S47931 Vokoun v. City of Lake Oswego

SUPREME COURT CASES

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State: Oregon

Docket No: CC96-11-052

Case Date: 10/24/2002

Filed: October 24, 2002

IN THE SUPREME COURT OF THE STATE OF OREGON

WILLIAM VOKOUN
and PAULA VOKOUN,

Petitioners on Review,

CITY OF LAKE OSWEGO,
a municipal corporation,

Respondent on Review.

(CC 96-11-052; CA A101203; SC S47931)

En Banc

On review from the Court of Appeals.*

Argued and submitted September 12, 2001.

Mark P. Reeve, Portland, Reeve Kearns PC, argued the cause and filed the briefs for petitioners on review. With him on the briefs was Tracy Pool Reeve.

Timothy J. Sercombe, Portland, Preston Gates & Ellis LLP, argued the cause and filed the briefs for respondent on review. With him on the briefs was William K. Kabeiseman.

Mark C. McClanahan, Portland, filed a brief on behalf of amici curiae George Spada and Marietta Spada.

Harry Auerbach, Portland, Senior Deputy City Attorney, City Attorney's Office, filed a brief on behalf of amicus curiae League of Oregon Cities.

W. Eugene Hallman, Pendleton, Hallman and Dretke, filed a brief on behalf of amicus curiae Oregon Trial Lawyers Association.

LEESON, J.

The decision of the Court of Appeals is reversed, and the case is remanded to the Court of Appeals for further proceedings.

*Appeal from Clackamas County Circuit Court, Robert D. Herndon, Judge. 169 Or App 31, 7 P3d 608 (2000).

LEESON, J.

Plaintiffs William and Paula Vokoun (plaintiffs) challenge a decision of the Court of Appeals that reversed a jury verdict in their favor on their claims for inverse condemnation and negligence against the City of Lake Oswego (city) after the trial court denied the city's motion for a directed verdict on both claims. Vokoun v. City of Lake Oswego, 169 Or App 31, 7 P3d 608 (2000). For the reasons that follow, we reverse the decision of the Court of Appeals and remand the case to that court for further proceedings.

I. FACTS

Because the jury found in plaintiffs' favor, we view the evidence, and all inferences that reasonably may be drawn from it, in the light most favorable to plaintiffs. Greist v. Phillips, 322 Or 281, 285, 906 P2d 789 (1995). Our inquiry is whether there was any evidence from which the jury could have found the facts necessary to support its special verdicts on plaintiffs' claims for inverse condemnation and negligence. See Brown v. J. C. Penney Co., 297 Or 695, 705, 688 P2d 811 (1984) (describing standard of review in determining whether trial court erred in denying motion for directed verdict). Our review of the record "is circumscribed by the case actually presented to the jury through the pleadings, evidence, and jury instructions." Northwest Natural Gas Co. v. Chase Gardens, Inc., 333 Or 304, 310, 39 P3d 846 (2002).

In 1989, plaintiffs purchased a home on the north side of Rocking Horse Lane in the Red Fox Hills Subdivision in Lake Oswego. The subdivision had been developed in the early 1970s on a hill above Tryon Creek State Park. Plaintiffs' property slopes down to the north, into a ravine at the bottom of the hill. The ravine runs approximately parallel to the northern border of plaintiffs' property. Plaintiffs' house is located on the south side of their property.

The city built a storm drain that runs underground from Rocking Horse Lane north along a drainage easement near the western border of plaintiffs' property. (1) An outfall pipe, 12 inches in diameter, located near the northwest corner of plaintiffs' property, discharges the water into the ravine. The water then flows east along a drainage course towards Tryon Creek. During periods of heavy rainfall, the outfall pipe discharges a high volume of water.

Before the Red Fox Hills Subdivision and storm drain were built, storm water from approximately one acre of land drained to the location where the storm drain now exists. After the subdivision was built, the outfall pipe discharged runoff from about seven acres of land into the drainage course, causing extensive erosion. By 1986, in the words of a city engineer, the drainage course "needed some significant attention." However, the city has a "complaint driven" repair policy for maintaining storm drains, and, apparently because no one had complained, the city did not undertake any repairs at that time.

The city also has a five-year plan for determining which capital improvements projects -- including projects involving storm drains -- to undertake. That plan is incorporated into the city's budget. The plan addresses projects that are estimated to cost $25,000 or more. The city council decides which proposed projects to include in the capital improvements plan. Undertaking a capital improvement project that is not in the plan and that costs more than $25,000 usually requires the city council to adopt a supplemental budget. The city did not consider whether to place improvement of the storm drain and drainage course at issue in this case in the capital improvement plan. Neither did the city council consider whether to adopt a supplemental budget to repair the erosion problems associated with the storm drain.

Before buying their property in 1989, plaintiffs discovered a hole approximately eight feet deep around the storm drain outfall pipe. The hole appeared to have been caused by erosion from water coming out of the outfall pipe. Although the point where the pipe discharged the storm water was beyond the boundary of the property that plaintiffs were considering buying, the hole had swallowed the property marker for the northwest corner of the lot. Plaintiffs notified the city about the hole, and, after plaintiffs had purchased the property, the city's maintenance staff filled the hole with asphalt debris left over from a street project in another area of the city. After filling the hole with pieces of asphalt, the maintenance department did not inspect the outfall site or the drainage course to determine whether filling the hole had solved the erosion problem. Neither did the city tell plaintiffs that plaintiffs were responsible for inspecting the area to determine whether filling the hole had stopped the erosion at the outfall site or along the drainage course. In fact, filling the hole did not stop the erosion along the drainage course.

