City of Puyallup v. Hogan

• Decision Date: 16 May 2012
• Docket Number: No. 41017–6–II.
• Citation: City of Puyallup v. Hogan, 277 P.3d 49, 168 Wash.App. 406 (Wash. App. 2012)
• Court: Washington Court of Appeals
• Parties: CITY OF PUYALLUP, a municipal corporation, Plaintiff, v. Carl R. HOGAN, a married man, as his separate estate; Carl R. Hogan and Jane Doe Hogan, husband and wife, and the marital community composed thereof; Qwest Corporation, a Colorado corporation, successor in interest to Pacific Northwest Bell Telephone Company, a Washington corporation; Puget Sound Energy, Inc., a Washington corporation, on its own behalf and as successor in interest to Puget Sound Power & Light Company, a Washington corporation; Fruitland Mutual Water Company, a Washington nonprofit corporation; Kitsap Bank, a Washington corporation; State of Washington; Pierce County; Bank of America National Trust and Savings Association; Bank of America, N.A.; Pay'n Save Corporation, a Washington corporation; Randall W. Larson and Helen Larson, husband and wife, and the marital community composed thereof; B. Craig Larson, a single man; Keybank National Association, successor in interest to Puget Sound National Bank, a national banking association; Tandy Corporation, a Delaware corporation; Super Valu Stores, Inc., a Delaware corporation; McDonald's Corporation, a Delaware corporation; Aaron Brothers, Inc., a Delaware corporation; Borders, Inc., a Colorado corporation; Starbucks Corporation, a Washington corporation; Jamba Juice Company, a California corporation; Ritz Camera Centers, Inc., a Delaware corporation, Appellants/Cross Respondents, Borders, Inc., Respondent/Cross Appellant.

168 Wash.App. 406

277 P.3d 49

CITY OF PUYALLUP, a municipal corporation, Plaintiff,

v.Carl R. HOGAN, a married man, as his separate estate; Carl R. Hogan and Jane Doe Hogan, husband and wife, and the marital community composed thereof; Qwest Corporation, a Colorado corporation, successor in interest to Pacific Northwest Bell Telephone Company, a Washington corporation; Puget Sound Energy, Inc., a Washington corporation, on its own behalf and as successor in interest to Puget Sound Power & Light Company, a Washington corporation; Fruitland Mutual Water Company, a Washington nonprofit corporation; Kitsap Bank, a Washington corporation; State of Washington; Pierce County; Bank of America National Trust and Savings Association; Bank of America, N.A.; Pay'n Save Corporation, a Washington corporation; Randall W. Larson and Helen Larson, husband and wife, and the marital community composed thereof; B. Craig Larson, a single man; Keybank National Association, successor in interest to Puget Sound National Bank, a national banking association; Tandy Corporation, a Delaware corporation; Super Valu Stores, Inc., a Delaware corporation; McDonald's Corporation, a Delaware corporation; Aaron Brothers, Inc., a Delaware corporation; Borders, Inc., a Colorado corporation; Starbucks Corporation, a Washington corporation; Jamba Juice Company, a California corporation; Ritz Camera Centers, Inc., a Delaware corporation, Appellants/Cross Respondents,Borders, Inc., Respondent/Cross Appellant.

No. 41017–6–II.

Court of Appeals of Washington, Division 2.

May 16, 2012.

Michael Maurice Fleming, Janis G. White, Ryan P. McBride, Lane Powell PC, Seattle, WA, for Respondent.

G. Perrin Walker, Daniel C. Montopoli, Attorney at Law, Scott David Winship, Vandeberg Johnson & Gandara, Tacoma, WA, for Appellant/Cross–Respondent.

WORSWICK, A.C.J.

[168 Wash.App. 409]¶ 1 The City of Puyallup condemned a small portion of Carl Hogan's shopping center (Center) for a road construction project that will significantly reduce access to the Center.After a jury awarded Hogan over $5,150,000 in just compensation for the taking, the Center's anchor tenant, Borders, petitioned the trial court for apportionment of that award.The trial court awarded $918,129.18 to Borders in a bench apportionment trial.Hogan appeals, arguing that the trial court erred in (1) denying summary judgment because Borders waived its right to apportionment, (2) calculating Borders' award, (3) exercising its equitable discretion to increase Borders' apportioned award, and (4) awarding Borders prejudgment interest.Borders cross appeals, arguing that the trial court erred in suspending postjudgment interest.We affirm the trial court on summary judgment, apportionment, and prejudgment interest but reverse the order suspending postjudgment interest.

FACTS

¶ 2 Borders entered a commercial lease with Hogan for space in the Center in 2000.¹The lease included an initial 15–year term and further included five successive five-year options to renew.Article 22 in the lease addressed eminent domain, stating in pertinent part:

22.Eminent Domain

(a)Demised Premises/Ingress and Egress.If (i) any portion of the demised premises is expropriated, or (ii) any point of ingress and egress to the public roadways ... is materially impaired by a public or quasi-public authority ... so as to render, in [Borders'] sole reasonable opinion, the demised premises unsuitable for the operation of [Borders'] business in the normal course, then [Borders] shall have the option to terminate this lease....During any expropriation or impairment, regardless of the length of time of such expropriation or impairment ... or whether or not this Lease is terminated as a result of such expropriation or impairment, [Hogan] shall endeavor to provide a reasonable alternative to the impaired point of ingress and egress for the duration of any such expropriation or impairment.

