The Condemnation Lawsuit
a. What gives rise to a condemnation lawsuit? Who files the lawsuit?
If you cannot reach agreement with the government as to just compensation after initial negotiations, the government must file a condemnation lawsuit to obtain possession of and title to the property. The condemnation lawsuit is formally initiated by the filing of a “Complaint.” The Complaint will name the property owner and all holders of legal interests in the property (mortgage lenders, etc.) as defendants in the lawsuit. ORS 35.245. The Complaint will also describe the government’s eminent domain powers, allege that the property is necessary for a particular public use, and assert the amount the government contends is just compensation. ORS 35.255. The government’s just compensation allegation will most likely restate its original offer to you.
b. Is arbitration available?
Yes, arbitration is available in certain circumstances at the election of the property owner. Arbitration is a process similar to trial, but less formal. In arbitration, rather than have a judge or jury decide the case, an experienced attorney or retired judge acts as the sole decision maker or “arbitrator.” If the total amount claimed by any party as just compensation does not exceed $20,000, you may elect binding arbitration, meaning that the decision of the arbitrator is final and not appealable except for very limited reasons. If the total amount claimed by any party exceeds $20,000, but is less than $50,000, you may elect non-binding arbitration, which allows either party unsatisfied with the outcome of the arbitration to appeal the case for a normal trial. ORS 35.346(6).
c. How long does the lawsuit take?
A condemnation lawsuit may last between 12 and 24 months if it goes all the way through trial. That being said, the lawsuit can possibly settle at any time.
d. What happens in the lawsuit before the trial?
Prior to the trial, there are a number of important milestones following the Complaint.
- Immediate Possession: If the government needs immediate possession of the property, which is often the case for construction purposes, it will file a “Notice of Immediate Possession” at or near the time of the Complaint. ORS 35.352. The Notice of Immediate Possession basically asks the court for an order allowing the government to take possession of the property prior to trial. Except in the most extreme of cases, the court grants such requests.
- Deposit of Funds by Government; Property Owner Withdrawal: In order to obtain immediate possession, the government must deposit with the court what it contends is just compensation for the taking of the property. ORS 35.265. Upon order of the court, you are then permitted to withdraw those funds from the court without prejudicing your case. ORS 35.285. The withdrawal process can be more complicated if there is more than one defendant, particularly when there is a mortgage or other lien on your property.
- Property Owner’s Answer: Your “Answer” is the formal response to the government’s Complaint. It is generally due 30 days after the filing and service of the Complaint, and failure to timely file an Answer may result in your being “defaulted” or forfeiting the right to challenge the government’s assertion of just compensation. The Answer responds to the government’s allegations, sets forth any available defenses to the government’s exercise of its eminent domain power, and alleges the amount you believe to be just compensation. ORS 35.295. In certain situations, you may also allege in coordination with the Answer counterclaims against the government, including those for “inverse condemnation,” which is described below.
- Discovery: “Discovery” is the formal process by which parties to a lawsuit obtain documents and information from each other prior to trial. This process may involve requests for production of documents, requests that parties admit certain facts, and depositions of parties. The parties may also request documents and depositions of third parties by way of subpoena. In Oregon state court, there is no “expert discovery,” so a party may not seek documents from or depose the other party’s appraiser or other experts prior to trial.
- Exchange of Appraisals: While the government must, in most cases, provide the property owner an appraisal with its original offer, Oregon law requires the exchange of appraisals at certain times prior to trial. The parties may exchange subsequent appraisals at any point in the process as part of their negotiations. Appraisals not exchanged prior to trial, however, cannot be used at trial. ORS 35.346(5).
- Settlement Conference or Mediation: Many courts will require the parties to engage in a judicial settlement conference before allowing a case to proceed to trial. The parties may also engage in private mediation. This process is described above.
e. Will I testify?
Yes, in many cases you, as the property owner, may testify regarding your opinion of the value of the property taken and, as applicable, the damages to the remaining value of the property.
f. Who else will testify?
