City of Indianapolis v. Towne & Terrace Corporation

FILED
Jul 03 2018, 9:05 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES
Donald E. Morgan Clifford R. Courtney
Thomas J. O. Moore Frederic C. Sipe
Deborah L. Law Indianapolis, Indiana
Office of Corporation Counsel Robert A. Smith
Indianapolis, Indiana Smith Wade, LLC
James J. Ammeen Noblesville, Indiana
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
City of Indianapolis, July 3, 2018
Appellant-Plaintiff/Counterclaim Court of Appeals Case No.
Defendant, 49A02-1711-OV-2686
v. Appeal from the Marion Superior
Court
Towne & Terrace Corporation, et The Honorable Cynthia J. Ayers,
al., Judge
Appellees-Defendants/Counterclaim Trial Court Cause No.
Plaintiffs. 49D04-1311-OV-42187
Riley, Judge.
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STATEMENT OF THE CASE
[1] Appellants-Plaintiff/Counterclaim Defendant, City of Indianapolis (City),
appeals the trial court’s summary judgment in favor of Appellees-
Defendants/Counterclaim Plaintiffs), Towne & Terrace Corporation, et al.,
(Towne & Terrace).
[2] We affirm.
ISSUES
[3] The City presents four issues on appeal, three of which we find dispositive and
which we restate as follows:
(1) Whether no genuine issue of material fact exists to conclude that Indiana
Code section 32-31-1-22 barred the City’s claims against Towne &
Terrace;
(2) Whether no genuine issue of material fact exists to conclude that the
City’s public nuisance action under Indiana Code section 32-30-6-7
against Towne & Terrace is not succesful ; and
(3) Whether there is no genuine issue of material fact to conclude that the
City owed Towne & Terrace maintenance assessments on the units it
acquired ownership to.
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FACTS AND PROCEDURAL HISTORY
[4] Towne & Terrace is a residential complex near the intersection of East 42nd
Street and Post Road in Indianapolis, Indiana. Incorporated in 1964 for the
purpose of owning and maintaining the common areas of the condominium
development, Towne & Terrace is a private, nonprofit Indiana corporation with
volunteer directors. Unlike more recent condominium developments, Towne &
Terrace homeowners are members of Towne & Terrace and do not own any
interest in its common areas. The individual lots are transferred by deed. To
keep Towne & Terrace apprised of ownership changes in the individual
condominiums, the corporation’s Amended Articles of Incorporation require
the issuance of a certificate of membership to each member, and it is each
member’s responsibility to inform Towne & Terrace when his or her lot is
transferred to a new owner. The previous member must then request a new
certificate of membership to be issued to the new member. As of 2017, the City
owned at least 49 units in Towne & Terrace. Thirteen of the units were
acquired as part of a settlement in an unrelated nuisance action. The remainder
of the units became the City’s possession after they were not purchased at tax
sales. Since being acquired, each of the City’s homes in Towne & Terrace has
been left vacant and boarded up.
[5] Over the years, the East side of Marion County has suffered a major crime
wave. In 2015, the Federal Bureau of Investigation, the United States
Attorney’s Office, the Indiana State Police, the Marion County Sheriff, and
Indianapolis Metropolitan Police Department conducted raids throughout
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Indianapolis, leading to the arrest of thirty-five criminals—the vast majority on
the East side.
[6] On December 16, 2014, the City filed an Amended Complaint against Towne
& Terrace and four members of its board in their representative capacities,
alleging that Towne & Terrace “failed to provide, maintain, and ensure that all
common areas of the [] residential complex are safe from hazardous conditions,
including but not limited to general lawlessness and the threat of reasonably
foreseeable criminal intrusions.” (Appellant’s App. Vol. II, p. 40). Specifically,
the City noted that “[s]ince January 1, 2008, there have been at least excessive
police runs and numerous reports filed by the Indianapolis Metropolitan Police
Department at the [] residential complex involving crimes such as homicide,
rape, fraud, arson, domestic battery, public intoxication, child abduction, child
abuse, larceny, burglary, armed robbery, aggravated assault, vandalism,
intimidation, invasion of privacy, and trespass.” (Appellant’s App. Vol. II, p.
