Farmington Road Project: Washington County Filing Condemnation Lawsuits

Farmington Road Project:  Washington County Filing Condemnation Lawsuits

From all indications, Washington County has begun filing condemnation actions against property owners with whom it has not reached “agreement” on its Farmington Road Project.

As I noted in my post on the Project earlier this year,  it calls for the widening of Farmington Road from Murray Boulevard to Hocken Avenue.

The “final design” map showing the extent of the takings and impacted properties is found here, and a the Project’s very basic construction staging map is found here.

In road widening projects such as this one, which result primarily in partial “strip takings,” the often-found fundamental tension between the government’s approach and just compensation is the government’s propensity to ignore or minimize damages to the value of the property remaining after the taking.  Unfortunately for property owners, such damages can be significant, even if the strip taken is relatively small.  In addition to factors such as an increased proximity to travel lanes and attendant noise, property owners can be faced with adverse impacts to access, parking, on-site vehicle maneuvering, and conformity with set-backs and other development requirements.  In certain situations, the highest and best use of the property can take a hit, potentially resulting in very significant damages.

Fortunately, property owners have a constitutional right not to have their just compensation minimized.  Vindicating that constitutional right, however, requires action and standing up to the government.

 

Hall v. Department of Transportation: Oregon Supreme Court Takes on Condemnation Blight Claims

Hall v. Department of Transportation:  Oregon Supreme Court Takes on Condemnation Blight Claims

Fresh off its decision in Dunn v. City of Milwaukie, 355 Or 339, 361, 328 P3d 1261 (2014) (en banc), the Oregon Supreme Court has, again, narrowily read its previous decisions and raised the bar for property owners seeking recourse on inverse condemnation claims under the Oregon constitution.  In Hall v. Department of Transportation, 355 Or 503,  326 P3d 1165 (2014) (en banc), the court held that a property owner seeking relief on a “condemnation blight” inverse condemnation claim–one in which a property owner seeks relief for damages resulting from the specter of condemnation ahead of an actual taking–the property owner must allege and ultimately prove that the government’s actions deprived the property owner of “all economically viable use.”  Id. at 523.  In other words, it is not enough that the government’s actions have diminished the value of a property, even substantially; to maintain a condemnation blight claim, the property must apparently have virtually no remaining value.

Upholding the court of appeals reversal of a jury verdict in excess of $3,000,000, the supreme court held that the plaintiffs’ classic “condemnation blight” allegations and supporting evidence failed to “establish a cognizable de facto taking by condemnation blight” because “plaintiffs’ property retained some economic value.” Id. at 523.  In reaching its decision, the court expressly rejected the plaintiffs’ argument that condemnation blight claims are subject to the less stringent “reduction-in-value damage requirement” associated with “the substantial-interference-with-use-and-enjoyment standard,” id. at 522, reserving this standard for cases in which “a governmental actor physically occupies private property or invades a private property right.” Id.

To give some flesh to the bone, the plaintiffs in this case presented evidence at trial supporting the following allegations:

  • The Oregon Department of Transportation (ODOT) “had disseminated information to the public that plaintiffs’ access to the state highway system would be eliminated and that ODOT planned to acquire plaintiffs’ property through eminent domain proceedings”;
  • ODOT had conducted public hearings and otherwise informed the public that the highway interchange near the plaintiffs’ property was dangerous, it would be eliminated, and that plaintiffs access to it property would accordingly be eliminated;
  • ODOT had disclosed plans and consulting reports recommending the closure of the interchange and taking of plaintiffs’ property;
  • ODOT had informed the local city with jurisdiction over the area that it intended to remove plaintiffs’ access and take their property; and
  • ODOT had specifically informed prospective investors, lessees, purchasers and developers of the subject property that it intended to close the interchange and take plaintiffs’ property.

Id. at 506-07.

