Baumgardner v. Town of Ruston

712 F. Supp. 2d 1180 (2010)

David BAUMGARDNER, an individual' Gimme Five D, LLC, a Washington State limited liability company; and Commencement View, LLC, a Washington State limited liability company, Plaintiffs,
v.
TOWN OF RUSTON, a fourth class municipal corporation; Michael Transue, individually and in his former official capacity as Ruston Mayor; Huitt-Zollars, Inc., a Texas corporation, and Carl Stixrood, individually and in his official capacity as Ruston Town Planner, Defendants.

Case No. C09-5151RJB.

United States District Court, W.D. Washington, at Tacoma.

April 28, 2010.

Joan K. Mell, III, Branches Law PLLC, Fircrest, WA, for Plaintiff.

John Turner Kugler, Burgess Fitzer, Tacoma, WA, Carol A. Morris, Morris & Taraday, Seabeck, WA, Amber L. Hardwick, Kenneth G. Yalowitz, Green & Yalowitz, Seattle, WA, for Defendant.

ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

ROBERT J. BRYAN, District Judge.

This matter comes before the Court on Defendants Town of Ruston and Michael Transue's Motion for Summary Judgment Re: Federal Claims (Dkt. 64), Plaintiffs' Motion for Partial Summary Judgment (Dkt. 63), Defendants Huitt-Zollars and Carl Stixrood's Motion for Summary Judgment (Dkt. 57), Defendants Town of Ruston and Michael Transue's Motion for Summary Judgment Re: State Claims (Dkt. 65), Defendants Huitt-Zollars and Carl Stixrood's Joinder in Ruston and Transue's Motion for Summary Judgment (Dkts. 78 and 79), Plaintiffs' Motion to Strike Defendants Huitt-Zollars and Carl Stixrood's Editorial Exhibits 1 and A-C (Dkt. 106), and Defendant Ruston and Transue's motion to strike (Dkt. 95). The Court has considered the pleadings filed in support of and in opposition to the motions and the file herein.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. FACTS

This matter centers around undeveloped property located at 5000 North Orchard Street in Ruston, Washington. Dkt. 1. The property is on the west side of North Orchard Street, and so, is in Ruston. Dkt. 74, at 2. North Orchard Street is bordered on the east by Tacoma, Washington. Dkt. 67, at 2. It is an eighteen foot wide paved roadway with curbs and gutters on the Ruston side, but not on the Tacoma side. Dkt. 67, at 2. The whole of North Orchard Street in the subject area is controlled by Ruston. Id. There is no storm water catchment system for North Orchard. Id.

1. Plaintiffs and Plaintiffs' Tacoma Property on North Orchard Street

Plaintiff David Baumgardner is a real estate developer. Dkt. 1, at 5. He is the managing member of the two Washington limited liability companies—Gimme Five D, LLC and Commencement View, LLC— that are named as Plaintiffs in this case. Id. In 2005, Commencement View, LLC, purchased 10 acres of land on the Tacoma side of North Orchard Street. Dkt. 68, at 3. The property was on a "bluff and down along the railroad tracks on Ruston Way," and "is part of the ASARCO ``Super Fund' EPA jurisdiction." Dkt. 68, at 4. Three view lots were developed on top of the Tacoma side of the bluff. Dkt. 68, at 4. Plaintiffs eventually purchased the subject property which in on the Ruston side of North Orchard Street. Dkt. 77-4, at 5. In order to get utilities to Plaintiffs' North Orchard properties (those both within Ruston and Tacoma city limits), Plaintiffs need to get a permit from Ruston. Dkt. 58-4, at 28.

2. Ruston

Ruston has a total population of 750 people and occupies about 5 blocks. Dkts. 69, at 2; 73, at 3. The mayor is Ruston's land use official. Dkt. 73, at 3. None of the few people that work for Ruston have any land use experience. Dkt. 69, at 2. In 1995, Ruston contracted with Richard Carothers & Associates ("Carothers") for land use planning related services. Dkt. 69, at 2. Defendant Carl Stixrood worked for Carothers when the contract was awarded, and was involved in the bidding and selection process. Dkt. 77-2, at 5-7. The contract, referred to as "Consulting Agreement," provided that Carothers, referred to as the "consultant," would perform "planning, civil engineering, landscape architecture, and surveying services in connection with the general and specific projects by written task order." Dkt. 66-4, at 2. The consultant was to "perform all services and provide all work product . . . within the time limit shown on the specific task order from the date written notice is given to proceed, unless an extension of such time is granted in writing." Dkt. 66-4, at 5. Payment was not to exceed "the amount provided on each specific task order." Dkt. 66-4, at 2. The consultant was to secure a general liability insurance policy, and name Ruston as an insured. Dkt. 66-4, at 3. The consultant was to "perform its obligations with a high degree of professional skill and diligence." Dkt. 66-4, at 3. The contract provides for attorneys fees and costs to a prevailing party who prevails in a suit against the other for enforcement of the contract. Dkt. 66-4, at 4.

Ruston charges fees for land use application review pursuant to RCW 82.02.020. Dkt. 69, at 2. The Ruston Municipal Code provides that Ruston's fees are $150.00 plus consultant and staff costs over one hour. Ruston Municipal Code ("RMC") 1.14.050, in the record at Dkt. 58-4, at 39-37. According to former Ruston Mayor Kim Wheeler, developers have no administrative remedies to challenge fees charged. Dkt. 73, at 9-10.

In 1998, Carothers merged with Defendant Huitt-Zollars, Inc. ("HZ"). Dkt. 69, at 2. According to both HZ and Defendant former Ruston Mayor Michael Transue, who was in office from 1997-2002 and from 2006-2008, HZ assumed Carother's responsibilities under the Consulting Agreement. Dkts. 59, at 2; 58-4, at 6-7; 58-4, at 59-60. Mr. Stixrood was the land use planner, employed first by Carothers and then by HZ, to review land use applications for Ruston. Dkt. 59, at 2. He testified that he was not free to rewrite regulations or make proposals to the mayor or council. Dkt. 58-4, at 4. He testified that he and the other HZ staff members would perform town planning services on an "on-call" or "as directed" basis, but did not come up with projects like a traditional town planner would. Dkt. 58-4, at 4-5. Mr. Stixrood testified that he did most of the work for Ruston. Dkt. 58-4, at 6. As Mayor, Defendant Transue testified that he did not feel that Mr. Stixrood was an employee of Ruston, but just a consultant. Dkt. 48-4, at 49.

Mr. Stixrood testified, that in practice, some of the town-initiated projects used task orders, but they were not used for developer's applications. Dkt. 77-2, at 7. Mr. Stixrood testified that he believed the rates that HZ charged were in line with the industry standard. Dkt. 77-2, at 9-11. He stated that he would record his time as he was doing the work, and put it in a timesheet at the end of the week. Dkt. 66-37, at 19.

Kevin Foley, Plaintiffs' engineer, stated that he had attended several meetings and Mr. Stixrood did not do a good job of controlling the Town Council meetings or the Planning Commission meetings. Dkt. 58-4, at 28-30. Mr. Foley observed that Mr. Stixrood did not try to bring the members back to what they were supposed to be talking about. Dkt. 58-4, at 28-30.

Mr. Stixrood states that HZ billed Ruston for its services monthly. Dkt. 59, at 2. Ruston's Town Council approved the bills, and the Town Clerk paid HZ's bills monthly. Dkts. 58-4, at 53 and 97, at 4. Ruston generally did not bill an applicant until the review process was complete. Dkt. 59, at 2.

3. Subject Property-Ruston Side of North Orchard Street

In April of 2005, Joellen Lewtas Jungers, one of the then owners of the subject property, contacted Mr. Stixrood. Dkt. 59, at 2. Mr. Stixrood states that he advised her about the process and possible fees associated with vacating a portion of Court Street, which abutted the subject property. Dkt. 59, at 2. He estimated that the cost to have Court Street vacated would be around $2,000 to $4,000. Dkt. 59-2, at 13.

On June 3, 2005, Mr. Stixrood recommended to the Ruston Town Council that a portion of Court Street be vacated, and that a cul-de-sac, at the end of Court Street for emergency vehicle turn around, was "desirable." Dkt. 59-2, at 21. The Town Council decided a study session was needed, and directed Mr. Stixrood to examine alternative methods of accommodating an emergency vehicle turnaround. Dkt. 59-3, at 2. Mr. Stixrood testified that he drafted different possible lot configurations (assuming that every piece of ground that could be developed would be developed and nothing else would hinder development), and possible emergency vehicle accesses. Dkt. 58-4, at 14. He drafted "A Supplemental Staff Report," reviewed several options, and recommended that a "fire access loop road" was the best option to provide emergency vehicle access. Dkt. 59-3, at 5-11. He then drafted the Town of Ruston Ordinance 1172, which vacated the contemplated portion of Court Street subject to the condition that a loop turnaround be built. Dkts. 59, at 3; 59-3, at 12-14. Ordinance 1172 was signed by the Mayor of Ruston in July of 2005. Dkt. 59-3, at 12-14.