42). As such, the City requested the trial court, among other things, to
[a]ward the City compensatory damages against [Towne &
Terrace], jointly and severally, to compensate the City for all
damages caused by [Towne & Terrace’s] operation, management
and maintenance of the [Towne & Terrace] residential complex
and individual units, including but not limited to:
i. All resources expended by the City, including but not limited to
the Department of Public Safety, IMPD, DCE, and MCHD, in
response to the unreasonable volume of investigations, reports,
and citations caused by [Towne & Terrace’s] neglect of the []
residential complex and individual units, and
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ii. Any and all other public resource expenditures resulting from
[Towne & Terrace’s] neglect of the [] residential complex.
(Appellant’s App. Vol. II, pp. 47-48).
[7] On January 30, 2015, Towne & Terrace filed an Answer and Counterclaim,
denying the allegations in the Amended Complaint and asserting that the City
owed Towne & Terrace maintenance fees on the individual units owned by the
City. On October 3, 2016, Towne & Terrace moved for summary judgment on
its counterclaim against the City. The trial court conducted a hearing on May
17, 2017.
[8] Prior to the trial court issuing a ruling, Towne & Terrace filed a second motion
for summary judgment on the City’s Amended Complaint; to which the City
responded on July 17, 2017. After a hearing on Towne & Terrace’s second
motion for summary judgment, the trial court issued its ruling on October 18,
2017, granting summary judgment to Towne & Terrace on the City’s Amended
Complaint and partial summary judgment on Towne & Terrace’s counterclaim.
DISCUSSION AND DECISION
I. Standard of Review
[9] In reviewing a trial court’s ruling on summary judgment, this court stands in the
shoes of the trial court, applying the same standards in deciding whether to
affirm or reverse summary judgment. First Farmers Bank & Trust Co. v. Whorley,
891 N.E.2d 604, 607 (Ind. Ct. App. 2008), trans. denied. Thus, on appeal, we
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must determine whether there is a genuine issue of material fact and whether
the trial court has correctly applied the law. Id. at 607-08. In doing so, we
consider all of the designated evidence in the light most favorable to the non-
moving party. Id. at 608. A fact is ‘material’ for summary judgment purposes if
it helps to prove or disprove an essential element of the plaintiff’s cause of
action; a factual issue is ‘genuine’ if the trier of fact is required to resolve an
opposing party’s different version of the underlying facts. Ind. Farmers Mut. Ins.
Group v. Blaskie, 727 N.E.2d 13, 15 (Ind. 2000). The party appealing the grant
of summary judgment has the burden of persuading this court that the trial
court’s ruling was improper. First Farmers Bank & Trust Co., 891 N.E.2d at 607.
When the defendant is the moving party, the defendant must show that the
undisputed facts negate at least one element of the plaintiff’s cause of action or
that the defendant has a factually unchallenged affirmative defense that bars the
plaintiff’s claim. Id. Accordingly, the grant of summary judgment must be
reversed if the record discloses an incorrect application of the law to the facts.
Id.[10] We observe that, in the present case, the trial court entered findings of fact and
conclusions of law in support of its judgment. Special findings are not required
in summary judgment proceedings and are not binding on appeal.
AutoXchange.com. Inc. v. Dreyer and Reinbold, Inc., 816 N.E.2d 40, 48 (Ind. Ct.
App. 2004). However, such findings offer this court valuable insight into the
trial court’s rationale for its review and facilitate appellate review. Id.I. Indiana Code section 32-31-1-22
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[11] Indiana Code section 32-31-1-22 was enacted as part of P.L. 266-2017 and
became effective July 1, 2017, several years after the City filed its Amended
Complaint. The statute provides, in pertinent part:
(d) [] a political subdivision may not adopt or enforce any
ordinance, rule or regulation that imposes a penalty, 1 or allows
for the imposition of a penalty against a tenant, an owner, or a
landlord for a contact made to request law enforcement
assistance or other emergency assistance for one (1) or more
rental units if:
(1) the contact is made by or on behalf of:
(A) a victim or potential victim of abuse:
(B) a victim or potential victim of a crime; or
(C) an individual in an emergency; and
(2) either of the following applies:
(A) at the time the contact is made, the person
making the contact reasonably believes that law
enforcement assistance or other emergency
assistance is necessary to prevent the perpetration or
escalation of abuse, a crime, or an emergency.
