The Spot On Evergreen Iii, Inc., Res. v. Wa State Liquor And Cannabis Board, App. ( 2020 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
THE SPOT ON EVERGREEN III, INC. )
(d/b/a THE SPOT ON EVERGREEN), ) No. 80210-1-I
a limited liability company incorporated )
in Washington, ) DIVISION ONE
)
Respondent, ) UNPUBLISHED OPINION
)
v. )
)
THE WASHINGTON STATE LIQUOR )
AND CANNABIS BOARD, )
)
Appellant. )
)
SMITH, J. — The Washington State Liquor and Cannabis Board (Board)
appeals the superior court’s order reversing the Board’s denial of an application
for a marijuana retail license in Mukilteo submitted by The Spot on Evergreen III
Inc. (Spot). The Board denied Spot’s application because it had allocated the
last license available in Mukilteo to another applicant, Rengar LLC. The Board
contends that contrary to the superior court’s determination, the Board properly
determined that Traxx Indoor Raceway and the Mukilteo YMCA, both located
within 1,000 feet of Rengar’s location, were not restricted entities under the
Board’s regulations. The Board also contends that the superior court erred by
determining that the Board’s decision to allocate the license to Rengar was
arbitrary and capricious.
We agree with the Board. Thus, we reverse the superior court and
No. 80210-1-I/2
reinstate the order of the Board denying Spot’s application for a marijuana retail
license in Mukilteo.
BACKGROUND
In Washington State, only a limited number of marijuana retail licenses are
issued in each jurisdiction. RCW 69.50.345(2). The Board determines the
maximum number of marijuana retail locations per jurisdiction based on
estimated consumption data and population data from the state Office of
Financial Management. RCW 69.50.345(2).
In 2015, the legislature merged Washington’s medical and recreational
marijuana systems and directed the Board to make additional retail licenses
available to address the needs of the medical market. See LAWS OF 2015, ch. 70,
§§ 2, 8. It is undisputed that as a result, the maximum number of marijuana retail
licenses for the city of Mukilteo was increased from one to two.
As part of the 2015 legislation, the Board was directed to “develop a
competitive, merit-based application process” for marijuana retail licensure.
Former RCW 69.50.331(1)(a) (LAWS OF 2015, ch. 70, § 6(1)(a)).1 According to
the declaration of Nicola Reid, the compliance and policy manager for the
Board’s Licensing and Regulation Division (Licensing), “[t]here were usually far
more applicants for the licenses than there were spaces available.” Accordingly,
“the applicants would be competing to see who would be able to secure the
1This licensing scheme was later eliminated after the merger of the two
systems was completed and additional retail outlets licensed. See LAWS OF
2017, ch. 317, § 2; see also FINAL B. REP. ON ENGROSSED SUBSTITUTE S.B. 5131,
65th Leg., Reg. Sess. (Wash. 2017).
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No. 80210-1-I/3
licenses.” Also according to Reid, Licensing would process applications “in the
order that they were able to submit the necessary documentation.” Reid
explained that “[t]his meant that the applicants who were more prepared, and
who could most quickly provide the necessary documentation would be the first
to be allocated a spot in the jurisdiction.” Also according to Reid, “[t]he spot
would be allocated as soon as the applicants made it through to the final step of
the licensing process: the final inspection of the physical location by . . . Board
Enforcement Officers.” Thus, Reid explained, “applicants were . . . trying to be
the first to complete the licensing process up to the final inspection in order to
secure a spot in the jurisdiction.” “If the applicant failed the inspection, they
would lose the allocation and be sent back to the licensing process again.” If that
occurred, it “would allow another applicant to have a chance to secure one of the
allocations.”
Spot applied for a marijuana retail license in 2016 and, in November 2017,
moved its application to Mukilteo. It is undisputed that at that time, Mukilteo had
only one marijuana retail license allotment remaining. It also is undisputed that
Rengar was competing with Spot for that final allotment. In December 2017,
after it became clear that there were more applicants than licenses available for
Mukilteo, Licensing sent Spot a letter asking Spot to indicate whether it wished to
proceed in Mukilteo. Spot did not respond to this letter until February 22, 2018.
On March 5, 2018, Licensing determined that Rengar had completed the
application process. Licensing thus moved Rengar forward to final inspection
and allocated the last remaining marijuana retail license in Mukilteo to Rengar.
