author: Andrus, J.

text:
    STATE of Washington, Respondent, v. Benjamin BATSON, Appellant.
    No. 78341-6-I
    Court of Appeals of Washington, Division 1.
    FILED: August 12, 2019
    Washington Appellate Project, 1511 Third Avenue, Suite 610, Seattle, WA, 98101, Jessica Constance Wolfe, Washington Appellate Project, 1511 3rd Ave. Ste. 701, Seattle, WA, 98101-3647, for Appellant.
    Prosecuting Atty. King County, King Co. Pros./App. Unit Supervisor, W554 King County Courthouse, 516 Third Avenue, Seattle, WA, 98104, Gavriel Gershon Jacobs, Attorney at Law, 516 3rd Ave. Ste. W554, Seattle, WA, 98104-2362, for Respondent.
    PUBLISHED OPINION
   Andrus, J.

¶1 Benjamin Batson challenges the constitutionality of RCW 9A.44.128(10)(h) to the extent it imposes a duty to register as a sex offender based on an out-of-state conviction for which there is no comparable Washington crime. We conclude that the sex offender registration statute contains an unconstitutional delegation of the legislative function to another state and reverse Batson's conviction for failing to register.

FACTS

¶2 On November 14, 1984, while living in Arizona, Batson was convicted of two counts of sexual conduct with a 16 year old, a felony in Arizona. The trial court sentenced Batson to prison, and ordered him to register as a sex offender while living in Arizona.

¶3 Batson moved to Washington in 2008. At the time, Washington's registration statute did not require Batson to register as a sex offender because his Arizona conviction was not legally comparable to a crime in Washington. Former RCW 9A.44.130(1)(a) (2008) provided:

Any adult ... whether or not the person has a fixed residence, or who is a student, is employed, or carries on a vocation in this state who has been found to have committed or has been convicted of any sex offense or kidnapping offense ... shall register with the county sheriff for the county of the person's residence ....

Former RCW 9A.44.130(10)(a)(iv) defined "sex offense" as "[a]ny federal or out-of-state conviction for an offense that under the laws of this state would be classified as a sex offense under this subsection." Because the comparable Washington statute only criminalized sexual contact with minors under the age of 16, Batson's conduct did not meet the definition of a sex offense.

¶4 In 2010, the Legislature amended RCW 9A.44.128, modifying the definition of "sex offense" to include:

Any federal or out-of-state conviction for: An offense for which the person would be required to register as a sex offender while residing in the state of conviction; or, if not required to register in the state of conviction, an offense that under the laws of this state would be classified as a sex offense under this subsection, unless a court in the person's state of conviction has made an individualized determination that the person should not be required to register.

LAWS OF 2010, ch. 267, § 1 (emphasis added).

¶5 The amended statute required Batson to register as a sex offender in Washington because he was required to register in Arizona. Because Batson is homeless, he must also report weekly to the sheriff of the county of registration and maintain an "accurate accounting" of each location he stayed during the week. RCW 9A.44.130(6)(b). The failure to report constitutes failure to register and is a felony. RCW 9A.44.132.

¶6 Batson was convicted of felony failure to register as a sex offender on June 21, 2011. He was again convicted of felony failure to register in 2014, but this court reversed that conviction because the State failed to prove that Batson lacked a fixed residence during the charging period. State v. Batson, 194 Wash. App. 326, 339, 377 P.3d 238 (2016). Batson challenged the constitutionality of the statute in that appeal, but this court declined to reach Batson's constitutional challenge because it reversed his conviction on other grounds. Id. at 328, 377 P.3d 238.

¶7 On November 14, 2017, the State charged Batson a third time with felony failure to register. CP 1, 17. The trial court convicted Batson of this offense and sentenced him to 9 months in jail followed by 36 months in community custody. Batson appeals his conviction, again raising a constitutional challenge to RCW 9A.44.128(10)(h).

ANALYSIS

¶8 Batson claims that the sex offender registration is unconstitutional. We review a statute's constitutionality de novo.

State v. Bassett, 192 Wash.2d 67, 77, 428 P.3d 343 (2018). Statutes are presumed constitutional, and the defendant has the burden of proving otherwise. Id.

¶9 Batson claims that RCW 9A.44.128(10)(h) is an unconstitutional delegation of the legislative function because it allows another state's legislature to define "sex offense," an element of the crime of felony failure to register. We agree.

¶10 Article II, section 1 of the Washington State Constitution vests all legislative powers in our state senate and house of representatives. It is unconstitutional for the Legislature to "abdicate or transfer its legislative function to others." Brower v. State, 137 Wash.2d 44, 54, 969 P.2d 42 (1998). This legislative duty requires that all statutes be complete when they leave the Legislature. Diversified Inv. P'ship v. Dep't of Soc. & Health Servs. (Diversified), 113 Wash.2d 19, 24, 775 P.2d 947 (1989). To meet the rule of completeness, the Legislature must define all elements of any crime and may not transfer that legislative function to others. State v. Dougall, 89 Wash.2d 118, 123, 570 P.2d 135 (1977) ; State v. Ramos, 149 Wash. App. 266, 276, 202 P.3d 383 (2009).

¶11 The Legislature may make the operative effect of a statute contingent on its ongoing harmony with federal law to ensure, for example, ongoing federal funding of certain state programs. Diversified, 113 Wash.2d at 26, 775 P.2d 947. But it may not attempt to adopt by statute future laws enacted by other legislative bodies. Dougall, 89 Wash.2d at 123, 570 P.2d 135 ; see also State ex rel. Kirschner v. Urquhart, 50 Wash.2d 131, 135-37, 310 P.2d 261 (1957) (Legislature cannot pass licensing law that declares that accredited medical schools shall be those thereafter established by private medical societies); Nostrand v. Balmer, 53 Wash.2d 460, 471-72, 335 P.2d 10 (1959) (statute unconstitutionally delegated to United States Attorney General the task of defining "subversive" organizations, the membership in which was prohibited), vacated in part on other grounds, Nostrand v. Little, 362 U.S. 474, 80 S. Ct. 840, 4 L. Ed. 2d 892 (1960).

¶12 The State contends that the sex offender registration statute merely makes its operative effect contingent on another state's statute and thus is permissible under Diversified. Batson, however, argues that the portion of the statute that makes sex offender registration contingent on the future laws of another state violates the non-delegation holding of Dougall. We conclude that Dougall controls here.

¶13 In Dougall, the defendant was charged with possession of Valium after a federal order published in the Federal Register designated it as a controlled substance under federal law. 89 Wash.2d at 122, 570 P.2d 135. The Washington Legislature did not designate or reschedule Valium as a controlled substance under the state Uniform Controlled Substances Act, chapter 69.50 RCW, but under RCW 69.50.201 (d), Valium automatically became a controlled substance under state law 30 days from the date of the federal order's publication in the Federal Register, if the Washington State Board of Pharmacy did not object to its designation. Id. at 120, 570 P.2d 135.

¶14 Our Supreme Court concluded that ROW 69.50.201(d) was an unconstitutional delegation of legislative authority to the federal government because it attempted to incorporate into state law future federal rules. Id. at 123, 570 P.2d 135. It held that the statute was unconstitutional because it permitted future federal designation, rescheduling, or deletion of controlled substances in the Federal Register to become controlled substances under the Uniform Controlled Substances Act by means of Board inaction or acquiescence. Id.

¶15 A person commits the crime of felony failure to register as a sex offender if the person has a duty to register under RCW 9A.44.130 for a felony sex offense and knowingly fails to comply with any of the requirements of RCW 9A.44.130. RCW 9A.44.132(1). RCW 9A.44.130(1)(a) in turn requires any adult convicted of a sex offense to register with the county sheriff for the county of the person's residence. RCW 9A.44.128(10)(h) then defines those "sex offenses" for which registration is mandatory. The provision provides:

Any out-of-state conviction for an offense for which the person would be required to register as a sex offender while residing in the state of conviction; or, if not required to register in the state of conviction, an offense that under the laws of this state would be classified as a sex offense under this subsection.

(emphasis added).

¶16 The duty to register thus is an element of Batson's crime. See 11 WASHINGTON PRACTICE: WASHINGTON PATTERN JURY INSTRUCTIONS: CRIMINAL 49C.02 (4th ed. 2016). The State had to establish that Batson had this duty during the period he was charged with violating RCW 9A.44.132. The only way to establish this element of the crime was to prove that during any alleged charging period, Batson "would be" required to register under Arizona law if he lived in that state. The definition of an out-of-state "sex offense" does not link the duty to register to any specific point in time in the past but instead conditions that duty on whether Arizona law imposes a duty to register in the future. Batson's duty to register in this state is thus completely dependent on whether the Arizona Legislature retains or removes his crime of conviction on its list of registrable crimes. If the Arizona Legislature eliminates Batson's crime of conviction from this list, any duty to register in Washington evaporates. If, however, the Arizona Legislature then reinstates the registration requirement, Batson's duty under Washington law would be resuscitated. As in Dougall, the sex offender registration statute permits future Arizona law to define an element of the crime.

