Neal Coy v. City Of Duvall

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

NEAL COY, )
) DIVISION ONE
Appellant, )
) No. 67737-3-1
v. )
) PUBLISHED OPINION
CITY OF DUVALL, )
)
Respondent. ) FILED: April1, 2013
)

DWYER, J.- Neal Coy appeals from the trial court's summary judgment

dismissal of his claim against the City of Duvall (the City). Coy contends that,

although the City ultimately approved his preliminary plat application, it acted in

an arbitrary and capricious manner during the application process. Pursuant

solely to the "final decision" prong of RCW 64.40.020(1 ), Coy seeks an award of

money damages for claimed injuries resulting from the City's purportedly arbitrary

and capricious conduct. Because the statute provides no cause of action in such

circumstances, we affirm the trial court's dismissal of Coy's claim.

In May 2006, Coy submitted an application to the City for preliminary plat

approval of a 32-unit residential subdivision on a 4.58-acre property. In his

application, Coy proposed filling the entire on-site wetland. The City's outside

consultant peer reviewer, an ecologist at The Watershed Company, thereafter
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performed two site visits of the property to determine whether Coy's proposal

was consistent with the City's code. He determined that Coy's proposed

mitigation plan was deficient and concluded that, because the wetland "serve[d]

several functions," it "appear[ed] that the code would not allow alteration of this

wetland."

On June 29, 2006, city planner Lara Thomas wrote to Coy's consultant,

David Evans & Associates, Inc. (Evans}, stating that the City's wetland peer

review process had been completed and that Coy's wetland fill request did not

meet the criteria set forth in the City's code. On October 13, 2006, after receiving

an extension of the period of time allowed for responding to the City's letter,

Evans suggested to Doreen Booth, the City's planning director, that the City's

response to the proposal was arbitrary and capricious and "constitute[d] a denial

of rights afforded to others in the recent past." Evans maintained that the City's

code allowed for the wetland fill proposed by Coy. On December 11, 2006,

Booth informed Evans by letter that the City's planning staff could not "approve,

or recommend approving, the filling of the wetland under the Sensitive Areas

Regulations [Coy's] project [was] vested in."

In January 2007, Evans and the City explored the possibility of processing

Coy's application under the new City code, rather than the code in which the

application had vested, and Coy submitted a wetland analysis based upon the

new code. Ultimately, however, in May 2007, Coy decided not to pursue permit

approval pursuant to the City's new code; instead, he decided to remain vested

in the prior code.

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Then, in October, Coy's attorney wrote to the City, requesting "the City's

prompt and immediate action to confirm that wetland alteration with off-site

mitigation is authorized for this preliminary plat application." The City's outside

counsel, Amy Pearsall, responded, maintaining that the City was not "prepared at

this time to say that" Coy's proposal was consistent with the City's code.

However, Pearsall proposed a compromise whereby the City would review a

proposal consistent with Coy's interpretation of the code if Coy could submit

appropriate documentation demonstrating code compliance.

Following Coy's submission of this documentation, the City's outside

consultant determined on July 14, 2008, that Coy had met the requirements for

filling the wetland. However, an appropriate site for off-site mitigation could not

be located; thus, the City allowed Coy to perform off-site mitigation by

contributing to the Snohomish Basin Mitigation Bank. The hearing examiner

approved Coy's preliminary plat application on December 23, 2008.

On January 22, 2009, Coy sued the City pursuant to RCW 64.40.020(1),

which provides permit applicants with a cause of action for damages "to obtain

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

lawful authority, or relief from a failure to act within time limits established by

law." Coy alleged that the City had both (1) failed to comply with the statutorily-

mandated time limit for processing the permit application and (2) acted in an

arbitrary and capricious manner during the application process. The City moved

for partial summary judgment, seeking dismissal of Coy's claim for damages

resulting from the alleged arbitrary and capricious conduct. On September 9,

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2011, the trial court granted the City's motion, dismissing that claim for relief.

Coy thereafter stipulated to the dismissal of his claim asserting that the City had

failed to comply with the application processing time limit. Thus, the trial court

entered an order dismissing that remaining claim. The trial court thereafter

granted the City's motion for an award of attorney fees pursuant to RCW

64.40.020(2). 1

Coy appeals from the trial court's dismissal of his claim for relief from the

City's alleged arbitrary and capricious conduct.

II

Coy contends that he is entitled to delay damages due to the City's

purportedly arbitrary and capricious conduct during the application process,

notwithstanding the fact that his permit application was ultimately approved.

