CourtListener 10795205

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NOT FOR PUBLICATION IN WEST'S HAWAI I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
17-FEB-2026
11:59 AM
Dkt. 81 SO
NOS. CAAP-XX-XXXXXXX and CAAP-XX-XXXXXXX
(consolidated)

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI I

COUNTY OF KAUA I, Plaintiff-Appellee, v.
B & D PROPERTIES, LLC, dba NORTH DAKOTA HOLDINGS,
Defendant-Appellant, and
JOHN DOES 1-25; JANE DOES 1-25; DOE PARTNERSHIPS 1-25;
DOE CORPORATIONS 1-25; DOE ENTITIES 1-25; and
DOE GOVERNMENTAL UNITS 1-25, Defendants

APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT
(CIVIL NO. 5CCV-XX-XXXXXXX)

MEMORANDUM OPINION
(By: Leonard, Presiding Judge, Wadsworth and Guidry, JJ.)
In this consolidated appeal in an eminent domain case,

Defendant-Appellant B & D Properties, LLC dba North Dakota

Holdings (B&D) appeals from the December 11, 2023 Final Judgment

(Judgment) entered by the Circuit Court of the Fifth Circuit

(Circuit Court).1 B&D also challenges the Circuit Court's

November 9, 2023 Findings of Fact, Conclusions of Law, Order and

Preliminary Judgment (FOFs/COLs & Order). B&D contends the

Circuit Court erred in its valuation of the subject property

(Property). For the reasons discussed below, we vacate the

Judgment and FOFs/COLs & Order.

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The Honorable Kathleen N.A. Watanabe presided.
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I. BACKGROUND

The Property is an approximately 23.5 acre vacant

parcel located in Kīlauea, Kaua i County. It is currently zoned

for agriculture and the State's land use designation is also

agricultural, but it has been identified in the Kaua i County

General Plan and the Kīlauea Town Plan for future urban

expansion.

In September 2019, Adam Roversi (Roversi), then newly-

appointed Director of the Kaua i County Housing Agency, saw a

billboard advertising the Property for sale, indicating it "was

zoned commercial in part and residential in part, which Roversi

knew to be false." Roversi called the number and spoke with

Leland Bertsch (Bertsch), B&D's managing director, who admitted

the Property was not zoned for commercial or residential use and

declined to provide a purchase price. In November 2019,

Plaintiff-Appellee County of Kaua i (County) contracted with CBRE

to provide a "restricted appraisal" of the Property to see if the

County could purchase it. Nathan Alexander (Alexander) conducted

the appraisal in which he, among other things: recognized the

Property was "designated for future development in the Kauai

General Plan and Kilauea Town Plan;" "analyzed the

probabilities," time, and cost of changing the land use and

zoning status from agriculture; noted that the Property lacked

sufficient water and roadway access to support increased

density;2 and thus determined "a potential buyer would not want
to pay for the enhanced value that would result from entitlement

2
It appears that at least the roadway access concern was resolved
in May of 2021, when the County accepted dedication of a road extension that
provides access to the Property.

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changes which had not yet been realized." Alexander concluded

the Property was worth $3,270,000 as of October 2019, based on

the highest and best use of the Property as being subdivided into

agricultural estate lots (Agricultural Lots). The County later

requested a full appraisal, which Alexander provided in January

2021, in which he employed the same analysis and determined the

Property was worth $3,835,000 as of September 2020. Roversi

presented the $3,835,000 figure to Bertsch, who rejected it as

"offensive."

At an August 18, 2021 Kaua i County Council Meeting,

Councilmember KipuKai Kuali i moved for passing of Resolution No.

2021-27 (Resolution), "authorizing the acquisition of land for

public use, to wit, the [Property], and determining and declaring

the necessity of the acquisition thereof by eminent domain."

Roversi provided the council an "overview" of the Resolution,

representing that the "Housing Agency's intention in seeking

acquisition of [the Property] is to develop affordable housing

both for rent and sale," that he and Bertsch have "been unable to

come to an agreement on the purchase price," and the "eminent

domain proceeding simply provides a vehicle" to acquire the

Property "with the court involved in deciding what a fair

purchase price would be." The Resolution passed unanimously on

October 6, 2021.

On March 23, 2022, the County filed the underlying

complaint against B&D for condemnation of the Property, alleging,

among other things, that "[t]he acquisition of [the Property] is

necessary for a public use, to wit: the development of workforce

housing and related public infrastructure." The case proceeded

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to a bench trial. As a trial exhibit, the County provided an

updated appraisal (County Trial Appraisal) in which Alexander

"conducted the same analysis" as the prior appraisal, brought it

"current by accounting for increases in the market generally and

analysis of new comparable properties," and valued the Property

at $4,470,000. As stated in the FOFs/COLs & Order, Alexander

determined that the highest and best use of the Property was to

be subdivided into Agricultural Lots.

