Costco Wholesale Corp. v. City of Beaverton

161 P.3d 926

343 Or. 18

COSTCO WHOLESALE CORPORATION, Petitioner, and Henry Kane, Intervenor-Petitioner, v. CITY OF BEAVERTON, Respondent.

Wells Real Estate Funds, Inc., Respondent on Review, v. City of Beaverton, Petitioner on Review.

Bold, LLC, Petitioner, and Henry Kane, Intervenor-Petitioner, v. City of Beaverton, Respondent.

C.E. John Company, Inc., Petitioner, and Henry Kane, Intervenor-Petitioner, v. City of Beaverton, Respondent.

LUBA No. 2005-044.

LUBA No. 2005-046.

LUBA No. 2005-050.

LUBA No. 2005-053.

CA A130488.

SC S53777.

Supreme Court of Oregon, En Banc.

Argued and Submitted March 5, 2007.

Decided June 7, 2007.

On review from the Court of Appeals.^*

Alan Andrew Rappleyea, of Beaverton City Attorney's Office, Beaverton, argued the cause and filed the brief for petitioner on review. With him on the brief was William J. Scheiderich.

Jack L. Orchard, of Ball Janik LLP, Portland, argued the cause and filed the response and brief for respondent on review. With him on the response and brief was Dana L. Krawczuk.

Thomas Sponsler, of Beery, Elsner & Hammond LLP, Portland, filed the brief for amicus curiae League of Oregon Cities.

WALTERS, J.

Under state statute, a city may annex property that is contiguous to the city by obtaining either the consent or majority vote of the owners of the property to be annexed. A city may annex property without such approval if the city boundaries "surround" the property to be annexed, a form of annexation referred to as an island annexation. In this case we decide whether a city may annex only part of an island that it surrounds without the consent or majority vote of the owners.

The territory that gives rise to the dispute in this case is made up of property owned by Wells Real Estate Funds, Inc. (Wells), respondent on review in this court, and Nike, Inc. (Nike).¹ The City of Beaverton (city) extended its boundaries and encircled that territory so that its boundaries were contiguous to the territory on all sides. It is undisputed that that territory thus became an island, within the meaning of the island annexation statute, and that Oregon law authorizes the city to annex that territory in its entirety without the approval of the owners of property in the territory.

In 2004, the city adopted a resolution announcing a policy to annex all adjacent urban unincorporated areas "over time" and directing the mayor to annex the territory at issue in its entirety, including both the property owned by Wells and the property owned by Nike. In 2005, however, the city excluded from further annexation proceedings all property owned or leased by Nike.² As a result, although the city boundaries continued to form a ring around the territory as a whole, and although the Wells property was located within that ring, the city boundaries were no longer entirely contiguous to the property then to be annexed, the Wells property on all sides. The Nike property stood between the city boundary and the Wells property on one side. The city nevertheless asserted that it could annex the Wells property:

"The subject properties are within islands defined by the City's corporate limits. Some of the properties that are the subject of this proposed annexation constitute only part of an island. The statutory provision cited above [ORS 222.750] does not require annexation of an entire island."³

Wells appealed the annexation of its property to the Land Use Board of Appeals (LUBA). After LUBA affirmed the city's annexation of the Wells property, Wells sought judicial review in the Court of Appeals. The Court of Appeals reversed, concluding that, under the applicable statute, ORS 222.750, "the territory to be annexed must be completely enclosed by and contiguous with the corporate boundaries of the annexing city or the corporate boundaries of the annexing city and a body of water." Costco Wholesale Corp. v. City of Beaverton, 206 Or.App. 380, 398, 136 P.3d 1219 (2006). We granted the city's petition for review.⁴

We begin our review with the text of ORS 222.750, which authorizes island annexation of territory "surrounded by" city boundaries:

"When territory not within a city is surrounded by the corporate boundaries of the city, or by the corporate boundaries of the city and the ocean shore or a stream, bay, lake or other body of water, it is within the power and authority of that city to annex such territory. However, this section does not apply when the territory not within a city is surrounded entirely by water. Unless otherwise required by its charter annexation by a city under this section shall be by ordinance or resolution subject to referendum, with or without the consent of any owner of property within the territory or resident in the territory."

