Hayes v. City of Seattle , 131 Wash. 2d 706 ( 1997 )

Alexander, J.

The City of Seattle obtained review of a decision of the Court of Appeals affirming the Superior Court’s grant of a summary judgment in favor of Michael Hayes and against Seattle. We affirm the Court of Appeals, albeit for reasons that differ from those given by that court, concluding that the Superior Court correctly determined that Hayes should be awarded damages pursuant to RCW 64.40 for arbitrary and capricious action of the Seattle City Council.

In November 1987, Michael Hayes applied to Seattle’s Department of Construction and Land Use (DCLU) for a master use permit in order to allow Hayes to remove an existing single family residence from a lot that he owned and to replace it with a three story, mixed use apartment building. Hayes indicated in his permit application that he intended to construct a building on his lot that would be 80-feet long and 40-feet wide. The lot, which was zoned "Neighborhood Commercial,” was contiguous to land that was zoned for single family residences. On July 10, 1989, the DCLU approved Hayes’s application for a master use permit.

A homeowner who lived near the subject property appealed the DCLU’s decision. A hearing examiner for Seattle affirmed the DCLU. The neighboring homeowner then appealed the examiner’s decision to the Seattle City Council. On December 18, 1989, the Council adopted all of the hearing examiner’s findings, except for the finding that the height, bulk and scale of Hayes’s building would produce "no materially adverse edge impact.” Clerk’s Papers at 398, 347. It approved issuance of the permit, subject, however, to the condition that the proposed building be no more than 65 feet in length. The Council did not explain why it added the restriction on length, other than to indicate that "[permitting a building 80 in length and 40 in width will clearly leave bulk and scale impacts insufficiently mitigated.”¹ Clerk’s Papers at 92.

Hayes timely filed a "complaint” in King County Superior Court for judicial review of the Council’s action. In this action,² he sought to overturn the decision of the Council and reinstate the hearing examiner’s decision, contending that the Council had acted arbitrarily and capriciously when it conditioned approval of his application for the master use permit on a reduction in size of the proposed building. Upon review, the Superior Court ruled that the findings of the Council were "conclusory” and remanded the matter to the Council with instructions to "identify, if any, the specific adverse impacts of the bulk of this project, and to further identify the manner in which the proposed condition would mitigate any such identified adverse impacts.” Clerk’s Papers at 101-02.

On November 26, 1990, slightly more than three years after Hayes initially applied to Seattle for the master use permit, the Seattle City Council reconsidered its earlier decision. Without explanation, it affirmed the DCLU’s approval of Hayes’s request for a permit, thereby allowing him to construct a building on his property that was 80-feet long and 40-feet wide.

Thirty days after the Council rendered its decision, Hayes commenced the action in King County Superior Court that led to this appeal. He claimed in this second action that he was entitled to damages, costs and attorney fees, pursuant to the provisions of RCW 64.40.020,³ asserting that the Seattle City Council had "arbitrarily, capriciously and/or unlawfully conditioned” approval of his master use permit on a reduction in the size of the proposed building. Clerk’s Papers at 202. Hayes also sought damages under 42 U.S.C. § 1983 and attorney fees under § 1988, for what he claimed was the Seattle City Council’s violation of his civil rights.

Hayes moved for summary judgment, relying on RCW 64.40, as well as 42 U.S.C. §§ 1983 and 1988. The Superior Court, relying strictly on RCW 64.40, granted his motion and awarded him damages against Seattle in the amount of $18,609.33, together with $1,302.65 for prejudgment interest and a reasonable attorney fee of $24,048.82. The latter amount included $5,621.50 in expert witness fees.

The Court of Appeals, Division One, affirmed the trial court, despite holding that Hayes’s claim for damages under RCW 64.40 was barred by the statute of limitations. It concluded, however, that Hayes was entitled to damages pursuant to 42 U.S.C. § 1983 and attorney fees under 42 U.S.C. § 1988. It also affirmed the award of reasonable attorney fees, but held that Hayes was not entitled to recover any amount for fees he had paid to expert witnesses.

In reviewing a decision of the Court of Appeals affirming an order of summary judgment, we engage in the same inquiry as the trial court. This requires us to consider the facts in the light most favorable to the non-moving party. In re Estates of Hibbard, 118 Wn.2d 737, 744, 826 P.2d 690 (1992). Summary judgment should be granted only when it can be said there is no genuine issue of material fact, and the moving party is entitled to a judgment as a matter of law. CR 56(c); Hibbard, 118 Wn.2d at 744.

