KSLW by Wells v. City of Renton

• Decision Date: 24 February 1986
• Docket Number: No. 12887-6-I,12887-6-I
• Citation: 736 P.2d 664,47 Wn.App. 587
• Parties: In re the Matter of KSLW, a partnership by Richard W. WELLS, partner, Appellant, v. CITY OF RENTON, a municipal corporation, and Barbara Y. Shinpoch, Mayor, and Ronald G. Nelson, Building Director, Respondents.
• Court: Washington Court of Appeals

Page 587

47 Wn.App. 587

736 P.2d 664

In re the Matter of KSLW, a partnership by Richard W. WELLS,

partner, Appellant, v. CITY OF RENTON, a municipal corporation, and Barbara Y.

Shinpoch, Mayor, and Ronald G. Nelson, Building

Director, Respondents.

No. 12887-6-I.

Court of Appeals of Washington,

Division 1.

Feb. 24, 1986.

Publication Ordered May 4, 1987.

Robert J. Backstein, Tacoma, for KSLW, a partnership by Richard W. Wells, partner.

Lawrence J. Warren, Renton, for City of Renton.

SCHOLFIELD, Acting Chief Judge.

KSLW appeals both from the dismissal of its writ directing the City of Renton to renew its building permit and from the dismissal of its alternative action against the City for damages allegedly the result of an illegal downzone.

We hold that KSLW's appeal from the City's revocation of its permit must be dismissed for failure of the appellant to exhaust its administrative remedies. We affirm the trial court's dismissal of KSLW's damage claim for lack of standing.

FACTS

The property, which is the subject of this lawsuit, was originally owned by Lakeview Towers Associates. Lakeview obtained a permit from the City of Renton in July 1979 to construct an 86-unit condominium on the site (hereinafter the "Lakeview project"). Citizen reaction to the Lakeview project prompted a public hearing that resulted in a downzone to single-family use of the entire area that included the subject property. Because of its building permit, Lakeview's right to build the 86-unit project, however, was vested under the prior multi-family zoning. Consequently The appellant, KSLW, purchased the Lakeview project in October of 1980, after only minor progress had been made on construction. Relying upon the seller's assurances that the condominiums could be completed under the existing building permit, KSLW did not check the current zoning status of the property, and at that time was unaware of the downzone. Prior to the purchase, however, the City Building Director, Ronald Nelson, told KSLW that "substantial work" under the building permit would be required to keep it in force. On the strength of a bank's oral financing commitment, during October and November of 1980 KSLW made excavations and poured concrete foundation footings on the site, at a cost to it of over $142,000. The City then agreed to extend the building permit for an additional year beginning January 1981 on the condition that work commence within 120 days from that date. ¹

no one appeared at the public hearing on behalf of Lakeview to contest the downzone, and no appeal was taken from the final rezone of the area which, but for the building permit, would have reduced the development permissible on the Lakeview property from 86 to 10 units.

Unfortunately, before KSLW could finalize its bank loan, the bank so changed the terms of its oral commitment that KSLW was forced to reject the loan as uneconomical. Thereafter, KSLW diligently sought alternative financing, but without success. Consequently, no further construction was performed on the project and the building permit was in danger of being revoked by the City for failure to prosecute construction. On June 19, 1981, Nelson wrote to KSLW that due to the "tight money market" the City On December 31, 1981, just prior to the building permit's January 6, 1982 expiration date, KSLW sent an informal request to the City by letter asking for either a new permit or renewal of its existing permit. KSLW conditioned its request, however, upon the City's continued application of the prior multi-family zoning. The City Building Director responded by letter on January 6, 1982 that the June 19, 1981 notification was KSLW's final extension and that its permit had expired. KSLW made a timely appeal of this determination to the City Hearing Examiner, but this appeal was never pursued. Subsequently, KSLW filed suit in superior court to compel the City to either reissue the permit or respond in damages for what KSLW claimed was an illegal downzone of the property in 1979.

                would extend the permit for an additional 180 days. 2  Nelson also said that "[w]e will be unable to extend the permit again and we will not accept minor work on the project site as substantial construction."   Nevertheless, although KSLW continued to actively seek economical financing, it performed no permanent construction on the project during the entire year of 1981
                

The City denied KSLW's assertion that the administrative appeal was abandoned by "mutual agreement" of the parties. In any event, the trial court concluded that KSLW's building permit had expired and with it KSLW had lost its rights under the prior zoning code. The court also held that KSLW had no standing to challenge the 1979 downzone.

