Cent. Puget Sound Reg'l Transit Auth. v. Airport Inv. Co.

• Citation: 186 Wash.2d 336,376 P.3d 372
• Decision Date: 04 August 2016
• Docket Number: NO. 91653–5,91653–5
• Court: United States State Supreme Court of Washington
• Parties: Central Puget Sound Regional Transit Authority, a regional transit authority, d/b/a Sound Transit, Respondent, v. Airport Investment Company, a Washington corporation, d/b/a Hampton Inn, Petitioner, and Horizon Air Industries, Inc., a Washington corporation; IBEW 77 International Boulevard, LLC, a Washington limited liability company; JPMorgan Chase Bank, N.A., f/k/a The Chase Manhattan Bank, as Trustee for the Registered Holders of Prudential Securities Financing Corporation Commercial Mortgage Pass–Through Certificates, Series 199–C2; King County; and All Unknown Owners and Unknown Tenants, Defendants.

186 Wash.2d 336

376 P.3d 372

Central Puget Sound Regional Transit Authority, a regional transit authority, d/b/a Sound Transit, Respondent

v.Airport Investment Company, a Washington corporation, d/b/a Hampton Inn, PetitionerandHorizon Air Industries, Inc., a Washington corporation; IBEW 77 International Boulevard, LLC, a Washington limited liability company; JPMorgan Chase Bank, N.A., f/k/a The Chase Manhattan Bank, as Trustee for the Registered Holders of Prudential Securities Financing Corporation Commercial Mortgage Pass–Through Certificates, Series 199–C2; King County; and All Unknown Owners and Unknown Tenants, Defendants.

NO. 91653–5

Supreme Court of Washington, EN BANC.

Argued January 21, 2016

Filed August 04, 2016

Averil Budge Rothrock, Dennis J. Dunphy, Christopher Holm Howard, Schwabe Williamson & Wyatt PC, 1420 5th Avenue Suite 3400, Seattle, WA, 98101–4010, Joaquin M. Hernandez, BE Meyers & Co. Inc., 9461 Willows Road NE, Redmond, WA, 98052–3577, Counsel for Petitioner.

Ibew 77 International Boulevard, LLC (Appearing Pro Se), 19415 International Boulevard, Seatac, WA, 98188, Margaret A. Pahl, Office of the Prosecuting Attorney, 516 3rd Avenue Room W400, Seattle, WA, 98104–2385, Counsel for Defendants.

Marisa L. Velling, Matthew R. Hansen, Estera Felice Gordon, Jacqualyne Jean Walker, Miller Nash Graham & Dunn LLP, 2801 Alaskan Way Suite 300, Pier 70, Seattle, WA, 98121–1128, Counsel for Respondent.

STEPHENS

, J.

¶ 1 Central Puget Sound Regional Transit Authority (Sound Transit) condemned property owned by Airport Investment Company (AIC) in order to secure easements to construct and operate an elevated light rail. The parties could not agree on the amount of just compensation for the taking, so the matter proceeded to trial. AIC contends it is statutorily entitled to attorney fees because Sound Transit failed to make a valid settlement offer 30 days before trial. Specifically, AIC argues that the 30-day offer Sound Transit made did not reflect the reduced temporary construction easement it ultimately obtained, making the offer ineffective or resulting in a total abandonment of the condemnation. AIC also seeks a new trial, alleging the trial court erroneously allowed Sound Transit's counsel to question AIC's president, Sandra Oh, about the taking valuation of a nontestifying appraisal expert.

¶ 2 We affirm the Court of Appeals. A condemnee is entitled to attorney fees under RCW 8.25.070(l)(a)

only “[i]f [the] condemnor fails to make any written offer in settlement” at least 30 days before trial. Sound Transit made a timely settlement offer, which was not rendered ineffective by subsequent revisions to reduce the impact of its temporary construction easement. AIC's evidentiary objection is also unavailing: the trial court properly admitted Oh's testimony under ER 801(d)(2) as an admission of a party opponent.

FACTS AND PROCEDURAL HISTORY

¶ 3 Sound Transit is a regional transit organization authorized to construct and operate a high-capacity electric light rail system (Light Rail). RCW 81.112.010

; Clerk's Papers (CP) at 1–2. Pursuant to its statutory authority to condemn real property to construct the Light Rail, Sound Transit sought easements over property owned by AIC. The property consists of approximately 112,626 square feet of land area and is developed with a 4-story, 130-room hotel constructed in 1988.

¶ 4 In the condemnation action, Sound Transit sought to take a portion of the property for a permanent guideway easement (PGE) to construct the Light Rail along the property's western boundary. It also sought a temporary construction easement (TCE), which afforded Sound Transit a nonexclusive, three-year time period to construct the Light Rail and encumbered up to 3,882 square feet of the property.¹ Except when Sound Transit required exclusive occupancy, the TCE afforded AIC the right to use the TCE area for any purpose that did not interfere with Sound Transit's construction activities.

