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Overlake Fund v. City of Bellevue

as corrected.: April 8, 1991.


Pekelis, J. Scholfield and Coleman, JJ., concur.

Author: Pekelis

The Overlake Fund and Fluke Capital Management appeal the trial court's decision that the City of Bellevue had shown cause why it should not produce all documents relating to Overlake's hotel development proposal. Overlake asserts that the public disclosure act appears to require disclosure of the information and thus, the trial court abused its discretion in refusing to conduct an in camera review of the requested documents. Overlake also contends that if it prevails, it is entitled to costs, attorney fees, and a statutory allowance.


The Overlake Fund and Fluke Capital Management (Overlake) owns property in the City of Bellevue (the City) at approximately S.E. 6th Street and 114th Avenue S.E. Substantial portions of Overlake's property are classified as "wetlands." These portions are environmentally sensitive under the Sensitive Area Overlay District regulations, Bellevue City Code (Land Use Code) ch. 20.25H (commonly referred to as the Natural Determinants Ordinance).*fn1

In June 1987, Overlake gave Mathew Terry, the director of the Bellevue Design and Development Department (the DDD), a proposal for construction of a 240-room hotel.

Under the Natural Determinants Ordinance, the project required a variance from the Bellevue Board of Adjustment (the Board) and a conditional use permit from the Bellevue City Council (the City Council). The DDD prepares recommendations for the Board and the City Council. The City Council then makes the final decision on a variance or conditional use permit.

In response to concerns raised by the City about the height of the proposed hotel, in October 1987, Overlake submitted three alternative revised proposals. Overlake also submitted several documents which contained various experts' conclusions that the height of the hotel was the minimum which was economically feasible.*fn2 On August 23, 1988, Overlake wrote a letter to Terry summarizing its efforts to address the City's concerns about Overlake's proposed development. The letter also stated:

It is extremely important for you to understand that any reduction in the size or room capacity of this project beyond the Scheme D concessions will simply result in the project losing all economic viability. As we have discussed, we believe that such further reductions would constitute an unconstitutional taking of this property. We also believe such a requirement would render further pursuit of a permit unnecessary in order to establish that the City's actions and policies are in violation of both federal and state law.

In his affidavit, Andrews contends that at this point he thought that if Overlake was not satisfied with the City's decision, Overlake intended to pursue court action asserting an unconstitutional deprivation of its property rights. Therefore, Andrews

determined as the attorney for the City that it was necessary for me to secure the advice of an expert appraiser for an opinion concerning the value of the property in order to advise my clients whether the city was at legal risk with regard to its actions or potential actions concerning the Overlake Fund property. It was for this purpose that the study was requested by me. The report was completed for me and at my direction

and has been used as a basis for providing legal advice to my client in this matter. I have reviewed the report with Mathew Terry, in his capacity as Director of Design and Development for the City and advised him concerning his legal position based upon it. It has not otherwise been disclosed outside of the City Attorney's office. It has at all times been treated by Mr. Terry and me as a confidential document, privileged under the attorney-client and work-product principles.

In September 1989, Terry verbally advised Overlake that the DDD intended to recommend denial of Overlake's project because its proposed hotel height did not qualify for a variance. According to Overlake, Terry stated that he based his conclusion, in part, on a study which evaluated Overlake's property and other property in the Seattle/Bellevue area as well as elsewhere in the country upon which hotels had been or could be built. Terry also informed Overlake that the City had undertaken the analysis to determine whether the requested variance represented the "minimum necessary to afford relief" under the City regulations. Subsequently, Overlake made several informal inquiries to the DDD requesting the documents upon which the DDD based its recommendation that Overlake's proposal be denied. On January 9, 1990, pursuant to the public disclosure act, RCW 42.17, Overlake requested

[a]ll documents which you or any member of your staff or any city employee prepared, caused to be prepared or reviewed, which relate in any way to any appraisal or economic or market analysis of the [Overlake] project or property, or to any other project, property, use or activity, which analysis was prepared, reviewed or discussed in connection with the [Overlake] project or property.

On January 23, 1990, the City wrote to Overlake denying the request. Relying on the public disclosure act's "preliminary recommendation" and "pre-trial discovery" exemptions, the City stated:

The City of Bellevue asserts the exemptions in RCW 42.17.310(1)(i) and (j) for all documents related to the Fluke property, and has no ...

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