Case Name: STATE OF OREGON, acting by and through its Department of Transportation, Plaintiff-Respondent, v. ALDERWOODS (OREGON), INC., an Oregon corporation, successor by merger with Young's Funeral Home, Inc., an Oregon corporation, Defendant-Appellant, and BANK OF AMERICA, N. A., a national association, as administrative agent, Defendant
Court: Oregon Court of Appeals
Jurisdiction: Oregon
Decision Date: 2014-09-17
Citations: 265 Or. App. 572
Docket Number: C085449CV; A146317
Parties: STATE OF OREGON, acting by and through its Department of Transportation, Plaintiff-Respondent, v. ALDERWOODS (OREGON), INC., an Oregon corporation, successor by merger with Young’s Funeral Home, Inc., an Oregon corporation, Defendant-Appellant, and BANK OF AMERICA, N. A., a national association, as administrative agent, Defendant.
Judges: Before Haselton, Chief Judge, and Armstrong, Wollheim, Ortega, Sercombe, Duncan, Nakamoto, Egan, DeVore, Tookey, and Garrett, Judges, and Schuman, Senior Judge.
Reporter: Oregon Reports, Court of Appeals
Volume: 265
Pages: 572–611

Head Matter:
Argued and submitted July 30, 2012; resubmitted en banc March 12,
affirmed by equally divided court September 17, 2014,
petition for review allowed February 11, 2015 (356 Or 689)
STATE OF OREGON, acting by and through its Department of Transportation, Plaintiff-Respondent, v. ALDERWOODS (OREGON), INC., an Oregon corporation, successor by merger with Young’s Funeral Home, Inc., an Oregon corporation, Defendant-Appellant, and BANK OF AMERICA, N. A., a national association, as administrative agent, Defendant.
Washington County Circuit Court
C085449CV; A146317
336 P3d 1047
Charles F. Hudson argued the cause for appellant. With him on the briefs was Lane Powell PC.
Erin C. Lagesen, Assistant Attorney General, argued the cause for respondent. With her on the brief were John R. Kroger, Attorney General, and Anna M. Joyce, Solicitor General.
Before Haselton, Chief Judge, and Armstrong, Wollheim, Ortega, Sercombe, Duncan, Nakamoto, Egan, DeVore, Tookey, and Garrett, Judges, and Schuman, Senior Judge.
PER CURIAM
Armstrong, J., concurring.
Sercombe, J., concurring.
Wollheim, J., dissenting.

Opinion:
ARMSTRONG, J.,
concurring.
As part of a project to improve SW Pacific Highway (Highway 99W) in Tigard, the Oregon Department of Transportation (ODOT or the state) brought a condemnation action against defendant to acquire interests in land owned by defendant that abuts Highway 99W. Among other things, the project involved the reconstruction of the sidewalk on Highway 99W and the elimination of curb cuts and driveways that had allowed vehicular access from defendant's property to the highway. Before trial, the trial court granted the state's motion in limine to exclude evidence of the diminution in the value of defendant's land as a result of its loss of access to Highway 99W. The court thereafter entered a general judgment awarding defendant just compensation of $11,792. Defendant appeals the judgment and assigns error to the order granting the state's motion in limine. I conclude that the trial court did not err in granting the motion.
Defendant owns a rectangular parcel of property whose southern boundary abuts Highway 99W near the interchange of Highway 99W and Highway 217 in Tigard. Before the state undertook to improve Highway 99W, defendant's property had direct vehicular access to Highway 99W through two driveways. The property also has indirect access to Highway 99W from Warner Avenue, which abuts the western boundary of the property and intersects Highway 99W. To orient the reader, a map of the property is included as an appendix to the opinions in this case.
As noted, ODOT undertook to improve the portion of Highway 99W that includes the highway abutting defendant's property. The state filed a condemnation action against defendant in September 2008 to acquire a temporary easement across a portion of defendant's property "for the purpose of a [construction] work area" and to acquire "[a] 11 abutter's rights of access, if any," to Highway 99W. One month later, ODOT sent defendant a notice of the removal of defendant's unpermitted approaches to Highway 99W, which advised defendant that ODOT had no record of a permit for defendant's driveways and that defendant's unpermitted approaches to the highway — viz., its driveways— would be eliminated with the reconstruction of the sidewalk on Highway 99W. The notice also advised defendant that it could submit to ODOT an application for a permit for an approach to Highway 99W from defendant's property or could provide proof that the existing approaches had been established before 1949.
