Ragaway v. City of Portland ( 2021 )

647
Argued and submitted September 29, affirmed November 17, 2021
Philip RAGAWAY,
an individual;
J A Atwood Corporation, an Oregon corporation;
Spot Properties, LLC, an Oregon limited liability company;
JSP Investments, LLC, an Oregon limited liability company;
Concept Entertainment - Two, LLC, an Oregon limited
liability company, dba Duke’s Country Bar and Grill;
Concept Entertainment - Four, LLC, an Oregon limited
liability company, dba Dixie Tavern;
Daniel Lenzen, an individual; Divine Comedy, LLC,
an Oregon limited liability company, dba Dante’s;
Glitz, LLC, an Oregon limited liability company,
dba Star Theater; and Does 1-100,
Plaintiffs-Appellants,
v.
CITY OF PORTLAND,
an Oregon municipal corporation,
Defendant-Respondent.
Multnomah County Circuit Court
17CV41675; A172095
504 P3d 79
Plaintiffs are building owners and operators in Portland who installed sprin-
kler systems as a result of the city’s adoption of an ordinance in 2013 that man-
dated automatic fire sprinkler systems in existing nightclubs with an occupant
load of more than 100 persons. In 2017, they filed this action alleging claims
for declaratory relief, quasi-contract, impairment of contract, negligence, and
intentional interference with contractual relations; the crux of their complaint
is that Oregon’s state building code governs when and where sprinklers must be
installed, thereby preempting any city ordinance that attempts to impose addi-
tional sprinkler requirements. The trial court dismissed their claim for declara-
tory relief based on the doctrine of common-law exhaustion, reasoning that plain-
tiffs were required to first raise the preemption issue in an appeal to the Portland
Fire Code Board of Appeals, and it granted summary judgment on plaintiffs’ four
remaining claims based on substantive arguments independent of the merits of
the preemption question. On appeal, plaintiffs argue that each of the adverse rul-
ings on their claims was erroneous. Held: The trial court did not err in conclud-
ing that plaintiffs were required to follow an administrative review process to
challenge the application of the ordinance rather than wait and file a declaratory
judgment action, nor did the court abuse its discretion in denying their motion
to amend their complaint to plead around the exhaustion requirement. The trial
court also correctly granted summary judgment on plaintiffs’ remaining claims.
Plaintiffs failed to create a genuine issue of material fact as to whether the city
had been unjustly enriched, failed to show that an obligation of a contract was
648 Ragaway v. City of Portland
impaired, and failed to show how the city could be liable in tort for the quintes-
sential discretionary policy-making decision to enact the sprinkler ordinance.
Affirmed.
Eric L. Dahlin, Judge.
Daniel T. Goldstein argued the cause for appellants. Also
on the briefs was Aldrich Goldstein, P.C.
Denis Vannier argued the cause and filed the briefs for
respondent.
Before Lagesen, Presiding Judge, and James, Judge, and
Kamins, Judge.
KAMINS, J.
Affirmed.
Cite as 315 Or App 647 (2021) 649
KAMINS, J.
In 2013, the Portland City Council passed an ordi-
nance that amended the city’s fire code to mandate that
all existing nightclubs in the city with an occupant load
of more than 100 persons have automatic fire sprinkler
systems. Plaintiffs are building owners and operators in
Portland who installed sprinkler systems as a result of the
ordinance. In 2017, they filed this action alleging various
claims arising out of the city’s enactment and enforcement
of the sprinkler ordinance, including claims for declaratory
relief, quasi-contract, impairment of contract, negligence,
and intentional interference with contractual relations.
The crux of their complaint is that Oregon’s state building
code governs when and where sprinklers must be installed,
thereby preempting any city ordinance that attempts to
impose additional sprinkler requirements. See ORS 455.040
(providing that “no municipality shall enact or enforce any
ordinance, rule or regulation relating to the same matters
encompassed by the state building code but which provides
different requirements unless authorized by the Director
of the Department of Consumer and Business Services”).
According to plaintiffs, the city knew that such an ordi-
nance was preempted under ORS 455.040 but enacted and
enforced one anyway, thereby resulting in economic damage
to them.
The city responded with both procedural and merits-
based defenses. The city argued that the ordinance was not
preempted but that, in any event, plaintiffs were required
to raise their challenges sooner and in a different forum—
specifically, before the city’s Fire Code Board of Appeals
(FCBA)—and that, even if the ordinance was preempted,
the claims failed for other reasons. Plaintiffs, for their part,
moved for partial summary judgment on the merits of the
preemption question.