On February 8, 1996, following a period of unusually heavy rain, a landslide occurred on the hillside on which plaintiffs' property is located. The landslide continued to grow in the following months. The landslide caused a four-foot drop in the land approximately nine feet from plaintiffs' house and a 20-foot drop approximately 19 feet from the house. The landslide damaged a deck on the house and a dog run, and both had to be removed. The landslide also destroyed many trees. If plaintiffs had not taken remedial action, the land would have continued to slide, eventually destroying the house.

In November 1996, plaintiffs filed this action against the city for inverse condemnation and negligence. (2) In their claim for inverse condemnation, plaintiffs alleged that the city had "taken" their property for a public use by constructing a storm drain pipe and outfall pipe in a manner that destabilized the soils on and adjacent to plaintiffs' property, causing a landslide. As relates to issues on appeal regarding plaintiffs' negligence claim, plaintiffs alleged, among other things, that the city was negligent by failing properly to inspect the outfall and drainage course to discover the erosion that was occurring and to take reasonable steps to prevent a catastrophic landslide.

As noted, in its answer, the city admitted that it built the storm drain in question. The city contended that plaintiffs had failed to state facts sufficient to constitute a claim and that the city was immune from liability for plaintiffs' negligence claim under ORS 30.265(3)(c). (3)

At trial, plaintiffs presented evidence that the water that the storm drain diverted into the drainage course eroded more than nine tons of soil per acre each year. Before the development of the Red Fox Hills Subdivision and construction of the storm drain, there had not been a drainage course running from the outfall site to Tryon Creek. One of plaintiffs' experts testified that the speed of the water coming out of the outfall pipe likely caused the extensive erosion that occurred along the drainage course. Another expert testified that the erosion had been occurring for about 25 years before the landslide, or about since the time that the storm drain and outfall pipe were installed, and that the primary cause of the landslide was the erosion in the drainage course that had removed the soil at the toe of the slope that supported the hillside on which plaintiffs' property is located. According to that expert, the city should have been aware of the potential for further erosion in the drainage course when it filled the hole at the outfall site in 1989. Finally, plaintiffs presented evidence that the city could have prevented the landslide if it had "backfilled" the length of the drainage course with compacted soil or had constructed an enclosed pipe to carry water from the outfall pipe east along the drainage course to Tryon Creek. Either of those repairs would have cost more than $25,000.

At the close of plaintiffs' case, the city moved for a directed verdict on plaintiffs' inverse condemnation and negligence claims. The city argued that, as a matter of law, the damage to plaintiffs' property from the landslide was not a taking. The city also argued that, as a matter of law under ORS 30.265, discretionary immunity barred plaintiffs' negligence claim. The trial court denied both motions, and the jury thereafter returned special verdicts for plaintiffs on both claims. (4)

The city appealed, raising multiple assignments of error. The Court of Appeals reversed, addressing only the city's contention that the trial court erred in denying the city's motion for a directed verdict on plaintiffs' inverse condemnation and negligence claims. See Vokoun, 169 Or App at 33 (those two assignments "dispositive"). The Court of Appeals viewed plaintiffs' inverse condemnation claim as being predicated on the city's negligence. See Vokoun, 169 Or App at 40 ("In this case, plaintiffs expressly predicate their claims on the City's negligence."). Relying primarily on Patterson v. Horsefly Irrigation Dist., 157 Or 1, 69 P2d 282, 70 P2d 33 (1937), the Court of Appeals held that, as a matter of law, negligent interference with property rights does not support a claim for inverse condemnation. Vokoun, 169 Or App at 37-38. The Court of Appeals also held that, as a matter of law, the city had made discretionary policy decisions that entitled it to discretionary immunity under ORS 30.265. Id. at 42-43. We allowed plaintiffs' petition for review. We begin our analysis with the inverse condemnation claim.

II. INVERSE CONDEMNATION

Article I, section 18, of the Oregon Constitution provides, in part, that "[p]rivate property shall not be taken for public use * * * without just compensation[.]" Private property is "taken" for public use or benefit through the exercise of the power of eminent domain. GTE Northwest, Inc. v. Public Utility Commission, 321 Or 458, 466, 900 P2d 425 (1995). See Dept. of Trans. v. Lundberg, 312 Or 568, 571 n 1, 825 P2d 641 (1992) (describing eminent domain as "the power inherent in a sovereign state of taking or of authorizing the taking of any property within its jurisdiction for a public use or benefit"). A governmental unit with eminent domain authority can exercise its power of eminent domain by instituting condemnation proceedings. Id. An action against the government to recover the value of private property that the government has taken without first filing condemnation proceedings is referred to as an action for "inverse condemnation." See Suess Builders v. City of Beaverton, 294 Or 254, 258 n 3, 656 P2d 306 (1982) (claim for inverse condemnation is shorthand description of process through which landowner recovers just compensation for governmental taking of property even though government did not institute condemnation proceedings).

