Alexandria Real Equities Inc. John J. Cox, Dean A. Takko, V. University Of Wa ( 2023 )

Filed
Washington State
Court of Appeals
Division Two
December 5, 2023
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
ALEXANDRIA REAL ESTATE EQUITIES, No. 57985-5-II
INC., a Washington State Taxpayer, JOHN
JOSEPH COX, a Washington State Taxpayer,
and DEAN A. TAKKO, a Washington State
Taxpayer,
PUBLISHED OPINION
Appellants,
v.
UNIVERSITY OF WASHINGTON, a Public
Institution of Higher Education and Agency of
the State of Washington.
Respondent.
PRICE, J. — This case arises from a selection process used by the University of Washington
(UW) to retain a real estate developer for a new building on its campus. The development plan
involved a variation of a leaseback arrangement. UW proposed to enter an 80-year ground lease
with a developer for the property. The developer, in turn, would demolish an existing building
and construct the new one, incurring all of the costs. The developer would own the building for
the 80-year duration of the ground lease, but UW would agree in advance to lease back a portion
of the building space from the developer. At the end of the ground lease, the building’s ownership
would return to UW.
Alexandria Real Equities, Inc. (ARE) was one of the two finalists to negotiate for the
development contract, but UW ultimately selected ARE’s competitor.
No. 57985-5-II
Litigation resulted. At the superior court, ARE and two individual taxpayers asserted three
claims against the university—(1) UW lacked authority to enter into this particular type of
agreement, (2) UW failed to use a required competitive bidding procedure to select a developer,
and (3) UW’s selection process was arbitrary and capricious because it did not follow the selection
process described in a request for developers’ proposals. The superior court granted UW summary
judgment on the first and second claims, and the third claim proceeded to a bench trial. Following
the trial, the superior court dismissed ARE’s third claim for lack of standing and because it
concluded UW’s selection process was not arbitrary and capricious. ARE appeals.
We affirm the superior court’s summary judgment order because UW had authority to enter
into the contracts with ARE’s competitor and UW was not required to strictly adhere to a specific
competitive bidding process. We also affirm the dismissal of ARE’s third claim because ARE
lacked standing for the claim.
FACTS
I. BACKGROUND
A. UW’S DEVELOPMENT PLANS
UW is a state university with a campus in Seattle and is governed by a “Board of Regents.”
In 2019, UW began its process to redevelop its West Campus (a 70-acre portion of its Seattle
campus) to create an “innovation district.” Clerk’s Papers (CP) at 1458. UW wanted the new
West Campus to serve as a central location for students and faculty in multiple fields to partner
with businesses, government, nonprofit organizations, and the Seattle community to solve critical
problems. UW created a 30-year plan to redevelop West Campus, with 19 locations identified for
reconstruction.
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No. 57985-5-II
The first site selected for reconstruction was site W27. The site is a 1.5-acre property, and
its redevelopment is focused on clean energy science and technologies. The new building will
“house UW faculty, students, classrooms[,] and research facilities, along with public and private
sector tenants with compatible research and technologies.” CP at 96. UW intends for the building
to “[f]acilitate[] multidisciplinary academic and professional exploration,” “[p]rovide[] students
with immersive and experiential learning environments,” and “enhance[] strong connections
between UW faculty, staff[,] and students with external partners to expand the impact of UW
research, teaching/learning[,] and public service activities.” CP at 98. The construction of the
new building will utilize a “ground lease development structure” that UW had previously used for
other projects outside of West Campus. CP at 161.
Under the ground lease development structure, UW executes a long-term, 80-year ground
lease to the developer. The developer then demolishes the existing building and designs, finances,
and constructs the new building. The developer owns the building for the term of the ground lease,
bearing full responsibility for project risks and costs. Throughout the duration of the ground lease,
UW agrees to lease approximately 30,000 square feet (about 9 percent) of the new building at a
fixed rate. UW also has the option to lease an additional 70,000 square feet, which would bring
its total usage of the building to about 30 percent. The remainder of the building is leased to non-
UW tenants, but with certain restrictions—the tenants must be “private and public tenants that
have activities, research[,] and/or products focused on sustainable solutions and [that] are
complementary with the UW’s education and research mission.” CP at 107. At the end of the
80-year duration, the developer returns ownership of the building to UW.
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No. 57985-5-II
To begin the construction process, UW hired Jones Lang LaSalle Americas, Inc. (JLL), a
firm that helps public entities with development solutions, to provide real estate services for the
site W27 development. JLL created a general procedure for the site W27 development, involving
a two-step process for selecting a developer. First, a “Request for Qualifications” (RFQ) would
solicit potential developers. Second, the responding developers with the best overall proposals
would be invited to participate further with a “Request for Proposals” (RFP).
In January 2020, UW posted the RFQ for development of site W27, including the details
about the proposed ground lease development structure. UW received responses from
11 developers. UW selected four of the developers to participate in the next-step RFP process,
two of which were ARE and Wexford Science & Technology, LLC (Wexford).
