Court Opinion

ID: 4711742
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:37:14.822899+00
Date Added: 2024-06-11T08:07:10.164000
License: Public Domain

Johnson, J.
— This case requires us to decide whether a municipality, in setting and applying water connection charges authorized under RCW 35.92.025, is liable to a developer for damages under RCW 64.40.020(1), RCW 35.92.010, or 42 U.S.C. § 1983 and § 1988. Specifically, we must resolve whether a municipality, in determining its water system users’ equitable share of the system’s cost via the computation of water charges authorized under RCW 35.92.025, must deduct grants and donations used for improving the water system. We are also asked to decide whether a municipality may charge a different connection fee to two similarly situated developers. The Court of Appeals reversed the trial court’s judgment in favor of the property owner. Landmark Dev., Inc. v. City of Roy, No. 19797-9-II (Wash. Ct. App. May 9, 1997). We affirm.
FACTS
In early July 1990, Landmark Development, Inc. (Landmark) requested a water availability letter from the city of *564Roy (Roy), a city of approximately 350 people in Pierce County. In compliance with county platting procedures, Landmark sought tentative assurance from Roy that sufficient water was available for Landmark’s proposed 50-unit residential development to be built outside the Roy city limits.
On July 9, 1990, Mark Carpenter, a principal of Landmark, assured the Roy City Council (Council) that Landmark’s inquiry, as a preliminary step in the developer’s rudimentary plans, was limited to the issue of water availability alone: “[A]t this point, [the Landmark development] is all conjecture and so what I’m just looking for is a letter stating that you do have water that is available to tap on to this and, you know, so that I can go ahead and submit and go from there.” Roy City Council Hr’g Tr. (July 9, 1990) at 2 (Pl.’s ex. 1, at 2) (hereinafter Transcript). The Council attempted to secure more detailed information about the planned development at this meeting but Carpenter was unable to provide specific facts for the Council to rely on: “I wish I had more stuff, but, you know, until we get it back from the County and they tell us things we can and can’t do, its hard to pin it all down.” Transcript at 3.
Indeed, at this meeting, Landmark expressly stated that its inquiry was not about what Roy’s water might cost the developer. Rather, Landmark was solely seeking assurance that Roy’s water quantity was sufficient if Landmark’s development plans came to fruition. When Roy Mayor Charles L. Wolf cautioned Landmark that the development project “will he at your expense,” Landmark replied: “Right. But . . . they don’t want to know about that. All they care about is that there is water available.” Transcript at 7. Based on these representations of Landmark’s interests, Roy shortly after the meeting issued Landmark a standard water availability letter and certificate of water availability on July 18, 1990. Landmark signed the certificate on August 22, 1990 and returned it to Roy.
The one-year water availability letter confirmed enough water was available for the 50 new water connections *565Landmark might install. In conformity with the understanding that occurred at the July 9, 1990 Council meeting, the letter did not commit Roy to a fixed connection fee. Directly above Carpenter’s signature, the letter reads:
I [Landmark] acknowledge that this proposed project may require improvements to the water system which would incur my financial obligation. Prior to final approval for construction of the water system, it is understood that a legal contract between myself and the water utility must be submitted which specifies the terms of water service, operational responsibility, and financial obligation.
Certificate of Water Availability (PL’s ex. 4, at 2).
Also, at the July 9, 1990 Council meeting, Landmark assured Roy that Landmark’s on-site water connections would be “more than up and running” in six months. Transcript at 6. Roy’s city attorney confirmed this understanding of Landmark’s building schedule, reiterating, “we anticipate that the contract will be completed sometime in the fall . . . .” Transcript at 7. However, it was in fact nearly two years later, on May 13, 1992, when Landmark finally managed to purchase the proposed 30 acres of property outside Roy. Since the property purchase date occurred nearly two years after Roy’s original one-year water availability letter had been issued to Landmark, that letter had expired by the time Landmark actually bought the property. On February 26, 1993, two and one half years after Landmark first made its water availability inquiries to the Council, Roy renewed the original one-year water availability letter to Landmark.
During this time, another developer, New Concept Homes, Inc. (New Concept), requested a water availability letter from Roy for a planned 83-unit residential development also located outside of Roy. Roy issued a one-year water availability letter to New Concept on October 19, 1992; that letter was identical to the one issued to Landmark.
