Greensun Group Llc v. City Of Bellevue

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

GREENSUN GROUP, LLC, No. 77635-5-1

Appellant, DIVISION ONE

V. PUBLISHED OPINION

CITY OF BELLEVUE,

Respondent. FILED: March 4, 2019

CHUN, J. — Greensun Group LLC (Greensun)1 brought a claim against the

City of Bellevue (the City) for tortious interference with business expectancy. We

address whether the trial court properly dismissed the claim on summary

judgment. In doing so, we discuss each element of the tort. And we discuss the

affirmative defense of privilege.

Upon passage of Initiative 502 (1-502) in 2012, the City issued a regulation

prohibiting marijuana retail shops from being located within 1,000 feet of each

other (the 1,000 Foot Separation). In 2014, the City denied Greensun a license

to operate such a shop after determining the business planned to locate too

close to another shop deemed "first-in-time."

Greensun then filed this action against the City, claiming violations of the

due process and privileges and immunities clauses of the Washington State

1 For clarity, this opinion refers to appellant as "Greensun" although the business also

used its trade names in the events leading up to this case.

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Constitution. The trial court dismissed the case on summary judgment.

Greensun appealed. Because the City adopted its first-in-time rule without

engaging in formal rule-making, this court invalidated it.

On remand, Greensun amended its complaint to claim tortious

interference with business expectancy. On cross-motions for summary

judgment, the trial court dismissed Greensun's claim and declared the City had

remedied the rule-making issue identified in the first appeal.

Because genuine issues of fact exist as to the tortious interference claim,

we affirm in part and reverse in part the trial court's order denying Greensun's

motion for partial summary judgment and granting the City's summary judgment

motion. We remand the case for trial.

BACKGROUND

A. Facts

On November 6, 2012, Washington passed 1-502. 1..xtvs of 2013, ch. 3§

41. 1-502, in part, legalized the possession of limited amounts of marijuana and

directed the Washington State Liquor Control Board (the LCB)to develop and

implement rules to regulate and tax recreational marijuana retailers by

December 31, 2013.

Greensun's managing members, Seth Simpson and David Ahl, leased a

retail space at 10600 Main Street, Bellevue, Washington on November 29, 2012.

They planned to open a retail marijuana shop there. As such, Greensun made

several upgrades to the building. It intended to operate a medical marijuana

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business at the space until the LOB implemented the regulations for recreational

marijuana. Greensun applied to the City for a building permit on January 8,

2013.

The City opposed Greensun's attempt to open a medical marijuana

operation, claiming the proposed use violated Bellevue's Land Use Code (LUC).

The City obtained injunctive relief prohibiting the opening of a medical marijuana

facility at the location. Greensun then abandoned its plan to open a medical

marijuana store. However, because it still planned to use the space for

recreational marijuana, it extended its lease through June 30, 2016.

The LOB then opened the application process for retail marijuana

licenses. Greensun applied. By March 1, 2014, the LCB had screened

Greensun's application and listed it as one of 19 qualified applicants for licenses

in Bellevue.

On March 17, 2014, the City adopted Ordinance 6156, which extended

Ordinance 6133 B-12 for an additional six months and implemented a new

restriction—the 1,000 Foot Separation. Under the restriction, no marijuana

retailer could be located within 1,000 feet of any other marijuana retailer.

On April 2, 2014, the LOB announced it would process license

applications "with geographic distribution and population density in mind." To this

end, the LOB allocated a predetermined number of initial licenses for recreational

marijuana stores to each jurisdiction. If the number of applicants in a jurisdiction

2 Ordinance 6133 B-1 constituted the first ordinance to include interim zoning controls to

regulate recreational marijuana. It did not contain a 1,000 foot separation requirement between

retailers.

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exceeded its number of licenses, the LCB would use a lottery system to

determine which applicants it would license. The LCB stated it expected to issue

the initial retail licenses in "batches" during the first week of July 2014.

The LCB initially allocated four such licenses for Bellevue. Because 19

qualified applicants sought to open shops in Bellevue, the LCB held a lottery on

May 2, 2014. Greensun ranked fifth. Two other applicants, Par 4 Investments

LLC (Par 4)3 and High Society, ranked in the top four.

On May 7, 2014, the City e-mailed High Society about the 1,000 Foot

Separation. It explained that "[a] retailer will 'lock down' their location upon

submittal of a complete building permit application. This means that once we

determine a building permit application complete for review that [sic] we will apply

the 1,000 foot separation from that property."

On May 16, 2014, Par 4 applied for its building permit.

Greensun met with the City on May 19, 2014. At the meeting, it told the

City the LCB would likely disqualify High Society's application because the

business listed the wrong address. It asked how the 1,000 Foot Separation

would be applied if Greensun became one of the four lottery winners. The City

advised Greensun it would give priority to the applicant who first submitted a

complete building permit application. Greensun mentioned it had submitted a

complete application for 10600 Main Street in 2013. The City responded that the

LCB had to have designated an applicant as a lottery winner to establish priority.

clarity, this opinion refers to this retailer as "Par 4" although the company also used

3 For

trade names in the events leading up to this case.

