Chapter § 62.7 INVERSE CONDEMNATION

• Jurisdiction: Oregon

§ 62.7 INVERSE CONDEMNATION

§ 62.7-1 In General

"Private property shall not be taken for public use . . . without just compensation." Or Const, Art I, § 18.

"No person's property shall be taken by any corporation under authority of law, without compensation being first made, or secured in such manner as may be prescribed by law," Oregon Constitution, Article XI, section 4, "nor shall private property be taken for public use, without just compensation." US Const, Amend V.

Inverse condemnation is the name given to a cause of action against a governmental agency to recover the value of property which has been taken in fact by the governmental agency, even though there has been no formal exercise of the power of eminent domain. Successful litigation against the governmental agency is a factual determination that there has been a "taking" and in effect forces the governmental agency to purchase the interest taken. The "taking" in that case relates back to the date of the beginning of the governmental conduct that is determined to be a taking.

Hawkins v. City of La Grande, 315 Or 57, 67, 843 P2d 400 (1992) (quoting Restatement (Second) of Property § 8.1, comment d (1977)).

As noted, the Oregon Constitution provides that private property may not be taken for public use without payment of just compensation. This provision is to be distinguished from the constitutional guarantees of other states providing that private property may not be taken or damaged without payment of just compensation. Hawkins, 315 Or at 68; Moeller v. Multnomah Cnty., 218 Or 413, 425-26, 345 P2d 813 (1959).

In states having a "taking and damages" constitutional provision, the property owner is entitled to seek compensation from condemning authorities for the reduction in property values caused by consequential damage as distinguished from severance damage. Even though no part of the owner's real property is actually physically taken, the owner is not precluded from obtaining a recovery if it can be established that the location, proximity, or construction of a project has materially depreciated the property's value. See Wyo Const, Art 1, § 33; Sheridan Drive-In Theatre, Inc. v. State, 384 P2d 597 (Wyo 1963); SD Const, Art 6, § 13; La Fleur v. Kolda, 71 SD 162, 22 NW2d 741 (1946); Colo Const, Art 2, § 15; Mosher v. City of Boulder, Colo., 225 F Supp 32 (D Colo 1964). In states having constitutions worded as Oregon's is, however, the owner is limited to receiving just compensation only when a taking has occurred. See Idaho Const, Art 1, § 14; Idaho-W. Ry. Co. v. Columbia Conference of Evangelical Lutheran Augustana Synod, 20 Idaho 568, 119 P 60 (1911); RI Const, Art 1, § 16; Gen. Fin. Corp. v. Archetto, 93 RI 392, 176 A2d 73 (1961). It is critical, therefore, to study and analyze appellate decisions that define taking to determine whether an action in inverse condemnation against a governmental authority is available in Oregon. Further, the Oregon Court of Appeals has held that inverse condemnation is inappropriate when another exclusive remedy exists. See Caldwell v. Jackson Cnty., 36 Or App 821, 585 P2d 755 (1978).

§ 62.7-2 Relationship to Tort Claims Act

The Oregon Tort Claims Act provides that, subject to certain limitations, every public body is liable for its torts and "those of its officers, employees and agents acting within the scope of their employment or duties, whether arising out of governmental or proprietary function[s]." ORS 30.265(1).

Actions for real property damage resulting from acts of public bodies have long been recognized even though the doctrine of sovereign immunity prevented a tort claim. Inverse-condemnation suits provided a method of avoiding sovereign immunity. The Oregon Court of Appeals has indicated a willingness to permit these causes of action as torts under the Oregon Tort Claims Act (ORS 30.260-20.300), now that sovereign immunity has been abolished. See Lanning v. State Highway Comm'n, 15 Or App 310, 515 P2d 1355 (1973) (landowners sued Highway Commission for negligence after an accumulation of debris next to bridge piers caused their property to flood; the court held that because highway maintenance is a ministerial rather than a discretionary act the commission was liable for their negligence and was not immune from suit); Vokoun v. City of Lake Oswego, 335 Or 19, 56 P3d 396 (2002) (city's adoption of a capital improvements plan not including purchasing and improving drainage courses did not establish the city's immunity from a negligence claim when a landslide occurred on the hillside where the plaintiff's home was located). If brought as tort actions, however, they will be subject to the immunity provisions and procedural requirements of the Oregon Tort Claims Act. See Willard v. City of Eugene, 25 Or App 491, 550 P2d 457 (1976) (the wrongful abatement of property as a nuisance did not give rise to an action for inverse condemnation; the court noted that a tort claim was possible, but observed that the claim could not be brought in this instance because the Oregon Tort Claims Act statute of limitations had expired).

