Court Opinion

ID: 9899044
Source: CourtListenerOpinion
Date Created: 2023-11-15 20:04:57.27116+00
Date Added: 2024-06-11T09:19:20.295206
License: Public Domain

FILED
                                                                        Nov 15 2023, 8:56 am

                                                                            CLERK
                                                                        Indiana Supreme Court
                                                                           Court of Appeals
                                                                             and Tax Court

ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Mark K. Leeman                                            Theodore E. Rokita
Leeman Law Office                                         Attorney General of Indiana
Logansport, Indiana                                       Kyle Hunter
                                                          Deputy Attorney General
                                                          Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA
John E. Moriarity, Mae E.                                 November 15, 2023
Moriarity, and C-A-R-E Auto                               Court of Appeals Case No.
Auction, Inc.,                                            22A-PL-2899
Appellants-Plaintiffs,                                    Appeal from the Grant Circuit
                                                          Court
        v.                                                The Honorable Mark E. Spitzer,
                                                          Judge
State of Indiana, Indiana Natural                         Trial Court Cause No.
Resources Commission, and                                 27C01-1805-PL-17
Indiana Department of
Natural Resources,
Appellees-Defendants

                                Opinion by Judge Weissmann
                              Judges Riley and Bradford concur.

Court of Appeals of Indiana | Opinion 22A-PL-2899 | November 15, 2023                           Page 1 of 7
      Weissmann, Judge.

[1]   Nearly 30 years ago, John and Mae Moriarity built on their property a dam big

      enough to violate Indiana’s Dam Safety Act.1 After being ordered to either

      modify the dam or remove it, the Moriaritys sought compensation from the

      State for what they say will be attending damages—namely, a 30-to-40- acre

      mud pit and thousands of dead fish. This claim ignores the simple fact that the

      Moriaritys created the quagmire in which they find themselves and cannot now

      rely on the State to bail them out. Therefore, we affirm the trial court’s

      dismissal of the Moriaritys’ inverse condemnation action.

      Facts
[2]   In the late 1990s, the Moriaritys built a dam that rose more than 20 feet in

      certain spots, creating a roughly 30-to-40-acre pond that contained over one

      hundred acre-feet of water. After learning about the dam, the Indiana

      Department of Natural Resources (DNR) ordered the Moriaritys to make

      changes, fearing safety deficiencies could cause the structure to burst and

      endanger nearby homeowners.

[3]   The Moriaritys first litigated, and lost, a claim that their dam did not fall within

      the DNR’s jurisdiction. Moriarity v. Ind. Dep’t of Nat. Res., 113 N.E.3d 614, 617-

      1
          Ind. Code § 14-27-7.5 et seq.

      Court of Appeals of Indiana | Opinion 22A-PL-2899 | November 15, 2023        Page 2 of 7
      18 (Ind. 2019). Our Supreme Court concluded that the Moriaritys must either

      modify the illegal dam to comply with the Dam Safety Act or remove it. 2

[4]   But while that case worked its way through the courts, the Moriaritys also

      pursued an inverse condemnation action. They claimed the DNR’s action in

      forcing them to modify or remove their illegal dam constituted a regulatory

      taking that entitled them to just compensation. The trial court dismissed the

      Moriaritys' inverse condemnation complaint, finding that the facts “[did] not

      support a finding of a regulatory taking by the DNR.” App. Vol. III, p. 47.

      Discussion and Decision
[5]   On appeal, the Moriaritys claim they met the low bar necessary to survive

      dismissal of their inverse condemnation claim. A motion to dismiss under

      Indiana Trial Rule 12(B)(6) generally “tests the legal sufficiency of the plaintiff’s

      claims, not the fact supporting it.” Bellwether Props., LLC v. Duke Energy Ind.,

      Inc., 87 N.E.3d 462, 466 (Ind. 2017). A Trial Rule 12(B)(6) dismissal is

      reviewed de novo. Crystal Valley Sales, Inc. v. Anderson, 22 N.E.3d 646, 652 (Ind.

      Ct. App. 2014). Thus, the issue here is whether the Moriaritys’ complaint

      alleged facts constituting a compensable regulatory taking. It did not.

      2
       The Indiana Supreme Court affirmed a trial court’s judgment, which itself affirmed the decision of the
      Natural Resources Commission, that the Moriaritys’ dam violated the Indiana Dam Safety Act because it
      was an impermissible “high-hazard structure.” Moriarity, 113 N.E.3d at 622-23 (citing Ind. Code § 14-27-7.5-
      8(b)).

      Court of Appeals of Indiana | Opinion 22A-PL-2899 | November 15, 2023                            Page 3 of 7
      Regulatory Taking

[6]   Both Article 1, § 21 of the Indiana Constitution and the Fifth Amendment to

      the United States Constitution prevent the taking of private property for public

      use without “just compensation.” These provisions “are textually

      indistinguishable and are to be analyzed identically.” State v. Kimco of Evansville,

      Inc., 902 N.E.2d 206, 210 (Ind. 2009).

