RECEIVED AUG 2 9 ~ 0 0 3 COURT OF APPEALS, DIVISION III CAU SE NUMB ER 21114-2-11 1 STATE OF WASHINGTON, Petitioner, v. ELROY COSnCH; ELROY COSTICH as trustee under the COSTICH LIVING TRUST, Respondents, SPOKANE COUNTY, Defendant. PETITION FOR REVIEW RECEIVED SEP 0 2 2001 ; \7 T ORNEY GENERAL'S OFFH,::E .' ,.!'JSPORTATIOI'J ,8, PU i 3UC COf\JSTRUCTION D!ViSION CHRISTINE O. GREGOIRE Attorney General JOHN F. SALMON III Assist ant Attorney General WSBA No. 20812 Transportation & Public Construction Post Office Box 40113 Olympia , Washington 98504-0113 (360) 753-1622
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A. Does the Court ofAppeals' decision requiring the publicto pay a property owner's attorney and expert witnessfees where the jury verdict is $30,000 tess than theDOT's highest written offer in settlement conflict withthis Court's decision in State v. Swarva? . . . . . . . . . . . . . . 2
B. Does the Court ofAppeals decision invalidating theDOT's offer improperly make adjustment for fees andcosts in conflict with the Court ofAppeals, Division 1'sholding in SeaTac v. Cassan? ..................... 2
C. Does the Court ofAppeals' decision, which prohibitscondemnors from considering factors other than theiropinion of the fair market value of the owner's propertyin making settlement offers, thereby hindering efforts tosettle condemnation lawsuits, raise issues of substantialpublic interest? ......................... . . . . . 2
ST ATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . 3
ARGUMENT FOR ACCEPTANCE OF REVIEW . . . . . . . . . . 5
A. The Court OfAppeals' Decision Ignores The PlainLanguage OfRCW 8.25.070 And Conflicts With ThisCourt's Decision In State v. Swarva. ...... . . . . . . . . . . 5
B. The Court OfAppeals' Decision Conflicts With TheDivision One Holding In SeaTac v. Cassano .......... 10
C. Because It Hinders Efforts To Settle CondemnationLawsuits, The Court OfAppeals' Decision Raises Issues
Of Substantial Public Importance..................
12
D. The Court ofAppeals' Advisory Decision RequiringCondemnors To Leave Settlement Offers Open ForThirty Days Before Trial Raises Issues Of SubstantialPublic Importance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
verdict was, yet had to pay fees essentially because it offered
more to settle the case than its eventual trial evidence of fair
market value. This result is contrary to both the plain meaning
of the statute and the underlying policy. It also negatively
impacts the ability of all public agencies to settle condemnation
cases.
The Court of Appeals' decision should be reversed
becauseit:
(1) improperly relies on RCW 8.26 to create newrights in condemnation actions contrary to this Court's holding
in State v. Swarva, 86 Wn.2d 29 (1975); (2) contradicts
Division I's holding in SeaTac v. Cassan, 93 Wn. App. 357
(1998); and (3) frustrates the Legislature's goal of encouraging
settlement in condemnation cases. The DOT respectfully
contends that the dissenting opinion is correctly reasoned and
should be followed by this Court.
IV. ISSUES PRESENTED FOR REVIEW
A. Does the Court of Appeals' decision requiring thepublic to pav a propertv owner's attorney and expertwitness fees \vhere the jury verdict is $30,000 less thanthe DOT's highest written offer in settlement conflictwith this Court's decision in State v. Swarva?
B. Does the Court of A p ~ e a l s decision invalidating theDOT's offer improperly make alijustment for feesand costs in conflict with the Court of Appeals,Division I's holding in SeaTac v. Cassall?
C. Does the Court of A p ~ e a l s ' decision, which prohibitscondemnors from considering factors other than their
opinion of the fair market value of the owner'sproperty in making settlement offers, therebvhindering efforts to settle condemnation lawsuits,
raise issues of substantial public interest?