To establish a taking by inverse condemnation, the plaintiff is not required to show that the governmental defendant deprived the plaintiff of all use and enjoyment of the property at issue. See Morrison v. Clackamas County, 141 Or 564, 568, 18 P2d 814 (1933) (any destruction, restriction, or interruption of common and necessary use and enjoyment of property constitutes taking). A "substantial interference" with the use and enjoyment of property is sufficient. Hawkins v. City of La Grande, 315 Or 57, 68-69, 843 P2d 400 (1992).

Before this court, plaintiffs first argue that the Court of Appeals erred in holding that negligent governmental interference with property rights will not support a claim for inverse condemnation. They contend that, under this court's decisions in Morrison and Tomasek v. Oregon Highway Com'n, 196 Or 120, 248 P2d 703 (1952), a public body is liable in inverse condemnation for the consequences of a public use, "regardless of whether the consequences are themselves expected or intended, regardless of 'fault.'" In the alternative, plaintiffs contend that the Court of Appeals erred in analyzing their claim for inverse condemnation as being predicated on the city's negligence. According to plaintiffs, they based their inverse condemnation claim on the city's acts, not on the city's omissions regarding maintenance of the drainage course and repair of erosion along the drainage course.

The city responds that this court's cases, including Morrison and Tomasek, establish that a "purposive act" is an element of an inverse condemnation claim and that "there is no allegation or proof in this case that the city designed or constructed the subdivision stormwater drainage system." Rather, "[t]he only action of the City related to the subdivision drainage system was its presumed acceptance of the system in the plat dedication." The city's alleged failure to maintain the drainage course and repair the erosion along the course, the city continues, is not the type of "purposive act" that this court's cases have held is required to state a claim for inverse condemnation. The city does not comment on whether its admission that it built the storm drain would satisfy what it views as the "purposive act" requirement. In addition, the city argues that plaintiffs failed to establish a taking in this case because the damage that the landslide caused to their to property did not amount to a substantial interference with their use and enjoyment of the property.

We begin with plaintiffs' first argument, namely, that the Court of Appeals erred in holding that a takings claim cannot be based on interference with property rights that is "merely a consequence of negligent government conduct." Vokoun, 169 Or App at 37. Plaintiffs are mistaken. This court long has held that a claim for inverse condemnation requires a showing that the governmental acts alleged to constitute a taking of private property were done with the intent to take the property for a public use. See Gearin v. Marion County, 110 Or 390, 402, 223 P 929 (1924) (distinguishing eminent domain from tort, in part, by whether governmental acts done with intent to take private property for public use). Patterson, on which the Court of Appeals relied, explained by analogy the difference between negligence and inverse condemnation, and it cited Gearin for the proposition that governmental negligence will not support a claim for inverse condemnation. Patterson, 157 Or at 17-19. Plaintiffs apparently believe that Morrison and Tomasek eliminated the requirement that a claim for inverse condemnation requires a showing that the governmental defendant intended to take private property for a public use. We disagree.

In Morrison, the plaintiff alleged that the defendant county had built a jetty in the Sandy River that closed the southerly portion of the river channel, thereby forcing the entire flow of the stream to the northerly bank. 141 Or at 566. The next spring, when the river reached its annual high water stage, the entire flow of the river was diverted over the plaintiff's land, destroying it. Id. at 566-67. In discussing the law of inverse condemnation, this court stated:

"In an action of this character it is no defense that there was no specific intention on the part of defendant to appropriate plaintiff's property, but the defendant must be held to have intended to do those things which are the natural and ordinary consequences of [its] act."

Id. at 569 (emphasis added). By alleging that the county intended to construct the jetty in a manner that necessarily caused the flooding that destroyed the plaintiff's property, the plaintiff had stated a claim for inverse condemnation. Id. Morrison thus stands for the proposition that the fact-finder may infer the intent-to-take element of a claim for inverse condemnation from the natural and ordinary consequences of the government's act. Accord Levene v. City of Salem, 191 Or 182, 196-97, 229 P2d 255 (1951) (municipal act resulting in "a direct and continuous trespass upon real property, as by diverting the flow of a stream from its natural course onto the property, or by flooding the property through a drain or sewer so constructed that such flooding is a necessary result of the construction," is "taking").

Tomasek is consistent with Morrison. In that case, the Highway Department constructed a grade, roadbed, and bridge in a manner that closed off most of a flood plain. Tomasek, 196 Or at 138-39. Closing off the flood plain, combined with excavating rock from the river bed, substantially increased the velocity of the current in the main river and changed its course and channel from its original location to a place over and across the plaintiff's land. Id. Relying on Morrison, this court held that the Highway Department had taken the plaintiff's land for a public use without first condemning the land. Id. at 148-50. See also Hawkins, 315 Or 57 (holding intentional release of sewage-laden water onto private property to prevent overflow at sewage treatment plant, killing livestock and crops, supported claim for taking personal property by inverse condemnation).

Thus, neither Morrison nor Tomasek eliminated the requirement that a claim for inverse condemnation requires a showing that the governmental defendant intended to take private property for a public use. A fact-finder may infer the intent to take from the governmental defendant's action if, as this court stated in Morrison, the natural and ordinary consequence of that action was the substantial interference with property rights. The Court of Appeals did not err for the first reason that plaintiffs have asserted.