In 1986, Roy had constructed a 260,000-gallon standpipe and two 500-gpm wells. That expansion of the city’s water *566supply cost $177,669 and the expansion of the city’s water storage capacity cost $269,923. The total cost of the 1986 construction was $447,592. A part of the cost was funded by a federal grant. Roy borrowed $70,000 to pay those expansion costs not borne by the federal monies.
Both the Landmark and New Concept developments would he utilizing Roy’s water system as it existed after the 1986 expansion project. The new developments would add an additional 133 service connections to Roy’s existing draws. Roy would also need to provide required fire flows to the proposed development plats.
At the time Roy sent the 1992 water availability letters to Landmark and New Concept, Roy’s water connection fee was set at $350 under Roy City Ordinance 351. In July 1993, New Concept finished installing its water system at its development site and was ready to connect to Roy’s water system.
After Roy was informed by New Concept in June that its development units would be ready in less than one month to connect to the municipal water system, Roy issued a connection fee invoice to the developer. This bill, dated June 15, 1993, charged New Concept $350 per connection, the city fee then in effect. New Concept paid this invoice on October 21, 1993.
Meanwhile, by June 1993, Landmark was still one and one half years away from commencing installation of the water system at its development site. Landmark had not moved beyond the initial stage in the negotiation process— Roy’s water availability letter. That letter, as noted above, contained no language guaranteeing Landmark a specific water connection fee.
After New Concept was connected to the Roy water system and had received its invoice, Roy learned that a project report was required by the state Department of Health as a supplement to Roy’s 1982 comprehensive water system plan and engineering report. On July 9, 1993, nearly one month after issuing its water connection rate invoice to New Concept, Roy contracted with a professional *567engineering firm, Gray & Osborne, to prepare the mandatory project report. Gray & Osborne’s report was to “evaluate [] the proposed developments’ impacts on the City water system using hydraulic modeling.” Gray & Osborne Report at 1-1 (Pl.’s ex. 33) (hereinafter Report).
Gray & Osborne recommended, inter alia, “that the City consider increasing their installation and connection charges outside the City limits to provide a source of funding for capital improvements which will be necessary to meet the requirements of the expanded service area.” Report at 1-3.
Specifically, Gray & Osborne advised Roy increase its $350-per-unit connection fee to $920. Gray & Osborne had taken the total cost of Roy’s 1986 expansion ($447,592) into account when calculating its recommended connection fee increase: “The connection charge for the City of Roy was determined using the 1986 construction cost of the 260,000-gallon standpipe and two 500-gpm wells, and dividing these costs by the number of equivalent residential units (ERUs) each facility has the capability of serving.” Report at app. F.
Roy followed Gray & Osborne’s recommendation and adopted Roy City Ordinance 448 at its October 11, 1993 Council meeting, raising the water connection fee to $920 per connection. At a September 21, 1993 Council meeting, a month before Ordinance 448 was passed, Landmark tendered a check to Roy for $17,500 which would have paid in full Landmark’s planned connections at Roy’s old water connection fee rate. However, at the time Landmark tendered the check, the developer had not begun design or construction of its water system and could not estimate when it might do so. In fact, Landmark was over one month away from even submitting its water system plans to Roy. Roy, therefore, rejected Landmark’s check. Although initially cautious at this meeting, Roy’s city attorney later conducted legal research and advised Roy to charge Landmark the new connection fee.
Landmark brought suit in December 1993, alleging Roy *568was charging it an unreasonable water connection fee. Landmark specifically alleged Roy had breached its contract with Landmark, violated Landmark’s equal protection rights, acted arbitrarily and capriciously, and denied Landmark its substantive and procedural due process rights under both the federal and state constitutions. Landmark requested injunctive relief and over $600,000 in lost profits, attorney fees, and costs. Following a trial, the superior court found in favor of Landmark on four grounds, ultimately awarding it approximately $125,000 in damages, attorney fees, and costs. Roy timely appealed. The Court of Appeals reversed the trial court judgment on all grounds in an unpublished opinion. Landmark Dev., Inc. v. City of Roy, No. 19797-9-II (Wash. Ct. App. May 9, 1997). The Court of Appeals further denied both parties’ requests for attorney fees. We granted Landmark’s appeal.
ANALYSIS
I
Did the Court of Appeals, by interpreting state law to allow a municipality to base water connection fees on something more than the cost of the water system in municipal dollars alone, err in its reversal of the trial court’s judgment for Landmark?
