State v. Alderwoods (Or.), Inc.

• Decision Date: 31 December 2015
• Docket Number: CC C085449CV,SC S062766.,CA A146317
• Parties: STATE of Oregon, acting by and through its DEPARTMENT OF TRANSPORTATION, Respondent on Review, v. ALDERWOODS (OREGON), INC., an Oregon corporation, successor by merger with Young's Funeral Home, Inc., an Oregon corporation, Petitioner on Review, and Bank of America, N.A., a national association, as administrative agent, Defendant.
• Court: Oregon Supreme Court

358 Or. 501

366 P.3d 316

STATE of Oregon, acting by and through its DEPARTMENT OF TRANSPORTATION, Respondent on Review,

v. ALDERWOODS (OREGON), INC., an Oregon corporation, successor by merger with Young's Funeral Home, Inc., an Oregon corporation, Petitioner on Review,andBank of America, N.A., a national association, as administrative agent, Defendant.

CC C085449CV

CA A146317

SC S062766.

Supreme Court of Oregon, En Banc.

Argued and Submitted June 16, 2015.

Decided Dec. 31, 2015.

Charles F. Hudson, Lane Powell PC, Portland, argued the cause and filed the brief for petitioner on review. With him on the brief was Thomas W. Sondag.

Denise G. Fjordbeck, Assistant Attorney General, Salem, argued the cause and filed the brief for respondent on review. With her on the brief were Ellen F. Rosenblum, Attorney General, and Anna M. Joyce, Solicitor General.

Jordan R. Silk, Schwabe, Williamson & Wyatt, P.S., Portland, filed the brief for amici curiae Central Oregon Builders Association, Oregonians In Action, and Owners' Counsel of America.

Brian T. Hodges, Pacific Legal Foundation, Bellevue, Washington, filed the brief for amici curiae Pacific Legal Foundation and National Federation of Independent Business Small Business Legal Center.

Denis M. Vannier, Deputy City Attorney, Portland, filed the brief for amicus curiae League of Oregon Cities.

BALDWIN, J.

As part of a highway improvement project, plaintiff, Oregon Department of Transportation (ODOT or the state), brought this condemnation action against defendant, Alderwoods (Oregon), Inc., seeking to acquire "[a]ll abutter's rights of access, if any," between defendant's property and Highway 99W. The improvement project involved rebuilding the sidewalk along Highway 99W and eliminating two driveways that previously had allowed direct vehicular access from defendant's property to the highway. Defendant's property retained access to the highway, however, by means of two driveways onto a city street that runs perpendicular to and intersects the highway. Before trial, the state moved in limine to exclude as irrelevant evidence of any diminution in value of defendant's property as a result of the loss of the two driveways. The trial court concluded that the elimination of those driveways had not effected a taking of defendant's right of access to the highway and granted the state's motion. The Court of Appeals, in an equally divided en banc opinion, affirmed.

We allowed review to determine whether the state's interference with a property owner's right of access to an abutting state highway constitutes a taking for which the owner is entitled to compensation when the owner retains reasonable access to the highway via another abutting road. We answer that question "no" and, for the reasons that follow, affirm the decision of the Court of Appeals.

I. BACKGROUND

Defendant owns a rectangular parcel of property near the interchange of Highway 99W and Highway 217 in Tigard. The southern boundary of defendant's property abuts Highway 99W. The western boundary of defendant's property abuts Warner Avenue, a public road that intersects Highway 99W at the southwest corner of defendant's property. Before ODOT's improvement project, Highway 99W had been accessible from defendant's property at four points: two driveways onto Highway 99W, and two driveways onto Warner Avenue, near the intersection with Highway 99W. ODOT later initiated a project to improve Highway 99W that involved, among other things, rebuilding the sidewalk along Highway 99W and eliminating the two driveways that had allowed direct vehicular access to the highway from defendant's property. The project left intact the two drive-ways onto Warner Avenue.

The following is a diagram of the relevant intersection:

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As part of its highway improvement project, the state brought this condemnation action against defendant to acquire a temporary construction easement across a portion of defendant's property for the purpose of reconstructing the sidewalk and to acquire any right of access that defendant might have to Highway 99W. A month later, ODOT sent defendant a notice of removal of defendant's approaches to Highway 99W. The letter informed defendant that ODOT had no record of a permit for defendant's driveways, and that defendant could either apply for a permit or could provide proof that the existing approaches had been established before 1949. See OAR 734–051–0040(26) (2008) (defining "grandfathered approach," for purposes of exemption from ODOT's permitting system, as any legally constructed approach that existed before 1949).

