City of Hammond v. MARINA ENTER. COMPLEX, INC.

• Decision Date: 08 August 2000
• Docket Number: No. 56A05-9902-CV-87.,56A05-9902-CV-87.
• Citation: 733 N.E.2d 958
• Parties: CITY OF HAMMOND, Indiana, a Municipal Corporation, Appellant-Plaintiff, v. MARINA ENTERTAINMENT COMPLEX, INC., Great Lakes Inland Marina, Inc., Auditor of Lake County, Indiana, and Treasurer of Lake County, Indiana, Appellees-Defendants.
• Court: Indiana Appellate Court

733 N.E.2d 958

CITY OF HAMMOND, Indiana, a Municipal Corporation, Appellant-Plaintiff, v. MARINA ENTERTAINMENT COMPLEX, INC., Great Lakes Inland Marina, Inc., Auditor of Lake County, Indiana, and Treasurer of Lake County, Indiana, Appellees-Defendants.

No. 56A05-9902-CV-87.

Court of Appeals of Indiana.

August 8, 2000.

Zeff A. Weiss, Curtis W. McCauley, Ice Miller Donadio & Ryan, Indianapolis, Indiana, Joseph Stalmack, Joseph Stalmack & Associates, Hammond, Indiana, Attorneys for Appellant.

Karl Mulvaney, Bingham Summers Welsh & Spilman, Indianapolis, Indiana, Terrance L. Smith, Smith & Debonis, Highland, Indiana, Attorneys for Appellees.

OPINION

FRIEDLANDER, Judge.

This appeal arises out of an eminent domain proceeding initiated in 1995 by the City of Hammond, Indiana against Great Lakes Inland Marina, Inc. (fee owner) and Marina Entertainment Complex, Inc. (lessee/optionee) [the Landowners]. At that time, the Landowners held a 13.679-acre parcel of real property [the parcel] located in Hammond adjacent to the city-owned Hammond Marina, which was the anticipated site for the development of a riverboat casino on Lake Michigan. The City of Hammond sought to condemn a permanent and a temporary construction easement on the parcel in order to build an overpass to the Hammond Marina. The overpass was part of an overpass and public roadway project planned by the City. At the conclusion of trial, the jury returned a verdict in excess of $5.2 million in favor of the Landowners. The trial court entered judgment in accordance with the verdict. The City of Hammond now appeals.¹

The following restated issues are presented in this appeal:

1. Did the trial court err in allowing the Landowners to present damages evidence for loss of access resulting from the closing of Calumet Avenue, and was the verdict contrary to law in that damages were awarded for an adverse change in the property's highest and best use caused by the closing of Calumet Avenue?

2. Did the trial court err in allowing testimony regarding the enhanced value of the Landowners' property based on its proximity to the Hammond Marina, where a riverboat casino project was being developed?

3. Did the trial court err in allowing the Landowners to present evidence pertaining to a letter of intent entered into between the City and one of the applicants for the casino license, and did error occur when the Landowners argued in closing that the owner of Great Lakes Inland Marina, Inc. "got screwed" when the City sought to preserve the possible financial benefits of that letter of intent by closing Calumet Avenue?

We affirm.

The facts most favorable to the judgment are as follows. Michael Strain formed Great Lakes Inland Marina, Inc. and, in late 1989 or early 1990, it purchased the parcel from the Penn Central Railroad for $200,000. The parcel was located west of Calumet Avenue between the Conrail and the CSX railroad tracks and only a few hundred feet south, along Calumet Avenue, of the lakefront where the Hammond Marina was to be located. Great Lakes Inland Marina, Inc. thereafter went into business and provided boat storage services to the Hammond Marina, which opened in either 1990 or 1991.

After riverboat gambling legislation was introduced in the Indiana General Assembly in January 1993, Great Lakes Inland Marina, Inc. sent out letters advising that it had the only privately owned property near the Hammond Marina that might be used for a riverboat gambling development. On February 18, 1993, Great Lakes Inland Marina, Inc. and Alan Gull, a real estate developer acting for and under the corporate name of Marina Entertainment Complex, Inc., entered into an agreement that granted Marina Entertainment Complex, Inc. an exclusive option to lease or purchase the parcel.

The gaming bill that provided for a riverboat casino to be located at the Hammond Marina went into effect in July 1993. Numerous companies hoped to obtain the Hammond riverboat gaming license.

