FILED

COURT OF APPEALS

DIVISION 11

7015 JUN - 4

IN THE COURT OF APPEALS OF THE STATE OF WASHING

STS

DIVISION II

TILLMAN CARR individually; CAL FARRER

and JENELL FARRER, a marital community; 

KUO -YING FRENZEL, individually; JULIE

GANAS, individually; WILLIAM B. 

MINAGLIA, individually; DARRYL and

ROSE HUDSON, a marital community; KEITH

PETERSON, individually; KATHRYN

DEBERNARDI, individually; KATHERINE

MEADE, individually; ROB and SHARA

COFFMAN, a marital community; and

PAMELA SMITH, individually, 

Appellants, 

v. 

THE STATE OF WASHINGTON by and

through the WASHINGTON STATE LIQUOR

CONTROL BOARD, a board of the State of

Washington; and the WASHINGTON STATE

DEPARTMENT OF REVENUE, a department

of the State ofWashington, 

Respondents. 

BY

No. 46590 -6 -II

PUBLISHED OPINION

AM 8: 33

TON

LEE, J. — A group of former contract liquor store owners ( collectively " the Owners ") 

appeal the superior court' s order dismissing their complaint against the Washington State Liquor

Control Board (Board) and the Washington State Department of Revenue ( Department). After

Initiative 1183 ( I -1183) was adopted, the sale and distribution of liquor in Washington was

privatized. As a result, the Board terminated the contracts it had with current liquor store owners. 

The Owners filed a complaint against the Board and the Department based on the termination of

their contracts and alleged violations ofRCW 66.24.620 and section 303 of I -1183. 
No. 46590 -6 -II

Under our recent decision in Fedway Marketplace West, LLC v. State, 183 Wn. App. 860, 

336 P. 3d 615 ( 2014), review denied, 182 Wn.2d 1013 ( 2015), we hold that the superior court

properly dismissed the Owners' contract claims. And, the superior court properly- determined that

there were no private causes of action created under RCW 66.24.620 or section 303 of I -1183. 

Accordingly, we affirm the superior court' s order granting summary judgment and dismissing the

Owners' complaint. 

FACTS

Tillman Carr, Cal and Jenell Farrer, Kuo -Ying Frenzel, Julie Ganas, William Minaglia, 

Darryl and Rose Hudson, Keith Peterson, Kathryn Debernardi, Katherine Meade, Rob and Shara

Coffman, and Pamela Smith ( "the Owners ") all owned contract liquor stores. The Owners entered

into new, identical, five -year contracts with the Board, effective June 30, 2011. Under the

contracts, the Owners sold liquor on behalf ofthe Board in exchange for a base rate compensation

and commission based on monthly net sales. The contracts contained the following provisions

governing termination of the contract: 

6. 5 TERMINATION BYMUTUAL AGREEMENT

The [ Board] and the Contractor may terminate this Contract in whole or in part, at

any time, by mutual agreement. 

6. 9 TERMINATION FOR WITHDRAWAL OFAUTHORITY

In the event that the [ Board' s] authority to perform any of its duties relating to this

Contract is withdrawn, reduced, or limited in any way after the commencement of

this Contract and prior to normal completion, the [ Board] may terminate this

Contract in whole or in part, by seven ( 7) calendar day' s written notice to

Contractor. Contractor shall have no right of appeal when this clause is exercised

by the [ Board]. 

Clerk' s Papers ( CP) at 148 -49. 

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No. 46590 -6 -II

In November 2011, the people ofWashington State passed I -1183, an initiative privatizing

the sale ofliquor. I -1183 required the Board to close all state liquor stores by June 1, 2012. LAWS

OF 2012, ch. 2 § 102 ( codified at RCW 66.24.620(2)). To comply with I -1183, the Board offered

the Owners a contract amendment that changed the contract termination date to May 31, 2012. All

of the Owners, except Carr and Farrer, signed the contract amendment. The contract amendment

also allowed the Owners to sell liquor to licensees ( primarily bars and restaurants) at the Board' s

discounted rate and allowed the Owners to solicit licensee accounts prior to June 1, 2012. And, 

the contract amendment allowed the Owners to make deliveries directly to licensees. 