This activity went on for a period of six years without ODOT initiating condemnation proceedings, as it worked through public opposition to removal of the interchange.  Id. at 506.  Indeed, during a period of ODOT-instituted delay, when ODOT learned that the plaintiffs were trying to develop their property,  ODOT internal emails confirmed that “ODOT had taken steps to stop any future development of plaintiffs’ property.”  Id.  Moreover, “[b]etween 2005 and 2007, plaintiffs attempted to sell their property or reach agreements to development,” which efforts were unsuccessful, id., and “[a] real estate broker . . . testified that he was unable to consummate an agreement because of the uncertainty surrounding the closure of the . . . interchange.”  Id.

At the close of evidence, “ODOT moved for a directed verdict on the ground that there was no evidence that its conduct amounted to a nuisance but, rather, the evidence showed that it had engaged in planning for a public purpose, and that the proper standard of harm was whether ODOT’s conduct had deprived the plaintiffs of all economically viable use of their property.”  Id. at 508.  The trial court denied the motion and rejected ODOT’s proposed jury instructions premised on similar arguments.  Id.  “In response to questions posed in the verdict form, the jury found that ODOT’s actions had substantially and unreasonably interfered with plaintiffs’ use and enjoyment of the land, and that those actions were sufficiently direct, particular, and of a magnitude to support a conclusion that the interference had reduced the fair market value of the property.”  Id. at 509.  “The jury found that the value of the property without interference was $4,000,000 and that ODOT’s interference had reduced that value by $3,378,750.”  Id.  “The trial court denied ODOT’s motion for judgement notwithstanding the verdict and entered judgment for the plaintiffs.”  Id.

The court of appeals reversed the trial court’s decision on two grounds: (1) “evidence that ODOT’s actions lowered the value of plaintiff’s property was insufficient to establish a compensable taking”; and (2) the trial court erred to the extent it relied in its rulings for plaintiffs that ODOT was pursuing a vendetta against them because plaintiffs’ assertion of ODOT’s malicious intention was “self-defeating” in that “[i]f * * * the intent behind ODOT’s actions was not to take plaintiffs’ property for public use, then those actions could not amount to a taking.”  Id. at 509 (emphasis in original) (citation omitted).

On review, the supreme court ignored the “vendetta” issues, and confined its analysis to “plaintiffs’ assertions that the trial court properly based its dispositive ruling, jury instructions, and verdict form on its conclusion that the substantial-interference-with-use-and-enjoyment standard–not the more stringent deprivation-of-all-economically-viable-standard–applied to plaintiffs’ inverse condemnation claim.”  Id. at 510.  It specifically held that “because the actions that plaintiffs challenge involved planning related to the designation of plaintiffs’ property for eventual public use, and plaintiffs did not allege that those actions deprived them of all economically viable use of their property or prove that ODOT physically occupied their property or invaded their property rights in a way that substantially interfered with its necessary use and enjoyment, the trial court erred in denying ODOT’s motion for a directed verdict.”  Id. 

The court reached this decision only by reading its previous decision in Lincoln Loan Co. v. State Hwy. Comm., 274 Or 49, 545 P2d 105 (1976) to an extremely narrow–and arguably distorted–extent.  In Lincoln Loan, the plaintiff “brought [an] inverse condemnation action against the Oregon State Highway Commission to recover damages for an alleged taking of plaintiff’s property in the process of the construction of the East Portland Freeway by allegedly placing a ‘cloud of condemnation’ over the property, which resulted in a ‘condemnation blight’ and a de facto taking, not of the possession of the property, but of a substantial use and benefit thereof.”  Id. at 51.  The Oregon Supreme Court held that plaintiff stated a claim for inverse condemnation based upon this condemnation blight theory on the following allegations:

