       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

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KENNETH EMERSON and KELLY                                                              rHC:
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ISLAND COUNTY, a political subdivision          UNPUBLISHED OPINION              jct
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of the State of Washington,
                                                FILED: March 28, 2016
                    Respondent.


      Becker, J. — Kenneth and Kelly Emerson applied for a permit to build an

addition on to their Island County home. Island County issued the permit after

lengthy wrangling over whether there was a wetland on the property. The

Emersons filed suit seeking damages for the delay. They now appeal from an

order granting summary judgment to the county. We affirm.

      The purpose of summary judgment is to avoid a useless trial. Seven

Gables Corp. v. MGM/UA Entm't Co.. 106 Wn.2d 1, 12, 721 P.2d 1 (1986).

Summary judgment is properly granted when the pleadings, affidavits,

depositions, and admissions on file demonstrate there is no genuine issue of

material fact and the moving party is entitled to judgment as a matter of law.

Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998). Any doubt as

to the existence of a genuine issue of material fact is resolved against the moving
No. 73208-1-1/2


party. Atherton Condo. Apartment-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co.,

115 Wn.2d 506, 516, 799 P.2d 250 (1990). But the existence of a material fact

cannot be hypothetical. "The adverse party must set forth specific facts showing

there is a genuine issue for trial or have the summary judgment, if appropriate,

entered against them." Seven Gables. 106 Wn.2d at 12-13.

       We review the facts in the light most favorable to the Emersons. In late

August 2010, Kenneth Emerson started constructing a sunroom addition to the

Emersons' Camano Island home. He did not obtain a permit for this work.

Someone who observed the construction anonymously notified Kelly Emerson's

opponent in the then upcoming election for Island County Commissioner. A

complaint, alleging damage to wetlands, reached the Island County Department

of Planning and Community Development. The county dispatched an inspector

to the Emerson property. No one was home. The inspector observed the framed

addition at the back of the home and stapled a stop work order to the framing.

       On August 31, 2010, Kenneth Emerson went to the county permitting

office. He filled out and filed forms to obtain an after-the-fact building permit for

the addition. On one of the forms, he stated that no wetlands existed on the

Emerson property. On September 16 and September 23, 2010, the county sent

letters stating that the county had information indicating the presence of a

wetland on the Emersons' property.

       The Emersons received a notice of violation letter on October 1, 2016.

The letter offered the opportunity to come into compliance within 30 days by
No. 73208-1-1/3


submitting a wetland report. The letter indicated that failure to come into

compliance would result in an enforcement order and civil fines.

       The Emersons did not submit a wetland report. Feeling certain there were

no wetlands on the property, they filed a lawsuit against individuals they believed

were engaging in a misuse of power to discredit Kelly Emerson's political

campaign. Later, they added the county as a defendant.

       In November 2010, the county sent an enforcement order to the

Emersons. The order advised the Emersons that they needed to submit a

wetland report within 30 days. It stated that civil fines would be imposed if they

failed to comply.

       In January 2011, the county issued a supplemental enforcement order.

The supplemental order repeated the demand for a wetland report and assessed

a civil penalty of $37,000 against the Emersons.

       In May 2011, the trial court entered summary judgment and dismissed the

Emersons' lawsuit. The summary judgment was not appealed.

       In June 2011, the Emersons retained SNR Co. to determine whether

wetlands were on their property. SNR concluded no wetlands were present.

       In July 2011, the Emersons submitted the SNR report to the county. The

county expressed concern with the methodologies used by SNR and forwarded

the report to the Department of Ecology for a second opinion.

       In December 2011, the Emersons were told the SNR report did not comply

with federal and state standards. The Emersons retained a second expert, Ed

Kilduff, to perform a peer review of the SNR report. Kilduff criticized the
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Department of Ecology for comments that "appear to deliberately misunderstand

some of SNR's points for the purpose of manufacturing controversy."