The trial court ultimately agreed with the city that
each of plaintiffs’ claims failed. It granted the city’s motion
to dismiss the claim for declaratory relief based on the doc-
trine of common-law exhaustion, reasoning that plaintiffs
were required to raise the issue before the FCBA, and it
later denied plaintiffs’ motion to amend their complaint to
650 Ragaway v. City of Portland
plead around that doctrine. And, although the court agreed
with plaintiffs on the merits of the preemption issue and
granted their motion for partial summary judgment, it
nonetheless concluded that the city was entitled to sum-
mary judgment on plaintiffs’ four remaining claims (quasi-
contract, impairment of contract, and the two tort claims)
based on substantive arguments independent of the merits
of the preemption question. Plaintiffs now appeal, arguing
that each of the adverse rulings on their claims was erro-
neous; the city cross-assigns error to the court’s ruling on
the preemption issue. We affirm the trial court’s judgment
in favor of the city as to each of plaintiffs’ claims, obviating
the need to address the city’s contingent cross-assignment
of error.
I. BACKGROUND
This is the second time that we have addressed
issues arising from the city’s enactment of the sprinkler
ordinance. In City of Portland v. Building Codes Div., 313
Or App 93, 496 P3d 1108 (2021), we described the enact-
ment history of the ordinance, as well as the overlay of the
statutory and regulatory schemes involving the state build-
ing code and state fire marshal statutes. For purposes of
our resolution of the issues on appeal, it is not necessary
to repeat that context in full. Rather, we begin with a brief
overview of the parties’ dispute and discuss the pertinent
facts in greater detail within particular assignments of
error.
The state building code establishes requirements
for fire protection systems, including automatic sprinkler
systems, in certain new buildings and structures, but the
building code generally does not require retrofitting of exist-
ing buildings that were up to code at the time they were
built. In 2013, the City of Portland was concerned about the
potential for catastrophic nightclub fires in existing build-
ings that were not required to be equipped with automatic
sprinkler systems. However, city officials were cognizant
of the fact that Oregon law prohibits municipalities from
imposing building code requirements without authorization
from the Oregon Building Codes Division (BCD). See ORS
455.040(1). So, rather than seek authorization for a code
Cite as 315 Or App 647 (2021) 651
change regarding sprinkler systems, they proposed an ordi-
nance that imposed fire sprinkler requirements as part of
the city’s fire code, not its building code.
The sprinkler ordinance, which the city adopted
in September 2013, required automatic sprinkler systems
to be installed in all existing nightclubs with an occupant
load greater than 100, and it gave nightclubs with an occu-
pant load of 200 or more until December 31, 2014, to com-
ply. Nightclubs with an occupant load of 101 to 199 were
required to comply no later than June 30, 2015. The ordi-
nance further provided:
“Any person, owner or occupant subject to the require-
ments of [the amendment to the fire code] may submit an
appeal for a modification pursuant to Portland Fire Code
104.8 and in the manner provided by Portland City Code
31.10.080 [for appeals to the FCBA].”
Plaintiffs complied with the ordinance by installing sprin-
klers, incurring costs for permits and installation. None of
them filed an appeal with the FCBA.
Meanwhile, in 2014, the BCD began investigating
the city’s enactment of the ordinance—specifically, whether
the city’s ordinance was unlawful because it was preempted
by the state building code. Eventually, in April 2016, the
BCD issued an investigative report concluding that the
ordinance was unlawful; it followed that with a notice of
proposed order for corrective action and fines in July 2017.
(That order was the subject of our recent decision in City of
Portland, 313 Or App 93, in which we held that the BCD did
not have the broad enforcement powers that it claimed with
regard to the enactment of local ordinances.)
In September 2017, plaintiffs filed this action. Their
operative complaint included five claims for relief: (1) declar-
atory relief; (2) quasi-contract; (3) “constitutional violations”
(which ultimately narrowed to an impairment-of-contract
count); (4) negligence; and (5) intentional interference with
economic relations. In allegations common to all of those
claims, plaintiffs alleged that the city unlawfully enacted
the ordinance with awareness that the state building code
governed installation of sprinklers in buildings, that the
652 Ragaway v. City of Portland
city lacked authority to enact any sprinkler ordinance that
deviated from the building code without express approval
from the BCD, and that it could not require retrofits on
existing buildings when they are not under construction,
reconstruction, alteration, or repair. According to plaintiffs,
it was not until June 2016, when they became aware of the
investigative report from the BCD, that they first discov-
ered that the city’s “action of adopting and enforcing the
Retroactive Sprinkler Ordinance and the related policies,
rules, and procedures were contrary to Oregon Law.” And,
they alleged, it was at that point that they provided notice
of their claims to the city under the Oregon Tort Claims Act
(OTCA).
After plaintiffs filed their operative complaint, the
city moved to dismiss the claims on the basis of common-law
exhaustion, arguing that plaintiffs were required to pursue
an appeal before the FCBA; the city also moved to dismiss on
a number of grounds that touched on the merits of the vari-
ous claims, including the fundamental question whether the
sprinkler ordinance was preempted by state law. The trial
court granted the city’s motion to dismiss on exhaustion
grounds only with regard to the claim for declaratory relief.
It otherwise concluded that common-law exhaustion did not
bar the remaining claims; that the city’s arguments on the
merits of the preemption issue were wrong; and that the rest
of the issues presented in the city’s motion to dismiss were
better resolved at the summary judgment stage after devel-
opment of the record.
