Douglas N. Owens P.S.

Attorney At Law -  Your Legal Resource
 1610 Commercial Ave., Suite 207
Anacortes, WA 98221

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            In land use matters, the conventional wisdom is that it is difficult to “fight city hall’ in the sense that the costs of the fight can overwhelm the benefits, and market conditions can change dramatically due to the passage of time during the contest.  A recent Supreme Court case showed that sometimes the fight is worth pursuing despite these obstacles.
            Normally, land use decisions can be appealed under LUPA, the Land Use Petition Act.  Appeals under LUPA are limited to determining whether the local government’s decision was based on unlawful procedure, an erroneous interpretation of the law, was outside the agency’s power, was clearly erroneous based on the evidence or violated an appellant’s constitutional rights.  This recent case involved an appeal under LUPA and also a more unusual lawsuit for damages to the property owner that resulted from the two years that had been consumed in battling opponents in the administrative process including activists and officials of government agencies, and which delay had ended the business that would have used the permitted land.
            The case began with a company called Citifor which had manufactured munitions on property in Thurston County that was located on or near a significant prairie oak-wetland habitat, and which obtained from Thurston County a twenty year permit to engage in gravel mining on the site in 2005.  The permit was issued after negotiations with environmental opponents of the mine, one of which withdrew its opposition in exchange for concessions by Citifor as to the scope of mining and restoration activities after mining.  However before mining began Citifor sold the land with the permit to the Port of Tacoma for its use in building a freight transfer location.  The freight transfer location was never built and so the Port of Tacoma negotiated with a company called Maytown to sell the property and based on the assurance to Maytown by the Thurston County Department of Natural Resources that the permit was still valid, Maytown bought the property in 2009.
            Maytown’s problems after its purchase centered on four issues: an environmental opponent (not the one that had negotiated with Citifor) challenged the validity of the permit; because of the delay between the permit’s issuance and the expected commencement of mining certain water quality deadlines had already passed; there was a discrepancy between the type of water quality testing required by the permit and the groundwater monitoring plan; and the permit was due for a five year review by a Department hearing examiner.
            Maytown had proposed some amendments to the conditions in the permit to reflect changed circumstances but once the extent of the legal campaign against the mine became apparent, Maytown withdrew all of the proposed amendments except two that dealt with the timeliness of the water quality measurements.
            During the two year administrative review period, decisions were made by the Department and appealed to a hearing examiner and then to the Department’s Board of Commissioners, all within Thurston County local government, and all during a time when according to the Supreme Court, at least two of the County Commissioners had adopted a plan to try to torpedo the mine for political reasons.
            Accordingly, after the internal county appeals had been exhausted (at which one of the environmental groups that had negotiated and agreed with Citifor participated as a mine opponent) and then the LUPA appeals to Superior Court had also been exhausted, and Maytown and the the Port of Tacoma had largely been vindicated, the victory was a Pyhrric one because the mining market had changed and the business failed.  So the Port of Tacoma and Maytown sued the county for damages resulting from the intentional misuse of government processes to interfere with a valid permit for the use of land.
            The jury agreed with Maytown and awarded $13.1 million in damages against the county, and the county appealed to the Supreme Court.  Other than on the issue of whether the trial court could award Maytown damages for its attorney’s fees in the administrative process, the Supreme Court upheld the lower court.  This case should hearten property owners who face bureaucratic opponents over land use.
            The foregoing is not intended as legal advice and should be considered as educational only.