In February 2012, the Board presented another contract amendment that allowed the

Owners to purchase their current liquor inventory from the Board. All the Owners signed the

second contract amendment. 

As a result of I -1183, many owners lost licensee accounts because they were required to

pay a higher percentage of their sales to the State. Additionally, overall sales dropped

considerably, and some owners closed or sold their stores. 

On November 9, 2012, the Owners filed a complaint against the Board and the Department. 

The Owners alleged that ( 1) the Board breached its contract with the Owners, ( 2) I -1183

unconstitutionally interfered with the owner' s contracts with the Board, (3) the termination oftheir

contracts was an unconstitutional taking, (4) the Board failed to " avert harm" from the privatization

of liquor as required by RCW 66.24.620( 2), 1 and ( 5) the Department failed to comply with the

1 RCW 66.24.620( 6)( b) states: 

The transition must include, without limitation, a provision for applying

operating and asset sale revenues of the board to just and reasonable measures to

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No. 46590 -6 -II

requirement under section 303 of I -1183 to create rules addressing claims that I -1183

unconstitutionally impaired contracts.2

The Department and the Board moved for summary judgment. The Owners filed a cross

motion for partial summary judgment on all issues except damages. The superior court granted

the Department' s and the Board' s motion for summary judgment, and dismissed all ofthe Owners' 

claims. The Owners appeal.3

ANALYSIS

The Owners argue that the superior court improperly granted the Department' s and the

Board' s motion for summary judgment. We review the superior court' s ruling on a motion for

summary judgment de novo. Torgerson v. One Lincoln Tower, LLC, 166 Wn.2d 510, 517, 210

P. 3d 318 ( 2009). Summary judgment is appropriate only ifthe pleadings, affidavits, depositions, 

and admissions on file demonstrate the absence of any genuine issues of material fact, and the

moving party is entitled to judgment as a matter of law. CR 56( c). " A material fact is one on

avert harm to interests of tribes, military buyers, and nonemployee liquor store

operators under then existing contracts for supply by the board of distilled spirits, 

taking into account present value of issuance of a spirits retail license to the holder

of such interest. The provision may extend beyond the time for completion of

transition to a spirits licensee system. 

2 Laws of2012, ch. 3, section 303 states: 

The department of revenue must develop rules and procedures to address claims

that this act unconstitutionally impairs any contract with the state and to provide a

means for reasonable compensation of claims it finds valid, funded first from

revenues based on spirits licensing and sale under this act. 

3 The Owners originally appealed directly to our Supreme Court. Our Supreme Court denied direct

review and transferred the Owners' appeal for consideration by this court. 

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No. 46590 -6 -II

which the outcome of the litigation 'depends" in whole or in part. Dania, Inc. v. Skanska USA

Bldg. Inc., 185 Wn. App. 359, 365, 340 P. 3d 984 ( 2014). "[ W]e consider all the facts submitted

and the reasonable inferences therefrom in the light most favorable to the nonmoving party." 

Atherton Condo. Apartment - Owners Ass 'n Bd. ofDirs. v. Blume Dev. Co., 115 .Wn.2d 506, 516, 

799 P.2d 250 ( 1990). Here, there was no genuine issue of material fact. 

A. CONTRACT CLAIMS

The Owners make three claims related specifically to the termination oftheir contracts with

the Board. First, the Owners argue that the Board breached its contracts by terminating the

contracts prior to the expiration of the five -year term. Second, the Owners argue that I -1183

unconstitutionally impaired the Board' s contracts with the Owners. Third, the Owners argue that

the early termination of their contracts is an unconstitutional taking. 

Recently, we addressed nearly identical arguments in Fedway Marketplace, 183 Wn. App. 

