City of Woodinville v. Eastside Cmty. Rail, LLC
| Decision Date | 23 May 2022 |
| Docket Number | 82660-3-I |
| Citation | 510 P.3d 355 |
| Parties | CITY OF WOODINVILLE, a municipal corporation, Respondent, v. EASTSIDE COMMUNITY RAIL, LLC, a Washington corporation, and Douglas Engle, an individual; Appellants, GNP Rly Inc., a Washington corporation; Respondent, Telegraph Hill Investments, LLC, a Wyoming corporation; Ballard Terminal Rail Company, a Washington corporation; NW Signal Maintenance, LLC, a Washington corporation; Kevin Kucera, an individual; Joanne Skievaski, an individual; Earl Engle, an individual; and All Other Persons or Parties Unknown Claiming Any Right, Title, Estate, Lien, or Interest in the Real Property Described in this Complaint, Defendants. |
| Court | Washington Court of Appeals |
Jami K. Elison, The Collins Law Group, 98 Ne Gilman Blvd. Ste. 201, Issaquah, WA, 98027-2515, for Appellants.
Jeffrey Ganson, Haggard & Ganson LLP, 19125 N Creek Pkwy. Ste. 120, Bothell, WA, 98011-8000, David P. Rossmiller, Andrew Thomas Gust, The Chartwell Law Offices, LLP, 1050 Sw 6th Ave. Ste. 1100, Portland, OR, 97204-1153, for Respondent.
PUBLISHED OPINION
¶ 1 Eastside Community Rail (ECR) and Douglas Engle appeal from an order granting summary judgment in a quiet title action. ECR and Engle argue the superior court lacked subject matter jurisdiction, and therefore all orders it entered are void, because federal law preempts state exercise of jurisdiction over claims of ownership of railroad easements. Alternatively, ECR and Engle argue there is no justiciable controversy. Because the superior court properly exercised authority over the justiciable claim, we affirm.
¶ 2 This appeal arises from a lawsuit the City of Woodinville (City) filed in King County Superior Court to quiet title of a railroad easement. The easement was created in 2009 by BNSF Railway Company, who then conveyed it to GNP Railway, Inc. (GNP). In January 2011, Douglas Engle, who was chief financial officer of GNP at the time, executed a quit claim deed on behalf of GNP conveying the easement to his then-wife and his father. Engle was terminated from his position at GNP that same month. Days later, GNP creditors commenced involuntary bankruptcy proceedings. During the bankruptcy proceedings, the bankruptcy trustee and Engle, now acting on behalf of Eastside Community Rail, LLC (ECR),1 executed a Record of Transfer, documenting that ECR had purchased the easement from GNP in the bankruptcy, despite the fact that Engle had quitclaimed the easement to his relatives 11 months earlier.
¶ 3 In July 2018, Snohomish County2 filed several petitions with the Surface Transportation Board (STB) to revoke ECR's ability to operate a railroad on the easement. Eastside Cmty. Rail, LLC—Acquisition & Operation Exemption—GNP Rly Inc. Ballard Terminal R.R. Co., LLC—Lease Exemption—Eastside Cmty. Rail, LLC, Fed. Carr. Cas. (CCH) ¶ 37406, 2018 WL 6579043 at *1 (U.S. Surface Transp. Bd. Dec. 11, 2018). Snohomish County claimed ECR's "verified notices contained materially false or misleading information about ECR's property interests in an easement over the [railroad line] and are therefore void ab initio[3 ]." Id. The STB denied the petitions to revoke, concluding it could not determine whether the notices contained false information because it could not determine ownership of the easement as "the determination of whether the parties have the necessary right to exercise Board authority is a question for a court with expertise in state contract and property law, and federal bankruptcy law." Id. at *6 Snohomish County appealed the decision to the United States Court of Appeals, District of Columbia Circuit. Snohomish Cty, Wash. v. Surface Transp. Bd., 954 F.3d 290, 446 U.S. App. D.C. 56 (2020). The D.C. Circuit reversed, holding the STB's decision was arbitrary and capricious because it "fail[ed] to consider whether the notices of exemption were misleading, even if not demonstrably false as a matter of state or federal law." Id. at 301.
¶ 4 On remand, the STB found "ECR's verified notice at issue in this case was materially misleading" and vacated its exemption. Eastside Cmty. Rail, LLC—Acquisition & Operation Exemption—GNP Rly Inc. Ballard Terminal R.R. Co., LLC—Lease Exemption—Eastside Cmty. Rail, LLC, Fed. Carr. Cas. (CCH) ¶ 37,457, 2020 WL 7640412 at *3 (U.S. Surface Transp. Bd. Dec. 21, 2020). Neither party appealed. The STB issued a subsequent opinion in September 2021 to "clarif[y]" of its December 2020 decision. Eastside Cmty. Rail, LLC—Acquisition & Operation Exemption—GNP Rly Inc. Ballard Terminal R.R. Co., LLC—Lease Exemption—Eastside Cmty. Rail, LLC, 2021 WL 4467636 at *4 (U.S. Surface Transp. Bd. Sep. 27, 2021). Between the STB's December 2020 and September 2021 decisions, Snohomish County alleged ECR and Engle failed to take action to return the rail line to GNP as instructed by the STB. Id. at *2. It asked the STB to void deeds executed by Engle conveying the line to his father and then-wife, or alternatively to order ECR to reconvey the easement to GNP. Id. The STB ordered ECR "to convey the Line's easement to GNP and certify to the [STB] that they have done so." Id. at *4.
