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Avoiding Traps in Making or Accepting an Offer of Compromise in a Condemnation Case

The procedure for initiating and prosecuting a condemnation is set forth in Chapter 35 of the Oregon Revised Statutes. Once the condemnation lawsuit is filed, the Oregon Rules of Civil Procedure ("ORCP") typically control. However, there are potential traps lurking in the gray areas where the condemnation statute and the ORCPs converge. A condemning authority and property owner fell into such a trap in Washington County v. Querbach, 275 Or App 897 (2015).

The County set the trap (for itself) when, pursuant to ORS 35.300(1), it served an unsigned offer of compromise on the property owner. Relying on the procedure for serving an offer of compromise under ORCP 54E and ORCP 9D, the County did not file the offer of compromise with the court. The property owner expressly rejected the offer – raising no objection to the fact that the County’s offer was unsigned and unfiled. The case proceeded to trial.

A little background is necessary to understand the trap. A property owner is entitled to recover his or her attorney fees and costs if a jury awards just compensation in excess of the highest written offer made by the condemner prior to filing the lawsuit. ORS 35.300(1) allows the condemner to limit a property owner’s right to recover fees and cost by serving an offer of compromise on the property owner. The property owner then has three days to consider the offer. On the third day the property owner must both sign and file acceptance of the offer with the court or the offer is deemed rejected and withdrawn. If the just compensation awarded at trial is more than the highest pre-litigation offer, but less than the amount offered in the offer of compromise, then the property owner’s right to recover attorney fees and costs is severed as of the date the offer was served. The condemner’s right to make an offer of compromise expires ten days before trial. This is an important tool employed to great effect by condemning authorities.

In Querbach, the jury awarded the property owner more than the highest pre-litigation offer, but less than the offer of compromise. After trial, the County filed the offer of compromise with the trial court and argued that the property owner was not entitled to attorney fees or costs incurred after the date the offer of compromise was served.

In a bold move, the property owner sought to strike the offer of compromise from the record, arguing that because the offer was unsigned and had not been contemporaneously filed with the trial court, it was invalid. The trap was sprung! The property owner contended that ORCP 17 required the County to sign the offer and that ORCP 9 required it to be filed. Thus, he argued, the offer of compromise was a nullity and he was therefore entitled to all of his attorney fees and costs despite his failure to beat the offer.

In a confusing set of rulings, the trial court agreed with the County that the offer of compromise was valid (ordering the County to sign and file the offer with the court), but still awarded the property owner fees and costs incurred after the date the offer of compromise was served. Both sides appealed.

The Court of Appeals ruled in the County’s favor – allowing it to escape from its trap. The Court held that an unsigned and unfiled offer of compromise was valid because the special procedure set forth in ORS 35.300(1) trumps the Oregon Rules of Civil Procedure. It found that ORS 35.300(1) contains no requirement that the condemner sign or file an offer of compromise. Rather, ORS 35.300(1) requires the property owner to sign and file an acceptance of the offer with the court. Thus, ORS 35.300(1) set forth a procedure for making and accepting an offer of compromise and that procedure did not require the condemner to sign or file its offer. The Court of Appeals ruled that the special procedure set forth in Chapter 35 trumps any otherwise applicable rules of civil procedure – in this case ORCP 9 and 17. The Court also found that ORCP 17 would not apply to the offer of compromise. The Court of Appeals remanded the case to the trial court to adjust the award of attorney fees accordingly. Thus, the County escaped the trap, but only after a trip to the Court of Appeals.

This case raises the specter of similar traps in ORS Chapter 35. Such a trap is found in ORS 35.300(1), which gives the property owner only three days to file an acceptance of an offer of compromise. There are two alternative methods of calculating deadlines – ORCP 10 and ORS 174.120. ORCP 10 provides the method for calculating time for deadlines set forth in rules of civil procedure, local rules or court orders. If a deadline to respond is less than seven days, weekends and holidays are not counted. Moreover, if the item requiring response is served by mail, then three days are added to the time to respond. ORS 174.120 provides “[e]xcept as otherwise provided in ORCP 10, the time within which an act is to be done, also provided in the civil and criminal procedure statutes, is computed by excluding the first day and including the last day unless the last day falls upon a legal holiday or on a Saturday, in which case the last day is also excluded.” The calculation of time under ORCP 10 and ORS 174.120 is not the same. For example, under ORCP 10, the deadline to respond to an offer of compromise served by mail on a Thursday would be the following Friday (after skipping the weekend and adding three days for service by mail). Under ORS 174.120, an offer of compromise served by mail on Thursday would be due the following Monday (perhaps the same day it arrives in the mail). It is not completely clear which method of calculating time applies – although I suspect, based on Querbach, that it would be ORS 174.120. Thus, a trap is set for the property owner every time an offer of compromise is made. Personally, I seek agreement from the condemning agency on the deadline each time I receive an offer of compromise and freely extend the deadline when I represent the condemner.

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