Judge Panner Measure 37 ruling

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
CITIZENS FOR CONSTITUTIONAL
FAIRNESS, et al.,
Civ. No. 08-3015-PA
Plaintiffs,
JACKSON COUNTY, et al.,
Defendants.
FINDINGS OF FACT
AND
CONCLDSIONS OF LAW
PANNER, J.
Plaintiffs own property in Jackson County. Following the
requirements of Ballot Measure 37, Jackson County agreed to waive
zoning restrictions that were imposed after plaintiffs acquired
their property. However, when Oregon voters passed Ballot
Measure 49 in 2007, superseding Ballot Measure 37, Jackson County
decided that it would not honor the Measure 37 waivers.
I conclude that plaintiffs1 Measure 37 waivers are valid and
must be honored by Jackson County. These are my findings of fact
1 - FINDINGS OF FACT AND CONCLUSIONS OF LAW
and conclusions of law after the court trial. Fed. R. Civ. P.
52 (a) .
FINDINGS OF FACT
Measure 37 "requires state and local governments to
compensate private property owners for the reduction in the fair
market value of their real property that results from any land
use regulations of those governmental entities that restrict the
use of the subject properties." MacPherson v. Department of
Admin. Servs., 340 Or. 117, 122, 130 P.3d 308, 312 (2006).
Measure 37 allowed governments to choose between paying
compensation to property owners for loss of fair market value, or
waiving enforcement of land use regulations.
Here, each plaintiff filed a timely claim under Measure 37
against Jackson County, seeking monetary compensation for reduced
fair market value. The County Administrator for Jackson County
investigated the claims and referred them to the Board of County
Commissioners (the Board) for decision. The Board held public
hearings and determined as to each plaintiff that the claims were
valid. Because Jackson County could not pay monetary
compensation, the Board instead waived enforcement of zoning
changes.
Plaintiff Velma A. Dickey's claim is a good example of the
claims at issue here. Since 1971, Mrs. Dickey has had an
ownership interest in about 70 acres adjacent to Interstate 5 at
2 - FINDINGS OF FACT AND CONCLUSIONS OF LAW
an exit between Talent and Ashland. When Mrs. Dickey and her
late husband acquired the property, there were no zoning
restrictions on it. The'Dickeys held the property, which was
well-situated for development, as a long-term investment for
their retirement.
The Dickeys received permits to build a service station and
a motel. They hired experts to create plans for developing the
remainder of the property. Although the property is zoned
Exclusive Farm Use, a soil engineer retained by the Dickeys found
that the land was not suited for agriculture. Mrs. Dickey sought
to change the EFU zoning, but in August 2004 she was told that
the Oregon Land Use Board of Appeals considered the requested
zoning change to be uuproblematic.
When Measure 37 was enacted later in 2004, Mrs. Dickey
concluded that bringing a claim under the new law would be her
best chance to develop the property. She filed a Measure 37
claim with Jackson County in May 2005, asserting that zoning
changes after she acquired the property reduced its fair market
value by about $30 million.
In March 2006, Jackson County issued an order issued by the
Board confirming Mrs. Dickey's claim. Each plaintiff received a
similar order, containing a legal description of the property at
issue; the date on which the claimant first acquired an ownership
interest; and a detailed list of the zoning restrictions that
3 - FINDINGS OF FACT AND CONCLUSIONS OF LAW
were in effect when the claimant first acquired the property, and
the zoning restrictions that wexe imposed after the claimant's
acquisition. Each order states that the claim is valid and
specifies the zoning regulations that Jackson County will not
apply to the property. The orders also state that Jackson County
does not promise that the claimant will be allowed to put the
property to any particular use. Each order is signed by the
chair of the Jackson County Board of Commissioners and notarized.
Each order requires that it be recorded in the official
county title records for the property. The orders are known as
waivers because of the promise to waive enforcement of zoning
changes.
After receiving the Measure 37 waiver, Mrs. Dickey submitted
a plat describing potential uses for her property, including
dividing it into seven lots. In March 2007, she requested a preapplication
conference with Jackson County. In November 2007,
Jackson County held a conference to consider Mrs. Dickey's
proposal. At Jackson County's request, the proposal included the
relocation of a road to eliminate a dangerous curve.
Later in November 2007, Jackson County issued a report on
the conference, stating that Mrs. Dickey needed to show that the
State of Oregon had issued a final Measure 37 order allowing the
requested development. Mrs. Dickey did not have such an order,
4 - FINDINGS OF FACT AND CONCLUSIONS OF LAW
and could not determine how she could obtain one. In the Measure
37 waivers, Jackson County had stated that it had no opinion on
whether property owners were required to file Measure 37 claims
with the State of Oregon.