¶ 5 In light of the STB's 2018 conclusion that ownership of the easement was better determined by an appropriate court applying state property law, which was undisturbed by the D.C. Circuit Court decision, the City brought its 2020 quiet title action in King County Superior Court, rather than to the STB. ECR was largely unresponsive to the City's quiet title claim, which eventually resulted in an order of default. The default order against ECR was later vacated, but the court imposed a monetary sanction. The court also found ECR "failed to timely respond to interrogatories and requests for production ... and that counsel for them has willfully refused or failed to confer in good faith."
¶ 6 ECR disputed the claim solely on the assertion that the trial court lacked subject matter jurisdiction (SMJ), seeking dismissal on that basis. The parties appear to agree that, due to scheduling issues, ECR's motion challenging the court's jurisdiction was stricken by the court with instructions for ECR to renote it.4 ECR did not renote the motion and the trial court never ruled on the challenge to jurisdiction.
¶ 7 The City filed a motion for summary judgment, which was joined by named defendants GNP, NW Signal Maintenance, LLC, and Kevin Kucera. The court granted the motion, finding there was "no genuine issue of material fact as to ECR's and Douglas Engle's lack of legal interest in the Easement." ECR timely appealed.
¶ 8 This court reviews the question of subject matter jurisdiction de novo. Angelo Prop. Co., LP v. Hafiz, 167 Wash. App. 789, 808, 274 P.3d 1075 (2012). ECR's argument, essentially, is that the superior court lacks subject matter jurisdiction over the quiet title action because of federal preemption. It contends federal law allows only the STB to determine ownership of a railroad easement under 49 U.S.C. § 10501.
¶ 9 As the parties noted at oral argument, the concepts of subject matter jurisdiction and preemption overlap but are distinct. If a subject otherwise properly heard by a superior court falls into a set of issues over which the STB has preemptive authority, any exercise of authority by the state court is preempted by federal law. "[S]uperior courts have jurisdiction ‘in all cases and of all proceedings in which jurisdiction shall not have been by law vested exclusively in some other court.’ " In re Marriage of Weiser, 14 Wash. App. 2d 884, 905, 475 P.3d 237 (2020) (quoting WASHINGTON CONST. art. IV, § 6 ). RCW 2.08.010 provides that superior courts "have original jurisdiction in all cases in equity, and in all cases at law which involve the title or possession of real property ... and in all other cases in which the demand or the value of the property in controversy amounts to three hundred dollars." Absent any law that vests exclusive jurisdiction in some other court, the superior court has jurisdiction over a quiet title action.
¶ 10 "Federal law preempts state law when state law operates in a field that is completely occupied by federal law or when state law conflicts with federal law." West v. Seattle Port Comm'n, 194 Wash. App. 821, 830, 380 P.3d 82 (2016). Preemption analysis is guided by Congressional intent. Id. Preemptive intent may be explicit in statutory language or implied. Inlandboatmen's Union of the Pac. v. Dept. of Transp., 119 Wash.2d 697, 701, 836 P.2d 823 (1992). If "Congress expressly withdraws specified powers from a state through a statutory provision," there is express preemption. Beatty v. Wash. Fish & Wildlife Comm'n, 185 Wash. App. 426, 454, 341 P.3d 291 (2015). "We must interpret an express preemption clause narrowly but fairly." Kitsap County v. Kitsap Rifle and Revolver Club, 1 Wash. App. 2d 393, 404, 405 P.3d 1026 (2017). 49 U.S.C. § 10501(b) states in part:
The jurisdiction of the Board over ... the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks, or facilities, even if the tracks are located, or intended to be located, entirely in one State, is exclusive. Except as otherwise provided in this part, the remedies provided under this part with respect to regulation of rail transportation are exclusive and preempt the remedies provided under Federal or State law.
¶ 11 The STB has reached the question of whether this statutory language preempts state superior courts from hearing quiet title actions involving railroad easements in several cases, including a case involving ECR with nearly identical facts and concerning the very railroad tract at issue here.5 The STB's opinion stated in part:
ECR has argued in the state appellate court that federal preemption under 49 U.S.C. § 10501(b) bars the state courts from ruling on state property law issues concerning property subject to this agency's licensing proceedings. That...
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