I

We first address Seattle’s contention that Hayes’s action for damages, on either of the theories he presented to the trial court, is barred by the principle of res judicata. In that regard, Seattle contends, as it did at the trial court and at the Court of Appeals, that because Hayes’s action for damages was not joined with his earlier filed action for judicial review that was based on the same transaction, Hayes should have been precluded from pursuing damages in the subsequent action.

The purpose of the doctrine of res judicata is to ensure the finality of judgments. Under this doctrine, a subsequent action is barred when it is identical with a previous action in four respects: (1) same subject matter; (2) same cause of action; (3) same persons and parties; and (4) same quality of the persons for or against whom the claim is made. Norco Constr., Inc. v. King County, 106 Wn.2d 290, 293, 721 P.2d 511 (1986). Factors three and four are met here because Hayes and Seattle are the only parties to both actions. Our focus, therefore, is on whether the subject matter of the suits is identical and whether the causes of action are the same.

We are satisfied that the two lawsuits with which we are here concerned do not involve the same subject matter simply because they both arise out of the same set of facts. Indeed, in Mellor v. Chamberlin, 100 Wn.2d 643, 673 P.2d 610 (1983), a case in which a single real estate transaction produced two lawsuits, we so held. In the first of those lawsuits, a buyer of land contended that the seller had misrepresented the extent of the property included in the sale. That lawsuit was settled and an order of dismissal with prejudice was thereafter entered. Shortly thereafter, the buyer brought a second lawsuit claiming that the seller breached a covenant of warranty. The buyer prevailed in that action on the theory that an adjoining landowner’s encroachment onto the property breached the seller’s warranty of quiet and peaceful possession. On appeal, the seller contended that the issue in the second lawsuit should have been raised in the first and, because it was not, the second lawsuit was barred by res judicata. In ruling against the sellers, we held that "[although both lawsuits arose out of the same transaction (sale of property), their subject matter differed” and the second suit was therefore not barred by res judicata. Mellor, 100 Wn.2d at 646.

While there is a dearth of case law defining when the subject matter of cases differs, one noted authority has observed that when courts examine subject matter "[t]he critical factors seem to be the nature of the claim or cause of action and the nature of the parties.” Philip A. Trautman, Claim and Issue Preclusion in Civil Litigation in Washington, 60 Wash. L. Rev. 805, 812-13 (1985). Examining the two actions that were brought by Hayes in that light, we are satisfied that they do not deal with the same subject matter. We reach that conclusion because the nature of the two claims is entirely disparate. The action for judicial review focused exclusively on the propriety of the decision making process of the Seattle City Council. On the other hand, the subsequent action was for a judgment for money to compensate Hayes for the damages he allegedly suffered as a result of the Council’s action.

In deciding whether two causes of action are the same we are to consider the following four factors:

(1) [W]hether rights or interests established in the prior judgment would be destroyed or impaired by prosecution of the second action; (2) whether substantially the same evidence is presented in the two actions; (3) whether the two suits involve infringement of the same right; and (4) whether the two suits arise out of the same transactional nucleus of facts.

Rains v. State, 100 Wn.2d 660, 664, 674 P.2d 165 (1983) (quoting Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir.), cert. denied, 459 U.S. 1087 (1982)). After reviewing these factors, we are convinced that Hayes’s action for judicial review and his subsequent action for damages are separate. In the action for judicial review, Hayes essentially sought to overturn a decision of the Seattle City Council. In order to succeed in that lawsuit, Hayes needed only to establish that the Seattle City Council’s action met one of the five standards listed in the statutory writ of certiorari. RCW 7.16.120.⁴ The evidence he needed to maintain that action is far different than the type of evidence that he needed to muster to establish that he was entitled to an award of damages. Indeed, we have previously held that writ actions cannot be used to decide damages issues and must be brought separately. Lutheran Day Care v. Snohomish County, 119 Wn.2d 91, 114, 829 P.2d 746 (1992), cert. denied, 506 U.S. 1079 (1993). Finally, nothing in the subsequent action for damages destroyed or impaired any right established in the action for judicial review.

