Eugster v. City of Spokane

• Decision Date: 27 May 2004
• Docket Number: No. 21654-3-III.,21654-3-III.
• Court: Washington Court of Appeals
• Parties: Stephen K. EUGSTER, Appellant, v. CITY OF SPOKANE, Spokane Parking Public Development Authority; Spokane Downtown Foundation; Citizens Realty Company; Lincoln Investment Company; River Park Square L.L.C.; R.P.S. II L.L.C. and U.S. Bank Trust National Association, Petitioners.

91 P.3d 117

121 Wash.App. 799

Stephen K. EUGSTER, Appellant, v. CITY OF SPOKANE, Spokane Parking Public Development Authority; Spokane Downtown Foundation; Citizens Realty Company; Lincoln Investment Company; River Park Square L.L.C.; R.P.S. II L.L.C. and U.S. Bank Trust National Association, Petitioners.

No. 21654-3-III.

Court of Appeals of Washington, Division 3, Panel Eight.

May 27, 2004.

Leslie R. Weatherhead, Robert S. Magnuson, Christopher G. Vallaro, Attorneys at Law, Spokane, WA, for Petitioners.

Steven G. Jones, Jeff B. Kray, Deborah K. Espinosa, Marten Law Group, Seattle, WA, Stephen K. Eugster, Eugster Law Offices PSC, Michael F. Connelly, City Attorney, Pamela H. Rohr, Trunkenbolz, Rohr PLLC, Spokane, WA, Margery Bronster, Bronster, Crabtree & Hoshibata, Honolulu, HI, for Respondent.

BROWN, J.

We granted discretionary review to resolve a discovery dispute arising in the River Park Square (RPS) parking garage controversy. On First Amendment grounds, the Spokane Superior Court quashed certain subpoenas duces tecum. The subpoenas were issued by Citizens Realty Company, Lincoln Investment Company of Spokane, River Park Square, L.L.C., and RPS II, L.L.C. (collectively Developer) to third-parties C. Paul Sandifur, Jr., Philip Sandifur, Erik Skaggs, Metropolitan Mortgage & Securities Co., Inc., Summit Property Development, Inc., and Metwest Mortgage Services, Inc. (collectively Metropolitan). Additionally, the trial court granted fees and costs to Metropolitan and plaintiffs Stephen K. Eugster and Cheryl L. Rodgers.

We affirm except as to the attorney fees awarded to Mr. Eugster and Ms. Rodgers.

FACTS

The background facts related to the controversial RPS parking improvements are found in Eugster v. City of Spokane, 118 Wash.App. 383, 389-401, 76 P.3d 741 (2003). Relevant here is the Developer's discovery effort in aid of its counterclaim for damages due to alleged interference with its business expectancies and due process violations. The Developer sought discovery from the City, former Mayor John Talbott, and council members Stephen K. Eugster, Cheryl L. Rodgers, and Steven Corker. The court issued a protective order, permitting certain discovery to be marked and treated as confidential.

The Developer then directed written discovery to Mr. Talbott, Mr. Eugster, Mr. Corker, and Ms. Rodgers seeking, among other things, all records of meetings and communications with Metropolitan, a third-party to this suit. Metropolitan Mortgage is a private mortgage company with several subsidiaries. According to information filed with the Public Disclosure Commission, Metropolitan Mortgage, its affiliates, subsidiaries, employees, owners and a Political Action Committee (PAC) known as Straight Talk, which received contributions from Metropolitan Mortgage, made contributions to the political campaigns of Mr. Talbott, Mr. Eugster, Mr. Corker, and Ms. Rodgers. The commission's records show Metropolitan Mortgage was fined $10,000, with an additional $10,000 suspended, for failing to disclose $11,165 in contributions to former Mayor Talbott's campaign.

Mr. Talbott, Mr. Eugster, Mr. Corker and Ms. Rodgers refused to provide the requested documents. Mr. Talbott and Mr. Eugster claimed no documents were in their possession. Mr. Corker produced some documents, but none related to River Park Square. Ms. Rodgers objected to the request, arguing it was vague and ambiguous, overbroad and unduly burdensome. Clerk's Papers (CP) at 1318. She additionally objected on First Amendment grounds.

The Developer then directed its discovery requests to Metropolitan. It filed six subpoenas duces tecum, seeking all documents relating to campaign contributions to Mr. Talbott, Mr. Eugster, Mr. Corker, and Ms. Rodgers; all records relating to campaign contributions to 22 other groups and individuals; all communication with various current and former elected officials, political candidates, and members of the media; and all documents regarding Metropolitan's development properties from January 1, 1995 to the present.

Metropolitan filed a motion to quash the subpoenas duces tecum based on procedural and substantive grounds. The City, Mr. Eugster, and Ms. Rodgers also filed motions to quash the subpoenas directed to Metropolitan. In response, the Developer filed a motion to compel production of the documents described in the subpoenas.

