Court Opinion

ID: 9905486
Source: CourtListenerOpinion
Date Created: 2023-11-29 17:04:51.14295+00
Date Added: 2024-06-11T09:23:38.802126
License: Public Domain

FILED
                                                                       Nov 29 2023, 9:31 am

                                                                           CLERK
                                                                       Indiana Supreme Court
                                                                          Court of Appeals
                                                                            and Tax Court

ATTORNEYS FOR APPELLANTS                                  ATTORNEY FOR APPELLEES
Theodore E. Rokita                                        J. Eric Rochford
Attorney General of Indiana                               Thomas R. Malapit, Jr.
                                                          Malapit & Rochford
Natalie F. Weiss                                          Indianapolis, Indiana
Deputy Attorney General
Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

State of Indiana and Indiana                              November 29, 2023
Department of Transportation,                             Court of Appeals Case No.
Appellants-Defendants,                                    23A-PL-937
                                                          Appeal from the Hamilton
        v.                                                Superior Court
                                                          The Honorable Michael A. Casati,
John Laughlin and Eileen                                  Judge
Laughlin,                                                 Trial Court Cause No.
Appellees-Plaintiffs.                                     29D01-2209-PL-7193

                                  Opinion by Judge Tavitas
                                Judges Pyle and Foley concur.

Tavitas, Judge.

Court of Appeals of Indiana | Opinion 23A-PL-937 | November 29, 2023                           Page 1 of 9
      Case Summary
[1]   In this interlocutory appeal, the State of Indiana and the Indiana Department of

      Transportation (“INDOT”) (collectively, “the State”) appeal the trial court’s

      order of appropriation in an inverse condemnation action brought by John and

      Eileen Laughlin. The trial court entered an order of appropriation based only

      upon the initial pleadings filed in the action. When determining whether a

      taking occurred, the trial court did not hold a hearing, which is required by

      Indiana Code Section 32-24-1-6, or resolve factual issues through dispositive

      motions. On appeal, the State argues that the trial court erred by entering an

      order of appropriation without resolving factual issues as to whether a taking

      occurred. We agree that, in the inverse condemnation context, before entering

      an order of appropriation, the trial court must hold a fact-finding hearing or rule

      on other dispositive motions to determine whether a taking has occurred.

      Accordingly, we reverse and remand for further proceedings.

      Issue
[2]   The State raises one issue, which we restate as whether the trial court erred by

      entering an order of appropriation without resolving factual issues as to whether

      a taking occurred.

      Facts
[3]   In September 2022, the Laughlins filed a complaint against the State alleging

      inverse condemnation. The Laughlins alleged that they are the “owners/lessees

      of a billboard advertising sign [ ] and billboard advertising Sign Lease” located

      Court of Appeals of Indiana | Opinion 23A-PL-937 | November 29, 2023      Page 2 of 9
      at the southwest corner of the intersection of 226th Street and U.S. 31 in

      Hamilton County. Appellant’s App. Vol. II p. 17. The Laughlins alleged that

      the original term of the lease was eight years and that they had the right to

      renew the lease for ten successive eight-year terms. The Laughlins attached a

      copy of the sign lease to the complaint, but they did not attach the written

      renewals of the lease.

[4]   According to the Laughlins, the State removed the sign as part of a project to

      improve U.S. 31 and 226th Street, and the State did not offer or pay

      compensation for the taking of the sign or sign lease. The Laughlins attached

      the following photograph of the sign to their complaint:

      Id. at 24.

[5]   In response, the State filed their “Objections, Affirmative Defenses, and Motion

      to Dismiss.” Id. at 25. The “Objections” section admitted or denied the

      allegations contained in each paragraph of the Laughlins’ complaint. Next, the

      Court of Appeals of Indiana | Opinion 23A-PL-937 | November 29, 2023      Page 3 of 9
      State asserted multiple affirmative defenses. Finally, the document included a

      motion to dismiss. The State alleged, in part, that the Laughlins’ complaint

      failed to adequately describe their real estate interest and failed to describe their

      property interest by omitting their outdoor advertising permit.

[6]   The trial court gave the Laughlins until December 22, 2022, to file a response.

      The trial court noted that it would “then rule on the pleadings filed or set this

      matter for hearing.” Id. at 6. The Laughlins filed a response to the motion to

      dismiss. On January 25, 2023, the trial court denied the State’s “Objections,

      Affirmative Defenses and Motion to Dismiss.” Id. at 11.

[7]   The Laughlins then filed a “Motion for Entry of Order of Appropriation of Real

      Estate and Appointment of Appraisers” on March 1, 2023. Id. at 44. The

      Laughlins alleged that “no objections remain and the only issue in this case is

      the amount of just compensation due to Plaintiffs resulting from Defendants’

      inverse condemnation.” Id. at 45. The Laughlins requested that the trial court

      appoint appraisers.

