Opinion
No. CS-00-0444-AAM.
August 30, 2001.
ORDER DENYING PETITION TO APPOINT ARBITRATOR, INTER ALIA
BEFORE THE COURT is the respondent City of Spokane's Motion for Summary Judgment Regarding the Open Public Meetings Act (Ct. Rec. 87), its Motion for Leave to File Additional Counterclaim for Equitable Relief (Ct. Rec. 94), and the Motion of Building Industry Association of Washington (BIAW) for Leave to File Amicus Curiae Brief (Ct. Rec. 114)
Oral argument was heard on August 16, 2001. Blame C. Morley, Esq., and Jerry R. Neal, Esq., appeared for the petitioner. David D. Swartling, Esq., appeared for the respondent City of Spokane. Stephen K. Eugster, Esq., appeared for the intervenor-respondent Spokane Research and Defense Fund (SRDF)
Counsel for amicus did not request oral argument on his motion and therefore, he did not appear at the argument. The motion for leave to file an amicus brief has been decided without oral argument.
I. BACKGROUND
This case involves a planned apartment complex development by the petitioner Feature Realty, Inc. The development is now known as the Canyon Bluffs PUD (Planned Unit Development).
In 1995, petitioner and others brought a lawsuit against the respondent City of Spokane and others in Spokane County Superior Court seeking damages and injunctive relief for wrongful withholding of a grading permit. The trial court entered summary judgment in favor of the respondent and the other defendants. An appeal was taken and the Washington State Supreme Court reversed the judgment and held the plaintiffs (including petitioner) had a cognizable cause of action and that none of the defendants (including respondent) were immune from liability. Plaintiffs were awarded appellate costs and attorney fees and the case was remanded to Spokane County Superior Court for further proceedings. Mission Springs, Inc., et al., v. City of Spokane, et al., 134 Wn.2d 947, 954 P.2d 250 (1998)
Following that decision, the petitioner and the respondent entered into a "Stipulated Settlement Agreement," dated October 14, 1998, to settle all claims. Pursuant to the agreement, petitioner dismissed with prejudice its Spokane County Superior Court lawsuit against the respondent.
Paragraph 15 of the Stipulated Settlement Agreement provides:
In order to forestall future problems, the City agrees that any future disputes over the interpretation or implementation of this Settlement Agreement . . . shall be resolved as follows: The Developer(s) shall have the option to submit the dispute either to the Hearing Examiner for a review and final determination, subject to judicial review as provided in RCW 36.70(C), or to the Superior Court, if no review by the Hearing Examiner is allowed by Washington State Law, or by serving a written demand for binding arbitration upon the City.
(Emphasis added)
In May of 2000, petitioner and respondent entered into an "Arbitration Agreement," incorporating the Stipulated Settlement Agreement by reference. They agreed to arbitrate the extent of the respondent's water system obligation for the Canyon Bluffs PUD under the Stipulated Settlement Agreement.
Page 1 of the Arbitration Agreement states: "On October 14, 1998, the parties entered into a STIPULATED SETTLEMENT AGREEMENT, a true copy of which is attached hereto as Exhibit A and incorporated herein by reference." (Emphasis added).
On November 28, 2000, petitioner filed in Spokane County Superior Court a "Petition to Appoint Arbitrator" (Dkt No. 00206812-8) pursuant to the aforementioned Arbitration Agreement. The petition is brought pursuant to Washington statutes pertaining to arbitration (RCW 7.04.010 et seq.) The petition was removed to this court on the basis of diversity jurisdiction.
In a previous order ("Second Order Re Petition to Appoint Arbitrator"), this court held it was appropriate for an arbitrator to decide what the parties meant by the term "entire water system" in the Stipulated Settlement Agreement in determining the extent of the respondent's water system obligation. However, this court also held that it would not compel arbitration until it determined whether the Stipulated Settlement Agreement was executed by respondent in violation of the Washington Open Public Meetings Act ("OPMA") (RCW 42.30). The issue of compliance with the OPMA is not arbitrable because it is a "true defense to contract formation." If compliance with the OPMA was necessary and it did not occur, the Stipulated Settlement Agreement and its arbitration clause are "null and void." In turn, the Arbitration Agreement formulated pursuant to that clause is "null and void" as well, or fails for impossibility because without a Stipulated Settlement Agreement, there is nothing to be arbitrated.
These are the uncontroverted facts taken from the petitioner's and respondent's respective statements of facts.
In early fall 1998, representatives of the City of Spokane and Feature Realty agreed to a proposed settlement of the Mission Springs litigation.
In early October 1998, then City Attorney James C. Sloane presented to the City Council in executive session a confidential memorandum that outlined the costs and various obligations associated with the proposed settlement. A majority of council members were present at this executive session. A consensus was reached among those members present that the proposed settlement agreement should be executed. The parties treated the proposed settlement agreement as confidential until the day it was executed.
At no time, either preceding or following this executive session, was the settlement agreement ever submitted to the City Council for consideration, debate, public input or approval in an open meeting prior to its execution.
On October 14, 1998, City Manager Bill Pupo, City Attorney James C. Sloane, and the President of Feature Realty, Russell Lugli, signed the Stipulated Settlement Agreement.
In doing so, the City represented that it had full authority and power to enter into the agreement; that it had satisfied all legal requirements necessary in order to lawfully execute the agreement; and that the persons signing the agreement had the authority to act for and bind their respective principals. (Paragraph 20 of Stipulated Settlement Agreement).
On November 23, 1998, the City Council, in an open public meeting, approved payments of sums due to Feature Realty under the Stipulated Settlement Agreement.
On March 29, 1999, the City Council, in an open public meeting, approved two ordinances abandoning streets previously owned by the public. This was done pursuant to the Stipulated Settlement Agreement.
III. DISCUSSION
A. Relevant Provisions of the OPMA
Respondent City of Spokane contends it violated the Washington Open Public Meetings Act of 1971 ("OPMA") (RCW 42.30) by obtaining approval of the Stipulated Settlement Agreement at a closed executive session of the City Council, rather than at an open public meeting.
RCW 42.30.010 contains the "Legislative declaration" regarding the OPMA:
The legislature finds and declares that all public commissions, boards, councils, committees, subcommittees, departments, divisions, offices, and all other public agencies of this state and subdivisions thereof exist to aid in the conduct of the people's business. It is the intent of this chapter that their actions be taken openly and that their deliberations be conducted openly.
The people of this state do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created.
RCW 42.30.030 provides:
All meetings of the governing body of a public agency shall be open and public and all persons shall be permitted to attend any meeting of the governing body of a public agency, except as otherwise provided in this chapter.
(Emphasis added).
"Public agency" includes a city. RCW 42.30.020(1)(b). A "governing body" includes the council of a public agency. RCW 42.30.020(2). There is no doubt that the Spokane City Council is subject to the OPMA.
See Clark v. City of Lakewood, F.3d 2001 WL 877062 (9th Cir., Aug. 6, 2001), amended 2001 WL 914195 (9th Cir., Aug. 15, 2001). (City of Lakewood was "public agency" and its city council was a "governing body")
A "meeting" means meetings at which action is taken. RCW 42.30.020(4). Pursuant to RCW 42.30.020(3), "action" is defined as follows:
. . . the transaction of the official business of a public agency by a governing body including but not limited to receipt of public testimony, deliberations, discussions, considerations, reviews, evaluations and final actions. 'Final action' means a collective positive or negative decision, or an actual vote by a majority of the members of a governing body when sitting as a body or entity, upon a motion, proposal, resolution, order, or ordinance.
According to RCW 42.30.060:
(1) No governing body of a public agency shall adopt any ordinance, resolution, rule, regulation, order, or directive, except in a meeting open to the public and then only at a meeting, the date of which is fixed by law or rule, or at a meeting of which notice has been given according to the provisions of this chapter. Any action taken at meetings failing to comply with provisions of this subsection shall be null and void.
