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HomeMy WebLinkAbout031218_ca01Consent Agenda JEFFERSON COUNTY BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST TO: Board of Commissioners Philip Morley, County Administrator FROM: Philip C. Hunsucker, Chief Civil Deputy Prosecuting Attorney DATE: March 12, 2018 RE: BDN Tolling Agreement STATEMENT OF ISSUE: On April 28, 2017, the Director of the Department of Community Development (DCD) issued a code interpretation that a Shoreline Master Program (SMP) permit was required for new geoduck aquaculture started after the effective date of the SMP on February 21, 2014. BDN sent Joint Aquatic Resources Permit Applications (JARPA) to the County in 2013. BDN appealed the code interpretation to the Hearing Examiner. The Hearing Examiner upheld the code interpretation in December 2017. BDN filed a Land Use Petition Act (LUPA) claim in Superior Court in January 2018. BDN also filed a tort claim against the County in January 2018. BDN plans to apply for conditional use permits which potentially could eliminate the need for litigation, but also wishes to preserve their appeal rights. Accordingly, BDN and the County have agreed in principal to a stay of the LUPA appeal and a tolling of the BDN tort claims. ANALYSIS: The Board of County Commissioners (BoCC) is the contracting authority in Jefferson County. A tolling agreement must be approved by the BoCC. A stipulation for an order staying the LUPA appeal can be entered into by the Prosecuting Attorney's Office (PAO). To potentially avoid further litigation, the PAO recommends that the County enter into a stipulation to stay the LUPA appeal and a tolling agreement to toll BDN's tort claims. FISCAL IMPACT: Entering into the tolling agreement potentially could eliminate the need and costs of litigation. Consent Agenda RECOMMENDATION: Approve and sign the tolling agreement. DEPARTMENT CONTACT: Philip C. Hunsucker, Chief Civil Deputy Prosecuting Attorney at Extension 219 REVIEWED BY: fF hilip Mor eV. ounty A ministr r Date TOLLING AGREEMENT This Tolling Agreement (the "Agreement") is entered into as of the 281h day of February, 2018, by and between BDN, LLC, a Washington Limited Liability Company ("BDN"), and Jefferson County, a Washington Municipal Corporation ("the County"), on the other hand. BDN and Jefferson are collectively the "Parties" and individually a "Party." WHEREAS, beginning on or about April 21, 2017, and continually thereafter, BDN claims that it has been damaged by the acts or omissions of the County, acting through its Department of Community Development, as more fully detailed in the Washington State Tort Claims Form ("the Claim") that was served on the County on January 10, 2018, and which is attached hereto as Exhibit A, and incorporated herein by this reference, and WHEREAS, the County denies the claims and allegations of BDN as set forth in the Claim, and WHEREAS, BDN desires to apply for County conditional use permits which potentially could eliminate or obviate the losses and damages claimed by BDN in the Claim, and WHEREAS, the Parties are hopeful that a resolution of the disputes between the Parties can be resolved through the process of applying for such conditional use permits, instead of through the initiation of litigation by BDN based on the Claim, and WHEREAS, the initiation of litigation by BDN based on the assertions contained in the Claim is subject to various Statutes of Limitation, and other time -based bars and defenses under applicable state and federal laws and regulations, and WHEREAS, the Parties intend to toll the running of such time -based bars and defenses during the period from the effective date of this Agreement through it termination as provided below, NOW, THEREFORE, in consideration of the promises and representations contained herein, the sufficiency of which are hereby acknowledged, the Parties agree as follows: 1. The period between the date of this Agreement and the effective date of termination of this Agreement as provided below (the "Tolling Period") shall not be included in determining the applicability of any time -based bars including, but not limited to statutes of limitations and statutes of repose, in any action or proceeding arising from or related to the Claim. Any statute of limitations, statute of repose, or other time -based bar for bringing such action or proceeding shall be tolled entirely during the Tolling Period. 2. This Agreement may be terminated by either party effective upon seven days written notice to the other party. Such written notice shall be given by Certified Mail, return receipt requested, addressed to the Parties as follows: TOLLING AGREEMENT - To BDN: BDN, LLC c/o Kenneth A. Sheppard 999 Third Ave., Suite 2525 Seattle, WA 98104 To Jefferson County: c/o Jefferson County Prosecuting Attorney 1820 Jefferson Street/P.O. Box 1220 Port Townsend, WA 98368 3. Nothing in this Agreement shall be treated as an admission by any Party of any liability, or an admission as to the date on which a statute of limitations or statute of repose for any alleged cause of action related to the Claim begins and ends in the absence of tolling. 