Holden-mcdaniel Partners v. City Of Arlington

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

HOLDEN-MCDANIEL PARTNERS,
LLC,
No. 73528-4-
Appellant,
DIVISION ONE

CITY OF ARLINGTON, a municipal
corporation; WOODLAND RIDGE, a
joint venture; KAJIMA DEVELOPMENT
CORP., A JOINT VENTURE;
ARLINGTON COUNTRY CLUB, INC.,
a joint venture; BNSF RAILWAY C""'

COMPANY, a Delaware corporation,

Respondents. UNPUBLISHED OPINION

HOMESTREET BANK, formerly known
as CONTINENTAL SAVINGS BANK;
BANNER CORPORATION, formerly
known as FIRST SAVINGS BANK OF
WASHINGTON; VINE STREET FUND,
LLC; U.S. BANK NATIONAL
ASSOCIATION, a subsidiary of U.S.
BANCORP; SEATTLE MORTGAGE
COMPANY; PBW, LLC; GLENEAGLE
COUNTRY CLUB ASSOCIATION;

Petitioners
FILED: October 31, 2016

Spearman, J. — Appellant Holden McDaniel Partners, LLC (HM) brought

claims against the City of Arlington, Burlington Northern Santa Fe (BNSF) Railway

Company, and the developers of the neighboring property, Gleneagle, for

designing, developing, operating and maintaining a stormwater management
No. 73528-4-1/2

system that caused stormwater runoff and flooding on HM's property. The trial court

dismissed HM's claims on summary judgment based on a release agreement

executed by the parties, the statute of limitations, and HM's failure to establish

damages. Because the trial court erred in dismissing HM's claims based on the

release agreement and because there are disputed issues of material fact as to

whether HM established its claimed damages, we reverse the trial court on those

issues. We otherwise affirm.

FACTS

Appellant Holden-McDaniel Partners, LLC ("HM") owns property in Arlington,

Washington, at 18520 67th Avenue North (Property). HM purchased the Property in

1986 and manufactured steel under the company name HCI Steel Products, Inc.

The Property was bordered by a forested hill to the east and by railroad tracks on

the west. There was a culvert on the Property that carried drainage from the

eastern slope across the Property and discharged it into a ditch near a right-of-way

belonging to respondent BNSF. The water then passed through a culvert under the

right-of-way and flowed to the south.

Beginning in the 1980s, the area east of the Property was being developed

into a residential community and golf course known as Gleneagle. In 1989,

respondents Woodland Ridge, Kajima Development Corp., and Arlington Country

Club, Inc. (WRJV) purchased the development rights to Gleneagle. Respondent City

of Arlington (City) and WRJV entered into a rezone contract where WRJV paid the

City to upgrade the downstream stormwater system to accommodate the increased

stormwater runoff from the project. The Property flooded in November 1990, when
No. 73528-4-1/3

the stormwater retention pond to the east (W-1) overflowed. The same thing

happened in December 1994, November 1995, and December of 1996.

In 1994, WRJV enlisted Triad Engineering (Triad) to develop a master

drainage plan for Gleneagle. Triad determined that the existing facilities were

insufficient and on February 2, 1995, contacted the City to suggest that an

enhanced system be constructed on HM's property. At that time, HM had submitted

plans for a new manufacturing building. It is unclear from the record whether HM

had agreed to accommodate the runoff from Gleneagle as well as its own

stormwater issues. Eventually HM agreed to move the existing culvert south and

installed it "at a steeper slope and with an inlet configuration which allowed for

greater surcharging at the upstream end. . . ." Clerk's Papers (CP) at 1185. But it

refused to install a larger pipe because it would protrude above ground and make

the area unusable.

The City issued a permit for HM's proposed new building but withheld

authorization to begin construction because HM would not install a pipe with greater

carrying capacity. On May 5, 1995, HM filed suit under Snohomish County Superior

Court cause No. 95-2-03498-3 against the City for damages resulting from the

delay in permitting and withholding of construction (Permit Lawsuit). HM brought

statutory claims under RCW 64.40.020, which allows an action "for damages to

obtain relief from acts of an agency which are arbitrary, capricious, unlawful, or

exceed lawful authority," and under 42 U.S.C. § 1983 for denial of substantive due

process. Id. At the same time HM filed the complaint, it also filed a "Claim for

Damages" which alleged that the City negligently approved the stormwater
No. 73528-4-1/4

collection, retention, and discharge system for Gleneagle, causing damage to the

Property in the amount of $750,000. CP at 660. The Claim for Damages referenced

a letter to the City dated March 20, 1995, wherein HM informed the City that it "may

very well have liability" for the flooding on HM's property. CP at 663.

