Pacific Coast Shredding, Llc, Appellant/cross-res. v. Port Of Vancouver, Usa, Res/cross-app.

Filed
Washington State
Court of Appeals
Division Two
September 1, 2020
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
PACIFIC COAST SHREDDING, L.L.C., a No. 52020-6-II
Washington limited liability company,
Appellant/Cross-Respondent,
v.
PORT OF VANCOUVER, USA, a PUBLISHED OPINION
Washington municipal corporation,
Respondent/Cross-Appellant.
GLASGOW, J.—The Port of Vancouver USA (Port) condemned a portion of land it leased
to Pacific Coast Shredding LLC (PCS) and informed PCS of its right under federal and state law
to receive financial compensation for any reasonable and necessary costs that PCS incurred as a
result of the taking. PCS made a number of significant modifications to its operations and requested
reimbursement for each of them. The Port largely rejected the request and paid PCS only for the
cost of moving some of its personal property out of the condemned area.
PCS appealed to an administrative panel, which upheld the Port’s decision. PCS then
appealed to the superior court, which reversed. The court ruled that the panel erred in denying
additional compensation because it failed to consider which of PCS’s actions were reasonable and
necessary responses to the taking. The court held that the taking required PCS to do more than
simply move personal property out of the condemned area in order to continue its operations. The
Port did not further appeal this decision.
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On remand, the administrative panel again denied additional compensation to PCS. The
panel found that none of PCS’s actions were reasonable and necessary and that any increased
operational costs incurred as a result of the taking were minimal. PCS again appealed to the
superior court. The court ruled that the panel violated its remand instructions from the initial appeal
and erred in denying any additional compensation. The court determined that PCS was entitled to
the cost of reconfiguring one piece of heavy equipment and increased costs of moving shred
material that PCS had incurred up until it reconfigured the equipment. But PCS was not entitled to
reimbursement for any other operational changes.
PCS appeals, seeking reimbursement for the cost of its full site reconfiguration. It argues
that the panel’s decision violated the law of the case and was unsupported by substantial evidence,
contrary to law, and arbitrary and capricious. The Port also filed a notice of appeal from the
superior court’s decision but does not assign error to any aspect of the panel’s decision.
We hold that although the panel’s challenged factual findings were supported by
substantial evidence, the panel erred in denying additional compensation to PCS because it
misapplied the law. First, the panel was bound by the superior court remand order, which the Port
did not appeal, to award some level of compensation beyond only reimbursement for moving
personal property out of the condemned area. Second, although the panel’s findings were
supported by substantial evidence, it was a misapplication of the law and arbitrary and capricious
for the panel to reject some additional compensation when the panel established that the taking
required periodic relocation of shred material and, therefore, the taking impacted PCS’s operations
beyond simply necessitating a move of personal property out of the condemned area.
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We reverse the panel’s decision in part and conclude that PCS is entitled to some additional
compensation for reasonable and necessary relocation of shred material, as well as reasonable and
necessary reconfiguration of one piece of equipment, the conveyor. The panel’s alternative
findings establish that the amounts awarded by the superior court are appropriate. This matter is
therefore remanded to the panel for entry of a final order awarding PCS $347,800 in expenses for
reconfiguration of the conveyor and an additional $46,000 in tramming costs incurred to move
shred material prior to reconfiguration, in addition to the $68,259 already paid. We otherwise
affirm the panel’s decision rejecting all other claims. Consistent with the superior court’s order,
the panel may consider any requests related to costs and fees.
FACTS
PCS operates a scrap metal recycling operation on land leased from the Port. Prior to the
taking at issue in this case, PCS bought scrap metal and collected it at the north end of the property,
where it fed the metal into a shredder. The machine broke the scrap metal into smaller pieces and
separated ferrous and nonferrous material. Nonferrous shred was deposited into piles, while
ferrous shred was conveyed through a “‘Z box,’” which filtered out impurities, to a picking station
where employees checked for additional impurities. Clerk’s Papers (CP) at 6. At this point, a
conveyor picked up the shred and deposited it into a large, partial annulus shaped “‘conveyor-
stacked shred’” pile near the southern edge of the property. CP at 187. Depending on the size of
this pile, PCS occasionally used front-end loaders to push some of the shred into another pile at
the southwest corner of the property. Trucks entered the property from the east and then moved
counterclockwise around the property, loading and unloading at various piles.
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The Port condemned a 47,598-square foot strip of the 13-acre leasehold, left of the orange
dotted line in the image below, of which 7,332 square feet was used by PCS for its operations. The
condemned area overlapped with the truck traffic path and some of the area PCS used to pile shred
material. The following image is a demonstrative exhibit depicting a portion of PCS’s operations
prior to the taking, with the dotted line depicting the boundary of the taking:
Administrative Record (AR) at 1155. The condemnation required PCS to move its truck traffic
path several feet to the north of where it was previously located, which then encroached into
another area where PCS would pile shred material. Around 45 times a year, this shred pile grew
big enough that it would block or partially block the new truck traffic path, creating a choke point.
