Opinion
No. 63971-4-I.
April 4, 2011. UNPUBLISHED OPINION
Appeal from a judgment of the Superior Court for King County, No. 06-2-30454-3, Catherine D. Shaffer, J., entered July 10, 2009.
Affirmed by unpublished opinion per Grosse, J., concurred in by Dwyer, C.J., and Spearman, J.
An ordinance that requires a specified percentage of gambling tax revenue be dedicated to a purpose other than enforcement of the gambling act does not violate RCW 9.46.113 where the ordinance contains a proviso that insures that the revenue collected from the tax is put in the first instance to the purpose of enforcing the gambling act. Further, an ordinance banning all card rooms within a city does not constitute an unconstitutional taking as applied to the operator of a card room where the ordinance does not deprive the operator of all economically viable use of its property and there is no showing that the ordinance goes beyond regulating a public harm. Accordingly, the city of Kenmore's ordinance imposing a card room tax of 15 percent of gross revenue is not invalid under RCW 9.46.113, nor does the application of its ordinance banning all card rooms to Star Northwest, Inc. constitute a taking in violation of the Fifth Amendment. We affirm.
FACTS
Star Northwest, Inc. operated a card room, restaurant, bowling alley, bar, and arcade in leased premises located in the city of Kenmore (Kenmore). This appeal involves Star Northwest's challenge to two of Kenmore's ordinances. One ordinance, enacted in 2004, raised Kenmore's tax on card rooms from 11 percent to 15 percent and provided for the dedication of a portion of the tax revenue to the funding of capital facility projects. The other ordinance at issue is a 2005 ordinance banning all card rooms in Kenmore.
Ordinance Increasing Gambling Tax
In 1998, Kenmore enacted Ordinance No. 98-0013, which established a gambling tax on card rooms. The ordinance provided:
C. Social card playing: Operators shall pay a tax equal to eleven percent (11%) of the gross receipts from such games.
Star Northwest operated a card room as part of its business and, accordingly, was subject to this tax.
In December 2004, Kenmore enacted Ordinance No. 04-0223, which raised the card room tax from 11 percent to 15 percent of gross revenue and imposed requirements as to the expenditure of the card room tax revenue. The amended ordinance provides:
C. Social Card GamesPlaying.Operators shall pay a tax equal toelevenfifteen percent of the gross receipts from such games. An amount equal to four fifteenths of the social card game tax paid by operators of social card games shall be dedicated to funding City Capital Facilities Plan projects; provided, however, that revenue collected from this tax shall be expended primarily for the purpose of enforcement of gambling laws pursuant to RCW 9.46.113.
Ordinance Banning Card Rooms
In December 2005, Kenmore enacted Ordinance No. 05-0237 banning all card rooms within the city. Star Northwest closed its card room in 2009 after expiration of an injunction allowing the card room to remain open. Federal and State Court Litigation
After the ordinance banning card rooms was enacted, but before it became effective, Star Northwest filed an action in federal district court against Kenmore and the city council (collectively the City), challenging both the ordinance banning card rooms and the ordinance increasing the gambling tax. Star Northwest sought injunctive relief, declaratory relief, and damages. The court issued a temporary restraining order (TRO) barring enforcement of the card room prohibition. The parties later stipulated to continuation of the TRO as a preliminary injunction until the district court determined the merits.
The district court granted the City's motion for summary judgment and dismissed Star Northwest's challenge to the card room prohibition. The court declined to exercise supplemental jurisdiction over Star Northwest's claim for a refund of the gambling tax it paid and remanded that claim to state court. The court also dissolved the injunction. Star Northwest appealed to the Ninth Circuit, and that court affirmed the district court. According to Star Northwest's complaint filed in state court, the Ninth Circuit issued an order in September 2006 staying the district court's order dissolving the injunction.
In 2006, Star Northwest filed this action in state court, seeking injunctive relief and damages. Star Northwest alleged a taking under the Fifth Amendment, a violation of 42 U.S.C. §§ 1983 and 1988, a claim for injunctive relief, and a claim for a refund of the gambling tax it paid under the ordinance. The state court denied Star Northwest's motion for partial summary judgment on the gambling tax claim and its motion to reconsider the denial. The court granted the City's motion for summary judgment on the gambling tax claim and dismissed the claim. The court later granted the City's motion for summary judgment on Star Northwest's takings claim and dismissed that claim as well. Star Northwest appeals.
