                                                                                                           FILED
                                                                                                     COURT OF APPEALS
                                                                                                         DIVISION 11

                                                                                                    7015 JUN - 4 AM 8: 33
    IN THE COURT OF APPEALS OF THE STATE OF WASHING
                                                                                                    STS              TON

                                              DIVISION II                                           BY


 TILLMAN CARR individually; CAL FARRER                                     No. 46590 -6 -II
 and JENELL FARRER, a marital community;
 KUO -YING FRENZEL,               individually;   JULIE
 GANAS,    individually;               B.
                                     WILLIAM
 MINAGLIA,   individually; DARRYL and
 ROSE HUDSON, a marital community; KEITH
 PETERSON,      individually; KATHRYN
 DEBERNARDI, individually; KATHERINE
 MEADE, individually; ROB and SHARA
 COFFMAN,          a    marital     community;      and

 PAMELA SMITH, individually,

                                     Appellants,


           v.




 THE STATE OF WASHINGTON by and                                      PUBLISHED OPINION
 through the WASHINGTON STATE LIQUOR
 CONTROL BOARD, a board of the State of
 Washington; and the WASHINGTON STATE
 DEPARTMENT OF REVENUE, a department
 of the State of Washington,


                                     Respondents.


          LEE, J. —    A group of former contract liquor store owners ( collectively " the Owners ")

appeal the superior court' s order dismissing their complaint against the Washington State Liquor

Control Board ( Board)      and   the   Washington State Department   of   Revenue ( Department).          After


Initiative 1183 ( I -1183) was adopted, the sale and distribution of liquor in Washington was


privatized. As a result, the Board terminated the contracts it had with current liquor store owners.


The Owners filed a complaint against the Board and the Department based on the termination of


their   contracts and alleged violations of   RCW 66. 24. 620   and section   303   of   I -1183.
No. 46590 -6 -II




         Under our recent decision in Fedway Marketplace West, LLC v. State, 183 Wn. App. 860,

336 P. 3d 615 ( 2014),       review      denied, 182 Wn.2d 1013 ( 2015), we hold that the superior court


properly dismissed the Owners' contract claims. And, the superior court properly-determined that

there were no private causes of action created under RCW 66. 24. 620 or section 303 of I -1183.


Accordingly, we affirm the superior court' s order granting summary judgment and dismissing the

Owners' complaint.


                                                           FACTS


         Tillman Carr, Cal and Jenell Farrer, Kuo -Ying Frenzel, Julie Ganas, William Minaglia,

Darryl and Rose Hudson, Keith Peterson, Kathryn Debernardi, Katherine Meade, Rob and Shara


Coffman,      and   Pamela Smith ( "the Owners ") all owned contract liquor stores. The Owners entered


into   new,     identical, five -year    contracts    with   the Board,      effective   June 30, 2011.   Under the


contracts, the Owners sold liquor on behalf of the Board in exchange for a base rate compensation


and commission         based   on   monthly    net sales.    The contracts contained the following provisions

governing termination of the contract:

         6. 5       TERMINATION BY MUTUAL AGREEMENT
         The [ Board] and the Contractor may terminate this Contract in whole or in part, at
         any time, by mutual agreement.

         6. 9       TERMINATION FOR WITHDRAWAL OF AUTHORITY
         In the event that the [ Board' s] authority to perform any of its duties relating to this
         Contract is withdrawn, reduced, or limited in any way after the commencement of
         this Contract and prior to normal completion, the [ Board] may terminate this
         Contract in      whole     or   in   part,   by   seven (   7)   calendar day' s written notice to
         Contractor. Contractor shall have no right of appeal when this clause is exercised
         by the [ Board].

Clerk' s Papers ( CP) at 148 -49.




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No. 46590 -6 -II



           In November 2011, the people of Washington State passed I -1183, an initiative privatizing

the sale of liquor. I -1183 required the Board to close all state liquor stores by June 1, 2012. LAWS

OF   2012,   ch.   2 § 102 ( codified     at   RCW 66. 24. 620( 2)).      To comply with I -1183, the Board offered

the Owners a contract amendment that changed the contract termination date to May 31, 2012. All

of the Owners, except Carr and Farrer, signed the contract amendment. The contract amendment

also allowed the Owners to sell liquor to licensees ( primarily bars and restaurants) at the Board' s

discounted     rate and allowed      the Owners to         solicit    licensee   accounts prior    to June 1, 2012.   And,


the contract amendment allowed the Owners to make deliveries directly to licensees.

