Court Opinion

ID: 9550416
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:35:01.342923+00
Date Added: 2024-06-11T15:21:30.848255
License: Public Domain

Dore, J.
(dissenting) — I dissent.
The appellants sue on nine causes of action. The majority recognizes eight of the nine as justiciable. Seven of those claims turn on the construction of a letter written by the State's Auditor. That letter does not support the appellants' allegations because the writing and dissemination of that letter were acts beyond the authority of the Auditor. Being ultra vires, the letter created no obligations and no liability on the part of the State. The eighth cause of action is barred by the well recognized rule that the State and its agents are not liable for alleged injuries resulting from the making of policy. There is no reason under CR 12(b)(6) that we cannot read the letter, draw these conclusions and affirm the dismissal of the first eight causes of action. I agree with the majority that the ninth cause of action does not pass muster under CR 12(b)(6), but I fail to see any distinction between that claim and the appellants' other eight. I would therefore dismiss the appellants' suit in its entirety.
The Auditor's Letter
During the period at issue here, the State Auditor's letter appeared in WPPSS' annual reports. *436To Whom It May Concern:
The Washington State Auditor's Division of Municipal Corporation[s] conducts a continuous examination of all of the operations of the Washington Public Power Supply System, including each and every project. Reports are issued covering each fiscal year, and are public documents.
On every such examination, state law requires that inquiry shall be made as to the financial condition and resources of the Supply System, whether the Constitution and laws of the state, the resolutions and orders of the Supply System, and the requirements of the Division of Municipal Corporations have been properly complied with; and into the methods and accuracy of the accounts and reports.
Very truly yours,
Robert V. Graham, State Auditor
Clerk's Papers, at 33. The appellants' allegations are based on the second paragraph of this letter. That paragraph is nothing more than a very close paraphrase of RCW 43.09-.260, which provides:
On every such examination, inquiry shall be made as to the financial condition and resources of the taxing district; whether the Constitution and laws of the state, the ordinances and orders of the taxing district, and the requirements of the division of municipal corporations have been properly complied with; and into the methods and accuracy of the accounts and reports.
While this summary of the Auditor's statutory duties lies at the heart of seven of the appellants' causes of action, it cannot support any of them.
The Public Duty Doctrine and Ultra Vires Acts
The appellants' complaint asserts four claims based on RCW 43.09.260 and RCW 54.24.070. Appellants allege that the State Auditor failed to perform or negligently performed his duties under each of these statutes. However, both statutes create duties owed to the public at large, not to appellants or any other separate individuals. Our "public *437duty doctrine" therefore bars these four tort claims. Bailey v. Forks, 108 Wn.2d 262, 737 P.2d 1257 (1987).
The majority finds that an exception to the doctrine applies here, because a "special relationship" existed between the appellants and the Auditor, which converted his duties to the public to duties owed to them personally. Generally, the special relationship exception exists where there is contact between a public official and the plaintiff and the plaintiff justifiably relies on the acts or assertions of that official. Bailey v. Forks, 108 Wn.2d at 268. The act the appellants rely on here is the Auditor's writing the letter and the dissemination of that letter by WPPSS, which, it is alleged, the Auditor knew or should have known of.
However, the Auditor's letter cannot give rise to a special relationship because his writing and disseminating it was ultra vires and as a consequence it can have no legal effect. The appellants' complaint suggests that the Auditor wrote his letter at the instance of WPPSS' bond counsel, who was concerned that the amendment of RCW 54.24.070, relieving the Auditor of the duty to register, certify and sign bonds, would adversely affect the marketability of WPPSS' bonds. Clerk's Papers, at 32-33. Providing such reassurances to the bond market on behalf of WPPSS is not within the statutory duties of the State Auditor. RCW 43.09.050. Because he acted without authority, the Auditor's act can have no legal effect and cannot have given rise to a special relationship. The appellants' claims are therefore still barred by the special duty doctrine.
The situation is no different from that presented in Chemical Bank v. WPPSS, 99 Wn.2d 772, 666 P.2d 329 (1983), in which we invalidated certain financing arrangements on the ground that the municipal corporations involved exceeded their authority in agreeing to them. We held there:
In the present case, the participants lacked substantive authority to enter into this type of contract... As such, *438these contracts failed to protect unsuspecting individuals, the ratepayers, represented by the participants. By choosing such an alternative arrangement in lieu of a statutory scheme that incorporated protections against those very liabilities, the participants exceeded their statutory authority, rendering the contracts ultra vires.
Chemical Bank, at 798. If a contract is void because there was no power to agree to it, an act beyond the scope of the State Auditor's authority cannot be the basis of a special relationship. There can never be justifiable reliance creating a special relationship, just as there can be no agreement creating a contract. It is not within the Auditor's authority to act on behalf of WPPSS in order to enhance the value of its bonds in the market. Such an act was not among the Auditor's duties and, as this very suit illustrates, was contrary to the interests of the people of this State. Since the Auditor did not, therefore, create a special relationship, the appellants' negligence claims are barred by the public duty doctrine.