      The Emersons presented Kilduffs peer review to the county. Again, the

county sought assistance from the Department of Ecology. In early 2012, the

Department of Ecology concluded that Kilduffs peer review was unpersuasive

because it lacked site specific information. The Department of Ecology

recommended that state or county staff perform an onsite inspection at no cost to

the Emersons. The inspection would facilitate a final determination regarding the

presence or absence of regulated wetlands on the Emersons' property. The

Emersons rejected the suggestion. The Emersons did not believe the state or

the county could make an unbiased determination as to the existence of

wetlands on their property.

       In early 2013, the Emersons were repeatedly advised that the dispute

could be resolved quickly and without cost if the county or the state was allowed

to inspect the Emerson property. More than 10 letters and phone calls conveyed

this recommendation to the Emersons. The Emersons refused to allow

inspection.

       On March 28, 2013, the county issued a second supplemental

enforcement order. The second supplemental order asserted the violations listed

in the initial enforcement order, noted the previous imposition of a $37,000 civil

fine, and stated that a lien would be placed on the Emersons' property if the

Emersons did not submit a proper wetland report. On March 29, 2013, the
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county denied the Emersons' 2010 permit application. The Emersons appealed

the denial and the second supplemental enforcement order.

       In June 2013, the parties executed a settlement agreement. Under the

terms of the agreement, the Emersons agreed to pay a reduced fine of $5,000,

submit a wetland report that strictly complied with the Department of Ecology

wetland manual, and withdraw their administrative appeal. The fine was to be

paid within 30 days of the execution of the settlement agreement, and the

wetland report was to be submitted within 60 days after execution. Upon

withdrawal of the appeal, the county would return a substantial portion of the

administrative appeal fees. Upon submission of the new wetland report, the

county would process the permit application in good faith. The agreement

allowed the county to obtain third party review of the new wetland report but only

if the county reasonably determined that the report did not strictly comply with the

Department of Ecology's wetland manual.

       The Emersons paid the fine and withdrew their administrative appeal as

required by the agreement. After retaining a third expert, the Emersons

submitted a wetland report to the county on August 27, 2013.

       On September 16, 2013, the Emersons e-mailed the county, stating that

the county would be in default if a permit was not issued in 10 days. On

September 23, 2013, the county asked the Emersons to clarify certain aspects of

their wetland report.

       On October 16, 2013, the Emersons submitted supplemental responses

from their expert without waiving their previous claim of default. That same day,
No. 73208-1-1/6


the county renewed its request to inspect the Emerson property. On October 18,

2013, the Emersons rejected the request and declared a breach of the settlement

agreement.

      The Emersons initiated this lawsuit in November 2013. Their complaint

demanded damages and injunctive relief under a variety of legal theories,

including breach of the settlement agreement. The county forwarded the

Emersons' wetland report and supplemental responses to the Department of

Ecology approximately one week after the Emersons filed the complaint. The

Department of Ecology determined that the Emersons' report did not comply with

the wetland manual.

       In October 2014, the county inspected the Emerson property under CR

34(a)(2), the discovery rule that authorizes a litigant to request permission for

entry onto designated land possessed by the responding party. No wetlands

were found. The county issued the building permit.

       The parties agreed to arbitration of the breach of contract claim. The trial

court dismissed all the other claims on summary judgment. The Emersons

moved for reconsideration. Their motion was denied.

       The Emersons ask this court to reinstate their claims under RCW

64.40.020, under the takings clause of the Washington Constitution, under 42

U.S.C. § 1983 for substantive due process violations, and for common lawfraud.

                                  RCW 64.40.020

       RCW 64.40.020 grants permit applicants a limited cause of action for

damages if an agency's permitting actions are arbitrary, capricious, unlawful, or
No. 73208-1-1/7


otherwise exceed its lawful authority, or if an agency fails to act within time limits

established by law. See Birnbaum v. Pierce Countv. 167 Wn. App. 728, 734, 274

P.3d 1070(2012).

