Kenneth & Kelly Emerson, Apps. v. Island County, Resp.

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
e=3 t/>o
KENNETH EMERSON and KELLY rHC:
o->
>;-x
EMERSON, a married couple, No. 73208-1-1 3C -H—i
3»
ZX3 O-n
r\>
Appellants, DIVISION ONE oo
t>
^•nr
>~Orr.
3*
v. 3C 3E'>
a:'"'1.
oo CJ
ISLAND COUNTY, a political subdivision UNPUBLISHED OPINION jct
C/1
O—;
3C<
of the State of Washington,
FILED: March 28, 2016
Respondent.
Becker, J. — Kenneth and Kelly Emerson applied for a permit to build an
addition on to their Island County home. Island County issued the permit after
lengthy wrangling over whether there was a wetland on the property. The
Emersons filed suit seeking damages for the delay. They now appeal from an
order granting summary judgment to the county. We affirm.
The purpose of summary judgment is to avoid a useless trial. Seven
Gables Corp. v. MGM/UA Entm't Co.. 106 Wn.2d 1, 12, 721 P.2d 1 (1986).
Summary judgment is properly granted when the pleadings, affidavits,
depositions, and admissions on file demonstrate there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law.
Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998). Any doubt as
to the existence of a genuine issue of material fact is resolved against the moving
No. 73208-1-1/2
party. Atherton Condo. Apartment-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co.,
115 Wn.2d 506, 516, 799 P.2d 250 (1990). But the existence of a material fact
cannot be hypothetical. "The adverse party must set forth specific facts showing
there is a genuine issue for trial or have the summary judgment, if appropriate,
entered against them." Seven Gables. 106 Wn.2d at 12-13.
We review the facts in the light most favorable to the Emersons. In late
August 2010, Kenneth Emerson started constructing a sunroom addition to the
Emersons' Camano Island home. He did not obtain a permit for this work.
Someone who observed the construction anonymously notified Kelly Emerson's
opponent in the then upcoming election for Island County Commissioner. A
complaint, alleging damage to wetlands, reached the Island County Department
of Planning and Community Development. The county dispatched an inspector
to the Emerson property. No one was home. The inspector observed the framed
addition at the back of the home and stapled a stop work order to the framing.
On August 31, 2010, Kenneth Emerson went to the county permitting
office. He filled out and filed forms to obtain an after-the-fact building permit for
the addition. On one of the forms, he stated that no wetlands existed on the
Emerson property. On September 16 and September 23, 2010, the county sent
letters stating that the county had information indicating the presence of a
wetland on the Emersons' property.
The Emersons received a notice of violation letter on October 1, 2016.
The letter offered the opportunity to come into compliance within 30 days by
No. 73208-1-1/3
submitting a wetland report. The letter indicated that failure to come into
compliance would result in an enforcement order and civil fines.
The Emersons did not submit a wetland report. Feeling certain there were
no wetlands on the property, they filed a lawsuit against individuals they believed
were engaging in a misuse of power to discredit Kelly Emerson's political
campaign. Later, they added the county as a defendant.
In November 2010, the county sent an enforcement order to the
Emersons. The order advised the Emersons that they needed to submit a
wetland report within 30 days. It stated that civil fines would be imposed if they
failed to comply.
In January 2011, the county issued a supplemental enforcement order.
The supplemental order repeated the demand for a wetland report and assessed
a civil penalty of $37,000 against the Emersons.
In May 2011, the trial court entered summary judgment and dismissed the
Emersons' lawsuit. The summary judgment was not appealed.
In June 2011, the Emersons retained SNR Co. to determine whether
wetlands were on their property. SNR concluded no wetlands were present.
In July 2011, the Emersons submitted the SNR report to the county. The
county expressed concern with the methodologies used by SNR and forwarded
the report to the Department of Ecology for a second opinion.
In December 2011, the Emersons were told the SNR report did not comply
with federal and state standards. The Emersons retained a second expert, Ed
Kilduff, to perform a peer review of the SNR report. Kilduff criticized the
No. 73208-1-1/4
Department of Ecology for comments that "appear to deliberately misunderstand
some of SNR's points for the purpose of manufacturing controversy."
