Those of us who represent private parties in litigation know that when we appeal and we want to suspend enforcement of the judgment, we can do so if we post a supersedeas bond (aka appeal bond). In other words, if we put our money where our mouths are. We also know that some parties -- generally governments -- are often exempt by statute from this requirement, and can appeal without having to post a bond.
But here's a case where that exemption may have come back to bite a city which exercised it.
Holmquist v. King County, No. 733354 (Feb. 8, 2016) started off as a quiet title action for property which became private after the County vacated a Seattle-area street back in the 1930's. A dispute arose about ownership, and the private owners sued the County. The City of Seattle thought it owned the property -- it also maintained a 4- foot by 4-foot sign on the land announcing a future shoreline access project, and the public used the land to access Lake Washington -- and intervened in the lawsuit.
Flash forward to the trial court judgment, which concluded that the owners (and neither the county nor the city), have title. Both the county and the city appealed, "but only the City sought to stay enforcement of the trial court's judgment quieting title in the owners." Slip op. at 2. The city filed a notice of supersedeas without bond, pursuant to a Washington statute which allowed it to do so. The city kept its sign on the land, and "the public continued to use the contested property while the City's appeal progressed." Slip op. at 3.
The appeal did not progress successfully. The Court of Appeals affirmed private title, and the Washington Supreme Court denied discretionary review.
The property owners then asked the trial court to award them damages for the City's and the public's continued use of the land, which interfered with the owners' exclusive private use. In other words, the owners asserted a temporary physical taking, even though they did not use that label for their claim. The trial court refused to award anything.
The Washington Court of Appeals disagreed and concluded that the owners were entitled to exclusive use upon entry of the trial court's quiet title judgment, and the city's and the public's continued use interfered with their rights. The court rejected the city's argument that it could not be liable for damages, because the supersedas-without-bond statute means that a government entity cannot be liable for damages incurred while it appeals a judgment. Relying on Norco v. King County, 721 P.2d 511 (Wn. 1986), the court concluded that the government's liability for damages incurred during the pendency of an appeal, like other appellants', is "absolute." The lack of a bond only means that the property owners cannot collect from the bond, but that the city must pay directly.
The court also concluded that the owners' rental theory of damages (i.e., the just compensation they were due), was a "valid methodology for quantifying their damages." Slip op. at 7. The court concluded that the owners were deprived of exclusive use, citing our favorite case, Kaiser Aetna v. United States, 444 U.S. 164 (1979) (the right to exclude others is "one of the most essential sticks in the bundle of rights that are commonly characterized as property"). Thus, the measure of compensation is the rental value of the property. The court rejected the city's argument that the owner must be deprived of all use of the property, an argument sure to fail in light of Kaiser and Loretto, since we know that any physical invasion, however minimal, is a per se taking, regardless of the other uses which the owner might retain. The fact that the city's and the public's use was not of the entire bundle only goes to the measure of damages, and not whether there's been a taking.
The court characterized the rental value theory as "an unremarkable proposition," (a conclusion we agree with), and held the city is liable for the rental value of the property during the pendency of the appeal.