Grace Kealoha v. William Aila, Jr. ( 2022 )

NOT FOR PUBLICATION FILED
JAN 28 2022
UNITED STATES COURT OF APPEALS
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
GRACE KEALOHA; DANIEL ARIAS, Jr., No. 20-17430
Plaintiffs-Appellants, D.C. No.
1:19-cv-00274-DKW-WRP
v.
WILLIAM J. AILA, Jr., Interm Director, MEMORANDUM*
Department of Hawaiian Home Lands; et al.,
Defendants-Appellees,
and
UNITED STATES OF AMERICA,
Defendant.
Appeal from the United States District Court
for the District of Hawaii
Derrick Kahala Watson, District Judge, Presiding
Submitted January 18, 2022**
Honolulu, Hawaii
Before: O’SCANNLAIN, MILLER, and LEE, Circuit Judges.
The Department of Hawaiian Home Lands (“DHHL”) administers a
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
homesteading program on behalf of Native Hawaiians. See Hawaiian Homes
Commission Act, 1920, 42 Stat. 108 (1921) (codified as amended at Haw. Rev.
Stat. Ann., HHCA § 1 et seq. (West 2021)) (“HHCA”); HHCA § 202(a). Jacob
Tanner, a Native Hawaiian, leased a tract of land from DHHL but soon failed to
make the payments. Tanner agreed to transfer the lease to his sister, Grace
Kealoha, and her partner, Daniel Arias, Jr. But before the transfer was finalized,
DHHL cancelled the lease for delinquency and issued a notice of eviction.
Kealoha and Arias then filed suit under 42 U.S.C. § 1983 against the United
States, the State of Hawaii, DHHL, the Hawaiian Homes Commission, and various
DHHL officials and commissioners, alleging a violation of due process under the
Fifth and Fourteenth Amendments of the United States Constitution. The district
court granted summary judgment for the defendants. One week after summary
judgment was granted, Kealoha and Arias obtained new evidence and filed a
motion for reconsideration of summary judgment. The district court denied the
motion.
Kealoha and Arias appeal the district court’s grant of summary judgment
and denial of reconsideration. We have jurisdiction under 28 U.S.C. § 1291. We
review a grant of summary judgment de novo, Sandoval v. Cty. of Sonoma, 912
F.3d 509, 515 (9th Cir. 2018), and a denial of a motion for reconsideration of
without oral argument. See Fed. R. App. P. 34(a)(2).
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summary judgment for abuse of discretion, Far Out Prods., Inc. v. Oskar, 247 F.3d
986, 992 (9th Cir. 2001). We affirm.
1. The district court correctly granted summary judgment for the defendants
because Kealoha and Arias failed to establish a cognizable property interest in the
lease. To bring a due process claim, a plaintiff must “have a legitimate claim of
entitlement” to the deprived property under “existing rules or understandings that
stem from an independent source such as state law.” Bd. of Regents v. Roth, 408
U.S. 564, 576–77 (1972). This generally requires a plaintiff to demonstrate that
state law makes “the conferral of a benefit,” such as the lease at issue here,
“mandatory.” United States v. Guillen-Cervantes, 748 F.3d 870, 872 (9th Cir.
2014) (quoting Town of Castle Rock v. Gonzales, 545 U.S. 748, 760 (2005)).
Kealoha and Arias contend they have a cognizable property interest in the
lease in three ways. First, Kealoha and Arias claim that Tanner transferred the
lease to them before it was cancelled by DHHL and thus they were the lessees at
the time of cancellation. But this allegation is plainly refuted by the record. The
lease cancellation order was dated May 17, 2017, while Kealoha and Arias’ lease
transfer application was dated June 1, 2017. Thus, the documentary evidence
proves that DHHL cancelled the lease before Kealoha and Arias even completed
their transfer application.
Still, Kealoha asserts in a declaration that “[i]n 2016, representatives of
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DHHL informed us that our transfer application had been approved.” But her
statement is at odds with the record, including the pair’s original complaint in
which they alleged that they received the lease cancellation order from the
defendants on May 29, 2017, before they completed their transfer application on
June 1, 2017. Because Kealoha’s declaration is contradicted by the record, her
vague and self-serving statement does not create a genuine dispute of material fact.
Scott v. Harris, 550 U.S. 372, 380 (2007).
Second, Kealoha and Arias argue their minor children had a property interest
because the children were designated as “successors in interest” to the lease. But a
successorship interest does not constitute a cognizable property right under Hawaii
law. Under the HHCA, a lessee may designate a successor to his lease, but such
interest only vests “[u]pon the death of the lessee,” and the lessee maintains the
right to “change the beneficiary at any time.” HHCA § 209; see also Kahalewai v.
Rodrigues, 667 P.2d 839, 843 (Haw. Ct. App. 1983) (“HHCA § 209(1)
unequivocally . . . states that the lessee has the right to change such designated
beneficiary at any time.”). Kealoha and Arias have never claimed that Tanner is
deceased, so the children’s property interest remains unvested. And the children’s
successorship interest was not “mandatory” because it could be terminated at
Tanner’s discretion. See Guillen-Cervantes, 748 F.3d at 872.
Lastly, Kealoha and Arias claim they have an “equitable property interest”
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in the lease because they made substantial financial investments in the property,
lived on the property for several years, and relied on DHHL’s assurances that the
property would be transferred. Hawaii law, however, does not recognize such
equitable property interests. Relevant provisions of the HHCA make clear that
property interests are created by DHHL grant, not equity. See HHCA § 207(a)
(“The department is authorized to lease . . .”); § 208(5) (“The lessee shall not in
any manner transfer . . . the lessee’s interest . . . except . . . with the approval of the
department.”). Because Kealoha and Arias’ alleged “equitable interest” is not
recognized under Hawaii law, their due process claim fails. See Roth, 408 U.S. at576–77.
2. We affirm the district court’s denial of the motion for reconsideration
because Kealoha and Arias failed to exercise due diligence in discovering the new
evidence. A party moving for reconsideration under Rule 59(e) because of “newly
discovered evidence” must show that “(1) the evidence was discovered after trial,
(2) the exercise of due diligence would not have resulted in the evidence being
discovered at an earlier stage and (3) the newly discovered evidence is of such
magnitude that production of it earlier would likely have changed the outcome of
the case.” Far Out, 247 F.3d at 992–93 (emphasis added) (quoting Defs. of
Wildlife v. Bernal, 204 F.3d 920, 929 (9th Cir. 2000)).
After summary judgment, Kealoha and Arias obtained new evidence from
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Michael Kahikina, a DHHL official. But Kahikina was a named defendant, so the
pair were familiar with him since the start of litigation and could have earlier
obtained the evidence through deposition or interrogatories. And they had ample
time to do so, as the pair filed suit well over a year before summary judgment was
granted. While perhaps it is understandable that Kealoha and Arias did not want to
engage in costly discovery at an early stage of litigation, they still could have
uncovered this new evidence with due diligence. Moreover, the COVID-19
pandemic provides no excuse, as the litigation commenced in May 2019, well
before the onset of the pandemic in March 2020. For these reasons, the district
court did not abuse its discretion in finding that Kealoha and Arias failed to
exercise due diligence.
AFFIRMED.
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