           In February 2012, the Board presented another contract amendment that allowed the

Owners to      purchase    their current        liquor   inventory     from the Board.       All the Owners signed the


second contract amendment.



           As a result of I -1183, many owners lost licensee accounts because they were required to

pay    a   higher    percentage     of    their    sales   to   the   State.     Additionally, overall sales dropped

considerably, and some owners closed or sold their stores.

           On November 9, 2012, the Owners filed a complaint against the Board and the Department.


The Owners          alleged   that ( 1)    the Board breached its              contract   with   the Owners, ( 2) I -1183



unconstitutionally interfered with the owner' s contracts with the Board, (3) the termination of their

contracts was an unconstitutional taking, (4) the Board failed to " avert harm" from the privatization

of liquor as required by RCW 66.24.620( 2), 1 and ( 5) the Department failed to comply with the



1 RCW 66. 24. 620( 6)( b) states:

                   The transition must include, without limitation, a provision for applying
           operating and asset sale revenues of the board to just and reasonable measures to

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No. 46590 -6 -II



requirement under section 303 of I -1183 to create rules addressing claims that I -1183

unconstitutionally impaired contracts.2

         The Department and the Board moved for summary judgment. The Owners filed a cross

motion   for   partial   summary judgment        on all   issues   except   damages. The superior court granted


the Department' s and the Board' s motion for summary judgment, and dismissed all ofthe Owners'

claims. The Owners appeal. 3

                                                     ANALYSIS


         The Owners argue that the superior court improperly granted the Department' s and the

Board'   s motion    for summary judgment.          We review the superior court' s ruling on a motion for

summary judgment           de   novo.   Torgerson v. One Lincoln Tower, LLC, 166 Wn.2d 510, 517, 210


P. 3d 318 ( 2009).       Summary judgment is appropriate only if the pleadings, affidavits, depositions,

and admissions on file demonstrate the absence of any genuine issues of material fact, and the

moving party is      entitled    to   judgment   as a matter of     law. CR 56( c).   "   A material fact is one on




         avert harm to interests of tribes, military buyers, and nonemployee liquor store
         operators under then existing contracts for supply by the board of distilled spirits,
         taking into account present value of issuance of a spirits retail license to the holder
         of such interest. The provision may extend beyond the time for completion of
         transition to a spirits licensee system.


2 Laws of 2012, ch. 3, section 303 states:

         The department of revenue must develop rules and procedures to address claims
         that this act unconstitutionally impairs any contract with the state and to provide a
         means for reasonable compensation of claims it finds valid, funded first from
         revenues based on spirits licensing and sale under this act.

3 The Owners originally appealed directly to our Supreme Court. Our Supreme Court denied direct
review and transferred the Owners' appeal for consideration by this court.



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No. 46590 -6 -II



which      the   outcome of        the litigation 'depends" in              whole or    in    part.   Dania, Inc. v. Skanska USA


Bldg. Inc.,       185 Wn.    App.     359, 365, 340 P. 3d 984 ( 2014). "[ W] e consider all the facts submitted


and the reasonable inferences therefrom in the light most favorable to the nonmoving party."

Atherton Condo. Apartment -Owners Ass 'n Bd. of Dirs.                             v.   Blume Dev. Co., 115 .Wn.2d 506, 516,


799 P. 2d 250 ( 1990). Here, there was no genuine issue of material fact.


A.          CONTRACT CLAIMS


            The Owners make three claims related specifically to the termination of their contracts with

the Board.          First, the Owners argue that the Board breached its contracts by terminating the

contracts        prior to the     expiration of       the five -year term.             Second, the Owners argue that I -1183


unconstitutionally impaired the Board' s contracts with the Owners. Third, the Owners argue that

the early termination of their contracts is an unconstitutional taking.

            Recently, we addressed nearly identical arguments in Fedway Marketplace, 183 Wn. App.

