[31 ASR2d 122]
CONGREGATIONAL
v.
High Court of
Land and Titles Division
LT No. 3-96
January 13, 1997
[1] A lessor waives its right to
object to an assignment of a lease when it accepts the assignee’s performance
under the lease terms, even if the lessee acted without the lessor’s affirmative
consent to the assignment.
[2]
The Legislature of
[3] The
Legislature has 30 days after it receives a lease of ASG land for a period of 10
years or longer to adopt a disapproval resolution under § 37.2030. Any lease subject to legislative review
becomes effective only after this 30-day period passes without negative
action.
[4] For the purposes of A.S.C.A. §
37.2030, the formal distinction between a lease “extension,” which continue an
existing lease, and a lease “renewal,” which create an entirely new lease is
irrelevant when a[31 ASR2d 123]
lessee has unilateral power to continue the leasehold. Unilateral options can give a lessee
complete and exclusive control over the use of land, whether they are
"extensions" or "renewals," for prolonged periods without legislative review,
something that § 37.2030 is designed to prevent.
[5]
Where, in addition to entry into possession under an
invalid lease, rent is paid and accepted under the lease, a periodic tenancy is
created. By the payment and
acceptance of such rent, the parties have given further indication of their
intention to be bound by the invalid lease, and the periodic tenancy provides a
measure of security of their expectations. A periodic tenancy was terminable
at the will of either the lessor or the lessee with one month’s notice.
[6] A claim of denial of due process,
either procedural or substantive, cannot be sustained, absent proof of a
deprivation of a ‘liberty’ or ‘property’ interest within the meaning of the Due
Process Clause of Article I, § 2 of the Revised Constitution of American Samoa,
or of the Fifth or Fourteenth Amendments of the U.S. Constitution.
[7]
Not every interest is protected by procedural due process
guarantees. The claim must be
derived from a statute or legal rule or through a mutually explicit
understanding to be an enforceable right or entitlement.
[8]
Though
courts have eschewed rigid definitions of “liberty” and “property”
interests, we believe that an interest in continuing an at-will periodic tenancy
is not a constitutionally protected “liberty” or “property” interest. An at-will tenant may have a subjective
need or desire for the relationship to continue but not a legitimate expectation
for it to continue.
[9] One’s interest in securing a
future leasehold interest is not a constitutionally protected “liberty” or
“property” interest. It stretches
the concept of “liberty” and “property” too far to suggest that a person is
deprived of liberty or property because an at-will periodic tenancy is not
affirmatively prolonged.
[10] Although the governor may
voluntarily choose to grant audiences to anyone who seeks to maintain an at-will
periodic tenancy or who proposes to lease government land, the due process does
not mandate that the governor must conduct formal administrative hearings
whenever he exercises his discretion to terminate an at-will periodic tenancy or
acts on a proposal to lease government land.
[11] Although the ASG’s Parks and
Recreation Commission is a statutory agency of the ASG's Executive Branch, it is
not a “commission[31 ASR2d 124] . .
. authorized by law to make rules or to determine contested cases." A.S.C.A. § 4.1001(a).
[12] This court functions to ensure
that the executive branch respects a party’s substantive due process rights by
determining whether decisions of the governor and his executive agencies were
arbitrary and capricious, pretextual, or without a rational basis.
[13] A decision regarding the lease of
government land is a matter solely within the governor’s discretion.
[14] Although land use regulations
impact activities on land and the manner in which an owner or possessor deals
with land, they do not divest title interests within the meaning of Article I, §
3, the Bill of Rights of the American Samoa Revised Constitution of 1967, and
therefore, are not subject to the double enactment requirement of Article I, §
3.
[15]
Rulemaking under the Administrative Procedures Act requires several
procedural steps, including: 1) the rule-making agency must give at least 20
days notice of adoption, amendment, or repeal of any non-emergency rule,
A.S.C.A. §§ 4.1004 and 4.1010, which must include statutorily required
information, and be mailed to interested persons or publicized in all ASG
operated broadcasting media, A.S.C.A. § 4.1004; 2) the agency must give all interested
persons reasonable opportunity to submit “data, views, and arguments, orally or
in writing,” either at a public or other suitable means, and consider those
submissions before the rule is adopted, amended, or repealed, A.S.C.A. §
4.1005; 3) the agency must file the
rule with the Secretary of American Samoa, and with the Clerk of the House of
Representatives and the Secretary of the Senate of the Legislature, A.S.C.A. §
4.1008 (the rule become effective 20 days after the filing is complete, or later
if required by statute or rule, A.S.C.A. § 4.1009(c)(1)); and 4) the agency must
make the rule available for public inspection. A.S.C.A. §
4.1020(a).
[16] Except as to any person who has
actual knowledge of a rule, no agency rule is valid or effective until the
public inspection requirement, A.S.C.A. § 4.1020(a), has been
met.
[17] The court
will accept an agency’s letter and printed rule as demonstrating substantial
compliance with all applicable procedures, including a public hearing and public
inspection, except the requisite filing.[31 ASR2d 125]
[18] Despite procedural deficiencies,
administrative rules are valid and enforceable against persons who have actual
knowledge of the rules. A.S.C.A. § 1009(b).
Before
Counsel:
For Plaintiff Congregational
For Plaintiff Amerika Samoa Bank, William H.