In the wake of that ruling, plaintiffs sought to turn
the court’s denial of the city’s motion into an affirmative rul-
ing in their favor. They filed a motion for partial summary
judgment, explaining that “[t]he Court has already cor-
rectly ruled that ORS 455.040 preempted City enactment of
Ordinance No. 186247, which ruling this Court made during
consideration of the City’s Motion to Dismiss. Plaintiffs
now seek an express ruling of the inevitable result: that
Ordinance No. 186247 is not valid.”
The city, on the other hand, filed a motion for sum-
mary judgment on the claims that had survived the motion
to dismiss. At a hearing on those motions in April 2019, the
Cite as 315 Or App 647 (2021) 653
trial court provided alternative rulings on many of the issues
that were before it, in the event that issues were taken up
on appeal. During the hearing, the court indicated that it
was granting plaintiffs’ partial summary judgment motion
on preemption but also granting the city’s motion for sum-
mary judgment on each of plaintiffs’ four remaining claims
for relief for independent reasons. Then, after the court’s
oral ruling but before a judgment had been signed, plaintiffs
filed a motion to amend their complaint to add new allega-
tions about a representative of the city impeding the ability
of one of the plaintiffs to file an administrative appeal—
allegations that were intended to bring that plaintiff within
an exception to the common-law doctrine of exhaustion. The
court denied the motion to amend, explaining that “this
isn’t just a mere pleading issue, it’s injecting new facts, after
Summary Judgment, after I ruled on Summary Judgment.”
Thereafter, the trial court entered the judgment that plain-
tiffs now appeal.
II. ANALYSIS
Plaintiffs’ appeal raises three assignments of error.
The first is directed at the trial court’s “refus[al] to issue a
declaratory judgment invalidating the Ordinance”; the sec-
ond is directed at the court’s grant of summary judgment on
plaintiffs’ “non-tort claims of impairment of contracts and
unjust enrichment”; and the third is directed at the court’s
grant of summary judgment on plaintiffs’ tort-based claims.
The city raises a single cross-assignment of error directed
at the court’s ruling on the merits of the preemption issue.
In addressing the various assignments, we proceed with a
claim-by-claim discussion and then address why we are not
reaching the cross-assignment of error.
A. First Claim: Declaratory Relief
Plaintiffs’ declaratory judgment claim sought a
declaration that the city’s enactment and enforcement of
the sprinkler ordinance was unlawful in various respects,
including that it violated ORS 455.040(1), ORS 455.020,
and the contract clause of the Oregon Constitution; that its
enforcement had been “uneven, unfair, unpredictable, arbi-
trary, capricious, without substantial reason, and outside its
654 Ragaway v. City of Portland
delegated authority and discretion”; and that it “violate[d]
the applicable rulemaking procedures and requirements
under city and state law and is beyond the City’s inherent
police power.”
In its motion to dismiss, the city argued that plain-
tiffs failed to exhaust their administrative remedies before
pursuing declaratory relief, improperly sought retrospective
rather than prospective relief on that claim, and could not
prevail on the merits in any event, because the ordinance
was not preempted or otherwise unlawful. The trial court
agreed with the city that the declaratory relief claim was
barred by the doctrine of common-law exhaustion, but it
otherwise denied the city’s motion to dismiss.
On appeal, plaintiffs argue that the trial court
misapplied the doctrine of common-law exhaustion. That
doctrine, which the Supreme Court described in Miller v.
City of Portland, 356 Or 402, 419-20, 338 P3d 685 (2014),
applies
“ ‘where one seeks prematurely to obtain judicial review of
or judicial intervention into the action of an agency * * *
without waiting to see whether the agency will in fact
take the desired action.’ Zollinger v. Warner, 286 Or 19,
25, 593 P2d 1107 (1979). That doctrine, insofar as appli-
cable here, is judicially created. See Richard J. Pierce,
Jr., 2 Administrative Law Treatise § 15.2, 1219-20 (5th ed
2010) (distinguishing common-law exhaustion requirement
from statutory exhaustion requirement); * * * The exhaus-
tion requirement—at least in its common-law variant—is
‘not rigid but flexible’ and is intended to promote ‘orderly
procedure and good administration.’ Marbet v. Portland
Gen. Elect., 277 Or 447, 456, 561 P2d 154 (1977) (internal
quotation marks and citations omitted); see also Pierce, 2
Administrative Law Treatise § 15.2 at 1219 (common-law
exhaustion requirement ‘is flexible and pragmatic’).”
Accord Tuckenberry v. Board of Parole, 365 Or 640, 646,
451 P3d 227 (2019) (“The general doctrine of exhaustion of
administrative remedies is judicially created, a creature
of the common law, and is employed by the courts * * * in
the interest of orderly procedure and good administration.
* * * It generally holds that judicial review is only available
after the procedure for relief within the administrative body
Cite as 315 Or App 647 (2021) 655
itself has been followed without success.” (Internal quota-
tion marks and citation omitted.)).
