PLAINTIFFS' CROSS-MOTION FOR SUMMARY JUDGMENT AND RESPONSE - 1 IN by mcu14908

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 4                   IN THE CIRCUIT COURT FOR THE STATE OF OREGON
 5                                     COUNTY OF HOOD RIVER
 6                                       )               Case No.: 020055 CC
     HOOD RIVER VALLEY RESIDENTS’        )
 7                                       )
     COMMITTEE, INC., an Oregon non-profit               PLAINTIFFS’ CROSS-MOTION FOR
     corporation, and MIKE MCCARTHY, an  )               SUMMARY JUDGMENT AND
 8                                       )
     individual resident of the State of Oregon and      RESPONSE TO DEFENDANTS’
     Hood River County,                  )               MOTION FOR SUMMARY JUDGMENT
 9                                       )
                    Plaintiffs,          )               Oral Argument Scheduled for
10           vs.                         )               March 27, 2003
                                         )
11   BOARD OF COUNTY COMMISSIONERS )
     OF HOOD RIVER COUNTY, an Oregon )
12   Municipal Corporation, and MT. HOOD )
     MEADOWS OREGON, LTD, an Oregon      )
13   limited partnership.                )
                                         )
14                  Defendants.          )
15

16                                    Motion for Summary Judgment
17          Pursuant to ORCP 47, plaintiffs Hood River Valley Residents Committee, Inc.
18   (“HRVRC”) and Mike McCarthy move this Court for an order granting Summary Judgment to
19   plaintiffs and against defendants, on all of plaintiffs’claims, and dismissing the defendant Hood
20                s
     River County’ (the “County”) counterclaim, with prejudice, for the following reasons: (1) a
21   justiciable controversy exists and plaintiffs have standing to challenge the exchange of properties
22   and “equalization” payment between defendants (the “Land Exchange”); (2) plaintiffs are
23   entitled to a declaration that the County acted arbitrarily, capriciously and outside its statutory
24   authority in approving the Land Exchange and a permanent injunction declaring the Land
25   Exchange void; (3) plaintiffs need not plead the elements of a rescission claim; (4) the doctrine
     PLAINTIFFS’CROSS-MOTION FOR                              Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 1                        917 SW Oak Street, Suite 417
                                                              Portland, OR 97205
                                                              (503) 525-2724
                                                              (503) 296-5454
 1   of merger does not apply; and (5) plaintiffs claims are not barred by the doctrine of res judicata.
 2          Plaintiffs also oppose defendants’Motion for Summary Judgment. This brief serves as a
 3   response to that motion. This cross-motion and response is supported by the Affidavits of
 4   Michael McCarthy, Kate McCarthy, Steve McCarthy, Ken Maddox, Rich Garber, Margo Earley,
 5   Dennis Chaney, Ralph Bloemers and Robert T. Bancroft, submitted herewith, and the following
 6   points and authorities.
 7                                      Request for Oral Argument
 8          Oral argument has been set by this Court and the parties to begin at 9 am on March 27,
 9   2003 in Hood River County Court. Court reporting services have been requested. Plaintiffs
10   estimate that oral argument may take three hours.
11                                    Statement of Undisputed Facts
12          1.        In January of 2001, Hood River County (the “County”) instructed the County
13   Forester, Kenneth Galloway, to seek out properties to replace the forestland base that the County
14   had lost in a past trade of property involving the United States Forest Service (the “Tri-partite
15   Exchange”). Affidavit of Kenneth Galloway in Support of Defendants’Motion to Dismiss
16   (“Galloway Aff.”) at 1.
17          2.        On April 13, 2001, Steve Warila of MHM sent CAD maps to Teunis Wyers of the
18   Hood River County Planning Department regarding Goal 8 destination resort siting and high
19   value farmland. Affidavit of Ralph O. Bloemers in Support of Motion to Dismiss (“Bloemers
20   Aff.”) at Ex. 1. Michael Benedict was informed of these communications. Bloemers Aff. Ex. 37
21   at 8, 33/8-10.
22          3.        On April 16, 2001, Carol York introduced a last minute item to Board of
23   Commissioners agenda to support HB 3585 regarding the siting of destination resorts under Goal
24   8. Bloemers Aff. Ex.12. The Board of Commissioners then approved a resolution to support HB
25   3585. Bloemers Aff. Ex. 13.
     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 2                       917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1          4.      In a letter to Michael Benedict, dated April 23, 2001, Mr. Virgil Ellet stated,
 2   among other things, that his farm should be excluded from the Goal 8 destination resort map that
 3                                                                               s
     the County was working on. Bloemers Aff. Ex. 16. The exclusion of Mr. Ellet’ farm from the
 4   Goal 8 map would facilitate the development of a destination resort on the County Property that
 5   MHM was to later to receive from the County in the Land Exchange. Bloemers Aff. Ex. 16.
 6          5.      In May of 2001, the County Forester sent solicitations to landowners in Hood
 7   River County offering to purchase their property outright or exchange property with them. Each
 8   solicitation identified specific acreage owned by the recipient of the letter. Galloway Aff. at 1-2.
 9   The solicitation to MHM identified 145 acres, but unlike all of the other solicitations, the letter
10   also asked MHM whether it had more land that it was willing to sell to or trade with the County.
11   Bloemers Aff. Ex. 7.
12          6.      On June 12, 2001, Dave Riley of MHM met with Kenneth Galloway to discuss a
13   proposed Land Exchange. Galloway Aff. at 2.
14          7.      On June 27, 2001, Wilford Carey called a meeting to discuss the potential land
15   exchange with David Meriwether and John Arens. Galloway Aff. at 2.
16          8.      On July 10, 2001, there was a meeting at the County Courthouse with Wilford
17   Carey, John Arens, David Riley, David Meriwether, Michael Benedict and Kenneth Galloway to
18   discuss the land exchange. Galloway Aff. at 2.
19          9.      By July 18, a proposed agreement for the exchange of property was drafted. The
20   amount of acreage requested from MHM by the County increased to approximately 785 acres
21   from MHM. MHM was allowed to select which County lands it would take in trade for the
22   property owned by MHM. Bloemers Aff. Ex. 31 at 12, 89/13-15.
23          10.     On June 19 2001, Betty Foxley sent a letter to the County regarding the solication.
24   Bloemers Aff. Ex. 8 at 2. The County received other positive responses from landowners in the
25   County, many of whom were willing to sell their property outright to the County. Bloemers Aff.
     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 3                       917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   Ex. 8 at 1; Ex 31 at 3-7. Kenneth Galloway did not pursue these or any other responses from
 2   County forestland owners instead the County singularly pursued the exchange offer from MHM.
 3   Id.
 4          10.     On July 17, 2001, David Riley communicated information to Kenneth Galloway
 5   and Duane Ely from an appraisal that was completed on forestland property that is directly
 6   adjacent to the County Property that was traded to MHM. In that communication, Mr. Riley
 7   suggested that the County Property was worth in excess of $2,000 per acre. Bloemers Aff. Ex. 9.
 8          11.     On July 18, 2001, Michael Benedict, John Arens, David Riley, David Meriwether,
 9   Steve Pfeiffer and Robin McArthur-Phillips met with Dick Benner of the Department of Land
10   Conservation and Development in Salem, Oregon to discuss the proposed destination resort and
11   land swap. David Riley showed aerial photographs of the County Property, the MHM Property
12   and the adjacent Inn at Cooper Spur Property during that discussion. Bloemers Aff. Ex. 6.
13          12.     On July 24, 2001, Michael Benedict sent a letter to David Riley of MHM stating
14   that he “did not see anything that set specific policy against Destination Resorts in the Forest
15                                                                         t
     Zones. There are a couple that could be used in an appeal, I just don’ think that they would
16   prevail.” Bloemers Aff. Ex.17.
17          13.     On August 3, 2001, Michael Benedict sent a letter to Kenneth Galloway stating
18   that the planning department “does not normally” become involved in forestland exchanges.
19   Bloemers Aff. Ex. 18.
20          14.     On August 6, 2001, the County held the first public hearing on the Land
21                                                   s
     Exchange. The public expressed concern over MHM’ plan to develop a destination resort on
22   the County Property. Galloway Aff. at 2-3. Members of the public asked for a continuation of
23   the hearing because no information on the value of the properties was provided to the public.
24   The hearing was continued to August 20, 2001. Galloway Aff. at 2-3.
25          15.     At the second public hearing on August 20, 2001, the County did not provide any
     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 4                       917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   reports on the value of properties were presented to the public. Bloemers Aff. Ex. 31 at 9, 55/16.
 2   The Board of Commissioners tentatively approved the Land Exchange subject to a number of
 3   conditions and information on the value of the property.
 4          16.     On August 25, 2001, David Riley met with members of the Mountain Shadows
 5                                                 s
     and Snowbird Residential Areas to discuss MHM’ plans for a destination resort on the County
 6   Property and adjacent forestland surrounding the Inn at Cooper Spur. Bloemers Aff. Ex. 2.
 7          17.     On August 27, 2001, David Meriwether sent a letter to Michael McCarthy stating
 8   that the “record closed when the public hearing was closed at the Board of Commissioners
 9   meeting on Monday, August 20.” Bloemers Aff. Ex. 24.
10          18.     On August 28, 2001, Kenneth Galloway sent a letter to Michael Benedict
11   requesting his comments on the proposed Land Exchange. Bloemers Aff. Ex. 42
12          19.     On August 29, 2001, the County and MHM entered into the Real Estate Exchange
13   Agreement (“REEA”). The REEA states that the parties would value the underlying land for its
14   value under current zoning. Bloemers Aff. Ex. 14 at 8-9.
15          20.     On September 6, 2001, Duane Ely submitted a letter containing information on
16   the value of the underlying land (without the value of the timber and regeneration capability) to
17   Kenneth Galloway. The valuation determined the value of the raw land to be $325 per acre. The
18   valuation was based on average land values of forestland used for solely for commercial timber
19   production. Bloemers Aff. Exhibits 10 and 11. The County did not consider any other other
20   potential uses aside from the existing use in the valuation process. Id. Duane Ely never saw the
21   REEA. Bloemers Aff. Ex. 34 at 11, 40/3-5.
22          21.     On September 21, 2001, Michael Benedict indicated in an email to Roger Kauble
23   of the Hood River County Public Works Department that he expected MHM to submit their
24   destination resort development application in November of 2001. Bloemers Aff. Ex. 20.
25          22.     On October 2, 2001, Michael Benedict, Wilford Carey, and David Meriwether
     PLAINTIFFS’CROSS-MOTION FOR                            Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 5                      917 SW Oak Street, Suite 417
                                                            Portland, OR 97205
                                                            (503) 525-2724
                                                            (503) 296-5454
 1   met with David Riley and Gregory Hathaway, legal counsel for MHM, to discuss a destination