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On May 21, 2014, the City made the determination that Par 4's building

permit application was complete.

On May 27, 2014, a reporter from The Seattle Times asked the City about

how it would enforce the 1,000 Foot Separation. The City responded that it "will

consider the first retail applicant who submits a complete building permit as the

'first in,' against which the other applicants will be compared for conformance

with the requirement."

Around the end of May 2014, Greensun applied to the City for a business

license to operate a retail marijuana shop at 10600 Main Street. On June 3,

2014, the City sent a letter to Greensun stating that it "can only approve a

business license application for the four selected retailers." The City denied the

application.

The City received Par 4's marijuana license application from the LCB on

June 4, 2014. The City approved Par 4's proposed location at 10697 Main

Street, but stated it "reserves all rights accorded under law to enforce violations

of city ordinances and codes as exist now or as hereafter amended."

On June 5, 2014, the LCB notified Greensun that it became one of the

four lottery winners because of High Society's disqualification. The LCB told the

City about Greensun's new status on June 9, 2015.

In an email to High Society on June 11, 2014, the City stated that Par 4

had "locked down" their location for purposes of the 1,000 Foot Separation.

4 The "four selected retailers" refers to the four winners of the LCB lottery.

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The City then determined it would not use the timing of building permit

applications for the first-in-time test. The City deemed the method inequitable

because the "[v]esting of a building permit had no connection to the Washington

State Liquor Control Board's program." Instead, the City decided to tie the first-

in-time determinations to when the LCB issued its licenses. The City did so

without engaging in formal rule-making.

On June 24, 2014, the City informed applicants that "[On the event two or

more retail marijuana applicants seek licensing from the LCB and are located

within 1000 feet of another potential retail applicant, the City shall consider the

entity that is licensed first by the LCB to be the 'first-in-time' applicant." The City

detailed the application process, explaining that if the LCB approves an

application, the applicant will receive a payment request for a $1,000 license fee.

The City said, once the LCB receives the fee, it will send a conditional approval

letter that acts as a 30-day marijuana license until the applicant receives a

business license with the marijuana endorsement from the Washington State

Department of Revenue Business Licensing Service. The City indicated the

issuance date for the 30-day license would determine which applicant had priority

for the purposes of the 1,000 Foot Separation.

The City approved Greensun's marijuana license application on June 25,

2014. The application listed 10600 Main Street as Greensun's address. As with

Par 4, the approval notice provided that the City "reserves all rights accorded

under law to enforce violations of city ordinances and codes as exist now or as

hereafter amended."

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No. 77635-5-1/7

On July 1, 2014, Greensun tendered payment of its license fee to the

LCB.

On July 2, 2014, High Society obtained a temporary restraining order

(TRO)against the LCB. The TRO prohibited the LCB from licensing retail

marijuana applicants except for the four original lottery winners. The LCB then

told Greensun it could not accept its license fee payment.

The same day, an LCB employee emailed the City a copy of High

Society's complaint. The City responded, "[I]it sounds like if [the LCB] issue[s] a

license for a Bellevue retail store on Monday, it likely would be to Par 4

Investments (based on the status of Novelty Tree, Happy Highway, and High

Society)? Can you please confirm?" The LCB indicated that the City had

assumed correctly.

Par 4 paid the license fee to the LCB on July 3, 2014.

The LCB issued the first batch of marijuana retailer licenses on July 7,

2014. Par 4 received its conditional approval letter from the LCB via email at

9:17 a.m. that day. The letter sent to Par 4 was misdated July 3, 2014. Upon

receiving the letter from the LCB, Par 4's attorney e-mailed it to the City. The

City replied, "Consistent with my letter to your client dated June 24, 2014,[Par 4]

is first in time for purposes of application of the 1,000 foot separation requirement

between retail marijuana outlets." At 1:08 p.m. that same day, the LCB issued

Par 4 a corrected letter with the date changed to July 7, 2014.

The initial batch of licensed applicants omitted Greensun. However, later

in the day on July 7, a court lifted High Society's TRO. The LCB emailed

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Greensun its conditional approval letter at 3:04 p.m. on July 7. The LCB then

issued an updated list of the retail marijuana licenses to include Greensun. After

the LCB added Greensun to the list, counsel for Par 4 emailed the City asking if

this affected its first-in-time status. The City responded it did not.

At 4:19 p.m. on July 7, Greensun received an email with a letter from the

City attached. The letter provided that the City had deemed Par 4 first-in-time.

Accordingly, the City told Greensun it may not open a marijuana retail store at

10600 Main Street. Greensun claimed the City incorrectly deemed Par 4 to be

first-in-time because the LCB issued the conditional license dated July 3, 2014 in

error.