Reardon
For Defendant
Opinion and Order:
On February 2, 1996,
plaintiffs Congregational Church of Jesus in
The court issued a temporary
restraining order forestalling the ASG from immediately evicting the CCJS and
stopping the CCJS's use of the leased premises. On February 14 and 15, 1996, the court
regularly heard the order to show cause on issuing a preliminary injunction to
the same effect pendente lite. All
counsel were present.
During
the hearing, the court advanced and consolidated the trial on the merits with
the hearing on the preliminary injunction application, in accordance with
T.C.R.C.P. 65(a). At the conclusion
of the hearing, the court imposed a preliminary injunction, incorporating the
terms of the temporary restraining order.
On February 26, 1996, the ASG answered the complaint and counterclaimed
for alleged violations of the American Samoa Coastal Management Act, for summary
eviction, and for unpaid liabilities under the lease. The court conducted further trial
proceedings on May 13 and 14, 1996, with all counsel
present.
The
story of the present controversy truly began in 1986 and puts at issue some 0.83
acres of land, within or immediately adjacent to
On
October 24, 1986, the ASG leased the land to Coral Corporation ("Coral"), an
Coral
was to operate indoor recreational facilities on the premises, featuring
bowling, eating, and related activities.
Coral could, with the ASG's prior written consent, use the premises for
other commercial or business purposes, not inconsistent with the ASG's policies
and plans then in effect for
The
initial lease term was nine years, from October 20, 1986, to October 19,
1995. Coral was given options to
renew the lease for four successive nine-year terms, by exercising the option in
writing at least three months prior to the end of the first and each succeeding
term.
Coral
was allowed rent-free use of the land for the first six months. It was then required to pay monthly,
beginning in April 1987, $900 in rent for the land, along with $245 on the
amortized $25,000 of the purchase price of the building and fixtures. The rent was subject to periodic
adjustments, pursuant to A.S.C.A. § 37.2025, fixed by renegotiation or
arbitration. Coral was also
committed to, and did, invest a minimum of $575,000 in the premises during the
first lease year to carry on the authorized purposes of the
lease.
Paragraph E of clause 15 of the lease permitted Coral to
assign the lease or sublet the premises, with the ASG's prior written consent,
not unreasonably withheld; provided that Coral remained primarily liable for
performance of the lessee's lease obligations and the premises continued to be
used only for the purposes permitted by the lease, unless the ASG gave prior
written consent for other uses.
Coral
or any successor was authorized under paragraph O of clause 15 of the lease, as
amended on December 5, 1988, to use the leasehold, with the ASG's prior written
consent, not unreasonably withheld, to secure loans by commercial financial
institutions for purposes related to the lease purposes; provided that, in the
event of a default of the loan, the[31
ASR2d 127] security agreement must require the lending institution to assume
all of the lessee's lease duties, including the rental payments.1
On
June 29, 1987, the ASG consented to Coral's mortgage of the leasehold to the
ASB. The consent gave the ASB the
right to enforce the mortgage, including upon foreclosure authority, without the
ASG's further consent, to sublet or assign the leasehold, so long as the
assignee assumed all of the lessee's lease obligations. The ASG's consent to mortgage remained
unchanged when paragraph O was amended.
Contemporaneously with the paragraph O amendment, on
December 5, 1988, the ASB loaned Coral $660,000. The loan proceeds were used primarily to
acquire furniture, fixtures and equipment for the recreational facilities on the
premises, with those items as the collateral for the loan. The ASB made another smaller loan to
Coral a year later.
The
bowling alley operation failed once again, and on November 15, 1990, the ASB
commenced action against Coral, CA No. 101-90,2 to collect on the loan promissory notes,
foreclose on the loan security, and appoint a receiver. The court appointed the ASB as the
receiver on December 6, 1990. The
ASB carried on as the receiver until it was discharged in 1993 after the CCJS
entered the picture in 1992.
On
July 5, 1991, Coral notified the ASG's Real Property Management Board in writing
of its intentions to suspend operations, except for the lounge and restaurant,
and sell the existing bowling furniture, fixtures and equipment, and requested
the board's approval to rent the bowling alley space for storage or warehouse
purposes while searching for an experienced
On
August 18, 1992, the CCJS purchased the building and fixtures from Coral, and
Coral assigned leasehold to the CCJS.
The ASB also loaned[31 ASR2d
128] the CCJS $675,000 to finance the acquisition, secured by the leasehold
and the building and fixtures.3
On August 28, 1992, in CA No. 101-92, the court approved the
transactions, and the ASB paid the ASG $27,150 to bring the lease rent and
amortization payments to the ASG current.4
From
August 18, 1992 to the present time, the CCJS used the premises to conduct
fund-raising bingo games in the building, renamed "Tautua Community Hall"
("hall"), and rented the hall for the same purpose, regularly to other churches
but also to the ASG (for a proposed sports stadium) and occasionally for other
meetings. 5
The CCJS also subleased restaurant and lounge space. The CCJS held a "grand opening" in
September 1992, which included bingo in the program. The Governor attended this event.