The Emersons presented Kilduffs peer review to the county. Again, the
county sought assistance from the Department of Ecology. In early 2012, the
Department of Ecology concluded that Kilduffs peer review was unpersuasive
because it lacked site specific information. The Department of Ecology
recommended that state or county staff perform an onsite inspection at no cost to
the Emersons. The inspection would facilitate a final determination regarding the
presence or absence of regulated wetlands on the Emersons' property. The
Emersons rejected the suggestion. The Emersons did not believe the state or
the county could make an unbiased determination as to the existence of
wetlands on their property.
In early 2013, the Emersons were repeatedly advised that the dispute
could be resolved quickly and without cost if the county or the state was allowed
to inspect the Emerson property. More than 10 letters and phone calls conveyed
this recommendation to the Emersons. The Emersons refused to allow
inspection.
On March 28, 2013, the county issued a second supplemental
enforcement order. The second supplemental order asserted the violations listed
in the initial enforcement order, noted the previous imposition of a $37,000 civil
fine, and stated that a lien would be placed on the Emersons' property if the
Emersons did not submit a proper wetland report. On March 29, 2013, the
No. 73208-1-1/5
county denied the Emersons' 2010 permit application. The Emersons appealed
the denial and the second supplemental enforcement order.
In June 2013, the parties executed a settlement agreement. Under the
terms of the agreement, the Emersons agreed to pay a reduced fine of $5,000,
submit a wetland report that strictly complied with the Department of Ecology
wetland manual, and withdraw their administrative appeal. The fine was to be
paid within 30 days of the execution of the settlement agreement, and the
wetland report was to be submitted within 60 days after execution. Upon
withdrawal of the appeal, the county would return a substantial portion of the
administrative appeal fees. Upon submission of the new wetland report, the
county would process the permit application in good faith. The agreement
allowed the county to obtain third party review of the new wetland report but only
if the county reasonably determined that the report did not strictly comply with the
Department of Ecology's wetland manual.
The Emersons paid the fine and withdrew their administrative appeal as
required by the agreement. After retaining a third expert, the Emersons
submitted a wetland report to the county on August 27, 2013.
On September 16, 2013, the Emersons e-mailed the county, stating that
the county would be in default if a permit was not issued in 10 days. On
September 23, 2013, the county asked the Emersons to clarify certain aspects of
their wetland report.
On October 16, 2013, the Emersons submitted supplemental responses
from their expert without waiving their previous claim of default. That same day,
No. 73208-1-1/6
the county renewed its request to inspect the Emerson property. On October 18,
2013, the Emersons rejected the request and declared a breach of the settlement
agreement.
The Emersons initiated this lawsuit in November 2013. Their complaint
demanded damages and injunctive relief under a variety of legal theories,
including breach of the settlement agreement. The county forwarded the
Emersons' wetland report and supplemental responses to the Department of
Ecology approximately one week after the Emersons filed the complaint. The
Department of Ecology determined that the Emersons' report did not comply with
the wetland manual.
In October 2014, the county inspected the Emerson property under CR
34(a)(2), the discovery rule that authorizes a litigant to request permission for
entry onto designated land possessed by the responding party. No wetlands
were found. The county issued the building permit.
The parties agreed to arbitration of the breach of contract claim. The trial
court dismissed all the other claims on summary judgment. The Emersons
moved for reconsideration. Their motion was denied.
The Emersons ask this court to reinstate their claims under RCW
64.40.020, under the takings clause of the Washington Constitution, under 42
U.S.C. § 1983 for substantive due process violations, and for common lawfraud.
RCW 64.40.020
RCW 64.40.020 grants permit applicants a limited cause of action for
damages if an agency's permitting actions are arbitrary, capricious, unlawful, or
No. 73208-1-1/7
otherwise exceed its lawful authority, or if an agency fails to act within time limits
established by law. See Birnbaum v. Pierce Countv. 167 Wn. App. 728, 734, 274
P.3d 1070(2012).
