Summary of a Recent
Judicial Development in
Urban Encroachment

County Constitutionally Required to Honor
Landowners' Waiver of Zoning Restriction

Eric H. Foy
National AgLaw Center Research Associate

Summary of Decision

In Citizens for Constitutional Fairness v. Jackson County, No. 08-3015-PA, 2008 WL 4890585 (D. Or. Nov. 12, 2008), the United States District Court for the District of Oregon held that Plaintiffs' Measure 37 waivers were valid and must be honored by Jackson County. Plaintiffs, owners of property in Jackson County, brought the instant action against Jackson County and the county's chief administrative officer to force the county to honor the waivers as binding, constitutionally protected contracts between Plaintiffs and Jackson County.

Background

Plaintiffs owned property in Jackson County that became subject to county zoning restrictions after Plaintiffs acquired their property. Id. at *1. Measure 37 "require[d] state and local governments to compensate private property owners for the reduction in the fair market value of their real property that result[ed] from any land use regulations of those governmental entities that restrict the use of the subject properties." Id. It gave governments the choice to either pay monetary compensation to property owners for loss of fair market value, or waive enforcement of land use regulations. Id. After the county passed new zoning restrictions affecting Plaintiffs' land, Plaintiffs filed a timely Measure 37 claim seeking monetary compensation for the reduced fair market value of their property. Id. The county could not provide monetary compensation; therefore, the Board of County Commissioners agreed to waive the zoning restrictions for Plaintiffs' land. Id.

In 2007, Oregon voters passed Ballot Measure 49, which allegedly superseded Measure 37. Id. Once the new measure passed, Jackson County decided that it would not honor the Measure 37 waivers. Id. Plaintiffs brought this action against Jackson County and Danny Jordan, Jackson County's chief administrative officer. Id. at *2.

Arguments

Plaintiffs argued that the Measure 37 waivers were binding constitutionally protected contracts between Plaintiffs and Jackson County, and not subject to being superseded by Ballot Measure 49. Id.

Analysis and Holdings

To resolve claims under the Contracts Clause of the United States Constitution, courts use a three-step test. Id. A court will examine: 1) whether the state law substantially impairs a contractual relationship; 2) whether the state has a significant and legitimate public purpose for the regulation; and 3) whether the adjustment of the rights and responsibilities of contracting parties is based upon reasonable conditions, and is of a character appropriate to the public purpose justifying the legislation's adoption. Id. Oregon law defines a contract as a "bargain in which there is a manifestation of mutual assent to the exchange and a consideration." Id. at *3.

When the instant court applied these contract principles, it determined that the Measure 37 waivers were binding contracts between Plaintiffs and Jackson County. Id. The court classified them as settlement agreements because the waivers allowed the parties to avoid litigation, and the facts presented manifested a mutual intent that the waivers were binding on all parties. Id. In addition, there was mutual consideration given for the agreements. Id. Ultimately, the court held that Plaintiffs' Measure 37 waivers were valid and enforceable contracts. Id. at 4.

The case was decided on November 12, 2008.