¶ 5 In May 2012, Sound Transit sent AIC a valuation offer of $142,300 for both easements. This offer was based on an initial valuation by its appraiser of $79,825 for the PGE, $46,600 for the TCE, and $15,875 for improvements. Sound Transit advised AIC that it had the right to obtain its own appraisal at Sound Transit's expense. Id. AIC exercised this right, and its appraiser valued the easements at $485,000. AIC submitted its appraisal to Sound Transit in July 2012 in a letter expressing its belief that it was entitled to $485,000 for the easements. Suppl. Br. of Resp't Sound Transit, App. A at 1. Rejecting AIC's valuation, Sound Transit asked AIC to reconsider its original offer.

¶ 6 On June 14, 2013, 30 days before trial, Sound Transit made a written settlement offer to AIC of $463,500. The offer was for both the PGE and the TCE, and was marked “For Settlement Purposes Only .” CP at 1334. The offer provided that it “remain[ed] open until accepted, rejected, or until withdrawn by Sound Transit” and was “made subject to Sound Transit's reservation of its right to re-evaluate this offer and submit a revised 30-day offer if the pending trial date is continued.” Id. The parties could not agree on the amount of just compensation due, and the matter proceeded to trial.

¶ 7 On July 1, 2013, Sound Transit informed AIC that it would change the configuration of the TCE because it no longer needed to relocate the property's driveway to construct the Light Rail.² That same day, Sound Transit provided AIC with an updated parcel map and updated right-of-way plan showing the change. The modification reduced the total TCE area by approximately 1,000 square feet. Suppl. Br. of Resp't Sound Transit at 3. These changes to the TCE were designed to ameliorate AIC's loss of business costs from the property's use as a parking lot. Notwithstanding the language in the TCE, Sound Transit communicated to AIC that its construction would require only sporadic use of the TCE area during the three-year period.³ Sound Transit did not revoke or reduce its settlement offer despite the reduced easement.

¶ 8 AIC then filed a motion in limine, requesting that the trial court exclude any evidence that Sound Transit intended to use the TCE area for less than the entire three-year term. At oral argument on the motion, the trial court agreed with AIC that if Sound Transit had the right to exclusive use of the TCE area for the entire three-year term, it could not tell the jury that its actual use would be less. The trial court granted AIC's motion, “provided, however, this ruling ... does not preclude [Sound Transit] from submitting a revised form of [TCE] providing for the actual time of use of the easement area.” CP at 904.⁴

¶ 9 On the first day of trial, Sound Transit withdrew its 30-day settlement offer. With leave of the trial court, Sound Transit provided AIC with revised TCE language regarding time of use. This occurred after jury selection, hut before opening statements. Although the revised TCE still provided a three-year easement term, it limited Sound Transit's exclusive use of the TCE to a maximum of 160 nonconsecutive days.

¶ 10 AIC also moved in limine to exclude evidence of its July 2012 valuation letter stating that it was entitled to $485,000 for the easements. Sound Transit responded that it had no objection to AIC's motion so long as Sound Transit's first appraisal would also be excluded on the grounds that both parties' appraisals were for purposes of settlement negotiations. Finding that neither initial appraisal letter constituted a settlement offer under ER 408

(and also rejecting AIC's claim of work product privilege), the trial court ruled that AIC and Sound Transit could “figure out if you want to get into this history [of the first appraisals]. If one of you does, the other one can.” Verbatim Report of Proceedings (VRP) (July 16, 2013) at 53–54. Accordingly, the trial court did not “grant[ ] this motion on either side.” Id. at 55.

¶ 11 At trial, Sound Transit's appraisal expert, Murray Brackett, testified that the PGE was worth $113,169, the TCE was worth $61,503, and AIC was not entitled to severance damages. VRP (July 24, 2013) at 1072, 1094. AIC's appraisal expert, Scott Biethan, testified that the PGE was worth $210,000, the TCE was worth $32,124, and AIC was entitled to $1,457,000 for diminished value, totaling $1,699,124 in just compensation due. VRP (July 29, 2013) at 1502–03.

¶ 12 During its case in chief, Sound Transit called AIC president, Oh, to testify about the July 2012 valuation letter. Before doing so, Sound Transit inquired about possible avenues to introduce the letter into evidence. The court advised, “I think to get this document in you need to lay a foundation. I don't know how to be more clear than that. I don't read the case law as saying that apparent authority is enough to introduce a party admission. The whole policy of the rule here is it needs to be the party's statement.... ” VRP (July 25, 2013) at 1190.

¶ 13 When Sound Transit began to question Oh about the contents of AIC's valuation letter, the trial court excused the jury to voir dire the witness:

THE COURT: Was there a belief that you were entitled to $485,000 for just compensation?

MS. OH: Whatever was in the appraisal and what the appraiser came up with with—

THE COURT: Is that an accurate statement, Ms. Oh? Did you believe you're entitled to $485,000? When you said it in July, was that an accurate statement about what your belief was?

MS. OH: My belief was whatever the appraiser said was—

THE COURT: Yes. Focus on the letter and die date and tell me if this was your belief.

MS. OH: Well, that was my belief from the information from the appraiser.

THE COURT: Okay. Thank you. May I have this?

MS. OH: Oh, sorry.

THE COURT: I'm going to let you question her about this letter—

....

THE COURT: ... I do think it's clear that this is a statement of something that she believed at the time and you can bring it in as her party admission.

Id. at 1202–03.

¶ 14 AIC's counsel...