D. Does the Court of Appeals' advisory decisionreguiring condemnors to leave settlement offers ineffect for thirty days before trial raise issues ofsubstant ial publIc importance?
V. STATEMENT OF THE CASE
This IS a condemnation action brought to acqUlre
property needed for the construction of the North Spokane
Corridor Highway Project on State Route 395. The DOT
brought this condemnation action to acquire approximately two
and one-half acres of property located in Spokane County. In
preparation for the valuation trial, both the DOT and the
Costiches retained expert witnesses to appraise the value of the
property. The DOT's expert witness valued the property at
$191,200. The Costiches' expert witness valued the property at
$382,000. The parties exchanged these appraisal conclusions in
November 2001 pursuant to RCW 8.25.120.2
Thirty-three days before the date set for trial, the DOT
sent a written offer to settle the case for $282,500 pursuant to
2 The Court of Appeals' decision incorrectly states that the DOTdid not disclose its opinion of fair market value. The record shows that
this opinion was disclosed in November 2001. CP 193 (11-29-01 entry).The Court of Appeals also incorrectly identifies the date of the appraisal
done by the DOT's expert witness, Bruce Jolicoeur, as August 21, 2001.Costich Opinion at 3 and 9. In fact, Mr. Jolicoeur only visited theproperty in August. His appraisal was not completed until November2001 and then revised in December. CP at 34-35, 194 (12-17-01 entry).
Appeals mistakenly found that guidelines for agency
acquisitionof
real property found in RCW 8.26.180 Imposeduties on condemning agencies even after the cases have
entered into adversarial condemnation proceedings. The Court
of Appeals stated:
The State must make every effort to aCRuire thep'roperty through negotiation. RCW 8.20.180(1)Every effort' mcludes informing the condemneeof the State's fair market value determination.RCW 8.26.180(3). Before negotiations begin, the
State must have the property appraised and fix anamount which it believes represents 'justcompensation' for the 'Rroperty. The State mustthen 'make a prompt offer to acquire the propertyfor the full amount so established. In no eventshall such amount be less than the agency's~ p p r o v e d appraisal of the fair market value.'RCW 8.26. I 80(2), (3). We read these provisionsas requiring the State in this case to offer Mr.Costicn $191,200 in just compensation when itreceived this appraisal m August 2001.
Costich Opinion at 9.
By its own terms, RCW 8.26.180 relates only to pre
acquisition activity by the acquiring agency. See RCW
8.26.180(2) ("Real property shall be appraised before the
initiation of negotiations;") RCW 8.26.180(3) ("Before the
initiation of negotiations for real property, the acquiring agency
shall establish an amount which it believes to be just
compensation therefore ....") The DOT met these requirements
prior to the initiation of this condemnation action. CP 26-30.
RCW 8.26.180 does not create a duty for the DOT to
immediately transmit new settlement offers when it receives
new condemnation appraisals during pre-trial preparation in thecondenmation litigation. In relying on RCW 8.26.180 as the
basis of its holding, the Court of Appeals ignored RCW
8.26.205, which provides:
The provisions of RCW 8.26.180, 8.26.190 and8.26.200 create no rights or liabilities and do notaffect the validity of any property acquisitions bypurchase or condemnation.
(Emphasis added.)
The Court ofAppeals also ignored this Court's holding in
State v. Swarva. In that case, this Court confirmed that the
plain language of RCW 8.26.180 means what it says.
We note initially that RCW 8.26.180 is a guidelinestatute only, and its terms do not declare rights.
Swarva, 86 Wn.2d at 33.
In Swarva, this Court held that the guidelines found in
RCW 8.26.180 do not affect subsequent condemnation
litigation. Swarva at 33. The Swarva court held that the State
was not prohibited from making a settlement offer for more
than its trial testimony concerning just compensation. "Such
practice is one purpose of settlement-to avoid litigation and its
resulting cost and delay." Swarva at 33. The Court of Appeals'
holding that the State in this case was limited to offering no
more than its opinion of just compensation is therefore in direct
conflict with the Swarva decision and should be reversed.
