Could Damascus city council members be personally sued if they spent city funds the way state law required them to, but the state law later turned out to be unconstitutional?
Plain-English summary
The City of Damascus, Oregon spent years caught in a disincorporation fight. In 2013, 63 percent of voters voted to disincorporate, but city officials interpreted state law to require a majority of all registered voters (not just those who voted), and a court agreed that disincorporation hadn't passed. The 2015 Legislature responded with HB 3085 and HB 3086, which lowered the threshold to a simple majority and, if voters approved, required the city to wind down by paying off debts and refunding remaining money to property taxpayers.
City officials had been told they could be personally liable if a court later found those bills unconstitutional and they had already spent city money under them. Representative Kennemer asked the AG whether that risk was real.
Attorney General Ellen F. Rosenblum's office answered no. ORS 294.100 makes officials personally liable for spending public money for purposes "other than authorized by law" if the spending constitutes malfeasance or willful neglect. Spending city money in the manner required by HB 3085 and HB 3086 is itself an authorized purpose, because those bills were duly enacted by the Legislature. There is no general doctrine requiring officials to second-guess statutory constitutionality before complying. Burt v. Blumenauer did not change that result, because Burt involved an expenditure that an otherwise broad authority statute did not specifically require, and that another statute prohibited.
The Oregon Tort Claims Act analysis came out the same way: tort liability requires a tortious act, which compliance with valid law is not.
Currency note
This opinion was issued in 2016. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Historical summary
The Damascus disincorporation saga
The City of Damascus, in Clackamas County, was incorporated in 2004. Voter dissatisfaction grew, and a 2013 disincorporation measure won 63 percent. The city argued, and Hawes v. City of Damascus affirmed, that the controlling state law required a majority of registered voters (the higher bar), so disincorporation failed. The Legislature in 2015 passed HB 3085 (lowering the bar to a simple majority for Damascus) and HB 3086 (specifying how city funds were to be wound down if voters approved disincorporation).
Why officials worried
Damascus officials feared that if they spent city money pursuant to HB 3085/3086 and someone later challenged the statutes as unconstitutional, they could be sued personally for ultra vires expenditures. The fear is not entirely irrational, because Burt v. Blumenauer held that public officials could be personally liable under ORS 294.100 for spending county money to oppose a ballot measure even though general expenditure authority statutes seemed to permit it.
How the AG distinguished Burt
The AG read Burt as a case where general expenditure authority was constrained by another specific statute that prohibited the particular expenditure. HB 3085/3086 are different: they expressly require the expenditure. Compliance with a duly enacted statute is, by definition, authorized by law. Compliance also cannot be malfeasance or willful neglect, the second prong of ORS 294.100. The AG cited Liv v. State of Oregon for the proposition that elected officials' oaths to uphold the constitution do not let them second-guess statutes by refusing to act under them.
What this meant for the officials
Damascus mayor and council members could spend funds as HB 3085/3086 required without taking on personal financial risk, even if a constitutional challenge to those bills succeeded later. The opinion expressly noted that under ORS 180.060(2), the AG's opinion is for the requesting legislator's benefit and "cannot be relied on as advice by local government officials," but the legal reasoning was nonetheless useful guidance for the city's own attorney to follow.
Common questions
Q: Can a public official refuse to comply with a state law they think is unconstitutional?
A: Generally no, under Oregon law as cited in this opinion. Officials swear to uphold both state and federal constitutions, but that oath does not give them authority to disregard duly enacted statutes based on their own constitutional opinion. Constitutional challenges go through courts.
Q: When can an official be personally liable for spending public money?
A: Under ORS 294.100, when the expenditure is for a purpose not authorized by law AND the expenditure constitutes malfeasance in office or willful or wanton neglect of duty. Both prongs must be met.
Q: What is the Oregon Tort Claims Act's role?
A: The OTCA governs tort liability of public officials. It does not create personal liability for compliance with valid statutes; it just provides the procedural framework for suits that do allege wrongful conduct.
Q: Did Damascus actually disincorporate?
A: The legal and political process around Damascus continued past this opinion. For current city status, consult county records.