In its offer of proof, the Developer alleged C. Paul Sandifer, Jr., Metropolitan Mortgage's former Chairman, President, and Chief Executive Officer, had extreme disdain and antipathy for the Cowles family, particularly the senior members of this family, stemming from the perceived mistreatment of his father who, many years ago, had felt snubbed and looked down upon by the Cowles family. CP at 1076. The Developer alleged Metropolitan Mortgage contributed greatly to the campaigns of Mr. Talbott, Mr. Eugster, Ms. Rodgers and Mr. Corker in order to control their decisions regarding the River Park Square improvements in an effort to [get] even with the Cowles family. CP at 1076. The Developer partly alleged a small group of people would meet in Metropolitan Mortgage's basement for early morning meetings regarding Spokane politics and the RPS dispute.

Metropolitan argued the subpoenas were procedurally defective based on the utter breadth and burdensomeness. Report of Proceedings (RP) at 39. Metropolitan, the City, Mr. Eugster, and Ms. Rodgers objected on substantive grounds, arguing the subpoenas would infringe on their respective First Amendment rights.

The court ruled the subpoenas, while in some cases relevant to the underlying issue, would have a chilling effect on our system's democratic process. RP at 86. The court then quashed the subpoenas duces tecum served on Metropolitan Mortgage and denied the Developer's motion to compel.

The Developer requested reconsideration, citing Pleas v. City of Seattle, 112 Wash.2d 794, 774 P.2d 1158 (1989) and arguing discovery was needed to support its tortious interference claim. It also argued the Washington Public Disclosure Act (WPDA) and OPMA provide policy reasons, justifying disclosure. The court denied reconsideration, ruling Pleas was not controlling and WPDA and did not apply.

Next, the court considered attorney fees. Metropolitan Mortgage, Mr. Eugster and Ms. Rodgers requested fees under CR 26(c) (regarding protective orders), CR 37(a)(4) (regarding expenses for failure to make discovery), and CR 45 (regarding subpoenas). The Developers countered the subpoenas duces tecum related solely to CR 45, which makes no provision for attorney fees. The court awarded fees and costs under CR 26(c) and CR 37(a)(4) to Metropolitan Mortgage in the amount of $26,787.22, Mr. Eugster in the amount of $4,755, and Ms. Rodgers in the amount of $9,478.22. Without entering written findings of fact and conclusions of law, the court ruled the fees were reasonable.

This court granted discretionary review.

ANALYSIS

A. Order Quashing Subpoenas Duces Tecum

The issue is whether the trial court erred in quashing the Developer's subpoenas duces tecum directed to Metropolitan Mortgage.

A trial court's order granting or denying a motion to quash a subpoena is reviewed for an abuse of discretion. Hammond v. Braden, 16 Wash.App. 773, 776, 559 P.2d 1357 (1977). A court abuses its discretion when its decision is based on untenable grounds or reasoning. Luckett v. Boeing Co., 98 Wash.App. 307, 309, 989 P.2d 1144 (1999).

The First Amendment protects, among other rights, an individual's right to free speech and political association. Fed. Election Comm'n v. Colorado Republican Fed. Campaign Comm., 533 U.S. 431, 440, 121 S.Ct. 2351, 150 L.Ed.2d 461 (2001). Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs. Nat'l Ass'n for Advancement of Colored People v. State of Ala. ex rel. Patterson, 357 U.S. 449, 462, 78 S.Ct. 1163, 2 L.Ed.2d 1488 (1958).

In the discovery context, Washington has established a three-part test for First Amendment challenges based on associational privilege. First, the party asserting the right is only required to show some probability that the requested disclosure will harm its First Amendment rights. Snedigar v. Hoddersen, 114 Wash.2d 153, 158, 786 P.2d 781 (1990). Once this threshold is met, the burden shifts to the party requesting discovery to establish (1) the relevance and materiality of the information sought, and (2) that reasonable efforts to obtain the information by other means has been unsuccessful. Id. at 164, 786 P.2d 781. Finally, even if both of these required showings are made, the court must still balance the claim of privilege against the need for disclosure to determine which is the strongest. Id. at 166, 786 P.2d 781. The Developer contends the associational privilege is not applicable because Metropolitan is not a political association. While most courts addressing the right of association involve groups organized for a political or social purpose, the Supreme Court has extended the First Amendment rights of association and expression to private corporations. See Austin v. Mich. Chamber of Commerce, 494 U.S. 652, 657, 110 S.Ct. 1391, 108 L.Ed.2d 652 (1990)

(The mere fact that the Chamber is a corporation does not remove its speech from the ambit of the First Amendment.).

Additionally, Washington's Supreme Court has held that a county ordinance, requiring massage businesses to maintain certain patron records impermissibly intruded on the right of privacy and freedom of association. See Myrick v. Bd. Of Pierce County Comm'rs, 102 Wash.2d 698, 705, 677 P.2d 140 (1984)

(Because of the importance of these tightly intertwined rights that Court has refused to draw a line excluding those `engaged in business activities' from the reach of the First Amendment.) (quoting Thomas v. Collins, 323 U.S. 516, 531, 65 S.Ct. 315,...