REAL ESTATE CASE LAW PDATE 2013 - Oregon State Bar

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REAL ESTATE CASE LAW UPDATE 2013

Cases from the Oregon Supreme Court, Oregon Court of Appeals, and federal courts in Oregon

July 2012–June 2013

Presented by Alan Brickley, First American Title Insurance Co.

Shannon McCabe, Miller Nash LLP David Rubenstein, Miller Nash LLP

Dustin Klinger, Miller Nash LLP

OREGON STATE BAR Real Estate and Land Use Section

2013 Annual Meeting

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ADVERSEPOSSESSION.........................................................................................................................3

CC&RSANDFAIRHOUSING................................................................................................................4

CONDEMNATIONANDEMINENTDOMAIN....................................................................................4

CONSTRUCTION.....................................................................................................................................6

DEEDS,CONTRACTS,ANDPURCHASE/SALE................................................................................7

EASEMENTS.............................................................................................................................................8

FORECLOSURESANDMERS................................................................................................................9

INSURANCE............................................................................................................................................10

LANDLORD/TENANT..........................................................................................................................12

TAKINGS.................................................................................................................................................12

TITLEANDBOUNDARIES..................................................................................................................15

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AdversePossession Uhl v. Krupsky 254 Or App 736, 294 P3d 559 (January 30, 2013)

Facts: Plaintiffs purchased property encumbered by a 60-foot-wide driveway and utility easement in 1995. Defendants purchased the benefitted property in 1999. Since 1995 Plaintiff had used two-thirds of the disputed easement, the area not used as Defendant's driveway, as their own by irrigating, planting shrubs, and installing a remote control gate. Plaintiff filed suit to quiet title and a declaration that Defendant's rights to the disputed portion of the easement had been extinguished by adverse possession. The trial court found Plaintiffs satisfied all of the elements of a common law adverse possession claim. Issue: Whether the requirements of ORS 105.620, specifically the "honest belief" that the claimant is the true owner, applies to a claim where an owner of fee simple title seeks to extinguish an easement? Held: ORS 105.620 does not apply to claims whereby the owner of fee simple title seeks to extinguish an easement on that property through adverse possession. Summary: The Court determined that interpretation of the text limits the reach of the adverse possession statute to claims involving the acquisition of the broadest property interest allowed by law, which does not include easements. In the context of an easement, where the burdened property owner holds fee simple title to the property requiring an "honest belief that the person was the actual owner" does not make sense. The claim extinguishing the easement did not alter the Plaintiff's fee simple ownership; it merely removed the burden from their property. Here, Plaintiffs already held the broadest property interest and they were not seeking to enlarge their control through adverse possession, but sought simply to remove the easement burdening the property.

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CC&RsandFairHousing Fair Housing Council v. Brookside Village Owners Ass'n 2012 WL 8017842 (U.S. District Court Oregon, October 19, 2012)

Facts: Brookside is an eighty unit development in Rogue River built in 1977, predating the federal and state equivalent Fair Housing Act. Original CC&R declaration limited residence to adults age 18 and over. Such restrictions violate the FHA, and the Fair Housing Council of Oregon brought suit to enjoin enforcement as seek damages. Issues: 1) Did the non-profit have standing and sufficient damages to bring a FHA claim; 2) Is the Broker liable for violations remediated before litigation was files, and 3) Does Defendant HOA's later amendment of CC&R's to a 55 and older restriction exempt it from FHA familial status discrimination violations, and if so can the HOA still be liable for prior discrimination in violation of the FHA? Held: 1) Yes. Affirming standing for non-profit groups use of disguised "testers" calling to inquire about available housing; 2) No. The brokerage instituted training, new policies, and fair-housing logos on promotional materials and that satisfied the court; 3) Yes, but violations prior to the amendment changing from 18 and over to 55 and over are actionable and summary judgment was granted against the defendant HOA on those claims only. Summary: While rare, pre-1988 age-restricted communities must revise any restrictions to fit the 55 and over statutory exceptions, and show evidence of historic 55 and over residents or the FHA can override those restrictions and expose the owners, HOA, managers and brokers to statutory damages.

