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Yesterday, April 27, 2011, the Hawaii Supreme Court issued an opinion in a case styledJohn M. Corboy and Stephen Garo Aghjayan v. David M. Louie, T.A. No. 07-0086 (the case is actually a consolidation of several tax cases on the same issue).

In Corboy, non-Native Hawaiian owners of real property/taxpayers argued that they were entitled to an exemption from real property taxes equal to the exemption granted to Hawaiian homestead leases under the Hawaiian Homes Commission Act (“HHCA”).

According to the taxpayers, the tax exemptions on the homestead leases are discriminatory on the basis of race in violation of the Fifth and Fourteenth Amendments to the United States Constitution and federal civil rights laws.  The taxpayers sought as relief (1) tax refunds, (2) invalidation of the laws underlying the Hawaiian homestead lease tax exemptions, and (3) injunction barring implementation of any law that gives a tax preference to Native Hawaiians.  

The Hawaii Supreme Court noted in its decision “that Taxpayers’ challenge to the HHCA tax exemption is, in essence, a challenge to the HHCA’s native Hawaiian qualification for homestead leases.”

The Court held that the taxpayers, because they are not “interested in participating in the homestead lease program,” lacked standing.   The Court’s decision was based on the taxpayer’s failure to establish injury-in-fact related to the native Hawaiian ancestry qualification for homestead leases because they never established, for example, that they applied for a homestead lease.

The court vacated the summary judgment and remanded directing the lower court to dismiss the claims for lack of jurisdiction.  The full opinion is available here.

Justice Acoba filed a concurring opinion in which he disagreed with the Court’s holding that the taxpayers lacked standing.  His conclusion is essentially based on whether the case is characterized as a challenge to the Hawaiian homestead lease qualifications or merely the tax exemptions.  Ultimately, Justice Acoba finds standing under either scenario.  Despite standing, however, Justice Acoba joined the opinion but would have ruled the taxpayers case could not go forward because the United States was not named as a party.  Justice Acoba’s concurrence is available here.

The opinion is also discussed on Planet Kauai here and here.