BEFORE THE HEARING EXAMINER FOR THURSTON COUNTY

Transcription

1 COUNTY COMMISSIONERS Cathy Wolfe District One Diane Oberquell District Two Robert N. Macleod District Three HEARING EXAMINER BEFORE THE HEARING EXAMINER FOR THURSTON COUNTY In the Matter of the Request of ) NO. IPUR ) Patricia Varney, Mary Kaminski, ) Ysanne Giordano, ) Christine Hartman, Isabella Regina, ) FINDINGS, CONCLUSIONS, and Laurie Barta ) AND DECISION ) For Innocent Purchaser Status ) SUMMARY OF DECISION The request for innocent purchaser status is DENIED. SUMMARY OF RECORD Request: Patricia Varney, Christine Hartman, Ysanne Giordano, Mary Kaminski, Isabella Regina, and Laurie Barta (Applicants) request innocent purchaser status as individuals under Thurston County Code (TCC) (L) relating to seven five-acre parcels located generally at 6045 Churchill Road SE, in Tenino, Washington. Hearing Date: The Thurston County Hearing Examiner held an open record hearing on the request on October 15, Testimony: At the open record hearing, the following individuals presented testimony under oath: Cassandra Moore, Associate Planner Thurston County Development Services Department Ken Valz, Applicants Representative 1 Laurie Barta, Applicant Christine Hartman, Applicant 1 Mr. Valz is an attorney, but at hearing, he testified in the capacity as representative for all applicants. Testimony of Mr. Valz Lakeridge Drive SW, Olympia, Washington (360) /FAX (360)

2 Isabella Regina, Applicant Brian Blowers Anita Marriott, on behalf of Ysanne Giordano Exhibits: At the hearing the following exhibits were submitted as part of the record of this proceeding: EXHIBIT 1 Development Services Planning & Environmental Section Staff Report in File No. IPUR , dated October 15, 2007, including the following attachments: Attachment a Attachment b Notice of Public Hearing Vicinity Map Attachment c Letter filing Innocent Purchaser Claim dated March 12, 2007 Attachment d Attachment e Attachment f John D. Swift and Associates Survey dated July 1991 recorded under Auditor File Number Legal Lot Determination dated December 11, 2003 recorded under Auditor File Number Hearings Examiner Decision for Innocent Purchaser Claim, Project Number dated December 10, 2003 Attachment g Notarized Affidavit from Patricia Varney, dated June 18, 2007 Attachment h Notarized Affidavit from Christine Hartman, dated December 28, 2006 Attachment i Notarized Affidavit from Ysanne Giordano, dated February 6, 2007 Attachment j Notarized Affidavit from Mary Kaminski, dated January 2, 2007 Attachment k Notarized Affidavit from Isabella Betty Regina, dated December 19, 2006 Attachment l Notarized Affidavit from Laurie Barta, dated December 28, 2006 Attachment m Photo demonstrating site posting on October 2, 2007 EXHIBIT 2 Thurston County Ordinance No , adopted January 29, 2004 Varney et al, No. IPUR page 2 of 12

3 EXHIBIT 3 Additional Declaration of Brian Blowers and Laurie Barta, dated October 12, 2007 EXHIBIT 4 2 Development Services Planning & Environmental Section Staff Report in File No. IPUR , dated April 7, 2003, including the following attachments: Attachment a Attachment b Attachment c Attachment d Notice of Public Hearing Zoning/Vicinity Map Applicant s Request for IPUR Status letter, undated Miscellaneous receipts Attachment e Survey, dated July 23, 1991 Attachment f Attachment g Real Estate Contract, stamped received by Thurston County Auditor May 2, 1991 Transfer Document, Kotyk to Forust Family Trust, dated August 14, 1991 Attachment h Receipt, dated August 7, 1991 Attachment i Partial Fulfillment Deed, Cox et al to Kotyk, dated July 23, 1992 Attachment j 2001 Property Tax statement for Parcel No Attachment k Various quit claim deeds Attachment l Quit Claim Deed, Forust Family Trust to Varney, dated May 14, 2002 Attachment m Property Reappraisal, dated May 27, 1994 Attachment n Statutory Warrant Fulfillment Deed, Cox et al to Kotyk, April 26, 1991 Attachment o (Former) TCC The Hearing Examiner requested that the exhibits noted in the December 10, 2003 hearing examiner decision on Ms. Varney previous innocent purchaser request be admitted to this record. There was no objection from the Applicants representative. Development Services staff submitted exhibits 4 through 10 with attachments as noted in response to this request. Varney et al, No. IPUR page 3 of 12