Star Northwest also appeals orders denying its motion for partial summary judgment and denying its motion for reconsideration of the denial. These orders are not appealable.Anderson v. State Farm Mut. Ins. Co., 101 Wn. App. 323, 329, 2 P.3d 1029 (2000). It further appeals an order striking a declaration, but makes no argument on appeal with regard to this order. Accordingly, we do not address any issue relating to the declaration. King County v. Seawest Inv. Assocs., LLC, 141 Wn. App. 304, 317, 170 P.3d 53 (2007).
ANALYSIS
Standard of Review
We review the denial of a motion for summary judgment de novo. Summary judgment is appropriate if the pleadings, deposition, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. We take all facts in the light most favorable to the nonmoving party.
Atlantic Cas. Ins. Co. v. Oregon Mut. Ins. Co., 137 Wn. App. 296, 302, 153 P.3d 211 (2007).
CR 56(c).
Herring v. Texaco, Inc., 161 Wn.2d 189, 194, 165 P.3d 4 (2007).
"[T]he proper construction of a city taxation ordinance is a legal question that is reviewed de novo on appeal." The taxpayer has the burden of proving that a tax it paid is incorrect. We also review de novo the question whether a municipal ordinance conflicts with state law.
Avanade, Inc. v. City of Seattle, 151 Wn. App. 290, 297, 211 P.3d 476 (2009).
Avanade, Inc., 151 Wn. App. at 297.
City of Seattle v. Wilson, 151 Wn. App. 624, 629, 213 P.3d 636 (2009).
Card Room Tax
Under state law, the City is permitted to provide, by ordinance, for the taxing of any gambling activity authorized by the gambling act within its jurisdiction. The statute directs that the taxation of social card games may not exceed 20 percent of the gross revenues from such games. Under the law as it existed at the relevant time, the City was required to use any revenue collected from such a tax "primarily for the purpose of enforcement of the provisions of [the gambling act] by the county, city or town law enforcement agency."
Former RCW 9.46.113 (effective until June 9, 2010). Effective June 10, 2010, the statute requires that the revenue from the tax be used "primarily for the purpose of public safety." RCW 9.46.113.
Star Northwest argues that the City's gambling tax ordinance violates RCW 9.46.113 on its face because the ordinance does not require that the tax revenue be used primarily for the purpose of enforcement of the gambling act, but rather requires that fourfifteenths of the tax revenue be dedicated to funding capital facilities plan projects. It argues that the proviso in the ordinance does not cure the problem. We disagree.
A proviso is a limitation upon or an exception to the general terms of the statute to which it is appended. "The appropriate office of a proviso or exception is to restrain or modify the declaring or enacting part of the statute or to except something which would otherwise be in the enacting clause." The proviso in the City's gambling tax ordinance limits the directive in the declaring part of the statute as to the dedication of four-fifteenths of the tax revenue to funding capital facilities plan projects. The proviso ensures that the City expends the revenue collected from the tax "primarily for the purpose of enforcement of gambling laws pursuant to RCW 9.46.113" before dedicating revenue to funding capital facilities plan projects. The City's card room tax ordinance fulfills the requirement of RCW 9.46.113 that the tax revenue be "primarily" used for the purpose of enforcing gambling statutes.
West Valley Land Co., Inc. v. Nob Hill Water Ass'n, 107 Wn.2d 359, 369, 729 P.2d 42 (1986).
Jepson v. Dep't of Labor and Indus., 89 Wn.2d 394, 403, 573 P.2d 10 (1977).
Kenmore Ord. No. 04-0223.
Star Northwest also argues that the City has failed to comply with RCW 9.46.113 with regard to the use of the tax revenue collected under the ordinance because the City is not primarily using the tax revenue for the purpose of enforcing the gambling statutes. Each year, the City deposits all gambling tax revenue into the general fund, into which it also deposits property tax revenue, sales and use tax revenue, criminal justice sales tax revenue, utility tax revenue, franchise fees, state-shared revenues, liquor excise tax revenue, community development fees, investment interest, and other sources of revenue. The City contracts with King County for its police services and pays the county for these services out of the general fund. The City likewise pays for costs incurred in enforcing the gambling tax from the general fund. Payments are not tracked to a particular source of revenue, but rather are simply tracked to the general fund as a whole.
