Pepper v. J.J. Welcome Const. Co.

• Decision Date: 04 April 1994
• Docket Number: No. 29128-9-I,29128-9-I
• Citation: 73 Wn.App. 523,871 P.2d 601
• Court: Washington Court of Appeals
• Parties: Robert Johnson PEPPER, a widower, and Peggy Pepper French, as Trustee of the Florence M. Pepper Testamentary Family Trust; Larry Jaffe and Debra Jaffe, husband and wife, Appellants, v. J.J. WELCOME CONSTRUCTION COMPANY, a Washington corporation, L.A. Welcome and Betty Welcome, husband and wife; R.R. Welcome and Barbara Welcome, husband and wife; Joy and William Backstrom, wife and husband, Respondents, and King County, a municipal corporation, Additional Respondent.

Page 523

73 Wn.App. 523

871 P.2d 601

Robert Johnson PEPPER, a widower, and Peggy Pepper French,

as Trustee of the Florence M. Pepper Testamentary

Family Trust; Larry Jaffe and Debra

Jaffe, husband and wife, Appellants, v. J.J. WELCOME CONSTRUCTION COMPANY, a Washington corporation,

L.A. Welcome and Betty Welcome, husband and wife; R.R.

Welcome and Barbara Welcome, husband and wife; Joy and

William Backstrom, wife and husband, Respondents,

and

King County, a municipal corporation, Additional Respondent.

No. 29128-9-I.

Court of Appeals of Washington,

Division 1.

April 4, 1994.

Reconsideration Granted April 4, 1994.

As Amended May 6, 1994.

Camden Michael Hall, Thomas Langston Weinberg, Cynthia Renz First, Foster Pepper & Shefelman, Seattle, for appellants

Sandra Bates Gay, Bellevue, George William Akers, Michael Wayne Babcock, Montgomery, Purdue, Blankinship & Austin, Maureen L. Hoy, Stephen Gift Skinner, and Mark Robert Johnsen and Karr Tuttle Campbell, Seattle, for respondents.

WEBSTER, Chief Judge.

Robert Pepper, Peggy Pepper French, and Larry and Debra Jaffe appeal an award of damages for

                injury to their properties caused by excessive water run-off from a private residential development.   They argue the trial court stripped away their claims against King County, severely impaired their claims against L.A., Betty, R.R., and Barbara Welcome, Joy and William Backstrom and J.J. Welcome Construction Company, and eviscerated the jury award.   Welcome and Backstrom cross appeal
                

FACTS

Pepper/Jaffe own adjoining properties at the eastern base of an upland plateau known as Novelty Hill. Welcome Wood is a Novelty Hill subdivision owned and developed by the Welcomes and Backstroms (Welcome). King County approved short plats for the Welcome Wood project in 1981/82. Welcome hired Meriweather-Leachman to design the plans and J.J. Welcome Construction Co. (owned by Welcome) to build a road and drainage system. J.J. Welcome subsequently revised the drainage system eliminating check dams and level overflows, which had been designed to reduce concentrated water run-off from the site.

The Welcome Wood road and drainage system was substantially complete in November 1983. The County gave final approval in April 1984, and accepted them for County maintenance in March 1985. Welcome sold lots with the last lot being sold in 1990. Various lot owners constructed homes, built driveways and cleared trees for views and pastures.

In the fall of 1978, Pepper first observed increased run-off and deposits of sediment on his property allegedly from Novelty Hill's clearing and grading of land. Similar problems occurred during the winter storms over the next several years. ¹ Pepper filed suit in October 1986, and was joined by Jaffe in August 1987.

DISCUSSION

Pepper/Jaffe claim the court erred in (a) dismissing their claims for inverse condemnation, injunctive relief, public and private nuisance, trespass, intentional tort, and Pepper's emotional distress claim, (b) limiting their damages to those occurring after 1983/84, (c) reducing the jury's award of damages to the lesser of the cost of restoration or the diminution in value of their properties, (d) allowing the jury finding that the damage was temporary, and (e) ruling that the Washington Tort Reform Act was not unconstitutional and that they were not entitled to attorneys' fees. ² Welcome and J.J. Welcome crossclaim that the court erred in denying their summary judgment motions to dismiss.

Welcome's Motion to Dismiss

Welcome claims that the court erred in denying their motion for summary judgment because they had no duty which would prevent them from developing and selling residential lots on their property and they are not personally liable for the acts of the independent contractor, J.J. Welcome; thus, there was no proximate cause between their activities and Pepper/Jaffe's injuries.

Here, it was disputed whether: (1) the 2- or 3-year statute of limitations applied; (2) the common law discovery rule had been met as to Jaffe; (3) the independent contractor, J.J. Welcome, was in fact independent; (4) Welcome had a non-delegable duty; and (5) Welcome negligently hired J.J. Welcome, the independent contractor. These issues were material to the outcome, and thus, the court properly denied the motion for a summary judgment of dismissal.

