The legal wrangling between the City of SeaTac and K & S Development continued on Jan. 16 as the City filed its’ appellate brief in the K&S Developments, LLC v. City of SeaTac matter at the Washington State Court of Appeals, Division One.
The case pertains to the SeaTac Center which is located at South 154th Street and International Boulevard in the City’s South 154th Street Station Area. As the Highline Times reported in January of 2016 and last July the case involves alleged deception by the City over land at the SeaTac Center owned by Gerry and Kathryn Kingen who also own Salty’s Seafood Grills in Seattle, Redondo and Portland. The issues began in 2004 when they proposed to build a parking garage on land near 154th Street South in SeaTac.
According to the Kingen's and their attorneys they said they were first led to believe they could go ahead with their development plan but were later turned down by the Central Planning Staff of the City of SeaTac who, working with the legal staff, began a pattern of changing the land use rules to delay and thus prevent the development.
Since the city had a plan to build an entertainment center and parking structure roughly one mile away at 176th South they felt the Kingen's plan would have been competitive with theirs. The city did not honestly attempt to buy it, and formed a secret partnership with another developer to in fact develop a parking garage on that site, but one controlled by them.
Additionally K&S introduced evidence at trial of former Mayor Gene Fisher’s motives in preventing or delaying the project. While assuring the Kingens he would fully support their proposed park-and-fly, K&S argued that Mayor Fisher, who lived about two blocks away, was actually privately against the park-and-fly because he wanted condominiums on the property.
K&S argued the former mayor felt condominiums would increase housing prices that in turn would help drive out the large refugee population. K&S also argued Mayor Fisher believed condominiums, instead of a park-and-fly, would increase the value of his nearby home and Christmas tree farm. K&S was right—shortly before trial, Mayor Fisher sold his property to a developer of townhouses and moved to Nevada. Mayor Fisher unlawfully ignored a court subpoena and refused to testify at trial.
In July K&S Development was awarded $18.3 million in damages and fines to accrue in the amount of $6000 for every day the penalty was not paid. This was the largest land use judgement in the history of Washington State
Making the case even more complex and troubling as the Highline Times reported last week, was the charge that the City allegedly destroyed relevant documents in the case, denying them to the plaintiffs.
In a memorandum filed with the court last week K&S Development stated:
"K&S [Kingen’s just learned from a former City of SeaTac employee, Meghan Howey, that the City may have improperly withheld documents that responded to K&S’s 2010 public records and discovery requests. Ms. Howey says she was fired on because she challenged City Officials about these documents. She also describes the documents as very incriminating and that she felt the City was directing her to essentially bury them."
Following the judgement now under appeal statement Judge Richard F. McDermott said:
“A government entity owes a duty of honesty and transparency to those people to whom they deal with…The City (of SeaTac) violated that duty so many times I’ve lost count,…it’s amazing. Quite frankly, the actions of the City of SeaTac in this case are unexplainable and totally unacceptable. The period of deception even lasted through their answer in the public records…I find this to be the worst thing about this case is the actions of the City and how dishonest they were and I find that to be completely and totally unacceptable.”
The Appellant Brief (see link) states in part:
K&S Development LLC "who in 2009 transferred to the City in lieu of foreclosure real property they had purchased in 2003 for $5.3 million. In exchange, the City paid $12.3 million, more than the property's appraised value, to respondents' "hard-money" lenders, relieving respondents of $22 million in debt and $21 million in personal guarantees. All of respondents' claims depend on three critical events: the City's 1.) 4-month development moratorium in mid-2006, 2) negotiation and agreement to a plan for development of respondents' property in 2007-08, and 3) purchase of the property by accepting deeds in lieu of foreclosure in late 2009.
But it is indisputable that the City, far from causing respondents any loss, protected them from the calamitous consequences of their own overextension and the Great Recession.
Respondents' inverse condemnation claim fails because they did not establish a "taking" as a matter of law; the trial court erred in submitting this issue to the jury because the State constitution mandates that the court determine whether private property has been taken for public use without just compensation. Acquiring the
property through purchase of debt was a proper exercise of the City's contractual proprietary powers, and the City's temporary moratorium and negotiation of a development agreement with respondents were legitimate regulatory actions. Respondents' tortious interference, misrepresentation, and promissory estoppel
claims fail on the same facts, and for the same reasons. This Court should vacate the judgment and dismiss respondents' claims."
A copy of the brief can be found on the City’s website at www.CityofSeaTac.com/KandSAppeal.
It is anticipated that oral argument will be scheduled for later this year.