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Rengar passed its final inspection on March 13, 2018, and was ultimately
licensed on May 9, 2018.
Meanwhile, Licensing notified Spot that Mukilteo had met its allotment of
retail licenses and offered Spot an opportunity to find another location (other than
Mukilteo) to proceed with its application. After Spot indicated that it wished to
appeal Licensing’s determination, Licensing issued a “Statement of Intent to
Deny Proposed Location in the City of Mukilteo” setting forth its reasons for
seeking denial of Spot’s application.
On April 6, 2018, Spot requested an adjudicative proceeding and a
hearing before an administrative law judge (ALJ). In mid-September, both
Licensing and Spot moved for summary judgment before the ALJ. In Spot’s
motion, Spot argued that Rengar’s proposed site was within 1,000 feet of three
restricted entities: (1) Traxx Indoor Racing (Traxx), which Spot contended was a
“game arcade” under WAC 314-55-010(11); (2) a 13-acre, City-owned property
that the Boys and Girls Club “is developing into use for minors”; and (3) the
Mukilteo YMCA, which Spot contended was a “recreation center” under
WAC 314-55-010(27). Spot argued that because the Board’s regulations
prohibited issuing a license to Rengar due to its proximity to these entities, the
Board would violate its obligation to conduct a “‘comprehensive, fair, and
impartial’” evaluation by denying Spot’s application based on a decision to
allocate the final remaining license in Mukilteo to Rengar. Meanwhile, Licensing
argued that (1) Traxx primarily featured go-karts and thus was not a “game
arcade,” (2) the YMCA was not a “recreation center” because it was not intended
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No. 80210-1-I/5
primarily for use by people under the age of 21, and (3) although the Boys and
Girls Club planned to build facilities on the city’s 13-acre property, they had not
yet been constructed and, thus, the property did not qualify as a restricted entity.
On October 22, 2018, the ALJ entered an initial order in which she
determined that (1) Traxx was not a “game arcade,” (2) the YMCA “is not
intended primarily for use by persons under the age of 21” and instead “is
primarily used by adults taking exercise classes,” and (3) the Boys and Girls Club
ballfield “has not yet been built and wasn’t built at the time [Licensing] moved
Rengar forward for final inspection, nor at the time its license was issued.” The
ALJ granted Licensing’s motion for summary judgment and denied Spot’s motion.
On November 30, 2018, Spot petitioned the Board for review of the ALJ’s
initial order.2 In its petition for review, Spot renewed its arguments about Traxx
but did not rebrief its arguments regarding the YMCA or the future Boys and Girls
Club park. It did, however, raise a new argument about the alleged mobility of
Rengar’s proposed location. Specifically, Spot contended that Rengar’s building
was mobile (and thus not licensable) because it had a trailer hitch and wheels
attached to it. In support of this contention, Spot relied on a March 12, 2018, e-
mail from Jody Boranian, a Spot principal, to a city of Mukilteo planning manager.
In that e-mail, on which licensing investigator Michael Roe was copied, Boranian
2 Under WAC 314-42-095(2)(a), a petition for review with the Board must
be filed within 20 days after the date of service of the initial order. Here, Spot
initially moved for reconsideration of the ALJ’s initial order and the ALJ denied
reconsideration because the relevant statutes and WACs “provide for motions to
reconsider for final orders only.” After realizing its error, Spot filed a petition for
review after the close of the 20-day period, citing exigent circumstances.
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No. 80210-1-I/6
notified the city planning manager that Rengar’s building was a “temporary
mobile structure.” Roe forwarded the e-mail to others in Licensing the same day
and noted, “It looks like the hitch is still hooked up to the modular trailer so I’m
not sure if this was caught prior.” Spot also relied on another March 12, 2018, e-
mail from Mistie Jones, a licensing specialist supervisor, to others in Licensing, in
which Jones wrote:
I just spoke with [Spot] . . . which is not able to proceed since your
application for [Rengar] just went to inspection and took the last
allotment in Mukilteo. [Spot] had several complaints about [Rengar]
but the one that might be an issue is the fact [Spot] states it’s a
mobile building with a trailer hitch hooked up to it, so it can be
hooked up and towed away at any time. I didn’t see any pictures
before it went to inspection so this might be something to look into.
I don’t believe we are moving forward with licensing those types of
buildings any longer because of the fact they can be moved at any
time.