860. In Fedway Marketplace, landlords sued the Board for breach of its leases with the landlords

of   its   state -run   liquor    stores.   Id. at 865 -67. After I -1183 passed, the Board terminated its leases


with the landlords based on a lease termination clause that terminated the leases if the Board lost


the authority to          continue    to    sell   liquor.   Id.   at   866.    The landlords claimed that ( 1) the Board


breached the terms          of    the lease, (     2) I -1183 unconstitutionally impaired the Board' s contracts, and

 3) the termination of the leases constituted an unconstitutional taking. Id. at 866 -67. We affirmed

the trial court'        s order   dismissing        the landlords'      claims.        Id.   at   868 , 873, 874.   Our holdings in


Fedway Marketplace control the owner' s contract claims here.




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No. 46590 -6 -II



            1.          Breach of Contract Claim


            In Fedway Marketplace, the leases contained a specific termination clause, providing that

each lease would terminate upon the enactment of any law that prevented either party from

carrying         out   the lease terms.   Id.   at   868.   We held that the termination clause in each lease was


triggered when I -1183 passed and the Board was no longer permitted to sell liquor. Id. at 869 -70.


Therefore, the Board complied with the express terms of each lease and did not breach the contract.


Id.   at   870.     Because the Board complied with the express terms of the leases, the Board did not


breach the terms of each lease between the landlords and the Board. Id. The same situation exists


here.


            The contracts between the Board and the Owners contain an express provision stating that

the contract can be terminated by the Board if "the [ Board' s] authority to perform any of its duties

relating to this Contract is            withdrawn, reduced, or       limited in any way."   CP   at   149.   And, the


contract contains a provision allowing the contract to terminate based on mutual agreement. Here,

many of the Owners agreed to amend the contract and establish a termination date of May 31,

2012.            Therefore,     those contracts were terminated under the express provision allowing

termination            by   mutual   agreement.      The remaining owners' contracts were terminated by the

provision allowing the Board to terminate the contract if its authority to sell liquor was withdrawn.

Therefore, the contracts were terminated under the express, unambiguous termination provisions


contained in the contracts.


            As in Fedway Marketplace, the Board complied with the express terms of the contract.

Therefore, under Fedway Marketplace, the Board did not breach its contracts with the Owners.

183 Wn.          App.   at   870.
No. 46590 -6 -II



          2.          Unconstitutional Impairment of Contracts


          Like       the   Owners here,        the landlords in Fedway Marketplace argued that I -1183

unconstitutionally impaired the State' s existing contract obligations. Id. at 864. Article 1, section

23 of the Washington Constitution and article I, section 10 of the United States Constitution


prohibit       any legislative     action    from    impairing       an   existing     contractual   obligation.      In Fedway

Marketplace, we determined that the landlords' contracts were not impaired because, based on the


express    provision
                            terminating      the lease upon a change                  in the law, " the    parties'   rights   and




expectations remained           the same as        before the    new     law   was passed."    Id. at 875.


          Here, the contracts between the Owners and the Board contained express provisions


addressing the        effect of a change       in the law. I -1183 triggered the termination provision in the


contracts, but it did not change the terms of the contracts. Therefore, like the landlords in Fedway

Marketplace, the Owners' rights and expectations under their contracts with the Board did not


change when          I -1183   was passed.         Id.   at   875.   Consequently, I -1183 did not unconstitutionally

impair the Board' s contract with the Owners.


          3.          Unconstitutional Taking

          Like the Owners here, the landlords in Fedway Marketplace also argued that the Board' s

termination of their leases resulted in an unconstitutional taking. We held in Fedway Marketplace

that the landlords had not shown a total taking because they retained their fundamental property

rights, specifically the right to possess and dispose of their property, to exclude others, and make

an economic use of the property. Id. at 877. Because the landlords could not show a total taking,

they had       to   show   that I -1183 "   goes   beyond preventing           real   harm to the   public[,]   which is directly

caused by the prohibited use of the property and instead imposes on those regulated the



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No. 46590 -6 -II



requirement of providing an affirmative public                 benefit." Guimont v. Clarke, 121 Wn.2d 586, 603,


854 P. 2d 1 ( 1993),     cert.   denied, 510 U. S. 1176 ( 1994).           We determined that I -1183 does not go


beyond preventing public harm, and that its purpose is at " the heart of the State' s police power."

Fedway Marketplace, 183 Wn. App. at 878. Therefore, the Board' s termination of the leases did

not constitute a taking. Id.