4 Attachment p excerpt citing Craven v. Tacoma, 63 Wn.2d 23 (1963) Attachment q Unsigned, undated statement EXHIBIT 5 Statement from Laurie Barta and Brian Blowers, submitted in IPUR , dated April 2, 2003, with attachments: Attachment 1 Attachment 2 Declaration of Trust, Forust Family Trust, and Trustee Meeting minutes Residential lease agreement signed by Pat Varney, dated August 14, 1991 Attachment 3 Trust Meeting agenda, dated October 3, 1991 Attachment 4 Meeting Minutes, dated September 18, 1992 Attachment 5 Meeting minutes, dated April 16, 1993 Attachment 6 Letter from Pat Varney to Laurie Kotyk Barta, dated April 21, 1993 Attachment 7 Undated, unsigned letter to Laurie Attachment 8 Meeting Minutes, dated September 24, 1993 Attachment 9 Undated letter to Laurie, signed Linda Attachment 10 Notes dated September 1991 Attachment 11 Memorandum to McLemore, Gohan, and Varney from Hartman, dated February 9, 1994 Attachment 12 Meeting Minutes, dated April 1994 Attachment 13 dated January 17, 2002 Attachment 14 dated March 8, 2002 Attachment 15 dated March 21, 2002 Attachment 16 dated April 23, 2002 Attachment 17 Meeting Minutes, dated January 29, 2003 Varney et al, No. IPUR page 4 of 12

5 Attachment 18 Lis Pendens, dated February 24, 2003 EXHIBIT 6 Memorandum from Robert Smith, Associate Planner, dated November 4, 2003, with the following attachments: Attachment a RCW Attachment b Crown Cascade v. O Neil, 100 Wash.2d 256 (1983) EXHIBIT 7 Letter from Thomas Bjorgen, dated November 13, 2003 EXHIBIT 8 EXHIBIT 9 Varney statement in support of application for innocent purchaser status, dated November 13, 2003 Quit Claim Deed dated August 19, 2003, transferring real property from the Forust Family Trust to WARLPIRI Trust (Patricia Varney) EXHIBIT 10 Meeting Minutes from June 5, 2003 Trust meeting Upon consideration of the testimony and exhibits submitted at the open record hearing, the Hearing Examiner enters the following Findings and Conclusions: FINDINGS 1. The Applicants request innocent purchaser status as individuals under Thurston County Code (TCC) (L) relating to seven five-acre parcels located generally at 6045 Churchill Road SE, in Tenino, Washington. 3 The parties claim title to lots as follows: Patricia Varney Lot 1 Christine Hartman Lot 2 Ysanne Giordano Lot 3 Mary Kaminski Lot 4 Isabella Regina Lot 5 Laurie Barta Lots 6 and 7 The Applicants desire to establish each lot as a legally separate lot. Exhibit 1, Attachment c. 2. The subject property is located in unincorporated rural Thurston County and is zoned Rural Residential Resource One Dwelling Unit Per Five Acres (RRR 1/5). Exhibit 1, page 2. 3 The legal description of the subject property a portion of Section 27, Township 16 North, Range 1 West, W.M.. The subject property has been assigned Tax Assessor Parcel Number Exhibit 1, page 2. Varney et al, No. IPUR page 5 of 12