Finally, Spot relied on photographs of Rengar’s building taken on October 27,
2018, by Spot’s attorney, purporting to show a trailer hitch and wheels still
attached to the structure. The March 12, 2018, e-mails and the photographs
were not previously made a part of the record before the ALJ.
In its response to Spot’s petition, Licensing argued, among other things,
that the Board should decline to consider new evidence and arguments that were
not before the ALJ, including Spot’s argument about the mobility of Rengar’s
building. Licensing argued further that even if the trailer hitch argument were
considered, it should be rejected because (1) Licensing did not overlook the hitch
and wheels but instead made a determination that they were not an issue and (2)
the mere presence of a trailer hitch would not, in any event, preclude licensure.
In support of its argument, Licensing submitted a declaration from Frank O’Dell, a
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No. 80210-1-I/7
Board administrative regulations analyst, in which he declared, “I participated in
discussions regarding Rengar, LLC in which it was determined that a trailer hitch
present on the building at the time of the final inspection would not prevent
issuance of a license.” Attached to O’Dell’s declaration was a March 13, 2018, e-
mail in which O’Dell informed Roe that Lauren Ware, the licensing investigator for
the Rengar application, “is aware of the complaint and to date there is no
concern. Lauren will communicate with the E[nforcement] O[fficer] to ensure the
modular building is not mobile (off the tires/track and tongue secured so they
could not just back up and drive away).”
On January 2, 2019, the Board entered a final order affirming and
adopting the ALJ’s initial order. In its final order, the Board also denied Spot’s
license application.
On January 29, 2019, Spot petitioned the superior court for review of the
Board’s final order. The superior court concluded, as relevant here, that Spot
was entitled to relief under RCW 34.05.570(3)(d) because the Board erroneously
interpreted the law:
Per RCW 34.05.570(3)(d), [the Board] erroneously interpreted the
law when it found that a go-kart track, Traxx, does not qualify as a
“game arcade,” as defined in WAC 314-55-010(12).
. . . [The Board] also erroneously interpreted the law when it
found that the Mukilteo YMCA does not qualify as a “recreational
facility” as defined in WAC 314-55-010(35).
The superior court also concluded that Spot was entitled to relief under
RCW 34.05.570(3)(i) because the Board’s order was arbitrary and capricious:
Per RCW 34.05.570(3)(i), [the Board]’s actions were arbitrary and
capricious when it licensed a moveable premise, with wheels and a
trailer hitch, contrary to [Board] policy.
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No. 80210-1-I/8
. . . Per RCW 34.05.570(3)(i), [the Board]’s actions were
arbitrary and capricious when it disregarded the proximity of
Rengar to the proposed location of ballfields that the Boys and Girls
Club had been approved to build.
The superior court granted Spot’s petition for judicial review, reversed the
Board’s final order, and ordered that Spot’s “application is hereby reinstated
with . . . Licensing . . . for processing of [Spot]’s retail marijuana license
application.” The Board appeals.
ANALYSIS
The Washington Administrative Procedure Act (APA), chapter 34.05
RCW, governs this court’s review of the Board’s final order. Top Cat Enters.,
LLC v. City of Arlington, ___ Wn. App. 2d ___, 455 P.3d 225, 229 (2020). “This
court sits in the same position as the superior court, applying the standards of the
APA directly to the record before the agency.” Top Cat, 455 P.3d at 229. “‘The
burden of demonstrating the invalidity of agency action is on the party asserting
invalidity.’” Top Cat, 455 P.3d at 229 (quoting RCW 34.05.570(1)(a)). Although
Spot correctly points out that this court views the facts in the light most favorable
to the nonmoving party when the ALJ’s original decision was on summary
judgment, where, as here, the parties cross-moved for summary judgment, they
conceded that there were no material issues of fact. Pleasant v. Regence
BlueShield, 181 Wn. App. 252, 261, 325 P.3d 237 (2014).
A court may grant relief from an agency order in an adjudicative
proceeding only in certain statutorily enumerated circumstances.
RCW 34.05.570(3). As relevant here, a court may grant relief if it determines that
“[t]he agency has erroneously interpreted or applied the law” or that “[t]he order is
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No. 80210-1-I/9
arbitrary or capricious.” RCW 34.05.570(3)(d), (i). Each of these grounds for
relief is separately discussed below.