In addition, the Court of Appeals' holding on this issue
makes RCW 8.25.120 superfluous. RCW 8.25.120 provides the
mechanism for the reciprocal exchange of appraisal
information. It provides:
After the commencement of a condemnation
action, upon motion of either the condemnor orcondemnee, the court may order, upon such termsand conditions as are fair and equitable theproduction and exchange of the writtenconclusions of all the appraIsers of the Rarties as tojust compensation owed to the conaemnee, asprepared for the purpose of the condemnationactIOn, and the comparable sales, if any, used bysuch aRpraisers. The court shall enter such orderonly after assurance that there will be m u t u a l ~ recIprocal and contemporaneous disclosures ofsimIlar information between the parties.
By holding that condemnors have a duty to immediately
disclose their appraisal information under RCW 8.26.180, the
Court of Appeals makes RCW 8.25.120 superfluous. A
unilateral duty on the part of the DOT to disclose its appraisal is
contrary to the requirement that there be an exchange of
information and that the exchange be "mutual, reciprocal, and
it says and not "in effect for thirty days" or "in effect for the
thirty days" before trial as the Costiches have argued.
The Court of Appeals in this case offered an advisory
opinion without conducting any analysis of the Issue. The
Court of Appeals' opinion in this case states:
We need not, therefore, address the State'scontention that an offer is "in effect thirty daysbefore the trial" if it is operative, howeverfleetingly, on the 30th day before trial. We
nevertheless mention in passing-purely asdictum-that, as we read this statute, the State isrequired to keep its offer in effect for a full 30days.s
Costich Opinion at 6. If the Court of Appeals wished to decide
that issue, it should have done so directly. If it wished to pass
on the issue, it should not have included gratuitou's remarks.
These unsupported conc1usory remarks are poor jurisprudence
and unfairly prejudice all condemning authorities in future
5 The Court of Appeals' assertion that the DOT contended that a
settlement offer satisfies RCW 8.25.070 "if it is operative, however
fleetingly, on the 30th day before trial" repeats and erroneously attributes
to the DOT the Costiches' mischaracterization of the DOT's argument. Itwas never the DOT's argument that its offer could be "fleeting." In fact,
the DOT argued that any offer must be open for a reasonable amount of
time, and that fifteen days in this case (eight days plus a seven day
extension) was a reasonable amount of time for the offer to be open.
Trial was set for March 4, 2002 on the only unresolved question-the amount of
just compensation to be paid for the property. Meanwhile, on August 21. 2001) the State
received a second appraisal of$191 ,200. Although this was the just compensation value
the State planned to offer at trial. the offer was not passed along to !vir. Costich.
On January 30, 2002-34 days before trial-the State made 'a written settlement
offer of$282,500. The State described this offer as~ ' a l l · i n c l u s i v e , · ~
and told Mr. Costich
1
that the offer would expire on February 8.
!vir. Costich responded by asking what portion of the offer represented the State's
fair market value offer for the land and what part of the remainder represented interest,
attorney fees, and so forth. The State responded that "our offer is the written settlement
offer referred to iD. RCW 8.25.070.,,2 C l e r k ~ s Papers (CP) at 78. The State persisted in
its refusal to identifY how much, if any, of the offer was for amounts extraneous to the
fair market value offer for the land. In response to every inquiry, the State simply
reiterated that the offer was a "global settlement": U[i]n formulating this offer in
settlement we did not itemize the categories . . . this offer is all-inclusive." CP at 79-80.
"'All-inclusive means that the offer settles all claims in this condemnation action." CP at
t Phillip Costichdied shortly before the State made this offer. His brother, ElroyCostich, was substituted as the condemnee.
2 RCW 8.25.070(1)(a) and (b) provide that the condemnee is entitled to expertwitness fees and attorney fees if either the condemnor fails to make an offer at least 30days prior to trial or the jury award exceeds the offered amount by 10 percent or more.