Depending on the nature of the taking, a variety of fact and expert witnesses may testify at trial as to just compensation. These witnesses will include, in the least, the respective appraisers hired by the government and the property owner.
g. Will the jury view my property?
Yes, in most cases the jury will take a court-sanctioned trip called a “jury view” to view the property. Either party may request the jury view by motion to the court prior to the formation of the jury. ORS 35.315. In many cases, by the time of trial and the jury view, the government has taken possession of the property and the project for which the property was taken is under construction or complete.
h. How long will the trial take?
Generally, a trial on a condemnation action may take three to four days. Depending on the complexity of the case and the number of witnesses for each side, the trial could last longer.
i. What happens after the jury returns a verdict?
The verdict is reduced to a judgment, which is a document that states the just compensation the government must pay the property owner. Upon the government’s satisfying the judgment, the judgment also operates to transfer title to the property to the government. ORS 35.325. In many cases, the property owner is also then entitled to petition the court for an award of attorney fees and costs. Based upon the court’s determination of the property owner’s reasonable attorney fees and costs, a supplemental judgment is typically entered, requiring the government to pay the property owner in such an amount.
j. What kinds of fees and costs are involved in such a lawsuit?
Property owners can expect to incur attorney fees, expert witness fees, filing fees, the costs associated with appraising the property, related planning and engineering costs, and general expenses associated with litigation. Depending on the nature of the case, other types of fees and costs may be incurred. The amount of fees and costs varies widely, depending on the complexity of the matter, the length of the dispute, and other factors.
k. Can I recover my fees and costs from the government?
In many cases, yes. As discussed above in Section 6, Oregon law allows a property owner to recover reasonable fees and costs, as determined by the court, if: (1) the government abandons the condemnation lawsuit or the lawsuit is dismissed for the government’s failure to comply with ORS Chapter 35; (2) the property owner obtains just compensation that exceeds the government’s highest written offer prior to filing the lawsuit; or (3) the property owner obtains just compensation that exceeds the government’s highest written offer of compromise. ORS 35.335, 35.346(7), 35.300.
If the government does not abandon the lawsuit, its first offer was in good faith, and the jury’s determination of just compensation does not exceed the government’s highest written offer before filing its Complaint, the government is entitled to a judgment against the property owner for certain limited costs and disbursements, but not attorney and expert witness fees. ORS 35.346(9).
The amount of fees and costs to which you are entitled may be affected by an “offer of compromise” by the government. An offer of compromise is a formal offer by the government to settle the case after filing the Complaint. If you reject the offer of compromise but do not obtain a judgment after trial in an amount greater than the offer, your entitlement to fees and costs may be reduced. ORS 35.300. In particular, an offer of compromise serves to potentially cut off a property owner’s entitlement to attorney fees. For instance, if the government’s initial offer of just compensation is $50,000 and the government subsequently sends an offer of compromise for $75,000, the property owner would need to receive just compensation in excess of $75,000 to recover his or her fees and costs for the entire case. If the property owner recovered $60,000, he or she would only be entitled to his or her reasonable fees and costs through the date of the offer of compromise. An experienced condemnation attorney will be able to fully advise you concerning any offer of compromise from the government.
Finally, attorney fees and costs should be included in negotiations with the government, and they are often accounted for in settlement agreements reached with the government.
l. Can either side appeal? Am I entitled to fees and costs on appeal?
Yes, either the government or you may appeal a judgment of the court. An appeal, however, will not prevent the government from taking possession of the property and using it for the designated public use. If you prevail on appeal, you are entitled to an award of reasonable attorney fees and costs incurred during the appeal process. ORS 35.355.
m. What is the effect of withdrawing funds awarded by the jury on my appeal rights?
If you withdraw from the court the compensation awarded by the jury and deposited by the government (as opposed to the government’s original deposit of its contention of just compensation), you will likely waive your right to appeal. ORS 35.365.