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City signs documents to finalize Jensen settlement

Extends lease one year, pays out $175,000


by: HOLLY M. GILL - Paul JensenThe Madras City Council finalized details of a lawsuit settlement agreement with Paul Jensen, 69, of Madras, at a special meeting at 7 a.m. Aug. 7.

The settlement finally resolved the lawsuit, which dated back to 2006, when the city tried to evict Jensen from property he had leased at the Madras airport for 28 years.

The city alleged that Jensen, who had owned and operated an aerial crop-dusting business on leased property at the airport since 1978, was behind on his rent, which at that time was $150 per month.

In December 2006, a Jefferson County Circuit Court jury found that his lease had given him unlimited renewal options, and restored his original monthly payment of $75, which meant that he had never been behind on rent.

Jensen, who declined to comment on the settlement, had previously explained that the low rent was due to the expensive improvements he was required to make to the property, which included constructing a hangar, installing a septic tank, and grading, paving and fencing the property, which amounted to about $175,000.

Between May 16, 2006, when the city cut off sewer to the property, and the December jury decision, Jensen, who had refused to vacate, was effectively out of business at the airport.

Although the city appealed the Circuit Court ruling, the Oregon Court of Appeals affirmed the lower court's ruling without opinion in June 2008, and said the city must pay the costs of the appeal.

By that time, Jensen had missed three seasons of aerial spraying, lost his line of credit, customer base and income.

The case continued on when Jensen sought economic and noneconomic damages in a complaint filed in the Jefferson County Circuit Court on July 26, 2011, which claimed the city had breached his contract and wrongfully used a civil proceeding.

Attorneys for Jensen and the city of Madras each asked for a summary judgment — a decision without a trial — in the Jefferson County Circuit Court in February 2012. The motions were denied, but before the dispute could go to trial once again, the two parties participated in mediation and reached a confidential settlement on July 23.

That settlement was finalized by the city last week at the early morning meeting, when the City Council authorized settlement and release agreements, a short-term airport lease agreement with Jensen, and a resolution approving the transfer of funds "to settle a litigation matter in the 2013-2014 fiscal year."

Under terms of the new, 16-page lease agreement, Jensen will pay $75 per month until the lease expires in December 2014. Jensen is allowed to continued subleasing the property to Cat-AG Aviation during that time.

In the resolution approving transfer of funds, the city adopted a supplemental budget decreasing the operating contingency in the Internal Services Central Services Fund by $72,450, and the Internal Services Public Works Staff Fund by $102,550, and increasing the miscellaneous expenses for materials and services in those two categories by the same amount, to allow the city to spend $175,000 "to settle a litigation matter."

"The council went ahead and passed those three things," said Gus Burril, city administrator, who declined further comment, citing the confidentiality agreement between the city and Jensen. "They were all follow-up to the settlement."

In an email July 30, Jensen's attorney, Roger Hennagin, wrote, "Paul Jensen is exhausted as a result of fighting this battle for the past seven and a half years. If we had tried the case and he had prevailed, the city could have appealed that verdict and delayed payment for another two or three years. These circumstances forced Paul to conclude that agreeing to a settlement was in his long-term, best interest."




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