For a discussion of potential tort liability of municipalities in the land use planning context, see 2 Torts chapter 28 (OSB Legal Pubs 2012).

PRACTICE TIPS An action for damages to property under the Oregon Tort Claims Act must be commenced within two years of the accident or occurrence. ORS 30.275(9).

In an inverse-condemnation action, attorney fees may be recovered under ORS 20.085 in addition to just compensation. No provision is made for attorney fees under the Oregon Tort Claims Act.

For a discussion of the applicability of 42 USC section 1983, see City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 US 687, 119 S Ct 1624, 143 L Ed 2d 882 (1999). The Court held that "[b]ecause its statutory action did not accrue until it was denied just compensation, in a strict sense Del Monte Dunes sought not just compensation per se but rather damages for the unconstitutional denial of such compensation." Del Monte Dunes at Monterey, Ltd., 526 US at 710. The Court further noted that a major difference between a condemnation action and a section 1983 action is that liability is not an issue in condemnation actions. That is because the government, in initiating condemnation proceedings, concedes the landowner's right to receive just compensation and seeks merely to determine the amount of compensation that is due. Del Monte Dunes at Monterey, Ltd., 527 US at 711-12.

§ 62.7-3 Physical Taking

Whenever a governmental action causes a physical taking or destruction of real property, the property owner may seek lawful compensation by means of inverse condemnation. If, for example, the soil is eroded and washed away by reason of the location, manner, and construction of a public improvement, the owner may recover the loss in the property's market value in an action against the public authority responsible. Tomasek v. State, 196 Or 120, 248 P2d 703 (1952) (state built a bridge that caused the plaintiff's land to erode during high water and altered the main river channel across the plaintiff's property; the plaintiff suffered a compensable taking because the direct effect of the bridge construction was a partial destruction of the plaintiff's land); Morrison v. Clackamas Cnty., 141 Or 564, 18 P2d 814 (1933). But see Kropitzer v. City of Portland, 237 Or 157, 390 P2d 356 (1964) (plaintiff's hillside land subsided during street excavation; the court ruled that the plaintiff was not entitled to compensation because the dedication of the streets made to the city by the filing of a subdivision plat by the plaintiff's predecessor-in-interest was a grant to the city of the benefit of removing "naturally necessary" lateral support to construct streets).

When the character of the governmental action is a permanent physical occupation of property, the cases uniformly have found a taking to the extent of the occupation, "without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner." Ferguson v. City of Mill City, 120 Or App 210, 215, 852 P2d 205 (1993) (quoting Loretto v. Teleprompter Manhattan CATV Corp., 458 US 419, 434-35, 102 S Ct 3164, 73 L Ed 2d 868 (1982)). A physical occupation of property is a "taking regardless of how 'reasonable' that occupation may be." Ferguson, 120 Or App at 213-14 (an ordinance requiring that property owners grant the city an easement to enter on their property to construct and maintain a sewer connection constituted a permanent physical occupation of the property).

In the Loretto case, the United States Supreme Court found an unconstitutional taking when a state statute prohibited a landlord's interference with the installation of cable television equipment on her property and prohibited any demand for payment by the landlord from tenants or the cable television company. The equipment installation constituted a permanent physical occupation and invasion of the owner's property. The Court held that when an owner forever loses the ability to exercise any of his or her property rights—that is, the right to possess and occupy the space, to exclude others from possessing and using the space, and to control the use of the property—the occupation is permanent. Loretto, 458 US at 435-41.

For there to be a taking, the property must be substantially damaged or destroyed by the government's action and, generally, its fair market value must be permanently reduced as a result, regardless of whether the damage is caused by a single incident or by continuous conduct. The mere fact that the property or property owner suffered some damage is not enough. Whether the property has been "substantially damaged" is a question that requires an analysis of the kind of property and the nature and extent of the damage. Hawkins v. City of La Grande, 315 Or 57, 66-71, 843 P2d 400 (1992) (city intentionally released effluent into a slough that flooded...