 2   resort on the County Property that MHM was to receive in the Land Exchange. Bloemers Aff.
 3   Exhibits 3, 4 and 19. At that meeting, MHM showed the County detailed destination resort plans
 4   setting forth the design and layout of the destination resort (the “Destination Resort Plan
 5   Document”). The Destination Resort Plan Document will be submitted in accordance with the
 6   protective order entered by this court under separate cover. MHM showed these plans to County
 7   officials on October 2, 2001 while the valuation on the lands subject to the trade was still being
 8   performed, and well before the County completed the Land Exchange. Bloemers Aff., Ex 25,
 9   Ex. 41 at 61-67. MHM also provided the County officials, including the planning director, with
10   a detailed timeline for approval of a destination resort under the Goal 2 exception process and a
11   list of the “team” of consultants and contractors that MHM had employed to assist on it.
12   Bloemers Aff. Exhibits 3 and 4. Michael Benedict took detailed notes at this meeting in which he
13   noted that he expected a destination resort application to be submitted in December 2001.
14   Bloemers Aff. Ex. 19.
15          23.     On October 16, 2001, Kenneth Galloway sent a letter to David Meriwether
16   reporting on the value of the properties subject to land exchange. Bloemers Aff. Ex. 25.
17          24.     In December of 2001, the County proposed to undertake a minor partition to
18   adjust the property boundaries to allow the Land Exchange to proceed. The County later
19   scrapped this process because it would take too long and because it would allow the public to
20   appeal the process because of land use implications.
21          25.     The County administrator instructed the County forester to adjust the property
22   lines of the land the County was to trade to ensure that MHM received land to suit its
23   development purposes. Bloemers Aff. Ex. 28; Bloemers Aff. Ex. 41 at 82/1-83/21. The County
24   traded approximately 86 acres more than the County Forester recommended as being in the best
25   interests of the County. Bloemers Aff. Ex. 28. Thereafter, David Meriwether sent a letter to
     PLAINTIFFS’CROSS-MOTION FOR                            Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 6                      917 SW Oak Street, Suite 417
                                                            Portland, OR 97205
                                                            (503) 525-2724
                                                            (503) 296-5454
 1   David Riley proposing a lot line adjustment in accordance with the recommendation that he
 2   made to Kenneth Galloway.
 3          26.     On February 6, 2002, Kenneth Galloway indicated in a letter that David
 4   Meriwether had informed him that the Board of Commissioners had agreed with all the final
 5   details of the land exchange. Bloemers Aff., Ex. 29.
 6          27.     On February 8, 2002, the Hood River County Planning Department approved the
 7   final property line adjustment.
 8          28.     On February 22, 2002, the HRVRC and Mr. McCarthy sent a letter with a
 9   declaration of Robert T. Bancroft alleging that the properties were incorrectly valued and that the
10   transaction is not for equal value as required by Oregon law. This letter followed up on an
11   earlier letter sent on February 14, 2002. The County did not respond whatsoever to the
12         s                s
     HRVRC’ or Mr. McCarthy’ concerns. Galloway Aff. at 4.
13          29.     On March 8, 2001, the deeds were signed and the Land Exchange was finalized.
14                                          Point and Authorities
15   I.     Procedural Background
16          On March 27, 2002, Plaintiffs filed a Petition for a Writ of Review (the “Petition”)
17                                                                      s
     seeking judicial review of Hood River County Board of Commissioner’ (the “County”) decision
18   to enter into the Land Exchange with MHM. The County and MHM moved to dismiss the
19   Petition on April 11th and April 15th respectively, arguing in part that this Court lacks jurisdiction
20   because the Land Exchange was a legislative and not a quasi-judicial decision.
21          This Court granted both motions to dismiss on May 23, 2002, holding that “the Court has
22                                                       s
     no authority to proceed with a review of the County’ conduct.” Letter Opinion of the
23   Honorable Donald Hull dated May 23, 2002. Plaintiffs requested that the Court reconsider its
24   decision, and the Court affirmed its initial ruling on this specific issue upon reconsideration.
25          Plaintiffs then filed this action for Declaratory Judgment and Injunctive Relief on May
     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 7                       917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1                                                   s
     30, 2002, seeking judicial review of the County’ legislative determination to enter into and
 2   complete the Land Exchange with MHM. MHM filed an Answer, Affirmative Defenses and
 3   Counterclaim on July 29, 2002. The County filed an Answer, Affirmative Defenses and
 4   Counterclaim on July 31, 2002. MHM filed an Amended Answer, Affirmative Defenses and
 5   Counterclaim on August 6, 2002 (the “First Amended Answer”). MHM filed a second Amended
 6   Answer, Affirmative Defenses and Counterclaim on September 25, 2002 (the “Second Amended
 7   Answer”). On November 6, 2002, during a hearing on plaintiffs’special motion to strike
 8       s
     MHM’ counterclaim, MHM mentioned that it might wish to reinstate its First Amended
 9   Answer, however, MHM never formally did so.
10           MHM filed a motion for summary judgment seeking to have this court decide this matter
11                                                                 s
     without a trial on October 16, 2002. The County joined in MHM’ motion. Plaintiffs filed a
12   motion for an extension of time to respond, and this Court granted plaintiffs’motion and allowed
13   plaintiffs time to conduct discovery necessary to respond to the defendants’motions for
14   summary judgment.
15   II.     Mr. McCarthy and HRVRC have standing to sue.
16           Mr. McCarthy and HRVRC have standing to sue in this matter for the reasons set forth in
17                                                        s
     Appellants’Response to Mt. Hood Meadows Oregon, Ltd.’ Motion to Dismiss Appeal for Lack
18   of Standing. The plaintiffs request this court to take judicial notice of this document, a copy of
19   which is included with this filing. Plaintiffs reference that brief and incorporate it by reference
20   into this motion and response.1
21           The statute at issue in that appeal, ORS 34.010, requires that a plaintiff establish that he
22   or she has suffered an injury to a “substantial interest.” Pursuant ORS 28.020, the statute at issue
23   in this action, any person may seek declaratory judgment if their “rights, status or other legal
24
     1
       Two copies of this document were served on the defendants in this action on February 14, 2003 and so will not be
25   served on the defendants as part of this filing.
     PLAINTIFFS’CROSS-MOTION FOR                                     Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 8                               917 SW Oak Street, Suite 417
                                                                     Portland, OR 97205
                                                                     (503) 525-2724
                                                                     (503) 296-5454
 1   obligations are affected.” The two statutes contain difference language, however, plaintiffs
 2   briefing before the Court of Appeals establishes that plaintiffs in this case have had their “rights,
 3   status or other legal obligations” affected by the Land Exchange. The standard in ORS 20.080
 4   does not fall below the constitutional minimum necessary to create a justiciable controversy.
 5   HRVRC and McCarthy have alleged sufficient practical effect to allege a justiciable controversy
 6   in their complaint, and those allegation are further supported in Appellants’Response to Mt.
 7                             s
     Hood Meadows Oregon, Ltd.’ Motion to Dismiss Appeal for Lack of Standing attached hereto.
 8   III.   Plaintiffs’ Claims for Declaratory Judgment and Injunctive Relief
 9          Plaintiffs have alleged three separate bases for seeking to void and undo the decision of
10   the County to exchange land with MHM and the actions taken to effectuate that decision. First,
11                                               s
     the plaintiffs have alleged that the County’ determination of “equal value” and “best interests”
12   as required by ORS 275.335 is arbitrary. Second, the plaintiffs have alleged that the County
13   failed to follow the required process for undertaking a land exchange by failing to provide the
14   public with information on the value of the properties to be exchanged prior to tentatively
15   approving the Land Exchange. Third, the plaintiffs have alleged that the County failed to hold
16   the hearings required by ORS 275.100.
17          A.      Applicable Law.
18
            The plaintiffs have brought this action pursuant the Uniform Declaratory Judgment Act
19
     ORS §§ 28.010-.160. The Uniform Declaratory Judgment Act provides a statutory remedy that
20
     permits “any person … affected by a statute to . . . obtain a declaration of rights, status or other
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     legal relations thereunder.” ORS 28.120. The plaintiffs seek a declaration of their rights and
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     other legal relations under ORS 275.335 and ORS 275.100 with respect to the exchange of
23
     County land with MHM.
24

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     PLAINTIFFS’CROSS-MOTION FOR                              Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 9                        917 SW Oak Street, Suite 417
                                                              Portland, OR 97205
                                                              (503) 525-2724
                                                              (503) 296-5454
 1

 2                  1.                                                         s
                           The Court has the authority to set aside the County’ legislative action
                           under the Declaratory Judgment statute
 3

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            The declaratory judgment action is an appropriate vehicle for the review of legislative or

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     ministerial actions. State ex rel. Columbia County School Dist. No. 13 v. Columbia County, 66

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     Or App. 237, 674 P.2d 608 (1983), review denied, 296 Or 829, 679 P2d 1366 (1984); Neuberger

 7
                                                                        g
     v. City of Portland, 288 Or 155, 164, 608 P2d 771, 777 (1979), reh’ denied, 288 Or 585, 607

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     P.2d 722 (1980). County governments do not enjoy unlimited or unfettered discretion in making

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     a legislative decision. County legislative bodies must comply with the enabling act of the state

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     legislature. See, e.g., Roseta v. Washington County, 254 Or 161, 165, 458 P2d 405, 408 (1969)

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     (holding that the “the power of the Board of County Commissioner is limited by the enabling

12
     act”). Courts review the legislative actions of county governments to determine whether the

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     action is arbitrary or capricious given the standards of the enabling act. Neuberger, 288 Or at

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     165 (holding that “the statute sets out the standards which must be met before the governing

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     body of the county can legally effect a change”).

