Dunn v. City of Milwaukie: Oregon Supreme Court sets high bar for certain “physical invasion” inverse condemnation claims

In a recent decision, the Oregon Supreme Court clarified Oregon law on “physical invasion” inverse condemnation claims.   In Dunn v. City of Milwaukie, 355 Or 339, 361, __ P3d __ (2014) (en banc), the court held that a homeowner could not maintain a claim for inverse condemnation against the city based upon a physical invasion of sewage into her home caused by the city.  Reversing both the court of appeals and trial court, the court held that the homeowner failed to prove that the city had the requisite intent to invade her home with sewage because she failed to show either that the city specifically intended the invasion or that intent could be imputed to the city based upon the invasion being the “natural and ordinary consequence” of the city’s actions.  Id.  In order to satisfy the “natural and ordinary consequence” test, the court held that a plaintiff must show the physical invasion was the “inevitable result” of the government’s intentional act.  Id. at 358-59, 61.

The court restated “natural and ordinary consequence” test as follows:

A factfinder is entitled to impute the requisite intent to take property if the invasion to the property owner’s interests was the necessary, substantially certain, or inevitable consequence of the government’s intentional acts. . . . And although a plaintiff’s burden is less than specific intent would make it, it is still exacting.  A plaintiff still must show that the government intentionally undertook its actions and that the inevitable result of those actions, in the ordinary course of events, was the invasion of the plaintiff’s property that is the basis for the plaintiff’s inverse condemnation claim.  Thus, if a plaintiff’s best evidence is that the invasion was a less that certain consequence — such as a conceivable, possible, or plausible outcome, or one that otherwise might or might not occur — that is not enough for a factfinder to infer that the invasion was intentional.

Id. at 358-59.

In Dunn, the city was in engaged in “hydrocleaning” of sewer pipes, which involved applying high pressure water to sewer pipes, so that the cleaned pipes could be properly inspected for maintenance and repair purposes.  Id. at 341.  The city’s hydrocleaning resulted in sewage backing up into the homeowner’s lateral line and exploding into her home through her plumbing fixtures.  Id. at 341-42.  As described by the court:

Plaintiff first became aware of a backup when she heard a “loud roar,” felt her house shake, and then saw “brown and gray gunky sewer water that stunk” come out her toilets and bathroom fixtures.  Soon afterwards, water was dripping from her bathroom ceiling and was three to four inches deep on the bathroom floor, flowing down the hallway and into her living room.

Id. at 342.

Plaintiff’s home suffered significant damage as a result of the invasion of water and sewage.  Id.  Over a period of months, the homeowner tried to remedy the damage to her home without success.  Id.  About 10 months after the incident, she filed a formal complaint with the city.   Id.  After the city apparently failed to take responsibility for the “incident,” and about 20 months after the incident, the homeowner filed claims against the city for negligence and inverse condemnation.  Id.

The trial court dismissed the negligence claim based upon the homeowners’ failure to comply with Oregon’s strict tort claims notice provisions for suing governmental entities in tort.  Id.  It, however, allowed her inverse condemnation claim to continue, as it was not conditioned upon a statutory waiver of sovereign immunity.  See id.

As noted by the court, “[a]t trial, no witness could explain why the sewage backed up into plaintiff’s house when it did.”  Id. at 342.  “The two city workers who were hydrocleaning the sewers near plaintiff’s  house when the backup occurred explained that they did ‘everything by the book’ and that their equipment was ‘operating properly’ that day.”  Id. at 343.  Notably, a plumber who inspected the house and found nothing out of the ordinary with the home’s pre-incident plumbing system, provided that “backups sometimes occur if the hydrocleaning cannot clear a blockage in the main line, which can cause sewage water in the main line to backup into a lateral line running to a nearby house.”  Id.   He further “was generally aware of other sewer backups such as the one into plaintiff’s house, and he characterized them as ‘uncommon.'”  Id.  Similarly, one of the city workers involved was personally aware of another such sewage backup into a home.  Id.

Relying on Vokoun v. City of Lake Oswego, 335 Or 19, 56 P3d 396 (2002) (en banc), the trial court accepted the plaintiffs’ argument that to show the city’s requisite intent to physically invade her property “she had to show only that the backup into her house was the ‘natural and ordinary consequence’ of the city’s actions and that where, as here, there was no evidence of any other causes, the evidence was sufficient to go to the jury.”  Id. at 344.  The jury found for the plaintiff and awarded just compensation in the amount of $58,333.  Id.

The Oregon Court of Appeals was similarly persuaded by the plaintiff’s argument, affirming the trial court decision and stating as follows regarding satisfying the intent requirement:  “The question is not whether the harmful result occurs frequently; it is whether the result is the natural and ordinary consequence of the government’s action at the time and place where that action occurred.”  Id. at 345 (citing Dunn v. City of Milwaukie, 241 Or App 95, 102, 250 P3d 7 (2011)).   In other words, the court of appeals held that “the jury could infer the city’s intent from evidence that the city had carried out the cleaning according to normal procedures and that doing so in some areas of the city can cause sewer backups in private houses.”   Id.

Consistent with these facts, the Oregon Supreme Court found that the “[t]he conclusion most favorable to plaintiff on this record is that the intrusion of sewage water into one or more nearby houses was a known risk of hydrocleaning generally, but one that rarely came to pass.”  Id. at 361.  In applying its narrow reading of “natural and ordinary consequence” test as stated in Vokoun, the court, however, held that this was not enough; that the plaintiff did not show that the physical invasion of sewage was the “necessary, certain, predictable, or inevitable result” of the city’s actions.  Id.

The Oregon Supreme Court has obviously laid down an extremely high bar for physical invasion inverse condemnation claims in which specific intent cannot be shown.  Apparently, even when the government is engaged in an activity that is known to cause physical invasions of private property, if the frequency of such physical invasions is low, it can act without liability on a takings claim.  If the government knows that its actions will likely result in sewage exploding into 1 of out of every 1000 homes, and, in fact, its actions do cause such effect, does the government act with intent to physically invade that one home?  I believe a very good argument can be made that, yes, it does then act with the requisite intent.  I believe the trial court in this case and court of appeals would likely agree.  What about 1 in 100 homes? 1 in 10?  At what point would the Oregon Supreme Court be satisfied that the result of governmental action was “necessary, certain, predictable, or inevitable”?  The court states in a footnote that “[c]ertainty or inevitability, in this context, does not require–at least not, necessarily–regularity or frequency” and gives the example of flooding of particular property “substantially certain to occur on a seasonal or other intermittent basis.”  See id. at 356 n 13.  If this is the case, should not statistical “substantial certainty” be enough–that some percentage of a group of properties will be “naturally and ordinarily” invaded as a result of government action?

Also worth reading regarding this case is an insightful and entertaining post on Robert Thomas’s blog:  inversecondemnation.com.

In addition, reporting by The Oregonian provides some additional background.

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