We turn to plaintiffs' argument that the Court of Appeals erred nonetheless because it mischaracterized plaintiffs' inverse condemnation claim as being predicated on the city's negligent maintenance of the outfall pipe. We agree. Plaintiffs' complaint states that their claim for inverse condemnation was based on the city's construction of the storm drain pipe and outfall in a manner that created a drainage course where one had not been previously, and caused accelerated erosion along that course, thereby destabilizing the soils on and adjacent to plaintiffs' property. Accordingly, the question is whether plaintiffs presented evidence from which a jury could find that the natural and ordinary consequence of the city's construction of the storm drain was to destabilize plaintiffs' property, causing the landslide. As we have explained, an appellate court will not reverse the trial court's denial of a motion for a directed verdict if there is any evidence in the record from which the jury could find the facts necessary to establish the elements of the claim. See Brown, 297 Or at 705 (stating standard of review of denial of motion for directed verdict).

As noted, in this case, the city built the storm drain. The city does not dispute that water from that storm drain caused erosion in the drainage channel. The parties presented conflicting evidence about what caused the landslide. Plaintiffs' evidence showed that the hillside on which plaintiffs' property is located was stable before the storm drain was built there had not been a drainage course in the ravine beneath plaintiffs' property before the storm drain was built; the storm-drain channeled water consistent with the way that the drain had been designed and built 25 years earlier; and water from the drain, without any intervening causes, had created the drainage course and caused the erosion that undermined the hillside, causing the landslide.

That the jury heard conflicting evidence on virtually every issue regarding plaintiffs' claim for inverse condemnation is of no moment in our review of whether the trial court erred in denying the city's motion for a directed verdict on that claim. The city built the storm drain, and it is undisputed that a storm drain is a public work, serving a public purpose. Before the storm drain was built, there was no natural drainage course in the ravine. The storm drain collected more than five times the amount of water that naturally flowed through the area where the landslide occurred. The outfall pipe dispersed that water with such force that the water carved a drainage course along the ravine. The water was directed at, and caused, unnatural erosion along the drainage course, undermining the toe of the slope that supported the hillside on which plaintiffs' property is located. One reasonable inference from the foregoing evidence is that the landslide was the natural and ordinary (even inevitable) consequence of the city's construction of the storm drain in that manner. It follows that there is evidence in the record to support the jury's verdict.

Nonetheless, the city argues, there is no evidence in the record to support plaintiffs' claim that the landslide caused substantial interference with their property rights. See Hawkins, 315 Or at 68-69 (test for whether damage to property rises to the level of a taking is whether there has been "substantial interference" with use and enjoyment of property). Rather, the city contends, the landslide did not functionally impair the use of plaintiffs' property. That argument is without merit. As we have explained, plaintiffs presented evidence that the landslide caused such a significant drop in plaintiffs' land within a few feet of their home that a deck on the house and a dog run had to be removed. Without remedial action, the house would have collapsed. On that evidence, the jury could find that plaintiffs had suffered a substantial interference with their property rights. The trial court did not err in denying the city's motion for a directed verdict on plaintiffs' inverse condemnation claim.

Our decision on plaintiffs' inverse condemnation claim does not address all the assignments of error that the city raised on appeal regarding that claim or the relationship of that claim to plaintiffs' negligence claim. See Vokoun, 169 Or App at 33 (noting that Court of Appeals did not address all assignments of error). Accordingly, the case must be remanded to the Court of Appeals to address those other assignments of error. Moreover, at the Court of Appeals, the city argued that the trial court erred in a number of respects regarding plaintiffs' negligence claim. The Court of Appeals did not reach those arguments because it held, as a matter of law, that the city was immune from liability under ORS 30.265(3). See id. at 43 (so holding). Whether the Court of Appeals also must address the city's remaining assignments of error regarding plaintiffs' negligence claim depends, in part, on whether the Court of Appeals erred in its holding on discretionary immunity. We turn to that issue.

III. DISCRETIONARY IMMUNITY

Discretionary immunity protects governmental defendants from liability for certain types of decisions, namely, those that require supervisors or policy makers to assess costs and benefits, and to make a choice among competing goals and priorities. McBride v. Magnuson, 282 Or 433, 437, 578 P2d 1259 (1978). The doctrine of discretionary immunity does not immunize a decision not to exercise care at all, if action of some kind is required. See Garrison v. Deschutes County, 334 Or 264, 274, 48 P3d 807 (2002) (so stating). To qualify for discretionary immunity under ORS 30.265(3)(c), the city must show that it made a decision "involving the making of policy" as opposed to a "routine decision[] made by employees in the course of their day-to-day activities[.]" See Mosley v. Portland School Dist. No. 1J, 315 Or 85, 89, 843 P2d 415 (1992) (stating test for discretionary immunity). The burden is on the governmental defendant to establish its immunity. Stevenson v. State of Oregon, 290 Or 3, 15, 619 P2d 247 (1980).