The Port informed PCS of its right under federal and state law to receive financial
assistance to relocate or reconfigure its operations in light of the taking. A relocation specialist for
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the Port, Martyn Daniel, determined that PCS was eligible for reimbursement only for the cost of
moving the shred and other materials out of the condemned area. The Port accordingly paid PCS
$68,259.
PCS disputed the Port’s conclusion that it was entitled only to payment for moving personal
property from the condemned area. PCS contended that the taking required more substantial
changes to its operations to maintain the traffic path necessary for trucks to travel along the south
side of the property, as well as the space necessary for piling shred. To make room for the
relocation of the truck traffic path, PCS reconfigured the conveyor by turning it 90 degrees to the
west and extending it 77 feet, and PCS built a new shred pad in the new conveyor-stacked shred
location. The following is a demonstrative exhibit depicting a portion of PCS’s operations after
the taking:
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AR at 1160. In addition, PCS relocated a rail spur to the west, upgraded some storm water facilities,
expanded and improved employee parking, added a new picking conveyor, and made substantial
changes to its office space and the property entrance. Together these changes cost over $6.1
million.
PCS sought full reimbursement for all of these changes, arguing that they were all
reasonable and necessary consequences of the taking. The Port rejected the claim. PCS appealed,
and the Port convened a three-person panel to consider the evidence, hear testimony, and resolve
the appeal.
Neil Fitzpatrick, an operations manager at PCS, authorized the site reconfigurations. He
testified about PCS’s reasons for the reconfiguration, although he admitted that he did not
understand the full scope of the taking until the hearing. Three engineers—Dr. Adam Aleksander,
Neil Alongi, and Valerie Uskoski—testified to the safety and efficiency concerns facing PCS in
terms of maintaining the truck path. In particular, Aleksander and Alongi both testified that prior
to the taking, PCS maintained a truck path width of at least 20 feet. The panel received conflicting
testimony and photographic evidence, however, that PCS had maintained the truck path at a
minimum width of 14.9 feet. Moreover, PCS’s initial construction plans for the reconfiguration
that were submitted to the city provided for a 15-foot wide truck path.
The panel upheld the Port’s decision not to reimburse PCS for moving shred out of the new
truck traffic path or the reconfigurations it made to adjust its operations after the taking. The panel
determined that the issue presented was an “all or nothing proposition”—whether PCS’s full site
reconfiguration was a reasonable and necessary response to the taking. CP at 17. The panel did not
enter formal findings of fact, but it did note that the site remained “virtually unchanged” after the
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taking except that the taking infringed on the area containing the shred pile. CP at 6. The panel
recognized that, after the taking, the shred pile could occasionally spill onto the truck path and
create a potential “‘choke point’” in the circulation of truck traffic. CP at 6. However, the panel
noted that there was evidence that the truck path was at times as narrow as 14.9 feet wide before
the taking, so the choke point issue could be avoided by reducing the width of the truck path after
the taking. Thus, the panel concluded that PCS’s full reconfiguration was not a reasonable and
necessary response to the “purported ‘choke point’” resulting from the taking. CP at 20-21. The
panel accordingly denied any reimbursement beyond the $68,259 already paid for relocating the
shred material from the condemned area.
PCS appealed to Clark County Superior Court. The superior court ruled that the panel erred
by concluding that the taking resulted only in a “potential ‘choke point,’” when the parties had
agreed that the choke point was an actual consequence of the taking. CP at 193. Rather than
consider “‘all or nothing’” whether the entire reconfiguration of PCS’s operations was reasonable
and necessary, the panel should have conducted a more detailed analysis of which aspects of the
reconfiguration were reasonable and necessary consequences of the taking. CP at 193. The superior
court explained: “In order to continue to operate its business, PCS was required to address the
issue created by the Port’s action, either by relocating portions of its facilities or by increasing its
operational expenses through the movement of excess shred.” CP at 193.
The superior court also noted in its summary of the underlying facts that PCS had
previously maintained a minimum 20-foot traffic corridor around the shred piles. But the court did
not expressly conclude that substantial evidence in the record failed to support the panel’s finding
that PCS had historically narrowed the truck path to 14.9 feet occasionally.
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The superior court remanded for the panel to reconsider “the issue of the amount of PCS’s
reconfiguration expenses that were necessary and reasonably related to addressing the ‘choke
point’ caused by the Port’s condemnation of the southern portion of the leasehold property.” CP
at 194. Neither party appealed the superior court’s decision.
On remand, the panel denied additional compensation to PCS. The panel again concluded
that the full site reconfiguration was not reasonable and necessary. The panel found that the truck
path before the taking was sometimes as narrow as 14.9 feet wide, specifically noting that the
evidence provided by the Port was more reliable than PCS’s evidence that the minimum width of
the truck path had been 20 feet. The panel found that the taking required moving the truck path 8.5
feet to the north in order to maintain a 14.9-foot wide truck path, and this encroached only on the
shred stack and did not impact any buildings, structures, or equipment. Even so, the panel also
found that the shred stack became large enough to encroach on the new truck traffic path several
times a year, and the cost of moving the excess shred out of the way would be approximately
$46,000 a year. The panel noted that there was “no credible evidence that PCS ever evaluated the
actual impacts of the Port’s project or any [less expensive] alternatives that mitigated the alleged
impact.” CP at 203.