In concluding that Hayes’s action for damages is not barred by res judicata, we are not saying that the two separate actions could not have been joined for trial. "Res judicata does not bar claims which arise out of a transaction separate and apart from the issue previously litigated.” Schoeman v. New York Life Ins. Co., 106 Wn.2d 855, 860, 726 P.2d 1 (1986) (citing Seattle-First Nat’l Bank v. Kawachi, 91 Wn.2d 223, 226, 588 P.2d 725 (1978)).

II

Having concluded that Hayes’s action for damages is separate from the action for judicial review, we must address the question of whether or not Hayes was, as the trial court found, entitled to a summary judgment on his claim insofar as it was based on RCW 64.40. Before reaching that issue, however, we must confront an issue that Hayes raised in his response to Seattle’s petition for review — was the Court of Appeals correct in holding that Hayes’s claim under RCW 64.40.020 was barred by the applicable statute of limitations, RCW 64.40.030? ⁵

In concluding that Hayes’s claim under RCW 64.40.020 was barred, the Court of Appeals relied on R/L Assocs., Inc. v. City of Seattle, 73 Wn. App. 390, 869 P.2d 1091, review denied, 125 Wn.2d 1006 (1994), a case in which the facts are very similar to the instant facts. In that case, a developer, R/L Associates, applied to Seattle’s DCLU for a zoning variance. The DCLU approved R/L Associates’ request, but conditioned the grant of a variance on a reduction in the size of the proposed building. R/L Associates appealed that decision to a hearing examiner for the city who denied the request for a variance. R/L Associates sought judicial review of that decision in King County Superior Court. The Superior Court set aside the hearing examiner’s denial of the variance, concluding that the examiner’s decision was arbitrary, capricious or unlawful. Faced with that ruling, the City of Seattle then approved the variance. In a subsequent action in Superior Court for damages, based on RCW 64.40, R/L Associates prevailed against Seattle. The Court of Appeals reversed the damage award, however, holding that the statute of limitations had run on R/L Associates’ cause of action for damages. In reaching that decision, it concluded that R/L Associates’ action for damages was commenced more than 30 days after the date R/L Associates had exhausted its administrative remedies, to wit: more than 30 days after the hearing examiner denied R/L Associates’ request for a variance.

Similarly, the Court of Appeals concluded here that Hayes had exhausted his administrative remedies when the Seattle City Council conditioned the grant of a master use permit on a reduction in the length of the proposed building. Consequently, it held that his damage action, which was commenced more than 30 days after that action by the council, was barred.

We disagree with that conclusion for two reasons. First, the exhaustion issue was rendered moot by Seattle’s issuance of the master use permit. See R/L Assocs., Inc. v. City of Seattle, 61 Wn. App. 670, 676-77, 811 P.2d 971, review denied, 117 Wn.2d 1024 (1991). Secondly, we do not believe that Hayes had exhausted his administrative remedies when the Council conditionally approved his master use permit application. While the Council’s action would have been final if Hayes had done nothing further, Hayes promptly commenced an action for judicial review specifically for the purpose of overturning what he claimed was arbitrary and capricious action by the Council. Hayes was, as we have observed, successful in that effort and following remand by the Superior Court to the City Council, he continued to seek the Council’s approval of his application for a master use permit. Because Hayes continued to pursue his efforts to obtain a master use permit from the Seattle City Council, albeit with aid from the King County Superior Court, it cannot be said that he had exhausted his administrative remedies at the time of the council’s initial action.

Underlying our decision is a recognition of the fact that the final action that an administrative body can take in this area is the issuance or denial of the sought after permit. Although we are not saying that an action in superior court for judicial review is an administrative remedy that must be exhausted prior to commencing an action to recover damages pursuant to RCW 64.40, under these facts, final action on Hayes’s request for a permit did not occur until the City Council ultimately approved his application for a master use permit. Therefore, Hayes’s action for damages, which was commenced within 30 days of that final action, was timely and is not barred by the statute of limitations.

If we adopted the position advanced by Seattle and approved the reasoning set forth in R/L Associates, persons in Hayes’s position would, in order to avoid a potential bar of the statute of limitations, be forced to bring an action for damages before final action on their application had been taken by the administrative agency. That makes no sense because it would force applicants for permits to file an action for damages before their cause of action was ripe.

