West LINN Corp.ORATE PARK v. CITY of West LINN, USCA 05-53061

• Decision Date: 23 September 2010
• Docket Number: SC S056322,USCA 05-53061,05-36062
• Citation: 349 Or. 58,240 P.3d 29
• Parties: WEST LINN CORPORATE PARK, L.L.C., Plaintiff, v. CITY OF WEST LINN, Boris Piatski, and John Does 1-10, Defendants. West Linn Corporation Park, L.L.C., Plaintiff, v. City of West Linn, Boris Piatski, and John Does 1-10, Defendants.
• Court: Oregon Supreme Court

349 Or. 58

240 P.3d 29

WEST LINN CORPORATE PARK, L.L.C., Plaintiff, v. CITY OF WEST LINN, Boris Piatski, and John Does 1-10, Defendants.

West Linn Corporation Park, L.L.C., Plaintiff, v. City of West Linn, Boris Piatski, and John Does 1-10, Defendants.

(USCA 05-53061, 05-36062; SC S056322).

Supreme Court of Oregon.

Certification Order Dated July 29, 2008.

Certification Accepted Dec. 10, 2008.

Argued and Submitted Sept. 17, 2009.

Decided Sept. 23, 2010.

D. Joe Willis, Schwabe, Williamson & Wyatt, P.C., Portland, argued the cause and filed the brief for plaintiff. With him on the brief were Michael T. Garone and Jill S. Gelineau.

Robert E. Franz, Jr., Springfield, argued the cause and filed the brief for defendants.

Alan M. Sorem and Hunter B. Emerick, Salem, filed a brief for amicus curiae National Association of Homebuilders.

John M. Groen, Bellevue, WA, and Meriem L. Hubbard, Sacramento, CA, filed a brief for amicus curiae Pacific Legal Foundation.

Edward J. Sullivan, Carrie A. Richter, and Harry Auerbach, Portland, filed a brief for amici curiae League of Oregon Cities, American Planning Association, and the Oregon Chapter of the American Planning Association.

Before DE MUNIZ, Chief Justice, and DURHAM, BALMER, WALTERS, KISTLER, and LINDER, Justices. ^*

WALTERS, J.

In this case, we answer three questions certified to us by the United States Court of Appeals for the Ninth Circuit (Ninth Circuit). The questions arise from an action that West Linn Corporate Park (plaintiff) originally filed in state court against the City of West Linn (the city) alleging that the city effected a taking of plaintiff's property when the city required, as a condition of development of that property, that plaintiff construct off-site public improvements. In that action, plaintiff asserted two claims for inverse condemnation and sought payment of just compensation.

The city answered, asserted a counterclaim, and sought invalidation of a city ordinance that vacated a street abutting plaintiff's property. The city then removed the case to federal court. Following a bench trial, the federal district court entered judgment in favor of the city on plaintiff's inverse condemnation claims and in favor of plaintiff on the city's road vacation counterclaim. The parties cross-appealed to the Ninth Circuit, which entered an order certifying the following questions to this court:

1. “[W]hether a plaintiff bringing an inverse condemnation action alleging that a condition of development amounts to an exaction or a physical taking is required to exhaust available local remedies as a prerequisite to bringing his claim in state court.”

2. “[W]hether a condition of development that requires a plaintiff to construct off-site public improvements, as opposed to dedicating an interest in real property such as granting an easement to a municipal entity, can constitute an exaction or physical taking.”

3. “[W]hether the vacation of a street approved by the City Council purporting to act pursuant to [ORS 271.110] is ultra vires where the petition does not comply with the landowner consent provisions of [ORS 271.080].”

West Linn Corporate Park LLC v. City of West Linn, 534 F.3d 1091, 1093-94 (9th Cir.2008) (certification order).

To understand fully the basis for the Ninth Circuit's first two questions, it is necessary to explain in greater detailthe procedural history of this case and the inverse condemnation claims that plaintiff filed in state court. ¹ In its first claim for relief, plaintiff alleged that, as a condition of development, the city “required [it] to construct and dedicate to the City numerous public improvements for street and water”; that the cost of those improvements was “well beyond what is roughly proportional to the impact of Plaintiff's development”; and that the city's action constituted a taking under Article I, section 18, of the Oregon Constitution. ² As a result, plaintiff alleged, it was entitled to payment of just compensation equal to the cost of the improvements that it had constructed. ³

