State, Dept. of Ecology v. Pacesetter Const. Co., Inc.
| Decision Date | 03 November 1977 |
| Docket Number | No. 44226,44226 |
| Parties | , 8 Envtl. L. Rep. 20,119 STATE of Washington, DEPARTMENT OF ECOLOGY and Slade Gorton, Attorney General, James R. Huntley and Colleen Grounds Huntley, his wife, Respondents/Cross-Appellants, v. PACESETTER CONSTRUCTION COMPANY, INC., a Washington Corporation, William A. Hoffman and Elizabeth Hoffman, his wife, Appellants and City of Seattle, Third-Party Defendants. |
| Court | Washington Supreme Court |
Derrill T. Bastian, Seattle, for appellants.
Slade Gorton, Atty. Gen., Robert Jensen, Asst. Atty. Gen., Olympia, John P. Harris, Corp. Counsel, J. Roger Nowell, Asst. Corp. Counsel, Barnett, Pease, Doces & Lewicki, Gust Doces, Arthur G. Barnett, Seattle, for respondents.
The principal issue appellants-defendants raise is whether the Shoreline Management Act of 1971 as applied to a privately owned lakefront lot violates article 1, section 16 (amendment 9) of the state constitution which forbids the taking or damaging of private property without just compensation.
The controlling facts are these. In May 1973, Pacesetter Construction Company (Pacesetter) acting through defendant-appellant Hoffman, a member of its Board of Directors, purported to purchase a house and lot in Hoffman's name in a residential area of Seattle. The lot fronts on Lake Washington and extends back from the lake a substantial distance. It is located, as are the lots of neighboring property owners, in what the Shoreline Management Act of 1971 (SMA) defines as "wetlands." RCW 90.58.030(2)(f). Both to the north and to the south of Pacesetter's property are similar lots which also front on Lake Washington. The residences on these lots are uniformly located on the upper portion of the properties, conforming to a voluntarily created setback line to preserve the excellent and much valued view the owners of these lots enjoy.
In August 1973, the City of Seattle approved Pacesetter's application as owner to divide the purchased lot into two parts, the upper and lakeward lots. Two years later the City of Seattle, at Pacesetter's request, issued building permits to build a house on each lot. The lakeward house was designed to reach a height of 37.9 feet above the grade level existing when construction began and was much closer to the lake than the other houses in the neighborhood. Furthermore, the location of both houses violated Seattle's building code 5-foot sideyard setback requirement.
In August, 1974, plaintiff-respondents Huntley purchased the adjoining waterfront house and lot immediately north of the Pacesetter property. The Huntleys thereafter, beginning in July 1975 and prior to commencement of construction by Pacesetter, made repeated attempts to find out about Pacesetter's proposed construction on its property, and Pacesetter falsely assured them the lakeward house would not substantially impair the view from Huntleys' property.
Pacesetter sent the city an earnest money agreement for the upper house and lot dated August 9, 1975, purportedly executed by a Mr. and Mrs. Tingwall. The agreement was written without Tingwalls' permission and their signature was forged by a Pacesetter employee. Pacesetter at the same time falsely assured the city Hoffman was a "contract purchaser" of the lakeward lots. The city relied on Pacesetter's representations and no substantial development permit was required.
From the time it had acquired its lots, Pacesetter had taken steps to avoid the otherwise existing necessity of obtaining a substantial development permit under SMA. Thus, when Pacesetter acquired property, Hoffman purported to enter into a contract with Pacesetter to have the latter build him a house on the lakeward part of the purchased lot. The trial court held this contract to be void and unenforceable and that this contract was a subterfuge by defendants to deceive the City of Seattle and to avoid the requirement of obtaining a substantial development permit required by SMA.
The plans for the lakeward house were finally revealed at an August 22, 1975 meeting in Seattle. Defendants indicated they intended to continue the construction. In November 1975, the night before Mrs. Tingwall's deposition, the Tingwalls signed a second earnest money agreement backdated to August 18, 1975. The trial court, in an unchallenged finding, found this to be an apparent attempt to manufacture evidence. Tingwalls were later released by Pacesetter from this second agreement. The court further found that the Tingwall earnest money agreement was a sham to mislead the city into continuing, in effect, a building permit on the upper portion of the Pacesetter property.