In September of 2005, Mr. Baumgardner made offered $850,000 for the North Orchard Street Ruston property, contingent on a feasibility study on whether the property could be developed. Dkt. 58-2, at 27. Originally, Mr. Baumgardner and the sellers contemplated November 26, 2005, as the deadline for Mr. Baumgardner's feasibility review. Dkt. 58-2, at 8. This deadline was extended to December 23, 2005, and again to January 17, 2006. Dkt. 58-2, at 9-10. Before he bought the Ruston property, the prior owners gave Mr. Baumgardner the drawings Mr. Stixrood did for Ordinance 1172, which indicated that nine to twelve lots could be developed on the subject property. Dkt. 68, at 5.

On December 30, 2005, Mr. Baumgardner contacted Mr. Stixrood regarding the subject property and inquired about substituting a cul-de-sac for the loop turnaround required in Ordinance 1172. Dkt. 59, at 3. Mr. Baumgardner testified that Ruston's Town Clerk, Karen Murphy, had referred him to Mr. Stixrood. Dkt. 58-3, at 33. Mr. Baumgardner asserts in his declaration that Mr. Stixrood told him that "nine to twelve lots could be built and that the building height restrictions were 30 feet measured from a location that accommodated the steep slope of the property." Dkt. 68, at 5. He states that "these characteristics made the property attractive to [him] as a developer as the more lots that can be developed the higher the potential returns." Dkt. 68, at 5. During his deposition, Mr. Baumgardner testified that he and Mr. Stixrood also discussed a six or seven lot "possibility." Dkt. 58-3, at 11.

Mr. Baumgardner testified that in January of 2006, he had a conversation with Penelope St. John, at HZ, regarding the number of lots possible on the property. Dkt. 58-3, at 14. Mr. Baumgardner testified that she referred him to some of the exhibits which were attached to Ordinance 1172, which included several different possible lot configurations, including a possible five lots, six lots, eight lots or maybe nine lots on the subject property. Dkt. 58-3, at 15-16. He states that he explored a six lot possibility with her. Dkt. 58-3, at 17. On January 10, 2006, after that conversation, Mr. Baumgardner sent an email to his real estate agent, stating that he was looking at a three to four lot configuration. Dkt. 58-2, at 11-12, and 36. He testified during his deposition that this email was sent during the negotiation process, and that he was "assuming the worst and hoping for the best." Dkt. 58-3, at 20. He states that he was relying, in part, on what Baseline Engineering, his engineering firm, was telling him. Dkt. 58-3, at 27. Mr. Kevin Foley, of Baseline Engineering, testified that he and Mr. Baumgardner worked on a four lot plan, because the other configurations just did not work. Dkt. 58-4, at 25-26.

In March of 2006, Mr. Stixrood informed Mr. Baumgardner that the mayor had directed HZ not to continue work on questions regarding the subject property until Mr. Baumgardner signed an agreement to pay for services. Dkt. 58-3, at 53.

On April 11, 2006, Mr. Baumgardner signed an "Agreement to Pay for Town Review Services." Dkt. 59-3, at 22. This document provides that, "[b]y requesting this action, the applicant agrees to pay the full cost of review regardless of outcome." Dkt. 59-3, at 22. The Agreement lists the scope of services to include: "preliminary review per RMC 29.02 and RCW 58-17.110 in anticipation of submittal for short plat review and final short plat approval. This includes review of the proposed cul-de-sac as submitted on 01/09/06 to determine if the solution is feasible." Dkt. 59-3, at 22. HZ estimated the labor and materials cost to be $800.00 but cautioned that "the balance due will reflect the actual amount spent." Dkt. 59-3, at 22.

On April 13, 2006, Mr. Baumgardner was informed by Mr. Stixrood that Mr. Stixrood's interpretation of height calculations on steep slopes was incorrect. Dkt. 59-3, at 27. Mr. Stixrood testified that the Town Council changed the Code in December of 2005, and it became effective in February of 2006. Dkt. 66-37, at 27. Mr. Baumgardner notes that Mr. Stixrood helped draft the change in the code regarding building heights. Dkt. 68, at 9. Mr. Stixrood stated that he sent Mr. Baumgardner an email to let him know of the change, because they had conversation in 2005 regarding the previous interpretation of the prior code. Dkt. 66-37, at 27.

Concerned that the first contract may have expired, Mr. Baumgardner and the prior owners renegotiated the deal for the Ruston property on April 24, 2006, and dropped the purchase price to $827,500.00. Dkt. 58-2, at 41. The deal did not close for several months. Dkt. 77-4, at 5.

Michael Robinson, Plaintiffs' real estate agent, testified that he had a conversation in April of 2006 with Mr. Baumgardner about Mr. Stixrood's drawings which were submitted with Ordinance 1172. Dkt. 77-2, at 40. Mr. Robinson testified that Mr. Baumgardner told him that the vacation of Court Street was done without "topo or geo" and that "Stixrood has lots off hill." Dkt. 77-2, at 40. Mr. Robinson further testified Mr. Baumgardner felt that the loop road design, from Ordinance 1172, could not be utilized. Dkt. 77-2, at 40.

Kevin Foley, of Baseline Engineering, testified that in June of 2006, he and Mr. Baumgardner had settled on a hammerhead turnaround for emergency vehicles. Dkt. 77-3, at 31. He testified that his firm had prepared a conceptual drawing of the hammerhead turnaround which was submitted to Ruston and HZ before passage of Ordinance 1200, which mandated the hammerhead turnaround. Dkt. 77-3, at 32.

Mr. Stixrood states that by July of 2006, he was discussing three approvals with Mr. Baumgardner, including the fire turn around, variance from height requirement and lot segregation approval, rather than the single approval referenced in the April 11, 2006, "Agreement to Pay for Town Review." Dkt. 59, at 4. On July 19, 2006, in his letter to Mr. Baumgardner, Mr. Stixrood informed him that the "processing costs for a variance requests are typically in excess of $5,000," and that the "costs of segregation review would be charged to the applicant." Dkt. 59-3, at 28-29. Mr. Baumgardner states that Mr. Stixrood "kept pushing for a subdivision proposal" which Mr. Baumgardner contends was not necessary because the property was already platted. Dkt. 68, at 11. Mr. Stixrood contends that he was encouraging this because it was cheaper. Dkt. 92, at 7.

On July 26, 2006, HZ sent Mr. Baumgardner a summary of charges as of July 22, 2006, for $2,272.14. Dkt. 59-3, at 31. HZ acknowledges that this is more than the original estimate of $800.00. Dkt. 59-3, at 31.

On July 27, 2006, Plaintiffs filed a petition with Ruston to vacate an alley and all of Orchard Street to the east of the subject property, and to change the emergency vehicle access required in Ordinance 1172. Dkt. 74-2, at 9. Mr. Baumgardner states that Mr. Stixrood's loop turn around emergency vehicle access proposal, in Ordinance 1172, could not be built as drawn. Dkt. 68, at 6. He states that the loop was drawn off the bluff. Dkt. 68, at 6. Mr. Baumgardner states that he felt that Ruston would want to fix the problems with Ordinance 1172 that he asserts Mr. Stixrood created. Dkt. 68, at 7. Mr. Baumgardner states that when he raised the issue with Mr. Stixrood, he was told to submit a proposal to change the loop turn around. Dkt. 68, at 7. Plaintiffs submitted a drawing of their proposed hammerhead emergency vehicle turnaround. Dkt. 74-2, at 13. On December 18, 2006, Town of Ruston Ordinance 1200 was adopted. Dkt. 74-2, at 15-22. Ordinance 1200 vacates the alley and a portion of North Orchard Street requested by Plaintiffs and requires that they dedicate land for a hammerhead emergency vehicle turnaround before any application for a grading permit or lot segregation permit could be approved. Dkt. 74-2, at 15-22. Plaintiffs were also required to dedicate land for an approximately ten foot public viewing area with guardrails. Dkt. 74-2, at 17 ("The 10' -/+ area in Orchard Street right-of-way east of the turnaround shall be available for public access.").

On July 27, 2006, Plaintiffs filed an application for a variance from the lot grade definition regarding the calculation of building height. Dkt 74-2, at 36-48. Mr. Baumgardner states that rather than recommend Ruston amend Ordinance 1178, regarding building height calculations, Mr. Stixrood recommended that Mr. Baumgardner apply for a variance. Dkt. 68, at 9. Mr. Baumgardner states that he ended up paying nearly $14,000.00 for a height variance in "an instance where [Mr. Stixrood] led [him] to believe height was not an issue, and where the code could not be met without constructing a subterranean home." Dkt. 68, at 10. Mr. Baumgardner states that in addition, his property was then encumbered with restrictions on pruning trees and shrubs. Dkt. 68, at 10. Plaintiffs' requested variance from the building height requirements, with conditions addressing protection of vegetation on steep slopes, was approved on October 16, 2006. Dkts. 74, at 3; 74-3, at 7.

The North Orchard Street Ruston property was finally conveyed from Robert H. Jungers, Joellen Lewtas Jungers, and John Lewtas to Plaintiff Gimme Five D, LLC, by deed dated August 30, 2006. Dkt. 77-4, at 5.

