motiona ).

Plaintiffs OFFICE OF HAWAIIAN AFFAIRS and the BOARD OF

TRUSTEES OF THE OFFICE OF HAWAIIAN AFFAIRS (hereinafter

"PlaintiffsU) being represented by attorneys James E. Duffy, Jr.

and Leslie E. Kobayashi, and Defendant STATE OF KAWAI'I

(hereinafter "the STATE") being represented by Deputy Attorneys

General Charlene M. Aina and Melissa L. Lewis, and the Court

having reviewed all memoranda, affidavits and exhibits filed in

connection with these motions, and the entire record and files

herein, and also having heard and considered the arguments of

counsel and being otherwise fully advised in'the premises, the

Court finds and orders as follows:

STANDARD

Under Rule 56(c) of the Hawai'i Rules of Civil

Procedure (hereinafter ItHRCpU) I summary judgment is appropriate

where there is no genuine issue of material fact and the moving

party is entitled to judgment as a matter of law. See GECC

Financial Corp. v. Jaffarian, 79 Haw. 5~6, 904 P.2d 630 (Haw. Ct.

App. 1995), aff'd in part, 80 Haw. 1~8, 905 P.2d 624 (1995).

HRCP Rule 56(c) also authorizes partial summary judgment on

2

I I I

• • • • • • • • i

• -• • j

• •

2.

3 .

4.
















STANDARD








2

I I I

• • • • • • • • i

• -• • j

• •

2.

3 .

4.
















STANDARD








2

I I I

• • • • • • • • i

• -• • j

• •

2.

3 .

4.
















STANDARD








2

I I I

• • • • • • • • i

• -• • j

• •

2.

3 .

4.
















STANDARD








2


I

• I

• t

• • • • , • , • • • • • • •

issues of liability alone although there is· a genuine issue as to

the amount of damages. See also HRCP Rule 56(d).

DI:SCUSS:ION

Pursuant to HRCP Rule 56, the Court grants each of

Plaintiff's Motions For Partial Summary Judgment listed above.

The Court finds and concludes that, under Rule 56(c) of the

Hawai'i Rules of Civil Procedure and GECC Financial Corp. v.

Jaffarian, supra, there are no genuine issues of material fact

that would prohibit partial summary judgment and, clearly,

Plaintiff OHA is entitled to partial summary judgment concerning

the liability of the State for the revenues in question under

each of those motions.

In granting partial summary judgment on the issue of

liability, the Court does not reach issues relating to the

specific amounts being requested by Plaintiffs. The Court is not

ruling on such issues at this time, and each side will have its

opportunity to have a hearing or trial with respect to the

particular amounts involved, consistent with the pareial summary

judgments granted herein.

In the instant case, the Court has carefully considered

all of the evidence and arguments submitted by Plaintiffs and the

STATE in support of and in opposition to these Motions. The

Court takes judicial notice of the following:

1. Upon annexation in 1898, the Republic of Hawai'i

"ceded ll lands to the United States which were returned to Hawai'i

upon its admission as a State in the United States subject to the

3

I

• I

• t

• • • • , • , • • • • • • •



DI:SCUSS:ION
























3

I

• I

• t

• • • • , • , • • • • • • •



DI:SCUSS:ION
























3

I

• I

• t

• • • • , • , • • • • • • •



DI:SCUSS:ION
























3

I

• I

• t

• • • • , • , • • • • • • •



DI:SCUSS:ION
























3


I I I I

• • • -• , • • 1

• • • •

provisions as see forth in the Admission Act, particularly at

Section S(f).