  • “[A]bout ten years prior to the filing of the complaint in this action the defendant, by resolution, declared plaintiff’s property necessary in the construction of the said East Portland Freeway.”
  • ‘That at the time of declaring the resolution aforesaid and at all times thereafter defendant commenced the taking of real property in the vicinity of plaintiff’s property for highway purposes and did in fact file condemnation proceedings against plaintiff’s property herein.”
  • “That in so taking said properties, defendant has caused the following:
(a) Caused notices to be published that all real property within the areas designated by the State of Oregon would be taken for roadway purposes;
(b) Caused notices to be given that no compensation would be awarded for improvements to said real property even though such improvements may be in the nature of maintenance only;
(c) Caused dwellings to be dismantled in the surrounding properties, creating noise, dust and confusion and encouraging the decay and desertion of the area;
(d) Caused heavy equipment including trucks and tractors to be brought into the neighborhood for use in demolishing adjacent buildings and thereby further encouraging the decay and desertion of the area;
(e) Caused notices to be given to tenants that they would be required to vacate the buildings in the area because the defendant was taking them for roadway purposes;
(f) Caused notices to be published that defendant would pay moving expenses and other compensation to tenants if they vacated plaintiff’s premises described above.”

 

Id. at 51-52.  After a thorough analysis, the court held that “[p]laintiff has alleged adequate facts which indicate a substantial interference by the state with the use and enjoyment of its property. The combination of the acts alleged in plaintiff’s complaint, the alleged pervasive extent of that combination of acts and the alleged duration of those acts over a ten-year period unite to allege a substantial interference with the use and enjoyment of its property by plaintiff.”  Id. at 57.  The court then went on to specifically describe as “unpersusive” a number of cases from other jurisdictions “all of which held that preliminary steps taken to exercise the power of eminent domain without an actual physical taking or invasion are not actionable by the landowner.”  Id. at 58.

To avoid the clear direction of its previous decision in Lincoln Loan, the Oregon Supreme Court in Hall, rather than looking to the totality of the circumstances which gave rise to the condemnation blight inverse condemnation claim in Lincoln Loan and the court’s express rejection in Lincoln Loan of a requirement of physical taking or invasion to invoke the substantial interference standard, focused on only one of the acts alleged–the creation of “dust, noise and confusion”–and thus marginalized Lincoln Loan as follows:

“The plaintiff in Lincoln Loan alleged that the defendant had interfered with its use and enjoyment of its property by, among other things, creating noise, dust, and confusion by the demolition of neighboring properties.

Viewed in its particular context, Lincoln Loan thus stands for the proposition that a precondemnation, government-created nuisance that substantially interferes with an owner’s right to the use and enjoyment of property can give rise to an inverse condemnation claim based on a resulting reduction in the property’s value. However, nothing in Lincoln Loan suggests that, in the absence of a physical occupation or invasion of a property right, a government action that causes only a reduction in the value of property qualifies as a taking.”

 

Hall, 355 Or at 516 (emphasis added).

Whatever your sense of the outcome of case, it is a good read and one that thoroughly explains the Oregon Supreme Court’s analytical framework for inverse condemnation claims.  Also of interest, it was argued for the plaintiff property owner by former Oregon Supreme Court justice Michael Gillette.

Finally, it is also very important to note that the holding applies only to claims under Oregon’s constitution.  As noted by the court in its concluding footnote, the plaintiffs did not “raise a federal constitutional argument in this court; accordingly, we do not address that issue.”  Id. at 524 n 9.

Bus Rapid Transit for Powell-Division Project Says Steering Committee

Bus Rapid Transit for Powell-Division Project Says Steering Committee

The steering committee for Metro’s Powell-Division transit project has spoken.  Moving forward, it will focus on bus rapid transit (BRT) options, dropping from considering street car and light rail options.

As reported by Metro:

The unanimous vote came as committee members said they were focused more on a project that could be built soon and require substantially less private property acquisition and roadway impacts than a rail project.

* * *

The committee also voted unanimously to focus on a transit route that would use Powell Boulevard in inner Portland, then jog north to Division Street somewhere between 52nd and 92nd avenues, before heading east to Gresham. The route could then extend as far east as the Mt. Hood Community College campus near Troutdale.

For more on the Powell-Division project, see my earlier post.