On January 24, 2007, Ruston sent Mr. Baumgardner a bill for "professional services" through July 22, 2006, for $2,272.14, and July 23, 2006 through December 23, 2006, for "services provided by Huitt Zollars for variance, definition of fire turn around compliance, ordinance amendment, SEPA review and all public hearings" for $41,254.61, and "administrative costs" for $2,176.33. Dkt. 66-2, at 2. Mr. Baumgardner emailed Mr. Stixrood in response and stated that the bill exceeded the $5,000 to $10,000 he agreed to pay. Dkt. 58-3, at 37. Mr. Baumgardner notes that when he questioned Mr. Stixrood regarding the bills, he was charged for bill review. Dkt. 68, at 12. Mr. Baumgardner complains that he was billed 34 hours by HZ for a "fire turn around drawing." Dkt. 68, at 13. He states that he had already submitted a hammerhead turnaround drawing from his experts, so HZ should not have been preparing any drawings. Dkt. 68, at 13. Mr. Baumgardner notes that Mr. Stixrood billed for an hour and half to talk with the fire chief, although the fire chief denies ever speaking with Mr. Stixrood for over fifteen minutes. Dkt. 68, at 13.

Former Mayor Transue states that Mr. Baumgardner complained to him about the bills generated from HZ' work. Dkt. 97, at 3-4. Transue states that he referred Mr. Baumgardner to Mr. Stixrood, and also directed the Town Clerk to remove the administrative fee of 5%. Dkt. 97, at 3-4. Mr. Baumgardner complained to the Town Council about the bills. Dkt. 68, at 13-14.

Mr. Stixrood states that while he was involved, Mr. Baumgardner made a total of four separate town actions. Dkt. 59, at 5. He states that there were a number of council and/or planning commission meetings related to Mr. Baumgardner's requests. Dkt. 59, at 5.

Former Mayor Transue testified that he felt that Mr. Stixrood was doing the work that Mr. Baumgardner requested. Dkt. 58-4, at 64-64. Mayor Transue acknowledges that he never did an audit of HZ, or explore whether they were getting a competitive rate with HZ. Dkt. 66-38, at 11.

On October 19, 2007, Plaintiffs filed a request to prune trees on the steep slope to improve views. Dkt. 74-3, at 19. More information was requested by Mr. Stixrood. Dkt. 74, at 3. Mr. Baumgardner asserts that Mr. Stixrood created "absurd requirements, including his demands that [he] map out every bush, shrub, and tree on [his] property." Dkt. 68, at 11. Mr. Baumgardner states that after HZ's contract was terminated in 2008, he provided the Town Council a picture rather then these drawings, and his tree pruning request was approved. Dkt. 68, at 12. Plaintiffs' request was approved in June of 2009. Dkt. 74-3, at 27.

Mr. Foley, Plaintiffs' engineer, testified that in November 2007, he notified HZ and Ruston that there were errors in Ordinance 1200 (the ordinance that vacated Court Street and an alley), soon after he received a copy of Ordinance 1200. Dkt. 77-3, at 36. These errors included errors in the legal description and errors as to exhibits. Dkt. 66-44, at 2. Baseline Engineering billed Mr. Baumgardner $4,441.25 for its work correcting Ruston's mistakes on Ordinance 1200. Dkt. 66-44, at 5-6.

In November of 2007, Mr. Baumgardner paid almost $42,000.00 of the January 24, 2007, bill from Ruston, "under protest." Dkt. 68, at 13.

On December 3, 2007, Carl Stixrood reviewed Plaintiffs' two lot segregation requests, as required by Pierce County, Washington. Dkt. 74-3, at 41. Plaintiffs were reminded that their application was not complete; including their failure to meet requirements in Ordinance 1200 for the dedication of the emergency vehicle access right of way. Dkt. 74-3, at 42. In 2009, Plaintiffs signed the deed which dedicated a portion of the property for emergency vehicle access. Dkt. 74-3, at 50. Ruston's Town Council accepted the deed on June 1, 2009. Dkt. 74-3, at 51. After Plaintiffs provided a tax affidavit (on June 19, 2009), Ruston filed the deed which dedicated a portion of the property for emergency vehicle access, on June 22, 2009. Dkt. 74-3, at 50. Ruston approved the lot segregation on June 24, 2009. Dkt 74-3, at 25.

Defendant Stixrood also responded to Plaintiffs' October 2007 grading permit application on December 3, 2007. Dkt. 74-3, at 58. He again reminded Plaintiffs that the application was incomplete absent the dedication of the emergency vehicle turn around and that they had submitted an incomplete grading plan. Dkt. 74-3, at 58. The first requirement-the deed granting the property for the turn around—was fulfilled in June of 2009. Dkt. 74-5. Mr. Baumgardner notes that Ruston required a second SEPA review for the grading permit, even though one had already been submitted in the Ordinance 1200 materials. Dkt. 68, at 12. Plaintiffs completed their grading permit application on July 27, 2009, and on October 7, 2009, the grading permit was issued. Dkt. 74, at 5.

On January 23, 2008, Ordinance 1200 was amended, to correct (according to the language in the Ordinance) "scrivener's errors" discovered by "staff" and the "property owner's representative." Dkt. 74-2, at 24. Mr. Baumgardner states that he paid nearly $20,000.00 for Ordinance 1200 and the amendment. Dkt. 68, at 8.

In June of 2008, Ruston terminated its contract with HZ. Dkt. 69, at 2. Ruston then hired Villager Properties Inc. d/b/a/ North Creek Consulting ("North Creek") to provide land use planning, consulting, and services. Dkt. 74, at 2.

On July 31, 2009, at Mr. Baumgardner's request, Rob White, of North Creek, issued an "Administrative Interpretation" regarding Mr. Baumgardner's building height variance approved on October 16, 2006. Dkt. 74-3, at 2-17.

In September of 2009, Plaintiffs submitted an application for a permit to get sewer lines to the property. Dkts. 74, at 5; 77-3, at 42. Plaintiffs were informed that they needed to incorporate some changes to their plans and post a bond or execute a cash set-aside agreement. Dkt. 74, at 5-6. According to Mr. White, of North Creek, as of March 2010, Plaintiffs had not provided the updated plans or completed Ruston's request that they either post a bond or execute a cash set aside agreement before issuance of the permit. Dkt. 74, at 6. According to Mr. Baumgardner, Mr. White told him he had to pay a bond to Gig Harbor (another town in Pierce County, Washington). Dkt. 68, at 17. Mr. Baumgardner states that he paid the Ruston clerk the $1,000 bond, and then Mr. White told him that the bond was not big enough. Dkt. 68, at 17.

Mr. Baumgardner states that every time it rains, "Ruston's water continues to flow over [his] property" and the property has had several substantial landslides as a result. Dkt. 68, at 16. Mr. Baumgardner states that as early as 2005, he has been rasing the issue of Ruston's storm water discharge onto his property with Ruston and Stixrood. Dkt 68, at 14-15. He states that Mr. Stixrood has run up "huge bills ``researching' storm water." Dkt. 68, at 15. He acknowledges that he will be responsible for the storm water issues created by his development, but doesn't think that he should be forced to pay for the solution for Ruston's storm water issues. Dkt. 68, at 15-16.

Mr. Baumgardner asserts that there is no oversight by Ruston on the bills he receives: he notes that he gets bills for other people's projects. Dkt. 68, at 17. Mr. Baumgardner states that as of March 15, 2010, he has received around $75,000.00 in bills from Ruston. Dkt. 68, at 19. He asserts that Ruston would then tack on a 5% administrative fee. Dkt. 68, at 19. He alleges that HZ was allowed to generate fees without restraint. Dkt. 68, at 20.

Karen Carlisle, Ruston's Town Clerk from 2000-2009, states that "the administrative fee at five percent was not based upon actual clerk time spent on the bill, but was a flat rate charged for any bill regardless of actual clerk time spent on processing the application." Dkt. 72, at 5. Karen Carlisle states that the fee schedule set in Ruston's Ordinances 951 and 1021 were prepared by Mr. Stixrood and the town's attorney. Dkt. 72, at 7.

Mr. Baumgardner feels that due to Ruston and HZ's delays, he missed his opportunity to sell both of these properties when the market was considerably better. Dkt. 68, at 20. For example, Mr. and Ms. Dan Kuchan explored purchasing Plaintiffs' Tacoma property (4925 N. Orchard Street) in October of 2007. Dkt. 77-3, at 18. Offers and counteroffers were made. Dkts. 77-2, at 45-53. Mr. and Ms. Kuchan wanted to condition the sale on Mr. Baumgardner's getting utilities to the site within 60 days or forfeiting $150,000. Dkt. 77-2, at 49-53. Mr. Baumgardner would not agree. Id. In the spring of 2008, Mr. and Ms. Michael McLeod explored purchasing the Tacoma property. Dkt. 77-4, at 10. Mr. McLeod testified that they decided not to purchase because he and his wife met on site with an architect and were advised that "the site would be very expensive to engineer a foundation that would secure a home on such a very steep slope." Dkt. 77-4, at 10. He testified that the timing regarding utilities was not an issue. Dkt. 77-4, at 11.