CondemnationandEminentDomain City of Harrisburg v. Leigh 254 Or App 558, 295 P3d 138 (January 16, 2013)

Facts: Plaintiff's constructed a municipal water well on Defendant's property. The mistaken placement was discovered in 2007, and the city subsequently filed a claim for adverse possession and easement by prescription. Defendant filed a counter claim for ejectment. In 2008 judgment was entered in Defendant's favor and allowed Plaintiff a timeframe in which to remove the well and other water works. Plaintiff failed to remove the items and instead filed condemnation proceedings. Plaintiff offered $7,425 to Defendant as compensation for the property, and when Defendant declined their offer the funds were deposited with the court. The trial court determined Defendant should receive compensation for

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the unimproved property as well as a portion of their attorney's fees. Plaintiff tendered the remaining judgment amount to Defendant's lawyer. Issue: 1) In a condemnation proceeding is the condemnee entitled to just compensation for just the land, or are they also entitled to compensation for improvements to the land made by the condemner in error? 2) Under ORS 35.365 did the Defendant waive their right to appeal when they accepted compensation from and the benefit of the judgments? Held: 1) Compensation for property includes the land and improvements there on, and since the prior judgment had vested ownership in the property and the well conclusively in Defendant they were entitled to payment for the property valued on the date of the condemnation, including the improvements. 2) Defendant did no waive appeal because the statute applies only to compensation, not to attorney fees or costs. In addition, a defendant is precluded from appeal when compensation has been tendered to the court and withdrawn by the defendant. In this case the money was transferred from Plaintiff directly to Defendant's attorney. Also, the Defendant did not waive appeal by accepting the benefit of the judgment because the Defendant's appeal does not jeopardize those portions of the judgment that Defendant benefitted from. Defendant does not challenge Plaintiff's ability to condemn the property, but rather appeals the trial court's calculation of damages and attorney's fees. An appeal on the grounds that damages are inadequate is not precluded by an acceptance of the award. Summary: Due to the Plaintiff's failure to remove the improvements from Defendant's property within the time directed by the court following the ejectment the improvements Defendant had exclusive right to possession of the property including all improvements. Therefore, Plaintiff's damages calculations should have been based on the improved property. Defendant was also entitled to an increased award for attorney fees because the trial courts reliance on the small size of the judgment and their determination that Defendant's interpretation of the ejectment proceedings should limit the award for attorney fees was erroneous.

State ex rel. Dept. of Transp. v. Singh 2013 WL 3215699 (Oregon Court of Appeals, June 26, 2013)

Facts: As part of an intersection improvement project Plaintiff brought condemnation action against Defendant, a convenience store owner, to eliminate two of Defendant's access points and acquire an easement over Defendant's property. Plaintiff offered to pay Defendant $64,887 for the easement and as compensation for damages to the property's value. Plaintiff also offered to provide access to Defendant, but did not include any specifications about the new access point such as size, location, or guarantee that Defendant would be granted a road approach permit.

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Issue: Was Plaintiff's offer of compensation sufficiently definite under ORS 35.346 to constitute a good faith offer? Held: Plaintiff's offer did not satisfy the requirements of ORS 35.346 because the assumptions used to calculate the damages to Defendant's property did not adequately reflect what had been offered in the proposed agreement. Summary: Under ORS 35.346 the terms of an offer of compensation must match the assumptions used in calculating the damages. The Court determined that basing the compensation for damages on assumed terms that were not guaranteed in the real property agreement was not an accurate calculation of damages sufficient to meet the standard set forth in ORS 35.346. A condemner may make offers before all the specifics of an agreement are in place, but the offer must reflect the uncertainties.

Construction PIH Beaverton v. Super One 254 Or App 486, 294 P3d 536 (January 9, 2013)

Facts: Plaintiff's predecessor in interest hired Defendant, as general contractor, to construct a hotel. The hotel owner filed a Notice of Completion under ORS 87.045 on February 13, 1997. In February 1997, a temporary occupancy permit for the hotel was issued and the hotel owner took possession of the property and opened for business. The final certificate of occupancy was issued in September 24, 1997. In 2006 Plaintiff purchased the property from the hotel owner. On May 23, 2007, Plaintiff brought a negligent construction action against the general contractor and several subcontractors. General contractor filed a cross-claim and a third party claim seeking indemnity from two subcontractors. The property owner never accepted the construction in writing and the parties did not prepare and execute a certificate of substantial completion as required/contemplated by the construction contract. Defendants moved for summary judgment alleging that the Plaintiff's claims were time-barred because they were brought 10 years after the ultimate repose period set forth in ORS 12.135. The subcontractors moved for summary judgment against the general contractor alleging that the general contractor's claims were also time-barred under ORS 12.135. Issues: (1) Did the owner's filing of the notice of completion constitute written acceptance of the construction and start the 10-year ultimate repose period? (2) Do indemnity claims against the subcontractors arise from construction related activities such that the ultimate repose period set forth in ORS 12.135 applies to these claims?

