Northwest Land Matters Update - August 2017

July 26, 2017

Culvert Treaty Fishing Rights Litigation: While the Ninth Circuit Denies Rehearing; Does the Dissent Provide Passage to the Supreme Court?

Recently, a divided Ninth Circuit Court of Appeals denied the State of Washington’s (“State”) petitions for rehearing of its prior order upholding an injunction requiring the State to remove or repair State-owned culverts blocking salmon passage to spawning habitat as violative of Tribal Treaty fishing rights. In a strongly worded dissent, nine judges criticized the denial of rehearing en banc, and faulted the panel for relying upon a “heretofore unknown duty” in the Stevens Treaties to impose an obligation to create additional salmon habitat at a significant and purportedly unjustified cost. While it is unclear whether the State will petition the U.S. Supreme Court to review the decision, the implications of the panel’s decision and the vigorous dissent both provide potential justification for seeking the Court’s review. On many accounts, this appears far from settled.

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IN BRIEF 

SCOTUS Rules on Regulatory Takings

The Supreme Court of the United States recently issued a ruling that has important implications for owners seeking compensation for regulatory takings of real property. Both the United States and Washington Constitutions require payment of “just compensation” for the government’s taking of private property. Courts have consistently recognized that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking, for which compensation is due. To establish a taking, landowners must show that they have been deprived of all economically beneficial use of their property. This case of Murr et al. v. Wisconsin et al. further defined the unit of property against which the deprivation of economic beneficial use must be assessed. In Murr, the plaintiffs owned two adjacent lots that were subject to a local regulation that considered them merged into a single site for purposes of development. Plaintiffs wanted to develop both lots, and claimed that the regulation deprived them of all beneficial use of one of the lots. The Court held that the combined parcel, not the individual lot rendered undevelopable by the regulation, was the appropriate parcel for determining whether a regulatory taking had occurred. Because the plaintiffs had use of the combined parcel, no taking had occurred.

Court Extends LUPA to Latecomer Fee Challenges

In Cave Properties v. Brainbridge Island a developer obtained an agreement from the City, under the Municipal Water and Sewer Facilities Act, RCW 35.91.020(2), which required that neighbors who subsequently connected to the water system he installed pay a “latecomer fee” to partially reimburse the developer. Cave Properties, one such neighbor, challenged the agreement under the Land Use Petition Act (LUPA), chapter 36.70C RCW. The trial court dismissed the LUPA petition finding that LUPA was not the proper means to challenge a latecomers agreement. The Court of Appeals reversed, holding that challenges to a utility latecomer reimbursement agreement must be filed under LUPA. The appeals court agreed with the developer that a latecomers agreement was not a “Land Use Decision” under subsection (a) of RCW 36.70C.020(2), which defines that term, because the developer was not required to enter into the reimbursement agreement. However, the Court held that a reimbursement agreement did meet the second prong of the Land Use Decision definition in subsection (b) as a “(1) interpretative or declaratory decision, (2) regarding the application to a specific property, (3) of … rules regulating the . . . development. . . or use of real property.” Most land use practitioners viewed subsection (2)(b) as being applicable only to challenging formal land use interpretations for a specific property. Now, the Court has broadened this statutory provision to capture latecomer agreements that impose latecomer fees on other properties. This case could open up the door to challenges under LUPA for other types of “declaratory” land use decisions, or new defensive arguments seeking to preclude challenges that have not be filed under LUPA’s strict 21 day appeal period.

Supreme Court Rules on Agencies' Use of Executive Session

The "minimum price" exception under the Open Public Meetings Act (OPMA, RCW 42.30.110(1)(b)) allows public agencies to use executive session when selling or leasing property, to consider only the lowest acceptable price for the sale or lease. In Columbia Riverkeeper v. Port of Vancouver, the Court addressed the breadth of discussions that can permissibly occur during executive session under RCW 42.30.110(1)(b) when considering a proposed sale or lease of public lands. The Port of Vancouver argued in this case that the "minimum price" exception should be broadly construed to allow discussion within executive session of various factors that commonly influence the price at which public agencies will offer real estate for sale or lease. The Port further defended its use of executive session to discuss key deal factors based on the need to protect the Port's "negotiating power" and avoid "poaching" from competing ports vying for similar tenants. The Court rejected the Port's interpretation of this OPMA exception, ruling that general discussions of factors that influence minimum price decisions must first occur in open public session. Thereafter, those factors may be referenced in executive session solely to establish the agency's minimum price. For public agencies that commonly use executive session to consider the sale or lease of public property, this ruling may significantly change the extent of discussions that will be allowed outside of agencies' open public session.

