Court Decision Clarifies Vested Rights Doctrine as Entirely Statutory

Note: In December 2016, the Washington Supreme Court issued a significant decision interpreting the statutory vested rights doctrine and further clarifying the term “land use control ordinance” in the vesting statutes. For more information, see Washington Supreme Court Issues Significant Vesting Decision.

In Potala Village Kirkland, LLC v. City of Kirkland (August 25, 2014), Division I of the state court of appeals issued a significant decision regarding the vested rights doctrine. The court held that the doctrine is entirely statutory, with the statutory doctrine replacing, rather than supplementing, the common law (court-made) vested rights doctrine. In the first sentence of its opinion, the court states: "Washington's vested rights doctrine originated at common law but is now statutory."

The plaintiff in this case, Potala Village Kirkland, LLC, filed a complete application for a shoreline substantial development permit for a large mixed-use project in a Neighborhood Business (BN) zone, a small portion of which was subject to state and local shoreline laws. However, before Potala Village applied for a building permit for its development, the city imposed an emergency moratorium on the issuance of any development-related permits in its BN zones. During an extension of the moratorium, the city adopted more restrictive development regulations in these zones, placing a limit on residential density and thus precluding Potala Village's development as had been proposed. Potala Village sued the city, arguing that the city had violated its vested rights that it contended were established by the filing of the shoreline substantial development permit application. (If Potala Village's rights vested at the time of that application, then its development would be governed by the regulations in effect at the time of that application, rather than by any subsequently-enacted regulations.)

The court of appeals rejected Potala Village's argument, concluding that an application for a shoreline substantial development permit does not establish vested rights. The court's conclusion was based on its determination that, under the language of recent state supreme court decisions, the vested rights doctrine is now governed solely by statutory law and not by common law. That common law includes a 1974 court of appeals decision, Talbot v. Gray, 11 Wn. App. 807, 811 (1974), that held that vested rights were established with the filing of a shoreline substantial development permit application. Statutory law, however, does not apply vested rights to shoreline substantial development permit applications. Statutory law applies vested rights only to building permit applications (RCW 19.27.095), short subdivision and subdivision applications (RCW 58.17.033), and development agreements (RCW 36.70B.180). A city or county may, however, grant broader vested rights.

The court explained that the legislature codified the vested rights doctrine in 1987 and that its codification, in effect, limited the scope of the doctrine. The court also noted that, as indicated by the Washington Supreme Court, if there is any need for reform of Washington’s vested rights doctrine, it’s the legislature, not the judiciary, that is best suited for that job.

This court decision is significant because, although the state supreme court had in three recent cases stated that the vested rights doctrine was now statutory, that court had not yet squarely addressed - as the court did here - the continued viability of the common law vesting doctrine. Unless the court of appeals decision in Potala Village Kirkland, LLC v. City of Kirkland is appealed to and reversed by the state supreme court, the common law vested rights doctrine is indeed dead.

For more information on the vested rights doctrine, see our Vested Rights webpage.