The current mayor of Ruston, Bruce Hopkins, states that Ruston has incurred many costs in connection with review of Mr. Baumgardner's applications for which they have chosen not to bill him. Dkt. 98, at 3. Mayor Hopkins states that Ruston has not made any profit from reviewing his applications. Dkt. 98, at 4. He states that if developers like Mr. Baumgardner do not pay their bills, it could bankrupt the town. Dkt. 98, at 4.

B. PROCEDURAL HISTORY

On March 6, 2009, Plaintiffs filed this case in Pierce County Washington, Superior Court. Dkt. 1. Plaintiffs allege that all Defendants have violated their federal and state constitution Due Process rights (both substantive and procedural), have "taken" their property without compensation, and have violated their First Amendment rights. Id. Plaintiffs make claims for tortious interference with a contract and negligence against all Defendants. Id. Plaintiffs make a breach of contract claim against the HZ Defendants. Id. They assert that Ruston's failure to deal with its storm water run off amounts to an inverse condemnation or trespass. Id. Plaintiffs seek damages, injunctive relief, attorney's fees, and costs. Id.

Defendants removed this case to this Court based on 28 U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1367(a) (supplemental jurisdiction). Dkt. 1.

Parties filed cross motions for summary judgment in March 2010. Dkts. 57, 63-65, 78-79. On March 18, 2010, Plaintiffs were ordered to show cause why a pleading filed under seal should not be unsealed. Dkt. 81. No responses were filed. The sealing issue is resolved below in Section II. A.

C. PENDING MOTIONS

1. Defendants Ruston and Transue's Motion for Summary Judgment Re: Federal Claims

Defendants Ruston and Transue move for summary dismissal of Plaintiffs' federal claims arguing that: 1) alleged violations of state law and negligence are insufficient to establish liability under 42 U.S.C. § 1983, 2) Plaintiffs' takings claims are not ripe, and even if they were ripe, Plaintiffs have not suffered a taking requiring compensation, 3) Plaintiffs' substantive and procedural due process claims should be dismissed because they have identified only two interests that are protected under the due process clause, and they have suffered no deprivation of those interests, 4) Plaintiffs have not shown that their free speech rights have been violated, and 5) Defendant former Mayor Transue is entitled to qualified immunity. Dkt. 64. Defendants HZ and Stixrood jointly move for summary dismissal of Plaintiffs' claims on these grounds. Dkts. 78 and 79.

2. Plaintiffs' Motion for Summary Judgment

Plaintiffs move for partial summary judgment against Defendants for "violating their due process rights through unreasonable fees and processes for review services." Dkt. 63. Plaintiffs move for "injunction banning Ruston from enforcement of Ruston Mun.Code 1. 14.050 until such time as Ruston complies with state statute to set reasonable rates for review and limit its fees for review to the statutorily authorized categories." Id. Plaintiffs move for an order dismissing "Defendant HZ's anti-SLAPP [Washington's Anti-Strategic Lawsuits Against Public Participation] claim with prejudice and for an award of attorneys' fees and the $10,000.00 penalty" for having to defend against the claim. Id.

3. Defendants HZ and Stixrood's Motion for Summary Judgment

Defendants HZ and Stixrood move for summary judgment arguing that: 1) Plaintiffs' tort claims asserted against HZ are barred by the economic loss doctrine, 2) Plaintiffs' negligence and negligent misrepresentation claims must be dismissed because Plaintiffs cannot establish essential elements of their causes of action, 3) Plaintiffs' claims premised upon alleged errors in Ordinance 1172 are barred by the statute of limitations, 4) Plaintiffs' breach of contract claims against HZ must be dismissed because Plaintiffs cannot identify a specific contract provision that was breached, 5) Plaintiffs' § 1983 and state constitutional claims against HZ and Stixrood must be dismissed because Plaintiffs cannot establish that HZ or Stixrood were state actors, and 6) Ruston's indemnity claims against HZ and Stixrood must be dismissed because no basis for indemnity exists. Dkt. 57.

4. Defendants Ruston and Transue's Motions for Summary Judgment Re: State Claims

Defendants Ruston and Transue move for summary dismissal of Plaintiffs' state law claims, arguing that: 1) Plaintiffs' state constitutional takings claims should be dismissed because they are either unripe or no takings occurred, 2) Plaintiffs can not show that they have an inverse condemnation claim based upon surface water run off, 3) there is no evidence that Ruston breached the "agreement to Pay for Town Review Services," 4) Plaintiffs' intentional interference with a contract claim should be dismissed because no valid contract existed between Plaintiffs and either the Kuchans or the McLeod, none of the Defendants knew of the potential contracts, Defendants' acts were not designed to induce a breach and there was no breach or disruption of the relationship, 5) Plaintiffs' negligence claims should be dismissed, and 6) Defendant Transue is entitled to discretionary immunity under RCW 4.24.470. Dkt. 65.

5. Motions to Strike

Plaintiffs' move to strike Defendants HZ and Stixrood's Editorial Exhibits 1 and A-C. Dkt. 106. Defendants Ruston and Baumgardner move to strike several pleadings submitted in support of Plaintiffs' motions and responses (Dkt. 95).

D. ORGANIZATION OF THIS OPINION

This opinion will first deal with the Court's March 18, 2010, Order to Show Cause. Dkt. 81. Next, the opinion will address the various motions to strike. Dkts. 95 and 106. The opinion will then turn to Defendants' joint motions to summarily dismiss Plaintiffs' federal claims (Dkts. 64, 78 and 79) and Plaintiffs' partial motion for summary judgment to the extent that it addresses federal claims (Dkt. 63). Lastly, the opinion will discuss the propriety of remanding this case to Pierce County, Washington Superior Court.

II. DISCUSSION

A. SEALING OF DOCUMENTS—STANDARD

Local Fed.R.Civ.P. 5(g) provides,

(2) There is a strong presumption of public access to the court's files. With regard to dispositive motions, this presumption may be overcome only on a compelling showing that the public's right of access is outweighed by the interests of the public and the parties in protecting the court's files from public review.... (3) If a party seeks to have documents filed under seal and no prior order in the case or statute specifically permits it, the party must obtain authorization to do so by filing a motion to seal or a stipulation and proposed order requesting permission to file specific documents under seal. The court will allow parties to file entire memoranda under seal only in rare circumstances. A motion or stipulation to seal usually should not itself be filed under seal. A declaration or exhibit filed in support of the motion to seal may be filed under seal if necessary. If possible, a party should protect sensitive information by redacting documents rather than seeking to file them under seal. A motion or stipulation to seal should include an explanation of why redaction is not feasible.

Parties filed cross motions for summary judgment in March 2010. Dkts. 57, 63-65, 78-79. On March 15, 2010, Plaintiffs filed, under seal, a pleading entitled "Exhibit 35 to Declaration of Joan K. Mell" in support of their Motion for Summary Judgment. Dkt. 76. Plaintiffs did not file a motion to seal this document, nor is there a prior order in the record permitting it to be filed under seal pursuant to Local Fed.R.Civ.P. 5(g). On March 18, 2010, Plaintiffs were ordered to show cause why that pleading should not be unsealed. Dkt. 81. Parties failed to respond to the Court's March 18, 2010, Order to Show Cause (Dkt. 81). Accordingly, no showing has been made under Local Fed.R.Civ.P. 5(g). The pleading entitled "Exhibit 35 to Declaration of Joan K. Mell" (Dkt. 76) should be unsealed.

B. MOTIONS TO STRIKE

Fed.R.Civ.P. 56(e) provides that affidavits filed supporting or opposing summary judgment must be "made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated."

Plaintiffs move to strike Defendants HZ and Stixrood's "Exhibit 1 to [HZ's] Reply in Support of Summary Judgment Inaccurate Record References in Plaintiffs Response to [HZ's] Motion" (Dkt. 88, at 15-18). Dkt. 106. Plaintiffs move to strike Defendants' HZ's "Exhibit A, B and C to [HZ's] Opposition to Plaintiffs' Motion for Summary Judgment" (Dkt. 90-2, at 1-16). Id.

Plaintiffs' motion to strike (Dkt. 106) should be granted and the pleadings stricken. These pleadings contain inadmissible opinion testimony of legal counsel. Fed.R.Evid. 701 and 702. The exhibits were not relied upon in deciding the pending motions.

Defendants Ruston and Stixrood move to strike portions of the Plaintiffs' pleadings. Dkt. 95. Defendants' motion regarding Plaintiffs' character evidence should be granted insofar as it is offered to show conformity therewith on a particular occasion, Fed.R.Evid. 403, and but denied insofar as it is offered to provide general background information.

Defendants' motion to strike Plaintiffs' submissions containing opinions on matters of law should be granted. See United States v. Poschwatta, 829 F.2d 1477, 1483 (9th Cir.1987).

