Pleas v. City of Seattle

• Court: Washington Supreme Court
• Writing for the Court: UTTER
• Citation: Pleas v. City of Seattle, 774 P.2d 1158, 112 Wn.2d 794 (Wash. 1989)
• Decision Date: 22 June 1989
• Docket Number: No. 54909-5
• Parties: Riley W. PLEAS and Nancy Pleas, husband and wife; Max A. Gurvich and Helen Gurvich, husband and wife; Joseph L. Brotherton and Maureen P. Brotherton, husband and wife; Lisa Gurvich; Tina H. Gurvich and Andria K. Gurvich; d/b/a Parkridge, a general partnership, Petitioners, v. The CITY OF SEATTLE, a municipal corporation, Respondent.

Page 794

112 Wn.2d 794

774 P.2d 1158

Riley W. PLEAS and Nancy Pleas, husband and wife; Max A Gurvich and Helen Gurvich, husband and wife; Joseph L Brotherton and Maureen P. Brotherton, husband and wife Lisa Gurvich; Tina H. Gurvich and Andria K. Gurvich; d/b/a Parkridge, a general partnership, Petitioners, v. The CITY OF SEATTLE, a municipal corporation, Respondent.

No. 54909-5.

Supreme Court of Washington En Banc.

June 22, 1989.

Montgomery, Purdue, Blankinship & Austin, John D. Blankinship, Jerry W. Spoonemore, Seattle, for petitioners.

Douglas N. Jewett, Seattle City Atty., Gordon F. Crandall, Asst., Philip Mortenson, Asst. Seattle, for respondent.

UTTER, Justice.

Parkridge, a general partnership, seeks reversal of a Court of Appeals decision reversing a judgment against the City of Seattle in an action brought by Parkridge for intentional interference with a business expectancy. We reverse the Court of Appeals and remand to the King County Superior Court.

The facts of this case are the same as those involved in Parkridge v. Seattle, 89 Wash.2d 454, 573 P.2d 359 (1978) with some additional facts found by the trial court. Clerk's Papers, at 144-66.

In 1966 and 1967 Parkridge purchased property near Volunteer Park on Capitol Hill in Seattle with the intent of constructing a high rise 60-unit apartment complex. This use of the property was allowed under existing zoning regulations.

In the early 1970's, neighborhood residents formed the Capitol Hill Community Council and the Capitol Hill Land Use Review Board (CHLURB). Several members of this group wanted Parkridge to either renovate the existing structures on the property or construct town houses. CHLURB requested the City to give them special notice of any application for demolition permits in the Capitol Hill area. Although this arrangement was not made with other groups in the city, then-Mayor Wes Uhlman directed the Superintendent of Buildings to accommodate CHLURB. The trial court found that this "special treatment ... constituted a form of favoritism." Clerk's Papers, at 148-49.

In December 1973 Parkridge applied for a demolition permit for one of the nine houses on the property. In accordance with the special arrangement with CHLURB, the City promptly notified the Capitol Hill group of the Parkridge application. An employee of the Mayor's office, who was also a member of the Community Council executive board, met with the Superintendent of Buildings and reached an agreement that an Environmental Impact Statement (EIS) would be required before any demolition permits were issued for the Parkridge project. This agreement bypassed the normal procedures of the City under the State Environmental Policy Act of 1971 (SEPA). Standard procedures required consideration of an environmental checklist, personal visit to the site by City staff, and staff review, culminating in a declaration of either significance or nonsignificance. None of these steps were taken. The City also requested certain environmental data not customarily required of permit applicants.

During the same time period, some of the CHLURB officers met with John Miller, then chairman of the City Council Planning Committee and an unannounced candidate for Mayor. Miller encouraged the group to petition the City for a downzone of the Parkridge property to single family residential. CHLURB filed a petition for downzone of the property in early January 1974, approximately 1 month after Parkridge had applied for demolition permits.

While the downzone petition was pending, Parkridge applied for a permit to construct an apartment complex. In April 1974, the Superintendent of Buildings requested data for preparation of an impact statement for the proposed structure. This request also bypassed the normal procedures and again included items not customarily required of applicants for building permits for similar structures. Nonetheless, Parkridge employed an environmental consultant to assemble and submit the information requested.

In June 1974 the City Council, against the recommendation of the Planning Commission, granted the petition to downzone the Parkridge property to single family residential. Parkridge filed a petition for certiorari to review the City Council's decision.