The panel concluded that none of PCS’s reconfiguration costs, taken individually, were
reasonable or necessary because the reasonable solution was to periodically move any excess shred
to another area and do nothing else. The panel also concluded that the increased costs PCS would
have incurred of about $46,000 a year by following this “‘do nothing’” approach were de minimis
and not reimbursable. CP at 205. The panel reasoned that it would have been far cheaper to move
the shred and that the Port presented several other cheaper alternatives to a full reconfiguration,
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costing from $25,000 to about $775,000. One of these alternatives was turning the conveyor 90
degrees at a cost of $347,800.
The panel emphasized that PCS apparently never engaged in a cost-benefit analysis of its
reconfiguration, and so it was unreasonable to proceed with the full $6.1 million reconfiguration
without exploring cheaper alternatives. The panel also rejected PCS’s contention that the Port’s
suggested alternatives were unsafe because PCS presented no evidence regarding the safety of
those alternatives.
The panel then entered a series of secondary findings specific to each action taken by PCS
in case the superior court reversed the panel’s conclusion that PCS was not entitled to any further
reimbursement. First, it found that turning the conveyor 90 degrees was not reasonable and
necessary and, even if it were, only $347,800 of the $3,129,528 claimed by PCS for accomplishing
the conveyor turn was actually attributable to the taking and reimbursable.
Second, the panel found that relocating the rail spur was not reasonable and necessary
because there was evidence that PCS had often used the existing rail spur to store scrap metal
before the taking, so there was nothing to suggest that PCS could not continue that practice with
excess shred after the taking. Again, the panel emphasized that PCS did not analyze any
alternatives. The panel explained that the only plausible explanation for moving the rail spur was
PCS’s decision to extend the conveyor 77 feet to the west, but that extension was not related to the
taking and instead was an improvement that was not eligible for reimbursement. And even if the
extension and moving the spur were reasonable and necessary, the panel found that a minor (and
cheaper) alternative adjustment to the spur was available to PCS.
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Third, the panel concluded that PCS’s remaining expenditures for the full site
reconfiguration were not necessary and reasonably related to addressing the choke point. Cheaper
alternative options were available, and the panel did not find PCS’s expert on this matter to be
credible. The panel specifically concluded that tramming costs, or costs of moving shred out of
the new truck traffic path, were only $46,000 a year, and PCS’s claimed increased annual operation
costs of $5,426,850 were “significantly overstated.” CP at 214. The panel also reasoned that
reimbursement for tramming costs for the shred creating the choke point was not appropriate
because PCS was only eligible for reimbursement to move personal property from the condemned
area.
PCS appealed once more to the superior court, which ruled that the panel erred in denying
PCS any additional compensation for its reconfiguration expenses. The superior court reasoned
that the panel failed to follow the court’s remand instructions because the panel continued to focus
on the entire reconfiguration, rather than consider piecemeal each of PCS’s actions.
The superior court emphasized it had already ruled in an order that was not appealed that
PCS was entitled to some additional costs associated with the choke point problem, so the panel
erred in denying PCS any additional compensation. The superior court explained that its prior
“order noted that the taking required PCS ‘to either (a) use machinery to “tram” materials away
from the area and store these materials in additional “loader-stacked shred” piles or (b) reconfigure
the conveyor . . . to deposit the “conveyor-stacked shred” pile on another portion of the leasehold
property,’” rather than so near the truck path that it would regularly block the road. CP at 369
(alterations in original).
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The superior court therefore ruled that in addition to the reimbursement already paid, PCS
was entitled to the costs of turning the conveyor and tramming materials before the conveyor was
turned, which the panel had calculated at $347,800 and $46,000, respectively. The superior court
adopted those figures in its order.
PCS appeals and the Port cross-appeals, but the Port asks only that we affirm the panel’s
decision.
ANALYSIS
PCS argues that the panel’s decision denying additional compensation contradicted the law
of the case, was not supported by substantial evidence, was contrary to law, and was internally
inconsistent and arbitrary and capricious. PCS assigns error to the panel’s finding that PCS
previously operated with a 14.9-foot wide truck path, its rejection of PCS’s arguments pertaining
to safety, and its determination that PCS was entitled to compensation only for a one-time move
of personal property from the condemned area.
With regard to the panel’s finding on the 14.9-foot truck path, the law of the case doctrine
did not apply to this factual finding and it was supported by substantial evidence. The panel’s
findings related to PCS’s safety concerns were also supported by substantial evidence. However,
we hold that the panel erred in denying any additional compensation to PCS. The superior court’s
order bound the panel to compensate PCS for additional reasonable and necessary costs caused by
the taking. Having recognized that the taking forced PCS to do more than just the one-time move
of personal property out of the condemnation area, the panel was required under the law to award
some amount of additional compensation. The panel’s refusal to order any additional
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compensation violated the law of the case, was a misapplication of the law, and was arbitrary and
capricious.
