Northwest Land Matters Update - September 2018

September 24, 2018

Court Reinforces Finality of Water Rights Determinations and Avoids Ownership Dispute

Adam Gravley and Tadas Kisielius

On September 5, 2018, Division II of the Washington State Court of Appeals published a water law decision that rejected an appeal by a party claiming an ownership interest in the water right because the appeal was late and failed to challenge the proper agency action. The decision underscores the importance of statutes of limitation for appeals of Department of Ecology (“Ecology”) determinations and the related principle of finality in water law determinations. The court also interprets a “catch-all” avenue for appeal of administrative decisions under the Administrative Procedure Act, which may have broader relevance to regulatory practitioners outside the water law realm. 

Click here to read the full article.

Obama Era WOTUS Rule Reinstated in Washington State (For Now)

Sophia Amberson

After years of litigation concerning the 2015 “Waters of the United States” Rule (the “WOTUS Rule’), which redefined the geographic scope of federal jurisdiction under the Clean Water Act, the WOTUS Rule is, for now, effective in 26 states, including Washington and Oregon. A more detailed discussion of the WOTUS Rule litigation can be found in our August 2018 alert. The WOTUS Rule has far-reaching implications for project development and landowners across the energy, water, agricultural, construction, and transportation sectors.

Click here to read the full article.

IN BRIEF

Washington Supreme Court Affirms Tortious Interference and Due Process Violation Judgment and Damages Award Against County - Maytown Sand & Gravel, LLC v. Thurston Cty., 423 P.3d 223 (Wash. 2018)

This case arose from a final mining permit issued by Thurston County in 2005. In 2009, Maytown Sand and Gravel and the Port of Tacoma sought to use the permit and commence mining operations, but the County imposed a number of procedural hurdles and requirements such as a requirement for a new critical areas study and the issuance of a new SEPA threshold determination (triggering additional appeals), resulting in a two-year delay in mining operations. Maytown and the Port filed a complaint against the County, seeking damages arising from the delay, lost property value, and the mine’s eventual closure.

A central issue in the appeal concerned the application of the Land Use Petition Act (LUPA) to tort claims that arise during the land use decision-making process. Under LUPA, a party challenging a “land use decision” must exhaust local administrative processes before seeking review in the courts. The Washington Supreme Court ruled a “land use decision” subject to LUPA’s exhaustion requirement does not include tortious acts committed during the land use permitting process, and therefore the plaintiffs’ tort claims were not barred. The Court noted that a hearing examiner decision and application of land use statutes and ordinances could have a preclusive effect on subsequent tort claims in some cases, but in this case, neither plaintiff challenged any of the examiner’s determinations.

The Court also held that Maytown and the Port were not entitled to recover prelitigation, administrative fora attorney fees as damages for their tortious interference claims. The Court ruled that an award of attorney fees as damages is limited narrow circumstances such as malicious prosecution and abuse of process claims. The Court affirmed the jury verdict in favor of the plaintiffs’ claims for tortious interference and violation of substantive due process rights, however, resulting in a $12 million damages award to Maytown and the Port as well as $1.1 million in attorney fees for prevailing on the due process claim.

Tribe’s Treaty Rights are Servitudes, not Easements, for Title Insurance Coverage Purposes

Division II of the Washington State Court of Appeals recently delivered a setback to title insurers in Washington State when the court held that tribal treaty rights are servitudes, not easements, thereby rejecting a title company’s argument it had no duty to defend a claim because unrecorded easements are not covered by a standard title insurance policy. The ruling underscores that lawyers should strongly encourage (read: insist) that clients get an extended coverage title policy as any additional cost is far outweighed by the protection afforded against claims, particularly in shoreline or tideland properties.