_ 0 8 / 2 9 / ~ F : R I 12;17 FAX 360 586 6847AGO - TPC
No. 21114-2-III. 21243-2-InState v. Costich
Costich for $365,669.20. This included $88,157.75 for attorney fees; $12.582.35 for
expert witness fees; $1,214.52 for costs; and $11.714.58 in prejudgment interest:
The State filed a timely notice of appeal. A month later, the State returned to the
superior court and filed a belated motion for an order of appropriation, vesting title to the
property in the State upon its payment into court of $252,OOO-the amount ofjust
compensation sans costs and fees. Mr. Costich challenged the superior court's
jurisdiction after the State had filed an appeal, and argued that title could vest only upon
payment of the total judgment. The superior court ruled against Mr. Costich and entered
an order ,of appropriation vesting title in the State upon payment of $252,000 (the jury's
just compensation award).
Before this court are two appeals. The State appeals the order invalidating its
January 30 uall-inclusive offer" and the award of attorney fees. Mr. Costich appeals the
entry of the order of appropriation vesting title in the State on payment of less than the
full judgment amount.
DISCUSSION
THE STATE'S APPEAL
RCW 8.25.070(1) provides in part:
[l]f a trial is held for the fixing of the amount of compensation . . . , thecourt shall award . . . reasonable attorney's fees and reasonable expertwitness fees in the event ofany o f the following:
(a) lfthe condemnor fails to make any written offer in settlement tocondemnee at least thirty days prior to commencement of said trial; or
No. 21114-2-llI, 2 1 2 4 3 ~ 2 · m State v. Costich
(b) If the judgment awarded as a result of the trial exceeds by tenpercent or more the highest written offer in settlement submitted to thosecondemnees appearing in the action by condemnor in effect thirty daysbefore the trial.
(Emphasis added.)
We are asked to review the trial court's interpretation of the statutory term
"highest written offer in settlement:· Our review is, therefore, de novo. State ex reI.
Wash. State Convention & Trade err. v. Allerdice, 101 Wn. App. 25, 28, 1 P.3d 595
(2000). Our determination is dispositive on the issue of attorney fees. We need not,
therefore, address the State's contention that an offer is "in effect thirty days before the
trial" ifit is operative, however fleetingly, on the 30th day before trial. We nevertheless. ~ .
mention in passing-purely as dictum-that, as we read this statute. the State is required
to keep its offer in effect for a full 30 days.
Highest Written Offer in Settlement
The State contends that its " a l 1 - i n c 1 u s i v e ~ 7 offer of $282,500 was a valid offer in
settlement fot' the purposes ofRCW 8.25.070(1)(b). 1vfr. Costich responds that, under the
State's interpretation of the statute, thejury award and the pretrial offer are like apples
and oranges, impossible to compare in deciding whether the award beat the offer by 10
percent. This is because the jury award includes only the just compensation amount, with
no fees or other judgment costs. City o/SeaTac v. Cassan,93 Wn. App. 357,362.967
P.2d 1274 (1998). Costs and fees are added later by the court if certain statutory
Forthright Offer Required. The State insists that an unambiguous offer ofjust
compensation is optional. The State is mistaken. The statute provides:
The acquiring agency shall provide the owner ofreal property to be
acquired with a written statement of, and sununary of the basis for, theamount it established as just compensation. Where appropriate the just
compensation for the real property acquired, for damages to remaining realproperty. and for benefits to remaining real property shaH be separatelystated.
RCW 8.26.180(3) (emphasis added).
The State's reliance on State v. Swarva is misplaced. State v. Swarva, 86 Wn.2d
29, 541 P .2d 982 (1975). At issue in Swarva was whether an order of immediate
possession binds the State to pay the amount offered at that time, even if the jury award is
less. Id. at 30. Swarva merely holds that the State can offer more than its lowest
appraisal of the fair market valuein
the interests of avoiding trial. Swarva cannot be read
to say that the State need not disclose what its determination of the fair market value is.
ld. at 34.
