                                                                                               Filed
                                                                                         Washington State
                                                                                         Court of Appeals
                                                                                          Division Two

                                                                                            May 2, 2017

      IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                         DIVISION II
    WASHINGTON STATE DEPARTMENT OF                                   No. 48842-6-II
    LABOR AND INDUSTRIES,

                        Respondent,

         v.

    DOUG and ALICE KRISTENSEN,                                UNPUBLISHED OPINION

                        Appellants.


        SUTTON, J. — Alice and Doug Kristensen installed and operated a single-family use

residential tram, which the Department of Labor and Industries (Department) inspected and

approved in the 1990’s as complying with all relevant safety regulations. In 2012, the Department

changed its mind and issued a red-tag,1 requiring the Kristensens to stop operating the tram due to

safety concerns about the car safety hook. We hold that there are no genuine issues of material

fact and the Kristensens established that the Department is equitably estopped from red-tagging

their tram. Thus, we reverse the superior court’s order and affirm the administrative law judge’s

(ALJ) final corrected order granting summary judgment to the Kristensens and ordering the red-

tag to be removed. Because we hold that equitable estoppel applies, and that the Department’s

actions were not substantially justified, we also hold that the Kristensens are a qualified party who

prevailed in a judicial action under RCW 4.84.350(1). Upon their compliance with RAP 18.1(a),



1
 A red-tag is an order to cease operation of an elevator or other conveyance under RCW 70.87.145.
See WAC 296-96-00700.
No. 48842-6-II


we award the Kristensens’ reasonable attorney fees and costs on appeal, not to exceed $25,000.

And because the superior court did not rule on the merits of the Kristensens’ request for attorney

fees and costs during judicial review, we remand to the superior court to make this determination.

                                             FACTS

                                        I. BACKGROUND

A. THE DEPARTMENT’S APPROVAL TO INSTALL THE TRAM

       In 1989, the Kristensens purchased a home which did not have road access. That same

year, the Kristensens submitted an application to install a single-family use residential tram

manufactured by Rehmke Products Corporation (Rehmke) to the Department. The application

specified that the emergency braking mechanism (car safety) was a “Positive Engagement Hook—

on Car.” Administrative Record (AR) at 222.

       The safety regulation in effect at the time required two parts for the car safety: “[t]he car

safety shall be of the Type A or B and operated by a speed governor.” 2 Former WAC 296-94-

170(2) (1986), repealed by Wash. St. Reg. 01-02-026 (Jan. 22, 2001); AR at 163, 166-67. A Type

A and B safety applies pressure to guide rails to stop the tram.3 AR at 183. Instead of using a

Type A or B safety, the Rehmke tram used a safety hook that caught on a cross bar if the suspension

cable broke, if excessive speed occurred, or if the hoisting system failed. The safety hook did not



2
  A “speed governor” continuously monitors speed and activates the car safety if the tram reaches
a set speed. AR at 182.
3
  Former WAC 296-94-170(2) did not define a Type A or B car safety. The description we use is
from the national elevator safety standards in effect at the time from the American Society of
Mechanical Engineers and the American National Standards Institute (ASME/ANSI). Safety Code
for Elevators and Escalators, ASME/ANSI A17.1-1987; AR at 183. The legislature directed the
Department to consider ASME/ANSI standards before adopting its rules. RCW 70.87.030.


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No. 48842-6-II


comply with the regulation. The Rehmke tram also had an internal “full-time” speed governor

that, unlike a traditional speed governor, did not rely on a set speed to be activated, but was

activated as soon as the tram moved downhill, preventing the tram from overspeeding. AR at 253.

          In September of 1989, despite the fact that the Rehmke tram did not meet the safety

regulation, the Department approved the Kristensens’ application and issued an installation permit.

The Kristensens purchased the Rehmke tram (tram) and it was installed in June 1990.

B. THE DEPARTMENT ISSUED AN APPROVAL TO OPERATE THE TRAM

          After installation, the Department inspected the tram twice and required additional work

for the tram to pass final inspection. But the Department did not require any corrections or

modifications to the car safety during these inspections.

          In March 1991, the Department inspected the tram and reported that “all acceptance tests

[were] performed [and] [n]o apparent deficiencies were found.”4 AR at 115. In July 1992, the

Department inspected the tram again and required three corrections, including an external speed

governor. The Kristensens purchased the additional components, including the additional speed

governor, at a cost of $4,773.5 In November 1992, the Department issued an operating permit for

the Kristensens’ tram.