(2) No governing body of a public agency at any meeting required to be open to the public shall vote by secret ballot. Any vote taken in violation of this subsection shall be null and void, and shall be considered an 'action' under this chapter.
(Emphasis added)
RCW 42.30.110 sets forth the instances in which it is appropriate for a governing body to hold an executive session rather than an open public meeting. One of these instances is:
To discuss with legal counsel representing the agency matters relating to agency enforcement actions, or to discuss with legal counsel representing the agency litigation or potential litigation to which the agency, the governing body, or a member acting in an official capacity is, or is likely to become a party, when public knowledge regarding the discussion is likely to result in an adverse legal or financial consequence to the agency[.]
RCW 42.30.110(1)(i). (Emphasis added).
RCW 42.30.910 states the purposes of RCW 42.30 are "remedial and shall be liberally construed."
To analyze compliance with the OPMA, it must be determined whether (1) the executive session falls within the definition of "meeting" under the Act, and (2) if so, whether one of the exceptions to the Act applies. Miller v. City of Tacoma, 138 Wn.2d 318, 979 P.2d429 (1999).
B. Summary of Respondent's Position
Respondent City of Spokane asserts the executive session that was held to consider the proposed settlement with Feature Realty meets the statutory definition of "meeting." According to respondent, the Spokane City Charter (SCC) and the Spokane Municipal Code (SMC) (SCC § 38 and SMC § 7.06.250) required the City Council to direct or authorize execution of the settlement agreement and therefore, the City Council was transacting "official business" at the executive session. Furthermore, according to respondent, because the City Attorney distributed a confidential memorandum at the meeting that outlined the City's obligations under the agreement and contained his office's evaluation of the agreement, the City Council members engaged in "deliberations, discussions, considerations [and] evaluations" of the proposed settlement. This conduct, says respondent, falls within the statutory definition of "action." Respondent adds that because the City Council reached a consensus at the executive session approving the agreement, there was "final action" taken as defined in RCW 42.30.020(3).
Respondent contends that no exception applies which would have allowed the City Council to take such "final action" in an executive session. Respondent observes that the Washington Supreme Court has held that liberal construction of the OPMA "'implies a concomitant intent that its exceptions be narrowly confined.'" Miller, 138 Wn. 2d at 324, quotingMead School Dist. No. 354 v. Mead Educational Assn., 85 Wn.2d 140, 145, 530 P.2d 302 (1975). According to respondent, RCW 42.30.110(1)(i) exempts only "discussions" with the City's legal counsel and its purpose is to provide protection for the City's legal and financial position when engaged in potentially delicate settlement negotiations. However, when negotiations are complete, says respondent, "the public policy in favor of open governmental decisions returns to its usual primacy" and "action approving a proposed settlement which concludes litigation and fixes the City's legal position and obligations is not covered by the exemption found in RCW 42.30.110(1)(i)." (Emphasis in original). Respondent says that because negotiations were complete between the City and Feature Realty and a proposed agreement had been drafted, the City Council did not need to go into executive session and by doing so and determining there was a consensus to enter into the agreement, its "action" was not exempted under RCW 42.30.110(1)(i).
Respondent asserts the Stipulated Settlement Agreement is "null and void" pursuant to RCW 42.30.060(1) because the "action" taken by the City Council constituted a "directive" to the City Attorney and the City Manager to enter into the agreement. Respondent also asserts the agreement is void pursuant to RCW 42.30.060(2) because the City Council effectively conducted a vote at the executive session which amounted to a "secret ballot" vis-a-vis the public.
C. Summary of Petitioner's Position
Petitioner Feature Realty concedes "no action was taken by the City Council in any open meeting to approve the Settlement Agreement or authorize its execution." Petitioner asserts, however, that an open meeting was not necessary. According to petitioner, the decision to execute the Stipulated Settlement Agreement was not one that required an underlying "ordinance, resolution, rule, regulation, order or directive" and therefore, by its plain terms, RCW 42.30.060(1) does not apply. In other words, petitioner says execution of the Stipulated Settlement Agreement was not one of the "actions" specified by RCW 42.30.060(1)
In support of this argument, petitioner cites Slaughter v. Snohomish County Fire Protection District No. 20, 50 Wn. App. 733, 750 P.2d 656 (1988). In that case, the plaintiff, a firefighter, alleged his discharge could only be done at a meeting open to the public. The Washington Court of Appeals found the decision to discharge the plaintiff was not an "ordinance, resolution, rule, regulation, order, or directive" within the meaning of RCW 42.30.060 and therefore, an open public meeting was not required. Id. at 739. The court of appeals observed that the terms "ordinance, resolution, rule, regulation, order or directive" are not defined anywhere in RCW Chapter 42.30. Therefore, the court looked for guidance elsewhere, specifically the administrative procedure act which at RCW 34.04.010(2) defines a "rule" as "any agency order, directive, or regulation of general applicability." The court of appeals concluded that the terms used in RCW 42.30.060 "denote matters of some broad public import or 'general applicability'" and agreed with the trial court "that it would be unreasonable to expect that every public agency should hold a public meeting each time it must determine whether to hire or discharge an employee." Id. at 738.
Petitioner asserts execution of the Stipulated Settlement Agreement was "purely administrative" and not legislative and therefore, an open public meeting was not required. Petitioner cites Durocher v. King County, 80 Wn.2d 139, 492 P.2d 547 (1972), wherein the Washington Supreme Court distinguished legislative action from administrative action. An action of a legislative body is legislative in nature if it relates to subjects of a permanent or general character, or if it makes new law or policy. An action is administrative if it provides for subjects of temporary or special character, or merely pursues a plan already adopted. Id. at 152-53. Petitioner says "the act of signing the Settlement Agreement was administrative" because "[i]t involved one piece of property and two parties" and [i]ts subject matter was not of general concern" and "nothing about it required the type of 'action' addressed by § 42.30.060(1)."
Durocher did not involve the OPMA.
Petitioner contends that pursuant to state law and the Spokane City Charter, Spokane's City Manager at the time (Bill Pupo) had "administrative" authority to execute the Settlement Agreement "without prior resolution of the City Council." Petitioner notes that RCW 35.18.060(1) and (9) provide that a City Manager's duties include "general supervision over the administrative affairs of the municipality" and to "perform such other duties as the [city] council may determine by ordinance or resolution." Petitioner says the Spokane City Charter (SCC), §§ 24(a)(12) and 38, implemented that legislative directive by empowering the City Manager "to approve for payment and submit to the city council at each meeting for its allowance, all claims and bills incurred by or under the direction or supervision of the city manager" and to execute contracts and instruments "in the name of the city." Petitioner says the Spokane City Council properly delegated the power to sign contracts to the City Manager subject to the limitations expressed in SCC § 24(b)(2) and (3), those being that the City Manager does not have power "to adopt or enact ordinances or resolutions or exercise any legislative function" or "to expend any sums of money except in accordance with appropriations and authorizations made by the city council or by this Charter."
According to petitioner, the SCC and the OPMA were followed in this case because the City Manager and the City Clerk signed and attested the Stipulated Settlement Agreement as required by SCC § 38 without action by the City Council and then, in November 1998, the City Manager made application for payment of amounts due under the Stipulated Settlement Agreement from funds previously appropriated by the City Council. At an open public meeting on November 23, 1998, the City Council approved payment of those amounts.
Petitioner says that with a few notable exceptions, this has been the longstanding procedure of the City of Spokane. According to petitioner's research, of seventeen cases filed by or against the City and settled between October 1998 and December 2000, fourteen of them were settled without City Council approval at an open public meeting. of those fourteen, petitioner singles out two cases (Gypsy Church of the Northwest, et al. v. City of Spokane, et al., C-89-423-AAM, and Mission Springs, Inc. v. City of Spokane). Petitioner identifies three of the seventeen cases (Ronald v. City of Spokane; Walmsley v. City of Spokane and City of Spokane v. Sutherland Resources) where the settlement was approved by the City Council at an open public meeting because of "the great public concern associated with those cases." Petitioner suggests this was a proper "legislative" function of the City Council because the settlements of these cases were "permanent and general in character" and therefore, of concern to the City Council and the public.
