PUD NO. 2 OF GRANT COUNTY, WASH. v. N. AMERICAN FOREIGN TRADE …

• Decision Date: 03 February 2005
• Docket Number: No. 22894-1-III.,22894-1-III.
• Court: Washington Court of Appeals
• Parties: PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY, WASHINGTON, a municipal corporation, Respondent, v. NORTH AMERICAN FOREIGN TRADE ZONE INDUSTRIES, LLC, a Washington limited liability company, Pacific Northwest Bank, a Washington banking corporation, Appellant.

105 P.3d 441

PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY, WASHINGTON, a municipal corporation, Respondent, v. NORTH AMERICAN FOREIGN TRADE ZONE INDUSTRIES, LLC, a Washington limited liability company, Pacific Northwest Bank, a Washington banking corporation, Appellant.

No. 22894-1-III.

Court of Appeals of Washington, Division 3, Panel Eight.

February 3, 2005.

Frank R. Siderius, Siderius, Lonergan & Martin LLP, Seattle, WA, for Appellant.

David E. Sonn, Kari D. Kube, Jeffers, Danielson, Sonn & Aylward PS, Wenatchee, WA, Ray A. Foianini, Ephrata, WA, for Respondent.

BROWN, J.

This is a condemnation dispute between Grant County Public Utility District No. 2(PUD) and North American Foreign Trade Zone Industries, LLC (NAFTZI) involving land leased from NAFTZI by the PUD for its diesel power generation facility. We first decide whether the trial court erred in reconsidering and reversing an initial order declaring the PUD had given inadequate statutory notice of the initiating resolution. Next, we decide whether the trial court abused its discretion in not requiring the PUD to re-file the condemnation petition. Finally, we decide whether the trial court erred in granting its order of public use and necessity. Finding no error, we affirm.

FACTS

In late 2000 and early 2001, an electricity shortage caused power prices to significantly spike. In response to the resulting energy supply crisis, Governor Gary Locke issued proclamations and energy supply alert orders. By March 2001, the PUD had declared an energy emergency, acquiring 20 diesel generators with a capital cost of about $27 million. Similarly, other utilities were electing to purchase or lease diesel generators to lessen power purchases and "augment the amount of power available to sell." Clerk's Papers (CP) at 508.

On April 9, 2001, NAFTZI and the PUD signed a 15-month lease for 20 acres of unimproved land adjacent to PUD property. The lease was renewable for up to 12 months and terminated on July 31, 2003. The PUD declined a proposed purchase option, but negotiations continued. By June 18, 2003, lease extension, purchase and condemnation negotiations apparently broke down when NAFTZI's corporate counsel wrote in response to a PUD June 16 letter that the landowner was "more than willing to defend a condemnation action." CP at 660. The writer refused to concede "the `public purpose' requirement for condemnation" at that time. CP at 661. Further, corporate counsel accused the PUD of dealing in "bad faith" when all his principal wanted was "fair market value for the property." CP at 661. On July 14, 2003, the PUD passed Resolution 7643 authorizing condemnation of approximately 10 acres of the leasehold.

Critical here is the process leading to Resolution 7643. Mary L. Heston, PUD's Executive Secretary, declared the week before the July 14 public hearing she followed her regular "procedure" and compiled the July 14 agenda. CP at 662-63. The agenda shows Resolution 7643 was to be considered by the PUD Commission. The agenda was faxed to newspapers and radio stations, sent electronically to all district employees and individuals who had requested notification, sent to the PUD commissioners, and posted outside the commission's meeting room. The agenda identified Resolution 7643 as a "Resolution Authorizing the Acquisition By Condemnation of Certain Real Property." CP at 665.

Resolution 7643 recited the property's legal description and approximate size and specified that purchase negotiations had failed. It also contained statements of public use and necessity, named the owners of the described property, including NAFTZI, and authorized a condemnation suit. As noted below, PUD's counsel later argued the agenda's reference to the proposed resolution satisfied the court's notice concerns because the public could inspect the proposed resolution as part of the PUD's public record, but we could not find that process explained.

On July 17, 2003, the PUD filed the condemnation petition. In September 2003, NAFTZI responded, admitting passage of Resolution 7643, but denying a public use and necessity. Affirmatively, NAFTZI alleged the need for a "buffer" and, "that the entire 20 acres as originally agreed under the Lease be the subject of this action" or alternatively "that additional damages be awarded for the adverse effects" of not providing a buffer for the generators. CP at 17.

No notice issue was raised until November 17, 2003 when NAFZTI moved to dismiss based upon lack of "statutory notice required to legislatively initiate [condemnation]." CP at 22. The PUD responded that NAFTZI sought greater notice than required by law.