¶17 Diversified is not analogous. In that case, the Legislature passed a statute that provided if any part of chapter 74.46 RCW, which established a nursing facility Medicaid payment system, was found to conflict with federal law, the conflicting state statute would become inoperative pending further review by the Legislature. 113 Wash.2d at 24, 775 P.2d 947. Diversified challenged the constitutionality of this provision, arguing it attempted to adopt future federal law in violation of the Dougall standard, Id. at 25, 775 P.2d 947. Our Supreme Court distinguished the Medicaid statute from the criminal statute in Dougall, concluding that the Legislature may determine when a law, substantively complete in itself, will take effect and when it will be repealed. Id. at 26, 775 P.2d 947. The Medicaid statute merely conditioned its operative effect on a future specified event, whereas the controlled substance statute at issue in Dougall transferred power to define an element of a crime to the federal government. Id. at 28-29, 775 P.2d 947.

¶18 The sex offender registration statute does not provide that it becomes ineffective or inoperative if some event occurs in the future. Instead, it transfers to Arizona the power to define whether Batson has an ongoing duty to register in Washington. See State v. Green, 156 Wash. App. 96, 230 P.3d 654 (2010) (duty to register is an ongoing obligation; failure to register is ongoing course of conduct). This obligation depends entirely on Arizona law at any given point in the future. Thus, the duty to register as the result of an out-of-state conviction for which registration would be required while residing in the state of conviction is an unconstitutional delegation of the legislative function and violates article II, section 1 of the Washington State Constitution. We do not invalidate RCW 9A.44.128(10)(h) in its entirety, but do so to the extent it imposes a duty to register based on an out-of-state conviction that would not be classified as a sex offense under the other provisions of RCW 9A.44.128(10).

¶19 Reversed.

WE CONCUR:

Hazelrigg-Hernandez, J.

Chun, J.

      Arizona Revised Statutes (ARS) § 13-1405(A) makes it a crime to engage in sexual conduct with a minor, which is defined as any person under the age of 18.

      ARS § 13-3821 (A)(4) provides that anyone convicted of sexual conduct with a minor in violation of ARS § 13-1405 must register with the sheriff of the county of residence.

      RCW 9A.44.089, Washington's child molestation statute, makes it unlawful for a person to have sexual contact with a minor at least 14 years of age but under the age of 16, if the perpetrator is at least 4 years older than the victim. Thus, the age of consent in Washington is 16 years of age.

      A 2011 amendment removed federal offenses from the statute. Laws of 2011, ch. 337, § 2. The statute now reads:
      Any out-of-state conviction for an offense for which the person would be required to register as a sex offender while residing in the state of conviction; or, if not required to register in the state of conviction, an offense that under the laws of this state would be classified as a sex offense under this subsection.
      RCW 9A.44.128(h). This is the current version of the statute.

      Batson also argues the statute is an ex post facto law, violates double jeopardy and violates equal protection under the federal and state constitutions. Because we invalidate the statute under article II, section 1, we need not reach these additional constitutional claims.


source: Caselaw Access Project

author: Appelwick, C.J.

license: Public Domain

text:
    Carlos PACHECO, Appellant, v. OREGON MUTUAL INSURANCE COMPANY, a foreign insurance company, Respondent.
    No. 77525-1-I
    Court of Appeals of Washington, Division 1.
    FILED: August 19, 2019
    Paul Michael Veillon, Galileo Law, PLLC, 1218 3rd Ave. Ste. 1000, Seattle, WA, 98101-3290, Stephen Michael Hansen, Law Offices of Stephen M. Hansen P.S., 1821 Dock St. Unit 103, Tacoma, WA, 98402-3201, Scott Nealey, 71 Stevenson Street #400, San Francisco, CA, 94105, for Petitioner(s).
    Jennifer Page Dinning, R. Lind Stapley, Soha & Lang P.S., 1325 4th Ave. Ste. 2000, Seattle, WA, 98101-2570, for Respondent(s).
    PUBLISHED OPINION
   Appelwick, C.J.

¶ 1 Pacheco filed a claim under the underinsured motorist insurance coverage under a policy provided by Oregon Mutual. The policy expressly excluded coverage for diminished value and loss of use. Pacheco sought discretionary review from denial of his motion to determine that both exclusions are contrary to RCW 48.22.030 and violate public policy. We hold that the exclusion for diminished value violates the language of the statute, but that the exclusion for loss of use does not violate either the language of the statute or public policy. We affirm in part, reverse in part, and remand for further proceedings.

FACTS

¶ 2 On May 15, 2016, an uninsured driver damaged Carlos Pacheco's 2014 Audi. Pacheco made a claim to Oregon Mutual Insurance Company under the policy's underinsured motorist coverage. Oregon Mutual accepted coverage, and made $16,115 in payments on the claim, including the $1,050 limit for rental car expenses. Oregon Mutual did not pay for alleged diminished value damages, nor did it pay for loss of use damages beyond the amount provided for rental car coverage. Oregon Mutual informed Pacheco, "The uninsured motorist property damage provisions of the policy ... unambiguously exclude such coverage" for loss of use and diminished value.

¶ 3 Pacheco filed suit against Oregon Mutual in King County District Court. The complaint sought payment of the excluded damages for "diminished value and loss of use," attorney fees, and interest. Pacheco then filed a motion for partial summary judgment, requesting a determination that, "while the plain language of the policy excludes those damages from the benefits recoverable, said exclusion is void as contrary to public policy." The district court granted the motion as to the diminished value exclusion where the diminished value is caused by "unrepairable continuing physical damage." But, the court ruled that there was no basis to void an exclusion for loss of use damages.

¶ 4 Both parties filed motions for reconsideration. The district court denied both motions, leaving its original decision in place. Oregon Mutual filed a notice of appeal to the King County Superior Court, and Pacheco filed a notice of cross-appeal.

¶ 5 The superior court reversed the district court's order as to the finding that exclusions for diminished value damages are void, and affirmed the finding as to loss of use damages. Pursuant to CR 54(b), the trial court certified that its order is eligible for discretionary review. Pacheco sought review, which this court granted.

DISCUSSION

I. Standard of Review

¶ 6 An appellate court reviews de novo a grant of summary judgment. Bostain v. Food Exp., Inc., 159 Wash.2d 700, 708, 153 P.3d 846 (2007). Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id. Facts and reasonable inferences therefrom are viewed most favorably to the nonmoving party. Id.

¶ 7 When interpreting a statute, the court first looks to its plain language. Homestreet, Inc. v. Dep't. of Revenue, 166 Wash.2d 444, 451, 210 P.3d 297 (2009). Our function is to give effect to the object and intent of the Legislature. Hoa Doan v. Dep't of Labor & Indus., 143 Wash. App. 596, 601, 178 P.3d 1074 (2008).

II. Underinsured Motorist Statute

¶ 8 Washington law requires mandatory minimum liability automobile insurance. RCW 46.60.020. Washington law also requires that all insurers make UIM coverage available to Washington automobile liability policyholders. Clements v. Travelers Indem. Co., 121 Wash.2d 243, 250, 850 P.2d 1298 (1993) ; RCW 48.22.030(2). The purpose of the UIM statute is "to protect innocent victims of motorists of underinsured motor vehicles." RCW 48.22.030(12). UIM coverage is not mandated, and policyholders can waive all or part of that coverage. RCW 48.22.030(4).

¶ 9 The relevant text of the UIM statute is RCW 48.22.030 :

