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Royal Skies Investors Limited Partnership v. Schwab

September 9, 1996

ROYAL SKIES INVESTORS LIMITED PARTNERSHIP, A WASHINGTON LIMITED PARTNERSHIP; C.H. WIRUM AS GENERAL PARTNER; AND C.H. WIRUM, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF MARY LOU WIRUM, AS GENERAL PARTNER, APPELLANTS/CROSS-RESPONDENTS,
v.
ANTHONY AND JANE DOE SCHWAB, HUSBAND AND WIFE; RESPONDENTS/ CROSS-APPELLANTS. BRUCE AND LOUISE MOSER, HUSBAND AND WIFE; ALLEN AND ELIZABETH MOSER, HUSBAND AND WIFE; KING COUNTY, A MUNICIPAL CORPORATION; AND PUGET SOUND SAVINGS BANK, A WASHINGTON CORPORATION, RESPONDENTS.



Appeal from Superior Court of King County. Docket No: 92-2-17167-8. Date filed in Superior Court September 1, 1994. Superior Court Judge signing: Hon. Ann Schindler.

Petitions for Review Denied May 7, 1997,

Faye C. Kennedy, A.c.j. WE Concur: H. Joseph Coleman, William W. Baker.

The opinion of the court was delivered by: Kennedy

KENNEDY, A.C.J. -- Royal Skies Investors Limited Partnership appeals the trial court's grant of summary judgment dismissing its claims for declaratory relief and damages, contending that the trial court erred: (1) in holding that it lacked standing to challenge the tax assessment and foreclosure sale of Lot 2 of the Royal Skies PUD; (2) in holding that King County provided proper notice of the tax foreclosure sale of Lot 2 to all parties who were entitled to receive notice; and (3) in its interpretation of the open space provisions of the King County PUD ordinance. Anthony Schwab cross appeals, contending that the trial court erred: (1) in granting King County's motion to dismiss Schwab's mandamus claim for failure to state a claim upon which relief could be granted; (2) in its interpretation of the open space provisions of the King County PUD ordinance; and (3) in holding that his claim for a refund of taxes was barred by his failure to pay the taxes under written protest. Finding no error, we affirm, and remand the case back to the trial court for determination of the issues still pending.

FACTS

In 1979, Allan, Betty, Louise, and Bruce Moser owned property in the Federal Way area of King County. The property consisted of approximately 18.1 acres, a portion of which was comprised of wetlands. Beginning in 1979, the Mosers entered into a series of negotiations with Kenton Associates to sell the property for development as an apartment complex. An important aspect of the negotiations was obtaining Planned Unit Development (PUD) approval for the property. Accordingly, in 1980, the parties submitted a request for preliminary approval of a PUD to the Building and Land Development Division of the King County Department of Planning and Community Development.

In June of 1981, during the PUD application process, King County approved the short plat of the Mosers' property into two lots, referred to as Lots 1 and 2. Each lot is a separate tax parcel. Approximately two-thirds of Lot 2 is the northern portion of a wetland; as such, its use is severely restricted. In October of 1981, the King County Council approved the PUD and it was recorded on October 22, 1981. According to the face of the PUD plat and the easement contained within the PUD, Lot 2 was to be preserved as permanent open space, while Lot 1 was platted for development. Accordingly, all of the density and development rights of Lot 2 were transferred to Lot 1, thereby permitting 240 units to be built on Lot 1 rather than the 141 units allowed under applicable zoning. In its statement of purpose, the PUD states that it will "ensure preservation of a wooded and wetland area which keeps intact a valuable natural resource that helps retain the general quality of life for the community." Clerk's Papers at 458.

Shortly after the PUD was recorded, the sale between the Mosers and Kenton Associates closed, with Kenton Associates purchasing Lot 1 while the Mosers retained title to Lot 2. Kenton Associates subsequently formed a partnership entitled Royal Skies Limited Partnership to construct an apartment complex on Lot 1. On October 27, 1981, the parties filed a Declaration of Covenants, Easements and Release of Easements (Declaration). Pursuant to the Declaration, Royal Skies Limited Partnership granted the Mosers non-exclusive access rights of record across Lot 1 for the benefit of Lot 2. In return, the Mosers covenanted for themselves, their successors, heirs and assigns and for the benefit of Royal Skies, its successors and assigns, to hereafter keep the Moser property clear and in a natural and undisturbed condition until said property may be developed in accordance with the . .

. . If at any time Moser shall fail to keep the Moser property clear and in the condition set forth herein, Royal Skies may do so and the costs thereof shall be paid and borne by Moser and the Moser property and shall constitute a lien on said property which may be foreclosed in the same manner and with the same effect as mortgages are foreclosed. Clerk's Papers at 283-84.

After obtaining a construction loan from Puget Sound Savings Bank, Royal Skies Limited Partnership constructed the 240-unit Royal Skies apartment complex which presently occupies Lot 1. Over the next 5 years, title to Lot 1 passed through various entities until in 1987 it came to be held by the appellant, Royal Skies Investors Limited Partnership (Royal Skies).