The RFP provided to the selected developers described UW’s intent to negotiate the ground
lease development structure. The RFP stated that UW “may elect to work directly with [the]
Developer on other similar projects in the future without further competitive requests for
proposals.” CP at 109. Additionally, the RFP explained that the developers’ proposals would be
evaluated and scored by UW’s evaluators, called the “Slating Committee,” “based on the criteria
identified in [the] RFP.” CP at 126.
UW received proposals from three developers, including ARE and Wexford. The
developers were able to submit questions to UW as part of the negotiation process; one developer
asked UW to “describe any associated scoring, ranking, or numerical weights assigned to the
criteria.” Ex. 66, at 3. In response, UW issued an addendum to the RFP, stating it would evaluate
the proposals for specified criteria in the RFP, but would not at that time indicate weight or
importance of the items. UW’s Slating Committee reviewed the proposals and conducted
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No. 57985-5-II
interviews but did not use actual scorecards for the different developers. Ultimately, UW selected
Wexford as the developer for site W27.
B. UW/WEXFORD LEASES
UW began negotiating the leases for the development with Wexford. Wexford won the
bid to be the developer, leading UW to execute the contracts with Wexford’s related entity, LS
W27 JV, LLC (LS W27)1. The parties signed an initial agreement to lease in March 2022. The
subsequent ground and building leases were signed in May 2022.
The ground lease required Wexford to design, finance, construct, and maintain the facility.
The companion building lease then required Wexford to lease 100,000 square feet of building
space back to UW. The ground lease self-executes upon “closing,” which is dependent on certain
conditions precedent. The only relevant condition precedent is the absence of litigation that would
prevent UW or Wexford from performing under the leases. The building lease self-executes when
the building is substantially completed.
C. ARE’S SUBSEQUENT ACTIONS
When ARE learned Wexford had been selected as the site W27 developer, its lawyer wrote
to UW’s President questioning the “methodology and objectivity of the RFP process.” CP at 153.
The letter requested that UW reconsider and select ARE instead. UW declined.
ARE and its Senior Vice President, John Cox, then sent letters to the Washington State
Attorney General asserting that the RFP selection process was illegal and requesting the attorney
1
Wexford had a five percent equity interest in LS W27.
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No. 57985-5-II
general “enjoin the execution/performance of the illegal [c]ontracts.” CP at 769. The attorney
general declined to respond.
II. ARE’S COMPLAINTS AND UW’S MOTION FOR SUMMARY JUDGMENT
In June 2021, ARE, together with two individual taxpayers, Cox (in his individual capacity)
and former state legislator Dean Takko, filed a lawsuit against UW, asserting two claims.2 ARE’s
first claim (Claim 1) contended UW lacked authority to enter into the leases for site W27. ARE’s
second claim (Claim 2) alleged UW failed to use competitive bidding procedures required under
public works law.
UW moved for summary judgment on both of ARE’s claims in August 2021. UW asserted
it had general authority to enter into the leases through several different statutes, including RCWs
28B.20.130, 28B.140.010, and 28B.10.300. UW also argued the building’s construction was not
a public work because UW was not incurring construction costs and, therefore, the statutory
competitive bidding process did not apply.
While UW’s summary judgment motion was pending, ARE filed an amended complaint
adding a third claim (Claim 3). ARE’s Claim 3 asserted that UW’s developer selection process
was arbitrary and capricious.
The superior court granted UW’s summary judgment motion and dismissed Claims 1 and
2.3 Claim 3 remained.
2
Although ARE, Cox, and Takko were plaintiffs as to all claims, we refer to the plaintiffs
collectively as ARE for brevity.
3
ARE filed a supplemental declaration on January 4, 2022, with additional evidence it wanted the
superior court to consider for summary judgment. The supplemental declaration included exhibits
with information about postconstruction costs UW will incur while renting building space from
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No. 57985-5-II
III. BENCH TRIAL
ARE and UW proceeded to a bench trial on Claim 3.4 After hearing testimony from
numerous witnesses and considering over 100 exhibits, the superior court rejected ARE’s
Claim 3. The superior court determined that ARE lacked standing to pursue Claim 3 and further
determined UW was not arbitrary and capricious in its selection of Wexford.
The superior court entered lengthy findings of fact. In ruling for UW, the superior court
determined that ARE lacked standing as a disappointed bidder and as a taxpayer. Findings of fact
relevant to those decisions included the following:
34. UW and Wexford have executed the contracts (the Amended and Restated
Agreement to Lease, the Ground Lease, and the Building Lease, collectively the
Leases) that were procured and negotiated in connection with the Site W27
development.
....
36. The Leases are self-executing and require UW and Wexford to “close” on the
transaction subject to certain Conditions Precedent. The Ground Lease commences
upon “Closing” and the Office Lease commences upon substantial completion of
the Site W27 Facility.