4
 A test of the car safety was required before the tram was put into service. Former WAC 296-94-
170(9).
5
    In total, the Kristensens spent approximately $65,000 to permit, purchase, and install the tram.


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No. 48842-6-II


         In 1994, the Kristensens applied to install the external speed governor, required by the

Department.       After installation, the Department inspected the tram and reported that “the

modernization/alteration work on this conveyance[6] has been inspected and no apparent

deficiencies were noted.” AR at 120. After this final alteration in 1994, the Kristensens’ tram

contained the following car safety system: two speed governors and a safety hook that activated

at a set speed.

C. THE DEPARTMENT LEARNS OF SAFETY CONCERNS

         In 1998, tram maintenance representatives advised the Department that the Rehmke safety

hook was a safety concern. The Department conducted a safety test that year in which the safety

hook failed by not catching the initial cross bar, bending the cross bar when it did catch, and

freefalling before catching a cross bar.

         Ten years later in 2008, the Department sent out letters to all Rehmke residential tram

owners notifying them of the “potential unsafe condition” of the Rehmke safety hook. AR at 178-

79. The letter stated,

         The problem with the Rehmke device is that the car may achieve too much speed
         prior to the application of the safety hook.
         ....
         Although the Rehmke hook, as long as it is maintained, will at least stop the lift and
         hold it in place, I do not want to see any injuries as a result of its operation.
         ....
         The department will take further steps to bring these lifts into compliance but we
         would prefer that you first work with licensed companies to mitigate these issues.

AR at 178-79.



6
    A tram is a conveyance under RCW 70.87.010(6).


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No. 48842-6-II


D. THE DEPARTMENT’S RED-TAG

          In December 2012, when the Kristensens did not voluntarily respond to the Department’s

request to address the safety issue, the Department issued a red-tag, ordering the Kristensens to

cease operating the tram because the tram used a safety hook that the Department considered to be

unsafe.

          The tram was the Kristensens primary means of ingress and egress to their home. The tram

was not open to the public, and it was not relocated or altered after the Department’s last inspection

in 1997. Nor had the Kristensens’ tram been involved in any accidents.

                                          II. PROCEDURE

          The Kristensens appealed the red-tag to the Office of Administrative Hearings. After the

Kristensens filed a trial brief and filed a motion for summary judgment, the ALJ conducted a

summary judgment hearing.          The Kristensens and Department representatives submitted

declarations and exhibits as to the above facts. The Kristensens argued that equitable estoppel

applies to bar the Department from red-tagging their tram. The Kristensens also argued that the

Department acted inconsistently by now claiming that the tram never complied with the car safety

regulations, despite the Department’s previous tests, inspections, and approval of their tram 20

years earlier.

          During the hearing, the Department’s chief conveyance inspector submitted a declaration

that stated that “it is regrettable” that the Department “approved” the Kristensens’ tram installation

application and operating permit when the safety hook did not comply with the safety regulations

at the time of the initial permit in 1989. AR at 195. The inspector further stated that the “non-




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No. 48842-6-II


compliant safety hook has posed a safety hazard from the beginning and that the safety hazard . . .

increases with the passage of time.” AR at 196.

       The ALJ ruled that there were no genuine issues of material fact and that the Kristensens

were entitled to summary judgment as a matter of law. The ALJ also ruled that the Department

was equitably estopped from red-tagging the Kristensen tram because the Department approved

the tram 20 years earlier and cannot now argue that the tram is non-compliant and should cease

operation until corrected.      After additional briefing and argument, the ALJ denied the

Department’s motion for reconsideration and issued a corrected final order, ordering that the red-

tag be removed from the tram.

       The Department petitioned for judicial review to Thurston County Superior Court. The

superior court reversed the ALJ order and remanded the matter for a hearing on the merits. The

Kristensens appeal.

                                          ANALYSIS

       The Kristensens argue that the Department is equitably estopped from red-tagging their

tram. We agree.

                                      I. LEGAL PRINCIPLES

A. THE ADMINISTRATIVE PROCEDURE ACT

       The Administrative Procedure Act (APA) governs the appeal of a Department’s red-tag.