Ronald involved acquisition of a public right of way to insure that a view of the Spokane River from the new city library was not blocked by a proposed condominium development; Walmsley involved the city's development of the Colbert compost facility; and Sutherland involved city acquisition of a property for a cross-over between 34th Avenue and Regal Street.
Finally, petitioner asserts RCW 42.30.060(2) ("No governing body of a public agency at any meeting required to be open to the public shall vote by secret ballot") was not violated because (1) the executive session conducted by the Spokane City Council at which it considered the proposed agreement was not a "meeting required to be open to the public" and (2) no vote was taken at this executive session.
D. Does the OPMA Apply?
If, as petitioner contends, the City Manager could have executed the Stipulated Settlement Agreement without any direction or authorization from the City Council, one immediately has to question why the City Attorney bothered with an executive session to seek direction from the City Council regarding the agreement.
While her opinion is of no legal significance, the court notes that at least one of the Spokane City Council members present at the October 5, 1998 executive session, Cherie Rogers, understood council "permission" was necessary for the City to pursue the Stipulated Settlement Agreement. (Rogers Dep. at p. 7).
Spokane City Charter (SCC) § 38 states:
All written contracts, bonds, and instruments of every kind and description to which thecity shall be a party shall be executed in the the name of the city by the mayor or the manager under the direction of the city council, and attested by the clerk, and when necessary, shall be acknowledged.
(Emphasis added)
Furthermore, Spokane City Charter § 115 states:
To the extent permitted by law the council shall have the power to prescribe the manner, form and time by which the various types of claims for damages against the City, if any, shall be made, settled and paid. The council may provide for insurance and for adjustment and settlement of claims.
Considering these specific charter provisions, petitioner's reliance on SCC § 24(a)(12) is not persuasive since that provision merely empowers the City Manager "to approve for payment and submit to the city council at each meeting for its allowance, all claims and bills incurred by or under the direction or supervision of the city manager." Furthermore, § 24(b)(3) and (7) specify that the City Manager has no power to "expend any sums of money except in accordance with appropriations and authorizations made by the city council or by this Charter," and no power "to sell, lease, encumber or otherwise dispose of any real or personal property belonging to the City of Spokane."
Respondent City of Spokane cites Chapter 7.06 of the Spokane Municipal Code (SMC) in support of its argument that City Council authorization of the settlement agreement was required. However, this chapter relates to "Procurement of Goods, Services and Works" (procurement contracts) and the court questions its application to a settlement agreement which is clearly a non-procurement contract.
That said, RCW 7.06.250 provides:
All contracts to which the City is a party shall be in writing and executed in the name of the City by the mayor or the city manager under the direction of the city council, attested by the city clerk and, when necessary, acknowledged . . .
(Emphasis added). This is very similar to the language in SCC § 38.
Citing Washington Superior Court Rule 2A (CR 2A) and RCW 2.44.010(1), petitioner contends "[n]othing in the law requires a demonstration that a settlement agreement subscribed by an attorney be previously approved by the governing body in an open meeting of the government entity. . . ." In other words, petitioner says that because City Attorney Sloane signed the agreement and certified he had the authority to do so, the lack of City Council approval at an open public meeting is irrelevant. CR 2A provides:
No agreement or consent between parties or attorneys in respect to the proceedings in a cause, the purport of which is disputed, will be regarded by the court unless the same shall have been made and assented to in open court on the record, or entered in the minutes, or unless the evidence thereof shall be in writing and subscribed by the attorneys denying the same.
RCW 2.44.010(1) provides that an attorney and counselor has authority:
To bind his client in any proceedings in an action or special proceeding by his agreement duly made, or entered upon the minutes of the court; but the court shall disregard all agreements and stipulations in relation to the conduct of, or any of the proceedings in, an action or special proceeding unless such agreement or stipulation be made in open court, or in presence of the clerk, and entered in the minutes by him, or signed by the party against whom the same is alleged, or his attorney. . . .
These provisions "grant an attorney authority to bind his client to agreements or stipulations made on behalf of the client but without the client's written agreement or presence in court." Nguyen v. Sacred Heart Medical Center, 97 Wn. App. 728, 734, 987 P.2d 634 (1999) However, "an attorney without special authority has no right to stipulate away a valuable right of a client." Id. at 735, quoting Wagner v. Peshastin Lumber Co., 149 Wn. 328, 337, 270 P.2d 1032 (1928). Absent express authority or an informed consent or ratification, attorneys may not waive, compromise or bargain away a client's substantive rights. Morgan v. Burks, 17 Wn. App. 193, 199-200, 563 P.2d 1260 (1977).
CR 2A and RCW 2.44.010(1) did not create authority for City Attorney Sloane to sign the Stipulated Settlement Agreement. Rather, those provisions presume the existence of authority and as such, allow an attorney to bind his client to an agreement without the client's written agreement or presence in court. Without authority, the attorney cannot bind his client to anything.
Here, City Attorney Sloane thought he and the City Manager had authority to execute the settlement agreement because of what transpired at the executive session of the City Council. As it turns out, they did not have such authority because the City Council failed to authorize execution of the Stipulated Settlement Agreement at an open public meeting.
Petitioner notes that Sloane testified at his deposition that an assistant city attorney was authorized to enter into the Arbitration Agreement at issue in this case and that this Arbitration Agreement was never submitted to the City Council for approval. According to respondent, City Council approval was not necessary because the Arbitration Agreement qualifies as a "minor contract" under Spokane Municipal Code 7.06.260 which states that the "city council hereby directs and authorizes the city manager to execute minor contracts without individual approval of each contract by the city council." "Minor" contracts are those which involve (a) a contract that involves a cost or a fee of $25,000 or less within a twelve-month period and is of a routine nature or (b) a housekeeping change or clarification to a contract that does not affect a material term or condition.
As noted above, SMC Chapter 7.06 is restricted to procurement contracts. However, even if Chapter 7.06 does not apply, the court's immediate concern is with the Stipulated Settlement Agreement, not the Arbitration Agreement. The Arbitration Agreement is derived from the Stipulated Settlement Agreement and in particular, the arbitration clause contained in the Stipulated Settlement Agreement. If the Stipulated Settlement Agreement is void, the Arbitration Agreement is also void or fails for impossibility because there is nothing left to arbitrate.
Petitioner suggests the "under the direction of the city council" language in SCC § 38 is satisfied because the City Council can remove the City Manager (SCC § 23) if it does not approve of his "administrative" actions (i.e, a particular settlement agreement he has executed). Petitioner also suggests the public is protected because if the public does not approve of the "administrative" actions taken by the City Manager it can vote the City Council members out of office or subject them to a recall election. The fact the Stipulated Settlement Agreement was considered by the City Council, albeit in an executive session, is recognition enough that the City Council had to provide direction or authorization before the agreement could be executed.
Salmon for All v. Dept. of Fisheries, 118 Wn.2d 270, 821 P.2d 1211 (1992), cited by petitioner, is inapposite. In Salmon for All, the Washington Supreme Court held that because the Washington State Department of Fisheries is governed by an individual director who has full decision-making authority, and agencies which are operated under full decision-making power of a single director are excluded from the OPMA, the Department of Fisheries is exempt from OPMA's requirements. There is no "governing body" as defined in the OPMA since there is no multimember rule-making body. Id. at 277.
Here, City Council approval of the Stipulated Settlement Agreement was necessary before the City Manager could execute the agreement. The City Council is a "governing body" as defined in OPMA because it is a multimember council of a public agency, that being the City of Spokane.
