Court Opinion

ID: 4168647
Source: CourtListenerOpinion
Date Created: 2017-05-16 16:10:03.829538+00
Date Added: 2024-06-11T14:23:48.900087
License: Public Domain

FILED
                                                                          May 16 2017, 10:47 am

                                                                               CLERK
                                                                           Indiana Supreme Court
                                                                              Court of Appeals
                                                                                and Tax Court

ATTORNEYS FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
George M. Plews                                           Donald E. Morgan
Jonathan P. Emenhiser                                     Melissa Hayden Kramer
Plews Shadley Racher & Braun LLP                          Office of Corporation Counsel
Indianapolis, Indiana                                     Indianapolis, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

FLM, LLC,                                                 May 16, 2017
Appellant-Defendant,                                      Court of Appeals Case No.
                                                          49A02-1609-OV-2216
        v.                                                Appeal from the Marion Superior
                                                          Court
Metropolitan Development                                  The Honorable Cynthia J. Ayers,
Commission of Marion County,                              Judge
Indiana,                                                  Trial Court Cause No.
Appellee-Plaintiff                                        49D04-1308-OV-31452

Baker, Judge.

Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017                            Page 1 of 15
[1]   This case has been here before, in a different guise, on multiple occasions.

      FLM, LLC (FLM), leased property to International Recycling, Inc. (IRI). IRI

      proceeded to amass a veritable mountain of over 100,000 tons of sand on the

      property, in violation of multiple ordinances, and then went out of business and

      abandoned the sand. The mountain of sand is over fifty feet high, covers two

      acres, and is leaching multiple toxic chemicals into the ground beneath it. It

      has been looming over neighboring properties, polluting the City of

      Indianapolis, and violating multiple ordinances for over fourteen years. We are

      concerned, as the citizens of Indianapolis should be, that it took the City so

      long to step in more forcefully and that, despite winning a nearly $2 million

      judgment from IRI’s insurer, FLM has not done what needs to be done to

      remedy the situation.

[2]   The Metropolitan Development Commission of Marion County, Indiana (the

      City), eventually filed a claim against FLM in an attempt to require FLM to

      abate the ordinance violations on the property. FLM and the City filed cross-

      motions for summary judgment, and the trial court granted summary judgment

      in favor of the City. FLM now appeals, arguing that it did not cause, suffer, or

      allow its tenant’s ordinance violations and should not, therefore, be held liable

      for them. It also contends that the City is empowered to enter the property and

      abate the violations for itself. Finding that FLM allowed the violations, we

      affirm and remand.

      Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017   Page 2 of 15
                                                      Facts    1

                                     The Creation of Black Mountain

[3]   FLM owns a property located at 3515 East Washington Street in Indianapolis

      (the Property). On May 14, 1999, IRI leased the Property from FLM.

      Pursuant to the Lease, IRI was permitted to use the Property for the “storage,

      mixing and removal” of sand. Appellant’s App. Vol. III p. 175. The Lease

      required IRI to “comply fully with all federal, state and local environmental,

      health or safety statutes, rules, regulations, or ordinances.” Id. at 179.

[4]   At some point, IRI entered into an agreement with Daimler Chrysler

      Corporation (Chrysler), pursuant to which IRI collected and transported

      foundry sand from Chrysler’s foundry to the Property. The Chrysler

      Agreement provided that Chrysler paid IRI to remove the sand and that IRI

      was required to find beneficial reuses or other appropriate disposal for the sand.

[5]   After executing the Lease with FLM, IRI began depositing Chrysler’s foundry

      sand onto the Property. Its right to do so was contingent on IRI’s compliance

      with the Lease. For a period of time, IRI mixed the foundry sand with

      aggregate and then removed it from the Property for use as structural backfill

      for construction projects, but at some point, IRI stopped removing the sand

      from the Property. FLM did not authorize IRI to store the sand permanently

      1
       We held oral argument in this cause in Indianapolis on May 2, 2017. We thank counsel for their excellent
      oral and written presentations.

      Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017                       Page 3 of 15
      on the Property. In June 2002, an environmental consultant reported that IRI

      was in compliance with applicable environmental guidelines.