RCW 34.05.526; 70.87.145, .170(4); WAC 296-96-00805(1). We review the ALJ’s final order de

novo and we apply the APA standards of review under RCW 34.05.570 directly to the agency’s

record, not to the superior court’s decision. Postema v. Pollution Control Hearings Bd., 142

Wn.2d 68, 77, 11 P.3d 726 (2000). We review the ALJ’s legal conclusions under the “error of



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No. 48842-6-II


law” standard of review under RCW 34.05.570(3)(d). Verizon Nw., Inc. v. Emp’t Sec. Dep’t, 164

Wn.2d 909, 916, 194 P.3d 255 (2008). The Kristensens have the burden to show that the

Department’s red-tag was invalid. See RCW 34.05.570(1)(a).

B. SUMMARY JUDGMENT

         Because the original administrative action was decided on summary judgment, we overlay

the APA standard of review with the standard of review for a summary judgment motion. Verizon,

164 Wn.2d at 916. We view the facts in the light most favorable to the non-moving party on a

summary judgment motion. Verizon, 164 Wn.2d at 916. We uphold a summary judgment ruling

if the undisputed material facts entitle the moving party to judgment as a matter of law. Verizon,

164 Wn.2d at 916.

C. THE DEPARTMENT’S AUTHORITY

         1. Authority Over All Conveyances

         The Department’s authority related to conveyances is “to provide for safety of life and limb

. . . and to ensure the safe design, mechanical and electrical operation, and inspection of

conveyances . . . [in order to prevent serious injury] to employees and the public exposed to unsafe

conditions.” RCW 70.87.020(1) (emphasis added). All conveyances must “be reasonably safe to

persons and property” and must comply with the Department’s rules in effect at permit issuance,

“regardless of whether the rule(s) [have since] been repealed.” WAC 296-96-00500(2), -00600, -

07021.

         All privately owned conveyances are subject to the provisions of RCW 70.87 “except as

specifically excluded by this chapter.” RCW 70.87.040. It is undisputed that the Kristensens’




                                                  7
No. 48842-6-II


tram is a “private residence conveyance” for single-family use under RCW 70.87.010(33) and that

the Kristensens’ tram is not open to the public.

        2. Limited Authority Over Single-Family Use Residential Trams

        Generally, the Department must inspect and test conveyances annually. RCW 70.87-

.120(2)(a). But in 1997, the legislature limited the Department’s authority to inspect single-family

use residential trams. LAWS OF 1997, ch. 216 § 2; see RCW 70.87.120(2)(b). Under the 1997

amendment, the Department could inspect single-family use residential trams only when they were

new, altered, or relocated and an operating permit had been issued, or to “investigate accidents and

alleged or apparent violations of this chapter.” LAWS       OF   1997, ch. 216, § 2; RCW 70.87-

.120(2)(b), (4).

        The following year in 1998, the legislature also exempted single-family use residential

trams from the operating permit requirements in RCW 70.87.090. LAWS OF 1998, ch. 137, § 4;

see RCW 70.87.120(2)(b)(ii). Thus, after these amendments, single-family use residential trams

were no longer subject to an annual operating permit or annual inspection, unless requested by the

tram’s owner. RCW 70.87.090, .120(2)(b)(i); WAC 296-96-01000(3), -01045(3). In 2004, the

legislature further exempted owners (and contractors on their behalf) who perform maintenance

on single-family use residential trams from the Department’s licensing oversight. LAWS OF 2003-

2004, ch. 66, § 3; RCW 70.87.305.

        3. Authority to Red-Tag Conveyances

        The Department’s authority to red-tag a conveyance is set forth in RCW 70.87.145(1),

which provides:




                                                   8
No. 48842-6-II


        An authorized representative of the department may order the owner or person
        operating a conveyance to discontinue the operation of a conveyance, and may
        place a notice that states that the conveyance may not be operated on a conspicuous
        place in the conveyance, if:

        (a) The conveyance work has not been permitted and performed in accordance with
        this chapter; or

        (b) The conveyance has otherwise become unsafe.

The Department’s red-tag must be rescinded if the conveyance is fixed or modified to bring it into

compliance. RCW 70.87.145(3).

                                     II. EQUITABLE ESTOPPEL

        The Kristensens argue that the Department is equitably estopped from red-tagging their

tram. Br. of Appellant at 11. They argue that the Department’s red-tag is inconsistent with its

prior approvals that the tram complied with the safety regulations. They argue that they reasonably

relied on the Department’s approvals to their detriment, they were injured, a manifest injustice has

occurred, and applying estoppel here would not impair legitimate governmental functions.

Because the Kristensens meet all five elements of equitable estoppel and there are no genuine

issues of material fact, we agree that the Department is equitably estopped from red-tagging their

tram.

