Greensun Grp., LLC v. City of Bellevue

Decision Date04 March 2019
Docket NumberNo. 77635-5-I,77635-5-I
CourtWashington Court of Appeals
Parties GREENSUN GROUP, LLC, Appellant, v. CITY OF BELLEVUE, Respondent.

Bryan Wesley Krislock, Davidson, Kilpatric & Krislock, PLLC, 520 Kirkland Way Ste. 400, Kirkland, WA, 98033-6256, Kenneth Harry Davidson, Attorney at Law, PO Box 817, Kirkland, WA, 98083-0817, for Appellant.

Jessica Anne Skelton, Athanasios P. Papailiou, Jamie L. Lisagor, Matthew J. Segal, Pacifica Law Group LLP, 1191 2nd Ave. Ste. 2000, Seattle, WA, 98101-3404, for Respondent.


Chun, J.¶1 Greensun Group LLC (Greensun)1 brought a claim against the City of Bellevue (the City) for tortious interference with business expectancy. We address whether the trial court properly dismissed the claim on summary judgment. In doing so, we discuss each element of the tort. And we discuss the affirmative defense of privilege.

¶2 Upon passage of Initiative 502 (I-502) in 2012, the City issued a regulation prohibiting marijuana retail shops from being located within 1,000 feet of each other (the 1,000 Foot Separation). In 2014, the City denied Greensun a license to operate such a shop after determining the business planned to locate too close to another shop deemed "first-in-time."

¶3 Greensun then filed this action against the City, claiming violations of the due process and privileges and immunities clauses of the Washington State Constitution. The trial court dismissed the case on summary judgment. Greensun appealed. Because the City adopted its first-in-time rule without engaging in formal rule-making, this court invalidated it.

¶4 On remand, Greensun amended its complaint to claim tortious interference with business expectancy. On cross-motions for summary judgment, the trial court dismissed Greensun’s claim and declared the City had remedied the rule-making issue identified in the first appeal.

¶5 Because genuine issues of fact exist as to the tortious interference claim, we affirm in part and reverse in part the trial court’s order denying Greensun’s motion for partial summary judgment and granting the City’s summary judgment motion. We remand the case for trial.



A. Facts

¶6 On November 6, 2012, Washington passed I-502. Laws of 2013, ch. 3 § 41. I-502, in part, legalized the possession of limited amounts of marijuana and directed the Washington State Liquor Control Board (the LCB) to develop and implement rules to regulate and tax recreational marijuana retailers by December 31, 2013.

¶7 Greensun’s managing members, Seth Simpson and David Ahl, leased a retail space at 10600 Main Street, Bellevue, Washington on November 29, 2012. They planned to open a retail marijuana shop there. As such, Greensun made several upgrades to the building. It intended to operate a medical marijuana business at the space until the LCB implemented the regulations for recreational marijuana. Greensun applied to the City for a building permit on January 8, 2013.

¶8 The City opposed Greensun’s attempt to open a medical marijuana operation, claiming the proposed use violated Bellevue’s Land Use Code (LUC). The City obtained injunctive relief prohibiting the opening of a medical marijuana facility at the location. Greensun then abandoned its plan to open a medical marijuana store. However, because it still planned to use the space for recreational marijuana, it extended its lease through June 30, 2016.

¶9 The LCB then opened the application process for retail marijuana licenses. Greensun applied. By March 1, 2014, the LCB had screened Greensun’s application and listed it as one of 19 qualified applicants for licenses in Bellevue.

¶10 On March 17, 2014, the City adopted Ordinance 6156, which extended Ordinance 6133 B-12 for an additional six months and implemented a new restriction—the 1,000 Foot Separation. Under the restriction, no marijuana retailer could be located within 1,000 feet of any other marijuana retailer.

¶11 On April 2, 2014, the LCB announced it would process license applications "with geographic distribution and population density in mind." To this end, the LCB allocated a predetermined number of initial licenses for recreational marijuana stores to each jurisdiction. If the number of applicants in a jurisdiction exceeded its number of licenses, the LCB would use a lottery system to determine which applicants it would license. The LCB stated it expected to issue the initial retail licenses in "batches" during the first week of July 2014.

¶12 The LCB initially allocated four such licenses for Bellevue. Because 19 qualified applicants sought to open shops in Bellevue, the LCB held a lottery on May 2, 2014. Greensun ranked fifth. Two other applicants, Par 4 Investments LLC (Par 4)3 and High Society, ranked in the top four.