The City then engaged in the following inquiries: Chad Barnes, an

Assistant City Attorney for the City, contacted Assistant Attorney General Kim

O'Neal, who represented the LCB. He did so "to better understand the timing of

the conditional approval letters issued by the LCB." O'Neal informed the City

"that the LCB currently takes the position that the July 3, 2014 letter received by

[Par 4] was not the actual marijuana retail license." O'Neal clarified that "that the

actual licenses were issued following the July 7, 2014 online notice." When

asked if the LCB could determine which applicant it had licensed first, O'Neal

"indicated that their system was not set up for such a query."

On July 11, 2014, the City sent letters to Par 4 and Greensun asking them

to provide any information that may indicate whom the LCB had licensed first.

Counsel for Par 4 responded on July 14, 2014. Par 4 noted it placed first

in the LCB lottery. It said it paid the license fee on July 3, 2014 and the LCB

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issued its conditional approval letter the same day. Par 4 also asserted it had

received its initial conditional approval letter on the morning of July 7, 2014, and

Greensun did not receive its letter until after the court lifted the TRO later in the

day. Lastly, Par 4 stated it should be licensed because the City confirmed Par

4's status as first-in-time on July 7, 2014.

Greensun's attorney responded on July 21, 2014. Greensun pointed out it

first applied for a building permit 18 months prior and thus had first-in-time status

under the City's original method. It further contended the LCB had issued the

July 3, 2014 letter to Par 4 in error because it had intended to issue all of the

licenses simultaneously. Greensun argued the LCB issued both Par 4's and

Greensun's licenses on July 7, 2014. Additionally, Greensun noted it "passed

[its] final inspection first and [was] invoiced on July 1st prior to [Par 4]."

On July 29, 2014, the City informed Greensun via letter that it had

"determined that [Par 4] was licensed by the LCB before [Greensun].

Consequently,[Par 4] is 'first-in-time' for the purposes of applying the separation

requirements established in Ordinance No. 6156." The letter further explained

the City's decision as follows:

The City's decision is based on the fact that on July 3, 2014, the LCB

sent [Par 4] a letter indicating it was approving [Par 4]'s marijuana

retailer license and directed that the letter be posted as [Par 4]'s

temporary permit. The LCB subsequently sent [Par 4] a revised

temporary operating permit on July 7, 2014 at 1:08 pm.

The City's decision is further supported by the LCB's records that

indicated [Par 4's] license was approved on July 6, 2014.

[Greensun's] license was not approved until July 7, 2014.

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No. 77635-5-1/10

The City will not grant [Greensun] a business license to operate a

retail marijuana outlet at 10600 Main Street based on the separation

requirement in Ordinance 6156.

The next day, July 30, 2014, the City's legal planner and assistant

attorney emailed other city employees and directed them not to approve

Greensun's license.

Par 4 opened its retail marijuana store on October 7, 2014.

B. Procedural History

Greensun filed a complaint against the City on November 3, 2014. The

complaint alleged the City had violated the due process and privileges and

immunities clauses of the Washington State Constitution and sought declaratory

and injunctive relief. In the complaint, Greensun claimed it "would have been

able to open its retail store in less than a week of[the LCB's] issuance of its

license on July 7, if the City of Bellevue had issued its requested business

license."

On May 20, 2015, the trial court granted summary judgment in favor of the

City and dismissed Greensun's suit. The trial court ruled the City did not act in

an arbitrary and capricious manner in denying Greensun a business license.

Greensun appealed to this court.

On August 3, 2015, during the pendency of the first appeal, the Bellevue

City Council engaged in formal rulemaking and passed Ordinance 6253 to

legislatively adopt its first-in-time rule. The ordinance specified as follows:

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If two or more marijuana retail applicants seek licensing from the

state and propose to locate within 1,000 feet of each other, the City

shall consider the entity who is licensed first by the state liquor and

cannabis board to be the "first-in-time" applicant who is entitled to

site the retail use. First-in-time determinations will be based on the

date and time of the state-issued license or conditional license,

whichever is issued first.

On June 13, 2016, this court reversed the trial court's summary judgment

order. City of Bellevue v. Greensun Group, LLC, No. 73646-9-1 (Wash. Ct. App.

June 13, 2016)(unpublished) https://www.courts.wa.pov/opinions/pdf/736469.pdf

(Greensun I). The decision invalidated the first-in-time rule and related decisions

because the City adopted the rule without engaging in rule-making procedures.

Greensun I, No.73646-9-I, slip op.at 15-17. This court remanded "for further

proceedings consistent with" the opinion from the first appeal. Greensun I,

No.73646-9-I, slip op. at 18. Our Supreme Court denied the City's petition for

review.

On February 14, 2017, Greensun moved for leave to amend its complaint.

Greensun sought to "add a claim for monetary damages caused by the City of

Bellevue's tortious interference with its business expectancy." The trial court

granted Greensun's motion. Greensun filed its amended complaint on

February 28, 2017.