City Attorney Sloane was under the impression this authorization could be obtained in an executive session. He and the City Manager did not sign the agreement until after the executive session. The court fails to see the logic in not requiring City Council authorization for execution of the agreement, but requiring their authorization (perhaps "rubber stamping" is a better word) of payments from funds already appropriated to consummate the agreement. Once the Stipulated Settlement Agreement was executed, what could the City Council realistically do other than approve the payments? If it did not do so, it would have potentially subjected the City to a breach of contract action (unless the agreement was explicitly conditioned on City Council approval of payments) Accepting petitioner's interpretation of "under direction of the city council" in SCC § 38 would render that language meaningless.
This, of course, assumes City Council approval of the Stipulated Settlement Agreement at an executive session was not a violation of the OPMA which would render the agreement "null and void."
Likewise, what is the reason for having an open public meeting when the city approves payments for a settlement agreement already executed, but not having an open public meeting when the council members consider whether a proposed settlement agreement should be executed? Certainly, members of the public can express their concern about payments to be made, but once again what is the council going to do if the agreement has already been executed? Perhaps the council may bow to public outrage and decline to approve the payments, but in doing so it may subject the city to a breach of contract action. Once the agreement is executed, there is a not a lot that can be done to undo it (unless the agreement is "null and void" because of failure to comply with the OPMA).
E. Was the OPMA Violated?
Former Spokane City Attorney James C. Sloane acknowledges the Stipulated Settlement Agreement was not presented to the Spokane City Council on either October 5th or 12th, 1998 for consideration in an open public meeting. According to Sloane:
This was the settlement of pending litigation, and it was our practice to get authority from the city council in executive session and then proceed with the settlement and then components of the settlement would come back to the city council generally as a claim that would be approved as a part of the city manager's weekly reports to city council.
(Sloane Dep. at p. 16)
At that time, it was my opinion that settlement of the litigation was a circumstance under which the city council could give policy direction to the city manager and the city attorney in executive session that permitted them to go outand resolve matters of litigation byexecuting the necessary documents to resolve the litigation with the understanding that the amount involved would come back as a part of the city manager's claims and be approved formally by the city council at a later time.
(Sloane Dep. at p. 23).
Sloane testified that at the time his deposition was taken (June 13, 2001), his opinion had changed and he now believes that the City Council needed to approve the settlement agreement prior to its execution by resolution at an open public meeting. (Sloane Dep. at pp. 26-27). The change in his opinion was prompted by Miller v. City of Tacoma, citedsupra, with which Sloane says he became acquainted when the decision was rendered (July 1999)
In Miller, the plaintiff was an unsuccessful applicant for a position on the Tacoma City Planning Commission. During an executive session, the Tacoma City Council conducted three rounds of secret ballots before arriving at a consensus candidate for the planning commission. The Washington Supreme Court found the City Council took "action" in the executive session and therefore, the executive session was a "meeting" subject to the OPMA. 138 Wn.2d at 325. The supreme court then went on to find that the balloting conducted during the executive session to arrive at a consensus candidate did not fall within the exception to open public meetings specified in RCW 42.30.110(1)(g) (allowing executive sessions "to evaluate the qualifications of an applicant for public employment or to review the performance of a public employee"). The supreme court concluded balloting was not "evaluation" for the purpose of the exception. Id. at 326.
The Washington Supreme Court rejected Tacoma's argument that the city council was entitled to conduct ballots in executive session because this was "action" as opposed to "final action" under RCW 42.30.020(3). Said the court:
. . . Tacoma's argument . . . involves an inherent misreading of the operation of the Open Public Meetings Act and its exceptions. The argument the council could take 'action' in executive session not only fails to give effect to the act's mandate for liberal interpretation, but in fact implicitly reverses the fundamental premise of the act that all 'action' must be taken at meetings open to the public. RCW 42.30.030. RCW 42.30.020(3) does not authorize action to be taken in executive session. but rather provides a broad definition of 'action.' Contrary to the trial court's conclusion, the act's general rule is that 'action' must be taken in an open meeting (RCW 42.30.030; RCW 42.30.020(4)); whereas one of the act's exceptions must be triggered before an executive session may be convened.Id. at 326-27. (Emphasis added)
Because the parties' arguments focused on whether the balloting by the city council in executive session amounted to "final action" in terms of the statute, the supreme court addressed that issue although it was unnecessary to do so because of its finding that the balloting constituted "action" which went beyond the scope of the exception provided in RCW 42.30.110(1)(g). RCW 42.30.110(1)(g) provides that "final action hiring" must take place in public and, as noted above, "final action" is defined by RCW 42.30.020(3) as "a collective positive or negative decision, or an actual vote by a majority of the members of a governing body when sitting as a body or entity, upon a proposal, resolution, order, or ordinance." Tacoma argued that the action taken by the city council in executive session was not "final action," relying on several cases, including Slaughter, cited supra.
The supreme court noted that in Slaughter, the court of appeals was not considering exceptions to the OPMA under RCW 42.30.110, but rather was considering RCW 42.30.060(1) which requires an "ordinance, resolution, rule, regulation, order or directive" to be adopted at a public meeting which has been scheduled in accordance with the provisions of the Act. The supreme court also noted that Slaughter did not define "final action" under the OPMA and therefore, the statutory definition of "final action" in RCW 42.30.020(3) "must control." Id. at 330. The supreme court concluded the Tacoma City Council had taken "final action" as that term is used in RCW 42.30.020(3) because it was a "collective decision made by an actual vote on at least an informal proposal." Id. at 330-31.
While petitioner Feature Realty seeks to have this court focus narrowly upon the language of RCW 42.30.060(1) in determining whether an open meeting was required, Miller is at odds with that approach. The terms "action" and "final action" cannot be confined solely to RCW 42.30.060. RCW 42.30.030 lays down a general rule that " all meetings of the governing body of a public agency shall be open and public and all persons shall be permitted to attend any meeting of the governing body of a public agency, except as otherwise provided in this chapter ." (Emphasis added). Hence, the analysis is: (1) whether the executive session in question constitutes a "meeting" covered by the OPMA; and (2) if so, whether one of the act's exceptions applies. Miller, 138 Wn.2d at 325.
No governing body of a public agency shall adopt any ordinance, resolution, rule, regulation, order, or directive, except in meeting open to the public and then only at a meeting, the date of which is fixed by law or rule, or at a meeting of which notice has been given according to the provisions of this chapter. Any action taken at meetings failing to comply with provisions of this subsection shall be null and void.
RCW 42.30.030 states a general rule, whereas RCW 42.30.060(1) pertains to particular action by a governing body, that being the adoption of an "ordinance, resolution, rule, regulation, order, or directive." The definition of "action" and "final action" in RCW 42.30.020(3) is broader. "Action" includes the transaction of official business involving receipt of public testimony, deliberations, discussions, reviews, and evaluations, in addition to "final actions." Unlike RCW 42.30.060(1), the action does not have to be the adoption of an ordinance, resolution, rule, regulation, order or directive. Moreover, while the adoption of an ordinance, resolution, rule, regulation, order or directive likely constitutes "final action," the definition of "final action" in RCW 42.30.020(3) discusses "final action" with regard to motions and proposals, in addition to "final action" on resolutions, orders and ordinances. It is apparent from RCW 42.30.020(3) that "action" and "final action" is more than what is described in RCW 42.30.060(1). That is what the Washington Supreme Court concluded in Miller in the process of distinguishing Slaughter. Miller, 138 Wn.2d at 330-31.
The October 5, 1998 executive session of the Spokane City Council at which it considered and approved the Stipulated Settlement Agreement between the City and Feature Realty was a "meeting" at which "action" was taken. At this "meeting" there occurred the "transaction of the official business of a public agency by a governing body including but not limited to receipt of public testimony, deliberations, discussions, considerations, reviews, evaluations, and final actions." RCW 42.30.020(3). The Stipulated Settlement Agreement was deliberated, discussed, considered, reviewed and evaluated.