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Rule: (1) ORS 12.135 defines substantial completion as (a) the date when the contractee accepts in writing the construction as having reached the state of completion in which it may be used or occupied for its intended purpose, or (b) the date the contractee accepts the completed construction. If the contractee does not accept the construction in writing, substantial completion does not occur until final completion of construction. (2) ORS 12.135 applies to indemnity actions that arise from the indemnitor's allegedly defective performance of construction-related activities. Held: (1) A genuine issue of material fact existed regarding the date on which construction was completed and therefore whether the ultimate repose period had expired. The trial court's grant of summary judgment to Defendants was reversed and the case was remanded. (2) The dismissal of the general contractor's claims for indemnification from the subcontractors was affirmed because these claims were held to be time barred because the general contractor conceded in the case that the project was substantially completed more than 10 years before it filed its indemnity claims and the general contractor failed to argue that a reversal of the summary judgment on plaintiff's negligent construction claim should lead to a reversal of the trial court's dismissal of the general contractor's indemnity claims as untimely. Summary: (1) The language of the construction contract is relevant in determining when construction is completed. (2) This case used the version of ORS 12.135 that existed before the 2009 amendments, but the relevant language in this case appears to be unchanged from the currently existing form of ORS 12.135. (3) It is best not to concede a legal conclusion, especially if there is a chance it could lead to the court disagreeing with the legal conclusion in one instance and using the concession against you in another.

Deeds,Contracts,andPurchase/Sale Columbia St. Bank v. Kubicek 2013 WL 2178086 (U.S. District Court Oregon, May 20, 2013)

Summary: Prominent developer sought to defeat federal diversity jurisdiction in bank suit to enforce multiple personal loan-guaranty contracts. In dispute was his personal state of "citizenship" for diversity jurisdiction application and Judge Papak applied an eight part test to the elements of state residents and citizenship under Lew v Moss, 297 F2d 749 (9th Cir 1989). The factors considered were the state locations of his: current physical residence, personal and real property, brokerage and bank accounts, spouse and family, memberships, employment or business, driver's license and auto registration, and payment of taxes. The factors were split, but the Judge found the evidence of current physical residence, family, and indefinite time plan to return to

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Washington to conclusive to find Defendant an Oregon citizen and diversity jurisdiction supported. Motion to dismiss was denied. Conclusion: Intent does not control residence for diversity purposes, and beware that discoverable utility bills and ex-wife testimony will undercut a claim to live in an unused condo.

Marchione v. Playboy Enterprises 2013 WL 8786263 (U.S. District Court Oregon, March 7, 2013)

Summary: Not directly a real estate case, related to claims for payment by a designer of a "Playboy" themed guitar, However in denying a motion to dismiss a quasi-contract claim, Judge Clarke considered then declined a request to require "exhaustion" of direct contract party claims before allowing a quasi-contract claim by a third party to proceed. Such a requirement to exhaust claims against a contract party before a supplier could seek quasi-contract equitable recovery from a landowner was required in Oregon under Tum-A-Lum Lumber v. Patrick, 95 Or App 719, 770 P2d 964 (1989), but was found limited to the specific supplier lien context. Conclusion: Titillating case names do not make good law.

Easements Hazel Green Ranch, LLC v. U.S. Department of the Interior 490 FedAppx 880, 2012 WL 3059316 (Ninth Circuit, July 27, 2012)

Facts: Plaintiff's property abuts a county road that travels over land owned by Defendant, and the Plaintiff attempted to assert an easement right over the road utilizing the federal Quiet Title Act. California law recognizes an abutting landowner's easement over a public road as a property right. However, during the trial it was determined that the County had forfeited their interest in the disputed road. Issue: Is Plaintiff's status as an abutting landowner sufficient to raise a Quiet Title Act claim to assert easement rights over a county road if the County has vacated the road? Held: Plaintiff's status as an abutting landowner is not a sufficient property right to assert a claim against the federal government under the Quiet Title Act because under California law the property right of the Plaintiff terminates when the County's control of the road ceases.

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Summary: Under California law the property right held by an individual by virtue of a being an abutting landowner is sufficient to assert a Quiet Title Act claim against the United States. However, a property right created by abutting a county road can be extinguished if the county abandons the road. In this case the County had forfeited their rights in the road, and therefore Plaintiff had no claim under the Quiet Title Act. Plaintiff may be able to recover damages from the County, but Plaintiff cannot demand continued use of the road or assert a Quiet Title Act claim. Plaintiff's also attempted to assert an implied easement acquired as a result of the patent acquired by their predecessors, but Plaintiff failed to specify the origin of the claimed easement.

See also Uhl v. Krupsky in Adverse Possession.

ForeclosuresandMERS Manufacturers and Traders Trust Co. v. Fidelity National Title Ins. 2012 WL 5462887 (U.S. District Court Oregon, July 11, 2012)

Facts: Lender (plaintiff) took deed of trust (via MERS) and purchased an insurance policy from the defendant. Lender later assigned its interest to third party, Deutsche Bank. Former homeowner sued lender and Deutsche Bank. Lender tendered defense of homeowner's claim and Deutsche Bank's cross-claim to title company, which refused to pay. Litigation ensues. Issues: Was plaintiff an "insured" even after it assigned its interest to a third party? Held: No. Under the terms of the policy and the plain meaning of "title," plaintiff's coverage ceased when it assigned its interest. [NOTE: Court declined to consider the effect of the Niday decision on the MERS issue.]