Applicant for permit—Actions for damages from governmental
actions.
(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: PROVIDED, That the action is unlawful or
in excess of lawful authority only if the final decision of the agency
was made with knowledge of its unlawfulness or that it was in
excess of lawful authority, or it should reasonably have been known
to have been unlawful or in excess of lawful authority.
(2) The prevailing party in an action brought pursuant to this
chapter may be entitled to reasonable costs and attorney's fees.
(3) No cause of action is created for relief from unintentional
procedural or ministerial errors of an agency.
(4) Invalidation of any regulation in effect prior to the date an
application for a permit is filed with the agency shall not constitute a
cause of action under this chapter.
RCW 64.40.020. Any action brought under chapter 64.40 RCW "shall be
commenced only within thirty days after all administrative remedies have been
exhausted." RCW 64.40.030.
The county's motion for summary judgment argued that the Emersons
failed to exhaust their administrative remedies. The county also sought dismissal
under the 30-day limitations period.
The Emersons responded that they had no obligation to exhaust their
administrative remedies because the county had not issued a final order when
they brought this lawsuit, there were no administrative remedies available to
them under the settlement agreement, and the county lacked the institutional
No. 73208-1-1/8
competence to resolve the dispute. The Emersons cited Saben v. Skagit Countv.
136 Wn. App. 869, 152 P.3d 1034 (2006).
The trial court dismissed the Emersons' RCW 64.40 claim for failure to
exhaust administrative remedies.
The Emersons argue, citing Saben, that there is no exhaustion
requirement under RCW 64.40 when a claim stems from a settlement
agreement. That is not the holding of Saben.
In Saben, Skagit County denied the Sabens a permit. The Sabens filed
an administrative appeal. Saben, 136 Wn. App. at 872. It was agreed that
Skagit County would issue the permit if the Sabens complied with certain laws
and withdrew their appeal. The Sabens complied, but Skagit County refused to
issue the permit. The Sabens filed another administrative appeal and brought an
action for damages under RCW 64.40. Saben, 136 Wn. App. at 873-74. The
superior court granted summary judgment for the Sabens, ruling that the county
was bound by its settlement agreement to issue the permit and finding the county
liable for damages. This court affirmed. "The county adopted an interpretation
and made an agreement based on it. Then, unilaterally, it disregarded that
interpretation, disregarded its agreement, and disregarded the consequences to
the Sabens, who acted in reliance upon it." Saben, 136 Wn. App. at 878.
Nothing in Saben excuses a plaintiff from the statutory requirement to
exhaust administrative remedies before bringing suit. The exhaustion
requirement established by RCW 64.40.030 was not at issue.
No. 73208-1-1/9
The Emersons alternatively contend that their claim is supported by
Smoke v. City of Seattle. 132 Wn.2d 214, 937 P.2d 186 (1997). In Smoke, the
city of Seattle sent a letter (the Mills letter) denying land use and building permits
to a set of plaintiffs. The letter informed the plaintiffs of their option to apply for a
legal building site letter or a formal building cite code interpretation by the
director. Neither a building site letter nor an interpretation by the director was a
required component of the city's application process. Smoke, 132 Wn.2d at 218.
The plaintiffs brought an action against the city under RCW 64.40 without
seeking a building site letter or a director's interpretation. Smoke, 132 Wn.2d at
220.
The case reached our Supreme Court, where the issue was whether the
plaintiffs could claim damages under RCW 64.40. The court first held that the
statute unambiguously requires exhaustion of administrative remedies. Smoke,
132 Wn.2d at 221-22. The next question was whether the plaintiffs had an
unexhausted remedy. "No exhaustion requirement arises . . . without the
issuance of a final, appealable order. Thus, we must first determine whether the
Mills letter constituted a final decision by the City." Smoke, 132 Wn.2d at 222(citation omitted). The court concluded that the plaintiffs did not have to pursue a
site letter or a director's interpretation because neither option could have
reversed the decision to deny the permits. Because there was no further
administrative remedy after the Mills letter, the Mills letter was a final and
appealable decision denying the permits. Smoke, 132 Wn.2d at 226-27.