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            The court's review is de novo. Brooks v. Dierker, 275 Or 619, 625, 552 P2d 533 (1976).

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     Factual issues may be tried and determined as they would be “in other actions or suits in equity.”

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     ORS 28.090. The court may grant preliminary relief pending the final judgment, as well as

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     necessary supplemental relief thereafter. ORS 28.080.

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                    2.     ORS 275.335 requires a determination of the market value of the
                           property that is based upon an analysis of the highest and best use of
21                         property.

22          The enabling legislation (ORS 275.335) requires that the County determine whether the

23   exchange is for “equal value” and in the “best interests” of the County. The “equal value”

24   requirement of ORS 275.335 requires the County to determine the value of the properties to be

25   exchanged. Pursuant to the enabling legislation, any exchange shall be made by order of the
     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 10                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   county court (the Board of Commissioners) and supported by reports from: (a) the county
 2   assessor; and (b) the County forester or other qualified agent selected by the governing body.
 3   ORS 275.335(3).
 4                                                                  s
            Duane Ely, an appraiser working for the County assessor’ office, stated that the term
 5   “value” in ORS 275.335 means what one would expect the property to sell for on the open
 6                                                                       s
     market with a knowledgeable and willing seller and buyers in an arm’ length transaction.
 7   Bloemers Aff. Ex. 34 at 8/10-12; 19/15-18. Duane Ely agreed that HRC must try to obtain the
 8   highest price for the County Property that it can possibly get in an open market transaction when
 9   performing the valuation of property it is considering exchanging. Bloemers Aff. Ex. 34 at 20/2-
10   4. The County has admitted that the term value as used in ORS 275.335 means “real market
11   value.” Bloemers Aff. Ex. 36. County Counsel Wilford Carey stated that ORS 275.335 requires
12   the County to determine the “fair market value” of both properties. Bloemers Aff., Ex. 27.
13   Whether or not the term “value” means “market value,” “real market value” or “fair market
14   value” the fact remains that the County has admitted that it must determine the value of the
15   property if it were sold on the open market, even though the statute contemplates an exchange of
16   property.
17          The County has admitted that the term “value” as used in ORS 275.335 means “real
18   market value” and it has essentially equated that term with “market value.” The legislative
19   history of the statute also supports this interpretation. House Bill No. 1269 (“HB 1269”) was
20   passed in 1961 and was codified as ORS 275.335. The legislative history for HB 1269 provides
21   the following instructive guidance on the meaning of the term “equal value:”
22          “Rep. George Annala, co-sponsor of the bill, explained to the committee that the
            purpose of this bill is to permit the county court to consolidate into more suitable
23          units, county forests. He said that the only counties in the State of Oregon that
            have county forests at the present time are Hood River and Coos and that Coos
24
            County will neither forfeit nor benefit if this bill is passed. Rep. Annala told the
25
            committee that Hood River County has approximately 33,000 acres in forest lands

     PLAINTIFFS’CROSS-MOTION FOR                           Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 11                    917 SW Oak Street, Suite 417
                                                           Portland, OR 97205
                                                           (503) 525-2724
                                                           (503) 296-5454
 1          but they are scattered throughout the county and this bill would permit the court to
            trade. He pointed out that there would be no money involved but that it would
 2          not necessarily mean that it would be traded acre for acre but rather that the
            value of each would have to be considered.” Committee on Natural Resources
 3
            Minutes of February 2, 1961; Bloemers Aff. Ex. 30.
 4

 5
            Rep. Annala contemplated that county land had different and unique values, and that

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     the value of each unique property would have to be considered prior to making an exchange.

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     In other words, the County was not given the discretion to simply dictate the value of the

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     property as it sees fit or to trade forestland “acre for acre.” The County must determine the

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     unique value of the underlying land, and this determination of “value” involves, first, a

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                                   s
     determination of the property’ highest and best use, and, second, flowing from that initial

11
                                                          s
     determination the County must determine the property’ market value.

12
                    3.                                             s
                            The County must determine the property’ highest and best use in
                            order to determine its market value.
13
            “Determining the ‘highest and best use’of the property, is one step in the process at
14
                              s real market value.’ STC Submarine v. Dep’ of Revenue, 320 Or 589,
     arriving at the property’ ‘                   ”                     t
15
     592 n5, 890 P2d 1370 (1995). ORS 308.205(2) governs the determination of real market value
16
     for tax assessment purposes. That statute provides that “real market value” reflects the
17
     “minimum amount a typical seller would accept or the highest amount a typical buyer would
18
     offer which could reasonably expected by a seller of property.” The County has to determine the
19
     highest and best use, because “a seller of property reasonably can expect to receive the highest
20
     offer from a prospective buyer who intends to put the property to its most profitable use.” STC
21
     Submarine, 320 Or at 592 n.5.
22
            Standard appraisal practices also require the determination of the highest and best of the
23
     property. See Bancroft Aff. at 3-4. The Appriasal of Real Estate is a well-recognizes treatise
24
     referred to by the County Assessor in determining the value of property. Id.; see also STC
25

     PLAINTIFFS’CROSS-MOTION FOR                            Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 12                     917 SW Oak Street, Suite 417
                                                            Portland, OR 97205
                                                            (503) 525-2724
                                                            (503) 296-5454
 1   Submarine, 320 Or at 593 (citing to the Appraisal Institute, Appraisal of Real Estate 293 (10th ed
 2   1992)). Both Oregon law, as announced by the Supreme Court, and standard appraisal practices
 3                                           s
     require the determination of a property’ highest and best use in determining its value.
 4          County Counsel Wilford Carey has also admitted that “the formula for appraisals has to
 5                        s
     be based on the land’ highest and best use under current zoning… ” Bloemers Aff. Ex. 26.
 6   While County Counsel Carey admits that a highest and best use analysis must be performed, he
 7   also contends that this determination must only be limited to what is allowed under current
 8   zoning. That alleged limitation on the highest and best analysis is directly contrary to standard
 9   appraisal practices and a determination of “equal value.” Bloemers Aff. Ex. 34 at 20, 76/15;
10   Affidavit of Bob Bancroft at 7-8. A rational, willing and informed seller would require any
11   probable change in zoning, although discounted appropriately to account for the risks involved,
12   to be included in the valuation. Any limitation or constraint on the highest and best use
13   determination would result in an incorrect, and arbitrary, determination of “value.”
14          In sum, the County had to prepare a highest and best use analysis pursuant to both
15   Oregon law and standard appraisal practices to determine the market value of the properties
16   subject to the Land Exchange.
17                  4.      ORS 275.335 does not authorize an “equalization payment” to achieve
                            “equal value.”
18
            The County paid MHM more than $1 million to “equalize” the value in the Land
19
     Exchange, but ORS 275.335 does not provide for an equalization payment. The County
20
     admitted as much in its response to plaintiffs’request for admissions. County governments are
21
     limited by the authorization in the enabling statute, and the statute simple does not authorize an
22
     “equalization payment.” ORS 275.335
23
            Other statutes, such as ORS 271.230 and ORS 390.885, authorizing the exchange of land
24
     owned by government subdivisions of the State of Oregon, do authorize a payment of money to
25

     PLAINTIFFS’CROSS-MOTION FOR                            Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 13                     917 SW Oak Street, Suite 417
                                                            Portland, OR 97205
                                                            (503) 525-2724
                                                            (503) 296-5454
 1   “equalize” the transaction. The legislature has, for instance, enacted legislation that provides that
 2   “the value of the real property accepted by the political subdivision in exchange for any of its
 3   property plus cash, if any, shall not be less than the value of the property relinquished.” ORS
 4   271.230 (emphasis added). ORS 390.885 provides for the exchange of property within a scenic
 5   waterway for property outside the waterway provides and specifically provides that “if they [the
 6   properties] are not of approximately equal fair market value, the department may accept cash or
 7   property from, or pay cash or grant property to, the grantor in order to equalize the values of the
 8   properties exchanged.”
 9          The statutory language is clear that the County does not have authority to make an
10   equalization payment to MHM. To the extent that the authority granted to the County is
11   ambiguous, the legislative history provides similar guidance.
12          Rep. Annala, the co-sponsor of HB 1269 testified before the Committee on Natural
13   Resources on February 2, 1961, and the minutes of that meeting reflect his testimony. “[T]his
14   bill would permit the court to trade. He pointed out that there would be no money involved but
15   that it would not necessarily mean that it would be traded acre for acre but rather that the value
16   of each would have to be considered.” Committee on Natural Resources Minutes of February 2,
17   1961; Bloemers Aff. Ex. 30 (emphasis added). The co-sponsor of the bill specifically stated that
18   no money was involved, which would explain the difference in the statutory language when
19   compared to ORS 271.320 and ORS 390.885.
20                  5.      The County does not enjoy unfettered discretion to determine the
                            value of the property.
21
            MHM argues in its motion for summary judgment that the County did not abuse its
22
     discretion in approving this Land Exchange, because the statute says that valuations are to be
23
     done in the “judgment of the county.” MHM Motion at 10 (citing ORS 275.335(1)). The
24
     County does not enjoy the same kind of unfettered discretion that MHM wills it to have in its
25