During
this period, the CCJS made the lease rent and amortization payments to the ASG
through the ASB. The ASB did not
deliver the payment checks to the ASG every month but did deliver them at
frequent intervals. Apparently the
CCJS and ASB thought that the payments were totally current. However, as of October 19, 1995, when
the initial term of the lease and the amortization payment period ended, $10,800
was still outstanding on the total of the rent and amortization payments due for
that period. The amount due the ASG
on this combined amount was reduced to $2,550 as of December 31, 1995. The CCJS and ASB acknowledged and are
ready to pay this deficit.
The
CCJS is current in paying the note to the ASB for the $675,000 loan. The outstanding balance on this
long-term note is approximately $600,000.
On
August 19, 1994, the CCJS applied for land use and building permits to construct
extensions on both sides of the hall.
The estimated project completion date was September 30, 1994. However, the ASG's Development Planning
Office ("DPO") did not forward the application to the Governor until February
14, 1995. The Governor signed the
declaration of ASG-owned land on February 21, 1995, and returned the application
to the DPO on February 22. Then, on
March 15, 1995, the DPO advised the CCJS to apply separately to the ASG's Zoning
Board for a variance.
The CCJS received clear, written
direction from the ASG not to begin construction until both the land use and
building permits were issued. The
CCJS also understood that application for those permits would be processed under
the ASG's project notification and review system ("PNRS"), which is administered
by a board comprised of representatives of the ASG agencies concerned with land
use development, and issued only when the application review is completed with
all necessary agency approvals.
Nevertheless, the CCJS ignored this admonition and proceeded to construct
the extensions.
The
ASG caught up with this violation and discovered other violations in early 1995,
and then issued formal stop orders on the partially but significantly completed
work on February 16 and 22, 1995.
However, the CCJS continued the construction, at least for a time. On February 28 and March 10, 1995, the
ASG's site inspectors recorded noncompliance with a 50-foot stream setback and
additional parking space requirements for commercial developments, and
unauthorized drainage into the adjacent stream through a pipe extending from the
hall, in addition to the lack of permits, and recommended denial of the
application for the permits and removal of the extensions.
On
March 23, 1995, with the PNRS board's prior approval, the board's chairman,
citing the lack of permits, stream setback, and stop order violations, and
citing the civil penalties provision of the American Samoa Coastal Management
Act of 1990 ("ASCMA"), gave the CCJS 60 days to either remove the extensions and
certain solid waste (largely scrap metal) behind the hall or pay a $30,000 fine
and dispose of this waste, and 15 days to notify the DPO of its decision.
Apparently, representatives of the CCJS and the DPO had
several discussions about the situation after the CCJS received the March 23
letter. However, on May 23, 1995,
the CCJS informed the DPO that it opted for the fine alternative, but requested
abeyance pending the Governor's follow-up decision on the matter when the
Governor returned from an off-island journey.[31 ASR2d 130]
The
deadline for the CCJS's exercise of the option to renew for the second nine-year
term of the lease was July 19, 1995.
The CCJS let this date pass without exercising the option. No other significant developments
occurred, at least in evidence, until September 1995. The ASG's Parks and Recreation Commission
("PRC") became active in the matter in that month.
On
September 12, 1995, CCJS and ASB representatives were notified by telephone of a
PRC meeting to take place the following day. The CCJS and ASB representatives
conferred about the meeting and also the expiration date of the initial term of
the lease. They prepared a letter
addressed to the ASG's Director of Administrative Services to exercise the
option to renew the lease for the next nine-year term.
The
CCJS and ASB representatives attended the PRC meeting on September 13,
1995. The PRC discussed but did not
make any decisions on the CCJS situation.
After the PRC meeting, the CCJS and ASB representatives met with the
Lieutenant Governor, who was then the Acting Governor. After they explained the current lease
situation, the Acting Governor signed the approval line on the letter exercising
the option to renew.
The
PRC next met on the matter on October 12, 1995. This time the CCJS and the ASB received
no notice and did not attend the meeting, but again the PRC only reviewed the
CCJS situation and did not take any final action. However, the PRC took a different tack
on November 1, 1995, with a reconstituted membership. This time the PRC voted to notify the
CCJS that the lease would not be renewed.
The CCJS and ASB received no notice of the meeting and were not in
attendance.
On
November 7, 1995, the PRC forwarded this recommendation to the Governor, and the
Governor in turn notified the CCJS.
Both documents gave as reasons the untimely exercise of the option to
renew, disallowed use of the premises, accumulated solid waste and, in
connection with the hall extensions, the lack of land use and building permits,
disregard of the stop orders and violation of the mandated stream setback. The CCJS was told to vacate the premises
by January 1, 1996. The Governor
also advised the CCJS that the ASG opted not to purchase the building, equipment
and other personal property as permitted under clause 13 of the
lease.
The
CCJS and ASB asked the Governor to reconsider this decision, and on November 28,
1995, the Governor directed the PRC to meet on the issue, saying he would
support whatever decision the PRC reached.
On November 29, 1995, the PRC re-examined the matter and renewed the[31 ASR2d 131] decision to terminate the
lease. Once again the CCJS and ASB
were not notified and did not attend this meeting. They learned of this development when
the Governor wrote to the CCJS on December 20, 1995 and repeated the ASG's
position taken on November 7, 1995, except to delay the termination date to
January 15, 1996.
The
ASB, on January 11, 1996, and the CCJS, on January 16, 1996, reiterated their
appeals to the Governor. The
Attorney General responded. On
January 23, 1996, he ordered both entities to surrender the premises and remove
any personal property within 10 days of receipt of this notice on the grounds
that the CCJS and ASB were trespassers.