No. 73208-1-1/10
The Emersons contend that by entering into the settlement agreement,
they became like the plaintiffs in Smoke in that they had no further administrative
remedies. This case is factually unlike Smoke because the Emersons did not
obtain a final, appealable order. They withdrew their appeal.
The county contends that ifthe Emersons wanted to pursue a remedy
under RCW 64.40 in addition to pursuing a breach of contract action, the
Emersons could have either reactivated their appeal of the building permit denial
or sought a new appeal of the wetlands inspection condition that the county was
imposing. The Emersons respond that there was no way for them to reactivate
their appeal or seek a new appeal because the terms of the settlement
agreement did not permit them to pursue an administrative remedy. They rely on
the venue provision stating that Island County Superior Court would be the venue
for any "action" arising out of the agreement:
Governing Law and Venue. This agreement shall be governed by
and interpreted in accordance with the laws of the State of
Washington. The venue for any action arising out of this Agreement
shall be in the Superior Court of the State of Washington, in and for
Island County.
The Emersons contend that the venue provision amounted to an agreement to
exchange administrative remedies for a judicial action.
Settlement agreements are governed by general principles of contract law.
Saben, 136 Wn. App. at 876. The touchstone of contract interpretation is the
parties' intent. Tanner Elec. Coop, v. Puoet Sound Power & Light Co., 128
Wn.2d 656, 674, 911 P.2d 1301 (1996). A settlement agreement listing the
superior court as the venue for an "action" does not evidence an intent to waive
10
No. 73208-1-1/11
the exhaustion requirement in RCW 64.40.030. The venue provision does not
refer to the administrative process or exhaustion of administrative remedies.
The Emersons did not obtain a final, appealable, administrative order
denying their permit either before or after bringing this lawsuit. By bringing suit
before obtaining a final, appealable order, the Emersons deprived the county of
the opportunity to correct its own mistakes, which is "one of the primary purposes
of the doctrine to exhaust administrative remedies." Smoke. 132 Wn.2d at 226.
We conclude the Emersons' RCW 64.40 claim was properly dismissed for failure
to exhaust administrative remedies.
TAKINGS
The Emersons contend that they have a triable takings claim against the
county under the Washington Constitution.
Count 3: Takings under State Constitution
38. Plaintiffs reallege paragraphs 1-26 as if fully set forth
herein.
39. The Washington State Constitution provides, "No private
property shall be taken or damaged for public or private use without
just compensation having been first made, or paid into court for the
owner." Const. Art. I, § 16.
40. By virtue of the actions complained above the
Department has taken or damaged the Emersons' Property without
just compensation.
41. As a result of this taking, the Emersons have suffered
significant damage in an amount to be proven at trial.
The county's motion for summary judgment argued that a permitting delay
cannot amount to a constitutional taking. The county also argued that no taking
occurred because the Emerson property did not suffer total economic
deprivation.
11
No. 73208-1-1/12
In response, the Emersons argued only that the Washington Constitution
provides "more protection" than its federal counterpart. The entirety of the
Emerson's response regarding their takings claim states:
The Emersons' third count, "Takings under the state Constitution,"
seeks damages for Defendant's violation of Article I, § 16 of the
Washington State Constitution. Defendant has moved for summary
judgment of a claim for takings under the Federal constitution—a
claim that is not before the court. Defendant provides no authority
or discussion regarding the Emersons' claim under the State
constitution, which, under well settled case law, affords citizens with
more protection than that guaranteed by the Federal Constitution.
See, e.g., Manufactured] HousH Cmtvs. of Wash, v. State, 142
Wn.2d 347, 360-61, 13 P.3d 183 (2000). Accordingly, Defendant
has failed to meet its burden and the motion must be denied.
The Emersons offered no other basis for denying the county's motion with
regard to their takings claim. The county pointed out in its reply that the federal
constitution provides at least as much protection in the context of a regulatory
taking.
