In September 2014, I reported on the Parkview Terrace Development case, where the developer applied to transform Phases II and III of a planned unit development (PUD) from for sale townhouses to multi-family rentals and the City denied the application. LUBA reversed the City’s denial of an affordable housing development and ordered the City to grant the developer approval. In the Parkview Terrace blog post, I suggested that the case was ripe for an award of attorneys’ fees and LUBA recently issued an order on the fee motion.
The developer sought to recover over $39,000 in attorneys’ fees and had originally sought a mandatory fee award against the City of Grants Pass under ORS 197.835(10)(b) because LUBA reversed the City’s decision. However, LUBA’s order describes that the developer subsequently withdrew its motion for attorneys’ fees against the City. I can only surmise that the developer, a rental housing provider, calculated that its long-term working relationship with the City would not be bolstered by pursuit of these fees.
Thus, LUBA was left to determine whether the project neighbors should be on the hook for the developer’s fees. The standard of review for attorneys’ fee motions in land use matters is whether LUBA finds that a party presented a position without probable cause to believe the position was well-founded in law or on factually supported information. In these circumstances, “without probable cause” is where no reasonable lawyer would conclude that any of the legal points asserted on appeal possessed legal merit. In order to avoid attorneys’ fees in land use cases, a party must present at least one argument on appeal that satisfies the probable cause standard.
LUBA concluded that one issue raised by the intervening neighbors satisfied the probable cause standard. The neighbors had challenged the City’s authority to grant site plan and variance approvals for a development proposal that is different from, and inconsistent with, the townhouse development authorized by the City’s original approval of the PUD. On the merits, the neighbors had argued that the City’s PUD regulations have no procedures for terminating a residential PUD and that the developer’s unilateral decision to terminate the PUD by sending a letter to the planning department could not be construed as an automatic termination of the original approval. Although the City had not relied on the developer’s letter in its local decision and the neighbors had not complied with LUBA’s procedural rules for filing a cross-assignment of error on the basis of the termination letter with the result that LUBA refused to consider the argument on the merits when it reached its decision in July, in the fee order, LUBA ruled these reasons were insufficient to base an award of attorneys' fees.
LUBA concluded that in light of the Board having made only a single-decision based on the cross-assignment rule since the rule’s adoption in 2010, that the lawyer’s mistake in not presenting the argument as a cross-assignment of error was not the kind of mistake “no reasonable lawyer would make.” Thus, LUBA ruled that the procedural error on the neighbors’ part does not mean their argument on the merits was presented without probable cause.
Finally, LUBA looked to the City’s code to determine whether the termination argument would pass muster under the probable cause test. LUBA found that if it had reached the merits of the neighbors’ argument about the authority to grant site plan and a variance approvals, the argument would have met the probable cause standard because the code lacks express authorization for termination of a residential PUD once it has been approved. If the argument had been promoted in accord with procedural requirements, it would have raised an issue that might have been a basis for remand.
Consistent with previous decisions regarding attorneys’ fee motions, LUBA will give the benefit of the doubt to the party that could be on the hook for the fees. This order continues the high bar to recover attorneys’ fees in Oregon land use matters, but, in my opinion, it would have been quite another story if the developer had maintained the fee motion against the City.
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