In assessing taxes on Lot 1, King County used the income method, under which a "value per allowable apartment unit is utilized." Clerk's Papers at 222. Lot 1 was thus assessed at $4650 per unit, or $2.75 per square foot. In 1983, King County began taxing Lot 2 as a separate tax parcel with an assessed value of $130,000. In 1984, without contesting King County's assessments, the Mosers ceased paying taxes on Lot 2. In June of 1987, King County issued a certificate of delinquency for taxes not paid. According to the notice, Lot 2 was subject to foreclosure unless the past due property taxes from 1984 through 1987 were paid. In December of 1987, King County foreclosed on the property, selling it to the respondent and cross-appellant, Anthony Schwab. A tax deed in Schwab's name was recorded on December 21, 1987. Schwab has paid all taxes on the property since the date of the tax sale.

In 1988, Schwab sent a letter to King County stating that because he had purchased Lot 2 at the tax sale, Lot 1 was in violation of density requirements and set-back lines. A copy of the letter was forwarded to Puget Sound Savings Bank. Because it had not received notice of the tax foreclosure sale, Royal Skies asserts that Schwab's letter was its first notice of Schwab's tax title to Lot 2. In the summer of 1992, Schwab attempted to erect a fence between Lots 1 and 2 to prevent the residents of the Royal Skies apartments from using Lot 2. Royal Skies sought and obtained a temporary restraining order requiring the removal of the fence and maintaining the status quo pending the filing of a complaint.

On August 5, 1992, Royal Skies filed a complaint for declaratory relief and damages. On March 17, 1993, Royal Skies filed an amended complaint seeking the following relief: (1) a declaration that Royal Skies' occupancy of Lot 1 was legal and in conformance with King County zoning and density requirements, and that Royal Skies had the right to use Lot 2 for amenity and recreational purposes; (2) an injunction preventing Schwab from erecting a fence or otherwise interfering with Royal Skies' use of Lot 2; (3) damages against the Mosers, Schwab and King County; or (4) in the alternative, judgment declaring the assessment of Lot 2 to be void, setting aside the tax deed, refunding moneys expended by Schwab, and ordering the conveyance of Lot 2 to either King Country or Royal Skies; and (5) judgment against Puget Sound Savings Bank for costs and expenses incurred.

On August 13, 1992, Schwab filed an answer to Royal Skies' complaint and two cross-claims against King County seeking: (1) a refund or restitution of the amounts paid at the tax foreclosure sale and in taxes in the event that the court voided the tax deed; and (2) a writ of mandamus to compel King County to "issue a Notice of Violation for plaintiff's violation of the PUD contract for Royal Skies apartments and to revoke the certificate of occupancy[.]" Clerk's Papers at 49. On April 14, 1993, King County filed a motion to dismiss Royal Skies' claims and Schwab's cross-claims under CR 12(b)(6). King County asserted that Schwab failed to state a claim upon which relief could be granted because a writ of mandamus was not available to enforce the discretionary act of revoking a certificate of occupancy or enforcing the provisions of the Royal Skies PUD. The trial court granted King County's motion in part, dismissing Schwab's cross-claim seeking a writ of mandamus. Schwab appeals this ruling.

In early 1994, the parties brought motions and cross-motions for partial summary judgment on numerous issues. On January 28, 1994, Schwab sought summary judgment: (1) quieting title to Lot 2 and declaring that Royal Skies and the public had no right of entry onto Lot 2 for recreational or amenity purposes; (2) seeking an interpretation of the phrase "permanent open space" as used on the face of the Royal Skies PUD; (3) declaring that Royal Skies had been trespassing on Lot 2 and was liable for damages; (4) declaring that the tax deed to Lot 2 was valid and that all necessary parties received notice of the tax foreclosure sale; (5) declaring that the Royal Skies PUD was not properly recorded; and (6) dissolving the preliminary injunction.

On February 11, 1994, King County moved for partial summary judgment that: (1) the Royal Skies PUD was properly recorded and thus the restrictions of the PUD and the recorded Declaration survived the tax foreclosure sale; (2) Schwab's restitution claim was barred by the state of limitations; (3) Schwab's claim for a tax refund was barred because he failed to pay the taxes under written protest; and (4) the applicable interest rate on any tax refund should be based on RCW 84.69.100. Also on February 11, 1994, Royal Skies moved for partial summary judgment that: (1) Lot 2 was not properly assessed and a valid tax was never levied upon it; (2) the 1987 tax foreclosure sale of Lot 2 was void; and (3) that Lot 2 was illegally separated and alienated from Lot 1.

Following the above motions and cross motions, the trial court entered a series of judgments. The court determined that: (1) the PUD was properly recorded; (2) proper notice was given for the tax foreclosure sale; (3) the restrictions in the PUD and the Declaration survived the 1987 tax foreclosure sale; (4) Schwab was not entitled to a refund of taxes paid because he failed to pay the taxes under written protest; (5) Royal Skies' use of Lot 2 was limited to "amenity" purposes; and (6) Lot 2 was not illegally separated and alienated from Lot 1. Raising the issue of Royal Skies' standing to challenge the assessment and foreclosure sale of Lot 2, the trial court reserved ruling on Royal Skies' summary judgment motion pending further briefing on the standing issue.

On April 12, 1994, the Mosers and King county filed motions for partial summary judgment seeking a ruling that Royal Skies lacked standing to challenge the tax assessment and foreclosure sale of Lot 2. On June 1, 1994, the trial court granted the motions, holding that Royal Skies did not ...


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