The parties filed cross-motions for summary judgment. Greensun sought

partial summary judgment on the issue of liability with respect to its claim for

,

tortious interference. The City asked the court to dismiss GreenSun's Suit and to

grant declaratory relief confirming it remedied the rule-Making issue. On

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No. 77635-5-1/12

November 2, 2017, the court denied Greensun's motion, granted the City's

motion, and dismissed Greensun's claims5 with prejudice.

Greensun appeals.

ANALYSIS

Greensun claims the trial court erred by entering summary judgment for

the City and denying its motion for partial summary judgment. Greensun asserts

that, as a matter of law, it establishes liability for its tortious interference with

business expectancy claim. The City counters that Greensun fails to raise a

material issue of fact as to any of the claim's elements.

Appellate courts review de novo a trial court's grant of summary judgment.

Woods View II, LLC v. Kitsap County, 188 Wn. App. 1, 18, 352 P.3d 807 (2015).

We will affirm a summary judgment order only "if there is no genuine issue of

material fact and the moving party is entitled to judgment as a matter of law."

Woods View 11, LLC, 188 Wn. App. at 18. Reviewing courts conduct the same

inquiry as the trial court and view all facts and their reasonable inferences in the

light most favorable to the nonmoving party. Pac. Nw. Shooting Park Ass'n v.

City of Sequim, 158 Wn.2d 342, 350, 144 P.3d 276 (2006).

A plaintiff must prove five elements6 to establish a prima face case of

tortious interference with a business expectancy. Pac. Nw. Shooting Park Ass'n,

5 Though the summary judgment motions and order focused on Greensun's tortious

interference claim, the City also asked the court to dismiss any remaining constitutional claims

and Greensun's request for declaratory relief if the court chose to revisit those claims after the

first appeal. Greensun's current appeal concerns only its claim for tortious interference.

6 More recently, our Supreme Court listed three elements for a prima face case of tortious

interference. See Elcon Const., Inc. v. E. Wash. Univ., 174 Wn.2d 157, 168, 273 P.3d 965(2012)

("A claim of intentional interference requires (1) the existence of a valid contractual relationship of

which the defendant has knowledge,(2) intentional interference with an improper motive or by

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No. 77635-5-1/13

158 Wn.2d at 351. Specifically, a plaintiff must show "(1) the existence of a.. .

[valid] business expectancy;(2) that [the defendant] had knowledge of that

[expectancy];(3) an intentional interference inducing or causing . . . termination

of the.. . expectancy;(4) that [the defendant] interfered for an improper purpose

or used improper means; and (5) resultant damage." Pac. Nw. Shooting Park

Ass'n, 158 Wn.2d at 351. If a plaintiff establishes all five elements, the defendant

may demonstrate a privilege protecting its actions. Commodore v. Univ. Mech.

Contractors, Inc., 120 Wn.2d 120, 137, 839 P.2d 314 (1992). We address each

element in turn.

A. Existence of a Business Expectancy

Greensun claims it "had a valid business expectancy in operating a retail

marijuana store." The City asserts Greensun fails to prove this element because

(1) the company did not identify a third party with which it would have had a

business relationship had it opened its store; and (2) it did not have a right to

open its store in violation of the City's LUC. We conclude Greensun raises a

genuine issue of material fact as to this element.

To establish a valid business expectancy, courts require something less

than an enforceable contract. Scymanski v. Dufault, 80 Wn.2d 77, 83, 491 P.2d

1050 (1971). Instead, a "valid business expectancy includes any prospective

contractual or business relationship that would be of pecuniary value." Newton

Ins. Agency & Brokerage, Inc. v. Caledonian Ins. Group, Inc., 114 Wn. App. 151,

improper means that causes breach or termination of the contractual relationship, and (3)

resultant damage."). Because the tests contain essentially the same elements, we apply the five-

element test, as do the parties.

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No. 77635-5-1/14

158, 52 P.3d 30 (2002). Courts allow tortious interference claims "where a

defendant's acts destroy a plaintiff's opportunity to obtain prospective

customers." Caruso v. Local Union No. 690, 33 Wn. App. 201, 207,653 P.2d

638 (1982), rev'd on other grounds, 100 Wn.2d 343, 670 P.2d 240 (1983).

Washington courts require a plaintiff to show only that its "future business

opportunities are a reasonable expectation and not merely wishful thinking." Life

Desiqns Ranch, Inc. v. Sommer, 191 Wn. App. 320, 337, 364 P.3d 129(2015)

(internal quotations and citations omitted); Woods View II, LLC, 188 Wn. App. at

30 (determining the plaintiff had an expectancy in a business development

project that ultimately failed).

Greensun established that after Washington passed 1-502, it leased a

retail space in Bellevue in order to open a recreational marijuana store.

Greensun made improvements to the store to prepare it for such use.

Furthermore, the LCB issued Greensun a marijuana retailer license. The

company made arrangements to acquire inventory and had staff available to

begin operations. Greensun's plan to open a marijuana retail shop was not

merely wishful thinking. It demonstrated a material issue as to its valid business

expectancy.