4. Nothing in this Agreement shall waive the rights of the Parties or affect any defense available to any Party as of the date of this Agreement or after the termination of the Tolling Period, including without limitation, statutes of limitation or repose, jurisdictional statutes of limitation, or contractual periods of limitation or repose, that accrued and/or expired prior to the execution of this Agreement or that accrued and/or expired after the termination of the Tolling Period. Without limiting the generality of the foregoing, the Parties understand that it shall not be a violation of this Agreement if a Party files suit relating to the Claims during the Tolling Period. 5. This Agreement is to be construed, interpreted, and enforced in accordance with the laws of the State of Washington, and the courts of the State of Washington shall have exclusive jurisdiction to resolve any and all disputes relating to this Agreement, including, but not limited to its interpretation and enforcement. 6. This document constitutes the entire agreement between the Parties regarding any tolling of any period of limitations or repose and supersedes all prior communications, understandings, and/or agreements, oral or written, if any, regarding the same subject matter. This Agreement may not be modified, altered or changed in any way except in writing signed by the duly authorized representatives of the Parties to this Agreement. 7. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement. Signatures by facsimile or sent by email shall have the same force and effect as original signatures. 8. Each of the persons signing this Agreement on behalf of the Parties hereto represents and warrants that he or she is duly authorized to execute this Agreement and to bind the Parties to the terms hereof. (SIGNATURES FOLLOW ON NEXT PAGE) IN WITNESS WHEREOF, the Parties hereto have executed this Agreement the date TOLLING AGREEMENT - 2 indicated above. JEFFERSON COUNTY WASHINGTON Board of County Commissioners Jefferson County, Washington David Sullivan, Chair Date SEAL: ATTEST: Carolyn Galloway Date Deputy Clerk of the Board Approved as to form only: �?/- -r/7//67 Philip C. Hunsucker 'Da(e Chief Civil Deputy Prosecuting Attorney TOLLING AGREEMENT - 3 BDN, LLC By:�`-- Bradley D. Nelson, Date Member and Manager law, oil Divim C--oi-N P631!itiq V, WASHINGTON STATE TORT CLAIMS FORM RCW 4.96.020 1. Claimant's name: BDN, LLC, a Washington Limited Liability Company 2 Inmate DOC number (if applicable): N/A 3. Current residential address: 3011 Chandler Street, Tacoma, WA, 98409 4. Mailing address (if different): Same 5. Residential address at the time of the incident: Same (if different from current address) JAN 10 2018 6. Claimant's daytime telephone number.- N/A 253-377-3353 Home Business or Cell 7. Claimant's e-mail address: Brad (cDsea prod ucks.com 8. Date of the incident: See 9. Below. Time: ❑ a. m. ❑ p.m. (check one) (mm/dd/yyyy) 9. If the incident occurred over a period of time, date of first and last occurrences: from April 21, 2017 Time: ❑ a. m. ❑ p.m. (mm/dd/yyyy) (mm/dd/yyyy) to Present Time: ❑ a. m. ❑ p.m. (mm/dd/yyyy) (mm/dd/yyyy) 10. Location of incident: Real property located in Jefferson County and comprised of tax parcel numbers 721031007 ("the Smersh parcel"), 821334074, 821334075 and 821334076 ("the Garten parcels") and 821334078 ("the Tiemsland parcels") (collectively referred to herein as the "Property") 11. If the incident occurred on a street or highway: N/A Name of street or highway Milepost number At the intersection with or nearest intersecting street 12. State agency or department you believe is responsible for damage/injury: Jefferson Countv Department of Communitv Development ("DCD") 13. Names and telephone numbers of all persons involved in or witness to this incident David Greetham, DCD Planning Manager — 360 379-4450 Patty Charnas, DCD Director - 360 379-4450 TORT CLAIMS FORM (RCW 4.96.020) 14. Names and telephone numbers of all state employees having knowledge about this incident: See 13 above 15. Names and telephone numbers of all individuals not already identified in #13 and #14 above that have knowledge regarding the liability issues involved in this incident, or knowledge of the Claimant's resulting damages. Please include a brief description as to the nature and extent of each person's knowledge. Attach additional sheets if necessary. Bradley D. Nelson - 253-377-3353 16. Describe how the state of Washington caused your injuries or damages (if your injuries or damages were not caused by the State, do not use this form. You must file your claim against the correct entity). Explain the extent of property loss or medical, physical or mental injuries. Attach additional sheets if necessary. Damages were caused by Jefferson County, Department of Community Development, as follows: A. Negligent Misrepresentation The County's negligent misrepresentation concerning BDN's need to obtain a conditional use permit has caused significant damages to BDN. To establish a claim for negligent misrepresentation, BDN must "show that [the County] negligently supplied false information [it] knew, or should have known, would guide [BDN] in making a business decision, and that [BDN] justifiably relied on the