6 3. On December 11, 2003, Thurston County Development Services Department (Department) issued a legal lot determination in response to an application by many of the Applicants. The Department determined that the individual five-acre lots were not separate saleable lots and that the only legal lot of record was the 35-acre parent parcel. Exhibit 1, Attachment e. 4. Applicant Varney previously requested innocent purchaser status in 2003; her application was heard at an open record hearing on November 17, Evidence submitted in the record at the 2003 hearing included documents purporting to establish the following facts. 4 Applicant Barta entered into a contract to purchase the underlying 35 acres in April In July 1991, Barta hired John D. Swift and Associates to survey the 35 acres into seven separate five-acre parcels. The resulting survey was filed at Thurston County on July 23, Exhibit 4; Exhibit 4, Attachments c, e, and f. 5. On August 7, 1991, Barta issued a receipt to Varney stating: Received of Pat Varney $3, for down payment on Lot 1. Exhibit 4, Attachment h. At time of purchase, Varney did not receive any document purporting to convey title. Exhibit 1, Attachment f. 6. On August 14, 1991, Barta signed documents purporting to convey the 35 acres of real property (and additional personal property) to an entity called the Forust Family Trust. The trust converted the real property into 100 shares of beneficial interest. Exhibit 5, Attachment The August 14, 1991 meeting minutes of the Forust Family Trust purport to issue the 100 shares of beneficial interest in the trust corpus as follows: three shares to Hartman; three shares to Varney; three shares to Linda Columbia; 14.3 shares to Effie Ligon; 14.3 shares to Wendy Boulton; and 14.3 shares to Barta. The remaining 48.1 shares stayed in the trust. According to the minutes, at the trust s first meeting, Barta (then Kotyk) voluntarily donated her interest in the real property to the trust, giving up all claim to control. Effie Ligon was nominated president of the trust for the duration of the first meeting, at the end of which she resigned and Barta became president of the trust. No title documents were prepared at this time. Exhibit 4, Attachment g; Exhibit 5, Attachment Notes offered into the record by Barta show that as of September 1991, Barta was aware that neither the beneficial shares arrangement nor the survey constituted legal subdivision of the 35-acre parent parcel. Exhibit 5, Attachment 10. Barta imputes this knowledge to Varney. Exhibit 5. Varney denies understanding that the lots were not legally created 4 The determination of the legal effect of such documents is not within the scope of the Examiner s authority. The details of these documents are relevant in determining the intentions, knowledge, and motives of the parties to the present innocent purchaser claims. Varney et al, No. IPUR page 6 of 12

7 until a later date. Exhibit 1, Attachment g. Barta stated: All members of this trust decided to put the land in trust for privacy sake and asset protection. Exhibit 5, page The minutes from the September 18, 1992 Forust Family Trust meeting reflect that membership in the trust and ownership of shares of beneficial interest had changed. As of that date, shares were divided as follows: Hartman, 9.6 shares; Mary Kaminski, 4.7 shares; [unnamed party] 14.3 shares; Varney, 3.4 shares; Columbia, 3.4 shares (although it is noted that Linda was selling her land); Richards, 7.48 shares; Barta, 7.15 shares; Doranne McLemore, 7.48 shares; and John Shull, 7.15 shares. No record of how membership or share transfer was accomplished is included in the record. Exhibit 5, Attachment At an April 1993 Forust Family Trust meeting, it was agreed that the parties should prepare lease agreements because they understood that technically we lease land [from the] trust. As of this meeting, Columbia was no longer listed as a member, and Margaret Gahan was listed as a member. Exhibit 5, Attachment 5. Varney signed a lease agreement obligating her to pay $147 per month in rent. The lease agreement also states that each lessee was obligated to pay property taxes on their lots. Exhibit 5, Attachment 2. Varney stated that she understood the rent payments to be payments towards ownership of the real property. Exhibit 1, Attachment g. 11. The record shows that the group was concerned about equitable payment of County property taxes and had some concerns about coming to the attention of the IRS. Exhibit 4, Attachment m; Exhibit 5, Attachments 9, 12, 15, 16, etc. 12. Varney s November 2003 innocent purchaser request was denied on December 10, The Examiner at the time concluded that the certificate of beneficial shares received by Varney and the residential lease agreement requiring payment of rent signed by Varney were not consistent with the concept of real property ownership. The Examiner went on to conclude that Varney became aware in the early 1990s that the lots had not been legally segregated and that her continued payments after gaining this awareness took away her innocence for the purpose of an innocent purchaser claim. Exhibit 1, Attachment f. 13. In her current application for innocent purchaser status, Varney offers the same facts in evidence and argues that the adoption of Ordinance No on January 29, 2004, revising criteria for innocent purchaser status, affords her the opportunity to have her application reheard. Exhibit 1, Attachments f and g; Testimony of Mr. Valz. 14. At the time of Applicant Varney s 2003 innocent purchaser application, pertinent Thurston County Code provisions read: Relief for an Innocent Purchaser for Value Varney et al, No. IPUR page 7 of 12