Although the exhaustion requirement is flexible
and highly case specific, certain broadly applicable princi-
ples can be gleaned from Oregon cases summarizing the
doctrine. In Marbet, 277 Or at 456, the court explained that
the doctrine “most obviously” applies in the case of a party
seeking judicial review whose license or individual rights,
duties, or privileges “are the occasion of the contested case,”
but “is less obviously applicable” when the agency’s action
is challenged as based on an unconstitutional statute or
a rule that was invalid under the constitution, exceeded
agency authority, or was adopted without compliance with
applicable rulemaking procedures, “for these are legal flaws
which the agency could not remedy in the contested case.”
(Emphasis added.) Marbet further states, “Indeed, this court
has dispensed with the ‘exhaustion’ requirement entirely in
one such case,”1 and “[t]here can be other justifications for
considering on judicial review important statutory issues
not first decided by the agency, * * * especially when cor-
rect administration of the statute concerns public interests
beyond those of the parties.” 277 Or at 456.
In their first assignment of error, plaintiffs argue
that an exhaustion requirement does not serve the orderly
administration of justice in this case. Specifically, they con-
tend that the preemption issue that is the subject of this
action involves a power struggle between the city and the
state that is beyond the purview and expertise of a local
board like the FCBA and, in any event, requires a remedy
that the FCBA is not authorized to provide—i.e., overturn-
ing the city’s sprinkler ordinance.
With regard to the purview and expertise of the
FCBA, it is true that the board is not made up of lawyers
trained to resolve legal questions like preemption. However,
the same can be said of many local boards with regard to
1
See Sunshine Dairy v. Peterson, 183 Or 305, 345, 193 P2d 543 (1948) (“The
rule requiring plaintiff to exhaust his administrative remedies before resorting
to the court has no application when the attack upon the administrative order
is based upon the contention that the administrative body is without statutory
power to issue the order.”).
656 Ragaway v. City of Portland
many legal issues. And, in this case, the local board may
well have relevant experience with the building code and
its reach, the board could develop a factual record to facil-
itate judicial review, and any decision by the board would
be subject to judicial review through the writ of review pro-
cess based on the record created before the board. See, e.g.,
Landsing Prop. v. City of Portland Fire Code Board, 94 Or
App 154, 156, 764 P2d 616 (1988) (involving the appeal of a
judgment on a writ of review, affirming an order by the City
of Portland Fire Code Board of Appeals that the petitioner’s
building be equipped with a sprinkler system throughout
the entire building within 10 years). We therefore disagree
with plaintiffs’ argument that the FCBA by its nature is
too ill-equipped for such review to further orderly procedure
and administration of justice.
Plaintiffs’ main contention, and the one that became
the focus in the trial court, is whether the FCBA is empow-
ered to invalidate the city’s sprinkler ordinance.2 Plaintiffs
asserted before the trial court:
“Certainly, those who are under some sort of an Order
by the Fire Marshal, who want an expedited way to get
that Order heard, go straight to the Fire Code Board of
Appeals. That’s not this. We want the ordinance stricken.
Fire Code Board of Appeals does not serve that purpose.
“* * * * *
“It’s unclear from the language of the ordinance itself,
310.10.080. Certainly nothing in that ordinance expressly
gives the Fire Code Board of Appeals authority to overturn
a City action. That would be completely upside down. Fire
2
Plaintiffs argued below:
“The Fire Code Board of Appeals, as a body, wouldn’t have had authority
to declare the City’s action unlawful. That’s the core of this dispute. There
would have been no point in taking this to the Board of Appeals and saying,
yes, we completely agree that on the face of the statute we have an obligation to
comply.
“* * * * *
“* * * And there’s an express exemption within the common law exhaustion
of remedies doctrine for situations where the administrative body cited would
not have had authority to take the action sought here. And that’s exactly what
we’re talking about. It would have simply added costs.”
(Emphases added.)
Cite as 315 Or App 647 (2021) 657
Code Board of Appeals exists within the City. Fire Marshal
works for the City. The Fire Code Board of Appeals works
for the City.
“The Fire Code Board of Appeals can’t overturn City
action. That’s not the way the structure of, as I understand
it, the City governance is intended to work.”
(Emphasis added.)
The city disagreed, asserting that the FCBA was
authorized, like state regulatory agencies, to determine that
the sprinkler ordinance was unlawful, which would then be
subject to judicial review. The city argued that the FCBA
has “the authority * * * to make that determination. And
then, in that instance, the City—that it would go to a Writ of
Review.” On appeal, and consistent with its position below,
the city argues that “ ‘Oregon administrative agencies have
the power to declare statutes and rules unconstitutional,’ ”
Outdoor Media Dimensions Inc. v. State of Oregon, 331 Or
634, 662, 20 P3d 180 (2001), and it argues that the FCBA is
no different from those administrative tribunals.