The CCJS and ASB filed this action on February 2,
1996.
I. Claims by the CCJS and
ASB.
A. Standing.
First
and foremost, this court must address the issue of the CCJS's and ASB's standing
to claim redress. The ASG argues
that the CCJS and ASB have no standing to assert any rights under the lease
agreement ("Coral lease") and related documents because the assignment of the
Coral lease from Coral to the CCJS was invalid.
The
ASG correctly points out that, under paragraph E of clause 15 of the Coral
lease, the ASG's prior written consent is an essential prerequisite to a valid
lease assignment by the lessee.
However, the ASG incorrectly claims that the Coral lease was assigned to
the CCJS without such consent.
1. Actual consent.
On
June 29, 1987, the ASG consented in writing to Coral's mortgage of the leasehold
to the ASB to secure loans by the ASB to Coral. The ASG also consented to the
following arrangement in that document: that “upon foreclosure thereof the
Mortgagee [the ASB] may without further consent of the Lessor [the
ASG] or the Lessee . . . sell and assign the leasehold estate by
assignment . . . .” See
Trial Exh. D (emphasis added).
The
ASG’s consent was not withdrawn, and was therefore still effective in 1990, when
the ASB first chose to judicially foreclose the mortgage, with an interim
receivership to keep the premises operational, and on August 18, 1992, when
Coral assigned the leasehold to the CCJS.
The ASG had actual knowledge that the ASB was pursuing these remedies in
accordance with the 1987 consent to mortgage, and the ASG failed to[31 ASR2d 132] object.6
Therefore, the Coral lease was assigned to the CCJS with the ASG’s actual
consent, given on June 29, 1987.
2. Waiver.
[1] The ASG waived its right to object to the lease assignment to
the CCJS when it accepted the CCJS’s performance under the lease terms, even if
Coral acted without the ASG's affirmative consent to the assignment. See Pacific Gas & Electric Co. v.
Universal Electric & Gas Co., 271 P 377 (Cal. App. Ct. 1928) (citing
Staples v.
Thus,
alternative grounds exist for finding a valid assignment of the Coral lease to
the CCJS: (a) because the ASG operatively consented to the assignment of the
Coral lease to the CCJS by the 1987 consent to mortgage, or (b) because the ASG
waived its right to object to the assignment when it accepted the CCJS's
performance of leasehold obligations.
We therefore hold that the CCJS has standing to sue as the assignee of
the lessee’s interest in the Coral lease, and the ASB has standing as the CCJS's
leasehold mortgagee.
B. Declaratory relief.
Next,
we address the CCJS's and ASB's request for declaratory relief as to the rights
and duties of the parties to the Coral lease.
1. The Coral lease was never
effective.
[2-3] The Legislature of
Legislative review provides another and broader perspective
to guard against improvident long-term public land use. The statute provides the Legislature
with a check on the Governor's executive power, by giving the Legislature the
opportunity to review and disapprove any lease that will give the lessee an
interest in government land for more than 10 years. Thus, the statute rationally and
reasonably serves a legitimate public policy interest.
[4] The Coral lease granted the lessee, Coral, or its assigns, the
unilateral power to “renew” the lease for up to four successive terms of nine
years each for a total of 45 years.
The law traditionally distinguishes lease “extensions," which continue an
existing lease, from lease “renewals,” which create an entirely new lease. See Haleck v. Lee, 4 A.S.R. 519, 540-41, 554-55 (Trial Div. 1964). For the purposes of A.S.C.A. § 37.2030,
however, this formal distinction is irrelevant when, as in this case, a lessee
has unilateral power to continue the leasehold. Unilateral options can give a lessee
complete and exclusive control over the use of land, whether they are
"extensions" or "renewals," for prolonged periods. Section 37.2030 is designed to prevent
the ASG Executive Branch from entering into leases that tie up government land
for 10 years or more without the Legislature's independent evaluation. This court cannot overlook a legislated
directive and grant the ASG's Executive Branch carte blanche to tie up public
land and avoid legislative review for an extensive period, simply by entering
into leases that give lessees unilateral options to “renew” for a series of
terms of less than 10 years each--the method employed in the Coral lease. We will not permit application of the
technical legal distinction between extensions and renewals of leases to subvert
lawful public policy enacted by the Legislature. See Haleck v. Governor, 4 A.S.R. 968, 973 (App. Div. 1971).
The
Coral lease, entered into after June 25, 1986, and potentially binding for 45
years, has never been subjected to legislative review. Therefore, the Coral lease has never
become “effective," in accordance with the mandate of A.S.C.A. § 37.2030.[31 ASR2d 134]
2. Effect of an invalid lease.
[5]
The Restatement
(Second) of Property § 2.3, comment d.,7 states:
Where, in addition to entry into possession under an invalid lease, rent
is paid and accepted under the lease, a periodic tenancy is created. By the payment and acceptance of such
rent, the parties have given further indication of their intention to be bound
by the invalid lease, and the periodic tenancy provides a measure of security of
their expectations.