Erroneous Interpretation or Application of the Law
“We interpret agency regulations as if they were statutes and review [the
Board]’s legal determinations de novo.” Top Cat, 455 P.3d at 229. “We give
substantial weight, however, to an agency’s interpretation of statutes and
regulations within its area of expertise.” Top Cat, 455 P.3d at 229. “‘Accordingly,
we will uphold an agency’s interpretation of a regulation if it reflects a plausible
construction of the statutory language and is not contrary to the legislature’s
intent and purpose.’” Top Cat, 455 P.3d at 229 (quoting Wash. Cedar & Supply
Co. v. Dep’t of Labor & Indus., 137 Wn. App. 592, 598, 154 P.3d 287 (2007)).
That said, “‘[i]f a regulation is unambiguous, . . . we will not look beyond the plain
meaning of the words in the regulation.’” Top Cat, 455 P.3d at 229 (quoting
Mader v. Health Care Auth., 149 Wn.2d 458, 473, 70 P.3d 931 (2003)).
“Regulatory definitions apply[,] and any undefined terms are given their ordinary
definition as defined in the dictionary.” Dep’t of Labor & Indus. v. Tyson Foods,
Inc., 143 Wn. App. 576, 582, 178 P.3d 1070 (2008). An agency’s application of
law to facts is a question of law reviewed de novo. Yow v. Dep’t of Health
Unlicensed Practice Program, 147 Wn. App. 807, 818, 199 P.3d 417 (2008).
Here, the Board contends that it did not erroneously interpret or apply the
law in determining that (1) Traxx is not a “game arcade” and (2) the Mukilteo
YMCA is not a “recreation center or facility.” For the reasons discussed below,
we agree.
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Traxx
The Board may not issue a new marijuana license to a business situated
within 1,000 feet of “[a]ny game arcade (where admission is not restricted to
persons age twenty-one or older).” WAC 314-55-050(10)(h).3 Here, it is
undisputed that Rengar’s proposed location was within 1,000 feet of Traxx and
that admission to Traxx was not restricted to persons 21 years of age or older.
Accordingly, the only question before us is whether the Board erred by
determining that Traxx was not a “game arcade.”
The Board’s regulations define “game arcade” as “an entertainment venue
featuring primarily video games, simulators, and/or other amusement devices
where persons under twenty-one years of age are not restricted.” WAC 314-55-
010(12).4 Spot does not dispute that Traxx features primarily go-karts, but it
contends that go-karts are either “simulators” or “amusement devices.” We
disagree.
The regulations do not define “simulators.” However, the parties are in
agreement that the dictionary definition of “simulator” is “a device that enables
the operator to reproduce or represent under test conditions phenomena likely to
occur in actual performance.” MERRIAM W EBSTER, https://merriam-
webster.com/dictionary/simulator (last visited March 23, 2020). To this end, the
Board contends that a go-kart is not a “simulator” because “[r]acing a go-kart is
3 WAC 314-55-050(10) was amended in 2018 to add exceptions that are
not relevant to this appeal. Accordingly, we cite to the current version of that
regulation, and its subsections, throughout this opinion.
4 The definition of “game arcade” was renumbered, without amendment, in
2016 and again in 2018. We cite to the current version.
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No. 80210-1-I/11
not a representation or reproduction of any kind of performance or condition – it
is racing a go-kart.” Meanwhile, Spot contends that the Board’s argument that a
go-kart is not a simulator is “absurd” because “[a] go-kart literally simulates the
activity of driving.” But driving a go-kart is just that: driving a go-kart. Even
though a go-kart is typically driven on a closed course, driving a go-kart does not
simulate driving a car any more than racing NASCAR5 does. Therefore, we
conclude that applying the plain meaning of “simulator,” a go-kart is not a
simulator.
Turning next to whether a go-kart is an “amusement device,” the dictionary
does not provide a definition for the phrase “amusement device.” Thus, it is
unclear from the plain language of WAC 314-55-010(12) whether a go-kart is an
“amusement device.” Accordingly, we will uphold the Board’s interpretation so
long as it constitutes a plausible construction of the regulation and is not contrary
to the legislature’s intent and purpose. See Bayley Constr. v. Dep’t of Labor &
Indus., 10 Wn. App. 2d 768, 793-94, 450 P.3d 647 (2019) (“[W]e accord
substantial weight to an agency’s interpretation within its area of expertise and
uphold that interpretation if it reflects a plausible construction of the regulation
and is not contrary to legislative intent.”), review denied, No. 97867-1 (Wash.
