IN RE CITY OF LYNNWOOD

• Citation: 118 Wash. App. 674,77 P.3d 378
• Decision Date: 06 October 2003
• Docket Number: No. 51203-0-I.,51203-0-I.
• Court: Court of Appeals of Washington
• Parties: In the Matter of the Petition of CITY OF LYNNWOOD, a Washington Municipal Corporation, to Acquire by Condemnation Certain Real Property for Public Use as Authorized by Ordinance 2413, City of Lynnwood, a Washington municipal corporation, Respondent, v. Video Only, Inc., a Washington corporation, Appellant.

77 P.3d 378

118 Wash. App. 674

In the Matter of the Petition of CITY OF LYNNWOOD, a Washington Municipal Corporation, to Acquire by Condemnation Certain Real Property for Public Use as Authorized by Ordinance 2413,

City of Lynnwood, a Washington municipal corporation, Respondent, v. Video Only, Inc., a Washington corporation, Appellant.

No. 51203-0-I.

Court of Appeals of Washington, Division 1.

October 6, 2003.

Kinnon William Williams, Catherine Cecily Clark, Williams Clark PSC, Kenmore, WA, for Appellant.

Greg Alan Rubstello, Jeffrey Burton Taraday, Ogden Murphy Wallace, Seattle, WA, for Respondent.

KENNEDY, J.

The City of Lynwood wants to build a convention center that will function as multi purpose, regional, tourism-related facility under RCW 35.57.020 and a multi-purpose community center under RCW 35.59.010. To accomplish this, the City adopted an ordinance creating the South Snohomish County Public Facilities District (PFD) for the purpose of acquiring, constructing, financing and operating a regional center, which will be named the Lynwood Convention Center. The City then entered into an agreement with the PFD, affirming the ordinance and agreeing to undertake activities in support of the PFD, including the acquisition of property for the project by eminent domain.

Before the City commenced the condemnation action that is the subject of this appeal, the PFD purchased the aging Alderwood Village Shopping Center (Shopping Center) when it was made available for sale by its owners. When the PFD purchased the Shopping Center, most of the buildings there were subject to existing leases. With the purchase, the PFD stepped into the shoes of the sellers and became a landlord with respect to these leases.

The Shopping Center's parking lot will be necessary to provide most if not all of the 484 parking spaces that will be required for Phase I of the regional center—the convention center proper and the exhibition hall. By the time that the PFD reaches Phase III of the project, virtually all of what is now the Shopping Center will be required for expanded facilities and additional parking, including a multi-story parking garage. In the meantime, the PFD intends to use the rental income from the Shopping Center—estimated to be some $500,000 per year—to help finance Phases I and II of the project. The PFD has not granted any renewals of existing leases, and refused to renew one lease when it was asked by the tenant to do so. But including potential renewals, at least one of the leases could last through the year 2023, if not sooner terminated by one means or another.

Video Only, Inc., owns and its business is located on property adjacent to the Shopping Center that the City wishes to condemn in order to acquire land for Phase I of the project. Video Only does not dispute that these are public uses, that the public interests require the project and that its land is necessary for the purpose of Phase I of the project. But it contends that PFD's continued operation of the Shopping Center is beyond the legislative authority granted to public facilities districts and constitutes an impermissible means of financing a public project, that the Shopping Center is not being put to a public use and will not be put to a public use for an unreasonably long period of time, and that the continued operation of the Shopping Center is so substantial a part of the financing as to taint the project in its entirety and undermine the validity of the condemnation of Video Only's land.

The City counters that an action to condemn private property for a public use is a proceeding in rem, and that when jurisdiction is based on property, the resulting judgment can only affect the property that has been brought before the court, here, Video Only's property and not the adjacent Shopping Center. The City contends that Video Only's arguments constitute a collateral attack on the PFD's purchase and use of the Shopping Center, which the court's in rem jurisdiction will not support.

The trial court found the City's arguments persuasive. The court concluded that it lacked subject matter jurisdiction to address whether the Shopping Center is being put to a public use because the Shopping Center is not being condemned, but that if the court did have subject matter jurisdiction, the PFD's continued operation of the Shopping Center did not taint the public use for which it was acquired, namely parking for the convention center and future expansion of the multi-use facility, which are lawful purposes. The court also concluded that the use being made of the Shopping Center did not taint the public use for which Video Only's property was being acquired. Accordingly, the court found that the use for which the City sought to acquire and condemn Video Only's property is a public use, that Video Only's property is necessary for the public use contemplated in the petition, and that the public interest requires its acquisition, and entered its order of public use and necessity. The court directed the matter to be set for trial in order to determine just compensation.