2. Section S(f) of the Admission Act states:

(f) The lands granted to the State of Hawai'i by subsection (b) of this section and public lands retained by the United States under subsection (c) and (d) and later conveyed to the State under subsection (e), together with the proceeds from the sale or other disposition of any such lands and the income therefrom, shall be held by said State as a public trust for the support of the public schools and other public educational institutions, for the betterment of the conditions of native Hawaiians, as defined in the Hawaiian Homes Commission Act, 1920, as amended, for the development of farm and home ownership on as widespread a basis as possible for the making of public improvements, and for the provision of lands for public use. Such lands, proceeds, and income shall be managed and disposed of for one or more of the foregoing purposes in such manner as the constitution and laws of said State may provide, and their use for any other object shall constitute a breach of trust for which suit may be brought by the United States. The schools and other educational institutions supported, in whole or in part out of such public trust shall forever remain under the exclusive control of said State; and no part of the proceeds or income from the lands granted under this Act shall be used for the supporc of any sectarian or denominational school, college, or university.

The Act does not state that the lands shall be ·ownedn by the

State of Hawai'i but says that these lands shall be ·held" by the

State of Hawai'i as a public trust.

3. Section S(f), subsection 2 of the Admission Act is

clear that ehe "beneficiaries of the public trust, among other

public beneficiaries, are the Native Hawaiians.

4

I I I I

• • • -• , • • 1

• • • •


Section S(f).









4

I I I I

• • • -• , • • 1

• • • •


Section S(f).









4

I I I I

• • • -• , • • 1

• • • •


Section S(f).









4

I I I I

• • • -• , • • 1

• • • •


Section S(f).









4


• • • III

• • • • II

• III

• • • • •

4. Major constitutional and legislative provisions

have been reviewed, approved, and adopted by the Hawai.i state

legislature and the people of Hawai'i to ensure the protection of

the rights and interests of the Native Hawaiians as beneficiaries

of the public trust, in particular, at Article XII, Sections 4, 5

and 6 of the Hawai'i Constitution, Act 273 of the 1980 Hawai'i

state legislature, and Chapter 10, Hawai'i Revised Statutes

("HRS") .

s. United States Senate Joint Resolution 19 adopted

by the United States Senate on January 21, 1993 ("Resolution")

specifically determined that the overthrow of the Hawaiian

Monarchy was illegal and that 1,800,000 acres of ceded lands were

part of the illegal overthrow and were improperly taken. The

Resolution points out that ~(t]he health and well-being of the

Native Hawaiian people is intrinsically tied to their deep

feeling and attachment to the land . . . (and] "that the Native

Hawaiian people are determined to preserve, develop and transmit

to future generations their ancestral territory and their

cultural identity in accordance with their own spiritual and

traditional beliefs, customs, practices, language and social

institutions."

6. HRS Section 5-7.5, the "Aloha Spirit" law, was

adopted by the Hawai"' i legislature in 1986, and states in

subsection (b):

In exerCising their power on behalf of the people and in fulfillment of their responsibilities, obligations and service to the people, the legislature, governor, lieutenant

5

• • • III

• • • • II

• III

• • • • •








("HRS") .













institutions."



subsection (b):


5

• • • III

• • • • II

• III

• • • • •








("HRS") .













institutions."



subsection (b):


5

• • • III

• • • • II

• III

• • • • •








("HRS") .













institutions."



subsection (b):


5

• • • III

• • • • II

• III

• • • • •








("HRS") .













institutions."



subsection (b):


5


I

• • • I

• • • • • • • • • • • • • •

governor, executive officers, each department, the chief justice, associates justices and judges of the appellate, circuit and district courts may contemplate and reside with the life force and give consideration to the aloha spirit.

The legislature defined "aloha" in this statute at subsection (a)

as being: "Aloha means mutual regard and affection and extends

warmth and caring with no obligation in return, and aloha is the

essence of relationship in which each person is important to·

every other person for collective existence.- See also Public

Access Shoreline Hawai'i v. Hawai'i County Planning Commission,

79 Haw. 425, 450, 903 P.2d 1246,1271 (1995). The court is

hereby adopting these concepts and applying them in ruling on

these motions which directly relate to the well-being of native

Hawaiian people.