The City's arguments to the contrary do not persuade us. The City cites

Pac. Nw. Shooting Park Ass'n to argue a claim of tortious interference with a

business expectancy requires the plaintiff to show a relationship with identifiable

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No. 77635-5-1/15

third parties.7 But this argument appears to conflate the claim at issue with the

closely related tort of interference with a contractual relationship. The Pac. Nw.

Shooting Park Ass'n case concerned whether the plaintiff had a valid contractual

relationship, rather than a valid business expectancy. Pac. Nw. Shooting Park

Ass'n, 158 Wn.2d at 352-53. As Greensun alleges interference with a valid

business expectancy, the case is inapposite here.

The City also argues Greensun did not have a valid business expectancy

because opening its store would have violated the LUC. But this argument

dodges the underlying question of whether the City engaged in actionable

conduct, which led to the first-in-time determinations at issue; and these

determinations led to the City's denial of a license to Greensun based on the

LUC.8

Furthermore, the City does not cite legal authority to support its claim that

a plaintiff must demonstrate an enforceable legal right to meet the first element.

And case law runs contrary to such a claim. See, e.g., Scvmanski, 80 Wn.2d 77

7 The City also cites two Division III cases, Hudson v. City of Wenatchee, 94 Wn. App.

990, 974 P.2d 342(1999) and Evergreen Monevsource Mortg. Co v. Shannon, 167 Wn. App.

242, 274 P.3d 375 (2012), to support this proposition. We do not read Hudson to go so far as to

require a plaintiff to prove it would have had a relationship with a specific prospective customer

but for the defendant's interference. To be sure, such a requirement would conflict with well-

established case law, which allows tortious interference claims for interference with prospective

contractual or business relationships. See Scvmanski, 80 Wn.2d at 83; Life Designs Ranch, Inc.,

191 Wn. App. 320 at 337; Caruso, 33 Wn. App. at 207. Likewise, Evergreen does not apply. In

that case, the plaintiff claimed the defendants improperly diverted its customers. 167 Wn. App. at

259. The court found the plaintiff did not have an expectancy because it could not demonstrate

the defendant took any customers from it. 167 Wn. App. at 259.

8 Also, the parties dispute whether Greensun's store would have violated the LUC's 1,000

Foot Separation requirement. While neither party disputes that the store locations were within

1,000 feet of one another, they dispute when a violation of the 1,000 Foot Separation requirement

would occur: (1) when the City licensed two applicants with proposed locations within 1,000 feet

of each other; or(2) when two marijuana shops actually opened within 1,000 feet.

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No. 77635-5-1/16

at 82-83 (allowing a tort action for wrongful interference where the contract

interfered with was not enforceable because it violated the statute of frauds).

In light of the foregoing, Greensun has presented sufficient evidence to

raise a genuine issue as to whether it had a reasonable expectation of opening a

recreational marijuana business at 10600 Main Street.

B. Knowledge of the Expectancy

The parties next dispute whether the City had knowledge of Greensun's

business expectancy. We determine Greensun raises a genuine issue of

material fact as to this element.

The second element of a tortious interference claim requires the

defendant to have known of the plaintiff's business expectancy. Pac. Nw.

Shootinq Park Ass'n, 158 Wn.2d at 351. This element requires only that the

defendant knew of facts giving rise to the presence of the business expectancy.

Calbom v. Knudtzon, 65 Wn.2d 157, 165, 396 P.2d 148 (1964). The facts need

merely show the defendant had "awareness of'some kind of business

arrangement." Woods View II, LLC, 188 Wn. App. at 30-31 (citing Topline

Equip., Inc. v. Stan Witty Land, Inc., 31 Wn. App. 86, 93, 639 P.2d 825 (1982))

(finding the second element satisfied where the county knew of the plaintiffs

business plans despite the later failing of those plans).

The City knew Greensun hoped to open a recreational marijuana shop in

Bellevue. Greensun applied to the City for a building permit. The City knew the

LCB lottery selected Greensun as one of the four lottery winners and it approved

the intended location in the company's business license application. Greensun

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No. 77635-5-1/17

spoke with the City about the 1,000 Foot Separation on several occasions and

the City asked it to submit evidence regarding which applicant was first-in-time.

The City asserts Greensun did not allege sufficient facts "as a matter of

law to establish that the City knew its actions would terminate any identifiable

relationship Greensun may have had." This, however, misstates the test. A

defendant needs only to be aware of facts that suggest an expectancy existed,

and "[i]t is not necessary that the [defendant] understand the legal significance of

such facts." Calbom, 65 Wn.2d at 165. That the City knew of Greensun's plans

to open a store suffices to raise a genuine issue of material fact as to whether the

City knew of Greensun's expectancy.

C. Intentional Interference Inducing or Causing a Breach or Termination of

the Expectancy

Greensun asserts it meets the third element because the City intentionally

denied its business license. The City responds by contending the "good faith

effort to enforce its LUC does not constitute intentional and improper

interference." But the analysis of intentional interference does not consider good

faith. We decide that Greensun raises a genuine issue of material fact as to the

element of intentional interference.

