State of Indiana v. Monroe Liberty, LLC (mem. dec.)

MEMORANDUM DECISION FILED Pursuant to Ind. Appellate Rule 65(D), Jul 15 2016, 8:37 am this Memorandum Decision shall not be regarded as precedent or cited before any CLERK Indiana Supreme Court court except for the purpose of establishing Court of Appeals and Tax Court

the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE Gregory F. Zoeller Thomas R. Malapit, Jr. Attorney General of Indiana Joshua A. Brown McKinney & Malapit, P.C. David L. Steiner Muncie, Indiana Deputy Attorney General Indianapolis, Indiana Yasmin L. Stump J. Eric Rochford Yasmin L. Stump Law Group, PC Carmel, Indiana

IN THE COURT OF APPEALS OF INDIANA

State of Indiana, July 15, 2016 Appellant-Plaintiff, Court of Appeals Case No. 53A05-1508-PL-1009 v. Interlocutory Appeal from the Monroe Circuit Court Monroe Liberty, LLC, The Honorable Frances G. Hill, Appellee-Defendant Judge Trial Court Cause No. 53C06-1402-PL-402

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Case Summary [1] The State of Indiana brings this interlocutory appeal in an eminent domain

action involving the taking of real property owned by Monroe Liberty, LLC, for

the extension of I-69 from Evansville to Indianapolis. This action is in the

damages phase, which has yet to be tried by the jury. 1 The subject of this

appeal is the “Trial Order for June 23, 24, 2015” (“the Order”), denying the

State’s motion in limine. On appeal, the State contends that the trial court

erred in refusing to exclude certain evidence and testimony. Specifically, the

State asserts that certain evidence and testimony pertaining to the highest and

best use and/or the value of Monroe Liberty’s property is inadmissible because

that evidence and testimony are based wholly or partly on the construction and

completion of I-69, the project for which the property is being taken. 2 Because

we conclude that the evidentiary issues raised by the State are not ripe for our

review, we dismiss the State’s appeal.

Facts and Procedural History [2] Monroe Liberty is owned and managed by Leo Hickman. On or about

February 15, 2011, Monroe Liberty purchased a vacant house on 2.818 acres

(“the Property”), commonly known as 2201 West Fullerton Pike, Bloomington.

1 The first phase of an eminent domain proceeding concerns the propriety of the taking itself, while the second phase deals with the issue of just compensation. Hass v. State, Dep’t of Transp., 843 N.E.2d 994, 998 (Ind. Ct. App. 2006), trans. denied. 2 Monroe Liberty purports to file a cross-appeal, but it does not ask for relief from any part of the Order. Its argument is not actually a cross-appeal but simply a counter-argument in support of the trial court’s rulings.

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The purchase price was $58,500. The Property is located on the southeastern

quadrant of State Road 37 and Fullerton Park. Monroe Liberty spent

approximately $46,700 to improve the house and began leasing it for residential

use. The Property is zoned Agriculture/Rural Reserve (“AG/RR”), which

permits general agricultural and residential uses. The Property is also located

within the Business/Industrial Overlay District, which permits uses limited to

those allowed in light industrial and heavy industrial districts. [3] The State offered Monroe Liberty $52,800 to acquire a 1.240-acre rectangular

strip of the Property for the construction of I-69. This strip does not contain the

rental house. Monroe Liberty rejected the State’s offer. [4] On February 27, 2014, the State filed its eminent domain complaint. The trial

court found that the State’s taking was appropriate, and the action proceeded to

the damages phase. Pursuant to Indiana Code Section 32-24-1-9, the trial court

appointed three impartial appraisers. [5] Monroe Liberty retained Steven M. Shockley to provide an appraisal. Monroe

Liberty also enlisted Herman Bernitt, formerly a licensed real estate agent, to

testify as an expert regarding the highest and best use and the value of the

Property. Bernitt had advised Hickman to purchase the Property in 2011. In

addition, Monroe Liberty enlisted Michael L. Carmin, a real estate attorney, to

serve as an expert on local zoning ordinances, describe the procedure for

rezoning the Property from AG/RR to commercial, and provide his opinion

that rezoning the Property for commercial purposes is very probable.

Court of Appeals of Indiana | Memorandum Decision 53A05-1508-PL-1009 | July 15, 2016 Page 3 of 9 [6] In June 2015, the State filed its motion in limine and brief in support thereof.