The Court also notes that the STATE relies heavily on

Act 304's (enacted by the Hawai'i legislature in 1990)

distinctions between "sovereign" and "proprietary" functions in

opposing these Motions. The Court concludes, however, that it

must liberally construe the "revenues" to which OHA is entitled,

and narrowly construe the exceptions and limitations to such

rtrevenues" that are not present in Section 5(£) of the Admission

Act of 1959, Public Law 86-3, 73 Stat. 4 and 6 (1959).

The Admission Act has the force and effect of

constitutional law. See Article XII, Section 4 of the Hawai'i

State Constitution. Therefore, the Admission Act "must be

construed with due regard to the intent of the framers and the

people adopting it, and the fundamental principle in interpreting

6

I

• • • I

• • • • • • • • • • • • • •











Hawaiian people.














6

I

• • • I

• • • • • • • • • • • • • •











Hawaiian people.














6

I

• • • I

• • • • • • • • • • • • • •











Hawaiian people.














6

I

• • • I

• • • • • • • • • • • • • •











Hawaiian people.














6


I I I I II

• -• • II

• II

• • • • • ".

• •

a constitutional provision is to give effec~" to that intent."

Hirano v. Peabody, 81 Haw. 230, 232, 915 P.2d 704, 706 (~996)

{quoting Convention Center Auth. v. Anzai, 78 Haw. 157, 167, 890

P.2d 1197, 1207 (1995».

The guiding principle of statutory construction is to

ascertain the intent of the legislature as gleaned primarily from

the statutory language. State v. Dumlao, 6 Haw. App. 173, 7~S

P.2d 822 (1986). Section S(f} of the Admission Act provides the

following:

[tlhe lands granted to the State of Hawai'i by subsection (b) of this section and public lands retained by the United States under subsections (c) and (d) and later conveyed to the State under subsection (e), together with the proceeds from the sale or other disposition of any such lands and the income therefrom, shall be held by said State as a public trust for the support of the public schools and other public educational institutions, for the betterment of the conditions of Native Hawaiians ....

(emphasis added).

The plain language of the Admission Act reflects the

constitutional intent to liberally construe 11 revenues . " The use

of the words "proceeds n and 11 income therefrom" demonstrate that

Congress intended that all revenues derived from ceded lands be

placed in public trust. Further, the language of the Admission

Act does not explicitly state that "proceeds l1 be limited by

geographical location. If Congress intended to limit what

proceeds and income were to be held in public trust, it would not

have drafted this statute so broadly. Accordingly, the Admission

Act mandates a liberal construction of "revenues. R

7

EXlliAB.AC2S& aCA .AiMa = .2&£&£ _we .Zt&EJiSS&£&&£ &&1&JA&ZJ$li'

I I I I II

• -• • II

• II

• • • • • ".

• •




P.2d 1197, 1207 (1995».





following:


(emphasis added).











7


I I I I II

• -• • II

• II

• • • • • ".

• •




P.2d 1197, 1207 (1995».





following:


(emphasis added).











7


I I I I II

• -• • II

• II

• • • • • ".

• •




P.2d 1197, 1207 (1995».





following:


(emphasis added).











7


I I I I II

• -• • II

• II

• • • • • ".

• •




P.2d 1197, 1207 (1995».





following:


(emphasis added).











7

EXlliAB.AC2S& aCA .AiMa = .2&£&£ _we .Zt&EJiSS&£&&£ &&1&JA&ZJ$li' University of Hawaii School of Law Library - Jon Van Dyke Archives Collection

• • • • • • • • -• • • II

• • • • •

In turn, Act 304 is a remedial statute, because it was

enacted to effectuate the intent and spirit of the Admission Act .

The purpose of Act 304, as set forth in House Bill No. 2896, is

to:

(c]larify the basis for determining the revenue due to the Office of Hawaiian Affairs (OHA) for the betterment of Native Hawaiians under the provisions of the State Constitution and chapter 10, Hawai'i Revised Statutes.

