TAPPS BREWING COMPANY, INC. v. McCLUNG, 31959-4-II (Wash.App. 1-25-2005)

No. 31959-4-IIThe Court of Appeals of Washington, Division Two.
Filed: January 25, 2005 UNPUBLISHED OPINION

Appeal from Superior Court of Pierce County. Docket No. 98-2-06522-8. Judgment or order under review. Date filed: 10/30/2002.

William Colwell Severson, Attorney at Law, 1191 2nd Ave Ste 1800, Seattle, WA 98101-2939, Counsel for Appellant(s).

Patricia Bosmans, Attorney at Law, City Atty City of Sumner, 1104 Maple St, Sumner, WA 98390-1407, Counsel for Respondent(s).

Andrew C Cook, Building Industry Assn of Washington, PO Box 1909, Olympia, WA, 98507, Amicus Curiae on behalf of BUILDING INDUSTRY ASSOCIATION OF WASHINGTON.

VAN DEREN, J.

Daniel and Andrea McClung (McClung)[1] appeal the trial court’s dismissal of their lawsuit challenging the City of Sumner’s imposition of a storm water general facilities charge (GFC) and an obligation to upgrade a storm water pipe in order to gain approval of commercial development plans for their property. McClung contends that (1) the complaint and summary judgment motion provided the City adequate notice of the challenge to the upgrade obligation’s legality on both state statutory and constitutional grounds; (2) the trial court erred in denying the motion to amend; and (3) Tapps Brewing, Inc. v. City of Sumner, 106 Wn. App. 79, 22 P.3d 280 (2001), a decision that resulted from a stipulation under RAP 2.3(b)(4) for discretionary review, erroneously held that the City’s storm water GFC was legal under RCW 35.67.020. We reverse and remand for trial only on McClung’s challenge to the upgrade obligation’s legality and allow McClung to amend the complaint to clarify the constitutional claims. Otherwise, we affirm the trial court’s rulings.

FACTS

A. Background

McClung applied to the City of Sumner (City) to develop a commercial building in 1994. McClung’s commercial development included asphalt paving that added approximately 3,576 square feet of new impervious surface area.

Because McClung’s proposed commercial building added impervious surface, the City imposed a GFC to defray the City’s cost of maintaining storm water drain facilities. The City collects the storm water GFC when it issues a development permit and Summer Ordinance No. 1603 authorizes this fee.

The City also advised McClung that the storm water pipe running through the proposed development was too small. Under the City’s Storm Water Comprehensive Plan, the City required McClung to upgrade and install a larger storm water pipe. The City offered to waive the storm water GFC, in addition to other mandatory charges, such as permit and inspection fees, if McClung built a larger storm water pipe. The City estimated the waived charges were approximately $8,000. McClung claimed that the GFC would have been $3,719 and that it cost over $50,000 to upgrade the storm water pipe.

McClung sued the City in April 1998. The complaint included Tapps Brewing, Inc. as a plaintiff; however, the trial court granted relief to Tapps Brewing and it is not a part of this appeal.

B. Procedural History

1. McClung’s Complaint and Summary Judgment Motion

McClung’s complaint challenged the legality of the City’s storm water GFC and the obligation the City imposed on McClung to upgrade the storm water pipe. One of the causes of action stated, `[t]he obligation imposed on the McClung’s to upgrade the storm drain in order to obtain a waiver of the storm water general facilities charge was illegal.’ Clerk’s Papers (CP) at 3. The complaint included facts about the GFC and asserted that the City’s upgrade obligation was based on the City’s `Storm Water Comprehensive Plan.’ CP at 2. The complaint alleged that, `[t]he full cost of upgrading the storm drain was imposed upon the McClungs even though their improvement would create only a minor amount of additional impervious surface area’ and that McClung `accepted the City’s offer and bore the cost of upgrading the drain in order to complete the construction.’ CP at 2-3. The complaint’s prayer for relief included a request that the City `be required to refund to the McClungs an amount commensurate with the storm water general facilities charge that was purportedly waived.’ CP at 3.

