Score one for Puyallup in dispute over warehouse zoning. City fends off Schnitzer appeal
An appellate court has ruled in favor of Puyallup in a lawsuit brought by a warehouse developer following a zoning dispute with the city.
A three-judge panel of Division II of the state Court of Appeals upheld a Pierce County judge’s ruling that dismissed Schnitzer West, LLC’s claims against the city.
“The claims arose from the Puyallup city council’s passage of Ordinance 3067 in 2014 that applied a zoning overlay only to property that Schnitzer had contracted to purchase,” Judge Bradley Maxa wrote for the unanimous panel Tuesday. “The Ordinance limited the size of a building that could be constructed on Schnitzer’s property, which Schnitzer alleged hindered its plans to develop the property.”
Schnitzer had plans to build a 470,000-square-foot warehouse, but the measure imposed a limit of 125,000 square feet. The developer argued that hurt the value of the property near Shaw Road and Pioneer Way East, which used to be owned by the Van Lierop family.
Part of a brief the developer filed in the case argued that one of its experts suggested “the ordinance reduced the value of the Property itself by $3,000,000 and the lost development opportunity by between $6.8 and $9.8 million.”
A different company later built a warehouse there after Schnitzer sold the property.
Schnitzer sued Puyallup for damages related to the ordinance in 2019. Superior Court Judge Bryan Chushcoff dismissed the developer’s various claims last year, and Schnitzer appealed regarding two.
The developer sought damages under part of the United States Code, alleging there was an equal protection violation because Puyallup treated the company differently than property owners in a similar position. Schnitzer also claimed tortious interference, arguing that the city’s actions interfered with the developer’s business relationships.
Puyallup argued the statute of limitations already expired for the equal protection claim and that legislative immunity barred Schnitzer’s claim for tortious interference.
The Court of Appeals agreed.
“On its face, this action was purely legislative in nature,” Maxa wrote in part of the opinion Tuesday, signed by Judges Linda Lee and Anne Cruser. “And even if the Ordinance was designed to single out the Schnitzer property, the fact that an action may have been performed with an improper motivation or in bad faith is immaterial to application of legislative immunity.”
Attorneys who represented Schnitzer did not respond before publication to a request for comment about the decision.
Puyallup said in a statement Thursday: “The appeals court agreed with the trial court that the plaintiff did not provide sufficient evidence of tortious interference and did not meet the statute of limitations for the equal protection violations. We are relieved to learn that the Court of Appeals has sided with the City and dismissed these claims.”
Zoning dispute
Schnitzer previously fought the ordinance under the Land Use Petition Act and won in Superior Court in 2015, then finalized its purchase of the property for about $1.5 million.
Then Puyallup successfully appealed, and Schnitzer’s LUPA petition was dismissed.
Meanwhile, Schnitzer sold the property to Viking JV, LLC for $9.25 million in 2016. Viking built a large warehouse there, which was possible because of an application Schnitzer filed before the ordinance took effect.
Schnitzer appealed the LUPA dismissal to the state Supreme Court, which sent the case back to the state Court of Appeals.
“Under the Puyallup Municipal Code, rezone applications are within the jurisdiction of the hearing examiner,” Maxa wrote Tuesday. “Therefore, this court ruled that the City should have commenced a hearing before the hearing examiner when considering a rezone rather than deciding the matter at the city council.”
It was after the Supreme Court’s decision that Schnitzer sued Puyallup for damages.
Viking has also brought development lawsuits against the city.
The News Tribune reported earlier this year that the developer filed a lawsuit seeking reimbursement for a sewer facility Viking built, arguing that other properties would also benefit from it. That case is pending, according to court records.
Prior to that, Viking also went to court over stormwater connection fees and park impact fees, The News Tribune reported.
Superior Court judges found Viking needed to pay $388,000 in park impact fees and $571,000 for the stormwater hookup. Viking has appealed those decisions.