A few days later, HM filed suit against WRJV and other developers under

cause No. 95-2-03599-8 for failing to implement an appropriate stormwater

collection, retention, and discharge system and causing surface water to be

discharged onto the Property (Flooding Lawsuit). On July 7, 1995, HM added the

City as a defendant in the Flooding Lawsuit, in which its claims against the City

mirrored those contained in the Claim for Damages. On August 31, 1995, the court

granted the City's motion to consolidate the two lawsuits under cause No. 95-2-

03599-8.

In September 1995, the City granted HM's building permit in exchange for a

prescriptive drainage easement across the Property. On September 26, 1995, HM

executed a hold harmless agreement in favor of the City "to the extent that a 24" x

36" drainpipe is inadequate to handle the flow of surface water legally conveyed to

[HM's] property " CP at 1364. Also in 1995, WRJV enlisted Higa Engineering to

design an additional upstream detention facility known as pond W-2. The pond was

constructed and finished in 1996.

On November 24, 1998, HM and the City reached a settlement in which HM

agreed to release certain of its claims against the City (Release). On motion of the

court clerk, the consolidated lawsuit was dismissed without prejudice for want of

prosecution in 2000.
No. 73528-4-1/5

In 1999 the City installed a second culvert under the railroad tracks to

alleviate backwatering. In 2001, the City retained Earth Tech to design a 67th

Avenue improvement project that involved widening the roadway and redirecting

the outflows from W-1. Earth Tech designed a v-notched weir that would limit the

flow to HM, and excess water was rerouted to a new facility north of 188th Street

known as the Triangle pond. As part of the improvements, HM requested that the

City lower the road near the north building in order to better accommodate its

trucks.

HM experienced no flooding at all on its property from 2003 until 2009, when

flooding occurred after a series of storms. Also in that year, HM replaced its onsite

filtration system. In 2007, the business was sold to Bluescope Buildings North

America, Inc. (BBNA). BBNA leased the Property and facilities from HM until 2012

when the parties reached an agreement releasing BBNA from the lease in

exchange for $2.6 million.

In January 2011, HM filed suit against the City, WRJV and other Gleneagle

investors, alleging that the developers were negligent in their design and

maintenance of Gleneagle's stormwater system. HM also claimed that the City was

negligent in its design, construction, and maintenance of the stormwater facilities

that receive water from Gleneagle, and for reviewing and approving Gleneagle's

permit and design. HM also brought an inverse condemnation claim against the

City.

HM alleged that the City's negligence had caused increased flooding of the

Property, which constituted an ongoing nuisance as well as past trespass of surface

5
No. 73528-4-1/6

waters and the threat of future trespass. HM claimed that it had incurred clean up

and restoration costs for past floods and was facing a loss of over $6 million if it

were to lose its lease with BBNA due to flooding. In 2012, HM added BNSF as a

defendant, claiming that BNSF had contributed to the increased flooding by failing

to maintain its portions of the stormwater system.

The parties brought multiple motions for summary judgment in early 2015.

The trial court dismissed each of HM's claims that arose from alleged conduct by

the City and WRJV that occurred before May 5, 1995, concluding that the Release

precluded any liability on those claims. The court also found that res judicata barred

the assertion of HM's claims against the City and WRJV that arose before

November 24, 1998, the date the Release was signed. The court also dismissed

HM's claims against the City and WRPV because it found that HM's evidence failed

to establish an issue of material fact as to its claimed damages. The court

dismissed HM's intentional tort claims for nuisance and trespass, concluding that

those claims were subsumed within HM's negligence claims. It also dismissed the

claims against BNSF, finding that they were precluded by the statute of limitations.

Finally, the court excluded a letter offered by HM in support of its damages claim,

concluding that it was inadmissible hearsay. HM appeals these rulings.

DISCUSSION

We review a trial court's grant of summary judgment de novo. Camicia v.

Howard S. Wright Constr. Co.. 179 Wn.2d 684, 693, 317 P.3d 987 (2014).