The Emersons argue on appeal that the trial court impermissibly
dismissed their takings claim under a theory not originally briefed in the county's
opening memorandum. They cite White v. Kent Medical Center, Inc., 61 Wn.
App. 163, 810P.2d4(1991).
This case is not controlled by White. The county's reply did not present
new theories for summary judgment. The problem for the Emersons is that they
did not substantively respond to the county's motion to dismiss the takings claim.
Because the Emersons failed to provide any substantive argument to
demonstrate a genuine issue of material fact under CR 56, the trial court properly
dismissed the takings claim.
12
No. 73208-1-1/13
SUBSTANTIVE DUE PROCESS
The Emersons further contend that they have a triable substantive due
process claim under 42 U.S.C § 1983, based on the county's delay in processing
their application pursuant to the settlement agreement.
"Arbitrary or irrational refusal or interference with processing a land use
permit violates substantive due process." Mission Springs, Inc. v. City of
Spokane, 134 Wn.2d 947, 970, 954 P.2d 250 (1998). When executive action like
a permitting decision is at issue, only egregious official conduct can be said to be
arbitrary in the constitutional sense. Official conduct is arbitrary in the
constitutional sense if it amounts to an abuse of power lacking any reasonable
justification in the service of a legitimate governmental objective. Shanks v.
Dressel. 540 F.3d 1082, 1088 (9th Cir. 2008). If it is at least fairly debatable that
the county's conduct is rationally related to a legitimate governmental interest,
there has been no violation of substantive due process. Halverson v. Skagit
Countv, 42 F.3d 1257, 1262 (9th Cir. 1994).
When all inferences are drawn in the Emersons' favor, the county's
actions in reprocessing the Emersons' application do not amount to a substantive
due process violation. The county's actions were directly related to determining
whether wetlands were on the Emerson property. We affirm the dismissal of the
Emersons' substantive due process claims.
13
No. 73208-1-1/14
FRAUD
The Emersons' complaint alleges that the county fraudulently induced
them to enter into a settlement agreement the county did not intend to honor.
They contend the court erred in dismissing this claim.
To state a claim for fraud, a plaintiff must satisfy the following nine
elements:
(1) representation of an existing fact, (2) materiality, (3) falsity,
(4) the speaker's knowledge of its falsity, (5) intent of the speaker
that it should be acted upon by the plaintiff, (6) plaintiff's ignorance
of its falsity, (7) plaintiffs reliance on the truth of the representation,
(8) plaintiff's right to rely upon the representation, and (9) damages
suffered by the plaintiff.
W. Coast, Inc. v. Snohomish Countv, 112 Wn. App. 200, 206, 48 P.3d 997(2002).
In the settlement agreement, the county promised to issue a permit to the
Emersons only if they submitted a wetland report that strictly followed certain
methodologies. The parties agreed to a disclaimer clause stating that nothing in
the agreement should be construed as a guarantee of approval or as constituting
a "representation" by the county:
Disclaimer by Department. Nothing in this Agreement shall be
construed as a waiver by the County of any permit requirements
applicable to the Emersons construction activities on the Property
pursuant to the County Code or other applicable laws, rules, or
regulations. Nothing in this Agreement shall be construed as
guaranteeing the availability of any permits or approvals regarding
said activities. Nothing in this Agreement shall be construed as
constituting a representation of any kind or nature by the County, or
any official or employee thereof.
The Emersons contend that the county should not be allowed to contract
around its duty to be truthful in negotiations because this "would sanction
14
No. 73208-1-1/15
fraudulent and generally deceptive behavior." The Emersons cite no authority for
this argument. They do not explain how a court can enforce a written agreement
as if it guaranteed a permit when the agreement expressly states it is not a
guarantee. Also, the Emersons overlook the principle that promises of future
performance are not representations of existing fact. See W. Coast, 112 Wn.
App. at 206.
The Emersons have not created an issue of material fact to establish that
the county made a materially false representation. They fail to show why the
disclaimer does not control. The trial court properly granted summary judgment
on the Emersons' claim of fraudulent inducement.
Affirmed.
vkcx&e v
~r~
WE CONCUR:
h**J(i y.
15