In relevant part, the State sought to exclude as inadmissible the reports and/or

testimony of Shockley, Carmin, Bernitt, and Hickman, contending that they

relied on the completion of I-69 to form their opinions on the highest and best

use and the value of the Property. [7] On June 18 and 19, 2015, the trial court held a preliminary hearing on expert

qualifications. On June 23 and 24, 2015, the trial court held a hearing on the

admissibility of testimony and evidence, including the remaining issues raised

by the State’s motion in limine. Based on the evidence provided at these two

hearings, as well as witness depositions, the trial court issued the Order, which

in relevant part provides as follows:

Argument was heard on the State’s motion to exclude testimony on the basis of the [Project Rule], set out in State v. Sovich, 252 N.E.2d 582 (Ind. 1969). The court rules that the [Project Rule], as stated in Southtown Properties, Inc. v. City of Fort Wayne, 840 N.E.2d 393, 400 (Ind. Ct. App. 2006) is a rule of relevancy that is applicable to this proceeding. The court adopts the restatement of Sovich from Southtown Properties that “evidence of changes in the value of property brought about by the project for which the property is being taken is irrelevant to the determination of the value of the property on the date of the condemnation, i.e. the date the condemnation action is filed.” Southtown Properties at 400. This ruling by the court excludes any offered evidence (testimony, exhibits) on the effect of the construction or completion of the I-69 Highway project on the highest and best use for which the taken property is adaptable as of the date of taking … and the fair market value of the taken property on the date of taking. ….

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All witnesses are subject to the above stated ruling of exclusion.

The court finds … that some witnesses considered the effect of the construction and completion of the I-69 Highway project in formulating their opinions of highest and best use, value of surrounding real estate, and determination of fair market value. The court also finds that the testimony … of all the witnesses challenged by [the State] considered additional factors that are relevant, besides the I-69 Highway project, in formulating their opinions. Some of the challenged witnesses, but not all, testified in person or by deposition (in essence) that their opinions would not change or were not based solely or significantly upon, the construction or completion of the I-69 Highway project. Because the opinions of the witnesses are based upon multiple factors that are relevant, the court denies the request of [the State] to exclude the testimony of a witness on the grounds that the witness stated … that the witness “considered” the construction or completion of the I-69 Highway in forming his opinion of highest or best use or fair market value or the value of surrounding real estate as to the property taken. [The State] may ask on cross examination if the witness based his opinion on the I-69 Highway project and the witness may testify as is necessary to answer the question. The court anticipates objections regarding whether the answer of a witness may include the relevancy of the I-69 Highway project to his/her opinion and whether [the State] has opened the door to testimony about the I-69 Highway project and how that affects highest and best use or valuation of the property taken.

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Appellant’s App. at 20-21. The Order also includes determinations specifically

with respect to Hickman, Bernitt, and Carmin. 3 This interlocutory appeal

ensued.

Discussion and Decision [8] The State asserts that the trial court abused its discretion by denying its motion

in limine. Specifically, the State contends that reports and/or testimony of

Shockley, Hickman, Bernitt, and Carmin regarding the highest and best use

and/or the value of the Property is inadmissible because it violates the Project

Rule adopted in State v. Sovich, 253 Ind. 224, 252 N.E.2d 582 (1969), and

restated in Southtown Properties, Inc. v. City of Fort Wayne ex rel. Dep’t of

Redevelopment, 840 N.E.2d 393 (Ind. Ct. App. 2006), trans. denied. [9] In Sovich, our supreme court articulated the Project Rule as follows: “neither an

increase nor a decrease in the market value of the property sought to be taken,

which is brought about by the same project for which the property is being

3 The trial court found that Monroe Liberty agreed that Hickman will not testify as an expert, but that he can testify to his opinions on value and highest and best use within the confines of Evidence Rule 701. The trial court also found that “[h]e can testify as to intent to purchase the subject project for commercial purposes but not as to an intended specific future use such as a gas station.” Appellant’s App. at 21. As for Bernitt, the trial court concluded that Monroe Liberty qualified him as an expert on highest and best use but that he is not qualified as an expert on fair market valuation. The trial court also found that Bernitt may testify as a skilled witness on commercial sales that “he has personally been involved in if he clarifies his involvement on the record.” Id. at 22. Finally, the trial court found that the parties agreed that Carmin’s written report would not be offered into evidence and that neither the Monroe County Urbanizing Plan nor any ordinances or statutes that went into effect after the date of taking would be offered into evidence or testified to by Carmin.