Summary judgment is appropriate only when there is no genuine issue as to any

material fact and the moving party is entitled to judgment as a matter of law. See
No. 73528-4-1/7

CR 56(c); Camicia, 179 Wn.2d at 693. When making this determination, we

consider all the facts and make all reasonable, factual inferences in the light most

favorable to the nonmoving party. Young v. Kev Pharmaceuticals. Inc.. 112 Wn.2d

216, 226, 770P.2d 182(1989).

The Scope of the Release

The Release first states that for the sole consideration of $750,000, HM

discharges:

The City ... and all other persons ... from any and all claims ...
relating to all claims set forth in and described in Plaintiff's
Complaint and Amended Complaints in Snohomish County Cause
No. 95-2-03599-8 and/or 95-2-03498-3.1

CP at 1107. Next, the Release explicitly provides that any claims related to future

flooding on HM's property are excluded from the release, unless they fall within a

specific exception. It states:

This Release does not release any future claims which the
Plaintiff may have... against the City of Arlington, ... or any other
person, ... relating to flooding on Plaintiff's property, except to the
extent said claims arise out of the conduct described in the
Complaint and Amended Complaints in Snohomish County Cause
No. 95-2-03498-3. Id.

It is abundantly clear from this language that the Release does not apply to

any future claims that HM might have regarding flooding on its property, unless the

claims arise from conduct described in the cause No. 95-2-03498-3 complaint. At

1As previously noted, cause No. 95-2-03498-3 was the original cause number of the Permit
Lawsuit which was consolidated with the Flooding Lawsuit under cause No. 95-2-03599-8. There
was no amended complaint filed in the Permit Lawsuit, however, there were two amended
complaints filed in the Flooding Lawsuit.

7
No. 73528-4-1/8

issue is what conduct the parties intended to describe by reference to that

complaint.

We interpret settlement agreements the same way as other contracts.

McGuire v. Bates. 169 Wn.2d 185, 188, 234 P.3d 205 (2010) (citing Mut. of

Enumclaw Ins. Co. v. USF Ins. Co.. 164 Wn.2d 411, 424 n.9, 191 P.3d 866 (2008)).

We attempt to determine the parties' intent by focusing on their objective

manifestations as expressed in the agreement, ]d, at 189. We generally give words

their ordinary and usual meaning unless the entirety of the agreement clearly

demonstrates a contrary intent. Hearst Commc'ns, Inc. v. Seattle Times Co., 154

Wn.2d 493, 504, 115 P.3d 262 (2005). But we interpret only that which was written,

not what was intended to be written. ]d_, The parties' subjective intent is generally

irrelevant if "an intention corresponding to the reasonable meaning of the words

used" can be imputed, jd.

HM contends that the reference in the Release to the Permit Lawsuit

complaint is to the conduct described in the complaint, that is, claims for flooding

damages arising out of the City's alleged wrongful withholding of HM's authorization

to begin construction. The City and WRJV contend the reference is to the conduct

described in the complaint and the Claim for Damages that was filed at the same

time. They contend the Claim for Damages was attached to the complaint when it

was filed and served on the City. Citing Superior Court Civil Rule (CR) 10(c), they

argue that as a result, the Claim for Damages became a part of the complaint. The

City and WRJV also contend that the settlement agreement makes no sense unless

it is read to include future flooding damages.

8
No. 73528-4-1/9

HM disputes that the Claim for Damages was attached to the complaint. And

even if it was attached, HM disputes that the document falls within the reach of CR

10(c). They also contend the Claim for Damages was filed for the sole purpose of

providing the City with the statutorily required 60-day notice of HM's claims against

it. (See former RCW 4.96.020 (1995), in effect at the time.)2 HM points out that just

over 60 days following service of the Claim for Damages, it amended the complaint

in the Flooding Lawsuit adding the City as a defendant.3 HM further points out that

had the Claim for Damages actually been part of the Permit Lawsuit, the claims

would have violated former RCW 4.96.020 and been barred as a result. HM also

argues that the language of the Release is plain and unambiguous and should be

given effect as written.