       Applicant for permit—Actions for damages from governmental
       actions.
               (1) Owners of a property interest who have filed an
       application for a permit have an action for damages to obtain relief
       from acts of an agency which are arbitrary, capricious, unlawful, or
       exceed lawful authority, or relief from a failure to act within time
       limits established by law: PROVIDED, That the action is unlawful or
       in excess of lawful authority only if the final decision of the agency
       was made with knowledge of its unlawfulness or that it was in
       excess of lawful authority, or it should reasonably have been known
       to have been unlawful or in excess of lawful authority.
               (2) The prevailing party in an action brought pursuant to this
       chapter may be entitled to reasonable costs and attorney's fees.
               (3) No cause of action is created for relief from unintentional
       procedural or ministerial errors of an agency.
               (4) Invalidation of any regulation in effect prior to the date an
       application for a permit is filed with the agency shall not constitute a
       cause of action under this chapter.

RCW 64.40.020. Any action brought under chapter 64.40 RCW "shall be

commenced only within thirty days after all administrative remedies have been

exhausted." RCW 64.40.030.

       The county's motion for summary judgment argued that the Emersons

failed to exhaust their administrative remedies. The county also sought dismissal

under the 30-day limitations period.

       The Emersons responded that they had no obligation to exhaust their

administrative remedies because the county had not issued a final order when

they brought this lawsuit, there were no administrative remedies available to

them under the settlement agreement, and the county lacked the institutional
No. 73208-1-1/8



competence to resolve the dispute. The Emersons cited Saben v. Skagit Countv.

136 Wn. App. 869, 152 P.3d 1034 (2006).

      The trial court dismissed the Emersons' RCW 64.40 claim for failure to

exhaust administrative remedies.


      The Emersons argue, citing Saben, that there is no exhaustion

requirement under RCW 64.40 when a claim stems from a settlement

agreement. That is not the holding of Saben.

      In Saben, Skagit County denied the Sabens a permit. The Sabens filed

an administrative appeal. Saben, 136 Wn. App. at 872. It was agreed that

Skagit County would issue the permit if the Sabens complied with certain laws

and withdrew their appeal. The Sabens complied, but Skagit County refused to

issue the permit. The Sabens filed another administrative appeal and brought an

action for damages under RCW 64.40. Saben, 136 Wn. App. at 873-74. The

superior court granted summary judgment for the Sabens, ruling that the county

was bound by its settlement agreement to issue the permit and finding the county

liable for damages. This court affirmed. "The county adopted an interpretation

and made an agreement based on it. Then, unilaterally, it disregarded that

interpretation, disregarded its agreement, and disregarded the consequences to

the Sabens, who acted in reliance upon it." Saben, 136 Wn. App. at 878.

      Nothing in Saben excuses a plaintiff from the statutory requirement to

exhaust administrative remedies before bringing suit. The exhaustion

requirement established by RCW 64.40.030 was not at issue.
No. 73208-1-1/9



       The Emersons alternatively contend that their claim is supported by

Smoke v. City of Seattle. 132 Wn.2d 214, 937 P.2d 186 (1997). In Smoke, the

city of Seattle sent a letter (the Mills letter) denying land use and building permits

to a set of plaintiffs. The letter informed the plaintiffs of their option to apply for a

legal building site letter or a formal building cite code interpretation by the

director. Neither a building site letter nor an interpretation by the director was a

required component of the city's application process. Smoke, 132 Wn.2d at 218.

The plaintiffs brought an action against the city under RCW 64.40 without

seeking a building site letter or a director's interpretation. Smoke, 132 Wn.2d at

220.


       The case reached our Supreme Court, where the issue was whether the

plaintiffs could claim damages under RCW 64.40. The court first held that the

statute unambiguously requires exhaustion of administrative remedies. Smoke,

132 Wn.2d at 221-22. The next question was whether the plaintiffs had an

unexhausted remedy. "No exhaustion requirement arises . . . without the

issuance of a final, appealable order. Thus, we must first determine whether the

Mills letter constituted a final decision by the City." Smoke, 132 Wn.2d at 222

(citation omitted). The court concluded that the plaintiffs did not have to pursue a

site letter or a director's interpretation because neither option could have

reversed the decision to deny the permits. Because there was no further

administrative remedy after the Mills letter, the Mills letter was a final and

appealable decision denying the permits. Smoke, 132 Wn.2d at 226-27.
No. 73208-1-1/10



       The Emersons contend that by entering into the settlement agreement,

they became like the plaintiffs in Smoke in that they had no further administrative

remedies. This case is factually unlike Smoke because the Emersons did not

obtain a final, appealable order. They withdrew their appeal.

