Court Opinion

ID: 4711402
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:36:52.836917+00
Date Added: 2024-06-11T08:07:08.717782
License: Public Domain

Talmadge, J.
(dissenting) — The majority tries valiantly to make sense of the so-called “independent business judgment” rule, a defense we crafted in King v. City of Seattle, 84 Wn.2d 239, 525 P.2d 228 (1974), and Pleas v. City of Seattle, 112 Wn.2d 794, 774 P.2d 1158 (1989), to the cause of action for tortious interference we created for persons wrongfully denied land use permits by municipalities. I dissent from the majority opinion because I believe it does not go far enough. We should overrule King in its entirety.
FACTS
In 1987, the Blumes applied to the City of Seattle (Seattle) for a Master Use Fermit (MUF) to construct a six-story office/research project, University Center Phase II. Phase I of this development in Seattle’s University District gener*261ated substantial traffic problems and considerable community opposition. In response to the Blumes’ application, Seattle determined there were significant environmental impacts requiring an Environmental Impact Statement (EIS). The Blumes did not appeal from Seattle’s finding of environmental significance. Between 1987 and 1990, the Blumes worked on the draft and final EIS. The development of an EIS remained entirely in the hands of the Blumes, rather than Seattle. In July of 1990, Seattle’s Department of Community and Land Use (DCLU) proposed a final decision that would have required the Blumes to mitigate the traffic problems as well as limit the height, bulk, and scale of the project. Anticipating community opposition, the Blumes met with neighborhood project opponents and negotiated with them between July of 1990 and May of 19.92, when DCLU indicated it would issue a final draft of the proposed conditions for approval of the Blumes’ MUE A comment period on the final draft of the conditions was to take place until June 8, 1992, but the Blumes formally withdrew their application for a permit on June 2, 1992.
At no time between March of 1987 and June of 1992 did the Blumes file an action for a mandamus to force Seattle to issue the MUP.8
Seattle sued the Blumes for back interest due on a loan the City made to the Blumes for construction of University Center Fhase I. The Blumes answered Seattle’s complaint and counterclaimed against Seattle under theories of violation of RCW 64.40 and tortious interference with a business expectancy. The trial court granted summary judgment to the City and the Court of Appeals affirmed the *262judgment.9 The Court of Appeals noted the Blumes confused their RCW 64.40 theory with tortious interference, holding the Blumes did not state a claim under RCW 64.40 and their tortious interference claim was appropriately barred by the independent business judgment defense because of their delay in preparing the EIS, their negotiation with the opponents of the project, their failure to initiate any mandamus action to speed up Seattle’s decision-making process, and their withdrawal of the permit application. City of Seattle v. Blume, No. 35597-0-1, slip op. at 4-8 (Wash. Ct. App. June 10, 1996).
DISCUSSION
The Court of Appeals correctly affirmed the trial court’s dismissal of the Blumes’ RCW 64.40 claim; the Blumes did not bring their claim within the 30-day statutory limitation period. The majority appears to agree with the Court of Appeals on this point: although it does not say so explicitly, the majority implies as much in its discussion of why the RCW 64.40 time bar did not apply to the tortious interference claim. The Blumes have not petitioned for review of this issue. RAP 13.7(b).
The Court of Appeals also affirmed dismissal of the claim for tortious interference with a business expectancy because the Blumes exercised independent business judgment in deciding not to proceed with their MUP application. The majority disagrees, and reverses and remands the case for trial.
In so doing, the majority opinion discards the “independent business judgment” defense that emerged from King. I agree with the majority. The “independent business judgment” defense has no place in a field already fully occupied by the doctrine of avoidable consequences, in cases where liability exists (also called mitigation of damages), and by *263the necessity for proving the proximate cause element in every claim of tort.10 Abandonment of the “independent business judgment” defense not only makes logical sense, but follows from our recent decision in Smoke v. City of Seattle, 132 Wn.2d 214, 228, 937 P.2d 186 (1997), where we equated the defense with proximate cause: “A plaintiffs voluntary or ‘business judgment’ refusal to pursue a known legal remedy may save a defendant from liability by acting as the proximate cause of any damages.”
However, the majority persists in believing King was correct in allowing a cause of action for tortious interference in the land use context although such a cause of action is a departure from any known formulation of the tortious interference cause of action. The Court then created the “independent business judgment” defense in King as jerryrigging to prop up the theory of liability it created in that case. In King, the City of Seattle arbitrarily and capriciously refused to issue a street use permit for development of property along Lake Union. King obtained a writ of mandamus ordering issuance of the permit, and finally received the permit four months after he had applied for it. In the interim, however, the Army Corps of Engineers changed a regulation to require a federal permit for the development King wanted to undertake. King asserted the federal permit could take up to two years to obtain. Br. of Resp’ts at 5 in King. King was unable to make the payments on his property for such a long period of time, and eventually ceased making payments on it, ultimately losing it. Had the City issued the street use permit to King at the time he had applied for it, he would not have had to comply with the new Corps of Engineers regulation, and allegedly would have been able to develop his property. He sued the *264City for the resulting damages, including the loss of his property and lost future profits. The trial court awarded King over $365,000.