Significantly, however, ODOT rules establish minimum safety standards for an approach to a state highway such as Highway 99W, and those standards require an approach to be located at least 750 feet from a highway interchange. See OAR 734-051-0125 (2008) (Table 5). Under that standard, no approach to Highway 99W would be permitted from defendant's property, because the entire length of the property that abuts Highway 99W is less than 750 feet from the interchange of Highway 99W and Highway 217. As it is, defendant did not respond to the ODOT notice, and, accordingly, ODOT constructed the sidewalk abutting the property without curb cuts or driveways that would allow vehicular access from the property to Highway 99W.
The state subsequently filed a motion in limine in the condemnation action that sought to exclude any evidence of the diminished value of defendant's property due to its loss of access to Highway 99W. The state argued that the denial of access resulting from the elimination of the curb cuts and driveways constituted a denial of access to promote the efficient and safe use of the highway, that is, a regulatory restriction on access to the highway to promote its use as a highway and, consequently, that the denial of access as a result of those restrictions did not constitute a taking of the access for which compensation would be due under Article I, section 18, of the Oregon Constitution. In the state's view, because the regulatory restriction on access did not constitute a taking and because the property has access to Warner Avenue, any reduction in the value of defendant's property as a result of its loss of access to Highway 99W was not compensable. Hence, it sought to exclude evidence of the diminished value of the property due to its loss of access to Highway 99W on the ground that the evidence was not relevant.
The trial court agreed with the state and granted its motion in limine. The parties then stipulated that defendant was entitled to an award of $11,792 as just compensation for the temporary construction easement over defendant's land, but that the stipulated amount did not include compensation for the taking of defendant's right of access to Highway 99W. The trial court entered judgment accordingly. Defendant appeals, assigning error to the order granting the state's motion in limine, which we review for legal error. See, e.g., State v. Cunningham, 337 Or 528, 536, 99 P3d 271 (2004), cert den, 544 US 931 (2005) (exclusion of evidence on relevance grounds reviewed for legal error).
It is helpful to begin by reviewing Oregon law on access to public roads from abutting property. Owners of real property in Oregon have a common-law right of access to public roads that abut their property. The legislature modified that principle for state highways in 1951 with its enactment of ORS 374.405, which denies abutting landowners a right of access to state highways "constructed, relocated or reconstructed after May 12, 1951." The road at issue in this case is a state highway, but the state does not contend that ORS 374.405 applies to deny defendant a right of access to the highway.
Denying access to a road to a property owner who has a common-law right of access to the road can constitute a taking of that right for which compensation would be owed under Article I, section 18, of the Oregon Constitution. For example, the construction of an irrigation ditch that denied landowners access to a road in Sweet et al. v. Irrigation Canal Co., 198 Or 166, 191, 254 P2d 700, reh'g den, 256 P2d 252 (1953), constituted a taking of the owners' access rights because the ditch involved a use of the right of way of the road for a purpose other than a road purpose. As the court explained, an impairment of an abutting owner's right of access to a highway "caused by the use of the highway for other than legitimate highway purposes is a taking within the meaning of the constitution." Id. The measure of damages for the loss of access to a road is the diminution in the value of the land resulting from the loss of access.
However, it is well established in Oregon that governmental regulation or modification of a road for road purposes that denies a landowner access to the road does not give rise to a compensable taking of the owner's access right. For example, the court held in Oregon Investment Co. v. Schrunk, 242 Or 63, 408 P2d 89 (1965), that Portland's decision to establish a 24-hour bus-loading zone that spanned the entire length of a city block and, as a consequence, that denied abutting landowners any access from their property to the affected street, did not constitute a taking of the owners' access to the street. The court acknowledged that the owners' right of access to the street was a property right but concluded that the right was "subservient to the primary rights of the public to the free use of the streets for the purposes of travel and incidental purposes." Id. at 69 (citations omitted). The court went on to explain:
"It is apparent that the concern of the city in refusing to allow a curb cut on SW Fourth Avenue and thereby barring the use of the sidewalk on that street for the passage of automobiles going into and leaving plaintiffs' property, was with the public safety and convenience — with the safety in a heavily congested area of pedestrians, including persons boarding and departing from buses, and the safe and orderly movement of automobile traffic. It may be that some depreciation in the value of plaintiffs' property or some lessening of profits from their parking business has resulted — though neither is alleged. But if so, it is damnum absque injuria. There was no 'taking' of plaintiffs' property within the meaning of Article I, section 18, of the Oregon Constitution. As this court said in Brand v. Multnomah County, [38 Or 79, 92, 60 P 390, aff'd on reh'g, 62 P 209 (1900)] *:
"'Acts done in the proper exercise of governmental powers, and not directly encroaching upon private property, though their consequences may impair its use, are universally held not to be a taking within the meaning of the constitutional provision.'"