Ill

On the question of whether the trial court was correct in concluding that the Seattle City Council acted in an arbitrary and capricious manner, we are satisfied that it correctly decided that issue. Although the City Council had the authority under Seattle Municipal Code 25.05.675(G)(2)(b) and the State Environmental Policy Act of 1971 (SEPA), RCW 43.21C.060, to impose conditions on the grant of a master use permit, that authority is subject to the qualification that "the agency must specifically describe the adverse environmental impacts, and either outline mitigation measures or specifically state why such measures are insufficient.” Cougar Mt. Assocs. v. King County, 111 Wn.2d 742, 757, 765 P.2d 264 (1988). In Cougar Mountain, King County denied a developer’s application for a subdivision, determining that the project would have significant adverse environmental impacts which could not be mitigated. The County, under the authority of SEPA, denied the application stating that the proposal' would have significant impact on the environment. Upon review, we concluded that the County’s determination was conclusory and did not indicate how the proposal conflicted with the policies of SEPA. Consequently, we reversed and remanded with instructions for King County to comply with the statutory requirements.

In our judgment, the Seattle City Council’s findings here are similarly conclusory and the trial court was correct in so holding. Nothing in the Council’s decision to condition the grant of a master use permit on a reduction in the length of the proposed building describes the adverse impact of Hayes’s proposal or explains how reducing the size of the project would mitigate any such adverse impact. The decision simply reflects the Council’s view that Hayes’s project was too big, apparently on the theory that smaller is better.⁶

Such conclusory action taken without regard to the surrounding facts and circumstances is arbitrary and capricious, such action being defined as a " 'willful and unreasoning action, taken without regard to or consideration of the facts and circumstances surrounding the action.’ ” Kendall v. Douglass, Grant, Lincoln & Okanogan Counties Pub. Hosp. Dist. 6, 118 Wn.2d 1, 14, 820 P.2d 497 (1991) (quoting Abbenhaus v. City of Yakima, 89 Wn.2d 855, 858-59, 576 P.2d 888 (1978)).

For reasons stated above, we are satisfied that the trial court was correct in determining that Hayes was entitled to recover damages that he incurred as a result of the Council’s decision.

Because we have determined that Hayes is entitled to recover damages pursuant to RCW 64.40, we need not address his claim that he is entitled to damages under 42 U.S.C. § 1983.⁷

IV

In answering Seattle’s petition for review, Hayes has asked this court to review the Court of Appeals decision that the amount of fees Hayes paid to expert witnesses should be deducted from his award of attorney fees and costs. Costs have generally been narrowly defined and absent specific statutory authority, expert witness fees are not recoverable as costs. See Hume v. American Disposal Co., 124 Wn.2d 656, 674, 880 P.2d 988 (1994), cert. denied, 115 S. Ct. 905 (1995). Although RCW 64.40.020 does provide for an award of reasonable attorney fees in addition to costs, it does not explicitly provide for recovery of expert witness fees and we are not inclined to place fees for experts under the umbrella of attorney fees.

In reaching this conclusion, we are not unmindful of our recent decision in Louisiana-Pacific Corp. v. ASARCO Inc., 131 Wn.2d 587, 934 P.2d 685 (1997). There, we considered a statute with language similar to that contained in RCW 64.40.020⁸ and held that trial courts are not limited in awarding costs under that statute to the items enumerated in RCW 4.84.010, but could "additionally award other reasonably necessary expenses of litigation based upon such equitable factors as the court determines are appropriate.” Louisiana-Pacific, 131 Wn.2d at 604. Aside from the unique policy considerations that impelled our decision in Louisiana-Pacific, that case is distinguishable in that the definition section of RCW 64.40 provides, "Damages . . . are not based upon . . . litigation expenses.” RCW 64.40.010(4). Similar language is not present in the statute we reviewed in Louisiana-Pacific. Because we believe that the phrase "litigation expenses” encompasses expert witness fees, we are left to conclude that the plain language of RCW 64.40 bars the awarding of such fees in cases maintained under RCW 64.40.