King’s legal theory of liability was nebulous. In his appellate brief, King cited a California case that held, “[W]here the law requires absolutely a ministerial act to be done by a public officer, and he neglects or refuses to do such act, he may be compelled to respond in damages to the extent of the injury arising from his conduct.” Br. of Resp’ts at 17 (citing Ellis v. City Council, 222 Cal. App. 2d 490, 35 Cal. Rptr. 317, 321 (1963)). The Court rejected this approach, holding instead “the tort complained of here is interference with prospective economic advantage.” King, 84 Wn.2d at 247. The King Court then adopted the independent business judgment defense to mitigate the effect of the cause of action it created.11
We had earlier discussed the origins of the tort of interference with a business expectancy in a scholarly disquisition in Calbom v. Knudtzon, 65 Wn.2d 157, 161-62, 396 P.2d 148 (1964):
Intentional and unjustified third-party interference with valid contractual relations or business expectancies constitutes a tort, with its taproot embedded in early decisions of the courts of England, e.g.: Keeble v. Hickeringill, 11 East 574, 11 *265Mod. 74, 130, 3 Salk 9, 103 Eng. Rep. 1127 (1809); Lumley v. Gye, 2 El. & Bl. 216, 118 Eng. Rep. 749 (1853); Bowen v. Hall, 6 Q.B.D. 333, 50 L.J.Q.B. 305 (1881); Temperton v. Russell, 1 Q.B. 715, 62 L.J.Q.B. 412 (1893); South Wales Miners’ Federation v. Glamorgan Coal Co., A.C. 239, 74 L.J.K.B. 525 (1905).
From and with the English decisions, the tort has become engraved upon American law, generally unsullied in principle, although with some case by case distinctions. See Carpenter, Interference with Contract Relations, 41 Harv. L. Rev. 728; Prosser on Torts (3d ed.) § 123, p. 950; 30 Am. Jur., Interference § 61, p. 95; 84 A.L.R. 43; 9 A.L.R. (2d) 228; 26 A.L.R. (2d) 1227.
We have recognized the tort in its various forms. Jones v. Leslie, 61 Wash. 107, 112 Pac. 81 (1910); Seidell v. Taylor, 86 Wash. 645, 151 Pac. 41 (1915); Pacific Typesetting Co. v. International Typographical Union, 125 Wash. 273, 216 Pac. 358, 32 A.L.R. 767 (1923); Sears v. International Brotherhood of Teamsters, Chauffeurs, Stablemen & Helpers of America, Local No. 524, 8 Wn. (2d) 447, 112 P. (2d) 850 (1941); Hein v. Chrysler Corp., 45 Wn. (2d) 586, 277 P. (2d) 708 (1954); Titus v. Tacoma Smeltermen’s Union Local No. 25, International Union of Mine, Mill & Smelter Workers, 62 Wn. (2d) 461, 383 P. (2d) 504 (1963).
The fundamental premise of the tort—that a person has a right to pursue his valid contractual and business expectancies unmolested by the wrongful and officious intermeddling of a third party—has been crystallized and defined in Restatement, Torts § 766, as follows:
“Except as stated in Section 698 [betrothal promises], one who, without a privilege to do so, induces or otherwise purposely causes a third person not to
“(a) perform a contract with another, or
“(b) enter into or continue a business relation with another is liable to the other for the harm caused thereby.”
Clause (a) relates to those cases in which the purposeful interference of a third party induces or causes a breach of an existing and valid contract relationship. Clause (b) embraces two types of situations. One is that in which the interferor *266purposely induces or causes a party not to enter into a business relationship with another. The second is where a business relationship, terminable at the will of the parties thereto, exists, and the intermeddler purposely induces or causes a termination of such relationship. The distinction between the situations propounded by clauses (a) and (b) lies not so much in the nature of the wrong, as in the existence or nonexistence, and availability as a defense, of privilege or justification for the interference. Restatement, Torts § 766, Comment c.
The tort of interference with a business expectancy requires a third party. “An action for tortious interference with a contractual relationship lies only against a third party. A party to the contract cannot be liable in tort for inducing its own breach.” Olympic Fish Prods., Inc. v. Lloyd, 93 Wn.2d 596, 598, 611 P.2d 737 (1980) (citing Hein v. Chrysler Corp., 45 Wn.2d 586, 277 P.2d 708 (1954), and Houser v. City of Redmond, 16 Wn. App. 743, 559 P.2d 577 (1977), aff’d, 91 Wn.2d 36, 586 P.2d 482 (1978)). There is no third party in the case at bar. The only parties are Seattle and the Blumes. Even if one gets past the rather peculiar idea that Seattle, by receiving an application for a Master Use Fermit from the Blumes, was somehow creating a business expectancy, Seattle cannot be liable for inducing its own breach.
Although Hein had been on the books for 20 years, the King Court erroneously failed to take it into account. In a case where only two parties are involved, such as a city and an applicant for some city service or amenity, there can be no tortious interference with a business expectancy. To the extent King holds as much, we should overrule it and cases like Pleas that rely on it.
The Court in King created a theory of liability in an apparent effort to give the Kings a remedy for the wrongful actions of a municipality in the land use context. This was in 1974, well before the advent of regulatory takings jurisprudence. Today, in addition to a constitutional regulatory takings claim, parties like the Blumes have state statutory *267remedies in both RCW 64.4012 and the Land Use Petition Act, RCW 36.70C. They also can pursue a claim under 42 U.S.C. § 1983. It is therefore no longer justifiable to sustain and perpetuate a cause of action that exists in open hostility to other holdings of this Court.
CONCLUSION
Here, the Blumes had a perfectly adequate remedy at law for the City’s alleged improper actions in delaying the MUP permit, i.e., RCW 64.40, or perhaps 42 U.S.C. § 1983. Unfortunately for them, they did not file their claim under RCW 64.40 until after the statutory limitation period had run and chose to forgo a § 1983 claim.
We should now abolish not only the defense (independent business judgment), but also the tort that should never have been (tortious interference as formulated in King) where clearer remedial schemes such as RCW 64.40 and other statutory provisions exist. I would affirm the decisions of the Court of Appeals and the trial court.
Durham, C.J., and Dolliver and Guy, JJ., concur with Tal-MADGE, J.
Reconsideration denied February 11, 1998.