However, as we have recently held, the "final decision" prong of RCW

64.40.020(1 ), pursuant to which Coy seeks relief, provides only for damages

resulting from an agency's "final decision"-not from its conduct occurring prior to

that decision. Thus, Coy did not state a viable cause of action pursuant to that

statutory provision, and the trial court did not err by dismissing the claim.

RCW 64.40.020(1) grants to property owners who apply for land use

permits a cause of action (1) "for damages to obtain relief from acts of an agency

which are arbitrary, capricious, unlawful, or exceed lawful authority" or (2) for

damages to obtain "relief from a failure to act within time limits established by

1
"The prevailing party in an action brought pursuant to this chapter may be entitled to
reasonable costs and attorney's fees."

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law." Such a cause of action arises only where there is an "act" by the agency,

defined by statute as either (1) "a final decision by an agency which places

requirements, limitations, or conditions upon the use of real property in excess of

those allowed by applicable regulations" or (2) "the failure of an agency to act

within time limits established by law in response to a property owner's application

for a permit." RCW 64.40.010(6). The statute further provides that the

recoverable "damages" are the "reasonable expenses and losses ... incurred

between the time a cause of action arises and the time a holder of an interest in

real property is granted relief as provided in RCW 64.40.020." RCW

64.40.010(4). Thus, the statute allows a permit applicant to recover damages in

two circumstances-when those damages result from an agency's "final

decision" and when the damages are caused by an agency's failure to act within

statutorily-prescribed time limits.

Here, Coy asserts that the City acted in an arbitrary and capricious

manner by determining that Coy's proposal to fill the wetland was inconsistent

with the City's code and, thus, that its approval could not be recommended by

City planning staff. Coy contends that the City's conduct was arbitrary and

capricious because, he asserts, the City had previously approved other such

wetland fills under the same code language. Thus, Coy sought damages to

obtain relief from an allegedly arbitrary and capricious "act" of the City-not from

an alleged failure of the City to act. 2 See RCW 64.40.01 0(6). Moreover, Coy

2
Although Coy's complaint alleged that the City had both acted in an arbitrary and
capricious manner and failed to act on his application within the statutorily-prescribed time limit,

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does not contend that the hearing examiner's ultimate approval of his preliminary

plat application was itself arbitrary and capricious. Rather, he asserts that the

hearing examiner's decision-the "final decision" contemplated by RCW

64.40.020(1 )-was the result of an "arbitrary process."

However, as we recently decided in Birnbaum v. Pierce County, 167 Wn.

App. 728, 274 P.3d 1070 (2012), the "final decision" prong of RCW 64.40.020(1)

does not provide a cause of action in such circumstances. There, Pierce County

approved Birnbaum's conditional use permit application five years after its

submission. Birnbaum, 167 Wn. App. at 730-31. Thirty days after the approval

of her permit application, Birnbaum sued Pierce County pursuant to RCW

64.40.020(1), alleging that the County had both exceeded the statutorily-

prescribed time limit for action on her application and made arbitrary and

capricious requests for additional information prior to approving that application.

Birnbaum, 167 Wn. App. at 731-32. The trial court dismissed Birnbaum's action

pursuant to CR 12(b)(6), and we affirmed. Birnbaum, 167 Wn. App. at 731-37.

As relevant here, we determined that Birnbaum had not "stated a claim for

damages based on arbitrary and capricious actions or delays under the final

decision prong of the statute." Birnbaum, 167 Wn. App. at 735-37. We noted

that "Birnbaum's complaint [did] not allege that the final 2010 permit approval

place[d] requirements, limitations, or conditions upon her real property that gave

Coy stipulated to the dismissal of his claim based upon the City's alleged noncompliance with the
application processing time limit. He appeals only from the trial court's dismissal of his claim for
relief from the City's alleged arbitrary and capricious conduct. Thus, only the "final decision"
prong of RCW 64.40.020(1) is at issue here.

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rise to her damages"-thus, the permit approval itself was not the "act" for which

Birnbaum sought damages. Birnbaum, 167 Wn. App. at 735. Rather, Birnbaum

sought "damages for costs and delays that occurred while the County processed

the application, before the permit issued." Birnbaum, 167 Wn. App. at 735. We

held that, pursuant to its plain meaning, the statutory definition of damages set

forth in RCW 64.40.010(4) "authorizes damages only for expenses and losses

that are incurred after a cause of action under the statute arises." Birnbaum, 167

Wn. App. at 735-36. Thus, the damages alleged by Birnbaum, which were

incurred prior to the final decision giving rise to a cause of action, were not

recoverable. Birnbaum, 167 Wn. App. at 736. We rejected Birnbaum's assertion

that "a claim for arbitrary delay occurring prior to a final decision ... may be

brought once the permit decision is final." Birnbaum, 167 Wn. App. at 736.

