10 North Washington Avenue v. City Of Richland ( 2013 )

STATE OF WASHINGTON
20I3OEC -9 AH 9=1*5
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
10 NORTH WASHINGTON AVENUE, No. 70397-8-
LLC, a Washington limited liability
company, DIVISION ONE
Appellant,
CITY OF RICHLAND, a municipal UNPUBLISHED
corporation,
FILED: December 9. 2013
Respondent.
Cox, J. — 10 North Washington Avenue, LLC (NWA) appeals the
summary dismissal of its tortious interference and inverse condemnation claims
against the City of Richland. Because NWA fails to establish that there are any
genuine issues of material fact for trial, we affirm.
Randolph Peterson and his three sons own NWA. NWA owns property
and provides administrative services to companies owned by the Peterson
family. The Peterson family also owns a majority of Tri-City Railroad Company
LLC (TCRY), which is not a party to this action. TCRY operates a short line
railroad in Benton County.
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In 2001, TCRY entered into a temporary service agreement with the City.
This agreement permitted TCRY to operate on the Horn Rapids Spur, an
industrial track. By its terms, the agreement could be "terminated upon ten (10)
days written notice by either party." It also stated, by its terms, that the City and
TCRY would "negotiate on a good faith basis to agree on an Industrial Track
Agreement... to replace this [temporary service agreement]."
In 2008, NWA purchased 33 acres in the Horn Rapids Industrial Park for
the purpose of building "transloading" and biofuel production facilities.
"Transloading" means moving commodities between rail and truck. When NWA
bought the property, it intended that TCRY would provide rail service to these
future facilities.
NWA allegedly signed a letter of intent with Gen-X Energy Group in 2009.
It appears that this letter provides for these two parties to jointly develop and
construct a biofuel production facility on NWA's property and to have TCRY
provide the necessary rail service.
In 2010, the City gave TCRY notice under the temporary service
agreement that it intended to terminate the agreement. The City also presented
a new track use agreement that required TCRY to relinquish its rights to use
"Richland Junction" in exchange for continued use of the Horn Rapids Spur.
Richland Junction is located outside the Horn Rapids Industrial Park. It appears
that the City wanted to construct an at-grade crossing at Richland Junction.
The temporary service agreement terminated. TCRY refused to enter into
the proposed new track use agreement offered by the City. Consequently, TCRY
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can no longer use the Horn Rapids Spur unless it operates on the track as an
agent of another railroad company.
NWA commenced this action asserting (1) inverse condemnation, (2)
regulatory taking, (3) breach of contract, and (4) tortious interference. Notably,
TCRY is not a party to this action.
The City moved for summary judgment on all claims, which the trial court
granted. The court also denied NWA's motion for reconsideration.
NWA appeals.
TORTIOUS INTERFERENCE
The first of the only two claims on appeal is the tortious interference claim.
The other is the takings claim, which we address later in this opinion.
NWA argues that the trial court erred when it summarily dismissed its
tortious interference claim. We hold that NWA fails to establish any genuine
issue of material fact. Thus, all other facts are immaterial for summary judgment
purposes.
This court reviews summary judgment orders de novo and engages in the
same inquiry as the trial court.1 Summary judgment is appropriate when there is
no genuine issue of material fact, and the moving party is entitled to summary
judgment as a matter of law.2
1 Cornish Coll. of the Arts v. 1000 Va. Ltd. P'ship, 158 Wash. App. 203, 216,
242P.3d 1 (2010).
2 CR 56(c).
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A defendant may move for summary judgment by showing that "'there is
an absence of evidence to support the [plaintiff's] case.'"3 If the defendant shows
an absence of evidence, the burden then shifts to the plaintiff to set forth specific
facts showing a genuine issue of material fact for trial.4 While this court
construes all evidence and reasonable inferences in the light most favorable to
the nonmoving party, if the plaintiff "'fails to make a showing sufficient to
establish the existence of an element essential to that party's case, and on which
that party will bear the burden of proof at trial,'" summaryjudgment is proper.5
For a tortious interference with a business expectancy claim, a plaintiff
must prove five elements:
"(1) the existence of a valid contractual relationship or business
expectancy; (2) that defendants had knowledge of that relationship;
(3) an intentional interference inducing or causing a breach or
termination of the relationship or expectancy; (4) that defendants
interfered for an improper purpose or used improper means; and
(5) resultant damage."'61
A complete failure of proof concerning any of these elements necessarily
renders all other facts immaterial for summary judgment purposes.7
3 Young v. Key Pharm., Inc.. 112 Wash. 2d 216, 225 n.1, 770 P.2d 182
(1989).