37. The only relevant “Condition Precedent” provides that UW and Wexford’s
obligations are conditioned on there being no litigation that would affect UW’s or
Wexford’s ability to perform.
....
39. [ARE] presented evidence at trial as to the costs incurred in responding to the
W27 RFP and anticipated profits that it believes it would have earned had it been
selected as the W27 developer.
Wexford. UW objected to consideration of the evidence because it was not timely filed in
accordance with CR 56. The superior court agreed and did not consider the declaration.
4
Only ARE, the company, participated in the bench trial because the superior court had previously
dismissed Cox and Takko from Claim 3 based on standing.
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No. 57985-5-II
CP at 1469-70.
Conclusions of law relevant to the superior court’s standing decisions included the
following:
1. The Court concludes that [ARE] lacks standing to pursue its claim in this matter,
both as a disappointed bidder and as a taxpayer, as follows:
2. The Court concludes that [ARE] lacks standing as a disappointed bidder to
pursue its claims. Under Washington law, a bidder loses standing to pursue claims
concerning the procurement of a public project once the contracts at issue have been
executed. Dick Enterprises, Inc. v. Metro. King County, 83 Wn. App. 566, 572,
922 P.2d 184 (1996). A disappointed bidder’s sole remedy under Washington law
is to sue to enjoin execution of the contract at issue in the procurement.
....
4. The Court concludes that the Leases bind UW and Wexford to the terms of the
proposed W27 development, subject only to a litigation contingency that allows
Wexford to terminate the Amended and Restated Agreement to Lease.
5. Any remaining or future agreements or contracts between UW and Wexford
associated with Site W27 development flow from the agreement that has already
been signed. [ARE] lacks disappointed bidder standing to challenge such contracts
to the extent they flow from any agreements related to Site W27 in existence at the
time of trial.
....
7. The Court concludes that [ARE] lacks standing as a Washington State taxpayer
to pursue its claims because it has failed to establish that it has incurred any “special
injury” beyond that suffered by any other Washington taxpayer.
8. The evidence of injury or damages presented by [ARE] included costs incurred
in responding to the RFP and selection process and the alleged loss of its anticipated
profits. These alleged losses or damages are only associated with [ARE] not being
selected as the developer for the W27 project.
CP at 1470-72. Thus, Claim 3 was dismissed.
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No. 57985-5-II
ARE appeals the summary judgment order dismissing Claims 1 and 2 and the conclusions
of law dismissing Claim 3.5
ANALYSIS
I. CLAIMS 1 AND 2 WERE PROPERLY DISMISSED ON SUMMARY JUDGMENT
ARE challenges the superior court’s dismissal of Claims 1 and 2 at summary judgment.
For Claim 1, ARE argues UW did not have statutory authority to enter into a transaction under the
ground lease development structure. For Claim 2, ARE asserts, even if UW had authority to enter
into the transaction, UW failed to comply with the statutory bidding procedures required for
selecting a developer. We affirm the superior court on both claims.
A. SUMMARY JUDGMENT STANDARD OF REVIEW
We review a superior court’s grant of summary judgment de novo. Crisostomo Vargas v.
Inland Wash., LLC, 194 Wn.2d 720, 728, 452 P.3d 1205 (2019). Summary judgment may be
granted if there is no genuine issue of material fact and the moving party is entitled to judgment
as a matter of law. CR 56(c); Meyers v. Ferndale Sch. Dist., 197 Wn.2d 281, 287, 481 P.3d 1084(2021). A genuine issue of material fact exists if reasonable minds could disagree on the
conclusion of a factual issue controlling the outcome of the litigation. Sartin v. Estate of McPike,
15 Wn. App. 2d 163, 172, 475 P.3d 522 (2020), review denied, 196 Wn.2d 1046 (2021). When
determining whether to grant summary judgment, we view all facts and inferences in the light most
favorable to the nonmoving party. Id.5
As noted above, the superior court had previously dismissed Cox and Takko for Claim 3 based
on standing. Because that order has not been appealed, only ARE, the company, remains an
appellant for Claim 3.
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No. 57985-5-II
B. CLAIM 1—UW HAD AUTHORITY TO ENTER TRANSACTION
ARE argues UW had no authority to enter into transactions arising from a ground lease
development structure. UW responds by claiming statutory authority from three individual
statutes—RCW 28B.20.130, RCW 28B.10.300, and RCW 28B.140.010. We determine that
RCW 28B.20.130 grants UW the authority to enter into the transaction with Wexford.
The legislature has granted broad authority to UW for managing its own property. Indeed,
chapter 28B.20 RCW applies exclusively to UW and grants the UW Board of Regents expansive
powers under statute. See RCW 28B.20.020. Relevant here, RCW 28B.20.130 provides the Board
of Regents with “[g]eneral powers and duties,” including the grant of “full control of the university
and its property of various kinds, except as otherwise provided by law.” RCW 28B.20.130(1).