Rather, we held:

Under the final decision prong, the final decision is the act
which triggers the cause of action. The definition of "damages"
limits recovery to those damages that occur after the cause of
action accrues. Simply put, the statute does not contemplate
damages-for delay or otherwise-under the final decision prong
that occurred prior to the final decision.

Birnbaum, 167 Wn. App. at 737.

Similarly, here, Coy seeks damages for delays resulting from the City's

allegedly arbitrary conduct prior to the City's final decision-in this case, the

hearing examiner's ultimate approval of Coy's preliminary plat application. Coy

does not allege that the hearing examiner's approval of the permit application

"places requirements, limitations, or conditions" upon Coy's use of his property

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"in excess of those allowed by applicable regulations." RCW 64.40.01 0(6).

Thus, the conduct at issue-from which Coy contends his alleged damages

flow-is the City's conduct during the application process, not the hearing

examiner's final decision approving the application. But, as Birnbaum makes

clear, damages resulting from such conduct are not recoverable pursuant to

chapter 64.40 RCW. Rather, damages must result from either a final decision

(which Coy does not challenge) or a failure by the agency to act within the

statutorily-prescribed time limit (which Coy no longer alleges). RCW

64.40.010(4). Just as we stated in Birnbaum, "the statute does not contemplate

damages-for delay or otherwise-under the final decision prong that occurred

prior to the final decision." 167 Wn. App. at 737.

Pursuant to RCW 64.40.020, where a permit applicant challenges an act

of an agency-rather than the agency's failure to act-the applicant's damages

must flow from the agency's final decision. Because, here, Coy challenges the

agency's conduct prior to the final decision, he has not stated a viable claim for

relief pursuant to that statute. Accordingly, the trial court properly dismissed his

claim.

Ill

Coy additionally contends that the trial court erred by granting an award of

attorney fees to the City. We disagree.

Coy first asserts that the trial court's grant of an award of attorney fees to

the City was improper because, he contends, the City prevailed on "jurisdictional"

grounds rather than "on the merits" of the claim. However, RCW 64.40.020(2),

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which provides for an award of attorney fees to the prevailing party in an action

brought pursuant to that chapter, does not require that a party prevail on any

particular ground. Nevertheless, Coy contends that RCW 4.84.370 is a "similar,

almost parallel, statute" and that, pursuant to that statute, Washington courts

have determined that an award of fees is precluded where a party does not

prevail on the merits of a claim. But that statutory language-which provides that

"the county, city, or town whose decision is on appeal is considered a prevailing

party if its decision is upheld at superior court and on appeal," RCW 4.84.370(2)

(emphasis added)-bears little resemblance to the language of RCW

64.40.020(2). It does not inform our decision. Under the plain language of the

applicable statutory provision, the trial court had the discretion to award fees to

the prevailing party, regardless of the basis for its victory.

Coy additionally asserts that, even if the grant of an award of fees was

proper, the trial court abused its discretion in determining the amount of that

award. Specifically, he asserts that, "considering the City prevailed on

jurisdictional grounds and not the merits, the number of hours spent on this case

were extraordinary." However, Coy fails to note that the City addressed "the

merits" of the arbitrary and capricious claim in its motion for partial summary

judgment, even though the trial court dismissed that claim on other bases.

Moreover, Coy does not address the fact that the City prevailed on his claim

regarding the timeliness of the application process; although Coy eventually

stipulated to the dismissal of that claim, he did not do so until after a motion for

partial summary judgment on that issue had been submitted to the trial court.

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"The amount of a fee award is discretionary, and will be overturned only

for manifest abuse." Boeing Co. v. Sierracin Corp., 108 Wn.2d 38, 65, 738 P.2d

665 (1987). The trial court did not abuse its discretion in either determining to

make an award of fees or in determining the amount of the award it entered.

IV

Finally, the City requests an award of attorney fees on appeal pursuant to

RCW 64.40.020(2). The City is the prevailing party on appeal. Accordingly,

upon proper application, our commissioner will enter an appropriate order

awarding appellate attorney fees to the City.

Affirmed.

We concur:

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SCHINDLER, J. (concurring)- I concur in the result but write separately because I

would also affirm on the grounds that Coy failed to exhaust all administrative remedies

before filing his lawsuit against the City of Duvall alleging a cause of action under

chapter 64.40 RCW, and I disagree with the mischaracterization of Callfas v.