The trial court awarded Landmark damages under RCW 64.40.020(1), essentially concluding that Roy acted unlawfully in calculating its new water connection fee as authorized under RCW 35.92.025. Landmark contends that the statute requires a municipality, when calculating water connection fees, to deduct any grants and donations it uses in the funding of its water system. RCW 64.40.020(1) provides:
Owners of a property interest who have filed an application for a permit have an action for damages to obtain relief from acts of an agency which are arbitrary, capricious, unlawful, or exceed lawful authority, or relief from a failure to act within time limits established by law: PROVIDED, That the action is *569unlawful or in excess of lawful authority only if the final decision of the agency was made with knowledge of its unlawfulness or that it was in excess of lawful authority, or it should reasonably have been known to have been unlawful or in excess of lawful authority.
In order to resolve Landmark’s RCW 64.40.020(1) claim, we must first decide what RCW 35.92.025 requires of municipalities. That statute reads in part:
Cities and towns are authorized to charge property owners seeking to connect to the water or sewerage system of the city or town as a condition to granting the right to so connect, in addition to the cost of such connection, such reasonable connection charge as the legislative body of the city or town shall determine proper in order that such property owners shall bear their equitable share of the cost of such system.
Statutory interpretation is a legal question which we review de novo. Dioxin/Organochlorine Ctr. v. Pollution Control Hearings Bd., 131 Wn.2d 345, 352, 932 P.2d 158 (1997). RCW 35.92.025 authorizes municipalities to require property owners pay a fee to the city or town in order to connect to its water or sewage system. The statute allows the city or town to set the fee so that all system users pay their equitable share of the cost of such system. The statute does not expressly require that federal grant monies be deducted when the city calculates each user’s equitable share. RCW 35.92.025 requires only that connection fees be computed based on the cost of the system. The statute is silent on the matter of the system’s funding sources.
Since the Legislature, in drafting RCW 35.92.025, did not expressly require funding sources be factored into a city’s computation, we must decide whether such a requirement is implied. We hold it is not. In reaching this determination, we find review of related statutes helpful.
There are four types of municipal corporations in Washington engaged in water purveying and/or sewer service. There are special purpose municipal sewer and water districts, covered in Title 56 RCW and Title 57 RCW, *570respectively. In 1997, these distinct districts were combined into single water-sewer districts. Laws of 1996, ch. 230 (effective July 1, 1997). Municipal utilities, such as Roy where the water purveyor is a department of the city government, are covered in RCW 35.92. Finally, there is a fourth type of municipal corporation, known as a metropolitan municipal corporation, covered by RCW 35.58.
In 1989, the Legislature amended various utility statutes and added new chapters to Title 56 and Title 57 regarding “water and sewer connection and capacity charges.” Laws of 1989, ch. 389. We shall now consider several sections of chapter 389, Laws of 1989 that are relevant to the resolution of Landmark’s claim.
Section one of chapter 389 added a new section to RCW 35.58. The new section addressed sewage connection and capacity charges for metropolitan municipal corporations. Section one does not state that a metropolitan municipal corporation must offset grants or donations when calculating connection charges for incoming system users.
Section two of chapter 389 addressed capacity charges for sewer districts. It added the following language to section one, chapter 449, Laws of 1987 and RCW 56.08.010:1 “The cost of existing facilities shall not include those portions of the system which have been donated or which have been paid for by grants.”
Section nine of chapter 389 addressed capacity charges for water districts. It added the following language to section one, chapter 11, Laws of 1988 and RCW 57.08.010:2 “The cost of existing facilities shall not include those portions of the system which have been donated or which have been paid for by grants.”
Thus, in 1989, in a single piece of legislation, the *571Legislature specifically provided direction whether water purveyors are mandated to deduct donations and grants from the costs of water and sewer systems for the purpose of calculating user connection charges. The Legislature, sub silentio, allowed the inclusion of donations and grants in the calculation method of metropolitan municipal corporations. At the same time, the Legislature expressly required the deduction of donations and grants in the calculation methods of water and sewer districts. The Legislature specifically did not amend, via Laws of 1989, chapter 389, the statutory scheme for municipal utility corporations such as Roy.