[7]   Two types of regulatory action generally establish per se takings: (1) the

      permanent physical invasion of property; or (2) the deprivation of all or

      substantially all economic or productive use of an owner’s property. Lingle v.

      Chevron U.S.A., Inc., 544 U.S. 528, 538 (2005). Outside of these “two relatively

      narrow categories,” courts turn to the well-worn Penn Central factors. Id. (citing

      Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978)). These

      factors require consideration of (1) the economic impact of the regulation, (2)

      the extent the regulation interfered with distinct investment-backed

      expectations, and (3) the character of the government action. Id. at 538-39.

[8]   Here, given that no physical invasion occurred, the Moriaritys largely allege the

      second category of a per se taking: the loss of all economic or productive use of

      their property. But even if such a loss occurred, the Moriaritys’ claim fails

      because the government may affect a total regulatory taking without

      compensation where “‘background principles of nuisance and property law’

      independently restrict the owner’s intended use of the property.” Lingle, 544

      U.S. at 538 (quoting Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1026-32

      (1992)).
      Court of Appeals of Indiana | Opinion 22A-PL-2899 | November 15, 2023        Page 4 of 7
[9]    The Moriaritys never possessed a right to build an illegal dam. Therefore, they

       are not entitled to compensation because the State forced them to remove or

       modify it. This situation falls neatly within a category of regulatory cases

       identified by the United States Supreme Court as not deserving of just

       compensation. In Lucas, the petitioner purchased two beachfront lots that he

       intended for future residential use. 505 U.S. at 1007. But within a few years, the

       state of South Carolina enacted a law that effectively banned “any permanent

       habitable structures” from being built on his lots, which were within a beach

       erosion zone. Id. Under these circumstances, the Supreme Court found no

       compensable taking because “background principles” in the “law of property

       and nuisance” supported the state’s right to place such restrictions upon land

       ownership. Id. at 1029.

[10]   As an illustrative example, Justice Scalia pointed out that “the owner of a lake-

       bed . . . would not be entitled to compensation when he is denied the requisite

       permit to engage in a landfilling operation that would have the effect of

       flooding others’ land.” Id. This is true even where the “regulatory action may

       well have the effect of eliminating the land’s only economically productive use”

       because the government action “does not proscribe a productive use that was

       previously permissible under relevant property and nuisance principles.” Id.

       (emphasis added).

[11]   The Moriaritys’ situation mirrors Justice Scalia’s example. The DNR is

       requiring the Moriaritys to fix or remove the dam because of the hazard it poses

       to them and their neighbors. To find for the Moriaritys here would be like

       Court of Appeals of Indiana | Opinion 22A-PL-2899 | November 15, 2023       Page 5 of 7
       endorsing the lake-bed owner’s unpermitted landfilling operation and then—

       once the threat of flooding arises—forcing the State to pay the owner to undo

       his own actions that created the danger in the first place. Such a result is absurd.

       Indeed, the “recognition that the Takings Clause does not require compensation

       when an owner is barred from putting land to a use that is proscribed by those

       ‘existing rules or understandings’ is surely unexceptional.” Id. Thus, the

       Moriaritys’ complaint did not plead a per se regulatory taking.

[12]   For similar reasons, the Moriaritys also failed to plead a regulatory taking under

       the Penn Central factors. First, under our standard of review, we assume as true

       the Moriaritys’ claim that the dam’s removal will cause them significant

       economic damages. Yet this injury is counterbalanced by the corresponding

       lack of any investment-backed expectations the Moriaritys should have had.

       Although the Moriaritys alleged their expectation that the dam would create a

       “thriving ecosystem” of fish and wildlife, Appellant’s Br., p. 26 (citing App.

       Vol. II, p. 88), left entirely unmentioned is any reasonable expectation that they

       possessed the right to build a dam that violated Indiana’s Dam Safety Act. And

       the Moriaritys would have been entirely wrong to simply assume their dam’s

       legality. As the Supreme Court remarked in Lucas, a “property owner necessarily

       expects the uses of his property to be restricted, from time to time, by various

       measures newly enacted by the State in legitimate exercise of its police powers.”

       505 U.S. at 1027 (emphasis added).

[13]   Lastly, the character of the government action here supports finding no

       regulatory taking occurred. In regulating the Moriaritys’ dam, the DNR is

       Court of Appeals of Indiana | Opinion 22A-PL-2899 | November 15, 2023        Page 6 of 7
       acting to promote the common good and ensure public safety from the risk that

       a potentially deficient dam will fail and flood nearby landowners. These facts

       are the hallmark of a permissible government action. See Duke Energy Ind., LLC

       v. Bellwether Props., LLC, 192 N.E.3d 1003, 1009 (Ind. Ct. App. 2022) (finding

       no regulatory taking where government action “is intended to protect life and

       property”).

[14]   Because the Moriaritys’ complaint did not successfully plead a regulatory

       taking, we affirm its dismissal.

       Riley, J., and Bradford, J., concur.

       Court of Appeals of Indiana | Opinion 22A-PL-2899 | November 15, 2023   Page 7 of 7