(1) "Underinsured motor vehicle" means a motor vehicle with respect to the ownership, maintenance, or use of which either no bodily injury or property damage liability bond or insurance policy applies at the time of an accident, or with respect to which the sum of the limits of liability under all bodily injury or property damage liability bonds and insurance policies applicable to a covered person after an accident is less than the applicable damages which the covered person is legally entitled to recover.
(2) No new policy or renewal of an existing policy insuring against loss resulting from liability imposed by law for bodily injury, death, or property damage, suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be issued with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of underinsured motor vehicles, hit-and-run motor vehicles, and phantom vehicles because of bodily injury, death, or property damage, resulting therefrom, except while operating or occupying a motorcycle or motor-driven cycle, and except while operating or occupying a motor vehicle owned or available for the regular use by the named insured or any family member, and which is not insured under the liability coverage of the policy. The coverage required to be offered under this chapter is not applicable to general liability policies, commonly known as umbrella policies, or other policies which apply only as excess to the insurance directly applicable to the vehicle insured.
(3) Except as to property damage, coverage required under subsection (2) of this section shall be in the same amount as the insured's third party liability coverage unless the insured rejects all or part of the coverage as provided in subsection (4) of this section. Coverage for property damage need only be issued in conjunction with coverage for bodily injury or death. Property damage coverage required under subsection (2) of this section shall mean physical damage to the insured motor vehicle unless the policy specifically provides coverage for the contents thereof or other forms of property damage.
(4) A named insured or spouse may reject, in writing, underinsured coverage for bodily injury or death, or property damage, and the requirements of subsections (2) and (3) of this section shall not apply. If a named insured or spouse has rejected underinsured coverage, such coverage shall not be included in any supplemental or renewal policy unless a named insured or spouse subsequently requests such coverage in writing. The requirement of a written rejection under this subsection shall apply only to the original issuance of policies issued after July 24, 1983, and not to any renewal or replacement policy. When a named insured or spouse chooses a property damage coverage that is less than the insured's third party liability coverage for property damage, a written rejection is not required.
(5) The limit of liability under the policy coverage may be defined as the maximum limits of liability for all damages resulting from any one accident regardless of the number of covered persons, claims made, or vehicles or premiums shown on the policy, or premiums paid, or vehicles involved in an accident.
(6) The policy may provide that if an injured person has other similar insurance available to him or her under other policies, the total limits of liability of all coverages shall not exceed the higher of the applicable limits of the respective coverages.
(7)(a) The policy may provide for a deductible of not more than three hundred dollars for payment for property damage when the damage is caused by a hit-and-run driver or a phantom vehicle.
(b) In all other cases of underinsured property damage coverage, the policy may provide for a deductible of not more than one hundred dollars.
(8) For the purposes of this chapter, a "phantom vehicle" shall mean a motor vehicle which causes bodily injury, death, or property damage to an insured and has no physical contact with the insured or the vehicle which the insured is occupying at the time of the accident if:
(a) The facts of the accident can be corroborated by competent evidence other than the testimony of the insured or any person having an underinsured motorist claim resulting from the accident; and
(b) The accident has been reported to the appropriate law enforcement agency within seventy-two hours of the accident.
(9) An insurer who elects to write motorcycle or motor-driven cycle insurance in this state must provide information to prospective insureds about the coverage.
(10) An insurer who elects to write motorcycle or motor-driven cycle insurance in this state must provide an opportunity for named insureds, who have purchased liability coverage for a motorcycle or motor-driven cycle, to reject underinsured coverage for that motorcycle or motor-driven cycle in writing.
(11) If the covered person seeking underinsured motorist coverage under this section was the intended victim of the tort feasor [sic], the incident must be reported to the appropriate law enforcement agency and the covered person must cooperate with any related law enforcement investigation.
(12) The purpose of this section is to protect innocent victims of motorists of underinsured motor vehicles. Covered persons are entitled to coverage without regard to whether an incident was intentionally caused. However, a person is not entitled to coverage if the insurer can demonstrate that the covered person intended to cause the event for which a claim is made under the coverage described in this section. As used in this section, and in the section of policies providing the underinsured motorist coverage described in this section, "accident" means an occurrence that is unexpected and unintended from the standpoint of the covered person.
(13) The coverage under this section may be excluded as provided for under RCW 48.177.010(6).[ ]
(14) "Underinsured coverage," for the purposes of this section, means coverage for "underinsured motor vehicles," as defined in subsection (1) of this section.

¶ 10 Pacheco argues that the superior court erred in failing to find that RCW 48.22.030 requires coverage for damages for diminished value and loss of use. And, Pacheco argues the exclusions for diminished value and loss of use in the underinsured motorist policy he holds are void as contrary to the UIM statute and public policy. He reads RCW 48.22.030(2) as requiring coverage for all damages because of bodily injury, death, or property damage, including consequential damages. The statute provides, "Property damage coverage required under subsection (2) of this section shall mean physical damage to the insured motor vehicle unless the policy specifically provides coverage for the contents thereof or other forms of property damage." RCW 48.22.030(3).

¶ 11 Framing this case first as one of statutory interpretation, Pacheco asserts, "While the statute notes that 'property damage' 'shall mean' 'physical damage,' this is a definition as to what risks are covered, not a limitation to the covered damages, and it impacts nothing but the phrase it defines: i.e., 'property damage.' " He asserts, "Applying the statutory definition language as to the covered risks, the purpose is still clear: coverage must be provided to protect insureds 'legally entitled to recover damages' 'because of' 'physical damage.' "

¶ 12 We begin by analyzing the language of the subsection that mandates the insurance offering:

(2) No new policy or renewal of an existing policy insuring against loss resulting from liability imposed by law for bodily injury, death, or property damage, suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be issued with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of underinsured motor vehicles, hit-and-run motor vehicles, and phantom vehicles because of bodily injury, death, or property damage, resulting therefrom, except while operating or occupying a motorcycle or motor-driven cycle, and except while operating or occupying a motor vehicle owned or available for the regular use by the named insured or any family member, and which is not insured under the liability coverage of the policy. The coverage required to be offered under this chapter is not applicable to general liability policies, commonly known as umbrella policies, or other policies which apply only as excess to the insurance directly applicable to the vehicle insured.

RCW 48.22.030(2).

¶ 13 The statutory mandate language, "No new policy or renewal of an existing policy insuring against loss resulting from liability imposed by law for bodily injury, death, or property damage, suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be issued with respect to any motor vehicle registered or principally garaged in this state" is based on the definitions of motor vehicle, RCW 48.22.005(1), and automobile liability policy, RCW 48.22.005(8). It could be replaced by "No automobile liability insurance policy shall be issued ...."

¶ 14 The exceptions in this subsection to the mandated coverage offering also derive from the definitions of automobile and automobile liability insurance policy found in RCW 48.22.005, and of passenger car found in RCW 46.04.382 :

[E]xcept while operating or occupying a motorcycle or motor-driven cycle, and except while operating or occupying a motor vehicle owned or available for the regular use by the named insured or any family member, and which is not insured under the liability coverage of the policy. The coverage required to be offered under this chapter is not applicable to general liability policies, commonly known as umbrella policies, or other policies which apply only as excess to the insurance directly applicable to the vehicle insured.

RCW 48.22.030(2). Offering UIM motorcycle coverage is optional under RCW 48.22.030(9) and (10). The exceptions are of no interest in this case.

¶ 15 The focus here is on the remaining language, stating that no automobile liability insurance policy shall be issued "unless coverage is provided ... for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of underinsured motor vehicles, hit-and-run motor vehicles, and phantom vehicles because of bodily injury, death, or property damage, resulting therefrom." RCW 48.22.030(2). The key is that the clause which begins with "who," modifies "persons insured." It is a limitation on whether an insured has coverage following an accident. The insured may recover under UIM coverage only if (1) the insured is legally entitled to recover damages; (2) those damages will be recovered from owners or operators of underinsured motor vehicles, hit-and-run motor vehicles, and phantom vehicles; and (3) the damages are because of bodily injury, death, or property damage, resulting from the accident. The use of the phrases "legally entitled to recover damages" and "because of bodily injury, death, or property damage" does not change the clause from a limitation on whether an insured is covered for the accident into one defining the scope of coverage under the UIM policy.

¶ 16 While subsection (2) requires that UIM coverage be offered and defines when it is applicable, subsection (3) identifies the minimum scope of coverage:

Except as to property damage, coverage required under subsection (2) of this section shall be in the same amount as the insured's third party liability coverage unless the insured rejects all or part of the coverage as provided in subsection (4) of this section. Coverage for property damage need only be issued in conjunction with coverage for bodily injury or death. Property damage coverage required under subsection (2) of this section shall mean physical damage to the insured motor vehicle unless the policy specifically provides coverage for the contents thereof or other forms of property damage.

RCW 48.22.030(3). This subsection treats property coverage differently from bodily injury or death coverage in several ways. Property damage coverage need be issued only in conjunction with coverage for bodily injury or death, not as a stand-alone coverage. Property damage need not be the same amount as the insured's third party liability coverage, while other coverages must be. "Property damage" is defined, and defined narrowly, as "physical damage to the insured motor vehicle." Coverage of vehicle contents or other forms of property damage is optional. And, under subsection (7), minimal deductibles for property damage coverage are prescribed.

¶ 17 The plain reading of the statutory language requires that physical damage to the insured motor vehicle must be covered. Other property damages, including consequential damages, are not require to be covered by the UIM policy.

III. Exclusions

¶ 18 UIM insurers cannot reduce statutorily mandated UIM coverage through language in the insurance policy. McIllwain v. State Farm Mut. Auto. Ins. Co., 133 Wash. App. 439, 446, 136 P.3d 135 (2006). The terms and conditions of the insured's contract with the UIM carrier must be consistent with the statute and cases construing it. Blackburn v. Safeco Ins. Co., 115 Wash.2d 82, 86, 794 P.2d 1259 (1990). Our Supreme Court has addressed exclusions under UIM coverage:

In determining the validity of a UIM exclusionary clause the court applies a two-part test which asks: "Does the proposed exclusion conflict with the express language of the UIM statute? If not, is the exclusion contrary to the UIM statute's declared public policy?" A UIM exclusionary clause will be upheld only if we can answer both inquiries in the negative.

