Facts

The condominiums at 1515-1519 Lakeview Boulevard in Seattle were constructed on a steep slope prone to landslides, consisting of permeable sand and fill over impermeable silt and clay. Apartment Sales Corporation obtained a building permit from the City of Seattle after securing zoning variances and agreeing to conditions imposed due to the site's slide risk, including recording a covenant in the deed that exculpated the city from liability for soil movement damages except those caused by the city's sole negligence, requiring notification to successors, and mandating continuous insurance.

The homeowners, who purchased the three townhouse condominiums, received assurances from the developers that the sites were stable. Between November 1992 and November 1996, the properties flooded at least four times, with over a foot of water inundating garages and basements each time, caused by overflows from the city's public storm drain system. Evidence from an engineering geologist indicated that failures in the city-maintained drains allowed thousands of gallons of water to saturate the soil, contributing to instability. In November 1996, a city inspector found and repaired a separated, blocked pipe in the system.

Severe storms in late December 1996 dumped snow on saturated soil, followed by rapid thawing and heavy rain, leading to widespread flooding and landslides in the Puget Sound region. On January 3, 1997, after about four years of occupancy, significant soil movement occurred: the properties sank four to six feet and shifted west two feet, breaking water mains and rendering the homes uninhabitable.

The homeowners, comprising the 1515-1519 Lakeview Boulevard Condominium Association, sued the City of Seattle, the developers, the geotechnical engineer, the architect, the contractor, and the structural engineer, alleging negligent permitting by the city for allowing construction despite known risks and negligent maintenance of storm drains that contributed to the slide. They sought damages for the loss of their homes. The homeowners settled with the developers, and claims against the builders were dismissed on statute of limitations grounds in a prior proceeding. The trial court granted summary judgment dismissing all claims against the city based on the covenant, assumption of risk, and the public duty doctrine. The Court of Appeals affirmed dismissal of the negligent permitting claims but reversed and reinstated the negligent maintenance claims related to the storm drains. The city petitioned for review, which the Supreme Court granted.

Analysis

Issue #1

Issue

Does the exculpatory covenant violate the abolition of sovereign immunity under RCW 4.96.010?

Legal Rule

Exculpatory covenants do not categorically violate sovereign immunity, but blanket grants of immunity for routine public functions are invalid. A tailored, bargained-for agreement addressing specific risks unique to a property is permissible if it does not functionally enact blanket immunity.

Rule Analysis

The covenant was imposed as a condition for granting the building permit due to the site's known landslide risks and was limited to damages from soil movement, excluding those caused by the city's sole negligence. It was an arm's-length agreement between the city and the developer, tailored to the property's unique characteristics, and did not amount to a blanket immunity for general negligence.

The city's argument that such instruments encourage development on marginal lots under the Growth Management Act was considered, emphasizing that property owners can accept risks through creative solutions. This approach allowed development while protecting the city from specific, contemplated risks without violating the abolition of sovereign immunity.

Conclusion

No, the exculpatory covenant does not violate the abolition of sovereign immunity because it is narrowly tailored to the specific risks of soil movement on the property and does not create blanket immunity.

Issue #2

Issue

Does the exculpatory covenant run with the land and bind successive owners?

Legal Rule

A covenant runs with the land if: (1) it is enforceable between the original parties; (2) it touches and concerns the land; (3) the parties intend to bind successors; (4) enforcement is sought against a successor in possession; and (5) the successor has notice. The 'touch and concern' element requires that the covenant benefits or burdens the occupation or enjoyment of the land and passes to assignees.

Rule Analysis

Four elements were not disputed, leaving the focus on whether the covenant touched and concerned the land. The covenant warned of slide risks, required insurance, and limited liability for soil movement, directly relating to the soil and the reasonable enjoyment of the property.

It burdened land use by restricting rights associated with ownership and concerned the land's physical stability, meeting the touch and concern requirement as articulated in prior cases. The covenant was not merely personal but tied to the property's inherent risks, binding successors with notice.

Conclusion

Yes, the exculpatory covenant runs with the land because it touches and concerns the land by addressing risks inherent to the property's soil and binds successive owners with notice.

Issue #3

Issue

Does the city have a duty to homeowners to refuse to grant a building permit when there is a known risk of significant soil movement?

Legal Rule

Negligent permitting alone cannot form the basis of a negligence claim against local government unless a recognized exception to the public duty doctrine applies, such as a special relationship or statutory intent to protect a particular class.

Rule Analysis

The homeowners alleged the city negligently issued the permit despite known slide risks, but they did not establish a recognized exception to the public duty doctrine. Prior cases held that permitting decisions generally do not create tort liability to third parties without specific circumstances.

The trial court and Court of Appeals dismissed this claim, and the disposition affirmed that no duty existed enforceable in tort for future homeowners based solely on permitting.

Conclusion

No, the city does not have a duty to refuse the building permit, and the negligent permitting claim was properly dismissed.

Issue #4

Issue

Does the city have a duty to exercise due care to maintain a public drain system enforceable against it by the homeowners?

Legal Rule

Under the special relationship exception to the public duty doctrine, a duty arises if: (1) there is direct contact or privity setting the plaintiff apart from the general public, and (2) express assurances by a public official give rise to justifiable reliance.

Rule Analysis

The homeowners presented evidence of negligent maintenance, including overflows, a broken pipe, and connections that introduced water to the soil. One homeowner (Ms. Fukui) filed a claim, received compensation, and relied on city assurances to maintain the drains, with the city installing catch basins.

This demonstrated direct contact, express assurances, and justifiable reliance, sufficient to defeat summary judgment under the special relationship exception. The claims related to off-site and on-site drainage issues were reinstated for losses caused by the city's negligence, not exculpated by the covenant.

Conclusion

Yes, the city has a duty to maintain the drain system under the special relationship exception, and the negligent maintenance claims were properly reinstated.