Whether the FCBA is authorized to declare the
city’s ordinances invalid depends on whether the city has
given such authority to the FCBA, either explicitly or implic-
itly. To determine whether the city has done so, we look to
the provisions governing board authority in the 2014 Oregon
Fire Code, which the parties agree had been adopted by the
city at the relevant time. It provides:
“108.1 Board of appeals established. In order to
hear and decide appeals of orders, decisions or determina-
tions made by the fire code official relative to the application
and interpretation of this code, there shall be and is hereby
created a board of appeals. The board of appeals shall be
appointed by the governing body and shall hold office at its
pleasure. The fire code official shall be an ex officio member
of said board but shall have no vote on any matter before
the board. The board shall adopt rules of procedure for
conducting its business, and shall render all decisions and
findings in writing to the appellant with a duplicate copy to
the fire code official. Also see ORS 479.180.
“108.2 Limitations on authority. An application for
appeal shall be based on a claim that the intent of this code
658 Ragaway v. City of Portland
or the rules legally adopted hereunder have been incorrectly
interpreted, the provisions of this code do not fully apply, or
an equivalent method of protection or safety is proposed.
The board shall have no authority to waive requirements of
this code.”
(Boldface in original; emphases added.)
Plaintiffs offer two arguments as to why, under
those provisions, the FCBA lacked authority to determine
that the sprinkler ordinance was preempted. First, they
argue that invalidating the ordinance would not be based on
a claim that “the provisions of this code do not fully apply”
or any of the other bases listed in Fire Code 108.2 for an
appeal. We disagree. The most plausible interpretation of
the provision is the one that the city offers: that the board
has authority to determine that some provisions of the code
are inapplicable, whether because they do not apply as a fac-
tual matter or as a legal matter, which would encompass a
determination that the provisions are preempted (or uncon-
stitutional or otherwise unlawful to apply). As the city points
out, that interpretation would be consistent with the powers
that administrative boards in Oregon are generally under-
stood to wield in a quasi-judicial capacity. See, e.g., Outdoor
Media Dimensions Inc., 331 Or at 662 (describing the power
of Oregon administrative agencies to declare statutes and
rules unconstitutional).
Plaintiffs’ remaining argument is that the last sen-
tence of Fire Code 108.2 precludes the FCBA from deter-
mining that an ordinance is preempted, because it expressly
deprived the FCBA of authority to “waive requirements
of this code.” But, as the trial court correctly observed, a
“waiver” is distinct from a determination that a code provi-
sion is unlawful. To “waive” a requirement is to give up the
right to enforce that requirement. See Webster’s Third New
Int’l Dictionary 2570 (unabridged ed 2002) (defining “waive”
in this context to mean “to refrain from pressing or enforc-
ing (as a claim or rule) : dispense with : forgo <~ a portion of
the tax due> <~s his opposition to the bill> <~ the customary
formalities> <waived the club rules to admit him>”). In the
context of an unlawful requirement, there is no such right
to be “waived”; it cannot lawfully be enforced.
Cite as 315 Or App 647 (2021) 659
For those reasons, we are not persuaded by plain-
tiffs’ arguments that the trial court erred in concluding that
they were required to follow an administrative review pro-
cess to challenge the application of the ordinance to their
buildings rather than wait and file a declaratory judgment
action.3
Plaintiffs argue, in the alternative, that they should
have at least been permitted to amend their complaint
to plead that the city interfered with their ability to seek
administrative review after they “presented evidence to
the trial court regarding the City’s actions in dissuading
at least one plaintiff from exercising formal appeal rights
before the FCBA.” Specifically, they sought to add the fol-
lowing allegation:
“After the City enacted the illegal ordinance, Frank
Faillace, a co-owner of Glitz, LLC and Divine Comedy, LLC
asked the City Fire Marshal about an appeal process for
the Retroactive Sprinkler Ordinance. Mr. Faillace was
told to give the City Fire Marshal a proposed plan and
that he would run it by whoever was in charge. Two weeks
later, Mr. Faillace was notified that his appeal was denied.
Mr. Faillace asked about any further appeal process, and
was told that there was no other appeal process.”
According to plaintiffs, that evidence would have brought
them (or at least one of them) within the exception to the
exhaustion doctrine that was identified in Miller, in which
the court declined to apply the common-law doctrine of
exhaustion where the agency’s interim director had misled
the plaintiff about the administrative review process. 356
Or at 420.
3
We note that the claim for declaratory relief includes some allegations con-
cerning ongoing or prospective harm from the ordinance, including that “[t]he
City is continuing and expanding unlawful enforcement and engaging in retalia-
tory action and harassment.” However, plaintiffs did not sufficiently develop any
argument below or on appeal as to why, if justiciable, those allegations would not
be capable of being exhausted before the FCBA. In fact, plaintiffs do not refer to
the ongoing harms or requests for prospective relief anywhere in their appellate
briefing regarding exhaustion. Accordingly, we do not address those allegations
as part of our analysis. See Beall Transport Equipment Co. v. Southern Pacific,
186 Or App 696, 700 n 2, 64 P3d 1193, adh’d to on recons, 187 Or App 472, 68 P3d
259 (2003) (explaining that we will not speculate as to what a party’s argument
might be and that it is not “our proper function to make or develop a party’s argu-
ment when that party has not endeavored to do so itself”).
