City of Bellevue v. Best Buy Stores, LP

• Decision Date: 21 April 2014
• Docket Number: C/w No. 70856-2-I,No. 70855-4-I,70855-4-I
• Court: Washington Court of Appeals
• Parties: CITY OF BELLEVUE, a municipal corporation, Respondent, v. BEST BUY STORES, LP, a Virginia limited partnership, Appellant, HD DEVELOPMENT OF MARYLAND, INC., a Maryland corporation; 457 120th AVENUE NE, LLC, a Delaware limited liability company; HOME DEPOT USA, INC., a Delaware corporation; THRIVENT FINANCIAL FOR LUTHERANS, a Wisconsin corporation; PUGET SOUND ENERGY, INC., a Washington corporation; KING COUNTY; and DOES 1-10, Defendants.

CITY OF BELLEVUE, a municipal corporation, Respondent, v. BEST BUY STORES, LP, a Virginia limited partnership, Appellant,

HD DEVELOPMENT OF MARYLAND, INC., a Maryland corporation;

457 120th AVENUE NE, LLC, a Delaware limited liability company;

HOME DEPOT USA, INC., a Delaware corporation;

THRIVENT FINANCIAL FOR LUTHERANS,

a Wisconsin corporation; PUGET SOUND ENERGY, INC.,

a Washington corporation; KING COUNTY; and DOES 1-10, Defendants.

No. 70855-4-I

C/w No. 70856-2-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

FILED: April 21, 2014

UNPUBLISHED OPINION

DWYER, J. —

Although the courts may well determine from the evidence whether a project is for the public benefit, convenience or necessity, they are not trained or equipped to pick the better route, much less design and engineer the project. Thus, the rule that leaves these decisions to the administrative agencies is a sensible one consistent with the idea that the public's business be carried out with reasonable efficiency and dispatch by those possessing the superior talents to accomplish the public purposes.¹

In this case, the City of Bellevue brought a condemnation action over two parcels of land in order to extend NE 4th Street from its current terminus at 116th Avenue NE to a new terminus at 120th Avenue NE. The proposed design calls for a five-lane road. Best Buy Stores, LP (Best Buy), the current lessor of one of the parcels, opposes the condemnation action, contending that the to-be-condemned property is not necessary to fulfill a public use. Specifically, Best Buy contends that a five-lane road is not necessary and that a four-lane road would suffice.

Best Buy fails to demonstrate that Bellevue's determination of public necessity was arbitrary and capricious such that it amounted to constructive fraud. Because it is not our role to second-guess Bellevue's choice of road design, we affirm.

I

The property at issue in this dispute is located at 457 120th Avenue NE in Bellevue. The property is owned by 457 120th Avenue NE, LLC (Landlord) and leased by Best Buy. Best Buy operates a retail store at that location. Immediately to the south is a parcel of land owned by HD Development of Maryland, Inc. (Home Depot), and occupied by a Home Depot retail store.

In 2008, Bellevue began planning for an extension of NE 4th Street from its current terminus at 116th Avenue NE to a new terminus at 120th Avenue NE. The road extension was part of a broader project known as the Mobility and Infrastructure (M&l) Initiative, which "was formed to address recent growth and planned development in the Downtown Bellevue, Bel-Red, and Wilburton areas."Bellevue believed that the NE 4th Street extension would "provide an alternate to and relieve congestion at key intersections including NE 8th Street at 112th Avenue NE and NE 8th Street at 116th Avenue NE," and that it would "enhance travel time and mobility options."

The idea of extending NE 4th Street was not a new one. Previously, in 2006, KG Investments² had approached Bellevue about support for its development plans. KG Investments requested that Bellevue commit to condemning property for an extension of NE 4th Street through the properties occupied by Best Buy and Home Depot. As part of its request, KG Investments offered to fund the project. However, Bellevue declined KG Investments' offer.

From 2008 to 2012, the city council "reviewed considerable community input and undertook substantial community involvement" in relation to the M&l Initiative. Specifically, the city council "conducted three 'Open Houses' in 2010," had "multiple meetings with property owners and tenants," and discussed the M&l Initiative at 28 open public meetings.

The city council initially reviewed seven alternative designs for the NE 4th Street extension. Two designs were rejected because of their substantial impacts on Best Buy. After choosing one of the seven designs, the city council further considered three distinct modifications to that design. Ultimately, in April 2010, the city council selected a five-lane design that would require the demolition of 10,000 square feet of the Best Buy retail store. This design wasselected because

it impacted the least number of parcels, allowed for the ability to modify the existing structure for continued retail use, was the least overall cost compared to other alternatives considered at the time, was compatible with the Wilburton Village land use vision, and the community preferred the location where NE 4^th would intersect with 120^th Avenue NE.