B&D's expert witness, Curtis Bedwell (Bedwell),

provided an appraisal valuing the Property at $22,500,000 (B&D

Trial Appraisal). The Circuit Court found that in reaching this

value, Bedwell determined that there was no risk that the

entitlements necessary for residential development would be

obtained. Accordingly, Bedwell concluded that the Property was

worth $23,000,000 less "a discount of $500,000 to account for the

estimated cost to obtain the entitlements necessary for

residential development." Bedwell had previously appraised the

Property for Bertsch in 2017, for purposes of obtaining financing

(Financing Appraisal). At that time, he had concluded the

"as-is" value of the Property was $4,210,000, and that as of

October 2022, the "prospective value with the assumption of

having altered the land use and zoning would be $8,110,000." In

the Financing Appraisal, Bedwell "applied various discounts to

his land sales comparison analysis to account for the uncertainty

of obtaining changes in the Subject entitlements," but he did not

apply such discounts in the B&D Trial Appraisal.

Following an October 2023 bench trial, the Circuit

Court adopted the County's valuation of $4,470,000 as just

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compensation for the Property. The Circuit Court found

"Alexander to be credible based on his reports and his responses

to questions on direct and cross examination, as well as his

demeanor in court." The Circuit Court found that "Bedwell's

testimony lacks credibility, and his valuation appraisal

conclusions are unreliable and misleading," particularly because

Bedwell valued the Property as if it were upzoned, but he did not

clarify that upzoning was a hypothetical condition.

B&D appealed from the FOF/COL & Order, creating CAAP-

23-718. B&D also appealed from the Judgment, creating CAAP-23-

724. The appeals were consolidated under CAAP-23-718.

II. POINTS OF ERROR

B&D raises five points of error on appeal, contending

that the Circuit Court erred by: (1) failing to make an

independent determination of the highest and best use of the

Property; (2) failing to consider and determine whether it was

reasonably probable the Property could be upzoned to a higher and

more valuable use; (3) failing to consider the evidence which

overwhelmingly showed it is reasonably probable the Property may

be upzoned to a higher and more valuable use for residential

development; (4) failing to make a determination of the

Property's fair value as of the date of summons; and (5) basing

its $4,470,000 award of just compensation on comparisons to sales

of other agriculturally-zoned properties, which do not represent

the Property's highest and best use.

III. APPLICABLE STANDARDS OF REVIEW

A trial court's FOFs are reviewed under the clearly

erroneous standard. Gordon v. Maesaka-Hirata, 143 Hawai i 335,

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346, 431 P.3d 708, 719 (2018), overruled on other grounds by

Eason v. State, 157 Hawai i 252, 576 P.3d 765 (2025). "A finding

of fact is clearly erroneous when, despite evidence to support

the finding, the appellate court is left with the definite and

firm conviction in reviewing the entire evidence that a mistake

has been committed." Id. The appellate court reviews the trial

court's COLs de novo. Bhakta v. Cnty. of Maui, 109 Hawai i 198,

208, 124 P.3d 943, 953 (2005). A COL that is supported by the

trial court's FOFs and that reflects an application of the

correct rule of law will not be overturned. Id.

In an eminent domain trial,
any competent evidence of matters, not merely speculative,
which would be considered by a prospective vendor or
purchaser or which tend to enhance or depreciate the value
of the property taken is admissible. The only question,
then, is one of competence of the witnesses and their
testimony. If there is then a conflict as to the highest
and best use of the property, the question is properly one
left to the jury. Thus, the proffered uses that should be
excluded from jury consideration are those that are illegal,
illogical, physically or financially unfeasible, or
otherwise so remote or improbable as to not figure
materially in the considerations of the hypothetical willing
buyer and seller.

City & Cnty. of Honolulu v. Victoria Ward, Ltd., 153 Hawai i 462,

488, 541 P.3d 1225, 1251 (2023) (cleaned up).

IV. DISCUSSION

B&D first argues that the Circuit Court clearly erred

by failing to independently determine the highest and best use of

the Property. The Hawai i Supreme Court has explained:
Eminent domain proceedings are intended to award landowners
an amount of just compensation which as nearly as possible
approximates the value which a free market would attach to
the taken property. A standard valuation method in eminent
domain cases calculates just compensation as the difference
between the fair market value of condemned property
immediately before the taking (i.e., the condition
unaffected by the taking) and the fair market value of the
remaining property after the taking. The fair market value
of the property in both the before and after conditions is
calculated by estimating the highest and best use, defined
as the use of property that will generate the most profit.

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The highest and best use of a property is the one that is
physically possible, legally permissible, financially
feasible, and maximally productive.