U.S. Bank National Association v. Wright. 253 Or App 207 (Oct. 24, 2012)

Facts: Purported purchaser of real property at trustee's sale brought eviction action against record owner. Record owner made a general denial in his answer and raised an issue as to whether the plaintiff actually purchased the property at the trustee's sale, offering testimony that he was not in default and that no trustee's sale actually occurred. The trial court granted summary judgment to the plaintiff, holding that it could not determine the validity of a deed in an eviction action.

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Issues: 1) Can the court determine the validity of the deed in an eviction action? 2) Were plaintiff's declarations (though not contained in the answer) sufficient to raise a genuine issue of fact as to plaintiff's title? Held: 1) Yes, court can determine deed validity in eviction action. 2) Yes, defendant's declarations raised a genuine issue of fact as to whether deed was valid.

Wholesale Real Estate v. First Horizon 2013 WL 3287131 (U.S. District Court Oregon, June 28, 2013)

Facts: The Plaintiff bought property from the Defendant trustee at a foreclosure auction. The Defendant trustee gave the borrower a notice of default and election to sell the property and conducted the auction. The Defendants never delivered a trustee's deed to the Plaintiff, did not notify junior lienholders of the foreclosure, failed to record affidavits, and never refunded the purchase price to the Plaintiff. The Plaintiff brought claims against the trustee and the lender for violation of the Oregon Unlawful Trade Practices Act ("UTPA") and a claim for "money had and received." The lender filed a motion to dismiss both claims for failure to state a claim. Issue: Must a plaintiff show misconduct on the part of the defendant to properly bring a "money had and received" claim? Rule: The claim for "money had and received" only requires that one party have money rightly belonging to another party and does not require a showing of wrongdoing. Held: Plaintiff's claim under UTPA was dismissed with leave to amend to state facts supporting the allegation that fraudulent conduct of the defendants induced the Plaintiff to delay filing its suit and the claim for "money had and received" was allowed to proceed.

Insurance Arnett v. Bank of America 874 F Supp 2d 1021 (U.S. District Court Oregon, July 11, 2012)

Facts: Homeowners brought putative class action against bank as mortgage alleging that the flood insurance required for their mortgages exceeded the amounts required by the National Flood Insurance Act (NFIA), the amounts specified in the loan documents, and greater even than the Bank's secured interest in the property. The plaintiffs brought several common law tort and contract claims, and statutory claims under the Real Estate Settlement Procedure Act (RESPA), Oregon's Unlawful Debt Collection Practices Act (UDCPA), and the

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Truth in Lending Act (TILA). The Bank brought a motion for judgment on the pleadings. Issues: 1) Did the mortgage contract allow the Bank to set the amount of required flood insurance? 2) Did plaintiffs state a claim for their various causes of action? 3) Did flood insurance charges constitute a "finance charge" required to be disclosed by TILA? Held: 1) The mortgage contract, which incorporated the NFIA, did not expressly grant the Bank the right to set the amounts of flood insurance that homeowners must maintain, and the contract was ambiguous as to the amount required. 2) Plaintiffs stated a claim for conversion of their flood insurance premiums and their contract claims, but the breach of fiduciary duty, unjust enrichment, and statutory claims were dismissed. 3) The insurance premiums were not finance charges covered under TILA.

Chubb Custom Ins. Co. v. Space Systems/Loral, Inc. 710 F3d 946 (Ninth Circuit, March 15, 2013)

Facts: Plaintiff filed a subrogation claim against Defendants under CERCLA subsections 107(a) and 112(c). Plaintiff paid the insured $2.4 million as reimbursement for environmental cleanup costs. Subsequently, Plaintiff attempted to recover from Defendants, who were surrounding property owners Plaintiff alleged had released hazardous substances that migrated to the insured's property. In addition to the CERCLA claims the Plaintiff also asserted state law claims based on their theory of liability. Issue: 1) Does an insurance payment qualify as a "cost of response" under CERCLA and therefore allow the Plaintiff to make a claim under 107(a)? 2) Can Plaintiff make a claim under 112(c) if the insured has not made a claim for reimbursement from either the Superfund or a potentially responsible party? Held: 1) Plaintiff did not have standing under 107(a) because they had not incurred response costs and were not liable under CERCLA for response costs. 2) Plaintiff did not have standing under 112(c) because the claim failed to allege that the insured was a claimant as defined by statute. Summary: Under 107(a) only costs incurred during cleanup of a site can be recovered. Further, section 107(a) specifies that reimbursing response costs does not qualify as costs incurred during cleanup and therefore cannot be recovered under this provision. Plaintiff did not participate in the cleanup, and merely reimbursed the insured after the fact, therefore Plaintiff did not incur any costs during cleanup and was not entitled to recovery based on 107(a). In order to have standing under 112(c) Plaintiff would need to allege that the insured was a claimant as defined by the statute. However, since the insured had

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not made any claims against other potentially responsible parties or the Superfund the insured did not qualify as a "claimant" and therefore the Plaintiff lacked standing to file a claim.