A party intentionally interferes with a business expectancy if it "desires to

bring it about or if he knows that the interference is certain or substantially certain

to occur as a result of his action." Newton Ins. Agency & Brokerage, Inc., 114

Wn. App. at 158.

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No. 77635-5-1/18

On July 7, 2014, the City notified Greensun that Par 4 had first-in-time

status and that Greensun could not open its retail marijuana store at 10600 Main

Street. In a letter dated July 29, 2014, the City told Greensun,"The City will not

grant[Greensun] a business license to operate a retail marijuana outlet at 10600

Main Street based on the separation requirement in Ordinance 6156." After the

City determined it would not grant Greensun a license, the City's legal planner

and assistant attorney emailed other City employees, telling them not to approve

Greensun's license.

The City does not dispute that its actions interfered with Greensun's ability

to open a retail marijuana store. Rather, the City argues it did not intentionally

interfere because it acted in good faith. Whether the City acted in good faith,

however, does not matter under this element,9 which concerns only whether the

defendant had the intent to do the interfering act. Accordingly, viewing the facts

in a light most favorable to the Greensun, a genuine issue exists as to the third

element.

D. Interfered with Improper Means

Greensun claims the City acted with improper means by acting in an

arbitrary and capricious manner. The City denies this. In Greensun I, we

"decline[d] to address the more troubling claim by Greensun that the

questionable first in time decision here constitutes arbitrary and capricious action

by the City." No.73646-9-I, slip op. at 17, n.13. We reach the question here.

We conclude Greensun has presented sufficient evidence of arbitrary and

9 However, as discussed below, good faith conduct can support an affirmative defense.

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capricious conduct to raise a genuine issue of material fact as to improper

means.1°

A claim for tortious interference can be established by demonstrating the

defendant acted with improper motive, improper means, or both. Pleas v. City of

Seattle, 112 Wn.2d 794, 804-05, 774 P.2d 1158 (1989). Here, Greensun alleges

only improper means.

Tortious interference through improper means "arises from. . . the

defendant's ... use of wrongful means that in fact cause injury to plaintiff's

contractual or business relationships." Pleas, 112 Wn.2d at 803-04. To show

improper means, the plaintiff must demonstrate the defendant had a duty not to

interfere. Pleas, 112 Wn.2d at 804. To establish such a duty, the plaintiff may

point to a statute, regulation, recognized common law, or established standard of

trade or profession. Libera v. City of Port Angeles, 178 Wn. App. 669, 676-77,

316 P.3d 1064(2013)(citing Pleas, 112 Wn.2d at 804).

When determining whether a party acted with improper means, courts

analyze the method by which the defendant interfered with the expectancy.

Wash. Trucking Ass'n v. Emp't Sec. Dep't, 192 Wn. App. 621, 651, 369 P.3d 170

(2016), rey'd on other grounds, 188 Wn.2d 198, 393 P.3d 761 (2017). Courts

can consider a city's arbitrary and capricious actions as evidence of improper

means. Pleas, 112 Wn.2d at 805. "A court need not find that a defendant acted

10 In light of this conclusion, we do not reach the question whether the City's failure to

engage in formal rule-making constituted improper means.

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with ill will, spite, defamation, fraud, force, or coercion in order to find improper

purpose or means." Libera, 178 Wn. App. at 677.

The City does not dispute that arbitrary and capricious conduct can serve

as evidence of improper means. Instead, it argues it did not act in such a

manner. Such conduct is defined as follows:

Arbitrary and capricious refers to willful and unreasoning action,

taken without regard to or consideration of the facts and

circumstances surrounding the action. Where there is room for two

opinions, an action taken after due consideration is not arbitrary and

capricious even though a reviewing court may believe it to be

erroneous.

Singh v. Covington Water Dist., 190 Wn. App. 416, 424, 359 P.3d 947(2015)

(internal quotations and citations omitted).

In March 2014, the City decided to implement the 1,000 Foot Separation

by creating a first-in-time rule. Throughout May, the City told applicants it would

make the first-in-time determination based on which applicant first applied for a

building permit. When Greensun informed the City it had submitted a complete

application, a City employee stated the applicant first had to be designated as a

lottery winner by the LCB. As early as June 11, 2014, the City stated Par 4 was

first-in-time.

