Opinion
No. 52683-9-I.
Filed: June 1, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 03-2-25043-1. Judgment or order under review. Date filed: 06/20/2003. Judge signing: Hon. Linda Lau.
Counsel for Appellant(s), Catherine Cecily Clark, Williams Williams PSC, 6161 NE 175th St. Ste 202, Kenmore, WA, 98028-4800.
Kinnon William Williams, Williams Williams PSC, 6161 NE 175th St. Ste 202, Kenmore, WA, 98028-4800.
Counsel for Respondent(s), Estera Felice Gordon, Graham Dunn PC, Pier 70, 2801 Alaskan Way Ste 300, Seattle, WA, 98121-1128.
Larry John Smith, Graham Dunn PC, Pier 70, 2801 Alaskan Way Ste 300, Seattle, WA, 98121-1128.
Consequential damages are not included as part of "just compensation" in condemnation actions under Washington State Constitution article I, section 16. Coco's Restaurant, Inc., and EDCCA Foods, Inc. (collectively, "Coco's") ask this court to re-examine and interpret Art. I, sec. 16 to allow it to assert a claim for consequential damages, including lost profits, in either a condemnation action or a separate lawsuit. We affirm the trial court's decision that as a matter of law Coco's is not entitled to assert a claim for lost profits or other consequential damages under Art. I, sec. 16.
FACTS
Central Puget Sound voters approved funding for a ten year regional high capacity transit plan. As part of this project, Central Puget Sound Regional Transit Authority (Sound Transit) condemned a portion of the property located at NE 6th Street between 112th Avenue NE and Interstate 405 to construct a freeway ramp. The ramp will allow direct access to the freeway for transit and high occupancy vehicles.
The owner of the property located at NE 6th Street and 112th Avenue NE is WRG Associates (WRG). Coco's is the lessee and operates a restaurant at this location. When the ramp is constructed, Coco's will lose its access from NE 6th Street and the restaurant's front entrance will face the side of the elevated ramp.
The ramp construction will not affect Coco's restaurant building and the restaurant can still be accessed from 112th Avenue NE.
WRG and Coco's stipulated that construction of the access ramp serves a public purpose and is necessary. Sound Transit agreed to compensate WRG and Coco's based on the difference between the fair market value of the property before and after acquisition. The trial court entered an order that there is public use and necessity for taking a portion of the property to construct the ramp and scheduled a trial to determine the amount of just compensation.
The lease between Coco's and WRG governs allocation of the fair market value award in the condemnation action brought by Sound Transit.
Coco's also sought compensation for lost profits and other consequential damages. Coco's and Sound Transit asked the court on summary judgment to decide as a matter of law whether Coco's was entitled to assert a claim for consequential damages in the condemnation action. The trial court ruled that Coco's was not entitled to assert a claim for consequential damages in the condemnation action and granted Sound Transit's motion for summary judgment.
Coco's consequential damages claim includes lost profits, relocation expenses, reconstruction expenses and the increased cost of operating at a new location.
ANALYSIS
This court reviews questions of law de novo. Wash. Equip. Mfg. Co. v. Concrete Placing Co., 85 Wn. App. 240, 244, 931 P.2d 170 (1997).
Coco's does not dispute that according to established caselaw precedent lost profits and other consequential damages are not available in eminent domain proceedings, but asks this court to re-examine and interpret Art. I, sec. 16 to allow a claim for consequential damages. Coco's also contends there is an apparent inconsistency between two lines of cases that interpret Art. I, sec. 16 that supports re-examining that constitutional provision.
Coco's also argues a State v. Gunwall, 106 Wn.2d 54, 720 P.2d 808 (1986), analysis is necessary to establish that art. 1, sec. 16 should be interpreted independently from the Fifth Amendment takings provision. U.S. Const. amend. V. But the Washington cases addressing whether consequential damages are available in a condemnation action have relied solely on art. 1, sec. 16. See, e.g., Fix v. City of Tacoma, 171 Wn. 196, 200, 17 P.2d 599 (1933). Accordingly, no Gunwall analysis is necessary.
The only issue in this case is whether "just compensation" in condemnation proceedings under art. I, sec. 16 includes lost profits and other consequential damages.
Art. I, sec. 16 provides, in part:
No private property shall be taken or damaged for public or private use without just compensation having been first made. . . .
The right to just compensation under art. I, sec. 16 is limited to the difference between the fair market value of the property before and after acquisition. State v. McDonald, 98 Wn.2d 521, 531, 656 P.2d 1043 (1983). The property owner is not entitled to recover lost profits or other consequential damages. Id.
A long line of Washington cases establish that consequential damages, including lost profits, are not available in eminent domain proceedings. This rule was first recognized as early as 1902 in Seattle Montana Ry Co. v. Roeder, 30 Wn. 244, 70 P. 498 (1902) (where condemned land contains mineral, the measure of just compensation in an eminent domain proceeding is the sum that would be given for the land with the mineral in it, but inquiry as to profits if the minerals are taken out is not permitted). See also City of Tacoma v. Nisqually Power Co., 57 Wn. 420, 107 P. 199 (1910); Chicago, M. P.S. Ry. Co. v. True, 62 Wn. 646, 114 P. 515 (1911).