Even if the phrase "ligitation expenses” could be said to be ambiguous, the legislative history of RCW 64.40 supports our view that expert witness fees may not be awarded as costs. A draft of House Bill 1006, the measure that was eventually enacted into law as RCW 64.40, contained language providing that successful plaintiffs may be awarded "litigation expenses,” which it defined as "all actual expenses incurred in pursuing remedies under this chapter, including . . . the costs of the appearance of witnesses.” H. B. 1006, 47th Leg., Reg. Sess. § 4(5), § 2(5) (1982) (emphasis added). The fact that RCW 64.40 does not contain the aforementioned provision indicates that the Legislature did not intend for successful plaintiffs to be awarded expert witness fees as costs. Cf. Elovich v. Nationwide Ins. Co., 104 Wn.2d 543, 549, 707 P.2d 1319 (1985) (considering prior version of enacted bill as evidence of legislative intent).

Hayes also asserts that he should be awarded expert fees pursuant to 42 U.S.C. § 1988(c). Although we are affirming the Court of Appeals on the basis of state law, Hayes is not entitled to recover expert witness fees under 42 U.S.C. § 1988(c). Although that statute does provide for the recovery of expert witness fees in certain instances (equal rights actions brought under 42 U.S.C. § 1981 or employment discrimination actions under 1981a), nothing in § 1988(c) indicates that fees for expert witnesses are recoverable in actions brought under § 1983.

Durham, C.J., and Dolliver, Smith, and Johnson, JJ., concur.

1 In a memo dated December 7, 1989, a date that preceded the council’s action by 11 days, a council staff person informed the council’s Land Use and Community Development Committee that Hayes’s project "meets or exceeds these Land Use Code regulations.” Clerk’s Papers at 350. The author of the memo also informed the committee that "[i]t would appear that the applicable City code for Commercial zones did very specifically address the issue of setbacks adjacent to residentially zoned property, and that there is no SEPA [State Environmental Policy Act] authority to require further mitigation in this case.” Clerk’s Papers at 350.

2 Although Hayes did not indicate in his complaint what statute he was proceeding under, it is clear from his pleading that his action was a special proceeding maintained pursuant to RCW 7.16 and is properly denominated as a writ of review or certiorari. RCW 7.16.030.

3 RCW 64.40.020 reads in part:

"(1) Owners of a property interest who have filed an application for a permit have an action for damages to obtain relief from acts of an agency which are arbitrary, capricious, unlawful, or exceed lawful authority, or relief from a failure to act within time limits established by law ....

"(2) The prevailing party in an action brought pursuant to this chapter may be entitled to reasonable costs and attorney’s fees.”

4 Under RCW 7.16.120, a complaining landowner is entitled to relief if he or she can establish any one of the five listed standards: (1) lack of subject matter jurisdiction; (2) action in excess of lawful authority; (3) an error of law; (4) lack of an essential element; or (5) factual determinations not supported by substantial evidence. While a court may find on a writ of review that the decision maker’s action was so egregious as to be classified as arbitrary and capricious and warrant a grant of relief, such a finding is not required in order for the court to grant relief on a writ of certiorari. Cf. Lutheran Day Care, 119 Wn.2d 91 (county’s action was so egregious as to merit finding of arbitrary and capricious for both writ and damages action).

5 RCW 64.40.030 reads as follows:

"Any action to assert claims under the provision of this chapter shall be commenced only within thirty days after all administrative remedies have been exhausted.”

6 In reaching our decision, we are not unmindful of the dissent’s observation that a member of the council "fully and fairly considered” the Hayes project before the council imposed its restrictions. Dissenting op. at 728-29. Although a city council member submitted an affidavit containing that averment, it surfaced only after this lawsuit was commenced. Clerk’s Papers at 112-13. Significantly, the facts set forth in that affidavit are not found in the administrative record. Even if such an investigation took place, however, it is difficult to understand how this investigation could have overlooked the memo, submitted to the council by a staff member prior to the date the council took its action, indicating that the project conformed to all of the City’s land use regulations. See n.l.

7 Although the Court of Appeals affirmed the trial court on the basis of 42 U.S.C. § 1983, the amount of damages Hayes was seeking under that statute was the same as the damages he sought under RCW 64.40. Neither party has argued at any level that the amount of damages would differ based on this alternate theory of liability or that there is a fact question as to the amount of the damages.

8 The statute at issue in Louisiana-Pacific, RCW 70.105D.080, provides that a "prevailing party . . . shall recover its reasonable attorneys’ fees and costs,” while RCW 64.40.020(2) provides that "[t]he prevailing party . . . may be entitled to reasonable costs and attorney’s fees.” (Emphasis added).