Misrepresentation and Ultra Vires Acts
The same analysis applies to bar the appellants' claims for fraud, negligent misrepresentation and a violation of The Securities Act of Washington, RCW 21.20.010. All these causes of action require a showing of a false statement of material fact. Appellants allege that the Auditor's letter constitutes this false statement of fact. Essentially the same contention was made in Devoe v. State, 48 Ohio App. 2d 311, 357 N.E.2d 396 (1975). The Ohio court held that ultra vires acts could not form the basis for a claim of fraud.
Plaintiffs contend that the officers and employees of the division of securities of the state acted contrary to the authority vested in them by statute and registered certain securities which not only did not meet the statutory requirements, but which such officers and employees knew were fraudulent. If plaintiffs' allegations be correct, the acting [sic] of the officers and employees of the division of securities were ultra vires, not being authorized *439by law and being contrary to the interest of the state itself.
Devoe, at 317. The same reasoning applies here. If we accept the appellants' allegations as true, and assume the Auditor made a false statement of material fact, he has acted against the interests of the State and beyond his lawful authority. His act being ultra vires, it is without legal effect and cannot create liability on behalf of the State. The claims for fraud, negligent misrepresentation arid securities fraud were therefore properly dismissed under CR 12(b)(6).
Acts Alleged To Constitute "Tortious Interference" Are Immune
The appellants allege that the Legislature and the Governor tortiously interfered with WPPSS' projects by investigating the conduct of WPPSS and the consequences of terminating the projects and by making public statements to the effect that the projects should be terminated.
In conducting their investigations and in discussing this matter of public interest, these elected officials were engaged in the making of public policy. It is clear beyond question that such acts cannot lead to liability on the part of the State. Cougar Business Owners Ass'n v. State, 97 Wn.2d 466, 647 P.2d 481, cert. denied, 459 U.S. 971 (1982). In Cougar, the Governor had "red-lined" the area surrounding Mount St. Helens, which resulted in harm to businesses in the town of Cougar. We held that the Governor's actions were immune from liability.
While the doctrine of sovereign immunity has been abolished, Const, art. 2, § 26; RCW 4.92.090, there is an exception for the exercise of discretion in formulating public policy. A 4-part test applies.
(1) Does the challenged act . . . necessarily involve a basic governmental policy, program, or objective? (2) Is the questioned act . . . essential to the realization or accomplishment of that policy, program, or objective . . .? (3) Does the act . . . require the exercise of basic policy evaluation, judgment, and expertise . . .? (4) Does the governmental agency involved possess the requisite *440constitutional, [or] statutory . . . authority ... to do or make the challenged act. . .?
Evangelical United Brethren Church v. State, 67 Wn.2d 246, 255, 407 P.2d 440 (1965).
WPPSS is a joint operating agency with all the powers and duties of a municipal corporation, RCW 43.52.391, but that does not exempt it from the police powers of the State. It is well within the authority of the Legislature and the Governor to investigate and to consider appropriate action where the conduct of such an agency appears to conflict with the public interest. In taking such action, the Legislature and the executive are protecting the basic interests of the State and its citizens, and legal immunity is required in order to insulate their actions from interference by this coordinate branch of government. Bender v. Seattle, 99 Wn.2d 582, 588, 664 P.2d 492 (1983). Since the actions on which the claim for tortious interference is based are immune, the claim was properly dismissed under CR 12(b)(6).
The Appellants' Own Allegations Negate Their Claims Under CR 12(b)(6)
In cases where the pleadings themselves contain factual allegations that negate the cause of action, dismissal under CR 12(b)(6) is appropriate. The rule that the facts should be construed in the light most favorable to the plaintiff does not require the court to turn a blind eye to facts asserted by the plaintiff which negate his cause of action.
A plaintiff who files a long and detailed complaint may plead himself out of court by including factual allegations which if true show that his legal rights were not invaded.
American Nurses' Ass’n v. Illinois, 783 F.2d 716, 724 (7th Cir. 1986). This is the case here. The appellants allege that the Auditor issued his letter for the purpose of assisting WPPSS in the marketing of its bonds. On a CR 12(b)(6) motion, we take that allegation to be true. If it is true, the Auditor's act was ultra vires and the appellants have no *441special relationship and their claim is barred by the public duty doctrine.
The appellants allege that the Auditor made a false statement of material fact. If that is true, he acted beyond his authority and contrary to the interests of the State. His act was ultra vires and cannot form the basis of liability on the part of the State.