ARE appears to agree that RCW 28B.20.130 grants broad power to UW. But ARE focuses
on the statute’s language, “except as otherwise provided by law,” and contends the language has
been interpreted to limit UW’s “full control” when there is an applicable statute. See Univ. of
Wash. v. City of Seattle, 188 Wn.2d 823, 832-33, 399 P.3d 519 (2017); RCW 28B.20.130.
For this case, ARE argues there is such a statute—RCW 28B.10.300—that limits UW’s
authority to engage in this project. RCW 28B.10.300 generally applies to all state universities in
Washington, not just UW, and authorizes them to enter ground lease transactions for eight specific
building types. The statute permits boards of regents for various state universities to enter into
contracts for:
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No. 57985-5-II
[T]he construction, installation, equipping, repairing, renovating and betterment of
buildings and facilities for the following:
(a) Dormitories
(b) Hospitals
(c) Infirmaries
(d) Dining halls
(e) Student activities
(f) Services of every kind for students, including, but not limited to, housing,
employment, registration, financial aid, counseling, testing and offices of the dean
of students
(g) Vehicular parking
(h) Student, faculty and employee housing and boarding[.]
RCW 28B.10.300(1). Such contracts include leases. RCW 28B.10.300(3).
ARE contends the site W27 building does not fall into any of these eight building types.
And because this project falls outside of the eight building types specifically permitted by
RCW 28B.10.300, ARE argues this statute operates to limit UW’s very general authority under
RCW 28B.20.130. In other words, the limitation of distinct building types in RCW 28B.10.300
constitutes the “except as otherwise provided by law” limitation in RCW 28B.20.130.
UW disputes this argument. UW acknowledges the limitation from the “except as
otherwise provided by law” clause, but argues that RCW 28B.10.300 is not the type of statute that
limits its authority under RCW 28B.20.130. According to UW, RCW 28B.10.300 grants power
to public universities to enter into agreements, not limits their power to enter into them. One statute
granting authority to all Washington universities cannot operate to limit UW’s broader grant of
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No. 57985-5-II
authority in a separate statute. UW essentially argues two positive grants of authority cannot limit
one another.
UW’s position is persuasive. RCW 28B.10.300 provides state universities the authority to
enter into certain transactions, but it does not, on its face, prohibit universities from entering into
any transactions. Moreover, there is no language in the statute indicating that the eight building
types are the entire universe of permitted building types for which universities may contract; the
statute, for example, does not state that universities are only authorized to contract for the
enumerated building types. Without some language in RCW 28B.10.300 more overtly enacting a
limitation on the authority of the universities, rather than merely acting as a grant of authority, the
statute cannot be reasonably seen as functioning as an “except as otherwise provided by law”
limitation of the broad authority given to UW from RCW 28B.20.130. Simply put, both statutes
grant UW authority to manage its property holdings. See Hood Canal Sand & Gravel, LLC v.
Goldmark, 195 Wn. App. 284, 300, 381 P.3d 95 (2016) (determining chapters that individually
granted DNR “expansive authority to grant easements” and “certain narrow authority . . . to grant
easements” did not conflict). Thus, RCW 28B.10.300 does not limit UW’s broad authority to enter
into property lease agreements.
UW’s ability to control its property under RCW 28B.20.130, while not limitless, is broad.
ARE fails to cite any law that prevents this broad grant of authority from permitting the
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No. 57985-5-II
development structure chosen for site W27.6 Thus, the superior court properly dismissed
Claim 1. We affirm the superior court.7
C. CLAIM 2—COMPETITIVE BIDDING REQUIREMENTS DO NOT APPLY
ARE’s Claim 2 is related to competitive bidding laws. ARE argues that assuming UW has
the authority to enter into the development structure, UW failed to follow competitive bidding
procedures required by law. ARE asserts that because UW will incur costs associated with the
new site W27 building, it is a public work that requires competitive bidding. ARE contends that
because the bidding for the development did not comply with these laws, UW’s transactions with
Wexford are ultra vires and void. We disagree.
Generally, public policy favors competitive bidding laws in Washington. See Manson
Constr. & Eng’g Co. v. State, 24 Wn. App. 185, 190, 600 P.2d 643 (1979), review denied, 93
Wn.2d 1004 (1980). Thus, even if a construction contract is within an agency’s general authority,
noncompliance with statutorily mandated procedures is ultra vires and renders the contract void.
Failor’s Pharmacy v. Dep’t of Soc. & Health Servs., 125 Wn.2d 488, 499, 886 P.2d 147 (1994);
see also Bankston v. Pierce County, 174 Wn. App. 932, 939, 301 P.3d 495 (2013) (“When a public
6
ARE contends that such a broad reading of RCW 28B.20.130 would make RCW 28B.10.300
superfluous. But considering the breadth of the grant of authority in RCW 28B.20.130, coupled
with very general language of the exception—“except as otherwise provided by law”—we are
persuaded that the legislature has the prerogative to provide clear authorization for the specific
projects listed in RCW 28B.10.300 without eviscerating the broad authority of RCW 28B.20.130.