2 Former RCW 4.96.020 provided as follows:

(1) The provisions of this section apply to claims for damages
against all local governmental entities.
(2) All claims for damages against any such entity for damages shall
be presented to and filed with the governing body thereof within the
applicable period of limitations within which an action must be
commenced.
(3) All claims for damages arising out of tortious conduct must
locate and describe the conduct and circumstances which brought about
the injury or damage, describe the injury or damage, state the time and
place of the injury or damage occurred, state the names of all persons
involved, if known, and shall contain the amount of damages claimed,
together with a statement of the actual residence of the claimant at the
time of presenting and filing the claim and for a period of six months
immediately prior to the time the claim arose ....
(4) No action shall be commenced against any local governmental
entity for damages arising out of tortious conduct until sixty days have
elapsed after the claim has first been presented to and filed with the
governing body thereof....

3The trial court initially determined that HM filed the Flooding Lawsuit only five days later,
instead of waiting 60 days. On HM's motion for reconsideration, the court acknowledged its error on
this point, but it concluded that "the result is the same." CP at 35.
9
No. 73528-4-1/10

We first address the City and WRJV's reliance on CR 10(c) to argue that as

a matter of law the Claim for Damages was incorporated into the Permit Lawsuit

complaint. We conclude that their reliance is misplaced. CR 10(c) states:

Adoption by Reference; Exhibits. Statements in a pleading may
be adopted by reference in a different part of the same pleading or
in another pleading or in any motion. A copy of any written
instrument which is an exhibit to a pleading is a part thereof for all
purposes.

Citing P.E. Systems. LLC v. CPI Corp., 176 Wn.2d 198, 289 P.3d 638 (2012), the

City and WRJV argue that our supreme court "made it clear" that a document

attached to the complaint is part of the complaint. Br. of WRJV at 29, Br. of the City

at 20. But the holding of the case does not stretch the application of CR 10(c)

nearly so far as that. At issue in P.E. Systems, was whether a contract attached to

an answer to a complaint became a part of the pleading. The court noted that the

rule expressly states that it applies to "written instruments" and that "'[ijnstrument'

has a specific legal meaning: 'A written legal document that defines rights, duties,

entitlements, or liabilities, such as a contract, will, promissory note, or share

certificates.'" ]d at 204 (quoting BLACK'S LAW DICTIONARY 869 (9th ed. 2009)).

The court easily concluded that the purported contract fell within the meaning of a

"written instrument" and held that under CR 10(c) "the contract does become part of

the pleadings by simply attaching it. ..." Id The court cautioned, however, that

"exhibits that stretch the definition of a 'written instrument,' such as affidavits, are

extrinsic evidence that may not be considered as part of the pleadings." jd. at 205

(citing Rose v. Bartle. 871 F.2d 331, 339 n.3 (3d Cir. 1989)).

10
No. 73528-4-1/11

The City and WRJV nevertheless argue for an expansive view of the

definition of "written instrument" as that term is used in CR 10(c), but they cite no

Washington authority in support of that position. Instead, they rely on a number of

federal cases citing to the similarly worded Fed. R. Civ. P. 10(c). For example, they

note that in P.E. Systems. 176 Wn.2d at 204, our supreme court cited Tiernev v.

Vahle, 304 F.3d 734, 738 (7th Cir. 2002) with approval. In that case, the court held

that "[bjecause the letter was attached to the complaint, it became a part of it for all

purposes." Tierney at 738. But in indicating its approval of the case our supreme

court noted only that Tiernev held that the "weight of authority permits attachment of

documents such as contracts to pleadings for federal rule 12(b) or 12(c) purposes."

P.E. Systems, 176 Wn.2d at 204-05. (Emphasis added). The court clearly did not

adopt the view advanced by the City and WRJV that any document attached to a

pleading becomes a part of the pleading itself.4

Neither the City nor WRJV explain how the Claim for Damages purportedly

attached to the Permit Lawsuit complaint falls within the definition of a written

instrument as expressed by our supreme court in P.E. Systems. Neither suggests

that it defines rights and duties like a contract, will, promissory note or share

certificate or that it establishes any entitlements or liabilities. It is a claim for

4 Indeed, following its limited approval of Tierney's apparently expansive reading of the
federal rule, the P.E. System court cited approvingly the narrow approach taken in Rose. 871 F.2d at
339 n.3. There the Rose court noted "[t]he case law demonstrates, however, that the types of
exhibits incorporated within the pleadings by Rule 10(c) consist largely of documentary evidence,
specifically, contracts, notes, and other 'writing[s] on which [a party's] action or defense is based',"
(citing 5 C. Wright &A. Miller, Federal Practice and Procedure, § 1327, at 489). And interestingly,
although the court in Tiernev spoke in expansive terms about the scope of federal Rule 10(c), the
letter at issue in that case is actually consistent with the view expressed in Rose. The plaintiffs in
that case claimed the letter was both defamatory and retaliatory against the plaintiffs' exercise of
their constitutional rights. Thus, the letter was a writing on which the plaintiffs' action was based.
11
No. 73528-4-1/12

damages but it is not by any stretch, documentary evidence that forms the basis for

the claim. We conclude that the Claim for Damages is more akin to an affidavit and,

as such, it is extrinsic evidence and not, as a matter of law, a part of the document

to which it was attached.