8 2. A lot not created in a legal manner and subsequently acquired by an innocent purchaser, as so determined by the Thurston County Hearing Examiner after a properly noticed public hearing, is deemed legal. Exhibit 4, Attachment o, TCC Chapter (Ordinance 11398, 4/14/97). 15. Ordinance 13120, adopted January 29, 2004, established new criteria for innocent purchaser status, amending TCC as follows: Relief for an innocent purchaser for value C. A lot not created in a legal manner and subsequently acquired by an innocent purchaser, as so determined by the Thurston County hearing examiner after a properly noticed public hearing, is deemed legal, wherein such purchaser files a notarized affidavit with the Thurston County Development Services Department attesting to the following: 1. The lot was purchased at market value not reflecting the illegal division, 2. The purchaser exercised reasonable diligence but did not know of the illegal division, and 3. The purchaser has not previously been granted innocent purchaser status by Thurston County. Exhibit 2, Ordinance Varney asserts: that she paid fair market value ($18,000) for Lot 1; that there was no trust in existence at the time she made her $3, down payment; that no refund was available to her; that she exercised reasonable diligence; and that she has not been granted innocent purchaser status previously. Exhibit 1, Attachment g. 17. Hartman asserts: that she made a $3, down payment on Lot 2 on May 1, 1991; that she paid fair market value ($18,000.00); that she trusted Barta (Kotyk) because of her banking and real estate expertise and thus exercised reasonable diligence; and that she has not been granted innocent purchaser status before. Testimony of Ms. Hartman; Exhibit 1, Attachment h. A receipt, dated with an illegible date in 1992, shows that Hartman paid $14, for the remaining beneficial shares of the Forust Family Trust totaling 14.3 shares. Exhibit 1, Attachment h. 18. Giordano asserts: that she paid fair market value for Lot 3 ($21,500.00) when she purchased it from Wendy Boulton; that she exercised reasonable diligence because she saw the original certificate of shares and the subdivision plan, because she relied on the banking and real estate expertise of Barta, and because her neighbors seemed happy with Varney et al, No. IPUR page 8 of 12