Mar. 4, 2020).
To this end, the Board points out that under the maxim of ejusdem
generis, “general words accompanied by specific words are construed to
embrace only similar objects.” State v. Van Woerden, 93 Wn. App. 110, 117,
5 National Association for Stock Car Auto Racing.
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No. 80210-1-I/12
967 P.2d 14 (1998). Thus, the Board argues, the phrase “other amusement
devices” in WAC 314-55-010(12) must be read to embrace only objects similar to
video games and simulators. The Board contends further that unlike “something
like a pinball machine that may be found in a game arcade,” a go-kart is not
similar to a video game or a simulator and, thus, is not an “amusement device”
within the meaning of WAC 314-55-10(12).
The Board’s reading of “other amusement devices” is a plausible one. As
the Board points out, unlike other devices that one would normally expect to
encounter in an arcade, a go-kart is not similar to a video game or a simulator.
Furthermore, Spot does not point to any statute or other expression of legislative
intent with which the Board’s interpretation would conflict. Cf. Dep’t of Labor &
Indus. v. Granger, 159 Wn.2d 752, 764-65, 153 P.3d 839 (2007) (declining to
defer to agency where agency’s construction could not be reconciled with
statutory mandate that industrial insurance act be liberally construed). Therefore,
we conclude that a go-kart is not an “amusement device.”
Spot disagrees and contends that a go-kart is plainly an “amusement
device” because it is “a device designed for the sole purpose of entertainment.”
But WAC 314-55-010(12) does not refer to “amusement devices” generically;
rather, it defines “game arcade” in terms of “video games, simulators, and/or
other amusement devices.” (Emphasis added.) And as the Board points out,
“[u]nder Spot’s interpretation, the amusement device tail would wag the game
arcade dog” such that the term “amusement device” would render the terms
“video games” and “simulators” superfluous. Therefore, Spot’s argument is
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unpersuasive.
Spot next points out that Traxx features some video games. Spot then
relies on the regulation’s use of “and/or” before the phrase “other amusement
devices” to argue that “a location can be a game arcade if it has video games or
simulators or other amusement devices.” But Spot’s argument ignores the
regulation’s use of the word “primarily”: “‘Game arcade’ means an entertainment
venue featuring primarily video games, simulators, and/or other amusement
devices.” WAC 314-55-010(12). Therefore, Spot’s argument fails.
Spot also points to the definition of “amusement device” adopted by the
city of Mukilteo to support its interpretation of that phrase. But Spot offers no
authority for the proposition that a municipal code is relevant to this court’s
interpretation of a state agency’s regulation. Thus, Spot’s reliance on Mukilteo’s
municipal code is misplaced.
Finally, Spot asserts that the Board’s interpretation of the term “game
arcade” is in conflict with “the Washington legislature’s intent to protect the
state’s youth.” Spot relies on State v. Jimenez, 200 Wn. App. 48, 401 P.3d 313(2017), in support of its assertion. But the Jimenez court was not interpreting a
marijuana licensing statute; it was interpreting a statute criminalizing the
possession of marijuana by minors. Jimenez, 200 Wn. App. at 51. Therefore,
Jimenez is inapposite here. Spot also relies on legislative findings that appear in
an official note following RCW 69.50.325 and, in particular, a sentence stating,
“[T]he legislature finds that the state has a substantial and compelling interest in
enacting this act aimed at protecting Washington’s children, youth, and young
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adults.” See LAWS OF 2017, ch. 317, § 12. But those findings accompanied 2017
amendments that did not change the statutes defining restricted entities and
establishing minimum distances therefrom. See LAWS OF 2017, ch. 317, § 2.
Thus, the 2017 legislative findings are not persuasive. See Brenner v. Leake, 46
Wn. App. 852, 854, 732 P.2d 1031 (1987) (“The function of the court in
construing legislation is to ascertain legislative intent at the time of enactment of
the statute.” (emphasis added)).
We conclude that a go-kart is neither a “simulator” nor an “amusement
device” within the meaning of WAC 314-55-010(12) and, thus, the Board did not
erroneously interpret or apply the law in determining that Traxx, which primarily
features go-karts, is not a “game arcade.”
