Source: https://www.gsblaw.com/northwest-real-estate-forum/author/Paul-H-Trinchero
Timestamp: 2019-04-22 20:47:37+00:00

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Who Decides Whether Reasonable Access Exists - The Court or the Jury?
Improvement districts are authorized by statute to construct and operate permanent utilities for irrigation, drainage, diking, water improvement and water control throughout the State of Oregon. See Oregon Revised Statutes Chapters 545, 547, 551, 552 and 549. In some instances, the permanent utilities constructed and operated by these districts have been in existence for over 100 years. Often, these districts do not have title to the land on which the permanent utility is located nor do they hold recorded easements allowing access to maintain the infrastructure of the permanent utility. The lack of recorded property rights can lead to uncertainty as to what rights a district has to enter onto its members’ lands to operate, repair and improve the existing infrastructure of its permanent utility. Current landowners in a district may feel that their district does not have the right to enter onto their lands or that the district must obtain the right to enter their lands through voluntary acquisition or through condemnation. This creates a potential nightmare for an improvement district and its members when a landowner seeks to prevent a district from entering onto his or her land for the purpose of operating, repairing or improving the permanent utility. If this occurs, litigation may be the only option for the district or the landowner. This was the case in Davis v. Nye Ditch Users Improvement District, 247 Or App 266, 268 P3d 778 (2011).
In Nye Ditch, the predecessors-in-interest to the plaintiffs joined with neighboring landowners in the 1920s to dig the Nye Ditch to irrigate their lands for agriculture. Id. at 268. The plaintiffs Davis and Ritters each purchased property in the district in 2003 and 2006, respectively. Id. The plaintiffs’ properties benefitted from the Nye Ditch and it was visible from their land. Id. The Nye Ditch Users Improvement District was formed under Chapter 554 in 2006 and the plaintiffs’ lands were within the district. Id. at 268–69. The plaintiffs used the Nye Ditch and paid assessments to the district. Id. at 269. The district contracted with an excavation contractor to make improvements to the Nye Ditch on the Ritters’ property. The Ritters barred the excavation crew from entering their property and filed a lawsuit challenging the district’s authority to enter onto their lands. Id. The trial court granted summary judgment to the district finding that the district had the right to enter the land based on “(1) the easements belonging to landowners who draw water from the ditch, (2) ORS Chapter 554, and (3) defendant’s articles of incorporation.” Id. at 270. The plaintiffs appealed.
The Court of Appeals began its analysis by noting that the landowners drawing water from Nye Ditch, as neighbors who receive a “mutual benefit” through a “common enterprise,” hold easements to cross their neighbors’ property to access the Nye Ditch. Id. at 270–71 (citing Foster v. Foster, 107 Or 355, 368, 213 P 895 (1923); Luckey v. Deatsman, 217 Or 628, 634, 343 P2d 723 (1959)). The easements are appurtenant to and run with the land. Nye Ditch, 247 Or App at 271; Luckey, 217 Or at 636–37. The Court of Appeals further held that landowners’ easement rights included the right to access their neighbors’ property for repairs. Id. at 271 (citing Baumbach v. Poole, 266 Or 154, 157–58 n.1, 511 P2d 1219 (1973)). “The general rule, that a party who has a right of enjoyment, has also a right to enter and make necessary repairs, is essential to the enjoyment of the thing granted.” Id. at 271–72 (quoting Thompson v. Uglow, 4 Or 369, 372 (1873)).
The Court of Appeals went on to explain that the Nye Ditch Users Improvement District was entitled to exercise its members’ easement rights to enter onto its members’ lands to improve or repair the Nye Ditch. Id. at 275. The holding was based on the statute authorizing the formation of the district, ORS Chapter 554. In particular, the Court noted that ORS 554.110 gave the district’s board “full authority and power to . . . (1) Build, construct and complete any works and improvements . . . (3) Operate and maintain such works as are necessary, convenient and beneficial for said purposes . . . .” Id. at 274. The Court of Appeals found that the statute granted the district the right to enter the land of its members to improve or repair irrigation ditches by implication.
Id. at 275 (quoting Pioneer Real Estate Co. v. City of Portland, 119 Or 1, 10, 247 P2d 319 (1926)). “The legislature granted improvement districts the authority to act on behalf of individual landowners and to exercise, on their behalf, their common-law rights of improvement and repair and access necessary for that purpose.” Id. at 275.
The decision in Nye Ditch has a number of interesting aspects. First, it acknowledges that the landowners who band together to build a permanent utility have property rights in each other’s lands. Second, it takes that concept a step further to allow statutorily created and governed improvement districts to exercise its members’ property rights to operate, maintain and improve its existing infrastructure. Third, by allowing the districts to exercise its members’ property rights, the Court of Appeals appears to have bypassed the question of whether the District’s operation, maintenance and improvement of a permanent utility on the lands of its members constitutes a constitutional taking. By doing so, it removes the possibility that the members of the district may have to pay for the permanent utility twice – once when it was built and a second time to gain access to it. Thus, the Court of Appeals created an elegant solution to what is otherwise an intractable problem for improvement districts around the Oregon.