Powell-Division Transit and Development Project: Metro Plans Another Move in High Capacity Transit

Powell-Division Transit and Development Project:  Metro Plans Another Move in High Capacity Transit

Metro is moving forward with preliminary planning for its “Powell-Division Transit and Development Project.”  For this “high capacity transit” project–meaning most likely light rail or bus rapid transit–Metro is currently soliciting input from the public and the Project’s steering committee regarding transit type, route, station areas, and redevelopment opportunities.  Similar to Metro’s “Southwest Corridor” planning, such move was foretold by Metro’s 2009 High Capacity Transit Plan, which sets forth its vision and priority for high capacity transit projects across the Portland metropolitan area.

The Powell-Division corridor, as currently envisioned, stretches from downtown Portland to Gresham.  As the name of the Project indicates, the corridor centers on SE Powell Boulevard and SE Division Street for much of its length.  A “Project Atlas” published by Metro provides a many-layered view of the corridor area.

As noted above, the planning for the Project is currently in its public input phase, after which the Project team will decide on a preferred mode of transit and preferred route.   The Project’s published timeline, from its most recent fact sheet, indicates that the Project team will make a final decision on mode and route recommendations in Winter 2015.

Whatever route and mode of high capacity transit is ultimately chosen, many properties, homes and businesses will likely be impacted.  While many elements of the Project appear to serve legitimate public purposes, whether the owners of the impacted properties will receive the just compensation to which they are constitutionally entitled is a wholly different matter.  It will also be interesting to see how the Project implements its development goals.

 

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.

Southwest Corridor Planning: Metro’s Next Move in High Capacity Transit

Metro has set its sights on the “Southwest Corridor” as the region’s next area for construction of “high capacity transit,” meaning most likely light rail or rapid bus transit.  Such move was foretold by Metro’s 2009 High Capacity Transit Plan, which sets forth its vision and priority for high capacity transit projects across the Portland metropolitan area.

The Southwest Corridor, as currently envisioned, stretches from downtown Portland to Tualatin.  It centers on SW Barbur Blvd/99W for much of its route, working its way through Tigard, and then south through the Bridgeport area to downtown Tualatin.

The planning for the project is currently in its “refinement phase,” in which the stakeholders will zero in on a preferred mode of transit and preferred route.  “Recommended routes for further discussion” are set forth in Metro staff’s May 5, 2014 report. The Project’s published timeline indicates that the Project’s steering committee will make a final decision on design options in June 2014.

Whatever route and mode of high capacity transit is ultimately chosen, many properties, homes and businesses will likely be impacted.  While this Project appears to serve a legitimate public purpose, whether the owners of the impacted properties will receive the just compensation to which they are constitutionally-entitled is a wholly different matter.

 

The Government Comes Knocking: Evaluating “Offers” to Take Your Property

In the event the government decides to take your property, you will most likely receive a visit from a “right of way agent” who will present you the government’s “offer” to acquire your property.  This post explores what that “offer” typically looks like and what next steps you need to think about.

What kind of communication from the government will accompany the offer?

The government must attempt to reach agreement with you on the fair market value of the property and its acquisition.  ORS 35.235(1).  Without such an attempt, the government cannot initiate a condemnation lawsuit.  ORS 35.245(1).  As part of this negotiation, the government must make you an unqualified offer based upon what the government contends is the just compensation for the property.  The offer will be in the form of a letter from the government or a private right of way agent with whom the government has contracted.

What is the government’s offer based upon?

In most cases, the government’s offer must be accompanied and supported by a written appraisal.  ORS 35.346(2).  However, if the government determines that the amount of just compensation is less than $20,000, it may provide you with a “written explanation of the bases and method” by which it arrived at fair market value, in place of a formal appraisal.

The offer mentions possible environmental issues. What is this about?

As part of the appraisal process, the government will often times conduct an environmental review of the targeted property.  This review is looking for evidence of possible environmental contamination stemming from present or past uses of the property.  A common example giving rise to governmental concern is the presence of an underground storage tank for petroleum products.  If the government determines that the property will require some level of environmental remediation, it may seek to have associated costs deducted from the determination of just compensation.