4 ld\ at 225.
5 Id, (quoting Celotex Corp. v. Catrett. 477 U.S. 317, 322, 106 S. Ct. 2548,
91 L. Ed. 2d 265 (1986)).
6 Moore v. Commercial Aircraft Interiors. LLC. 168 Wash. App. 502, 508-09,
278 P.3d 197, review denied. 175 Wash. 2d 1027 (2012) (quoting Leinqanq v.
Pierce County Med. Bureau. Inc.. 131 Wash. 2d 133, 157, 930 P.2d 288 (1997)).
7 Bovce v. West. 71 Wash. App. 657, 665, 862 P.2d 592 (1993).
No. 70397-8-1/5
Improper Purpose or Means
NWA argues that the City's termination of the service agreement was for
an improper purpose. It argues that this interference was improper for three
reasons: "(1) the interference was wrongfully motivated, and conducted in bad
faith; (2) the bad-faith interference led to bad-faith negotiations in violation of the
2001 [temporary service agreement]; and (3) [t]he City's requirement that TCRY
relinquish its rights to Richland Junction was arbitrary and capricious, and
therefore wrongful." We disagree with all three of these reasons.
As an initial matter, the City argues that NWA is precluded from arguing
the second and third reasons because it did not preserve them below. We agree
in part.
"When reviewing a grant of summary judgment, we consider solely the
issues and evidence the parties called to the trial court's attention on motion for
summary judgment."8 But "'new issues may be raised for the first time in a
motion for reconsideration, thereby preserving them for review, where ... they
are not dependent upon new facts and are closely related to and part of the
original theory.'"9
Here, NWA did not discuss the second and third reason in its response to
the City's motion for summary judgment. But in its motion for reconsideration,
8 Schreiner Farms. Inc. v. Am. Tower. Inc.. 173 Wash. App. 154, 158, 293
P.3d 407 (2013) (citing RAP 9.12).
9 Id (quoting Nail v. Consol. Res. Health Care Fund I. 155 Wash. App. 227,
232, 229 P.3d 885 (2010)).
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NWA briefly referenced the second reason. Thus, we address that second
reason.
As for the third reason, NWA concedes in its reply brief before this court
that it did not use the words "arbitrary and capricious" in its motion for
reconsideration. Further, the cases NWA cites to support the third reason does
not appear in its motion for reconsideration.11 Forthese reasons, we do not
consider the third reason.
As noted above, for the fourth element of a tortious interference claim, a
plaintiff must prove that the defendant interfered for an improper purpose or used
improper means.12
"Interference is for an improper purpose if it is wrongful by some measure
beyond the interference itself, such as a statute, regulation, recognized rule of
common law, or an established standard oftrade or profession."13 But exercising
one's legal interests in good faith is not an improper interference.14
10 Clerk's Papers at 636 ("That the intentional interference was for an
improper purpose and by an improper means is also amply demonstrated by the
recitation regarding Richland's breach of its duty of good faith to Plaintiff
above.").
11 Compare Brief of Appellant at 23-24 (citing Pleas v. City of Seattle. 112
Wash. 2d 794, 774 P.2d 1158 (1989); Landmark Dev.. Inc. v. City of Roy. 138
Wash. 2d 561, 980 P.2d 1234 (1999)), wjth Clerk's Papers at 621-37.
12 Moore. 168 Wash. App. at 509.
13 Newton Ins. Agency & Brokerage, Inc. v. Caledonian Ins. Grp.. Inc.. 114
Wash. App. 151, 158,52P.3d30(2002).
