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Clarity Is Key in Condemnation Judgments - Courter v. City of Portland, 286 Or App 39 (2017)

This article originally appeared in the August 2017 edition of the Oregon Real Estate and Land Use Digest, Volume 39, No. 4, a publication of the Oregon State Bar Section on Real Estate and Land Use.

water pipesThe Court of Appeals recently weighed in on the “ripeness” of claims for inverse condemnation and to interpret a judgment issued after a prior condemnation trial under the Uniform Declaratory Judgments Act. The case demonstrates the importance to both a condemner and property owner of clearly and unambiguously describing the scope of a taking in the conveying document – in this case a condemnation judgment.

The case arose from a 2003 condemnation action brought by the City of Portland to take land, as well as an access and utility easement, for a water project. The property owner alleges that, during trial, the City agreed to bury the water pipes necessary for the project at a depth of at least 18 feet. The trial court excluded evidence of damages to the remaining property based on the contention that the utility easement would limit future development. The property owner alleges that the trial court excluded the evidence based on the City’s argument that pipes buried at a depth of 18 feet would not affect future development of the property. The jury awarded just compensation, and a judgment was entered conveying the property and easement. Apparently, the easement’s depth restriction was not described in the judgment.

According to the property owner, the City constructed the pipes at a depth of as little as four feet. The property owner filed a lawsuit for inverse condemnation and declaratory judgment. The property owner also seeks a declaration that the prior condemnation judgment only permits the City to bury pipes at a depth of at least 18 feet. The property owner contends that the City exceeded the scope of the easement by burying the pipes at a shallower depth – resulting in an inverse taking. The property owner seeks compensation for the physical taking and for diminution of value of the remaining property because the taking’s alleged effect on future development of the property.

The City obtained summary judgment on the grounds that the controversy was not ripe for adjudication because the property owner could not yet show actual or imminent injury. The City contends that any effect on the future development is speculative because the property owner, in order to develop the property, must first obtain a zoning change and approval of a development plan. The City believes that the owner cannot obtain approval of development plan that would require the City’s pipes to be relocated. The City also argued that the trial court was prohibited from construing the terms of the 2003 condemnation judgment under the Declaratory Judgments Act.

The Oregon Court of Appeals disagreed on both counts. The Court held that the claim of inverse condemnation was ripe because exceeding the scope of easement, if proved, was a physical taking of property that would support an inverse condemnation claim. This is true even if the inverse taking resulted in minimal damages or was of great benefit to the public. Thus, the property owner is entitled to a jury trial seeking damages for inverse condemnation.

The Court found the declaratory judgment action was ripe for the same reasons. The Court further held that interpretation of an ambiguous judgment was within the purview of the Declaratory Judgments Act, relying on the catchall provision. ORS 28.050. The Court distinguished cases prohibiting the use of the Declaratory Judgments Act to improperly seek review of another court’s ruling. In other words, a trial court has the ability to interpret ambiguous terms in a previously entered judgment in order to declare the rights of the parties to that judgment.

The take away from this case is that parties in similar situations should take care to ensure that the judgment in a condemnation action describes the taking in unambiguous terms. Further, if trial tactics result in a change of the taking, it is vitally important that the change be reflected in the judgment and that the contractors building the project are aware of the change.

Practice Note: Under current law it is possible, if not likely, that a change in the scope of the taking would subject the action to dismissal under State ex rel Dept. of Transp. v. Singh, 257 Or App 322 (2013), which requires the condemner’s taking to match the offer.

Query: Will the City be able to exclude evidence of damages to remainder as too speculative based on current restrictions on development? The Court of Appeals identified it as a possibility citing ODOT v. Fullerton, 177 Or App 254, 262 (2001).

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