A. Background on Relocation Law
PCS’s claim for compensation arose under Washington’s real property acquisition policy
act (chapter 8.26 RCW) and its corresponding administrative regulations (chapter 468-100 WAC),
as well as the federal Uniform Relocation Assistance and Real Property Policies Act of 1970 (42
U.S.C. §§ 4601-4655) and its corresponding regulations (49 C.F.R. § 24.1-.306).1 The Washington
State Department of Transportation Right of Way Manual (Aug. 2012) (M 26-01.08) (WSDOT
Manual)2 also provides guidance to agencies implementing these laws, including the Port. The
Port acknowledges that it relies on the WSDOT Manual. Both the federal and state statutes indicate
that their primary purpose is to minimize the hardship of displacement for individuals and
businesses affected by public projects by providing uniform procedures for providing relocation
assistance. 42 U.S.C. § 4621(b); RCW 8.26.010(1)(a).
RCW 8.26.035(1) provides in relevant part that when an agency project will result in the
displacement of a business, the agency shall pay the displaced business the (a) actual reasonable
expenses in moving the business or other personal property; (b) actual losses of tangible personal
property as a result of moving the business, not to exceed an amount equal to the reasonable
expenses that would have been required to relocate the property; (c) actual reasonable expenses in
searching for a replacement business; and (d) “[a]ctual reasonable expenses necessary to
1
The federal statutes and regulations contain substantially the same language as the state statutes
and regulations.
2
https://www.wsdot.wa.gov/publications/manuals/fulltext/M26-01/M26-01.08Complete.pdf
[https://perma.cc/5NDY-8VK5].
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reestablish a displaced farm, nonprofit organization, or small business at its new site.” WAC 468-
100-301(1)(a) explains that a displaced business is entitled to all “actual moving and related
expenses” that the displacing agency determines to be “reasonable and necessary.”
A displacement may be characterized as “[p]ersonal property only,” where the agency
action forces the business to relocate personal property but does not necessitate the relocation of
the entire business. WAC 468-100-301(5) (bold type omitted); WSDOT Manual § 12-9.1, at 12-
110. The version of the WSDOT Manual in effect at the time of this condemnation explained that
the movement of personal property that is located within the condemned or acquired area is
reimbursable. Id. But a business can also receive reimbursement for expenses where personal
property must be moved because the agency’s acquisition requires the business to otherwise move
personal property from real property that is located outside the condemned or acquired area. See
id. (“Business . . . operations that must incur reestablishment expenses to facilitate the continuous
operation of their business on the subject property should be relocated under the provisions of
Section 12-7.”); WSDOT Manual § 12-7.1, at 12-73 (“Moving of personal property when the
acquisition of real property used for nonresidential use causes the displaced occupant to vacate . .
. other real property not acquired.”).
Moreover, WAC 468-100-301 does not limit moving expenses for personal property to
instances where the personal property is moved from the condemned or acquired area. WAC 468-
100-301(5). The regulations provide:
Eligible expenses for a person who is required to move personal property from real
property but is not required to move from a . . . business . . . include . . .
....
[t]ransportation of the displaced . . . personal property . . . [and]
....
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[d]isconnecting, dismantling, removing, reassembling, and reinstalling relocated . .
. personal property. For businesses, . . . this includes machinery [and] equipment[,]
. . . it also includes modifications to the personal property, including those mandated
by federal, state or local law, code or ordinance, necessary to adapt it to the
replacement structure, the replacement site, or the utilities at the replacement site,
and modifications necessary to adapt the utilities at the replacement site to the
personal property.
WAC 468-100-301(5), (7)(a), (c).
Storage expenses not to exceed 12 months and “[o]ther moving-related expenses that are
not . . . ineligible under subsection (8) . . . as the agency determines to be reasonable and necessary”
are also eligible for reimbursement. WAC 468-100-301(7)(d), (g). Certain increased operating
expenses incurred as a result of the acquisition, such as personal or real property taxes or insurance
premiums, are recoverable up to $50,000 for the first two years, but otherwise increased operating
expenses are not eligible. WAC 468-100-301(7), (8); WAC 468-100-306(1)(f).
In sum, eligible expenses include the costs of moving personal property, reassembling and
reinstalling machinery and equipment, and making modifications necessary for adapting
machinery and equipment as a result of the agency’s acquisition. Eligible expenses in this category
also include storage expenses up to 12 months and can include some increased operating expenses
up to 2 years and up to $50,000.
Neither the statute nor any relevant regulation defines “reasonable and necessary.” The
WSDOT Manual explained that “reasonable means the costs are typical in the geographic area in
which the displacement occurred for the type of goods or services being purchased. Necessary
means that such goods or services are needed to carry out the reestablishment of [the] business.”
§ 12-7.2.3, at 12-85. “[T]he test is one of necessity, i.e., is the expense necessary to reestablish the
displaced business[?]” Id.
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The WSDOT Manual also provided:
It is important to remember that [relocation] expenses should be necessary to
reestablish the present operation, not to improve it . . . . Displacement provides an
excellent opportunity for an operation to do all those things itself, but they should
not be accomplished with public funds. In the situation where a displaced business
selects a larger replacement site or a betterment, these tests allow the specialist to
set a reasonable threshold for reimbursement based on the size or quality of the
displacement site.
Id.
