Owen v. City of Portland

• Citation: 368 Or. 661,497 P.3d 1216
• Decision Date: 04 November 2021
• Docket Number: CC 17CV05043 (SC S068000)
• Parties: Phillip E. OWEN, an individual; Owen Properties, LLC, an Oregon limited liability company; and Michael L. Feves, an individual, Petitioners on Review, v. CITY OF PORTLAND, an Oregon municipal corporation, Respondent on Review.
• Court: Supreme Court of Oregon

368 Or. 661

497 P.3d 1216

Phillip E. OWEN, an individual; Owen Properties, LLC, an Oregon limited liability company; and Michael L. Feves, an individual, Petitioners on Review,

v.CITY OF PORTLAND, an Oregon municipal corporation, Respondent on Review.

CC 17CV05043 (SC S068000)

Supreme Court of Oregon.

Argued and submitted May 4, 2021.

November 4, 2021

John DiLorenzo, Jr., Davis Wright Tremaine LLP, Portland, argued the cause for petitioners on review. Kevin H. Kono filed the briefs for petitioners on review. Also on the briefs was John DiLorenzo, Jr., Portland.

Denis M. Vannier, Office of the City Attorney, Portland, argued the cause and filed the brief for respondent on review.

Sara Kobak, Schwabe, Williamson & Wyatt, PC, Portland, filed the brief for amicus curiae Oregon Realtors. Also on the brief was W. Michael Gillette, Portland.

Emily M. Matasar, Beery, Elsner & Hammond, LLP, Portland, filed the brief for amicus curiae League of Oregon Cities. Also on the brief was Chad A. Jacobs, Portland.

Emily Rena-Dozier, Oregon Law Center, Portland, and Diane D. Nguyen, Legal Aid Services of Oregon, Portland, filed the brief for amici curiae Oregon Law Center and Legal Aid Services of Oregon. Also on the brief was MariRuth Petzing, Oregon Law Center, Portland.

Phil Goldsmith, Law Office of Phil Goldsmith, Portland, filed the brief for amicus curiae Oregon Trial Lawyers Association.

Before Walters, Chief Justice, and Balmer, Nakamoto, Flynn, Nelson and Garrett, Justices.^**

BALMER, J.

At issue in this case is a challenge to a City of Portland ordinance requiring landlords to pay relocation assistance to displaced tenants in certain circumstances. Plaintiffs are landlords that rent property in the city. Plaintiffs filed a declaratory judgment and injunction action against the city contending, as relevant here, that ORS 91.225 preempts the ordinance at issue and that the ordinance impermissibly creates a private cause of action that a tenant may bring against a landlord that violates the ordinance. On review, we conclude that ORS 91.225, which prohibits municipalities from "enact[ing] any ordinance or resolution which controls the rent that may be charged for the rental of any dwelling unit," ORS 91.225(2), with certain exceptions, does not prevent municipalities from enacting other measures that may affect the amount of rent that a landlord charges or may discourage a landlord from raising its rents. We further hold that ORS 91.225 does not preempt the city's ordinance. We also reject plaintiffs’ contention that the ordinance impermissibly creates a private cause of action.

I. BACKGROUND

The Oregon legislature enacted what is now ORS 91.225 as a temporary measure in 1983. Or Laws 1983, ch. 708, §§ 3-5. The legislature made that measure permanent in 1985 with some amendments. Or Laws 1985, ch. 335. As now codified, ORS 91.225 reads:

"(1) The Legislative Assembly finds that there is a social and economic need to insure an adequate supply of affordable housing for Oregonians. The Legislative Assembly also finds that the imposition of general restrictions on housing rents will disrupt an orderly housing market, increase deferred maintenance of existing housing stock, lead to abandonment of existing rental units and create a property tax shift from rental-owned to owner-occupied housing. Therefore, the Legislative Assembly declares that the imposition of rent control on housing in the State of Oregon is a matter of statewide concern .

"(2) Except as provided in subsections (3) to (5) of this section, a city or county shall not enact any ordinance or resolution which controls the rent that may be charged for the rental of any dwelling unit .

"(3) This section does not impair the right of any state agency, city, county or urban renewal agency * * * to approve rent increases, establish base rents or establish limitations on rents on any residential property for which it has entered into a contract under which certain benefits are applied to the property for the expressed purpose of providing reduced rents for low income tenants.

"* * * * *

"(7) * * * The electors or the governing body of a city or county shall not enact, and the governing body shall not enforce, any ordinance, resolution or other regulation that is inconsistent with this section."

ORS 91.225 (emphases added). ORS 90.100(38) defines "rent" as used in ORS 91.225 as, in relevant part, "any payment to be made to the landlord under the rental agreement, periodic or otherwise, in exchange for the right of a tenant * * * to occupy a dwelling unit." The statute does not define "control" or "rent control."