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taken, may be considered in determining the value of the property.” 253 Ind. at

234, 252 N.E.2d at 588. 4 [10] In Southtown, another panel of this Court discussed the Project Rule in the

context of the Indiana Rules of Evidence, which were adopted subsequent to

Sovich. The Southtown court explained, “We believe that the rule announced in

Sovich is essentially a rule of the relevancy of evidence.” 5 840 N.E.2d at 400.

The Southtown court stated, “Sovich basically stands for the proposition that

evidence of changes in the value of property brought about by the project for

which the property is being taken is irrelevant to the determination of the value

of the property on the date of condemnation, i.e., the date the condemnation

action is filed.” Id. [11] Based on our review of Sovich and Southtown, we agree with the trial court’s

statement of the Project Rule. On appeal, the parties vigorously dispute

whether any or all of the challenged witnesses actually relied on the

construction and completion of I-69 in reaching their opinions as to the highest

and best use and/or the value of the Property. They also disagree on various

aspects related to the scope of the Project Rule, such as whether the Project

4 In Gradison v. State, 260 Ind. 688, 300 N.E.2d 67 (1973), the supreme court declined to apply Sovich to valuation of the residue in a condemnation action. In so doing, the Gradison court concluded that valuation of the residue may include consideration of “benefits derived by the residue from the improvements resulting from the condemnation project.” Id. at 710, 300 N.E.2d at 82. 5 Pursuant to the Indiana Rules of Evidence, “[i]rrelevant evidence is not admissible” and, with some exceptions, “[r]elevant evidence is admissible.” Ind. Evid. Rule 402. Evidence is relevant if “it has any tendency to make a fact more or less probable than it would be without the evidence” and “the fact is of consequence in determining the action.” Ind. Evid. Rule 401.

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Rule excludes evidence of highest and best use and/or valuation if that

evidence is based even in part on the project for which the property is being

taken. [12] We observe that “[o]rdinarily the denial of a motion in limine can occasion no

error; the objectionable occurrence is the improper admission of items in

evidence.” Perry v. Gulf Stream Coach, Inc., 871 N.E.2d 1038, 1047 (Ind. Ct.

App. 2007). “A trial court’s ruling on a motion in limine does not determine

the ultimate admissibility of the evidence; that determination is made by the

trial court in the context of the trial itself.” Gibson v. Bojrab, 950 N.E.2d 347,

350 (Ind. Ct. App. 2011). “If the trial court errs by admitting evidence, the

exclusion of which was sought by the motion in limine, then the error is in

admitting the evidence at trial in violation of an evidentiary rule, not in denying

the motion in limine.” Bova v. Gary, 843 N.E.2d 952, 955 (Ind. Ct. App. 2006). [13] We note that an appeal of a motion in limine is a discretionary interlocutory

appeal. 6 “[O]ur decision whether or not to accept a discretionary interlocutory

appeal is entirely discretionary.” Bridgestone Americas Holding, Inc. v. Mayberry,

854 N.E.2d 355, 358-59 (Ind. Ct. App. 2006), summarily aff’d in relevant part by

878 N.E.2d 189, 191 n.2 (Ind. 2007). “It is well established that we may

reconsider a ruling by our motions panel.” Wise v. State, 997 N.E.2d 411, 413

(Ind. Ct. App. 2013). “More specifically, we have the authority to reconsider

6 Such appeals are governed by Indiana Appellate Rule 14(B), which provides, “An appeal may be taken from … interlocutory orders if the trial court certifies its order and the Court of Appeals accepts jurisdiction over the appeal.”

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our motions panel’s initial ruling on a motion to accept interlocutory

jurisdiction.” Id. [14] We conclude that the evidentiary issues raised by the State are not ripe for our

review. These issues are fact-sensitive, and we will be in a far superior position

to decide these questions after the trial is held and the precise character of the

evidence and the nature of the objections are available to us. The Order’s

suppositions regarding specific questions and the consequences of those

questions are advisory at best and speculative at worst. We are not insensitive

to the parties’ dilemma in wading into this difficult area, but our ability to

render an opinion on the issues raised is constrained by not having specific

rulings or specific evidence before us. Because we conclude that the issues are

not ripe for review, we dismiss the State’s appeal. [15] Dismissed.

Robb, J., and Pyle, J., concur.

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