Next, the City and WRJV argue vigorously that we should interpret the

Release to include the claims in the Flooding Lawsuit because otherwise, in their

view, "the settlement agreement makes virtually no sense[.]" Br. of the City at 27.

See Br. of WRJV at 27-28. We turn first to the plain language of the Release. It

unambiguously states that HM specifically reserved the right to bring future flooding

claims "except to the extent said claims arise out of the conduct described in the

Complaint... in Snohomish County Cause No. 95-2-03498-3." CP at 1107. It is

undisputed that the claims arising out the conduct in the Permit Lawsuit are

unrelated to the claims alleged in the Flooding Lawsuit. It is also undisputed that the

Claim for Damages, which does address the claims in the Flooding Lawsuit, is not

explicitly mentioned anywhere in the Release.

Despite the unambiguous clarity of the language in the Release, the City and

WRJV argue that we must take into account what, in their view, the settlement

agreement was intended to accomplish. The City points out that in reaching the
agreement it intended to "end[] the litigation, including future claims related to
'permanent or progressive damage' arising out of the litigated subject matter." Br. of
the City at 30. But to the extent the City believed the Release included all future
flooding damage on HM's property without exception, that belief is in direct
contradiction to the plain language in the Release. The Release provides "[t]his

12
No. 73528-4-1/13

Release does not release any future claims which the Plaintiff may have ... against

the City of Arlington ... or any other person ... relating to flooding on the Plaintiff's

property" unless the claims arise out of the Permit Lawsuit. CP at 1107 (emphasis

added). It is well settled that courts are not at liberty to rewrite contracts to reflect a

party's unexpressed, subjective intentions. Hearst Commc'ns. 154 Wn.2d at 503.

And that is what the City and WRJV ask us to do here.

Accordingly, we hold the trial court erred in denying HM's motion for

summary judgment dismissal of the affirmative defense of release and in granting

dismissal of HM's claims on that ground.

Res Judicata

Res judicata prohibits a party from bringing a claim already litigated or a

claim that could have been litigated in a prior action. Pederson v. Potter, 103 Wn.

App. 62, 67, 11 P.3d 833 (2000). This doctrine prevents repetitive litigation of the

same matter, ensuring integrity and finality in the legal system. Id. at 71. A

threshold requirement of res judicata is a final judgment on the merits in the prior

suit. Hisle v. Todd Pac. Shipyards Corp., 151 Wn.2d 853, 865, 93 P.3d 108 (2004).

Once obtained, a prior judgment has preclusive effect when a second action is

identical in: (1) persons and parties; (2) cause of action; (3) subject matter; and (4)

quality of persons for/against whom the claim is made. Yakima County v. Yakima

County Law Enforcement Officers Guild. 157 Wn. App. 304, 327-28, 237 P.3d 316

(2010). Whether res judicata bars an action is a question of law we review de novo.

Kuhlman v. Thomas, 78 Wn. App. 115, 120, 897 P.2d 365 (1995).

13
No. 73528-4-1/14

The parties do not appear to dispute that there was no judgment on the

merits entered in this case. After the Release was signed the parties took no further

action with regard to obtaining a judgment. Instead, the case was dismissed without

prejudice on the court clerk's motion "for want of prosecution" pursuant to CR

41(b)(2). It is well settled that a dismissal order entered without prejudice will not

support a res judicata defense because it is not a final judgment.5 Young v. Key

Pharmaceuticals, Inc.. 112 Wash.2d 216, 223, 770 P.2d 182(1989)

Nevertheless, the City and WRJV argue that the prior settlement "ended the

litigation for ail intents and purposes." Br. of City at 37-38. Citing Rasmussen v.

