State By and Through Dept. of Transp. v. Lundberg

• Decision Date: 28 April 1992
• Parties: STATE of Oregon, By and Through its DEPARTMENT OF TRANSPORTATION, Respondent on Review, v. Walter C. LUNDBERG, individually and as the personal representative of the estate of Frances J. Lundberg, deceased, Petitioner on Review. STATE of Oregon, By and Through its DEPARTMENT OF TRANSPORTATION, Respondent on Review, v. ATLAS CONSTRUCTION COMPANY, an Oregon corporation that took title as Atlas Construction Co., an Oregon corporation, Petitioner on Review. CC A8801-00481; CA A50223; SC S37157; CC A8711-06919; CA A50779; SC S37205.
• Court: Oregon Supreme Court

Page 641

825 P.2d 641

312 Or. 568

STATE of Oregon, By and Through its DEPARTMENT OF

TRANSPORTATION, Respondent on Review, v. Walter C. LUNDBERG, individually and as the personal

representative of the estate of Frances J.

Lundberg, deceased, Petitioner on Review.

STATE of Oregon, By and Through its DEPARTMENT OF

TRANSPORTATION, Respondent on Review, v. ATLAS CONSTRUCTION COMPANY, an Oregon corporation that took

title as Atlas Construction Co., an Oregon

corporation, Petitioner on Review.

CC A8801-00481; CA A50223; SC S37157; CC A8711-06919; CA

A50779; SC S37205.

Supreme Court of Oregon In Banc.

Argued and Submitted Nov. 7, 1990.

Decided Jan. 30, 1992.

Reconsideration Denied April 28, 1992.

G. Kenneth Shiroishi, Portland, argued the cause for petitioner on review Walter C. Lundberg. With him on the petition were Dunn, Carney, Allen, Higgins & Tongue, John M. Keller, and Keller & Keller, P.C., Portland.

Paul G. Dodds, Portland, argued the cause for petitioner on review Atlas Const. Co. On the petition were James W. Hendry and Brownstein, Rask, Sweeney, Kerr, Grim & DeSylvia, Portland.

Jas. Adams, Asst. Atty. Gen., Salem, argued the cause for respondent on review. With him on the response brief were Dave Frohnmayer, Atty. Gen., and Virginia L. Linder, Sol. Gen., Salem.

UNIS, Justice.

In these consolidated cases, the State of Oregon, by and through its Department of Transportation (plaintiff), acquired two pieces of property, located along S.E. 82nd Avenue in Portland, in condemnation actions under its power of eminent domain. ¹ At each trial, the state offered evidence of the existence of a sidewalk dedication ordinance passed by the City of Portland (city). The evidence was offered to suggest that, because of certain limitations placed on uses of the properties by the ordinance, the properties were worth less than they otherwise would have been. In each case, the trial court admitted the evidence for the jury's consideration over timely objection by the owners of the properties. The issue before us is whether the trial court in each proceeding erred in its ruling. We hold that it did not err.

On August 20, 1980, the Portland City Council adopted a land use plan that sought to "create a safe and efficient transportation pattern along 82nd Avenue," "minimize conflicts between vehicular and pedestrian movement," "provide safe pedestrian circulation to community facilities," and "improve the visual appearance" along S.E. 82nd Avenue. In furtherance of those goals, the plan called for widening S.E. 82nd Avenue by establishing an 80-foot right-of-way, which includes a 60-foot roadway (containing four travel lanes and a center lane for left turns) and 10-foot sidewalks with street trees.

On March 11, 1981, a sidewalk dedication ordinance, Portland City Code (PCC) § 17.88.010, was adopted. ² It provides in part:

"No single family, multiple dwelling, industrial or commercial building shall be constructed, or altered so as to increase its number of occupants, on property that does not have direct access by frontage or recorded easement with not less than 10 feet width of right-of-way to a street used for vehicular traffic. If such street or any other street adjacent to the property used for vehicular access for said property does not have a standard full width improvement, including sidewalks, the owner as a condition of obtaining a building permit, conditional use, zone change, land partition or variance, shall provide for such an improvement or a portion thereof as designated by the City Engineer, in accordance with provisions elsewhere in this Title."

Defendants Lundberg and Atlas Construction Co. (Atlas) each own commercially-zoned property that abuts S.E. 82nd Avenue. Lundberg's property is vacant; Atlas' property contains nine rental cottages. The parties agree that the highest and best use for the properties is commercial. No zoning change is, therefore, required. Neither defendant has applied to the city for a building permit, conditional use permit, zone change, land partition, or variance.

In these condemnation actions, plaintiff sought to acquire a 10-foot strip along each defendant's property as part of plaintiff's project to improve S.E. 82nd Avenue. That project included constructing sidewalks. The property sought to be acquired was to be used for sidewalks. After the parties in each case were unable to agree in 1987 as to the appropriate price for the acquisition, plaintiff brought these condemnation actions.