Thirty-two years after the legislature enacted that statute, the city sought to address the displacement of residential tenants from rental properties. In 2017, the city council passed Ordinance 188219, which amended the Portland City Code to require landlords to pay a sum for "relocation assistance" to tenants in certain circumstances, including when a landlord increases the rent of a unit by 10 percent or more within a 12-month period and the tenant gives notice that they intend to terminate the agreement.¹

The amount of relocation assistance required varies from $2,900 for a studio to $4,500 for larger units. The ordinance permits a tenant to bring an action against a landlord that fails to comply:

"A Landlord that fails to comply with any of the requirements set forth in this Section 30.01.085 shall be liable to the Tenant for an amount up to 3 months Rent as well as actual damages, Relocation Assistance, reasonable attorney fees and costs (collectively, ‘Damages’). Any Tenant claiming to be aggrieved by a Landlord's noncompliance with the foregoing has a cause of action in any court of competent jurisdiction for Damages and such other remedies as may be appropriate."

PCC 30.01.085(D) (2017) (emphasis added).

Plaintiffs filed this action seeking a judgment both declaring portions of the ordinance to be invalid and permanently enjoining enforcement of the ordinance. Plaintiffs contended, among other things, that portions of the ordinance were preempted by ORS 91.225 and that others exceeded the city's authority under its charter in violation of the state constitution. On cross-motions for summary judgment, the trial court held that "[i]f the legislature had intended to proscribe ordinances that had the indirect effect of controlling rents it could have said so," and further held that because ORS 91.225 had more than one plausible construction, that ambiguity should be resolved in favor of the local home-rule jurisdiction. The trial court accordingly denied plaintiffs’ motion for summary judgment and granted the city's motion. Plaintiffs appealed, reprising several of their arguments that the ordinance was invalid.

The Court of Appeals affirmed the substance of the trial court's decision. The court concluded that the trial court properly granted the city's motion for summary judgment and denied plaintiffs’ motion, but it also held that the trial court's general judgment dismissing the complaint was not the proper disposition of plaintiffs’ declaratory judgment action. Owen v. City of Portland , 305 Or. App. 267, 286, 470 P.3d 390 (2020). Accordingly, the Court of Appeals vacated the judgment and remanded the case to the trial court, directing it to issue a judgment declaring the respective rights of the parties. Id. at 286-87, 470 P.3d 390. We allowed plaintiffs’ petition for review.²

II. PREEMPTION AND THE TENANT RELOCATION ASSISTANCE ORDINANCE

The first issue is whether the ordinance's requirement that landlords pay relocation assistance to tenants in certain circumstances "controls the rent that may be charged" for purposes of ORS 91.225(2) and is therefore preempted by that statute. The ordinance requires such payments to tenants whose rent has increased by more than 10 percent in 12 months and who choose to relocate rather than pay that higher rent. For the reasons discussed below, we conclude that ORS 91.225 does not preempt the ordinance.

A. State Law Preemption

Article XI, section 2, of the Oregon Constitution provides "home rule" for cities and towns that adopt municipal charters.³ Gunderson, LLC v. City of Portland , 352 Or. 648, 659, 290 P.3d 803 (2012). Portland has adopted such a charter. Laws adopted pursuant to that home-rule authority cannot conflict with state legislation. "[H]ome-rule municipalities possess authority to enact substantive policies, even in areas also regulated by state law, so long as the local enactment is not incompatible with state law." Id. (internal quotation marks omitted). The analytical process for determining whether state law preempts a local law in Oregon is well established:

"[B]oth municipalities and the state legislature in many cases have enacted laws in pursuit of substantive objectives, each well within its respective authority, that were arguably inconsistent with one another. In such cases, the first inquiry must be whether the local rule in truth is incompatible with the legislative policy, either because both cannot operate concurrently or because the legislature meant its law to be exclusive. It is reasonable to interpret local enactments, if possible, to be intended to function consistently with state laws, and equally reasonable to assume that the legislature does not mean to displace local civil or administrative regulation of local conditions by a statewide law unless that intention is apparent. However, when a local enactment is found incompatible with a state law in an area of substantive policy, the state law will displace the local rule."

La Grande/Astoria v. PERB , 281 Or. 137, 148-49, 576 P.2d 1204, aff'd on reh'g , 284 Or. 173, 586 P.2d 765 (1978) (citations and footnote omitted).

The question, then, is whether a local law is "incompatible" with state law, "either because both cannot operate concurrently or because the legislature meant its law to be exclusive." Id. To protect the constitutional interests of...