Hood Canal Shellfish Company, LLC v. State, Department of Natural Resources

HOOD CANAL SHELLFISH COMPANY, LLC, a Washington limited liability company; MARLENE IDDINGS, LINDA SLATES, LLOYD E. IDDINGS, and RENEE HANOVER, individuals, Petitioners, v. STATE OF WASHINGTON, DEPARTMENT OF NATURAL RESOURCES, BK LOVELY, LLC, a Washington limited liability company; STEVEN LOVELY, individually, SUSAN LOVELY, individually, and the marital community composed thereof; VIRGIL G. TIMMERMAN, individually, JESSIE DORENE TIMMERMAN, individually and the marital community composed thereof; PHILLIP PAUL ELDER, individually; LISA MARLENE IVEY, individually; TIMOTHY L. CLEMENTS, individually, PAMELA J. CLEMENTS, individually, and the marital community composed thereof; PETER F. MARTINEZ, individually, NANCY D. MARTINEZ, individually, and the marital community composed thereof; MICHAEL GRIFFITH, individually, SUE A. GRIFFITH, individually, and the marital community composed thereof; LAURE A. IDDINGS, individually, and the marital community of LAURE A IDDINGS and LLOYD E. IDDINGS; EARL J. IDDINGS, individually; CARON DENOTTA, individually; and D.D. DENOTA, LLC, a Washington limited liability company, Respondents.

Nos. 53486-0-II, 53616-1-II

Court of Appeals of Washington, Division 2

June 2, 2021

UNPUBLISHED OPINION

Worswick, J.

Hood Canal Shellfish Company (HCSC), Virgil Timmerman, and other owners of Dewatto Bay tidelands appeal an order granting summary judgment to the Washington Department of Natural Resources (DNR) in a property dispute concerning those tidelands.^[1] The trial court ordered that the tidelands be equitably divided according to a survey ordered by DNR. HCSC and Timmerman each own separate tideland parcels on opposite sides of the tidelands DNR claims: Timmerman to the northeast and HCSC to the west and south. The equitable division ordered by the trial court reduces the size of HCSC and Timmerman's tideland claims as well as HCSC's upland parcel.

Timmerman argues that the trial court erred when it granted DNR summary judgment because (1) DNR's claim is barred by res judicata; (2) DNR waived its claim to any portion of Timmerman's tidelands in prior litigation; (3) DNR should be equitably estopped from asserting a claim to any portion of Timmerman's tidelands; (4) DNR's claim to the disputed tidelands is barred by laches; and (5) that general equitable principles should not be used to divide the tidelands. HCSC incorporates Timmerman's arguments, and also argues that (6) it is entitled to summary judgment on its quiet title claim against DNR based on evidence extrinsic to its tideland deed; and (7) that the survey ordered by DNR was fatally flawed and improperly reapportioned HCSC's upland property.

First we hold that DNR's claim on Timmerman's parcel is barred by res judicata. Second, we hold that equitable division of the tidelands is appropriate as a matter of law but that genuine issues of material fact exist as to the boundaries set by DNR's survey. Finally, we hold that the trial court erred when it adopted DNR's survey results as to the extent of HCSC's upland plot. Accordingly, we affirm in part, reverse in part, and remand to the trial court for further proceedings consistent with this opinion.

FACTS

I. Historical Background

This dispute has its roots in Washington's tideland ownership and grant system. The Washington State Constitution, adopted in 1889, contains a declaration of State ownership over all submerged lands in navigable waters up to and including the line of ordinary high water. Const. art. XVII, § 1. This declaration divested upland owners of all riparian rights including the right of access to deep water. Eisenbach v Hatfield, 2 Wash. 236, 240-41, 26 P. 539 (1891). The State was not, however, prohibited from subsequently selling such submerged lands and rights. Davidson v. State, 116 Wn.2d 13, 16, 802 P.2d 1374 (1991). The State's first Legislature "authorized the sale of tideland and shoreland and provided a purchase preference to the abutting upland owners." Davidson, 116 Wn.2d at 16; Laws of 1889-90, ch. 14, p. 431.

Between 1889 and 1971, the State, through DNR and its predecessor agencies, including the Department of Public Lands (DPL), sold tidelands into private ownership. See generally Chapter 79.125 RCW (aquatic lands-tidelands and shorelands). The State conveyed tidelands by deeds that usually described the abutting upland parcel. Deeds would typically describe tidelands as "in front of" or "abutting" the described upland parcel, without clearly defining the lateral boundaries. Clerk's Papers (CP) at 404. The State rarely used metes and bounds to describe tideland deeds. In 1971, the Legislature halted the State's sale of tidelands. Laws of 1971, 1st Ex. Sess. Ch. 217, § 2; RCW 79.125.200. Tidelands not sold were retained by the State. See Const. art. XVII, § 1. To determine remaining State tidelands, DNR subtracted the parcels previously sold based on descriptions in the deed to determine those lands remaining in State ownership.