EXHAUSTION OF ADMINISTRATIVE REMEDIES

The doctrine of exhaustion of administrative remedies is well established in Washington. South Hollywood Hills Citizens Ass'n v. King County, 101 Wash.2d 68, 677 P.2d 114 (1984). Generally, the doctrine provides that the courts may not intervene in a case where an adequate administrative remedy has not first been pursued. Wright v. Woodard, 83 Wash.2d 378, 518 P.2d 718 (1974); Sunny Brook Farms v. Omdahl, 42 Wash.2d 788, 793, 259 P.2d 383 (1953).

Various rationales support this rule. As a practical matter the judiciary should give deference to agency expertise in areas outside the conventional experience of judges. Retail Store Employees Union, Local 1001 v. Washington Surveying & Rating Bureau, 87 Wash.2d 887, 906, 558 P.2d 215 (1976). The exhaustion doctrine also (1) ensures against premature interruption of the administrative process; (2) allows the agency to develop the necessary factual background upon which to base a decision; (3) provides for a more efficient process; and (4) protects the administrative agency's autonomy by allowing it to correct its own errors, thus ensuring that individuals are not encouraged to ignore its procedures by resorting to the courts. McKart v. United States, 395 U.S. 185, 89 S.Ct. 1657, 23 L.Ed.2d 194 (1969).

However, exceptions to the exhaustion requirement are recognized where these policies are outweighed by considerations of fairness and practicality. South Hollywood Hills Citizens Ass'n v. King County, supra, 101 Wash.2d at 74, 677 P.2d 114. For example, a party will not be required to exhaust administrative remedies where resort to the administrative procedures would be futile. Zylstra v. Piva, 85 Wash.2d 743, 539 P.2d 823 (1975); Orion Corp. v. State, 103 Wash.2d 441, 693 P.2d 1369 (1985).

The Renton Municipal Code, which was in effect in January 1982, provides for appeals to the Hearing Examiner from administrative determinations of the City's land use regulation codes. § 4-3010(A)(8). Although KSLW filed a timely appeal with the Hearing Examiner, this administrative process was apparently abandoned With but a few narrow exceptions, the exhaustion doctrine requires that parties aggrieved by administrative decisions utilize administrative appeal processes, if possible, to settle disputes before resorting to the courts. This requirement places the burden on the appellant, not the agency, to perfect the administrative appeal, although the agency must comply with any statutory directives to process appeals once they are made. If the agency refuses to act on an appeal properly before it, the appellant may seek a writ of mandamus to compel agency action. RCW 7.16.160; Coughlin v. Seattle School Dist. 1, 27 Wash.App. 888, 892, 621 P.2d 183 (1980).

                in favor of a suit in superior court.   KSLW does not maintain that an administrative appeal was futile.   Even if it had, the Orion court made it clear that the "futility" exception to the exhaustion doctrine is only applicable in rare factual circumstances, Orion, at 458, 693 P.2d 1369, which we find do not exist in this case.   Instead, KSLW alleges that the Hearing Examiner refused to act on the appeal, referring the matter to the City Attorney's office, and at trial KSLW maintained that the parties had agreed that a court should resolve their dispute.   KSLW asks rhetorically, "What more could the appellant have done to exhaust their [sic ] administrative remedies?"   Appellant's Reply Brief, at 13
                

In the instant case, when an appeal has been made from an administrative determination of the City's land use regulation code, the Renton Municipal Code directs the Hearing Examiner to conduct public hearings and make a decision based thereon. Renton Municipal Code § 4-3010(A) (1982). Thus, KSLW had the right to demand that the Hearing Examiner act on its appeal and the right to compel that action by writ of mandamus, if necessary. By choosing not to do so, KSLW failed to exhaust its administrative remedies, and the trial court could not intervene in the case. Even if the parties could have mutually agreed to forgo the administrative process, the City denies any such agreement. Moreover, there is no evidence that a binding stipulation to that effect was entered into. See RCW 2.44.010(1); Nevertheless, our decision does not rest solely upon this ground. Even if, arguendo, this matter was properly before the trial court, we affirm the court's disposition on the merits.

CR 2A.

STATUTORY CONSTRUCTION

A party has a vested right to develop property in accordance with zoning ordinances in effect at the time a building permit is applied for, if that permit is thereafter issued. Eastlake Community Council v. Roanoke Assocs., 82 Wash.2d 475, 480-81, 513 P.2d 36 (1973). Consequently, KSLW continued to have the right, despite the downzone, to develop the Lakeview project, so long as their building permit remained in force. It follows that the terms of that permit are governed by the 1976 building code under which the permit was issued. ³

Under the 1976 Uniform Building Code, after work has been suspended or abandoned for a period of 120 days, it can be recommenced only after a "new permit" is obtained "provided ... that such...