B. Standard of Review and Burden to Show Invalidity of Agency Action
The Administrative Procedure Act, chapter 34.05 RCW, governs appellate review of state
and local agency decisions. Utter v. Dep’t of Soc. & Health Servs., 140 Wn. App. 293, 299, 165
P.3d 399 (2007). “On appeal from the superior court, we sit in the same position as the superior
court and review the agency’s order based on the administrative record rather than the superior
court’s decision.” B&R Sales, Inc. v. Dep’t of Labor & Indus., 186 Wn. App. 367, 374, 344 P.3d
741 (2015). Upon review, we generally “treat any findings of fact or conclusions of law the
superior court made as surplusage.” Morawek v. City of Bonney Lake, 184 Wn. App. 487, 491, 337
P.3d 1097 (2014).
The party asserting the invalidity of an agency’s decision has the burden of demonstrating
invalidity. RCW 34.05.570(1)(a); PacifiCorp v. Wash. Utils. & Transp. Comm’n, 194 Wn. App.
571, 586, 376 P.3d 389 (2016). RCW 34.05.570(3) sets out nine grounds for invalidating an agency
action. PCS’s challenge implicates three of those grounds. PCS argues that the panel misapplied
the law, the panel’s factual findings were not supported by substantial evidence, and the panel’s
decision was arbitrary and capricious. RCW 34.05.570(3)(d), (e), (i).
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We review the panel’s factual findings for substantial evidence, asking whether the record
contains evidence sufficient to convince a rational, fair-minded person that the finding is true. B&R
Sales, 186 Wn. App. at 375. An agency’s determination of actual costs under RCW 8.26.035 is
one of fact that we review for substantial evidence. Cedar River Water & Sewer Dist. v. King
County, 178 Wn.2d 763, 797, 315 P.3d 1065 (2013). “We do not reweigh evidence or judge witness
credibility” but instead defer to the agency’s broad discretion in weighing expert testimony.
PacifiCorp, 194 Wn. App. at 588-89.
We review an agency’s legal conclusions de novo, but give substantial weight to its
interpretation of the law when subjects fall within its area of expertise. B&R Sales, 186 Wn. App.
at 375. In addition, a mixed question of law and fact requires the application of legal precepts to
factual circumstances. Tapper v. Emp’t Sec. Dep’t, 122 Wn.2d 397, 402, 858 P.2d 494 (1993). For
example, determining whether particular facts meet a legal definition of a term like “misconduct”
is a mixed question of law and fact. Id. “Analytically, resolving a mixed question of law and fact
requires establishing the relevant facts, determining the applicable law, and then applying that law
to the facts.” Id. at 403. We are not free to substitute our judgment for that of the agency as to the
facts. Id. “[T]he factual findings of the agency are entitled to the same level of deference which
would be accorded under any other circumstance.” Id. “The process of applying the law to the
facts, however, is a question of law and is subject to de novo review.” Id.“An agency’s action is arbitrary and capricious only if it ‘is willful and unreasoning and
taken without regard to the attending facts or circumstances.’” PacifiCorp, 194 Wn. App. at 587
(internal quotation marks omitted) (quoting Att’y Gen.’s Office v. Wash. Utils. & Transp.
Comm’n, 128 Wn. App. 818, 824, 116 P.3d 1064 (2005)). “‘Where there is room for two opinions,
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an action taken after due consideration is not arbitrary and capricious even though a reviewing
court may believe it to be erroneous.’” Id. (internal quotation marks omitted) (quoting Att’y Gen.’s
Office, 128 Wn. App. at 824). “‘Neither the existence of contradictory evidence nor the possibility
of deriving conflicting conclusions from the evidence renders an agency decision arbitrary and
capricious.’” Id. (quoting Att’y Gen.’s Office, 128 Wn. App. at 824).
C. Historical Width of the Truck Path
PCS argues that the panel’s determination that PCS maintained only a minimum 14.9-foot
wide traffic path before the taking was not supported by substantial evidence. PCS also contends
that we are bound by the superior court’s determination in its first decision that PCS instead
required a 20-foot wide traffic path because that decision was not appealed. We disagree.
The superior court’s reference to a 20-foot wide path was a factual statement that did not
bind the panel on remand under the law of the case. The law of the case doctrine most commonly
“‘stands for the proposition that once there is an appellate holding enunciating a principle of law,
that holding will be followed in subsequent stages of the same litigation.’” State v. Johnson, 188
Wn.2d 742, 755, 399 P.3d 507 (2017) (emphasis added) (quoting Roberson v. Perez, 156 Wn.2d
33, 41, 123 P.3d 844 (2005)). The doctrine does not apply to factual findings. Karanjah v. Dep’t
of Soc. & Health Servs., 199 Wn. App. 903, 916, 401 P.3d 381 (2017).
Moreover, a superior court acting in its limited appellate capacity may review whether
substantial evidence supports a finding of fact, but it generally may not decide disputed factual
issues. See RCW 34.05.570(3); Herman v. Shorelines Hr’gs Bd., 149 Wn. App. 444, 455, 204 P.3d
928 (2009). Findings of fact made by a superior court acting in its appellate capacity are
surplusage. Morawek, 184 Wn. App. at 491. The aspects of the superior court’s order that were
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statements of fact were not binding on the panel, nor are they binding on this court even though
the superior court’s first decision was not appealed.