McClung filed a motion for summary judgment, alleging that the City’s storm water GFC and the upgrade obligation violated RCW 82.02.20. The summary judgment motion also asserted that the City’s actions violated federal constitutional taking principles under Dolan v. City of Tygard, 512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994). McClung’s counsel raised all of these arguments at the summary judgment hearing. With very little stated analysis, the trial court denied McClung’s summary judgment motion.

2. Discretionary Review, Tapps Brewing Decision, and Remand

McClung sought discretionary review, which our commissioner denied; however, the commissioner suggested that discretionary review might be granted if the parties submitted a stipulation under RAP 2.3(b)(4). Consequently, the parties filed the following stipulation, in relevant part:[2]

2. Was the requirement imposed on plaintiff McClung to upgrade the City’s storm water system an illegal charge on real estate development that is prohibited by RCW 82.02.020?

3. Are plaintiffs entitled to refunds and reimbursements of the illegal charges imposed by the City?

IT IS FURTHER STIPULATED AND AGREED that . . . Plaintiff McClung was provided a credit of $8500.00 against the GFC.

CP at 1040.

We granted discretionary review on the following issue: `Are the GFCs illegal charges on real estate development prohibited by RCW 82.02.020?’ Tapps Brewing, 106 Wn. App. at 81 (emphasis added). We upheld the trial court’s denial of McClung’s summary judgment motion and held that because RCW 35.67.020[3]
authorized the City’s storm water GFCs, RCW 82.02.020[4]
did not apply to this charge. 106 Wn. App. at 83, 85. Tapps Brewing also expressly declined to decide whether the City’s storm water GFCs were discriminatory as applied to McClung and remanded for further proceedings. Tapps Brewing, 106 Wn. App at 84-85.

3. Motion to Amend and Bench Trial

McClung filed a motion to amend the complaint 10 weeks before trial following remand.[5] The proposed amendments alleged that the storm water pipe upgrade obligation violated RCW 82.02.020, RCW 35.92.025,[6] and was an unconstitutional taking under the Washington and federal constitutions. The amended complaint also sought a refund of `the costs they incurred to upgrade the City’s storm water facilities’ and damages under 28 U.S.C. sec. 1983. CP at 775. The trial court denied McClung’s motion to amend because it was untimely. Neither the City nor the trial court specifically identified how McClung’s amended complaint prejudiced the City’s ability to prepare for trial.[7]

At the beginning of the bench trial, McClung sought to relitigate the legality of the City’s storm water GFC on the basis that Tapps Brewing was erroneous and the decision was based on a misunderstanding of material facts. McClung also challenged the legality and constitutionality of the storm water pipe upgrade obligation. But the trial court rejected these arguments and limited the issue at trial to whether the City’s storm water GFC was discriminatory as applied to McClung. The trial court’s final order stated, `[p]laintiffs’ complaint does not encompass any other theory of recovery for the improvement obligations imposed on the McClungs beyond the claim that the City’s stormwater GFC charge was illegal.’ CP at 802. The court also refused to consider whether Tapps Brewing was erroneous because it was bound by the appellate decision.

The trial court ultimately dismissed McClung’s lawsuit on the basis that the City’s storm water GFC complied with RCW 35.67.020
and was not discriminatory as applied to them.

4. Post-trial Motions

McClung petitioned the Washington Supreme Court for direct review.[8] The City moved on the merits to affirm; however, the commissioner denied the City’s motion, in part out of concern that the trial court erred in refusing to consider the portion of McClung’s complaint challenging the upgrade obligation’s legality. The Supreme Court then denied direct review and transferred the appeal for our evaluation.

ANALYSIS

I. Notice Pleading Requirements

McClung argues that the complaint adequately challenges the legality of the City’s upgrade obligation regarding the storm water pipe and asserts that the complaint and summary judgment motion together provided the City sufficient notice of the unconstitutional taking claim. The City responds that Tapps Brewing bars our review on all issues because of the law of the case doctrine and that McClung’s complaint failed to provide notice of a challenge to the upgrade obligation’s legality.

A. Standard of Review

Washington is a notice pleading state that allows us to liberally construe a party’s complaint. Dewey v. Tacoma Sch. Dist. 10, 95 Wn. App. 18, 23, 974 P.2d 847 (1999); see also CR 8(f) (`All pleadings shall be so construed as to do substantial justice’). The pleading’s purpose `is to facilitate proper decision on the merits, not to erect formal and burdensome impediments to the litigation process.’ State v. Adams, 107 Wn.2d 611, 620, 732 P.2d 149 (1987).