Beginning in 1891, the State designated certain tidelands as oyster reserves to preserve and grow natural oyster beds. Laws of 1891, ch. 150, § 1. As Washington's shellfish industry changed, the State began vacating oyster reserves that it determined no longer required protection. Laws of 1929, ch. 224, § 1. After an oyster reserve was vacated, the State could sell the tidelands. Id. The statute providing the procedures for the sale of tidelands gave the owners of abutting uplands a preferential right to purchase the tidelands abutting their upland parcels. Laws of 1927, ch. 255, § 121.

The State designated Dewatto Bay an oyster reserve in 1895 and vacated it in 1930. A 1930 survey of Dewatto Bay shows the entire southern and eastern halves of the bay as "Reserve No. 2 Area." Suppl. CP at 2517. Regardless of the reserve designation, the record shows that the State deeded some parcels of tidelands within the Dewatto Bay reserve before it was vacated.

II. TIMMERMAN'S CLAIM: THE MURRAY TIDELANDS

(Image Omitted)

In 1896, James Murray-Timmerman's predecessor in interest-owned the uplands in the eastern portion of Government Lot 5 on the south side of Dewatto Bay. Government Lot 5 forms a headlands that protrudes north into the bay, as shown in the portion marked "School District Uplands" in the image above.^[2] CP at 690. Government Lot 5 also includes the Reidell uplands, which HCSC now holds title to and will be described in Part III, infra.

In 1903, despite the statutory ban on the sale of oyster reserves, the State sold Murray a parcel of second class tidelands.^[3] The deed conveyed to Murray "All tide lands of the second class owned by the State of Washington, situate in front of, adjacent to or abutting upon [a] portion of the United States government meander line." CP at 694. The deed did not convey the tidelands in association with an upland parcel, but instead defined the tidelands with calls along the government meander line in detail by angles and chain lengths.

Under the laws in effect at the time the State conveyed the tidelands to Murray, tidelands extended waterward only down to mean low tide. Laws of 1897, ch. 89, § 4. In 1903, the lateral boundaries of the Murray tidelands would have been determined from using the angles and limiting points listed in the deed along the meander line and extending perpendicular lines from those limiting points to the waterward limit. Thus, the Murray tidelands occupy a narrow strip wrapping around the northern tip of the headlands between ordinary high water and mean low tide.

In 1966, Timmerman's predecessor in interest sued to quiet title to the Murray tidelands. CP at 755 (Claim in a Quiet Title Action, Margett v. Armour, Mason County Super. Ct. No. 9217, July 23, 1966) (Margett litigation). DNR was a party to the Margett litigation. CP at 765-67. DNR filed an answer to the quiet title complaint and argued that the deed to the Murray tidelands was void. DNR requested the court "quiet[] title" to the Murray tidelands. CP at 766. The Margett litigation did not proceed to trial because the parties stipulated to an order of dismissal with prejudice.

The Margett litigation was resolved when Timmerman's predecessor in interest settled with the State for $1, 000.00. In exchange, the State affirmed the validity of the Murray tideland deed and the trial court ordered that the State "shall have no further claim of right to the property described herein." CP at 773. The Commissioner of Public Lands then confirmed this settlement in a letter, restated the language from the deed, and ordered that the $1, 000.00 was "payment in full for any claim the State of Washington may have had in any of the tidelands herein described." CP at 77.

Timmerman acquired an ownership interest in the Murray tidelands in 1977. He has improved and maintained the tidelands and previously-built structures there since acquiring ownership.

III. HCSC's Claim: The Reidell Tidelands

HCSC's predecessor in interest to its tidelands claim was Theresa Reidell. Reidell purchased an upland plot on the southwest shore of Dewatto Bay in 1933. At that time, the upland parcel to the east of her property, containing the headlands, was owned by the Mason County School District.

A. Reidell Upland Deed

In 1912, Clara and W.M. Nance owned the majority of the Government Lot 5 uplands, including both the school district and Reidell parcels. A 1912 warranty deed conveyed an uplands parcel west of the headlands to James Harden Nance. The 1912 deed defined the dividing boundary as "the line along the aforesaid gulch to run on the south and west side of aforesaid creek . . . not to touch or cross aforesaid creek." CP at 1058. The 1933 deed that conveyed the uplands from James Harden Nance to Reidell was identical:

All that portion of Government

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