After Parkridge submitted environmental data on the building permit, the building department notified Parkridge in January 1975 that it would take no further action on the permit. Parkridge then brought a mandamus action to compel continued processing of the building permit application. That action was consolidated with the action challenging the rezone.

In June 1975 the trial court ruled that the rezone was unreasonable, arbitrary and capricious and therefore void. The court also ruled that the City's refusal to process the permit application was improper. The court ordered the City to continue processing the building permit application promptly, diligently, and in good faith.

In December 1976 Parkridge filed the present action seeking damages from the City for intentional interference with a business expectancy. The action was stayed, however, until after it had obtained a building permit and constructed the apartment complex.

This court rendered its decision in Parkridge v. Seattle, supra, in March 1978. We affirmed the finding of the trial court that the City's rezone action was arbitrary and capricious and therefore void. Parkridge, at 459, 573 P.2d 359. The court also held that Parkridge had a right to have its building permit application processed under the zoning ordinances in effect at the time it filed the application.

The City then notified Parkridge that the EIS prepared in 1974 was now outdated and would have to be redone in accordance with subsequent amendments to SEPA. Parkridge continued to press for a demolition permit for the nine dilapidated structures on its property, spurred by the City's repeated inspections and emergency orders which declared the structures to be an imminent hazard. Despite these emergency orders, the City continued to refuse to issue a demolition permit until a new EIS was completed for the entire project.

In October 1978 Parkridge moved for an order compelling the City to issue permits immediately for the demolition of the nine structures without requiring an impact statement. The King County Superior Court denied this motion on the basis of lack of jurisdiction since the relief sought was not predicated upon a right previously adjudicated; Parkridge did not appeal.

In May 1980 the City issued a draft EIS and a final EIS was issued in April 1981. In April 1982 the Department of Construction granted Parkridge a master use permit for a 50-unit apartment building. The CHLURB appealed from that decision but later settled their grievances with Parkridge.

The City issued demolition permits in August 1983 and a building permit in December 1983. Parkridge constructed the apartment house in 1984; the City issued a certificate of occupancy in January 1985. The present action, begun in December 1976, proceeded to trial.

In rendering its decision, the trial court made several findings of fact which we adopt here since the findings are supported by substantial evidence. Nichols Hills Bank v. McCool, 104 Wash.2d 78, 82, 701 P.2d 1114 (1985). The trial court found that at all times after December 5, 1973 (the date Parkridge filed its original application for a demolition permit), the City, through its officers, intentionally prevented, blocked, and delayed construction of Parkridge's apartment complex merely because they "thought it politically expedient for them to cater to those opposing an apartment house on the property." Clerk's Papers, at 164. Furthermore, the City did not process Parkridge's application for permits "promptly and diligently and in good faith" as required by the judgment of the court entered in June 1975 and as required by this court in its opinion of March 1978.

The trial court also found that throughout the permit application process beginning in 1973,

the plaintiffs were diligent, patient and forthright in their efforts to construct an apartment building on the property, notwithstanding unreasonable demands made upon them by City officials. They were ready, willing and able to construct the building as soon as permits were issued

. . . . .

Clerk's Papers, at 163-64.

As a result of the City's tortious interference, the court determined that Parkridge had been damaged in the total amount of $969,468, which included lost profits, loss of favorable financing, increased construction costs due to inflation, the costs of the first EIS which was discarded by the City, and attorney fees. However, the court denied the claim for $155,240 in damages sought by Parkridge due to a subsequent change in the method of calculating property size which prevented it from modifying the fourth floor of the apartment structure.

The City appealed and the Court of Appeals reversed, holding that Parkridge had not presented sufficient evidence to prove that the City's interference with its business expectancy was improper. The court further held that the City's actions were not the proximate cause of Parkridge's damages. Pleas v. Seattle, 49 Wash.App. 825, 746 P.2d 823 (1987). This court granted Parkridge's petition for review.

I

We first consider § 766B of the Restatement (Second) of Torts and its effect in allocating burdens of proof and persuasion in actions for tortious interference.

The tort of intentional interference with contractual relations or business expectancy was defined by this court in Calbom v. Knudtzon, 65 Wash.2d 157, 396 P.2d 148 (1964). Relying in part on the first Restatement of Torts § 766 (1939), we identified four necessary elements for a prima facie case:

(1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing...