Eugster v. City of Spokane

156 P.3d 912

139 Wn. App. 21

Stephen K. EUGSTER, Appellant v. CITY OF SPOKANE, a Washington first class charter city, Respondent.

No. 24472-5-III.

Court of Appeals of Washington, Division 3.

February 15, 2007.

Publication Ordered April 24, 2007.

Stephen Kerr Eugster, Spokane, WA, pro se.

Milton G. Rowland, Foster Pepper PLLC, Spokane, WA, for Respondent.

SWEENEY, C.J.

¶ 1 This is the latest of a series of lawsuits arising from the River Park Square garage project in Spokane, Washington. Stephen K. Eugster sued the City of Spokane (City) to challenge the legality of several aspects of the settlement between the City and developers.

¶ 2 The trial court granted the City's motion for summary judgment based on the undisputed facts, plain statutory language, and well-settled common law. Mr. Eugster is appealing three of the court's rulings. We affirm. On our own, we also award the City its attorney fees and costs for responding to Mr. Eugster's appeal because we conclude it is frivolous.

FACTS

¶ 3 In 1997, the Spokane City Council committed its support to the development of River Park Square, a downtown retail mall. As part of the project, the City arranged financing for the parking garage. The financing scheme for the garage was complex and eventually collapsed resulting in a plethora of lawsuits. We set out only those facts essential to the issues presented here. A more complete recitation of the facts is set out in our opinion in Eugster v. City of Spokane, 118 Wash.App. 383, 76 P.3d 741 (2003).

¶ 4 As part of the scheme, the City borrowed $22,650,000 from the United States Department of Housing and Urban Development (HUD) against Spokane's future HUD Community Development Block Grant funds. The City loaned this money to a developer.¹ The developer was to repay the debt from garage revenues. But the loan agreement provided that, if garage revenues fell short, the City would absorb the loss and make up the shortfall from its general parking revenues.

¶ 5 The garage revenues fell short. And the developer demanded the promised parking meter funds. The City resisted. It claimed that the developer's experts gave highly inflated forecasts of garage revenues based on imaginary numbers. Mr. Eugster was a plaintiff in a successful mandamus action to force the City to turn over the parking meter funds. See Eugster, 118 Wash.App. 383, 76 P.3d 741. Those funds were placed in escrow with the superior court and were released as part of the settlement agreement. Mr. Eugster challenges the transfer of the funds from the parking meter fund to the escrow account.

¶ 6 The City issued bonds to buy the garage from the developer. The City was to receive title once the bonds were paid off. A group of bondholders bought the bonds. But the market value of the garage turned out to be a fraction of the price the City paid, and the bonds lost value. A multitude of lawsuits were filed in both state and federal courts.²

¶ 7 The City and the developer eventually reached a global settlement under the guidance of the courts. Two key elements of the settlement were specifically ordered by the court. One, in a single pass-through transaction, the City was to receive title to the garage from the current holder and quitclaim it immediately to the developer. Two, the City was to release to the developer the funds from the escrow account. The City and the developer executed a settlement agreement and performed on it.

¶ 8 Mr. Eugster filed this action in the superior court challenging the legality of the settlement. Among other objections, Mr. Eugster raised statutory and constitutional objections to the release of the parking meter funds and the pass-through transfer of the title. Both the City and Mr. Eugster moved for summary judgment. Neither side disputed the material facts; each asserted the right to judgment as a matter of law.

¶ 9 The City asked the superior court to impose CR 11 sanctions against Mr. Eugster. The City alleged the complaint was frivolous because Mr. Eugster knew the disputed settlement terms were court ordered. Mr. Eugster had, in fact, been a party to the successful suit to force the City to turn over the funds. And he had not opposed the court order in that case. Mr. Eugster characterized the CR 11 motion as a retaliatory action prohibited by the anti-SLAPP³ statute, RCW 4.24.510.⁴ This statute protects citizens who provide information to government agencies by providing a defense from retaliatory lawsuits. It provides attorney fees and a statutory penalty if the citizen prevails on the defense. The trial court granted the City's motion for summary judgment but indicated informally that it was disinclined to characterize Mr. Eugster's action as frivolous. The City withdrew its CR 11 motion. But Mr. Eugster requested the statutory fees and a penalty. The trial court rejected Mr. Eugster's anti-SLAPP claim.