     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 14                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   motion for summary judgment or that the County exercised in this case. The County must
 2   determine that the properties exchanged are of “equal value,” and in so doing the County cannot
 3   simply trade the properties acre for acre, instead it must analyze the unique value of the
 4   properties to be exchanged in accordance with the statutory guidelines and the circumstances
 5   presented by each individual land exchange.
 6          MHM incorrectly begins with the decision in Lane v. City of Prineville as the basis for
 7                             s
     discussing a municipality’ authority to dispose municipal property. Lane v. City of Prineville,
 8   49 Or App 385, 619 P2d 940 (1980). The controlling statute in Lane was ORS 271.310(1),
 9   which required the city to determine whether the property was needed for public use or whether
10   the public interest may be served by selling the property. ORS 271.310 does not require any
11   notice to the public, does not require a hearing or opportunity to take testimony and evidence,
12   and, most importantly, does not impose substantive legal criteria upon the valuations.
13          ORS 275.335 differs significantly from the statute at issue in Lane in that it contains an
14   explicit “equal value” requirement, a detailed fact-finding procedure to ensure the transaction
15   meets that requirement and a hearing to provide the public an opportunity to object to the
16   exchange. The City of Prineville, in fact, did not have to comply with the kind of strict statutory
17                                                                                        s
     criteria that apply to the exchange of county land. Instead of supporting the County’ position,
18   Lane emphasizes the fact that the legislature created a very different, and quasi-judicial, process
19   in implementing ORS 275.335.
20          MHM next cites to Daniels v. City Portland as authority that the court may reverse the
21   Land Exchange only if it “manifestly unreasonable and arbitrary, and offend[ed] * * * the
22   prohibitions within the federal or state Constitution.” Daniels v. City of Portland, 124 Or 677,
23   684, 265 P 790 (1928). In citing to Daniels, MHM is applying an incorrect legal standard, taken
24   out-of-context from a case decided under facts distinguishable from the present case.
25          In Daniels, plaintiffs sought an injunction to prevent the city from enforcing a housing
     PLAINTIFFS’CROSS-MOTION FOR                            Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 15                     917 SW Oak Street, Suite 417
                                                            Portland, OR 97205
                                                            (503) 525-2724
                                                            (503) 296-5454
 1   code ordinance, which would have required the plaintiff to remedy an unhealthful ventilation
 2   system in his hotel. The ordinance was upheld. Daniels, 124 Or at 678. The “manifestly
 3   unreasonable” standard was applied to determine the reasonableness of the health ordinance that
 4   regulated hotels, tenements, and other lodging houses. The Daniels court applied the standard in
 5                                     s
     the context of reviewing the city’ use of its police power to protect the public health welfare and
 6   safeguard the public interest. In this case, however, the County must comply with the specific
 7                                                                                  s
     criteria of ORS 275.335. The state legislature specifically limited the County’ legislative power
 8   in this case.
 9           Moreover, actions such as those in Daniels that are taken in furtherance of public welfare
10   and safeguarding the health of citizens receive a higher standard of deference because of the
11   important state interest involved in ensuring the safety of its citizens. MHM misleadingly cites
12   to following section from Daniels:
13           “The reasonableness of a given ordinance is pre-eminently and primarily a
             question for legislative judgment, and, in a doubtful case, the judicial authority
14           must defer to the legislative wisdom. But, when the legislative enactment is
             manifestly unreasonable and arbitrary and offends against the prohibitions within
15
             the federal or state Constitution, it becomes the duty of the judiciary to declare
16
             such act invalid.”

17
     Daniels stands for the proposition that if a given legislative enactment is manifestly unreasonable
18
     and arbitrary, then the court must take action to prevent its application, it does not speak to when
19
     a court can take action in cases where a government decision maker is unreasonable or arbitrary
20
     in making a decision that must be in keeping with specifically established statutory criteria.
21
             MHM next cites to the Gurdane case, and changes what it claimed to be the standard of
22
     review from “manifestly unreasonable and arbitrary” to “fraud or abuse of discretion.”
23
     Guardane et al v. No. Wasco P.U.D., 183 Or 565, 195 P2d 171 (1948). However, the plaintiffs
24
     are not claiming that Hood River County officials committed fraud upon the public; the plaintiffs
25

     PLAINTIFFS’CROSS-MOTION FOR                            Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 16                     917 SW Oak Street, Suite 417
                                                            Portland, OR 97205
                                                            (503) 525-2724
                                                            (503) 296-5454
 1                                s
     are claiming that the County’ determination that the trade was for “equal value” and in the
 2   “bests interests” of the County was arbitrary. The County misled the public by failing to disclose
 3   information regarding meetings it had with officials from MHM regarding the proposed
 4   destination resort and land swap (both before and after the public hearings), and it told the public
 5                                                            s
     the record was closed in an effort to exclude the public’ participation before the County had
 6   even prepared the requisite reports on the value of the properties. Plaintiffs, however, are not
 7                                                                   s
     alleging fraud or misrepresentations but rather that the County’ decision was arbitrary and
 8   outside the authority given to it in the implementing legislation.
 9          MHM also cites to Pullen v. Oregon Indus. Dev. as authority for the proposition that
10                                                                s
     “broad legislative discretion also applies to a municipality’ power to dispose of real property.”
11   Pullen v. Oregon Indus. Dev., 240 Or 583, 402 P2d 240 (1965). The land transaction at issue in
12   Pullen fell under ORS 271.310, the same statute at issue in the City of Prineville. In Pullen,
13   waters impounded by the John Day Dam caused partial inundation of lands in the City of
14   Arlington, requiring officials to relocate a portion of the business district. Pullen is inapposite
15   for a number of reasons. As was explained above, ORS 271.310 provides a different statutory
16   authority for the disposition of public lands and different standards that the decision maker must
17   apply in making that disposition.
18          In Pullen, the City Council had “… considered various plans to provide for the relocation
19   of the business community. None of the plans were acceptable to the council until the one
20   involved in this litigation was adopted… ” Id. at 584. Using the language in ORS 271.310, the
21   plaintiff-taxpayers were trying to prescribe the method in which the city would sell plots of land
22   for the relocation of the business community. The plaintiffs argued that planning a city center
23   was so vested with a public interest that city should have been required to sell plots of land
24   individually to business interests. The city contended that it was allowed to sell the entire piece
25   of public land to a development company, who would then sell the properties to individual
     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 17                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   businesses as interest arose, according to certain priorities and other limitations established by
 2   the city for such sale. In Pullen, the citizens were attempting to require the City Council to enter
 3   into the real estate business by selling each plot individually, rather than selling the whole tract
 4   to a development corporation. The Court found that the City had other methods at their disposal,
 5   including zoning restrictions, to effectuate the public interest. As a result, the Court denied the
 6   plaintiffs’claims. Id.
 7           Plaintiffs, in this case, are not attempting to force the commissioners to make their
 8   decision in a certain way based upon the public interest, rather the plaintiffs contend that the
 9   Land Exchange is not for “equal value” or in the “bests interests” of the County as specifically
10   required by ORS 275.335. In other words, plaintiffs contend that the County acted outside of its
11   statutory authority in approving a trade for unequal value, not that the County could not approve
12   a trade of forestland with a developer.
13           MHM also cites to Thunderbird Motel for the premise that the County has unfettered
14   discretion to decide how to value property under ORS 275.335. Thunderbird Motel v. City of
15   Portland, 40 Or App 697, 596 P2d 994, rev denied 287 Or 409 (1979).           In Thunderbird Motel,
16   the court held that a city, in selling a city block as part of an urban renewal project, did not abuse
17   its’discretion under the applicable statute (ORS 457.230) when it did not consider, as
18                          s
     components of the land’ sale price, both the value of the contemplated post-sale improvements
19   and public improvements on adjacent land. Id. at 707. The city used public funds to build tennis
20   court and skybridge in a blighted area, and then assigned the area to a private entity for
21   management as a public facility.
22           According to MHM, both Thunderbird Motel and Pullen “demonstrate that a
23   municipality has the discretion to dispose of land as it finds is in its best interests, and has the
24                                                                s
     discretion about guidelines for appraising the real property’ value.” MSJ at 11. MHM
25   misstates the holding of both cases; in neither case did the decision maker have the discretion to
     PLAINTIFFS’CROSS-MOTION FOR                               Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 18                        917 SW Oak Street, Suite 417
                                                               Portland, OR 97205
                                                               (503) 525-2724
                                                               (503) 296-5454
 1   determine the guidelines for valuing the property. Instead, those guidelines were determined by
 2   the state legislature. For example, the decision maker in Thunderbird Motel met the “fair reuse
 3   value” guideline established by the legislature in that statute. Meeting a guideline and later
 4   receiving deference about whether that guideline has been met from the court is far different
 5   from having discretion to determine what the guideline is or how the guideline may be met.2
 6            Moreover, as more fully articulated above, the guideline in Thunderbird Motel is far
 7   different than the guideline in ORS 275.335. ORS 457.230 governs the disposition of land in an
 8   urban renewal project. The determination of value in subsection (1) of ORS 457.230 is
 9   completely different from 275.335:
10            “(1) The urban renewal agency shall, in accordance with the approved urban
              renewal plan, make land in an urban renewal project available for use by private
11            enterprise or public agencies. Such land shall be made available at a value
              determined by the urban renewal agency to be its fair reuse value, which
12
              represents the value, whether expressed in terms of rental or capital price, at
13
              which the urban renewal agency in its discretion determines such land should be
              made available in order that it may be developed, redeveloped, cleared, conserved
14            or rehabilitated for the purposes specified in such plan.”