In a condemnation when only a portion of the property is taken, the property owner is entitled to just compensation based on the value of the property taken plus damages to the remaining property, if any. However, if the damage to the remaining property can be cured, the property owner is only entitled to the lesser of the damage to the remaining property or the cost to cure.
Impact on remaining property and the ability to “cure” damage is probably the most subjective area in any condemnation appraisal. The ODOT ROW Manual instructs the appraiser to first determine if the remaining property is damaged and to quantify that damage. Only after the appraiser has determined there has been damage and the extent or amount of the damage is the appraiser to consider if the damage can be “cured” and, if so, the “cost of the cure.” Often, however, an appraiser will go directly to the cure and its costs, bypassing any quantification of the amount of the damages. The “cure” and “cost of cure” are often the significant issue in partial takings with the condemner and owner positions challenging each other as to what would constitute a cure and its costs.
In two recent condemnation trials, the State of Oregon has sought to exclude evidence and testimony about potential “cures” considered by the property owner’s appraiser in concluding the just compensation for a partial taking. In both cases, the State’s appraiser presented evidence that the damage to the property owner’s remaining property could be cured, and measured the damages to the remaining property using the “cost-to-cure” valuation methodology. In each case, the property owner’s appraiser considered and rejected potential cures as not resulting in a cure or the cost was more than the damage. The owner’s appraiser determined the damage to the remainder, i.e., its diminution in the value, based on a change in the highest and best use of the property, as the appropriate measurement of just compensation.
"[The property owner argues] that since, under the circumstances . . . restoration costs may be used as a measure of damages, it is necessary for the appraiser to make an initial estimate of such costs in order to determine whether they were less than the depreciation in the market value of the property not taken and thus binding upon the owner. We reject this argument. The appraiser may find it advisable to make such a calculation but if the owner seeks to recover the depreciation in the market value of the property remaining, he cannot testify as to restoration costs. To permit him to do so would be to inject into the case evidence which the jury is likely to improperly consider in estimating the owner’s loss. (emphasis added.)"
In response, the property owners made three arguments: (1) that the property owner was entitled to put on evidence of potential cures considered and rejected by the appraiser to rebut the State’s evidence that the damage to the remainder should be measured by the State’s proposed “cost-to-cure”; (2) that USPAP requires an appraiser to consider “cost-to-cure” in determining just compensation in a partial taking; and (3) that later Court of Appeals opinions favor allowing the jury to consider evidence of competing valuation methodologies in determining just compensation. The trial court denied the motion to exclude in each case finding that the property owner was entitled to present the rejected “cures” as rebuttal evidence. The trial courts appeared to reject (or at least did not reach a decision on) the property owners’ other two arguments.
The Tunison case is most often cited in support of using a “cost-to-cure” methodology in valuing damages to the remainder in condemnation cases. As a result, the State’s use of this case in an attempt to exclude competing “cost-to-cure” evidence is clever, but also disconcerting. First, USPAP (and the ODOT Right of Way Manual) requires an appraiser to consider potential cures in determining damages to the remainder in a partial taking case. To exclude evidence of rejected potential cures would prevent an appraiser from testifying to a key underpinning of his or her opinion on value. Second, the argument runs counter to Oregon Court of Appeals cases issued after Tunison that set a liberal standard for presenting expert testimony on valuation methodology to juries. See Tri-Met v. Posh Ventures, LLC, 24- Or App 425, at 437-438 (2011) (finding that jury is entitled to “hear expert testimony regarding the appropriateness of a particular valuation methodology”) and City of Bend v. Juniper Utility Co. 242 Or App 9, 20 (2011) (it is left to the trier of fact to assess the evidence, including expert testimony regarding the appropriateness of a particular valuation methodology, and to then make a factual call as to the fair market value of the property in question). Third, any danger that a jury will be misled or confused by evidence of rejected “cures” is mitigated by the uniform jury instructions used in most condemnation cases. For these reasons, it is the authors’ opinion that a property owner should be entitled to present evidence of competing potential cures in it case in chief, and not just as rebuttal evidence.
Effectively, the State asserted that only it could present evidence and testimony of a potential cure and its costs, but the owner, if relying on just compensation using diminution in value to the remainder, could not present testimony or evidence as to a cure or its costs, i.e., what is good for the goose is only for the goose. Fortunately, in both cases, the court allowed the owner to put in evidence and testimony regarding potential cure and their costs as rebuttal to the State’s assertion of a specific cure and its costs. Overall, a practitioner should carefully consider this aspect of the Tunison case in preparing for any trial that involves a partial taking in which either party intends to present “cost-to-cure” evidence.

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