Coral
and the CCJS, its assignee, took possession of the land under an invalid lease,
yet the ASG accepted payment of monthly rent from both Coral and the CCJS under
the terms of the Coral lease. The
parties thus created and maintained an at will periodic tenancy with all the
terms of the Coral lease except duration.8
On
November 7, 1995, the ASG notified the CCJS that the ASG decided to terminate
the tenancy with the CCJS and directed the CCJS to vacate the premises by
January 1, 1996, which was later postponed to January 15, 1996. The ASG thus gave at least one month’s
notice, as is required to terminate a periodic tenancy involving monthly rental
payments.
Therefore, we conclude that the CCJS no longer has any
rights to occupy the land beyond those of any holdover tenant at sufferance, and
that we[31 ASR2d 135] cannot grant
the CCJS's and ASB's request to enjoin the ASG from attempting to evict the CCJS
from the property through lawful means.
3. Due process.
The
CCJS and ASB also submit that the decision of the Governor and the PRC to end
the Coral lease deprived them of both procedural and substantive due process of
law.
a. Right to a hearing.
[6] A claim of denial of due process, either procedural or
substantive, cannot be sustained, absent proof of a deprivation of a ‘liberty’
or ‘property’ interest within the meaning of the Due Process Clause of Article
I, § 2 of the Revised Constitution of American Samoa, see Ferstle v. American
Samoa Govt., 7 A.S.R.2d 26, 49 (Trial Div. 1988), or of the Fifth or
Fourteenth Amendments of the U.S. Constitution. Webster v. Redmond, 599 F.2d 793,
796 (7th Cir. 1979), cert. denied, 444
[7] Not every interest is protected by procedural due process
guarantees. See Board of Regents
v. Roth, 408
[8] Though
the CCJS and ASB believed that the Governor and PRC were depriving them of a
leasehold and related entitlements without affording them an opportunity to be
heard, the CCJS and ASB were in legal reality requesting that the Governor
either continue an at-will periodic tenancy or establish a new lawful
lease. Though courts
have eschewed rigid definitions of “liberty” and “property” interests, we
believe that an interest in continuing an at-will periodic tenancy is not a[31 ASR2d 136] constitutionally
protected “liberty” or “property” interest. An at-will tenant may have a subjective
need or desire for the relationship to continue but not a legitimate expectation
for it to continue. Roth, 408
[9] Additionally, we believe that one’s interest in securing a future
leasehold interest is not a constitutionally protected “liberty” or “property”
interest. In Board of Regents v.
Roth, the United States Supreme Court rejected the proposition that a
university deprived a teacher of procedural due process when it failed to
provide the teacher with a hearing after deciding not to rehire him following
the expiration of his one-year contract.
408
[10] The Governor may voluntarily choose to grant audiences to
anyone who seeks to maintain an at-will periodic tenancy or who proposes to
lease government property. However,
we hold that due process does not mandate that the Governor must conduct formal
administrative hearings whenever he exercises his discretion to terminate an
at-will periodic tenancy or acts on a proposal to lease government land.
b. The PRC's role.
Although we find that due process did not require any
hearing on this matter because the CCJS’s interests were not constitutionally
protected “property” interests, we want to discuss the nature of the PRC’s[31 ASR2d 137] administrative
proceedings. The CCJS and ASB aver
that the PRC is an agency for purposes of the Administrative Procedures Act
("APA"), A.S.C.A. §§ 4.1001-4.1044, and conducted hearings concerning the Coral
lease, which evolved into a contested case under the APA and thus required
unafforded due process rights of reasonable notice and an opportunity to be
heard. The ASG views the PRC as a
non-APA agency providing advisory decisions and without authority to process a
contested case.
[11] We agree with the ASG’s position.
Unquestionably, the PRC is a statutory agency of the ASG's Executive
Branch. A.S.C.A.
§ 18.0101(a). An APA agency,
however, "means each . . . commission . . . authorized by law to make rules or
to determine contested cases."
A.S.C.A. § 4.1001(a).10
A.S.C.A. § 18.0102, which outlines the PRC’s powers and duties, does not
authorize the PRC to make rules or to adjudicate disputes. The statute merely empowers the PRC to
"develop policies and programs,” to “review and make recommendations to the
Governor,” and to “perform other assignments as the Governor may make.” A.S.C.A. §
18.0102. The PRC’s meeting
minutes show that the PRC regularly makes recommendations to the Governor on
private uses, by lease or license, of park lands. But offering recommendations is neither
rule making nor adjudication. The
PRC's action did not “determine” the CCJS's or ASB's legal rights, duties, or
privileges. A.S.C.A. § 4.1001.
Therefore, since the PRC proceedings did not constitute
resolution of a contested case under the APA, we also hold the CCJS and ASB had
no right to notice of, or meaningful participation in, the PRC meetings, as a
matter of procedural due process.
c. Substantive due process
claims.
We
also conclude that the Governor's decision to terminate an at-will tenancy or to
accept or decline a proposal for a new lease is not vulnerable to substantive
due process attacks. We emphasize
that because a periodic tenancy is not a constitutionally protected property
interest, substantive due process was not violated.[31 ASR2d 138]
[12] However, we wish to address the CCJS's and ASB's contention that
the ASG’s actions were an abuse of discretion. This court ensures that the ASG's
Executive Branch respects a party’s substantive due process rights by
determining whether decisions of the Governor and his executive agencies were
arbitrary and capricious, pretextual, or without a rational basis. Anthony v.
