Gunther Kranz and Carol Kranz v. Meyers Subdivision Property Owners Association, Inc.,Christopher Bartoszek, and Indiana Dept. of Natural Resources

FILED
Aug 28 2012, 8:41 am
FOR PUBLICATION CLERK
of the supreme court,
court of appeals and
tax court
ATTORNEY FOR APPELLANTS: ATTORNEYS FOR APPELLEE:
JERE L. HUMPHREY GREGORY F. ZOELLER
Wyland, Humphrey, Wagner & Clevenger, LLP Attorney General of Indiana
Plymouth, Indiana
ANDREW R. FALK
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
GUNTHER KRANZ and CAROL KRANZ, )
)
Appellants-Petitioners, )
)
vs. ) No. 75A03-1112-PL-577
)
MEYERS SUBDIVISION PROPERTY )
OWNERS ASSOCIATION, INC., )
CHRISTOPHER BARTOSZEK, and INDIANA )
DEPARTMENT OF NATURAL RESOURCES, )
)
Appellees-Respondents. )
APPEAL FROM THE STARKE CIRCUIT COURT
The Honorable Roger V. Bradford, Judge
Cause No. 75C01-1102-PL-2
August 28, 2012
OPINION ON REHEARING - FOR PUBLICATION
CRONE, Judge
Case Summary
Gunther and Carol Kranz petition for rehearing in the case of Kranz v. Meyers
Subdivision Property Owners Association, 969 N.E.2d 1068 (Ind. Ct. App. 2012). We grant
rehearing solely to clarify why we believe that our interpretation of a regulation promulgated
by the Department of Natural Resources (“the DNR”) is consistent with that of the agency’s.
Therefore, we reaffirm our original opinion in all respects.
Facts and Procedural History
The Kranzes own property on Bass Lake that is subject to an easement by other
landowners in the Meyers Subdivision (“the Subdivision”). In prior, separate proceedings,
the Natural Resources Commission (“the NRC”) determined that the easement holders had
the right to place a pier at the end of the easement, but they would have to apply for a permit
for a group pier (“the Group Pier”) from the DNR. The DNR initially denied the permit, and
the easement holders requested a hearing before an administrative law judge (“the ALJ”),
who determined that the easement holders should be allowed to have a group pier and that
the Kranzes should move their pier to accommodate the Group Pier. The Kranzes appealed
to the NRC, which adopted the ALJ’s decision.
The Kranzes then sought judicial review in the Starke Circuit Court. The Kranzes
advanced four reasons for reversing the NRC’s decision: (1) that the NRC lacked
jurisdiction to determine property rights; (2) that the decision was arbitrary and capricious
because the NRC did not follow its own rule; (3) that the decision was not supported by
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substantial evidence; and (4) that the decision effected an unconstitutional taking. The trial
court affirmed, and the Kranzes appealed to this Court.
On appeal, we held that: (1) the NRC has jurisdiction to render a decision concerning
property rights to the extent necessary to implement the permit process; (2) that the NRC
properly interpreted and applied its own rule; (3) that the evidence favorable to the decision
supported the NRC’s ruling; and (4) that there was not an unconstitutional taking of the
Kranzes’ property. Id. at 1080.
The Kranzes filed a petition for rehearing in which they argue that our interpretation
of the DNR regulation at issue is not consistent with the way in which the agency interpreted
it.1 Recognizing that an agency’s interpretation of its own regulations is typically accorded
great weight, we grant rehearing to clarify why we believe that our interpretation of the
regulation is consistent with the NRC’s. See Ind. Dep’t of Envtl. Mgmt. v. Steel Dynamics,
Inc., 894 N.E.2d 271, 274 (Ind. Ct. App. 2008) (“[A]n interpretation of statutes and
regulations by the administrative agency charged with enforcing those statutes and
regulations is entitled to great weight, and the reviewing court should accept the agency’s
reasonable interpretation of such statutes and regulations, unless the agency’s interpretation
would be inconsistent with the law itself.”), trans. denied (2009).
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The Kranzes raise two additional issues, which we believe were adequately addressed in our original
opinion.
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Discussion and Decision
On appeal, the Kranzes argued that the NRC’s decision was arbitrary and capricious
because it failed to follow one of its own rules, 312 Indiana Administrative Code 11-4-
8(c)(1). That rule states:
(c) The [DNR] shall condition a license for a group pier so the
placement, configuration, and maintenance of the pier …:
(1) Provide a reasonable buffer zone between the pier and the:
(A) portion of the lake two hundred (200) feet from the
shoreline or water line; and
(B) riparian zone of adjacent property owners to provide for
reasonable navigation by the adjacent property owner and by the
public. Except as otherwise provided in this clause, the
department shall require at least five (5) feet of clearance on
both sides of a riparian line (for a total of ten (10) feet). The
department may require as much as ten (10) feet of clearance on
both sides of a riparian line (for a total of twenty (20) feet) if,
based upon the opinion of a qualified professional, additional
clearance is required for reasonable navigation. The department
may approve an exception to this clause where adjacent riparian
owners use a common pier along their mutual property line, and
the purposes of this clause are satisfied by waters elsewhere
within their riparian zones.