A mandamus action is available in land use actions to force a municipality to process an application and issue a land use permit. See Hillis Homes, Inc. v. Snohomish County, 32 Wn. App. 279, 647 P.2d 43 (1982); Norco Constr., Inc. v. King County, 97 Wn.2d 680, 649 P.2d 103 (1982); Pleas v. City of Seattle, 112 Wn.2d 794, 774 P.2d 1158 (1989).

The Blumes have not petitioned this Court for review of the Court of Appeals decision that they did not have a claim under RCW 64.40. Moreover, the Blumes never sought a claim against the City under 42 U.S.C. § 1983. The Blumes’ only theory for recovery, which was substantially intertwined with their theory under RCW 64.40, is tortious interference by Seattle with a business expectancy.

Contrary to the dissent in King, the “independent business judgment” defense cannot be analogized to mitigation of damages, because there is no requirement to mitigate damages when the tort is intentional. Desimone v. Mutual Materials Co., 23 Wn.2d 876, 884, 162 P.2d 808 (1945); Champa v. Washington Compressed Gas Co., 146 Wash. 190, 201, 262 P. 228 (1927). Interference with a business relationship is an intentional tort. Calbom v. Knudtzon, 65 Wn.2d 157, 161, 396 P.2d 148 (1964). See Sunland Invs., Inc. v. Graham, 54 Wn. App. 361, 365, 773 P.2d 873 (1989).

The King court formulated the defense as follows:
Municipal liability for tortious interference with prospective economic advantage should not be premised on the independent unsubstantiated decision of a plaintiff that it would be unavailing to seek a possible administrative remedy accorded him under the law. If this were not so, the plaintiff would be able to create liability in another by his own independent judgment. We therefore find no legal liability (proximate cause) in the City for the plaintiffs’ damages here.
King, 84 Wn.2d at 251. The rule has been reaffirmed in Hillis Homes, Inc., 32 Wn. App. 279; Grader v. City of Lynnwood, 53 Wn. App. 431, 767 P.2d 952, review denied, 113 Wn.2d 1001, 777 P.2d 1050, cert. denied, 493 U.S. 894, 110 S. Ct. 243, 107 L. Ed. 2d 193 (1989). The defense has also been extended to cases of professional liability. Marsh v. Commonwealth Land Title Ins. Co., 57 Wn. App. 610, 789 P.2d 792, review denied, 115 Wn.2d 1025, 802 P.2d 127 (1990); Horn v. Moberg, 68 Wn. App. 551, 844 P.2d 452, review denied, 121 Wn.2d 1025, 854 P.2d 1085 (1993). Recently, Division Three of the Court of Appeals criticized the extension of the independent business judgment defense to professional liability cases. Flint v. Hart, 82 Wn. App. 209, 917 P.2d 590 (1996).

It is noteworthy that RCW 64.40.030, like the independent business judgment defense, requires a claimant to exhaust his or her administrative remedies.