The entire length of defendant's property that abuts Highway 99W is less than 750 feet from the interchange of Highway 99W and Highway 217, and, under ODOT's minimum safety standards, an approach to a highway must be located at least 750 feet from any highway interchange, OAR 734–051–0125 (2008) (Table 5). No approach to Highway 99W therefore would have been permitted from defendant's property. In any event, defendant did not respond to ODOT's notice, and ODOT reconstructed the sidewalk abutting defendant's property without the driveways that previously had allowed direct vehicular access from the property to Highway 99W.

Before trial in the condemnation action, the state filed a motion in limine seeking to exclude as irrelevant any evidence of the diminished value of defendant's property as a result of the elimination of the two driveways onto Highway 99W. The state argued that its restriction of defendant's access to the highway did not constitute a compensable taking under Article I, section 18, of the Oregon Constitution, because the restriction was intended to promote the efficient and safe use of the highway and because defendant's property retained indirect access to the highway via Warner Avenue. The trial court agreed and granted the state's motion. The parties later stipulated that defendant was entitled to an award of $11,792 as just compensation for the temporary construction easement over defendant's land. The stipulation stated that that amount did "not include any compensation for the taking of any abutting rights of access claimed by defendant, the court having granted plaintiff's motion to exclude all evidence of such taking." The trial court thereafter entered judgment, and defendant appealed, assigning error to the order granting the state's motion in limine.

The Court of Appeals affirmed by an equally divided court. ODOT v. Alderwoods (Oregon), Inc., 265 Or.App. 572, 336 P.3d 1047 (2014). In a concurring opinion in which four judges joined, Judge Armstrong held that the trial court had not erred in granting the state's motion in limine. Id. at 574, 336 P.3d 1047 (Armstrong, J., concurring). After reviewing Oregon cases on the common-law right of access to an abutting road, the Armstrong concurrence noted that a denial of that right may constitute a compensable taking under Article I, section 18, of the Oregon Constitution. Id. at 576, 336 P.3d 1047. Nevertheless, the concurrence observed that "it is well established in Oregon that governmental regulation or modification of a road for road purposes that denies a landowner access to the road does not give rise to a compensable taking of the owner's access right." Id. at 577, 336 P.3d 1047 (emphasis in original; citing Oregon Investment Co. v. Schrunk, 242 Or. 63, 408 P.2d 89 (1965) ; Barrett et al. v. Union Bridge Co., 117 Or. 220, 243 P. 93, reh'g den., 117 Or. 566, 245 P. 308 (1926) ; Brand v. Multnomah County, 38 Or. 79, 60 P. 390, aff'd on reh'g, 38 Or. 79, 62 P. 209 (1900) ).

The Armstrong concurrence concluded that one decision of this court could not be reconciled with the above principles:

"Notwithstanding those decisions holding that a complete loss of access to a road is not a compensable taking of access when the loss is caused by the regulation or modification of the road for road purposes, the Supreme Court concluded in dictum in State Highway Com. v. Burk et al., 200 Or. 211, 265 P.2d 783 (1954), that the conversion of a conventional highway to a limited-access highway, with the concomitant loss of access to the highway by abutting landowners, requires the government to condemn the access rights of the abutting landowners, because denying the owners access to the highway would constitute a compensable taking of their access right."

Alderwoods, 265 Or.App. at 578, 336 P.3d 1047. In the concurrence's view, the dictum in Burk could not be squared with the analysis that applies to governmental regulations that affect land, under which a regulation does not constitute a taking unless it leaves the landowner with no economically viable use of the land. Id. at 579–80, 336 P.3d 1047.

Ultimately, the Armstrong concurrence concluded that Schrunk, Barrett, and Brand established the binding constitutional principle in cases involving abutting rights of access—i.e., that a denial of access for abutting landowners to an existing road to promote the efficient and safe use of the road is not a taking under Article I, section 18. Id. at 582, 336 P.3d 1047. Applying that principle to this case, the concurrence concluded that a taking had not occurred. Id. at 582–83, 336 P.3d 1047. Rather,

"as a result of ODOT's regulatory decision to eliminate the curb cuts and driveways to Highway 99W, which resulted in a loss of access to Highway 99W for which compensation is not owed, see, e.g., Schrunk, 242 Or. at 71 , defendant's property does not have access to Highway 99W irrespective of whether the state condemned the access. Hence, defendant was not entitled to recover damages measured by a loss of access that it does not have. It follows that the trial court did not err in excluding evidence relevant to that measure of damages."

Alderwoods, 265 Or.App. at 582–83, 336 P.3d 1047 (emphases in original).

In a separate concurring opinion, Judge Sercombe concluded that a compensable taking of defendant's right of access to Highway 99W had not occurred, because defendant did not...