There was also "final action" taken at the executive session because, at a minimum, the City Council reached a "collective positive decision" approving of the proposed settlement agreement. "Final action" is defined as "a collective positive or negative decision, or an actual vote by a majority of the members of a governing body when sitting as a body or entity, upon a motion, proposal, resolution, or ordinance." RCW 42.30.020(3). (Emphasis added).
A persuasive argument can also be made that an "actual vote" was taken at the executive session, approving of the Stipulated Settlement Agreement. Councilperson Cherie Rogers says that a "vote" was not taken, but that a consensus was ascertained by asking each council person whether they approved of the agreement ("yes") or did not approve ("no"). There were no dissents. (Rogers Dep. at pp. 7-8) While this may not constitute a formal vote, it nonetheless qualifies as an "actual vote."
The respondent and intervenor-respondent SRDF correctly observe there is nothing in the OPMA or case authorities discussing OPMA which distinguishes between "legislative" and "administrative" action. All the OPMA is concerned with is meetings at which "action" is taken. However, if a label is necessary, the court agrees with intervenor-respondent SRDF that "the City Manager and the City Attorney treated the settlement as a legislative action because they sought Council approval prior to signing it."
Because the executive session was a "meeting" at which "action, " and indeed "final action," was taken, it had to be open to the public, unless an exception applies. RCW 42.30.110(1)(i) does not apply here because at the executive session more than just a mere "discussion" took place with legal counsel about litigation. The council reached a consensus decision about resolution of the litigation and approved execution of the Stipulated Settlement Agreement. In arriving at this conclusion, the court is mindful that liberal construction of the OPMA "implies a concomitant intent that its exceptions be narrowly confined." Miller, 138 Wn.2d at 324, quoting Mead School Dist. No. 354 v. Mead Educational Assn., 85 Wn.2d 140, 145, 530 P.2d 302 (1975). Even if the analysis was confined to RCW 42.30.060, as the petitioner seeks, the court would arrive at the same conclusion: an open public meeting was necessary. RCW 42.30.060(1) states that "no governing body of a public agency shall adopt any ordinance, resolution, rule, regulation, order or directive, except in a meeting open to the public. . . ." Petitioner acknowledges that City Attorney Sloane "received a policy directive from the City Council to pursue . . . settlement. . . ." (Petitioner's Opening Brief at p. 15). City Attorney Sloane has testified that he was seeking "policy direction" from the City Council at the October 5, 1998 executive session. (Sloane Dep. at p. 23). The City Council adopted a directive that the Stipulated Settlement Agreement be executed. RCW 42.30.060(2) states that no governing body of a public agency at any meeting required to be open to the public shall vote by secret ballot. While it is true that a formal vote was not taken at the executive session, the court agrees with respondent that the consensus decision of the City Council regarding the Stipulated Settlement Agreement was essentially a "secret ballot" vis-a-vis the public. It seems, however, that the intent of RCW 42.30.060(2) is to prohibit use of secret ballots at open public meetings rather than executive sessions. Here, the City Council arrived at its consensus decision at an executive session which constitutes in the first instance, a violation of RCW 42.30.030, and secondly, a violation of RCW 42.30.060(1). Respondent need not avail itself of RCW 42.30.060(2).
Respondent also asserts RCW 42.30.110(1)(i) does not apply because negotiations between petitioner and respondent were complete and therefore, public knowledge regarding the discussion was not "likely to result in an adverse legal or financial consequence to the agency." The petitioner takes issue with that, citing deposition testimony from councilperson Cherie Rogers and attorney Terrence L. Butler that the matter was still confidential as of October 5, 1998 (the date of the executive session) and that negotiations continued up until October 14 when the settlement agreement was executed. However, respondent cites the affidavit of Jack Krystal, Chief Operating Officer of Feature Realty, wherein he states that on October 5, 1998, he attended the City Council meeting and during one of the breaks, then City Attorney Sloane told him "it looks like we have a deal," which Krystal understood to mean the City Council had approved the Stipulated Settlement Agreement "as required by Section of the Settlement Agreement."
While there may be dispute about whether "public knowledge regarding the discussion [was] likely to result in an adverse legal or financial consequence to the agency," the exception still does not apply because there was more than just a mere "discussion" at the executive session. There was a consensus decision to authorize settlement.
F. Was Ratification Possible?
Petitioner contends that even if the City Council should have directed execution of the Stipulated Settlement Agreement at an open public meeting instead of an executive session on October 5, 1998, the Stipulated Settlement Agreement was ratified by conduct of the City Council at subsequent open public meetings, including the November 23, 1998 meeting at which the City Council approved payments pursuant to the agreement. Petitioner cites deposition testimony from former City Attorney Sloane:
The city council clearly ratified specific components of the stipulated settlement agreement through their approval of the city manager's claims related to monetary expenditures by the city to fulfill the components of the settlement agreement.
(Sloane Dep. at p. 25).
In Mason County v. PERC, 54 Wn. App. 36, 771 P.2d 1185 (1989), the Public Employment Relations Commission (PERC) determined Mason County was guilty of an unfair labor practice for refusing to consider, at a meeting convened in accordance with the OPMA, the ratification of a proposed collective bargaining agreement. The agreement had been negotiated and formulated by representatives of the Teamsters Union and the county at meetings which did not comply with OPMA requirements.
The Washington Court of Appeals held the OPMA applies to collective bargaining sessions of a public agency and the bargaining representatives of the employees of that agency. Id. at 40. The court went on to hold that a public agency cannot ratify a proposed collective bargaining agreement, reached in bargaining sessions conducted in violation of the OPMA, at a later meeting conducted in compliance with the OPMA. Therefore, Mason County was not required to reconsider the proposed agreement for ratification at a public meeting. Id. According to the court:
Because the bargaining sessions violated the Act [OPMA], the sessions and the agreement produced from them are a legal nullity. [Citation omitted]
Our conclusion is supported by the Supreme Court's observation that 'the purpose of the Act is to allow the public to view the decision making process at all stages.' Cathcart v. Andersen, 85 Wn.2d 102, 107, 503 P.2d 313 (1975). Part of the Legislature's declaration of purpose states that the actions of public entities 'be taken openly and that their deliberations be conducted openly.' RCW 42.30.010.Id. at 41.
An agreement which is a legal nullity (void) cannot be "ratified." A void contract is incapable of ratification. Nothing can cure its defect. This is fundamental contract law. See Osborne, Tremper Co. v. King County, 76 Wn. 277, 289-90, 136 P. 138 (1913) (contract by county river and harbor improvement commission was void because the commissioners had no power to create improvement district and contract could not be ratified); Stabbert v. Atlas Imperial Diesel Engine Company, 39 Wn.2d 789, 792, 238 P.2d 1212 (1951), citing 1 Williston on Contracts, (Rev. ed.) 22, § 15 (if agreement is void it is not a contract and produces no legal obligation; however, voidable contract is common in the law and is one where one or more parties have the power to avoid the legal relations created by the contract or by ratification of the contract to extinguish the power of avoidance); Western Washington Cement Masons Health Sec. Trust Funds v. Hillis Homes, Inc., 26 Wn. App. 224, 234, 612 P.2d 436 (1980) (contract voidable, not void, and therefore subject to ratification). A void agreement cannot be ratified; a voidable one can.
Ratification was not an option for the Spokane City Council. The only option was (and may still be) presentation of the Stipulated Settlement Agreement to the City Council at an open public meeting with the council approving or disapproving of its execution. The existing execution of the agreement is a nullity because of the OPMA violation. Therefore, if the Stipulated Settlement Agreement is again presented to the City Council, this time at an open public meeting, it would have to be considered unexecuted. The City Council is incapable of ratifying the execution which already took place.