860. In Fedway Marketplace, landlords sued the Board for breach of its leases with the landlords

of its state -run liquor stores. Id. at 865 -67. After I -1183 passed, the Board terminated its leases

with the landlords based on a lease termination clause that terminated the leases if the Board lost

the authority to continue to sell liquor. Id. at 866. The landlords claimed that ( 1) the Board

breached the terms of the lease, ( 2) I -1183 unconstitutionally impaired the Board' s contracts, and

3) the termination ofthe leases constituted an unconstitutional taking. Id. at 866 -67. We affirmed

the trial court' s order dismissing the landlords' claims. Id. at 868 , 873, 874. Our holdings in

Fedway Marketplace control the owner' s contract claims here. 

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No. 46590 -6 -II

1. Breach of Contract Claim

In Fedway Marketplace, the leases contained a specific termination clause, providing that

each lease would terminate upon the enactment of any law that prevented either party from

carrying out the lease terms. Id. at 868. We held that the termination clause in each lease was

triggered when I -1183 passed and the Board was no longer permitted to sell liquor. Id. at 869 -70. 

Therefore, the Board complied with the express terms of each lease and did not breach the contract. 

Id. at 870. Because the Board complied with the express terms of the leases, the Board did not

breach the terms of each lease between the landlords and the Board. Id. The same situation exists

here. 

The contracts between the Board and the Owners contain an express provision stating that

the contract can be terminated by the Board if "the [Board' s] authority to perform any of its duties

relating to this Contract is withdrawn, reduced, or limited in any way." CP at 149. And, the

contract contains a provision allowing the contract to terminate based on mutual agreement. Here, 

many of the Owners agreed to amend the contract and establish a termination date of May 31, 

2012. Therefore, those contracts were terminated under the express provision allowing

termination by mutual agreement. The remaining owners' contracts were terminated by the

provision allowing the Board to terminate the contract ifits authority to sell liquor was withdrawn. 

Therefore, the contracts were terminated under the express, unambiguous termination provisions

contained in the contracts. 

As in Fedway Marketplace, the Board complied with the express terms of the contract. 

Therefore, under Fedway Marketplace, the Board did not breach its contracts with the Owners. 

183 Wn. App. at 870. 
No. 46590 -6 -II

2. Unconstitutional Impairment of Contracts

Like the Owners here, the landlords in Fedway Marketplace argued that I -1183

unconstitutionally impaired the State' s existing contract obligations. Id. at 864. Article 1, section

23 of the Washington Constitution and article I, section 10 of the United States Constitution

prohibit any legislative action from impairing an existing contractual obligation. In Fedway

Marketplace, we determined that the landlords' contracts were not impaired because, based on the

express provision terminating the lease upon a change in the law, " the parties' rights and

expectations remained the same as before the new law was passed." Id. at 875. 

Here, the contracts between the Owners and the Board contained express provisions

addressing the effect of a change in the law. I -1183 triggered the termination provision in the

contracts, but it did not change the terms ofthe contracts. Therefore, like the landlords in Fedway

Marketplace, the Owners' rights and expectations under their contracts with the Board did not

change when I -1183 was passed. Id. at 875. Consequently, I -1183 did not unconstitutionally

impair the Board' s contract with the Owners. 

3. Unconstitutional Taking

Like the Owners here, the landlords in Fedway Marketplace also argued that the Board' s

termination oftheir leases resulted in an unconstitutional taking. We held in Fedway Marketplace

that the landlords had not shown a total taking because they retained their fundamental property

rights, specifically the right to possess and dispose of their property, to exclude others, and make

an economic use of the property. Id. at 877. Because the landlords could not show a total taking, 

they had to show that I -1183 " goes beyond preventing real harm to the public[,] which is directly

caused by the prohibited use of the property and instead imposes on those regulated the

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No. 46590 -6 -II

requirement ofproviding an affirmative public benefit." Guimont v. Clarke, 121 Wn.2d 586, 603, 

854 P.2d 1 ( 1993), cert. denied, 510 U.S. 1176 ( 1994). We determined that I -1183 does not go

beyond preventing public harm, and that its purpose is at " the heart of the State' s police power." 

Fedway Marketplace, 183 Wn. App. at 878. Therefore, the Board' s termination of the leases did

not constitute a taking. Id. 