Greengo v. Pub. Employees Mut. Ins. Co., 135 Wash.2d 799, 806, 959 P.2d 657 (1998) (quoting Bohme v. PEMCO Mut. Ins. Co., 127 Wash.2d 409, 412, 899 P.2d 787 (1995) ). In Greengo, the court also stated, "[L]ack of express statutory authorization for the precise exclusion is not the focus of our inquiry. Instead we look to whether such exclusion conflicts with the statute." Id. at 808, 959 P.2d 657.

¶ 19 Addressing the diminished value exclusion, we must ask first whether the exclusion for diminished value conflicts with the express language of the UIM statute. In Moeller, the court set out diminished value, explaining, " 'A vehicle suffers "diminished value" when it sustains physical damage in an accident, but due to the nature of the damage, it cannot be fully restored to its preloss condition. Weakened metal that cannot be repaired is one such example.' " Moeller v. Farmers Ins. Co. of Wash., 173 Wash.2d 264, 271, 267 P.3d 998 (2011) (quoting Moeller v. Farmers Ins. Co. of Wash., 155 Wash. App. 133, 142, 229 P.3d 857 (2010), aff'd 173 Wash.2d 264, 267 P.3d 998.). Thus, under Washington case law, the diminished value of a vehicle from physical injury is property damage as defined in the UIM statute. An express policy exclusion for coverage for diminished value of the damaged vehicle is therefore contrary to the UIM statutory language. Having answered the first question under Greengo in the affirmative, we need not answer the second question of whether it conflicts with public policy.

¶ 20 Addressing the loss of use exclusion, we must ask first whether the exclusion for loss of use conflicts with the express language of the UIM statute. Loss of use may flow from physical damage to a vehicle, but it is not physical damage to the vehicle. Loss of use is not property damage as defined in RCW 48.22.030. Because it is not required by the statute, it does not violate the express language of the statute to exclude it.

¶ 21 Having answered the first question in the negative, under Greengo, we ask next whether the exclusion for loss of use violates public policy. The declared public policy of the UIM statute is to protect innocent insureds. RCW 48.22.030(12). The protection afforded by the statute is not absolute. The legislature defined property damage coverage narrowly as "physical damage to the insured motor vehicle." RCW 48.22.030(3). It made additional coverage optional rather than mandatory with the clause "unless the policy specifically provides coverage for the contents thereof or other forms of property damage." Id. This language, contained in the same section as the declared public policy, makes plain that damages such as loss of use are not required to be covered. An express UIM policy exclusion for loss of use of a vehicle is not inconsistent with the stated public policy.

¶ 22 We conclude that a UIM policy exclusion for diminished value resulting from physical damage to a vehicle is void. The trial court erred in finding that the exclusion for diminished value is not void. However, because the statutory language and declared public policy do not require coverage for loss of use as property damage, the trial court did not err in upholding the exclusion for loss of use in the UIM policy.

IV. Attorney Fees

¶ 23 Pacheco requests attorney fees under Olympic S.S. Co. v. Centennial Ins. Co., 117 Wash.2d 37, 811 P.2d 673 (1991).

¶ 24 In Olympic Steamship, the court held, "[A]n award of fees is required in any legal action where the insurer compels the insured to assume the burden of legal action, to obtain the full benefit of his insurance contract, regardless of whether the insurer's duty to defend is at issue." 117 Wash.2d at 53, 811 P.2d 673. RAP 18.1(a) authorizes an award of fees on appeal if applicable law grants to a party the right to recover reasonable attorney fees. Id.

¶ 25 The State Supreme Court has expanded on the Olympic Steamship rule. See Leingang v. Pierce County Med. Bureau, Inc., 131 Wash.2d 133, 147, 930 P.2d 288 (1997). In Leingang, the court explained,

If a claim is denied on the basis of an alleged lack of coverage and a court later determines there is coverage, then the case would fall under the rule of Olympic Steamship. The holding of Olympic Steamship and Dayton [ ] is that an insured is entitled to attorney fees if the insured litigates an issue of coverage, but not if the issue is merely a dispute about the value of a claim. The present case is like the McGreevy [ ] case in that the insurer admitted there was some coverage but disputed the scope of the coverage. Coverage disputes include both cases in which the issue of any coverage is disputed and cases in which "the extent of the benefit provided by an insurance contract" is at issue.

Id. (quoting McGreevy, 128 Wash.2d at 33, 904 P.2d 731 ). In Leingang, the dispute was over coverage as it was the claim of the insurer that the exclusion at issue denied possibility of recovery under any foreseeable facts. Id. The court held that the insurer was liable for the reasonable attorney fees its insured incurred in its successful effort to overcome the asserted policy exclusion from coverage. Id. at 147-48, 930 P.2d 288.

¶ 26 In Greengo, the court reiterated that a party is entitled to attorney fees when an insurer wrongfully denies "coverage," as distinguished from the situation where "coverage" is conceded but the claim fails, or recovery is diminished on its factual merits. 135 Wash.2d at 817, 959 P.2d 657. The Greengo court answered "the threshold coverage question, while reserving the factual entitlement to a monetary recovery against the insurer, as well as the amount of that recovery, to remand." Id. at 817-18, 959 P.2d 657. But, the court found that awarding reasonable attorney fees at that stage was appropriate. Id. at 818, 959 P.2d 657.

¶ 27 Pacheco had to pursue legal action to obtain a determination that the policy cannot exclude coverage for diminished value. Pursuant to Greengo, awarding Pacheco appellate attorney fees at this stage of the proceeding is appropriate.

¶ 28 We affirm in part, reverse in part, and remand for further proceedings.

WE CONCUR:

Smith, J.

Andrus, J.

      In support of his motion for partial summary judgment, Pacheco offered a declaration from Darrell Harber, who had over 28 years of experience in the automotive collision repair industry. Harber opined that the accident had reduced the value of Pacheco's Audi by $7,950.

      RCW 48.177.010(6) provides: "Insurers that write automobile insurance in Washington may exclude any and all coverage afforded under a private passenger automobile insurance policy issued to an owner or operator of a personal vehicle for any loss or injury that occurs while a driver for a commercial transportation services provider is logged in to a commercial transportation services provider's digital network or while a driver provides a prearranged ride. This right to exclude all coverage may apply to any coverage included in a private passenger automobile insurance policy including, but not limited to: ... (c) Underinsured motorist coverage." This is the only explicit exclusion enumerated in the statute.

      Pacheco did not assert below, and does not argue on appeal, that the Oregon Mutual policy included coverage for diminished value and loss of use. Instead, he argues that the policy's exclusions for such coverage violate the statute in question.

      Oregon Mutual asserted below that Pacheco's expert combined stigma and diminished value damages in his analysis. But, Pacheco presented his argument as purely an issue of law on his motion for partial summary judgment, and the distinction of damages was not discussed.

      RCW 48.22.005 provides these definitions:
      (1) "Automobile" means a passenger car as defined in RCW 46.04.382 registered or principally garaged in this state other than:
      (a) A farm-type tractor or other self-propelled equipment designed for use principally off public roads;
      (b) A vehicle operated on rails or crawler-treads;
      (c) A vehicle located for use as a residence;
      (d) A motor home as defined in RCW 46.04.305 ; or
      (e) A moped as defined in RCW 46.04.304.
      ....
      (8) "Automobile liability insurance policy" means a policy insuring against loss resulting from liability imposed by law for bodily injury, death, or property damage suffered by any person and arising out of the ownership, maintenance, or use of an insured automobile. An automobile liability policy does not include:
      (a) Vendors single interest or collateral protection coverage;
      (b) General liability insurance; or
      (c) Excess liability insurance, commonly known as an umbrella policy, where coverage applies only as excess to an underlying automobile policy.
      RCW 46.04.382 provides that "Passenger car" means every motor vehicle except motorcycles and motor-driven cycles, designed for carrying 10 passengers or less and used for the transportation of persons.

      "Underinsured motor vehicle" is defined in RCW 48.22.030(1). "Phantom vehicle" is defined in RCW 48.22.030(8).

      Again, the only explicit exclusion enumerated in the statute, under subsection (13), is "for any loss or injury that occurs while a driver for a commercial transportation services provider is logged in to a commercial transportation services provider's digital network or while a driver provides a prearranged ride." RCW 48.22.030(13) ; RCW 48.177.010(6). It does not apply here.

      Our State Supreme Court has stressed that the public policy underlying the UIM statute is to create a second layer of floating protection for the insured, not to guarantee full compensation for accident victims. Greengo, 135 Wash.2d at 809-10, 959 P.2d 657. And, subsections (4), (5), (6), and (7) of RCW 48.22.030 are each in some manner a potential limitation on recovery under UIM coverage.

      Dayton v. Farmers Ins. Grp., 124 Wash.2d 277, 876 P.2d 896 (1994).

