Hall v. State

• Decision Date: 10 October 2012
• Docket Number: 081164.,A146386
• Citation: 252 Or.App. 649,288 P.3d 574
• Parties: S. Fred HALL; and Viewcrest Investments, LLC, an Oregon limited liability company, Plaintiffs–Respondents, v. STATE of Oregon, by and through the OREGON DEPARTMENT OF TRANSPORTATION, Defendant–Appellant, and Westek Properties, LLC, Intervenor.
• Court: Oregon Court of Appeals

252 Or.App. 649

288 P.3d 574

S. Fred HALL; and Viewcrest Investments, LLC, an Oregon limited liability company, Plaintiffs–Respondents,

v. STATE of Oregon, by and through the OREGON DEPARTMENT OF TRANSPORTATION, Defendant–Appellant,andWestek Properties, LLC, Intervenor.

A146386; 081164.

Court of Appeals of Oregon.

Argued and Submitted May 2, 2012.

Decided Oct. 10, 2012.

Patrick M. Ebbett, Assistant Attorney General, argued the cause for appellant. With him on the brief were John R. Kroger, Attorney General, Mary H. Williams, Solicitor General, and Denise Fjordbeck, Attorney–in–Charge, Civil/Administrative Appeals. With him on the reply brief were John R. Kroger, Attorney General, and Anna M. Joyce, Solicitor General.

W. Michael Gillette, Portland, argued the cause for respondent. With him on the brief were Schwabe Williamson & Wyatt P.C. and Russell L. Baldwin.

Before SCHUMAN, Presiding Judge, and WOLLHEIM, Judge, and NAKAMOTO, Judge.

SCHUMAN, P.J.

The jury in this inverse condemnation case found that plaintiffs' property had a fair market value of $4,000,000 before defendant's disputed activities and that these activities—repeated statements to the general public and potential purchasers that defendant intended to eliminate an I–5 interchange, thereby rendering plaintiffs' property landlocked, and then acquire it by condemnation—amounted to a substantial interference with plaintiffs' use and enjoyment of the property, reducing the property's value by $3,378,750.¹ The court subsequently awarded plaintiffs that amount plus $466,222.87 in attorney fees and costs. Defendant, the Oregon Department of Transportation (ODOT), appeals, contending first that its actions did not amount to a taking and second that, even if its actions were a taking, they did not amount to a compensable taking; a compensable taking in this situation would have occurred only if ODOT's activities deprived plaintiffs of all economically viable use of the property. We agree with ODOT that there was no taking, and we therefore reverse.

Plaintiffs own a 25–acre parcel of real property abutting Interstate 5 in Linn County. The property's only access to the public highway system is by way of an easement connecting the property to an overpass that is part of what is known as the Viewcrest I–5 interchange. When plaintiffs purchased the property in 1991, that access was blocked by a guardrail; in 1993, plaintiffs prevailed in a lawsuit against ODOT seeking removal of the guardrail. Plaintiffs then began to look for opportunities to develop their property, but without success. They did, however, purchasetwo small parcels, each containing a billboard, within the larger parcel.

Meanwhile, ODOT began to develop plans to address what it characterized as safety concerns near the Viewcrest I–5 interchange. One of the potential plans was to close the interchange, thereby rendering plaintiffs' property landlocked. ODOT informed plaintiffs, the general public, and affected federal and local governmental entities of its plans, including the closure option. Public meetings were held. The closure option was not popular. ODOT then revised the plan, replacing the immediate closure option with a more delayed process. That planning process was ongoing when plaintiffs filed this action.

Plaintiffs' complaint alleged that ODOT's widely published statements indicating plans to close the Viewcrest interchange, landlock plaintiffs' property, and then acquire it by condemnation, resulted in “blighting plaintiffs' land” and causing “direct economic damages” in the amount of $5,353,000. At the contentious jury trial, each side attempted (without objection) to impugn the motives of the other, and also to use expert appraisal testimony to establish the property's value. Legal arguments centered on whether ODOT's activities amounted to a taking and, if so, the appropriate test to determine whether the taking was compensable. ODOT argued that planning to regulate property does not amount to a taking even if the planning might reduce the property's value, and that, in any event, no compensable taking occurs unless the government's activities leave the property with no substantial viable economic use. ODOT lost its legal arguments at several junctures: in an unsuccessful motion for a directed verdict, an unsuccessful challenge to jury instructions, an unsuccessful challenge to the verdict form, and an unsuccessful motion for judgment notwithstanding the verdict. The jury was instructed to determine whether ODOT's activities “substantially and unreasonably interfered with plaintiffs' use and enjoyment of their land and that [ODOT's] activities were sufficiently direct, particular, and of a magnitude to support a conclusion that the interference has reduced the fair market value of plaintiff's [land],” and was given a verdict form containing that question. The jury answered, “Yes.” It also determined that the fair market value of the property was $4,000,000, and that “the amount of the reduction in the market value of plaintiffs' property caused by the unreasonable interference of [ODOT]” was $3,378,750. In a supplemental judgment, the court awarded plaintiffs their costs and attorney fees in the amount of $466,222.87 plus interest. This appeal ensued.

ODOT raises seven assignments of error. Five are variations on the argument that, in denying ODOT's motions and in instructing the jury, the court erred by rejecting the argument that ODOT's activities did not amount to a taking and rejecting the denial of all viable economic use standard in favor of the substantial and unreasonable interference with use and enjoyment standard as the appropriate measure to determine whether a compensable taking occurred under Article I, section 18, of the Oregon Constitution.² Because we agree that the court erred in denying ODOT's motion for a directed verdict, we need not address ODOT's sixth assignment of error, arguing that the court, having required the state to pay compensation, should have awarded the property to the state. ODOT's seventh assignment of error, challenging the award of attorney fees, is moot.

Although they disagree about several issues, the parties substantially agree on several others. They agree that, ordinarily, “[t]o establish a taking by inverse condemnation, the plaintiff is not required to show that the governmental defendant deprived the plaintiff of all use and enjoyment of the property at issue. * * * A ‘substantial interference’ with the use and enjoyment of property is sufficient.” Vokoun v. City of Lake Oswego, 335 Or. 19, 26, 56 P.3d 396 (2002) (quoting Hawkins v. City of La Grande, 315 Or. 57, 68–69, 843 P.2d 400 (1992)). They also agree, however, that, when the governmental action resulting in the interference is legislation or some form of quasi-legislation (agency rules, zoning ordinances, etc.), a taking does not occur unless the enactment deprives the property owner of “all substantial beneficial use of its property.” Fifth Avenue Corp. v. Washington Co., 282 Or. 591, 609, 581 P.2d 50 (1978). And finally, the parties agree that ODOT's activities in this case did not deprive plaintiffs of all economically feasible use of their property; the jury found as fact that it retained a value of $621,250.

ODOT argues initially that, under Oregon law, “mere plotting or planning in anticipation of a public improvement does not constitute a taking or...