We therefore agree with the trial judge. He correctly concluded that the State's
highest written offer for the purposes ofRCW 8.25.070 was the $134,000 offered to
secure the order of immediate possession and usc. The January 30 so-called "all
inclusive" offer did not establish the State's determination ofjust compensation. RCW
8.26.180(3). The only offer on the table was, then, th7 $134,000 preliminary offer made
08/29/03 PRI 12:21 FAX 360 586 6847 AGO - TPC flIChapter 8.25.070 RCW - The Washington State Legislature Page
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RQW T l I l , E : . ~ » I!I!.._E._e » Q H ~ E I E B J t , 4 , ~ » SECTION 6.25.070
f 3 , 2 ~ . Q ~ Q . « 8.25.070 » . e . : . ~ 5 . 0 , Z . ~
~ c 8.25.070Award of attorney's fees and witness fees to condemnee •• Conditions to award.
(1) Except as othelWise provided in subsection (3) of this section, if a trial is held forthe fixing of the amount of compensation to be awarded to the owner or partyhaving an interest in the property being condemned. the court shall award the
condemnee reasonable attorney's fees and reasonable expert witness fees in theevent of any of the following: "
(a) If condemnor fails to make any written offer in settlement to condemnee at least thirty days prior to commencement of said trial; or
'b) If the judgment awarded as a result of the trial exceeds by ten percent or
the highest written offer in settlement submitted to those condemnees""-1earing in the action by condemnor in effect thirty days before the trial.
(2) The attorney general or other attorney representing a condemnor in effectinga settlement of an eminent domain proceeding may allow to the condemnee
reasonable attorney fees.
(3) Reasonable attorney fees and reasonable exp'ert witness fees authorized bythis section shall be awarded only if the condemnee stipulates, if requested to do soin writing by the condemnor, to an order of immediate possession and use of the
property being condemned within thirty days after receipt of the written request, orwithin fifteen days after the entry of an order adjudicating public use whichever islater and thereafter delivers possession of the property to the condemnor upon thedeposit in court of a warrant sufficient to pay the amount offered as provided by law.In the event, however, the condemnor does not request the condemnee to stipulateto an order of immediate possession and use prior to trial, the condemnee shall be
entitled to an award of reasonable attorney fees and reasonable expert witness
fees as authorized by subsections (1) and (2) of this section.
(4) Reasonable attorney fees as authorized in this section shall not exceed thegeneral trial rate, per day customarily charged for general trial work by thecondemnee's attorney for actual trial time and his or her hourly rate for preparation.Reasonable expert witness fees as authorized in this section shall not exceed the("' . -+omary rates obtaining in the county by the hour for investigation and research
ly the day or half day for trial a t t endance . ' "
Chapter 8.25.070 RCW - The Washington State Legislature
(5) In no event may any offer in settlement be referred to or used during the trialfor any purpose in determining the amount of compensation to be paid for the-"operty.
c 129 § 1; 1971 ex.S. c 39 § 3; 1967 ex.s. c 137 § 3.]
06 ) 29 ) OJ FRJ. 12; 22 I 'AA 566 586 BU' x a - TPC ~ Chapter 8.25.120 RCW - The Washington State Legislature . Page
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.KG.Y\I : r I T ~ J ; § » T I T . ~ ~ . . a » . ~ t . 1 S P . T . e R 8 2.2 >.> SECTION 8.25.120
e , . ~ 9 . , O r § .. « 8.25.120 » 8 . 2 . ~ . . ! ~ O O
RCW 8.25.120Conclusions of appraisers - Order fo r production and exchange betweenparties.After the commencement of a condemnation action, upon motion of either thecondemnor or condemnee, the court may order. upon such terms and conditions asare fair and equitable the production and exchange of the written conclusions of allthe appraisers of the parties as to just compensation owed to the condemnee, asprepared for the purpose of the condemnation action, and the comparable ~ a l e s , ifany, used by such appraisers. The court shall enter such order onty after assurancethat there will be mutual. reciprocal and contemporaneous disclosures of similarinformation between the parties.
