Hood Canal Sand & Gravel, LLC v. Goldmark

• Decision Date: 26 July 2016
• Docket Number: No. 47655–0–II,47655–0–II
• Citation: 195 Wash.App. 284,381 P.3d 95
• Court: Washington Court of Appeals
• Parties: Hood Canal Sand and Gravel, LLC, a Washington limited liability company, Appellant, v. Peter Goldmark, Washington State Commissioner of Public Lands, and Administrator for the Department of Natural Resources; Washington State Department of Natural Resources; and State of Washington, Respondents.

195 Wash.App. 284

381 P.3d 95

Hood Canal Sand and Gravel, LLC, a Washington limited liability company, Appellant,

v.Peter Goldmark, Washington State Commissioner of Public Lands, and Administrator for the Department of Natural Resources; Washington State Department of Natural Resources; and State of Washington, Respondents.

No. 47655–0–II

Court of Appeals of Washington, Division 2.

July 26, 2016

Duana Theresa Kolouskova, Vicki E. Orrico, Johns Monroe Mitsunaga Kolouskova, PLLC, 11201 SE 8th St., Ste. 120, Bellevue, WA, 98004–6457, for Appellant.

Edward David Callow, Atty. General of Washington, Natural Resources Division, P.O. Box 40100, Olympia, WA, 98504–0100, for Respondents.

Worswick, J.¶ 1 Hood Canal Sand and Gravel LLC (HCSG) appeals the summary judgment dismissal of its claims against the Washington Department of Natural Resources (DNR). HCSG claims that DNR illegally granted the United States Navy an easement over certain tidal "bedlands" in Hood Canal, which easement restricted development on the bedlands.¹ HCSG had hoped to lease those bedlands to build a pier for its own project. The superior court dismissed HCSG's claims against DNR on summary judgment. HCSG argues that the superior court erred because DNR's cross motion for summary judgment suffered procedural flaws and summary judgment was improper on each of HCSG's claims. We disagree and affirm the summary judgment dismissal.

FACTS

¶ 2 HCSG is a Washington company that owned land on the shoreline of Hood Canal. Its land abutted tidelands known as the "Pit-to-Pier Property." Clerk's Papers (CP) at 4. HCSG planned to develop a marine load-out facility for sand and gravel, which involved building a 1,000–foot pier into Hood Canal. To build this pier, HCSG needed to lease, then build on, bedlands owned by DNR.²

¶ 3 In 2003, HCSG applied to Jefferson County for certain permits for the Pit-to-Pier project, including a zoning permit. It also submitted a portion of a Joint Aquatic Resources Permit Application (JARPA) form to DNR and other agencies, seeking to use DNR's state-owned aquatic lands.³

¶ 4 Meanwhile, the United States Navy began working with DNR around 2011 to obtain an easement in Hood Canal to "limit uses [of aquatic lands] that are incompatible with military operating areas and Navy mission in Hood Canal." CP at 620. Among these incompatible uses were "the construction of wharves, piers, docks, floating structures and other construction" in the canal. CP at 620. Apparently, one of the Navy's goals in pursuing this easement was to "block [the] Pit-to-Pier" project. CP at 291. In 2012, the Navy filed a JARPA form seeking to obtain an easement over DNR's bedlands adjacent to HCSG's property.

¶ 5 An initial appraisal valued the easement sought by the Navy at $1,680,000. This sum included the estimated diminution in the value of the bedlands due to the restrictive easement the Navy sought. To calculate this diminution, the appraiser evaluated case studies of other bedlands in Washington burdened by easements. The diminution in the value of the bedlands in the case studies ranged from 30 percent to 85 percent. The appraiser concluded that Case Study A was the most similar to the site, but noted that other case studies were also instructive. Specifically, the appraiser noted that Case Study C, which reflected a much lower diminution in value of bedlands burdened by an easement, involved an easement "which merely imposes an additional layer of protection on a property with very little development potential to begin with." CP at 419. Believing that no single case study was identical to this site, the appraiser estimated that the easement would reduce the bedlands' value by 70 percent, which was the approximate midpoint between the diminutions found in all of the case studies A through F. The appraiser further found that the value of geoduck revenues from the site would be unaffected.

