Daniel Enterprises, L.P. v. City of Portage, Indiana (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), FILED
this Memorandum Decision shall not be
Dec 12 2018, 8:53 am
regarded as precedent or cited before any
court except for the purpose of establishing CLERK
Indiana Supreme Court
the defense of res judicata, collateral Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
David M. Austgen Bonnie C. Coleman
Michael L. Muenich Steven J. Scott
Ryan A. Deutmeyer HODGES & DAVIS, P.C.
AUSTGEN KUIPER JASAITIS P.C. Merrillville, Indiana
Crown Point, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Daniel Enterprises, L.P., et al., December 12, 2018
Appellants-Defendants, Court of Appeals Case No.
18A-PL-1594
v. Appeal from the Porter Superior
Court
City of Portage, Indiana, The Honorable Jeffrey W. Clymer,
Appellee-Plaintiff. Special Judge
Trial Court Cause No.
64D05-1711-PL-10862
Bailey, Judge.
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Case Summary
[1] Daniel Enterprises, L.P. (“Daniel”) appeals an order of condemnation in favor
of the City of Portage, Indiana (“the City”) appropriating footage (0.287 acres)
from a parcel of commercial property (“the Property”) owned by Daniel and
leased by Heartland Midwest, LLC (“Heartland”).1 Daniel presents a sole,
consolidated issue: whether the trial court clearly erred in overruling Daniel’s
objections to the appropriation. We affirm.
Facts and Procedural History
[2] In 2017, the City was engaged in a road improvement project involving
Willowcreek Road. The Property is located on Willowcreek Road; the
improvements include a commercial building from which a fast food restaurant
is operated.
[3] On November 16, 2017, the City filed a condemnation complaint against
Daniel, the owner of the property. The City also named Heartland, who had
recorded on April 2, 2012 a memorandum of lease in the office of the Recorder
of Porter County. Daniel entered an appearance and filed objections,
1
Heartland, although a named defendant, has not entered an appearance in the case below or on appeal and
is thus not an active party on appeal. Purportedly, Heartland sublet the property to Tri City Foods of
Indiana, Inc., (“Tri City”) who was not a named defendant and has not been joined as a party.
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contending a lack of statutory compliance on the part of the City. Heartland
did not appear.
[4] On May 9, 2018, the trial court conducted a hearing and heard testimony from
a single witness, Nancy Hermann (“Hermann”), an agent for an acquisition
firm employed by the City. Daniel did not present testimonial or documentary
evidence but argued that the appropriation order should not be granted because
the City had failed to negotiate with the real party in interest, sub-lessee Tri
City.
[5] On June 8, 2018, the trial court entered an Order of Condemnation and for
Appointment of Appraisers. In so doing, the court overruled the objections
filed by Daniel and appointed three appraisers to assess the damages. Daniel
now appeals.
Discussion and Decision
[6] The State has inherent authority to take private property for public use. Sagarin
v. City of Bloomington, 932 N.E.2d 739, 744 (Ind. Ct. App. 2010), trans. denied.
“The taking of private property for public purposes like roads and schools has
historically been treated, constitutionally speaking, as a matter consigned to
legislative judgment.” Boyd v. State, 976 N.E.2d 767, 768 (Ind. Ct. App. 2012)
(citing Randall T. Shepard, Land Use Regulation in the Rehnquist Court: The Fifth
Amendment and Judicial Intervention, 38 Cath. U. L. Rev. 847, 853-57 (1989)).
The courts are not to infringe upon an administrative act of determining the
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necessity or reasonableness of a taking; rather, judicial review is limited to
whether the condemnation proceedings were legal, whether the condemner had
the authority to condemn the property, and whether the property was to be
taken for a public purpose. Id. at 769.
[7] Article 1, Section 21 of the Indiana Constitution, otherwise known as Indiana’s
eminent domain provision, provides, “No person’s property shall be taken by
law, without just compensation; nor, except in the case of the State, without
such compensation first assessed and tendered.” Eminent domain proceedings
are governed by Indiana Code chapter 32-24-1 and take place in two separate
phases: (1) the initial or summary phase, and (2) a phase for determination of
damages. State v. Dunn, 888 N.E.2d 858, 861 (Ind. Ct. App. 2008), trans. denied,
cert. denied, 558 U.S. 823 (2009).
[8] Pursuant to Indiana Code section 32-24-1-8(a), a defendant may file objections
during the initial phase of the proceedings, on grounds that the court does not
have jurisdiction, the plaintiff does not have the right to exercise the power of
eminent domain for the use sought, or “for any other reason disclosed in the
complaint or set up in the objections.” “After a consideration of the legality of
the action and any objections which may have been filed, the trial court
concludes this phase of the proceedings by entering an order of appropriation
and appointing appraisers to assess the damages.” State ex rel. Bd. of Aviation
Comm’rs of City of Warsaw v. Kosciusko Cty. Super. Ct., 430 N.E.2d 754, 755 (Ind.
1982).
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[9] Daniel’s objections concerned the City’s alleged non-compliance with Indiana
Code Sections 32-24-1-3 and -5. Indiana Code Section 32-24-1-3(b) requires
that the condemner must first “make an effort to purchase for the use intended
the land, right-of-way, easement, or other interest, in the property.” The effort
must include (1) establishing a proposed purchase price, (2) providing the
owner with an appraisal or other evidence used to establish the proposed
purchase price, and (3) conducting good faith negotiations with the owner of
the property. An “owner” is defined as “the persons listed on the tax
assessment rolls as being responsible for the payment of real estate taxes
imposed on the property and the persons in whose name title to real estate is
shown in the records of the recorder of the county in which the real estate is
located.” Ind. Code § 32-24-1-2. “As a condition precedent to filing a
complaint in condemnation,” a condemner must, at least thirty days before
filing a complaint, make an offer to purchase the property to (1) the owner of
the property sought to be acquired; or (2) the owner’s designated representative.
I. C. § 32-24-1-5.
[10] At the hearing, Hermann testified on behalf of the City. She described the area
sought to be condemned as grass and a portion of the concrete apron. The
drive, parking spaces, and building were not directly affected. However, the
traffic pattern would be changed such that patrons could only access the
premises with a right-hand turn. Hermann testified that the City had
commissioned an appraisal and had made an acquisition offer of $42,300.00 to
Daniel. A return receipt indicated that the offer had been received. No offer
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had been made to either Heartland or Tri City. Daniel presented no evidence,
but its counsel argued that the City should have dealt with the leaseholder.
According to counsel, Tri City “took over” at some point, he was “not positive
how,” and Tri City was “not here” to represent its own interests. (Tr. at 9.)
Daniel conceded that any transfer of leasehold interest from Heartland to Tri
City was not recorded.
[11] On appeal, Daniel concedes that the City performed the statutory condition
precedent of making an offer to purchase to the owner of the Property.
However, Daniel insists that a parallel offer must have been made to the current
leaseholder. Apart from the lack of evidence to establish that Tri City is indeed
a leaseholder, Daniel cites no authority for the proposition that a public entity
seeking condemnation of property must negotiate with any party other than the
owner. In its reply brief, Daniel attempts to present a public policy argument
that leaseholders should be elevated to the status of owners during negotiations.
Nonetheless, the public policy of this State regarding eminent domain
proceedings is specifically embodied in the statutory scheme. The record is
devoid of any basis, factual or legal, upon which the trial court was obliged to
grant the objections from Daniel.
Conclusion
[12] Daniel has identified no illegality in the proceedings. The trial court properly
overruled Daniel’s objections to the City’s condemnation action.
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[13] Affirmed.
Bradford, J., and Brown, J., concur.
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