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800px-Scappoose_Industrial_Airpark_OregonScappoose, Oregon, located right off Highway 30, has only 6,800 residents. Its motto is “A place to grow.” This expected growth was the subject of a recent court of appeals case, Zimmerman v LCDC, 274 Or App 512 (2015). In 2011, the city enacted an ordinance amending its comprehensive plan, hoping to add more land to its UGB designating much of it for industrial and commercial uses, particularly for airport employment uses. To expand a UGB pursuant a Goal 14, a local government must establish that land is needed to further future economic opportunities; determining such need requires compliance with Goal 9 and implementing administrative rules. In order to justify such expansion, a local government must compare the demand for industrial and employment lands against the existing supply, through a review of the “best available” information considering national, regional or local trends, site characteristics of expected uses and development potential. OAR 660-009-0015.

Public meetingFor those practicing in the land use field, there is always a concern about how decisions get made and, in particular, what communication occurs behind closed doors.  The Oregon Public Meetings Law is clear that all decisions must be made in a public meeting, but public officials may sometimes meet in groups of less than a quorum to discuss their perspectives.  The Court of Appeals issued a decision last month that will require local governments to reconsider such conversations.

Shopping center exterior 27455 Incorporated v. Tuala Northwest, LLC, 2015 WL 7009180 (Or. Ct. App. 2015)

On an issue of first impression in Oregon, the Court of Appeals recently decided that a tenant lacks standing to bring a lawsuit to establish a prescriptive easement. The tenant in this case operated a business under the name “Jiggles” in Tualatin. The neighboring property was a shopping center featuring a K-Mart store that was owned or managed by the defendants. The suit was brought after the defendants blocked access to plaintiff’s establishment from the neighboring shopping center by installing a fence and locked gate.

For the past nine years, Thornburgh Resort Company, LLC and its successor Loyal Land, LLC have attempted to site a destination resort on 2,000 acres in Deschutes County. Ms. Annunziata Gould has continually challenged this effort. The latest challenge, Gould v. Deschutes County (Gould X), may have been the last, for the Oregon Court of Appeals latest decision identified some significant boundaries to the deference that it and LUBA must give to local government interpretations of their own plan and land use regulations. A little background is necessary.

Changing EnvironmentThis month saw the latest chapter in a lengthy case about climate change and Oregon’s response to it.  The case, Cherniak v. State of Oregon, began in 2011, when two Eugene area teens challenged the state’s response to climate change, arguing that the atmosphere was part of the public trust and that the state had failed in its obligation to protect that resource for future generations.

The case was initially dismissed by the Lane County Circuit Court in 2012 for lack of subject matter jurisdiction.  In 2014, the Oregon Court of Appeals remanded the case, finding that the court did have authority to consider the matter.  On Tuesday, April 7, 2015, the state of Oregon found itself back in the Lane County Circuit Court arguing that the atmosphere is not subject to the public trust doctrine.  The other critical issue involves the remedy if the atmosphere is found to be subject to the public trust doctrine.  Essentially, what authority does a state circuit court have to dictate state policy and determine the appropriate level of emissions?

The court indicated it would likely rule on the matter within two months, but that is unlikely to be the end of the matter.  Stay tuned for future developments on climate change in Oregon.

ColumnsAs the Oregon Legislative session moves into full-swing giving spectators a front row seat to frantic lobbying and frenetic lawmaking, the Oregon Court of Appeals issued a decision that should remind those involved in this pastime affectionately known as “sausage-making,” to consider the importance of the deliberations.  The decision relates to efforts to remove the oldest home in Lake Oswego, the historic Carman House, from the City of Lake Oswego’s inventory of historic resources and potentially allow for its demolition, as described in my previous blog post.  In 1995, the Oregon Legislature passed the statute at issue, ORS 197.772, which precludes a local government from imposing a historic designation on a property over “a property owner’s” objection.  Subsection (3) of that same statute further provides that “a property owner” may subsequently seek to remove a historic designation that was imposed.  The issue before LUBA and the Court in the case, Lake Oswego Preservation Society v. City of Lake Oswego, was whether a request to remove a designation after it has been imposed must be made by the same property owner who originally objected or whether a subsequent owner may also seek removal.