The appellants allege that the State negligently interfered with WPPSS' projects when the Legislature investigated the management of WPPSS. This allegation covers 20 pages in the appellants' complaint and sets out the facts in support of their claim with the specificity one would expect in an affidavit or findings of fact, including names, dates and citations to public records. Clerk's Papers, at 38-57. It is highly unlikely the appellants will offer any facts beyond those set forth in the complaint, especially since the facts in connection with this claim are part of the public record and are unlikely to be further developed through discovery. Under these circumstances, it is absurd for the court to turn a blind eye to the facts, so that more time and money may be spent on what are now known to be unmeri-torious claims. The negligent interference claim was therefore properly dismissed and this court should affirm.
With regard to the seven causes of action that depend for validity on the Auditor's letter, there is another sense in which the majority misapplies the law of CR 12(b)(6) in upholding the appellants' claims. The majority concludes that the letter created a special relationship and constitutes a false statement of fact because someone might have read the letter in a way that supports these claims. On that theory, anyone who misinterprets a document issued by a public agency would have a claim against the responsible official or agency and the State, city or county would have to defend that action. This is an absurd result.
The rule that the plaintiff can negate his own cause of action by his own allegations applies with special force when the claim rests on a particular document. See Tenopir v. State Farm Mut. Co., 403 F.2d 533 (9th Cir. 1968). *442See 5 C. Wright & A. Miller, Federal Practice § 1357, at 604-05 (1969). The law under CR 12(b)(6) does not require a court to interpret a document out of existence at a preliminary stage of the litigation, just so the same document can be considered later after more time and money have been spent. If it does not support the plaintiff's claims, that will be evident on the face of the document. The court should dismiss. See Nichols v. Severtsen, 39 Wn.2d 836, 239 P.2d 349 (1951) (demurrer upheld where exhibit to complaint for malicious prosecution showed proceedings had not been terminated favorably to plaintiff).
For example, in Western Reserve Oil & Gas Co. v. New, 765 F.2d 1428 (9th Cir. 1985), the plaintiff alleged that a prefiling notification letter sent to his limited partners by the IRS constituted a constitutional tort. The court affirmed a Fed. R. Civ. P. 12(b)(6) dismissal because the letter did not affect any recognizable constitutional interest. That was apparent from the face of the letter. The court was not required to consider hypothetical interpretations of the letter by the limited partners under which a constitutional interest might have been affected. The possibility that someone reading the letter might have read it in a way that would constitute a tort was not sufficient to get the plaintiff over the Fed. R. Civ. P. 12(b)(6) hurdle.
This case is no different. The majority argues:
Finally, the letter could plausibly be interpreted by its readers to contain implicit assurances.
Majority, at 423. This is nonsense. The question is whether the Auditor has acted to create a special relationship. This court can read the Auditor's letter. It does not, on its face, say anything more than what the statutory duties of the Auditor are. It does not support the appellants' claims and it never will. Dismissal of the seven causes of action that depend on it was entirely proper.
Unjust Enrichment
I agree with the majority that the appellants' ninth cause of action, for unjust enrichment, was properly dismissed *443because the State has not benefited from the financing of these nuclear projects. I am mystified by the majority's reasoning, however.
The bondholders alleged additional benefits at the trial court level. These alleged benefits included two partially constructed power plants, increased tax revenue from the projects' construction, and an improved economy. However, these allegations are wholly speculative in nature and are insufficient to preclude dismissal under CR 12(b)(6).
Majority, at 434-35. Why, suddenly, is the majority no longer willing to speculate in order to uphold the appellants' causes of action? How are the benefits to the State cited here any more speculative than the "possible meanings" of the Auditor's letter? Clearly there must be some limit to the hypothetical facts which will support a cause of action in the face of a CR 12(b)(6) challenge. It escapes me how the subjective understanding of a bondholder reading a letter reprinted in an annual report can be permissible speculation while the benefit to the State from increased tax revenues is too speculative to save this cause of action from dismissal. I would therefore dismiss all the appellants' causes of action along with the claim for unjust enrichment.
Conclusion
None of the appellants' nine causes of action is valid. The Auditor's letter, being an ultra vires act, has no legal effect. It cannot be the basis of a special relationship and it cannot constitute a misrepresentation for which the State can be held liable. Chemical Bank v. WPPSS, 99 Wn.2d 772, 666 P.2d 329 (1983); Chemical Bank v. WPPSS, 102 Wn.2d 874, 691 P.2d 524, cert. denied sub nom. Haberman v. Chemical Bank, 471 U.S. 1065 (1985). The claims for tortious interference were properly dismissed by the trial court on the ground of sovereign immunity. Cougar Business Owners Ass'n v. State, 97 Wn.2d 466, 647 P.2d 481, cert. denied, 459 U.S. 971 (1982).
The dismissal of all claims should be affirmed.
*444I dissent.
Goodloe, J., concurs with Dore, J.
Reconsideration granted December 8, 1988.