15   ORS 457.230 puts the discretion to determine the value of the property solely within the urban

16   renewal agency for the purposes of development, redevelopment, clearing, conservation, or

17   rehabilitation. ORS 275.335 requires that the county forestland be exchanged for “equal value”

18   and which presupposes a determination of the “value” of the property. An urban renewal statute

19   has far different goals, purposes, and objectives than a statute that was designed to allow the

20   County to consolidate its forestlands and ensure that the County maximizes the value of those

21   lands.

22
              2
23              It is true that the Thunderbird Motel court ruled that contemplated post-sale improvements and public
                                                                                          s
     improvements on adjacent land need not be considered as components of the land’ sale price under ORS 457.230.
24   Thunderbird Motel at 707. However, the plaintiff acknowledged that the fair reuse value of the hotel block, based
     on a restricted use as a convention hotel facility, was appraised at $1. So even the plaintiff appears to have accepted
     that the urban renewal agency met the statutory requirement of “fair reuse value,” whereas the plaintiffs in this case
25   claim that the County did not meet the “equal value” and “best interests” standards of 275.335
     PLAINTIFFS’CROSS-MOTION FOR                                       Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 19                                917 SW Oak Street, Suite 417
                                                                       Portland, OR 97205
                                                                       (503) 525-2724
                                                                       (503) 296-5454
 1

 2                     6.       ORS 275.100 applies to the exchange of County forestland.3
 3            Plaintiffs reassert their argument that ORS 275.100 applies to the Land Exchange
 4   between the County and Mt. Hood Meadows. Plaintiffs request that this Court consider

 5   revisiting its ruling on this point in the writ case, and plaintiffs’have attached the relevant

 6   sections of plaintiffs’opening brief before the Oregon Court of Appeals. Plaintiffs ask the Court

 7   take judicial notice of those sections of their brief and incorporate those arguments in this brief

 8   by reference.

 9                     7.       If ORS 275.100 does not apply to this Land Exchange, ORS 275.335
                                requires the disclosure of information on value before the public
10                              hearings.

11            The procedures contained in ORS 275.335 require a specific process that the County

12   must follow for the benefit of the public. Pursuant to ORS 275.335, the County had to do the

13   following prior to completing the land exchange: 1) publicize and hold a hearing at which

     objections to the proposed exchange may be heard, 2) conduct fact-finding to assist it in making
14
     the “equal value” and “best interest” determinations with respect to the specific properties
15
     involved, 3) make a specific finding based upon that fact-finding that the exchange is for equal
16
     value and in the best interests of the County, and 4) enter its decision in the journal of the county
17
     court. ORS 275.335(1)-(4). The statute does not discuss what the public may object to, so
18
     conceivably, a member of the public could object on any ground. However, the statute does
19
     require the County to comply with two specific statutory determinations, and therefore it would
20
     defy logic to allow the County to not provide the reports required by ORS 275.335(3) to the
21
              3
22              Plaintiffs argued in Case No. 020029CC that ORS 275.100 applies to the Land Exchange. Plaintiffs
     request this court to take judicial notice of the plaintiffs’(petitioners in Case No. 020029CC) briefing on this point
23   in that case and to reconsider its ruling based upon the additional points incorporated from their appeal. Plaintiffs
     attach the excerpts on ORS 275.100 from that briefing for this Court, but since that briefing was already served on
     defendants it is not being served on them as part of this filing.
24

25

     PLAINTIFFS’CROSS-MOTION FOR                                        Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 20                                 917 SW Oak Street, Suite 417
                                                                        Portland, OR 97205
                                                                        (503) 525-2724
                                                                        (503) 296-5454
 1
     public at or prior to the public hearing where the objections are taken. The only way for the
 2
     public to provide meaningful objections on these points is for the public to be informed on how
 3
     the County has valued the properties. Bancroft Aff. at 13-14.
 4
                                 s
            Moreover, the County’ order that the exchange is for “equal value” and in the “best
 5
     interests” of the County must be supported by reports as set forth in ORS 275.335(3). Without
 6   those reports, the County cannot legally order the exchange. All the County can do is instruct
 7   the County Forester to proceed with the requisite fact-finding
 8          The County had to disclose its valuations to the public and then take testimony at the
 9   hearing with respect to those valuations before entering into the transaction. The County was

10   required to make the required statutory determinations based on reports. In sum, the statutory

11   scheme, provided by either (or both) of ORS 275.335 and ORS 275.100, required the County to

12   provide the public reports on the value of the properties at or before the hearing when the public

13   was allowed to object. The County could only make a determination of “equal value” and “best

     interests” after the County had obtained the required reports on the value of the properties to be
14
     exchanged.
15

16          B.      The County failed to comply with the procedural requirements of ORS
                    275.100.
17

18
            One of the plaintiffs’two procedural arguments is that the County failed to comply with
19
     the procedural requirements of ORS 275.100. As discussed above, ORS 275.100 requires that
20
     the County hold a hearing not less than six weeks after the County initially approves the
21
     exchange of property. The County never held such a hearing nor complied with the mandates of
22
     ORS 275.100. Bloemers Aff. Ex. 36, Response to Plaintiffs’First Set of Requests for
23
     Admissions from Defendant Hood River County. In so doing, the County deprived the public of
24
     their right to make objections to the proposed exchange, including making objections to the
25

     PLAINTIFFS’CROSS-MOTION FOR                            Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 21                     917 SW Oak Street, Suite 417
                                                            Portland, OR 97205
                                                            (503) 525-2724
                                                            (503) 296-5454
 1   valuation process that was implemented by the County after the initial public hearing on the land
 2   exchange. Without the hearing required by ORS 275.100, the public, and the plaintiffs, were
 3   deprived of their statutory right to comment on the statutorily mandated “equal value” and “best
 4   interests” requirements.
 5          Defendants admit that they did not comply with the provisions of ORS 275.100. If this
 6   court determines that ORS 275.100 applies, then plaintiffs are entitled to summary judgment
 7                                         s
     against the defendants for the County’ failure to comply with the applicable mandates of ORS
 8   275.100.
 9          C.      The County did not comply with the procedural requirements of ORS
                    275.335 in consummating the Land Exchange.
10
            Plaintiffs’other procedural argument is that the County failed to follow the procedures
11
     required by ORS 275.335(3). The County did not provide the statutorily required information to
12
     the public on the value of the properties subject to the exchange at either of the two initial public
13
     hearings on August 6, 2001 and August 20, 2001. Without this information, the public has no
14
     way of participating in or commenting on the central decisions required by the statute.
15
            On August 6, 2001 and August 20, 2001, the County held hearings on the proposed
16
     exchange. Kenneth Galloway, Carol York and David Meriwether acknowledged that the
17
     requisite information on the value of the property was not provided for the public to review at or
18
     prior to the public meeting on August 20, 2001. Bloemers Aff. Ex. 31 at 54/25-55/24, Ex. 40,
19
     Ex. 41. On August 27, 2001, County Administrator David Meriwether sent a letter to Mr.
20
     McCarthy indicating that “[t]he record closed when the public hearing was closed at the Board of
21
     Commissioners meeting Monday, August 20.” Bloemers Aff. Ex. 24. However, David
22
     Meriwether was unable to explain how the County was able to close the record on the one hand
23
     and then comply with the statutory mandate that the order to exchange land be supported by
24
     reports on the value of the property that were not prepared until after August 20, 2001 on the
25

     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 22                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   other. Bloemers Aff. Ex. 41 at 3, 44/12.
 2                           s
            David Meriwether’ letter was nothing short of an illegal and highly prejudicial attempt
 3   to exclude the plaintiffs from exercising their statutory right to participate in the public process
 4   and comment on the value of the properties to be exchanged. More importantly, ORS 275.335
 5   requires that the County determine that the exchange is for “equal value” and in the “best
 6   interest” of the County prior making an order that the exchange be consummated. The County
 7   could not have legally made at the public hearing on August 20, 2001 because the reports
 8   required by ORS 275.335(3) were not yet prepared.
 9          The County also reversed its typical process. Bloemers Aff. Exhibits. 21 and 22. On
10   December 19, 1997, the County formally approved a Land Exchange with Steve McCarthy,
11                 s
     Mike McCarthy’ brother. Bloemers Aff. Ex. 21 at 8. In that case, the County first made an
12   effort to determine the highest and best use of the properties, then determined the value of those
13   properties and finally, at the end of that process, had a public hearing. Bloemers Aff. Ex. 21. In
14   this case, however, the County first had the public hearings, then the County failed to perform a
15   highest and best use analysis prior to determining the market value of the properties and then the
16   County produced and approved the valuation figures.
17                                                          s
            This reversal of process also led to the County’ failure to consider the impacts to value
18   as a result of the lot line adjustments. The County made property line adjustments in February of
19   2002, well after the hearing on August 20, 2001 when it purportedly made its order. Those
20   property line adjustments could have a significant impact on the value of the properties to be
21   exchanged, and the highest and best use of the County Property. Bancroft Aff. at 13. The
22   amount of property that was ultimately exchanged as a result of that property line adjustment
23                            s
     was altered to serve MHM’ development purposes. Bloemers Aff. Ex. 28 and Ex. 41 at 9, 82/1.
24   This was done in February of 2002, well after the initial public hearing, and was not factored into
25   the valuation. As further evidence of the procedural defects, David Meriwether stated that he,
     PLAINTIFFS’CROSS-MOTION FOR                              Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 23                       917 SW Oak Street, Suite 417
                                                              Portland, OR 97205
                                                              (503) 525-2724
                                                              (503) 296-5454
 1   not the Board of Commissioners, made the “best interest” determination at that time, even
 2   though the County forester suggested that trading less land to MHM was in the best interest of
 3   the County. Bloemers Aff. Ex. 41 at 10, 84/5-6.
 4                                    s
            As a result of the County’ reversal of the statutorily mandated process and its own
 5   practice, the public, including the plaintiffs, were deprived of their statutory right to make
 6   objections and comment on the “equal value” and “best interests” determinations that the County
 7   was required to make.
 8
            D.                  s
                    The County’ determination that the properties to be traded were of “equal
 9
                    value” and in the “best interest” of the County was arbitrary and capricious
10
                    and must be set aside.