Roughly two weeks before the LCB issued the licenses, the City changed

course and defined the first-in-time applicant as the one who first received a

license from the LCB. The City decided on this method even though the LCB

stated in April that it expected to issue licenses in batches. The City adhered to

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this method despite the inability of the LCB system to determine which applicant

it had licensed first. As this court noted in Greensun 1:

The City's failure to notice the LCB's public announcement

that "initial retail licenses will issued [sic] in batches (10-20) in most

populous areas"(included Par 4 and Greensun)triggered a series of

ad hoc City decisions intended to implement its unworkable first in

time rule. As Drews later described it, "we did not issue a written

policy about [the "lock down" rule]. We didn't publish it. We had to

make decisions on the fly and—Well,that's probably not a good way

to say it." The City's assistant attorney acknowledged licenses were

issued in batches and the LCB's system was not set up to "determine

which entity was actually first in time." Even the ultimate first in time

winner, Par 4, complained to the City about its "illogical first in time

rule":

The City's pursuit and reliance on the State's actual

license 'issuance order' is illogical and a waste of time

for all parties involved where those records likely do

not exist.

No.73646-9-I, slip op. at 15, n. 11 (internal citations omitted).

Moreover, although the LCB first issued Par 4 a license dated July 3,

2014, it told the City the license was not the actual marijuana retail license. The

LCB confirmed it issued all of the licenses on July 7, 2014. Notwithstanding this

information from the LCB, the City justified its determination that Par 4 was first-

in-time "based on the fact that on July 3, 2014, the LCB sent[Par 4] a letter

indicated it was approving [Par 4]'s marijuana retailer license." The City went on

to say its "decision is further supported by the LCB's records that indicated [Par

4]'s license was approved on July 6, 2014." Both of these dates were incorrect

as the LCB told the City it did not issue any licenses before July 7, 2014.

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Viewing the evidence in the light most favorable to Greensun, there

remains a genuine issue of material fact as to whether the City acted with

improper means through arbitrary and capricious conduct.

E. Resultant Damage

The parties dispute whether the City's actions caused Greensun

damages. The City argues Greensun cannot demonstrate it suffered damages

and cannot prove the City proximately caused any such damages. We disagree.

A party must prove a claim of damages with reasonable certainty. Mut. of

Enumclaw Ins. Co. v. Gregg Roofing, Inc., 178 Wn. App. 702, 315 P.3d 1143

(2013). Thus, the party must produce evidence sufficient to support its claim.

Mut. of Enumclaw Ins. Co., 178 Wn. App. at 715-16. "Evidence of damage is

sufficient if it affords a reasonable basis for estimating loss and does not subject

the trier of fact to mere speculation or conjecture." Mut. of Enumclaw Ins. Co.,

178 Wn. App. at 716.

Though Greensun asks to have a trial to determine the exact amount of its

damages, it has produced sufficient evidence that it suffered damages when it

could not open a recreational marijuana store. Greensun alleged it would have

opened its store but for the City's refusal to issue it a business license. It

submitted evidence that it would have been able to open its store within a week

of receiving its license, and therefore lost profits from that time forward. To

support this claim, Greensun points to the net profits of $2,577,614 in 2015, and

$3,760,535 in 2016, generated by its licensed retail store in Des Moines.

Simpson contends the Des Moines store is very similar to the store Greensun

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would have opened in Bellevue. Both spaces, he contends, are around 3,000

square feet, located on a major arterial, and have convenient customer parking.

In another declaration, Simpson points to the LCB's published gross sales

reported by each of its licensees. According to the LCB website, Par 4 reported

$300,000 in gross sales for its first month of operation. Viewed in the light most

favorable to Greensun, this evidence raises a material issue of fact as to whether

the company suffered damages as a result of the City's conduct.

F. Privilege

Once a plaintiff establishes all five elements of a tortious interference

claim, the burden shifts to the defendant to demonstrate the interference was

justified or the actions were privileged. Pleas, 112 Wn.2d at 805. The City

contends it established its actions were privileged as a matter of law. We

disagree. We conclude the evidence presented raises material issues of fact.

1. Good Faith

The City first claims its actions were privileged because it based its

conduct on a good faith interpretation of the zoning ordinance. Good faith may

privilege an interferor's actions and thereby serve as an affirmative defense to a

tortious interference claim. Moore v. Commercial Aircraft Interiors, LLC, 168 Wn.

App. 502, 511-12, 278 P.3d 197(2012)(describing good faith as an affirmative

defense); see also, Singer Credit Corp. v. Mercer Island Masonry Inc., 13 Wn.

App. 877, 884, 538 P.2d 544, 549(1975)(describing good faith as a privilege).

"It [is] well established that '[o]ne who in good faith asserts a legally protected

interest of his own which he believes may be impaired by the performance of a

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proposed transaction is not guilty of tortious interference." Brown v. Safeway

Stores, Inc., 94 Wn.2d 359, 375, 617 P.2d 704 (1980)(quoting Singer Credit

Corp., 13 Wn. App. at 884). The burden of proving privilege rests with the

defendant. Pleas, 112 Wn.2d at 800.

That the interferor is reasonably mistaken about the law does not defeat

the privilege. See Leingang v. Pierce County Med. Bureau, Inc., 131 Wn.2d 133,

930 P.2d 288 (1997); see also, Restatement(Second) of Torts § 773(1979). An

interferor may assert the good faith privilege based on an honest but incorrect

belief. See Restatement(Second) of Torts § 773 (1979).