House Bill No. 2896 indicates that Act 304 was further intended as:

(a]n important first step in addressing the concerns and needs of Native Hawaiians and Hawaiians. With the confusion cleared up over what constitutes the public land trust and revenue derived therefrom, OHA will be in a position to significantly increase its efforts on behalf of Native Hawaiians.

~ Standing Comm. Rep. No. 3073, 1990 Senate Journal at 1252-

1253; Standing Comm. Rep. No. 648-90, 1990 House Journal at 1082.

It is clear that Act 304 is a remedial statute, because

it attempted to clarify what constituted the public trust and the

basis for determining the revenue due to OHA in order to carry

out the purpose of the Admission Act. As a remedial statute, Act

304'9 definition of nrevenue" should be construed broadly to

include all revenues that were intended in the Admission Act.

Significantly, the Admission Act makes no distinction

between sovereign functions and proprietary functions for

purposes of the public trust. Since the Admission Act makes no

distinction between sovereign functions and proprietary functions

for purposes of the public trust, the Court concludes that it

must broadly construe revenues in effectuating the public trust

8

• • • • • • • • -• • • II

• • • • •




to:


















8

• • • • • • • • -• • • II

• • • • •




to:


















8

• • • • • • • • -• • • II

• • • • •




to:


















8

• • • • • • • • -• • • II

• • • • •




to:


















8


I

• • I I I II II

• I I I

• I

• • J

• •

and narrowly construe any distinctions not contained in the

Admission Act. In other words, the court interprets these

statutes liberally with respect to the aspects of the statutes

that benefit the beneficiaries of the public trust. See State v.

Jim, 80 Haw. 168, 907 P.2d 754 (1995); Aged Hawaiians v. Hawaiian

Homes Commission, 78 Haw. 192, 891 P.2d 279 (1995), cert. denied

sub nom, Hawaiian Homes Commission v. Aged Hawaiians, 116 S. Ct.

77 (1995); Ahuna v Department of Hawaiian Homelands, 64 Haw. 327,

640 P.2d 1161 (1982).

With these principles in mind, the Court now turns to

each of the Motions.

I. Plaintiffs I Motion Por Partial Summary Judgment On The Issue Of Whether The R.evenues Pram The Waikiki Duty Free Store Fall Within Act 304, filed Hay 7, 1996.

In considering the issues raised in connection with the

Duty Free Motion, the Court notes that there is ng dispute that

(a) the Waikiki Duty Free shop is not located on Public Trust

Lands, (b) the STATE calculates the rents for the Airport Duty

Free concessions based on gross sales generated from both the

Airport shop and the Waikiki shop, (c) the Waikiki Duty Free shop

could not exist, as presently constituted, without the use of

facilities located at the Airport (i.e., delivery to the Airport

gate or to the aircraft)" and (d) the Airport concession agreement

between the State and the Duty Free operator gives the operator

the right to deliver goods sold at the.Waikiki Duty Free shop to,

the Airport.

9

I

• • I I I II II

• I I I

• I

• • J

• •









640 P.2d 1161 (1982).















the Airport.

9

I

• • I I I II II

• I I I

• I

• • J

• •









640 P.2d 1161 (1982).















the Airport.

9

I

• • I I I II II

• I I I

• I

• • J

• •









640 P.2d 1161 (1982).















the Airport.

9

I

• • I I I II II

• I I I

• I

• • J

• •









640 P.2d 1161 (1982).















the Airport.

9


I

• • • • I

• • • • • I

• • • • j

j

•

In other words, the percentage rent the State charges

based on off-Airport gross sales is clearly rent or a fee for the

use of Airport facilities (i.e., the right to use Airport

facilities to deliver to the Airport), which facilitles are

located on Public Trust Lands.

