Arlington still dealing with litigation from the 1990s

ARLINGTON — The city thought the issue was settled two decades ago.

A legal entanglement that started in the mid-1990s over flood damage is back in court.

The state Court of Appeals recently ruled that a company can pursue claims for damage on a property it owned near the Gleneagle subdivision.

A limited liability company that once operated a steel manufacturing plant in Arlington is seeking damages from the city and the developers involved in the Gleneagle subdivision.

The company, Holden-McDaniel Partners, alleges that the city and developers designed and operated a stormwater management system at Gleneagle that caused runoff and flooding as far back as 1990 and as recently as 2009.

It echoes claims from 1995, when Holden-McDaniel first sought damages for flooding related to the stormwater system. Those claims became part of a lawsuit later that year.

When the company filed its original damage claims, it also filed a separate lawsuit against the city over an alleged delay in permitting for a new manufacturing building. At the time, Holden-McDaniel ran HCI Steel Products, Inc., which shuttered in 2012.

In 1998, the parties settled for $750,000 and Holden-McDaniel agreed to drop its claims.

The city thought it was over until 2011, when Holden-McDaniel again asserted that the city was liable for flooding on its property near Gleneagle.

“When this lawsuit was first served, I think those of us who had been around long enough to remember the first lawsuit were surprised,” said Steven Peiffle, the city’s attorney. “We thought it had been taken care of.”

In 2015, a trial court dismissed Holden-McDaniel’s most recent claims. The court cited the 1998 settlement. The company appealed.

The 2011 suit was in response to flooding that happened after the 1998 settlement, said David Bricklin, attorney for Holden-McDaniel.

“The property owners were tired of having their operations interrupted,” he said.

They have since sold the property, he said.

The worst of the flooding was in 2009, a year when unusually high snowfall, followed by a cold snap and then rain, led to flooding around Western Washington. Peiffle argues that flooding on the Holden-McDaniel property was primarily due to the weather, but Bricklin says it was poor stormwater management.

“I think it’s a case that demonstrates the problems that arise when we don’t have good regulations for new development,” Bricklin said. “And we allow folks to clear hillsides and reroute stormwater and not think through what it’s going to mean to downstream property owners.”

In a 22-page opinion filed earlier this month, the state Court of Appeals reversed the lower court’s decision to dismiss Holden-McDaniel’s claims.

There was discussion about the language of the settlement and whether papers were fastened together. The city said the permitting lawsuit and the original damage claim from Holden-McDaniel were attached when they were delivered in 1995; the company said they weren’t. The judge decided it didn’t make a difference and ruled that the flooding claims were not part of the permitting lawsuit, but were rather a separate issue.

The city insisted that the 1998 settlement applied to both the permitting and stormwater suits. Holden-McDaniel argued that the agreement specified the permitting suit, not the stormwater claims, and that the company still could sue over future flooding. The appeals court agreed.

Peiffle, the city’s attorney, now plans to bring arguments that were not considered when the court dismissed the claims in 2015. That includes debate about what actually caused the property damage and whether Holden-McDaniel waited too long to take its case to court.

The case raises questions about how long cities should be wary of decades-old disputes, Peiffle said.

The city doesn’t plan to take an appeal to the next level, which would be the state Supreme Court, he said. If no other parties appeal, the case likely will return to Snohomish County Superior Court for further litigation.

Kari Bray: 425-339-3439;

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