9 their properties. She has not previously been granted innocent purchaser status. Ms. Giordano is not a US citizen and had not participated in other real estate transactions prior to this one. The receipts offered in the record by Ms. Giordano (Richards) were from either Barta or the Forust Family Trust. Checks offered by Ms. Giordano were written to the Forust Family Trust. Exhibit 1, Attachment i; Testimony of Ms. Marriott. 19. Kaminski asserts: that she paid fair market value for Lot 4 ($23,000 in 1992); that she relied on information from Laurie Barta; and that she has not been previously granted innocent purchaser status. In her affidavit, she states both that she paid Ligon for the lot and that she understood that she bought it from the Forust Family Trust. In her testimony, she stated she assumed she was buying it from Barta. Kaminski married Albert Brown in 1999 and that is his only relationship to the case. Exhibit 1, Attachment j; Testimony of Ms. Kaminski. 20. Regina asserts: that she paid fair market value for Lot 5 ($33,000 in 1995); she exercised reasonable diligence in that this was her first purchase of real property, that she dealt with a real estate agent, and two neighbors assured her this was a legal sale; that she saw the survey before she paid Doranne McLemore for the lot; and that she has not been granted innocent purchaser status by the County. Regina offered a written statement from McLemore in which McLemore states: I, Doranne McLemore, release and transfer my beneficial land shares to Isabella Betty Regina. Payments for land have been received and paid in full to Doranne McLemore as of this date. This statement is signed December 18, The real estate agent Regina relied on was related by marriage to Mary Kaminski. Exhibit 1, Attachment l; Testimony of Ms. Regina. 21. Barta asserts: that she owned Lot 7 as of the transfer from Lawrence Lucke in 1991; that relied on the advice of Leo Bell in forming the trust; that she purchased Lot 6 from Rich Arnold in July 2001 for $38,000 (paid in full in July 2005), which she asserts is fair market value; that she had exercised reasonable diligence but didn t understand the process; and that she has not previously been granted innocent purchaser status. Exhibit 1, Attachment l; Testimony of Ms. Barta. 22. Notice of the October 15, 2007 public hearing was mailed to adjacent property owners, published, and posted on-site in accordance with Thurston County regulations. Exhibit 1, page 2; Exhibit 1, Attachments a and m. CONCLUSIONS Jurisdiction The Hearing Examiner is authorized to make determinations of innocent purchaser status after public hearing under Section (B) of the Thurston County Code. Criteria for Decision The Board of Commissioners authorized the Hearing Examiner to grant innocent purchaser status following a public hearing if findings can be entered that the lot was not created in a legal Varney et al, No. IPUR page 9 of 12

10 manner and that innocent purchaser status should be granted. However, there are no criteria in the Thurston County Code for making the determination of innocent purchaser status. 5 The innocent purchaser provision in the County Code states: Relief for an innocent purchaser for value. A. All purchasers or transferees of property shall comply with the provision of this title and each purchaser or transferee may recover his or her damages from any person, firm, corporation, or agent selling or transferring land in violation of this title, including any amount reasonably spent as a result of inability to obtain any development permit and spent to conform to the requirements of this title as well as the cost of investigation, suit and reasonable attorney s fees occasioned thereby. Such purchaser or transferee may as an alternative to conforming to these requirements rescind the sale or transfer and recover costs of investigation, suit and reasonable attorney s fees occasioned thereby. B. A lot not created in a legal manner and subsequently acquired by an innocent purchaser, as so determined by the Thurston County Hearing Examiner after a properly noticed public hearing, is deemed legal, wherein such purchaser files a notarized affidavit with the Thurston County Development Services Department attesting to the following: 1. The lot was purchased at market value not reflecting the illegal division, 2. The purchaser exercised reasonable diligence but did not know of the illegal division, and 3. The purchaser has not previously been granted innocent purchaser status by Thurston County. Thurston County Code State law provides that: No building permit, septic tank permit, or other development permit, shall be issued for any lot, tract, or parcel of land divided in violation of this chapter or local regulations adopted pursuant thereto unless the authority authorized to issue such permit finds that the public interest will not be adversely affected thereby. The prohibition contained in this section shall not apply to an innocent purchaser for value without actual notice. All purchasers' or transferees' property shall comply with provisions of this chapter and each purchaser or transferee may recover his damages from any person, firm, corporation, or agent selling or transferring land in violation of this chapter or local regulations adopted pursuant thereto, including any amount reasonably spent as a result of inability to obtain any development permit and spent to conform to the requirements of this chapter as well as cost of investigation, suit, and reasonable attorneys' fees occasioned thereby. Such purchaser or transferee may as an alternative to conforming his property to these requirements, rescind the sale or transfer and recover costs of investigation, suit, and reasonable attorneys' fees occasioned thereby. RCW Varney et al, No. IPUR page 10 of 12