242 Or at 71 (citation omitted); see also Barrett et al. v. Union Bridge Co., 117 Or 220, 223-24, 243 P 93, reh'g den, 117 Or 566, 245 P 308 (1926) (change of street grade for bridge approach that denied property owner access to the street was not a compensable taking of access right); Brand, 38 Or at 95-99 (same).
Notwithstanding those decisions holding that a complete loss of access to a road is not a compensable taking of access when the loss is caused by the regulation or modification of the road for road purposes, the Supreme Court concluded in dictum in State Highway Com. v. Burk et al., 200 Or 211, 265 P2d 783 (1954), that the conversion of a conventional highway to a limited-access highway, with the concomitant loss of access to the highway by abutting landowners, requires the government to condemn the access rights of the abutting landowners, because denying the owners access to the highway would constitute a compensable taking of their access right. The issue in Burk was whether the state could construct a highway in the first instance as a limited-access highway and thereby not be required to pay abutting landowners for a loss of access that they never had.
In concluding that the state could do that, the court noted the important public transportation and safety goals achieved by limiting access to a highway:
"In direct contrast with the land-service function of the conventional highway is the purpose and function of the non-access freeway or throughway. The congestion of population in the cities, the amazing increase of rapid automobile transportation, the delays and perils incident to the use of the conventional two-way unrestricted-access highways have rendered imperative the establishment of non-access or limited-access highways or freeways in the interest of the public convenience and necessity.
"It is reliably reported that travel upon our inadequate highways results in 40 thousand deaths, a million-and-a-half injuries, and property damage of 2 billion dollars a year, and that these staggering losses have been materially reduced wherever modern non-access highways have been established."
Id. at 231 (citation omitted).
Although the court recognized the public transportation and safety benefits of limited-access highways, it nonetheless said that "it is almost universally held that [the vested right of access of abutting landowners to a conventional highway] can be divested only by condemnation of the easement appurtenant to the abutting property." Id. In other words, although it would serve important highway purposes to convert a conventional highway to a limited- or non-access highway by denying abutting landowners access to the highway, the denial of access would nonetheless constitute a compensable taking of the owners' access rights.
The implicit premise of the Burk dictum appears to be that the conversion of a conventional highway to a limited-access highway is too great a change in the use of the highway to be included among the changes to which the access rights of abutting landowners can be understood to be subservient. In other words, landowners can expect their access to a conventional highway to be subject to impairment as a result of governmental decisions to regulate or modify the highway to better serve the public use of the highway as a highway, including impairment to the point of a denial of all access to the highway, see, e.g., Schrunk, 242 Or at 71, so long as the impairment does not result from a decision to convert a conventional highway to a limited- or non-access highway and thereby to eliminate "the land-service function" of the highway.
The distinction implicit in the Burk dictum cannot withstand examination. It simply does not make sense to distinguish between a change to a highway for highway purposes that denies one abutting landowner all access to the highway — which is not considered to constitute a taking of the owner's access rights — and a change to a highway for highway purposes that denies all abutting landowners access to the highway — which the Burk dictum concludes would constitute a taking of the owners' access rights. Both changes should be treated the same for purposes of Article I, section 18.
In fact, the Burk dictum cannot be squared with the analysis that applies to governmental regulations that affect land. Under that analysis, regulations affecting land do not constitute a taking of the land or any interest in it unless the regulations leave the owner with no economically viable use of the land. See, e.g., Coast Range Conifers v. Board of Forestry, 339 Or 136, 146-51, 117 P3d 990 (2005). The loss of all economically viable use of land conceivably could occur from the conversion of a conventional highway to a limited- or non-access highway if the conversion left a landowner with no access to the owner's land. However, absent such an effect, a conversion would not constitute a taking even though the value of the affected owners' land was significantly diminished as a result of the owners' loss of access to the highway.