[6]   At some point, the stored foundry sand reached 105,000 tons—the “Black

      Mountain” it is known as today. Id. at 142. It is undisputed that Black

      Mountain surpassed twenty feet in height, was stockpiled without a required

      drainage permit, and altered the land in a manner that does not conform to

      existing topography. Id. at 186, 189.

[7]   In the fall of 2002, Chrysler—IRI’s only customer and only source of revenue—

      stopped paying IRI. Once Chrysler stopped paying IRI, IRI could no longer

      continue its operations or remove the foundry sand from the Property. It

      stopped paying rent to FLM, abandoned the foundry sand on the Property, and

      eventually ceased all operations.

[8]   Around the time that Chrysler stopped paying IRI, the Indiana Department of

      Environmental Management (IDEM) began receiving complaints about Black

      Mountain; for example, one neighboring property owner complained that the

      sand was migrating onto its property and clogging drainage pipes. On May 17,

      2004, IDEM issued a notice of violation to FLM and IRI and ordered them to

      remove the foundry sand.

[9]   By early 2004, the City had also learned of Black Mountain. In January 2004,

      the City issued a notice of municipal code violation under a sediment control

      ordinance, ordering FLM either to comply with drainage requirements or to

      remove the foundry sand.

      Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017   Page 4 of 15
                       The Pursuit of Insurance Proceeds and Cost of Removal

[10]   After FLM received notices of violations from IDEM and the City, including

       orders to remove Black Mountain, FLM sought indemnification from IRI and

       IRI’s insurer for the substantial amount of money it would cost to remove the

       sand from the Property. That litigation occupied the better part of the next

       decade, reaching this Court twice. See FLM, LLC v. Cincinnati Ins. Co., 24
N.E.3d 444 (Ind. Ct. App. 2014), on reh’g, 27 N.E.3d 1141 (Ind. Ct. App. 2015),

       trans. denied; FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d 1167 (Ind. Ct. App.

       2012), trans. denied.

[11]   On July 16, 2013, the trial court overseeing the insurance litigation released to

       FLM $1.7 million in damages.2 FLM recouped a portion of the award for its

       own damages, including funds for lost rent (totaling $495,000), attorney fees

       (totaling $686,741), and environmental consultant fees (totaling $9,243.50).

[12]   FLM has done extensive research into the cost of removal of Black Mountain.

       It has learned the following:

            If contractors and/or projects willing to take the sand for reuse could be
             found, the removal would cost approximately $1.2 million. Despite
             intensive efforts, FLM has been unable to locate anyone willing to take
             the sand for reuse.

       2
        The insurer has since paid $750,000 more in insurance coverage into the trial court, but those funds have
       not yet been released to FLM.

       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017                          Page 5 of 15
            Removal by disposal in a landfill will cost at least $2.3 million. This cost
             would require a commitment to dispose of all the sand—and pay the full
             $2.3 million—at once.
            Load-by-load removal of the sand would cost over $3.5 million.

       After recouping its own fees, FLM does not have sufficient funds to dispose of

       all the sand at a landfill or to remove it on a load-by-load basis.

                                           The City Files a Lawsuit

[13]   On August 19, 2013, the City filed a complaint against FLM, alleging that FLM

       had violated an ordinance by causing, suffering, or allowing Black Mountain to

       remain on the Property and that Black Mountain exceeded twenty feet in

       height. On June 30, 2014, the City filed an amended complaint, adding two

       counts alleging that Black Mountain altered the land without required drainage

       permits and that Black Mountain altered the land in a manner that does not

       conform to the existing topography. FLM denied the allegations and raised as

       an affirmative defense the fact that the City had failed to join Chrysler and IRI,

       which FLM alleges are necessary parties to the litigation.

[14]   On August 13, 2015, FLM filed a motion for summary judgment, asking the

       trial court to find as a matter of law that FLM did not cause, suffer, or allow the

       alleged ordinance violations. On November 13, 2015, the City filed a cross-

       motion for summary judgment, contending that it was entitled to judgment as a

       matter of law. Following briefing and a hearing, on May 23, 2016, the trial

       court entered judgment in favor of the City. In pertinent part, it found and held

       as follows:

       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017   Page 6 of 15
        5.       On May 14, 1999, [FLM] allowed [IRI] to store spent
                 foundry sands on the Real Estate pursuant to a certain
                 lease agreement, for which [FLM] received compensation.

