Herbert C. Haggard and Alice M. Haggard v. State of Indiana and Jerry L. Hillenburg and Morgan County, Indiana

FILED
Jan 21 2021, 8:45 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
Benjamin A. Spandau Theodore E. Rokita
Brandon E. Tate Attorney General of Indiana
Tate Bowen Daugherty Funk Spandau Natalie F. Weiss
LLC Benjamin M.L. Jones
Indianapolis, Indiana
Aaron T. Craft
Deputy Attorneys General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Herbert C. Haggard and Alice January 21, 2021
M. Haggard, Court of Appeals Case No.
Appellants-Defendants, 20A-PL-1502
Appeal from the
v. Morgan Circuit Court
The Honorable
State of Indiana, Matthew G. Hanson, Judge
Appellee-Plaintiff, Trial Court Cause No.
55C01-2002-PL-354
and
Jerry L. Hillenburg and Morgan
County, Indiana,
Defendants.
Kirsch, Judge.
Court of Appeals of Indiana | Opinion 20A-PL-1502 | January 21, 2021 Page 1 of 13
[1] This case concerns the State of Indiana’s, through the Indiana Department of
Transportation (“INDOT”), appropriation of property as part of the ongoing
improvement of Interstate 69 (“I-69”) through Morgan County, Indiana. The
State filed a complaint for appropriation of real estate owned by Jerry
Hillenburg and named Herbert C. Haggard and Alice M. Haggard (“the
Haggards”) as defendants as to any interest they may have in the land as a
consequence of their easement over the property. The Haggards filed objections
to the State’s complaint because they had not received an offer to purchase their
easement prior to the State filing its complaint and moved the trial court to
vacate the order of appropriation. The Haggards appeal from the trial court’s
order overruling their objections and their motion to vacate the order of
appropriation and raise the following restated issue: whether the trial court
erred when it overruled the Haggards’ objections to the State’s complaint and
motion to vacate the order of appropriation.
[2] We affirm.
Facts and Procedural History
[3] On February 21, 2020, the State filed its Complaint for Appropriation of Real
Estate with the trial court for the improvement of I-69 under project number
0300382. Appellants’ App. Vol. II at 15-16. In order to complete the
improvement of I-69, the State needed to obtain a fee simple title with full
limitation of access, easement rights with full limitation of access, and
temporary right of way for building removal (to expire three years after
commencement of construction) to real estate owned by Jerry L. Hillenburg
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(“Hillenburg”). Id. Hillenburg owned the land by virtue of a Warranty Deed
and Reservation of Easement (“the Deed”) recorded on May 20, 1981 in the
Morgan County Recorder’s Office. Id. at 15-16, 23-25. The State’s complaint
acknowledged that the Haggards may hold an interest in the real estate by
virtue of an easement in the Deed recorded on May 20, 1981. Id. at 16. The
State alleged that it had attempted to acquire the owners’ interest in the real
property for $310,000 for the owners’ interests and any damages that may be
caused by the State’s appropriation but that the State and the owners had been
“unable to agree to a purchase price or to the amount of benefits and damages,
if any, which may be sustained by reason of this appropriation.” Id. at 16. The
State therefore requested that the trial court: (1) “appoint three . . . disinterested
parties to appraise the value of the interests to be appropriated and the amount
of benefits and damages, if any, caused by the appropriation”; and (2) “order
the disinterested parties to join in making one . . . written report” to the trial
court. Id. at 16. The Haggards were served with the complaint on February 28,
2020. Id. at 6.
[4] On March 18, 2020, the Indiana Supreme Court issued its order under Supreme
Court Case No. 20S-CB-150 granting the Morgan County Courts’ petition for
emergency relief due to COVID-19 (the “March 18 Order”). Due to the
national emergency caused by the COVID-19 pandemic, the March 18 Order,
utilizing Indiana Administrative Rule 17, authorized the tolling, from the
effective date of the order through April 10, 2020, “of all laws, rules, and
procedures setting time limits for speedy trials in criminal and juvenile
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proceedings, public health, mental health, and appellate matters; all judgments,
support, and other orders; and in all other civil and criminal matters before the
Morgan County Courts.” Id. at 51. The March 18 Order was extended
through subsequent orders by the Indiana Supreme Court with the provisions of
the Administrative Rule 17 emergency plan and orders to terminate on July 6,
2020. Id. at 53-60.
[5] On April 14, 2020, the State filed a motion for appropriation and appointment
of appraisers. Id. at 31-33. On the same day, the trial court granted the State’s
motion and ordered the appointment of one disinterested freeholder of Morgan
County and two disinterested appraisers. Id. at 39-40. On May 8, 2020, the
appraisers filed their report, in which they assessed that the fair market value of
the land was $42,650, the fair market value of the improvements to the land was
$20,600, and the damages to the residue of the defendants’ real estate caused by
the State’s appropriation was $270,750. Appellee’s App. Vol. 2 at 2-4. The total
appraised just compensation was $334,000. Id.
