Key Development Investment, LLC v. Port of Tacoma

292 P.3d 833, 173 Wash. App. 1
CourtCourt of Appeals of Washington
DecidedJanuary 23, 2013
DocketNo. 40974-7-II
StatusPublished
Cited by11 cases

This text of 292 P.3d 833 (Key Development Investment, LLC v. Port of Tacoma) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Key Development Investment, LLC v. Port of Tacoma, 292 P.3d 833, 173 Wash. App. 1 (Wash. Ct. App. 2013).

Opinions

Hunt, J.

¶1 — We granted interlocutory review to address the following certified issue from the trial court: Applica[5]*5tion of the independent duty doctrine (formerly, the economic loss rule) to tort claims arising from the Port of Tacoma’s negotiations to purchase real property from Key Development Investment LLC. The trial court (1) granted the Port’s summary judgment dismissal of Key’s tort claims for fraudulent and negligent misrepresentation and tortious interference with business opportunities; and (2) denied the Port’s motion for summary judgment dismissal of Trinity Glass International Inc.’s related tort claims. The Port also asks us to “strike” references to the “Plaintiffs’ Statement of Uncontested Facts — Corrected” from Key and Trinity’s responding briefs.1

¶2 Key and Trinity argue that, independent of the real estate purchase and sale letter of intent between Key and the Port, the Port owed them a duty to be honest in its representations and dealings about the Port’s need and plan to relocate its tenant from the Port’s soon-to-be-condemned property onto Key’s property. The Port argues that (1) the trial court should have granted summary judgment dismissal of Trinity’s tort claims because Trinity was a third-party beneficiary of the Port’s contract with Key; (2) the Port owed no duty to Trinity independent of this contract; and (3) the trial court’s grant of summary judgment to the Port based on the economic loss rule’s barring Key’s tort claims should have also included summary judgment similarly barring Trinity’s tort claims.

¶3 The trial court understandably “misinterpreted” the economic loss rule because, when it rendered its decision in 2010, our Supreme Court had not yet issued its Jackowski2 opinion clarifying the economic loss rule and transforming it into the “independent duty doctrine.”3 Applying Jackowski here, we (1) reverse the trial court’s summary judgment dismissal of Key’s tort claims against the Port; (2) affirm the [6]*6trial court’s reinstatement of Trinity’s tort claims against the Port on reconsideration and its corresponding denial of summary judgment dismissal of these claims; and (3) remand to the trial court to consider (a) under Jackowski’s independent duty doctrine, whether the Port owed Key a duty independent of the letter of intent to sustain its tort claims, (b) whether the Port owed Trinity a duty in tort, and (c) if so, whether a genuine issue of material fact exists for Key’s or Trinity’s tort claims to survive summary judgment for the Port and to warrant a trial on such tort claims. We deny the Port’s request to strike “Plaintiffs’ Statement of Uncontested Facts — Corrected.”4

FACTS

I. Negotiations and Letter of Intent for Port’s Purchase of Key’s Property

¶4 At the time of the negotiations at issue here, Key Development Investment LLC and Trinity Glass International Inc. were “affiliates, sharing [some] common ownership”5 and management: Ki and Jong Ham owned Trinity; Ki and Jong Ham, Tim Bang, and Chang Choi owned Key. Alexander C. Lee was vice president and chief financial officer of Trinity; and Chong So was Trinity’s in-house counsel. Both Lee and So, however, helped manage Key and acted on Key’s behalf in dealings with the Port.

¶5 Key owned property in the Frederickson Industrial Area of Pierce County. In 2007, Trinity was Key’s tenant on this property, although Trinity did not use the entire site. Trinity wanted Key to sell or to lease it the property to eliminate or to reduce Trinity’s rent payments to Key. On April 24, 2007, attempting to alleviate Trinity’s rent obli[7]*7gations, Key entered into a listing agreement with Colliers International to lease a portion of the property to another prospective tenant.

A. Port’s Plans To Obtain Superlon and Key Properties

¶6 In mid-2007, the Port was planning the “East Blair Project”6 — an $850 million redevelopment of the “Blair Peninsula container terminal” to accommodate a major new tenant. Clerk’s Papers (CP) at 1691. In August, the Port initiated condemnation proceedings against nearby property owned by Superlon Plastics Company Inc., identifying the Superlon property as “necessary” and “critical” for the Port’s redevelopment project. CP at 1148-49. The Port later entered into direct negotiations with Superlon to acquire this property for the East Blair Project’s road and rail infrastructure.

¶7 Despite its plan to condemn the Superlon property for the East Blair Project, the Port wanted to retain Superion’s jobs in the Tacoma area, so it sought another location near the Port where it could relocate Superlon. As a result, in September, Robert Hacker, a commercial real estate broker with CB Richard Ellis, “approached Key about the possibility of selling [its property] to the Port”7 and obtained permission from Key to approach the Port about buying the Key property for Superion’s relocation.

¶8 According to Trinity and Key’s in-house counsel, So, the Port represented to Key, Trinity, and the real estate brokers that (1) the Port’s condemnation of the Superlon property for the East Blair Project was a certainty, (2) Superlon must be relocated, and (3) Key’s property was the only available property that could accommodate Superion’s physical needs and the Port’s timing requirements. Jack Hedge, the Port’s property manager responsible for acquir[8]*8ing property for Superion’s relocation, did not deny having told Key and Trinity that acquiring Key’s property was a “certainty”-, and he acknowledged that “in conversation . . . about the ... various sites ..., that would have been a point [discussed].” CP at 1233 (emphasis added).

¶9 Nevertheless, by November, Port real estate director Bob Emerson told an East Blair Project road and utilities manager that he “wanted a design for keeping road and rail and utilities off Superlon.”8 But the Port did not tell Key that it might try to avoid acquiring the Superlon property for the East Blair Project infrastructure or that it might not need the Key property for Superion’s relocation.

¶10 Around this time, Key received an independent November 27, 2007 letter of intent from Harvey Widman and Assigns, wanting to purchase the Key property for $32.8 million.9 With Key’s authorization, CB Richard Ellis brokers disclosed to the Port Widman’s offer to purchase Key’s property and represented to the Port that Key would sell its property to the Port for $35 million. The next month, December, the Port’s representatives told So (acting for Key) that the Port would be willing to pay $35 million for Key’s property. Hedge, from the Port, and a Superlon owner inspected Key’s property. On December 19, CB Richard Ellis senior associate John Bauder e-mailed So (Key’s in-house counsel) that (1) Jay Stewart (the Port’s real estate manager) had said the Port was “very, very interested” in purchasing Key’s property; and (2) although interested, the Port “just can’t seem to get out of their own way.” CP at 1688.

¶11 Meanwhile, the Port had adjusted the estimated cost of acquiring the Superlon property from $3.3 million to $7.5 million. And estimates of the environmental cleanup costs [9]

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Bluebook (online)
292 P.3d 833, 173 Wash. App. 1, Counsel Stack Legal Research, https://law.counselstack.com/opinion/key-development-investment-llc-v-port-of-tacoma-washctapp-2013.