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Tri-City Service District v. Oregon City

Court of Appeals of Oregon

February 14, 2018

TRI-CITY SERVICE DISTRICT, by and through its governing body, The Board of County Commissioners of Clackamas County, Oregon, Plaintiff-Appellant,
v.
OREGON CITY, a municipality and public body within the State of Oregon, Defendant-Respondent.

          Argued and submitted March 16, 2017

         Clackamas County Circuit Court CV14060280; Henry C. Breithaupt, Judge pro tempore.

          Alexander Gordon argued the cause for appellant.With him on the briefs was Stephen Madkour.

          Nancy L. Werner argued the cause for respondent. With her on the brief was Beery, Elsner & Hammond, LLP.

          Before Ortega, Presiding Judge, and Lagesen, Judge, and Wilson, Senior Judge.

         Case Summary: Plaintiff, a special service district providing wholesale wastewater treatment services to defendant Oregon City (city), is subject to the city's right-of-way usage fee. Plaintiff disputed the city's authority to subject it to the fee and sought declaratory relief, which the trial court rejected, granting summary judgment to the city and entering a supplemental judgment for attorney fees. Plaintiff appeals both judgments, arguing that (1) ORS 221.420 preempted the city's authority to impose such a fee on plaintiff, (2) the fee was actually a property tax from which plaintiff was exempt under ORS 307.090, and (3) the trial court erred when it determined that plaintiff's claim for declaratory relief was objectively unreasonable for purposes of ORS 20.105. Held: The trial court did not err when it concluded that the city was entitled to judgment as a matter of law, because (1) ORS 221.420 did not preempt the city's authority to impose the fee and (2) ORS 307.090 would not exempt plaintiff, as that statute [290 Or.App. 233] only exempts "property" belonging to state and local governmental entities from "taxation" and does not extend to privilege taxes. However, the trial court erred in holding that plaintiff's claim was objectively unreasonable.

         [290 Or.App. 234]LAGESEN, J.

         Plaintiff Tri-City Service District is a special service district formed under ORS chapter 451. It provides wholesale wastewater treatment services to defendant Oregon City (the city), as well as the cities of West Linn and Gladstone. Approximately 20, 000 feet of plaintiff's sewage transmission lines are located within public rights of way belonging to the city. As a result, plaintiff is subject to the city's right-of-way usage fee under Oregon City Code chapter 13.34 and Oregon City Resolution 13-26. Those provisions, taken together, require utilities using public rights of way in Oregon City to pay a maximum of six percent of their annual revenues that is derived from the operation of utility facilities in Oregon City to the city in exchange for using the rights of way.

         Plaintiff disputes the city's authority to subject it to the fee and initiated this action for declaratory relief under the Uniform Declaratory Judgments Act, ORS 28.010 to 28.160, to address the issue. Plaintiff sought declarations that (1) ORS 221.420 precludes the imposition of a usage fee on a municipal corporation such as plaintiff; (2) the usage fee was not a valid licensing fee and was "void" as a licensing fee; (3) the usage fee was, instead, a tax; (4) the tax was a tax on real property; and (5) plaintiff was exempt from paying that tax by operation of ORS 307.090(1), which exempts certain governmental entities from paying property taxes. On cross-motions for summary judgment, the trial court concluded as a matter of law that plaintiff was not entitled to the declarations requested and entered a general judgment so declaring. Thereafter, the court entered a supplemental judgment awarding attorney fees to the city under ORS 20.105(1), which, among other things, authorizes an award of attorney fees to a party who prevails against a claim or defense if the trial court finds "that there was no objectively reasonable basis for asserting" the claim or defense.

         Plaintiff appeals both judgments, contending that the trial court erred in declining to grant summary judgment in its favor, rejecting the requested declarations, and in concluding that plaintiffs claim was not objectively reasonable and awarding attorney fees on that basis. For the [290 Or.App. 235] reasons that follow, we affirm the general judgment but conclude that the trial court erred in awarding attorney fees and, therefore, reverse the supplemental judgment.

         I. STANDARDS OF REVIEW

         The appeal of the general judgment comes to us after the trial court granted the city's motion for summary judgment. On appeal, plaintiff contends that the court erred by granting the city's motion for summary judgment and denying plaintiff's motion for summary judgment. We review the trial court's rulings to determine, on the summary judgment record as a whole, whether there are disputes of material fact and whether either party is entitled to judgment as a matter of law. Hicks v. Central Point School Dist., 270 Or.App. 532, 540, 348 P.3d 307 (2015); Citibank South Dakota v. Santoro, 210 Or.App. 344, 347, 150 P.3d 429 (2006), rev den, 342 Or. 473 (2007). Here, the relevant facts are not disputed; the issue is whether the trial court erred in concluding that the city was entitled to judgment as a matter of law and that plaintiff was not.

         As to the appeal of the supplemental judgment awarding attorney fees, we review for legal error the trial court's determination that there was no objectively reasonable basis for asserting a claim, so as to authorize an award of attorney fees under ORS 20.105. Williams v. Salem Women's Clinic, 245 Or.App. 476, 483-85, 263 P.3d 1072 (2011).

         II. BACKGROUND

         As noted, this case centers on the fee imposed on utilities by Oregon City Code (OCC) chapter 13.34, and Oregon City Resolution (OCR) 13-26, for using the city's rights of way. OCC 13.34.130 generally sets ...


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