Department of Construction and Land Use of the City of Seattle, 129 Wn. App. 579, 120

P.3d 110 (2005), in Birnbaum v. Pierce County, 167 Wn. App. 728, 274 P.3d 1070

(2012).

The exhaustion of all administrative remedies is a statutory condition precedent

to asserting a cause of action under chapter 64.40 RCW. RCW 64.40.030 states: "Any

action to assert claims under the provisions of this chapter shall be commenced only
1
within thirty days after all administrative remedies have been exhausted."

Coy claims he "diligently pursued the legitimate remedies available." But

contrary to his assertion, the undisputed record shows that Coy was aware of, but

chose not to pursue, all administrative remedies.

On May 11, 2006, David Evans & Associates (Evans) submitted a preliminary

plat application to subdivide the 4.58 acres of property owned by Coy into 32 lots for

single family homes. The property contains a wetland. The preliminary plat application

proposed filling "the entire on-site wetland area and provid[ing] fee in-lieu mitigation to

the City of Duvall." In support of the proposal, Evans submitted a "Sensitive Areas

Report" prepared by The Jay Group, Inc.

The City retained The Watershed Company to analyze whether the proposal

complied with the City of Duvall's "Sensitive Area Regulations." Ecologist Hugh

Mortensen determined that the wetland was larger than represented in the proposal,

1
(Emphasis added.)

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No. 67737-3-1/12

and is "an emergent wetland in a rapidly developing watershed [that] has both the

potential and the opportunity to improve water quality." Mortensen concluded the Duvall

City code "would not allow alteration of this wetland, since it does serve several

functions." Mortensen also concluded the proposal did not comply with the requirement

to consider practical or feasible alternatives that would result in less environmental

impact, and did not provide an analysis of mitigation sequencing.

The proposal is to fill the entire on-site wetland area and provide
fee in-lieu mitigation to the City of Duvall. Typically, since mitigation has
been shown to have a historically low success rate, both in Duvall and in
the broader region, it is common that agencies allow it only as a last
resort. One of the key steps in preparing or evaluating a wetland
modification proposal is to demonstrate that there is no practicable or
feasible alternative development proposal that results in less impact to the
wetland and its buffer. The proposal should include an analysis of
mitigation sequencing and an evaluation of how the project has been
designed to avoid impacts to the wetland or buffer and to minimize any
impacts that are determined to be unavoidable. In evaluating the
proposed design, it would appear that there are many efforts that could be
taken to avoid wetland fill, not the least of which would be a redesign of
the project to include fewer lots or cluster the allowed density on the non-
sensitive area portion of the site.

On June 29, the City notified Coy that the proposal to fill the wetland did not meet

the current code requirements and Coy could either revise the proposed plat to reduce

density, or resubmit the application after the new Sensitive Area Regulations were

adopted.

The City of Duvall has completed the wetland peer review process.
The City's wetland consultant has determined that there is more wetland
and buffer on site than the Sensitive Areas Report prepared by the Jay
Group dated April 7, 2006 shows. The City has determined based on peer
review that the wetland fill request does not meet the criteria in [former]
DMC [(Duvall Municipal Code)] 14.42.300A [(2005)]. Under existing
regulation the project will be subject to minimal fill in accordance with
[former] DMC 14.42.320 [(2005)], Wetland- Permitted Alterations. As the
applicant you have two choices revise your plans and density calculations

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accordingly or wait and resubmit your application under the new Sensitive
Area Regulations that are anticipated to be adopted in September of this
year.

Jack Molver of Evans & Associates sent Coy a draft letter in response to the City

for his review, and strongly urged Coy to not pursue administrative remedies, including

a variance or reasonable use exception.

Here is a draft for your consideration.
I think that it is clear that the city is making an arbitrary call. The
code clearly makes provisions for the fill.
Not complying with use of the DRC seems to be a violation of the
code. [Former] DMC 14.02.030 [(2005)] states that one duty of the
Planning Director is to manage the DRC.12l
I do not believe that we want to go into the appeal, variance or
reasonable use provisions discussed in [former DMCs] 14.42.060.
14.42.070 and 14.42.080 [(2005)] because we must stand firm in our
believe [sic] that what we are proposing to do is permitted outright.t31
If so, there is nothing to seek a variance from.
The Reasonable Use route is risky in that the [hearing examiner]
must rule that all reasonable use is denied. 141 That is clearly not the case.
Please give me your comments.

