Conflicts of Interest: Court Decisions and AG Opinions

What Constitutes a Contract Interest?

• In re Recall of Olsen, 154 Wn.2d 606 (2005) – A commissioner of a port district cast the deciding vote to have the port retain counsel to represent the commissioners in existing and future Open Public Meetings Act litigation and to indemnify them against claims or judgments in those lawsuits. The Washington Supreme Court found that a decision by the governing body of a municipal corporation to indemnify a member thereof for an obligation arising from a claim, suit, or proceeding brought against the member does not involve a “contract” within the meaning of RCW 42.23.030. Moreover, the court also found that the commissioner had no “beneficial interest” in violation of RCW 42.23.030 in the contract between the port district and the attorney hired to represent the commissioners.
• Citizens for Des Moines, Inc. v. Peterson, 125 Wn. App. 760 (2005), review denied, 157 Wn.2d 1014 (2006) – Division One of the Washington Court of Appeals held that a city councilmember who was the president and majority shareholder in a local towing company that city police and other city staff preferred to use when vehicles needed to be towed from city property did not violate the conflict of interest prohibition in RCW 42.23.030. The court held that the city had no express or implied contract with the councilmember's towing firm and had no written policies regarding towing requests, and thus there was no contractual interest to implicate the statutory prohibition.
• Barry v. Johns, 82 Wn. App. 865 (1996) – A city councilmember challenged the validity of a contract entered into by the city with a nonprofit organization that limits the liability of the organization's board members for discretionary decisions made in their official capacity. The plaintiff councilmember contended that the limitation of liability gives those board members a beneficial interest in the contract. Two city councilmembers were board members. Division One of the Washington Court of Appeals held that the beneficial interest in contracts prohibited by RCW 42.23.030 is limited to financial interests. The contract at issue did not confer a financial benefit on the nonprofit organization's board members because state law provides them with the same benefit. Thus, the court concluded that the contract was not invalid under RCW 42.23.030.
• AGO 1996 No. 15 – RCW 42.23.030 does not prohibit the service of one spouse as a county commissioner (and ex officio local health board member) while the other spouse serves as administrative officer of the health department because these positions are both public offices and the compensation for them does not arise out of contract.
• AGLO 1973 No. 6 – RCW 42.23.030 does not prohibit a school district from awarding a contract to a company that employs one of the members of the school board so long as that board member does not himself benefit financially from the contract. Simply put, RCW 42.23.030 only prohibits "beneficial interests" of a pecuniary or financial nature.

When is a Contract “Made by, Through or Under the Supervision” of a Municipal Officer?

•  City of Raymond v. Runyon, 93 Wn. App. 127 (1998), review denied, 137 Wn.2d 1030 (1999) – A city commissioner of public works owned a local rock quarry and sold rock to contractors holding city contracts that were supervised by the commissioner’s public works department. Division Two of the Washington Court of Appeals held that this behavior violated RCW 42.23.030 because the commissioner was ultimately responsible for supervising such contracts. The court noted that the commissioner’s good faith efforts to comply with the statute were no defense and, pursuant to RCW 42.23.050, found the offending contracts to be void and upheld a fine on the commissioner. However, the court found that the commissioner did not forfeit his public office because, as the case was pending, the citizens of the commissioner’s city voted to replace the commission form of government with a mayor-council form of government. Therefore, the court reasoned that there was no public office left to forfeit despite the fact that the commissioner was subsequently elected as a councilmember of the newly formed government.
• Seattle v. State, 100 Wn.2d 232 (1983) – The Washington Supreme Court held that Seattle’s system of public financing of elections did not violate RCW 42.23.030. The court reasoned that RCW 42.23.030 is “directed at self-dealing where a public official would otherwise have the discretion to use his public office to favor his private interests over the interests of others.” In contrast, the court found that the Seattle ordinance is “administered by an independent election administrator who performs the ministerial role of executing contracts with candidates based on purely objective criteria.” Therefore, there was no self-dealing in violation of RCW 42.23.030 because the contract was made under the supervision of the independent election administrator and not by any municipal officer benefiting from the contract providing public financing for election campaigning. The court emphasized that RCW 42.23.030 deals with the "making" of a contract.
• AGO 1978 No. 17 – Except under certain special circumstances in which the normal relationship between a board of county commissioners and a county housing authority is modified, as discussed in the opinion, the sale of real property by a county commissioner to a county housing authority within the same county does not violate RCW 42.23.030 because the contract was not made by, through, or under the supervision of the board of county commissioners.
• AGO 1972 No. 47 – RCW 42.23.030 does not prohibit the spouse of a chief deputy sheriff from being employed as a deputy sheriff in the same county because the sole authority to appoint any deputy sheriffs for a given county is vested in the sheriff himself and not in any of his deputies. In other words, RCW 42.23.030 does not apply because there would be no contract made by, through, or under the chief deputy sheriff’s supervision.
• AGLO 1970 No. 89 – The marriage of a county commissioner to a secretary of one of the other elected officials of the county does not pose a conflict of interest as a result of the secretary's current continuing employment. RCW 42.23.030 does not declare illegal or void any contract that preexisted the appointment or election of the officer to his position of conflict, nor any contract in which an officer acquires an interest in good faith in the contract after it has been made.

Special Privileges or Exemptions

• AGO 2019 No. 6 (2019) – Nothing in the Washington Constitution, statutes, or case law precludes sitting county commissioners or councilmembers from being eligible for appointment to vacant state legislative positions (though ethical restrictions would prohibit councilmembers from deliberating or voting in an appointment process in which they were a nominee).
• AGO 2010 No. 3 – For the purposes of RCW 42.23.070(1), a special privilege involves being allowed to do something that would otherwise be prohibited, and a special exemption involves being relieved from doing something that would be otherwise mandated.
• In re Recall of Feetham, 149 Wn.2d 860 (2003) – The Washington Supreme Court held that a prima facie violation of RCW 42.23.070(1) is legally sufficient to support the removal of an elected official from office through a recall election. The court found prima facie violations of RCW 42.23.070(1) where the mayor directed the town building inspector not to enforce the building code, and removed the permit file regarding the mayor’s own property, and directed town employees not to report the missing file.
• Hubbard v. Spokane County, 146 Wn.2d 699 (2002) (overruled on other grounds by Rose v. Anderson Hay & Grain Co., 184 Wash. 2d 268 (2015). The 2015 decision did not affect the “special privileges” decision summarized here) – A longtime county planner was fired because he argued with his new boss that the grant of a building permit for a new hotel violated the county’s zoning and building codes. The County argued that decisions made in the course of planning are not "special privileges" under RCW 42.23.070(1). The Washington Supreme Court said that:

As the Court of Appeals noted, many zoning and development decisions will favor one party over another. However, when a decision is made in favor of one party and that decision violates the zoning code, it is appropriate to consider the decision a special privilege because the favored party could not have received the benefit of the decision without a violation of the law.

• Smith v. Centralia, 55 Wash. 573 (1909) – Washington Supreme Court held invalid a street vacation ordinance for the reason, among others, that councilmember who stood to benefit financially from its enactment cast the deciding vote on the passage of the ordinance. In essence, this case represents the common law precursor to RCW 42.23.070(1).

Confidential Information 

• AGO 2017 No. 5 - RCW 42.23.070(4) contains two prohibitions: a municipal officer could violate RCW 42.23.070(4) either by disclosing “confidential information” or by otherwise using “confidential information” for personal gain without disclosing it. The term “confidential information” for the purposes of RCW 42.23.070(4) means: “(a) specific information, rather than generalized knowledge, that is not available to the general public on request or (b) Information made confidential by law.”