(B) if abuse, a crime, or an emergency occurs, the
law enforcement assistance or other emergency
assistance was needed.
****
(i) Nothing in this section shall be construed to prevent an
attorney representing a city, county or town from bringing a
nuisance action described under [I.C. §] 32-30-6-7(b) against a
landlord or owner of a rental unit.
1
“Penalty” is defined as “(1) the assessment of a penalty, fine, or fee (2) Actual or threatened eviction from a
rental unit, or the causing of an actual or threatened eviction from a rental unit.” I.C. § 32-31-1-22(b).
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The City focuses on several different reasons for its contention that the statute
does not apply to the current situation. Asserting that the trial court
retroactively applied the statute, 2 the City maintains that it is not trying to
enforce an ordinance, rule, or regulation; rather, it is bringing a nuisance action
under I.C. § 32-30-6-7 and seeking “compensatory damages for a public
nuisance for which it alleges Towne & Terrace is responsible.” (Appellant’s Br.
p. 8).
[12] While we agree with the City that it brought a nuisance action against Towne &
Terrace as allowed under I.C. § 32-31-1-22(i), at the same time the City is
seeking damages for “resources expended by the City, including but not limited
to the Department of Public Safety, IMPD, DCE, and MCHD, in response to
the unreasonable volume of investigations, reports, and citations caused by
[Towne & Terrace’s] neglect of the [] residential complex and individual units,”
which is seemingly prohibited under I.C. § 32-31-1-22(d).
[13] A court’s first task in statutory interpretation is to attempt to harmonize two
conflicting statutes. State v. Universal Outdoor, Inc., 880 N.E.2d 1188, 1191 (Ind.
2008). As long as two statutes can be read in harmony with one another, we
presume that the Legislature intended for them both to have effect. Id. Where
2
Even though the Statute only became effective after incurring the expenses and filing the Amended
Complaint, the statute clearly speaks to the situation where a political subdivision, as here, “enforce[s] any
ordinance, rule, or regulation that imposes a penalty.” I.C. § 32-31-1-22(d).
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possible, if conflicting portions of a statute can be reconciled with the remainder
of the statute, every word in the statute must be given effect and meaning, with
no part being held meaningless. Id.
[14] Indiana Code section 32-31-1-22(i) unequivocally allows the pursuit of nuisance
actions brought by a city, county or town. Even though this section (i) is silent
as to the type of damages a city, county, or town may demand under a nuisance
action, section (d) of the statute clarifies that the enforcement of the nuisance
rules cannot be used to penalize an individual in requesting law enforcement’s
assistance. Furthermore, section (i) only limits the type of damages that may be
pursued against “a landlord or owner of a rental unit.” Here, both parties
agreed that Towne & Terrace owns and maintains the common areas of the
condominium development but does not own individual units. In return for use
of the common areas by the individual units, Town and Terrace imposes
assessment and maintenance fees. As such, Towne & Terrace can be
considered a landlord for the common areas of the condominium complex.
Accordingly, the City’s nuisance action against Town and Terrace to refund the
City’s resources spent on law enforcement’s investigations and responses to the
residential complex, is barred by I.C. § 32-31-1-22(d).
III. The City’s Nuisance Action
[15] In so far as Towne & Terrace cannot be considered a landlord for the common
areas or the City’s nuisance action encompasses other damages than merely fees
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for excessively calling upon law enforcement, we will address the City’s
nuisance action against Towne & Terrace.
[16] The City contends that the trial court erred in determining that the City could
not maintain its nuisance claim based on the allegation that “Towne & Terrace
took no reasonable action to prevent the property from descending into criminal
chaos, nor did it take any reasonable steps to ameliorate the situation.”