[6] On May 14, 2020, the State filed exceptions to the report of the appraisers and a
demand for jury trial, arguing that the appraisers’ report overstated the fair
market value of the land, the fair market value of the improvements taken by
the State, and the damages to the residue of the defendants’ real estate caused
by the State’s appropriation. Id. at 8-9. Based on this, the State argued that the
appraisers’ report overstated the total amount of just compensation. Id. On
June 5, 2020, the Haggards also filed exceptions to the report of the appraisers
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and demand for jury trial, alleging that the amount of assessed damages was too
low. Id. at 10-12.
[7] On July 2, 2020, the Haggards filed a motion to vacate the trial court’s order of
appropriation, and they submitted their objections to the State’s complaint for
appropriation. Appellants’ App. Vol. II at 47-66. In their motion to vacate, the
Haggards argued that the appropriation order should be vacated because the
State failed to make the Haggards an offer to purchase prior to the State filing
its complaint. Id. at 49. The Haggards argued that their objections were timely
filed because various COVID-19-related orders tolled all deadlines until July 5,
2020. Id. at 48. In their objections to the State’s complaint, the Haggards
alleged that under Indiana Code section 32-24-1-5(a), the State was required to
make them an offer to purchase the property at least thirty days before filing a
complaint. Id. at 62-63. The Haggards contended that the State failed to do so
and provided as evidence an email where counsel for the State admitted that no
pre-suit offers were made to the Haggards because “the billboard matter was
offered to Outfront Media LLC for the physical sign and the other offer was
made to the fee owner, Jerry Hillenburg.” Id. at 61-64, 66.
[8] On July 15, 2020, the State filed a motion to overrule the Haggards’ objections
and their motion to vacate the order of appropriation, arguing that the
Haggards’ objections were legally deficient because: (1) INDOT is exempt
from having to prove that it made a good-faith effort to purchase real estate
pursuant to Indiana Code section 32-24-1-13; and (2) generally, a condemnor
only has to make an offer to the owner of the real estate, and the Haggards did
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not meet the definition of owners of the real estate at issue; the State further
argued that the March 18 Order did not apply to objections so the Haggards’
objections were untimely. Id. at 67-71. On the same date, the Haggards filed a
notice of intent to respond and requested a hearing. Id. at 74. On July 25,
2020, the Haggards filed their response to the State’s motion and reply in
support of their motion to vacate the order of appropriation and their objections
to the State’s complaint for appropriation. Id. at 76-86. The Haggards argued
that the Indiana Supreme Court’s June 8 order extended the March 18 Order so
that tolling continued until July 5, 2020 and because they filed their objections
on July 2, 2020, the objections were timely. Id. at 78-80. The Haggards further
contended that they were in fact owners because they had a reserved right in the
real estate, which was recorded by the Deed. Id. at 81. The Haggards asserted
that because the State failed to make an offer to purchase the Haggards’
reserved right in the real estate prior to filing its complaint, the condemnation
action was illegal, and the trial court did not have subject matter jurisdiction.
Id. at 81-85. On July 31, 2020, the trial court overruled the Haggards’
objections and motion to vacate the order of appropriation. Id. at 11. The
Haggards now appeal.
Discussion and Decision
[9] The State has inherent authority to take private property for public use. Knott v.
State, 973 N.E.2d 1259, 1262 (Ind. Ct. App. 2012), trans. denied. Eminent
domain proceedings for seizing private property are powerful instruments of
government. Id. (citing Sagarin v. City of Bloomington, 932 N.E.2d 739, 744 (Ind.
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Ct. App. 2010), trans. denied, cert. denied, 565 U.S. 826 (2011)). “As long as the
governmental entity intends to use the land for a public purpose that is
constitutional, there are few defenses to prevent a taking.” Id. Such powers
and rights, however, are not unlimited. Id.