As to the claim that it acted arbitrarily and capriciously, the City contends it

acted in good faith because it sought to enforce its zoning laws by applying the

1,000 Foot Separation through a neutral method and offered to help Greensun

find another location after it denied its license. It offers the following

interpretation of the 1,000 Foot Separation requirement:

Under the City's zoning ordinances, Greensun and Par 4

became "marijuana" retailers subject to the 1,000 [sic] Separation

rule at the time the LCB issued them licenses. Thus, at the time

Greensun received its marijuana license from the LCB, it was in

violation of the 1,000 Foot Separation because the LCB had already

issued a license [sic] Par 4 for a location within 1,000 feet of the

Greensun's Premises.

However, as discussed above, the City's decision to use the timing of the

LCB licensing for the first-in-time determinations was questionable. The City

originally implemented a system where applicants would "lock down" a location

based on building permit applications. It then abandoned that to instead link the

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first-in-time determinations to which applicant the LCB licensed first, even though

the LCB stated it would issue the licenses in "batches." After the LCB informed

the City that its system could not determine which applicant had been licensed

first, the City asked the applicants to submit evidence as to who the LCB licensed

first. This prompted even Par 4 to complain about the City's "illogical first in time

rule." In Greensun I, we described the City's actions as "ad hoc" and "troubling."

No.73646-9-I, slip op. at 15, n. 11, and 17, n.13.

Viewing the evidence in the light most favorable to Greensun, there is a

material issue of fact as to whether the City acted in good faith. Likewise, when

the evidence is viewed in the light most favorable to the City, there is a material

issue of fact as to good faith. Accordingly, Greensun was not entitled to

summary judgment as to liability. See C.L. v. Dep't of Soc. & Health Servs., 200

Wn. App. 189, 203-04, 402 P.3d 346 (2017). In tortious interference cases,

"when there is room for different views, the determination of whether the

interference was improper or not is ordinarily left to the [trier of fact]." Quadra

Enters., Inc. v. R. A. Hansen Co., Inc., 35 Wn. App. 523, 527, 667 P.2d 1120

(1983)(internal quotations and citations omitted)(addressing the good faith

privilege in a tortious interference claim).

2. Discretionary Immunity

Second, the City argues its actions were privileged based on discretionary

immunity. When the legislature passed RCW 4.92.090, it abolished sovereign

immunity. Evangelical United Brethren Church of Adna v. State, 67 Wn.2d 246,

252, 407 P.2d 440 (1965). However, courts still provide a narrow exception that

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No. 77635-5-1/26

immunizes "high level discretionary acts exercised at a truly executive level."

Chambers-Castanes v. King County, 100 Wn.2d 275, 281, 669 P.2d 451 (1983);

Avellaneda v. State, 167 Wn. App. 474, 480, 273 P.3d 477(2012). The immunity

does not privilege ministerial or operational government acts. Taggart v. State,

118 Wn.2d 195, 214, 822 P.2d 243(1992). Moreover, a "State [or City] is

immune only if it can show that the decision was the outcome of a conscious

balancing of risks and advantages." Taggart, 118 Wn.2d at 215; see also, King

v. City of Seattle, 84 Wn.2d 239, 246, 525 P.2d 228 (1974), overruled on other

grounds by City of Seattle v. Blume, 134 Wn.2d 243, 947 P.2d 223(1997)("The

fact that an employee normally engages in 'discretionary activity' is irrelevant if,

in a given case, the employee did not render a considered decision."). Put

another way, the immunity does not protect a city from liability for their arbitrary

and capricious acts. King, 84 Wn.2d at 247. As discussed above, Greensun

raises an issue of material fact as to whether the City acted in an arbitrary and

capricious manner. Accordingly, the City is not entitled to summary judgment on

discretionary immunity grounds.

CONCLUSION

The trial court properly denied Greensun's summary judgment motion

because issues of fact remain as to the City's liability. The trial court erred in

granting the City's motion for summary judgment because Greensun has

submitted evidence to raise genuine issues of fact as to the elements of a claim

for tortious interference with business expectancy. We affirm in part and reverse

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No. 77635-5-1/27

in part the order denying Greensun's motion for partial summary judgment and

granting the City's summary judgment motion." We remand the case for trial.

WE CONCUR:

11 Greensun's first assignment of error provides,"The King County Superior Court erred

in granting the City of Bellevue's Cross-Motion for Summary Judgment, granting the City's

request for declaratory relief, and dismissing all Greensun's claims for relief." However,

Greensun does not make any argument regarding the trial court's declaratory relief award in its

briefing. Greensun only states the formal rule-making conducted by the City after Greensun I

does not retroactively cure its tortious interference. A party abandons the assignments of error

that it does not discuss in its brief. Zabka v. Bank of Am. Corp., 131 Wn. App. 167, 174, 127 P.3d

722(2005). Because Greensun does not provide argument challenging the trial court's

declaratory relief award, it abandons the issue on appeal.

27