City of Evansville on Behalf of Dept. of Redevelopment v. Reising

• Decision Date: 20 December 1989
• Docket Number: No. 82A01-8906-CV-209,82A01-8906-CV-209
• Citation: 547 N.E.2d 1106
• Court: Indiana Appellate Court
• Parties: CITY OF EVANSVILLE, Indiana on Behalf of its DEPARTMENT OF REDEVELOPMENT, Plaintiff-Appellant, v. O. Gene REISING; Auditor and Treasurer of Vanderburgh County, Defendants-Appellees.

Page 1106

547 N.E.2d 1106

CITY OF EVANSVILLE, Indiana on Behalf of its DEPARTMENT OF REDEVELOPMENT, Plaintiff-Appellant, v. O. Gene REISING; Auditor and Treasurer of Vanderburgh County, Defendants-Appellees.

No. 82A01-8906-CV-209.

Court of Appeals of Indiana First District.

Dec. 20, 1989.

Allan G. Loosemore, Jr., Asst. City Atty., Evansville, for plaintiff-appellant.

Charles C. Griffith, Johnson, Carroll and Griffith, P.C., Evansville, for defendants-appellees.

RATLIFF, Chief Judge.

STATEMENT OF THE CASE

The City of Evansville (City), on behalf of its Department of Redevelopment, appeals the judgment against it and for O. Gene Reising in the City's action to appropriate, by its power of eminent domain, real property owned by Mr. Reising. We reverse.

FACTS

We will consider the evidence of record most favorable to Reising, who prevailed in the trial court. In 1982, the City of Evansville's Redevelopment Commission (Commission) initiated a project designated as the Walnut Centre Redevelopment Area Project (Project). The Commission approved and adopted a declaratory resolution, a redevelopment plan, and an amended declaratory resolution and redevelopment plan for the area. The plan commission of the area issued a written order approving the declaratory resolutions and redevelopment plans. Finally, the Common Council of the city passed a resolution declaring The City placed a notice to the general public in an Evansville newspaper advising the public of the foregoing and of a public hearing to be held on August 16, 1982, to receive and hear remonstrances or support for the project and to determine the public utility and benefit of the project. No written remonstrances were filed, but two citizens other than Reising, spoke at the hearing stating that there were many unsolved problems, there was no assurance that merchants would relocate to the Project and thirty-five percent (35%) of the residents of the area were senior citizens owning their own property and living on fixed incomes. The two citizens opined that those residents could not afford to buy property in another area if forced by the Project to relocate. After the hearing, the Commission took final action, determining the public utility and benefit of the proposed Project and approving, ratifying and confirming its own prior resolution and amended resolution declaring the area to be blighted.

the area to be a blighted area. The introduction to the amended redevelopment plan stated that the Project purposes are the elimination of deterioration and blight in the near downtown area and the development of a portion of that area as an industrial and commercial development. Financing for the Project was to come from a combination of sources, including federal Community Development Block Grant funds.

In 1987, the Commission, on separate occasions, offered to purchase two parcels of real estate in the Project area from O. Gene Reising (Reising), but Reising failed to respond to either offer. For more than forty (40) years, Reising has operated a business, commonly known as the Cut Rate Market, on a portion of his property. The market provides retail services to families in the immediate neighborhood, including the sale of grocery items, check cashing services, credit arrangements for the purchase of food and delivery services for home-bound individuals. After Reising failed to respond to the purchase offers, the City exercised its power of eminent domain and instituted a condemnation proceeding to acquire Reising's property. ¹ At the time the City offered to purchase Reising's property and throughout the condemnation action, federal Community Development Block Grant funds were the only source of revenue used to acquire property for the Project.

The trial court found for Reising in the eminent domain proceeding and entered findings of fact and conclusions of law. Among other findings, the trial court found that the neighborhood served by Reising's market is composed of predominantly black, poor individuals and that no other retail facility within the area provides exactly the same services as Reising's market. The court also found that the City's acquisition of Reising's real estate would result in the termination of the market and deprive the neighborhood of essential retail services generally available to other, predominantly white, neighborhoods within the City.

Based on those findings of fact the trial court concluded that the City had the burden of proving the Project area was not an economic development area and the burden of proving that in using federal Community Development Block Grant funds the City would not discriminate against individuals on the basis of race. The trial court also concluded that the redevelopment area was an economic development area pursuant to Indiana Code 36-7-14-41 and that the City therefore was prohibited from utilizing its power of eminent domain to carry out the Project plan.

