James v. County of Kitsap

• Decision Date: 07 July 2005
• Docket Number: No. 73747-9.,73747-9.
• Citation: 154 Wn.2d 574,115 P.3d 286
• Parties: James T. JAMES and Carol J. James, husband and wife, Ken Lund and Merri Lund, husband and wife, Forest Tonkins and Vicki Tonkins, husband and wife, Oakwood Homes, Inc., C.J. Homes, Inc., Grice Corporation, Inc., Washington Corporations, all individually and as Representatives of The Class, Respondents, v. COUNTY OF KITSAP, The Board of Kitsap County Commissioners, John Does I through IX, Appellants.
• Court: Washington Supreme Court

115 P.3d 286

154 Wn.2d 574

James T. JAMES and Carol J. James, husband and wife, Ken Lund and Merri Lund, husband and wife, Forest Tonkins and Vicki Tonkins, husband and wife, Oakwood Homes, Inc., C.J. Homes, Inc., Grice Corporation, Inc., Washington Corporations, all individually and as Representatives of The Class, Respondents, v. COUNTY OF KITSAP, The Board of Kitsap County Commissioners, John Does I through IX, Appellants.

No. 73747-9.

Supreme Court of Washington, En Banc.

Argued January 13, 2004.

Decided July 7, 2005.

Peter Buck, Jeffrey S. Weber, Buck & Gordon LLP, Seattle, for Appellants.

Charles Wiggins, Kenneth Masters, Bainbridge Island, William H. Broughton, Silverdale, Martin Eugene McQuaid, Seattle, for Respondents.

Paul Hewson Reilly, Skagit County Prosecuting Attorney's Office, Mount Vernon, for Amicus Curiae Skagit County.

Brent David Lloyd, Civil Div. Snohomish County Prosecutor's, Everett, Amicus Curiae Washington Association of Prosecuting Attorneys.

David John Lenci, Grace Tsuang Yuan, Julie Anne Halter, Preston Gates & Ellis LLP, Seattle, Amicus Curiae Washington Schools Risk Management Pool.

C. JOHNSON, J.

¶ 1 In this case, we are asked to determine whether the imposition of impact fees as a condition on the issuance of a building permit is a "land use decision" subject to procedural requirements of the Land Use Petition Act (LUPA), chapter 36.70C RCW. Here, individuals and developers (Developers) seek a refund of impact fees paid to Kitsap County (County), claiming these fees were improperly imposed during a period the County's comprehensive plan was noncompliant with the Growth Management Act (GMA), chapter 36.70A RCW. The trial court found that the Developers' claims were not subject to the procedural requirements of LUPA and granted a summary judgment motion in favor of the Developers. We reverse and remand this case back to the trial court.

FACTS AND PROCEDURAL HISTORY

¶ 2 In 1977, prior to the enactment of the GMA, the County adopted a comprehensive plan under the Planning Enabling Act, which contained a capital facilities plan element providing the capital facility improvements necessary to serve new development in Kitsap County. In 1994, the County began drafting a new comprehensive plan in order to comply with the requirements of the newly enacted GMA. The County was required to adopt GMA-compliant regulations by December 1994. The County first attempted to comply with the GMA in a comprehensive plan adopted by Kitsap County Ordinance 169-1994 in December 1994 and, like the 1977 plan, it contained a capital facilities plan element. Clerk's Papers (CP) at 404.

¶ 3 In October 1995, the Central Puget Sound Growth Management Hearings Board (GMHB) invalidated the County's 1994 Comprehensive Plan. CP at 57-153. Among other things, the GMHB found the County's plan incomplete under RCW 36.70A.070(3),¹ the capital facilities plan element requirements of the GMA. CP at 134-35. Attempting to reach compliance with the GMA, the County adopted a second comprehensive plan in 1996 by Kitsap County Ordinance 203-1996. CP at 404. This plan, however, was also invalidated by the GMHB, which again found the County's capital facility plan element noncompliant. CP at 196. In 1998, the County adopted a third comprehensive plan by Kitsap County Ordinance 215-1998, which was found fully compliant with the requirements of the GMA in 2000. CP at 405.

¶ 4 In 1991, the County adopted an impact fee ordinance to aid in funding the capital facility improvements identified in the County's 1977 Comprehensive Plan pursuant to RCW 82.02.060. From 1992 to October 1995, impact fees were collected by the County for parks and roads from any applicant for a residential, commercial, or mobile home building permit based on the 1977 pre-GMA Comprehensive Plan and then the 1994 Comprehensive Plan. Prior to the GMHB's decision in October 1995 invalidating the County's 1994 Comprehensive Plan, the County collected and spent the impact fees on developing parks and roads to support the new development. CP at 405-06.