[10] Judicial review of an eminent domain action is “limited to whether the
condemnation proceedings were legal, whether the condemnor had the
authority to condemn the property, and whether the property was to be taken
for a public purpose.” Boyd v. State, 976 N.E.2d 767, 769 (Ind. Ct. App. 2012),
trans. denied. Additionally, courts have the power to question whether the
condemnation was fraudulent, capricious, or illegal. Knott, 973 N.E.2d at 1262
(citing City of Evansville ex rel. Dep’t of Redevelopment v. Reising, 547 N.E.2d 1106,
1111 (Ind. Ct. App. 1989), trans. denied; State ex rel. Ind. Dep’t of Conservation v.
Barber, 246 Ind. 30, 36, 200 N.E.2d 638, 640 (1964)).
[11] The Haggards argue that the trial court erred in overruling their objections to
the State’s complaint for appropriation and for overruling their motion to
vacate the order of appropriation. Specifically, they assert that they had good
cause for their objections because they claimed that the State had failed to
satisfy statutory conditions precedent to filing its complaint for appropriation.
The Haggards claim that they are owners who were entitled to a good faith
offer prior to a lawsuit being filed pursuant to both Indiana Code section 32-24-
1-3 and Indiana Code section 32-24-1-5. The Haggards also contend that the
trial court erred in overruling their objections and their motion to vacate the
order of appropriation issued on April 14, 2020 because their objections were
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timely filed. They argue that the March 18 Order and subsequent extensions of
that order had tolled all deadlines, as well as judgments and other orders, in all
civil and criminal matters until July 5, 2020, and therefore, their objections
were timely filed on July 2, 2020.
[12] The procedure for the exercise of eminent domain is set out in Indiana Code
chapter 32-24-1. Initially, a person who seeks to exercise the power of eminent
domain for public use, the condemnor, must conduct good faith negotiations
with the owner of the property and make an effort to purchase the property for
the use intended. Ind. Code § 32-24-1-3(b)(2), (c)(3). If the condemnor does
not agree with the owner concerning the damages sustained by the owner, the
condemnor may file a complaint for the purpose of acquiring the property with
the clerk of the circuit court of the county where the property is located. Ind.
Code § 32-24-1-4(a).1 “As a condition precedent to filing a complaint in
condemnation, . . . a condemnor . . . must, at least thirty (30) days before filing
a complaint, make an offer to purchase the property[,] . . .[which] must be
served . . . upon . . . the owner of the property sought to be acquired . . . .” Ind.
Code § 32-24-1-5(a). For purposes of section 32-24-1-5, owner means “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
1
In addition to the names of the owners of the property, the complaint must state as defendants the names of
all claimants to, and holders of liens on the property, if known, or a statement that they are unknown. Ind.
Code § 32-24-1-4(b)(2).
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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.
[13] When the complaint is filed, a notice is issued and served on the defendants
requesting their appearance at a stated time to show cause, if any, why the land
should not be appropriated. Ind. Code § 32-24-1-6(a). A defendant may object
to the proceedings: (1) because the court does not have jurisdiction either of the
subject matter or of the person; (2) because the plaintiff does not have the right
to exercise the power of eminent domain for the use sought; or (3) for any other
reason disclosed in the complaint or set up in the objections. Ind. Code 32-24-
1-8(a). Such objections must be filed no later than thirty days after the date the
notice to appear is served on the owner. Ind. Code § 32- 24-1-8(b)(3). If the
objections filed are overruled, an order of appropriation is entered and
appraisers are appointed and ordered to file their report determining the fair
market value of each parcel of property sought to be acquired and the value of
each separate estate or interest in the property, the fair market value of all
improvements pertaining to the property, the damages, if any, to the residue of
the property of the owner resulting from the appropriation, and any other
damages that will result to any persons from the construction of the
improvements in the manner proposed by the plaintiff. Ind. Code § 32-24-1-
8(e); Ind. Code § 32-24-1-9(c). No later than forty-five days after the report of
the appraisal is mailed to the parties, any party aggrieved by the assessment of
benefits or damages in the report may file exceptions to the appraisal. Ind.
Code § 32-24-1-11(a), (b).
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[14] Here, the State sought to obtain a fee simple title with full limitation of access,
easement rights with full limitation of access, and temporary right of way for
building removal, with an expiration three years after commencement of
construction, to real estate owned by Hillenburg as part of the improvement
project of I-69. On February 21, 2020, the State filed its Complaint for
Appropriation of Real Estate with the trial court seeking to appropriate the
property. Appellants’ App. Vol. II at 15-16. The Haggards assert that the State
was required to make them an offer prior to filing the complaint. Under
Indiana Code section 32-24-1-5(a), as a condition precedent to filing a
condemnation action, the State was required to make an offer to purchase the
to the owner of the property at issue. However, for purposes of that statute,
“owner” is defined as only “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. Under these statutes, the Haggards are not owners of the land at issue
because they are not listed on the tax assessment rolls, and they are not persons
in whose name title in the property is shown in the recorder’s records. Their
name appears on the deed as easement holders, an easement for ingress/egress
and to erect /maintain a billboard. Under Indiana law, an easement is merely a
right to use the land of another. Harlan Bakeries, Inc. v. Muncy, 835 N.E.2d
1018, 1033 (Ind. Ct. App. 2005).