Here, the Owners appear to argue that the " property" that was taken was the potential future

earnings under their contracts. Their claim fails. 

Like in Fedway, there is not a total taking because the Owners retained their fundamental

rights to possess and dispose of their property, exclude others from their property, and make

economic use oftheir property. Because there was not a total taking, the Owners must show that

the regulation " goes beyond preventing real harm to the public{,] which is directly caused by the

prohibited use of the property[,] and instead imposes on those regulated the requirement of

providing an affirmative public benefit." Guimont, 121 Wn.2d at 603. In Fedway Marketplace, 

we determined that the purpose of I -1183 was directed at preventing a public harm —the

proliferation ofprivate liquor stores." Fedway Marketplace, 183 Wn. App. at 878. Because the

Owners cannot demonstrate a total taking, and I -1183 does not go " beyond preventing real harm," 

the Board terminating the Owners' contracts was not an unconstitutional taking. Guimont, 121

Wn.2d at 603; Fedway Marketplace, 183 Wn. App. at 877 -78. 

Thus, the enactment of I -1183 triggered an existing termination provision in the Owners' 

contract, and the contracts were terminated under their express terms; the Board did not breach the

contracts. Because the contracts were terminated under their express terms, I -1183 did not

unconstitutionally impair the contracts. And, I -1183 did not result in an unconstitutional taking. 

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No. 46590 -6 -II

Therefore, the superior court did not err in granting the motion for summary judgment on the

Owners' contract claims. 

B. PRIVATE CAUSE OF ACTION UNDER I -1183

The Owners also argue that they are entitled to monetary damages based on the Board' s

alleged violation of RCW 66.24.620( 6)( b) 4 and the Department' s alleged violation of Laws of

2012, chapter 3, section 303. To be entitled to monetary damages under either provision ofI -1183, 

the Owners must show that the I -1183 provisions create a private cause of action. Here, neither

provision of I -1183 creates a private cause of action that entitles the Owners to relief. 

When a statute does not explicitly create a private. cause of action, "` a cause of action may

be implied from a statutory provision when the legislature creates a right or obligation without a

corresponding remedy. "' Schatz v. Dep' t ofSoc. & Health Servs., 178 Wn. App. 16, 29, 314 P. 3d

406 (2013) ( quoting.Ducote v. Dep' t ofSoc. & Health Servs., 167 Wn.2d 697, 703, 222 P. 3d 785

2009)). We consider three factors to determine if a private cause of action is implied in a statutory

provision: "( 1) whether the plaintiffs are within the class of persons for whose benefit the statute

was enacted, (2) whether legislative intent supports, creating or denying a remedy, and (3) whether

implying aremedy is consistent with the underlying purpose ofthe legislation." Id. at 30. 

1. RCW 66.24.620( 6)( b): Aversion of Harm

The Owners claim that RCW 66.24.620( 6)( b) creates a private cause of action that entitles

them to monetary damages for the losses suffered as a result of the privatization of liquor sales. 

RCW 66.24.620( 6)( b) states: 

4

LAWS OF 2012, ch. 2, § 102( 6)( b). 

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No. 46590 -6 -II

The transition must include, without limitation, . a provision for applying

operating and asset sale revenues of the board to just and reasonable measures to

avert harm to interests of tribes, military buyers, and nonemployee liquor store

operators under then existing contracts for supply by the board of distilled spirits, 

taking into account present value of issuance of a spirits retail license to the holder

of such interest. The provision may extend beyond the time for completion of

transition to a spirits licensee system. 

Here, the Owners are nonemployee liquor store owners, as referenced in the statutory provision, 

and so are within the class for whose benefit the statute was created. However, creating a private

cause of action is not supported by either the legislative intent or the underlying purpose of the

legislation. Therefore, RCW 66.24.620( 6)( b) does not entitle the Owners to sue the Department

for monetary damages. 

When determining whether legislative intent supports creating a private cause of action we

employ principles of statutory construction and interpretation. See McCandlish Elec., Inc. v. Will

Constr. Co., 107 Wn. App. 85, 94 -95, 25 P. 3d 1057, review denied, 145 Wn.2d 1012 ( 2001). 