In its second claim for relief, plaintiff incorporated the facts that it alleged in its first claim for relief-that the city had required it to construct off-site improvements at a cost not “roughly proportional” to the impact of plaintiff's development-but alleged that those facts constituted a taking under the Fifth Amendment to the United States Constitution. ⁴ Plaintiff alleged that, as a result, it was entitled to payment of just compensation under the Fifth Amendment. In addition, plaintiff alleged that the city had violatedits civil rights and was liable for attorney fees under 42 U.S.C. section 1983. ⁵Plaintiff's allegations that the city effected a taking of its property by imposing costs of construction not “roughly proportional” to the impact of plaintiff's development derive from two United States Supreme Court cases- Nollan v. California Coastal Comm'n, 483 U.S. 825, 831-32, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987), and Dolan v. City of Tigard, 512 U.S. 374, 384, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994). In Nollan, the California Coastal Commission required that, in exchange for a permit to demolish an existing bungalow and replace it with a three-bedroom house, the plaintiffs grant a public easement across their beachfront lot connecting two public beaches located on either side of the plaintiff's property. 483 U.S. at 828, 107 S.Ct. 3141. The commission asserted that requiring the easement was a valid exercise of its regulatory authority to protect and grant visual access to the ocean and that that access would be diminished by construction of the larger house. The Court recognized the commission's interest as legitimate but held that it did not justify requiring that the plaintiffs provide physical access across their property. The Court concluded that, by demanding the easement as a condition of development, the commission had converted “a valid regulation of land” into “an out-and-out plan of extortion,” id. at 837, 107 S.Ct. 3141 (internal quotation marks omitted), that effected a taking for which just compensation was required, id. at 842, 107 S.Ct. 3141.

In Dolan, although the Court did not see the same “gimmicks” that it had noted in Nollan, it again concluded that the city had not established the necessary nexus between the conditions that it wished to impose and the effects of the proposed development. 512 U.S. at 387, 394-96, 114 S.Ct. 2309. The plaintiff had applied for a permit to double the size of her retail store and pave her gravel parking lot. The city hadrequired her to dedicate a pedestrian/bicycle pathway and a public greenway along a creek to relieve anticipated increases in congestion and flooding. After concluding that the dedications and the projected impact of the development must be “roughly proportional” to one another and that the city's findings were inadequate to establish that that standard had been met, the Court concluded that the dedications were unconstitutional takings that could not be sustained. Id. at 394-96, 114 S.Ct. 2309.

In this case, plaintiff alleged that the city's requirement that it construct off-site improvements at a cost not “roughly proportional” to the impacts of its development constituted a taking under the state and federal constitutions, entitling it to payment of just compensation. To obtain that compensation, plaintiff filed two claims for “inverse condemnation”: the first asserting that the city had effected a taking under the state constitution; the second asserting that the city had effected a taking under the federal constitution. The term “inverse condemnation” encompasses both of plaintiffs claims. An “[i]nverse condemnation” claim is any claim “against a governmental agency to recover the value of property taken by the agency although no formal exercise of the power of eminent domain has been completed by the taking agency.” Boise Cascade Corp. v. Board of Forestry, 325 Or. 185, 187 n. 1, 935 P.2d 411 (1997) (internal quotation marks and citation omitted).

Plaintiff appropriately filed both of its claims for inverse condemnation in state court. See id. at 187-88, 935 P.2d 411 (inverse condemnation action alleging taking under state and federal constitutions in state court); Coast Range Conifers v. Board of Forestry, 339 Or. 136, 151-55, 117 P.3d 990 (2005) (inverse condemnation action alleging taking under federal constitution in state court); see also San Remo Hotel, L.P. v. City & County of San Francisco, 545 U.S. 323, 347, 125 S.Ct. 2491, 162 L.Ed.2d 315 (2005) (state courts fully competent to hear federal takings claims). Plaintiff also appropriately filed its section 1983 claim in state court. See, e.g., Suess Builders v. City of Beaverton, 294 Or. 254, 264-65, 265 n. 10, 656 P.2d 306 (1982) (entertaining, and noting that state courts generally entertain, claims under section 1983).

If this case had remained in state court, the state trial court would have been required to decide whether plaintiff alleged facts sufficient to assert state claims for just compensation and, if so, whether plaintiff was entitled to compensation and in what amount. The state court's conclusion as to the viability of plaintiff's claims would have depended on that court's determination whether what plaintiff alleged-that plaintiff was required to construct off-site improvements at a cost that was not “roughly proportional” to the impact of plaintiff's development-could amount to a taking under the state constitution, as plaintiff alleged in its first claim for relief, or under the federal constitution, as plaintiff alleged in its second claim for relief. The state court also would have been required to determine whether state law required exhaustion of administrative remedies as a prerequisite to assertion of those claims. See id. at 261-62, 656 P.2d 306 (considering those issues).

When the city removed the case to federal court, the federal...