Landlord/Tenant See U.S. Bank v. Wright in Foreclosures and MERS

Takings Brown v. City of Medford 251 Or App 42, 283 P3d 367 (July 5, 2012)

Facts: Landowner brought action against city alleging unconstitutional taking of his property by requiring him to dedicate an easement to the city as a condition for approval of the partitioning of his lot. The trial court denied the city's motion to dismiss, entering summary judgment in favor of the landowner on the takings issue. The city appealed, alleging that the claims were unripe, that there was no taking, and contesting the calculation of damages. Issues: 1) Does ORS 197.796 apply to land partitions such that a landowner can simultaneously accept and challenge an unconstitutional condition of approval? 2) Does the requirement that a landowner dedicate an easement to the city in order to get a land partition constitute an unconstitutional taking? 3) For purposes of calculating damages, at what point in time is the land valued? Held: 1) Yes, ORS 197.796 applies to land partitions, and the petitioner may challenge the taking when the decision is final rather than waiting for a physical invasion. 2) Yes, the city failed to demonstrate a Nollan/Dolan "essential nexus" between the land partition and the street dedication. 3) The date on which the property should be valued for purposes of damages is the date that the city imposed its condition rather than the date the plat is submitted.

Hall v. State ex rel. Oregon Dept. of Transp. 252 Or App 649, 288 P3d 574 (October 10, 2012)

Facts: Plaintiff claimed Defendant made statements to the general public and potential purchasers that Defendant intended to eliminate access points to Plaintiff's property, which would land lock the property, and thereby caused economic damages to Plaintiff.

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Issue: Did a taking occur when Defendant announced plans to change the interchange system affecting Plaintiff's property that affected the value of the property? Held: A compensable taking does not occur when a government entity publicly announces plans that lower the value of an individual's property. Summary: A compensable taking does not occur when planning to regulate property decreases a property's value. A plaintiff only needs to show that a substantial interference with their use and enjoyment of property has occurred; they need not show that they were deprived of all use and enjoyment of their land. Actions that are legislative or quasi-legislative do not create a taking unless the property owner is deprived of all beneficial use. In this case the jury found that Plaintiff's retained some economic benefit from the property. Plaintiff's also claimed that Defendant's actions were based on personal animus, not a desire to use the property for public use. If the Defendant's had acted with personal animus as alleged the Plaintiff's still would not have prevailed on their inverse condemnation claim because a claim for inverse condemnation must allege that the property that is taken is intended for public use.

David Hill Development, LLC v. City of Forest Grove 2012 WL 5381555 (Oct. 30, 2012)

Facts: Plaintiff is a development company that engaged in activities in the City of Forest Grove ("Defendants"). Plaintiff and Defendant disagreed on a variety of development issues including sewer lines, trees, and phasing. Plaintiff claims that Defendant actively frustrated and delayed their development efforts which resulted in economic damages to the Plaintiff. Defendant delayed the final recording of the plat by between twelve to fourteen months. Issues: 1) Did the Defendant exact a taking by requiring Plaintiff to dedicate more land to Defendant beyond what was agreed to in the original conditions of approval? 2) Did Defendant unreasonably delay development by failing to approve plans and issue permits in such an egregious way that Plaintiff experienced a temporary taking? 3) Were Defendants' development demands substantially more rigorous for Plaintiff that similar developers that Defendants' actions violated the equal protection clause? 4) Did Defendant treat Plaintiff in a discriminatory, arbitrary, or capricious manner that interfered with a protected property right of Plaintiff to an extent that a substantive due process claim was supported? 5) Was Plaintiff allowed a reasonable opportunity to object to Defendants' interference with their property interest?

