Five-year legal battle over Forest Grove development appears near its end

The City of Forest Grove negotiated a $5 million settlement last week in a lawsuit first filed in 2008 by David Hill Development, LLC.

The city’s insurer will pay the entire $5 million.

“We’re feeling OK about this,” said David Hill owner Tim McDonald, who didn’t want to say more until after official papers have been signed — something he expects to happen within the next week.

City officials were equally tight-lipped.

Once made official, the deal would close the City of Forest Grove’s five-year legal battle with David Hill, just as its city council is preparing to vote on code changes that might prevent other such lawsuits.

In October 2011, a Federal District Court jury found the city had engaged in abuse of power and unequl treatment, imposing unfair and costly delays and requirements on the development of “The Parks,” a subdivision proposed by David Hill for an area northwest of Forest Grove High School.

The jury awarded David Hill Development $6.5 million in damages.

A month later, the city filed motions for a new trial and a case review by U.S. Magistrate Judge John Acosta.

Last November, Acosta denied the motion for a new trial and let the verdict and cash award stand.

The City of Forest Grove appealed the decision to the U.S. Ninth Circuit Court of Appeals that same month. In January, both sides agreed to try the court’s mediation process.

On Monday, April 22, the two sides sat down to negotiate. By the end of the day, they had reached a tentative agreement, said David Hill attorney Steve Morasch of Schwabe, Williamson and Wyatt.

There were 14 people involved in the mediation—four for David Hill and 10 for Forest Grove, including various attorneys and insurance-company representatives, said Morasch.

He said there were two main reasons McDonald accepted the $5 million amount. For one thing, an appeal could take years and the $6.5 million judgment was earning virtually no interest as it waited for the resolution. “If they have the money now they can go invest it, versus having the money three years from now,” Morasch said.

In addition, he said, McDonald knew the city’s insurance cap was $5 million and any amount beyond that would have come out of taxpayers’ pockets. “Our client was sensitive to that and didn’t want to punish the taxpayers,” Morasch said.

Meanwhile, the lawsuit sparked city staff to analyze the city’s subdivision-review process and propose changes to the city’s development code.

One such change would keep the city from issuing construction permits until all services for the development — sewer, water and so on — were available. Another change addresses time-limit issues related to tentative and final maps, and establishes separate criteria for time extensions.

At a Planning Commission meeting on Feb. 4, Chairman Tom Beck commended the city for taking such actions to prevent future lawsuits.

The city council is scheduled to vote on the changes at its May 13 meeting.

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