As noted, in this case, the city moved for a directed verdict on plaintiffs' negligence claim on the ground that the city's failure to inspect and maintain the outfall and drainage course was subject to discretionary immunity under ORS 30.265(3)(c). The trial court denied the city's motion and submitted plaintiffs' negligence claim to the jury, (5) which found the city liable. In reversing the trial court, the Court of Appeals held that the city's choice about which capital improvement projects exceeding $25,000 to undertake, which did not include inspection, maintenance, or repair of the drainage outfall at issue in this case, was "precisely the sort of discretionary policy decision that is subject to ORS 30.265(3)." Vokoun, 169 Or App at 42-43.

On review, plaintiffs contend that the Court of Appeals decision erroneously creates a presumption of immunity whenever a local government adopts a budget that fails to address that government's duty to inspect and maintain public facilities. In this case, plaintiffs contend, the city presented no evidence that policy makers had considered the risks to plaintiffs' property from erosion and alternative means for mitigating it. Therefore, they assert, the city failed to establish its immunity. The city responds that, although plaintiffs couched their specification of negligence in terms of the city's failure to inspect and maintain the drainage course, the underlying issue is the city's failure to acquire the drainage course from the state and improve it either by constructing a closed pipe along the length of the course or filling it with compacted soil. As to the decision not to acquire and improve the drainage course, the city argues, it is immune from liability under the doctrine of discretionary immunity, because the city's governing body made policy decisions reflected in the capital improvements plan that did not include acquiring and improving the drainage course at issue in this case. (6) For the reasons that follow, we conclude that, on the facts of this case, the Court of Appeals erred in holding that the city had established its immunity to plaintiffs' negligence claim.

As we have explained, the city has a complaint-driven policy regarding inspection and repair of storm drains. Plaintiffs complained about the hole at the outfall site in 1989. Maintenance employees responded to the complaint by going to the area to assess what should be done. They discovered that water from the outfall pipe was causing unnatural erosion along the drainage course in addition to the large hole that plaintiffs had identified. Maintenance employees decided to repair the erosion by filling the hole with asphalt debris. The decision how to respond to the erosion problem about which plaintiffs had complained was a routine decision made by employees in the course of their day-to-day activities. Such decisions do not qualify for discretionary immunity. See Mosley, 315 Or at 89 (describing decisions made by employees in course of day-to-day activities as not qualifying for discretionary immunity). Even assuming that city employees subsequently had inspected their repair, discovered that filling the hole with asphalt debris had not solved the erosion problem, and that adequate repairs would have cost more than $25,000, the capital improvements plan would not necessarily have barred the city from making the necessary repairs. That is so because, as we explained earlier in this opinion, city policy permitted the city council to adopt a supplemental budget to pay for repairs costing more than $25,000. The city presented no evidence that the city council considered whether to adopt a supplemental budget to repair the erosion that the outfall pipe at issue in this case had caused. On this record, we conclude that the fact that the city had adopted a capital improvements plan that did not include purchasing and improving the drainage course does not establish the city's immunity from plaintiffs' negligence claim. (7) The trial court did not err in denying the city's motion for a directed verdict on that claim, and the Court of Appeals erred in holding otherwise. On remand, the Court of Appeals must address the city's other assignments of error regarding plaintiffs' negligence claim. See Vokoun, 169 Or App at 33 (declining to address other assignments of error because holding on discretionary immunity dispositive).

The decision of the Court of Appeals is reversed, and the case is remanded to the Court of Appeals for further proceedings.

1. On appeal and on review before this court, the city has maintained that it did not build the storm drain; rather, the city asserts that the developer of the Red Fox Hills Subdivision built the drain and later dedicated it to the city. However, in its answer, the city admitted that it built the storm drain. See Yates v. Large, 284 Or 217, 223, 585 P2d 697 (1978) (holding admission of fact in pleadings is judicial admission and normally conclusive on party making it).

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2. Plaintiffs' complaint also alleged other claims that are not at issue here.

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3. ORS 30.265 provides, in part:

"(3) Every public body and its officers, employees and agents acting within the scope of their employment or duties * * * are immune from liability for:

"* * * * *

"(c) Any claim based upon the performance of or the failure to exercise or perform a discretionary function or duty, whether or not the discretion is abused."

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4. The jury awarded plaintiffs $138,410 on their inverse condemnation claim. The jury awarded each of the plaintiffs $69,205 for property damage, $80,750 for economic damage, and $12,000 for noneconomic damage on plaintiffs' negligence claim. The trial court struck the property damage award as duplicative of the inverse condemnation award and then entered judgment for plaintiffs on the balance, $323,910, plus attorney fees of $30,224. Because of the posture in which this case appears before this court, we do not address whether, as a matter of law, plaintiffs may recover both on their claim for inverse condemnation and on their claim for negligence.

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5. The trial court instructed the jury as follows:

"In evaluating Plaintiffs' negligence claim, you may consider only the City's acts or omissions in inspecting or maintaining the drain channel. If Plaintiffs have proven by a preponderance of the evidence that the landslide was caused by acts or omissions in the maintenance or inspection of the drain channel, then you may find for Plaintiffs."

(Emphasis added.)

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6. Regarding plaintiffs' allegation that the city was negligent in failing to inspect and maintain the outfall and drainage course, the city contends that it had no such duty because the drainage course is on state, not city, property. That argument relates to whether the city was negligent at all, not whether it made policy choices that establish its discretionary immunity.