But before the hearing on the dismissal motion, the PUD sent out an agenda in the described manner for a December 15, 2003 meeting. Additionally, the PUD specially notified NAFTZI's counsel. Further, it specially published proposed alternative resolutions for the December public meeting, one dismissing the pending condemnation and the other ratifying Resolution 7643. The second alternative was described as, "[a] Resolution Ratifying Resolution No. 7643 Relating To The Acquisition By Condemnation Of Certain Real Property For Use As A Diesel Generation Site." CP at 668. At the December hearing, NAFTZI unsuccessfully argued for dismissal. On December 29, the commission adopted the second alternative, Resolution 7680, ratifying Resolution 7643.

On January 15, 2004, the trial court considered and orally granted NAFTZI's dismissal request, adopting NAFTZI's view that the PUD gave inadequate notice describing the affected land. The trial court did not rule on the effect of the "December notice." Report of Proceedings (RP) (Jan. 14, 2004) at 30. The trial court's written order was subject to the PUD's reconsideration motion set for February 20.

Reconsideration was partly prompted when the PUD pointed out the July agenda "referenced [Proposed Resolution 7643], that was part of the public record." RP (Jan. 14, 2004) at 31. The PUD insisted:

As far as the city and town statutes are concerned, we complied with those statutes. If you read those statutes, for example, 35.23.221, it says, promptly after adoption of the ordinance, you publish it. In this case, there has been publication of the resolution.

RP (Jan. 14, 2004) at 31 (emphasis added). The court responded: "I'm not requiring a publication." RP (Jan. 14, 2004) at 31.

On February 20, the court considered the December events, particularly Resolution 7680, ratifying Resolution 7643. The trial court reversed its prior dismissal order "based upon CR 15 & ratification case law." CP at 93.

On April 1, 2003 the trial court granted the PUD's motion for determination of public use and necessity. The court favorably considered several declarations explaining the initial need for the generators and the current necessity to keep the generators to meet the PUD's electrical load, reliability, and reserve requirements. Partly based on dismantlement costs and salvage values, the court rejected NAFZTI's argument that the PUD merely meant to profit from the generators and no longer needed the generators to serve a public use. The court concluded "there's a reasonable basis for [the PUD] to reach its decision that it needs to keep these generators at this location and therefore condemn the property." RP (April 1, 2004) at 95. The court ruled the case should proceed to trial.¹ This appeal followed.²

ANALYSIS

A. Reconsideration Order

The issue is whether the trial court erred in reconsidering and denying NAFTZI's motion to dismiss for lack of statutory notice of the PUD's intent to initiate condemnation proceedings and concluding Resolution 7680 properly ratified Resolution 7643.

We review a trial court's decision on a reconsideration motion for abuse of discretion. Weems v. N. Franklin Sch. Dist., 109 Wash.App. 767, 777, 37 P.3d 354 (2002). Abuse of discretion occurs when the trial court's decision rests on untenable grounds or untenable reasons. State ex rel. Carroll v. Junker, 79 Wash.2d 12, 26, 482 P.2d 775 (1971).

NAFTZI contends Resolution 7680 could not ratify Resolution 7643 because under Port of Edmonds v. N.W. Fur Breeders Co-op., Inc., 63 Wash.App. 159, 816 P.2d 1268 (1991), the proper remedy is to start the condemnation process anew. Procedural error (e.g., lack of proper notice) is a question of law given de novo review. State v. Harris, 114 Wash.2d 419, 441, 789 P.2d 60 (1990).

RCW 54.16.020 empowers a PUD to acquire property by eminent domain. "The right of eminent domain shall be exercised pursuant to resolution of the commission and conducted in the same manner and by the same procedure as is provided for the exercise of that power by cities and towns." RCW 54.16.020. Chapter 8.12 RCW relates to eminent domain by cities. When a city desires to condemn property, the process is begun with an ordinance adopted by the city's municipal authority. RCW 8.12.040. Notably, no specific requirements for the form, content, or notice of such an ordinance are found in RCW 8.12.040. Once the ordinance is passed, the city files a petition in the superior court requesting a decree of public use and necessity and a determination of just compensation. RCW 8.12.050; City of Des Moines v. Hemenway, 73 Wash.2d 130, 138, 437 P.2d 171 (1968).

The condemnation petition must contain a copy of the ordinance and a "reasonably accurate description" of the property to be taken. RCW 8.12.060. The basic purpose of RCW 8.12.060 "is to acquaint the condemnee and the court with the nature and extent of the authority under which the municipal condemnor is proceeding." City of Tacoma v. Welcker, 65 Wash.2d 677, 687, 399 P.2d 330 (1965). Relevant to Resolution 7680, the requirements of RCW 8.12.060 are "not jurisdictional in the sense that an infirmity therein cannot be corrected by timely and appropriate amendment." Id. NAFTZI does not challenge the form of the condemnation petition or the adoption process...