This scenario is similar to that in American Legion Post No. 32 v. City of Walla Walla. That case was a taxpayer challenge to Walla Walla's gambling tax, imposed pursuant to chapter 9.46 RCW. As is the case in Kenmore, all gambling revenue was placed in Walla Walla's general fund, and no line item in the budget was specifically dedicated to the enforcement of the gambling laws. Walla Walla conceded that there was no way to trace the actual expenditure of the gambling tax revenue. The same appears to be true in Kenmore.
116 Wn.2d 1, 802 P.2d 784 (1991).
The American Legion made the same argument Star Northwest is making here, namely that the city was not utilizing the gambling tax revenue primarily for the enforcement of the gambling statutes as required by RCW 9.46.113. The court in American Legion first rejected the argument that an improper use of tax revenue renders an otherwise constitutional tax unconstitutional:
There is no authority, nor does Legion provide any, that renders an otherwise constitutionally levied tax unconstitutional merely because it is purportedly utilized for a purpose other than what is required.
American Legion, 116 Wn.2d at 7.
Rather, the court concluded, American Legion's argument was "nothing more than a challenge to Walla Walla's allocation of the gambling tax." Here, Star Northwest does not explicitly state that it is challenging the constitutionality of Kenmore's gambling tax ordinance, however, its argument appears to be such a challenge. To the extent Star Northwest is raising a constitutional challenge to the gambling tax, such challenge fails under the reasoning of American Legion. If anything, Star Northwest's challenge is to the City's allocation of revenue collected from the gambling tax. The court's analysis in American Legion disposes of this argument.
American Legion, 116 Wn.2d at 7.
Even though the court in American Legion concluded that the taxpayer lacked standing to challenge either the constitutionality of the ordinance or the allocation of the tax revenue because it failed to show it had a unique legal right or privilege different from other taxpayers that was violated by the levy and subsequent use of the gambling tax, the court nevertheless proceeded to interpret the terms "primarily" and "enforcement" as used in RCW 9.46.113 "for future reference." The court's interpretation of these terms is relevant here.
American Legion, 116 Wn.2d at 8. Standing is not an issue here.
The American Legion court held that the term "primarily" means
"in the first instance." Thus, regardless of amount, the tax must be utilized first of all to enforce the gambling act. If this requires all of the revenue, then it must be utilized. Similarly, if only 5 percent is needed, then that is all that must be used.
American Legion, 116 Wn.2d at 9.
With regard to the interpretation of the term "enforcement," the court rejected the taxpayer's argument that enforcement should be measured by the number of gambling violations reported and investigated and the actual police training devoted specifically to gambling. Rather, the court held that "enforcement" includes much more than police activity that can be specifically related to gambling and includes, for example, general police presence in the community because such presence has "an inhibitive effect on those who contemplate engaging in illegal gambling." The court stated:
American Legion, 116 Wn.2d at 10.
[A]lthough the gambling dollars are not readily traceable, the tax is placed in the general police budget and contributes to the ongoing existence and functioning of the police force. While police conduct in general is not always specifically dedicated to preventing gambling-related offenses, it is indisputable that the general presence and continuous activity of the police within the community impacts and helps to deter illegal gambling.
American Legion, 116 Wn.2d at 11.
Here, the proviso in the City's gambling tax ordinance insures that the tax revenue is put "in the first instance" to the purpose of enforcing the gambling laws. Under American Legion, the fact that there may not be a way to trace the actual expenditure of the gambling tax revenue, because the revenue is deposited along with other revenue into the general fund, does not mean that the City is not complying with RCW 9.46.113. Also, the proviso prevents the City from using the revenue to fund capital facilities plan projects before using the funds "in the first instance" to the enforcement of the gambling laws. Here, as in Walla Walla, revenue in Kenmore's general fund is used to pay for police services, which include the general police presence in the community as well as law enforcement work specifically directed at gambling. UnderAmerican Legion, the tax revenue is being used primarily for enforcement of the gambling act.