YMCA
The Board’s regulations also prohibit the Board from issuing a new
marijuana license if the proposed licensed business is within 1,000 feet of a
“[r]ecreation center or facility.” WAC 314-55-050(10)(c). Here, it is undisputed
that Rengar’s proposed location was within 1,000 feet of the Mukilteo YMCA,
which Spot argues is a recreation center within the meaning of the regulations.
We disagree.
As an initial matter, the Board contends that because Spot raised the
YMCA issue before the ALJ but did not rebrief it in its petition for review to the
Board, Spot failed to exhaust its administrative remedies with regard to the
YMCA. Because a petition for review to the Board must “[s]pecify the portions of
the initial order to which exception is taken,” WAC 314-42-095(2)(a)(i), and
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“[i]ssues not raised before the agency may not be raised on appeal,”
RCW 34.05.554, this argument has some merit. But unlike other agencies
whose regulations provide that issues not specifically raised in a petition are
waived,6 the Board’s regulations do not so provide. Furthermore, Spot fully
raised and argued the YMCA issue before the ALJ, and the Board cites no
authority to support its apparent contention that this did not constitute raising the
issue “before the agency” as contemplated by RCW 34.05.554. Cf. ZDI Gaming,
Inc. v. Wash. State Gambling Comm’n, 151 Wn. App. 788, 811, 214 P.3d 938(2009) (declining to review issue that neither the ALJ nor the agency considered
and that was raised for the first time on judicial review), aff’d, 173 Wn.2d 608,
268 P.3d 929 (2012). Finally, South Hollywood Hills Citizens Ass’n v. King
County, 101 Wn.2d 68, 677 P.2d 114 (1984), the case on which the Board chiefly
relies to argue that Spot waived its YMCA argument, is distinguishable. There,
the party challenging the county’s action failed entirely to appeal a hearing
examiner’s initial recommendation. See S. Hollywood Hills Citizens Ass’n, 101
Wn.2d at 72. But here, Spot did seek the Board’s review of the ALJ’s initial
order, even if Spot did not rebrief all issues. For these reasons, we reject the
Board’s exhaustion argument and reach the merits of the YMCA issue.
Turning to the merits of that issue, a recreation center is, as relevant here,
6 See, e.g., WAC 263-12-145(4) (providing, with regard to Board of
Industrial Insurance Appeals, that “[a] party filing a petition for review waives all
objections or irregularities not specifically set forth therein”); WAC 139-03-075
(providing, with regard to the Criminal Justice Training Commission, that “[a]
petition for review shall set forth in detail the grounds for review and the party
filing the petition shall be deemed to have waived all objections or claims of
irregularities not specifically set forth therein.”).
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“a supervised center that provides a broad range of activities and events
intended primarily for use by persons under twenty-one years of age, owned
and/or managed by a charitable nonprofit organization.” WAC 314-55-010(35).7
Under the plain language of this regulation, a facility is not a recreation center
unless it is “intended primarily for use by persons under twenty-one years of
age.”
Here, the undisputed facts presented to the ALJ were that although the
YMCA offered some activities and events for children, the facility itself was not
intended primarily for use by people under 21 years of age. Instead, it was open
to all and, indeed, most of its activities focused either in part or entirely on adults.
Accordingly, the Board, which adopted the ALJ’s determination on this issue, did
not err by concluding as a matter of law that the YMCA was not a “recreation
center or facility.”
Spot disagrees and contends that under WAC 314-55-010(35), “the
location itself need not be primarily for those under twenty-one, but rather that it
offers a broad range of activities primarily for youths, regardless of the other
activities it offers.” Put another way, Spot contends that in WAC 314-55-010(35),
the phrase “intended primarily for use by persons under twenty-one years of age”
modifies “activities and events” rather than “center.” Thus, Spot contends, so
long as a center offers a broad range of activities and events for children, it is a
“recreation center” regardless whether the facility itself is intended primarily for
7
This definition was renumbered in 2016 and amended in 2018. Because
these amendments do not affect the issues in this appeal, we cite to the current
version of the regulation.
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No. 80210-1-I/17
children. Spot’s contention fails for two reasons.
