LDS Development, LLC v. City of Eugene

When cities require bonds in order to shape the development of land, the city has an option to enforce the bond but is not required to do so.

LDS appealed an order from the trial court granting summary judgment in favor of the City of Eugene (the City) on LDS’s claims and the City’s counterclaims. LDS argued that the trial court erred when it concluded that the City was not required to act on the bond (LDS’s claims) and LDS was a successor to the original developer’s development agreement (the City’s counterclaims). The original contract with the City required the developer to make certain infrastructure improvements and post a bond equal to the cost of those improvements. The original developer abandoned the project before finishing it. The current litigation was started to force the City to enforce the bond or complete the infrastructure improvements itself. The City responded that LDS was a successor to the original contract and was obligated to fulfill the terms of the original contract. LDS argued that the City was required to finish the infrastructure improvements. The Court held that under relevant statutes, the City had the option to call in a bond, but was not required to exercise that discretion, as the trial court also concluded. However, the Court held that the trial court erred when it granted summary judgment on the City’s counterclaims because LDS was neither a party nor an assignee to the development agreement, so LDS has no contractual obligation under it. Reversed and remanded as to counterclaim summary judgment; otherwise affirmed.