City of Gary v. Belovich

• Decision Date: 15 November 1993
• Docket Number: No. 64A04-9211-CV-401,64A04-9211-CV-401
• Citation: 623 N.E.2d 1084
• Parties: The CITY OF GARY, Indiana, and the Gary, Indiana, Fire Department, Appellants (Defendants Below), v. Joseph BELOVICH and Bernice Belovich, Appellees (Plaintiffs Below).
• Court: Indiana Appellate Court

Page 1084

623 N.E.2d 1084

The CITY OF GARY, Indiana, and the Gary, Indiana, Fire

Department, Appellants (Defendants Below), v. Joseph BELOVICH and Bernice Belovich, Appellees (Plaintiffs Below).

No. 64A04-9211-CV-401.

Court of Appeals of Indiana,

Fourth District.

Nov. 15, 1993.

Gilbert King, Jr., Gary, for appellant.

James J. Nagy, Munster, for appellees.

MILLER, Judge.

In 1974, the City of Gary built Fire Station 7 on land it purchased from John and Judy Mravca in 1970. Unfortunately, the City forgot to record the deed to the land. Ten years later, an observant citizen noticed that the land was listed for sale by Lake County because of delinquent taxes. He paid the taxes and got title to the land and the improvement thereon, i.e., Fire Station 7. After two appeals to this court, a trial was held to assess damages against the City on the landowner's inverse condemnation ¹ claim for the taking of his land. The jury found that the City owed the landowner damages of $350,000 as compensation for the taking.

The City claims the trial court erred by: (1) failing to grant its oral motion (made on morning of the damage trial) to dismiss and/or for summary judgment on the grounds of res judicata; (2) instructing the jury that the highest and best use of the property taken was a fire station; and (3) refusing to give two of the City's tendered instructions because neither were supported by the evidence.

We agree with the trial court and affirm.

FACTS

In 1970, the City purchased three lots in the Miller section of Gary from the Mravcas to build a new fire station. The deed apparently was placed in a file and never recorded. The station was built and finally Belovich then filed a complaint in inverse condemnation, slander of title and ejectment. The trial court granted Belovich's motion for summary judgment on the inverse condemnation claim (finding, in effect, that Belovich was entitled to damages), dismissed his other claims, dismissed the City's counter-claims and then appointed three appraisers to fix damages. The City appealed both the granting of summary judgment on Belovich's inverse condemnation claim and the denial of its counter-claim. This court affirmed both of the trial court's judgments and found the Occupying Claimants Statute (Ind.Code 32-11-1-12) did not apply because the City had lost title to both the real estate and the improvement thereon in the quiet title proceeding. City of Gary v. Belovich (1989), Ind.App., 544 N.E.2d 178, reh'g denied, trans. denied. Thus, the issue of condemnation (the taking) was resolved and the case returned to the trial court for the sole purpose of determining damages.

put into service in 1974 as the City of Gary Fire Station 7. However, real estate taxes continued to accrue in the name of the Mravcas. About ten years later, an investor, Joseph Belovich, spotted the property on a list of properties owned and offered for sale by Lake County because of delinquent taxes. Belovich paid the back taxes and received a Commissioner's Deed ² which he recorded, and then filed a quiet title action. Two months later, on May 23, 1985, the City found and finally recorded the deed it had received from the Mravcas. The trial court quieted title in favor of Belovich and the City appealed. This court affirmed. City of Gary v. Belovich (1987), Ind.App., 504 N.E.2d 286, reh'g denied.

The appraisers tendered their report on August 31, 1990, with two appraisers assessing damages at $524,000 and another at $186,000. The City filed exceptions to the report on November 16, 1990, and requested a jury trial. On July 9, 1992, the City offered Belovich $80,000 to settle the case. Belovich refused this offer. On July 16, 1992, after a four day trial, the jury set Belovich's damages at $350,000. On October 5, 1992, the trial court calculated interest on this amount from the date of the taking, December 10, 1984, to July 16, 1992, to be $212,799.49. As per statute, he also awarded Belovich $6,735.59 for expenses, $31,896.00 for attorney fees and entered a judgment for $601,431.08 against the City.