Star Northwest relies on the "four-fifteenths" directive in the ordinance to argue that the City is not complying with RCW 9.46.113. However, Star Northwest provides no evidence that the City is not using gambling tax revenue in the first instance to enforce the gambling laws. It does provide evidence that the City's motivation for increasing the gambling tax from 11 percent to 15 percent was to increase the size of the general fund and increase funding for capital facilities plan projects. Under the statute, however, the motivation for the tax increase is not determinative of its validity. The City is authorized to impose a gambling tax of up to 20 percent of gross revenues of card rooms. Although the City is required to use the revenues in the first instance to enforce gambling laws, under American Legion, if only a fraction of the revenue is needed for that purpose, the remainder of the revenue need not be used for that purpose. Under this authority, the fact that, as Star Northwest argues, the City did not need the additional gambling tax revenue to enforce the gambling laws and intended to use the additional funds for its capital facilities plan projects does not render the City's gambling tax invalid. Nor, given the proviso in the ordinance and the fact that the revenue is deposited into the general fund, does the "four-fifteenths" requirement mean that the City's allocation of gambling tax revenue is in violation of RCW 9.46.113.
For example, the statement of the fiscal impact of the tax increase was "[e]stimated to increase General Fund revenues by $218,180 per year (proposed to be transferred to the Capital Projects Fund)."
We conclude that the City's card room tax ordinance does not violate RCW 9.46.113 and that the City complied with the statute's directives as to the expenditure of revenue collected from the tax.
Card Room Ban
Star Northwest claims that the application to it of the City's ordinance banning card rooms constitutes a taking in violation of the Fifth Amendment. Before addressing the substantive takings issues, however, we address the threshold issues of collateral estoppel and ripeness.
Collateral Estoppel
The takings issue was litigated in federal court before Star Northwest filed this state court action. Star Northwest argues that the trial court in the state litigation erred by holding that it was collaterally estopped from litigating the issue of whether it has a constitutionally protected property right. Star Northwest mischaracterizes the trial court's handling of the issue. A review of the record shows that the trial court did not simply find collateral estoppel and then end its analysis. Rather, the trial court determined that it was unclear from the federal district court's opinion whether that court actually rested its holding on the issue of whether Star Northwest had a constitutionally protected property right. The trial court's uncertainty was well-taken given the district court's order on summary judgment. In that order, the district court first concluded that Star Northwest was "unable to claim a protectable right in the operation of the 11th Frame card room." The district court did not, however, end its analysis at that point, but rather went on to determine that Star Northwest's federal takings claim was not ripe because Star Northwest did not seek compensation in state court. Even though the district court's ripeness analysis came after its analysis of the substantive issue, it appears to have rested its decision with regard to the takings claim on ripeness grounds:
Both parties provided briefing on whether the action before this Court satisfies the substantive elements of a takings claim. On the basis of the finding that Plaintiffs' takings claim is not yet ripe, this opinion does not reach the merits of that cause of action.
The Ninth Circuit affirmed the district court, but in its second, amended memorandum opinion, the Ninth Circuit omitted any mention of the issue of whether Star Northwest has a constitutionally protected property right. Rather, the court addressed only the ripeness issue and affirmed the district court's summary dismissal of the takings claim on ripeness grounds.
The trial court in the state litigation was of the opinion that the issue of whether Star Northwest has a constitutionally protected property right had indeed been litigated to finality in federal court. But, because of the court's alternative ruling on ripeness grounds, the trial court assumed, for purposes of its ruling, that Star Northwest was not collaterally estopped from raising the issue in state court. It is, therefore, unnecessary for us to address Star Northwest's claim that the trial court erred by finding it collaterally estopped because the trial court did not dispose of its takings claim on this ground.
Ripeness
The City argues not only that Star Northwest was required to file its takings claim in state court prior to filing it in federal court, but also that Star Northwest was required to file its claim under state law first. Accordingly, it argues, Star Northwest's federal takings claim filed in state court is not ripe. The trial court discussed the ripeness issue and found that Star Northwest was not precluded from raising its federal takings claim in state court. The trial court's discussion of the issue appears to have been undertaken on the court's own initiative because the City did not raise the ripeness issue in its motion for summary judgment on Star Northwest's takings claim, nor did the City appeal the trial court's determination that Star Northwest was not precluded from raising its federal takings claim in state court. The City may not raise this issue for the first time on appeal.