The sole issue at each trial was the just compensation to which each defendant was entitled for the property taken. Before trial, each defendant filed a motion in limine, seeking to prohibit plaintiff from introducing evidence and plaintiff's counsel from making statements or arguments relating to PCC § 17.88.010. Each defendant argued that PCC § 17.88.010 was (a) not relevant to any issue presented at trial, (b) unconstitutional as applied ³ because its dedication requirement violated the takings clause of the Fifth Amendment to the United States Constitution, ⁴ made applicable to the states by the Fourteenth Amendment, and (c) inadmissible under U.S. v. Virginia Electric Co., 365 U.S. 624, 636, 81 S.Ct. 784, 5 L.Ed.2d 838 (1961), which stated that "[t]he court must exclude any depreciation in value caused by the prospective taking once the Government 'was committed' to the project" (citing authorities).

In each proceeding, the trial court denied the motion and admitted the code provision in evidence, as well as expert testimony concerning its effect on the fair market value of each property. The trial courts also allowed plaintiff's counsel to refer to the code provision in opening statements and closing arguments. In each trial the jury did not agree with defendant's value of the condemned property and awarded defendant Lundberg $200 and defendant Atlas $2,500. The Court of Appeals affirmed each judgment. Dept. of Trans. v. Lundberg, 100 Or.App. 601, 788 P.2d 456 (1990); Dept. of Trans. v. Atlas Construction Co., 101 Or.App. 245, 789 P.2d 20 (1990).

We allowed review to determine whether the trial courts erred in allowing the juries to consider the impact of PCC § 17.88.010 on the fair market value of the condemned property. We conclude that the trial courts did not err. We affirm the decisions of the Court of Appeals, but on different grounds than those stated by that court.

Defendants first contend that PCC § 17.88.010, the city's sidewalk dedication ordinance, has no relevance to the value of the condemned property because they have not applied for any land use approvals that would invoke the sidewalk dedication requirement and that, therefore, its evidentiary use by the juries concerning its impact on the fair market value of the condemned property is speculative. We disagree.

In a condemnation action, the owner of property taken for public use by a public body is entitled to "just compensation." U.S. Const., Amend V. Just compensation is full remuneration for loss or damage sustained by an owner of condemned property. It is the fair market value of the condemned property or the fair market value of that of which the condemnee has been deprived by reason of the acquisition of the condemnee's property. State Highway Comm. v. Hooper, 259 Or. 555, 560, 488 P.2d 421 (1971). In the case of a partial taking of property, the measure of damages is the fair market value of the property acquired plus any depreciation in the fair market value of the remaining property caused by the taking. Id. ⁵ Fair market value is defined as the amount of money the property would bring if it were offered for sale by one who desired, but was not obliged, to sell and was purchased by one who was willing, but not obliged, to buy. Highway Comm. v. Superbilt Mfg. Co., 204 Or. 393, 412, 281 P.2d 707 (1955) (citing Pape v. Linn County, 135 Or. 430, 437, 296 P. 65 (1931)). Just compensation requires that valuation of property be based on its highest and best use. ⁶" 'Highest and best use is that which, at the time of appraisal, is the most profitable likely use of a property. It may also be defined as that available use and program of future utilization which produces the highest present land value.' "

2 Damages § 22.4, at 22-4 to 22-5 (Oregon CLE 1990), quoting American Institute of Real Estate Appraisers, The Appraisal of Real Estate 43 (7th ed 1978). The highest and best use of property may be other than the use to which the property is currently put if it is reasonably probable that the property has actual potential for higher and better use. State Highway Com. v. Arnold, 218 Or. 43, 57, 341 P.2d 1089, modified and reh. den. 218 Or. 43, 343 P.2d 1113 (1959); Highway Com. v. Assembly of God, 230 Or. 167, 176, 368 P.2d 937 (1962). The question of the highest and best use of particular property is not a question of constitutional magnitude or of law, but is a question of fact that relates to the question of value and is to be decided by a jury. Douglas County v. Briggs, 286 Or. 151, 157, 593 P.2d 1115 (1979).

The issue, then, is whether the sidewalk dedication ordinance is relevant to the issue of just compensation. Proffered evidence is relevant under OEC 401 if it has "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." See State v. Clowes, 310 Or. 686, 692, 801 P.2d 789 (1990) (rephrasing and applying Oregon Evidence Code (OEC) 401 relevancy standard). This standard is a very low threshold that evidence must cross to be considered relevant. Whether the proffered evidence satisfies the minimum threshold of relevancy required by OEC 401 is a preliminary question for the trial judge under OEC 104(1). Id.

In determining the fair cash market value of the land condemned, "all considerations that might fairly be brought forward and reasonably be given substantial weight in...