A governing body can remedy OPMA omissions. In Henry v. Town of Oakville, 30 Wn. App. 240, 633 P.2d 892 (1981), the Washington Court of Appeals observed that "[t]he well-established rule is that where a governing body takes an otherwise proper action later invalidated for procedural reasons only, that body may retrace its steps and remedy the defects by reenactment with the proper formalities." Id. at 246, citing Jones v. Centralia, 157 Wn. 194, 212, 220, 289 P. 3 (1930) and other authorities. (Emphasis added). The Henry court quoted fromJones v. Centralia as follows:
[W]here the procedure followed has not been in accordance with the law, proceedings had thereunder must be held void; but this nowise precludes the ultimate municipal authority, . . . from again exercising in a lawful manner its authority for the purpose of correcting errors and mistakes due, not to a basic want of power, but to defective procedure which has, in some respects caused the municipal machinery to cease to function.Id. at 247, quoting Jones, 157 Wn., at 212.
In Henry, the plaintiff challenged town ordinances, contending they had been adopted contrary to the OPMA and were void. Before the case went to trial, the town council met in a regular session and "ratified" each of the ordinances. The court of appeals found "no evidence of any procedural or substantive improprieties in the enactment of the ratification ordinances. . . ." 30 Wn.App. at 247.
While the court of appeals used the term "ratification," what happened is that the city council conducted a regular session to approve ordinances which had been previously approved at a "special" meeting which merely "continued" a regular meeting.
Here, the Spokane City Council did not "again exercis[e] in a lawful manner its authority for the purpose of correcting errors and mistakes due. . . ." There were subsequent open public meetings at which the Stipulated Settlement Agreement was mentioned and the City Council undertook action pursuant to the agreement. For example, on November 23, 1998, the City Council approved payments pursuant to the Stipulated Settlement Agreement as part of its "Consent Agenda" and in March 1999, adopted ordinances vacating rights-of-way as called for in the Stipulated Settlement Agreement. However, the City Council conducted those meetings on the assumption the agreement had been validly executed. The City Council did not conduct an open public meeting where the assumption was the agreement had not yet been executed (or at least not validly executed), allowing for public comment on whether the agreement should be executed. The agreement was never distributed to council members or discussed on its merits at an open public meeting subsequent to the executive session of October 5, 1998. (See Declaration of Terri L. Pfister, City Clerk of Spokane)
The only way the Spokane City Council could have remedied the defect of the October 5, 1998 executive session was to conduct a full open public meeting for the express purpose of determining whether the Stipulated Settlement Agreement should be executed. Summary approval of the already executed agreement at an open public meeting was not an option. See OPAL v. Adams County, 128 Wn.2d 869, 884, 913 P.2d 793 (1996) (full opportunity to express views in a public meeting distinguished from cases in which formal action is merely summary approval of decisions made in secret meetings).
Clark v. City of Lakewood, F.3d 2001 WL 877062 (9th Cir., Aug. 6, 2001), amended 2001 WL 914195 (9th Cir., Aug. 15, 2001), is not to the contrary. In this case, the Lakewood Adult Entertainment Task Force violated the OPMA by closing the majority of its meetings to the public. The result of these meetings was a report to the Lakewood Planning Advisory Board. Based on that report, the Planning Advisory Board recommended the Lakewood City Council pass a new adult cabaret ordinance. The City Council did so, adopting the new ordinance at an open public meeting.
The Ninth Circuit held it was unnecessary to declare the entire ordinance null and void "because the ultimate ratification of the Ordinance was done in compliance with the Act. . . ." However, the OPMA did require the court to declare the Task Force's "actions" to be null and void. The circuit cited OPAL v. Adams County for the proposition that OPMA does not require that subsequent actions taken in compliance with the OPMA also be held null and void. The circuit concluded that because any actions taken at the Task Force's closed meetings were null and void, the evidentiary foundation of the ordinance was potentially undermined. Therefore, the matter was remanded to the district court to determine which actions were null and void and what effect they might have on the constitutionality of the ordinance.
G. To What Extent is Equitable Relief Available?
Assuming the Stipulated Settlement Agreement was executed contrary to the OPMA, petitioner asserts respondent should nonetheless be "equitably estopped" from claiming the agreement is "null and void." According to petitioner, "[i]f Respondent had the power to properly present the Settlement Agreement to the City Council in open, public session in conformance with the OPMA and failed to do so, the defect was procedural and not substantive." Because it is merely a procedural defect, petitioner says equitable estoppel applies.
The elements of equitable estoppel are: (1) an admission, statement, or act inconsistent with the claim afterwards asserted; (2) action by the other party on the faith of such admission, statement, or act; and (3) injury to such other party from allowing the first party to contradict or repudiate such admission, statement, or act. Finch v. Matthews, 74 Wn.2d 161, 171 n. 3, 443 P.2d 833 (1968).
While petitioner may indeed be entitled to some type of equitable relief because of actions it has taken in reliance on what it believed to be a valid Stipulated Settlement Agreement, "equitable estoppel" cannot be employed to preclude declaring the Stipulated Settlement Agreement "null and void" under the OPMA. If it was merely a matter of precluding the City of Spokane from asserting a "right," equitable estoppel might be appropriate. Instead, the "right" at issue belongs to the public and involves its interest that a transaction of official government business be conducted in the "open." If that does not occur and it is legally required to occur under the OPMA, the transaction is "null and void." It cannot be merely "voidable" because that would defeat the purpose of the OPMA.
Equitable estoppel is the doctrine by which a person may be precluded by his act or conduct, or silence when it is his duty to speak, from asserting a right which he otherwise would have had. Black's Law Dictionary (6th Ed. 1990), at p. 538.
Furthermore, private parties dealing with government agencies and officers thereof are presumed to have knowledge of the authority of the agency and its officers and the limitations of such authority. Noel v. Cole, 98 Wn.2d 375, 379, 655 P.2d 245 (1982); State ex. rel. Bain v. Clallam County Board of Commissioners, 77 Wn.2d 542, 549, 463 P.2d 617 (1970); Terrace Heights Sewer District v. Young, 3 Wn. App. 206, 209, 473 P.2d 414 (1970); Stoddard v. King County, 22 Wn.2d 868, 883-84, 158 P.2d 78 (1945). Therefore, petitioner could not reasonably rely on the City Attorney's certification that he and the City Manager had authority to execute the agreement. Justifiable reliance is one of the essential elements for application of equitable estoppel.
Petitioner relies on Finch v. Matthews, 74 Wn.2d 161, 443 P.2d 83320 Washington Supreme Court affirmed a lower court's decision quieting title to real estate in favor of the private party plaintiffs versus the City of Seattle. The supreme court concluded the city was equitably estopped to assert that its claim to the real estate was superior to that of the plaintiffs. The supreme court arrived at that conclusion because of its finding that the actions taken by the municipality were within the general powers granted to the municipality, even though they were exercised in an irregular and unauthorized manner. The actions of the municipality were not substantively ultra vires, but procedurally ultra vires. Id. at 171, 173-74. The supreme court also found that the acts of the municipality were not malum in se, malum prohibitum, or against public policy, nor was there any evidence of bad faith, fraud, or collusion. Id. at 175, citing Edwards v. Renton, 67 Wn.2d 598, 409 P.2d 153 (1965) Nelson v. Pacific County, 36 Wn. App. 17, 671 P.2d 785 (1983) subsequently distinguished the result in Finch. This distinction is very pertinent to the situation between Feature Realty and the City of Spokane. In Nelson, the successors in interest of original platters of property sought to quiet title to land which was shown on the plat map as dedicated to public use, but which was outside the described platted area. The Washington Court of Appeals held the dedication was valid and Pacific County had not abandoned the property. The court stated:
In Edwards, equitable estoppel was not applied. Rather, the private party was afforded equitable relief under the doctrine of unjust enrichment by being reimbursed for the reasonable value of the benefit he had conferred on the municipality pursuant to an agreement which turned out to be illegal.