"The fact that a federal court is precluded from hearing a claim that hasn't yet visited in state court does not mean that the state court judge cannot hear the claim. So I don't find any bar from the fact that Star first tried to raise this federal takings claim before a federal court sent it back on ripeness grounds."
RAP 2.5(a)(3); Brundridge v. Fluor Fed. Servs., Inc., 164 Wn.2d 432, 441, 191 P.3d 879 (2008).
Substantive Takings Claim
This court has addressed the constitutionality of ordinances banning card rooms in two prior published opinions: Edmonds Shopping Center Associates v. City of Edmonds andParadise, Inc. v. Pierce County. Those cases control our analysis as to whether the ordinance banning card rooms, as applied to Star Northwest, constitutes an unconstitutional taking under the Fifth Amendment.
117 Wn. App. 344, 71 P.3d 233 (2003).
124 Wn. App. 759, 102 P.3d 173 (2004), review denied, 154 Wn.2d 1027 (2005).
We are not persuaded by Star Northwest's argument thatEdmonds and Paradise do not apply here. Those cases set forth the law we are bound to apply to any federal takings claim with respect to an ordinance banning card rooms.
In addressing the taxpayers' Fifth Amendment challenges to the card room ordinance in Edmonds and Paradise, we applied the analysis set forth in Guimont v. Clarke, which followed the analysis of Lucas v. South Carolina Coastal Council. The analysis begins with two threshold questions:
121 Wn.2d 586, 854 P.2d 1 (1993).
505 U.S. 1003, 112 S. Ct. 2886, 120 L. Ed. 2d 798 (1992).
First, whether the regulation destroys or derogates any fundamental attribute of property ownership, including the right to possess, to exclude others, to dispose of property, or to make some economically viable use of the property. If the landowner claims less than a "physical invasion" or a "total taking" and if a fundamental attribute of ownership is not otherwise implicated, we proceed to the second question. That question is whether the challenged regulation safeguards the public interest in health, safety, the environment, or the fiscal integrity of an area or whether the regulation "seeks less to prevent a harm than to impose on those regulated the requirement of providing an affirmative public benefit."
Edmonds, 117 Wn. App. at 362 (quotation marks omitted) (footnotes omitted); see also Paradise, 124 Wn. App. at 768.
If the answer to both of these threshold questions is no, then there is no taking. If, however, the answer to one or both of them is yes, then the court must undertake additional analysis:
This additional analysis includes consideration of two additional points. First, whether the regulation advances a legitimate state interest. Second, a balancing test to determine if the state interest in the regulation is outweighed by its adverse economic impact to the landowner, with particular attention to the regulation's economic impact on the property, the extent the regulation interferes with investment-backed expectations, and the character of the government action.
Edmonds, 117 Wn. App. at 363 (footnotes omitted); see also Paradise, 124 Wn. App. at 768. Arguably, as Star Northwest asserts, the "advances a legitimate state interest" part of Guimont's analysis does not survive the United States Supreme Court's opinion inLingle v. Chevron U.S.A., Inc., 544 U.S. 528, 125 S. Ct. 2074, 161 L. Ed. 2d 876 (2005), in which the Court determined that that part of the analysis is more of a due process inquiry than a takings inquiry. We need not, however, reach this argument because, given our determination that the answer to Guimont's two threshold inquiries is no, the potentially problematic part of Guimont's analysis does not come into play here.
With regard to the first threshold question, the court inParadise determined that the ordinance banning card rooms did not deprive the taxpayer of all economically viable use of its property because the ordinance did not prevent continued operation of the taxpayer's bowling and restaurant business on the property. The same is true in this case. The City's ordinance banned only Star Northwest's card room operation, not its restaurant, bar, bowling alley, and arcade that it operated at the same location. Star Northwest argues, however, that its card room sustained the overall profitability of its entire operation and, without the card room, the rest of the business would become valueless. It supported this argument with an expert declaration from an accountant. Its entire argument as to loss of all economically viable use of the property is based on its claim of loss of future profits. The United States Supreme Court has stated that "loss of future profits — unaccompanied by any physical property restriction — provides a slender reed upon which to rest a takings claim." The property on which Star Northwest operates its business remains zoned for commercial use, and the operation of its restaurant, bar, bowling alley, and arcade has not been curtailed because of the ordinance. Nor is Star Northwest precluded from undertaking other permitted commercial uses at the location. Given this, the ordinance does not eliminate all economically viable use of the property. The answer to Paradise's first threshold question is no.