.W i we 11<1 14 .... l i iX 360 560 6641 AGO - c ~ Chapter 8.26.180 RCW - The Washington State Legislature page
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RC,W..JITbJ;S » I J . T b . t ; . ~ » C H A e I . f . ; B . . ~ ~ ~ . e . » SECTION 8.26.180
8.26.. tt§. « 8.26.180 » §...~ . ~ . 1 . $ O
RCW 8.26.180Acquisition procedures. Every acquiring agency shall, to the greatest extent practicable, be guided by the following policies:
(1) Every reasonable effort shall be made to acquire expeditiously real property by negotiation.
(2) Real property shall be appraised before the initiation of negotiations, and the
owner or his designated representative shall be given an opportunity to accompany at least one appraiser of the acquiring agency during his inspection of the property, except that the lead agency may prescribe a procedure to waive the appraisal in cases involving the acquisition of property with a low fair market value
.,3) Before the Initiation of negotiations for real property. the acquiring agency~ I establish an amount which it believes to be just compensation therefor, andshall make a prompt offer to acquire the property for the full amount so established.In no event shall such amount be less than the agency's approved appraisal of thefair market value of such property; Any decrease or increase in the fair market
value of the real property to be acquired prior to the date of valuation caused by thepublic improvement for which such property is acquired, or by the likelihood that the
property would be acquired for such improvement, other than that due to physicaldeterioration within the reasonable control of the owner, will be disregarded indetermining the compensation for the property. The acquiring agency shall providethe owner of real property to be acquired with a written statement of. and summaryof the basis for, the amount it established as just compensation. Where appropriatethe just compensation for the real property acquired, for damages to remaining realproperty, and for benefits to remaining real property shall be separately s t a ~ ~ d .
(4) No owner shall be required to surrender possession of real property before the agreed purchase price is paid or deposited with a court having jurisdiction of
condemnation of such property. in accordance with applicable law, for the benefit of the owner an amount not less than the acquiring agency's approved appraisal of the fair market value of such property, or the amount of the award of compensation in the condemnation proceeding of such property. _ .
(5) The construction or development of a public improvement shall be sp . ,. . ~ d u l e d that, to the greatest extent practicable, no person lawfully occupying real
property shall be required to move from a dwelling or to move his business or farmoperation without at least ninety days wrrtten notice of the date by which such move. 'qulred.
If an owner or tenant is permitted to occupy the real property acquired onrental basis for a short term or for a period subject to termination on short notice,the amount of rent required shall not exceed the fair rental value of the property to ashort-term occupier.
(7) In no event shall the time of condemnation be advanced, on negotiations or
condemnation and the deposit of funds in court for the use of the owner be deferred, or any other coercive action be taken to compel an agreement on the price to be paid for the property. .
(8) If an interest in real property is to be acquired by exercise of the power of eminent domain, formal condemnation proceedings shall be instituted. The acquiring agency shall not intentionally make it necessary for an owner to institute legal proceedings to prove the fact of the taking of his real property.
(9) If the acquisition of only a portion of a property would leave the owner with anuneconomic remnant, the head of the agency concerned shall offer to acquire thatremnant. For the purposes of this chapter, an uneconomic remnant is a parcel ofreal property in which the owner is left with an interest after the partial acquisition of
the owner's property and that the head of the agency concerned has determinedhas little or no value or utility.
0) A person whose real property is being acquired in accordance with this"-rpter may. after the person has been fully informed of his right to receive justcompensation for the property, donate the property. any part thereof. any interesttherein, or any compensation paid for it to any agency as the person may
determine.[1988 c 90 § 12; 1971 ex.s. c 240 § 18.]
NOTES:
Section captions -1988 c 90: See note following RCW ~ . ~ 9 - , - Q 1 0 .
RCW 8.26.205Effect on certain property acquisitions.The provisions of RCW e . . , - ~ _ § ! .. 80.. 6.2§...J.. ~ 0 , and .8.._ 2 § , ~ O Q create no rights orliabilities and do not affect the validity of any property acquisitions by purchase orcondemnation.
{19B8 e 90 § 15.]
NOTES:
Section captions --1988 c 90: See note following RCW 8.26,010.