[13] The Governor has “general supervision and control” of the
ASG's executive functions, A.S.C.A. § 4.0111(b), including the lease of
government land. We believe that a
decision regarding the lease of government land is a matter solely within the
Governor’s discretion. See Ferry
v. Udall, 336 F.2d at 712 (stating that a “decision of whether or not it
would be in keeping with sound policy to sell a particular parcel of land at a
certain offered price involves the exercise of informed discretion.”).
The
Governor was fully aware of the CCJS's and ASB's desire to continue the Coral
lease, consulted with the PRC, and decided to terminate the Coral lease. He gave as reasons the untimely exercise
of the option to renew for a second nine-year term, disallowed use of the
premises, accumulated solid waste, disregard of land use and building permitting
system, and violation of the stream setback. We cannot say on the evidence that the
Governor’s decision was arbitrary, capricious, or an abuse of his
discretion. Therefore, we also
conclude that his decision did not deprive the CCJS and ASB of substantive due
process from this perspective.
Since
we hold that the CCJS's and ASB's claims are without merit,11 we now turn to the ASG's
counterclaims.
II. The ASG’s
counterclaims.
A.
The
ASG alleges that the CCJS violated the laws enacted and administrative rules
promulgated in support of the
1. The constitutionality of the American
Samoa Coastal Management Act of 1990.
First,
as a defense, the CCJS and ASB challenge the constitutionality of the American
Samoa Coastal Management Act of 1990 ("ASCMA"). A.S.C.A. §§
24.0501-24.0510. This issue
is particularly important, because the ASCMA provides the legal foundation for
land use permits, A.S.C.A. § 24.0505, and the
implementing administrative rules ("ASCMP rules") for the land use permit
system. A.S.C.A.
§ 24.0506.
The
CCJS and ASB argue that the ASCMA was enacted in violation of the policy
protective legislation provision set forth in Article I, § 3 the Bill of Rights,
of the American Samoa Revised Constitution of 1967. This section
reads:
Section
3. Policy protective legislation. It shall be
the policy of the Government of American Samoa to protect persons of Samoan
ancestry against alienation of their lands and the destruction of the Samoan way
of life and language, contrary to their best interests. Such legislation as may be necessary may
be enacted to protect the lands, customs, culture, and traditional Samoan family
organization of persons of Samoan ancestry, and to
encourage business enterprises by such persons. No change in the law respecting the
alienation or transfer of land or any interest therein, shall be effective
unless the same be approved by two successive legislatures by a two-thirds vote
of the entire membership of each house and by the Governor (emphasis
added).12
The
Legislature enacted ASCMA only once in P.L. 21-35. Thus, the issue centers on the meaning
of the phrase "alienation or transfer of land or any interest therein." The CCJS and ASB interpret this phrase
to apply to legislation respecting interests in land of any kind and
nature. The ASG applies the phrase
to legislation respecting the alienation or transfer of any title interests,
legal or equitable, in land.[31 ASR2d 140]
[14] We agree with the ASG's position on this issue. The policy set forth in § 3 is
straightforward and clear. The
protection afforded the Samoan people is prevention of the loss of their lands
and way of life and language. Land
use regulations impact activities on land and the manner in which an owner or
possessor deals with land, but they do not divest title interests. Land use regulations also do not
inherently impair cultural patterns.
We do not find any ASCMA provisions that require double enactment, and
therefore hold that the act is valid as enacted.
2. The validity of the American Samoa
Coastal Management Program rules.
Second, the CCJS and ASB question the validity of the ASCMP
rules, adopted by the Director of the Development Planning Office ("DDPO")
pursuant to A.S.C.A. § 24.0506(a).
In general, rule making is an essential component of the administrative
process and is often the preferred procedure for the evolution of agency
policies. Trans-Pacific Freight
Conference of Japan/Korea v. Federal Maritime Commission, 650 F.2d 1235,
1244-45 (D.C. Cir. 1980), cert. denied, Sea-Land Service, Inc. v. Federal
Maritime Commission, 451 U.S. 984 (1980). Administrative rules serve the important
function of implementing the a legislature's will
without engaging in the time-consuming and often unfair process of case-by-case
adjudication. See Ernst &
Ernst v. Hockfelder, 425
The
CCJS and ASB challenge the ASCMP rules on the grounds of noncompliance with the
rule-making process set forth in the APA.13
The ASG resists that challenge on the grounds that the CCJS failed to
demonstrate prejudice by any rule-making deficiency, and that the DDPO
substantially complied with the rule-making procedures, the standard required by
A.S.C.A. §4.1009(a).[31 ASR2d
141]
[15] Rule making under the APA involves several procedural
steps. First, the ASG agency
exercising rule-making authority must give at least 20 days notice of the
adoption, amendment, or repeal of any non-emergency rule. A.S.C.A. §§ 4.1004 and
4.1010. The notice must
include a statement of either the terms or substance of the proposed action or a
description of the subjects and issues involved, and the time, place and manner
in which persons may present their views on the matter. A.S.C.A. §
4.1004. The notice must be
mailed to all persons who have requested advance notice of the agency's rule
making, and must be at least publicized in all news or broadcasting media
operated by the ASG.