The general rule when interpreting a statute is to focus on the text and context of the provision.  However, courts will also look to the legislative history to determine intent.  In the Lake Oswego case, the Court found, as had LUBA, that the text and context for determining who was included as “a property owner” under ORS 197.772 was not particularly helpful and it turned to the legislative history.  This history came largely from two hearings before the House Committee on General Government and Regulatory Reform.  LUBA keyed into a statement by one of the bill’s authors, when asked whether a subsequent purchaser could seek to remove historic designation, responded that “[w]e haven't thought about that situation.”  LUBA also noted that a proposed amendment making clear that in cases where the property owner does not object, subsequent owners are bound to the designation, and was rejected and not included in the engrossed bill.  Based on those comments, LUBA concluded that the drafters intended to afford relief only to those property owners on whose property the designation had been imposed.

The Court of Appeals analysis of the legislative history makes no mention of those portions of the legislative history that LUBA found important.  Instead, the court highlighted that the legislation was to allow owners that were “coerced into the historic property designation” to seek removal of that designation.  The court quoted from another representative summarizing the scope of subsection (3) to include those cases where “property owners were not allowed to consent and government imposed it on them that now they would have an opportunity to remove their property from that designation.”  From this, the court concluded that the amendment allows “individuals who own property on which historic designations had been involuntarily imposed by the local government – before the enactment of ORS 197.772 – to have that designation removed.”  The court explained that the focus during these committee meetings was on providing relief in cases where a designation was imposed over an owner’s objection and not on whether subsequent purchasers could also take advantage of the previous owner’s objection.  Further, the court found that preservation advocates’ concerns that adoption of subsection (3) would have the effect of “dismantling historic districts” and a lack of response by the proponents indicated an intent to have broad effects.  As a result, the court concluded that any property owner that has a local historic designation forced on their property may remove that designation.

What is so interesting about this case is that two review bodies looked at the same legislative history and reached diametrically opposing conclusions.  Maybe the difficulty is that the Court of Appeals failed to mention, much less explain, why the comments that LUBA found instructive were not helpful.  How could the court find that committee discussions focused solely on giving relief to those owners who were “coerced into a historic preservation designation” and from that extend that same protection to property owners who were not coerced but instead knowingly purchased a designated property?  If this ruling rests on the conclusion that the legislature intended the effect of ORS 197.772 to “dismantle” historic preservation efforts, legislators, both proponents and opponents, need to be much more descriptive and particular in describing their intent.

Eminent DomainState v. Alderwoods (Oregon), Inc., 2014 WL 4823607 (Or. App. Sept. 17, 2014)

The issue of whether a property owner is entitled to compensation for the taking of abutter’s rights of access to a public highway was again taken up by the Court of Appeals in State v. Alderwoods (Oregon), Inc.  The case involved an eminent domain action relating to the recent improvements to Highway 99W near its intersection with Highway 217.  The State filed an eminent domain action seeking to take a temporary construction easement in order to improve the sidewalk and to remove the curb cuts and driveways that allowed access to the Alderwoods (Oregon), Inc.’s property from Highway 99W.  The property retained indirect access to Highway 99W from Warner Road. In its Complaint, the State alleged that, in addition to the temporary construction easement, it was seeking to acquire “[a]ll abutter’s rights of access, if any” to Highway 99W.  After the Complaint was filed but before trial, ODOT exercised its regulatory authority to remove the property’s access to Highway 99W through a separate administrative action.  Prior to trial, the trial court granted the State’s motion in limine to exclude all evidence of diminution in the value of Alderwoods’s land resulting from the loss of direct access to Highway 99W.  The parties stipulated to a general judgment awarding just compensation for the temporary construction easement and Alderwoods appealed the trial court’s ruling on the motion in limine.

The Court of Appeals heard the appeal en banc and an equally divided Court issued a per curiam decision affirming the trial court’s ruling. Judge Armstrong wrote the concurring opinion in favor of affirming the trial court’s decision.  Judge Sercombe wrote a separate concurring opinion.  Judge Wollheim wrote the dissent. All three opinions agree that, generally, “there is no right to compensation for a loss or restriction of access to an abutting street if access to the property is not completely eliminated by the project for which the other property is being condemned.” Id. at *8. Although a property owner has a common law right of access to an abutting public right of way, that access right is subservient to the public’s right of free use of the streets.  The state may protect that right through the exercise of its police powers.  Thus, if the state exercises its police power to eliminate or restrict property’s access to an abutting public right of way (so long as all access is not eliminated), the property owner is not entitled to compensation regardless of the diminution of value caused by the loss or restriction of access.

