City of Seattle v. Ballard Terminal R.R. Co.

509 P.3d 844

The CITY OF SEATTLE, Appellant/Cross-Respondent,

v.BALLARD TERMINAL RAILROAD COMPANY., L.L.C., Respondent/Cross-Appellant.

No. 82377-9-I

Court of Appeals of Washington, Division 1.

FILED May 16, 2022

Patrick Downs, Seattle City Attorney's Office, 701 5th Ave. Ste. 2050, Seattle, WA, 98104-7095, Dale Noel Johnson, Tadas A. Kisielius, Clara Park, Van Ness Feldman LLP, 1191 2nd Ave. Ste. 1800, Seattle, WA, 98101-2996, for Appellant/Cross-Respondent.

Joshua C. Allen Brower, Brower Law PS, Patrick John Schneider, Foster Garvey PC, 1111 3rd Ave. Ste. 3000, Seattle, WA, 98101-3296, for Respondent/Cross-Appellant.

PUBLISHED OPINION

Smith, A.C.J.

¶ 1 This appeal concerns the City of Seattle's efforts to construct the missing link, a 1.4-mile gap in the Ballard area of the Burke-Gilman Trail. Seattle sued the Ballard Terminal Railroad Company (BTRC) to require it to relocate a portion of its tracks to enable the trail's construction. Seattle claims BTRC is required to do so under both the 1997 operating agreement between the parties and the franchise ordinance issued by Seattle shortly thereafter, and appeals the superior court's summary judgment rulings that (1) the provision of the franchise ordinance that requires BTRC to relocate its tracks is preempted by the federal Interstate Commerce Commission Termination Act of 1995 (ICCTA), 49 U.S.C. §§ 10101 - 16106, and (2) the operating agreement does not require BTRC to move its tracks in the missing link area. BTRC cross-appeals, contending that the court erred by denying its claim for damages and attorney fees under Washington's anti-SLAPP¹ statute, RCW 4.25.510. Because the franchise ordinance is a federally-preempted local regulation regarding the route and construction of a railroad, the operating agreement only required BTRC to relocate its tracks to cooperate with the construction of the trail outside the missing link area, and Seattle's suit is not the type of action addressed by the anti-SLAPP statute, we affirm on all counts.

FACTS

¶ 2 The Burke-Gilman Trail is a regional bicycle and pedestrian trail that runs from Golden Gardens Park in Seattle to the Sammamish River Trail in Bothell, except for the missing link at issue here—a gap between the Hiram M. Chittenden Locks (Ballard Locks) and 11th Avenue NW in the Ballard neighborhood of Seattle. Seattle opened the first portions of the Burke-Gilman Trail in 1978 on a portion of abandoned rail line it had acquired from the Burlington Northern Railroad Company. In 1988, Burlington Northern and Seattle signed a "Joint Statement of Principles" expressing their shared long-term goal to establish a "continuous and permanent linear corridor along selected railroad rights-of-way to complete the Burke-Gilman Trail and other urban trails" while also continuing to support rail-served business along these rights of way. Burlington Northern continued to abandon portions of its rail lines and Seattle continued to convert these portions into trails.

¶ 3 In the late 1990s, Burlington Northern announced its intent to abandon the Ballard Line, a 2.6-mile railroad line serving shippers in Ballard. In 1996, the Seattle City Council adopted Resolution 29474,² endorsing a preferred plan for the development of the Burke-Gilman Trail in the area of the Ballard line, with the preferred route traveling along the railroad from 8th Avenue NW to 11th Avenue NW, leaving the tracks and continuing up 11th Avenue NW to NW Leary Way and NW Market Street, and then returning to the line west of the Ballard Locks.

¶ 4 Meanwhile, some of the shippers who had been served by the Ballard Line formed the Ballard Terminal Railroad Company (BTRC). BTRC entered negotiations with Seattle with the goal of preserving rail service even as Seattle pursued acquiring the corridor to develop the final portions of the Burke-Gilman Trail.

¶ 5 On September 14, 1997, as a result of these negotiations, BTRC and Sea Lion Railroad (SLR), a non-profit acting as Seattle's proxy, entered into the operating agreement. The operating agreement described its purpose as preserving the Ballard Line "intact for rail use, trail use, and other compatible public purposes." It explained the parties’ plan for SLR to seek authorization from the Surface Transportation Board (STB) to railbank³ the line, for SLR to transfer the underlying real estate and assign the operating agreement to Seattle, and for BTRC to then seek authorization from the STB to continue operating the railroad.