Defendants Ruston and Stixrood move to strike portions of Baumgardner's declaration (Dkt. 68) and his attorney, Ms. Mell's, declaration (Dkt. 66) as inadmissible hearsay under Fed. R. Ev. 802. Dkt. 95. The motion should be granted as to Mr. Baumgardner's assertions about purported complaints from other developers and assertions that the prior owners were unhappy with Ordinance 1172. The motion to strike based on hearsay in Ms. Mell's declaration should be granted as to the unverified "timeline" she created. The motion to strike based on hearsay should be denied in all other respects.

Defendants move to strike the Baumgardner Declaration (Dkt. 68) due to lack of personal knowledge. Dkt. 95. Defendants' motion to strike should be granted as to the amount of profit HS may have made and Transue's work ethic. It should be denied in all other respects.

Defendants' motion regarding settlement discussions should be granted pursuant to Fed. R. Ev. 408.

Defendants' motion to strike (Dkt. 95) irrelevant matters should be granted as to complaints of other developers about other developments, the state auditor performance report relating to eight other counties (to the extent it did not concern Ruston), and the 2006 state auditor's report which did not address land use fees. It should be denied in all other respects.

These evidentiary rulings apply to these motions only. In any event, much of the testimony Defendants seek to strike was not relevant to the questions considered in this opinion and so was not considered.

C. SUMMARY JUDGMENT-STANDARD

Summary judgment is proper only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party is entitled to judgment as a matter of law when the nonmoving party fails to make a sufficient showing on an essential element of a claim in the case on which the nonmoving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). There is no genuine issue of fact for trial where the record, taken as a whole, could not lead a rational trier of fact to find for the non moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (nonmoving party must present specific, significant probative evidence, not simply "some metaphysical doubt."); See also Fed.R.Civ.P. 56(e). Conversely, a genuine dispute over a material fact exists if there is sufficient evidence supporting the claimed factual dispute, requiring a judge or jury to resolve the differing versions of the truth. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 253, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987).

The determination of the existence of a material fact is often a close question. The court must consider the substantive evidentiary burden that the nonmoving party must meet at trial—e.g., a preponderance of the evidence in most civil cases. Anderson, 477 U.S. at 254, 106 S. Ct. 2505; T.W. Elec. Serv., Inc., 809 F.2d at 630. The court must resolve any factual issues of controversy in favor of the nonmoving party only when the facts specifically attested by that party contradict facts specifically attested by the moving party. The nonmoving party may not merely state that it will discredit the moving party's evidence at trial, in the hopes that evidence can be developed at trial to support the claim. T.W. Elec. Serv., Inc., 809 F.2d at 630 (relying on Anderson, supra). Conclusory, non specific statements in affidavits are not sufficient, and missing facts will not be presumed. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888-89, 110 S. Ct. 3177, 111 L. Ed. 2d 695 (1990).

D. FEDERAL CLAIMS BROUGHT UNDER 42 U.S.C. § 1983

"Section 1983 provides remedies for deprivations of rights under the Constitution and laws of the United States when the deprivation takes place under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory." Caviness v. Horizon Community Learning Center, Inc., 590 F.3d 806, 812 (9th Cir. 2010) (quoting Gorenc v. Salt River Project Agric. Improvement & Power Dist., 869 F.2d 503, 505 (9th Cir.1989))(internal quotation marks omitted). The conduct allegedly causing the deprivation of a federal right must be fairly attributable to the State. Id. The state-action element in § 1983 "excludes from its reach merely private conduct, no matter how discriminatory or wrongful." Id. (internal citations omitted).

"[G]overnment officials performing discretionary functions generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982). "Through application of the qualified immunity doctrine, public servants avoid the general costs of subjecting officials to the costs of trial-distraction of officials from their governmental duties, inhibition of discretionary action, and deterrence of able people from public service." V-1 Oil Co. v. Smith, 114 F.3d 854, 857 (9th Cir.1997)(internal citations omitted).

Plaintiffs make federal constitutional claims against Ruston and former Mayor Transue and private actors HZ and Stixrood. Dkt. 1. HZ and Stixrood argue that they are not "state actors" and therefore cannot be held liable for a constitutional violation. Dkt. 57. Ruston and Defendant former Mayor Michael Transue do not dispute that they are "state actors" for the purpose of potential constitutional liability under § 1983, but argue that Transue is entitled to qualified immunity. Dkt. 64. In order to determine both questions (whether private actors are "state actors" and whether qualified immunity applies), the Court should first reach the question of whether a constitutional right has been violated. Villegas v. Gilroy Garlic Festival Ass'n, 541 F.3d 950, 954-55 (9th Cir. 2008)("The first inquiry was whether the claimed deprivation has resulted from the exercise of a right or privilege having its source in state authority. The second was whether, under the facts of this case, the private parties, may be appropriately characterized as state actors.")(internal citations omitted); and Pearson v. Callahan, ___ U.S. ___, 129 S. Ct. 808, 172 L. Ed. 2d 565 (2009) (although no longer mandatory, in order to determine whether a government official is entitled to qualified immunity, it is helpful to examine first whether a constitutional violation occurred and then whether if there was a violation whether the rights were clearly established)((internal citations omitted). As stated in Section II. D. 1.-4. below, Plaintiffs have failed to show that they have suffered a federal constitutional violation. Accordingly, no further analysis on either the "state actor" doctrine or the qualified immunity defense is necessary. See Villegas, at 955; and Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 150 L. Ed. 2d 272 (2001). This opinion now will address each of Plaintiffs' federal constitutional claims.

1. Takings Claim

Defendants move to dismiss Plaintiffs' federal constitutional takings claim. Dkts. 64, 78, 79, and 113. The final Clause of the Fifth Amendment provides: "nor shall private property be taken for public use, without just compensation." U.S. Const. amend. V. The Fifth Amendment applies to the States as well as the Federal Government. Chicago B. & Q.R. Co. v. Chicago, 166 U.S. 226, 239, 17 S. Ct. 581, 41 L. Ed. 979 (1897). Plaintiffs challenging government action as uncompensated takings of private property may proceed under one of four theories: (1) a physical invasion of property, (2) that a regulation completely deprives a plaintiff of all economically beneficial use of property, (3) a general regulatory takings challenge pursuant to Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 98 S. Ct. 2646, 57 L. Ed. 2d 631 (1978), or (4) a land-use exaction violating the standards set forth in Nollan v. California Coastal Comm'n, 483 U.S. 825, 107 S. Ct. 3141, 97 L. Ed. 2d 677 (1987) and Dolan v. City of Tigard, 512 U.S. 374, 114 S. Ct. 2309, 129 L. Ed. 2d 304 (1994). McClung v. City of Sumner, 548 F.3d 1219, 1225 (9th Cir. 2008) (citing Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 548, 125 S. Ct. 2074, 161 L. Ed. 2d 876 (2005)).

Plaintiffs acknowledge that they are not basing their takings claim on an assertion that the Defendants' actions have completely deprived them of all economically beneficial use of the property. Dkt. 100, at 3. Plaintiffs argue that "this case concerns the physical invasion of [Plaintiffs'] property and the extraction of unreasonable regulations and fees from [their] development." Dkt. 100, at 3. Plaintiffs argue that Ruston's requirement in Ordinance 1200, that they dedicate a ten foot public viewing area (with guard rail) on the top of the slope, amounts to a "physical invasion" of their property. Dkt. 100, at 3. Plaintiffs also base their takings claim on Ruston's "refusal to remediat[e] its storm water" and on Plaintiffs' allegations that they were charged unreasonable fees under Ruston's application review fee ordinance. Dkt. 100, at 2-3.

Defendants argue that Plaintiffs' Fifth Amendment takings claim should be dismissed because it is not ripe. Under Williamson County Reg'l Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S. Ct. 3108, 87 L. Ed. 2d 126 (1985), a Plaintiff's federal takings claim is not ripe until (1) the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue, and (2) the Plaintiff has sought compensation through the procedures the state has provided for doing so, unless such action would be futile.

Plaintiffs have failed to show that their takings claim, based upon Ordinance 1200's requirement of a public viewing area, is ripe. Parties do not contest that passage of Ordinance 1200 was a final land use decision. Defendants point out that Plaintiffs did not seek redress through Washington's Land Use Petition Act ("LUPA"). Dkts. 64, and 113. LUPA is the "exclusive means of judicial review of land use decisions" with certain exceptions. James v. County of Kitsap, 154 Wash.2d 574, 583, 115 P.3d 286 (2005). "To have standing to bring a land use petition under LUPA, the petitioner must have exhausted his or her administrative remedies . . . . [and] filed for judicial review. . . within 21 days of the issuance of the land use decision." Id., (citing RCW 36.70C.040(3), .060(2)(d)). Plaintiffs did not bring a LUPA action to challenge this decision. "[A] taking is not complete until compensation for a deprivation has been sought and denied." Hacienda Valley Mobile Estates v. City of Morgan Hill, 353 F.3d 651, 657 (9th Cir.2003). Plaintiff makes no showing that such an action would have been futile. Plaintiffs' takings claim, based upon Ordinance 1200's requirement of a public viewing area, should be dismissed.