In the language of chapter 389 we have, therefore, a most persuasive application of the judicial doctrine expressio unius est exclusio alterius: the expression of one is the exclusion of the other. “Legislative inclusion of certain items in a category implies that other items in that category are intended to be excluded.” Bour v. Johnson, 122 Wn.2d 829, 836, 864 P./2d 380 (1993). “Where a statute specifically designates the things or classes of things upon which it operates, an inference arises in law that all things or classes of things omitted from it were intentionally omitted by the legislature under the maxim expressio unius est exclusio alterius—specific inclusions exclude implication.” Washington Natural Gas Co. v. Public Util. Dist. No. 1, 77 Wn.2d 94, 98, 459 P.2d 633 (1969).
The Legislature in 1989 considered the matter of how connection fees should be calculated for three of the four municipal corporations in Washington that purvey water and sewer services. In drafting chapter 389, Laws of 1989, the Legislature resolved that donations and grants must he deducted by water and sewer districts, but not by metro districts. The Legislature further decided not to alter the statutory scheme for municipal districts such as Roy. Adopting the doctrine that the expression of one is the exclusion of the other as the statutory tool to interpret the Legislature’s intent in drafting chapter 389, the inclusion or expression of the three types of water corporations in the *572legislation adds forceful argument to an interpretation that the Legislature’s exclusion of the remaining fourth type of corporation, municipal utility corporations, was intentional. If, under chapter 389, Laws of 1989, the Legislature had wanted to include municipal water utilities in its new mandate requiring water and sewer districts deduct donations and grants as offsets, the Legislature would have done so.
The Legislature’s intent is unmistakable under the ex-pressio unius est exclusio alterius rule of statutory construction: the Legislature does not require municipal utilities such as Roy to identify donations and grants as offsets. No matter how equitable it may initially appear to consider donations and grants as offsets, we cannot do so ■without ignoring the clear intent of the Legislature as evidenced in the 1989 legislation.
This interpretation is also consistent with the overall statutory purpose undergirding the Legislature’s authorization of this type of fee. Such fees are not, as Landmark’s interpretation would imply, cost recovery mechanisms for utility purveyors. If this faulty interpretation were correct, it could be argued that whenever a system’s costs were fully recovered through connection fees any future system users would be statutorily entitled to hook up to the “paid off’ utility system for free.
Instead, these statutorily authorized fees provide the means by which a purveyor may equitably allocate to new users access to an existing system possessing an existing value. In addition, the fees become a resource through which the utility purveyor may fund necessary capital improvements to the utility system.
We, therefore, conclude that, under the Legislature’s scheme for the computation of water system connection fees as demonstrated in RCW 35.92.025, grants are not deducted. Consequently, Roy acted properly and legally in *573computing its water connection costs and did not violate RCW 64.40.020(1).
II
Did the Court of Appeals err by interpreting state law to allow a municipality to charge a different fee to water users within the same class, thereby reversing the trial court’s judgment in favor of Landmark?
Landmark essentially argues a municipality acts arbitrary and capriciously under RCW 64.40.020(1) if it charges different fees to two similarly situated water users. We need not reach the issue of whether a municipality, in contracting for different water connection charges to similarly situated users, violates RCW 64.40.020(1) because we conclude, as did the Court of Appeals, that the evidence before the trial court did not support the conclusion that Landmark and New Concept were similarly situated.
Arbitrary and capricious action is “ ‘wilful and unreasonable action, without consideration and regard for facts or circumstances.’ ” Teter v. Clark County, 104 Wn.2d 227, 237, 704 P.2d 1171 (1985) (quoting Miller v. City of Tacoma, 61 Wn.2d 374, 390, 378 P.2d 464 (1963)). “Where there is room for two opinions, action is not arbitrary or capricious when exercised honestly and upon due consideration . . . .” DuPont-Fort Lewis Sch. Dist. No. 7 v. Bruno, 79 Wn.2d 736, 739, 489 P.2d 171 (1971).
The standard of review for a trial court’s findings of fact and conclusions of law is a two-step process. First, we must determine if the trial court’s findings of fact were supported by substantial evidence in the record. If so, we must next decide whether those findings of fact support the trial court’s conclusions of law. Willener v. Sweeting, 107 Wn.2d 388, 393, 730 P.2d 45 (1986).
The trial court concluded that Landmark and New Concept were similarly situated developers and Roy acted arbitrarily and capriciously when it charged Landmark a higher fee than New Concept. We hold the record in this case does not support this conclusion.
*574The record establishes that New Concept began installing its water system in June 1993, and completed installation in July 1993. On June 15, 1993, New Concept was invoiced for its water connection charges at $350 per connection, the amount established under the existing ordinance.