First, Spot ignores the word “use” in WAC 314-55-010(35). Because one
does not “use” an activity or event but does “use” a center, it is clear that the
phrase “intended primarily for use by persons under twenty-one years of age”
modifies “center” and not “activities and events.” In re Forfeiture of One 1970
Chevrolet Chevelle, 166 Wn.2d 834, 838-39, 215 P.3d 166 (2009) (court applies
ordinary meaning of words, basic rules of grammar, and statutory context to
discern plain meaning).
Second, Spot’s contention makes the regulation, at most, ambiguous.
And to the extent that the regulation is ambiguous, we defer to the Board’s
interpretation so long as it is plausible and not in conflict with legislative intent.
To that end, the Board’s interpretation of the phrase “intended primarily for
use by persons under twenty-one years of age” as modifying “center,” and thus
referring to the YMCA itself, is plausible. Furthermore, Spot’s arguments that the
Board’s interpretation is in conflict with legislative intent rely again on Jimenez
and the legislature’s 2017 findings, which, as already discussed, are not
persuasive here. Therefore, Spot’s contention fails, and we conclude that the
Board did not err when it concluded that the Mukilteo YMCA is not a “recreation
center or facility.”
Arbitrary or Capricious Order
Turning next to the parties’ arguments regarding whether the Board’s
order was arbitrary or capricious, “[a]n agency’s decision is arbitrary and
capricious only if it ‘is willful and unreasoning and taken without regard to the
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No. 80210-1-I/18
attending facts or circumstances.’” ZDI Gaming, 151 Wn. App. at 806 (internal
quotation marks omitted) (quoting Wash. Indep. Tel. Ass’n v. Wash. Utils. &
Transp. Comm’n, 149 Wn.2d 17, 26, 65 P.3d 319 (2003)). “The arbitrary and
capricious standard is very narrow and, as with other challenges to agency
action, the party asserting it bears a heavy burden.” ZDI Gaming, 151 Wn. App.
at 806. “‘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.’” Linville v. Dep’t of Ret. Sys., 11 Wn. App. 2d 316,
327, 452 P.3d 1269 (2019) (quoting Pub. Util. Dist. No. 2 of Pac. County v.
Comcast of Wash. IV, Inc., 184 Wn. App. 24, 45, 336 P.3d 65 (2014)).
Here, the Board argues that it did not act arbitrarily or capriciously with
regard to its consideration of the future Boys and Girls Club park and the alleged
mobility of Rengar’s location. As further discussed below, we agree.
Boys and Girls Club Park
Spot argued below, and the superior court agreed, that the Board acted
arbitrarily and capriciously by disregarding Rengar’s proximity to a 13-acre, city-
owned property (Future Park Property) on which the Boys and Girls Club planned
to build a park. We conclude that the superior court erred in this regard.
As an initial matter, the Board argues that Spot failed to exhaust its
administrative remedies with regard to the park argument by failing to rebrief it in
its petition for review to the Board. But the park argument was fully considered
by the ALJ, and thus, we reject the Board’s exhaustion argument for the reasons
discussed above in the context of Spot’s YMCA argument.
18
No. 80210-1-I/19
Turning to the merits of the park argument, under WAC 314-55-050(10),
the Board generally may not issue a license to a business within 1,000 feet of a
public park. “‘Public park’ means an area of land for the enjoyment of the public,
having facilities for rest and/or recreation, such as a baseball diamond or
basketball court, owned and/or managed by a city, county, state, federal
government, or metropolitan park district.” WAC 314-55-010(33) (emphasis
added).8
Here, although the record establishes that the Boys and Girls Club
planned to build a park, including recreation facilities, on the Future Park
Property, the record also indicates that completion was not anticipated until 2019.
Indeed, even the superior court found only that “[t]he Boys and Girls Club has
agreed with the City of Mukilteo to construct playfields within 1000 feet of
Rengar’s premise.” (Emphasis added.) Reasonable minds can, at the very
least, differ about whether a yet-to-be-completed park is a “public park.”
Furthermore, this issue was argued before the ALJ and addressed in detail in the
ALJ’s initial order, later adopted by the Board. Thus, Spot does not satisfy its
burden to show that the Board acted arbitrarily or capriciously in affirming the
ALJ in this regard. See Karanjah v. Dep’t of Soc. & Health Servs., 199 Wn. App.
