State ex rel. Crown Investment Group, LLC v. City of Bend

Citations: 206 Or. App. 453; 136 P.3d 1149; 2006 Ore. App. LEXIS 823Docket: 04CV0434AB; A126740

Court: Court of Appeals of Oregon; June 14, 2006; Oregon; State Appellate Court

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Crown Investment Group, LLC (Crown) initiated a mandamus action to compel the City of Bend to issue a demolition permit for the historic Crane Shed, a building significant to the local timber industry since its construction in 1937. Despite not receiving a permit, Crown prematurely demolished the building before a scheduled court hearing. The trial court imposed a $100,000 contempt sanction against Crown, which Crown has appealed. The appeal was deemed meritless and affirmed.

The Crane Shed was listed on the city’s inventory of historic resources under Goal 5, which aims to protect historic areas. Crown's application for demolition followed public hearings that generated debate about the building's future. On August 9, 2004, Crown filed for a writ of mandamus, prompting the court to issue an order for the city to respond regarding the permit. Just days before a scheduled hearing, Crown, influenced by a newspaper report and concerns about potential liability, opted to demolish the building, fearing legal complications.

In response, the city sought a contempt sanction, presenting expert testimony on the historic value of the Crane Shed and possible mitigation measures that could have been implemented if the permit application had been processed. The court found that Crown had acted to circumvent legal proceedings and imposed a $100,000 sanction to fund measures aimed at memorializing the Crane Shed. This sanction aligns with ORS 33.015, which allows for remedial sanctions to address damages resulting from contempt of court.

Crown's actions were found to be in contempt of court and obstructive to legal proceedings, which denied the City of Bend and other parties the chance to seek conditions for preserving the historical character of a building. A remedial sanction of $100,000 was deemed appropriate, to be paid to the City for establishing a memorial or historic site. A joint motion led to the issuance of a demolition permit conditioned on Crown demonstrating satisfactory asbestos cleanup, which ultimately revealed no asbestos, and the conveyance of minor historic artifacts to the city.

On appeal, Crown contended that no remedial sanction was warranted under ORS 33.015(4) because the city did not incur injury, damage, or costs from the demolition. Crown argued that since the city was compelled by law to issue an unconditional demolition permit, the premature demolition had no harmful impact. Crown presented two arguments: first, asserting that the contempt sanction was unlawful due to the lack of harm; second, claiming the trial court erred by addressing the contempt motion before the mandamus action, which Crown believed would have ruled in its favor and negated any contempt.

Both arguments were rejected, as they were based on the incorrect assumption that the city suffered no injury due to the mandatory issuance of a demolition permit. The court had authority to refuse or impose conditions on the mandamus, as local regulations required the Landmarks Commission to evaluate criteria related to the building's economic viability and potential rehabilitation. The Bend Code allows for conditional permits, meaning the city could have imposed more conditions had Crown not acted prematurely.

Crown's premature demolition of the historic building resulted in significant injury to the city, which included not only the loss of the building and its artifacts but also the deprivation of the opportunity to legally challenge the demolition. The city could have potentially succeeded in preserving the building's historical character through the courts. Crown's argument that self-help actions cause no harm if they predict court outcomes contradicts the foundational principles of the rule of law. Regarding the $100,000 sanction imposed on Crown, the court found it lawful and appropriate under ORS 33.105(1) to compensate the city for its losses, including the right to seek a court order pertaining to the building's preservation. Evidence indicated that the city lost the chance to assert its legal rights, and the value of the lost building as a historical asset was significant, with a model to represent it costing $132,000. Furthermore, Crown's actions were deemed contemptuous, as they obstructed court authority while the legality of the demolition was still under consideration. Consequently, the court's discretion in imposing the remedial sanction was affirmed, validating that it effectively addressed the city's injuries stemming from Crown's contempt.