Based upon the foregoing, and HRS Section lO-2 as

amended by Act 304 and other related provisions, the Court finds

and concludes that the State is required to pay OHA its pro rata

portion of all rents or fees collected by the State from the Duty

Free concessions at the State's airports, including rents based

upon gross sales generated from the Waikiki Duty Free shop.

These rents are clearly "revenues" as provided in the above-cited

law.

There being no genuine issue of material fact, OHA is

entitled to partial summary judgment as a matter of law.

II. Plaintiffs I Motion Por Partial Summary Judgment On The Issue Of Revenues Prom The Housing Pinance And Development Corporation And Kawai'i Housing Authority, filed May 7, 1996.

The STATE's primary argument is based on the

proprietary/sovereign function distinction set forth in HRS

Section 10-2. However, the Court finds that:

(a) HRS Section lO-2 has a specific listing of

sovereign functions not to be included in the definition of

"revenues". The STATE's activities which are the subject of the

HFDC Motion are not specifically listed.

(b) More importantly, the Admission Act does not make

a similar distinction. While not addressing the issue of whether

10

I

• • • • I

• • • • • I

• • • • j

j

•













law.













10

I

• • • • I

• • • • • I

• • • • j

j

•













law.













10

I

• • • • I

• • • • • I

• • • • j

j

•













law.













10

I

• • • • I

• • • • • I

• • • • j

j

•













law.













10


I I I I I

• • • • • • • • • • • • • •

the Admission Act or HRS Chapter 10 should control, the Court

finds that the activities excluded from the DRS Section lO-2

definition of "revenues" must be strictly construed. Given the

nature of the STATE's activities (which are carried out by

private individuals also), the Court finds such activities to be

proprietary in nature.



IJ:J:. Plaintiffs I Motion Por Partial Summary Judgment On

The Issue Of Revenues Prom T.he Hilo Hospital,

filed May', 1996.

The Court refers to Section II set forth above since

the issues to be considered with respect to the Hospital Motion

are similar to those to be considered with respect to the HFDC

Motion.

The nincome" at issue here, comes from three sources:

(1) patient services fees, (2) cafeteria sales and (3) rental

income from Clinical Laboratories and Radiologic Associates,

lessees of the State at Hilo Hospital (collectively -Hilo

Hospital Income").

The Hilo Hospital Income is generated from proprietary

actions rather than through the exercise of sovereign functions

because courts in other jurisdictions have held that state

hospitals are proprietary, and not governmental nor ~overeign, in

function. Thomas v. Hospital Authority of Clarke County, 440

S.E.2d 195 (Ga. 1994) ; Hershel v. University Hospital Foundation,

II

I I I I I

• • • • • • • • • • • • • •











filed May', 1996.




Motion.





Hospital Income").







II

I I I I I

• • • • • • • • • • • • • •











filed May', 1996.




Motion.





Hospital Income").







II

I I I I I

• • • • • • • • • • • • • •











filed May', 1996.




Motion.





Hospital Income").







II

I I I I I

• • • • • • • • • • • • • •











filed May', 1996.




Motion.





Hospital Income").







II


I I I I I , , I , III

• , , • , • I

• •

610 P.2d 237 (Okl. 1980); Sides v. Cabarrus·Memorial Hospital,

213 S.E. 2d 297 (N.C. 1975). As noted by the court in Thomas:

(T)hat the function of a hospital is not, in essence, a governmental function is made apparent by our holding in Richmond . County Hospital Authority v. Richmond County, 255 Ga. 183, 184, 336 S.E.2d 562 (1985), wherein we reiterated the holding in Bradfield v. Hosp. Authority of Musc:ogee County, supra, that there is no apparent reason why a suitable private corporation could not properly operate a hospital, either as lessee or owner, so as to promote, in. the same way as a hospital authority, the public health functions of government. As another jurisdiction has phrased it:

while it may be an appropriate goal or objective of government to establish a hospital authority, it does not follow that the daily operations of such a hospital authority constitute a governmental function. Governmental functions more properly refer to the tasks of governing. There is, for example, a governmental character to activities such as the collection of taxes or the operation of a court system. But the services of healing offered by a public hospital are not governmental functions. Lykins v. Peooles Community Hosoital, 3SS F.Supp. 52, S3 (E.D.Mich.1973).