7
UW also asserts that RCW 28B.10.300 and RCW 28B.140.010 each independently grant it power
to enter into the transaction with Wexford. Because UW has authority under RCW 28B.20.130,
we do not consider the breadth of any additional authority provided to UW by these other statutes.
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No. 57985-5-II
body makes a contract in violation of competitive bidding laws, the contract is illegal and imposes
no obligation on the public body.”).
State universities are required to comply with competitive bidding procedures under certain
circumstances. See Former RCW 28B.10.350 (2009); A-Line Equip. Co. v. Lower Columbia Coll.,
49 Wn. App. 217, 219, 741 P.2d 1057 (1987). Former RCW 28B.10.350 requires competitive
bidding when a state university will incur over $90,000 of costs for construction:
(1) When the cost to . . . any regional or state university of any building,
construction, renovation, remodeling, or demolition, other than maintenance or
repairs, will equal or exceed the sum of ninety thousand dollars, . . . complete plans
and specifications for the work shall be prepared, the work shall be put out for
public bid, and the contract shall be awarded to the responsible bidder who submits
the lowest responsive bid.
(Emphasis added.) But if the construction is not being done at the cost of the university, then the
construction is not for a public work and the statute would not apply. See Former RCW
28B.10.350(4) (“Where the estimated cost . . . is less than ninety thousand dollars . . . the
publication requirements of RCW 39.04.020 [(requiring public bidding for public works)] do not
apply.”).
ARE argues that former RCW 28B.10.350 applies here because the cost of the construction
is actually being paid in part by UW. As noted above, the development structure requires the
developer to fully fund the demolition and construction costs of the building in exchange for UW’s
promise in advance to commit to a long-term lease of space. ARE contends UW’s promised rent
payments mean the construction is actually being done at the “cost” of UW.8 Essentially, ARE
8
In support of this argument, ARE cites to its supplemental declaration, which the superior court
declined to consider below because it was not filed in accordance with CR 56. ARE argues we
should consider the declaration evidence because it is “appropriately part of the record for this
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No. 57985-5-II
argues that the millions of promised dollars that will be spent in rent are so closely tied to
demolition and construction at site W27 that they must be considered payment for the cost of
construction. If so, then former RCW 28B.10.350 applies and competitive bidding was required.
ARE supports its argument with this court’s decision in Supporters of the Center, Inc. v.
Moore, 119 Wn. App. 352, 80 P.3d 618 (2003). In Supporters, a nonprofit community group was
running out of money and struggling to complete a civic performing arts center when the project
received an infusion of funds from both a state agency and the city. Id. at 354-56. The city offered
its funding through an advance of rent payments—rent that the city initially expected to pay later,
only after construction was completed. Id. at 360. In the context of a prevailing wage dispute,
this court held that this public funding, including the advance of city rent payments, made the
performing arts center a public work, constructed “ ‘at the cost’ ” of public entities. Id. at 360
(quoting RCW 39.04.010). ARE contends that Supporters stands for the proposition that UW’s
promised rent payments should be deemed payment for costs for construction.
ARE also argues the legislature has identified rent as a cost in relation to real property
acquisition, citing RCW 28B.10.300(5). That provision states that boards of regents for state
universities are authorized to:
Contract to pay as rental or otherwise the cost of the acquisition of such lands and
of the construction and installation of such buildings and facilities on the
amortization plan[.]
RCW 28B.10.300(5) (emphasis added).
appeal and . . . it was presented to (and called to the attention of) the [superior] court.” Appellants’
Opening Br. at 20 n.8. The declaration appears to merely include additional postconstruction rent
figures and anticipated maintenance costs. Because the supplemental declaration, even if it is
considered, does not change our analysis, we decline to further address this issue.
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No. 57985-5-II
ARE’s position is unpersuasive. First, Supporters does not have application here. The
circumstances are not similar; UW is not making any advanced rent payments to actually fund the
building’s demolition or construction. The developer for site W27 will pay the demolition and
construction costs in their entirety.
Second, RCW 28B.10.300(5) is similarly inapplicable. This provision narrowly pertains
to the acquisition of buildings and facilities on an amortization plan. ARE fails to explain how
this apparent application can be broadly construed to equate lease payments to costs of
construction in the general sense—especially when the statute does not have any relation to
competitive bidding laws.
Although UW has committed to spending public funds in leasing space at the new building,
the funds will be paid as rent only after all construction is completed; the building lease self-
executes when the building is substantially complete. UW will not incur any risk for the building
or costs for the stated construction activities—all those costs are incurred by the developer, as is
the nature of the ground lease development structure. Because UW will not incur any costs for, or
closely associated with, “building, construction, renovation, remodeling, or demolition,” former
RCW 28B.10.350(1) and its competitive bidding requirements do not apply.