The trial court also found that the use of the federal funds in the manner contemplated by the City would result in race discrimination against some individuals and would have a disruptive effect upon housing Further facts will be provided as necessary to the discussion.

patterns in the area, both results being in violation of federal statutes.

ISSUES

1. Whether the trial court applied the correct burdens of proof in the condemnation proceeding.

2. Whether the trial court had jurisdiction to determine whether the City's purpose for the Project area was for redevelopment of a blighted area or for economic development of the area.

3. Whether the trial court had jurisdiction to determine whether the City had violated federal nondiscrimination statutes in its use of Community Development Block grant monies.

DISCUSSION AND DECISION

Issue One

The City contends that the trial court's conclusions of law, that the City had the burden of proving that the Walnut Centre Redevelopment Area Plan is not an economic development area plan and of proving that the use of the federal Community Development Block Grant (CDBG) monies will not result in discrimination of individuals on the basis of race, were clearly erroneous and contrary to law. We will not set aside the findings or the judgment of a trial court's decision made after a bench trial unless the findings are, or the judgment is, clearly erroneous. Ind.Rules of Procedure, Trial Rule 52(A). We will not hold findings of fact to be clearly erroneous unless the evidence contains no facts or reasonable inferences supporting the findings. Wiseman v. Wolfe's Terre Haute Auto Auction, Inc. (1984), Ind.App., 459 N.E.2d 736, 737. If the trial court's application of the law was erroneous, then we must correctly apply the law to the trial court's findings of fact. Paul Revere Life Insurance Co. v. Gardner (1982), Ind.App., 438 N.E.2d 317, 320; Indiana Industries, Inc. v. Wedge Products (1982), Ind.App., 430 N.E.2d 419, 422.

Indiana Code 32-11-1-2 requires the condemnor, in its complaint, to name itself as plaintiff and to name the landowner as defendant. The plaintiff's complaint must state the use the plaintiff intends to make of the property and give a specific description of each piece of land sought to be taken. Finally, the complaint must state that the plaintiff has been unable to agree with the landowner for the purchase of the land. The statute thus places the burden of proof on the condemnor to plead and, upon objection, to show that a good faith effort was made to purchase the property, but that the parties were unable to agree. Unger v. Indiana & Michigan Electric Co. (1981), Ind.App., 420 N.E.2d 1250, 1258. After the plaintiff has met his burden, the burden shifts to the condemnee to prove a valid objection to the taking. Joint County Park Board v. Stegemoller (1949), 228 Ind. 103, 109, 88 N.E.2d 686, 688; Jones v. Indiana Power Co. (1922), 192 Ind. 67, 71, 135 N.E. 332, 334.

A correct application of the law would have required the City to prove that the area where Reising's property was located had been declared a blighted area and that the City had instituted condemnation proceedings against Reising's property only after making a purchase offer which was rejected by Reising. The burden of proof then should have shifted to Reising to prove his objections to the condemnation action. Thus, Reising should have had the burden of proving that the City's redevelopment plan was treating the Walnut Centre Redevelopment Area as an economic development area instead of as a blighted area. Reising also should have had the burden of proving that the City's use of federal CDBG funds to purchase his property would result in racial discrimination and disruption of housing patterns. The trial court's assignment of the burdens of proof was clearly erroneous and contrary to law. Before applying the correct burdens of proof to the findings of fact made by the trial court, however, we must discuss additional issues. Even if the trial court had used the correct burdens of proof in arriving at its conclusions of law, the court's application of the law to the facts would have been contrary to law for the reasons hereinafter stated.

Issue Two

One of Reising's objections to the City's condemnation complaint was that the City had no right to exercise its power of eminent domain. Reising premised his argument on the contention that the City's real purpose in implementing its redevelopment plan was to achieve the results of an economic development area, instead of to rehabilitate a blighted area. Indiana Code 36-7-14-43 prohibits a city from exercising a right of eminent domain in an economic development area. Therefore, Reising argues, the City could not use eminent domain to acquire his property.

Indiana Code 32-11-1-3 provides that a defendant may object to eminent domain proceedings. Nevertheless, a factual question as to whether an area is blighted cannot be raised in an eminent domain condemnation...