Opinion ID: 2571698
Heading Depth: 1
Heading Rank: 5

Heading: Fair Market Value and Offset

Text: DSI argues that the difference in the fair market value of its certificate before and after the annexations without any offset for the five-year extension is the appropriate way to calculate measurable damages. The City, on the other hand, asserts that because fair market value is used to calculate damages in condemnation cases, it cannot also be used to assess the appropriate amount of measurable damages. The City also contends that the amount of damages should be reduced by the benefit gained from the five-year franchise extensions. This court routinely calculates damages by assessing fair market value in condemnation cases. See, e.g., Lange v. State, 86 Wash.2d 585, 547 P.2d 282 (1976); State v. Rowley, 74 Wash.2d 328, 444 P.2d 695 (1968); State v. Larson, 54 Wash.2d 86, 338 P.2d 135 (1959). However, condemnation is one of the other two choices that a city has under RCW 35A.14.900. Presumably, measurable damages has a separate and distinct meaning under the five-year extension option. The court should not construe statutory language `so as to result in absurd or strained consequences....' In re Custody of Smith, 137 Wash.2d 1, 8, 969 P.2d 21 (1998) (quoting Duke v. Boyd, 133 Wash.2d 80, 87, 942 P.2d 351 (1997)). A statute should be read as a whole and the various provisions should be read in light of each other. Miller v. City of Tacoma, 138 Wash.2d 318, 338, 979 P.2d 429 (1999). Since condemnation is an alternative to the five-year extension plus measurable damages option, it is presumed to have an independent and distinct meaning. See Haley v. Highland, 142 Wash.2d 135, 147, 12 P.3d 119 (2000) (stating that a difference in meaning is presumed when the legislature uses different language at various points within the same statute). This distinction makes common sense. If measurable damages were assessed by calculating fair market value with no offset for the five-year extension, then no city would ever choose the five-year extension option. If it did, it would have to pay fair market value plus grant a five-year extension, whereas if it instead chose the condemnation option, it could simply pay fair market value with no extension. Thus, by reading the statute as a whole, we conclude that the legislature did not intend for measurable damages to equal the difference in the fair market value of the certificate before and after annexation without an offset. In ascertaining the proper measure of damages, we look to other cases involving injury to property for guidance. This court has held that the proper measure of damages when property is permanently damaged is the difference between the value of the property before the injury and its value after the injury. Colella v. King County, 72 Wash.2d 386, 394, 433 P.2d 154 (1967); Drake v. Smith, 54 Wash.2d 57, 62, 337 P.2d 1059 (1959). See also 22 AM.JUR. 2d Damages § 405, at 490 (1988). Under this theory, however, because the five-year franchise extension also compensates the hauler for the loss of territory, we believe the award for diminution in value should be offset by the benefit gained by reason of the extension. The Metropolitan decision supports this interpretation. The Metropolitan court stated that a garbage collection company that receives a five-year extension has the right under the statute to seek damages for any loss sustained over and above the benefit derived from the franchise.  32 Wash.App. at 719, 649 P.2d 642 (emphasis added). Here, DSI enjoyed an extended five-year benefit because the City chose to grant it an extension rather than negotiating a purchase or condemning the franchise. In accordance with Metropolitan, DSI can seek damages for any loss that exceeds the benefit that it received from the five-year franchise extensions, but cannot claim both damages for the full loss in value of the certificate plus the benefit of the five-year extension. The trial court found that the DSI certificate had value unrelated to the 5 or 7 year continued service provision. Clerk's Papers at 1621. However, given that the other two options provided for by the legislature in RCW 35A.14.900 are a negotiated sale and condemnation, it is unlikely that any city would choose to grant the five-year extension if the legislature also meant for a city to pay damages without an offset for the benefit accrued during the five-year franchise extension. Therefore, although it is appropriate to assess measurable damages based on the change in fair market value, such a damages award must be reduced by the amount of benefit gained from the franchise extension.