DECISION

I. INTRODUCTION

Indiana courts have long recognized that just compensation is commanded by our Constitution when private property is taken for public use. Struble v. Elkhart County Park & Recreation Bd. (1978), 175 Ind.App. 669, 373 N.E.2d 906, 907; State Highway Com'n v. Blackiston Land Co., Inc. (1973), 158 Ind.App. 93, 301 N.E.2d 663. See also State v. Stabb (1948), 226 Ind. 319, 79 N.E.2d 392; Schnull v. Indianapolis Union Ry. Co. (1921), 190 Ind. 572, 131 N.E. 51. " 'Just compensation' is comprised of two essential elements: the condemnation award and the interest thereon." Struble, supra, 373 N.E.2d at 909. The purpose of money damages--the condemnation award--is to compensate the landowner for the value of the land taken. Interest on the money damages is intended to compensate the landowner for his loss of use of the land from the time of taking until he receives the damages awarded. Blackiston, supra. During the time before payment, landowners that are deprived of the use of their property are entitled to interest on the damages awarded because they have neither the use of the land nor the money that has been awarded. State ex rel. Ensley v. Superior Court of Marion County (1959), 239 Ind. 583, 159 N.E.2d 115, 118; Schnull, supra.

II. THE CITY'S MOTION TO DISMISS AND/OR FOR SUMMARY JUDGMENT

On the first morning of trial, the City orally moved the court to dismiss the damage action or grant it summary judgment on the grounds of res judicata. For the first time, the City claimed that the matter now before the court was, or might have been, determined in the quiet title suit brought by Belovich. The trial court denied the City's motions on two grounds: (1) the motion was not timely made; and (2) a party cannot bring a suit in inverse condemnation until title is established. The City claims its motions were timely because they went to the question of subject matter jurisdiction, which can be raised at any time, and the issues of damages and slander of title could have been raised in the quiet title action.

While we agree with the trial court that the City's motions were not timely, we also note there is no merit to the City's res judicata argument. Res judicata is an affirmative defense which must be pleaded by way of answer. Ind.Trial Rule 8(C). Here, the question of inverse condemnation was decided in the earlier judgment, City of Gary v. Belovich, 544 N.E.2d 178. The City did not raise this affirmative defense nor did it offer evidence of the quiet title proceeding, at the inverse condemnation trial. Therefore, the City waived its claim of res judicata. Lake Monroe Regional Waste v. Waicukauski (1986), Ind.App., 501 N.E.2d 466, 469. In addition, the decision of this court affirming the trial court's decision in the inverse condemnation matter is now the law of the case. The only issue on remand was that of damages.

The trial court did not err in denying the City's motions.

III. JURY INSTRUCTIONS--HIGHEST AND BEST USE

The City claims the trial court erred and invaded the province of the jury when: (1) it instructed the jury that the highest and best use of the land taken was as a fire station; and (2) it rejected two of its instructions which would have permitted the jury to consider a use other than the highest and best.

A. Instruction No. 5

The trial court's Instruction No. 5 stated: "You are instructed that as a matter of law the highest and best use of the property and improvements of the property in question is a fire station." R. 443. The City argues that this instruction prevented the jury from considering the land's value for residential purposes (which it clearly did), which value would be considerably less (which it was) than its value as a fire station. Belovich responds that the City attempted to value the property taken at its lowest and worst use--instead of its highest and best.

The City's argument is based upon its confusing the concept of market value with the concept of highest and best use. See 29A C.J.S. Eminent Domain Sec. 118. After much discussion, the following dialogue occurred (out of the hearing of the jury) between the trial court and the City's attorneys, Mr. Clark and Mr. Kovachevich:

The Court: You're--you're not comprehending, Mr. Clark. I have limited the plaintiffs [Belovich] to that. If you want to go to a higher use than residential and a fire station, then you're certainly free to. The jury may pick that it's suitable for the Sears Tower and then say that the property is worth $6,000,000. I have limited them. You don't understand that? I have limited them to what they can say, as far as the use of that property. If you are going to say that its value is a garbage dump, then, that's a different story.

Mr. Clark: Well, what--what you have done is--

The Court: I have limited the plaintiffs.

Mr. Clark: No.

The Court: If you're going to say it's for a lesser use--Are you going to say it's for a lesser use?

Mr. Clark: We're going to say it can be for a lesser use than a fire station.

The Court: But, you're using it as a fire station, so--

Mr. Clark: That's true.

The Court: So, I don't understand your argument. I have limited the plaintiffs, not you.

* * * * * *

Mr. Kovachevich: No. What I am saying is that the plaintiff is entitled to the market value of the real estate, in its highest and best use.

The Court: Okay. You want to raise it to a level higher than a fire station? Fine, then you go ahead, Mr. Clark. You raise it to a higher level than what I have limited the plaintiffs to, and if they [the jury] find it's worth more money, then so be it.

R. 941-942.

* * * * * *

Mr. Kovachevich: The bottom line is this, that in the marketplace, Mr. Belovich is competing for the potential purchasers. The competition, in the marketplace, that the City is facing is the possibility--the possibility that other buyers may buy it for a...