11          In plaintiffs’first claim for relief, plaintiffs have alleged that the County “misinterpreted

12   and misapplied ORS 275.335(1),” because it failed to consider the highest and best use of the

13   property in determining whether the Land Exchange was for “equal value” and in the “best

14   interests” of the County as required by the enabling legislation. Complaint for Declaratory and

15                                                                         s
     Injunctive Relief at ¶ 34-37. Plaintiffs also alleged that the County’ decision to pay MHM more

16   than $1 million to complete the land exchange is in violation of the “equal value” requirement of

17   ORS 275.335. Id. at ¶ 37

18          Plaintiffs allege in this case that the County valued the underlying land subject to the

19   Land Exchange at $325 per acre despite the fact that other far more valuable uses are allowed

20   under current zoning on forestland. The plaintiffs have also alleged that, before the cursory

21   valuations were even completed, MHM publicly disclosed its plans to develop that land into a

22   destination resort. Id. The County and MHM would have this Court and the public believe that

23   they can value land however they want in order to meet the “equal value” requirement of ORS

24   275.335. MSJ 9-11. The County acted in violation of ORS 275.335. This court has the

25   authority to review that action to ensure compliance with the applicable state statutes.

     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 24                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1                  1.      The County arbitrarily decided not to analyze the highest and best use
                            of the County Property under current zoning, let alone the uses
 2                          resulting from a probable change or exception to the current zoning.
 3
            The County had to perform a highest and best use analysis in order to comply with
 4
     Oregon law and standard appraisal practices. See infra at III.1.A.3. The County relied on a
 5
     report from Duane Ely on the underlying value of the properties and a timber cruise from Bill
 6
     Alexander Forestry, Inc. and these reports were not prepared or submitted to the County until
 7
     after the public hearings in August of 2001. Bloemers Aff. Ex. 25. The report on the underlying
 8
     land value from Duane Ely contained no analysis of the highest and best use of the County
 9
     property even under current zoning. Bloemers Aff. Exhibits 10 and 11. Duane Ely was
10
     instructed to provide the forestland for timber production value of the properties, their existing
11
     use, subject to the Land Exchange. Bloemers Aff. Ex. 34 at 13, 45/14-17. This instruction came
12
     from the Board of County Commissioners, who refused to consider other uses of the County
13
     Property unless those other uses were guaranteed. Bloemers Aff. Ex. 40, 83/1-88/4. In short, the
14
     Board of Commissioners deliberately ignored other possible uses without undertaking any
15
     analysis.
16
                       s
            The County’ approach is arbitrary because it is directly contrary to normal appraisal
17
     practices. Bancroft Aff. at 5-12. County Counsel admitted that the County is required to look at
18
     the Highest and Best Use under current zoning. Bloemers Aff. Ex. 26. County Counsel also
19
     admitted that the County is required to determine the “fair market value” of each property to be
20
     exchanged. Bloemers Aff. Ex. 27. The County failed to consider any other uses other than the
21
     existing use of the property. See Bloemers Aff. Ex. 34 at 9-10, 31/25 –33/3 and at18, 65/14.
22
                    2.      The County knew that MHM planned to develop the County Property
23
                            into a destination resort, encouraged and facilitate those plans, and
                            provided positive indications as to their probability of success .
24
            As set forth in the statement of undisputed facts, the County knew that MHM planned to
25

     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 25                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   develop the County Property as early as July 18, 2001. The County had this knowledge well
 2   prior to the initial public hearings on the land trade and its efforts to prepare and obtain the
 3                                            s
     requisite reports on the County Property’ value. Moreover, instead of indicating that the County
 4   Comprehensive Plan (the County zoning ordinances) did not support a destination resort, the
 5   County Planning Director wrote a letter to Dave Riley on July 24, 2001 stating that the County
 6                                                                s
     Comprehensive Plan was not likely to stand in the way of MHM’ plans to construct a
 7   destination resort. Bloemers Aff. Ex. 17. The Destination Resort Plan Document was shown to
 8   County officials on October 2, 2001, well before the land trade was finalized and before the
 9   County forester reported on the values of the properties subject to the exchange. Bloemers Aff.
10   Ex. 37 at 13, 57/15-18.
11                  3.                                                   s
                            The Appraiser with the County Assessor’ office assignment was
                            arbitrarily instructed to value the land as forestland for commercial
12                          timber production even though home sites are allowed outright or
                            conditionally in the forest zone in at least three different ways in Hood
13
                            River County.
14
            Duane Ely received instructions, flowing from the Board of Commissioners, to value the
15
     property as forestland for timber production. Duane Ely stated that he based his valuation on the
16
            s                                                       s
     County’ Forestland Land Study and acknowledged that the County’ Forestland Study looked
17
     exclusively at the value of forestland for commercial timber production. Bloemers Aff. Ex. 34 at
18
     9, 29/13 and at 13, 45/14-17. Duane Ely acknowledged that other uses, such as large tract
19
     homes, are allowed in the forest zone. Bloemers Aff. Ex. 34 at 8, 25/18-24 and at 12, 44/20-45/2
20
     In other words, the County Forest Lands Study excluded the value of large tract home sites, let
21
     alone a change in zoning, from the value assigned to F-1 and F-2 zoned property in Hood River
22
     County. Bloemers Aff. Ex. 11. Michael Benedict also confirmed that other uses are allowed
23
     under current zoning. Bloemers Aff. Ex. 37 at 14-15, 64/24-66/25. Duane Ely admitted he never
24
     took those other uses into consideration, because he was only asked to consider the value of the
25

     PLAINTIFFS’CROSS-MOTION FOR                              Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 26                       917 SW Oak Street, Suite 417
                                                              Portland, OR 97205
                                                              (503) 525-2724
                                                              (503) 296-5454
 1   County Property for its existing use as forestland for commercial timber production. Bloemers
 2   Aff. Ex. 34 at 13, 45/14-17; Bancroft Aff. at 4-5.
 3           The Destination Resort Plan Document showed high-end homes on the County Property
 4   that was traded to MHM. This was shown to County officials on October 2, 2001, prior to the
 5                    s
     Kenneth Galloway’ submission of the values of the properties subject to the Land Exchange to
 6   David Meriwether on October 16, 2001 and well prior to the completion of the land trade in
 7   March of 2002. The October 2, 2001 meeting was a continuation of meetings and discussions
 8   regarding the destination resort that began before the County even solicited County residents for
 9   the purchase or exchange of forestland property. The County was well aware of the potential for
10   other uses of the County Property, and in fact singularly pursued a trade with MHM despite the
11   fact that other forestland owners in the County responded positively to the solicitation. Bloemers
12   Aff. Ex. 31 at 3, 30/13-24 and at 3-7 generally.
13           In sum, the existing use of commercial timber production was merely an interim use of
14   the County Property. Bancroft Aff. at 9. The highest and best use of the County property was
15   not its existing use; instead it was, at a minimum, large tract homesites. Bancroft Aff. at. 11.
16                                                              s
     Plaintiffs are entitled to summary judgment for the County’ arbitrary failure to consider this
17   possibility in its valuation process.
18                   4.      The County arbitrarily failed to consider a possible change in zoning.
19
             An exception to the current forestland zoning under Goal 2 was an obvious possibility
20
     prior to the time that the Land Exchange was publicly disclosed. Bloemers Aff. Ex. 3 and Ex. 6,
21
     Bancroft Aff. at 6-7. The County restricted the consideration of a change in zoning altogether
22
     from its analysis. Bloemers Aff. Ex. 14 at 8-9. Prior to the submission of the values of the
23
     property, MHM officials presented the Destination Resort Plan Document to County officials
24
     and discussed in great detail the possibility of a change in zoning pursuant to Goal 2 on October
25

     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 27                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   2, 2001. Bloemers Aff. Exhibits 3 and 19. In addition, Michael Benedict provided advice to
 2                                                                                       s
     MHM about the possibility of an exception to the forest zone under Goal 2 of Oregon’ land use
 3   laws on July 24, 2001. Bloemers Aff. Ex. 17. MHM provided the County with a specific
 4   timeline for approval of a destination resort under Goal 2. Bloemers Aff. Ex. 3. The County
 5   never addressed the possibility of a change in zoning in its analysis of the value of the County
 6   Property. Rather, the County specifically excluded it in the REEA. Bloemers Aff. Ex. 14 at 8-9.
 7                                                              s
     Plaintiffs are entitled to summary judgment for the County’ arbitrary failure to consider this
 8   possibility in its valuation process.
 9                   5.      The County and MHM discussed the potential results of the Goal 8
                             destination resort mapping process, a process that would formalize
10                           where destination resorts would be allowed as a conditional use in the
                             forest zone.
11
             The County received maps from MHM containing draft Goal 8 maps on April 14, 2001.
12
     Bloemers Aff. Ex. 1. The County also received further communications from Virgil Ellett
13
     regarding the Goal 8 mapping process that the County was gearing up to perform. Bloemers Aff.
14
     Ex. 16. The Goal 8 mapping process would allow destination resorts in the forest zone. Despite
15
     its knowledge of this possibility, the County completely failed to analyze the potential for a
16
     destination resort, a use that is conditionally allowed in the forest zone pursuant to Goal 8.
17
                                                                s
     Plaintiffs are entitled to summary judgment for the County’ arbitrary failure to consider this
18
     possibility in its valuation process.
19

20
                     6.                    s
                             The County’ failure to properly value and reconcile information
21
                             contrary to its “best interests” and “equal value” determinations
                                                             s
                             regarding the value of MHM’ forestland that was traded to the
22                           County was arbitrary and capricious.