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7. We need not decide whether, assuming the city council had considered and then decided not to approve a supplemental budget for correcting the erosion in the drainage course, such a policy judgment would qualify for discretionary immunity.

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Filed: June 30, 2011 IN THE SUPREME COURT OF THE STATE OF OREGON In Re: Complaint as to the Conduct of J. MARK LAWRENCE, Accused. (OSB 08-115; SC S058778) En Banc On review of the decision of a trial panel of the Disciplinary Board. Argued and submitted May 2, 2011. Paula Lawrence, McMinnville, argued and cause and filed the briefs for accused. Stacy Hankin, Assistant Disciplinary Counsel, Tigard, argued the cause and filed the brief for the Oregon State Bar. PER CURIAM The complaint is dismissed. PER CURIAM The issue in this lawyer disciplinary proceeding is whether the accused, by releasing a partial transcript of a juvenile hearing to the press, violated Rule of Professional Conduct (RPC) 8.4(a)(4), which prohibits a lawyer from engaging in conduct that is prejudicial to the administration of justice. A trial panel found the accused guilty of violating RPC 8.4(a)(4) and suspended him for 60 days. We review the decision of the trial panel de novo. ORS 9.536(2); BR 10.6. Because we conclude that

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the Bar failed to prove by clear and convincing evidence that the accused's conduct caused prejudice to the administration of justice, we dismiss the complaint. The facts are straightforward and largely undisputed. In 2007, the accused represented a juvenile male who, along with another male friend, allegedly had touched or swatted several female classmates on the buttocks and had danced in front of the females in a lascivious manner. The incident occurred at the students' middle school. After being informed of the youths' behavior, the vice principal and a police officer interviewed the victims. Based on those interviews, the accused's client and his friend were arrested by a McMinnville Police Officer on February 22, 2007. On February 23, the Yamhill County Juvenile Department filed a delinquency petition alleging that the accused's client had committed acts that, if done by an adult, would have constituted five counts of first-degree sexual abuse and five counts of third-degree sexual abuse. At an initial detention hearing that same day, the court ordered the youths to remain in custody. The events giving rise to this disciplinary action arose out of a second detention hearing held on February 27, 2007, before Judge John Collins. The accused called two of the victims to testify on behalf of his client. The female victims testified that the youths were their friends and that they did not find the youths to be threatening in any way. Regarding the alleged sexual abuse, the female victims testified that the touching or swatting was not sexual in nature but rather was mere horseplay. The victims also testified that they felt pressured by the vice principal and the police officer to make the touching sound hurtful and uncomfortable when it was not. By the second detention hearing, the case was receiving substantial media 2

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attention. Judge Collins allowed the press to attend the detention hearing, but prohibited the press from recording the proceedings. The parties dispute whether the judge prohibited only video recordings or also prohibited audio recordings.1 A number of newspaper and television stories reported the events and testimony at the hearing. After the hearing, the accused obtained a copy of the official audio recording of the hearing and had a partial transcript prepared that contained the victims' testimony. In March 2007, a reporter contacted the accused about the February 27 hearing. The reporter, who was not present at the hearing, expressed disbelief that the female victims had felt pressured by the vice principal and the police officer to make the youths' actions seem sexual. The accused offered to give the reporter a copy of the partial transcript when it was available. The accused believed that it would have been improper to give the reporter the official audio recording of the hearing but thought that the transcript could be released. The accused contacted Deborah Markham, the deputy district attorney handling the case, to see if she objected to releasing the transcript. Markham told the accused that she believed that the court would have to consent. The accused then released the transcript to the reporter without obtaining permission from Judge Collins. Deputy District Attorney Deborah Markham testified that Judge Collins prohibited video recording. Judge Collins testified that he might have prohibited the press from recording the detention hearing, but that he did not remember whether he did so or not. He did remember allowing video recording at a later hearing in the proceeding. The accused testified that Judge Collins prohibited video recording but that he could not remember if the judge prohibited audio recording.
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When Judge Collins learned that the transcript had been released -following news reports that cited the transcript -- he called a meeting with Markham and the accused and told them to release no other transcripts. The testimony from the accused, Markham, and Judge Collins differs regarding that meeting. The accused described the meeting as relaxed and said that Judge Collins had stated that the release of the transcript was permissible. Markham testified that Judge Collins was "very concerned" about the release of the transcript and that Judge Collins said that the accused's disclosure violated the law. Judge Collins testified that the accused did not get his consent to release the transcript, but that he was not sure if the accused needed to do so under the circumstances of the case, particularly given the presence of the press at the hearing. In Judge Collins's description, the meeting was not contentious; although he requested that the parties refrain from releasing any additional transcripts, he did not "feel like [he] needed to be firm" and so did not issue an order barring further releases. In April 2008, several months after the juvenile case was resolved, Tim Loewen, director of the Yamhill County Juvenile Department, reported the accused's action of releasing the transcript to the Bar. After investigating the matter, the Bar charged the accused with violating RPC 8.4(a)(4)2 by releasing to the press "information
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RPC 8.4(a) provides, in relevant part: "It is professional misconduct for a lawyer to: "* * * * * "(4) engage in conduct that is prejudicial to the administration of