In the letter dated October 13 from Molver to City Planning Director Doreen

Booth, Molver claims that the proposal to fill the wetland was allowed by the code, and

asserts the City's position is "arbitrary and capricious, and constitute[s] a denial of rights

afforded to others in the recent past." Molver requests the Duvall City Development

Review Committee (DRC) review the "wetland issues associated with this project."

In response to the October 13 letter, Planning Director Booth cites the City code

provisions and reiterates that the City "cannot approve, or recommend approving, the

filling of the wetland under the Sensitive Areas Regulations your project is vested in."

2
(Emphasis in original.)
3
(Emphasis added.)
4
(Emphasis in original.)

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No. 67737-3-1114

Booth pointed out that the DRC did not hear appeals, and Coy could appeal to the

hearing examiner.

It is a planning director decision re: code interpretation. According to our
city attorney, projects are not vested in process, and an appeal of my
interpretation would be to the hearing examiner in accordance with
[former] DMC 14.08.010.C [(2005)]. Please call me ... if you have any
questions.

After receipt of the response from Booth, Molver again advised Coy against filing

an appeal. 5 Coy did not appeal the City's interpretation of the code or seek a variance

or reasonable use exception. Nonetheless, Coy claims he pursued administrative

remedies by requesting review by the DRC, and no other administrative remedies were

available. Coy misrepresents the function of the DRC, and the record shows there were

other administrative remedies that he did not pursue.

The DRC is an advisory board managed by the Planning Director. The DRC is

not an appellate review body to which the director's code interpretation decision may be

appealed. Former DMC 14.02.030A(A)(4) (2005); former DMC 14.02.080(8) (2005).

Under the code, the hearing examiner is the final decision-maker for issues

related to preliminary plats. Former DMC 14.08.010(C); former DMC 14.42.070. The

code also expressly provides for an appeal to the hearing examiner of an interim

decision concerning Sensitive Area Regulations. Former DMC 14.42.070 states:

14.42.070 Appeals.
A. Any decision to require a special sensitive area study pursuant
to this chapter may be appealed by the applicant to the hearing examiner.
The fee and costs, procedural and appellate provisions established in this
code for variances shall apply.
B. Any decision to approve, condition or deny a development
proposal based on the requirements of the sensitive area regulation may

5
In 2007, Coy submitted a wetland analysis under the City's new Sensitive Area Regulations.
However, based on the impact of the new drainage regulations, Coy abandoned that approach.

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be required in conjunction with and according to the review procedures for
the permit or approval involved.
C. Any decision authorized by the sensitive area regulations where
no review process exist for the permit or approval involved beyond the
development review committee (DRC), may be appealed by an aggrieved
party to the hearing examiner pursuant to this title.

See also former DMC 14.42.060 (reasonable use exception); former DMC 14.42.080

(variances).

Coy does not assert that he attempted to appeal the City's interpretation of the

Sensitive Area Regulations, nor does he address why he did not have to exhaust other

administrative remedies. For instance, the City code clearly provides for the issuance of

a variance where, due to the special circumstances applicable to the property, "the strict

application of the sensitive area regulations would deprive the subject property of rights

and privileges enjoyed by other properties in the vicinity and in the same zone." Former

DMC 14.42.080(B)(1 ).

Because the record shows that Coy did not exhaust all administrative remedies, I

would also affirm on this ground.

I also write separately because I disagree with the footnote in Birnbaum rejecting

a statement in Callfas as "not reconcilable with the statutory definition of 'damages' " in

RCW 64.40.020(1 ). Birnbaum, 167 Wn. App. at 736, n.2. The footnote in Birnbaum

states:

Callfas stated, "Indeed, a permit applicant like the Callfases would have a
claim under chapter 64.40 RCW for delay damages, as we noted above,
without a writ once the tardy permit was issued." Callfas, 129 Wn. App. at
597. This statement is not reconcilable with the statutory definition of
"damages," which that opinion had no occasion to analyze. We
respectfully reject it.

Birnbaum, 167 Wn. App. at 736, n.2.

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The statement in Callfas refers to the discussion of the supreme court's decision

in Mission Springs, Inc. v. City of Spokane, 134 Wn.2d 947, 954 P.2d 250 (1998), and is

not contrary to the definition in RCW 64.40.020(1 ). In addressing Mission Springs, the

opinion clearly states that the developer "filed his action under chapter 64.40 RCW well

within 30 days of the City's 'act' of voting to delay the permit to which he was entitled."

Callfas, 129 Wn. App. at 594.

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