We relied on the dictum in Burk to affirm a trial court decision in Douglas County v. Briggs, 34 Or App 409, 578 P2d 1261 (1978), aff'd on other grounds, 286 Or 151, 593 P2d 1115 (1979), that had held that a county's decision to convert a conventional county road to a limited-access road — thereby denying abutting landowners access to the road — constituted a compensable taking of the owners' access rights because the loss of access had reduced the value of the owners' land. We recognized that a government can qualify or restrict access to a road by an abutting landowner "to protect the public safety, convenience and welfare," and we cited the Supreme Court's decision in Schrunk as support for the principle that "[s]uch restrictions do not constitute a taking so long as an adequate means of access remains available to the abutting property owner." Id. at 414. However, our decision in Briggs can be reconciled with Schrunk only through reliance on the Burk dictum.
As noted earlier, the landowners in Schrunk had lost all access to one street but still had access to their property from adjoining streets. Schrunk, 242 Or at 71. The Supreme Court recognized that the loss of access to the one street may have reduced the value of the owners' land, but that reduction in value did not constitute a taking under Article I, section 18, because the restriction on access that had caused the reduction served the public use of the road as a road. Id. In Briggs, the landowners had lost access to the road that had been converted to a limited-access road, but they still had access to an adjoining road. Nonetheless, we held that the loss of access to the one road constituted a taking under Article I, section 18, because, although the land could still be used for the residential and farming purposes for which it historically had been used, the land could not be developed for commercial purposes, and, hence, its value had been reduced by the loss of access. Briggs, 34 Or App at 414-15. In other words, the loss of value due to the loss of access was a compensable taking of the access in Briggs but not in Schrunk even though the denial of access in both cases served the public use of the respective roads as roads. Hence, our decision in Briggs necessarily depended on the Burk dictum as support for the principle that a denial of access to an abutting road constitutes a compensable taking of the access if the denial is imposed to convert a portion of an existing road to a limited-access road. See also id. at 413 {Burk cited as source for principle that common-law right of access "may not be extinguished without just compensation").
The Supreme Court allowed review of our decision in Briggs. It ultimately affirmed our decision, but it did so based on its construction of the statute under which the county had acted in Briggs to convert the county road to a limited-access road, ORS 374.420, which the legislature had adopted in 1965. Briggs, 286 Or at 154-57. The court's construction of the statute depended, in turn, on its understanding of the legislative history of the statute. That history convinced the court that the legislature had enacted ORS 374.420 to give counties the authority to convert existing roads to limited-access roads but had conditioned that authority on a requirement that counties had to pay abutting landowners for their loss of access. Id.
Because the court resolved Briggs on the basis of its understanding of ORS 374.420, the court took
"no position one way or the other whether Article I, section 18, of the Oregon Constitution mandates payment for loss of rights of access in a situation like the present. Despite defendants' common law right of access, we believe the matter to be one of considerable doubt in situations in which the access is terminated for purposes [that] have to do with the use of the county road as a public road."
286 Or at 156-57 (footnote omitted).
Although the Supreme Court did not reach the constitutional issue in Briggs, the correct resolution of the issue is that a denial of access to a road in the circumstances presented in Briggs — viz., a denial of access for abutting landowners to an existing road to promote the efficient and safe use of the road — is not a taking of the owners' access rights that would require compensation to be paid to the owners under Article I, section 18, for their loss of access. In other words, Schrunk, Barrett, and Brand establish the correct constitutional principle in those circumstances, not the dictum in Burk.
Against that background, I turn to defendant's challenge to the trial court's exclusion of evidence on the diminished value of defendant's land due to its loss of access to Highway 99W. Defendant contends that the measure of damages for the condemnation of its right of access to Highway 99W is the diminished value of its land due to its loss of access to Highway 99W. Hence, the trial court erred in excluding evidence on that measure of damages. The premise that necessarily underlies that argument is that, but for the condemnation of the access to Highway 99W, the property would have access to Highway 99W. If that were true — that is, if the property would have access to Highway 99W but for the condemnation of access to it — then the diminution in the value of the property due to its loss of access would be the measure of damages that defendant could recover for the condemnation of its right of access to Highway 99W.