Next,
the agency must give all interested persons reasonable opportunity to submit
"data, views, and arguments, orally or in writing," either at a public hearing
or by other suitable means, and consider those submissions before the rule is
adopted, amended, or repealed.
A.S.C.A. § 4.1005. These provisions are intended to ensure
that rule making by administrative agencies is infused with openness,
explanation, and participatory democracy which is essential to minimize the
dangers of arbitrary and irrational decision making. See State of S.C.
ex rel Patrick v. Block, 558 F. Supp. 1004, 1015 (D.S.C. 1983). A public hearing was required for the
ASCMP rules. A.S.C.A. § 24.0506(a).
Third,
the agency must file the rule with the Secretary of American Samoa, and with the
Clerk of the House of Representatives and the Secretary of the Senate of the
Legislature. A.S.C.A. § 4.1008.
The Secretary of American Samoa is the Lieutenant Governor. Am.
[16]
Lastly, the agency
must make the rule available for public inspection. A.S.C.A. §
4.1020(a). No rule is valid
or effective until this public inspection requirement is met, except as to any
person who has actual knowledge of the rule. A.S.C.A. §
4.1009(b).
[17] The printed ASCMP rule is prefaced by the DDPO's letter of
November 22, 1994, informing the Governor of the rule's adoption. The DDPO states in this letter that
before adoption, the proposed rule was noticed, the subject of extensive
commentary by public hearing and other means, and reviewed. Even though we do not have the specific
documentary evidence before us, we accept the DDPO's letter and printed rule as
demonstrating substantial compliance with all applicable rule-making procedures,
including a public hearing and public inspection, except the requisite filing.[31 ASR2d 142]
The
DDPO has not filed the ASCMP rules with the Secretary of American Samoa and the
Legislature. This omission is
significant. The filing enables the
Secretary to fulfill his responsibilities, under A.S.C.A. § 4.1020(b), to keep a
permanent register of the administrative rules adopted by the ASG's various
agencies and, under A.S.C.A. § 4.1003, to publish regularly the rules. By carrying out these functions, the
Secretary fully informs the ASG's other agencies and the public at large of that
which the law requires of them.14
Furthermore, filing gives the Legislature an opportunity to learn how the
Executive Branch is administering legislative enactments, and gives the
Legislature a basis for recommending appropriate changes in the rules. A.S.C.A. §
4.1009(d). Thus, because the
ASCMP rules were not filed with the Secretary of American Samoa and the
Legislature, the ASCMP rules were not adopted in substantial compliance with the
statutory mandates for rule making. [31
ASR2d 143]
[18] However, despite procedural deficiencies, administrative rules are
valid and enforceable against persons who have actual knowledge of the
rules. A.S.C.A. §
1009(b). The CCJS applied
for land use and building permits for construction of the hall extensions, under
the ASCMA and ASCMP rules, and certainly had actual knowledge of the ASCMP
rules.
Thus,
the ASCMP rules are valid and effective as to the CCJS.15
3. Construction without
permits.
The
ASCMA requires a land use permit for "all uses, developments, or activities
which impact the coastal zone."
A.S.C.A. § 24.0505(a). The coastal zone includes all private
and public land in
The
CCJS applied for both land use and building permits to construct the hall
extensions in August 1994. Although
the applicant clearly has the responsibility to obtain necessary permits and
approvals, see ASCMP[31 ASR2d 144] rules § 26.0207(b),
apparently the CCJS's application loitered in the DPO until it was forwarded for
the Governor's necessary approval for construction on the ASG's land in February
1995. We think that the CCJS's
frustration over the bureaucratic process, coupled with the CCJS's desire to
meet the estimated completion date of September 30, 1994, at least partially
explains the significantly completed construction of the hall extensions by
February 1995. In any event,
however, the CCJS violated the law by building without the requisite permits.17
When
construction begins without the land use and building permits, the project may
be stopped. ASCMP
rules § 26.0218; Uniform Building Code § 106.1 (1964).18
The CCJS was served with proper stop orders on February 16 and 22, 1995,
but continued with the hall extension project. Unquestionably, the CCJS violated these
lawful orders as well.
Because the hall extension construction did not comply with
the ASCMP rules, the CCJS is responsible for removing the extension and properly
disposing of all resulting solid waste on the land.
4. Administrative fines.
The
ASCMA provides for civil fines imposed by this court for violations the ASCMA or
ASCMP rules not to exceed $5,000 per day against individuals and $10,000 per day
against corporations. A.S.C.A. § 24.0505(a) & (b). On March 23, 1995, the chairman of the
PNRS board purportedly levied a $30,000 fine on the CCJS as part of one of two
options given for the CCJS to take in response to three cited violations of
building without a land use permit, building within the 50-foot stream setback
required by the ASCMP rules § 26.0228(d)(2), and
failing to comply with the stop order issued on February 16,
1995.
The
ASCMA does not provide any administrative authority to assess fines. The unlawful attempt to exact this
penalty from the CCJS was a flagrant abuse of power. Although the CCJS tentatively
capitulated, this[31 ASR2d 145] illegal assessment was
fortunately set aside by later events.
The PNRS board cannot impose, collect, or attempt to impose or collect,
fines for failure to comply with the ASCMA or ASCMP rules.
B. Summary Eviction
The
ASG gave proper notice to terminate the at-will periodic tenancy with the
CCJS.19
The ASG explicitly notified the CCJS that it was unwilling to negotiate a purchase
of the building and fixtures.