      McGreevy v. Oregon Mut. Ins. Co., 128 Wash.2d 26, 904 P.2d 731 (1995), overruled on other grounds by Panorama Vill. Condo. Owners Ass'n Bd. of Dirs. v. Allstate Ins. Co., 144 Wash.2d 130, 26 P.3d 910 (2001).


author: Chun, J.

text:
    PORT OF ANACORTES, a Washington municipal corporation, Respondent, v. FRONTIER INDUSTRIES, INC. a Washington, corporation; Eino "Mike" Johnson and Lorie A. Johnson, a married couple; Itochu International, Inc., a foreign corporation; Petitioners,
    Indemnity Insurance Company of North America, a Pennsylvania corporation; Insurance Company of North America, a Pennsylvania corporation; ACE USA Insurance a Pennsylvania corporation; the Chubb Corporation, a Pennsylvania corporation, Defendants.
    No. 78726-8-I
    Court of Appeals of Washington, Division 1.
    FILED: August 19, 2019
    Erika Lindsay Holsman, Loren Robert Dunn, Beveridge & Diamond, P.C., 600 University St. Ste. 1601, Seattle, WA, 98101-4124, Clark J. Davis, Davis Law Office PLLC, Mark Jeffrey Davis, Attorney at Law, 7191 Wagner Way Nw. Ste. 202, Gig Harbor, WA, 98335-6909, for Petitioner(s).
    Frank Joseph, Holly Michelle Stafford, Brian Christopher Nadler, Chmelik Chmelik Sitkin & Davis P.S., Seth Ananda Woolson, Attorney at Law, 1500 Railroad Ave., Bellingham, WA, 98225-4542, for Respondent(s).
    Ivy Anderson, Office of the Attorney General, Ecology, P.o. Box 40117, 2425 Bristol Ct. Sw., Olympia, WA, 98504-0117, Caroline Elizabeth Cress, Attorney at Law, 2425 Bristol Ct. Sw., P.o. Box 40117, Olympia, WA, 98502-6003, for Amicus Curiae on behalf of Department of Ecology.
    PUBLISHED OPINION
   Chun, J.

¶1 The Port of Anacortes filed suit against defendants under the Model Toxics Control Act (MTCA), which imposes strict liability on any owner or operator of a facility "at the time of disposal or release of ... hazardous substances." RCW 70.105D.040(1)(b). Defendants' activities at the Port's log handling facility resulted in the accumulation of significant amounts of wood debris in the marine environment. Decomposition of such debris in the marine environment releases hazardous substances such as ammonia, benzoic acid, and phenols. Moreover, such hazardous substances existed in the water at the cessation of defendants' activities at the Port. This indicates that a release of hazardous substances occurred during defendants' tenure as operators of the facility. Therefore, we affirm the trial court's denial of defendants' joint motion for summary judgment.

I.

BACKGROUND

¶2 The Port serves as a Washington port district and owns upland and aquatic property on Guemes Channel in Anacortes, Washington. The Port purchased the site in 1965. The property includes Pier 2, a deep-water marine terminal, and a "round log" handling facility. Round logs have had their leaves and branches removed but maintain their bark. The round log handling facility consists of the upland "log yard" and the "log pocket" in a small embayment in the water. Log handling occurred at this site for approximately four decades, from the mid-1960s to 2004.

¶3 From 1994 to 1997, defendant Frontier Industries, owned by Mike Johnson, leased the log yard and log pocket for log handling. Defendant Itochu International, Inc., a Japanese trading firm, also used the log handling facility to export logs to Japan. In 1997, log handling ceased for a time due to a downturn in the round log export business. Exports resumed later that year, and Johnson entered an agreement with the Port for Itochu to serve as the exclusive round log user of the Port's facility. The Port closed the log handling facility in 2004.

¶4 Defendants handled tens of millions of board feet of round logs at the Port facility. A tugboat would pull large rafts, composed of many bundles of logs, into the log pocket. The tugboat would then deposit the logs in a north-south position within the log pocket. During low tide, the logs typically rested on the bottom of the log pocket. Removal of the logs required east-west positioning. A small gasoline-powered boat called a "log bronc" moved the rafts around inside the log pockets to reorient them. When the logs were properly situated, a large machine called a "Wagner" would go to the log pocket and retrieve bundles of logs with its hydraulic claws.

¶5 During this process, the logs shed bark while in the log pocket. Shedding occurred because the logs soaked in the salt water and rubbed and crashed against each other and the machinery. The shed bark deposited on the bottom of the log pocket.

¶6 Studies dating back to 1984 show that sediment with 20 percent wood waste by volume can cause a negative impact on the marine environment. "Wood waste leaches and/or degrades into some compounds that can be toxic to aquatic life, such as phenols and methylated phenols, benzoic acid and benzyl alcohol, terpenes, and tropolones." Wood debris decomposes into byproducts "such as sulfides, ammonia, and phenols, which can cause or contribute to toxicity." Additionally, "TVS [total volatile solids] and sulfides are known byproducts of wood waste decomposition in the marine environment that are toxic to aquatic life."

¶7 After the facility's closure, the Port assessed the environmental impacts of the log handling activities. Surface sediment samples contained contaminants such as benzene derivatives. The investigation also included the digging of eight test pits in the marine sediment to two feet below the mudline. All eight pits confirmed the presence of wood debris, with four of the test pits exceeding 50 percent wood waste by weight. The layer of deposited wood debris ranged in thickness from 11 inches to two feet. Two of the pits showed approximately 75 percent wood waste through two feet of sample sediment.

¶8 In 2008, the Washington State Department of Ecology (Ecology) required the Port to conduct chemical and biological toxicity testing to determine if the log pocket's wood waste posed an environmental risk. The testing found that the log pocket sediment samples contained higher concentrations of total sulfides than typically found in the Puget Sound. Additionally, the sediment samples failed to meet Ecology's criteria for benthic abundance. Subsequent investigations provided additional evidence of adverse environmental effects from wood debris. In addition to wood waste, sediment samples contained metals, benzoic acid, dioxins, and furans in amounts exceeding required cleanup levels.

¶9 In April 2014, Ecology issued a Potentially Liable Person (PLP) Determination letter to the Port as owner of the log handling site. In response, the Port entered into an Agreed Order with Ecology promising to conduct a remedial investigation of the extent of the hazardous substances and a feasibility study on the options for cleanup, as well as draft a cleanup plan. As of June 2018, the remedial investigation and feasibility studies for cleanup of the log handling facility reached their final stages. The Port has paid, and has agreed to continue to pay, for remedial action at the site.

¶10 The remediation report lists wood waste as the first contaminant of concern. In addition, substances such as metals, LPAHs, HPAHs, cPAHs, benzoic acid, phenols, dioxins, and furans contaminate the wood debris area and commingle within the wood waste. While many of these contaminants stem from the use of machinery during the log handling operations, hazardous substances such as benzoic acid and phenols also result from the decomposition and degradation of the wood debris in the marine environment. Site testing in the log pocket demonstrated the presence of these contaminants as well as other known by-products of wood debris including ammonia and sulfides.

¶11 In July 2016, the Port filed a complaint seeking contribution from defendants under MTCA. The Port requested proportionate recovery of the costs of remediation for the site from these former operators. The Port also sought declaratory judgment on two issues. First, the Port requested declaratory relief "that the Operator Defendants, as former owners and/or operators under RCW 70.105D.040(2), are strictly liable, jointly and severally, for all remedial actions costs resulting from releases or threatened releases of hazardous substances at the Site, a facility under RCW 70.105D.020(8)." Second, the Port claimed entitlement to declaratory judgment that defendants' insurance carrier is obligated to defend and/or indemnify the Port with respect to the environmental liability. Finally, the Port raised a breach of contract claim against the insurance company for failure to indemnify it for costs and liability incurred due to the damage caused by the hazardous substances.

¶12 Defendants jointly moved for summary judgment, requesting dismissal of all claims. Specifically, defendants sought to avoid liability on the ground that wood debris does not constitute a hazardous substance. The trial court denied the motion for summary judgment.

¶13 The trial court also denied defendants' motion for reconsideration, but certified the decision for review by this court under RAP 2.3(b)(4). A commissioner of this court accepted discretionary review to determine whether wood debris is a hazardous substance under MTCA.

II.

DISCUSSION

¶14 Defendants contend that wood waste, as a matter of law, does not qualify as a hazardous substance under MTCA. They ask us to reverse the trial court's ruling on this ground.

¶15 Appellate courts review de novo orders on motions for summary judgment and perform the same inquiry as the trial court. Owen v. Burlington N. & Santa Fe R.R., 153 Wash.2d 780, 787, 108 P.3d 1220 (2005). A court properly grants summary judgment where there exists no genuine issue as to any material fact, entitling the moving party to judgment as a matter of law. Owen, 153 Wash.2d at 787, 108 P.3d 1220 ; CR 56(c). "The court must consider the facts in the light most favorable to the nonmoving party, and the motion should be granted only if reasonable persons could reach but one conclusion." GO2Net, Inc. v. C I Host, Inc., 115 Wash. App. 73, 83, 60 P.3d 1245 (2003). We may affirm a trial court's decision on a motion for summary judgment on any ground supported by the record. Pac. Marine Ins. Co. v. Dep't of Revenue, 181 Wash. App. 730, 737, 329 P.3d 101 (2014).