Unsurprisingly, Best Buy objected to the probable demolition of a part of its store. Best Buy wrote seven letters and met with Bellevue representatives on 20 separate occasions since 2010, voicing its objections. On March 5, 2012, counsel for Best Buy wrote a letter to Bellevue stating, "Under no circumstances will Best Buy consent to the taking of its property for an unnecessary road lane." Best Buy's legal challenges to the proposed condemnation demonstrate the seriousness of its commitment to this statement. According to the declaration of Assistant City Attorney Monica Buck, Best Buy has "[a]ppealed the action of the City Council authorizing execution of a consultant agreement to complete final design and proposed plans," "[a]ppealed the City's threshold determination issued under the State Environmental Policy Act" to Bellevue's hearing examiner, "[f]iled a Request for Reconsideration of the Hearing Examiner's decision on the SEPA Appeal," "[f]iled with the King County Superior Court an appeal of the Hearing Examiner's decision under the Land Use Petition Act," "[f]iled an appeal of the Critical Areas Land Use Permit ("CALUP Appeal") issued by the Development Services Director for the NE 4th Street Extension Project" to the hearing examiner, and "[f]iled with the Hearing Examiner a Request for Reconsideration of the decision on the CALUP Appeal," all in addition to thisappeal. Meanwhile, Best Buy was aware that Bellevue had obtained grant funding that would be jeopardized should Bellevue not begin the project by a certain date.

On February 13, 2012, Ron Kessack, Bellevue Assistant Director of Capital Program Services, discussed a possible alternative four-lane road design with the city council. Kessack informed the council that the proposed design "would eliminate one of the westbound lanes up to the point just past Best Buy." Kessack stated that "right now we're looking at it and saying, you know, it's likely we don't [need the second westbound lane]. We do . . . want to run numbers on it and make sure and proof it out." One of the council members asked Kessack, "We're going to have more functionality if we have two westbound lanes, wouldn't we?" to which Kessack responded, "There's more wiggle room certainly."

In April 2012, counsel for Bellevue corresponded with Best Buy regarding a possible agreement between the parties. The proposed agreement incorporated a four-lane design similar to the one previously discussed by Kessack. The four-lane design narrowed the proposed road from 57 feet 3 inches to 42 feet 3 inches, and preserved an additional 2,000 square feet of the Best Buy retail store. However, because compensation for condemnation would be payable to the owner of the property, the Landlord needed to approve the agreement as well. Best Buy never obtained the Landlord's approval. The city council thus proceeded with the five-lane design it had previously adopted.

On February 4, 2013, the city council passed Ordinance No. 6098, authorizing the condemnation of property necessary for the NE 4th Streetextension. Therein, the council declared that it "finds construction of the Project to be a public use" and "specifically finds construction of the Project to be necessary, and in the best interests of the citizens." The ordinance also included legal descriptions of the property (hereinafter "take property") to be condemned for the project.

On April 29, 2013, Bellevue filed a petition in eminent domain to condemn the portion of the take property owned by Home Depot. Best Buy was named as a party to this action due to a sewer easement and a maintenance agreement it has with Home Depot. On May 6, Bellevue filed a petition in eminent domain to condemn the portion of the take property owned by the Landlord. The parties moved to consolidate the petitions for the purpose of a hearing on public use and necessity, which the trial court granted.

On July 23, 2013, Bellevue moved for an order adjudicating public use and necessity. Only Best Buy opposed the motion. Best Buy moved to present live testimony at the hearing. The trial court denied the motion, ruling that Best Buy presented no issues that might necessitate or benefit from live testimony.

At the hearing, Best Buy contended that a fifth lane was not necessary because four lanes would suffice. Best Buy also argued that Bellevue's decision to build a five-lane road was motivated by a desire to oust Best Buy from the land, and was done in collusion with the Landlord.

The trial court rejected all of Best Buy's arguments. On August 7, 2013, the trial court issued its findings of fact and conclusions of law. Therein, the trial court decreed:

1. The land, improvements, and property rights described as the Take Property in these Petitions in Eminent Domain will be taken for the public use of public street improvements for the NE 4^th Street Extension Project, as more specifically described in Finding of Fact No. 5.

2. The Take Property as described in these Petitions in Eminent Domain is necessary for the implementation of the public use of the NE 4^th Street Extension Project.

The trial court also issued a supplemental order explaining its reasoning. With respect to the issue of public use, the trial court stated, "It is beyond dispute that the use to which the property is to be put (as a public thoroughfare) is a public use." With respect to the issue of public necessity, the trial court had four responses to Best Buy's...