       The county contends that ifthe Emersons wanted to pursue a remedy

under RCW 64.40 in addition to pursuing a breach of contract action, the

Emersons could have either reactivated their appeal of the building permit denial

or sought a new appeal of the wetlands inspection condition that the county was

imposing. The Emersons respond that there was no way for them to reactivate

their appeal or seek a new appeal because the terms of the settlement

agreement did not permit them to pursue an administrative remedy. They rely on

the venue provision stating that Island County Superior Court would be the venue

for any "action" arising out of the agreement:

       Governing Law and Venue. This agreement shall be governed by
       and interpreted in accordance with the laws of the State of
       Washington. The venue for any action arising out of this Agreement
       shall be in the Superior Court of the State of Washington, in and for
       Island County.
The Emersons contend that the venue provision amounted to an agreement to

exchange administrative remedies for a judicial action.

       Settlement agreements are governed by general principles of contract law.

Saben, 136 Wn. App. at 876. The touchstone of contract interpretation is the

parties' intent. Tanner Elec. Coop, v. Puoet Sound Power & Light Co., 128

Wn.2d 656, 674, 911 P.2d 1301 (1996). A settlement agreement listing the

superior court as the venue for an "action" does not evidence an intent to waive



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No. 73208-1-1/11


the exhaustion requirement in RCW 64.40.030. The venue provision does not

refer to the administrative process or exhaustion of administrative remedies.

       The Emersons did not obtain a final, appealable, administrative order

denying their permit either before or after bringing this lawsuit. By bringing suit

before obtaining a final, appealable order, the Emersons deprived the county of

the opportunity to correct its own mistakes, which is "one of the primary purposes

of the doctrine to exhaust administrative remedies." Smoke. 132 Wn.2d at 226.

We conclude the Emersons' RCW 64.40 claim was properly dismissed for failure

to exhaust administrative remedies.

                                        TAKINGS

       The Emersons contend that they have a triable takings claim against the

county under the Washington Constitution.

                     Count 3: Takings under State Constitution
                 38. Plaintiffs reallege paragraphs 1-26 as if fully set forth
       herein.
               39. The Washington State Constitution provides, "No private
       property shall be taken or damaged for public or private use without
       just compensation having been first made, or paid into court for the
       owner." Const. Art. I, § 16.
               40. By virtue of the actions complained above the
       Department has taken or damaged the Emersons' Property without
       just compensation.
               41. As a result of this taking, the Emersons have suffered
       significant damage in an amount to be proven at trial.

       The county's motion for summary judgment argued that a permitting delay

cannot amount to a constitutional taking. The county also argued that no taking

occurred because the Emerson property did not suffer total economic

deprivation.




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No. 73208-1-1/12


          In response, the Emersons argued only that the Washington Constitution

provides "more protection" than its federal counterpart. The entirety of the

Emerson's response regarding their takings claim states:

          The Emersons' third count, "Takings under the state Constitution,"
          seeks damages for Defendant's violation of Article I, § 16 of the
          Washington State Constitution. Defendant has moved for summary
          judgment of a claim for takings under the Federal constitution—a
          claim that is not before the court. Defendant provides no authority
          or discussion regarding the Emersons' claim under the State
          constitution, which, under well settled case law, affords citizens with
          more protection than that guaranteed by the Federal Constitution.
          See, e.g., Manufactured] HousH Cmtvs. of Wash, v. State, 142
          Wn.2d 347, 360-61, 13 P.3d 183 (2000). Accordingly, Defendant
          has failed to meet its burden and the motion must be denied.

          The Emersons offered no other basis for denying the county's motion with

regard to their takings claim. The county pointed out in its reply that the federal

constitution provides at least as much protection in the context of a regulatory

taking.