23           The County was in possession of evidence that two extensively qualified forestry

24   consultants working for MHM had previously appraised and evaluated the forest land that MHM

25   traded to the County and determined that a large portion of that land was completely worthless
     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 28                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   for timber production. Bloemers Aff. Ex. 23. Commissioner Perkins was concerned about the
 2   forestland capability. Bloemers Aff. Exhibits 15 and 39. In addition, Kenneth Galloway
 3   confirmed in his deposition that the County did not perform a site class analysis of the forestland
 4   soil on either parcel. Bloemers Aff. Ex. 31 at 12, 92/17. The County was made aware of and
 5   possessed reports by R.J. Bowles and Bill Ellington, as well as the previous development
 6   application by MHM on the parcel traded to the County, yet it failed to reconcile this evidence
 7   that plainly suggested that the trade was not in the best interests of the County. Bloemers Aff.
 8   Exhibits 5 and 23. The land referenced in the letter from Franklin Drake and described in the
 9   MHM Goal 4 Document was traded to the County as part of this trade. Bloemers Aff. Exhibits 5
10   and 23.
11             Furthermore, the County did not meet the best interests of increasing the County
12   forestland base through this trade, as the County did not receive more manageable acres as the
13   result of trading its forestland, it received additional acreage as the result of paying over $1
14   million for that acreage in violation of the “equal value” requirement. Although the difference in
15   acreage traded was over 165 acres, the County Forester Kenneth Galloway stated that the County
16   only received less net manageable acres than the total acreage it received from the exchange and
17   payment of money. Bloemers Aff. Ex. 31 at 12. In addition, the County Administrator, David
18   Meriwether, altered the property subject to the trade by choosing an option that would suit
19       s
     MHM’ purposes. Bloemers Aff. Ex. 28. Although the Board of County Commissioners is
20   required to make the “best interest” determination, David Meriwether indicated that he made that
21   determination. Bloemers Aff. Ex. 41 at 10, 84/12. Mr. Meriwether instructed the County
22                                                              s
     Forester to make this property line adjustment to suit MHM’ purposes, even though the County
23   Forester had made a contrary recommendation. Bloemers Aff. Ex.28.
24             Moreover, the County arbitrarily concluded that the transaction was in the best interest of
25   the County even though the County failed to pursue other positive responses to the solicitations it
     PLAINTIFFS’CROSS-MOTION FOR                              Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 29                       917 SW Oak Street, Suite 417
                                                              Portland, OR 97205
                                                              (503) 525-2724
                                                              (503) 296-5454
 1                                                                         s
     sent out in early May. Numerous other parties responded to the County’ solicitation, many of
 2   whom were willing to sell their forestland property outright to the County. Bloemers Aff. Ex.
 3   31, 3-7. The County deliberately excluded viable options to purchase property from other
 4                                                                       s
     forestland owners outright, a choice that would have met the County’ stated goal of increasing
 5                                                              s
     its productive forestland base, in order to facilitate MHM’ development purposes.
 6   IV.    Plaintiffs do not have to prove the elements of rescission in order to challenge the
            Land Exchange.
 7
            MHM argues that plaintiffs’seek to “cancel the REEA” but have failed to prove the
 8
                                                                                 s
     elements of a rescission claim. MHM Motion for Summary Judgment at 8-9. MHM’ attempt to
 9
     recast the complaint as a claim for rescission distorts the appropriate analysis and should be
10
                   s
     rejected. MHM’ arguments fundamentally misconstrue the Declaratory Judgment statute as
11
     well as the law of government contracts. These issues are well settled in Oregon law. Courts
12
     have the power to fashion appropriate equitable relief pursuant to ORS 28.080, and a contract
13
     entered into by a public body is not governed or constrained by the standard law of contracts if
14   that agreement exceeded the authority of the public body.
15
            A.      The Declaratory Judgment statute empowers the Court to provide equitable
16                  relief.

            ORS 28.020 establishes the right to seek declaratory relief. “Any person * * * whose
17
     rights, status or other legal relations are affected by a constitution, statue municipal charter,
18
     ordinance, contract or franchise may have determined any question of construction or validity *
19
     * * and obtain a declaration of rights, status or other legal obligations thereunder.” ORS 28.020.
20
     ORS 28.080 then establishes the equitable power of the Court to furnish equitable relief.
21
     “Further relief based upon a declaratory judgment or decree may be granted whenever necessary
22
     or proper.” ORS 28.080.
23
            The Supreme Court has ruled that ORS 28.080 empowers the Court to order the equitable
24

25

     PLAINTIFFS’CROSS-MOTION FOR                              Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 30                       917 SW Oak Street, Suite 417
                                                              Portland, OR 97205
                                                              (503) 525-2724
                                                              (503) 296-5454
 1
     transfer in possession of property.6 See Ken Leahy Construction Inc. v. Cascade General, Inc.,
 2
     329 Or 566, 994 P2d 112 (1999). The Supreme Court clarified the analysis. First, the Court is to
 3
     determine the rights of the parties – to issue the declaration. Id. at 574. Next, the Court then
 4
     decides on “further relief.” Id. at 575. The Supreme Court clarified that a court may, “when
 5
     ‘based on a declaratory judgment’and when ‘necessary and proper,’grant other form of coercive
 6   relief, including injunctive relief.” Id. The Court, in this case, has the power to grant equitable
 7   relief pursuant to the plain meaning of the statutory language. Plaintiffs need not plead and
 8   prove the elements of a standard rescission claim, as they were not parties to the government
 9   contract that they challenge in this proceeding.

10            B.       Government contracts are void if outside the authority of the government
                       entity.
11
              Oregon courts have also clarified that government contracts are not governed by the
12
     standard laws of contractual relations. See, e.g., State v. Descutes Land Trust Company, 64 Or
13
     167, 129 P 764 (1913); Baker v. Deschutes County, 10 Or App 236, 498 P2d 803 (1972). “The
14
     agent of the State, acting under a public law, must find sanction for his doings in the statute
15
     itself; and the parties dealing with such agent are bound, at their peril, to take notice of the
16
                                    s
     enactment conferring the agent’ authority.” Deschutes Land Trust, 64 Or at 175.                       “A contract
17
     made by a public official in excess of the provisions of the statute authorizing such contract is
18
     void, so far as it departs from or exceeds the terms of the law under which it was attempted to be
19   negotiated.” Id.
20            In Baker, Plaintiffs brought a declaratory judgment action against defendants Deschutes
21   County and its three commissioners seeking specific performance of an option agreement to

22   purchase certain county owned land. Baker, 10 Or App at 237.                   The Court of Appeals held that

23   the initial contract was illegal, and that this “is not simply a case of a legal contract.” Id. The

24
              6
                Rescission, like restitution, specific enforcement or injunctive relief is an equitable remedy. Gangnes v.
25   Lang, 104 Or. App. 135, 137; 799 P.2d 670, 671 (1990).
     PLAINTIFFS’CROSS-MOTION FOR                                      Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 31                               917 SW Oak Street, Suite 417
                                                                      Portland, OR 97205
                                                                      (503) 525-2724
                                                                      (503) 296-5454
 1
     Court acknowledged that the County did not fulfill its obligations under the contract but held that
 2
     a “contract by a public officer in excess of the provisions of the statute authorizing such contract
 3
     is void.” Id. at 240. The court found that because there was never a contract the court did not
 4
     need to provide any remedy.
 5
              Government contracts are void if they exceed the statutory authority of the public official.
 6   The laws of rescission, enforcement, specific performance and merger do not apply to invalid
 7                                                  s
     government contracts. In this case, the County’ “equal value” and “best interest” determination,
 8   the REAA, the exchange of deeds, the payment of money by the County to MHM and all other
 9   actions taken to consummate the Land Exchange are void if this Court determines that plaintiffs

10   are entitled to the requested declaration. Once plaintiffs establish their right to the declaration,

11   they do not have to prove the elements of a rescission claim pursuant to the common law

12   applicable to ordinary contracts to be entitled to the requested remedy.7 ORS 28.080.

13            C.       MHM acted at its peril in relying upon the REAA, and MHM knew plaintiffs
                       alleged the transaction was illegal before the exchange of deeds.
14
              MHM knew that plaintiffs had alleged that the Land Exchange exceeded the authority of
15
     the Board of Commissioners before MHM chose to close the transaction and exchange the deeds.
16
     HRVRC sent a letter to the County on February 14 and February 22, 2002. Mr. Riley, General
17
                                                                               s
     Manager for MHM, stated in the Hood River News that he was aware of HRVRC’ allegations.
18
                                                s
     Bloemers Aff. Ex. 26. MHM knew about HRVRC’ allegations before it closed the transaction
19   with the County and exchanged the deeds. MHM completed the transaction at its own risk
20   despite being well aware of the public opposition.
21