         Here, the Owners appear to argue that the " property" that was taken was the potential future

earnings under their contracts. Their claim fails.


         Like in Fedway, there is not a total taking because the Owners retained their fundamental

rights to possess and dispose of their property, exclude others from their property, and make

economic use of their property. Because there was not a total taking, the Owners must show that

the   regulation " goes   beyond preventing           real   harm to the   public{,]      which is directly caused by the

prohibited    use   of   the property[,]      and instead imposes on those regulated the requirement of


providing    an affirmative public         benefit."    Guimont, 121 Wn.2d           at   603.   In Fedway Marketplace,

we    determined that the         purpose      of    I -1183   was   directed   at   preventing     a   public   harm —the


 proliferation of private        liquor   stores."    Fedway Marketplace, 183 Wn. App. at 878. Because the

Owners cannot demonstrate a total taking, and I -1183 does not go " beyond preventing real harm,"

the Board    terminating     the Owners'        contracts was not an unconstitutional              taking. Guimont, 121

Wn.2d at 603; Fedway Marketplace, 183 Wn. App. at 877 -78.

          Thus, the enactment of I -1183 triggered an existing termination provision in the Owners'

contract, and the contracts were terminated under their express terms; the Board did not breach the

contracts.    Because the contracts were terminated under their express terms, I -1183 did not


unconstitutionally impair the         contracts.       And, I -1183 did not result in an unconstitutional taking.



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No. 46590 -6 -II



Therefore, the superior court did not err in granting the motion for summary judgment on the

Owners' contract claims.


B.      PRIVATE CAUSE OF ACTION UNDER I -1183


        The Owners also argue that they are entitled to monetary damages based on the Board' s

alleged violation of RCW 66.24. 620( 6)( b) 4 and the Department' s alleged violation of Laws of

2012, chapter 3, section 303. To be entitled to monetary damages under either provision of I -1183,

the Owners           must show       that the I -1183     provisions create a private cause of action.       Here, neither


provision of I -1183 creates a private cause of action that entitles the Owners to relief.

           When       a   statute does    not   explicitly   create a private. cause of action, "`   a cause of action may


be implied from a statutory provision when the legislature creates a right or obligation without a

corresponding remedy. "' Schatz                   v.   Dep' t ofSoc. &   Health Servs.,   178 Wn. App. 16, 29, 314 P. 3d

406 ( 2013) ( quoting. Ducote              v.   Dep' t   of Soc. & Health Servs., 167 Wn.2d 697, 703, 222 P. 3d 785


 2009)).        We consider three factors to determine if a private cause of action is implied in a statutory

provision: "(        1) whether the plaintiffs are within the class of persons for whose benefit the statute


was enacted, (2) whether legislative intent supports, creating or denying a remedy, and (3) whether

implying        a   remedy is      consistent with       the underlying   purpose of   the legislation." Id. at 30.


           1.             RCW 66. 24. 620( 6)( b): Aversion of Harm


           The Owners claim that RCW 66. 24. 620( 6)( b) creates a private cause of action that entitles


them to monetary damages for the losses suffered as a result of the privatization of liquor sales.

RCW 66.24.620( 6)( b) states:




4
    LAWS   OF       2012,   ch.   2, § 102( 6)( b).



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No. 46590 -6 -II



                   The transition must include, without limitation, .a provision for applying
         operating and asset sale revenues of the board to just and reasonable measures to
         avert harm to interests of tribes, military buyers, and nonemployee liquor store
         operators under then existing contracts for supply by the board of distilled spirits,
         taking into account present value of issuance of a spirits retail license to the holder
         of such interest. The provision may extend beyond the time for completion of
         transition to a spirits licensee system.


Here, the Owners are nonemployee liquor store owners, as referenced in the statutory provision,

and so are within the class for whose benefit the statute was created. However, creating a private

cause of action is not supported by either the legislative intent or the underlying purpose of the

legislation. Therefore, RCW 66.24. 620( 6)( b) does not entitle the Owners to sue the Department


for monetary damages.

         When determining whether legislative intent supports creating a private cause of action we

employ principles of statutory construction and interpretation. See McCandlish Elec., Inc. v. Will

Constr. Co.,    107 Wn. App. 85, 94 -95, 25 P. 3d 1057, review denied, 145 Wn.2d 1012 ( 2001).