          The Emersons argue on appeal that the trial court impermissibly

dismissed their takings claim under a theory not originally briefed in the county's

opening memorandum. They cite White v. Kent Medical Center, Inc., 61 Wn.

App. 163, 810P.2d4(1991).

          This case is not controlled by White. The county's reply did not present

new theories for summary judgment. The problem for the Emersons is that they

did not substantively respond to the county's motion to dismiss the takings claim.

Because the Emersons failed to provide any substantive argument to

demonstrate a genuine issue of material fact under CR 56, the trial court properly

dismissed the takings claim.



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No. 73208-1-1/13


                          SUBSTANTIVE DUE PROCESS

       The Emersons further contend that they have a triable substantive due

process claim under 42 U.S.C § 1983, based on the county's delay in processing

their application pursuant to the settlement agreement.

       "Arbitrary or irrational refusal or interference with processing a land use

permit violates substantive due process." Mission Springs, Inc. v. City of

Spokane, 134 Wn.2d 947, 970, 954 P.2d 250 (1998). When executive action like

a permitting decision is at issue, only egregious official conduct can be said to be

arbitrary in the constitutional sense. Official conduct is arbitrary in the

constitutional sense if it amounts to an abuse of power lacking any reasonable

justification in the service of a legitimate governmental objective. Shanks v.

Dressel. 540 F.3d 1082, 1088 (9th Cir. 2008). If it is at least fairly debatable that

the county's conduct is rationally related to a legitimate governmental interest,

there has been no violation of substantive due process. Halverson v. Skagit

Countv, 42 F.3d 1257, 1262 (9th Cir. 1994).

       When all inferences are drawn in the Emersons' favor, the county's

actions in reprocessing the Emersons' application do not amount to a substantive

due process violation. The county's actions were directly related to determining

whether wetlands were on the Emerson property. We affirm the dismissal of the

Emersons' substantive due process claims.




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No. 73208-1-1/14


                                        FRAUD

      The Emersons' complaint alleges that the county fraudulently induced

them to enter into a settlement agreement the county did not intend to honor.

They contend the court erred in dismissing this claim.

      To state a claim for fraud, a plaintiff must satisfy the following nine

elements:

      (1) representation of an existing fact, (2) materiality, (3) falsity,
      (4) the speaker's knowledge of its falsity, (5) intent of the speaker
      that it should be acted upon by the plaintiff, (6) plaintiff's ignorance
      of its falsity, (7) plaintiffs reliance on the truth of the representation,
      (8) plaintiff's right to rely upon the representation, and (9) damages
       suffered by the plaintiff.
W. Coast, Inc. v. Snohomish Countv, 112 Wn. App. 200, 206, 48 P.3d 997

(2002).

       In the settlement agreement, the county promised to issue a permit to the

Emersons only if they submitted a wetland report that strictly followed certain

methodologies. The parties agreed to a disclaimer clause stating that nothing in

the agreement should be construed as a guarantee of approval or as constituting

a "representation" by the county:

       Disclaimer by Department. Nothing in this Agreement shall be
       construed as a waiver by the County of any permit requirements
       applicable to the Emersons construction activities on the Property
       pursuant to the County Code or other applicable laws, rules, or
       regulations. Nothing in this Agreement shall be construed as
       guaranteeing the availability of any permits or approvals regarding
          said activities. Nothing in this Agreement shall be construed as
          constituting a representation of any kind or nature by the County, or
          any official or employee thereof.

          The Emersons contend that the county should not be allowed to contract

around its duty to be truthful in negotiations because this "would sanction

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No. 73208-1-1/15


fraudulent and generally deceptive behavior." The Emersons cite no authority for

this argument. They do not explain how a court can enforce a written agreement

as if it guaranteed a permit when the agreement expressly states it is not a

guarantee. Also, the Emersons overlook the principle that promises of future

performance are not representations of existing fact. See W. Coast, 112 Wn.

App. at 206.

      The Emersons have not created an issue of material fact to establish that

the county made a materially false representation. They fail to show why the

disclaimer does not control. The trial court properly granted summary judgment

on the Emersons' claim of fraudulent inducement.

      Affirmed.




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