J.J. Welcome's Motion to Dismiss

J.J. Welcome claims the court erred in finding a disputed issue of material fact as to whether it was Welcome's "alter ego". It argues it was entitled to a dismissal since it was an independent contractor and the 3-year statute of limitations had expired. It contends that the doctrine of piercing the "corporate veil" may apply to shareholders' liability for a corporation's actions, but not to a corporation's liability for its shareholders' acts.

It is true that the "alter ego" doctrine is most commonly invoked to impose liability upon corporate officers for fraud committed by a corporation. However, this doctrine has also been recognized as imposing liability on a corporation for acts of its shareholders where the corporation and the shareholders are one and the same; hence, the act of the individual was the act of the corporation. Standard Fire Ins. Co. v. Blakeslee, 54 Wash.App. 1, 6, 771 P.2d 1172, review den'd, 113 Wash.2d 1017, 781 P.2d 1320 (1989).

Here, there was a genuine issue as to whether J.J. Welcome acted as an independent contractor, was one and the same as the Welcome defendants, or acted as their agent. Thus, summary judgment dismissing J.J. Welcome would have been inappropriate. CR 56(c).

Inverse Condemnation Claims Against King County

Pepper/Jaffe claim that the court improperly dismissed their inverse condemnation claims against King County. They argue that in failing to enforce its own ordinances, the County took or caused damage to their property without just compensation. ³

The term inverse condemnation has been used to describe an action alleging a governmental taking, brought to recover the value of property which has been appropriated in fact, but with no formal exercise of its eminent domain power. Lambier v. Kennewick, 56 Wash.App. 275, 279, 783 P.2d 596 (1989), review den'd, 114 Wash.2d 1016, 791 P.2d 535 (1990). Liability may exist where the alleged taking or damage was caused by affirmative action of a government entity, i.e., appropriating the land, restricting its use through regulation, or causing damage by constructing a public project to achieve a public purpose. Rains v. Department of Fisheries, 89 Wash.2d 740, 745- 575 P.2d 1057 (1978). A public project requires a "governmental enterprise, the value of which is enhanced by the State's actions." See Maple Leaf Investors, Inc. v. Department of Ecology, 88 Wash.2d 726, 733, 565 P.2d 1162 (1977).

Here, the damages to the Pepper/Jaffe properties were not the result of the County appropriating or regulating their use of the land. There was no allegation that Welcome Wood was a government project, or that King County affirmatively participated in any way. The fact that a County regulates development and requires compliance with road and drainage restrictions does not transform a private development into a public project. Since Welcome Wood was not a public project, the County did not appropriate Pepper/Jaffe's land, and land use regulation of their property did not cause the damages, no inverse condemnation was involved. The dismissal was proper.

Tort and Injunctive Relief Claims Against King County

Pepper/Jaffe next claim the trial court erred in dismissing the remainder of their tort and injunctive relief claims against the County. Those claims sound in negligence; ⁴ the elements of negligence are duty, breach, proximate cause, and resulting injury. Alger v. Mukilteo, 107 Wash.2d 541, 545, 730 P.2d 1333 (1987). To prove liability Pepper/Jaffe must first establish that King County owed them a duty of care. Atherton Condominium Apartment-Owners Ass'n Bd. of Directors v. Blume Dev. Co., 115 Wash.2d 506, 528, 799 P.2d 250 (1990). The existence of a duty is a question of law. Id. Thus, we review the issue de novo.

The public duty doctrine which immunizes a municipality from claims based on the negligent or improper exercise of its regulatory authority is subject to four recognized exceptions: (1) legislative intent, (2) failure to enforce, (3) special relationship, and (4) rescue. None of these exceptions apply here.

Legislative Intent. Pepper/Jaffe claim that King County was liable under the legislative intent exception to the public duty doctrine. They argue that, as adjacent property owners, the King County Code evidences a clear intent to identify and protect them. If a statute evidences a legislative intent to protect a particular class of individuals, members of that class may bring a tort action against the governmental entity for statutory violations. Honcoop v. State, 111 Wash.2d 182, 188, 759 P.2d 1188 (1988).

Here Pepper asserts that the County Code stated it was intended to "protect property owners adjacent to developing land from increased runoff rates which could cause erosion of abutting property ... and to decrease surface water damage to public and private property." Surface Water Runoff Policy, 2 KCC 20.50.010. ⁵ However, in Taylor v. Stevens Cty., 111 Wash.2d 159, 164, 168, 759 P.2d 447 (1988), the Supreme Court found that similar statutory language stating it intended to protect "building occupants" was primarily designed to protect the public and thus, the legislative intent exception was inapplicable to the occupants of a house. Taylor, at 165, 759 P.2d 447. Accordingly, we find that general precatory language in a statute does not identify a particular and circumscribed class of individuals. Because the statute referenced here was addressed to a general class of adjacent property owners, and it referenced the public, not a narrow class of specific property owners, the legislative intent...