Allstate, 45 Wn. App. 635, 726 P.2d 1251 (1986), they contend that even in the

absence of a final judgment on the merits, the Release triggered res judicata. In

Rasmussen, following a car accident, a passenger secured partial payment from

the tortfeasor and then brought suit against Allstate and Farmers seeking

underinsured motorist (UIM) coverage. Allstate disputed that the policy included

UIM coverage but the trial court ruled otherwise and Allstate appealed. While the

appeal was pending, Allstate settled with the passenger, but apparently did not

dismiss the appeal. Allstate then prevailed in an action seeking contribution from

Farmers. Farmers appealed and the case was consolidated with Allstate's appeal

challenging the coverage finding. In considering Allstate's appeal, the court

reviewed the settlement agreement between Allstate and the passenger. The

5 The City appears to argue that dismissal without prejudice can be a final judgment. Br. of
the City at 38. It cites Gazin v. Hieber. 8 Wn. App. 104. 113. 504 P.2d 1178 (1972). for the
proposition that a "[determination of what constitutes a final judgment in the context of res judicata
has always been a 'matter of substance and not form.'" Br. of the City at 38. But because it cites no
authority holding that a dismissal without prejudice is a final judgment, we reject the argument.

14
No. 73528-4-1/15

agreement provided that, in consideration for the sum received, the passenger

agreed to:

release and forever discharge ALLSTATE INSURANCE
COMPANY ... from any and all rights, claims, including claims for
underinsured motorist benefits, or damages of any kind, known or
unknown, existing or arising in the future, resulting from or related
to injuries or damages arising from an accident that occurred on or
about October 6, 1981.

Id. at 637. The court concluded that it need not reach Allstate's claim on appeal

because the

"compromise agreement constitutes a merger and bar of all existing
claims and causes of action and is as binding and effective as a final
judgment itself. Gregory v. Hamilton, 77 Cal.App.3d 213, 142
Cal.Rptr. 563 (1978); 15A Am.Jur.2d Compromise and Settlement!
24 (1976). It is res judicata of all matters relating to the subject matter
of the dispute. Handlev v. Mortland. 54 Wash.2d 489, 342 P.2d 612
(1959); In re Estate of Phillips. 46 Wash.2d 1, 278 P.2d 627 (1955).
Therefore, the scope of the coverage by Allstate is no longer an
issue." Id,

Despite its broad language, the City and WRJV's reliance on Rasmussen for

the proposition that a settlement agreement is res judicata, in the absence of a

judgment, is misplaced. First, the two cases cited in support of the assertion,

Handlev and Phillips, both involved settlement agreements that were followed by

entry of judgments. In Handlev, the court, in approving the settlement of a minor's

claim entered "findings of fact, conclusions of law, and judgment." ]d\ at 491. In

Phillips, the parties agreed to settle a dispute about the distribution of the

decedent's estate. The court held that "[a]n order settling the final account of an

administrator and a decree of distribution entered on the basis of such a

compromise or settlement are res judicata of all matters relating to the subject

matter of the controversy." igL at 14 (citing McClure v. Calispell Duck Club, 157
15
No. 73528-4-1/16

Wash. 136, 288 Pac. 217 (1930)). In this case, because the settlement agreement

was not followed by entry of either a judgment or a decree, we conclude that res

judicata is inapplicable.6

Furthermore, regardless of whether res judicata applies, it is well settled that

the law favors private settlements of disputes and is inclined to view them with

finality. Stottlemvre v. Reed. 35 Wn. App. 169, 173, 665 P.2d 1383 (1983). But the

finality of the Release at issue here is not in dispute. The parties disagree on the

scope of the Release, specifically whether it includes damages for flooding as

asserted in the Claim for Damages. That dispute is to be resolved by resorting to

principles of contract interpretation, not according to the law regarding the

enforceability of judgments, jd. at 171. We reverse the order granting the City and

WRJV summary judgment on this issue.

HM's Claimed Damages From post-1995 Conduct

HM argues that the trial court erred when it entered partial summary

judgment with regard to damages. The trial court concluded that HM could not

establish any flooding damages because there was no net increase in frequency of

flooding after 1995. Relying on HM's expert witness, Malcolm Leytham, the court

found that prior to the development of Gleneagle, HM's property flooded at a rate of

6We also reject the argument by the City and WRJV that Pederson, 103 Wn. App. at 67 is
controlling. That case considered whether the "confession of judgment" at issue in that case could
qualify as a judgment on the merits. The court held that it could "because the Pedersons knew of
their potential claims against the Potters when they settled and signed the confession of judgment.
They had the opportunity to be heard on these claims, and have them disposed of, but chose not to
do so." Id at 71. But again, in Pederson, unlike this case, a judgment had in fact been entered. In
addition, the confession of judgment reflected that the Pedersons had abandoned all of their claims
against the Potters. Here, it is undisputed that HM reserved at least some of its claims.