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Held: 1) When a plaintiff is required to dedicate a certain amount of property to a city for the construction of the north side of a road, but developers on the south side of the road are required to dedicate a smaller amount of property an exaction has occurred, and without an essential nexus the city has perpetrated a taking. 2) Although delays in the government decision making process do not always rise to the level of substantial interference if, based on a fact specific determination, that the government entity creates an extraordinary delay, especially in the presence of bad faith on behalf of the government, a temporary taking occurs. 3) The equal protection clause was violated because Plaintiff was held to a different development standard than other sufficiently similar, although not identical, developers. 4) The evidence presented demonstrated that Defendant treated Plaintiff in an improper manner requiring them to perform actions that was not a based on applicable code or regulation, and the Defendant was unable to establish that their varying treatment of Plaintiff had a basis that was not arbitrary or capricious. 5) Plaintiff was not provided with an avenue to appeal the various idiosyncrasies of Defendants' treatment, therefore sufficient evidence existed for the jury's finding that Plaintiff's procedural due process rights were violated. Summary: The court found that although Defendants' requirement that Plaintiff dedicate an additional four feet beyond what was required of similarly situated developers was an exaction. However, not all development conditions were unconstitutional exactions. If the condition served a rational purpose an exaction did not exist. The court found that sufficient evidence existed for a jury to determine that the Defendants' actions constituted an extraordinary delay. Plaintiff presented evidence that delays lasted over a year, which caused them to experience economic hardship because of an eroding market and loan interest payments. In addition, evidence was presented that Defendants' attorney advised them against certain demands that created further delay, but the Defendant required Plaintiff to meet the demands regardless. Plaintiff presented ample evidence for a jury to find that the standard to which Plaintiff was subjected was sufficiently different to require the Defendant provide a rational explanation for the differences, but Defendant was unable to provide a legitimate reason for the differences in treatment. Plaintiff was able to establish that they possessed a property interest that was sufficient to satisfy the threshold issue for due process claims. Defendant did not provide an adequate mechanism for Plaintiff to appeal adverse decisions, and LUBA is not the appropriate forum for such an appeal, therefore Plaintiff was without adequate process. The Defendant made various claims that the damages were improperly calculated, but the court believed there sufficient support for the jury's award of damages.

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Sierra Nevada SW Enterprises, Ltd. v. Douglas County 506 FedAppx 663, 2013 WL 414447 (Ninth Circuit, February 4, 2013)

Facts: Plaintiffs owned and developed land and alleged that Defendants', Douglas County, violated Plaintiffs' Fourteenth and Fifth Amendment rights by approving a development agreement and amending the master zoning plan to benefit a different developer. Issue: 1) Did Defendants' approval of an agreement benefitting a competing developer deprive Plaintiff of a constitutionally protected property interest? 2) Did Defendant intentionally treat Plaintiff and a competing developer differently without a rational basis? 3) Was Defendants' approval of an agreement benefitting a competing developer a taking? Held: 1) Approval of an agreement that benefitted a competing developer did not deprive Plaintiff of a protected interest and therefore Plaintiff did not have a claim for a violation of procedural or substantive due process. 2) Plaintiff and the competing developer were not similarly situated, which defeated Plaintiff's claim of a violation of their equal protection rights. 3) A taking claim requires that a plaintiff be deprived of all economically beneficial or productive use. Summary: The court assumed without deciding that the transferrable development right, which Plaintiff claimed to have been affected was a property right. However, Plaintiff's procedural due process claim was dismissed because Plaintiff's did not allege that Defendants' deprived them of their property right, but rather that Defendants' actions decreased the value of their property right by reducing demand as a whole. In order to substantiate a claim for a violation of procedural or substantive due process a deprivation of a property interest must occur. Plaintiff's claim that Defendants intentionally treated Plaintiff differently without a rational basis from other similarly situated developers was not supported by the evidence, therefore Plaintiff's equal protection claim was properly dismissed. There was a rational basis for Defendants' varying treatment of Plaintiff and the competing developer. Also, Plaintiff did not allege they were treated adversely, only that a competing developer was treated preferentially, which did not establish a true "class of one" claim. Finally, Plaintiff could not substantiate a takings claim on the possibility that they would be deprived of economic benefit. A classic taking involves government appropriation of private property, and the granting of a development right to a competing developer does not fit that description.

See also Condemnation.

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Vukanovich v. Kine 251 Or App 807, 285 P3d 733 (August 22, 2012)

Facts: Plaintiff and Defendant entered into a "Letter of Understanding" to purchase property through a newly formed LLC. Plaintiff alleged that Defendant breached the agreement by failing to purchase the property and instead purchased the property through another newly formed LLC with other parties (besides the Plaintiff) as members in the new LLC. In connection with Plaintiff's suit against Defendant, Plaintiff recorded a notice of lis pendens. The Defendant sought to strike and release any encumbrance created by the notice of lis pendens, arguing that it was an invalid claim of encumbrance. The Plaintiff sought either $2.5 million in damages or, alternatively, specific performance of the Agreement. Issue: 1) Does the notice of lis pendens constitute a claim of encumbrance against real property or is it merely notice of a pending claim? 2) Was the lis pendens valid when it was recorded as an encumbrance authorized by statute? Rule: The notice of lis pendens is a claim of encumbrance because it attaches to and binds the property and gives the party filing the civil action priority over subsequently asserted interests. Held: The lis pendens was invalid because the underlying lawsuit did not involve, affect, or bring into question the title to or any interest in or lien upon the real property as required by ORS 93.740. Even if the Plaintiff had been successful in its litigation, Plaintiff would at best have acquired a 50 percent interest in the LLC that was intended to purchase the property. Summary: For a notice of lis pendens to be valid under ORS 93.740, the plaintiff in the underlying case must allege an interest in the property or in some fashion bring into question an interest in the property, or show that as a result of the suit an interest in the property would pass to the plaintiff. Additionally, alleging an alternative remedy to specific performance makes it less likely that ownership of the property would be affected by a judgment in favor of the Plaintiff.