Near this time, Roy learned it needed to file the mandatory updated project report with the state. On July 9, 1993, Roy commissioned Gray & Osborne to compile this report. The report presented to the Council in September 1993 contained a recommendation that the water connection fees be increased to $920 per connection. Based on this advice, on October 11, 1993 Roy adopted Ordinance 448, raising the municipal water connection fee to $920 per connection. At this time, Landmark had not progressed beyond the preliminary negotiation stage in its dealings with Roy. Landmark was in possession of Roy’s renewed water availability letter; however, that letter contained no details about the terms, including the fee rate, for using the municipality’s water system.
Further, the record establishes Landmark had not yet even begun construction at its development site. Landmark, at the September 1993 Council meeting debating the fee increase, had still not submitted its water system plans to Roy nor had Landmark any idea when it would be ready to hook up to Roy’s water system. Ultimately, Landmark’s system was neither approved nor installed until January 1995.
We find that while Landmark and New Concept were both nonresident developers requesting Roy supply water to their development sites, they were not identical members of a designated class. This is so primarily because of the discrepancy in their construction statuses within the time frame of factual events. New Concept was ready to hook up to Roy’s water system when the connection fee was $350 and, following Roy’s practice of billing at the time of hookup, was invoiced accordingly. After that invoice was issued, Roy learned it needed to commission an engineering report. *575Gray & Osborne then issued the mandatory report, recommending Roy adopt an enhanced water connection fee. Roy, once made aware by Gray & Osborne what Roy’s municipal water connection fee should be, adopted the new connection charge. Since Landmark was still not ready to hook up to Roy’s water system, the developer was informed that once Landmark completed design and installation of its on-site water system it would be invoiced for water connections at the new rate.
We conclude, based on the record, that Roy possessed a rational basis for its different treatment of the two developers and its actions were not arbitrary and capricious. Since Landmark and New Concept were not similarly situated developers and there was no vested right at issue, we do not reach the matter of when, if ever, a municipality may treat similarly situated parties disparately.3
Finally, Landmark advances two subsidiary claims. First, Landmark contends that Roy’s ongoing treatment and negotiation with Landmark caused unnecessary delays and the stalling of Landmark’s residential building schedule. However, from the onset of the Roy/Landmark transactions there is sufficient evidence in the record of Landmark’s admitted own lack of certainty and efficiency when it came to its building plans and schedule. Since these self-imposed delays plagued the Landmark project from its outset, any alleged delays by Roy were inconsequential. This claim is denied.
Second, Landmark also claims Roy violated RCW 35.92.010, a statute mandating that users within the same class be charged the same rate. RCW 35.92.010 is a statute concerning the adoption of long-term, ongoing water rates. Here we are confronted with the methodology for calculating one time municipal water connection fees or charges. Landmark’s reliance on RCW 35.92.010 is in error and we, therefore, deny this claim as well.
*576In sum, we hold Roy’s action in applying Ordinance 448 to Landmark was not arbitrary and capricious and did not violate RCW 64.40.020(1). We dismiss Landmark’s related claims of disputatious negotiation conditions.
Ill
The trial court ruled that Landmark’s federal constitutional rights of due process and equal protection were violated and, under 42 U.S.C. § 1983 and § 1988, Landmark was entitled to damages, attorney fees, and costs. Landmark’s remedial request is that those awards be reinstated. Since we do not find Roy violated RCW 64.40.020(1), Landmark’s 42 U.S.C. claim need not be addressed and its companion award reinstatement request is, therefore, denied.4
Guy, C.J., and Durham, Smith, and Talmadge, JJ., concur.

Repealed by Laws of 1996, ch. 230, § 1702 (effective July 1, 1997). With the elimination in 1997 of distinct water and sewer districts and the creation of combined water-sewer districts all under a revised Title 57 RCV( RCW 56.08.010 now is effectively recodified at RCW 57.08.005. See RCW 57.02.001.

Recodified at RCW 57.08.005. Laws of 1996, ch. 230, § 301 (effective July 1, 1997).

The trial court made several “findings” that the costs of providing water were the same for both developers. Findings relating to the cost of providing services, while possibly relevant to determining rates, are irrelevant for computing RCW 35.92.025 connection fees.

Landmark claims the Court of Appeals’ decision was in error because it relied, in part, on facts not found in the record. We do not explore this claim since we have found sufficient facts exist in the record to resolve Landmark’s claim without relying on the Court of Appeals’ alleged error.