Thomas, 440 S.E.2d at 197 n 6.

While the State characterizes Hilo Hospital as an

exercise of its sovereign functions because it is mandated by

statute to provide public health services, it cannot deny anyone

health services, and, it has not traditionally operated at a

profit, such activities are not the hallmarks of ·sovereign

functions." Rather, the better view of whether or not the

12


• , , • , • I

• •












12


• , , • , • I

• •












12


• , , • , • I

• •












12


• , , • , • I

• •












12


• -• iI

• j

• • • • -• I

• • • j

I

activity is an exercise of sovereign functions turns on whether

the activity is among "those historically performed by the

government, and which are not ordinarily engaged in by private

corporations. " Sides v. Cabarrus Memorial Hospital,·· 213 S. E. 3d

at 303 (citing Hayes v. Billings, 240 N.C. 78, 81 S.E.2d 150

9~9S4) (erecting and maintaining a jail by a county); Hamilton v.

Hamlet, 238 N.C. 741, 78 S.E.2d 770 (1953) (installation and

maintenance of traffic light signals)).

Whether or not the activity as a whole is profitable

should not be a factor in making the determination of whether it

is proprietary or sovereign:

In the case sub iudice. there is no doubt that the hospital derived some pecuniary benefits from its day to day operations. In fact, it is common knowledge that hospitals derive "substantial revenues" from daily room rents, nursing care, laboratory work, etc. This is a crucial fact under our decisions. "Our city and county hospitals make charges for some of their services based on market value rather than actual expense, so that net revenues are obtained even though in particular instances the activity of the hospital as a whole maY be nonprofitable.-R. Ligon, North Carolina Hospital Law, supra, at 160. (Emphasis supplied.) However, the fact that the operation as a whole is nonprofitable is not determinative as to whether the activity will be classified as proprietary o~ governmental.

Id. Here, as admitted by the State, Hilo Hospital has

historically made money (i.e., operated at a profit) although the

public hospital system as a whole has not .

The STATE admits that Act 304 does not exclude the Hilo

Hospital Income from the definition of "revenues# and that there

13

• -• iI

• j

• • • • -• I

• • • j

I


















13

• -• iI

• j

• • • • -• I

• • • j

I


















13

• -• iI

• j

• • • • -• I

• • • j

I


















13

• -• iI

• j

• • • • -• I

• • • j

I


















13


• • • • • • • • • • • • • • • • • •

are "differences of opinion as to what kinds of activity .

constitute 'sovereign' func~ions#. Testimony of the Governor,

State of Hawai'i on S.B. No. 1698 H.D. 3 Proposed at 3. 1

Where Hilo Hospital Income is not specifically excluded, Act 304

must be construed broadly to include such income as -revenuesR•

The court finds that this is clearly a proprietary rather than

sovereign exercise of power which does not shield the Hilo

Hospital Income from Act 304's definition of ftrevenues ft .

There being no genuine issue of fact, OHA is entitled

to partial summary judgment as a matter of law.

IV. Plaintiffs' Motion For Partial Summary Judgment On The Issue Of Interest Income, filed May', 1996.

With respect to the Interest Motion, concerning the

interest that is claimed on any revenues which had not been paid

previously, but which are now being ordered to be paid pursuant

to the Court's earlier rulings on these motions, the Court finds

and concludes that the legislature clearly intended in Act 304

that interest be paid to Plaintiffs. Act 304 specifically

provides for interest of 6 percent for various revenues generated

from June 16, 1981 to June 17, 1982, and interest of 10 percent

for revenues generated thereafter.


entitled to partial summary judgment as a matter of law .