Statutory interpretation is a question of law we review de novo. Dep't ofEcology v. Campbell & 

Gwinn, LLC, 146 Wn.2d 1, 9 -10, 43 P.3d 4 ( 2002). To determine legislative intent, we begin by

looking at the plain language ofthe statute. Id. When looking at the plain language ofthe statute, 

we must consider " the context ofthe statute in which that provision is found, related provisions, 

and the statutory scheme as a whole." Lake v. Woodcreek Homeowners Ass' n, 169 Wn.2d 516, 

526, 243 P. 3d 1283 ( 2010) ( quoting State v. Engel, 166 Wn.2d 572, 578, 210. P.3d 1007 ( 2009)) 

internal quotation marks omitted). Only " ifthe statute is ambiguous, [ may] ` this court ... look

to the legislative history of the statute and the circumstances surrounding its enactment to

determine legislative intent. ' Id. at 527 ( quoting Rest. Dev., Inc. v. Cananwill, Inc., 150 Wn.2d

674, 682, 80 P. 3d 598 ( 2003)). 

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No. 46590 -6 -II

As an initial matter, there is no explicit legislative intent to create a private cause of action

under RCW 66.24.620( 6)( b). Instead, the Owners rely on the terms " applying operating and asset

sale revenues ofthe board" and " avert harm" to argue that the provision creates an implied private

cause of action for monetary damages based on economic loss resulting from privatization. 

However, looking at the provision as a whole and within the context of the entire legislation, a

plain reading ofthe provision does not support the conclusion that the legislature intended to create

a private cause of action for monetary damages under RCW 66.24.620( 6)( b). 

The plain language of RCW 66.24.620( 6)( b) requires the Department to take " measures" 

to avert harm. RCW 66.24.620( 6)( b) does not use the term " compensation "; instead, RCW

66.24.620( 6)( b) uses the much broader term " measures." " Measures," as used in RCW

66.24.620( 6)( b), is not the equivalent of "compensation." Compensation would be a very specific

measure that the Department could take to avert harm. The use of the broad term " measure" 

indicates that the legislature intended to allow the Department to exercise its discretion to

determine what measures would be just and reasonable. The term measure can encompass all of

the non - monetary actions taken by the Department during the transition to privatization.5

Further, " avert harm" is not the equivalent of "compensate for economic damages" as the

Owners suggest. " Avert" means to anticipate and ward off. WEBSTER' S THIRD INTERNATIONAL

DICTIONARY 151 ( 1969). The term avert is, by definition, anticipatory and proactive. It is not

reactive. By requiring the Board to take "just and reasonable measures to avert harm" the statute

5 For example, the Department allowed the Owners to purchase their existing inventory of state - 

owned liquor at a reduced price. The Department also allowed the Owners to solicit licensee

accounts prior to the effective date of privatization and deliver liquor to licensee accounts. And, 

the Department allowed the Owners to begin storing liquor at off -site locations. 

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No. 46590 -6 -II

contemplates that the Board take into consideration the possible effects of privatization and take

action to help mitigate the possible resulting harm. RCW 66.24.620( 6)( b). It does not contemplate

waiting until after the harm has been suffered and then compensating the party for the resulting

harm. And, the proactive nature ofthe provision implies that the legislature did not intend for the

provision to allow for full compensation for any harm suffered. Therefore, a plain reading of the

language of the statute does not support the conclusion that the legislature intended RCW

66.24.620( 6)( b) to create a private cause of action. 

Additionally, creating a private cause of action is not consistent with the underlying

purpose of the statute. The people were very specific regarding their intent in enacting I -1183: 

The people ofthe state of Washington, in enacting this initiative measure, find that

the state government monopoly on liquor distribution and liquor stores in

Washington and the state government regulations that arbitrarily restrict the

wholesale distribution and pricing of wine are outdated, inefficient, and costly to

local taxpayers, consumers, distributors, and retailers. Therefore, the people wish

to privatize and modernize both wholesale distribution and retail sales ofliquor and

remove outdated restrictions on the wholesale distribution of wine by enacting this

initiative. 