11 Conclusion Based on Findings 1. As to Applicant Varney, the same facts as she offered in this decision were previously heard and decided by the Thurston County Hearing Examiner. Applicant representative Valz argued that the amendment of the innocent purchaser code provisions allow Varney to reapply on the same facts. The Examiner disagrees and concludes that the legal doctrine of res judicata bars the same facts from being decided a second time. If, on appeal, it is determined that res judicata does not bar Applicant Varney, the Examiner concludes that Varney does not qualify for innocent purchaser status. Varney knew before completing payment in full that legal subdivision had not been effectuated. Further, reasonable diligence is not defined in the Thurston County Code; however, the Examiner concludes that it was not reasonable to rely on the trust/ beneficial share certificates scheme and a signed residential lease agreement as evidence of legal purchase of real property. Findings Nos. 1, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, and As to Applicant Hartman, she does not qualify for innocent purchaser status. Hartman s early involvement in the Forust Family Trust shows she actively participated in the scheme by which the Trust held title to the real property, protecting the privacy and assets of the members. Hartman s receipt reflects payment for shares, not land. Further, Hartman s receipt shows her down payment was made before the survey was recorded. Findings Nos. 1, 4, 5, 6, 7, 8, 9, 10, 11, and As to Applicant Giordano, she does not qualify for innocent purchaser status. No credible chain of title is established in the record upon which a finding of reasonable diligence can be based. Giordano entered into the beneficial shares scheme of her own accord and at her own risk. Findings Nos. 1, 4, 5, 6, 7, 8, 9, 10, 11, and As to Applicant Kaminski, she does not qualify for innocent purchaser status. No credible chain of title is established in the record upon which a finding of reasonable diligence can be based. Kaminski entered into the beneficial shares scheme of her own accord and at her own risk. Findings Nos. 1, 4, 5, 6, 7, 8, 9, 10, 11, and As to Applicant Regina, she does not qualify for innocent purchaser status. No credible chain of title is established in the record upon which a finding of reasonable diligence can be based. Regina entered into the beneficial shares scheme of her own accord and at her own risk. Findings Nos. 1, 4, 5, 6, 7, 8, 9, 10, 11, and As to Applicant Barta, she does not qualify for innocent purchaser status. She knew at the time the survey was recorded that it did not constitute a legal segregation of the seven lots. Her creation of the trust and beneficial shares scheme for the protection of privacy and assets appears to be an intentional circumvention of legal subdivision requirements. Findings Nos. 1, 4, 5, 6, 7, 8, 9, 10, 11, and 21. Varney et al, No. IPUR page 11 of 12

12 7. The County Code does not include a definition of reasonable diligence, which leaves interpretation of this requirement to the decision making body. The examiner concludes that neither mere ignorance nor active avoidance of legal requirements can constitute innocence for the purposes of innocent purchaser status. Many of the receipts in evidence are hand written. The purchase agreements refer to beneficial shares rather than real property. Many of the legal forms offered by the Applicants are obviously home made. These factors combine with the Forust Family Trust scheme to rob the transactions of potential credibility in support of claims of reasonable diligence. DECISION Based on the preceding Findings and Conclusions, the requests of all Applicants for innocent purchaser status are DENIED. Decided this 30 th day of October Sharon A. Rice Thurston County Hearing Examiner Pro Tem \\Tcbldg1d\VOL1\apps\track\Planning\Amanda Save File\Innocent Purchaser VH\Decisions\ decision.doc Varney et al, No. IPUR page 12 of 12