Statutory   interpretation is   a question of   law   we review   de   novo.   Dep' t ofEcology v. Campbell &

Gwinn, LLC, 146 Wn. 2d 1, 9 - 10, 43 P. 3d 4 ( 2002).         To determine legislative intent, we begin by

looking at the plain language of the statute. Id. When looking at the plain language of the statute,

we must consider " the context of the statute in which that provision is found, related provisions,


and   the statutory   scheme as a whole."       Lake v. Woodcreek Homeowners Ass' n, 169 Wn.2d 516,


526, 243 P. 3d 1283 ( 2010) (     quoting State v. Engel, 166 Wn.2d 572, 578, 210. P. 3d 1007 ( 2009))

 internal   quotation marks omitted).     Only " if the   statute   is   ambiguous, [   may] ` this   court ...   look


to the legislative history of the statute and the circumstances surrounding its enactment to

determine legislative intent. '     Id. at 527 ( quoting Rest. Dev., Inc.       v.   Cananwill, Inc., 150 Wn.2d


674, 682, 80 P. 3d 598 ( 2003)).




                                                         10
No. 46590 -6 -II




         As an initial matter, there is no explicit legislative intent to create a private cause of action

under   RCW 66. 24. 620( 6)( b).         Instead, the Owners rely on the terms " applying operating and asset

sale revenues of the board" and " avert harm" to argue that the provision creates an implied private


cause of action for monetary damages based on economic loss resulting from privatization.

However, looking at the provision as a whole and within the context of the entire legislation, a

plain reading of the provision does not support the conclusion that the legislature intended to create

a private cause of action for monetary damages under RCW 66. 24. 620( 6)( b).

         The plain language of RCW 66. 24. 620( 6)( b) requires the Department to take " measures"


to   avert   harm.    RCW 66. 24. 620( 6)( b) does             not use   the term "   compensation ";   instead, RCW


66. 24. 620( 6)( b)   uses      the   much    broader term "         measures." "     Measures,"    as used in RCW


66. 24. 620( 6)( b), is   not   the   equivalent of "compensation."          Compensation would be a very specific

measure      that the Department         could   take to   avert     harm.   The use of the broad term " measure"


indicates that the legislature intended to allow the Department to exercise its discretion to

determine      what measures would           be just   and reasonable.       The term measure can encompass all of


the non -monetary actions taken by the Department during the transition to privatization.5
         Further, " avert harm" is not the equivalent of "compensate for economic damages" as the


Owners       suggest. "   Avert" means to anticipate and ward off. WEBSTER' S THIRD INTERNATIONAL


DICTIONARY 151 ( 1969).               The term   avert   is,   by   definition, anticipatory   and proactive.   It is not


reactive. By requiring the Board to take " just and reasonable measures to avert harm" the statute



5 For example, the Department allowed the Owners to purchase their existing inventory of state -
owned    liquor    at a reduced price.         The Department also allowed the Owners to solicit licensee
accounts prior to the effective date of privatization and deliver liquor to licensee accounts. And,
the Department allowed the Owners to begin storing liquor at off s-ite locations.


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No. 46590 -6 -II



contemplates that the Board take into consideration the possible effects of privatization and take


action   to   help mitigate the possible resulting harm.                RCW 66. 24. 620( 6)( b). It does not contemplate


waiting until after the harm has been suffered and then compensating the party for the resulting

harm. And, the proactive nature of the provision implies that the legislature did not intend for the

provision to allow for full compensation for any harm suffered. Therefore, a plain reading of the

language of the statute does not support the conclusion that the legislature intended RCW

66. 24. 620( 6)( b) to create a private cause of action.


           Additionally, creating a private cause of action is not consistent with the underlying

purpose of the statute. The people were very specific regarding their intent in enacting I -1183:

           The people of the state of Washington, in enacting this initiative measure, find that
           the state government monopoly on liquor distribution and liquor stores in
           Washington and the state government regulations that arbitrarily restrict the
           wholesale distribution and pricing of wine are outdated, inefficient, and costly to
           local taxpayers,        consumers,     distributors,     and retailers.   Therefore, the people wish
           to privatize and modernize both wholesale distribution and retail sales of liquor and
           remove outdated restrictions on the wholesale distribution of wine by enacting this
           initiative.