See also U.S. Bank v. Wright in Foreclosures and MERS

Case Law Review (Supplement)

Hope Presbyterian Church of Rogue River, a domestic nonprofit corporation v. Presbyterian Church (USA)

and Presbytery of the Cascades, a domestic nonprofit corporation 352 Or 668, 291 P3d 711 (2012)

In the opening words of the court “This case requires us to decide whether a local church or the national

church from which it seeks to separate owns certain church property.” However, in order to do so, the

Court discussed the impact of the First Amendment to the United States Constitution “Congress shall

make no law respecting an establishment of religion, or prohibiting the free exercise, thereof[.]”

Referring to decisions of the US Supreme Court it was noted that there are two approaches to resolving

these types of disputes expressly approved by the Court and left to the states to adopt.

One approach is the “hierarchical deference” in churches with a hierarchical structure “…the legal

tribunals must accept such decisions as final, and as binding on them, in their application to the case

before them” referring to the highest of the Church judicatories.

The other approach is that of “neutral principles”. This approach requires the court to resolve these

disputes by examining deeds, local church charters, state statutes and provisions in the general church

constitution applying generally applicable neutral principles of law, such as trust or property law.

The Court of Appeals first reviewed the matter in light of the hierarchical deference approach since the

only extant Oregon case utilized this approach. However, they also analyzed it utilizing the neutral

principles approach noting that “the trend in the case law seemed to be toward that approach” and

concluded under that theory the result was the same, i.e. the general church owned the property and

not the local association.

The Oregon Supreme Court decided this case on the basis of the neutral principles approach and as such

reviewed the documentation relevant to the issue of both the parent organization, Presbytery Church

(USA) (“PCUSA”) and the local denomination, Hope Presbyterian Church of Rogue River (“Hope”). While

the Court noted that the PCUSA governing documents contain a provision creating a trust in the

property this alone was not dispositive of the case. The Court then analyzed documents created by

Hope applying the provisions of the Oregon Uniform Trust code adopted in 2005 (now part of ORS

Chapter 130).

The first issue addressed was whether Hope, as the record owner, declared that it held the property in

trust. After the PCUSA adopted the provision in their governing documents creating a trust in all church

property, Hope amended their bylaws to state:

“This church being a part of the Presbytery of the Cascades, the Synod of the Pacific and the

Presbyterian Church, U.S.A., is governed in all its provisions by the Constitution of the Presbyterian

Church, U.S.A.” (underscore in the original). In addition members of the church and board of trustees

approved an amendment to the articles of incorporation declaring:

“This corporation is a church congregation of and holds all property as trustee for the

Presbyterian Church (U.S.A.)”

In addition to these documents, the court also noted that the church participated by sending

representatives to Presbytery meetings and sought approval when buying or selling property in

accordance with governing church documents. Taking these matters into consideration, the court held

that there was requisite intent to create a trust for the benefit of the PCUSA.

The second issue is whether Hope could and did revoke the trust. Hope relies on the provisions of ORS

130.505 (1) which provides that:

“Unless the terms of a trust expressly provide that the trust is irrevocable, the settlor of th trust

may revoke or amend the trust”.

The court held that this provision does not apply to trusts created prior to 2005 and as noted the trust in

question was created prior to that date. The common law prior to that date was that a trust was

irrevocable, “unless the settlor reserved[d] the power of revocation.” (citations omitted). Therefore, in

the absence of express provisions, the trust was irrevocable and the property is subject to the trust in

favor of PCUSA.

Miller et al v. Jones 256 Or 392 ___P3d ____(April 2013)

The question was whether the following agreement created an appurtenant easement.

"This agreement is entered into this 10th day of March 1999 by and between James Scott Busby and Margaret Mary Busby, hereafter referred to as Owners, and Jamie Lee Hopkins and Suzanne Kay Hopkins, hereafter referred to as Users. "Whereas Owners shall give Users a non-exclusive right to service and maintain an existing underground irrigation pipeline and facility which services User's property known as Parcel 1 of Land Partition 1998-0103, Partition Platt records of Douglas County, Oregon. Users shall have the rights to service and maintain the existing underground pipeline facilities through Owner's Parcel 2 of Land Partition 1998-0103, and Parcels 1 and 2, also known as T-25 R7 S28, Tax Lot 400 and Tax Lot 500. "The access through Parcel 1 and Parcel 2 (Tax Lot 400 and Tax Lot 500) shall be limited to a 15 ft. non-exclusive easement, which will run North to South between the two parcels. Five feet of said easement will be on the Easterly property line of Parcel 2 and 10 feet shall be on the Westerly property line of Parcel 1."

