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Nordbye v. Ellington

Court of Appeals of Oregon

May 13, 2015

Sarah NORDBYE, individually and on behalf of all others similarly situated, Plaintiff-Respondent, and Arlene JACKSON and Susan Knoke, Intervenors-Plaintiffs/Respondents,
BRCP/GM ELLINGTON, an Oregon limited liability company, Defendant-Appellant, and OREGON HOUSING AND COMMUNITY SERVICES DEPARTMENT, Defendant

Argued and submitted October 28, 2014

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071113782. Multnomah County Circuit Court. Christopher J. Marshall, Judge.

John A. DiLorenzo, Jr., argued the cause for appellant. With him on the opening brief was Davis Wright Tremaine LLP. With him on the reply brief were Timothy R. Volpert, Aaron K. Stuckey, and Davis Wright Tremaine LLP.

Stephen S. Walters argued the cause for respondents. With him on the brief were Edward Johnson, Carolyn Norton, and Oregon Law Center.

Before Sercombe, Presiding Judge, and Hadlock, Judge, and Tookey, Judge. SERCOMBE, P. J., dissenting.


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[271 Or.App. 170] TOOKEY, J.

In this interlocutory appeal in a putative class action, defendant BRCP/GM Ellington[1]

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contends that the trial court erred in denying its motion to dismiss for lack of subject matter jurisdiction and, in the same order, allowing intervention by two members of the putative class. In defendant's view, the named plaintiff, Sarah Nordbye,[2] had ceased to have standing and her claims had become moot. Thus, defendant argues, the trial court lacked subject matter jurisdiction over the action and could not allow intervention. We conclude that defendant is correct; the trial court should have dismissed the action. Accordingly, we vacate the order and remand for entry of a judgment of dismissal.


This case, which involves low-income housing in northeast Portland, is before us for the second time. The underlying facts are set out in our first opinion, Nordbye v. Ellington, 246 Or.App. 209, 266 P.3d 92 (2011), rev den, 352 Or. 33, 281 P.3d 611 (2012) ( Nordbye I. ) Defendant owns The Ellington (the complex), an apartment complex that was funded through the federal Low-Income Housing Tax Credit (LIHTC) program. In 1990, in exchange for more than $2 million in federal tax credits, the original owner of the complex entered into a contract (extended use agreement) with the Oregon Housing Authority, the predecessor of defendant Oregon Housing and Community Services Department (department). The extended use agreement imposed use restrictions on the complex that required compliance with the LIHTC program requirements for 30 years. The original owner acknowledged the use restrictions in the Declaration of Land Use Restrictive Covenants for Low-Income Housing [271 Or.App. 171] Tax Credits (declaration), which was recorded in Multnomah County.

In accordance with section 42 of the Internal Revenue Code, the declaration provides that the owner

" agrees and consents that * * * any individual who meets the income limitation applicable under section 42 (whether prospective, present or former occupant) shall be entitled, for any breach of the provisions hereof, and in addition to all other remedies provided by law or in equity, to enforce specific performance by the owner of its obligations under this declaration in a state court of competent jurisdiction."

(Capitalization modified.)

The original owner subsequently transferred ownership of the project to another owner, the middle owner. After the middle owner failed to comply with the LIHTC program requirements, the department entered into an agreement (release agreement) with the middle owner that purported to release the complex from the use restrictions in the declaration. The Internal Revenue Service subsequently recaptured some of the federal tax credits that the original owner had received.

Defendant purchased the complex in 2006. Defendant evicted plaintiff, who was a qualified low-income tenant of the complex, and the other low-income tenants of the complex without cause and began renting the apartments at market rates. The evictions and market-rate rentals did not comply with LIHTC program requirements.

After plaintiff was evicted, she brought this action seeking to enforce the use restrictions in the declaration through declaratory relief under the Uniform Declaratory Judgments Act (DJA), ORS 28.010 to 28.160, and an injunction, on behalf of herself and a class consisting of qualified low-income past, present, and prospective tenants of the complex. Plaintiff sought declarations that defendant must (1) " rent all of the apartments at the [complex] to Qualified Low-Income Tenants" and (2) " comply with all of the requirements of the Declaration and the [LIHTC] Program

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until January 1, 2021, or such later date determined by the Court," and permanent injunctions to enforce those [271 Or.App. 172] declarations. She also sought attorney fees based on the declaration and an administrative rule implementing the LIHTC program in Oregon, former OAR 813-090-0070(6) (12/19/91). Finally, she sought " such other relief as may be just and equitable."

Plaintiff alleged that she was a qualified low-income tenant under the LIHTC program and she had been evicted from the complex in violation of the use restrictions. Plaintiff alleged that she had received an eviction notice that required her to move out of her apartment; the notice offered the option of renting a different apartment in the complex for $260 per month more than she was already paying. The complaint did not expressly allege, or pray for, damages. Plaintiff also sought relief on behalf of a class of " all Qualified Low-Income Tenants who: A) have lived at the Property since the Current Owner purchased it; or B) live at the Property now, if any[; ] or C) would want to live at the Property in the future if [defendant] complied with the Declaration."

Before plaintiff moved to certify the action as a class action under ORCP 32 C, defendants moved for summary judgment on the merits of plaintiff's claim. Defendants contended that the release agreement was " valid and enforceable" against plaintiff and the putative class, and that it terminated the use restrictions imposed in the declaration. Plaintiff filed a cross-motion for summary judgment. She contended that she was entitled to judgment as a matter of law because the release agreement was ineffective to release the complex from the use restrictions imposed in the declaration and she was entitled to enforce those use restrictions. The trial court granted summary judgment to defendants, and plaintiff appealed.