312 Ind. Admin. Code 11-4-8(c)(1).
The Kranzes argued that this rule required ten feet of clearance between each side of
the Group Pier and the boundaries of the easement; therefore, because the easement is only
fifteen feet wide, the permit had to be denied. We noted that the rule requires only five feet
of clearance on each side of a riparian line. We further held that the easement owners did not
have their own riparian zone, but merely had the right to use a portion of the Kranzes’
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riparian rights. See Kranz, 969 N.E.2d at 1079 (citing Klotz v. Horn, 558 N.E.2d 1096, 1097
(Ind. 1990)). Thus, we explained the application of the rule as follows:
In Adochio,[2] the NRC determined that the easement included the use of
the Kranzes’ riparian rights in the area corresponding to the boundaries of the
easement. This fifteen-foot area is not a separate riparian zone, but falls
entirely within the Kranzes’ riparian zone. Thus, the references in 312 Indiana
Administrative Code 11-4-8(c)(1) to riparian lines and zones do not refer to the
boundaries of the easement, but to the boundaries of the Kranzes’ riparian
zone. Both the Group Pier and the Kranzes’ pier are entirely within the
Kranzes’ riparian zone, and both piers are at least five feet from the boundaries
of the Kranzes’ riparian zone.
…. In other words, there must be five feet of clearance between
Bartoszek’s pier and the Bartoszek-Kranz riparian line, and five feet of
clearance between the riparian line and the Group Pier.[3] On its face, the rule
does not appear to address the amount of clearance that should exist between
the Group Pier and the Kranzes’ pier, which are both located in the same
riparian zone. Nevertheless, the NRC created a buffer of approximately
sixteen feet, which is consistent with the spirit of the rule. Thus, we conclude
that the NRC correctly applied 312 Indiana Administrative Code 11-4-8(c)(1).
Id. at 1079-80.
In their petition for rehearing, the Kranzes argue that the NRC did intend to create a
separate riparian zone for the easement holders. We acknowledge that there are a few
references in the NRC’s opinion to the easement holders having a riparian zone; however,
reading the opinion as a whole, we conclude that these references are nothing more than a
few isolated instances of lack of precision in the use of a term of art. The NRC cited and
clearly intended to apply Klotz, which held that an easement holder does not acquire riparian
2
Adochio v. Kranz, 11 CADDNAR 400, 413 (2008), available at www.in.gov/nrc/decision/07-
204w.v11.htm.
Bartoszek is the Kranzes’ neighbor to the west; the Bartoszek-Kranz property line is also the western
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boundary of the easement.
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rights, but may acquire the right to use the riparian rights of the servient estate. The greater
number of the NRC’s findings are consistent with Klotz. See e.g., Appellants’ App. at 12
(stating that the Subdivision holds an easement “which crosses a portion of the lands and the
riparian waters of the Kranzes”); id. at 13 (again stating that the subdivision holds an
easement “over the lands and riparian waters of the Kranzes” and describing the
subdivision’s riparian rights as “derivative”); id. at 15 (setting forth the Klotz rule and stating
that the easement holders “are not riparian owners”); id. at 19 (noting that the parties had
stipulated that the “appropriate delineation of riparian zones was described by the straight-
line extension of property lines”).
The Kranzes argue that paragraph 77 of the NRC’s order indicates that it intended to
create a separate riparian zone for the easement holders. That paragraph included a diagram
of the Kranzes’ property, Bartoszek’s property, and the easement. A line marked “1” extends
from the Kranz-Bartoszek property line (which is also the western border of the easement)
into Bass Lake. The text of paragraph 77 contains the following description of line 1:
This solid line is the straight-line extension into Bass Lake of the common
terrestrial property line of Bartoszek Lot 48 and Kranz Lot 49 and depicts the
delineation of riparian zones between those properties. In addition, the line
depicts the delineation of riparian zones between Bartoszek Lot 48 and the
subject easement.
Id. at 31. While this comment seems to refer to the easement holders having a riparian zone,
it also reflects that that zone is subsumed within the Kranzes’ riparian zone. Although this
language is not a very precise application of Klotz, the end result is essentially correct and
consistent with our opinion.
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Finally, the Kranzes rely on the statement of contentions that the DNR submitted in
the Adochio case and the testimony of Lieutenant Shepherd, a conservation officer who had
originally recommended denial of the permit for the Group Pier. However, the NRC is the
final authority for interpreting the regulation at issue, and as explained above, we believe that
our opinion is consistent with how the NRC interpreted it. Therefore, we reaffirm our
previous opinion in all respects.
VAIDIK, J., and BRADFORD, J., concur.
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