King v. City of Seattle

• Decision Date: 15 August 1974
• Docket Number: No. 42920,42920
• Citation: 525 P.2d 228,84 Wn.2d 239
• Parties: John P. KING and Catherine M. King, his wife, Respondents, v. The CITY OF SEATTLE, a municipal corporation, Appellant, and Flo Villa Corporation, a corporation, Defendant.
• Court: Washington Supreme Court

Page 239

84 Wn.2d 239

525 P.2d 228

John P. KING and Catherine M. King, his wife, Respondents, v. The CITY OF SEATTLE, a municipal corporation, Appellant, and Flo Villa Corporation, a corporation, Defendant.

No. 42920.

Supreme Court of Washington, En Banc.

Aug. 15, 1974.

Gordon F. Crandall, Asst. Corp. Counsel, Seattle, for appellant.

Olwell, Boyle & Hattrup, Lee Olwell, Seattle, for respondents.

UTTER, Associate Justice.

The City of Seattle appeals from a ruling by the trial court awarding damages to John P. King and his wife. The damages were for the city's alleged intentional and wrongful refusal to issue street use and building permits to the Kings.

The city contends that its acts are immune from liability because they involve the erroneous exercise of discretion and, even if no immunity exists, that its acts were not the proximate cause of the Kings' damages. We find no immunity under the facts of this case, but conclude there is no showing that the city's acts were the proximate cause of the Kings' damages.

The Kings were contract purchasers of lots submerged in Lake Union in Seattle. The lots abut Fairview Avenue East which is itself partially submerged along the edge of the lake where it adjoins the lot boundaries. The Kings first applied for a building permit in January 1969 to construct an apartment building on the lots. They were unable to obtain a lease from the State of Washington for adjoining state land which would have been necessary to meet the zoning requirements for construction of an apartment building. Their failure to obtain the leased land resulted in denial of the building permit.

In March of 1970 the Kings applied for a building permit to enable them to construct an office building on the same lots. This building did not require the use of additional land. A condition precedent to the granting of the building permit, however, was the issuance of a street use permit by the Board of Public Works, an agency of the city. The Board of Public Works denied the application for the street use permit at that time, based upon their judgment that a street use permit might conflict with a pending local improvement district plan, not yet enacted by ordinance. The building department denied the building permit at that time because no street use permit was granted.

The Kings then brought a mandamus action on May 15, 1970 to require the issuance of street use and building permits by the city. On June 11, 1970, a judgment was entered directing issuance of the building permit and street use permit either in the form requested or upon reasonable terms and without unreasonable delay. The court also found that the prior action of the city in refusing the same was arbitrary and capricious and without justification in law. The building permit was issued on June 16, 1970, and a street use permit authorizing construction of two ramps from the existing improved street area to the Kings' property was issued on July 22, 1970.

On May 26, 1970, however, the United States Corps of Engineers had changed its regulations to require permits over water areas inside the harbor or pierhead lines. For 70 years prior to this the Corps had required permits only in navigable waters beyond the established harbor or pierhead lines. After the issuance of the street use permit pursuant to court order, the Kings did not make application to the Corps for an overwater building permit for their office building but, apparently, abandoned the project. They ceased making payments on the property in the summer of 1970 and in November, 1970, quitclaimed their interest in the property to the vendor following service of a notice of forfeiture. No attempt was made to sell their interest in the property nor was it listed with a real estate broker.

The Kings, in this action, seek from the city damages and expenses for their loss of profit on the office building which they were unable to construct. The trial court found that '(f)ollowing the revision of the Army Corps regulations, it became impossible for Plaintiffs to construct the proposed office building . . .' (Finding of Fact No. 8), 'the said actions of the Defendant City of Seattle were a proximate cause of the losses and damage sustained by Plaintiffs, and the nature of said damage was reasonably foreseeable' (Finding of Fact No. 9), and 'the actions of the Defendant City of Seattle in refusing to issue a permit to Plaintiffs for an office building, from an after May 7, 1970, and in denying Plaintiffs any access to their own property involved no exercise of discretion, and in no manner were legislative or part of the planning process' (Finding of Fact No. 10).

The trial court awarded damages for costs and expenses of $54,524.36 and for lost profits on the proposed office building of $311,018.02.

