Hall v. State of Oregon

Government regulation of the use of property or planning for the eventual taking of property for use that reduces the property's value generally does not result in a de facto taking; however, there are two generally recognized exceptions to that general rule: (1) when a regulation or planning action deprives the owner of all economically viable use of the property, or (2) a physical government occupation or invasion of property rights substantially has interfered with the owner's use and enjoyment of the property.

Plaintiffs (Owners), the owners of real property in Linn County, brought an inverse condemnation action against the Oregon Department of Transportation (ODOT). Owners alleged in their complaint and undertook to prove at trial that ODOT, by repeatedly making representations to others about its intention to landlock their property and initiate a condemnation action, created a nuisance that “blighted” Owners property, resulting in a compensable taking of the property under Article I, section 18, of the Oregon Constitution. A jury agreed and awarded Owners damages. ODOT appealed the ensuing judgment, and the Court of Appeals reversed, holding that no taking had occurred. A precondemnation, government-created nuisance that substantially interferes with an owner's right to the use and enjoyment of their property can give rise to an inverse condemnation claim based on a resulting reduction in the property's value. However, in the absence of a physical occupation of invasion of a property right, a government action that causes only a reduction in the value of property does not qualify as a taking. The generally accepted rule is that a "mere plotting or planning in anticipation of a public improvement does not constitute a taking or damaging of property affected." There are two exceptions to this rule: (1) such actions preclude an owner from all economically feasible private uses pending an eventual taking by eminent domain (a "condemnation blight"), and (2) precondemnation results in a physical occupation of private property or invasion of private property rights that substantially interferes with an owner's rights of exclusive possession and use. Owners did not produce evidence that ODOT's actions had any effect on their property other than to reduce its value. The decision of the Court of Appeals was affirmed. The judgment of the circuit court was reversed, and the case was remanded to that court for further proceedings.