Garneau v. City of Seattle

• Decision Date: 04 May 1998
• Docket Number: No. 95-35920,95-35920
• Citation: 147 F.3d 802
• Parties: 98 Cal. Daily Op. Serv. 3296, 98 Daily Journal D.A.R. 4562 Faye GARNEAU, Edward Garneau, Robert Klepinger, Nicolas Fedan, Richard Ju, Triad Development, Inc., a Washington corporation, Plaintiffs-Appellants, v. CITY OF SEATTLE, a municipal corporation, Defendant-Appellee, and The Tenants Union, Defendant-Intervenor-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 802

147 F.3d 802

98 Cal. Daily Op. Serv. 3296, 98 Daily Journal

D.A.R. 4562

Faye GARNEAU, Edward Garneau, Robert Klepinger, Nicolas Fedan, Richard Ju, Triad Development, Inc., a Washington corporation, Plaintiffs-Appellants, v. CITY OF SEATTLE, a municipal corporation, Defendant-Appellee and The Tenants Union, Defendant-Intervenor-Appellee.

No. 95-35920.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 6, 1996.

Decided May 4, 1998.

Eric R. Hultman, Seattle, Washington, for appellants.

Sandra M. Watson, Seattle City Attorney's Office, Seattle, Washington, for appellee.

Steve Fredrickson, Seattle, Washington, for intervenor-appellee.

Appeal from the United States District Court for the Western District of Washington Barbara J. Rothstein, Chief Judge, Presiding. D.C. No. CV-94-00914-BJR.

Before: BRUNETTI and O'SCANNLAIN, Circuit Judges, and WILLIAMS, ^* District Judge.

BRUNETTI, Circuit Judge:

In this case we are asked to decide whether the enactment of the Tenant Relocation Assistance Ordinance by the City of Seattle effected a taking of property in violation of the Fifth and Fourteenth Amendments. ¹

I.

A.

During the 1980s, Seattle area low-income tenants were hurt by a booming redevelopment market that led to a sharp increase in rental prices and a corresponding decrease in the number of rental units affordable to low-income tenants. In 1990, as part of the Growth Management Act, the Washington State Legislature adopted legislation enabling municipal governments to enact relocation assistance provisions. RCW 59.18.440. In relevant part, the enabling legislation authorizes certain local jurisdictions:

to require, after reasonable notice to the public and a public hearing, property owners to provide their portion of reasonable relocation assistance to low-income tenants upon the demolition, substantial rehabilitation whether due to code enforcement or any other reason, or change of use of residential property, or upon the removal of use restrictions in an assisted-housing development....

RCW 59.18.440(1)

Through this legislation, the state hoped to encourage economic opportunity for all Washington citizens and to promote the availability of affordable housing as well as to preserve existing housing stocks. Washington Laws, 1990, 1st Ex.Sess., Ch. 17, § 2(4) and (5).

In July 1990, the City of Seattle took advantage of the State's enabling legislation by promulgating the Tenant Relocation Assistance Ordinance ("TRAO"), which requires landlords to pay cash relocation assistance to low-income ² tenants they intend to displace by redeveloping their property. Specifically, the TRAO provides that:

Low-income tenants who are displaced by demolition, change of use, substantial rehabilitation, or removal of use restrictions and who comply with the requirements of [the TRAO], shall be paid a relocation assistance payment in the amount of two thousand dollars ($2,000.00)....

SMC 22.210.130(A).

Under the TRAO, the owner of the dwelling unit:

is responsible for payment of one-half (1/2) of the total amount of relocation assistance due to eligible tenants pursuant to [the TRAO]. The City is responsible for payment of the remaining one-half (1/2) of the relocation assistance.

SMC 22.210.110(A).

Within five days of receiving notice of tenant eligibility, the owner of a dwelling must provide the Director of the Department of Construction and Land Use with the owner's portion of the relocation assistance to be paid to eligible tenants. SMC 22.210.110(B). After eligible tenants are paid the relocation assistance, any money remaining of the owner's deposit is returned "thirty (30) days after final unappealed decisions regarding eligibility of all tenants of the affected units,...." SMC 22.210.130(F).