The superior court’s reference to the 20-foot wide path appeared in its statement of the
case, and the court did not make any legal rulings with respect to this issue or state that the panel’s
finding of a 14.9-foot wide path was unsupported by substantial evidence. Absent an appellate
decision based on a lack of substantial evidence, the panel was not constrained on remand from
determining, as a factual matter, that the historical minimum width of the truck path was only 14.9
feet.
PCS submitted an aerial photograph from before the taking that showed the truck path was
14.9 feet wide at its narrowest point. Daniel, the Port’s expert, testified that by using photographic
evidence and consulting with the project surveyor he was able to determine that the narrowest
point along the truck path before the taking occurred was 14.9 feet wide. Daniel also pointed out
that standard highway lanes are 10 to 12 feet wide. Another expert similarly testified that the
narrowest point along the path after the taking was about 15 feet wide, and this was consistent with
the width of that part of the path before the taking. In addition, PCS’s initial construction plans for
the reconfiguration submitted to the city provided for a 15-foot wide truck path, which suggested
that PCS did not think that a path of that width was unworkable.
PCS contends that this evidence was not reliable because Daniel’s testimony was based on
an informal survey that was intended only for illustrative purposes and Daniel was not an engineer
or safety expert. PCS also contends that because some of its trucks are 14.3 feet wide, a 14.9-foot
wide path would be untenable. PCS argues that its construction plans submitted to the city were
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only preliminary, not final, and that Uskoski testified that the 15-foot wide path denoted in the
plans did not necessarily define the actual truck path.
PCS argues instead that the truck path was at least 20 feet wide before the taking, pointing
to Aleksander’s and Alongi’s testimonies. Aleksander testified that 20 feet was the minimum
historical width and Alongi testified that the width of the traffic path typically fluctuated between
28 and 34 feet. Aleksander also opined that 28 feet was the minimum width for a safe path.
But the panel specifically found that Alongi’s testimony was not credible, and that the
Port’s evidence establishing a 14.9-foot wide path was more reliable than PCS’s evidence of a 20-
foot wide path. Although Daniel admitted that some of PCS’s loaders are too wide for a 14.9-foot
wide path, he explained that those loaders could simply take a different path to reach their
maintenance building. And even if Daniel himself is not a surveyor or engineer, he confirmed his
measurements and conclusions regarding the 14.9-foot wide path with the project surveyor.
Multiple witnesses testified that the minimum width of the truck path was 14.9 feet and
this testimony was supported by the evidence, even though there was also conflicting testimony in
the record. The panel had considerable discretion to weigh the competing testimony and evidence,
and we are not permitted on appeal to reweigh the evidence and come to a different conclusion
where there is substantial evidence supporting the panel’s findings. PacifiCorp, 194 Wn. App. at
588-89. We accordingly hold that, based on testimony from Daniel and other witnesses, the aerial
photograph, and PCS’s construction plans submitted to the city, there was substantial evidence to
support a finding that 14.9 feet was the minimum width of the truck path before the taking
occurred.
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D. Safety as a Basis for Reconfiguring the Conveyor
PCS also argues the panel erred by not considering safety in its determination that the full
site reconfiguration was not reasonable and necessary. We disagree.
To support its argument that the panel did not factor safety into its decision, PCS points to
testimony on the need to change the Z box and dual picking station to accommodate safe access to
the shredder, to move the conveyor and rail spur for safe access across the site, and to reconfigure
the entire operation to maintain a safe operating corridor through the site. PCS also argues that the
panel’s finding of a 14.9-foot wide traffic path ignored safety considerations because Aleksander
testified that such a path would negatively impact safety and visibility.
Although Fitzpatrick mentioned safety as a concern for the reconfiguration, the panel
specifically noted that Fitzpatrick did not understand the scope or impact of the Port’s taking when
he decided that the reconfiguration was necessary. The testimony PCS cites suggests that the
necessity for making changes to the Z box and dual picking station was more related to
considerations of cost and efficiency rather than safety, these changes resulted from the decision
to rotate the conveyor, and they were not directly linked to safety concerns related to the underlying
taking.
Most of the other testimony PCS cites did not specifically mention safety as a concern and,
although Alongi stated that a safe operating corridor was an important concern for the
reconfiguration, the panel specifically found that Alongi’s testimony was not credible. Although
Aleksander also testified about the safety concerns regarding a 14.9-foot wide traffic path, as
discussed above, there was substantial evidence that such a path was viable and had been used by
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No. 52020-6-II
PCS in the past, and Daniel testified that he did not see any safety issues with a 14.9-foot wide
path.
The record does not support PCS’s claim that the panel completely ignored safety. Rather,
the panel did not find credible PCS’s conclusory claim that the Port’s suggested alternatives were
unsafe because PCS did not present evidence regarding the safety of those alternatives. Although
PCS presented some testimony regarding the safety concerns it claims motivated the site
reconfiguration, we do not reweigh evidence that the panel found unpersuasive, and the panel had
considerable discretion to judge the credibility of that testimony. PacifiCorp, 194 Wn. App. at
588-89.