Robbins v. Mason Cty dealt with two tracts of property with adjacent tidelands. Originally purchased in 1978, property owners Leslie and Harlene Robbins entered into several contracts with commercial shellfish harvesters, one of whom notified the Squaxin Island Tribe of its intent to harvest on the tidelands. In 2016, the Tribe sent a letter to the Robbinses asserting their right to harvest shellfish on the property under the 1854 Treaty of Medicine Creek, which gave the Tribe the right to take 50% of the harvestable shellfish within its “usual and accustomed grounds.” The Robbinses tendered a claim to their title company to defend against the Tribe’s asserted right. The title company declined any duty to defend their insured against the Tribe’s claim, arguing there was no coverage afforded under their policy because the Tribe’s right is an unrecorded easement, which was excluded from coverage. The court disagreed, holding that the general exception in a standard title policy for “public or private easements not disclosed by the public records” does not apply to a tribe’s treaty rights, because treaty rights are servitudes and therefore an encumbrance. (The Court’s discussion of easements, servitudes, and encumbrances is worth a read.) This was crucial to the Robbinses because there is coverage for encumbrances under their title policy. The court went on to scold the title company for their failure to defend their insured: “‘If it is not clear from the face of the complaint that the policy provides coverage, but coverage could exist, the insurer must investigate and give the insured the benefit of the doubt that the insurer has a duty to defend.’” Id. (internal alteration omitted) (quoting Woo, 161 Wn.2d at 53).

Ultimately, while this case was decided favorably for the property owner with respect to the title insurer’s duty to defend against the Tribe’s claim, they are still subject to the Tribe’s right to harvest shellfish on their property and the corresponding diminution in property value due to this encumbrance.

The takeaway for real estate attorneys (aside from adding treaty rights to the due diligence checklist for properties) is that the court determined that treaty rights are not easements for title insurance purposes, and therefore, the additional expense of an ALTA survey and extended coverage policy eliminates the general exceptions and provides protection against claims like this, particularly in shoreline or tideland properties.

Will getting extended coverage guaranty that a title company won’t deny a similar claim, whether for an “encumbrance” or an unrecorded easement? Of course not, but here, the title company’s key defense would have been eliminated with an extended coverage policy.

Timber Trespass: Passing the Saw Around

In Porter v. Kirkendoll, 2018 WL 3432940, the Washington State Court of Appeals, Division II, addressed a number of issues arising from the harvest of timber.

Porter and Kirkendoll are adjoining landowners, and they share the use of a road built on a roadway easement burdening Porter’s property. The Porter property extends beyond the road about 8 feet at the north end, and about 30 feet at the south end. Kirkendoll decided to harvest timber on his land, and hired “Logger 1” to cut them. Logger 1 hired “Logger 2” to assist in the tree cutting. Kirkendoll told the loggers that he owned the land to the edge of the road. The loggers cut the trees, sold them, and split the proceeds with Kirkendoll. Porter sued Kirkendoll and the Loggers for waste and timber trespass, claiming treble damages and attorneys’ fees, for the trees cut off Porter’s land.

The Loggers cross-claimed against Kirkendoll for contribution and indemnity, asserting that any liability for cutting trees on Porter’s property was Kirkendoll’s, since he told the Loggers to cut trees that were on Porter’s property.

In its decision, the Court of Appeals held the following:

  1. The Tort Reform Act does not apply to intentional torts such as timber trespass. Therefore, the statutory right to contribution from jointly liable parties was not available. However, the loggers’ common law indemnity claims against Kirkendoll were not abolished by the Tort Reform Act.  
  2. Under RCW 64.12.030 (the Timber Trespass statute), a person is liable if they cut down, girdle or otherwise injure or carry off any tree, timber, or shrub on the land of another person without lawful authority. The loggers committed timber trespass. Someone who authorizes or directs a trespass is jointly and severally liable with the actual trespassers. That would make Kirkendoll liable along with the loggers, since he directed them where to cut.  
  3. Under common law indemnity, a person without personal fault, who has become subject to tort liability for the wrongful conduct of another, is entitled to indemnity from the wrongdoer for expenditures made in the discharge of that liability. The loggers had the right to make a common law indemnity claim against Kirkendoll because they asserted it was Kirkendoll’s wrongful act of directing them to cut trees on Porter’s property, that lead to the loggers being subject to tort liability for the timber trespass.  
  4. The waste statute, RCW 4.24.630(i), expressly does not apply in any case when liability for damages is provided under the Timber Trespass statute, RCW 64.12.030. 

The case was remanded to the trial court for further proceedings.

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