State Supreme Court Denies Reconsideration and Attempts to Clarify its Decision in the Municipal Stormwater Permit Case

Washington’s “vested rights doctrine” (embodied in RCW 19.27.095(1) and RCW 58.17.033(1)) entitles developers to have a land development proposal processed under the “zoning or other land use control ordinances” in effect at the time a complete building permit application is filed, regardless of subsequent changes in zoning or other land use regulations. On May 2, 2017, the Washington State Supreme Court reaffirmed its decision in Snohomish County v. Pollution Control Hearings Board and Washington State Department of Ecology, in which it held that the vested rights doctrine does not apply to stormwater regulations adopted under Ecology’s 2013-2018 Municipal Stormwater Permit. Under the terms of Ecology’s Permit, projects with application dates prior to June 30, 2015 (Phase I jurisdictions) or January 1, 2017 (Phase II jurisdictions) may still develop under prior stormwater regulations, so long as they start construction by June 30, 2020 (Phase I) or January 1, 2022 (Phase II).

Both Snohomish County and King County filed motions for reconsideration of the original decision, in which the Court had extensively analyzed the meaning of “land use control ordinances” under vesting statutes in the state building code (RCW 19.27) and subdivision code (RCW 58.17). That decision implied that local development regulations adopted pursuant to state or federal mandate are not “land use control ordinances” for purposes of vesting. Taken to its logical extreme, the Court’s rationale could extend to regulations adopted pursuant to the Growth Management Act and the state building code, swallowing the vested rights doctrine whole. While denying the counties’ motions for reconsideration, the Court issued an order amending the original opinion stating, in footnote, that the court’s conclusion “should not be interpreted to suggest that all federal- and state-directed environmental laws are exempt from vesting.” The Court also eliminated and revised portions of its original decision that appeared to preclude vesting for more than just “certain state-mandated environmental laws.” Nevertheless, the amended decision preserves the Court’s distancing of SEPA conditions from the statutory vested rights doctrine, as well as a conclusion that the doctrine of finality of land use decisions is not violated in this case. The narrow holding of this case is limited to stormwater regulations implemented under the NPDES program; however, the Court’s analysis supports further narrowing of the vested rights doctrine to the extent that land use regulations are based on federal or state environmental mandate.

Supreme Court Ruling Addresses Possession During Foreclosure

In the recent case of Jordan v. Nationstar, 185 Wn.2d 876 (Wash. 2016), the Washington Supreme Court was asked by the US District Court for the Eastern District of Washington, to address the question whether under Washington law, a clause in a deed of trust that allows a lender to enter, maintain, and secure a borrower’s property before foreclosure, is enforceable. The Court held that it was not enforceable because Washington law, at RCW 7.28.230, specifically prohibits a lender from recovering “possession” of property without a foreclosure and sale according to law. The Court determined that “possession” of property generally means the exertion of a certain degree of physical control over the property. Here, because Nationstar had drilled the lock on the front door of Ms. Jordan’s house and installed a new lock, thereby preventing her access to her home, Nationstar had taken “possession” of the property in violation of the statute. The case has far-reaching impact because many lenders use the same process prior to the completion of a foreclosure sale. In addition, Ms. Jordan’s lawsuit was brought as a class action on behalf of more than 5,000 Washington homeowners who were locked out of their homes by Nationstar prior to the completion of a foreclosure sale.

The ruling was challenged by the Federal Housing Finance Agency (FHFA), which intervened in the case, claiming that Federal Law preempts applicable state law, and that under The Housing and Economic Recovery Act of 2008 (HERA), pre-foreclosure interior inspections of property are allowed. Since those inspections would violate Washington law, the FHFA claimed that the HERA conflicts and therefore Washington law is unenforceable. The US District Court found the argument unpersuasive and held that state law is not preempted. FHFA is also challenging the class certification of the plaintiffs, and this case is continuing through the federal courts.

Shared Trees and How Not to Trim Them

In Herring v. Pelayo, the Washington Court of Appeals held “. . . that where a tree stands on a common property line, the common owners of the tree may lawfully trim vegetation overhanging their property but not in a manner that the common owner knows will kill the tree.” The case involved a boundary tree which the Court characterized as the common property of both adjoining land owners. The Herrings had trimmed branches of the tree overhanging their property, leaving the tree in a condition that the Pelayos deemed to be unbalanced and a danger to their home and safety. The Pelayos then removed all the remaining branches from the tree, knowing that the tree would die. Neither owner consulted the other before cutting on the tree.

After the tree died, a lawsuit was brought by the Herrings against the Pelayos, claiming damages for timber trespass. The trial court found for the Herrings. The Court of Appeals affirmed the trial court’s decision, characterizing the issue as one of first impression. It recognized that the result in the case was to establish that, under existing law, a property owner has greater rights to trim the roots and branches of a tree that has its trunk wholly on the neighboring property, than it does to trim a tree standing over a common property line. The Court noted that this conclusion is the result of applying a statute to a situation that was probably not contemplated when the statute was drafted. It also noted that, because the Pelayos did not claim that Herrings also committed a timber trespass by their original removal of branches, the Court did not address whether Herrings also were liable for timber trespass resulting from the death of the tree.


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