            Some investors these days look for opportunities to obtain residential properties in foreclosure sales, including trustee’s sales under the Deed of Trust Act.  The Deed of Trust Act specifies periods that must elapse between the notice of the sale and when the sale can legally take place.
            Sometimes the borrower who is in financial distress will file a petition in bankruptcy after the notice of trustee’s sale has been recorded but before the sale takes place.   This may be an attempt by the borrower to stave off the trustee’s sale or for other reasons.  The filing of the petition invokes the automatic stay provisions of bankruptcy law, making it illegal for the trustee’s sale to be held as long as the bankruptcy case is pending in the bankruptcy court.
Unless the petition is deemed meritorious by the bankruptcy court, it will be dismissed. This type of situation can present a quandary for the investor who attends and bids at the trustee’s auction after a petition in bankruptcy by the borrower has been dismissed.  A recent case in the Court of Appeals considered such a case in which the borrower filed a petition in bankruptcy the day before the scheduled trustee’s sale and after the petition was dismissed, the trustee’s sale which had been continued by the trustee, was rescheduled and went forward, resulting in the borrower’s loss of the home.
The borrower then sued the lender and the purchaser at the trustee’s sale and the trustee, arguing that the trustee was required to send out a new notice of trustee’s sale, giving forty-five days’ notice after the dismissal of the bankruptcy petition before the sale could legally go forward.  The borrower also contended that the continuance of the trustee’s sale by the trustee violated the bankruptcy stay, and for both of these reasons asked that the sale be set aside by the court.
The Court of Appeals analyzed the borrower’s first argument based on two different statutes. The first statute says that when a bankruptcy petition is filed by the borrower and then later dismissed the trustee can choose to issue a new notice of trustee’s sale and the date of the sale cannot be fewer than forty-five days from the date the bankruptcy petition is dismissed.  The second statute says that the first statute is permissive only and does not apply when a trustee’s sale has been properly continued for a period not exceeding one hundred twenty days.  Because the trustee in this case had properly continued the sale after the filing of the bankruptcy petition for about fifty-eight days, the court held that the trustee was not required by the Deed of Trust Act to record a new notice of trustee’s sale.  
The Court of Appeals considered the borrower’s second argument under a case decided by the federal appeals court for the Ninth Circuit.  That case said that the automatic stay in bankruptcy is not violated by any action of the lender that does not change the status quo or give the lender some advantage over the borrower or harass or interfere with the borrower.  The Ninth Circuit court held that a continuance by the lender of the date of the trustee’s sale by publishing a notice of postponement of the sale did not create any advantage in the lender or otherwise prejudice the borrower while the bankruptcy was pending and therefore such a postponement did not violate the automatic stay.
The Court of Appeals therefore concluded that the borrower’s second argument was without merit and affirmed the dismissal of the lawsuit.  The court rejected the borrower’s argument that the “permissive” statute described above did not apply since according to the borrower the trustee lacked power to continue the sale due to the bankruptcy stay and must necessarily issue a new notice.  
The teaching of this case is that while it is important to keep abreast of any bankruptcy filings by the borrower that affect a trustee’s sale of property in which an investor is interested, that due diligence includes reviewing how the trustee has reacted to the bankruptcy filing.
The foregoing is intended to be educational and should not be considered legal advice.


A recent case decided by the Washington Court of Appeals has restricted the rights of landlords to evict Section 8 residential tenants for minor lease violations. Ordinarily, if a residential tenant violates a provision of the lease other than the payment of rent, the landlord can recover possession of the premises by serving a notice on the tenant directing correction of the violation within ten days. If the tenant fails to correct the violation then the landlord can file an unlawful detainer complaint with the court and ask the court to evict the tenant.

This recent case presented the question whether provisions required by the federal Department of Housing and Urban Development in Section 8 leases can throw a roadblock in front of this process in Washington for a landlord who gave the required notice to a tenant based on a minor but uncorrected lease violation. Of course, in Section 8 leases most of the rent is paid to the landlord by the federal government. The tenant in this case had placed a piece of plywood on the deck of her unit and had failed to remove it after the landlord served the ten day notice.

The Section 8 lease included an addendum with language required by HUD, which bound the landlord not to terminate the tenancy except for repeated serious violations by the tenant of the terms of the lease or other "good cause." In many unlawful detainer cases for residential tenants, the landlord asks the court to rule summarily, without a trial, that the tenant is wrongfully in possession of the property and should be evicted. In such cases, where a notice to correct the violation has been served and the ten days have passed without correction and the tenant cannot show that the violation was corrected within the ten days, then the court will typically grant the eviction without giving the tenant a trial.

That is what happened in this case. The tenant removed the plywood from the deck four days after the end of the ten day notice period, and this four day delay was the landlord's stated basis for seeking eviction. The trial court granted the eviction but on appeal the Court of Appeals reversed because the fact that the landlord had received the benefits of the federal rent subsidy program and in addition a federal tax credit program meant that the landlord was bound to the higher requirement of federal law to justify an eviction. This also meant that the tenant was entitled to a trial on whether her conduct amounted to repeated serious violations of the lease or other "good cause" for the termination of the tenancy. The Court of Appeals rejected the landlord's argument that the unlawful detainer statute in Washington allows eviction where the landlord complies by sending the required notice and the tenant fails to correct the identified violation within the ten days. The court also rejected the landlord's claim that the Section 8 lease limitation to a landlord's termination rights only applied at the end of a lease term, noting that the landlord in this case had filed a complaint asking the court to terminate the tenant's occupancy of the premises.

Plainly requiring a trial before the court may grant an eviction raises the stakes for landlords of Section 8 tenants. The time involved for a trial can be four or more months, even in the District Court which has much shorter time intervals for trial than the Superior Court. A trial can consume a day even for a simple case, compared with a summary hearing which would take a few minutes. And the evidence that will be required to justify an eviction of a Section 8 tenant will clearly be greater than a simple uncorrected minor violation of the terms of the lease. The court did not specify what would satisfy the standard, but landlords must be prepared to wait and accumulate evidence of violations that affect the quiet enjoyment of other tenants or otherwise threaten some harm that is real, if they hope to win such cases in the future.

The preceding is intended as education and may not be construed as legal advice.


Douglas Owens Attorney Seattle

Douglas N. Owens

1971 Graduate of University of Michigan Law School, twelve years service as Assistant Attorney General, thirty-five years private practice