Background and statutory framework
ORS 294.100 imposes personal civil liability on public officials who expend public money for unauthorized purposes when the expenditure is malfeasance or willful neglect. The provision protects both public funds and the discretion of officials. Both prongs are required.
Burt v. Blumenauer (1984) is the most-cited Oregon authority on personal liability under § 294.100. It involved Multnomah County commissioners' use of county funds to oppose a fluoridation ballot measure. The court found liability where general expenditure authority did not specifically authorize the spending and another statute (the analog of ORS 260.432) prohibited it.
Citations and references
Statutes:
- ORS 294.100 (personal liability for unauthorized expenditures)
- HB 3085 / HB 3086 (2015 Regular Session) (Damascus disincorporation)
Cases:
- Burt v. Blumenauer, 299 Or 55 (1984)
- Hawes v. City of Damascus, 271 Or App 590 (2015)
- Liv v. State of Oregon, 338 Or 376 (2005)
Source
- Index page: https://www.doj.state.or.us/oregon-department-of-justice/office-of-the-attorney-general/attorney-general-opinions/
- Original PDF: https://www.doj.state.or.us/wp-content/uploads/2016/04/op8290.pdf
Original opinion text
Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.
FREDERICK M. BOSS
ELLEN F. ROSENBLUM
DEPUTY ATTORNEY GENERAL
ATTORNEY GENERAL
DEPARTMENT OF JUSTICE
Justice Building
1162 Court Street NE
Salem, Oregon 97301-4096
Telephone: (503) 378-4400
April 18, 2016
No. 8290
This opinion answers a question posed by Representative Kennemer concerning whether
the mayor and city council members of the City of Damascus would risk personal liability for
expending funds in the manner required by House Bills 3085 and 3086 (2015). Below, we first
set out your question and our short answer, followed by our analysis. We emphasize that in
accordance with ORS 180.060(2), our legal opinions are solely for Representative Kennemer’s
use and benefit, and cannot be relied on as advice by local government officials.
QUESTION
Would the mayor and city council members of the City of Damascus be personally liable
either under ORS 294.100 or the Oregon Tort Claims Act for expending city funds in the manner
required by House Bills 3085 and 3086?
SHORT ANSWER
No.
: DISCUSSION
I. Background
In 2013, sixty-three percent of Damascus voters voted for disincorporation of the city.
City officials interpreted state law to require a majority of all registered voters to approve
disincorporation and concluded that the election results did not meet that requirement. A trial
court agreed with the city’s interpretation and the Oregon Court of Appeals affirmed without
opinion. Hawes y. City of Damascus, 271 Or App 590, 354 P2d 774 (2015).
In 2015, the Oregon Legislative Assembly enacted House Bill 3085, and referred that bill
to Damascus voters for their approval or rejection. Or Laws 2015, ch 603. The bill permits
disincorporation by simply majority vote. If the voters approve disincorporation, House Bills
3085 and another House Bill enacted in 2015, HB 3086, require the City of Damascus to expend
city funds to satisfy outstanding legal debts and obligations and to return any excess moneys to
ad valorem property taxpayers of the city. Jd, Or Laws 2015, ch 637.
Representative Kennemer informs us that the mayor and city council members have been
told that they risk personal liability for expending funds as directed by HB 3085 and 3086 if a
court later determines those bills to be unconstitutional. We understand the potential
constitutional issue to relate to the legislature’s authority to enact the legislation rather than to
the expenditure provisions in particular. Representative Kennemer tells us that he is not aware of
any current legal challenge to either law.
II. ORS 294.100
We first look to ORS 294.100, under which public officials may be personally liable for
expending public moneys either in excess of the amounts authorized by law, or for purposes
other than those authorized by law. Because the question posed involves public officials’
authority to expend funds as specifically directed by House Bills 3085 and 3086, we consider
only the “unauthorized purposes” prong of ORS 294.100.
A. Criteria for personal liability
Under ORS 294.100(1) makes it unlawful for public officials to expend money for
unauthorized purposes. ORS 294.100(2) provides, in pertinent part:
(2) Any public official who expends any public moneys * * * for any
other or different purpose than authorized by law shall be civilly liable for the
return of the money * * * if the expenditure constitutes malfeasance in office or
willful or wanton neglect of duty.