                                                 ***

        7.       IRI, with FLM’s consent, began depositing foundry sand
                 from Chrysler’s facility onto the Real Estate on or after
                 May 14, 1999.

                                                 ***

        9.       IRI stopped paying rent under the lease agreement with
                 [FLM] and abandoned approximately 100,000 tons of
                 foundry sand on the Real Estate.

        10.      The foundry sand . . . has a vertical height in excess of
                 twenty (20) feet . . . .

        11.      The placement of the foundry sand on the Real Estate
                 constituted a land alternation [sic] for which a drainage
                 permit is required . . . .

        12.      FLM did not obtain a drainage permit for the placement of
                 the foundry sand on the Real Estate . . . .

        13.      The placement of the foundry sand on the Real Estate
                 altered the land in a manner that does not conform to
                 existing topography . . . .

        14.      The abandonment of the foundry sand on the Real Estate
                 caused significant concerns for adjacent property owners,
                 the [IDEM], and the [City].

Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017      Page 7 of 15
               15.      FLM has not removed the foundry sand from the Real
                        Estate.

               16.      The foundry sand remains on the Real Estate in violation
                        of the Revised Code [of Indianapolis and Marion County].

       Appellant’s App. Vol. II p. 20-21. The trial court ordered FLM to bring the

       Property into full compliance with City ordinances and to pay a fine of $500.

       FLM now appeals.

                                     Discussion and Decision

                                       I. Standard of Review
[15]   Our standard of review on summary judgment is well established:

               We review summary judgment de novo, applying the same
               standard as the trial court: “Drawing all reasonable inferences in
               favor of . . . the non-moving parties, summary judgment is
               appropriate ‘if the designated evidentiary matter shows that there
               is no genuine issue as to any material fact and that the moving
               party is entitled to judgment as a matter of law.’” Williams v.
               Tharp, 914 N.E.2d 756, 761 (Ind. 2009) (quoting T.R. 56(C)). “A
               fact is ‘material’ if its resolution would affect the outcome of the
               case, and an issue is ‘genuine’ if a trier of fact is required to
               resolve the parties’ differing accounts of the truth, or if the
               undisputed material facts support conflicting reasonable
               inferences.” Id. (internal citations omitted).

       Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014).

       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017    Page 8 of 15
                                             II. The Ordinances
[16]   There are three specific ways in which Black Mountain undeniably violates City

       ordinances:

                  (1)      Revised Code section 561-2213 provides that “it shall be
                           unlawful for a person, partnership or corporation to
                           undertake or accomplish any land alteration without
                           having in force a written drainage permit obtained from
                           the bureau of license and permit services.”

                  (2)      Revised Code section 561-382 seeks to control erosion by
                           prohibiting land alterations and fill operations that do not
                           conform with existing topography.

                  (3)      Revised Code section 733-209(a)(1) prohibits stored
                           equipment and materials from exceeding twenty feet in
                           height.

       It is undisputed that Black Mountain does, in fact, violate the above ordinances.

       Although FLM did not actually commit any violations of the above ordinances,

       the City alleges that FLM is responsible for the cleanup of Black Mountain

       because of Revised Code section 730-505(a), which provides as follows:

                  It shall be unlawful for any person who is the owner or contract
                  vendee of, or who has a possessory interest in, real property
                  located in Marion County to cause, suffer or allow any of the
                  following civil zoning violations to occur on such property:

       3
           We refer to the Revised Code provisions as codified in August 2013, when this litigation began.

       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017                               Page 9 of 15
                                                        ***

               (8)      Failure to comply with zoning district development
                        standards . . . .

       (Emphasis added). The crux of this appeal, therefore, is whether, as a matter of

       law, FLM caused, suffered, or allowed Black Mountain’s ordinance violations.