In Fix v. City of Tacoma, 171 Wn. 196, 200, 17 P.2d 599 (1933), the Court specifically addressed whether lost profits were available in a condemnation proceeding under art. I, sec. 16. The claimant in Fix had a franchise to lay water mains and supply water to the inhabitants of a town. The City of Tacoma condemned a portion of the town to which the claimant had been supplying water and demolished all of the businesses and residences on the condemned land The claimant sought damages from the City for the loss of customers and revenue from water rentals resulting from the condemnation. On appeal, the Court considered whether the loss of customers and revenue was a taking or damaging of property under art. I, sec. 16. The Court concluded the claimant's losses were consequential damages and were not contemplated by art. I, sec. 16.
In McDonald, the most recent case addressing this issue, the State argued it was error to allow a jury to consider the value of crops in determining the amount of just compensation to be paid to a farmer for a condemned portion of his land The Court again reiterated the rule that an owner may not recover lost profits from a business conducted on condemned land as just compensation in an eminent domain proceeding. The Court said: "the only context in which evidence of the value of annual crops is admissible is in determining the value of the land" McDonald, 98 Wn.2d at 531.
Coco's argues that Washington State Constitution article I, section 29 requires the words "taken" and "damaged" in art. I, sec. 16 be given separate meaning and construed to allow an award of lost profits and other consequential damages in a condemnation action.
Washington State Constitution Article I, sec. 29 states: The provisions of this Constitution are mandatory, unless by express words they are declared to be otherwise.
According to the Court in Martin v. Port of Seattle, 64 Wn.2d 309, 391 P.2d 540 (1964), the words "or damaged" were included in art. I, sec. 16 "to avoid the distinctions attached to the word `taking' appropriate to a bygone era." Martin, 64 Wn.2d at 317-18. The Court concluded that, while "damaged" was used to expand the protection of the eminent domain clause beyond actual physical occupation of the condemned property, the distinction between "taken" and "damaged" was no longer necessary because the definition and interpretation of a taking included damage to property. Martin, 64 Wn.2d at 318 ("It is unnecessary to become embroiled in the technical differences between a taking and a damaging in order to accord the broader conceptual scope intended" by the inclusion of both "taken" and "damaged"). And in Highline School Dist. No. 401 v. Port of Seattle, 87 Wn.2d 6, 548 P.2d 1085 (1976), the Court reiterated that the "difficult and treacherous" distinction between "taking" and "damaging" was abandoned by the Martin Court. Highline, 87 Wn.2d at 11. As the Court in Highline observed, the abandonment of any distinction between "taken" and "damaged" corresponded with the recognition that property ownership includes both the right to exclusive possession and the right to use. The Court's conclusion in Martin that it is not necessary to distinguish between "taken" and "damaged" does not violate art. I, sec. 29 because Martin gives effect to both art. I, sec. 16 terms.
Coco's also claims there is an apparent conflict between the Roeder /Tacoma line of cases and a second line of cases starting with Lange v. State, 86 Wn.2d 585, 589, 547 P.2d 282 (1976), that supports re-examining art. I, sec. 16.
Coco's argues Lange is a departure from the traditional rule and that consequential damages are available in condemnation actions. Coco's misreads Lange. In Lange, the State filed a condemnation action to obtain property required for a highway building project approximately five years after the project and its proposed route were first announced. The trial court awarded compensation based on the value of the property as of the date of trial. On appeal, the owners argued the property should be valued as of an earlier date. The Court agreed, concluding the loss in property value and impaired marketability of the property was a direct consequence of the State's action. The Court held:
Under these circumstances the loss suffered is so closely connected to the condemnation itself that our constitutional concern for truly just compensation requires valuation in an eminent domain proceeding at a time earlier than the date of trial. This conclusion is necessary if the condemnee is to be placed in the same position monetarily as he would have occupied had his property not been taken.
Lange, 86 Wn.2d at 595. While the Court in Lange stated the rule that "the condemnee is to be placed in the same position monetarily as he would have occupied had his property not been taken," it did so in the context of when fair market value should be determined; it did not address the nature of the loss for which just compensation must be given or whether consequential damages were available.
Lange, 86 Wn.2d at 595.
The Court in McDonald rejected the same argument Coco's makes — that there is a conflict between Lange and the general rule excluding consequential damages, including lost profits. In McDonald, the farmer relied on Lange to argue it was proper to instruct the jury to consider the lost profits from the crops he did not plant because of uncertainty about when his land would be condemned. The Court held this instruction was improper because it contradicted the rule that the property owner in a condemnation action is only entitled to the difference in fair market value of his property before and after the condemnation. The Court concluded: Lange does not in any way alter the basic rule that just compensation must relate to the value of land taken. Lange merely modifies the time of valuation in certain cases where that is necessary to achieve a just compensation. It does not allow a landowner to claim, under the guise of compensation, profits allegedly lost as a result of precondemnation activities of the State.
McDonald, 98 Wn.2d at 532.
Coco's also argues there is a trend in other states toward allowing consequential damages in eminent domain actions. But the authority Coco's cites from other jurisdictions either represent the same rule as Washington's; rely on statutory or constitutional amendments that do not exist in Washington; apply only in limited circumstances not present here; would not provide the relief Coco's seeks; or resort to strained and circular reasoning. And even if a trend toward consequential damages was emerging, it would not alter this Court's analysis because the law in Washington is clear and binding on this Court.
This court follows Supreme Court precedent. State v. Gore, 101 Wn.2d 481, 487, 681 P.2d 227 (1984). The Washington Supreme Court has interpreted art. I, sec. 16 and construed the terms "taken" and "damaged". The Court has concluded consequential damages are not available as "just compensation" in condemnation cases under art. I, sec. 16.
We affirm the trial court's decision to grant Sound Transit's motion for summary judgment and dismiss Coco's claim for lost profits and other consequential damages.
GROSSE and COX, JJ., concur.