DISCUSSION

¶ 10 Mr. Eugster contends on appeal that the court-ordered transfer of parking meter funds and the court-ordered title pass-through transaction violated the state auditor statute, RCW 43.09.210. This statute requires cities to apply generally accepted accounting principles to interdepartmental transfers of assets. Here, as part of the settlement, parking funds were transferred to a City parking authority. Mr. Eugster also contends the pass-through of title violated the off-street parking facilities act, RCW 35.86.030. It prohibits disposal of garage property only if the council determines by ordinance that the garage is no longer necessary. Mr. Eugster also appeals the rejection of his anti-SLAPP claim.

AUDITOR STATUTE CLAIM

¶ 11 A party is entitled to summary judgment when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Reid v. Dalton, 124 Wash.App. 113, 120, 100 P.3d 349 (2004); Sane Transit v. Sound Transit, 151 Wash.2d 60, 68, 85 P.3d 346 (2004). The material facts here are not in dispute. We review the matters of law de novo. Reid, 124 Wash.App. at 120, 100 P.3d 349.

¶ 12 Mr. Eugster contends that the City parking meter fund disbursed assets without receiving anything in return. He contends this violates RCW 43.09.210. Mr. Eugster contends the statute requires that every transfer of assets out of a city department must be balanced by a corresponding transfer of assets in. The City raises a number of procedural bars to Mr. Eugster's auditor statute claim.

¶ 13 First, the City challenges Mr. Eugster's standing. The City contends the auditor statute does not create a private right of action. In his complaint, Mr. Eugster did not assert individual standing under the auditor statute. He asserted standing under the off-street parking facilities act, chapter 35.86 RCW, and as a taxpayer.⁵ Mr. Eugster did not address the City's chapter 43.09 RCW standing issue in his reply brief to this court. At oral argument, Mr. Eugster asserted taxpayer standing.

¶ 14 Mr. Eugster did not show taxpayer standing. Ordinarily, an individual taxpayer must show special injury in order to sue a municipality. Am. Legion Post No. 32 v. City of Walla Walla, 116 Wash.2d 1, 7-8, 802 P.2d 784 (1991). But every taxpayer is presumed injured if the city acts illegally. Kightlinger v. Pub. Util. Dist. No. 1, 119 Wash.App. 501, 506, 81 P.3d 876 (2003). However, taxpayers must first request the appropriate government entity-here, the attorney general-take action on their behalf. Id. at 508, 81 P.3d 876 (citing City of Tacoma v. O'Brien, 85 Wash.2d 266, 269, 534 P.2d 114 (1975)). Alternatively, the taxpayer may show that a request for government action would be useless. Wash. Pub. Trust Advocates v. City of Spokane, 117 Wash.App. 178, 182, 69 P.3d 351 (2003).

¶ 15 Neither does Mr. Eugster have individual standing to sue under the auditor statute. Chapter 43.09 RCW creates a state auditor to monitor government agencies and enforce the act's provisions. It does not create a right for an individual taxpayer to haul a city into court to defend every transaction and accounting entry. All judicial enforcement is by the attorney general. Again, the taxpayer can sue under the auditor statute only after the attorney general has declined the taxpayer's request to sue.

¶ 16 Mr. Eugster did not submit his complaint to the attorney general. Rather, he filed a complaint, then invited the attorney general to join as a co-plaintiff. The tone of Mr. Eugster's letter to the attorney general suggests that he did not believe the attorney general's office would have agreed to file its own action. But, without a request and a refusal, the statutory prerequisite for individual standing is not met.

¶ 17 The City also asserts that Mr. Eugster is estopped from complaining about the release of parking meter funds because he was a party to the mandamus suit that resulted in the court order to release these funds.

¶ 18 The doctrine of collateral estoppel is well established in Washington law. It is a way to prevent endless relitigation of disputes that have already been litigated by the parties and decided by the court. "`Collateral estoppel promotes judicial economy and prevents inconvenience, and even harassment, of parties.'" Hadley v. Maxwell, 144 Wash.2d 306, 311, 27 P.3d 600 (2001) (quoting Reninger v. Dep't of Corr., 134 Wash.2d 437, 449, 951 P.2d 782 (1998)). Collateral estoppel requires: "`(1) identical issues; (2) a final judgment on the merits; (3) the party against whom the plea is asserted must have been a party to or in privity with a party to the prior adjudication; and (4) application of the doctrine must not work an injustice on the party against whom the doctrine is to be applied.'" Id. (internal quotation marks omitted) (quoting Southcenter Joint Venture v. Nat'l Democratic Policy Comm., 113 Wash.2d 413, 418, 780 P.2d 1282 (1989)).

¶ 19 Mr. Eugster is silent on the City's assertion that the City was forced to turn over the parking meter funds by a lawsuit to...