On June 7, 1990, the Seattle City Council held a public hearing on the TRAO. Approximately thirty citizens testified in favor of the ordinance, while no one testified against it. The parties have stipulated to the following summary of testimony given at the June 7, 1990 public hearing:

One of the purposes of the hearing was to receive testimony regarding the relocation expenses that displaced tenants might reasonably incur. At the June 7, 1990 public hearing, Karen White, an employee of the Department of Construction and Land Use ("DCLU"), the agency designated to administer the TRAO, testified regarding the results of an informal study she had conducted regarding the average costs of relocating for displaced tenants, using the cost categories provided in RCW 59.18.440. Ms. White called three or four local moving companies to determine the average cost of moving a household from a one-bedroom apartment to some other location in Seattle. She referred to a Stip. Fact 4.

monthly report published by a local realty company, Cain and Scott, to learn the average rent in Seattle, to use in determining first and last months' rent costs. She also contacted a local real estate analyst who had recently completed a study of the typical amount required for damage and security deposits by local landlords. She also contacted the local utility companies to determine typical connection fees and deposits....

Karen White testified that the various moving costs, on average, totalled $2,191.00. Stip. Fact 4. That amount was based upon: $291 for physical moving costs, $1,000 for first and last month's rent, $200 for damage deposit, $100 for utility connection fees and deposits, and $600 for one year's increased rent of $50 per month. Stip. Fact 4.

B.

Owners of rental units subject to the TRAO ³ brought suit in state court challenging the constitutionality of the TRAO and its enabling legislation. They asserted facial and as-applied takings challenges, and facial and as-applied substantive due process challenges. The City removed the case to federal district court. At the outset of discovery, the City served each plaintiff with a set of interrogatories and requests for production of documents. The City asked plaintiffs to produce information concerning the value of their properties and the projected impact the TRAO would have on the value of each property. Plaintiffs refused to respond to the requests, objecting that the documents were not relevant and that the requests were overly burdensome. In response to the City's motion to compel discovery, plaintiffs brazenly confronted the district court by arguing:

Plaintiffs admit they have not attempted to literally comply with [Requests for Production] 1 and 2, or any other discovery request. Rather, plaintiffs view discovery as a process to provide relevant information, not complying with the letter of discovery requests. If the information sought in the discovery requests can be conveyed without answering completely, plaintiffs will do so.

On November 21, 1994, the district court granted the City's motion to compel discovery, ordering plaintiffs to produce the discovery forthwith. After plaintiffs ignored the court's order, the City filed a motion for sanctions, seeking dismissal of plaintiffs' as-applied constitutional claims. Hoping to avoid producing the requested discovery, plaintiffs agreed to dismiss their as-applied claims. Plaintiffs' hopes that the discovery requests would finally cease were defeated when the court found that the City's discovery requests were also relevant to plaintiffs' facial takings claim. Thus, even though the as-applied claims were dismissed, the court ordered plaintiffs to comply with the City's discovery requests. When plaintiffs again flaunted the court's order, the court imposed sanctions by prohibiting plaintiffs from introducing at trial or for any other purpose evidence "of the loss of value, the effect on the market value, or the economic impact of the TRAO." The court acknowledged the potentially fatal consequences of its order. "[T]he inability to present evidence of impact on market value or economic impact may greatly hinder or make impossible plaintiffs' ability to maintain a takings claim."

Following this episode, the parties filed a "Stipulations of Fact," concerning the City's reasons for promulgating the TRAO, and the 6. The TRAO does not compel any of the plaintiffs to submit to the physical occupation of any of their property.

effect the TRAO would have on plaintiffs. As noted above, the parties stipulated to the testimony presented at the June 7, 1990 City Council meeting. In addition, the parties stipulated to other facts relevant to the constitutional claims raised on appeal, including:

7. The TRAO does not deny any of the plaintiffs of all economically viable use of their property.

9. One of the purposes of the TRAO is to protect and financially assist residential tenants, especially low-income tenants, who were being displaced by demolition, change of use, or substantial rehabilitation of their rental units.

10. Protecting and assisting residential tenants, especially low-income tenants, who are being displaced by private development is a legitimate public purpose.

11. One of the ways in which the TRAO protects and assists low-income tenants subject to displacement ... is to pay each of them $2,000 for the purpose of relocation assistance....

16. The TRAO relocation assistance payment may be effective in reducing the costs to owners of evictions and repairs.

17. The TRAO did not prevent the named plaintiffs from developing their property.

After the close of discovery, the City moved for summary judgment, requesting that the court determine the facial constitutionality of the State and municipal laws. ⁴ The landowners cross-moved for summary judgment, requesting that the court declare the TRAO unconstitutional. The court granted the City's motion for summary judgment. Rejecting the landowners' facial takings claim, the court found that the TRAO is reasonably related to a legitimate state interest. Garneau, 897 F.Supp. at 1325 (citing Commercial Builders of Northern California v. City of...