¶13 On May 7, 2014, the City e-mailed High Society about the 1,000 Foot Separation. It explained that "[a] retailer will ‘lock down’ their location upon submittal of a complete building permit application. This means that once we determine a building permit application complete for review that [sic] we will apply the 1,000 foot separation from that property."

¶14 On May 16, 2014, Par 4 applied for its building permit.

¶15 Greensun met with the City on May 19, 2014. At the meeting, it told the City the LCB would likely disqualify High Society’s application because the business listed the wrong address. It asked how the 1,000 Foot Separation would be applied if Greensun became one of the four lottery winners. The City advised Greensun it would give priority to the applicant who first submitted a complete building permit application. Greensun mentioned it had submitted a complete application for 10600 Main Street in 2013. The City responded that the LCB had to have designated an applicant as a lottery winner to establish priority.

¶16 On May 21, 2014, the City made the determination that Par 4’s building permit application was complete.

¶17 On May 27, 2014, a reporter from The Seattle Times asked the City about how it would enforce the 1,000 Foot Separation. The City responded that it "will consider the first retail applicant who submits a complete building permit as the ‘first in,’ against which the other applicants will be compared for conformance with the requirement."

¶18 Around the end of May 2014, Greensun applied to the City for a business license to operate a retail marijuana shop at 10600 Main Street. On June 3, 2014, the City sent a letter to Greensun stating that it "can only approve a business license application for the four selected retailers."4 The City denied the application.

¶19 The City received Par 4’s marijuana license application from the LCB on June 4, 2014. The City approved Par 4’s proposed location at 10697 Main Street, but stated it "reserves all rights accorded under law to enforce violations of city ordinances and codes as exist now or as hereafter amended."

¶20 On June 5, 2014, the LCB notified Greensun that it became one of the four lottery winners because of High Society’s disqualification. The LCB told the City about Greensun’s new status on June 9, 2015.

¶21 In an email to High Society on June 11, 2014, the City stated that Par 4 had "locked down" their location for purposes of the 1,000 Foot Separation.

¶22 The City then determined it would not use the timing of building permit applications for the first-in-time test. The City deemed the method inequitable because the "[v]esting of a building permit had no connection to the Washington State Liquor Control Board’s program." Instead, the City decided to tie the first-in-time determinations to when the LCB issued its licenses. The City did so without engaging in formal rule-making.

¶23 On June 24, 2014, the City informed applicants that "[i]n the event two or more retail marijuana applicants seek licensing from the LCB and are located within 1000 feet of another potential retail applicant, the City shall consider the entity that is licensed first by the LCB to be the ‘first-in-time’ applicant." The City detailed the application process, explaining that if the LCB approves an application, the applicant will receive a payment request for a $1,000 license fee. The City said, once the LCB receives the fee, it will send a conditional approval letter that acts as a 30-day marijuana license until the applicant receives a business license with the marijuana endorsement from the Washington State Department of Revenue Business Licensing Service. The City indicated the issuance date for the 30-day license would determine which applicant had priority for the purposes of the 1,000 Foot Separation.

¶24 The City approved Greensun’s marijuana license application on June 25, 2014. The application listed 10600 Main Street as Greensun’s address. As with Par 4, the approval notice provided that the City "reserves all rights accorded under law to enforce violations of city ordinances and codes as exist now or as hereafter amended."

¶25 On July 1, 2014, Greensun tendered payment of its license fee to the LCB.

¶26 On July 2, 2014, High Society obtained a temporary restraining order (TRO) against the LCB. The TRO prohibited the LCB from licensing retail marijuana applicants except for the four original lottery winners. The LCB then told Greensun it could not accept its license fee payment.

¶27 The same day, an LCB employee emailed the City a copy of High Society’s complaint. The City responded, "[I]t sounds like if [the LCB] issue[s] a license for a Bellevue retail store on Monday, it likely would be to Par 4 Investments (based on the status of Novelty Tree, Happy Highway, and High Society)? Can you please confirm?" The LCB indicated that the City had assumed correctly.

¶28 Par 4 paid the license fee to the LCB on July 3, 2014.

¶29 The LCB issued the first batch of marijuana retailer licenses on July 7, 2014. Par 4 received its conditional approval letter from the LCB via email at 9:17 a.m. that day. The letter sent to Par 4 was misdated July 3, 2014. Upon receiving the letter from the LCB,...

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