¶ 6 The operating agreement provided that the parties "agree that the trail ... and railroad shall be constructed within the areas indicated in Exhibit D in all portions of the premises which are not in street right of way." Exhibit D showed a map of the planned trail and line, corresponding to the route Seattle endorsed in Resolution 29474. The portion of the premises which is in street right-of-way is the stretch between 11th Avenue NW and the Locks, which today is the missing link of the Burke-Gilman Trail.

¶ 7 The operating agreement also gave Seattle "the right to require [BTRC] to relocate its track in order to accommodate trail construction in accordance with this Agreement; provided, however that a continuous track on the premises shall be provided unless [BTRC] consents otherwise" and required BTRC to "promptly move its track at [Seattle's] written request to accommodate the construction of trail facilities." Furthermore, it provided that Seattle would "undertake[ ] to provide [BTRC] with 120 days notice, and a subsequent opportunity to consult, prior to [Seattle's] presentation of a request for initial authorization or financing for an extension of the Burke-Gilman Trail in the area between 11th Avenue [NW] and the Locks within the premises."

¶ 8 Shortly after the parties executed the operating agreement, Seattle passed Ordinance 118734 (franchise ordinance), which granted BTRC the right to operate the railroad along the Ballard Line for 30 years. Section 4 of the franchise ordinance reserved for Seattle the "full and complete right of access to any space occupied by [the Ballard Line] tracks and to all of said franchise right-of-way" and the right to excavate the ground within the right-of-way "for all purposes of construction, maintenance, repair, operation and inspection of any public utilities and public improvements." It provided that "[i]n all cases involving a possibility of such interference, or removal of lateral support or excavation beneath the tracks ... [BTRC] shall, at its own cost and expense, remove, relocate, support, reinforce said tracks as necessary."

¶ 9 SLR assigned the operating agreement to Seattle in December 1998. In 2001, Seattle adopted Resolution 30408, noting that the existing plan for the Burke-Gilman section between 11th Avenue NW and the Locks was unlikely to meet Seattle's goals of creating safe bicycle and pedestrian travel while also minimizing impacts to adjacent businesses. The resolution directed a work team to investigate alternate routes, "including the publicly owned railbanked right of way." Seattle eventually decided to move forward with constructing the missing link along the railroad right-of-way, and prepared an Environmental Impact Statement for this purpose.⁴

¶ 10 In December 2018, BTRC petitioned the STB seeking a declaratory order prohibiting Seattle from moving forward with its plan. Seattle responded that BTRC's claims were about a contract dispute over the operating agreement and should be heard by a state court. The STB stayed its decision "pending a decision from the state court resolving the City's contract action" and noted that "[i]ssues involving federal preemption can be decided either by the Board or the courts in the first instance."

¶ 11 Seattle then initiated a complaint in King County Superior Court, seeking "[a]n order for specific performance of all of BTRC's obligations under the Operating Agreement and Franchise, including but not limited to cooperating with the Trail's construction," a declaration of its rights under the operating agreement and franchise ordinance, and "[a]n injunction enjoining BTRC from taking any further action to preclude, prohibit, or interfere with the Missing Link's construction." BTRC responded that, among other defenses, it was immune from liability under Washington's anti-SLAPP statute. The court issued a series of summary judgment orders, concluding that the operating agreement did not give Seattle the right to require a relocation of BTRC's tracks in the missing link area and that the franchise ordinance did purport to give Seattle this right but that this provision was preempted by federal law. The court also denied BTRC's motion for damages and attorney fees under the anti-SLAPP statute. Seattle appeals and BTRC cross-appeals.

ANALYSIS

Standard of Review

¶ 12 "Summary judgment is appropriate where there is no genuine issue as to any material fact, so the moving party is entitled to judgment as a matter of law." Meyers v. Ferndale Sch. Dist., 197 Wash.2d 281, 287, 481 P.3d 1084 (2021). "We view the facts and reasonable inferences in the light most favorable to the nonmoving party." Meyers, 197 Wash.2d at 287, 481 P.3d 1084. "We review rulings on summary judgment and issues of statutory interpretation de novo." Am. Legion Post No. 149 v. Dep't of Health, 164 Wash.2d 570, 584, 192 P.3d 306 (2008).

Preemption of Franchise Ordinance

¶ 13 Seattle challenges the trial court's conclusion that enforcement of the franchise ordinance is preempted by the ICCTA, contending that the franchise was a voluntary agreement and did not regulate the construction of rail lines. We disagree.

¶ 14 "Under the preemption doctrine, states are deemed powerless to apply their own law due to restraints deliberately imposed by federal legislation." Alverado v. Wash. Pub. Power Supply Sys., 111 Wash.2d 424, 430-31, 759 P.2d 427 (1988).

Federal preemption is required when Congress conveys an intent to preempt local law by: (1) "express

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