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. Court of Appeals of Indiana | Memorandum Decision 18A-PL-1594 | December 12, 2018 Page 1 of 7

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).

Court of Appeals of Indiana | Memorandum Decision 18A-PL-1594 | December 12, 2018 Page 4 of 7 [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.

Court of Appeals of Indiana | Memorandum Decision 18A-PL-1594 | December 12, 2018 Page 6 of 7 [13] Affirmed.

Bradford, J., and Brown, J., concur.

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