The city appears to attempt to relitigate the characterization of the nature of its acts of April 22 in denying the street use permit and refusing to grant a building permit as arbitrary and capricious and without justification in law. The city's failure to appeal the findings of fact, conclusions of law and judgment in that case collaterally estops them from litigating those issues and is binding on the parties as to those issues in this case. Parties are collaterally estopped by judgment where the facts and issues claimed to be conclusive on the parties in the second action have been actually and necessarily litigated and determinated in a prior action. Henderson v. Bardahl Int'l Corp., 72 Wash.2d 109, 431 P.2d 961 (1967). The doctrine of collateral estoppel differs from res judicata in that, instead of preventing a second assertion of the same claim or cause of action, collateral estoppel prevents a second litigation of issues between the same parties even in connection with a different claim or cause of action. Bordeaux v. Ingersoll Rand Co., 71 Wash.2d 392, 429 P.2d 207 (1967); Goetz v. Board of Trustees, 203 Kan. 340, 454 P.2d 481 (1969).

The city urges, however, that its acts were purely of a governmental, policy-implementing character and the abrogation of governmental immunity in Washington did not expose the city to tort liability when performing such functions. Laws of 1963, ch. 159, § 2 (RCW 4.92.090) provides: 'The state of Washington, whether acting in its governmental or proprietary capacity, shall be liable for damages arising out of its tortious conduct to the same extent as if it were a private person or corporation.' This statute, by its terms, does not render the state liable for all official misconduct. As we said in Evangelical United Brethren Church v. State, 67 Wash.2d 246, 253, 407 P.2d 440, 444 (1965), it is necessary to determine where, in the act of government processes, orthodox tort liability stops and the act of governing begins. 'It is a gross understatement to say . . . that marking a definitive dividing line, with any degree of clarity or certainty, is fraught with some legal as well as factual difficulty.'

Immunity of governmental officials for discretionary acts historically has been independent of that advanced to justify the immunity of the state from liability for torts for which its agents are liable. The justification for this immunity, as stated by Judge Learned Hand in Gregoire v. Biddle, 177 F.2d 579, 581 (2d Cir. 1949), is that 'it is impossible to know whether the claim is well founded until the case has been tried, and that to submit all officials, the innocent as well as the guilty, to the burden of a trial and to the inevitable danger of its outcome, would dampen the ardor of all but the most resolute, or the most irresponsible, in the unflinching discharge of their duties. . . . In this instance it has been thought in the end better to leave unredressed the wrongs done by dishonest officers than to subject those who try to do their duty to the constant dread of retaliation.' See also Muskopf v. Corning Hosp. Dist., 55 Cal.2d 211, 11 Cal.Rptr. 89, 359 P.2d 457 (1961).

These fears are not founded upon fact, however, if it is the municipality and not the employee who faces liability. The most promising way to correct the abuses, if a community has the political will to correct them, is to provide incentives to the highest officials by imposing liability on the governmental unit. The ranking officials, motivated by threats to their budget, would issue the order that would be necessary to check the abuses in order to avoid having to pay damages. Davis, Administrative Law Treatise, § 25.17, at 864--65 (1970 Supp.). The idea that public entities and not officers or employees should ultimately bear liability springs from United States v. Gilman, 347 U.S. 507, 74 S.Ct. 695, 98 L.Ed. 898 (1954).

As noted in Davis, Administrative Law Treatise, § 25.18, at 870:

A discretionary function exception is essential to a good system of law on governmental tort liability, but the exception should not be pushed beyond the reasons behind it. . . . Fears that a system of liability for deliberate torts may cause unwanted results are satisfactorily answered by the experience in New York and California, where governmental units are often liable for deliberate torts of their agents.

As we recognized in Evangelical Church, 67 Wash.2d at page 254, 407 P.2d at page 444, "Liability cannot be imposed when condemnation of the acts or omissions relied upon Necessarily brings into question the propriety of governmental objectives or programs or the decision of one who, with the authority to do so, determined that the acts or omissions involved should occur or that the risk which eventuated should be encountered for the advancement of governmental objectives." We then set forth, 67 Wash.2d at page 255, 407 P.2d at page 445, four preliminary questions to assist in ascertaining whether an act was a discretionary governmental process and therefore nontortious, regardless of its lack of wisdom. '(1) Does the challenge act, omission, or decision necessarily...