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David Hill Development Accepts $5 Million Settlement From City of Forest Grove

May 17, 2013

Overview

After more than a year and a half of post-trial and appellate proceedings, David Hill Development has accepted a settlement offer from the City of Forest Grove in the amountof $5 million. In late 2011, a Federal Court jury found the City of Forest Grove, Ore., and two of its employees in violation of the Takings, Equal Protection and Due Process clauses of the U.S. Constitution, and awarded local residential developer David Hill Development LLC in excess of $6.5 million in damages.

In November 2011, the City filed several motions with the trial court, asking the judge to overturn the verdict. After an extensive briefing and oral argument, the trial judge issued a 78-page opinion in October 2012 denying all but one of the City's motions and explaining why the one motion that was granted did not change the outcome or the jury verdict. The City then filed a timely appeal with the Ninth Circuit Court of Appeals. The settlement was reached after the parties participated in a court-sponsored mediation through the Ninth Circuit's mediation program.

"David Hill Development endured a long trial and appeals process on a case that received not just state-wide, but national attention," said Schwabe, Williamson & Wyatt attorney Steve Morasch, the lead attorney on the team that represented David Hill Development in the case. "Throughout the entire process – from the filing of the case in 2008 through the original trial in 2011 and the appeals process – we felt extremely confident in our position. However, continuing the appeal process could take up to two more years. By settling, David Hill Development is able to lay this matter to rest and move forward to pursue new opportunities."

Two of the owners of David Hill Development, Vancouver residents Bill Maitland and Dave Becker, were quoted as saying that "We were cognizant of the amount of the City's insurance policy and that any amount the City paid in excess of policy limits would come directly out of taxpayer pockets. One of the reasons we accepted a policy limits offer, rather than fighting for more, was so the taxpayers would not have to suffer for the actions of a few City employees." Another owner, David Hill Development project manager Tim McDonald, commented that "I would have liked to have taken the case to the Ninth Circuit because I felt that strongly about our case, but the time value of money also weighed in our decision to settle, since our 2011 verdict was earning virtually no interest."

The Federal Court jury verdict was handed down on Friday, September 30, 2011. The lawsuit was originally filed in 2008 by David Hill Development, which in 2005 received a binding land-use approval from the City to develop a 217-lot subdivision in Forest Grove, Ore., located 25 miles west of Portland. The basis of the claim was that the City Engineer's Department acted unconstitutionally by delaying construction of the subdivision and adding additional costs that went beyond what was approved in the binding land-use decision, all for the purpose of benefitting other more favored local developers.

According to the complaint filed in Federal Court, the City of Forest Grove had determined as early as October 2005 that the developer's sewer routing met all code requirements. However, the City never communicated that to the developer, but instead told the developer that its plan did not meet the City's requirements and that the developer needed to make significant changes that would cost hundreds of thousands of dollars.

The Schwabe, Williamson & Wyatt attorneys representing David Hill Development presented evidence that City of Forest Grove officials ignored the city attorney's advice that the "City would be ill-advised to ‘force' [David Hill Development] to pay higher costs (and significantly so in this case) simply to more easily accommodate another, upstream developer." There was also evidence that city officials were yielding to pressure brought by a local Forest Grove attorney and friend of the Mayor, who represented the other "upstream" residential developer.

"The modified sewer plan was the first of many demands that the City made, and our client was required to take on a number of other added costs, which the City did not require of other similarly situated developers," said Morasch. "The judge instructed the jury that the city could be found liable if there was an ‘abuse of power' that ‘shocks the conscience.'"

The jury found the City liable and awarded damages against the City, the City Engineer and the assistant engineer in the amount of $6,539,176.00. The jury also took the unusual step and attached a note to the verdict form that indicated that they believed additional City officials were involved.

"It is a pretty high standard to bring these types of abuse of power cases against the government," said Morasch. "I hope that municipalities realize that they do need to follow the law, not just Forest Grove, but all the government agencies, cities and counties across our great country."

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