        “Equitable estoppel prevents a party from taking a position inconsistent with a previous

one where inequitable consequences would result.” Silverstreak, Inc. v. Dep’t of Labor and Indus.,

159 Wn.2d 868, 887, 154 P.3d 891 (2007). Equitable estoppel against the government is

disfavored. Dep’t of Ecology v. Campbell & Gwinn, L.L.C., 146 Wn.2d 1, 20, 43 P.3d 4 (2002).

When equitable estoppel is asserted against the government, the party asserting it must establish

five elements:



                                                 9
No. 48842-6-II


       1) a statement, admission, or act by the party to be estopped, which is inconsistent
       with its later claims,
       2) the asserting party acted in reliance upon the statement or action,
       3) injury would result to the asserting party if the other party were allowed to
       repudiate its prior statement or action,
       4) estoppel is “necessary to prevent a manifest injustice,” and
       5) estoppel will not impair governmental functions.

Silverstreak, 159 Wn.2d at 887 (quoting Kramarevcky v. Dep’t of Soc. & Health Servs., 122 Wn.2d

738, 743, 863 P.2d 535 (1993)). “‘[T]he facts relied upon to establish an equitable estoppel must

be clear, positive, and unequivocal in their implication.’” Colonial Imports, Inc. v. Carlton Nw.,

Inc., 121 Wn.2d 726, 735, 853 P.2d 913 (1993)(quoting 28 Am Jur. 2d Estoppel and Waiver § 148,

at 831 (1966)).

A. INCONSISTENT STATEMENT, ADMISSION, OR ACT

       The Department argues that the safety hook “has otherwise become unsafe” under

RCW 70.87.145(1)(b). Br. of Resp’t at 19. But, the Department’s chief conveyance inspector

acknowledged that the “non-compliant safety hook has posed a safety hazard from the beginning.”

AR 196. And the Department concedes that its permit and approval of the Kristensens’ tram in

1992 violated former WAC 296-94-170(2) because the tram did not have a Type A or B car safety

as required. Br. of Resp’t at 19, 23.

       It is undisputed that the Department repeatedly permitted, inspected, and approved the tram

as complying with safety regulations, which included the car safety hook and the two speed

governors. It is also undisputed that the Department then changed its mind in 2012 and red-tagged

the tram because it had determined the tram had become unsafe. The Department’s red-tag is




                                                10
No. 48842-6-II


inconsistent with its prior approvals. We hold that the Kristensens prove the first element of

estoppel—inconsistent statement, admission or act.

B. DETRIMENTAL RELIANCE

       It is undisputed that the Kristensens spent approximately $65,000 to install and upgrade a

non-compliant tram after the Department approved their initial installation permit in 1989. It is

undisputed that if the Department had rejected the Kristensens’ application to install the Rehmke

tram because the safety hook did not comply with the safety regulations, the Kristensens would

have chosen to install a tram that met the safety requirements. The Kristensens relied on the

Department’s approvals prior to purchasing, installing and upgrading a tram that was non-

compliant. Thus, we hold that the Kristensens prove the second element of estoppel—detrimental

reliance.

C. INJURY

       The Kristensens incurred approximately $65,000 in expenses to install and upgrade the

tram as approved by the Department. The Department does not directly address this element.

Thus, we hold that the Kristensens prove the third element of estoppel—injury.

D. MANIFEST INJUSTICE

       The Kristensens argue that the application of equitable estoppel is necessary to prevent a

manifest injustice, citing the analysis in Silverstreak as analogous to the case here. Br. of Appellant

at 14. The Department argues that Silverstreak is factually distinguishable because that case

involved the Department’s change in its interpretation of a regulation, however, this case involves

safety enforcement. Br. of Resp’t at 29. And the Department argues that it had a duty to address

safety issues under RCW 70.87.020(1), which requires safe conveyances. Br. of Resp’t at 28.



                                                  11
No. 48842-6-II


       Silverstreak addressed whether the Department was equitably estopped from enforcing its

post-bid interpretation of the prevailing wage act because that interpretation was inconsistent with

its earlier interpretation in a policy memorandum, which had been relied upon by the suppliers and

drivers in submitting their bids. Silverstreak, 159 Wn.2d at 886-87. Just as it did here, the

Department changed the way it interpreted and applied the regulations and, thus, the reasoning in

Silverstreak applies:

       If contractors and subcontractors cannot rely on the consistency of clear department
       interpretations in effect at the time they enter into a contract, they are left to guess
       at the meaning of regulations. Thus, the result the Department urges us to reach
       would be not only manifestly unjust but unconstitutional.