¶ 6 The Navy notified DNR that the Navy was not authorized to acquire land costing more than $750,000 under its "Low–Cost Authority" in 10 USC § 2663(c)(1)(B). CP at 288. The Navy suggested reevaluating the size of the easement or the appraisal so that the cost of the easement would not exceed $750,000. The Navy then reevaluated the appraisal and the case studies. The Navy determined that the most similar case study to the Hood Canal bedlands was Case Study C, which resulted in a 30 percent diminution in value. The Navy reached this conclusion because "the highest and best use of the property changes so little before and after the easement acquisition." CP at 537. The Navy reasoned that regardless of the easement, the bedlands were best used for management of the geoduck harvest and other low-intensity uses, not for the kinds of high-intensity development that the easement would prohibit. Thus, the Navy recommended recalculating the value of the easement with an assumption of a 30 percent diminution in bedlands value. This recalculation resulted in an estimated easement value of $720,000. DNR agreed that this estimate was accurate because the case study it relied on was the "most similar situation to the proposed easement." CP at 611.

¶ 7 The Navy then offered to purchase a 55–year easement over the bedlands for $720,000. DNR accepted the offer and granted the easement in July 2014. The easement achieved the Navy's military goals as well as DNR's conservation goals.

¶ 8 During these negotiations between DNR and the Navy in 2013, HCSG submitted a JARPA form to DNR in the appropriate form. DNR notified HCSG that it was working with another applicant (the Navy) "on an authorization that may preclude your use." CP at 245. The grant of the easement to the Navy ultimately blocked the Pit-to-Pier project.

¶ 10 In August 2014, HCSG filed a complaint in Jefferson County against DNR, the Navy, and individuals associated with both agencies seeking various forms of relief. In an amended complaint, HCSG sought additional relief under federal law. It sought to prove that the federal defendants violated certain federal laws. The Navy removed HCSG's lawsuit to the United States District Court for the Western District of Washington. The district court then granted DNR's Eleventh Amendment motion to dismiss the federal claims against the State due to the State of Washington's sovereign immunity. The district court's ruling stated: HCSG "does not have a 'priority right' to lease the bedlands" because RCW 79.130.010permitted (rather than required) DNR to lease bedlands to abutting landowners. CP at 108.

¶ 11 HCSG refiled its complaint against DNR in Jefferson County Superior Court, and HCSG's claims against the Navy remained in federal court. In the refiled complaint against DNR in Jefferson County, HCSG sought a declaratory judgment that DNR lacked the authority to execute the easement to the Navy. Specifically, it requested a declaratory judgment "that the Deed Easement violates Washington State laws, United States Codes [sic] and the Washington and United States Constitutions and should be deemed and void." CP at 124. It also sought a declaratory judgment that HCSG should have been included as a third party to the easement.

¶ 12 HCSG requested further relief under multiple theories. First, it sought three writs: a statutory writ of prohibition preventing DNR from enforcing its easement, a writ of mandamus requiring DNR to include HCSG as an easement third party, and a constitutional or statutory writ of certiorari declaring that the easement was unlawful and that HCSG should be an easement third party. Second, HCSG sought injunctive relief to restrain DNR and the Navy from enforcing the easement in a way that would interfere with the Pit-to-Pier project. Third, it filed a quiet title claim seeking to establish that it has a "right under state law to lease the bedlands adjacent to its property, and that right takes precedence over" the Navy's claim. CP at 129. It also claimed that DNR was "obligated under state law to offer the bedlands adjacent to" HCSG's land to HCSG before granting the Navy an easement over them. CP at 129. Fourth, HCSG claimed that DNR deprived HCSG of due process. Finally, it argued that it "has a property interest in the bedlands," which interest "includes priority over applications by other parties." CP at 130.

¶ 13 HCSG moved for partial summary judgment, and it noted this motion for a hearing on May 1, 2015. In its motion, HCSG purported to request summary judgment solely on the question whether DNR exceeded its statutory authority to grant the easement to the Navy. But its motion argued at length about other issues related to this question, such as whether DNR obtained full market value for the easement as required by law. It also asserted that "[a]butting property owners have a preferred leasing right." CP at 174–75. In its conclusion, it requested the superior court to (1) issue a declaratory judgment that the grant of the easement was illegal, (2) issue a writ of prohibition under RCW 7.16.290to prohibit DNR from enforcing the easement "as a whole or as against HCSG's Project and Property," or (3) issue a "temporary injunction, permanent injunction, or both, as may be necessary to restrain DNR[ ] from attempting to enforce" the easement. CP at 187.

¶ 14 DNR responded to this motion for summary judgment on April 20, 2015 (11 days before the summary judgment hearing), and in the same document it filed a cross motion for summary judgment. DNR argued that it was entitled to summary judgment because (1) a declaratory judgment could not be granted in a challenge to DNR's administration or application of a statute; (2) a declaratory judgment could not be granted because the Navy was a necessary party; (3) a writ of prohibition or mandamus was not available; and (4) the only avenue for HCSG to pursue judicial review was a constitutional writ of certiorari, which was not appropriate in this case. DNR also argued that its grant of the easement was legal because it had...