false information." Van Dinter v. Orr, 157 Wn.2d 329, 333 (2006). In responding to specific inquiries from permit applicants, the County is aware that the applicant will proceed in reliance upon the County's determination and "has a common law duty to exercise reasonable care to avoid foreseeable risks of harm under such circumstances." J&B Develop. Co., Inc. v. King County, 29 Wn.App. 942, 952 (1981)(finding county negligent for error in issuing building permit). Where the County is negligent in this regard, the project applicant is entitled to damages for losses caused by the County's negligence. Id. at 955. The County can be liable for damages even if it later determines that its prior determination was incorrect. Rogers v. City of Toppenish, 23 Wn.App. 554, 558, 560 (1979). Here, if the County's new interpretation of permitting requirements applicable to BDN's project is correct, the County's repeated statements for the last three years that BDN was not required to obtain a County permit and that BDN's interests were vested constitute "false information" that gives rise to a negligent misrepresentation claim. The issue as to whether BDN required a permit was specifically discussed in 2013 and 2014 with the County officials responsible for making that determination, Community Development Department staff, and County staff explicitly stated that no permit was required. For the past three years, BDN has relied upon that determination in preparing its farm and seeking the other regulatory approvals needed for farm installation. The County clearly knew that BDN would be relying upon its determination on this issue. The County also knew that BDN was undertaking a significant investment in conducting a geoduck farm and knew that BDN planned to plant its crop in early May 2017. BDN justifiably relied on the County's representations. Under these facts, BDN can maintain an action for damages based on the County's negligent misrepresentations for the damages described in Section C.5 below. B. Tortious Interference with a Business Expectancy The County's reversal also constitutes a tortious interference with business expectancy. A party can claim tortious interference where (1) there is a valid contractual relationship or business TORT CLAIMS FORM (RCW 4.96.020) expectancy, (2) defendants had knowledge of that relationship, (3) there is an intentional interference inducing or causing a breach or termination of the relationship or expectancy, (4) that defendants interfered for an improper purpose or used improper means, and (5) resultant damages. Westmark Develop. Corp. v. City of Burien, 140 Wn.App. 540, 557 (2007). BDN meets all of these elements. i) BDN had a valid business expectancy of being able to operate its geoduck farm once it obtained the other required permits without the need for applying for and obtaining a County permit, particularly in light of the County's repeated assurances that a permit was not required. Based upon these assurances, BDN also entered into a number of contracts and agreements with investors and seed suppliers to finance and provide materials for its farm. ii) The County was well aware through communications with BDN since 2013 that it had a business expectancy to obtain permits and start operation of its farm. The County was specifically aware before the date of its reversal that BDN had obtained all required permits and was planning on planting its farm in May 2017. It can be reasonably assumed from those communications that BDN had also entered into contracts consistent with that purpose and intent. iii) The County's determination to reverse its prior 2014 interpretation was intentional, and its significantly interfered with BDN's business expectancy, in that it will significantly delay and/or deny BDN's ability to conduct its farm as otherwise permitted. iv.) Arbitrary and capricious actions by the County can be considered evidence of tortious interference with a business relationship. Pleas v. City of Seattle, 112 Wn.2d 794, 805 (1989). Improper motive or means can be established by showing that the County "singled out" a project and uses its "permitting process to block the project's development" due to public opposition or to appease a neighborhood group. Id.; Westmark, supra, 140 Wn.App. at 558, 564. It does not require proof that the County had a specific purpose to interfere. Pleas, supra, 112 Wn.2d at 806. In this case, the main factor causing the change in the County's position appears to be public opposition to the project, which started in early 2016. As noted above, there have been no changes in County regulations or what permits create a vested right under state law that would warrant a reversal of the County's 2014 determination since the time of that determination. BDN appears to be singled out because of neighbor opposition to its farm. 4. 