16
No. 73528-4-1/17

once every 25 years. By 1995, however, after the development of Gleneagle and

the construction of Pond W-1, HM's property flooded at a rate of once every three

years. By 1998, following installation of Pond W-2 and the 36" x 24" pipe across

HM's property, the flood rate was reduced to once every 15 years. But, after

additional work by the City, including installation of Triangle Pond and lowering 67th

Avenue, the flooding worsened to once every ten years by 2003 . The court

concluded, however, that because flooding once every ten years was better than

once every three years, "no rational trier of fact could find that [HM] suffered

flooding damage more severe than was negotiated for in the prior litigation." CP at

24. The City and WRJV adopt this reasoning on appeal.

HM argues that there are disputed issues of material fact about whether the

City is responsible for the improvement from every three year flooding to every

fifteen year flooding. It points to evidence that the improvement was due primarily, if

not solely, to HM's installation of the larger 36" x 24" pipe and relocating it to a

steeper slope.7 It further argues that the City's installation of Triangle Pond and

7 The City argues that this theory was not argued below by HM until its motion for
reconsideration. The City and WRJV also argue that Leytham's deposition testimony does not
support the theory. HM argues that the reason for the improvement in flooding conditions from every
three years in 1995 to every fifteen years in 1998 was not a contested issue until the trial court's
summary judgment decision. HM contends that until then, the parties were using 1998 as the
baseline for determining whether flooding conditions had worsened. The record supports HM's
argument on this point. See CP at 2576; 2578-79. The City and WRJV are correct that Leytham did
not specifically testify in support of the theory HM argued in the motion for reconsideration, i.e., that
laying the culvert pipe at a steeper grade accounted for the improvement by 1998. But it is a
reasonable inference from the evidence that was presented below. Viewing the evidence in the light
most favorable to HM, as we must, it is sufficient to raise a material issue of fact as to HM's
damages claim. We also note that in response to HM's motion for reconsideration, the City argued to
the trial court, and does so here on appeal, that even accepting HM's new theory, the evidence of
HM's damages claim was insufficient to survive its motion for summary judgment. See Br. of the City
at 45-47. But these issues were not addressed by the trial court and we do not address them here.

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lowering 67th Avenue is solely responsible for the increase to every ten-year

flooding. If a rational factfinder were to credit HM's evidence it could conclude that

the City and WRJV bore some liability for the five-year increase in flooding

frequency. Because resolution of the damages issue turns on questions of

credibility, the trial court erred when it granted summary judgment on this issue.

HM's Intentional Tort Claims

HM argues that its claims for trespass should not have been dismissed

because there is an issue of material fact as to whether WRJV intended to flood the

Property, stating that WRJV knew it's conduct was "'substantially certain'" to result

in flooding, or that there was a high probability of increased flooding. Br. of HM at

41. To establish intentional trespass, a plaintiff must show (1) an invasion of

property affecting an interest in exclusive possession; (2) an intentional act; (3)

reasonable foreseeability the act would disturb the plaintiff's possessory interest;

and (4) actual and substantial damages. Bradley v. Am. Smelting & Refining Co.,

104 Wn.2d 677, 692-93, 709 P.2d 782 (1985). Intent requires proof that the actor

"desires to cause consequences of his act, or that he believes that the

consequences are substantially certain to result from it." Bradley, 104 Wn.2d at

682. At a minimum, this consists of proof that the actor has knowledge that the

consequences are certain, or substantially certain, to result from his conduct and

proceeds in spite of the knowledge. Id.