[8]   On March 2, 2023, the State filed a motion to reconsider the order denying the

      motion to dismiss based upon newly discovered evidence. The trial court

      denied the motion to reconsider.

[9]   On March 29, 2023, the trial court entered an “Order of Appropriation and

      Appointment of Appraisers.” Id. at 13. In the order, the trial court found:

      “Defendants have appropriated Plaintiffs’ real estate interest as described in

      their Complaint for Inverse Condemnation.” Id. at 14. The trial court then

      Court of Appeals of Indiana | Opinion 23A-PL-937 | November 29, 2023         Page 4 of 9
       appointed three appraisers pursuant to Indiana Code Section 32-24-1-7(c). The

       State filed a motion for clarification, which the trial court denied. The State

       now appeals. 1

       Discussion and Decision
[10]   The State challenges the trial court’s failure to resolve factual issues as to

       whether a taking occurred before entering an order of appropriation. “When

       the State exercises its inherent authority to take private property for public use,

       the United States Constitution requires just compensation for that taking.”

       Town of Linden v. Birge, 204 N.E.3d 229, 234 (Ind. 2023) (citing U.S. Const.

       amend. V). “If the government takes property but fails to initiate eminent-

       domain proceedings, an affected property owner may recover money damages

       from the State by suing for inverse condemnation.” Id. (citing Ind. Code § 32-

       24-1-16). Indiana Code Section 32-24-1-16 authorizes an inverse condemnation

       proceeding and provides: “A person having an interest in property that has

       been or may be acquired for a public use without the procedures of this article

       or any prior law followed is entitled to have the person’s damages assessed

       under this article substantially in the manner provided in this article.” The term

       1
         The State filed this appeal claiming that it was entitled to interlocutory appeal as of right. This Court
       dismissed the appeal, concluding that the State “failed to identify in the Notice of Appeal any order that is
       eligible for interlocutory appeal as a matter of right under Indiana Appellate Rule 14(A) or 14(D).” June 13,
       2023 Order Dismissing Appeal. The State then filed a motion to reconsider, which our motions panel
       granted and reinstated the appeal. “[W]hile a writing panel may reconsider a motions panel’s decision to
       accept a discretionary interlocutory appeal, the practice is appropriately disfavored.” Means v. State, 201
       N.E.3d 1158, 1165 (Ind. 2023). The Laughlins do not request in their appellee’s brief that we reconsider the
       motions panel’s decision; accordingly, we will address the arguments raised on appeal.

       Court of Appeals of Indiana | Opinion 23A-PL-937 | November 29, 2023                               Page 5 of 9
       “article,” in this context, refers to the statutes governing eminent domain

       actions, Indiana Code Article 32-24.

[11]   In an inverse condemnation action, “[t]he owner rather than the condemnor

       brings the action.” Ctr. Townhouse Corp. v. City of Mishawaka, 882 N.E.2d 762,

       770 (Ind. Ct. App. 2008), trans. denied. There are two stages in an inverse

       condemnation action. Id. “The first stage determines whether a compensable

       taking has occurred.” Id. “At this stage the landowner must show that he has a

       property interest that has been taken for a public use without having been

       appropriated pursuant to eminent domain laws.” Id. “If the trial court, acting

       as finder of fact in the first stage, determines that a taking has occurred, the

       matter proceeds to the second stage, at which the court appoints appraisers, and

       damages are assessed.” Id. Here, we are concerned with the procedures used

       by the trial court in the first stage.

[12]   In general, an action for inverse condemnation “requires the claimant to show

       (1) a taking or damaging (2) of private property (3) for public use (4) without

       payment of just compensation (5) by a government entity.” Town of Linden, 204

       N.E.3d at 234 (citing Murray v. City of Lawrenceburg, 925 N.E.2d 728, 731 (Ind.

       2010)). “A taking by inverse condemnation includes any substantial

       interference with private property that destroys or impairs one’s free use,

       enjoyment, or interest in the property.” Ind. Dep’t of Nat. Res. v. Houin, 191

       N.E.3d 241, 249 (Ind. Ct. App. 2022), trans. denied; see also Burkhart Advert., Inc.

       v. City of Fort Wayne, 918 N.E.2d 628, 632 (Ind. Ct. App. 2009), trans. denied.

       “Ordinarily, the question of whether a particular interference is substantial is a

       Court of Appeals of Indiana | Opinion 23A-PL-937 | November 29, 2023        Page 6 of 9
       question of fact.” Houin, 191 N.E.3d at 249; see also Indiana & Michigan Elec. Co.

       v. City of Anderson, 176 Ind. App. 410, 420, 376 N.E.2d 114, 121 (1978) (“The

       question as to whether there has been an interference with a compensable

       interest, and if so, to what extent, is a question of fact upon which evidence

       must be heard.”).