1 S.B. No. 1698, H.D. 3 Proposed attempted to amend §10-2 by including specific language that, among other things, -Moneys received by the departmen~ of health from the operations of . · . hospitals of its community hospital division .... - are excluded from the definition of ~revenuesn. Exhibit -Fw, S.B No . 1698, R.D. 3, a~tached hereto and incorporated by reference at 3.

14

• • • • • • • • • • • • • • • • • •
























14

• • • • • • • • • • • • • • • • • •
























14

• • • • • • • • • • • • • • • • • •
























14

• • • • • • • • • • • • • • • • • •
























14


-I I I I

-II I I I I I I I I 1

--I

•

CONCLUSl:ON

In accordance with the foregoing, IT IS HEREBY ORDERED,

ADJUDGED and DECREED that:

1. Plaintiffs' Motion For Partial Summary Judgment On



1996, be and hereby is GRANTED and partial summary

judgment be and hereby is ENTERED, adjudicating

and declaring that all of the concession fees or

rentals ("Lease Payments") paid to the State

pursuant to Lease No. DOT-ASO-19, Lease No. DOT-A-

88-1, and Lease No. DOT-A-92-13 for the years 1980

through the present (dDuty Free Concession

Agreements") are revenues derived from the Public

Land Trust, including those payments which are

based on gross revenues from the duty free store

located in Waikiki, and the State is required to

pay Plaintiffs its pro rata share of all such

Lease Payments.


The Issue Of Revenues From The Hilo Hospital,

filed May 7, 1996 be and hereby is GRANTED and

partial summary judgment be and hereby is ENTERED,

adjudicating and declaring, that Hilo Hospital's

patient service income (net of any Medicare and

Medicaid payments), cafeteria income, rent

lS

-I I I I


--I

•

CONCLUSl:ON


















Lease Payments.








lS

-I I I I


--I

•

CONCLUSl:ON


















Lease Payments.








lS

-I I I I


--I

•

CONCLUSl:ON


















Lease Payments.








lS

-I I I I


--I

•

CONCLUSl:ON


















Lease Payments.








lS


~ ,

II

-• • • • • •• • • II

• I

• • I

" .. •

received by the Hilo Hospital, and other

miscellaneous hospital income are revenues derived

from the Public Land Trust, and pursuant to the

Admission Act, the State Constitution, and HRS

Section 10-2, the State is required to pay

Plaintiffs its pro rata share of all of such

income derived from the Hilo Hospital.


The Issue Of Interest Income, filed May 7, 1996 be

and hereby is GRANTED and partial summary judgment

be and hereby is ENTERED, adjudicating and

declaring that Act 304 includes interest income

earned from ceded land revenues which were owed to

OHA but never paid by the State, and pursuant to

the Admission Act, the State Constitution, and HRS


Plaintiffs its pro rata share of the interest

income earned by the State from ceded land

revenues derived from the Public Land Trust •

4 . Plaintiffs' Motion For Partial Summary Judgment On

The Issue Of Revenues From The Housing Finance And

Development Corporation And Hawai.i Housing

Authority, filed May 7, 1996 be and hereby is

GRANTED and partial summary judgment be ~nd hereby

is ENTERED, adjudicating and declaring that

payments received by the Housing Finance and

16

~ ,

II

-• • • • • •• • • II

• I

• • I

" .. •



























16

~ ,

II

-• • • • • •• • • II

• I

• • I

" .. •



























16

~ ,

II

-• • • • • •• • • II

• I

• • I

" .. •



























16

~ ,

II

-• • • • • •• • • II

• I

• • I

" .. •



























16


University of Hawaii School of Law Library - Jon Van …...ruling on such issues at this time, and...

Documents

Transcript of University of Hawaii School of Law Library - Jon Van …...ruling on such issues at this time, and...