(Appellant’s Br. p. 10). In denying the City’s claim, the trial court maintained
that:
Towne & Terrace owns only the common areas of the Towne &
Terrace condominium property. Towne & Terrace Corp. owns
no lots, individual units or any other property on the site. Towne
& Terrace has no direct control over the individual dwellings
within the condominium community.
Further, the directors of Towne & Terrace have no police
powers, no authorization to enforce laws, and no control over
what happens inside a particular residence. The directors have
no authority to correct operations, management, or maintenance
issues. Only the owners can make such changes and the City did
not sue any individual owners in this case.
(Appellant’s App. Vol. II, p. 28).
[17] Indiana’s nuisance statute allows a county, city, or town to bring an action to
“abate or enjoin a nuisance.” I.C. § 32-30-6-7. “Nuisance” is described as
“Whatever is (1) injurious to health; (2) indecent; (3) offensive to the senses; or
(4) an obstruction to the free use of property.” I.C. § 32-30-6-6. In interpreting
the nuisance statute, our supreme court rejected the contention that a party
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must be the owner or controller of property to be held liable for a nuisance. City
of Gary ex rel. King v. Smith & Wesson Corp., 801 N.E.2d 1222, 1232 (Ind. 2003).
Rather, the court held “that there is no requirement that the activity involve an
unlawful activity or use of land. If an activity meets the requirements of an
unreasonable interference with a public right, it may constitute a public
nuisance.” Id.[18] Asserting that Towne & Terrace did nothing to increase security and safety at
the condominiums and negligently operated the complex, the City alleged in its
Amended Complaint that the Towne & Terrace complex is rife with “crimes
such as homicide, rape, fraud, arson, domestic battery, public intoxication,
child abduction, child abuse, larceny, burglary, armed robbery, aggravated
assault, vandalism, intimidation, invasion of privacy, and trespass, necessitating
excessive police runs[.]” (Appellant’s App. Vol. II, p. 42). As a result, the
Towne & Terrace residential complex has encouraged general lawlessness, with
the individual units posing a heightened and unreasonable risk of injury and
contributing to urban blight.
[19] In its second motion for summary judgment, Towne & Terrace contended that
“Towne & Terrace is not capable of controlling crime and is not authorized to
enforce criminal laws. Law Enforcement is the sole province of the City[.]”
(Appellant’s App. Vol. II, p. 161). Towne & Terrace “has no ownership of any
of the Lots or dwellings within Towne & Terrace.” (Appellant’s App. Vol. II,
p. 162). To this end, Towne & Terrace designated its Covenants & Restrictions
and its Articles of Incorporation, which reflected that Towne & Terrace only
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owns the common areas and has no control over the individual units in the
complex nor can it compel compliance with existing ordinances from an
individual owner. It merely has an obligation to maintain the common areas.
[20] During the hearing on Town & Terrace’s motions for summary judgment, the
City alleged that the individual residents at the condominium complex caused a
misuse and abuse of police and emergency resources by repetitive first
responder runs to the complex. However, at no point did the City designate
evidence indicating that Towne & Terrace’s use or maintenance of the common
areas amounted to a nuisance. As “the moving party demonstrated that its
designated evidence raised no genuine issues of material fact,” Towne &
Terrace was entitled to judgment in its favor as a matter of law. See Hughley v.
State, 15 N.E.3d 1000, 1003 (Ind. 2014).
IV. Maintenance Assessment Fees
[21] Lastly, the City maintains that the trial court erroneously issued partial
summary judgment to Towne & Terrace on the corporation’s counterclaim for
maintenance assessment fees.