660 Ragaway v. City of Portland
We review the denial of a motion to amend for abuse
of discretion. C.O. Homes, LLC v. Cleveland, 366 Or 207,
215, 460 P3d 494 (2020). “[T]he gravamen of the inquiry is
whether allowing a pretrial amendment would unduly prej-
udice the opposing party,” and “[i]n evaluating whether such
prejudice exists, a court considers factors such as whether
the party opposing the motion had a reasonable opportu-
nity to research appropriate law, move against the pleading,
avail [himself or her]self of discovery procedures, and pre-
pare requested instructions.” Id. at 216 (internal quotation
marks omitted). “ ‘Generally, the further a case proceeds,
the more reluctant the courts are to permit amendments.’ ”
Id. (quoting Perdue v. Pac. Tel. & Tel. Co., 213 Or 596, 606,
326 P2d 1026 (1958)); see also Ramsey v. Thompson, 162 Or
App 139, 145, 986 P2d 54 (1999), rev den, 329 Or 589 (2000)
(explaining that, in reviewing a motion to amend, we keep
in mind that “leave shall be freely given when justice so
requires” and balance four factors to determine if the court
permissibly exercised its discretion: (1) the nature of the
proposed amendments and their relationship to the existing
pleadings; (2) the prejudice, if any, to the opposing party;
(3) the timing of the proposed amendments and related
docketing concerns; and (4) the colorable merit of the pro-
posed amendment).4
Considering the nature of the amendments and
how late in the case the amendments were proposed, the
trial court did not abuse its discretion. On September 28,
2018, at a hearing on the issue of exhaustion, the court
explained that it could make a difference if this had been
a case that involved the type of facts in Miller: “[T]he only
way I think you get away from the exhaustion requirement
is if the City or whatever Government agency is proac-
tively doing something to keep the Plaintiff from filing an
4
The parties briefed and argued the discretionary decision on the motion
to amend based on the Ramsey factors and have not developed any argument
that those factors are somehow inconsistent with the standard described in C.O.
Homes, LLC. In Deep Photonics Corp. v. LaChapelle, 368 Or 274, 301, 491 P3d 60
(2021), one of the defendants advanced that contention, but the court ultimately
concluded that it “need not determine whether the various Ramsey factors or
the Ramsey test itself conflict with C.O. Homes.” For purpose of this case, in the
absence of any argument to the contrary, we are satisfied that application of the
Ramsey factors and the approach described in C.O. Homes, LLC lead to the same
result.
Cite as 315 Or App 647 (2021) 661
administrative action.” And yet it was not until eight months
later—after additional motions practice, including the court
granting summary judgment on all of plaintiffs’ remaining
claims—that plaintiffs finally moved to amend their com-
plaint, based on facts that were known to one of the plain-
tiffs. As the court explained, “this is information that was
in the Plaintiffs’ purview. This is evidence from the Plaintiff
directly.”
Furthermore, as the trial court observed, the poten-
tial merits of the amendment were questionable, because
it would require an “extension of Miller to even make this
a possibility”—thereby requiring further litigation of the
affirmative defense. Miller involved a situation in which the
plaintiff had followed an administrative review process set
forth in a letter from the agency director—a process that
was not inconsistent with the text of the rule governing
the review process. 356 Or at 420-21. Here, by contrast, the
plaintiffs relied on a phone conversation about “some sort
of appeal” between a club owner and the fire marshal, in
which the fire marshal told the owner to “give him a plan
and he’d run it by whoever was in charge,” followed by a
further conversation in which the owner asked about “any
further appeal process” and was told “that there was no
other appeal process.” The owner could not even recall the
approximate date of that conversation. Thus, as the trial
court correctly recognized, the amendment would not neces-
sarily have resulted in any different outcome, but only fur-
ther litigation of the exhaustion question that had already
been decided.
Given the totality of the circumstances, we can-
not say that the trial court abused its discretion in refus-
ing to revive the case to allow an amendment of question-
able merit. By the time of the motion to amend to add the
allegation, the case was nearly two years old and had been
litigated through dispositive motions. In that posture, the
court concluded that the city would be prejudiced by a
revival of the case to further litigate the exhaustion ques-
tion, noting that it was unaware of any case “close to two
years old, where after summary judgment has been, not
only filed but granted,” the parties had requested and been
allowed to amend the complaint. That conclusion was within
662 Ragaway v. City of Portland
the permissible range of the trial court’s options under
ORCP 23.
B. Second Claim for Relief: Quasi-Contract
Plaintiffs’ second claim, captioned “Quasi-Contract—
Money Had and Received,” sought recovery of “any money
received by the City from plaintiffs for fees and fines paid by
plaintiffs as a result of the unlawful enactment and enforce-
ment of the Retroactive Sprinkler Ordinance.” The city
understood the claim to be based on a principle of unjust
enrichment. See Comcast of Oregon II, Inc. v. City of Eugene,
346 Or 238, 255-56, 209 P3d 800 (2009) (involving an action
for money had and received “asserting a theory of quasi-
contract to avoid unjust enrichment”); Powell v. Sheets, 196
Or 682, 699, 251 P2d 108 (1952) (“The basis of a recovery of
money upon the theory of unjust enrichment is the existence
of a quasi contract, or a contract implied by law.”). The city
moved for summary judgment on the ground that there was
no unjust enrichment of the city because no fines had been
imposed and any fees had been related to installation and
maintenance of the sprinklers systems rather than directly
imposed under the ordinance.