Silverstreak, 159 Wn.2d at 890. Here, the Kristensens relied on the Department’s representations

that the tram was safe and proceeded to install and upgrade a non-compliant tram at significant

expense.   Years later, the Department changed its position and interpretation of its safety

regulations which is manifestly unjust. Thus, we hold that the Kristensens prove the fourth

element—manifest injustice.

E. IMPAIRING LEGITIMATE GOVERNMENT FUNCTIONS

       The Department argues that applying estoppel would “severely impair” and broadly

undermine its ability to protect the public from unsafe conveyances under chapter 70.87 RCW.

Br. of Resp’t at 30. We disagree.

       The Department’s position is that the tram was always unsafe, and that its duty to ensure

the safety of citizens is a legitimate government function. Br. of Resp’t at 19, 31. But the

Department’s vital government function was to assure the safety of the Kristensens’ tram 20 years

ago. The 1997, 1998, and 2004 amendments to chapter 70.87 RCW evidence the legislature’s




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No. 48842-6-II


intent to restrict the Department’s authority over single-family use residential trams except in

certain limited circumstances. Applying equitable estoppel here does not prevent the Department

from inspecting single-family use residential trams when they are new, altered, or relocated and

an operating permit has been issued, or to investigate accidents and alleged or apparent violations

of chapter 70.87 RCW. Nor will applying equitable estoppel undermine the Department’s broad

authority to keep the public and employees safe while riding in commercial or multi-family

residential conveyances. Viewing the evidence in the light most favorable to the Department, we

hold that the Kristensens prove the fifth element of equitable estoppel—not impairing legitimate

government functions.

                                ATTORNEY FEES AND COSTS

       The Kristensens request an award of reasonable attorney fees and costs as a qualified

party who prevails in a judicial review of an agency action under RCW 4.84.350(1).7 Br. of

Appellant at 18; CP at 60-61.

       Under RCW 4.84.350(1), “a court shall award a qualified party that prevails in a judicial

review of an agency action fees and other expenses, including reasonable attorneys’ fees, unless

the court finds that the agency action was substantially justified or that circumstances make an

award unjust.” “‘Substantially justified means justified to a degree that would satisfy a reasonable

person.’” Silverstreak, 159 Wn.2d at 892 (quoting Moen v. Spokane City Police Dep’t, 110 Wn.

App. 714, 721, 42 P.3d 456 (2002)). The State must show that its position has a reasonable basis




7
  RAP 18.1(a) provides that if an applicable law grants a party the right to recover reasonable
attorney fees or expenses on appeal, the party must request the award of attorney fees and costs in
their brief.


                                                13
No. 48842-6-II


in law and fact. Constr. Indus. Training Council v. Wash. State Apprenticeship & Training

Council, 96 Wn. App. 59, 68, 977 P.2d 655 (1999). The statute provides a statutory cap on attorney

fees for each level of judicial review of an agency action. Costanich v. Dep’t of Soc. & Health

Servs., 164 Wn.2d 925, 934, 194 P.3d 988 (2008). The amount awarded for each level for judicial

review shall not exceed $25,000. RCW 4.84.350(2).

       Because we hold that equitable estoppel applies and the Department’s actions were not

substantially justified, the Kristensens are a qualified party who prevailed in a judicial action under

RCW 4.84.350(1). Upon compliance with RAP 18.1(a), we award the Kristensens’ reasonable

attorney fees and costs on appeal, not to exceed $25,000. And because the superior court did not

rule on the merits of the Kristensens’ request for attorney fees during judicial review, we remand

to the superior court to make this determination.

                                              CONCLUSION

       We hold that there are no genuine issues of material fact and that the Kristensens proved

all five elements of equitable estoppel. Thus, we reverse the superior court’s order and affirm the

ALJ’s final corrected order granting summary judgment to the Kristensens and ordering the red-

tag to be removed. Because we hold that the Kristensens are a qualified party who prevailed in a

judicial action under RCW 4.84.350(1). Upon compliance with RAP 18.1(a), we award them

reasonable attorney fees and costs on appeal. But because the superior court did not rule on the




                                                  14
No. 48842-6-II


merits of the Kristensens’ request for attorney fees and costs during judicial review, we remand to

the superior court to make this determination.

        A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record in accordance with RCW 2.06.040,

it is so ordered.



                                                      SUTTON, JUDGE
 We concur:



 WORSWICK, P.J.




 JOHANSON, J.




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