[22] Article IV of the Towne & Terrace’s Declaration of Covenants and Restrictions
(Covenants) provides as follows:
Section 1. Creation of the Lien and Personal Obligation of
Assessments. The Declarant of each Lot owned by it within The
Properties hereby covenants and each purchaser of any Lot by
acceptance of a Deed therefor, whether or not it shall be so
expressed in any such deed or other conveyance, shall be deemed
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to covenant and agree to pay the Corporation: (1) annual
assessments or charges; (2) special assessments for capital
improvements, such assessments to be fixed, established and
collected from time to time as hereinafter provided. The annual
and special assessments, together with such interest thereon and
costs of collection thereof as hereinafter provided shall be a
charge on the land and shall be a continuing lien upon the
property against which each such assessment is made. Each such
assessment, together with such interest thereon and cost of
collection thereof as hereinafter provided shall also be the
personal obligation of the person who was the Owner of such
property at the time when the assessment fell due.
(Appellant’s App. Vol. II, pp. 84-85). Relying on the Covenants’ language that
only the ‘purchaser’ of a Lot is assessed maintenance fees, the City maintains
that “[m]any of the lots owned by the City were not purchased, the deeds came
into the City’s possession because no one bought the properties at tax sale.”
(Appellant’s Br. p. 13). Claiming to be no more than an “owner of last resort,”
the City asserts that it is not required to pay maintenance assessments.
(Appellant’s Br. p. 13).
[23] Absent a definition in the Covenants, we resort to English language dictionaries
to ascertain the plain and ordinary meaning of “purchaser.” See Vanderburgh
Co. Election Bd. v. Vanderburgh Co. Democratic Cent. Committee, 833 N.E.2d 508,
510 (Ind. Ct. App. 2005). Black’s Law Dictionary defines purchaser as “[o]ne
who acquires real property by means other than descent, gift, or inheritance.”
BLACK’S LAW DICTIONARY (8th ed. 2004). The City is not challenging its
current ownership of the individual units; rather, it is contesting the manner in
which it acquired these individual condominiums. However, the designated
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evidence reflects that its acquisition was not through descent, gift, or
inheritance. Instead, the City acquired the individual lots through a tax sale
and recorded the deeds to the lots. To exclude this manner of acquisition from
the meaning of purchaser for purposes of maintenance assessments would be to
elevate form over substance—which we decline to do.
[24] The City now attempts to avoid being assessed for maintenance fees by
referring to the Amended Articles of Incorporation, which included, in
pertinent part:
Every person or entity who is a record owner of a fee interest in
any Lot which is part of The Properties shall be a member of the
corporation, provided that any such person or entity who holds
such interest merely as a security for the performance of an
obligation shall not be a member. Such membership shall be
evidence[d] by a certificate of membership issued by the
Corporation Secretary. It shall be the obligation of each member
to have the certificate of membership transferred by the
Corporation Secretary upon transfer of title to any Lot. Failure
to do so will leave the certificate holder liable under all by-laws,
rules, and other regulations of the Corporation.
(Appellees’ App. Vol. II, p. 149). As it is uncontested that Towne & Terrace
failed to issue membership certificates to the City when it acquired the
individual rental units, the City contends that the previous owner remains liable
for the maintenance assessments. We disagree.
[25] Article IV of the Covenants does not condition the assessment of maintenance
charges on the certificate of membership. Rather, each ‘purchaser of any lot’ at
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the time the assessment falls due is subject to annual assessments or charges.
Likewise, the Articles of Incorporation fail to include any reference to the
Covenants and merely provides guidance as to the internal workings of the
corporation. Nothing in the Articles of Incorporation or in the Covenants
exempts purchasers of lots from maintenance assessments if the certification of
membership is not issued. To the contrary, the Articles of Incorporation
purport to safeguard the financial health of Towne & Terrace by increasing the
number of parties responsible for the maintenance assessments. In other words,
if the previous owner refrains from notifying the corporation of a change in
ownership of the rental unit, the previous owner—together with the new
purchaser—shall be liable for payment of the annual assessment. Therefore, we
conclude that there is no genuine issue of material fact that the City is
responsible for the payment of maintenance charges assessed on its rental units
in the Towne & Terrace condominium complex.
CONCLUSIONS
[26] Based on the foregoing, we hold that the trial court properly issued summary
judgment on Towne & Terrace’s motions for summary judgment.
[27] Affirmed.
[28] May, J. and Mathias, J. concur
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