It may be no surprise that the parties to this litigation are not the original parties to the agreement, but

subsequent purchasers from each. The burdened property owners argue that this created a personal

license and, even if it created an easement, it was not appurtenant.

The court held, first, that it created an easement which is the right to do certain acts on the land of

another and does use the word “easement” in the last paragraph. Secondly, the court held that it was

an appurtenant easement holding that an easement to benefit one property, especially when the

benefitted property is identified, is entitled to an inference that it is appurtenant. If there is no language

to override that inference it will be determined to be appurtenant.

Therefore, as an appurtenant easement it was conveyed as a benefit to the main parcel.

In re Baldwin ___Or App ___,___P3d____ (June 26, 2013)

Father and Mother divorced in 2003. The decree required Father to pay to mother the sum of $600.00

per month in child support each month until the child was 18 or longer if the child enrolled in school.

The Division of Child Support (“DCS”) is responsible for collection and distribution of this sum. Father

made all required payments through June 30 2011. Several times Father sought to obtain proof from

DCS that he had satisfied his payment obligations and DCS refused. Father also asked the trial court to

declare that his judgment was partially satisfied. The trial court would not enter a partial satisfaction of

the judgment, despite a finding that all required payments had been made. Finally, a request to the

Court administrator was also refused.

The court reviewed 4 statutes dealing with satisfaction of money awards. The first “foundational”

statute is ORS 18.225 which provides for a full or partial satisfaction to be signed by a judgment creditor

or attorney for the creditor.

However, a different statute applies when payments are made to DCS –ORS 18.228 as follows:

"(1) If a support award is paid to the Department of Justice, the judgment creditor may receive credit for satisfaction of the judgment only in the manner provided by this section. The department may provide judgment creditors with forms and instructions for satisfaction of support awards under this section. "(2) Any satisfaction document for a support award described in subsection (1) of this section must be mailed to or delivered to the Department of Justice, and not to the court administrator. The department shall credit the amounts reflected in the satisfaction document to the support award pay records maintained by the department. Except as provided in subsection (3) of this section [pertaining to support awards assigned to the state], the department shall not credit amounts against the support award pay records to the extent that the judgment is assigned or subrogated to this or another state. The Department of Justice shall thereafter promptly forward the satisfaction document to the court administrator for the court in which the money award was entered, together with a certificate from the department stating the amounts reflected as paid in the support award pay records maintained by the department. The court administrator shall note in the register as paid only the amount stated in the certificate, and not the amount shown on the satisfaction document."

An alternative is permitted under ORS 18.232:

“The third relevant statute is ORS 18.232, which provides that "[i]n addition to or in lieu of the certificate and satisfaction document provided for in ORS 18.228, [DCS] may execute and file a satisfaction document for a support award" if three conditions are met: (1) the judgment debtor provides a sworn affidavit indicating that the money award has been paid in full; (2) DCS certifies that it has a complete pay record for the payments; and (3) DCS certifies that there are no arrearages. ORS 18.232(1). DCS is required to give notice to the judgment creditor "[i]f a satisfaction document under this section is for any payment made to [DCS] for amounts that have not been assigned by the judgment creditor to the state * * *." ORS 18.232(4) Baldwin p.5

The final, fourth statute is ORS 18.325:

“The fourth statute is ORS 18.235, which provides that "[a] judgment debtor * * * may move the court for an order declaring that a money award has been satisfied or for a determination of the

amount necessary to satisfy the money award, when the person making the motion cannot otherwise obtain a satisfaction document from a judgment creditor." ORS 18.235(1). If, after notice to all interested parties and a hearing on the matter, the court concludes that the movant is entitled to relief, "the court shall issue an order providing that the money award has been satisfied in full or, if the money award has not been satisfied in full, the specific amount that will satisfy the judgment on a specific date or within a period of time specified in the order." ORS 18.235(7). Following a trial court finding that the "money award has been satisfied," the trial court administrator "shall note in the register and in the judgment lien record that the money award has been satisfied in full."6 ORS 18.235(9). Similarly, the statute requires that, "[u]pon request of the person making the motion, the court administrator shall issue a certificate indicating that the money award has been satisfied." ORS 18.235(10).” Baldwin p6

The Court goes on to interpret the statutory scheme as authorizing or requiring entry of satisfaction only when there has been a complete satisfaction and not partial.

The Father also brought an action against the state for attorney’s fees and damages under ORS Chapter 205 relating to the filing of an invalid encumbrance. The Court denied the request noting that the child support obligation was a valid encumbrance.

Documents

REAL ESTATE CASE LAW PDATE 2013 - Oregon State Bar