However, as a result of ODOT's regulatory decision to eliminate the curb cuts and driveways to Highway 99W, which resulted in a loss of access to Highway 99W for which compensation is not owed, see, e.g, Schrunk, 242 Or at 71, defendant's property does not have access to Highway 99W irrespective of whether the state condemned the access. Hence, defendant was not entitled to recover damages measured by a loss of access that it does not have. It follows that the trial court did not err in excluding evidence relevant to that measure of damages.
In summary, the state condemned defendant's access rights in the context of a project that would — and did— result in a regulatory denial of access to Highway 99W to promote the safe and efficient use of the highway as a highway. Whatever the measure of damages could be in those circumstances, it is not the diminished value of the land resulting from the loss of access to Highway 99W because, as a result of the regulatory elimination of the curb cuts and driveways, the property has no lawful access to Highway 99W irrespective of the condemnation of the access to the highway. As the trial court correctly concluded, evidence addressed to a measure of damages based on the loss of access was irrelevant. I conclude, therefore, that the trial court's judgment should be affirmed.
Ortega, Duncan, DeVore, and Garrett, JJ., join in this concurrence.
The reference to 1949 reflects that ODOT had established its permit system for approaches to state highways in 1949, so approaches established before 1949 would not have required a permit. Cf. OAR 734-051-0040(26) (2008) (defining "Grandfathered approach" under ODOT permit system as a legally constructed approach that existed before 1949).
Judge Wollheim contends in his dissent that the Burk dictum is based on the Oregon statutes that apply to the state's acquisition of land and interests in land for highway purposes. 265 Or App at 600 n 6 (Wollheim, J., dissenting). That is not correct. The dictum asserts that
"it is almost universally held that [the vested right of access of abutting landowners to a conventional highway] can be divested only by condemnation of the easement appurtenant to the abutting property."
Burk, 200 Or at 231. That is a statement of a constitutional principle applied by other courts, not a statement about the proper interpretation of an Oregon statute. To the extent that Burk applied Oregon condemnation statutes, it did so based on the court's understanding of Article I, section 18. As for Judge Wollheim's assertion that I rely in my concurrence on the proposition that the Supreme Court disavowed in Douglas County v. Briggs, 286 Or 151, 593 P2d 1115 (1979), its dictum in Burk, see 265 Or App at 600 n 6 (Wollheim, J., dissenting), I do not assert nor believe that the Supreme Court has disavowed the Burk dictum. See 265 Or App at 578-82 (Armstrong, J., concurring).
In contrast, had defendant established in response to ODOT's notice on the removal of defendant's approaches to Highway 99W that the approaches, viz., the driveways, had been lawfully established before 1949, ODOT may have concluded under its rules that it was required to allow the approaches to remain. Cf. 265 Or App at 575, 575 n 1 (discussing notice sent to defendant on removal of unpermitted approaches and ODOT rule on approaches lawfully established before 1949). Under that circumstance, defendant would have had access to Highway 99W but for the condemnation of it, and the diminished value of the property due to its loss of access arguably could have been an appropriate measure of damages for the loss. Given the posture of this case, I need not consider what measure of damage other than the diminished value of defendant's land due to its loss of access to Highway 99W might have been an appropriate measure of damages for the condemnation of defendant's access to Highway 99W.
Among other things, the dissent claims support for its contrary conclusion from the Supreme Court's decision in Briggs. It reasons that the Supreme Court's construction of ORS 374.420, the 1965 statute that applied to the county's conversion of a conventional county road to a limited-access road in Briggs, should apply to the 1947 statute under which the state condemned defendant's right of access to Highway 99W, ORS 374.035. 265 Or App at 602-03 (Wollheim, J., dissenting). The court's construction of ORS 374.420 in Briggs was very much driven by the legislative history behind the statute's enactment, which led the court to conclude that the legislature intended to require counties to pay landowners for their loss of access to a county road when the county converted the road to a limited-access road. See 286 Or at 153-56. I do not doubt that the 1947 legislature understood that landowners had a common-law right of access to state highways and, hence, that it enacted ORS 374.035 to provide authority for the state to acquire access rights by condemnation when the state believed it necessary to do that to restrict access to a state highway. However, there is no legislative history of which I am aware comparable to the history behind the enactment of ORS 374.420 that establishes that the 1947 legislature intended to require the state to pay landowners for access rights without regard to whether Article I, section 18, requires the state to pay for them.