PCS argues that it was the Port’s burden to show that its proposed alternatives were safe,
not PCS’s burden to show they were unsafe, but PCS does not cite to any authority to support this
contention and it is PCS’s burden on appeal to show the panel’s decision was improper. RCW
34.05.570(1)(a). The panel determined there was not enough evidence to suggest legitimate safety
concerns that would necessitate a complete reconfiguration of the site, and PCS has not met its
burden on appeal to show that this finding was unsupported by substantial evidence or otherwise
legally unsound.
E. The Panel’s Denial of Additional Compensation
1. Law of the case
PCS argues that the superior court’s order bound the panel to award PCS additional
compensation because the superior court determined that the taking forced PCS to either
reconfigure its operations or incur greater expenses to tram excess shred to another area of the
property, either of which would elevate the required compensation above a mere one-time payment
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No. 52020-6-II
for moving personal property out of the condemned area. We agree that the superior court
determined that PCS was entitled to some amount of compensation beyond the one-time payment
to move personal property out of the condemned area, and this portion of the ruling was binding
on the panel on remand.
A legal decision of an appellate court establishes the law of the case and must be followed
on remand. Lodis v. Corbis Holdings, Inc., 192 Wn. App. 30, 58, 366 P.3d 1246 (2015). This rule
“‘forbids, among other things, a lower court from relitigating issues that were decided by a higher
court, whether explicitly or by reasonable implication, at an earlier stage of the same case.’” Id. at
56 (internal quotation marks omitted) (quoting Mun. of San Juan v. Rullan, 318 F.3d 26, 29 (1st
Cir. 2003)). The trial court “may exercise discretion where an appellate court directs it to ‘consider’
an issue,” provided it adheres to the appellate court’s instructions. Marriage of McCausland, 129
Wn. App. 390, 399, 118 P.3d 944 (2005) (quoting State ex. rel. Smith v. Superior Court, 71 Wash.
354, 357, 128 P. 648 (1912)), rev’d on other grounds, 159 Wn.2d 607, 152 P.3d 1013 (2007). But
the trial court must adhere to the appellate court’s instructions and cannot ignore specific holdings
and directions on remand. Bank of Am., N.A. v. Owens, 177 Wn. App. 181, 189, 311 P.3d 594(2013).
Because the superior court here was acting in its appellate capacity, its legal rulings were
binding on the panel. The superior court ruled that the panel erred in taking an “‘all or nothing’”
approach rather than considering whether PCS’s individual actions were reasonable and necessary.
CP at 193. Applying the law to the facts, the superior court concluded that PCS was entitled to
more than compensation for just the one-time move of personal property. It was entitled to
whatever costs were reasonable and necessary to address the ongoing choke point problem that
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No. 52020-6-II
would occur about 45 times a year when the shred pile reached capacity. This ruling was binding
on the panel. The panel was bound to recognize some ongoing impact of the taking beyond the
one-time move of personal property out of the condemned area.
The panel’s ruling on remand improperly ignored the superior court’s command, and
instead determined that none of PCS’s costs were reasonable and necessary costs expended as a
result of the taking. This was error.
2. Determination of reasonable and necessary costs
PCS argues that the panel’s denial of any further compensation was a misapplication of the
law and arbitrary and capricious. We agree that the panel erred in denying PCS some additional
compensation, but reject PCS’s claim that it is entitled to the cost of the entire site reconfiguration.
PCS points to the panel’s conclusion that “do nothing” was the reasonable alternative,
where it was undisputed that PCS would have to do something about the taking’s displacement of
excess shred storage. CP at 204. The panel understood that PCS would have to do something about
the excess shred, but it concluded that PCS could simply move the shred to other areas on the site
whenever the shred pile reached a volume that would block the truck path. By “do nothing,” the
panel appears to have meant that no permanent reconfiguration was necessary, not that PCS could
literally do nothing whenever the shred pile overflowed. See CP at 204.
The panel concluded that the need to move the excess shred “equates to approximately
$46,000 per year in increased operating costs for PCS if they had done nothing except move the
shred more often with front-end loaders.” CP at 204-05 (emphasis added). Daniel testified that the
loss of shred pile capacity resulting from the taking would result in an increased annual operating
cost to PCS of $46,000 if PCS made no other changes to its operation. The Port and its expert
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No. 52020-6-II
therefore agreed with PCS that at least this annual cost would result from the taking if PCS did
nothing to reconfigure its machinery.
But having recognized that PCS would at least have to incur this additional expense as a
result of the taking if it did not reconfigure its machinery, the panel did not conclude that some
action to avoid this ongoing expense was reasonable and necessary. This approach ignored the
regulations and the WSDOT Manual, which both explain that PCS was entitled to additional
reimbursement in these circumstances. See WAC 468-100-301(5), (7).
The relevant regulations allow reimbursement for the costs of moving personal property,
reassembling and reinstalling machinery and equipment, and making modifications necessary for
adapting machinery and equipment as a result of the agency’s acquisition. WAC 468-100-
301(7)(a), (c). Eligible expenses in this category also include storage expenses up to 12 months
and can include some increased operating expenses up to 2 years and up to $50,000. Id.; WAC
468-100-306(1)(f). Thus, even where a business does not need to entirely relocate, it is entitled to
reimbursement for moving personal property that is displaced by the taking (i.e., the excess shred
and the reconfiguration of equipment that must be adjusted as a result of the taking). WAC 468-
100-301(5). This is true even if the business must move personal property only and not the entire
business.