Plaintiffs' takings claim based on Ruston's "refusal to remediate its storm water" should also be dismissed as unripe under Williamson. Plaintiffs have failed to point to a final decision. Plaintiffs have failed to seek relief from the state court or show that seeking such relief would be futile. To the extent Plaintiffs base their takings claim on Ruston's "refusal to remediate its stormwater" the claim should be dismissed.

Plaintiffs' final basis for their takings claim is that they were charged unreasonably high fees under Ruston's land use application review fee ordinance. Dkt. 100, at 2-5. This factual basis for a takings claim is insufficient. As to Williamson ripeness, Plaintiffs argue that the application review fees are not really land use decisions, and so are exempt from review under LUPA. Dkt. 63, at 29-30. RCW 36.70C.030(1)(c) expressly exempts claims for "monetary damages or compensation" from the procedures, standards, and deadlines set forth in LUPA. The Washington Supreme Court however, has found that the imposition of impact fees as a condition on the issuance of a building permit was a "land use decision" under LUPA, in a case which merely sought "monetary damages or compensation" for fees charged. James v. County of Kitsap, 154 Wash.2d 574, 583, 115 P.3d 286 (2005). The Washington Supreme Court held that the imposition of an impact fee was not reviewable unless a party timely challenges that decision within twenty-one days of its issuance pursuant to LUPA. James, 154 Wash.2d at 586-87, 115 P.3d 286. The dissent argued that a challenge to the government's decision to issue or withhold a permit is distinct from a challenge to the imposition of illegal fees or taxes. Id. at 591-94, 115 P.3d 286. However, the majority expressly found that the government's decision to exact a fee as a condition for granting the developer's building permit constituted a land use decision and not a revenue decision. Id. at 583-84, 115 P.3d 286. Plaintiffs here argue that impact fees and application fees are different. Dkt. 63, at 29-30. They argue that impact fees are assessed at the time of the land use decision, and are a condition of the decision. Id. They argue that application review fees are not conditioned on any land use decision, but are ongoing until the project is complete. Id.

Plaintiffs' argument that the fees are "ongoing" becomes problematic because, then, these bills are not "final decisions" as required under Williamson. Moreover, Defendants have shown a willingness to adjust the fees in the past, and so it is not wholly clear that each bill was a "final decision." Complicating matters, Plaintiffs complain that further action on their applications was halted until they paid the bills. Dkt. 63.

Assuming, without finding, that the LUPA statute does not apply to application and review fees, Plaintiffs fail to address whether other state court remedies are or are not available. Plaintiffs do not address whether a claim could be brought directly under RCW 82.08.020. RCW 82.02.020 permits cities or municipal corporations to collect "reasonable fees from an applicant for a permit or other governmental approval to cover the cost to the city, . . . or other municipal corporation of processing applications, inspecting and reviewing plans, or preparing detailed statements" required by the State Environmental Protection Act ("SEPA"). Plaintiffs make no showing that raising a claim under this statute would be futile. Additionally, Plaintiffs assert a breach of contract claim here that may result in the relief they request. Plaintiffs also fail to address whether relief would be futile by asserting a claim under RCW 64.40.050, which provides "[o]wners 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."

In any event, even assuming that this claim is ripe under Williamson, Plaintiffs fail to cite any authority that the fees charged pursuant application review amount to "takings" requiring compensation under the constitution. The U.S. Supreme Court has held that user fees do not constitute "takings" requiring just compensation. U.S. v. Sperry Corp., 493 U.S. 52, 110 S. Ct. 387, 107 L. Ed. 2d 290 (1989). In that case, the recipient of a claim award from the Iran-United States Claims Tribunal brought suit against the United States for recovery of a fee that the United States charged for him to receive payment of his claim. Id. The U.S. Supreme Court held that the fee required by statute to be paid to the United States from amount recovered was a user fee rather than an unconstitutional taking. Id. Here, Plaintiffs chose to request governmental services when they made their various land use applications. Accordingly, these fees are user fees and no showing has been made that they are "takings." In Sperry, the plaintiff argued that the fee could not be considered a user fee because there had "been no showing that the amount of the deduction approximate[d] the cost of the Tribunal to the United States or [bore] any relationship to Sperry's use of the Tribunal or the value of the Tribunal's services to Sperry." Id., at 393-94. The Court rejected his argument, holding that a user fee need not "be precisely calibrated to the use that a party makes of Government services." Id., at 394. "Nor does the Government need to record invoices and billable hours to justify the cost of its services." Id. All that is "required is that the user fee be a 'fair approximation of the cost of benefits supplied.'" Id. There is sufficient evidence in the record here to show, for the federal takings claim analysis only, that the fee assessments were a "fair approximation of the cost of the benefits supplied." Plaintiffs' takings claim based upon the fees he has been charged under Ruston's land use application fee statute should be dismissed.

Defendants' motion to summarily dismiss Plaintiffs' takings claim should be granted and the takings claim dismissed. This ruling does not foreclose Plaintiffs' due process claim, however. "A challenge to land use regulation may state a substantive due process claim, so long as the regulation serves no legitimate governmental purpose." North Pacifica LLC v. City of Pacifica, 526 F.3d 478, 484 (9th Cir.2008)(internal citations omitted). This opinion will now examine the motions related to Plaintiffs due process claims.

2. Due Process Claims

Defendants seek summary dismissal of Plaintiffs' due process claims. Dkts. 64, 78, 79, and 113. Plaintiffs make a cross motion for summary judgment on their due process claim based upon the fees they were charged under Ruston's application review fee ordinance. Dkts. 63 and 108.

a. Substantive and Procedural Due Process Claims—Protected Interest?

To state a substantive or procedural due process claim, the plaintiff must show as a threshold matter that a state actor deprived them of a constitutionally protected life, liberty, or property interest. Shanks v. Dressel, 540 F.3d 1082, 1087 (9th Cir.2008).

Plaintiffs argue, in response to Defendants' summary judgment motion, that Mr. Baumgarder's "substantive due process and procedural due process claims are founded on his fundamental rights to develop his land. He has protected property interests in his land and his resources. He has protected interests in reasonable regulatory controls and reasonable regulatory fees." Dkt. 100, at 6.

i. Constitutionally Protected Interest in Developing Land?

Turning first to Plaintiffs argument that they have a fundamental right to "develop [their] land," Plaintiffs fail to cite any authority for this extremely general proposition. In fact, the Ninth Circuit has noted that a landowner does not have an "unconditional right under the taking or deprivation clauses of the federal Constitution to build any particular project he chooses." Lakeview Development Corp. v. City of South Lake Tahoe, 915 F.2d 1290 (1990). Closer examination of the interests that Plaintiffs assert are protected is more helpful.

ii. Constitutionally Protected Interests Regarding Street Vacation Ordinance and Building Heights Variance?

To the extent that Plaintiffs base their due process claims on the conditions imposed on the street vacation ordinances, Plaintiffs have not shown that they had a protected property interest in avoiding those conditions or the manner in which the streets were vacated. Further, Plaintiffs have not shown that they had a protected interest in avoiding the conditions placed on their ability to prune trees and shrubs on the steep slope which was a part of the building height variance that they were granted.

"A statute that grants the reviewing body unfettered discretion to approve or deny an application does not create a property right." Thornton v. City of St. Helens, 425 F.3d 1158, 1165 (9th Cir. 2005). Ruston has discretion on whether or not to vacate public streets. See Puget Sound Alumni of Kappa Sigma v. Seattle, 70 Wash.2d 222, 227, 422 P.2d 799 (1967). Ruston has the discretion to require property owners who request street vacations to pay for property vacated. RCW 35.79.030. The Washington Supreme Court has upheld the payment of cash for vacated street, an exchange of property, and permitted the retention of easements as all part of the "payment" contemplated in RCW 35.79.030. Greater Harbor 2000 v. City of Seattle, 132 Wash.2d 267, 937 P.2d 1082 (1997). Similarly, Plaintiffs cite to no authority which would limit Ruston's ability to grant or deny Plaintiffs' building height variance, including placing conditions on trimming trees and shrubs on the steep slope. "[A] benefit is not a protected entitlement if government officials may grant or deny it in their discretion." Town of Castle Rock, Colo. v. Gonzales, 545 U.S. 748, 756, 125 S. Ct. 2796, 162 L. Ed. 2d 658 (2005).

Even if the condition for a public viewing area, for example, was not authorized by RCW 35.79.030, violation of state law does not necessarily give rise to a constitutionally protected due process interest. Shanks, at 1089. The erroneous "assumption that every state law violation invariably gives rise to a substantive due process claim is inconsistent with the principle that substantive due process is not a ``font of tort law' that superintends all official decision making." Id. Plaintiffs have not shown that they had a protected due process interest regarding Ruston's decision to grant their request to vacate a portion of Court Street and the alley in exchange for the public viewing area and reservation of the hammerhead emergency vehicle turnaround. This is also true of requirements placed on Plaintiff's request for a variance on building height limitations conditioned upon limitations to pruning trees and shrubs on the steep slope. To the extent that Plaintiffs' claims are based upon street vacation and zoning variances, it should be dismissed.

iii. Constitutionally Protected Interest in "Reasonable Fees" Under RCW 82.08.020?