This appeal followed.¹

I

We first address the trial court's subject matter jurisdiction for purposes of condemnation actions. Eminent domain is one of several kinds of proceedings in which courts exercise in rem jurisdiction.² Courts may have jurisdiction to enter judgment with respect to property or things located within the boundaries of the state, even if personal jurisdiction has not been obtained over the persons affected by the judgment. Tegland, Karl B., WASHINGTON PRACTICE SERIES, CIVIL PROCEDURE, § 5.1. The PFD is not a party to this condemnation action, and Video Only successfully resisted bringing the PFD into the lawsuit when the City sought to do so. The PFD purchased the Shopping Center outright; the City did not condemn it. The "res" (thing) for purposes of this condemnation action is Video Only's land, not the Shopping Center property. Certainly, the trial court lacked subject matter jurisdiction to order the PFD to take any action with respect to the Shopping Center or to cease any activity with respect to that property. But that is not the kind of relief that Video Only was seeking.

The Shopping Center and its operation by PFD as an interim financing device is an integral part of the Lynwood Convention Center project as a whole, and it is the project as a whole that must pass constitutional muster in a condemnation action. This conclusion is implicit in our Supreme Court's rulings with respect to eminent domain proceedings, to which we look for guidance.

For example, in In re Petition of City of Seattle (Westlake I), 96 Wash.2d 616, 627-28, 638 P.2d 549 (1981) the court held that "where the purpose of a proposed acquisition is to acquire property and devote only a portion of it to truly public uses, the remainder to be rented or sold for private use, the project does not constitute public use." (Emphasis ours). But in State ex rel. Washington State Convention and Trade Center v. Evans, 136 Wash.2d 811, 820, 966 P.2d 1252 (1998) the court said that because "[t]he project could go forward without private participation in entirely the same manner, except that three stories of vacant space would lie unused underneath" the expanded exhibit space, "the private development in this vacant space is a separable component of the expansion project. [The private developer's] participation is a means to an end, but it is not an end in and of itself." (Emphasis ours).

In In re Petition of City of Seattle (Westlake II), 104 Wash.2d 621, 707 P.2d 1348 (1985) the City of Seattle successfully condemned the same land for public park purposes that it had tried unsuccessfully to condemn in Westlake I. In response to the Supreme Court's decision in Westlake I that the City could not condemn any of the property for the Westlake Project because the project was to include both a public park and 186,000 square feet of retail and cinema space that the City would lease to private parties, the City devised a new means of accomplishing the same goal. It had already acquired some of the property on which the proposed retail center was to be built. It divested itself of that property by selling it to a developer on the condition that the developer would follow the City's architectural plans for the project as previously conceived. Then, it sought to condemn the same property that was necessary for the public park that had been part of the project as originally conceived. The condemnee objected to the condemnation of its land for purposes of the public park. Similarly to Video Only in the instant case, the condemnee argued that the park was such an integral and inseparable part of the continuing private development on the adjacent property as not to be a truly public use within the meaning of article 1, § 16 of the Washington Constitution. Westlake II, 104 Wash.2d at 623, 707 P.2d 1348. The Supreme Court rejected the argument—not on grounds that the court lacked subject matter jurisdiction to consider the argument—but on the following grounds:

Although [the condemnee] is correct in stating that the City is continuing to pursue the long-standing Westlake Project objectives, the City is now doing so pursuant to legal authority. The City is now condemning property for only one purpose— to establish a park. Although the City is pursuing other activities adjacent to the proposed park, those activities do not involve the use of the City's power of eminent domain. Insofar as that power is concerned, there is a total absence of mixing of public and private uses.

Westlake II, 104 Wash.2d at 625, 707 P.2d 1348.

We conclude that the trial court had subject matter jurisdiction to consider Video Only's contentions in this case because they relate to the project as a whole. A trial court should not put on blinders, as it were, to the project as a whole in adjudicating public use and necessity for the...