Civil Rule 8(a) generally governs pleading requirements and provides that a complaint `shall contain (1) a short and plain statement of the claim showing that the pleader is entitled to relief and (2) a demand for judgment for the relief to which he deems himself entitled.’ Accordingly, a sufficient pleading provides the opposing party fair notice of the other party’s claim and its legal basis. But `[a] complaint must at least identify the legal theories upon which the plaintiff is seeking recovery’ and `[a]lthough inexpert pleading is permitted, insufficient pleading is not.’ Dewey, 95 Wn. App. at 23, 25. In other words, `[e]ven our liberal rules of pleading require a complaint to contain direct allegations sufficient to give notice to the court and the opponent of the nature of the plaintiff’s claim.’ Berge v. Gorton, 88 Wn.2d 756, 762, 567 P.2d 187 (1977); see also Lobak Partitions v. Atlas Constr. Co., 50 Wn. App. 493, 498, 749 P.2d 716 (1988).

B. Alleged Illegality of Upgrade Obligation Regarding Storm Water Pipe

McClung’s complaint asserts a cause of action that states, `[t]he obligation imposed on the McClungs to upgrade the storm drain in order to obtain a waiver of the storm water general facilities charge was illegal.’ CP at 3 (emphasis added). The complaint describes facts supporting this assertion which include the fact that the City imposed the upgrade obligation `in order to meet the requirements of the Storm Water Comprehensive Plan,’ and `[t]he full cost of upgrading the storm drain was imposed upon the McClungs even though their improvement would create only a minor amount of additional impervious surface area.’ CP at 2. And McClung’s summary judgment motion reasserts the challenge to the upgrade obligation’s legality. See, e.g., CP at 12 (Under `RELIEF REQUESTED’ section, `[t]he requirement imposed on plaintiff McClung by the City to pay for substantial improvements to its stormwater utility system be ruled illegal.’).

Consequently, given liberal notice pleading requirements, McClung’s complaint has provided the City adequate notice of its challenge to the upgrade obligation’s legality. Thus, the trial court erred in refusing to consider this claim under state statutes and land use regulations.

The City emphasizes that the complaint’s prayer for relief states that McClung sought a refund `commensurate with the storm water [GFC].’ Br. of Respondent at 29 (quoting with emphasis McClung’s original complaint). The trial court accepted this argument in concluding that `[p]laintiff’s complaint does not encompass any other theory of recovery for the improvement obligations imposed on the McClungs beyond the claim that the City’s storm water GFC charge was illegal.’ CP at 802. But a complaint’s prayer for relief is not a dispositive or adequate reason to deny a complaint’s cause of action. CR 54(c); Allstot v. Edwards, 114 Wn. App. 625, 632, 60 P.3d 601 (2002), review denied, 149 Wn.2d 1028 (2003).

C. McClung’s Unconstitutional Taking Theory

McClung asserts that the complaint and summary judgment materials adequately encompass the theory that the City’s storm water pipe upgrade obligation was an unconstitutional taking under the Washington and federal constitutions. McClung’s original complaint does not expressly identify the federal constitution or Dolan, 512 U.S. 374. But McClung argues that if the complaint’s unconstitutional taking argument was unclear, the summary judgment motion and the subsequent hearing provided the City adequate notice of this constitutional claim. Adams, 107 Wn.2d at 620. We agree.

Although McClung’s summary judgment motion focused on whether the GFC and upgrade obligation violated RCW 82.02.020, it did briefly, and clearly, discuss unconstitutional taking issues and Dolan. Significantly, the unconstitutional taking arguments entail the same time period and very similar evidence and circumstances as the challenge to the City’s GFCs. Both the complaint and summary judgment motion clearly set forth the facts underlying the claims. And McClung’s counsel directly discussed the summary judgment’s unconstitutional taking arguments during the summary judgment hearing. In response, the City mischaracterized both the scope of McClung’s complaint and the summary judgment motion’s constitutional arguments.