Plaintiffs, in their motion for summary judgment and in response to Defendants' motion for summary judgment, also point to RCW 82.08.020, arguing that the state has removed the local jurisdiction's discretion in the amount of fees that can be charged in connection with an application for land use. Dkt. 63, at 15. Accordingly, Plaintiffs contend that they have a protected due process interest in the charge of "reasonable fees" for review of their land use applications. Id.

This Court is mindful of the Ninth Circuit's warning that "a federal court should not decide federal constitutional questions where a dispositive non-constitutional ground is available. This rule against unnecessary constitutional adjudication applies even when neither the trial court nor the parties have considered the non-constitutional basis for decision." City of Los Angeles v. County of Kern, 581 F.3d 841, 846 (2009). Plaintiffs have not made a sufficient showing that they could not challenge the reasonableness of these fees by simply bringing a claim under the state statute, through breach of contract action, or RCW 64.40.050.

That consideration aside, Plaintiffs have not convincingly shown that they have a protected due process interest that results from RCW 82.08.020. "The Supreme Court has repeatedly held that state statutes may create liberty interests that are entitled to the procedural protections of the Due Process Clause of the Fourteenth Amendment." Carlo v. City of Chino, 105 F.3d 493, 497 (9th Cir.1997) (emphasis added). "Property interests are not created by the Constitution but by existing rules or understandings that stem from an independent source such as state law-rules or understandings that secure certain benefits and that support claims of entitlement to those benefits." Thornton v. City of St. Helens, 425 F.3d 1158, 1164 (2005) (internal citations omitted). To have a property interest in a government benefit, "a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it." Id. The Ninth Circuit uses a "mandatory language test to determine that state statutes or regulations have created a liberty interest within the meaning of the Fourteenth Amendment." Carlo, at 498. Whether a statute creates a property interest depends on "the extent to which the [governing] statute contains mandatory language that restricts the discretion" of the decision makers. Thornton, at 1164.

The statutory language here does not contain language that is sufficiently "mandatory" to create a protected due process interest. The statute permits the collection of "reasonable fees to cover the cost to the city, ... or other municipal corporation of processing applications, inspecting and reviewing plans, or preparing detailed statements" required by SEPA. RCW 82.02.020. The phrase "reasonable fees" gives cities a great deal of discretion in the amount of fees they choose to charge, if they choose to do so at all. The statute uses other generalized language for the services that they are permitted to charge. The statutory language here does not create "a legitimate claim of entitlement." To the extent that Plaintiffs base their due process claims on RCW 82.02.020, their claim should be dismissed. Plaintiffs' motion for summary judgment on this issue should be denied, and Defendants' motion to summarily dismiss the claim on this factual basis should be granted.

iv. Constitutionally Protected Interest in "Accurate Billing"?

Plaintiffs assert that they have a constitutionally protected interest in "accurate billing." Dkt. 63, at 15 (citing Memphis Light, Gas and Water Division v. Craft, 436 U.S. 1, 98 S. Ct. 1554, 56 L. Ed. 2d 30 (1978)). In Memphis Light, the Supreme Court examined the specific language in the Tennessee statute and state court decisions regarding the statute. Id. They held that because the utility could terminate service only "for cause," the Plaintiffs had a "legitimate claim of entitlement" within the protection of the Due Process Clause. Id. Plaintiffs fail to point to a sufficiently specific statute which would entitle them to "accurate billing" such that they would be entitled to constitutional protection.

v. Constitutionally Protected Interest in Proper Delegation for City Planning Services to Private Entity?

Plaintiffs fail to identify a constitutionally protected interest implicated in Ruston's decision to contract with HZ for land use planning purposes. Plaintiffs point out that the state constitution prohibits contracting away the power of taxation, and they assert when Ruston contracted with HZ to provide these services and then passed the bill on to the applicants, Ruston had contracted away the power of taxation. Dkt. 63. Plaintiffs' argument ignores the undisputed fact that Ruston paid HZ's bills, and it is the Town Council that made the final decisions on the land use applications. Moreover, under Washington law, taxes are defined by their purposes: they are imposed to raise money for the public treasury. Okeson v. City of Seattle, 150 Wash.2d 540, 551, 78 P.3d 1279 (2003). There is no indication here that the fees charged were imposed to raise money for Ruston's treasury. Moreover, RCW 82.02.020 allow cities to assess charges to "cover the cost to the city." Ruston points out that it paid the bills HZ submitted. Dkt. 97, at 3. Plaintiffs have not shown that these charges were not costs to Ruston. Plaintiffs' due process claims, based on this factual basis, should be dismissed.

vi. Constitutionally Protected Interest in Applications for Grading Permit and Lot Segregation?

Defendants concede that Plaintiffs have a state created protectable due process interest in their applications for a grading permit and lot segregations. Dkt. 64, at 16 (citing Mission Springs v. Spokane, 134 Wash.2d 947, 965, 954 P.2d 250 (1998)). Whether there is sufficient evidence of a violation of these interests will be addressed below.

b. Due Process Claims—Violation?

Plaintiffs applications for a grading permit and lot segregation were both approved. Dkts. 74, at 5 and 74-3, at 25 respectively. Plaintiffs argue that it took far too long for their grading permit application and their lot segregation application to be approved. Dkt. 63.

To maintain a substantive due process claim, Plaintiffs must show that Ruston's delays in processing their applications lacked a rational relationship to a government interest. North Pacifica LLC v. City of Pacifica, 526 F.3d 478, 485 (9th Cir.2008).

Insofar as the lot segregation application was concerned, Plaintiffs do not meaningfully respond to Defendants' argument that approval of the lot segregation was a county function, and that the county could have acted without Ruston's approval. Plaintiffs have not shown sufficient evidence in the record to conclude that Defendants violated their due process rights based upon the length of time it took to approve their lot segregation application. To the extent that they base their due process claim on the time it took for approval of their lot segregation application, the claim should be dismissed.

Insofar as their due process claim is based upon the time it took to get their grading permit, Plaintiffs' due process claim should be denied. Plaintiffs' delay in processing due process claim is similar to the Plaintiff's claim in North Pacifica LLC v. City of Pacifica, 526 F.3d 478 (9th Cir. 2008). In North Pacifica the Ninth Circuit examined a case where the Plaintiff alleged that the City violated its substantive due process rights by repeatedly sending requests for more information that delayed the processing of Plaintiff's land use application. 526 F.3d at 485. The Court found that "the complaint demonstrate[d] that, each time the City sent a request for more information, it explained that it was requesting relevant information it did not have or information that would allow it to conduct a thorough review." Id. It held that there was "a reasonable explanation on the face of the complaint for every delay in the City's eventual approval of the application. The City's repeated information requests thus did not violate the [plaintiff's] substantive due process rights by making unreasonable requests that delayed the project." Id. Here, the grading permit was approved soon after Plaintiffs completed their application. The record indicates that Defendant Stixrood responded to Plaintiffs' October 2007 grading permit application on December 3, 2007. Dkt. 74-3, at 58. He reminded Plaintiffs that the application was incomplete absent the dedication of the emergency vehicle turn around and that they had submitted an incomplete grading plan. Dkt. 74-3, at 58. The first requirement—the deed granting the property for the turn around—was fulfilled in June of 2009. Dkt. 74-5. Plaintiffs completed their grading permit application on July 27, 2009, and on October 7, 2009, the grading permit was issued. Dkt. 74, at 5. Plaintiffs have not shown sufficient evidence in the record to conclude that Defendants violated their due process rights based upon the length of time it took to approve their lot grading permit.

To the extent that Plaintiffs base their due process claim upon Ruston's requirement that they submit another SEPA with the grading permit, the claim should be dismissed. Plaintiffs have not shown that Ruston's requirement of an additional SEPA violated their due process rights. The Court has "long eschewed ... heightened means-ends scrutiny when addressing substantive due process challenges to government regulation." Shanks v. Dressel, 540 F.3d 1082, 1087 (9th Cir. 2008) (quoting Lingle, 544 U.S. at 545, 125 S.Ct. 2074). Accordingly, the "irreducible minimum" of a substantive due process claim challenging land use action is failure to advance any legitimate governmental purpose. Id. "When executive action like a discrete permitting decision is at issue, only egregious official conduct can be said to be arbitrary in the constitutional sense: it must amount to an abuse of power lacking any reasonable justification in the service of a legitimate governmental objective." Id., at 1089. Plaintiffs make no showing that Ruston's request for another SEPA failed to advance any legitimate public purpose. The "exceedingly high burden" required to show that Ruston, HZ, or their "employees behaved in a constitutionally arbitrary fashion has not been met here." Shanks, at 1087 (internal citation omitted). To the extent Plaintiffs assert these actions as a basis for their due process claim, Defendants' motions should be granted and Plaintiffs' claim should be dismissed.

To the extent that Plaintiffs base their due process claim on the time it has taken for Ruston to make a decision on their utility permits, Plaintiffs have made no showing that the additional items Ruston has requested for the permit to be considered "complete" failed to advance "any legitimate public purpose." Moreover, according to the record, the application is still pending.