HM argues that the City and WRJV had "intent" because they knew that their

actions were "'substantially certain'" to result in flooding because the City

authorized the W2 pond to discharge at a rate greater than the known capacity of

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the culvert located on the Property. HM is essentially arguing that the City and

WRJV knew that the culvert was insufficient and failed to take that into account

when it designed and implemented the various elements of a stormwater

management system. A claim for failure to act sounds in negligence and does not

support the intentional act needed for trespass. Estate of Price v. City of Seattle,

106 Wn. App. 647, 660, 24 P.3d 1098 (2001).

HM's claims against BNSF

HM argues that the trial court erred when it found that BNSF had no statutory

or common law duty to accept water from upstream entities and dismissed its

negligence claims against BNSF. According to HM, by voluntarily allowing the City

and Gleneagle to use the ditch as a stormwater disposal facility, BNSF assumed a

duty to maintain the ditch in good repair. BNSF argues that it has no duty to HM nor

did it assume one when it allowed the ditch to be used for disposal of surface water.

In order to bring a claim for negligence, a plaintiff must first establish that a

legal duty exists. Christensen v. Royal School Dist. No. 160. 156 Wn.2d 62, 124

P.3d 283 (2005). HM argues that BNSF's duty arises under the Restatement

(Second) of Torts § 365 (1965), where a possessor of land is liable for physical

harm caused by the disrepair of a structure or other artificial condition if the

exercise of reasonable care would have made it safe or disclosed the disrepair.

BNSF argues that Washington courts have not adopted the Restatement and have

declined to impose liability for dangerous disrepair.8

8 Because we affirm the trial court on this ground, we do not reach the issue of whether
HM's claims were also properly dismissed because they were filed outside the statute of limitations.
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HM cites Phillips v. King County. 136 Wn.2d 946, 968 P.2d 871 (1998) and

Rothweiler v. Clark County. 108 Wn. App. 91, 29 P.3d 758 (2001), as supporting

the imposition of a duty to maintain a drainage system. But neither case advances

HM's position; both address the responsibility of municipalities to maintain public

drainage systems, not obligations of private landowners.

HM argues that the distinction makes no difference, quoting Phillips, 136

Wn.2d at 958, "'[gjenerally, municipal rights and liabilities as to surface waters are

the same as those of private landowners within the city.'" Br. of HM at 47. This is

not correct. The statement from Phillips pertains to the liability for trespass caused

by surface water, not a duty to maintain public drainage systems. The Phillips court

explained that "many municipalities in Washington accept private storm water

facilities for maintenance or ownership after they are constructed in connection with

a new development. This occurs because homeowner associations or other private

owners do not have the funds or motivation to do necessary maintenance to keep

the drainage facilities operating at their maximum efficiency." ]<± HM cannot

establish that a private landowner has the same duty as a municipality to maintain

the stormwater drainage facility that serves its property. We find that the trial court

did not err when it found that BNSF had no duty.

The Letter from BBNA's Counsel

HM argues that the trial court erroneously excluded a letter from BBNA's

counsel that indicated that it would no longer make payments on its lease and

notified HM of its potential claims related to flooding. HM argues that the letter falls

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within the business records exception listed in RCW 5.45.020. The trial court was

not persuaded that it was a business record.

We use the de novo standard of review when reviewing all trial court rulings

made in conjunction with a summary judgment motion. Folsom v. Burger King, 135

Wn.2d 658, 663, 958 P.2d 301 (1998). Washington's Uniform Business Records as

Evidence Act "makes evidence that would otherwise be hearsay competent

evidence." Cantrill v. Amer. Mail Line. 42 Wn.2d 590, 608, 257 P.2d 179 (1953).

Under the statute, a record of a relevant act, condition, or event,

shall... be competent evidence if the custodian or other qualified
witness testifies to its identity and the mode of its preparation, and
if it was made in the regular course of business, at or near the
time of the act, condition, or event, and if, in the opinion of the
court, the sources of information, method and time of preparation
were such as to justify its admission. RCW 5.45.020.

WRJV argues that the letter was properly excluded as hearsay and does not

fall within the exception for business records. We agree. There is no statement from

a records custodian or other qualified witness about its identity or that it had been

made in the usual course of business at or near the time of the act in question.

Neither the attorney's affidavit, nor the date of the letter, supply the missing pieces

or provide the inherent reliability necessary to satisfy the exception. The trial court

properly excluded the evidence as hearsay.

Fees and Costs

BNSF asks for an award of costs on appeal; upon submission of a cost bill,

we award BNSF its costs under RAP 14.2. Because WRJV is not the prevailing

party its request for fees and costs, pursuant to RAP 18.1 and RAP 14.3 is denied.

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Reversed in part and remanded for further proceedings consistent with this

opinion.

WE CONCUR:
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