In December 2007, shortly after Jackson County issued its
report on Mrs. ~ickeyls claim, Measure 49 took effect. Measure
49 replaced Measure 37's compensation provisions. ORS 195.305;
see Corev v. Deplt of Land Conservation and Dev., 344 Or. 457,
465, 184 P.3d 1109, 1113 (2008). Mrs. Dickey states that she
does not qualify for relief under Measure 49.
Jackson County notified plaintiffs that it would not honor
Measure 37 waivers because Measure 49 effectively nullified the
waivers. The Board refused to act on a petition from Measure 37
claimants seeking ratification of Measure 37 waivers. Plaintiffs
then brought this action against Jackson County and Danny Jordan,
Jackson County's chief administrative officer.
CONCLUSIONS OF LAW
I. Measure 37 Waivers Are Constitutionally Protected Contracts
Plaintiffs argue that the Measure 37 waivers are binding,
constitutionally protected contracts between plaintiffs and
Jackson County. I agree.
A. Standards for Contract Clause Claims
The Contract Clause of the United States Constitution
provides, "No State shall . . . pass any . . . Law impairing the
5 - FINDINGS OF FACT AND CONCLUSIONS OF LAW
Obligation of Contracts." U.S. Const. art. I, § 10, cl. 1.
Courts use a three-step test to resolve claims under the Contract
Clause. First, the court determines whether the state law
substantially impairs a contractual relationship. RUI One Corn.
v. City of Berkelev, 371 F.3d 1137, 1147 (9th Cir. 2004) (citing
Enersv Reserves Group, Inc. v. Kansas Power & Liqht Co., 459 U.S.
400, 411 (1983)). The court then asks whether the state has a
significant and legitimate public purpose for the regulation.
-Id. Finally, the court determines whether 'Ithe adjustment of
'the rights and responsibilities of contracting parties is based
upon reasonable conditions and is of a character appropriate to
the public purpose justifying the legislation's adoption.'" -Id.
(quoting Enersv Reserves, 459 U.S. at 412-13) (further citation
and quotation marks omitted)).
B. Application of the Test
In determining whether a state law substantially impairs a
contractual relationship, the court considers "whether there is a
contractual relationship, whether a change in law impairs that
contractual relationship, and whether the impairment is
substantial.14 General Motors Corn. v. Romein, 503 U.S. 181, 186
(1992) .
Under Oregon law, "[clontract formation requires la bargain
in which there is a manifestation of mutual assent to the
exchange and a considerati~n.'~ Ken Hood Constr. Co. v. Pacific
6 - FINDINGS OF FACT AND CONCLUSIONS OF LAW
Coast Constr., Inc., 201 Or. App. 568, 578, 120 P.3d 6, 11
(2005) (quoting Restatement (Second) of Contracts 5 17 (1) (l98l)),
modified, 203 Or. App. 768, 126 P.3d 1254, rev. denied, 341 Or.
366, 143 P.3d 239 (2006). The Oregon Court of Appeals has
defined uconsiderationw:
Consideration is "the accrual to one party of some
right, interest, profit or benefit or some forbearance,
detriment, loss or responsibility given, suffered, or
undertaken by the other." Shellev v. Portland Tua &
Barse Co., 158 Or. 377, 387, 76 P.2d 477 (1938). Under
that definition, "benefit" means that the promisor has,
in return for the promise, acquired a legal right to
which the promisor would not otherwise be entitled;
"detriment" means that the promisee has forborne some
legal right that the promisee would otherwise have been
entitled to exercise. Id. at 388, 76 P.2d 477.
McPhail v. Milwaukie Lumber Co., 165 Or. App. 596, 600-01, 999
Applying these contract principles, I conclude that the
Measure 37 waivers are binding contracts between plaintiffs and
Jackson County. The waivers are in effect settlement agreements
between Jackson County and each plaintiff, because the waivers
allow the parties to avoid potentially costly and protracted
litigation. The wording of waivers and the parties' conduct show
a mutual intent that the waivers would be binding on plaintiffs
and on Jackson County.
There was mutual consideration. plaintiffsg consideration
was the agreement to drop their claims for monetary compensation.
Jackson County's consideration was its waiver of otherwise
7 - FINDINGS OF FACT AND CONCLUSIONS OF LAW
applicable zoning regulations.
Jackson Countyls refusal to honor Measure 37 waivers
obviously impaired its agreements with plaintiffs. This
impairment was substantial by any definition of the word.