The three opinions differ on whether the State is required to pay just compensation where it seeks to take or restrict a property owner’s right of access through an eminent domain action as opposed to an administrative action exercising its police powers.  Judge Armstrong in his concurring opinion reasoned that Alderwoods had a common law right of access to Highway 99W.  However, because that right of access was lost by administrative action “the property has no lawful access to Highway 99W irrespective of the condemnation of the access to the highway.” Id. at *7 (emphasis in original).  Therefore, Judge Armstrong concluded that the evidence of diminution of value was irrelevant and properly excluded by the trial court.

Judge Sercombe in his separate concurring opinion finds that an abutter’s common law right of access is general and unfixed.  Judge Sercombe reasons that compensation is only required if the state takes both the direct and indirect access to the public right of way. Id. at *9.  Judge Sercombe concludes that Alderwoods was not entitled to compensation for the loss of direct access to Highway 99W in the eminent domain action because the State did not also seek to take Alderwoods’s indirect access.  The fact that the State also took Alderwoods’s right of access through an administrative action did not factor into Judge Sercombe’s opinion.

Judge Wollheim’s dissent concludes that Alderwoods should have been allowed to present evidence of damages resulting from the State’s taking of its abutter’s right of access to Highway 99W in the eminent domain proceeding. Judge Wollheim does not dispute that the State has the right to take or restrict access through its regulatory authority without compensation (so long as all access is not eliminated).  However, because the State chose to take the access through its eminent domain under the authority granted by ORS 374.035, the State was statutorily required to pay just compensation in the eminent domain proceeding.  Judge Wollheim did not consider the administrative action eliminating access, in part, because the State did not argue that the regulatory action eliminated Alderwoods’s right to compensation.

It is anticipated that Alderwoods will file a petition of review with the Oregon Supreme Court.  Until the Supreme Court weighs in on the issue, the primary take away from the Court of Appeals per curiam decision is that the condemner should exercise its regulatory authority to eliminate or restrict a property’s abutter’s rights of access before it files an eminent domain action.  It is clear under all three opinions that a property owner is not entitled to just compensation for a restriction or elimination of abutter’s right of access through the state’s regulatory authority (so long as all access is not eliminated).

 

The train of events from the release of the Oregon Court of Appeals decision in the Metro urban and rural reserves case to the resolution of that case in the Oregon legislature has been an interesting one to follow. The Court of Appeals remanded a decision that followed four years of public hearings and actions to establish urban and rural reserves in the Portland area. Following various stages of shock, denial and anger, the development community, Metro and Portland area local governments changed their positions from one that this was strictly a regional problem with which the legislature should not enter, to one in which such entry was invited.

In enacting the resolution of this case in the so-called “Grand Bargain,” the legislature imposed a solution in one particularly contested part of the region – Washington County – rather than to have the reserves decision reconsidered as the court had commanded. Other deficiencies in Multnomah and Clackamas Counties were left for the Land Conservation and Development (LCDC), those counties and the region to sort out. Within days, the legislature expanded the Urban Growth Boundary (UGB), as well as the urban and rural reserves in Washington County and declared victory to the applause of much of the development and business community and local governments.

Expanding the UGB is important, as urban type development is allowed only within that boundary and significantly affects the price of real estate. Similarly, placing land in an urban reserve presumptively puts that land first in line for addition to the existing UGB for urban development over a 50-year period. And placing land in a rural reserve makes it likely that such land will not urbanize over the next 50 years.

The legislature, local and regional governments, and public interest groups characterized these actions as nothing more than a mediated settlement with the parties to the lawsuit resulting in an outcome that was consistent with initial predictions. This does not change the fact that it was the legislators, rather than local governments, drawing colored lines on a map. Often these supplicants and the legislative leaders will assert that the UGB and reserves processes are just too complex and need to be simplified. Yet these parties might consider their own roles in shaping these processes. Instead of providing a checklist of objective requirements for expanding the UGB, the legislature left in place a system of unquantified “factors” to apply so as to give decision-makers the “flexibility” to reach whatever decision they wished. The legislature and LCDC used a similar system of applying “factors” to the reserves process for the same reason.

In addition, instead of allowing the Land Use Board of Appeals (LUBA) to review these decisions, the legislature specifically directed that review to LCDC, a government-friendly forum that did not work as hard to consider those pesky legal questions that occur in making land use decisions. Both left it to the Court of Appeals to weigh the reserves decision against the criteria and were duly shocked and appalled with the result. It is far easier to blame the process and other participants than to fess up to admitting to the source of the complexities in that process.

