State prevails in multimillion-dollar federal lawsuit over Big Island housing development

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The State of Hawai‘i prevailed in a multimillion-dollar federal lawsuit brought by a developer claiming damages after a decision to revert its Waikōloa project – Villages at Aina Leʻa – from an urban to an agricultural district.

The villages of Aina Leʻa, a largely undeveloped housing development in Hawaiʻi Island, is seen in 2016. (Courtesy of Aina Leʻa)

The lawsuit, filed by Nevada company DW Aina Leʻa, stems from the State of Hawai‘i Land Use Commission’s decision to change the district distinction at its meeting on April 25, 2011. In May 2022, Judge Susan Oki Mollway of the U.S. District Court for the District of Hawai‘i granted summary judgment in favor of the state, but the Ninth Circuit Court of Appeals sent the case back to the lower court for further proceedings.

On Feb. 12, 2024, Judge Mollway again granted summary judgment in favor of the state, holding that Aina Leʻa could not establish its regulatory taking claim as a matter of law, and final judgment was entered in favor of the Land Use Commission.

“The Department of the Attorney General will vigorously defend lawsuits brought by those who assert speculative claims seeking a financial windfall for themselves at the expense of Hawai‘i taxpayers,” said Special Assistant to the Attorney General Dave Day, who first began litigating regulatory taking cases concerning the Villages at Aina Le‘a in 2015. “Since the case was remanded from the Ninth Circuit last year, our litigation team led by Deputy Attorney General Ciara Kahahane and Special Deputy Attorney General Sharon Lovejoy presented an overwhelmingly strong defense, and Judge Mollway correctly ruled that the LUC was entitled to judgment as a matter of law.


“The court’s ruling is based in part on the finding that the plaintiff’s speculative investment in the planned development was not backed by reasonable expectations given its failure to comply with the affordable housing conditions imposed by the Land Use Commission. This decision supports the ability of government entities to impose and enforce reasonable affordable housing requirements on developers and property owners.”

Special Deputy Attorney General Sharon Lovejoy said the federal court’s ruling is a decisive win that reaffirms the state’s authority to pursue enforcement of land-use regulations without overstepping constitutional boundaries.

“This victory underscores the state’s commitment to defending the legal principles that sustain the balance between private property rights and the public interest,” Lovejoy said.


The April 25, 2011, board decision to revert the project land has been the subject of substantial litigation, including a previous federal case brought by another company, Bridge Aina Le‘a, LLC, in which the state prevailed before the Ninth Circuit Court of Appeals. The Ninth Circuit’s decision in Bridge Aina Le‘a is considered to be a significant regulatory-taking case that has been cited as authority in courts across the nation.

The case is DW Aina Le‘a Dev., LLC v. State of Hawaii, Land Use Comm’n, Civil No. 17-00113 SOM-WRP. The Order Granting Defendants’ Motions for Summary Judgment can be found here. The Judgment can be found here.

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