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appearing in the record" of a juvenile case without court consent, in violation of ORS 419A.255(1) and (3).3 The Bar alleged that the accused had "usurped" Judge Collins's authority to control the proceeding by not seeking the court's consent before releasing the transcript, and thereby had caused prejudice to the administration of justice. In the proceeding before the trial panel, the accused argued that his release of the transcript did not violate ORS 419A.255 for each of three independent reasons: (1) the transcript that he had prepared was not a part of the record of the case and so was not subject to ORS 419A.255; (2) Judge Collins had consented to the release of the information contained in the transcript when he allowed the press to attend and report on

justice[.]"
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ORS 419A.255 provides, in relevant part:

"(1) The clerk of the court shall keep a record of each case, including therein the summons and other process, the petition and all other papers in the nature of pleadings, motions, orders of the court and other papers filed with the court, but excluding reports and other material relating to the child, ward, youth or youth offender's history and prognosis. The record of the case shall be withheld from public inspection but is open to inspection by the child, ward, youth, youth offender, parent, guardian, court appointed special advocate, surrogate or a person allowed to intervene in a proceeding involving the child, ward, youth or youth offender, and their attorneys. The attorneys are entitled to copies of the record of the case. "* * * * * "(3) Except as otherwise provided in subsection (7) of this section, no information appearing in the record of the case or in reports or other material relating to the child, ward, youth or youth offender's history or prognosis may be disclosed to any person not described in subsection (2) of this section without the consent of the court * * * ."

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the hearing; and (3) the information in the transcript could be released under ORS 419A.255(5)(b) and (d), which list certain exceptions to the confidentiality of juvenile records. Even assuming that he did violate ORS 419A.255, the accused asserted, he did not violate RPC 8.4(a)(4), because his conduct was not prejudicial to the administration of justice. That was so, according to the accused, because the defendant and the victims supported releasing the transcript and because the information contained in the transcript had already been made public as a result of the press attending and reporting on the hearing. Thus, in the accused's view, no harm -- actual or potential -- resulted from his conduct. The trial panel found by clear and convincing evidence that the accused had violated RPC 8.4(a)(4) and suspended the accused from the practice of law for 60 days. The trial panel first determined that ORS 419A.255(3) prohibited the accused from releasing the partial transcript to the press without the consent of the trial court and that the accused had violated the statute in doing so. With little discussion, the trial panel then found that the evidence that the accused had violated the statute also was sufficient to show prejudice to the administration of justice and thus that the accused had violated RPC 8.4(a)(4). The accused sought review in this court. To prove a violation of RPC 8.4(a)(4), the Bar must prove (1) that the accused lawyer's action or inaction was improper; (2) that the accused lawyer's conduct occurred during the course of a judicial proceeding; and (3) that the accused lawyer's conduct had or could have had a prejudicial effect upon the administration of justice. See In re Kluge, 335 Or 326, 345, 66 P3d 492 (2003) (citing In re Haws, 310 Or 741, 746-48, 6

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801 P2d 818 (1990)) (so stating for identically worded former DR 1-102(A)(4)). Because we find the issue to be dispositive, we begin by examining the third element -- whether the accused's conduct had or could have had a prejudicial effect on the administration of justice -- and assume, without deciding, that the accused's conduct violated ORS 419A.255(3) and otherwise satisfied the test set out in Kluge and Haws. Prejudice to the administration of justice "may arise from several acts that cause some harm or a single act that causes substantial harm to the administration of justice." Kluge, 335 Or at 345. This court has identified two components to the "administration" of justice: "1) The procedural functioning of the proceeding; and 2) the substantive interest of a party in the proceeding." Haws, 310 Or at 747. "A lawyer's conduct could have a prejudicial effect on either component or both." Id. The Bar argues that the accused's conduct, a single act, resulted in prejudice to the administration of justice because it had the potential to cause substantial harm to the procedural functioning of the court. The Bar asserts, "Substantial potential harm to the administration of justice occurs whenever a lawyer interferes in or usurps the court's ability to do its job in a proceeding pending before it." The Bar states that the accused "usurped" the court's authority by not seeking Judge Collins's consent prior to releasing the transcript. The Bar cites three disciplinary cases to support its position that the accused's conduct resulted in substantial potential harm to the administration of justice. First, in In re Eadie, 333 Or 42, 36 P3d 468 (2001), this court found a violation of former DR 1-102(A)(4) where the accused lawyer submitted a proposed order containing a 7