¶16 This case requires us to interpret MTCA. We review de novo questions of statutory interpretation. Ass'n of Wash. Spirits & Wine Distribs. v. Wash. State Liquor Control Bd., 182 Wash.2d 342, 350, 340 P.3d 849 (2015). Our "fundamental objective is to ascertain and carry out the Legislature's intent, and if the statute's meaning is plain on its face, then [we] must give effect to that plain meaning as an expression of legislative intent." Dep't of Ecology v. Campbell & Gwinn, L.L.C., 146 Wash.2d 1, 9-10, 43 P.3d 4 (2002). Furthermore, "meaning is discerned from all that the Legislature has said in the statute and related statutes which disclose legislative intent about the provision in question." Campbell & Gwinn, 146 Wash.2d at 11, 43 P.3d 4. The court must interpret the language in a manner rendering no portion of the statute meaningless or superfluous. Rivard v. State, 168 Wash.2d 775, 783, 231 P.3d 186 (2010). The court defers to an agency's interpretation of its own regulations only if the statute presents ambiguity. Port of Seattle v. Pollution Control Hearings Bd., 151 Wash.2d 568, 593, 90 P.3d 659 (2004).

¶17 "The primary intent of MTCA is that '[p]olluters should pay to clean up their own mess.' " Pope Res., LP v. Dep't of Nat. Res., 190 Wash.2d 744, 751, 418 P.3d 90 (2018) (quoting State of Washington Voter's Pamphlet, General Election 6 (Nov. 8, 1988)). "The provisions of [MTCA] are to be liberally construed to effectuate the policies and purposes of this act." RCW 70.105D.910.

¶18 MTCA imposes strict liability on any owner or operator of a facility "at the time of disposal or release of ... hazardous substances" there. RCW 70.105D.040(1)(b) ; See Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wash.2d 654, 661, 15 P.3d 115 (2000). It provides for a private right of action for contribution or declaratory relief against liable persons to recover remedial costs. RCW 70.105D.080.

¶19 MTCA defines "hazardous substances" as:

(a) Any dangerous or extremely hazardous waste as defined in RCW 70.105.010 (1) and (7), or any dangerous or extremely dangerous waste designated by rule pursuant to chapter 70.105 RCW;
(b) Any hazardous substance as defined in RCW 70.105.010(10) or any hazardous substance as defined by rule pursuant to chapter 70.105 RCW;
(c) Any substance that, on March 1, 1989, is a hazardous substance under section 101(14) of the federal cleanup law, 42 U.S.C. Sec. 9601(14) ;
(d) Petroleum or petroleum products; and
(e) Any substance or category of substances, including solid waste decomposition products, determined by the director by rule to present a threat to human health or the environment if released into the environment.

RCW 70.105D.020(13).

¶20 Here, defendants argue that wood debris does not fit within the established definitions for hazardous waste. Ecology, while not a party in this case, submitted an amicus brief essentially conceding that wood debris itself does not fit into the definitions of a hazardous substance in RCW 70.105D.020(13). We agree.

¶21 However, the evidence in the record demonstrates that wood debris results in a release of listed hazardous substances as it breaks down in the marine environment. As discussed above, the wood debris decomposition products include ammonia, hydrogen sulfide, and benzoic acid. The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) has designated these compounds as hazardous substances. 42 USC § 9601(14) ; 40 C.F.R. § 302.4. As hazardous substances designated under CERCLA, ammonia, hydrogen sulfide, and benzoic acid meet the definition of hazardous substances for MTCA under RCW 70.105D.020(13)(c). While wood by itself may not qualify as a hazardous substance, wood debris decomposing in the marine environment releases designated hazardous substances under MTCA.

¶22 For the question of liability, the issue then becomes when the release of the hazardous substances occurred as a result of wood debris decomposition in the marine environment. As noted above, parties strictly liable under MTCA include, "[a]ny person who owned or operated the facility at the time of disposal or release of the hazardous substances." RCW 70.105D.040(1)(b). " 'Release' means any intentional or unintentional entry of any hazardous substance into the environment, including but not limited to the abandonment or disposal of containers of hazardous substances." RCW 70.105D.020(32).

¶23 The record shows that as of July 2004, sediment samples from the log pocket included detectible levels of hazardous substances known to be released during wood decomposition in the marine environment, including ammonia, benzoic acid, and phenols. While the chemicals of concern did not exceed Ecology's Sediment Quality Standards at that time, their presence at the cessation of log handling indicates a release of hazardous substances occurred during defendants' tenure as operators of the facility.

¶24 In the context of defendants' motion for summary judgment, we must view the evidence in the light most favorable to the Port. In doing so, we determine that issues of fact exist regarding whether hazardous substances were released at the time defendants were operators at the log handling facility. The trial court properly denied summary judgment.

¶25 Affirmed.

WE CONCUR:

Verellen, J.

Dwyer, J.

      "Defendants" refers to Petitioners Frontier Industries, Inc., Eino "Mike" Johnson, Lorie A. Johnson, and Itochu International, Inc.

      CP 287.

      CP 296-97.

      CP 288.

      CP 291.

      "Benthic" is defined as "of, relating to, or occurring on the bottom underlying a body of water." Webster's Third New International Dictionary 204 (2002). An expert for the Port described the importance of the benthic community as follows: "Benthic organisms, or benthos, are organisms that live on or near the sediment surface in a marine environment. A healthy and diverse benthic community is a foundation of the aquatic food web and recycles nutrients between the sediment and water column in forms useable to other organisms."

      LPAHs are low molecular weight polycyclic aromatic hydrocarbons such as acenaphtene and flourene.

      HPAHs are high molecular weight polycyclic aromatic hydrocarbons such as benzo(a)pyrene, fluoranthene and chrysene.

      cPAHs are carcinogenic polycyclic aromatic hydrocarbons.

      During oral argument, Itochu disputed its role as an operator of the log handling facility. Wash. Court of Appeals oral argument, Port of Anacortes v. Frontier Indus., No. 78726-8-I (July 12, 2019), at 2 min., 40 sec. through 3 min. 18 sec. (on file with the court). Itochu did not raise this issue in its briefing on review. We do not consider arguments made outside the briefing. RAP 10.3. For the purposes of this review, we assume Itochu operated the log handling facility as alleged.

      Defendants also alleged that the Port could not meet its burden of producing evidence of a release or disposal of other hazardous substances during the time defendants operated the site. This issue is not on review.

      After completion of the briefing, the Port filed a motion to strike portions of defendants' reply briefing concerning argument about the validity of the Sediment Management Standards (SMS) under the Administrative Procedures Act (APA). A commissioner of this court referred the motion to strike to the panel for consideration with the merits. Because we do not reach the SMS arguments raised by the Port, the motion is moot and we need not rule on it.

      Defendants argue the sole issue on review is whether wood debris is a hazardous substance and that we are limited to answering only this question. Specifically, defendants claim that the Port did not previously raise the issue of liability for disposal of non-hazardous materials that later decompose into hazardous substances. Defendants do not cite any legal authority to support their position. We may affirm the trial court's ruling on a summary judgment motion on any ground supported by the record. Pac. Marine Ins. Co. v. Dep't of Revenue, 181 Wash. App. 730, 737, 329 P.3d 101 (2014).

      Defendants point to microorganism activity as the cause of release of hazardous substances from the wood debris. But the MTCA provision here does not specify the types of actors required for liability. Liability attaches to "[a]ny person who owned or operated the facility at the time of disposal or release of the hazardous substances." RCW 70.105D.040(1)(b). Release entails "entry" of a hazardous substance into the environment regardless of intent. RCW 70.105D.020(32). MTCA does not require owner or operator activity for liability. The fact of the release, rather than the actors involved in the release, triggers liability for an owner or operator. This adheres to the strict liability scheme established by the Act.

      In light of this conclusion, we do not reach the following issues: (1) whether Ecology's SMS, promulgated through formal rulemaking, establishes wood waste as a hazardous substance, as argued by the Port, and (2) whether the disposal of a hazardous substance includes the disposal of a substance (such as wood debris) into an environment where it will cause a release of hazardous substances, as argued by Ecology.


author: Pennell, J.

text:
    SVN CORNERSTONE, LLC, a Washington Limited Liability Company, Appellant, v. N. 807 INCORPORATED, a Washington corporation, d/b/a Berkshire Hathaway Homeservices First Look Real Estate; Kenneth M. Lewis and Michelle S. Lewis, and the marital community composed thereof; and Henry Seipp and Jane Doe Seipp, and the marital community composed thereof, Respondents.
    No. 35995-6-III
    Court of Appeals of Washington, Division 3.
    Filed August 20, 2019
    Matthew Thomas Ries, Stamper Rubens PS, 720 W. Boone Ave. Ste. 200, Spokane, WA, 99201-2560, Kent Neil Doll Jr., Feltman Ewing PS, 421 W. Riverside Ave. Ste. 1600, Spokane, WA, 99201-0406, Counsel for Appellant.
    Nicholas D. Kovarik, Whitny L. Norton, Piskel Yahne Kovarik PLLC, 522 W. Riverside Ave. Ste. 700, Spokane, WA, 99201-0581, for Respondent.
    OPINION PUBLISHED IN PART
   Pennell, J.