To be personally liable under that section, a public official must expend public moneys for a
purpose not authorized by law and the expenditure must constitute malfeasance in office or
willful or wanton neglect of duty.
1. Purposes authorized by law
_ HB 3085 and HB 3086 require city officials to make certain expenditures. See Or Laws
2015, ch 603, § 1(1)(a) (providing that the “City of Damascus shall * * * [e]xpend moneys in the —
funds of the city to satisfy all debts, obligations, liabilities and expenses of the city[.]”); Or Laws
2015, ch 637, § 1(1)(a) (providing that the “City of Damascus shall expend moneys in the funds
of the City” in specified ways). City officials who expend funds in the manner required by those
laws would expend funds for authorized purposes. Those expenditures, therefore, would not
meet the first criteria for personally liability, that the expenditures be “for any other or different
purpose than authorized by law][.]”
Nothing in the language of ORS 294.100(2) or any other law of which we are aware
suggests that a public official must determine that a duly-enacted statute requiring certain ©
expenditures is constitutional before relying on the expenditure authority it provides. It is in
- fact questionable whether city officials éould elect not to make the expenditures directed by
~ HB 3085 and 3086 simply because they thought the bills might be unconstitutional. See
Livy. State of Oregon, 338 Or 376, 396, 110 P3d 91 (2005) (explaining that Oregon
Constitutional requirements that elected officials swear to uphold state and federal constitutions
does not imply authority to prescribe remedies for perceived constitutional shortcoming without
regard to the scope of the official’s statutory authority to act) (emphasis in original). Nor is
- this a case where a specific expenditure potentially authorized under the broad expenditure
authority provided by one statutory provision is prohibited by another statutory or
constitutional provision. See Burt v. Blumenauer, 299 Or 55, 699 P2d 168 (1984) (holding
that public officials could be held personally liable under ORS 294.100 for expending funds to
oppose ballot measure, because although expenditure was otherwise authorized under county
commissioners’ broad expenditure authority, that authority was limited by other law prohibiting
expenditures for certain government speech).
- Malfeasance in office or willful or wanton neglect of duty
Nor would expending funds as required by HB 3085 and 3086 meet the second criterion
for personal liability, which is that the expenditure “constitute[] malfeasance in office or willful or
wanton neglect of duty.” This criterion was added to the statute in 2001 changing the former strict
liability standard to one requiring malfeasance in office or willful or wanton neglect of duty.
Or Laws 2001, chapter 399. While “malfeasance in office” and “willful or wanton neglect of
duty” obviously are higher standards than mere negligence, we need not explore their precise
parameters as a public official who does nothing more than what the law expressly requires him to
do clearly does not commit malfeasance in office or willfully or wantonly neglect his duty.
We conclude that Damascus officials would not incur personal liability under
ORS 294.100 merely for expending city funds as required by HB 3085 and 3086.
B. Advice of counsel defense to action for unlawful expenditure of public funds
We also point out that a public official may avoid personal liability for an otherwise
unlawful expenditure of public funds under ORS 294.100 if the official relies in good faith and
without personal benefit upon the advice of counsel, whether public or private.
Belgarde v. Linn, 205 Or App 433, 440, 134 P3d 1082 (2006) (so holding).
If. Oregon Tort Claims Act
You also ask whether city officials could carry out the directives of HB 3085 and 3086
without risking tort action. Violations of ORS 294.100 are not tort claims within the meaning of .
the. Oregon Tort Claims Act, ORS 30.260 to 30.300. See Burt v. Blumenauer, 87 Or App 263,
265, 742 P2d 626 (1987) (so holding). Although we have difficulty conceiving what the tort
might be, if any person did assert a tort claim for damages against Damascus officials based on the
officials’ implementation of HB 3085 and 3086 on the ground that those laws are unconstitutional,
ORS 30.265(6)(f) would apply. ORS 30.265(6)(f) grants immunity from liability to officers for a
claim “arising out of an act done * * * under apparent authority of a law, * * * that is
unconstitutional * * * except to the extent that they would have been liable had the law
been constitutional * * * unless such act was done or omitted'in bad faith or with malice.”
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ELLEN F. ROSENBLUM
Attorney General
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