In short, ARE’s Claim 2 fails; UW was not required to use competitive bidding procedures
under former RCW 28B.10.350. We affirm the superior court’s dismissal of this claim.
II. CLAIM 3—SUPERIOR COURT DID NOT ERR WHEN IT RULED FOR UW
ARE’s Claim 3 alleged that assuming UW had the authority to enter the development
structure and assuming competitive bidding laws did not apply, UW’s developer selection process
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No. 57985-5-II
was arbitrary and capricious. After an extensive bench trial, the superior court determined that
ARE did not have standing to pursue this claim.9
ARE argues the superior court erred and it had standing both as a disappointed bidder and
a taxpayer.10 We hold that ARE did not have standing for Claim 3.
A. LEGAL PRINCIPLES
On appeal, we review the superior court’s findings of fact after a bench trial for substantial
evidence. Harrison Mem’l Hosp. v. Gagnon, 110 Wn. App. 475, 485, 40 P.3d 1221, review denied,
147 Wn.2d 1011 (2002). Unchallenged findings of fact are verities on appeal. Harris v. Urell,
133 Wn. App. 130, 137, 135 P.3d 530 (2006), review denied, 160 Wn.2d 1012 (2007).
We review conclusions of law de novo to determine if they are supported by the findings
of fact. Scott’s Excavating Vancouver, LLC v. Winlock Props., LLC, 176 Wn. App. 335, 342,
308 P.3d 791 (2013), review denied, 179 Wn.2d 1011 (2014).
B. ARE DID NOT ESTABLISH STANDING AS A DISAPPOINTED BIDDER
ARE first argues it has standing for Claim 3 as a disappointed bidder. We disagree.
A disappointed bidder may pursue injunctive relief before contract formation based on
disappointed bidder standing. BBG Grp., LLC v. City of Monroe, 96 Wn. App. 517, 519-20,
982 P.2d 1176 (1999). However, a disappointed bidder loses standing once the contracts at issue
9
The superior court also determined, substantively, that UW’s developer selection process was
not arbitrary and capricious. But because the superior court’s decision on standing, if not error,
would be dispositive, we limit our discussion to that aspect of the superior court’s decision.
10
ARE challenges the superior court’s conclusions of law, but notably does not assign error to any
of the superior court’s findings of fact.
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have been executed. Dick Enterprises, 83 Wn. App. at 571. Contract formation is the “bright-line
cutoff point.” Id. at 571.
ARE has two main arguments about its disappointed bidder standing. ARE first asserts
that it did not lose its disappointed bidder status because of the post-award switch in the identity
of the developer. ARE points out that UW has not actually executed contracts for the site W27
development with Wexford, but with a different corporate entity, LS W27, in which Wexford has
a five percent equity interest. Thus, ARE argues the contracts resulting from the RFP have not
been executed and it retains disappointed bidder standing.
Second, ARE argues that it maintains disappointed bidder standing because the
“Agreement to Lease” (Ex. 157) requires additional documents be completed before the overall
transaction can close. ARE does not explain what documents still need to be completed but argues
that those documents and a monetary deposit must be placed in escrow prior to closing.
ARE’s first argument about the identities of the contracting parties fails. The superior
court’s findings of fact clearly found no relevance to the differences in the corporate forms of
Wexford and LS W27. The superior court’s findings of fact stated that Wexford remained the
party that was entering the agreements with UW. CP at 1469 (“UW and Wexford have executed
the contracts (the Amended and Restated Agreement to Lease, the Ground Lease, and the Building
Lease, collectively the Leases) that were procured and negotiated in connection with the Site W27
development.”). Because ARE has not assigned error to any of the superior court’s findings of
fact, they are verities on appeal. Harris, 133 Wn. App. at 136. Because we apply these
unchallenged findings of fact to the conclusions of law, any alleged factual differences in the
corporate forms of the contracting parties are irrelevant on appeal. See id. Thus, ARE’s
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disappointed bidder standing cannot be maintained based merely on UW’s contract execution with
LS W27 instead of Wexford.
Similarly, ARE’s second argument about the alleged non-finalization of the contracts also
fails. The superior court explicitly included in its findings of fact that “UW and Wexford have
executed the contracts . . . that were procured and negotiated in connection with the Site W27
development.” CP at 1469. ARE did not challenge this finding of fact, thus again, it is a verity.
Harris, 133 Wn. App. at 136. Using these findings, the superior court made the following
conclusions of law, rejecting the argument that something further had to happen before the
contracts would be deemed executed:
4. The Court concludes that the Leases bind UW and Wexford to the terms of the
proposed W27 development, subject only to a litigation contingency that allows
Wexford to terminate the Amended and Restated Agreement to Lease.
5. Any remaining or future agreements or contracts between UW and Wexford
associated with Site W27 development flow from the agreement that has already
been signed. [ARE] lacks disappointed bidder standing to challenge such contracts
to the extent they flow from any agreements related to Site W27 in existence at the
time of trial.