Given the substance of the summary judgment motion and hearing, and that all of McClung’s claims are based on the same circumstances and very similar facts and evidence, McClung provided the City adequate notice of the constitutional claims.[9] The City consistently asserts that Tapps Brewing is the law of the case and precludes McClung’s challenge to the upgrade obligation’s legality. We disagree. Tapps Brewing expressly resolved the GFC’s legality and did not separately analyze the legality of the City’s storm water pipe upgrade obligation. See 106 Wn. App. at 81, 84 (`Are the GFCs illegal charges on real estate development prohibited by RCW 82.02.020?. . . . The parties stipulated to one issue: Whether the City’s GFC is an illegal charge under RCW 82.02.020.’).

Indeed, the parties do not challenge the trial court’s conclusions of law that the City’s GFC involves different legal authority than the City’s upgrade obligation to replace the storm water pipe. See CP at 801 (‘City of Sumner Ordinance 1603 imposes a stormwater GFC on real estate developments that add new impervious surface area.’); CP at 802 (‘The stormwater improvement obligations imposed on plaintiff McClung were not stormwater GFC charges imposed under Ordinance 1603.’) (emphasis added).

The City argues that the parties’ stipulation under RAP 2.3(b)(4) bars further consideration of the upgrade obligation’s legality. But the City mischaracterizes the nature of discretionary review and Tapps Brewing’s analysis.

The purpose of discretionary review under RAP 2.3(b)(4) is to narrow and advance the litigation in order to avoid a useless trial. See RAP 2.3(b)(4) (providing that `immediate review of the order may materially advance the ultimate termination of the litigation.’); Shannon v. State, 110 Wn. App. 366, 369, 40 P.3d 1200 (2002). The parties dispute whether their stipulation under RAP 2.3(b)(4) encompassed McClung’s entire challenge to the upgrade obligation’s legality; however, as previously discussed, Tapps Brewing limited review to one issue: the legality of the City’s GFC under RCW 82.02.020. 106 Wn. App. at 84-85. And regardless of Tapps Brewing’s interpretation of the parties’ RAP 2.3(b)(4) stipulation, McClung clearly sought a favorable ruling on the summary judgment motion, which could have reasonably avoided a future trial.

Consequently, in accord with RAP 2.3(b)(4), Tapps Brewing’s resolution of the GFC’s legality materially advanced the litigation between the parties. Further, Tapps Brewing’s narrow analysis does not preclude McClung’s additional claims that were not addressed in the decision. See Right-Price Recreation, L.L.C. v. Connells Prairie Cmty. Council, 105 Wn. App. 813, 820, 21 P.3d 1157 (2001) (‘a party who seeks discretionary review does not risk losing an issue not named in the notice.’); see also Alwood v. Aukeen Dist. Court, 94 Wn. App. 396, 400 n. 9, 973 P.2d 12
(1999) (discussing nature of interlocutory proceedings such as a summary judgment motion).

II. Motion to Amend

McClung argues that the trial court erred in denying the motion to amend the complaint. McClung’s amendment sought to expressly add constitutional taking and statutory claims relating to the storm water pipe upgrade obligation and requested a refund of the costs incurred to upgrade the pipe. As previously discussed, McClung’s original complaint and summary judgment motion and argument adequately notified the City of McClung’s claims that the upgrade obligation was illegal under state statutes and land use regulations and was an unconstitutional taking. But we review the proposed amendment concerning the constitutional challenge to the upgrade obligation because of the contentious history between the parties, and because the original complaint did not expressly identify the claimed constitutional defects.

A. Standard of Review

We review the trial court’s denial of a motion to amend for an abuse of discretion. Wilson v. Horsley, 137 Wn.2d 500, 505, 974 P.2d 316 (1999). Civil Rule 15 governs a motion to amend and provides that when the pleadings have closed, a party may amend his pleading `only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.’ This rule’s purpose is to `facilitate proper decisions on the merits’ and `provide parties with adequate notice of the basis for claims and defenses asserted against them[;]’ however, `[t]he touchtone for the denial of a motion to amend is the prejudice such an amendment would cause to the nonmoving party.’ Wilson, 137 Wn.2d at 505-06.