In reality, there was an attempt to game the process (through an assertion of “flexibility” which was designed to place a patina of respectability on the result) to justify putting certain lands over other lands into urban reserves than was justified, regardless of what the law said, because some of the participants wanted that result.

However the real problem created by the “Grand Bargain” is the precedent it sets. While both the UGB and reserves processes are difficult (and are supposed to be difficult as the decisions are significant and long-lasting), on what basis can the legislature turn down similar requests for imposition of a legislative solution in Woodburn, Bend or McMinnville which have similarly complex decisions? Will the watchdogs and the environmental community continue to be coy about the application of raw political power to make local planning decisions on the ground?

The quickest and easiest decision is not always the best one. The legislature may yet rue the day it stepped in to impose its will in the reserves case. It will be difficult to deny the second supplicant, much less the third, fourth and others.

The City of Harrisburg placed a municipal water well on undeveloped property owned by the Defendant property owner, Ms. Leigh. Shortly thereafter, the City discovered that they placed the well on her property but they did nothing. Several years later Ms. Leigh decided to sell the property and her broker discovered the well and approached the City with the situation. The City responded to her discovery of the well by suing her for adverse possession of her property, instead of offering to pay her fair market value of her property. The City lost and she won an ejectment action – which resulted in the trial Court opinion that the City was not entitled to legal possession or any interest in the property and ordering the City to vacate the property and decommission the well by September 1.

Months later, on a Friday, August 28, the City offered to purchase her property for $7,425. When she rejected their offer, they filed an emergency condemnation proceeding the following Tuesday, September 2. The dates here are important.

Ms. Leigh’s position at trial was that, as a matter of law, as of September 2, (one day after the well was to have been decommissioned) Ms. Leigh owned the well because the trial court’s judgment specifically held that the City had no legal right to Ms. Leigh’s property and were required to decommission the well by September 1st , which had not occurred. The trial court rejected Ms. Leigh’s legal argument and Ms. Leigh received only compensation for the land and not for the well.

Ms. Leigh appealed to the Oregon Court of Appeals, which agreed that the ejectment judgment conclusively established that Ms. Leigh was the owner of the property, including its improvements. Accordingly, she was entitled to compensation for the value of the property, as improved. A public body that takes private property for public use must pay the property owner “just compensation”. OR Const, Art I § 18. The Court of Appeals held that the prior judgment conclusively held that the City was “wrongfully withholding possession of the Property”, and therefore, the value of the property was measured as of September 2, 2008 – the date the condemnation action was commenced and the property included compensation for the well because the well had not been decommissioned by September 1. The case was remanded back to the trial court for entry of judgment for Ms. Leigh.

(Property owner was represented by Garvey Schubert Barer.)

City of Harrisburg v Ellen Leigh

It is not uncommon for property owners to believe that government actions have taken or significantly decreased their property values to the extent the actions constitute a “taking” of the property, i.e. “inverse condemnation.”  In some cases this condition may be the result of “condemnation blight.”  What isn’t common is for a court to agree. 

The seminal case in Oregon is Lincoln Loan Co. v State Hwy Comm’n, 274 Or 49 (1976), where the Oregon Supreme Court determined the plaintiff had at least pled sufficient allegations to claim condemnation blight.  The allegations included the State having sent letters to neighbors and tenants of its intent to take the property, the State condemning and destroying nearby properties, giving the plaintiff’s tenants notice they would have to move and filing condemnation actions.  Given all this, the Court concluded the plaintiff had pled sufficient allegations to constitute condemnation blight.

In a recent case in Linn County, Hall v. State of Oregon by and through the Oregon Department of Transportation, 252 Or App 649 (Oct. 10, 2012), a property owner claimed ODOT had committed condemnation blight.  The property owner plaintiff in Hall owned land near an I-5 interchange that was in the preliminary planning phase by ODOT. It is common, and in this case was required, that the government set out options as part of the planning process.  One of the potential options of ODOT was to close the interchange, thereby landlocking the property.  In accordance with federal planning requirements, ODOT informed the plaintiff owner, the general public and affected governments of all of its potential options for the interchange, including the option to close it.  ODOT held public meetings in furtherance of the planning process, and when the closure option was shown as being unpopular, ODOT revised the closure option with a more delayed process.  Notwithstanding, the plaintiff sued ODOT, claiming its actions constituted an inverse taking because of the “blight” it caused to plaintiff’s property.

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