                                     A. Cause, Suffer, Allow
[17]   Ordinances are treated as if they stand on the same footing as an act of the

       legislature; therefore, the rules applying to statutory construction apply equally

       to ordinances. Lutz v. City of Indianapolis, 820 N.E.2d 766, 770 (Ind. Ct. App.

       2005). The primary rule of statutory construction is to ascertain and give effect

       to the intent of the drafters, and the plain language of the statute (or ordinance)

       is the best evidence of the drafters’ intent. Id. All words must be given their

       plain and ordinary meaning unless otherwise indicated. City of Indianapolis v.

       Campbell, 792 N.E.2d 620, 624 (Ind. Ct. App. 2003).

[18]   FLM argues that, as a matter of law, it did not cause, suffer, or allow the

       ordinance violations. As these terms are not defined in the ordinances, we turn

       to dictionaries for their plain and ordinary meanings. See Hendricks Cty. Bank &

       Trust v. Guthrie Bldg. Materials, Inc., 663 N.E.2d 1180, 1186 (Ind. Ct. App. 1996)

       (noting that courts properly consult dictionaries to determine the plain and

       ordinary meaning of words in a statute).

            “Cause” means “[t]o bring about or effect.” Black’s Law Dictionary 213
             (7th ed. 1999).
       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017   Page 10 of 15
            “Suffer,” in this context, means “[t]o allow or permit.” Id. at 1446.
            “Allow” means to “permit,” or “to fail to restrain or prevent.” Merriam-
             Webster Online Dictionary, at http://www.merriam-
             webster.com/dictionary/allow (last visited May 3, 2017).

       According to FLM, “[t]hese terms all require action which constitutes support

       or affirmatively assists an action.” Appellant’s Br. p. 31. We disagree. To

       “suffer” or “allow” something to occur can be entirely passive; no action is

       required. Indeed, the definition of “allow” quoted above is framed entirely as a

       lack of action—the failure to restrain or prevent an event from occurring.

       Therefore, we decline to frame our analysis in this manner.

[19]   There are two relevant periods of time we must consider as we evaluate the

       situation. First, we must look at the period of time between 1999—when the

       lease was signed—and 2004—when IDEM and the City both issued notices of

       violations to FLM and IRI. Second, we must look at the period of time from

       2004—at which time FLM undisputedly had actual knowledge of Black

       Mountain—to the present day.

                                               1. 1999-2004
[20]   Initially, we note that FLM’s owner and sole member was managing another

       business operating on the Property. His office was located on the Property. We

       find FLM’s claim that it was unaware of a fifty-foot-tall, 105,000-ton, two-

       acres-wide mountain of sand on that Property to be wholly incredible. That

       said, FLM’s actual knowledge of Black Mountain is a material issue of fact that

       renders summary judgment inappropriate solely on this basis.

       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017   Page 11 of 15
[21]   Focusing on FLM’s actual knowledge, however, begs the question of whether

       actual knowledge of Black Mountain’s many ordinance violations is required.

       FLM insists that it is, but its own cited authorities stand for a different

       proposition. In City of Webster Groves v. Erickson, 789 S.W.2d 824, 826-27 (Mo.

       Ct. App. 1990), the Court held that the owner of a property is subjected to

       vicarious liability for a tenant’s zoning violation if the owner has, among other

       things, actual or constructive knowledge of the violation. And the Webster Groves

       Court cited favorably to a New York case holding that a property owner who

       “knowingly lets the premises for a purpose which may give rise to liability . . .

       will not be heard to complain, even though he has done no unlawful act.” New

       York v. Scott, 258 N.E.2d 206, 209 (N.Y. 1970) (emphases added).

[22]   Here, FLM admittedly leased a portion of the Property to IRI for the sole

       purpose of storing sand—a purpose that may give rise to liability. FLM is

       charged with knowing that sand storage would implicate rules limiting height,

       requiring drainage permits, and forbidding alterations that do not comply with

       existing topography. Moreover, we again note that FLM’s principal was

       operating another business on the very same Property, meaning that FLM

       cannot credibly claim that it lacked constructive notice of the massive Black

       Mountain.