On appeal, we concluded that plaintiff was a third-party beneficiary of the declaration and that defendant continued to be bound by the declaration's use restrictions notwithstanding the release agreement; accordingly, plaintiff was " entitled to enforce the declaration's use restrictions" against defendant. Nordbye I, 246 Or.App. at 230. Thus, we held, the trial court erred in granting summary judgment in favor of defendants; instead, it should have granted [271 Or.App. 173] plaintiff's motion for summary judgment. We reversed the trial court's judgment and remanded the case.

On remand, before the trial court entered a judgment in favor of plaintiff--and, again, before plaintiff moved for class certification--defendant sought to depose plaintiff. In lieu of being deposed, plaintiff stipulated that she no longer qualified for low-income housing under the LIHTC program and she did not intend to move back to the complex. Both defendants then moved to dismiss under ORCP 21 A(1) for lack of subject matter jurisdiction, contending that, in light of plaintiff's stipulation, plaintiff lacked standing and her claims were moot; accordingly, defendants contended, the court lacked jurisdiction. At the same time that defendants moved to dismiss, intervenors--two people who submitted declarations stating that they were income-qualified prospective tenants--moved to intervene.

After a hearing on both motions, the trial court denied the motion to dismiss and granted the motion to intervene. Pursuant to ORS 19.225,[3] the trial court then granted defendant permission to seek an interlocutory appeal of the resulting order, and we granted defendant's request for an interlocutory

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appeal.[4] After the trial court ruled on the motions, plaintiff moved to certify the class.

[271 Or.App. 174] On appeal, defendant contends that plaintiff lacks standing to litigate this action and that her claims are moot. Accordingly, defendant argues, the trial court lacked subject matter jurisdiction when the intervenors moved to intervene, and the court erred in considering the motion to intervene; rather, it should have dismissed the action. Alternatively, defendant argues that, even if the trial court had subject matter jurisdiction to consider the motion to intervene, it erred in granting the motion.

The parties submitted evidence outside the pleadings--plaintiff's stipulation and intervenors' declarations--and the trial court considered the allegations in the complaint and the additional submissions. See ORCP 21 A (court may consider " matters outside the pleading, including affidavits, declarations and other evidence" in deciding a motion under ORCP 21 A(1)); Black v. Arizala, 337 Or. 250, 265-66, 95 P.3d 1109 (2004) (explaining operation of ORCP 21 A). On appeal, we likewise assume the truth of the facts alleged in the complaint to the extent that they are not contradicted by additional facts in or outside of the record.[5] See Hale v. State of Oregon, 259 Or.App. 379, 382, 314 P.3d 345 (2013), rev den, 354 Or. 840, 326 P.3d 77 (2014) (on appeal of the grant of a motion to dismiss under ORCP 21 A(1), assuming the truth of the well-pleaded facts in the complaint); Beck v. City of Portland, 202 Or.App. 360, 365, 122 P.3d 131 (2005) (under ORCP 21 A(1), a court may rely on the facts alleged in the complaint as well as " evidence beyond the allegations in the pleadings" ); see also First Commerce of America v. Nimbus Center Assoc., 329 Or. 199, 206, 986 P.2d 556 (1999), abrogated in part on other grounds by Kerr v. Bradbury, 340 Or. 241, 250, 131 P.3d 737 (2006) (" If a case is not justiciable because an event that is not reflected in the circuit court record has rendered the case moot, then an appellate court has the inherent power to consider evidence of that event." ). Accordingly, here, we assume the truth of the allegations in the complaint apart from the allegation that plaintiff qualifies for low-income [271 Or.App. 175] housing (because the parties stipulated that that circumstance no longer exists), and we accept the facts stated in intervenors' declarations. As explained further below, we also take note of the fact that, before the trial court, plaintiff unambiguously disclaimed any intention of seeking damages in this action.


We begin with defendant's argument that the trial court erred in failing to dismiss the action because plaintiff lacked standing and her claims were moot. At the summary judgment stage (that is, before the first appeal), the trial court concluded that plaintiff had standing to bring this action because she met the LIHTC program eligibility requirements, and defendant did not challenge that determination in the first appeal. Nordbye I, 246 Or.App. at 213 n 3. Defendant does not now contend that plaintiff lacked standing at the outset of the litigation. Rather, defendant argues that, by the time the trial court denied defendants' motion to dismiss, plaintiff no longer had standing under the DJA and her claims were moot.

A. Standing under the DJA

Defendant does not distinguish the matter of plaintiff's standing from the matter of the

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mootness of plaintiff's claims. We begin by explaining the requirements for standing under the DJA; then, after we explain defendant's argument in more detail, we discuss the relationship between standing and mootness in this case.

Standing is the concept that " identifies whether a party to a legal proceeding possesses a status or qualification necessary for the assertion, enforcement, or adjudication of legal rights or duties." Kellas v. Dept. of Corrections, 341 Or. 471, 476-77, 145 P.3d 139 (2006). The legislature defines who possesses the required status or qualification in each statutory scheme that provides for the assertion, enforcement, or adjudication of legal rights or duties. Id. at 477. In other words, when the legislature provides a cause of action in a statute, it also specifies the group of people who may prosecute that cause of action. Here, the ...

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