For purposes of this analysis, I assume that Measure 49 has
a significant and legitimate public purpose. Measure 49 amended
Measure 37 and "altered the claims and remedies available to
landowner^.^ Corev, 344 Or. at 463, 184 P.3d at 1112.
Even when a state law that substantially impairs contractual
rights has a valid public purpose, the law still may violate the
Contract Clause if the law's effects go beyond its legitimate
purpose. Under Jackson County's interpretation, Measure 49 would
not just modify plaintiffs1 contractual rights under the Measure
37 waivers, it would eliminate them. To avoid an interpretation
of Measure 49 that would violate plaintiffst rights under the
Contract Clause, I conclude that Measure 49 does not apply to
plaintiffs1 Measure 37 waivers. See Clark v. Martinez, 543 U.S.
371, 380-81 (2005) (courts should reject a statutory construction
that raises constitutional problems if an alternate construction
would not raise such problems). I am not ruling that Measure 49
is unconstitutional, but rather that Jackson County may not rely
on Measure 49 as an excuse to avoid its obligations under
plaintiffs1 Measure 37 waivers.
This ruling does not give plaintiffs free rein to develop
8 - FINDINGS OF FACT AND CONCLUSIONS OF LAW
their property. Just as Jackson County must honor its
obligations under the Measure 37 waivers, so plaintiffs must
comply with the conditions imposed by the waivers, which include
applicable zoning restrictions.
11. Measure 37 Waivers Are Quasi-Judicial
Alternatively, I conclude that Measure 37 waivers are final
quasi-judicial orders, and that Measure 49 cannot rescind the
waivers without violating separation of powers.
A. Standards for Determining Whether an Act is Quasi-
Judicial
In Oregon, a county may act in a quasi-judicial role when
exercising its zoning authority. See Columbia Hills Dev. Co. v.
Land Conservation and Dev. Comm'n, 50 Or. App. 483, 492, 624 P.2d
157, 161 (1981). In determining whether a county's decision is
quasi-judicial, the court should consider whether the process
calls for a decision that is limited by preexisting criteria, or
allows a discretionary choice between action or inaction; whether
the decisionmaker must apply preexisting rules to the facts; and
whether the decision applies to a limited situation or a small
number of persons. See Hood River Vallev v. Board of County
Commissioners, 193 Or. App. 485, 495, 91 P.3d 748, 754 (2004)
(citing Strawberm Hill 4 Wheelers v. Benton Countv Bd. of
Commtrs, 287 Or. 591, 602-04, 601 P.2d 769, 775-76 (1979)). The
court must balance these factors. Ld.
9 - FINDINGS OF FACT AND CONCLUSIONS OF LAW
B. Measure 37 Waivers Are Quasi-Judicial
Here, Jackson County's decision to grant or deny a waiver
was limited by the requirements of Measure 37, rather than left
to the county's discretion. Jackson County's Board of
Commissioners was required to apply Measure 37's standards for
granting waivers to each property owner's particular
cfrcumstances, including the date that the property was acquired,
the applicable zoning, and the alleged loss of fair market value.
I conclude that Jackson County's decision to grant or deny a
Measure 37 waiver was quasi-judicial. See Citizens For
Res~onsibility v. Lane County, 207 Or. App. 500, 503, 142 P.3d
486, 488 (2006) ("The countyls review of the permit application
at issue here is, of course, quasi-judicial in nature.").
A party may seek judicial review of a quasi-judicial
decision. Butchart v. Baker County, 214 Or. App. 61, 71, 166
P.3d 537, 543 (2007); cf. Corev, 344 Or. at 466-67, 184 P.3d at
1114 (declining to rule on proper avenue for judicial review of
Measure 37 waiver issued by the Department of Land Conservation
and Development). Here, neither plaintiffs nor Jackson County
sought judicial review of the Measure 37 waivers. Instead, after
passage of Measure 49, Jackson County unilaterally announced that
it would not honor Measure .37 waivers. Measure 49, a legislative
act, cannot overrule Jackson County's quasi-judicial decision to
grant a Measure 37 waiver. Our system of separation of powers
10- FINDINGS OF FACT AND CONCLUSIONS OF LAW
does not allow legislation to set aside a judicial decision. See
Roles Shinqle Co. v. Beraerson, 142 Or. 131, 136, 19 P.2d 94, 96
(1933).
CONCLUSION
Plaintiffs1 Measure 37 waivers are valid and enforceable.
of November, 2008.
OWEN M. PANNER
U.S. DISTRICT JUDGE
11 - FINDINGS OF FACT AND CONCLUSIONS OF LAW

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