[23]   FLM was at least constructively, if not actually, aware of the presence of the

       105,000-ton mountain of sand on the Property. And Black Mountain did not

       just slightly exceed ordinance requirements. It is over fifty feet tall—more than

       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017       Page 12 of 15
       twice as high as that permitted by Revised Code section 733-209(a)(1)—and

       covers two acres of land.

[24]   FLM argues that to impose liability under these circumstances is an improper

       imposition of strict liability. We cannot agree. FLM is liable only if it caused,

       suffered, or allowed these violations; the mere fact that it owns and leased the

       Property is insufficient. Here, FLM leased the Property for the sole purpose of

       sand storage—a purpose that may give rise to liability. And FLM’s principal

       worked on a regular basis at that same Property. According to FLM’s own

       authority, these circumstances establish that FLM had constructive knowledge

       of the presence of Black Mountain on the Property, and its failure to take action

       to remediate the situation means that FLM allowed the violations to occur.

                                             2. 2004-Present
[25]   Even if the events occurring between 1999 and 2004 did not establish that FLM

       allowed the violations to occur, the events from 2004 to the present certainly

       do. While it is true that FLM pursued IRI’s insurer, FLM has now recovered at

       least $1.7 million—yet Black Mountain remains. We wholly agree with the

       City that it is “[n]onsense” that FLM’s mere pursuit of the insurance proceeds

       establishes that it is not suffering and allowing the ongoing ordinance violations

       when FLM has refused to use that money to remedy the violations. Appellee’s

       Br. p. 22.

[26]   For four years, FLM has had $1.7 million on hand. It used a significant portion

       of the award to recoup its own lost rent and legal fees. It has used $0 to work

       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017   Page 13 of 15
       on removing the Black Mountain scourge from the Property. FLM makes the

       outrageous defense that it does not have sufficient funds to completely remove

       the sand; as a result, it argues it should be excused from doing so. We are,

       frankly, stunned by this argument. A lack of ability to pay does not constitute a

       defense to a parking ticket or virtually any civil claim we can think of, much

       less to a lawsuit regarding an environmental scourge contained on the

       defendant’s own property. We decline to hold that a corporate entity may be

       absolved of a legal obligation simply because it is difficult to find the funds to

       fulfill that obligation—especially where the corporation has already reaped a

       nearly $2 million award for precisely that purpose.

[27]   We understand that in a perfect world, FLM would find a contractor willing to

       take all the sand for reuse, which is the least expensive option, but this is not a

       perfect world, and FLM has not been able to identify such a contractor. It is

       left with two options: (1) removal of all the sand at once to a landfill, at a cost

       of $2.3 million; or (2) load-by-load removal, at a total cost of over $3.5 million.

       FLM has taken no steps to initiate either option. It could have slowly, over

       time, removed the sand in loads, at least shrinking the mountain of sand and

       bringing it closer to compliance with the ordinances. It has had four years of

       possession of $1.7 million—with another $750,000 held by the insurance

       litigation trial court—and has not used a dime to make the mountain smaller.

       The fact that FLM claims it has insufficient funds to remove all the sand is

       wholly immaterial as to whether FLM has allowed Black Mountain to continue

       to exist. FLM has unquestionably and undeniably allowed this environmental

       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017   Page 14 of 15
       hazard to remain, and it has done so for years. Under these circumstances, we

       find that the trial court did not err by granting summary judgment in favor of

       the City.

[28]   As a final aside, we note that FLM argues that the City has the right to enter the

       Property to take appropriate action, including the removal of Black Mountain,

       to abate the problems caused by the sand. We find this argument to be

       ludicrous. FLM has obtained IRI’s only known asset—the insurance proceeds.

       To contend that FLM should be permitted to retain those millions of dollars

       while saddling taxpayers with the cost of removing Black Mountain is to make

       an argument that does not come close to passing the proverbial straight face

       test. It would be unjust and unfair to require the taxpayers of Indianapolis to

       foot this bill, and the trial court properly refused to do so.

[29]   The judgment of the trial court is affirmed and remanded to the trial court for

       enforcement.

       Barnes, J., and Crone, J., concur.

       Court of Appeals of Indiana | Opinion 49A02-1609-OV-2216 | May 16, 2017   Page 15 of 15