Id. at 485-86, 541 P.3d at 1248-49 (cleaned up).

The supreme court has repeatedly clarified that

"highest and best use need not be the use at the time of taking

or even the zoning at the time of taking" and that it may be

established through testimony and studies regarding the

feasibility of prospective future uses. Id. at 488, 541 P.3d at

1251 (cleaned up).

Here, the Circuit Court's findings and conclusions were

based on Alexander's determination that the highest and best use

of the Property as currently designated was for Agricultural

Lots. As the County argues, a trial court need not provide a

detailed itemization of its analysis regarding highest and best

use. However, there is nothing in the Circuit Court's findings

to indicate that it considered any use of the Property other than

for Agricultural Lots, notwithstanding ample evidence that it was

likely that the Property would be developed for, inter alia,

residential housing. Although a factfinder may properly consider

such evidence and determine that a use is not reasonably

probable, here, there is no indication that the Circuit Court did

so. Rather, the Circuit Court found Alexander's opinion to be

supported and credible, and adopted his "as-is" value.

Accordingly, it appears that B&D's argument has merit insomuch as

the Circuit Court did not determine that the as-currently-

designated value was the highest and best use of the Property.

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Points of Error (POEs) 2, 3, and 5 raise issues related

to and overlapping with B&D's arguments concerning highest and

best use.

In POE 2, B&D argues as follows. Hawaii Revised

Statues (HRS) § 466K-4(a) (2013) requires Hawai i real property

appraisers to comply with the Uniform Standards of Professional

Appraisal Practice (USPAP), and USPAP Standards Rule 1-3 requires

an appraiser to identify and analyze the effect on use and value

of "existing land use regulations" and "reasonably probable

modifications of such land use regulations." Under Hawai i case

law, a condemnation valuation must consider potential uses of the

property and whether it is reasonably probable the subject

property could be rezoned to a higher and more valuable use. See

Victoria Ward, 153 Hawai i at 486, 541 P.3d at 1249; see also,

e.g., Hawaii Cnty. v. Sotomura, 55 Haw. 176, 185, 517 P.2d 57, 64

(1973). Alexander's valuation did not comply with USPAP

Standards Rule 1-3 or relevant Hawai i cases, and the Circuit

Court erred by failing to independently determine whether it was

reasonably probable the Property could be upzoned.

In POE 3, B&D argues that the evidence presented at

trial overwhelming supported that the highest and best use of the

Property was as residential development. For example, the 2000

Kaua i General Plan called to expand Kīlauea Town for additional

"residential community," including the Property. In addition,

Kaua i County Planning Director Ka aina Hull testified the

Property would "most likely" be upgraded to a mix of commercial

and residential zoning. The 2006 Kīlauea Town Plan designates

the Property for residential use. Bertsch had commissioned a

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conceptual plan to develop the Property for residential housing.

Roversi testified the County wanted to condemn the Property "to

develop affordable housing both for rent and for sale." The

Resolution stated the public purpose supporting eminent domain

was "the development of workforce housing and related public

infrastructure." Thus, the evidence demonstrated it was "highly

probable" the Property would be reclassified and rezoned.

Regarding POE 5, which challenges the Circuit Court's

consideration of "comparable sales" of agricultural properties,

B&D points to cases in other jurisdictions that have reversed

awards of just compensation that were based on comparisons to

sales that do not reflect the correct highest and best use.

Alexander admitted the agricultural lots he selected as

comparisons could not be upzoned for residential or commercial

development, could not be subdivided into smaller lots for

development, were limited to the agricultural use stated in the

condominium property regime's governing documents, were not

located adjacent to an existing town, and were not designated for

urban expansion and residential development.

In Hawai i condemnation proceedings, the question of a

property's market value "is not limited to the value for the use

to which the land is actually devoted, but it may have a

potential use value." State v. Dillingham Corp., 60 Haw. 393,

406, 591 P.2d 1049, 1057 (1979) (citation omitted).
"[C]ompensation must be estimated as the fair market value
[(FMV)] of the property at the time of the taking[.] This
market value is not to be ascertained by what the property
would bring at a forced sale, but by what it would fairly
bring for any purpose if the owners themselves, without
pressure, should offer it for sale."

Hous. Fin. & Dev. Corp. v. Harold K.L. Castle Found., 79 Hawai i

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321, 327, 901 P.2d 1300, 1306 (App. 1995) (quoting United States

v. Thurston, 4 U.S. Dist. Ct. Haw. 16, 20–21 (1912)).

"In determining potential use value, 'any competent

evidence of matters, not merely speculative, which would be

considered by a prospective vendor or purchaser or which tend to

enhance or depreciate the value of the property is admissible.'"