¶ 1 SVN Cornerstone, LLC (Cornerstone) appeals several superior court orders permitting former employee Henry Seipp to go forward with an arbitration complaint for lost real estate commissions. Cornerstone argues that Seipp's claims should have been raised in the parties' prior litigation, and therefore Seipp's current claims are barred by the doctrine of res judicata and as waived compulsory counterclaims.

¶ 2 Because Cornerstone's arguments regarding res judicata and compulsory counterclaims are defenses to the merits of Seipp's arbitration complaint, they must be decided in arbitration, not by a court. Although there are circumstances in which a court should determine whether a prior judgment precludes a subsequent arbitration claim under a theory of res judicata, this case is not one of them. The parties' prior suit was resolved through a negotiated, out of court settlement agreement-not by a trial or contested motions. Given this circumstance, this court has no special role to play in discerning the scope of the prior litigation or the applicability of res judicata. Instead, because Seipp's claim for commissions properly belongs in arbitration, the defense of res judicata and related issues must be decided in that forum.

BACKGROUND

¶ 3 Seipp worked for Cornerstone until April 20, 2015, when he left to work as a broker for Berkshire Hathaway Home Services First Look Real Estate (Berkshire). Prior to Seipp's departure, Cornerstone had developed a marketing package for the sale of the Timber Court Apartments owned by EZ Properties, LLC. Two days after Seipp associated with Berkshire, Berkshire and EZ Properties entered into an exclusive listing agreement to sell the Timber Court Apartments. Berkshire sold the Timber Court Apartments, and once Cornerstone learned of the sale it asserted it was entitled to a commission from the sale. The final sale agreement for the property listed Seipp as the listing broker and Berkshire as the listing firm.

¶ 4 Cornerstone filed a complaint in Spokane County Superior Court against Berkshire, its owners, and Seipp, alleging Seipp's involvement in the sale of the Timber Court Apartments breached his independent contractor agreement with Cornerstone. Cornerstone also made claims for unjust enrichment, tortious interference with contract, violation of the Uniform Trade Secrets Act, chapter 19.108 RCW, conversion, and breach of the fiduciary duty of loyalty. Berkshire responded to the complaint by alleging Cornerstone's claims were subject to arbitration with the Commercial Brokers Association (CBA), since all the parties were members of the CBA and were required to arbitrate some disputes. Berkshire and Seipp then filed for dismissal and to compel arbitration. Cornerstone filed a cross motion for partial summary judgment for its breach of contract claim. The superior court declined to compel arbitration and denied the motion to dismiss.

¶ 5 In May 2017, this court affirmed the superior court's decision to not dismiss the complaint, but reversed the denial of the motion to compel arbitration, finding the plain language of the CBA's bylaws required arbitration of all of Cornerstone's claims related to lost commissions. We allowed that the superior court could retain jurisdiction over any claims unrelated to commissions.

¶ 6 Cornerstone petitioned for review by the Washington Supreme Court. While the petition was pending, the parties privately negotiated a settlement. Under the terms of their settlement agreement, Seipp agreed to pay Cornerstone $20,000, Cornerstone agreed to dismiss its Supreme Court petition for review, and the parties agreed the superior court case would be dismissed with prejudice and without attorney fees or costs to any party. The settlement agreement contained a one-sided release provision, in that Cornerstone agreed to release its claims against Seipp, but Seipp did not waive any claims or potential claims against Cornerstone. The agreement specified that disputes arising from the agreement would be decided in Spokane County Superior Court. On August 22, 2017, a stipulation and order of dismissal with prejudice was entered in Cornerstone's superior court lawsuit. The stipulation and order did not refer to the settlement agreement or cite the reasons for dismissal.

¶ 7 Prior to finalization of the settlement agreement, Seipp was approached by an individual named Dennis Crapo. Crapo had hoped to enlist Seipp's services in selling some commercial property. But when Seipp informed Crapo about the ongoing litigation with Cornerstone, Crapo decided to proceed with another broker. Crapo ultimately sold the property on August 28, 2017.

¶ 8 Seipp filed an arbitration complaint with the CBA against Cornerstone during September 2017 (the month after entry of the stipulated dismissal order). In his complaint, Seipp alleged Cornerstone's prior lawsuit caused him to lose the opportunity to list and sell Crapo's property, which could have resulted in a commission of over $1 million. Seipp asserted several causes of action: perversion of the court, malicious prosecution, failure to arbitrate, and tortious interference with business relations. In his prayer for relief, Seipp requested lost commissions for Crapo's property, punitive damages, and $60,000 for attorney fees and costs incurred in defending the recently dismissed lawsuit related to the Timber Court Apartments commissions.

¶ 9 Seipp later amended the arbitration complaint to remove the request for punitive damages and attorney fees and costs, but prior to this Cornerstone filed a complaint in superior court for breach of contract against Seipp and Berkshire (hereinafter collectively Seipp). Cornerstone alleged Seipp breached the terms of the settlement agreement by seeking an award of attorney fees and costs incurred in the first lawsuit in the arbitration complaint. Cornerstone requested damages and injunctive relief to prevent the CBA from arbitrating claims that were dismissed in the first lawsuit via the settlement agreement.

¶ 10 Cornerstone moved for summary judgment on its complaint on January 5, 2018. Cornerstone argued Seipp's arbitration complaint was barred by the parties' settlement agreement. Cornerstone also argued Seipp's claims were barred by the doctrine of res judicata and that Seipp waived his claims by failing to bring them as compulsory counterclaims in the prior litigation. Cornerstone requested the superior court address the issues of res judicata and compulsory counterclaims by issuing an injunction, prohibiting Seipp from going forward with his claims in arbitration.

¶ 11 Shortly after Cornerstone's motion for summary judgment, Seipp filed a CR 12(b)(6) motion to dismiss, arguing that because Seipp amended the arbitration complaint to remove the claims for punitive damages and attorney fees and costs, Cornerstone had failed to state a claim upon which relief could be granted. Seipp also argued the settlement agreement did not bar Seipp's amended arbitration complaint.

¶ 12 In response to Cornerstone's motion for summary judgment, Seipp made a two-fold argument. First, Seipp claimed Cornerstone's arguments regarding res judicata and compulsory counterclaims were defenses to the pending arbitration complaint and needed to be raised in arbitration. Second, Seipp argued Cornerstone's claims on the merits, contending the arbitration complaint was not barred by res judicata or waived compulsory counterclaims.

¶ 13 During the pendency of the superior court motion practice, Cornerstone filed a motion to amend its complaint, adding a cause of action for declaratory judgment. Cornerstone's request for declaratory relief pertained to its arguments regarding res judicata and compulsory counterclaims. The superior court granted Cornerstone leave to amend the complaint.

¶ 14 Seipp subsequently filed a motion to dismiss the amended complaint. Again, Seipp argued the amended arbitration complaint was not barred by the parties' settlement agreement and that the issues of res judicata and compulsory counterclaims needed to be decided in arbitration, not superior court.

¶ 15 The superior court issued several written rulings in response to the parties' motions. The court granted Cornerstone's motion for summary judgment in part after determining Seipp had breached the terms of the settlement agreement by seeking attorney fees and costs in the arbitration complaint. The court denied Cornerstone's motion to enjoin Seipp's arbitration complaint, concluding Cornerstone had not made a requisite showing of imminent irreparable injury. The court also granted Seipp's motion to dismiss. Although the superior court made some oral comments regarding the parties' arguments on res judicata and compulsory counterclaims, the court never issued a written ruling addressing Cornerstone's request for declaratory judgment on these matters.

¶ 16 Cornerstone now appeals the superior court's adverse rulings.

ANALYSIS

¶ 17 In their briefing, the parties operate under the mistaken assumption that the superior court decided the merits of Cornerstone's res judicata and compulsory counterclaim arguments. In fact, the court never entered a written ruling addressing these issues. Instead, the court simply rejected Cornerstone's request to enjoin Seipp from going forward with arbitration. The court also granted Seipp's motion to dismiss, which was based in part on the claim that the issues of res judicata and compulsory counterclaims needed to be decided in arbitration, pursuant to the broad CBA rules governing arbitration.

¶ 18 The superior court's decision to avoid a final decision on the issues of res judicata or compulsory counterclaims was appropriate. This is because the substance of such claims are for a CBA arbitration panel to decide, not the court.