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misrepresentation that was intended to influence the judge in changing the trial date. Id. at 58. That conduct substantially harmed the procedural functioning of the court because it resulted in the judge acquiescing to a trial date preferred by the accused and made it necessary for the judge to resolve a dispute resulting from the accused's misrepresentation and to redraft an order. Id. Second, in In re Morris, 326 Or 493, 953 P2d 387 (1998), this court concluded that the accused lawyer had engaged in a single act of conduct that had the potential to cause substantial harm, either to the procedural functioning of the court or to the substantive interests of the parties, when she knowingly filed a notarized document that she had altered. Id. at 502-03. Third, in In re Thompson, 325 Or 467, 940 P2d 512 (1997), this court found a violation of former DR 1-102(A)(4) where the accused lawyer physically confronted a judge after receiving an adverse decision. That conduct caused substantial harm to the administration of justice because the accused's ex parte communication with the judge "unfairly attack[ed] the independence, integrity, and respect due a member of the judiciary." Id. at 475. The conduct also had the potential to cause substantial harm, because it could have influenced the judge to change her decision or to recuse herself from the case. Id. In each of the preceding cases, the accused lawyer engaged in conduct that had the potential to disrupt or to improperly influence the court's decision-making process, Thompson, 325 Or at 475; that created unnecessary work for the court, Eadie, 333 Or at 58; or that had the potential to mislead the court, Morris, 326 Or at 503. Moreover, in Eadie and Morris, the accused lawyers made knowing misrepresentations to the court. Similarly, in Kluge, the accused lawyer's conduct in knowingly filing an 8

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untimely motion to disqualify the trial judge and then failing to serve the motion on opposing counsel caused prejudice to "the procedural functioning of the judicial system by imposing a substantial burden upon both opposing counsel and [the trial judge] to undo the accused's actions." 335 Or at 346. In this case, the Bar has made no showing, as required by Kluge and Haws, that the accused's conduct harmed the procedural functioning of the judicial system, either by disrupting or improperly influencing the court's decision-making process or by creating unnecessary work or imposing a substantial burden on the court or the opposing party. Nor has the Bar shown that his conduct had the potential to result in any of the above. Certainly, Judge Collins did not testify that the accused's actions interfered with Judge Collins's conduct of the juvenile proceeding. Although the Bar correctly asserts that ORS 419A.255 gives the trial court control over the release of protected information in a juvenile record -- and, as noted, we assume without deciding that the accused acted improperly in not seeking the trial court's consent -- the Bar's theory fails to take into account the fact that the information contained in the partial transcript that the accused released was presented in open court and had already been reported by the press.4 It is difficult to see how the accused's release of the same information, in the context of this case, had the potential to cause any harm to the proceeding, much less substantial harm.

Article I, section 10, of the Oregon Constitution grants members of the public, including the press, the right to attend juvenile hearings. State ex rel Oregonian Pub. Co. v. Deiz, 289 Or 277, 284-85, 613 P2d 23 (1980).

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See Kluge, 335 Or at 345 (prejudice to the administration of justice may arise from "several acts that cause some harm or a single act that causes substantial harm"). Indeed, the Bar makes no effort to show that the accused's conduct could have resulted in new information being made public or that the release of the partial transcript itself had any potential impact on the proceeding. In fact, after the press attended the hearing and the accused released the transcript, Judge Collins allowed members of the press to listen to the official audio recording of the hearing. Nevertheless, the Bar asserts that Judge Collins was sufficiently "concerned" about the release of the information to call the accused and Markham to his chambers to discuss the incident. The fact that Judge Collins was "concerned" and met with the accused and Markham does not, by itself, demonstrate the potential for substantial harm to the procedural functioning of the court. Judge Collins himself stated that, although "in a perfect world," he probably would not have wanted the transcript released, in the context of this case and the open court provision of Article I, section 10, of the Oregon Constitution, the release of the partial transcript was likely permissible without his consent because "if [the press is] * * * going to know the information and report the information, at least get it right." Judge Collins's testimony, then, does not demonstrate that the accused's conduct impacted the procedural functioning of the court, even if the accused's conduct was cause for "concern." Nor does the Bar offer any evidence to prove that the release of the partial transcript harmed the substantive interests of the accused's client, the victims, or the state. The accused released the transcript, with the support of his client, in response to an 10

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inquiry from the media and in order to respond to inaccuracies appearing in some media reports. The accused maintained the confidentiality of the victims' names in the transcript, referring to them by their initials, consistent with an earlier order by Judge Collins. In this proceeding, the accused also submitted letters from the two victims who testified (and their parents) that stated their support for the release of the partial transcript. Finally, there was no testimony from the Yamhill County Juvenile Department that the release of the partial transcript had any effect on its substantive interests or its ability to prosecute the case. The Bar appears, instead, to take the position that virtually any violation of a statute, rule, or court order that occurs during the course of a court proceeding and relates to the conduct or any procedural aspect of that proceeding necessarily is prejudicial to the administration of justice. The Bar asserts, in effect, that "substantial potential" harm is implicit in the accused's conduct. Our cases, however, require proof by clear and convincing evidence that an accused's conduct in a specific judicial proceeding caused actual or potential harm to the administration of justice and, when only one wrongful act is charged, that actual or potential harm must be "substantial." Kluge, 335 Or at 345; Haws, 310 Or at 748. Here, the Bar's evidence did not prove that substantial harm resulted or could have resulted from the accused's conduct. We conclude that the Bar has not proved by clear and convincing evidence that the accused violated RPC 8.4(a)(4). The accused's conduct did not result in such prejudice, because there is no evidence that the release of the partial transcript, which contained solely information already presented in open court and reported by the press, 11

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harmed the procedural functioning of the judicial system. Nor is there any evidence that the substantive rights of the accused's client, the other juvenile defendant, the victims, or the state were harmed. "Prejudice to the administration of justice" requires such a showing. Haws, 310 Or at 747-48. The complaint is dismissed.

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