City & Cnty. of Honolulu v. Market Place, Ltd., 55 Haw. 226, 242,

517 P.2d 7, 19 (1973) (cleaned up).
Just compensation includes all elements of value that
inhere in the property, but it does not exceed market
value fairly determined. The sum required to be paid
the owner does not depend upon the uses to which he
has devoted his land but is to be arrived at upon just
consideration of all the uses for which it is
suitable. The highest and most profitable use for
which the property is adaptable and needed or likely
to be needed in the reasonably near future is to be
considered, not necessarily as the measure of value,
but to the full extent that the prospect of demand for
such use affects the market value while the property
is privately held.

Sotomura, 55 Haw. at 185, 517 P.2d at 63-64 (emphasis added). As

discussed above, "the highest and best use [is] defined as the

use of property 'that will generate the most profit.'" Victoria

Ward, Ltd., 153 Hawai i at 486, 541 P.3d at 1249 (citation

omitted). That said, the supreme court has held:
Evidence of other transactions to aid the trier
of fact in determining value is generally admitted
where they are sufficiently near in time, the
purportedly comparable tracts are located sufficiently
near the land to be valued, and these tracts and the
subject property are sufficiently alike in character,
situation, usability, and improvements. At first
blush, a transaction three years removed from the
condemnation hardly appears close enough for
comparison purposes. Yet where there was an apparent
paucity of comparable sales, the allowance of a
discussion of a transaction occurring several years
after the subject property's condemnation was not
necessarily an abuse of discretion, particularly where
the jury was apprised of the circumstances and the
appraiser took market trends into account. We do not
find the trial court's action in this regard
constituted error; the possible untimeliness of the
transaction was a matter affecting the weight of such
evidence rather than its admissibility.

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State v. Pioneer Mill Co., 64 Haw. 168, 174-75, 637 P.2d 1131,

1136–37 (1981) (citation and footnote omitted; emphases added).

Thus, notwithstanding that a court's ultimate

determination of fair market value must be based on a property's

highest and best use, as discussed above, we conclude that the

Circuit Court did not abuse its discretion in considering

agricultural property sales, as the issue is one of weight, not

admissibility.

Finally, in POE 4, B&D argues that the Circuit Court

failed to determine the Property's fair market value as of the

date of summons. However, B&D does not identify where in the

record it objected to the County's valuation on the basis that it

did not represent the Property's fair market value as of the date

of service of the summons. 3 Therefore, the argument is waived

for the purpose of this appellate review. See Ass'n of Apt.

Owners of Wailea Elua v. Wailea Resort Co., Ltd., 100 Hawai i 97,

107, 58 P.3d 608, 618 (2002) ("Legal issues not raised in the

trial court are ordinarily deemed waived on appeal.").

In sum, nothing in the Circuit Court's findings

indicates that it independently considered any use of the

Property other than for Agricultural Lots, notwithstanding the

ample evidence that the Property would likely be developed for,

inter alia, residential housing. Although a factfinder may

properly consider such evidence and determine that a use is not

3
In its proposed FOFs & COLs, B&D included: "14. HRS § 101-24
provides in relevant part that '[f]or the purpose of assessing compensation
and damages, the right thereto shall be deemed to have accrued at the date of
summons[.]' See Haw. Rev. Stat. Ann. § 101-24." However, B&D does not point
to any argument to the Circuit Court on this issue and the inclusion of
proposed COL 14 was not sufficient to apprise the Circuit Court that B&D
objected to the County's proposed valuation on the basis that it did not
represent the Property's value as of the date of service of the summons.

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reasonably probable, here, there is no indication that the

Circuit Court did so. Rather, it merely found Alexander's

opinion of the Property as "currently designated" to be credible,

and adopted his as-is market value. Particularly in light of the

fact that the County specifically sought to condemn the Property

for the express purpose of residential development and related

public infrastructure, consistent with the Kaua i General Plan

and the Kīlauea Town Plan, we conclude that the Circuit Court

clearly erred in adopting Alexander's agricultural use valuation,

without regard to the Property's highest and best use, in

determining the fair market value of the Property.

For these reasons, the Circuit Court's December 11,

2023 Judgment is vacated and this case is remanded to the Circuit

Court for a new trial.

DATED: Honolulu, Hawai i, February 17, 2026.

On the briefs: /s/ Katherine G. Leonard
Presiding Judge
Bruce D. Voss,
Ciarra B. Sapigao, /s/ Clyde J. Wadsworth
(Lung Rose Voss & Wagnild), Associate Judge
for Defendant-Appellant.
/s/ Kimberly T. Guidry
Matthew M. Bracken, Associate Judge
County Attorney,
County of Kauai

and

David J. Minkin,
Brett R. Tobin,
Sara M. Hayden,
(McCorriston Miller Mukai
MacKinnon LLP),
for Plaintiff-Appellee.