At the summary judgment hearing, the trial court
asked plaintiffs to explain their theory, inquiring “what is
the money had and received claim?” They responded:
“[A]s it’s pleaded it relates to the monies already paid as of
the time of the filing and those are for, and we should prob-
ably distinguish between like the permit slash inspection
fees and some of these, like, major water line connection
fees which those are—there are hard costs with those.
“So you’re correct in your analysis that there’s built-in
overhead that goes into that that the City did receive. As to
the other ones like the permit for installation of sprinklers
requires that, you know, that a building inspector and a
Fire Marshal come out and visit the property and make
sure what you’ve done is correct.
“And those are just salaried individuals who the City is
spending the same amount for those as they would had we
not had to pay those. So that’s why I draw that distinction.”
Cite as 315 Or App 647 (2021) 663
Based on that clarification, the court granted the
motion for summary judgment, explaining:
“I understand the argument that the City was unjustly
enriched because it had part of its overhead paid and it got
extra money going to these overhead amounts, I just think
is a factual matter; there’s not a question of fact on that
issue.
“* * * I could envision a situation where having money
* * * going to the general fund or * * * going to pay over-
head that they had to pay for, anyway, there could be cir-
cumstances in which that would be unjust enrichment, but
there’s not a factual basis in this case.”5
We affirm the trial court’s grant of summary judg-
ment based on failure of proof of any benefit conferred. As
the trial court correctly observed, plaintiffs did not offer any
evidence at the summary judgment stage from which a rea-
sonable trier of fact could infer that the city made any profit
through the sprinkler inspection process, and they were not
able to identify specific evidence from which an inference
of profit could be drawn to support their unjust enrichment
theory. The trial court therefore did not err in granting the
city’s motion for summary judgment on the quasi-contract
claim.
C. Third Claim: Violation of Contracts Clause
Plaintiffs’ third claim for relief alleged a violation
of the contract clause of the Oregon Constitution, which pro-
vides that “[n]o * * * law impairing the obligation of contracts
shall ever be passed.” Or Const, Art I, § 21. According to
plaintiffs, “the illegal enactment of the Sprinkler Ordinance
drastically changed the economic foundation of the leases
between the nightclubs and their landlords by imposing the
5
The city had also argued that plaintiffs, knowing all of the facts, volun-
tarily paid the fees instead of contesting them, bringing them within the “volun-
tary payment” rule. See generally Adams v. Crater Well Drilling, Inc., 276 Or 789,
793-94, 556 P2d 679 (1976) (“As a general rule money which is voluntarily paid
with full knowledge of facts which would excuse payment cannot be recovered.
Recovery of money paid is allowed, however, where payment is made as a result
of fraud, mistake, duress or coercion. The threat of a civil suit alone does not
constitute duress or coercion sufficient to permit recovery of money paid to avoid
the litigation.” (Footnotes omitted.)). The trial court agreed with the city on that
issue as well, but we need not reach the merits of that alternative ruling.
664 Ragaway v. City of Portland
large cost of sprinkler installation which had not previously
been contemplated between the parties.” The trial court
ruled that such generalized economic effects from an ordi-
nance could not form the basis of a claim for impairment of
contract, and that plaintiffs had pointed to “no particular
contract or particular contract terms that were impaired by
the ordinance as contemplated by the contract clause.”
We agree with the trial court’s ruling. As we recently
reiterated in Owen v. City of Portland, 305 Or App 267, 286,
470 P3d 390 (2020), aff’d, 368 Or 661, 497 P3d 1216 (2021),
a claim based on a violation of the contract clause requires
more than an assertion that an ordinance imposes new obli-
gations under existing contracts:
“Here, plaintiffs have not identified contractual terms
that are obligations impaired by the ordinance. Plaintiffs
baldly assert that the ordinance is facially invalid because
it imposes new obligations under existing contracts. That,
however, is not what Article I, section 21, prohibits. See
Eckles v. State of Oregon, 306 Or 380, 395-96, 760 P2d 846(1988) (explaining that the United States Supreme Court
distinguishes between the impairment of a contract, which
may occur whenever a law enlarges, abridges, or changes
the agreement, and the impairment of the obligation of
a contract). Plaintiffs make only generalized arguments,
untethered to any particular contract or contractual term,
and do not point to any obligation of a contract that has
been impaired by the ordinance. We thus reject plaintiffs’
challenge under Article I, section 21.”
(Emphases added.)
Here, as in Owen, plaintiffs have failed to tether
their arguments to any particular contract or contractual
term and do not point to any obligation of a contract that
has been impaired by the ordinance. We therefore affirm
the court’s grant of summary judgment on plaintiffs’ claim
for impairment of contract.
