The battle over Koke‘e

Some Koke‘e Park leaseholders are mulling over legal options following a state judge’s decision ruling the state doesn’t have to compensate lessees for taking their cabins.

“It is a disappointment,” Paul Matsunaga, among more than 30 plaintiffs in a 5th Circuit Court lawsuit, said of state Judge Kathleen Watanabe’s decision last week. “We don’t necessarily agree with her ruling, but that is her job.”

Watanabe sided with state attorneys in ruling the leaseholders did not own the cabins and were required to give them up without compensation when the cabin leases end Dec. 31.

Matsunaga said the plaintiffs were aware a surrender clause existed, but insisted “nothing in the lease said (the state) would not pay for taking” the cabins.

Matsunaga said he and others plan to meet with Kaua‘i attorney Daniel Hempy today to consider an appeal. Hempy could not be reached yesterday.

A second and separate lawsuit challenges the planned auction of more than 110 cabins in the Koke‘e and Waimea State Park complex.

A second faction of leaseholders has asked a state judge to halt an auction of the cabins and wants the state to investigate a DLNR board decision not to allow direct negotiations with owners whose cabins are 50 years and older and are of historic design.

Pending the outcome of the lawsuits, the state has implemented a month-to-month revocable permit system for the cabins.

Peter Young, chairman of the Board of Land and Natural Resources, said the leaseholders and state Department of Land and Natural Resources can debate indefinitely, but the court system will have the final say.

“We want to get clarification from the court,” Young said. “And once we get clarification, that will determine what will happen in the future.”

Deputy Attorney General William Wynhoff said the plaintiffs never explained where “this right to just compensation came from in the first place.”

The leaseholders don’t own the cabins, as they claim, as the concept of ownership has different shades of meaning, Wynhoff said.

“A lessee has a limited bundle of rights,” he wrote. “Under Hawai‘i law, this bundle of rights doesn’t not include ownership of improvements after the lease ends.”

He said some of the 51 leaseholders who lost their leases in a 1985 auction got a fair price on cabins sold to incoming buyers, but none received “just compensation from the state.”

The deputy attorney also states Wayne Sakai, an attorney for those who secured leases in 1965, also acknowledged a 1985 lease “surrender clause” saying the state owns the improvements.

“The 1985 leases do not leave any room for a claim to just compensation,” Wynhoff wrote. “The deal was always the same — permittees and lessees were required to build and maintain cabins on the lots.”

Furthermore, the leaseholders were required to “either remove the cabins or surrender them to the government,” Wynhoff said.

Private property interests for the cabins also didn’t come up in either the 1965 or the 1985 leases, he said.

But Hempy says the 1985 leaseholders and those who acquired leases in subsequent years actually own the cabins and the state’s acquisition of the structures without compensation violates the federal and state constitution.

The right to compensation when government takes property “predates our very democracy” and “appears as early as the Magna Carta in 1215,” Hempy wrote.

The plaintiffs have shown ownership of the cabins by having built, bought or inherited them, he said.

In waiving fire insurance in the 1985 leases, the state acknowledged the cabins were privately owned, he said.

As well, the state could not set the value of the cabins because it didn’t own them, Hempy said.

Hempy said plaintiffs can’t fathom how the state can claim the leaseholders don’t own the cabins, but have a right to remove them through the state’s comprehensive district use application permit.

As additional proof of ownership, many of the leaseholders have used their cabins as they have seen fit over the last two decades, Hempy said.

And until the trial started late this year, the DLNR had always considered the leaseholders the owners of the cabins, Hempy contended.

• Lester Chang, staff writer, can be reached at 245-3681 (ext. 225) or lchang@kauaipubco.com.