¶ 19 As we recognized in our prior decision, the CBA bylaws obligate Seipp and Cornerstone to arbitrate any claim regarding lost commissions "regardless of the legal theory." SVN Cornerstone, LLC v. N. 807 Inc. , No. 34692-7-III, slip op. at 10, 2017 WL 2259054 (Wash. Ct. App. May 23, 2017) (unpublished), https://www.courts.wa.gov/opinions/pdf/346927_unp.pdf. In the present case, Seipp has requested arbitration based on lost commissions from Crapo's property that is attributed to Cornerstone. This is an arbitrable claim. See id . Whether or not Cornerstone can prevail against Seipp's claim on the basis of an affirmative defense such as estoppel or res judicata goes to the merits of the dispute, not the question of arbitrability. The CBA arbitration policy does not exclude equitable defenses such as estoppel or res judicata from the terms of its broad arbitration clause. Thus, Cornerstone's legal defense to Seipp's arbitration complaint falls within the scope of the parties' arbitration agreement. Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 85, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002) (Estoppel is an issue of procedural arbitrability that is for the arbitrator to decide.); see also Yakima County v. Yakima County Law Enf't Officers Guild , 157 Wash. App. 304, 321, 237 P.3d 316 (2010) (Doubts over the scope of arbitrability are resolved in favor of arbitration.).

¶ 20 Cornerstone does not seriously dispute that a legal defense to Seipp's claim for lost commission is arbitrable under the scope of the parties' arbitration agreement. Yet Cornerstone claims special circumstances govern this case because Cornerstone's legal defense involves the scope of a prior court order of dismissal and it is for a court to discern the scope of a prior order, not an arbitration panel.

¶ 21 Courts undoubtedly have a role to play in discerning the scope of their own prior judgments. After a case has been litigated and the court has resolved the parties' dispute, the court may properly defend its judgment and ensure the parties do not reassert claims that have already been decided. See id . at 326, 237 P.3d 316 ; John Hancock Mut. Life Ins. Co. v. Olick , 151 F.3d 132, 138 (3rd Cir. 1998) ; In re Y&A Group Sec. Litigation , 38 F.3d 380, 382 (8th Cir. 1994). For this reason, a majority of courts that address this issue hold that when a res judicata "objection is based on a prior court judgment from the same jurisdiction," application of res judicata "is a question for the trial court." Ford Motor Credit Co. v. Cornfield , 395 Ill. App. 3d 896, 907, 335 Ill. Dec. 327, 918 N.E.2d 1140 (2009).

¶ 22 But here, the superior court was not involved in resolving the merits of the parties' prior dispute. The last substantive order from the court determined that the parties needed to present the bulk of their claims to an arbitration panel. Rather than going through the time and expense of arbitration, the parties settled the dispute privately and submitted an agreed order of dismissal. The court was not involved in the settlement process and was not privy to the bases for the agreed resolution. The court therefore has no unique qualification to ascertain the scope and preclusive effect of a final judgment. An exception to the general rule of arbitrability does not apply in such circumstances. Ford Motor Credit Co. , 395 Ill. App. 3d at 909, 335 Ill.Dec. 327, 918 N.E.2d 1140 (An agreed order of dismissal is unlike a decision on the merits and does not implicate the court's duty to decide res judicata.); Chiron Corp. v. Ortho Diagnostic Sys., Inc. , 207 F.3d 1126, 1133-34 (9th Cir. 2000) (same with respect to order confirming arbitration award).

¶ 23 To the extent the superior court has an interest in defending the terms of its prior judgment, this interest weighs in favor of arbitration. The primary issue resolved in the prior case was that the parties' dispute over lost commissions (including any defenses thereto) had to be decided in arbitration. To now hold that a court should decide the scope of the prior case and whether it necessarily encompassed affirmative defenses or counterclaims would run counter to our prior decision and would deprive Seipp of the right to arbitration set forth in the CBA bylaws. See Local Union No. 370 of Int'l Union of Operating Eng'rs v. Morrison-Knudsen Co., Inc. , 786 F.2d 1356, 1358-59 (9th Cir. 1986) (Estoppel defenses are arbitrable and cannot be asserted in a way that deprives a party of the right to arbitration.).

¶ 24 Cornerstone complains that the defense of res judicata is complicated and, therefore, it should be resolved by a court instead of an arbitration panel. We are not unsympathetic to this claim. But that is the nature of arbitration. An agreement to arbitrate is enforceable, regardless of the complexity of the legal claim that winds up before the arbitration panel. See RCW 7.04A.060(1) (An arbitration agreement may properly cover "any ... controversy arising between the parties.").

¶ 25 The superior court's orders are affirmed to the extent they hold that Seipp is not prohibited from pursuing the arbitration complaint against Cornerstone. Any defenses Cornerstone has to Seipp's complaint, including defenses related to res judicata and compulsory counterclaims, shall be determined in first instance by the CBA arbitration panel.

¶ 26 A majority of the panel having determined that only the foregoing portion of this opinion will be printed in the Washington Appellate Reports and that the remainder having no precedential value shall be filed for public record pursuant to RCW 2.06.040, it is so ordered.

WE CONCUR:

Lawrence-Berrey, C.J.

Siddoway, J.

      See SVN Cornerstone LLC v. N. 807 Inc. , No. 34692-7-III, 2017 WL 2259054 (Wash. Ct. App. May 23, 2017) (unpublished), https://www.courts.wa.gov/opinions/pdf/346927_unp.pdf.

      The corporation, N. 807 Incorporated, will be referred to by one of its registered trade names rather than its corporate entity name.

      "It must be remembered that a trial judge's oral decision is no more than a verbal expression of his [or her] informal opinion at that time. It is necessarily subject to further study and consideration, and may be altered, modified, or completely abandoned. It has no final or binding effect, unless formally incorporated into the findings, conclusions, and judgment." Ferree v. Doric Co. , 62 Wash.2d 561, 566-67, 383 P.2d 900 (1963).

      Res judicata, or claim preclusion, prevents relitigation of a claim or cause of action that has already been adjudicated or should have already been adjudicated in a prior suit. Res judicata is an affirmative defense that must be pleaded and proved by the party seeking its application. See Large v. Shively , 186 Wash. 490, 497, 58 P.2d 808 (1936) ; Meder v. CCME Corp. , 7 Wash. App. 801, 806, 502 P.2d 1252 (1972). For res judicata to apply there must be identity of (1) subject matter, (2) cause of action, (3) persons and parties, and (4) the quality of persons and parties. Loveridge v. Fred Meyer, Inc. , 125 Wash.2d 759, 763, 887 P.2d 898 (1995). For background on the law of res judicata in Washington, see Philip A. Trautman, Claim and Issue Preclusion in Civil Litigation in Washington , 60 Wash. L. Rev. 805 (1985).

      This case is therefore distinguishable from Y&A Group Securities Litigation , 38 F.3d at 383, which involved a court-approved consent decree.


author: BY THE COURT:

text:
    Carl Leroy CARLSON, Appellant (Defendant), v. The STATE of Wyoming, Appellee (Plaintiff).
    S-19-0101
    Supreme Court of Wyoming.
    August 28, 2019
    ORDER AFFIRMING THE DISTRICT COURT'S JUDGMENT AND SENTENCE
    [¶ 1] This matter came before the Court upon its own motion following filing of Appellant's "Pro Se Brief." Pursuant to a plea agreement, Appellant entered unconditional "no contest" pleas to (1) aggravated assault and battery and (2) interference with a peace officer, a misdemeanor. Wyo.Stat.Ann. § 6-2-502(a)(iii) ; § 6-5-204(a). On the felony, the district court imposed a four to six-year sentence, suspended in favor of six years of probation. Appellant filed this appeal to challenge the district court's April 18, 2019, "Judgment and Sentence."
    [¶ 2] On June 24, 2019, Appellant's court-appointed appellate counsel filed a "Motion to Withdraw as Counsel," pursuant to Anders v. California , 386 U.S. 738, 744, 87 S.Ct. 1396, 1400, 18 L.Ed.2d 493 (1967). This Court subsequently entered an order permitting Appellant to "file with this Court a pro se brief specifying the issues he would like the Court to consider in this appeal." On August 8, 2019, Appellant filed his "Pro Se Brief."
    [¶ 3] Now, following a careful review of the record, the " Anders brief" submitted by appellate counsel, and the "Pro Se Brief," this Court finds that appellate counsel's motion to withdraw should be granted and the district court's "Judgment and Sentence" should be affirmed.
    [¶ 4] ORDERED that the Wyoming Public Defender's Office, court-appointed counsel for Appellant, Carl Leroy Carlson, is hereby permitted to withdraw as counsel of record for Appellant; and it is further
    [¶ 5] ORDERED that the district court's April 18, 2019, "Judgment and Sentence" be, and the same hereby is, affirmed.
    [¶ 6] DATED this 28th day of August, 2019.
   BY THE COURT:

/s/ MICHAEL K. DAVIS

Chief Justice