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City loses suit over spilled sewage

House was flooded by sewage while city crews power flushed pipes

When Sharon Dunn's house was flooded with sewage three years ago, she was understandably upset. But she got some towels and industrial-strength cleaner, she mopped it up and she moved on.

'At the time [Dunn] was disgusted by what happened, but she cleaned up the water, and even though she was disgusted, she's not the type to run out and file a lawsuit,' said Kenneth Dobson, Dunn's attorney.

The Milwaukie public works department had been power-flushing the sewers along the 6500 block of SE Apple Street to clean them out. But the force was too great, and waste shot up out of Dunn's toilets and shower, covering the walls and ceiling and washing out into the rest of the home. Dunn ran out to the work crew, who stopped and gave her some towels to clean. She figured things were all right.

'About five months later she starts seeing problems with the furnace, she notices her floors buckling, the wallpaper is peeling,' Dobson said.

Dunn didn't immediately put the two together, not until she checked the crawl space and found pockets of sewage festering there.

She hired contractors, who told her that the sewage had gotten into the furnace system. They told her it was likely the cause of the buckling floors and peeling paint.

Last month Dunn won a $58,000 lawsuit against the city, using an obscure constitutional provision called inverse condemnation and charging that the city's actions had deprived her of some of her home's value.

City Manager Mike Swanson, though, said the ruling was a judicial error, and that the city will appeal the claim.

In a negligence claim, Dunn could have argued that the city's actions had damaged her house, and the city would then have to pay to remediate the damage. Dunn couldn't file a common negligence claim because she didn't realize the extent of the damage for so long. Dobson said under Oregon law Dunn would have had to file her claim within 180 days of the flooding. But Dobson said negligence wasn't the issue, anyway.

'To bring a common negligence action, you would have to show that the city had done something wrong, had dropped the ball somehow,' he said. 'In this case it seemed they did everything by the book.'

So Dunn filed for inverse condemnation.

The Fifth Amendment to the Constitution says that private property cannot be taken by the government without compensation. Inverse condemnation occurs when the government 'takes' property indirectly, and the person must sue for compensation for the lost property.

In the case, Dunn argued that her property was taken by the government because she lost the use of about one-third of the house during the winter months after the sewage infiltrated her heating system. She further argued that the sewage damage created an adverse stigma on the house that would decrease its value by up to $25,000, and therefore the property, or some portion of it, was taken by way of a loss of equity.

'I think that the approach that the judge took was basically wrong,' Swanson said. 'The judge's job is to instruct the jury on the law … and she basically ignored existing law on inverse condemnation and basically let them use the proof in the negligence claim, which was dismissed.'

Swanson said the judge allowed Dunn to actually use negligence claims to win the case.

'The plaintiff's case basically consisted of what it would cost to fix the property,' he said. 'And if you can fix the property, it's not taken.'

Dobson said a complete taking wasn't necessary to qualify it as inverse condemnation.

'Taking doesn't mean an actual taking [of the property by the city] as long as there is substantial interference' or loss of equity, he explained.

But Swanson held that they were blurring the lines between the two.

'If the damage can be remediated, that's a negligence claim,' Swanson said. 'She kind of got the best of both worlds in that she didn't have to prove that the city was negligent, but got to use the facts of the negligence case, obliterating the distinction of the two.'