(Emphasis added.)

As shown in the figure below, the territory consisting of the Wells property and the Nike property is indisputably "surrounded by" the city boundaries.

NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The city agrees that, as a prerequisite to the exercise of its statutory island annexation authority, its boundaries must contiguously and completely encircle the territory in question and create such an island. The city argues, however, that, once its boundaries surround and create such an island, it is entitled to annex all or any part of that island. The city contends that, because the Wells property is within the circle of its boundaries, it too is "surrounded by" city boundaries. The city contends that the only contiguity that is required is the partial contiguity of the city territory and the Wells property that is represented by the solid line shown on the figure above. Wells responds that ORS 222.750 allows only annexation of territory that is completely and contiguously surrounded by city boundaries and that, when the city eliminated the Nike property from its annexation plans, the city boundaries no longer surrounded the territory to be annexed in the manner required by the island annexation statute. The issue presented is whether a city has authority to engage in island annexation pursuant to ORS 222.750 if city boundaries do not completely and contiguously encircle the property to be annexed.

We first consider the words "surrounded by," as used in ORS 222.750, and consult the dictionary. The word "surround" means to be situated or found around, about, or in a ring around. See Webster's Third New Int'l Dictionary 2302 (unabridged ed. 2002) (providing definitions). The senses in which that word can be used are many. Some suggest a requirement of close proximity, if not contiguity. Others seem to permit more distance. "To throng, press, or cluster around," as "[the] crowd throng[ed] the victor" implies immediacy, as do "to envelop in or as if in a cloud or mist," or "to encase or cover like pulp around a core." Id. "To live around on all or most sides," "to form or be in a retinue [or] entourage," or "to be present around, about, or near" all imply a greater range. Id. Because ORS 222.750 uses "surround" in conjunction with "boundaries," the sense that most aptly fits our purpose is "to form a ring around: extend around or about the edge of: constitute a curving or circular boundary for: lie adjacent to all around or in most directions." Id.

Using that sense of the word "surround" and applying it to the figure shown above, it is clear that the city boundaries "surround" the territory made up of both the Wells and Nike properties. The city boundaries form a ring around that territory, extend around the edge of it, constitute a circular boundary for it, and lie adjacent to it all around. As a prerequisite to annexation under ORS 222.750, the corporate boundaries of the city necessarily must surround territory in such a completely encircling and contiguous fashion or no island would be formed in the first instance.

The city points to the part of the dictionary definition that provides, "[to] lie adjacent to all around or in most directions" (emphasis added). It contends that, once the island is formed and city boundaries "surround" a territory completely and contiguously, they also "surround" any part of that territory, even though they lie adjacent to that part only "in most directions." To accept that argument, we would be required to give the term "surround" as used in ORS 222.750 two different meanings: (1) to create an island, city boundaries must lie adjacent to territory all around it; and (2) to annex part of an island, city boundaries need lie adjacent to territory only "in most directions." The words "surrounded by" cannot have both meanings, because those words describe and limit the conditions that allow the exercise of authority. If "surrounded by" means adjacent "in most directions," then ORS 222.750 would impose no requirement that city boundaries completely and contiguously encircle the territory to create an island in the first instance. We conclude that, in requiring that territory be "surrounded by" city boundaries, the legislature required that city boundaries encircle the territory completely and contiguously.

That conclusion does not, however, completely answer the city's argument. The city contends that, because the legislature has conferred upon the city the power to annex the whole island, the legislature also has conferred the power to annex a part of that whole. To respond, we consider the part of the statute beginning after the words "surrounded by." ORS 222.750 provides that, when "territory" is surrounded by city boundaries, the city may annex "such territory." "Such" refers to something previously mentioned and indicates that it is the identical thing. See Webster's at 2283 (defining "such," in part, as "previously characterized or specified: AFOREMENTIONED"). The most straightforward reading of the statute, and the interpretation that we adopt, is that the territory that is encircled, completely and contiguously, to form the island in the first instance, is the...