14 Leingang. 131 Wash. 2d at 157.
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The only case that NWA cites to support its assertion that the City's
interference was for an improper purpose is Cherberg v. Peoples National Bank
of Washington.15 There, a tenant sued a landlord after the landlord told the
tenant that it would not repair a wall despite its duty to repair structural
components.16 In its action, the tenant asserted that the landlord breached the
duty to repair in the lease and that the landlord intentionally interfered with its
business expectancies.17
The supreme court explained, "An examination of the testimony presented
at trial when considered in a light most favorable to [the tenant], indicates a
number of facts from which an inference of a bad faith motive for breach might be
drawn."18 It held that the landlord's "intentional and outrageous action in
breaching [the lease] interfered with the business relationship that the [tenants]
had with their customers."19
Here, like Cherberg. NWA points to a contract. It contends that the City
acted with an improper purpose when it terminated the temporary service
agreement. But, unlike Cherberg. this contract was between the City and TCRY,
an entity that is not a party to this lawsuit. Thus, whether there was any breach
15 Brief of Appellant at 18-20 (citing Cherberg v. Peoples Nat'l Bank of
Wash.. 88 Wash. 2d 595, 564 P.2d 1137 (1977)).
16 Cherberg. 88 Wash. 2d at 598-99.
17 JU at 599.
18 id, at 606.
19 Houserv. City of Redmond. 91 Wash. 2d 36, 41, 586 P.2d 482 (1978)
(discussing the holding in Cherberg. 88 Wash. 2d 595).
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of this contract is not at issue in this case. Because the decision in Cherberg
was based on the conclusion that the landlord breached a duty under the lease,
that case is not helpful for establishing that the City interfered for an improper
purpose in this case.
Further, other than Cherberg. NWA does not point to any other "measure
beyond the interference itself to show that termination of the temporary service
agreement was "wrongful."20 NWA argues that "the City was aware that the
termination of the [temporary service agreement] placed pressure on 10 NWA as
well as TCRY, and that the railroad access was required for 10 NWA to utilize the
property for the purposes for which it had been purchased and its improvements
constructed." But NWA does not point to a "statute, regulation, recognized rule
of common law, or an established standard of trade or profession" to establish
that this "pressure tactic" was wrongful.21
Because NWA fails to establish a genuine issue of material fact for this
necessary element of a tortious interference claim, any factual issues for the
otherelements are not material for summary judgment purposes.22 Dismissal of
this claim was proper.
INVERSE CONDEMNATION
NWA next argues that the trial court erred when it summarily dismissed its
inverse condemnation claim. Specifically, NWA argues that it established that
20 Newton Ins. Agency. 114Wn. App. at 158.
21 \±
22 Bovce. 71 Wash. App. at 665.
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there was a "taking" because the City's termination of the temporary service
agreement "injured 10 NWA by decreasing the volume of cars that the property
would be handling." We disagree.
The Washington Constitution provides that "[n]o private property shall be
taken or damaged for public or private use without just compensation having
been first made . . . ."23 A party alleging inverse condemnation must establish
"'(1) a taking or damaging (2) of private property (3) for public use (4) without just
compensation being paid (5) by a governmental entity that has not instituted
formal [condemnation] proceedings.'"24
"A 'taking' occurs when government invades or interferes with the use and
enjoyment of property, and its market value declines as a result."25 But the
interference must be more than "'a mere tortious interference.'"26 "There must be
an invasion [or interference] that is permanent or recurring, or an invasion [or
interference] that involves 'a chronic and unreasonable pattern of behavior by the
government.'"27 The invasion or interference is "permanent if the property may
23
Const, art. I, § 16.
24 Fitzpatrick v. Okanogan County. 169 Wash. 2d 598, 605-06, 238 P.3d
1129 (2010) (quoting Dickoieser v. State. 153 Wash. 2d 530, 535, 105 P.3d 26
(2005)).
25
Gaines v. Pierce County. 66 Wash. App. 715, 725, 834 P.2d 631 (1992).
26 li (quoting N. Pac. Rv. Co. v. Sunnvside Valley Irrigation Dist.. 85
Wash. 2d 920, 924, 540 P.2d 1387 (1975)).
27 jU at 725-26 (citations omitted) (guoting Orion Corp. v. State. 109
Wash. 2d 621, 671, 747 P.2d 1062 (1987)).
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not be restored to its original condition."28
Here, NWA fails to establish that there was a "taking." Even if the City
interfered with NWA's use of its property when it terminated TCRY's temporary
service agreement, this interference is not permanent or recurring. TCRY may
enter into another service agreement with the City, which would restore NWA's
use of its property. Further, NWA could seek rail service from a different railroad
company.
In sum, there is no showing of a taking. Summary dismissal of this claim
was also proper.
We affirm the summary judgment order.
du^s.
WE CONCUR:
LJl.e.S "
28
N. Pac. Rv. Co.. 85 Wash. 2d at 924.
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