[13]   Unfortunately, the procedures for determining whether a taking has occurred in

       an inverse condemnation action are not spelled out in Indiana Code Chapter

       32-24-1. Rather, Indiana Code Section 32-24-1-16, the only statute that

       addresses inverse condemnation actions, requires that the landowner’s claim for

       inverse condemnation be considered “substantially in the manner provided” by

       the eminent domain statutes. Accordingly, in determining procedures for

       considering an inverse condemnation action, we must look to those eminent

       domain statutes. Some of those statutes, however, simply are inapplicable to

       inverse condemnation proceedings. See, e.g., Ind. Code § 32-24-1-5.5

       (discussing rejections of written acquisition offers).

[14]   In general, after the State files an eminent domain action, the landowners must

       file “objections” to the proceedings, which the trial court will sustain or

       overrule. See Ind. Code § 32-24-1-8. The objections statute also provides: “The

       court may not allow pleadings in the cause other than the complaint, any

       objections, and the written exceptions provided for in section 11 of this chapter.

       However, the court may permit amendments to the pleadings.” I.C. § 32-24-1-

       8(c). It is clear, however, that the statutes also require the trial court to hold a

       hearing on the matter. Indiana Code Section 32-24-1-6 details the notice to be

       Court of Appeals of Indiana | Opinion 23A-PL-937 | November 29, 2023          Page 7 of 9
       sent to the landowner requiring the landowner to “appear before the court” and

       to file objections within thirty days.

[15]   In the context of an inverse condemnation action, our Courts have held that

       whether a taking has occurred involves a factual determination by the trial

       court, and the parties must be given the opportunity to present evidence or a

       designation of evidence. Our trial courts have used typical litigation practices

       to make that factual determination. See, e.g., Town of Linden, 204 N.E.3d at 232

       (noting that the inverse condemnation proceedings included a motion to

       dismiss, motion for summary judgment, and evidentiary hearings on the taking

       issue); Coutar Remainder I, LLC v. State, 91 N.E.3d 610, 614 (Ind. Ct. App. 2017)

       (summary judgment proceedings used to determine whether taking occurred),

       trans. denied; Boyland v. Hedge, 58 N.E.3d 928, 932 (Ind. Ct. App. 2016) (inverse

       condemnation action resolved through summary judgment proceedings); Ctr.

       Townhouse Corp., 882 N.E.2d at 766 (noting that the trial court held a bench trial

       on the taking issue); Bussing v. Indiana Dep’t of Transp., 779 N.E.2d 98, 102 (Ind.

       Ct. App. 2002) (noting that the trial court held a trial on the issue of whether a

       taking had occurred and entered findings of fact and conclusions thereon

       concluding no compensable taking occurred by INDOT), trans. denied.

[16]   Here, after the State filed its objections to the Laughlins’ inverse condemnation

       action, the trial court was required to make a factual determination as to

       whether a taking occurred. The nature of the Laughlins’ property interest is not

       entirely clear from their complaint as they claim to be “owners/lessees” of the

       sign and sign lease, and the State claimed in part that the Laughlins did not

       Court of Appeals of Indiana | Opinion 23A-PL-937 | November 29, 2023       Page 8 of 9
       have a required permit for the sign. 2 The State filed a motion to dismiss, which

       the trial court denied.

[17]   Accordingly, factual issues remained, and the trial court should have set the

       matter for a hearing or allowed other dispositive motions to be filed. As the

       State points out, the trial court essentially “sua sponte decided a legal,

       dispositive issue despite there being issues of fact.” Appellant’s Br. p. 12. The

       trial court resolved the issue of whether a taking occurred based upon only the

       Laughlins’ complaint and the State’s objections and affirmative defenses, which

       was improper under these circumstances.

       Conclusion
[18]   The trial court failed to resolve factual issues in determining whether a taking

       occurred. Accordingly, we reverse and remand for the trial court to conduct an

       evidentiary hearing or allow dispositive motions on the taking issue.

[19]   Reversed and remanded.

       Pyle, J., and Foley, J., concur.

       2
         We note that the “holder of an unexpired leasehold interest in land is entitled to just compensation under
       the Fifth Amendment, for the value of that interest when the land is taken by eminent domain.” Ind. Grocery
       Co. v. Crosby Properties Co., 578 N.E.2d 780, 782 (Ind. Ct. App. 1991), trans. denied. “Tenants are thus entitled
       to compensation for an unexpired term of a lease terminated by condemnation.” Id.

       Court of Appeals of Indiana | Opinion 23A-PL-937 | November 29, 2023                                  Page 9 of 9