CP at 1471.
Although ARE is correct that some additional documents and agreements may be necessary
before this development is completed, the main contracts for the development that ARE fought to
be the developer for—the agreement to lease, the ground lease, and the building lease—have all
been sufficiently signed and completed. Even if the contracts are deemed to “self-execut[e]” at a
later time or require other documents and actions to later be completed, the parties have already
executed the contracts. CP at 1470. Simply put, ARE does not have disappointed bidder standing
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because it did not bring its suit prior to the “bright-line cutoff point.” Dick Enterprises, 83 Wn.
App. at 571.
The superior court’s findings of fact sufficiently support its conclusion of law that ARE
lacks standing as a disappointed bidder for Claim 3.
C. ARE DID NOT ESTABLISH STANDING AS A TAXPAYER
ARE also argues it had standing to bring Claim 3 because it had standing as a taxpayer.
We disagree and hold that the superior court’s findings of fact support its conclusion of law that
ARE lacked taxpayer standing.
When challenging a government entity’s discretionary acts, as opposed to allegedly
unlawful acts, a taxpayer can establish standing by demonstrating: (1) taxpayer status, (2) a prior
demand of the attorney general, and (3) a special injury. See Friends of N. Spokane County Parks
v. Spokane County, 184 Wn. App. 105, 120-22, 336 P.3d 632 (2014). A “special injury” is not
required for taxpayer standing when a government’s allegedly unlawful act is being challenged.
Id. at 122.
To show a “special injury,” the taxpayer “ ‘must show that [it] has a unique right or interest
that is being violated, in a manner special and different from the rights of other taxpayers.’ ” Id.
at 120 (quoting Am. Legion Post No. 32 v. City of Walla Walla, 116 Wn.2d 1, 7, 802 P.2d 784(1991)); Greater Harbor 2000 v. City of Seattle, 132 Wn.2d 267, 281, 937 P.2d 1082 (1997). “The
taxpayer must show that the action complained of interferes with the taxpayer’s legal rights or
privileges.” Greater Harbor 2000, 132 Wn.2d at 281-82. Generally, the special injury must have
a causal link between the use of the taxes and the government’s discretionary action. See generally
74 AM. JUR. 2d Taxpayers’ Actions § 26 (2d ed. 2023) (explaining that a special injury is a “special
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interest in the taxation-derived fund by reason of which the taxpayer's own property rights are put
in jeopardy”); cf. Dick Enterprises, 83 Wn. App. at 573 (disappointed bidder did not have taxpayer
standing when it “d[id] not allege harm to taxpayers”); cf. Am. Legion Post No. 32, 116 Wn.2d
at 8 (party lacked taxpayer standing when it “provide[d] no argument demonstrating it has a unique
legal right or privilege different from other taxpayers that was violated by Walla Walla’s levy and
subsequent use of the . . . tax”).
Here, after the bench trial, the superior court concluded that ARE’s alleged damages did
not qualify as a “special injury.” The superior court’s findings of fact included that “[ARE]
presented evidence at trial as to the costs incurred in responding to the W27 RFP and anticipated
profits that it believes it would have earned had it been selected as the W27 developer.” CP at
1470. ARE has not assigned error to this finding, and it is therefore a verity on appeal. Harris,
133 Wn. App. at 136.
Using this finding of fact, the superior court concluded that ARE’s only damages were
those that were associated with being a disappointed bidder in the RFP selection process, not as a
taxpayer with a special injury. The superior court’s conclusions of law included:
7. The Court concludes that [ARE] lacks standing as a Washington State taxpayer
to pursue its claims because it has failed to establish that it has incurred any “special
injury” beyond that suffered by any other Washington taxpayer.
8. The evidence of injury or damages presented by [ARE] included costs incurred
in responding to the RFP and selection process and the alleged loss of its
anticipated profits. These alleged losses or damages are only associated with
[ARE] not being selected as the developer for the W27 project.
9. [ARE] fails to establish any injury to taxpayers generally from the UW’s
selection of Wexford’s bid. After an extensive process, the UW decisionmakers
determined that the Wexford proposal was more financially advantageous. Plaintiff
has not established a special injury as a taxpayer.
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CP at 1472 (emphasis added).
ARE challenges these conclusions of law, arguing it may establish its taxpayer standing
because it did sustain a special injury—injuries as a disappointed bidder. ARE claims Washington
law supports its position that, if it is a taxpayer, its damages as disappointed bidder can constitute
special injury. ARE states, “Washington courts reject additional requirements for such
disappointed bidders that are also Washington taxpayers, and as such enables those disappointed
bidders to continue to challenge a procurement decision based on their taxpayer standing even
after contract execution.” Appellants’ Opening Br. at 54 (emphasis omitted). ARE argues it can
show it had a special injury by “demonstrating that the government act has a connection to the use
of state appropriated funds (e.g., state tax dollars being used in connection with the project).”