LAws OF 2012,         ch.   2, §    101( 1).    The people listed 15 things the initiative was intended to do.


Among other things, the initiative specifically noted that one purpose of the initiative was to

 provide      increased     funding for        state and   local   government services.          LAws OF 2012, ch. 2, §


101( 2)(   a).   And, the people were clear that the purpose of privatizing liquor distribution was to

allow " the state to focus on the more appropriate government role of enforcing liquor laws and

protecting       public   health   and   safety concerning         all alcoholic   beverages."   LAws OF 2012, ch. 2, §


101( 2)( b).     Nothing contained in the stated purpose of privatizing liquor distribution indicates that

the underlying purpose of the initiative is consistent with using proceeds from the transition from




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No. 46590 -6 -II



a state -run system to a privatized system to compensate former contract liquor store owners for all

economic damages suffered from the enactment of I -1183.


         Creating a private cause of action from RCW 66.24.620( 6)( b) would be contrary to the

legislative intent and the underlying purpose of I -1183. Therefore, the Owners do not have a cause

of action for monetary damages as a result of the Board' s alleged violation of RCW

66. 24. 620( 6)( b).   The superior court properly granted the Board' s motion for summary judgment

on the Owners' claim that they are entitled to compensation under RCW 66.24. 620( 6)( b).

         2.        LAWS   OF   2012,    ch.   3, §   303: Department of Revenue Rulemaking

         The Owners also assert that they are entitled to monetary damages for the Department' s

failure to    engage   in rulemaking     under       Laws   of   2012,   chapter   3,   section   303. The text of Laws of


2012, chapter 3, section 303 states:


         The department of revenue must develop rules and procedures to address claims
         that this act unconstitutionally impairs any contract with the state and to provide a
         means for reasonable compensation of claims it finds valid, funded first from
         revenues based on spirits licensing and sale under this act.

However, "[     a] n administrative body does not have authority to determine the constitutionality of

the law it    administers;   only the   courts       have that   power."    Bare v. Gorton, 84 Wn.2d 380, 383, 526


P. 2d 379 ( 1974).     After the people enacted I -1183, the Department recognized this limitation on


its authority and issued a special notice stating, in relevant part:

         Because the Department lacks the authority to carry out the intent and purpose of
         I -1183 § 303, the Department will not develop rules or procedures concerning
         issues   of constitutional     impairment. The Department' s instruction in all cases of
         alleged constitutional impairment of contract related to I -1183 is for the claimant
         to file its claim directly with a court of competent jurisdiction.




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No. 46590 -6 -II



CP   at   112.    By issuing the special notice, the Department took the only step that was within its

authority to take. The Department cannot be expected to engage in rule making on topics that are

outside of the scope of the Department' s authority.

          Moreover, there is no precedent for establishing a private cause of action for an agency' s

failure to   engage    in   rule -making.      Chapter 35. 04 RCW provides the appropriate mechanism for


challenging an agency' s action or failure to act. The remedies available are expressly limited by

RCW 34. 05. 574. "          The court may award damages, compensation, or ancillary relief only to the

extent    expressly   authorized
                                       by   another provision of     law." RCW 34. 05. 574( 3) (     emphasis added).



Laws of 2012, chapter 3, section 303 does not provide for damages or compensation based on the


Department' s failure to engage in rule making.

          The Owners also seem to argue that Laws of 2012, chapter 3, section 303 creates a private


cause of action requiring the Department to pay them compensation for the termination of their

contracts.       However, to the extent that Laws of 2012, chapter 3, section 303 creates a claim for

compensation,        it is limited to       a claim   that I -1183 unconstitutionally     impairs   contracts.   For the


reasons explained above, I -1183 did not unconstitutionally impair the Owners' contracts with the

Department. Therefore, they would not be entitled to compensation under Laws of 2012, chapter

3, section. 303.


           The Owners do not have a private cause of action for monetary damages under either RCW

66. 24. 620( 6)( b)   or   Laws   of   2012,   chapter   3,   section   303.   Therefore, the superior court properly

granted the Department' s and the Board' s motions for summary judgment based on the alleged

violations of specific provisions of I -1183.




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No. 46590 -6 -II




        We affirm.




 We concur:




                     15