Finch v. Matthews . . . is likewise not controlling. There the court upheld the exchange of a dedicated right of way for a more desirable parcel nearby. It pointed out that the County had not followed the statutory methods for vacating and acquiring the properties, but held the action to be merely an irregular and unauthorized manner of exercising the broad powers granted to counties to build and operate roads. However, the County was neither giving up a specific use, provided for in the dedication, nor losing any quantity of land; in fact, it receivedmore land than it relinquished. No expectations were compromised by that transaction, and the procedural protections were not necessary. The opposite is true here. The statutory procedures were necessary to protect the interests of respondents and other members of the public in that area. They were ignored and we will not sanction the alienation of public property by shortcuts which exclude important safeguards.Id. at 24. (Emphasis added).
The procedures of the OPMA are necessary to protect the public interest. City Council approval of the Stipulated Settlement Agreement at an executive session was a shortcut which excluded the important safeguard of the OPMA. The terms of the Stipulated Settlement Agreement included the "alienation of public property," be it public money or public land. Thus, equitable estoppel cannot apply which would have the effect of validating and enforcing the terms of the Stipulated Settlement Agreement.
That said, the court believes, as does the respondent, that Feature Realty may be entitled to other forms of equitable relief. The respondent has filed a Motion for Leave to File Additional Counterclaim. Respondent's proposed additional counterclaim asserts the city is entitled to an "equitable determination . . . of the parties' rights and responsibilities towards one another pursuant to the Court's authority. . . ." Respondent notes that both the City and Feature Realty have "performed in part pursuant to their respective understandings of the terms of the Agreement." Thus, the City has made substantial payments to Feature Realty and vacated certain right-of-ways pursuant to the agreement, while Feature Realty dismissed the underlying lawsuit against the City. Respondent contends this court is best equipped to resolve the remaining disputes between the parties and an amended counterclaim will not prejudice any party.
In Noel v. Cole, cited supra, the state Department of Natural Resources (DNR) had general authority to sell timber rights and its failure to comply with the State Environmental Policy Act of 1971 (SEPA) was merely a failure to comply with a procedural requirement. The DNR did not lack the substantive authority to make the sale (substantive ultra vires), but merely carried it out in an unauthorized procedural manner (procedural ultra vires). 98 Wn.2d at 382. Therefore, the private party with whom DNR had contracted was entitled to equitable relief, notwithstanding that it had entered into an ultra vires contract with the Commissioner of Public Lands and the DNR which required the contract be declared void. Specifically, the private party was entitled to recover on a theory of unjust enrichment for actions it had already taken pursuant to the contract. Id. at 382-83.
The City of Spokane has general authority to contract with private parties, including entering into contracts which settle litigation. However, in this particular case, the City did not have the power to enter into the Stipulated Settlement Agreement without City Council approval at an open public meeting. This appears to be a procedural irregularity. Execution of the settlement agreement without City Council approval at an open public meeting is not "malum in se," although it may be "malum prohibitum" and "manifestly against public policy" as such policy is embodied by the OPMA.
"Malum in se" means an act which "is inherently and essentially evil, that is, immoral in its nature and injurious in its consequences, without any regard to the fact of its being noticed or punished by the law of the state." Black's Law Dictionary (6th Ed. 1990), at p. 959.
"An act which is not inherently immoral, but becomes so because its commission is expressly forbidden by positive law." Black's Law Dictionary (6th Ed. 1990), at 960.
In Noel, the Washington Supreme Court concluded DNR's action was not malum in se, malum prohibitum, or manifestly against public policy because while SEPA mandated important policy goals, DNR's failure to prepare an EIS (Environmental Impact Statement) was excusable in light of the regulations it relied upon. 98 Wn.2d at 382. In addition to the fact that the regulations exempted almost all timber sales, DNR had relied upon the regulations in making numerous past sales, none of which had been challenged. Id. at n. 4. Respondent suggests the same situation exists here because for years the City of Spokane executed settlement agreements without City Council approval at an open public meeting, relying on authority (case law and attorney general opinions) which preceded the Miller case. Thus, the argument is that the City's execution of the Stipulated Settlement Agreement, prior to Miller, was neither expressly forbidden by the OPMA or manifestly against the public policy embodied by the OPMA.
Based on Noel, the court agrees Feature Realty is entitled to equitable relief. The City did not lack the power to execute the Stipulated Settlement Agreement in any manner such as would allow a presumption of bad faith on the part of Feature Realty. Noel, 98 Wn.2d at 381, n. 3. However, the fact the City's execution of the Stipulated Settlement Agreement was only procedurally ultra vires as opposed to substantively ultra vires is insufficient to apply equitable estoppel in favor of Feature Realty. See Nelson v. Pacific County, cited supra.
As is clear from the case law cited above, the party who seeks equitable relief is usually the "private party" who has been the victim of government misfeasance. Here, it is the government which seeks equitable relief for the parties due to its own misfeasance. This is understandable since Feature Realty received considerable benefit from the Stipulated Settlement Agreement (i.e., payment of monies, adopting of ordinances vacating public interests in portions of streets, conveyance of lots to Feature Realty, approval of a boundary line adjustment in favor of Feature Realty, consent to elimination of the fire sprinkler system in the buildings to be constructed in the PUD, approval of plans for water and sewer systems, grading, drainage and street improvements for construction of Phase I of the PUD, and waiver of fees in conjunction with several of the foregoing items)
The estimated value of the fee waivers is $1,000,000 or more, according to Jack Krystal, Chief Operating Officer of Feature Realty.
What the City of Spokane received from the Stipulated Settlement Agreement was a dismissal with prejudice of the Spokane County Superior lawsuit, Mission Springs v. City of Spokane. The Washington State Supreme Court found the City improperly withheld a grading permit from Feature Realty and remanded to the superior court for trial and a determination of damages. Mission Springs v. City of Spokane, 134 Wn.2d 947, 954 P.2d 250 (1998). The Stipulated Settlement Agreement averted this trial and determination of damages. Because the Stipulated Settlement Agreement is "null and void," an option for Feature Realty is to attempt to resuscitate its Spokane Superior Court lawsuit by way of a CR 60(b) motion or an independent action seeking relief from the order of dismissal. If it obtains such relief, the matter is back in Spokane County Superior Court. Considering the lapse of time since the suit was first initiated (1995), it appears removal of that action to federal court on the basis of diversity is not an option for the City of Spokane.
28 U.S.C. § 1446(b) requires that a notice of removal be filed within 30 days after receipt by defendant of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based.
The Petition to Appoint Arbitrator which is currently before this court was filed in November 2000 and was timely and properly removed to this court by the City of Spokane on the basis of diversity jurisdiction.
Because the City of Spokane has successfully challenged the validity of its own agreement with the petitioner, the court believes petitioner should be allowed to choose whether it would prefer to attempt to reopen its Spokane County Superior Court lawsuit and proceed in that forum, or remain in this forum and sort out the equities. Petitioner may be inclined to choose the former since there are certain issues in that lawsuit with which the Spokane County Superior Court is already familiar (improper denial of grading permit and resulting damages). Those issues are not before this court on this "Petition to Appoint Arbitrator." If petitioner was successful in reopening the Spokane County Superior Court litigation, the City of Spokane could seek to add a counterclaim in that litigation seeking equitable relief with regard to those things it provided petitioner under the "null and void" Stipulated Settlement Agreement.
The court is uncertain if the petitioner demanded a jury in the Spokane County Superior Court lawsuit and therefore, a jury was going to determine the damages to which petitioner was entitled for the improper withholding of the grading permit. Respondent's proposed counterclaim is for an equitable determination of the parties' rights to be made by this court, not a jury.
In sum, the court will grant respondent's motion for leave to file an additional counterclaim and will equitably determine the rights of the parties arising from the "null and void" Stipulated Settlement Agreement, if the petitioner prefers this forum to the state forum.