Appellants’ Opening Br. at 53. For these assertions, ARE cites Friends of North Spokane County
Parks, 184 Wn. App. 105, and Dick Enterprises, 83 Wn. App. 566.
Neither case supports ARE’s position. In Dick Enterprises, a taxpayer/disappointed bidder
brought suit against a contractor when another bidder was selected, after the contract for services
was executed. 83 Wn. App. at 569-70. The court held the disappointed bidder was too late to
qualify for disappointed bidder standing. Id. at 572. But the disappointed bidder also argued it
should have taxpayer standing because it would otherwise “irretrievably lose its rights to contract
as the . . . bidder on the project.” Id. at 573 (internal quotation marks omitted). In rejecting that
argument, the court determined the disappointed bidder also lacked taxpayer standing because it
failed to adequately invoke taxpayer standing in its pleadings. Id. But nothing in the case supports
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ARE’s assertion that damages as a disappointed bidder can constitute special injury for the
purposes of establishing taxpayer standing.11
Similarly, Friends of North Spokane County Parks does not help ARE. Friends discusses
and examines the Dick Enterprises decision, but it contains no discussion about the relationship
between disappointed bidder status and the special injury necessary for standing as a taxpayer to
challenge discretionary governmental decisions. 184 Wn. App. at 118. Friends is of marginal
relevance, in any event, because the case involved an allegation of “unlawful” governmental action
which, unlike discretionary governmental action, does not require special injury to obtain taxpayer
standing. Id. at 122, 124.
None of the cases cited by ARE support its argument that disappointed bidder damages
alone can constitute special injury for tax payer standing for discretionary governmental decisions.
We presume that no such Washington cases exist. DeHeer v. Seattle Post-Intelligencer, 60 Wn.2d
122, 126, 372 P.2d 193 (1962) (“Where no authorities are cited in support of a proposition, the
court is not required to search out authorities, but may assume that counsel, after diligent search,
has found none.”). Thus, ARE fails to show that damages incurred solely as a disappointed bidder,
11
ARE also cites to Dick Enterprises to argue that a special injury can be shown by
“demonstrating that the government act has a connection to the use of state appropriated funds
(e.g., state tax dollars being used in connection with the project).” Appellants’ Opening Br. at 53.
And again, ARE is mistaken; ARE’s citation to Dick Enterprises is to the part of the opinion
analyzing whether the plaintiff had standing as a disappointed bidder, which has no relevance to
whether a connection between government acts and the use of state appropriated funds shows
special injury for taxpayer standing. Indeed, such an injury would not be “special,” but a general
injury applicable to ARE and to all other taxpayers. See Greater Harbor 2000, 132 Wn.2d at 281(“ ‘[T]he taxpayer must show . . . a unique right or interest that is being violated, in a manner
special and different from the rights of other taxpayers.’ ”) (second alteration in original) (quoting
Am. Legion Post No. 32, 116 Wn.2d at 7)).
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even if that bidder is a taxpayer, are within the category of damages that create “special injury”
necessary for taxpayer standing.
Indeed, such a holding would create a loophole for disappointed bidders (who also happen
to pay taxes) when they miss the deadline to challenge a bid decision. As explained above,
disappointed bidders are barred from challenging the result of a competitive bid after the contracts
for the bids have been executed. Dick Enterprises, 83 Wn. App. at 571-72. Dick Enterprises
explains that post-contracting relief for disappointed bidders competes with the public interest of
preventing excessive taxation. Id. at 569, 572 (“[E]ven where the wrongful award of a contract
violates a bidder’s interest in a fair forum, the bidder may not sue for damages. To allow damages
would violate the public interest by subjecting taxpayers to further penalties when they are already
injured by paying too high a price under an illegal contract.”). Such a loophole allowing standing
for all disappointed bidders who are also taxpayers would utterly frustrate the policies behind
cutting off disappointed bidder standing at the time of contract execution.
With these principles in mind, we hold that damages as a disappointed bidder alone,
without more, are not sufficient to show special injury for taxpayer standing.
At the end of the day, ARE has only shown damages that can be fairly categorized as
disappointed bidder damages. And apart from those damages, ARE has failed to articulate any
possible damages that would not also be suffered by all taxpayers. Such damages, if any, would
not be a special injury. Thus, ARE lacks standing as a taxpayer for Claim 3.
Because ARE did not have either disappointed bidder standing or taxpayer standing, the
superior court did not err by dismissing ARE’s Claim 3.
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CONCLUSION
We hold the superior court did not err when it granted summary judgment on Claims 1
and 2. We also hold the superior court’s conclusions of law determining ARE lacked standing and
dismissing ARE’s Claim 3 are supported by the findings of fact. Accordingly, we affirm the
superior court.
PRICE, J.
We concur:
MAXA, P.J.
VELJACIC, J.
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