Huntleys commenced an injunction suit against defendants on September 5, 1975, alleging, inter alia, that no substantial development permit was applied for as required by RCW 90.58.140 and that both the upper and lakeward houses were in violation of RCW 90.58.320 and the policies of SMA set forth in RCW 90.58.020. On September 19, 1975, the State of Washington, Department of Ecology, joined the suit as plaintiff and obtained a temporary restraining order halting construction of the houses. At that time, the foundations had been poured for both houses and two of three stories had been framed in on the lakeward house.
The court, after trial, entered a permanent injunction ordering removal of both houses, restoration of the original grade on the lakeward lot, prohibiting construction of any structure closer to the lake than the neighboring houses, and awarded Huntleys accrued and continuing damages for loss of view until abatement. The court also cancelled building permits on both houses because they were fraudulently obtained, ordered the city to require a substantial development permit prior to allowing any further construction on the property and required the city to consider whether the area around the property is environmentally sensitive under the Environmental Policy Act of 1971 (SEPA-RCW 43.21C). The court awarded Huntleys their costs and attorneys' fees and awarded the Department of Ecology its costs. Defendants appealed, and plaintiff Huntley and the Department of Ecology cross-appealed.
The first issue defendants raise is whether SMA as applied to the two Pacesetter lots is a taking or damaging of private property without compensation. The various tests that have been applied or suggested to resolve similar questions have created much controversy. Defendants' brief describes four tests, the test most commonly applied being the so-called test of balancing private loss against public gain. See generally, F. Michelman, Property, Utility and Fairness: Comments on the Ethical Foundations of "Just Compensation" Law, 80 Harv.L.Rev. 1165, 1191 (1967); J. Kusler, Open Space Zoning: Valid Regulation or Invalid Taking, 57 Minn.L.Rev. 1 (1972).
Whatever may be the relative merits of the respective tests, Pacesetter concedes the trial court in holding no taking or damaging occurred under art. 1, § 16 (amendment 9) balanced the private loss against public gain. Thus, in finding of fact No. 24, in referring to the defendant's proposed use of the Pacesetter property, the court finds:
This drastic effect upon the neighborhood and the effect upon the neighbors is a much greater loss socially and generally than the loss to one owner in requiring him to restrict his use in a manner that will not cause deterioration of the present conditions of the shoreline.
Finding of fact No. 25 states:
There is no evidence that application of the regulations of the Shoreline Management Act of 1971 to the Pacesetter property will deprive Pacesetter as an owner of all reasonable, economic use of its land.
Conclusion of law No. 9 states:
If one house sits far ahead of the others, then for that one person's financial benefit, he would be allowed to cause a drastic invasion into the aesthetics of the neighborhood and a tremendous financial loss to all of his neighbors.
The balancing test used by the trial court was adopted by this court while the instant case was on appeal. Maple Leaf Investors, Inc. v. Dep't of Ecology, 88 Wash.2d 726, 565 P.2d 1162 (1977). There the Department of Ecology denied property owners a permit to operate, maintain and construct single family homes within a flood control zone. The property owners contended they were entitled to just compensation because the denial deprived them of the use of 70 percent of their land on which to construct houses. The state contended RCW 86.16, which provides for flood control zones by the state, is police power legislation and no unconstitutional taking or damaging occurred by applying the statute. This court agreed, stating:
The next issue raised by the appellant is whether the prohibition on construction for human habitation within the floodway is a taking or damaging of private property for public use in violation of Const. art. 1, § 16, and the fifth amendment to the United States Constitution, or whether the prohibition is a valid exercise of the state police power.
In cases such as this, the judicial reasoning involved in a determination of the issue of police power versus condemnation is not reduced to a precise formula, nor is it capable of being so handled. There is no single, simple test to use in dealing with the taking issue. The court, guided by broad general principles, must decide each case on its own facts. See Bosselman, Callies & Banta, The Taking Issue (U.S. G.P.O. No. 4111-00017, 1973); Van Alstyne, Taking or Damaging by Police Power: The Search for Inverse Condemnation Criteria, 44 S.Cal.L.Rev. 1 (1971)
The question essentially is one of social policy which requires the balancing of the public interest in regulating the use of private property against the interests of private landowners not to be encumbered by restrictions on the use of their property. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322, 28 A.L.R. 1321 (1922)...
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