City of Sequim v. Malkasian

79 P.3d 24
Court of Appeals of Washington·Decided December 30, 2003·No. 22922-6-II·Published·Cited by 8 cases

Opinion

79 P.3d 24 (2003)

CITY OF SEQUIM, a Noncharter Code City and a Municipal Corporation of the State of Washington, by and through its City Council, Appellant,
v.
Paul MALKASIAN, Circulator, Sponsor and Presenter of an Initiative and a Referendum Petition to the Sequim City Council, Respondent.

No. 22922-6-II.

Court of Appeals of Washington, Division 2.

November 12, 2003.
As Amended December 30, 2003.

*25 Craig Andrew Ritchie, Port Angeles, WA, for Respondent.

Peter J. Eglick, Helsell Fetterman LLP, Seattle, WA, for Appellant.

MORGAN, J.

After an election in which a city's voters approve an initiative, thus converting the initiative into an ordinance, does the city have standing to seek a judgment declaring that the ordinance violates state law? Assuming that the city has standing to sue, may it name the initiative's sponsor, in his or her individual capacity, as the sole defendant? We answer yes to the first question but no to the second. Accordingly, we agree with the trial court that this action is not justiciable and should be dismissed.

In October 1996, Paul Malkasian proposed and filed an initiative which, if adopted, would require the City of Sequim to obtain a vote of the people before issuing revenue bonds. Titled the "Ratepayer's Responsibility Act" (hereafter RRA), the initiative provided in part:

3. Bond obligations entered into after the date of enactment of this Ordinance, which are intended for application city wide (as opposed to local improvement districts or similar limited assessments) and depend on rates or taxes on a city wide basis, shall be issued only if they are approved by a majority vote of the qualified electors of Sequim at a regular or special election. The necessity for voter approval is inclusive of bonds which are supported by revenues derived from rates for utilities and *26 such city services as are required to be paid for by Sequim residents.[[1]]

The City refused to put the RRA on the ballot and brought this action for declaratory judgment. It named as plaintiff the "[City of Sequim], a Noncharter Code City and a Municipal Corporation of the State of Washington, by and through its City Council[.]"[2] It named as defendant "[Paul Malkasian], Circulator, Sponsor and presenter of an Initiative...."[3] It prayed for a judgment declaring that the RRA was invalid.

The trial court denied pre-election relief and ordered the City to put the RRA on the ballot. The City complied with that order, and in November 1998 the RRA was approved by a majority of the City's voters. A short time later, the RRA took effect as one of the City's ordinances.

After the election, the City continued to prosecute this declaratory judgment action, primarily on the basis that the RRA violates state law.[4] The City did not ask the court to find that Malkasian was representative of the City's voters. Nor did it offer to fund a defense of the action.

In June 2002, after some intervening events not pertinent here, Malkasian moved to dismiss the City's action. He claimed that the City lacked standing to attack one of its own laws. He also claimed that the City could not sue him in his individual capacity because that would put him in "the anomalous position of unappointed sole defender (at his private expense) of a City ordinance...."[5] At the ensuing hearing, he orally told the trial court:

[T]here are ways that the City could proceed here if it was trying to do something other than essentially litigate against a party who does not have the same capability, the same financial resources, and who cannot really speak for the electorate or for the tax payers.
What the City could have done, and could still do, is either bring a class action[,]... and have a representative of class appointed who will retain counsel, and have payment made to that counsel[;] or the City could wait, and if and when the City has some bond issue that it thinks is [a]ffected by the initiative, the City could at that time bring a declaratory judgment action, have counsel appointed for the class of rate payers [a]ffected by the bond issue, or the taxpayers [a]ffected by the bond issue, and then arrange for payment ... [[6]]

In July 2002, the trial court dismissed the action. It reasoned that the case was not justiciable because the City had not joined proper parties defendant. It did not reach whether the RRA violates state law.

The City now appeals. It asks us to declare that the RRA violates state law, even though the trial court never reached that issue. Malkasian responds that the City cannot attack one of its own ordinances, and thus that it lacks standing to sue. Malkasian further responds that he is not a proper defendant, for he lacks the resources to represent the interests of the City's electorate. For both reasons, he says, the action is not justiciable. Finding his responses dispositive, we do not reach the merits.

I.

Malkasian argues that the City lacks standing to sue under Washington's Uniform Declaratory Judgments Act (hereafter the DJA). The DJA was originally passed in 1935[7] and is presently codified as Chapter 7.24 RCW. Its purpose "is to settle and to afford relief from uncertainty and insecurity with respect to rights, status and other legal relations," and it is "to be liberally *27 construed and administered."[8] It provides in part that a "person ... whose rights... or other legal relations are affected by a... municipal ordinance ... may have determined any question of construction or validity arising under the ... ordinance ... and obtain a declaration of rights, status or other legal relations thereunder."[9] It further provides that a "person" is, among others, a "municipal ... corporation of any character whatsoever."[10] Thus, a city has standing to bring a declaratory judgment action if "[its] rights ... or other legal relations are affected by a ... municipal ordinance"[11] in a "direct and substantial" way, as opposed to a "potential, theoretical, abstract or academic" way.[12]

In this case, the parties dispute whether the RRA violates state law. If the City is correct, its officials must follow state law. If Malkasian is correct, the City's officials must follow the RRA. Until the dispute is resolved, the City and its officials are necessarily "uncertain[ ] and insecur[e]"[13] about what law to follow when issuing revenue bonds. Similarly, bond underwriters and investors are "uncertain[ ] and insecur[e]"[14] about what law applies to the issuance of revenue bonds. Given the peculiarly sensitive nature of issuing and selling bonds, we hold that the mere existence of the RRA directly and substantially affects the City's bonding relationships; that the mere existence of the RRA creates the kind of "uncertainty and insecurity" that the DJA was designed to forestall;[15] and that the City has standing here.

Malkasian argues that even if a city has standing to claim that an ordinance is valid,[16] it lacks standing to claim that an ordinance is invalid. In our view, however, it makes no difference whether a city is attempting to validate or invalidate an ordinance created by initiative. Because a declaratory judgment "may be either affirmative or negative in form and effect," the ordinanc

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City of Sequim v. Malkasian, 79 P.3d 24 (Wash. Ct. App. 2003).

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