....

(d)Termination.If this Lease is terminated pursuant to this Article 22, then any Rent paid in advance under this Lease shall be refunded to [Borders], and [Borders] shall have an additional sixty (60) days following the termination date within which to remove [Borders'] property from the demised premises;provided, however, that Rent shall be adjusted from and after the date of such expropriation in proportion to the portion of the demised premises in which [Borders] elects to continue operating after such expropriation occurs.If at the time of any such termination[Borders] has any unamortized expenditures that [Borders] may have made at [Borders'] cost on account of any improvements, alterations, or changes to the demised premises, then [Hogan] shall assign to [Borders] that portion of any award payable as a result of such expropriation as shall equal the unamortized portion of [Borders'] expenditures.Such unamortized portion of [Borders'] expenditures shall be determined by multiplying such expenditures by a fraction, the numerator of which shall be the number of remaining years of the Lease term at the time of such expropriation, and the denominator of which shall be the number of remaining years of the Lease term at the time such expenditures shall have been made, plus the number of years for which the Lease term has been subsequently extended; provided, however, [Borders] shall have such right to share in a condemnation award only if the award for such unamortized expenditures is made by the expropriating authority in addition to the award for the land, building and other improvements (or portions thereof) comprising the demised premises, although [Borders'] right to receive compensation for damages or to share in any award shall not be affected in any manner hereby if said compensation, damages or award is made by reason of the expropriation of any land or buildings constructed, made or owned by [Borders].

Clerk's Papers(CP)at 129–30(emphasis added).

¶ 3 In 2005, Puyallup exercised its powers of eminent domain and began a condemnation proceeding to take a portion of the Center in order to extend 39th Avenue SE.This construction will eliminate the Center's primary entrance and, thus, decrease access to the Center.

¶ 4 Puyallup and Hogan entered an agreed order of immediate possession and use with the trial court, setting the taking date as July 11, 2007 for just compensation purposes.²The trial court bifurcated the condemnation proceedings.A jury determined the total amount of just compensation for the taking and the trial court then apportioned that award between Hogan and Borders.

¶ 5 Hogan requested Borders' assistance during the trial's first phase, so that the damage to Borders' leasehold would be included in the total just compensation award.Borders fully cooperated with Hogan.Hogan presented evidence that the road project and the diminished access to Borders would devastate the Center.Hogan argued that the total damages to the center were $11,900,000.But, the jury awarded $5,150,000 for the taking.Puyallup satisfied its judgment in full and ended its involvement in the case.Hogan paid $936,835 into the trial court registry for apportionment among the Center's tenants.

¶ 6 Borders thereafter filed a notice of claim to share in Hogan's just compensation award for diminished access to the Center.Hogan moved for summary judgment dismissing Borders' claim, arguing that, under the lease, Borders had waived its right to apportionment.Hogan argued that Borders could have only participated in apportionment if (a) it had terminated its lease under Article 22; or if (b) Puyallup had made a separate award for Borders' unamortized construction expenses, if any, and if that separate award arose from a taking of land or buildings Borders constructed, made, or owned.

¶ 7The trial court disagreed, stating, “[I]t is not clear ... that this lease ... set out the only possible mechanisms by which Borders can have part of the [just compensation] award apportioned to them.”Report of Proceedings (RP)(Feb. 19, 2010)at 23.The trial court denied Hogan's motion, but allowed the parties to submit additional briefing on Borders' rights to apportionment if Borders did not terminate its lease.

[168 Wash.App. 413]¶ 8 Hogan submitted additional briefing, arguing that Borders waived its common law right to participate in apportionment.Hogan claimed that the lease addressed eminent domain and specified that Borders could only share in apportionment of a just compensation award (1) if it terminated its lease or (2) if it met the two other narrow (and unsatisfied) contingencies in Article 22.The trial court again denied Hogan's summary judgment motion, stating that the lease's eminent domain provision was “convoluted” and that “questions still remain[ed] ... as to what the appropriate interpretation of this lease ... ought to be” because the lease language was ambiguous as to whether the parties intended to waive a lessee's common law right to apportionment.RP(Mar. 12, 2010)at 15–16.

¶ 9 Hogan submitted additional briefing, again arguing that Borders contracted away its common law right to share in Hogan's just compensation award.But the trial court again denied Hogan's motion for summary judgment, stating:

I've looked at [the lease] countless ... times.And my analysis is still the same, that absent a clear limitation on the right to share, Borders ought to be able to share.

This [lease] language is simply not clear ... at all.The better interpretation ... seems to be that ... Borders ... thought itself to be damaged [by the talcing] and that money ought to be given because the leasehold was diminished, that Borders ought to have a shot at sharing ... in the award.

RP(Apr. 2, 2010)at 23.Thus, the case proceeded to apportionment, during which Hogan argued that the jury only attributed $2,300,000 of its total award to decreased access to the Center.

¶ 10 At the trial's apportionment phase, Hogan presented Donald Palmer's and ...