H. Amicus Curiae Brief
An amicus brief should be allowed (1) when a party is not represented competently or not represented at all; (2) when the amicus has an interest in some other case that may be affected by the decision in the present case; or (3) when the amicus has unique information or perspective that can help the court beyond the help that the lawyers for the parties are available to provide. CARE v. DeRuyter Bros. Dairy, 54 F. Supp.2d 974, 975 (E.D. Wash. 1999)
BIAW asserts it should be allowed to appear as amicus curiae "because of the importance of the principles at stake in this case to the building industry in Washington State, and the unique perspective which BIAW brings to these principles. . . ." The court notes, however, that Feature Realty is a member of the BIAW, and essentially offers the same "administrative finality" policy argument advanced by BIAW in its amicus brief. While the court is not persuaded that BIAW's perspective is all that "unique," the court has considered the arguments raised in BIAW's brief. They are not persuasive.
BIAW contends the Stipulated Settlement Agreement did not require "legislative" action under the OPMA, and even if it did, Washington's "strong public policy favoring administrative finality in land use decisions" requires dismissing a collateral attack on the settlement agreement. BIAW "assumes" the Spokane City Manager had "full authority within the scope of the Spokane City Charter to sign the stipulated land use settlement agreement on behalf of the City, and that the signing constituted an administrative act."
For reasons set forth above, the Stipulated Settlement Agreement did require action under the OPMA, whether labeled "legislative" or "administrative." The OPMA does not distinguish between "legislative" and "administrative" action. Furthermore, for reasons set forth above, the City Manager did not have "full authority," absent City Council approval at an open public meeting, to execute the agreement.
RCW 42.30.140(2) states that OPMA does not apply to:
That portion of a meeting of a quasi-judicial body which relates to a quasi-judicial matter between named parties as distinguished from a matter having a general effect on the public or on a class or group. . . .
A four-part test is used to determine whether administrative action is quasi-judicial: (1) Whether a court could have been charged with making the agency's decision; (2) whether the action is one which historically has been performed by courts; (3) whether the action involves the application of existing law to past or present facts for the purpose of declaring or enforcing liability; and (4) whether the action resembles the ordinary business of courts as opposed to that of legislators or administrators. Protect the Peninsula's Future v. Clallam County, 66 Wn. App. 671, 676, 833 P.2d 406 (1992)
In Peninsula, the City of Sequim applied to the Clallam County Commissioners for a substantial development permit to enable it to extend its sewer outfall line farther out into the waters of the Straits of Juan de Fuca. The commissioners approved the permit. The plaintiffs brought suit alleging violation of the OPMA and the trial court held there had been such a violation when the commissioners met in executive session to discuss and review a draft permit. This discussion and review constituted an "action" as defined in RCW 42.30.020(3).
The Washington Court of Appeals rejected the county's argument that the OPMA did not apply because of the "quasi-judicial" exception. According to the court, the matter before the commissioners was not of interest only to the parties, but "was clearly a matter of substantial importance to the general public in that region of the state and to a lesser degree all of the citizens of the state." Id. at 676. Furthermore, the court found that none of the factors set forth above for determining whether administrative action is quasi-judicial were present. In particular, the action taken by the commissioners did not involve the application of law to past or present facts, but rather involved the commission acting in its administrative role. Id.
BIAW says "the settlement agreement would most certainly have been quasi-judicial had the City chosen to conduct hearings under the OPMA." Had the City of Spokane "chosen" to conduct hearings under the OPMA, there would be no controversy for resolution by this court. It appears the City was operating under the mistaken impression that City Council authorization of the Stipulated Settlement Agreement at an executive session was adequate.
BIAW says the "fact the City chose not to hold public hearings does not make the land use permits in the settlement any less of a final quasi-judicial decision or action." The "action" taken by the City Council at the executive session (whether administrative or legislative) was not quasi-judicial because the Stipulated Settlement Agreement was of importance to the Spokane public considering the concessions made to Feature Realty at public expense (i.e, waiver of permit fees in excess of one million dollars, ordinances to be adopted vacating public interests in portions of streets, etc.). Moreover, approval of the Stipulated Settlement Agreement at the executive session does not meet the aforementioned criteria for determining an "action" is quasi-judicial in nature. The approval of the Stipulated Settlement Agreement did not involve the application of law to past or present facts. While the City Council may act in a quasi-judicial capacity on occasion, this was not one of those occasions. Here, the City Council acted as legislators or administrators, rather than taking action resembling the ordinary business of courts.
Because the City Council's approval of the agreement at an executive session was not a "final quasi-judicial decision," principles of res judicata do not apply. Rather, the City Council's action was "null and void" legislative or administrative action under the OPMA. Because the action was "null and void" at the outset, res judicata cannot apply to preclude the City of Spokane from now challenging the validity of the agreement under the OPMA.
BIAW cites a recent Washington Supreme Court case, Skamania County v. Columbia River Gorge Commission No. 68602-5, (Slip Op. June 28, 2001), in support of its "administrative finality" argument. Skamania did not involve the OPMA which sets forth an equally strong, if not stronger, policy favoring public participation in government business. If the court allows an "administrative finality" exception to the OPMA, the OPMA becomes worthless. The strong public policy of public participation in government business will be sacrificed at the expense of administrative finality. There is no middle ground here. It is either OPMA at the expense of finality, or finality at the expense of OPMA. Based on the legislative declaration found in RCW 42.30.010, the choice is a clear one.
BIAW asserts, as does the petitioner, that the City had numerous opportunities to comply with the OPMA if it truly believed such action was required. First of all, the City thought its procedure was the correct one at the time. Secondly, this argument fails to distinguish between the City's interest and the public interest. OPMA is not intended to benefit government. It is intended to benefit the people. of course, that does not mean those who contract with the government are precluded from relief where they have taken action in the mistaken belief the government had authority to contract. However, any relief cannot come at the expense of enforcement of the OPMA.
The court shares the concern of Feature Realty and BIAW about the potential impact of its decision in this case upon settlement agreements previously concluded by municipalities and other governmental entities without benefit of an open public meeting. However, this court can only deal with the particular facts before it and how the law, as it now exists, must be applied to those facts. This court is only declaring that the Stipulated Settlement Agreement executed by Feature Realty and the City of Spokane is "null and void" under the OPMA.
IV. CONCLUSION
There are no genuine issues of material fact precluding a finding as a matter of law that the Stipulated Settlement Agreement between Feature Realty and the City of Spokane is "null and void" for violation of the OPMA. Hence, respondent's motion for summary judgment (Ct. Rec. 87) is GRANTED and the Petition to Appoint Arbitrator is DENIED. For the time being, the court defers ruling on respondent's Motion for Leave to File Additional Counterclaim for Equitable Relief (Ct. Rec. 94). Within ten (10) days of the date of this order, petitioner shall advise the court in a pleading to be filed and served on opposing counsel whether petitioner prefers to have this court make an equitable determination of the parties' rights as a result of the "null and void" Stipulated Settlement Agreement. If petitioner is so agreeable, the court will grant respondent's motion to file an additional counterclaim. In that event, the court will consider a request by petitioner to stay the additional proceedings in this court and allow petitioner to take an appeal to the Ninth Circuit from this court's denial of the Petition to Appoint Arbitrator pursuant to Fed.R.Civ.P. 54(b). If the petitioner desires to pursue relief in Spokane County Superior Court, the court will deny the motion for leave to file additional counterclaim and enter judgment for respondent. That will conclude the litigation in this court and petitioner can take an appeal from this court's judgment without need of Rule 54(b).
Rule 54(b) states:
When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.
The court would direct the entry of final judgment upon petitioner's "claim" for appointment of an arbitrator.
There are some discovery-related motions remaining from when Perkins Coie was still counsel for the City of Spokane. In a prior order ("Order Granting Motion to Stay and Motion to Withdraw"), this court stated the parties could re-note those motions for hearing after the stay was lifted. None of the motions have been re-noted and so they are DISMISSED as moot. The motions include respondent's motions for protective order and for costs, fees and sanctions; and petitioner's motion to compel production of documents and for costs (Ct. Rec. 60, 64 and 72).
BIAW's Motion for Leave to File Amicus Curiae Brief (Ct. Rec. 114) is GRANTED.
IT IS SO ORDERED. The District Executive is directed to enter this order and forward copies to counsel.