Therefore, even though the CCJS has "purchased" the building, or will
have purchased it upon paying the amortized purchase price in full, the at-will
periodic tenancy only permits the CCJS to remove machinery, equipment and
personal property from the premises upon termination of the lease
relationship.20
The CCJS must vacate the land.
C. The CCJS's account payable.
While
the Coral lease required the lessee or its assignees to make monthly payments of
$900 for rent and $245 for the amortized balance of the purchase of the building
and fixtures, a total of $1,145, after the first six months during the initial
term of the lease, the ASB actually paid $1,150, monthly in effect, on the
CCJS's behalf. We cannot tell from
the ASG's accounting in evidence exactly how the ASG credited these payments to
rent or the amortized balance.
However, the CCJS clearly owed the ASG $10,800 on the combined amounts on
October 19, 1995, which was reduced to $2,550 as of December 31, 1995. The CCJS is prepared to pay the
deficiency.
The
CCJS also still possesses and uses the premises by virtue of the temporary
injunction. It should bring current
any rent due and unpaid for the continuation of the periodic tenancy, and remit
payment for any unpaid portions of the amortized purchase price for the building
and fixtures.
We
will reiterate and summarize our conclusions of law.
1. The ASG
consented to the assignment of the Coral lease in the event of Coral's loan
default by the consent to mortgage of June 29, 1987. Moreover, by accepting rent from and
dealing with the CCJS, the ASG waived its right to object to the CCJS’s
assumption of rights and obligations under the lease. Therefore, the CCJS is properly before
the court as the lessee in this dispute.
The ASB is properly before the court as the leasehold
mortgagee.
2. The ASG
effectively granted the lessee in the Coral lease the use of public land for 45
years by giving the lessee the unilateral right to exercise options to renew at
the end of an initial nine-year term for up to four additional lease terms. This grant contravened statutory public
policy, unless and until the Legislature reviews and fails to disapprove the
lease. Because the Coral lease has
not been submitted to the Legislature for review, the Coral lease never became
effective.
3. Because the
Coral lease was ineffective, the CCJS had an at-will periodic tenancy with the
ASG, which incorporated all the terms of the Coral lease except duration. Both parties were able to terminate the
at-will periodic tenancy with or without cause at any time, as long as the party
seeking to terminate the tenancy provided at least one month’s notice. The ASG gave one month’s notice to the
CCJS and lawfully terminated the at-will periodic tenancy as of January 15,
1996.
4. The benefit
of maintaining an at-will periodic tenancy or entering into a new lease
agreement is not a liberty or property interest giving rise to substantive or
procedural due process rights. The
Governor's decision to terminate an at-will tenancy in government land or refuse
to lease government land did not result in deprivation of substantive due
process and did not require the minimal procedural due process elements of
notice of and meaningful participation in an administrative hearing. The PRC did not violate procedural due
process by excluding the CCJS and ASB from its meetings regarding the Coral
lease, because the PRC is empowered only to make recommendations to the
Governor, not to adjudicate contested cases or promulgate rules.
5. The
Governor’s decision to terminate the at-will periodic tenancy or to decline
forming a new lease was not arbitrary, capricious, or an abuse of his discretion
in violation of substantive due process considerations.
6. The ASCMA
is not unconstitutional on the grounds that it was not enacted by two successive
legislatures. The ASCMA affects
land use but does not divest title interests or impair cultural patterns.[31 ASR2d 147]
7. The ASCMP
rules were not promulgated in compliance with statutory directives because the
DDPO, the authorized rule maker, has not filed the ASCMP rules with the
Secretary of American Samoa and the Legislature. However, the ASCMP rules are binding and
enforceable on the CCJS and ASB, since each had actual knowledge of the
rules.
8. The CCJS
built the hall extensions without the requisite land use permit in violation of
A.S.C.A. § 24.0505(a) and without the requisite building permit in violation of
§ 301(a) of the 1964 Uniform Building Code, enacted by A.S.C.A. §
26.1001.
9. The ASCMA
does not empower the PNRS board to assess fines administratively for failure to
obtain the required land use permit or to comply with a stop work order, or for
any other violations of the ASCMA or ASCMP rules.
10. The CCJS
must leave the premises and remit payment to the ASG for its remaining
liabilities from the at-will periodic tenancy and subsequent tenancy at
sufferance.
The
CCJS shall, within 30 days after the entry of this order:
1. remove the hall extensions
built without land use and building permits;
2. remove from the land all solid
waste resulting from demolition of the hall extensions from the land, at the
CCJS's expense and with due consideration to the lawful property rights of other
landowners near the land and disposal site and between both
locations;
3. vacate the land, and reeenter the premises
only to exercise its remaining rights under paragraph B of clause 13 of the
Coral lease; and
4. remit payment to the ASG the total amount of
outstanding liabilities for rent under the at will periodic tenancy and holdover
tenancy at sufferance, to and including the day the CCJS vacates the land, and
for unpaid portions of the amortized purchase price for the building and
fixtures.
The
temporary injunction is dissolved 30 days after the entry of this
order.
It is
so ordered.21[31 ASR2d
148]
1 The original paragraph O did not require the ASG's consent to use the leasehold as security, and was worded differently in that the secur