¶ 5 After the GMHB ruling in October 1995, the County no longer required applicants seeking building permits to pay impacts fees; and, rather than imposing a moratorium on development, it required applicants to sign an agreement whereby the applicant promised to pay impact fees in the future when the County had a comprehensive plan fully compliant with the GMA. These agreements were converted by the County into liens on the applicants' property. The County also allowed applicants to pay the impact fees if the applicants requested to do so. However, the County did not spend any of these impact fees and held the funds in separate accounts for the parks department and the public works department. CP at 406-07.

¶ 6 In March 2000, the GMHB found the 1998 Comprehensive Plan to be fully compliant with the GMA, and the County again began requiring applicants seeking building permits to pay impact fees at the time it issued building permits. The County also began enforcing the impact fee agreements made between it and applicants during the time of the County's noncompliance. CP at 407.

¶ 7 In September 1999, the Developers filed a claim with the County, and in November 1999, the Developers filed a class action lawsuit against the County in Kitsap County Superior Court. CP at 3-15. The Developers sought a judgment against the County for the amount of the impact fees incurred as an obligation to pay park and road impact fees and for impact fees paid to the County by Developers. In August 2002, the County and the Developers filed cross motions for summary judgment.² The Developers sought to have the court order a refund of their moneys for the road and park portion of the impact fees paid to the County, including interest, an award of attorney fees, and an injunction requiring the County to remove liens from those properties with outstanding, unpaid lien agreements or liens on Developers' real property. CP at 653. The County moved to have the Developers' claims dismissed because they were time-barred under LUPA. In the alternative, the County sought summary judgment against those plaintiffs who did not pay under protest.

¶ 8 The trial court granted the Developers' motion for summary judgment, ordering the County to pay the Developers who had paid the impact fees at the time of application and the Developers who had paid the County subsequent to a lien agreement. The trial court also enjoined the County from continuing to maintain recorded, unpaid lien agreements on property owned or formerly owned by the Developers. CP at 1488-89. The Developers were awarded a total judgment of $3,346,506, including prejudgment interest. CP at 1592.

¶ 9 The County filed an appeal of the judgment directly with this court.³

ANALYSIS

¶ 10 Summary judgment is rendered where there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. CR 56(c). When reviewing an order for summary judgment, an appellate court engages in the same inquiry as the trial court. Denaxas v. Sandstone Court of Bellevue, 148 Wash.2d 654, 662, 63 P.3d 125 (2003). Questions of law are reviewed de novo.

¶ 11 The central issue in this case is whether the imposition of impact fees as a condition on the issuance of a building permit is a "land use decision" subject to the procedural requirements of LUPA. The County argues that the trial court erred in granting the Developers' motion for summary judgment because the Developers failed to exhaust their administrative remedies and because they are time-barred under LUPA. Additionally, the County claims that the Developers are independently barred from receiving a refund of their impact fees because they failed to pay under protest. In the alternative, the County argues the doctrine of equitable estoppel bars the Developers' claims. The Developers contend that their request for a refund of their impact fees is subject to a three-year statute of limitations because the imposition of impact fees are revenue decisions, not land use decisions.

¶ 12 In 1990 and 1991, the legislature enacted the GMA, which provided that counties containing either a high population or a high population growth, meeting specific criteria, were required to conform with its provisions. RCW 36.70A.040. The legislature provided the elements necessary for counties' comprehensive plans to comply with the GMA in RCW 36.70A.070, which includes a capital facilities plan element. RCW 36.70A.070(3).

¶ 13 One of the principal goals of the GMA is to "[e]nsure that those public facilities and services necessary to support development shall be adequate to serve the development at the time the development is available for occupancy and use without decreasing current service levels below locally established minimum standards." RCW 36.70A.020(12). To effectuate this goal, "[c]ounties, cities, and towns that are required or choose to plan under RCW 36.70A.040 are authorized to impose impact fees on development activity as part of the financing for public facilities. . . ."⁴ RCW 82.02.050(2). An "impact fee," for the purposes of chapter 82.02 RCW, is defined as "a payment of money imposed upon development as a condition of development approval to pay for public facilities needed to serve new growth and development. . . ." RCW 82.02.090(3).

¶ 14 In chapter 82.02 RCW, the legislature places several limitations on the calculation and imposition of impact fees, see RCW 82.02.050-.70, and it explicitly provides:

Impact fees may be collected and spent only for the public facilities defined in RCW 82.02.090[⁵] which are addressed by a capital facilities plan element of a comprehensive land use plan adopted pursuant to the provisions of RCW 36.70A.070 or the provisions for comprehensive plan adoption contained in chapter 36.70, 35.63, or 35A.63 RCW. After the date a county, city, or town is required to adopt its...