It was a misapplication of these regulations for the panel to deny PCS any additional
compensation beyond moving personal property out of the condemnation area. The panel
recognized that the taking created an occasional choke point that PCS would have to address
whenever the shred pile reached capacity, and yet it did not award any compensation for the
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No. 52020-6-II
reasonable and necessary cost of doing so. This decision misapplied the law and was arbitrary and
capricious in that it ignored the ongoing cost to PCS that resulted from the taking.
Eligible expenses for a move of personal property include the reasonable and necessary
costs of reassembling and reinstalling machinery and equipment and making modifications
necessary for adapting machinery and equipment as a result of the agency’s acquisition. WAC
468-100-301(7)(c). In PCS’s case, such expenses included the cost of making necessary
modifications to adapt its operations to address the choke point issue. And as discussed above, the
superior court concluded, as a matter of law, that an award only for the cost of moving personal
property out of the condemned area was insufficient because it did not adequately address the
choke point issue that both parties agreed existed, and the Port did not appeal that ruling.
Thus, PCS was entitled to compensation for the cost of moving excess shred for so long as
it was necessary and for the reasonable cost of reconfiguration of PCS’s equipment to avoid that
ongoing cost. This does not mean that PCS was entitled to all of its expenses associated with a full
site reconfiguration, but the panel did not point to anything in the statute, the regulations, or the
WSDOT Manual that authorized it to reject reasonable and necessary expenses simply because it
considered them to be de minimis. As the superior court noted in the initial appeal, it was wrong
for the panel to consider PCS’s compensation as an all-or-nothing proposition. The statutory and
regulatory framework clearly provides that there is an obligation to compensate for reasonable and
necessary expenses to move personal property and reconfigure equipment, even where the business
also must absorb the cost of additional, noncompensable improvements or modifications that are
not necessitated by the government action. WSDOT Manual § 12-7.2.3, at 12-85.
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No. 52020-6-II
PCS made numerous improvements and alterations to its site operations, but the fact that
most of those actions were not necessitated by the taking does not preclude PCS from being entitled
to compensation for the portion that would have been a reasonable and necessary response. In other
words, just because PCS did not take the route determined by the panel to be reasonable and
necessary does not mean that it is not entitled to any compensation. The law does not require PCS
to do only the bare minimum in response to the taking; it simply provides that public funding is
only available up to the amount that was both reasonable and necessary. See id.
The panel determined that the taking caused increased operating costs of moving the excess
shred whenever the pile reached capacity, which it calculated as $46,000 a year based on the
testimony of Daniel, the Port’s expert. Daniel and another Port expert identified turning the
conveyor as one reasonable and necessary option to eliminate the $46,000 a year expense. The
panel also determined that turning the conveyor was one of the options available, and the cost of
this option was $347,800. Daniel testified that PCS would be entitled to reimbursement for
modifying the conveyor.
Although the Port, in its briefing, challenges the adequacy of PCS’s evidence supporting
its claims for reimbursement, the Port did not appeal or assign error to any portion of the panel’s
second decision, and it did not assign error to any of the panel’s secondary findings, including the
finding as to the cost of turning the conveyor. PCS was entitled to these moving and machinery
reconfiguration expenses necessary to avoid the ongoing cost and to cover the cost of moving the
shred until the alterations were complete. We adopt the panel’s calculation of the cost to turn the
conveyor and the cost of tramming excess shred before the conveyor could be turned: $347,800
and $46,000.
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No. 52020-6-II
Otherwise, we find no other error in the panel’s decision rejecting the remainder of PCS’s
claimed expenses. There is substantial evidence in the record supporting the panel’s conclusion
that the costs incurred by PCS in relocating the rail spur, upgrading storm water facilities,
expanding and improving employee parking, adding a new picking conveyor, and making
substantial changes to its office space and the property entrance were not reasonable and necessary
responses to the taking. These changes were too attenuated from the underlying choke point issue
created by the taking to be reimbursable. The panel’s decision not to reimburse PCS for these costs
was neither arbitrary and capricious nor contrary to law.
CONCLUSION
The panel’s decision denying any additional compensation violated the law of the case by
ignoring the superior court’s remand order, misapplied the applicable regulations, and was
arbitrary and capricious because the panel recognized that the taking created a choke point that
would result in increased operating expenses for PCS. The statutory and regulatory framework
entitles PCS to some level of additional compensation.
We therefore affirm the panel’s decision in part and reverse in part. We conclude that some
additional compensation is due to PCS for reasonable and necessary relocation of shred material,
as well as the reasonable and necessary reconfiguration of the conveyor. The panel’s alternative
findings establish that the amounts awarded by the superior court are appropriate. Thus, this matter
is remanded to the panel for entry of a final order awarding PCS $347,800 in expenses for
reconfiguration of the conveyor and an additional $46,000 in tramming costs incurred prior to
reconfiguration, in addition to the $68,259 already paid. And consistent with the superior court’s
order, the panel may consider any requests related to costs and fees.
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No. 52020-6-II
Glasgow, J.
We concur:
Lee, C.J.
Cruser, J.
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