Today's opinions - Nov. 4, 2010
Affiliated FM Insurance Company v. LTK Consulting Services, No. 82738-9. Affiliated FM provides insurance for the Seattle Monorail Services (SMS), which operates the monorail under an agreement with the monorail’s owner, the City of Seattle. In May 2004 a fire broke out under a Blue Line train, allegedly caused by an electrical short that occurred because of improper wiring performed by LTK Consulting in 2002. Affiliated sued LTK for negligence.
This case originated in King County Superior Court, from where it was removed to federal district court, appealed to the Ninth Circuit Court of Appeals, and finally certified a question to the state supreme court: whether SMS, which does not own the Seattle Monorail, can bring a tort action against LTK.
In a two-vote lead opinion for the Supreme Court, Justice Mary Fairhurst wrote that that SMS may sue LTK for negligence. “LTK, by undertaking engineering services, assumed a duty of reasonable care. This obligation required LTK to use reasonable care, as we have defined it, with respect to risks of physical damage to the monorail. SMS enjoyed legally protected interests in the monorail, and LTK’s duty encompassed these interests.”
Justice Tom Chambers filed a concurrence agreeing with the lead opinion’s outcome. Chief Justice Barbara Madsen concurred in part and dissented in part.
Ameriquest Mortgage Co v. Washington Attorney General, No. 82690-1. This case presents the question of whether the federal Gramm-Leach-Bliley Act (GLBA), which requires banks to keep customer information private, preempts the state Public Records Act (PRA). During an investigation of the lending practices of the Ameriquest Mortgage Company, the Attorney General’s Office obtained a number of documents from Ameriquest, including loan files, e-mails, and other papers. A public records request was filed for the documents, and Ameriquest sued the AGO to keep the files secret.
The Court of Appeals held that the GLBA preempts the PRA, preventing disclosure of the loan files. Preemption doctrine requires that federal law will prevail when it conflicts with state law.
The Supreme Court (Justice Fairhurst writing the unanimous opinion) agreed that federal law prevented the AGO from releasing protected consumer information. However, the Supreme Court determined that the GLBA did not preempt the PRA, as the two could be reconciled—the PRA specifically recognizes that “other statutes” may protect records from disclosure.
Eastwood v. Horse Harbor Foundation, No. 81977-7. Linda Eastwood owns the Double KK Farm horse farm in Poulsbo, Washington. Horse Harbor is a nonprofit organization that cares for abused and abandoned horses. Eastwood and Horse Harbor agreed to a lease for a portion of the Double KK. Horse Harbor was obligated to maintain the farm and return it in good condition.
Horse Harbor neglected to maintain the farm. The Kitsap County Health District cited Horse Harbor for unlawful burning of solid waste and improper management of horse manure. The lack of maintenance resulted in pools of standing water and mud, broken fencing, a damaged riding arena floor, and horse-chewed wood surfaces. Eastwood complained to Horse Harbor’s board of directors but the board took no action. Eastwood sued for breach of lease, the commission of waste, and negligent breach of a duty to not cause physical damage to the leasehold.
The Court of Appeals characterized Eastwood’s claims as economic losses that resulted from Horse Harbor’s actions. The court held the economic loss rule applied and limited Eastwood to recovery only for breach of lease.
In a three-vote lead opinion, the Court (Justice Fairhurst writing) held that the Court of Appeals was mistaken to deny Eastwood tort damages for waste. “An injury is remediable in tort if it traces back to the breach of a tort duty arising independently of the terms of the contract. Because the term ‘economic loss rule’ inadequately captures this principle, we adopt the more apt term ‘independent duty doctrine.’ The existence of an independent duty is a question of law for courts to decide. We hold the duty to not cause waste is an obligation that arises independently of the terms of a lease covenant, and sufficient evidence supported the trial court’s findings of a causal connection between Eastwood’s losses and a breach of this independent duty.”
Chief Justice Madsen concurred with the result but objected to the analysis. “The lead opinion’s lengthy discourse on the economic loss rule and its new approach for determining when the rule applies is unnecessary for two reasons. First, we cannot apply the common law economic loss rule to nullify the statutory cause of action for waste without violating separation of powers principles and encroaching on the legislature’s authority to establish a cause of action. The issue whether the plaintiff was entitled to bring an action for waste should be resolved entirely on statutory grounds. Second, the injury to property here does not constitute an economic loss within the rule.” Justice Chambers also wrote a concurring opinion.
Jones v. State, No. 80787-6. The question here is whether a pharmacist whose business has been shut down by the state must exhaust all administrative remedies before bringing a tort action against the state, and whether state officials have absolute or qualified immunity against such a tort action.
Michael Jones owned a pharmacy franchise called the Medicine Shoppe, but after failing two consecutive inspections by the Washington Board of Pharmacy his license was suspended, causing his business to fail. He sued the Board of Pharmacy’s Executive Director and the two investigators that gave him the failing scores for negligent supervision and intentional interference with a business expectancy. The state moved for summary judgment, arguing that the Executive Director had prosecutorial immunity, all three defendants had qualified immunity.
The Supreme Court (Justice Fairhurst writing) reversed the Court of Appeals’ holding that the pharmacy inspectors enjoyed immunity, and also reversed the Court of Appeals’ holding that Jones failed to exhaust the available administrative remedies.