LAws OF 2012, ch. 2, § 101( 1). The people listed 15 things the initiative was intended to do. 

Among other things, the initiative specifically noted that one purpose of the initiative was to

provide increased funding for state and local government services. LAws OF 2012, ch. 2, § 

101( 2)( a). And, the people were clear that the purpose of privatizing liquor distribution was to

allow "the state to focus on the more appropriate government role of enforcing liquor laws and

protecting public health and safety concerning all alcoholic beverages." LAws OF 2012, ch. 2, § 

101( 2)( b). Nothing contained in the stated purpose ofprivatizing liquor distribution indicates that

the underlying purpose of the initiative is consistent with using proceeds from the transition from

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No. 46590 -6 -II

a state -run system to a privatized system to compensate former contract liquor store owners for all

economic damages suffered from the enactment of I -1183. 

Creating a private cause of action from RCW 66.24.620( 6)( b) would be contrary to the

legislative intent and the underlying purpose ofI -1183. Therefore, the Owners do not have a cause

of action for monetary damages as a result of the Board' s alleged violation of RCW

66.24.620( 6)( b). The superior court properly granted the Board' s motion for summary judgment

on the Owners' claim that they are entitled to compensation under RCW 66.24.620( 6)( b). 

2. LAWS OF 2012, ch. 3, § 303: Department of Revenue Rulemaking

The Owners also assert that they are entitled to monetary damages for the Department' s

failure to engage in rulemaking under Laws of2012, chapter 3, section 303. The text of Laws of

2012, chapter 3, section 303 states: 

The department of revenue must develop rules and procedures to address claims

that this act unconstitutionally impairs any contract with the state and to provide a

means for reasonable compensation of claims it finds valid, funded first from

revenues based on spirits licensing and sale under this act. 

However, "[ a]n administrative body does not have authority to determine the constitutionality of

the law it administers; only the courts have that power." Bare v. Gorton, 84 Wn.2d 380, 383, 526

P.2d 379 ( 1974). After the people enacted I -1183, the Department recognized this limitation on

its authority and issued a special notice stating, in relevant part: 

Because the Department lacks the authority to carry out the intent and purpose of

I -1183 § 303, the Department will not develop rules or procedures concerning

issues of constitutional impairment. The Department' s instruction in all cases of

alleged constitutional impairment of contract related to I -1183 is for the claimant

to file its claim directly with a court of competent jurisdiction. 

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No. 46590 -6 -II

CP at 112. By issuing the special notice, the Department took the only step that was within its

authority to take. The Department cannot be expected to engage in rule making on topics that are

outside of the scope of the Department' s authority. 

Moreover, there is no precedent for establishing a private cause of action for an agency' s

failure to engage in rule - making. Chapter 35. 04 RCW provides the appropriate mechanism for

challenging an agency' s action or failure to act. The remedies available are expressly limited by

RCW 34.05. 574. " The court may award damages, compensation, or ancillary relief only to the

extent expressly authorized by another provision of law." RCW 34.05. 574( 3) ( emphasis added). 

Laws of 2012, chapter 3, section 303 does not provide for damages or compensation based on the

Department' s failure to engage in rule making. 

The Owners also seem to argue that Laws of 2012, chapter 3, section 303 creates a private

cause of action requiring the Department to pay them compensation for the termination of their

contracts. However, to the extent that Laws of 2012, chapter 3, section 303 creates a claim for

compensation, it is limited to a claim that I -1183 unconstitutionally impairs contracts. For the

reasons explained above, I -1183 did not unconstitutionally impair the Owners' contracts with the

Department. Therefore, they would not be entitled to compensation under Laws of 2012, chapter

3, section. 303. 

The Owners do not have a private cause of action for monetary damages under either RCW

66.24.620( 6)( b) or Laws of 2012, chapter 3, section 303. Therefore, the superior court properly

granted the Department' s and the Board' s motions for summary judgment based on the alleged

violations of specific provisions of I -1183. 

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No. 46590 -6 -II

We affirm. 

We concur: 

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