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[15] The State was not required to provide a pre-complaint offer to the Haggards
because they do not have title to the real estate the State is seeking to condemn.
As holders to an easement interest in the property, the Haggards are appropriate
defendants to the State’s condemnation suit for determination of any just
compensation they are due for their interest in the easement. Ind. Code § 32-
24-1-4. However, an interest in property alone is not ownership of the real
estate entitled to an offer as a condition precedent to the State’s condemnation
suit. See Ind. Code § 34-24-1-2; Ind. Code § 34-24-1-3 (requiring the condemnor
to make a good faith effort to purchase the property from the owner of the
property). The owner of the property that the State seeks to condemn, who was
entitled to an offer to purchase as a precondition to the filing of a complaint,
was Hillenburg because he holds title to the property at issue, is listed on the tax
assessment rolls as being responsible for the payment of real estate taxes
imposed on the property, and is the person 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.
[16] When the Haggards conveyed the real estate to Hillenburg in 1981 by warranty
deed, the Haggards reserved only an easement on a portion of the property for
the purpose of maintaining a billboard. Appellant’s App. Vol. II at 23-25.
Although an easement is an interest in property, as previously stated, it “is
merely the right to use the land of another.” Harlan Bakeries, Inc., 835 N.E.2d at
1033. It is not ownership of the underlying land, and one may not
simultaneously hold title to and an easement in the same piece of property.
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Collins v. Metro Real Estate Servs. LLC, 72 N.E.3d 1007, 1014 (Ind. Ct. App.
2017). Thus, the Haggards are not landowners with title to the property sought
to be condemned and were not entitled to a pre-complaint offer to purchase
their easement.
[17] The Haggards assert that Indiana Code section 32-24-1-3 provides an
alternative basis upon which they were entitled to receive an offer to purchase,
prior to the State’s filing of its complaint. However, that provision does not
require the State to make them an offer to purchase either. Instead, it requires a
person who seeks to exercise the power of eminent domain for public use to
conduct good faith negotiations with the owner of the property and to make an
effort to purchase “for the use intended the land, right-of-way, easement, or
other interest, in the property.” Ind. Code § 32-24-1-3(b)(2), (c)(3). As
previously concluded, the Haggards’ easement is not ownership of the land and
is merely the right to use the land of another. Harlan Bakeries, Inc., 835 N.E.2d
at 1033. Therefore, the owner of the property from whom the State is seeking
to purchase is Hillenburg, who holds fee simple title in the land. We, therefore,
conclude that the Haggards were not entitled to receive a good faith offer to
purchase the land before the State filed its complaint to condemn it. The trial
court did not err in overruling the Haggards’ objections and their motion to
vacate the order of appropriation.
[18] As to the Haggards’ contention that the trial court erred in overruling their
objections and their motion to vacate the order of appropriation issued on April
14, 2020 because their objections were timely filed as the March 18 Order and
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subsequent extensions tolled all deadlines, as well as judgments and other
orders, in all civil and criminal matters until July 5, 2020, we do not find any
error. The trial court did not deny their objections because they were not timely
filed. The order stated that the trial court “finds the Defendant’s Objections to
Plaintiff’s Complaint and Motion to Vacate are insufficient as a matter of law
without the necessity of conducting a hearing.” Appellants’ App. Vol. II at 11.
Although the Haggards allege that the trial court overruled their objections and
motion to vacate the appropriation at least partly due to untimeliness, the trial
court’s order does not reflect that, and as we have determined above, their
objections had no merit. Further, the Haggards have not shown how they were
prejudiced because they were allowed to file their objections on July 6, 2020, to
which the State filed a motion to overrule and the Haggards filed a response to,
and the trial court, thereafter, reviewed such objections and denied them in the
order from which the Haggards now appeal. We do not find that the trial court
erred in overruling the Haggards’ objections and motion to vacate the order of
appropriation.
[19] Affirmed.
Bradford, C.J., and May, J., concur.
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