When evaluating whether a proposed amendment is prejudicial, the court may consider whether it is untimely or an unfair surprise to the opposing party. Wilson, 137 Wn.2d at 505. But a motion’s untimeliness alone, without more, is generally an improper reason to deny a motion to amend. Heron v. Tribune Publ’g Co., 108 Wn.2d 162, 166, 736 P.2d 249 (1987); Caruso v. Local Union No. 690 of Int’l Bhd. Of Teamsters, Chauffeurs, Warehousemen Helpers of Am., 100 Wn.2d 343, 349, 670 P.2d 240
(1983); Walla v. Johnson, 50 Wn. App. 879, 883, 751 P.2d 334
(1988).

When considering a motion to amend, trial courts usually allow amendments concerning facts similar to those in the original complaint. See Heron, 108 Wn.2d at 166 (‘Appellate decisions permitting amendments have emphasized that the moving parties in those cases were merely seeking to assert a new legal theory based upon the same circumstances set forth in the original pleading.’); Kirkham v. Smith, 106 Wn. App. 177, 181, 23 P.3d 10
(2001) (allowing amendment three weeks before trial because `the trial court recognized the similarity between the essential elements of the Smith’s FIPA claim and their already-existing misrepresentation claim and concluded that the amendment would not prejudice the [non-moving party]’). Generally, the party opposing the motion to amend cannot rely merely on conclusionary allegations of prejudice and the trial court must articulate reasons for its decision. Walla, 50 Wn. App. at 883.

B. McClung’s Amended Unconstitutional Taking Claim

McClung sought to amend the complaint 10 weeks before trial.[10] The trial court denied the motion on the sole basis that it was untimely. The City’s response stated that the amended complaint’s unconstitutional taking argument `changes the entire complexion of the case and would require the parties to essentially start all over again.’ CP at 849. But this conclusory allegation of prejudice does not satisfy the City’s burden to articulate or demonstrate how the amended complaint changed the facts or evidence or prejudiced its trial preparations. The City continues to assert that McClung’s motion to amend was untimely. But we typically find untimeliness dispositive only when the motion occurs on the eve of trial or after a final judgment. See, e.g. Wilson, 137 Wn.2d at 507. The City relies on Doyle v. Planned Parenthood of Seattle-King County, Inc., 31 Wn. App. 126, 131, 639 P.2d 240 (1982). But Doyle is easily distinguished. In Doyle, the plaintiff filed a motion to amend after the trial court dismissed the lawsuit on summary judgment. 31 Wn. App. at 131. Here, McClung’s motion was 10 weeks before trial and could not reasonably be construed as an unfair surprise to the City because the original complaint suggested, and the summary judgment response and argument clarified, McClung’s unconstitutional takings claim.

We hold that the trial court abused its discretion in denying McClung’s motion to amend the complaint to clarify the challenges to the constitutionality of the City’s storm water pipe upgrade obligation. The trial court failed to evaluate whether McClung’s amendments prejudiced the City. Instead, the trial court agreed with the City’s contention that the amended complaint was untimely because the motion to amend occurred after the lengthy discretionary review process.

Significantly, neither the City, nor the trial court, recognized that the interlocutory proceedings under RAP 2.3(b)(4) resolved only the legality of the GFC, not questions related to the City’s storm water pipe upgrade obligation. The trial court also failed to recognize that McClung’s arguments about the constitutionality of the storm water pipe upgrade obligation involved facts, expert testimony, and circumstances very similar to those involved in the further challenge to the City’s GFC. Thus, there was no evidence of prejudice to the City from the amendments when proposed by McClung and the amendment was not so untimely as to dictate denial on that basis alone.

III. Legality of the City’s Storm Water GFC

McClung argues that Tapps Brewing incorrectly evaluated the City’s storm water GFC. Tapps Brewing held that RCW 35.67.020
governs the City’s storm water GFC; McClung asserts that RCW 35.92.025 controls. 106 Wn. App. at 84. McClung also argues that in footnote one, Tapps Brewing mischaracterizes the GFC as applying to all impervious surfaces, not just new impervious surfaces only, and that this error is manifest enough to require the reversal of Tapps Brewing. 106 Wn. App. at 81 n. 1.