Plaintiffs procedural due process claim should be dismissed. To obtain relief on a procedural due process claim, the plaintiff must establish the existence of "(1) a liberty or property interest protected by the Constitution; (2) a deprivation of the interest by the government; [and] (3) lack of process." Shanks v. Dressel, 540 F.3d 1082, 1087, 1090 (9th Cir.2008) (citing Portman v. County of Santa Clara, 995 F.2d 898, 904 (9th Cir.1993)). Plaintiffs have failed to show that they have suffered a deprivation of a liberty or property interest protected by the constitution. Accordingly, Defendants' motion to dismiss their procedural due process claim should be granted. This opinion will now turn to Plaintiffs' final federal claim.

3. Free Speech Claims

Plaintiffs allege that after Mr. Baumgardner began to complain about the bills from Ruston that were generated by HZ's work, the Defendants retaliated against them, violating their speech rights. Dkt. 63.

"In recognizing one's protected interest in commenting on government officials' actions, we have stated that it is clear that state action designed to retaliate against and chill political expression strikes at the heart of the First Amendment." CarePartners, LLC v. Lashway, 545 F.3d 867, 877 (9th Cir.2008) (internal citations omitted). Acts of seeking administrative review of government decisions are protected by the right to petition the government. Id.

Mr. Baumgardner's complaints about the size of the bills generated by HZ's work that Ruston sent him were protected political speech. After Mr. Baumgardner received the bill in January of 2007 for around $45,000, he emailed people at HZ and Mayor Transue. Dkts. 66-2, at 3 and 58-3. He had conversations with people at City Hall, and with members of the Town Council about the bill. Dkt. 68 at 13-14. He raised the issue via email and at meetings. Dkt. 68, at 13-14. These actions were sufficient attempts to seek review of a governmental decision to be protected by the First Amendment.

"A plaintiff alleging retaliation for the exercise of constitutionally protected rights must initially show that the protected conduct was a substantial or motivating factor in the defendant's decision." CarePartners, at 877 (internal citations omitted). "[T]he "burden shifts to the defendant to establish that it would have reached the same decision even in the absence of the protected conduct." To meet this burden, a defendant must show by a preponderance of the evidence that it would have reached the same decision; it is insufficient to show merely that it could have reached the same decision." Id.

"The plaintiffs are required, however, to provide more than mere evidence" that the defendants were aware of their expressive conduct in order to establish a genuine material dispute as to whether retaliation was a substantial or motivating factor. Alpha Energy Savers, Inc. v. Hansen, 381 F.3d 917, 929 (2004). In addition, the plaintiffs must: (I) establish proximity in time between the expressive conduct and the allegedly retaliatory actions; (ii) produce evidence that the defendants expressed opposition to the speech, either to him or to others; or (iii) demonstrate that the defendants' proffered explanations for their adverse actions were false and pretextual. Id.

Plaintiffs have failed to show proximity in time between the expressive conduct and the allegedly retaliatory actions or that Defendants' proffered explanations were false and pretextual. Plaintiffs argue that when he complained about the bills, his applications were suddenly "incomplete." Dkt. 63, at 28. The two "incomplete" applications were the application for a grading permit and application for lot segregation. Review of the record shows that they were not complete, in part, because Plaintiffs had not dedicated land for an emergency vehicle access turnaround in compliance with Ordinance 1200. Plaintiffs make no showing that the applications were, in fact, complete. They argue that when Mr. Baumgardner refused to pay, Defendants retaliated against him by refusing to process his other requests. Dkt. 63, at 28. Plaintiffs fail to point which request was not processed because he was complaining about his bills. Moreover, Plaintiff makes no showing that even if Defendants stopped processing his requests that it was because he was complaining about his bills, and not because he was not paying the bills.

As to whether Plaintiffs have shown that Defendants opposed his speech, Plaintiffs allege that after complaining about the first bill of $45,000 in January of 2007, Mr. Baumgardner received more charges— that is he was billed for his billing questions. Dkt. 63, at 27. Plaintiffs have not shown that being billed for billing questions was in retaliation for the complaints. It only shows that the HZ Defendants billed for more work done for Plaintiffs.

Plaintiffs have failed to show that Mr. Baumgardner's complaints about HZ's bills were a substantial or motivating factor behind Defendants actions. Defendants' motions to summarily dismiss Plaintiffs' First Amendment claims should be granted.

E. SUPPLEMENTAL JURISDICTION

Pursuant to 28 U.S.C. § 1367(c), district courts may decline to exercise supplemental jurisdiction over a state law claims if (1) the claims raise novel or complex issues of state law, (2) the state claims substantially predominate over the claim which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction. "While discretion to decline to exercise supplemental jurisdiction over state law claims is triggered by the presence of one of the conditions in § 1367(c), it is informed by the values of economy, convenience, fairness, and comity." Acri v. Varian Associates, Inc., 114 F.3d 999, 1001 (9th Cir.1997) (internal citations omitted).

Here, two of the four conditions in § 1367(c) are present. This case was removed based on 28 U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1367(a) (supplemental jurisdiction). Dkt. 1. All Plaintiffs' federal claims are dismissed by this order. Accordingly, the Court has "dismissed all claims over which it has original jurisdiction," and so has discretion to decline to exercise supplemental jurisdiction over the state law claims under § 1367(c)(3). Moreover, the remaining state claims "raise novel or complex issues of state law" under § 1367(c)(1). For example, in order to determine whether Plaintiffs' negligence claim based on violation of RCW 82.02.020 (the state statute allowing cities to charge "reasonable fees" for land use application review), the undersigned would have to definitely determine whether LUPA applies—a determination for which the state court is uniquely suited. Moreover, the values of economy, convenience, and comity may well be served by this Court's declining to exercise supplemental jurisdiction. See Acri at 1001. State courts have a strong interest in enforcing their own laws. See Carnegie-Mellon University v. Cohill, 484 U.S. 343, 352, 108 S. Ct. 614, 98 L. Ed. 2d 720 (1988).

Although "it is generally within a district court's discretion either to retain jurisdiction to adjudicate the pendent state claims or to remand them to state court," Harrell v. 20th Century Ins. Co., 934 F.2d 203, 205 (9th Cir.1991), in the interest of fairness, the parties should be given an opportunity to be heard on whether the case should be remanded. The parties should be allowed to show cause why the remaining state law claims should not be remanded to Pierce County Superior Court. The parties' responses, if any, should be filed by May 3, 2010. Parties briefs should not exceed four pages. Consideration of the parties' responses to the Order to Show Cause should be noted for May 3, 2010. To the extent Plaintiffs' Motion for Partial Summary Judgment (Dkt. 63) deals with state law claims, it should be renoted for May 3, 2010. To the extent Defendants Huitt-Zollars and Carl Stixrood's Motion for Summary Judgment (Dkt. 57) deals with state law claims, it should be renoted for May 3, 2010. Defendants Town of Ruston and Michael Transue's Motion for Summary Judgment Re: State Claims (Dkt. 65) should be renoted for May 3, 2010. Defendants Huitt-Zollars and Carl Stixrood's Joinder in Ruston and Transue's Motion for Summary Judgment (Dkts. 78 and 79), to the extent these motions apply to state law claims should also be renoted for May 3, 2010.

III. ORDER

Therefore, it is hereby, ORDERED that:

• The Clerk is directed to UNSEAL the pleading entitled "Exhibit 35 to Declaration of Joan K. Mell" in support of Plaintiffs' Motion for Summary Judgment (Dkt. 76);

• Plaintiffs' Motion to Strike Defendants Huitt-Zollars and Carl Stixrood's Editorial Exhibits 1 and A-C (Dkt. 106) is GRANTED;

• Defendants Town of Ruston and Michael Transue's Motion to Strike (Dkt. 95) is GRANTED, IN PART, and DENIED, IN PART, as stated herein;

• Defendants Town of Ruston and Michael Transue's Motion for Summary Judgment Re: Federal Claims (Dkt. 64) is GRANTED;

• Plaintiffs' federal claims are DISMISSED;

• Plaintiffs' Motion for Partial Summary Judgment (Dkt. 63) as it pertains to their federal claims is DENIED and RENOTED to May 3, 2010, as it pertains to state law claims;

• Defendants Huitt-Zollars and Carl Stixrood's Motion for Summary Judgment (Dkt. 57) is GRANTED insofar as it applies to Plaintiffs' federal claims, and RENOTED to May 3, 2010, as it pertains to state law claims;

• Defendants Town of Ruston and Michael Transue's Motion for Summary Judgment Re: State Claims (Dkt. 65) is RENOTED to May 3, 2010;

• Defendants Huitt-Zollars and Carl Stixrood's Joinder in Ruston and Transue's Motion for Summary Judgment (Dkts. 78 and 79) is GRANTED as to Plaintiffs' federal claims and RENOTED to May 3, 2010, as to state law claims

• Parties may show cause, if any they have, why this matter should not be remanded to Pierce County, Washington Superior Court. Responses, if any, should be filed by May 3, 2010, and should not exceed four pages in length.

The Clerk of the Court is instructed to send uncertified copies of this Order to all counsel of record and to any party appearing pro se at said party's last known address.