42 U.S.C. § 1983 BDN also has a viable substantive due process claim under 42 U.S.C. § 1983, where the conduct of the County has deprived BDN of a property interest without due process. To establish a § 1983 action, BDN must show that the County deprived BDN of a federal constitutional or statutory right and that the County was acting under the color of state law. Lutheran Day Care v. Snohomish County, 119 Wn.2d 91, 117 (1992)(arbitrary denial of a CUP gave rise to a § 1983 action against County). The right to use and enjoy land is a property right. Maytown Sand & Gravel, LLC v. Thurston County, Case No. 46895-6-11, 2017 WL 1231784, April 4, 2017, at 11; Mission Springs, Inc. v. City of Spokane, 134 Wn.2d 947, 962 (1998). Arbitrary denial of a right to use property based on an official policy of the County constitutes deprivation of a property interest actionable under a § 1983 action. Mission Springs, supra, 134 Wn.2d at 963 ("procedural rights respecting permit issuance create property rights when they impose significant substantive restrictions on decision making"); Lutheran Day Care, supra, 119 Wn. 2n at 119, 125. Further, significant delays in commencing operations due to a County's TORT CLAIMS FORM (RCW 4.96.020) arbitrary decision or interpretation of its zoning ordinances forms a valid basis for damages. Maytown, supra, at 12; Mission Springs, supra, 134 Wn.2d at 965 ("City council members who improperly interfere with the process by which a municipality issues permits deprive the permit applicant of his property absent that process which is due"). BDN's current predicament is similar to that described in Norquest/RCA-W Bitter Lake P'ship v. City of Seattle, 72 Wn.App. 467 (1994). In Norquist, prior to submitting its application for a conditional use permit, Norquist scheduled a meeting with City's Department of Construction and Land Use to determine whether the City would require a master plan. After reviewing its code, the City determined that no master plan would be required. During the subsequent processing of building permits for the project, the City received numerous comments in opposition from neighborhood residents and reversed its decision that a master plan was not required. The court determined that the City's reversal was an arbitrary and capricious decision automatically entitling Norquist to damages. Id. at 480-81. Similarly, the County's arbitrary decision to reverse its prior code interpretation three years later, without any change in circumstances, is actionable for damages. 17. Has the incident been reported to law enforcement, safety or security personnel? If so, when and to whom? Please attach a copy of the report or contact information. No. 18. Names, addresses and telephone numbers of treating medical providers. Submit copies of all medical reports and billings. N/A. 19. Please attach documents which support the allegations of the claim. See all Exhi rson county Lommun r of BDN 20. 1 claim damages from the state of Washington in the sum of $ 12,696,965, calculated as follows: The damages BDN has suffered as a result of the County's reversal are substantial. Over the past three years, BDN has incurred a number of costs in reliance upon the County's determination and had made all preparations to plant its parcels in May 2017. While BDN is still determining the overall costs associated with the preparation of its otherwise permitted farm, it has incurred the following costs on the Smersh parcel alone: Cost Amount Nor lex Net Caps, Bags, Fasteners $2,682.04 Cover Netting $17,062.36 Geoduck Tubes $19,000.78 Geoduck Tube Storage (Rent) $1,020.00 Advance Seed Purchase from Barlow Bay Hatchery $50,000.00 Total Incurred Costs $89,765.18 Further, BDN's contract with Barlow Bay Hatchery provides BDN a right of first refusal for geoduck seed, where demand is significantly greater than supply. In the event that BDN's project is significantly delayed, Barlow Bay is authorized to sell seed allocated to BDN to other geoduck growers. There is no guarantee that BDN can find alternate sources for geoduck seed, particularly if it is required to go through a multi-year County permitting process. TORT CLAIMS FORM (RCW 4.96.020) In addition, the following table provides total damages for lost profits for geoduck that were planned to be planted on the Smersh parcel in May 2017 if BDN is prohibited from planting or its permit is eventually denied pursuant to the County's new interpretation: Seed Planted % Survival Average Weight Total Pounds Price/Lb. Dollar Value 515,000 80% 1.7 lbs. 700,400 $18.00 $12,607,200 Even if only delayed by two years as it goes through the County and Shoreline Hearings Board processes, BDN estimates that its total damages will be approximately $3,000,000. These damages, as a direct result of the County's actions, are immediate, significant, and ongoing. This Claim form must be signed by one of the following (check appropriate box). ❑ Claimant ❑ Person holding a written power of attorney from the Claimant ❑ Attorney in fact for the Claimant ❑ Attorney admitted to practice in Washington State on the Claimant's behalf ❑ Court -approved guardian or guardian ad litem on behalf of the Claimant I declare under penalty of perjury under the laws of the state of Washington that the foregoing is true and correct. Signature of Claimant Or ignature of' Wepe entative A. nqw Print Name of Representative TORT CLAIMS FORM (RCW 4.96.020) Date and place (residential address, city and county) Date and place (residential address, city and county) Jrr�-/ c1 Bar Number (if applicable)