Am I entitled to relocation compensation?

Yes, property owners, as well as tenants, are often entitled to reimbursement for certain relocation and business reestablishment costs resulting from displacement from the taken property.  Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, 42 U.S.C. § 4601 et seq.; ORS 35.500 to 35.530.  Relocation compensation is determined by an administrative process different from the process used to determine just compensation for the taking of the property.

Am I entitled to loss of value to my business?

Technically, no.  In the event of a partial taking of property, however, the taking could affect your ability to use the property for a particular business purpose, which also happens to be its highest and best use—for example, a restaurant adjacent to a highway.  If the taking results in a less intensive highest and best use, you may be entitled to resulting damages.

Are there benefits to securing a team of experienced advisors in responding to the offer?

Yes, definitely.  A team of advisors experienced in condemnation matters can help you achieve just compensation, advise you on relocation issues, and assist you with tax planning in regard to the proceeds of condemnation.  Your team may include a condemnation attorney, appraiser, relocation specialist, real estate broker, and tax planner.  In certain circumstances, you may need to also enlist the services of, among others, surveyors, land use planners, architects and engineers.

How much time do I have to respond to the offer? Do I have to accept or reject the government’s offer within this time?

The government must give you at least 40 days to respond to the offer before filing a condemnation action.  ORS 35.346(1).  It is important to note, however, that you are not required to respond to the offer.  If you fail to respond, you will be deemed to have rejected the offer.  The government may then initiate the condemnation action, but negotiations will most likely continue regarding fair market value and the government’s acquisition of title up to and through the litigation process.

If I reject the offer or do not respond to it, will the government lower its offer?

No, the government generally cannot lower its offer as a negotiation strategy.  For practical purposes, the government’s initial offer represents a floor for the negotiations regarding just compensation.  As a matter of law, the government cannot lower the amount of its initial offer except upon an order of the court, and that order cannot be entered less than 60 days before trial.  ORS 35.346(2).

Should I obtain an independent appraisal?

Yes, in most circumstances, you should obtain an independent appraisal.  Though the appraiser contracted by the government is a professional and bound by professional standards, he or she is hired by the government.  You also need an analysis performed by an independent professional.  Further, if you know the government’s offer is imminent, obtaining an independent appraisal before receiving the offer will, in certain situations, provide you and your advisors the necessary information to develop a proper negotiation strategy.

Farmington Road Project: Washington County and Beaverton Taking Property

Washington County and the City of Beaverton are moving forward with their Farmington Road Project, which calls for the widening of Farmington Road from Murray Boulevard to Hocken Avenue.  As set forth on the Project’s website:

Farmington Road, between Murray Boulevard and Hocken Avenue, is a heavily-used four-lane section of roadway that lacks continuous bicycle and pedestrian facilities.

This project will make needed safety and traffic capacity improvements to this section of Farmington Road, for all modes of transportation.

Improvements include:

■   Widening the roadway to five lanes (two travel lanes in each direction with a center turn lane)

■   Continuous bicycle facilities

■   Continuous pedestrian facilities

■   Street lighting

■   Realign 141st and 142nd Avenues

An aerial strip map showing the extent of the takings and impacted properties is found here.  While this Project appears to serve a legitimate public purpose, whether the owners of the impacted properties will receive the just compensation to which they are constitutionally-entitled is a wholly different matter.

The Project’s published schedule indicates that the government has begun “right of way acquisition,” which will continue into the Fall of 2014.  Construction was slated to begin in the Spring of 2015, but has been accelerated to the Summer of 2014 according to recent reports.

Urban and Rural Reserves: Oregon Court of Appeals Reverses and Remands LCDC Order

Today, in a 126-page, long-awaited opinion, the Oregon Court of Appeals reversed and remanded the Land Conservation and Development Commission’s order confirming the designation of urban and rural reserves by Metro and the counties of Clackamas, Multnomah and Washington.  Barkers Five, LLC v. Land Conservation and Development Commission (A152351).  The urban and rural reserve system was designed to manage growth in the Portland metropolitan area until 2060.

A synopsis of the decision can be found in today’s media release from the Court of Appeals.

Here’s an excerpt from the opinion (footnotes omitted):

This case concerns the designation of urban and rural reserves in the Portland metropolitan area that will guide its growth until 2060. Metro, in conjunction with Clackamas, Multnomah, and Washington counties, designated such reserves under a new process that had been established by the legislature in 2007, and, in June 2010, they submitted their designation to the Land Conservation and Development Commission (LCDC) for review. See generally ORS 197.626(1)(c), (f) (providing for LCDC review of urban and rural reserves). Ultimately, in August 2012–approximately one year after LCDC voted to acknowledge a revised submittal–LCDC issued its 156-page, single spaced acknowledgment order.

Twenty-two petitioners–including property owners, nonprofit and citizen 12 groups, and municipalities–seek judicial review of that order. In hundreds of pages of briefing, they raise assignments of error that are predicated on a record that consists of approximately 36,000 pages. Collectively, petitioners’ assignments of error range from fundamental methodological issues pertaining to LCDC’s understanding and application of the legal principles that govern the designation of reserves to the correctness of LCDC’s substantial evidence review of Metro and the counties’ designation of particular land as either urban or rural reserves. Simply stated, petitioners contend that LCDC’s order is unlawful in substance because, in reviewing Metro and the counties’ designation, LCDC misapplied the legal principles governing the designation of urban and rural reserves and circumscribing its review.

* * *

[W]e conclude that LCDC erred in four respects. In particular, LCDC erred in (1) approving Washington County’s misapplication of the rural reserve factors pertaining to agricultural land; (2) concluding that Multnomah County had adequately “considered” the rural reserve factors pertaining to Area 9D; (3) concluding that it has authority to affirm a local government’s decision where its findings are inadequate if the evidence “clearly supports” the decision; and (4) failing to meaningfully explain why–even in light of weighty countervailing evidence–Metro and the counties’ designation of Areas 4A to 4D (commonly referred to as Stafford) as urban reserves is supported by substantial evidence.

Accordingly, because LCDC’s order is unlawful in substance in various respects, we reverse and remand LCDC’s order for further action consistent with the principles expressed in this opinion. ORS 197.651(10)(a) (providing that “[t]he Court of Appeals shall reverse or remand the order only if the court finds the order is[,]” among other things, “[u]nlawful in substance”).

What effect this decision will have on the legislative efforts to craft a “grand bargain” regarding the urban and rural reserves designations and related urban growth boundary issues is unknown.  Stay tuned.

Anatomy of an Oregon Condemnation Lawsuit

The government wants to take your property, and you’ve heard that if “negotiations” with the government don’t work out, a lawsuit will result.  There are a lot of myths and misconceptions surrounding litigation, including condemnation litigation.  Let’s shed some light on the subject.

What gives rise to a condemnation lawsuit?  Who files the lawsuit?

If you cannot reach agreement with the government as to just compensation after initial negotiations, the government must file a condemnation lawsuit to obtain possession of and title to the property.  The condemnation lawsuit is formally initiated by the filing of a “Complaint.”  The Complaint will name the property owner and, typically, all holders of legal interests in the property (mortgage lenders, etc.) as defendants in the lawsuit.  ORS 35.245.  The Complaint will also describe the government’s eminent domain powers, allege that the property is necessary for a particular public use, and allege the amount the government contends is just compensation.  ORS 35.255.  The government’s just compensation allegation will most likely restate its original offer to you.

Is arbitration available?

Yes, arbitration is available in certain circumstances at the election of the property owner.   Arbitration is a process similar to trial, but less formal.  In arbitration, rather than have a judge or jury decide the case, an experienced attorney or retired judge acts as the sole decision maker or “arbitrator.”  If the total amount claimed by any party as just compensation does not exceed $20,000, you may elect binding arbitration, meaning that the decision of the arbitrator is final and not appealable except for very limited reasons.  If the total amount claimed by any party exceeds $20,000, but is less than $50,000, you may elect non-binding arbitration, which allows either party unsatisfied with the outcome of the arbitration, to appeal the case for a normal trial.  ORS 35.346(6).

How long does the lawsuit take?

A condemnation lawsuit may last between 12 and 24 months if it goes all the way through trial.  That being said, the lawsuit can possibly settle at any time.

What happens in the lawsuit before the trial?

Prior to the trial, there are a number of important milestones following the Complaint.

•     Immediate Possession:  If the government needs immediate possession of the property, which is often the case for construction purposes, it will typically file a “Notice of Immediate Possession” at or near the time of the Complaint.  ORS 35.352.  The Notice of Immediate Possession basically moves the court for an order allowing the government to take possession of the property prior to the trial and judgment on its value.  Except in the most extreme of cases, the court grants such requests.

•     Deposit of Funds by Government; Property Owner Withdrawal:  In order to obtain immediate possession, the government must deposit with the court what it contends is just compensation for the taking of the property.  ORS 35.265.  Upon order of the court, you are then permitted to withdraw those funds from the court without prejudicing your case.  ORS 35.285.  The withdrawal process can be more complicated if there is more than one defendant.

•     Property Owner’s Answer:  Your “Answer” is the formal response to the government’s Complaint.  It is generally due 30 days after the filing and service of the Complaint, and failure to timely file an Answer may result in you being “defaulted” or forfeiting the right to contest the government’s contention of just compensation.  The Answer responds to the government’s allegations, sets forth any available defenses to the government’s exercise of its eminent domain power, and alleges the amount you believe to be just compensation for the property taken and, as applicable, damages to the remaining value of the property.  ORS 35.295.  In certain situations, you may also allege in coordination with the Answer counterclaims against the government, including those for “inverse condemnation.”

•     Discovery:  “Discovery” is the formal process by which parties to a lawsuit obtain documents and information from each other prior to trial.  This process may involve requests for production of documents, requests that parties admit certain facts, and depositions of parties.  The parties may also request documents from and depositions of third parties by way of subpoena.  In Oregon state court, there is no “expert discovery,” so a party may not seek documents from or depose the other party’s appraiser and other experts prior to trial.

•     Exchange of Appraisals:  While the government must in most cases provide the property owner an appraisal with its original offer, and the parties may exchange subsequent appraisals at any point in the process as part of their negotiations, Oregon law requires the exchange of appraisals at certain times prior to trial.  Appraisals not exchanged prior to trial cannot be used at trial.  ORS 35.346(5).

•     Settlement Conference or Mediation:  Many courts will require the parties to engage in a judicial settlement conference before allowing a case to proceed to trial.  The parties may also engage in private mediation.

•     Pre-Trial Motions; Jury Instructions:  Immediately prior to trial, the parties will typically file motions with the court seeking the exclusion of certain evidence that may be irrelevant, unduly prejudicial, or otherwise inconsistent with the rules of evidence.  These motions are designed to limit the information that reaches the jury, and the orders arising from them are very important to how the case is tried.  The parties will also propose to the court instructions the judge should give to the jury regarding the law the jury must implement.  The court’s wording of the jury instructions can significantly influence the conduct of the trial and the jury’s verdict.

•     Jury Selection:  The jury selection process is technically part of the trial, but it takes place prior to what most people think of the as the beginning of the trial—opening statements.  The jury selection process entitles the property owner and the government to question and challenge potential jurors in a process called voir dire.  More art than science, jury selection can have major impacts on the outcome of the trial.

Will I testify?

Yes, in many cases you, as the property owner, may testify regarding your opinion of the value of the property taken and, as applicable, the damages to the remaining value of the property.

Who else will testify?

Depending on the nature of the taking, a variety of fact and expert witnesses may testify at trial as to just compensation.  These witnesses will include, in the least, the respective appraisers hired by the government and the property owner.

Will the jury view my property?

Yes, in many cases the jury will take a court-sanctioned “field trip” to view the property.  Either party may request the jury view by motion to the court prior to the formation of the jury.  ORS 35.315.  In many cases, by the time of trial and the jury view, the government has taken possession of the property and the project for which the property was taken is under construction or complete.  The jury view typically happens right before or right after the lawyers’ opening statements to the jury.

How long will the trial take?  How does it progress?

Generally, a trial on a condemnation action will take four days.  Depending on the complexity of the case and the number of witnesses for each side, the trial could last longer.  After the steps already described above (jury selection, jury view, opening statements), and if the property owner elected to proceed first in the presentation of evidence under ORS 35.305,  the property owner’s lawyer will present its case through the testimony of witnesses and presentation of documentary and demonstrative evidence.   The government’s lawyer will then present its case in a similar fashion.  After the parties are given the opportunity to call rebuttal witnesses, the court will give the jury its final instructions on the law, the lawyers will give closing arguments, and the jury will retire for deliberations on the verdict.  It should be noted that the order of the trial may be altered by the judge in certain respects.

What happens after the jury returns a verdict?

The verdict is reduced to a judgment, which is a document that states the just compensation the government must pay the property owner.  Upon the government satisfying the judgment, it also operates to transfer title to the property to the government.  ORS 35.325.  In many cases, the property owner is also then entitled to petition the court for an award of attorney fees and costs.  Based upon the court’s determination of the property owner’s reasonable attorney fees and costs, a supplemental judgment is typically entered requiring the government to pay the property owner in such an amount.

What kinds of fees and costs are involved in such a lawsuit?

Property owners can expect to incur attorney fees, expert witness fees, filing fees, the costs associated with appraising the property, related planning and engineering costs, and general expenses associated with litigation.  Depending on the nature of the case, other types of fees and costs may be incurred.  The amount of fees and costs varies widely depending on the complexity of the matter, the length of the dispute, and other factors.

Can I recover my fees and costs from the government?

In many cases, yes.  Oregon law allows a property owner to recover fees and costs, as determined by the court, in three instances:

•     If the amount of just compensation determined by the jury exceeds the government’s highest written offer in settlement submitted to the property owner before the government filed its Complaint, ORS 35.346(7)(a);

•     If the court determines that the first written offer made by the government before filing the Complaint did not constitute a good faith offer of an amount reasonably believed by the government to be just compensation, ORS 35.346(7)(b); or

•     The government “abandons” the condemnation lawsuit by dismissing it or filing an election not to take the property after the jury’s verdict, ORS 35.335.

If the government does not abandon the action, its first offer was in good faith, and the jury’s determination of just compensation does not exceed the government’s highest written offer before filing its Complaint, the government is entitled to a judgment against the property owner for certain limited costs and disbursements, but not attorney and expert witness fees.  ORS 35.346(9).

The amount of fees and costs to which you are entitled may be affected by an “offer of compromise” by the government.  An offer of compromise is a formal offer by the government to settle the case after filing the Complaint.  If you do not accept the offer of compromise, but do not obtain a judgment after trial in an amount greater than the offer, your entitlement to fees and costs can be reduced and the government’s entitlement to costs and disbursements can be increased.  ORS 35.300.

Finally, attorney fees and costs should be included in negotiations with the government, and they are often accounted for in settlement agreements reached with the government.

Can either side appeal?  Am I entitled to fees and costs on appeal?

Yes, either the government or the property owner may appeal a judgment of the court.  An appeal, however, will not prevent the government from taking possession of the property and using it for the designated public use.  If you prevail on appeal, you are entitled to an award of reasonable attorney fees and costs incurred during the appeal process.  ORS 35.355.

What is the effect of withdrawing funds awarded by the jury on my appeal rights?

If you withdraw from the court the compensation awarded by the jury and deposited by the government (as opposed to the government’s original deposit of its contention of just compensation), you will likely waive your right to appeal.  ORS 35.365.

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