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Forest Grove takes steps to overturn $6.5 million judgment

Appeal likely if Forest Grove doesn't prevail in lower court in David Hill Development lawsuit

Lawyers representing Forest Grove in a lawsuit that resulted in a $6.5 million judgment against the city in October will file paperwork today in federal court in an effort to roll back that decision.

The filings are the first step in post-trial wrangling that lawyers expect to wind up in the 9th Circuit Court of Appeals.

In the lawsuit, David Hill Development claimed city officials' mishandling of the planning and permitting of The Parks subdivision north of Forest Grove High School led to a multimillion dollar loss. The jury found in favor of the plaintiff, awarding $6.5 million in damages.

On Oct. 31, Steve Morasch, an attorney representing David Hill Development, filed with the court to petition for the recovery of $1.5 million in legal costs from Forest Grove.

That increases the entire package of potential costs for the city to $8 million. The city's insurance has a $5 million cap. That could leave the city paying $3 million if it can't prevail in court. But the court case isn't done yet, said Rick Kuhn, who defended Forest Grove in the case.

'There are so many different legal issues,' Kuhn said. 'We always assumed that even if we won the case, the other side would file an appeal.'

Potential for a wide impact

The ruling, if it stands, could have a chilling effect on other cities and government agencies who apply development codes.

Depending on what side of the courtroom you're sitting on, that could be good or bad news.

Dave Hunnicutt, executive director of Oregonians in Action, a group that works to change Oregon's restrictive land use system, compared the case to Dolan v. City of Tigard, a land-use case that wound up in front of the United States Supreme Court.

In that case, the Tigard planning commission required a builder to construct unrelated improvements in order to obtain permits. The U.S. Supreme Court threw out the requirement.

While the situation is different, the message in either verdict is clear, Hunnicutt said: You can fight city hall.

"One thing is for sure, I think the verdict will put other cities and counties who are aggressive in how they interpret their zoning ordinances on notice," Hunnicutt said. "That if you're overly aggressive and require one property owner to do something that you're not requiring another property owner to, you might get sued."

But Kuhn said the city didn't treat David Hill Development, or its head Tim McDonald poorly, instead it tried to help McDonald by letting him move forward with his development before he'd secured a right of way for sewer and road improvements.

"They wanted to help this guy get his project developed and ended up getting punished for it," Kuhn said.

But the jury didn't see it that way. In the notes from the trial, a juror suggests that after deliberation, some consensus of jurors felt a conspiracy was at work to undercut McDonald and felt that other people in Forest Grove were involved in preventing McDonald's development.

"They were able to convince the jury of this bizarre conspiracy theory that was nonsense," Kuhn said.

Judge's discretion

At this point in the case, Kuhn (whose legal work is paid for by the city's insurance agency), will try to convince U.S. Circuit Court Judge John V. Acosta that he should alter the verdict.

He can do so in a number of ways. The results could range from the reduction of the monetary judgment, the granting of a new trial, or the granting of any of the previous efforts by Forest Grove's lawyers to stop the lawsuit based on settled legal precedent.

Additionally, as a separate proceeding, Kuhn will argue that the $1.5 million in legal fees is excessive.

'We'll be objecting to their legal fees on both the rate they're asking for and the hours they're asking for,' Kuhn said.

With the case heading back to court, it will be a while before it could change venues to the appeals court, or see an ultimate resolution.

At the heart of the dispute is the unusual nature of the case and the complex facts at hand.

'Our inclination is that if we don't get everything we want we'll just take it up on appeal because of the novel legal issues,' Kuhn said.