22

23            7
               The courts of other jurisdictions have routinely exercised their equitable powers to void or prohibit land
24   exchanges or other property transactions entered into by government agencies. See, e.g., National Wildlife
     Federation v. Espy, 45 F3d 1337 (9th Cir 1995); Burbank v. Anti-Noise Group v. Goldschmidt, 623 F2d 115 (9th Cir
                                                                                                        s     n
     1980); Cambell v. First Baptist Church of Durham, 259 SE2d 558 (NC 1979); Skyline Sportsmen’ Ass’ v. Board
25   of Land Commissioners, 951 P2d 29 (Mont 1997).
     PLAINTIFFS’CROSS-MOTION FOR                                      Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 32                               917 SW Oak Street, Suite 417
                                                                      Portland, OR 97205
                                                                      (503) 525-2724
                                                                      (503) 296-5454
 1   V.     The doctrine of merger is not applicable to plaintiffs’ challenge to the Land
            Exchange.
 2
            MHM argues that the REEA is no longer challengeable because it has been merged into
 3
     the warranty deed. Meadows MSJ at 13. This argument is illogical because the court retains the
 4
     power to effectuate its declaration that the public contract is void with all necessary and proper
 5
     relief. ORS 28.080. Regardless of whether the REEA merged into a warranty deed, the County
 6
     has acted beyond its legislated authority, rendering its transaction void. This Court retains the
 7
     equitable power to order appropriate relief to address the declaration that the property transaction
 8
     was void.
 9
            MHM attempts to portray the issue as clearly falling under the merger principle.
10
     However, the principle of merger is not applicable in this case. Merger is defined as the
11
     “extinguishments of one contract by its absorption into another, and is largely a matter of
12
                                      s
     intention of the parties.” Black’ Law Dictionary 988 (6th ed. 1990). MHM cites Soursby v
13
     Hawkins, 307 Or.79, 83-4, 763 P.2d 725 (1988), for support of the principle of merger that
14
     purchase and sale agreements merge into the warranty deeds. MHM MSJ at 13. The principle of
15
     merger, however, is inapposite to this case. The purpose of the merger doctrine is to identify all
16
     contents of the final agreement. Plaintiffs, however, do not challenge which terms are part of the
17
                                                             s
     final contract. Rather, plaintiffs challenge the County’ authority to enter into an agreement
18
     which later resulted in a warranty deed, not the provisions of the agreement itself. As discussed
19
     above, the law is clear that government agreements respecting the disposition of land may be
20
     invalidated, after their execution, upon a showing that the government acted in excess of its
21
     lawful authority. Here, the County cannot sanitize an illegal Land Exchange agreement simply
22
     because it may have merged into a warranty deed. In sum, the principle of merger is inapposite
23
                                                  s
     and does not stand as a barrier to plaintiff’ claims.
24

25

     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 33                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   VI.    Res Judicata
 2          MHM alleges that plaintiffs’Declaratory Judgment action is barred by the doctrine of res
 3   judicata and/or claim preclusion simply because plaintiffs first filed an entirely separate action, a
 4   Petition for a Writ of Review. This Court, however, specifically ruled that it did not have subject
 5   matter jurisdiction over plaintiffs’Petition for a Writ of Review and dismissed that case without
 6   reaching the merits of plaintiffs’arguments.
 7          The Oregon Supreme Court laid down a clear rule on res judicata and claim preclusion:
 8                   “for a judgment to effect a preclusion of further litigation based on
                                                                   on
                    the same claim it must be a final judgment ‘ the merits.’ Sibold
 9                  v. Sibold, 217 Or 27, 32, 340 P2d 974 (1959); Swingle v. Medford
                                                                             on
                    Irr. Dist., 121 Or 221, 253 P 1051 (1927). The term ‘ the merits’
10
                    connotes a final definitive decision as to the substantive validity of
11
                              s
                    plaintiff’ cause of action, in contrast to a ruling based wholly on a
                    procedural aspect of the case. Thus, where a court dismisses a
12                            s
                    plaintiff’ action on a matter of procedure – e.g., improper venue,
                    lack of jurisdiction, or nonjoinder of an essential party – without
13                                                                     s
                    ruling as to the substantive validity of plaintiff’ claim for relief,
                    that dismissal will not generally be res judicata so as to preclude
14                  subsequent action based on the same claim. See Restatement
                    (Second) of Judgments § 20.”
15

16   Rennie v. Freeway Transport et al., 294 Or 319, 330-31, 656 P2d 919, 925 (1982) (emphasis
17   added); see also ORS 43.130 (stating that a decision by a court “having jurisdiction” bars
18   relitigation of the same issues); Helisveg v. Helisveg, 294 Or 769, 662 P2d 709 (1983) (holding
19   that a suit to partition real property was not barred by a prior proceeding, because the circuit
20   court concluded that it lacked subject matter jurisdiction to adjudicate the partition question).
21          In this case, plaintiffs initially filed a Petition for a Writ of Review, which courts may use
22   to review quasi-judicial decisions of county governments. In that suit, MHM and the County
23   specifically argued that “the Court lacks jurisdiction over this matter for the reason that the
24          s
     County’ action being challenged is a legislative action.” See Respondents’Motions to Dismiss
25   Petition for Writ of Review at 6 (emphasis added). This Court, in its letter opinion of May 23,
     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 34                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   2002, agreed with respondents, stating that if the decision was legislative “the Court has no
 2                                                    s
     authority to proceed with a review of the County’ conduct.” Letter Opinion from the Honorable
 3   Donald J. Hull at 4.
 4          MHM cannot prevail on its claim that the doctrine of res judicata “clearly barred”
 5   plaintiffs’Declaratory Judgment action. The doctrine of res judicata does not apply if the
 6   former action was dismissed for lack of jurisdiction. This Court clearly ruled that it did not have
 7                                                                                  s
     jurisdiction over plaintiffs’Petition for a Writ of Review, because the County’ action was a
 8                                    s
     legislative decision. This Court’ dismissal of the Writ action for lack of jurisdiction does not
 9   bar plaintiffs from pursuing a Declaratory Judgment action to secure a decision on the merits of
10   their claims.
11          MHM asserted earlier in this litigation that plaintiffs’claims were still barred, because
12   the Supreme Court in Rennie stated that “[a] rule requiring the plaintiff, under circumstances
13   such as this, to at least attempt joinder is congruent with the policies behind the res judicata
14   doctrine.” Rennie, 294 Or at 333. Plaintiffs in this case, however, specifically attempted to
15   consolidate the Write of Review proceeding with the Declaratory Judgment action. MHM and
16   the County opposed that motion. MHM specifically stated that “consolidating this action with
17                                                                s
     the Declaratory Judgment action will cause undue delay.” MHM’ Objections to Plaintiffs’
18   Motion to Consolidate at 1. MHM also opposed consolidation, because plaintiffs sought to “join
19   a summary proceeding, limited to a defined record, with a broad declaratory judgment
20   proceeding, which will include full discovery and a trial. “ Id. at 3. MHM did not want the two
21   actions to proceed together, yet it now argues that plaintiffs should have, in fact, joined the
22   claims rather than tried to consolidate them.
23              s
            MHM’ distinction between joinder and consolidation makes little difference in this case.
24   In Rennie, the plaintiff was in federal court during the first action, and, therefore, would have had
25   to request that the court allow the plaintiff to join the state law claims. When the plaintiff files
     PLAINTIFFS’CROSS-MOTION FOR                             Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 35                      917 SW Oak Street, Suite 417
                                                             Portland, OR 97205
                                                             (503) 525-2724
                                                             (503) 296-5454
 1   the first action in state court, it makes little difference whether plaintiff seeks to consolidate two
 2   separate actions or join one claim to another. Here, plaintiffs sought to consolidate two separate
 3   actions before this Court had entered a final judgment in the first action.
 4             MHM also tries to simply dismiss the precedent from Sherris v. City of Portland, 41 Or
 5   App 545, 599 P2d 1188 (1979). That case is directly on point with this case. “There was, at the
 6   time of declaratory judgment action was filed, an ongoing writ of review proceeding dealing
 7   with the same questions.” Id. at 550. The Court of Appeals held that the declaratory judgment
 8   action was not precluded. “There was a timely motion to consolidate this case with the writ of
 9   review proceeding, which request was denied.” Id.
10             MHM argues Sherris is not on point, because unlike “Sherris, there has been a final
11   disposition of the prior action.” MHM Motion for Summary Judgment at 16. MHM glosses
12   over the fact that plaintiffs specifically attempted to consolidate the two actions before this Court
13   entered a final judgment in the first writ of review proceeding. This Court heard that motion
14   while the writ of review proceeding was still pending. The Court was still deciding plaintiffs’
15   motion for reconsideration and motion to amend the petition. The writ of review proceeding was
16   by no means finalized when plaintiffs filed their motion to consolidate.
17             Plaintiffs’claims are not barred by the doctrine of res judicata. Plaintiffs followed the
18   judicial guidance setting forth a preference for Writ of Review proceedings. As soon as this
19   Court ruled that the Land Exchange was a legislative action, plaintiffs filed the Declaratory
20   Judgment action and attempted to consolidate the two actions. Plaintiffs tried to have all their
21   claims heard before the same tribunal at the same time, and MHM and the County opposed that
22   effort.
23

24

25

     PLAINTIFFS’CROSS-MOTION FOR                               Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 36                        917 SW Oak Street, Suite 417
                                                               Portland, OR 97205
                                                               (503) 525-2724
                                                               (503) 296-5454
 1                                                 Conclusion
 2          Plaintiffs respectfully move that this Court grant plaintiffs’motion for summary
 3   judgment on all three of its claims, and deny defendants’motions for summary judgment.
 4   Plaintiffs have standing to pursue this action. The County arbitrarily failed to perform a highest
 5   and best use analysis in determining whether it met the “equal value” requirement of ORS
 6   275.335. The County also failed to comply with the procedural requirements applicable to
 7   exchanges of County forestland. Plaintiffs need not plead a rescission claim, nor are they barred
 8   by the doctrines of merger or res judicata.
 9
     DATED: March 3, 2003.
10
                                                          Respectfully submitted,
11
                                                          ______________________________
12
                                                          Ralph O. Bloemers
13                                                        Christopher G. Winter
                                                          Cascade Resources Advocacy Group
14
                                                          917 SW Oak Street
15
                                                          Suite 417
                                                          Portland, OR 97205
16

17

18

19

20

21

22

23

24

25

     PLAINTIFFS’CROSS-MOTION FOR                            Cascade Resources Advocacy Group
     SUMMARY JUDGMENT AND RESPONSE - 37                     917 SW Oak Street, Suite 417
                                                            Portland, OR 97205
                                                            (503) 525-2724
                                                            (503) 296-5454

								
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