We agree with the trial court’s response to McClung’s argument at trial that Tapps Brewing made a mistake in footnote one: [W]hen they [Tapps Brewing panel] make this reference in Footnote 1, they are taking into account the very argument you’re making to me now, [the applicability of RCW 35.67.020 and RCW 35.92.025] finding that 35.67 is broader than you’re suggesting and ruling against you. They’re not overlooking or making a mistake with regard to your argument.

Report of Proceedings (June 12, 2002) at 58.[11]

Footnote one does refer to total imperious area, whereas the GFC is actually calculated only on new imperious surface area. Tapps Brewing, 106 Wn. App. at 81 n. 1. But this statement had no bearing on the legal issue in Tapps Brewing. It does not alter Tapps Brewing’s analysis of the GFC’s legality.

Tapps Brewing considered and rejected McClung’s assertion of RCW 35.67.020‘s inapplicability, holding that this statute provides the City broad authority to impose the storm water GFC:

Tapps and McClung argue that RCW 35.67.020 does not authorize the City to impose the GFC. They contend that the charge is not for the use of the system RCW 35.67.020 authorized. . . . Even though the GFCs at issue here are one-time charges, the City assesses and uses them to retire the debt it incurred in constructing the storm drainage system. Because RCW 35.67.020 gives the City broad authority to `construct . . . purchase, acquire, add to, maintain . . . and operate systems of sewerage,’ the authority to charge for its use must include charging for capital costs. We hold that RCW 35.67.020 authorizes the GFCs at issue here.

Tapps Brewing, 106 Wn. App. at 83-84 (emphasis added).

Consequently, the law of the case doctrine precludes our review of McClung’s challenge to the GFC’s legality because McClung has not demonstrated that Tapps Brewing is clearly erroneous or that applying this doctrine would create a manifest injustice. Folsom v. County of Spokane, 111 Wn.2d 256, 264, 759 P.2d 1196 (1988).

Although McClung’s argument regarding the GFC’s legality focuses on Tapps Brewing’s statutory analysis, the challenge briefly addresses the trial court’s finding that the GFC was not discriminatory. Contrary to RAP 10.3(a)(5), McClung does not cite any case law to support this argument; however, we briefly review the contention.

The City’s storm water GFC is calculated by the amount of square feet of new impervious service in a commercial development; however, the GFC has a cap of 48,000 square feet of new impervious surface. McClung argues that the GFC cap is discriminatory because small commercial developers end up paying more than commercial developers with more than 48,000 square feet of new impervious surface. But the trial court found that the storm water’s GFC cap `was not discriminatory because it applied equally to everyone.’ CP at 802. McClung does not persuasively argue how the trial court’s finding is erroneous or how the GFC cap is discriminatory.

We briefly summarize our holding given the complex nature of this dispute and its lengthy procedural history.

First, remand is limited to the legality of the City’s storm water pipe upgrade obligation and any remedies requested under those claims. For the reasons previously discussed, this includes whether the upgrade obligation was an unconstitutional taking under the Washington or federal constitutions or whether it violates relevant state statutes and land use regulations, such as RCW 82.02.020 and the Sumner Stormwater Comprehensive Plan.

Second, Tapps Brewing is the law of the case regarding the GFC’s legality under RCW 35.67.020. Thus, McClung cannot reassert a challenge to the City’s ability to impose a GFC on the commercial development plans.

Third, we do not determine the upgrade obligation’s legality because this claim is not properly before us. Although the evidence of the upgrade obligation’s legality and the GFC are very similar, the trial court expressly held that it only considered the evidence in the context of the City’s GFC. And the City did not consent under CR 15(b) to evidence admitted at trial that contested the legality of the upgrade obligation. Given these circumstances, it is inappropriate for us to make factual findings. For similar reasons, we also do not review McClung’s claim to entitlement to attorney fees under 42 U.S.C. sec. 1988
because the trial court did not consider McClung’s constitutional arguments and, thus, there was no prevailing party.

Finally, we identify the portions of the proposed amended complaint to be approved on remand: (1) Jurisdiction (adding 28 U.S.C. sec. 1983); (2) Cause of Action number six;[12] (3) Request for Relief, numbers two,[13] four,[14] and five.[15]

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 pursuant to RCW 2.06.040, it is so ordered.

We concur: Armstrong, P.J. and Hunt, J.