903, 925, 401 P.3d 381 (2017) (“‘Action taken after giving . . . ample opportunity
to be heard, exercised honestly and upon due consideration, even though it may
be believed an erroneous decision has been reached, is not arbitrary or
The definition of “public park” was renumbered, without amendment, in
8
2016 and again in 2018. We cite to the current version.
19
No. 80210-1-I/20
capricious.’” (internal quotation marks omitted) (quoting Heinmiller v. Dep’t of
Health, 127 Wn.2d 595, 609-10, 903 P.2d 433, 909 P.2d 1294 (1995))).
Spot contends that the Board acted arbitrarily and capriciously because it
ignored evidence that the park was already in existence at the time that it
processed Rengar’s license. In support of this contention, Spot points to the
Board’s “Report of Application” for Rengar, to which was attached aerial images
showing an existing ballfield and track. But those existing facilities are not
situated on the Future Park Property; they are on a different property. 9 And Spot
points to no evidence that the property on which the existing facilities are situated
is within 1,000 feet of Rengar’s location. Therefore, Spot’s contention fails.
Mobility of Rengar’s Proposed Location
Spot also argued below, and the superior court again agreed, that the
Board acted arbitrarily and capriciously when it “licensed a moveable premise,
with wheels and a trailer hitch, contrary to [Board] policy.” This, too, was error.
As an initial matter, the Board points out that Spot did not raise the
mobility argument before the ALJ and instead raised it for the first time before the
Board. But the Board does not argue that Spot’s failure to raise the issue before
the ALJ precludes this court’s review, and thus, we reach the merits of the
mobility argument. Cf. Holland v. City of Tacoma, 90 Wn. App. 533, 538, 954
P.2d 290 (1998) (“Passing treatment of an issue or lack of reasoned argument is
insufficient to merit judicial consideration.”).
9This is readily apparent if one compares page 324 of the administrative
record, depicting the Future Park Property, with page 391 of the administrative
record, depicting the existing facilities.
20
No. 80210-1-I/21
Spot’s argument is, in essence, that (1) the Board had an established
policy of not licensing mobile locations, as demonstrated by Licensing’s internal
e-mails; and (2) the Board acted arbitrarily and capriciously when it—and
specifically Licensing—disregarded that policy with regard to Rengar. But even
assuming that the internal e-mails were enough to establish that a policy existed,
there was evidence before the Board that Licensing in fact did not disregard that
policy. Specifically, the very e-mails on which Spot relies, as well as O’Dell’s
later declaration, reveal that Licensing was aware of Spot’s complaints about
Rengar’s building. They also reveal that Licensing discussed the complaint
internally; that Licensing did not consider a facility “mobile” so long as someone
could not “just back up and drive away”; and that Licensing made a
determination, based on the facts and circumstances—including a final
inspection—that Rengar’s facility was not mobile and could be licensed.
Furthermore, the record indicates that the Board, which listed the e-mails and
O’Dell’s declaration among the items it considered, gave due consideration to the
mobility argument. And reasonable minds can differ as to whether a modular
building is “mobile,” such that someone can “just back up and drive [it] away,”
merely because it has a hitch and wheels on it. For these reasons, the Board’s
determination was not arbitrary or capricious.
Spot disagrees and asserts that Licensing could not have taken the trailer
hitch and wheels into account because, as of March 12, 2018, Licensing was not
even aware of the issue. In support of this assertion, Spot relies on Jones’s
March 12, 2018, e-mail, in which she wrote, “I didn’t see any pictures before it
21
No. 80210-1-I/22
went to inspection.” But the fact that Jones herself was not aware of the mobility
issue does not demonstrate that Licensing as a whole was unaware, and in any
event, Spot does not dispute that the issue was brought to light just before
Rengar’s final inspection. Therefore, Spot’s reliance on Jones’s e-mail is
misplaced.
Spot next asserts that its attorney’s October 2018 photos showing
Rengar’s building with a trailer hitch and wheels attached to it demonstrate that
the building was mobile. But as discussed, reasonable minds can differ as to
whether the presence of a hitch and wheels renders a modular building mobile so
as to preclude licensure—particularly where, as here, Spot points to no statute or
regulation precluding licensure of modular buildings. Thus, the photos do not
demonstrate that the Board’s final order was arbitrary or capricious.
We reverse the superior court and reinstate the order of the Board
denying Spot’s application for a marijuana retailer license in Mukilteo.
WE CONCUR:
22