The expert stated: "Star Northwest's overall operations would incur operating losses ultimately leading to a complete business failure without the profit contribution from the existing gaming operations."
Andrus v. Allard, 444 U.S. 51, 66, 100 S. Ct. 318, 62 L. Ed. 2d 210 (1979).
The second threshold question we must address underParadise, which is properly reached because the ordinance does not result in a total taking, has two parts. With respect to the first part, the court's analysis inParadise is applicable:
Here, as in Edmonds, the local government acted under the specific legislative authority given to it under RCW 9.46.295 to ban gambling within its jurisdiction. To do so is undeniably the exercise of police power for the protection of the "public health, safety, and welfare," as we discussed in more detail in Edmonds. There is nothing in this case to distinguish it from that case insofar as our conclusion that the banning of gaming activities within a local government's jurisdiction pursuant to RCW 9.46.295 is a proper exercise of the police power.
Paradise, 124 Wn. App. at 771.
Under this reasoning, the City in this case acted within its police power to ban gaming activities. The gambling act gives cities and counties the authority to absolutely prohibit any and all licensed gambling activities. The ordinance was a proper exercise of the City's authority. The answer to the first part of the second threshold inquiry is, therefore, no.
The second part of the second threshold inquiry asks whether the regulation "seeks less to prevent a harm than to impose on those regulated the requirement of providing an affirmative public benefit." Legislative bodies may exercise their police power to prevent activities which are similar to public nuisances; however, a regulation may constitute a taking if it goes beyond preventing a public harm to actually enhance a publicly owned right in property.
Edmonds, 117 Wn. App. at 362 (quotation marks omitted) (footnote omitted).
Sintra, Inc. v. City of Seattle, 119 Wn.2d 1, 14, 829 P.2d 765 (1992).
Here, gambling activities have been historically characterized as in the nature of a public nuisance. As such, gambling activities are subject to broad legislative power of prohibition or suppression. The gambling act specifically authorizes cities and counties to absolutely prohibit licensed gambling activities. Because gambling activities are entirely within the legislature's domain, "any approved gambling activity is a legislative privilege and not an inherent right." TheParadise court's analysis of the second part of the second threshold inquiry as applied to the card room ban applies here:
City of Seattle v. Bittner, 81 Wn.2d 747, 751, 505 P.2d 126 (1973); Tarver v. City Comm'n In and For City of Bremerton, 72 Wn.2d 726, 731, 435 P.2d 531 (1967).
Northwest Greyhound Kennel Ass'n v. State, 8 Wn. App. 314, 320, 506 P.2d 878 (1973).
RCW 9.46.295.
State v. Gedarro, 19 Wn. App. 826, 829, 579 P.2d 949 (1978) (internal citations omitted). Star Northwest relies on Lee Eastes, Inc. v. Public Serv. Comm'n, 52 Wn.2d 701, 328 P.2d 700 (1958) andRhod-A-Zalea 35th, Inc. v. Snohomish County, 136 Wn.2d 1, 959 P.2d 1024 (1998), to argue it has a property right in the operation of a lawful business. These cases involved a freight carrying business and a peat mining business, respectively. Gambling, in contrast to these businesses, is deemed a public nuisance and different principles apply with regard to legislative authority over the operators of gambling businesses.
[T]he ordinance regulates gambling activities, which have been characterized as in the nature of a public nuisance. The regulation is expressly authorized by state statute, RCW 9.46.295. And Paradise advances no persuasive argument that the state legislature has exceeded its authority by expressly authorizing the elimination of gambling activities within the jurisdiction of Pierce County. There simply is no showing that the ordinance goes beyond regulating a public harm in this case.
Paradise, 124 Wn. App. at 772-773. Star Northwest's investment in improvements to the premises is not enough to show that it bears the economic burden of providing the public benefit of regulating gambling. Paradise, 124 Wn. App. at 771.
Under this reasoning, the answer to the second part of Guimont's second threshold inquiry is no. Because the answers to the first part of that inquiry, as well as to the first threshold inquiry are no, there is no taking.
Edmonds, 117 Wn. App. at 362;Paradise, 124 Wn. App. at 768.
Affirmed.
WE CONCUR: