Gould v. Deschutes Cnty.

• Decision Date: 05 August 2015
• Docket Number: 2014080,A158835.
• Citation: 362 P.3d 679,272 Or.App. 666
• Parties: Annunziata GOULD, Petitioner Cross–Respondent, v. DESCHUTES COUNTY, Respondent, and Loyal Land, LLC, Respondent Cross–Petitioner.
• Court: Oregon Court of Appeals

272 Or.App. 666

362 P.3d 679

Annunziata GOULD, Petitioner Cross–Respondent,

v. DESCHUTES COUNTY, Respondent,andLoyal Land, LLC, Respondent Cross–Petitioner.

2014080

A158835.

Court of Appeals of Oregon.

Argued and Submitted May 7, 2015.

Decided Aug. 5, 2015.

Paul D. Dewey, Bend, argued the cause and filed the briefs for petitioner-cross-respondent.

Robyn Ridler Aoyagi, Portland, argued the cause for respondent-cross-petitioner Loyal Land, LLC. With her on the briefs were David J. Petersen and Tonkon Torp LLP.

Laurie E. Craghead for respondent Deschutes County joined the opening brief of respondent-cross-petitioner Loyal Land, LLC, Robin Ridler Aoyagi, David J. Petersen, and Tonkon Torp LLP.

Before ORTEGA, Presiding Judge, and HASELTON, Chief Judge, and SERCOMBE, Judge.^*

ORTEGA, P.J.

This proceeding involves a petition and cross-petition for review of a final order of the Land Use Board of Appeals (LUBA) that remanded the declaratory ruling of the Deschutes County Board of Commissioners (the county) that a conceptual master plan (CMP) for a destination resort had been "initiated" within the county code's time limitations. In the petition, petitioner contends that LUBA erred by deferring to the county's "implausible" interpretation of a code provision that addressed whether a CMP had been "initiated." Alternatively, petitioner complains that the county's finding that the applicant was not at fault for failing to comply with conditions of approval in the CMP was not supported by substantial evidence. In the cross-petition, respondent Loyal Land, LLC (Loyal Land) maintains that LUBA failed to give the county's interpretation of another portion of the county code proper deference. We reverse and remand on the petition, and affirm on the cross-petition.

The proposed destination resort has an extensive history of litigation. For purposes of this opinion, we provide only the details necessary to understand and analyze the issues here. The Thornburgh Resort is a proposed destination resort on about 2,000 acres in Deschutes County. Under the Deschutes County Code (DCC), the approval of a destination resort requires three steps. First, the county must approve a CMP. DCC 18.113.040(A). Second, the county must approve a final master plan (FMP). DCC 18.113.040(B). And third, each element or development phase of the resort must receive additional approval through a required site-plan review or subdivision process. DCC 18.113.040(C).

Loyal Land's predecessor,¹ Thornburgh Resort Company, LLC, obtained an approved CMP from the county in May 2006. Petitioner appealed the county's decision approving the CMP to LUBA, and LUBA remanded that decision. Gould v. Deschutes County, 54 Or. LUBA 205 (2007) (Gould I ). Petitioner then sought our review of LUBA's decision, asking us to grant a more extensive remand than the one granted by LUBA. On review, we agreed with petitioner that LUBA had erred in part, and remanded the case. Gould v. Deschutes County, 216 Or.App. 150, 171 P.3d 1017 (2007) (Gould II ). On April 15, 2008, the county approved the version of the CMP that is at issue in this proceeding, and included 42 conditions of approval, some of which would require an approved FMP before they could be completed. Petitioner appealed that decision to LUBA, and LUBA affirmed. Gould v. Deschutes County, 57 Or. LUBA 403 (2008) (Gould III ). Petitioner again sought our review of LUBA's decision, and in Gould v. Deschutes County, 227 Or.App. 601, 206 P.3d 1106, rev. den., 347 Or. 258, 218 P.3d 540 (2009) (Gould IV ), we affirmed. Meanwhile, on October 8, 2008, the county approved Thornburgh's FMP. Petitioner appealed the approved FMP to LUBA, and LUBA remanded the county's FMP decision. Gould v. Deschutes County, 59 Or. LUBA 435 (2009) (Gould V ). We affirmed LUBA's remand of the FMP. Gould v. Deschutes County, 233 Or.App. 623, 227 P.3d 758 (2010) (Gould VI ). And, on August 17, 2010, LUBA remanded the FMP to the county.²

Under the DCC, a CMP approval, as a land use permit, "is void two years after the date the discretionary decision becomes final if the use approved in the permit is not initiated within that time period." DCC 22.36.010(B)(1).³ DCC 22.36.020(A)(3) provides that

"[a] development action undertaken under a land use approval * * * has been ‘initiated’ if it is determined that: * * * Where construction is not required by the approval, the conditions of a permit or approval have been substantially exercised and any failure to fully comply with the conditions is not the fault of the applicant."

The two-year limit on Loyal Land's CMP was set to expire on November 11, 2011. Ten days before the expiration date, Loyal Land asked the county, pursuant to the county code, for a declaratory ruling that the CMP had been "initiated" under DCC 22.36.020(A)(3). A hearings officer ruled that the CMP had been initiated, and the county commission declined to exercise discretionary review of that decision. Petitioner appealed the hearings officer's decision to LUBA, challenging the officer's interpretation of DCC 22.36.020(A)(3). LUBA concluded that the hearings officer had incorrectly interpreted the code provision, and remanded the matter to the county.⁴ Gould v. Deschutes County, ––– Or. LUBA –––– (LUBA No. 2012–042, Jan. 8, 2013) (Gould VII ).

The issues before us in this proceeding flow from LUBA's decision in Gould VII. Accordingly, we pause to examine that decision. DCC 22.36.020(A)(3) requires two findings to determine if a development action authorized by a permit has been initiated: (1) whether the conditions of approval have been substantially exercised (the "substantially exercised prong"), and (2) whether, for any conditions that have not been fully complied with, the failure to comply with the conditions is "not the fault of the applicant" (the "fault of the applicant prong"). Gould VII, ––– Or. LUBA at –––– (slip op. at 20). In Gould VII, LUBA was tasked with reviewing the hearings officer's conclusion that, in evaluating the substantially exercised prong, the county had to consider only those conditions that could be satisfied without FMP, land division, or site plan approvals. That is, the hearings officer had concluded that, out of the 42 conditions of approval in the CMP, for purposes of determining if Loyal Land had substantially exercised the conditions of approval, the officer only had to consider the 15 conditions that she found "relevant"—i.e., those conditions that did not require the applicant to acquire additional permits and approvals.

On appeal, LUBA disagreed, concluding that

"the hearings officer must be able to find both that the [42] conditions of approval, viewed as a whole, have been substantially exercised and that for any of the [42] conditions of approval where there has been a failure to fully exercise the condition, the applicant is not at fault."

Gould VII, ––– Or. LUBA at –––– (slip op. at 20) (emphasis in original). Accordingly, LUBA remanded to the county to "consider whether all of the [42] conditions of approval have been ‘substantially exercised,’ including those that required that the applicant seek additional permits and approvals." Id. LUBA clarified that the applicant need not show that "each of the [42] conditions must separately be ‘substantially exercised’ " but that the 42 conditions of approval, "viewed as a whole, have been substantially exercised." Id. We affirmed LUBA's Gould VII decision without opinion. Gould v. Deschutes County, 256 Or.App. 520, 301 P.3d 978 (2013) (Gould VIII ).

On remand from Gould VII, the hearings officer determined that Loyal Land had not initiated the CMP before it had expired. In particular, the hearings officer concluded that Loyal Land had not "substantially exercised" the 42 conditions of approval and that Loyal Land was at fault for not fully complying with many of the conditions. The county commission took discretionary review of the hearings officer's decision and rejected it, concluding instead that the CMP had been timely initiated. The county concluded that, although 19 of the 42 conditions were "fully exercised" and one additional condition was "substantially exercised," the remaining 22 conditions "required the occurrence of a contingency that did not occur by November 18, 2011." The county explained that Loyal Land had substantially exercised "100% of the conditions of approval that were relevant and necessary to initiation of the CMP." Because Loyal Land had substantially exercised 100 percent of the conditions that were "relevant and necessary to initiation of the CMP," the county decided that Loyal Land's actions "constitute substantial exercise of the conditions of approval of the CMP as a whole."

As to the fault of the applicant prong, the county concluded that Loyal Land's failure to comply with 23 conditions was "not the fault of the applicant." For each condition that Loyal Land had not fully complied with, the county noted that full compliance with the applicable condition "cannot occur until there is a final, approved FMP for the project, and that contingency has not occurred." The county further concluded that, as to the 23 conditions, Loyal Land's

"failure to fully comply with the condition prior to November 18, 2011 (including the failure to cause any contingency to full compliance to occur) is not the fault of the applicant because of the three-step process for approving destination resorts * * *."

The county explained that "[t]he two-year expiration of land use approvals under DCC 22.36.010[ (B)(1) ] must be applied to a destination resort CMP in a manner consistent with the three-step approval process for destination resorts created under DCC Chapter 18.113." The county claimed that, in creating the three-step process, it "never intended that the general two-year expiration of land use permits under DCC 22.36.010[ (B)(1) ] would require full compliance with all conditions of a CMP within two years of approval of the CMP[,]" and that, "[t]o find...