D. Fourth and Fifth Claims for Relief: Tort Claims
Plaintiffs’ remaining claims were based in tort.
Their fourth claim alleged that “[t]he City had a duty to exer-
cise reasonable care in enacting and enforcing ordinances,”
and that “[t]he City’s enactment of the illegal Retroactive
Cite as 315 Or App 647 (2021) 665
Sprinkler Ordinance and continuing and expanding unlaw-
ful enforcement, retaliatory action and harassment was
unreasonable in light of the foreseeable risk of harm to
plaintiffs.” Their fifth claim alleged that “[t]he City knew
that plaintiffs had these business relationships and inter-
ests,” and “[t]he City knowingly and intentionally interfered
with such relationships and prospective economic advan-
tages by implementing and enforcing the illegal Retroactive
Sprinkler Ordinance.”
The city moved for summary judgment on the ground
that the tort claims were untimely because plaintiffs had
not filed a tort claim notice within 180 days of learning that
their buildings would be affected by the ordinance (which
became effective, at the latest, on June 30, 2015); and that,
timely or not, their tort claims were barred because the city
is immune for its discretionary decision to enact the ordi-
nance.6 The trial court agreed with the city on both of those
grounds. With regard to immunity, the court explained that
“having a good faith but mistaken belief about what the law
allows” is not enough to lose discretionary immunity, and
that plaintiffs’ evidence (which showed the city’s concern
about preemption and efforts to get around the problem) was
not sufficient to show a willful disregard of the law.
We affirm the trial court’s ruling on discretionary
immunity and, for that reason, need not address the timeli-
ness of plaintiffs’ tort claim notice. ORS 30.265(6) provides
that “[e]very public body and its officers, employees and
agents acting within the scope of their employment or duties
* * * are immune from liability for: * * * (c) [a]ny claim based
upon the performance of or the failure to exercise or perform
a discretionary function or duty, whether or not the discretion
is abused.” (Emphasis added.) As we explained in Ramirez v.
Hawaii T & S Enterprises, Inc., 179 Or App 416, 420, 39 P3d
931, rev den, 335 Or 114 (2002), “[a] city would be immune
from liability for damages caused by its decision not to adopt
a taxi licensing system, but it is not immune when, having
6
The city argued, “I think when we’re talking about decisions made in
the legislative function of the City Council, absent some very clear evidence to
the contrary, that is certainly them exercising a discretionary policy-making
function.”
666 Ragaway v. City of Portland
adopted a policy requiring taxi drivers to meet certain crite-
ria before obtaining a license, one of its employees licenses a
taxi driver who does not qualify, and as a result that driver
causes harm. * * * The operative distinction, then, is between
choosing a course of action or inaction, on the one hand,
and putting that choice into effect, on the other.” (Emphasis
added.)
The city’s decision to enact the sprinkler ordinance
was the quintessential discretionary policy-making deci-
sion, and plaintiffs have not explained, in any cogent way,
how the city is not immune for that choice. Their argument
appears to be that, because the ordinance was preempted,
the city lacked any discretion to pass it.7 That confuses the
substance of the city’s act with the nature of the act; dis-
cretionary immunity applies when the nature of the act is
discretionary, even if that discretion is abused in substance.
ORS 30.265(6)(c). Plaintiffs have never engaged with that
aspect of the statute or the broad immunity that flows from
legislative acts by a city. Westfall v. Dept. of Corrections,
355 Or 144, 161, 324 P3d 440 (2014) (“Once a discretionary
choice has been made, the immunity follows the choice. It
protects not only the officials who made the decision, but
also the employees or agents who effectuate or implement
that choice in particular cases.”); see generally 18 McQuillin
Mun. Corp. § 53:124 (3d ed 2021 Update) (“No liability is cre-
ated against a municipal corporation by acts of its officers
done under an unconstitutional or void ordinance enacted
in the exercise of governmental powers, and a municipality
is not liable in damages to a person arrested under a void
ordinance passed in the exercise of its governmental func-
tions.” (Footnotes omitted.)); Id. § 53.8 (“The United States
Supreme Court has affirmed the belief that local govern-
ment officials are free from personal liability for voting for
an ordinance. In that decision the Court held that absolute
immunity attaches when a city official is voting on an ordi-
nance within the sphere of legitimate legislative activity.”
(Footnote omitted.)). Accordingly, we affirm the court’s grant
of summary judgment on plaintiffs’ tort claims.
7
Below, plaintiffs argued, “So in this situation to the extent they’ve enacted
an invalid ordinance then the discretionary immunity would go away because it’s
an invalid exercise by definition, invalid exercise of their authority.”
Cite as 315 Or App 647 (2021) 667
E. Cross-Assignment of Error
Because we affirm the trial court’s rulings as to each
of the claims, we do not reach the city’s cross-assignment of
error regarding the trial court’s grant of partial summary
judgment to plaintiffs on the underlying question of preemp-
tion. The city has not cross-appealed the general judgment,
and the city expressly asks this court to review the merits
of the preemption question only in the event that we were
to reverse with regard to one of plaintiffs’ assignments of
error.
Affirmed.