The City formed a committee for the purposes of considering candidates for the Hammond license and recommending which of the candidates the City should endorse. The committee sent out a request for qualifications to candidates interested in securing the City's endorsement. Lake Michigan Charters (now known as the Empress), Carnival, Boyd, Mirage, and Gamma responded to the request for qualifications. In September 1993, the City entered into an agreement (Letter of Intent) with Lake Michigan Charters to endorse Lake Michigan Charters and to support its effort before the Indiana Gaming Commission to obtain the Hammond gaming license. Pursuant to the agreement, the City would endorse Lake Michigan Charters in return for three percent of the gross gaming revenues and payment of $3 for each casino patron's car parked on city-owned property.

After a Hammond gaming referendum passed in November 1993, Marina Entertainment Complex, Inc. advised Great Lakes Inland Marina, Inc. that it was exercising the lease/purchase option on the parcel. Marina Entertainment Complex, Inc. thereafter signed a lease agreement. Pursuant to the lease, which was for a ten-year term and contained other terms and conditions, Marina Entertainment Complex, Inc. would pay Great Lakes Inland Marina, Inc. rent of $25,000 per month for the first two years and rent of $200,000 per month for the next eight years. The lease further provided for an option to purchase the parcel during the term of the lease. Pursuant to the terms of the lease, Marina Entertainment Complex, Inc. could purchase the parcel for $10 million during the first year of the lease, but the purchase price would increase by $1 million each subsequent year thereafter.

The lease commenced on January 1, 1994. By April 1994, three of the four gaming applicants for the Hammond license had made it known that they intended to use the parcel for their gaming development. The plans of the three gaming applicants showed Calumet Avenue open to the lakefront in order to facilitate their developments. Great Lakes Inland Marina, Inc. also began to develop potential plans, including placing a parking lot on the parcel.

In April 1994, Hammond commenced a condemnation suit against the Landowners. The City sought two easements on the parcel in order to build an overpass to the Hammond Marina. The Landowners contended at that time that Hammond was condemning their property not for the public good, but for the Empress's benefit. According to the Landowners in this appeal:

The basis for the property owners' contention [in this regard] was the contract between Hammond and the Empress ("Letter of Intent") that required the Empress to design, build and pay for the overpass including any expenses and damages incurred in condemnation suits. Hammond countered that the overpass project and the casino project were separate and distinct projects and were not connected in any way, notwithstanding the fact that the Empress was paying for the condemnation. Ultimately, an appeal on that issue was commenced by the Landowners. In November 1994, just weeks before trial on the first condemnation suit, Hammond dismissed the suit without prejudice. The trial court awarded fees and expenses to the Landowners, which was affirmed on appeal.

Appellee's Brief at 5 (footnotes omitted).

On January 19, 1995, the City of Hammond's Board of Public Works and Safety adopted a resolution (the Acquisition Resolution) that approved the purchase or condemnation of two easements on the parcel in order to build the overpass: 1) a permanent easement for an overpass right-of-way across a 0.458-acre portion of the parcel, and 2) a temporary construction easement on an adjacent 0.559-acre portion of the parcel. On that same date, the City also approved new plans (a version of Plan-F) for the overpass project that showed the permanent closing to vehicular traffic of Calumet Avenue just north of the Landowners' property. Plan-F resulted in placing the parcel on a dead-end road.²

On February 15, 1995, the City offered the Landowners $6041 to purchase the easements. When the Landowners did not accept the purchase offers, the City initiated this eminent domain proceeding by filing its complaint on April 7, 1995. The Landowners filed objections to the eminent domain proceedings.

In April 1995, Marina Entertainment Complex, Inc. learned of the City's plans to permanently close Calumet Avenue and thereafter stopped making rent payments to Great Lakes Inland Marina, Inc., claiming that the closing of Calumet Avenue prevented the use of the parcel for gaming development, a use condition specified in the lease. Great Lakes Inland Marina, Inc. also stopped all development plans for the parcel because the use of Calumet Avenue for ingress and egress from the lakefront was a necessary element of its development.

A hearing on the Landowners' objections to the eminent domain proceeding (Take Hearing) was held on July 12, 1995. At the Take Hearing, the parties stipulated the Acquisition Resolution into evidence. The City also introduced into evidence a version of Plan-F, dated March 31, 1995, that depicted the City's design for the overpass and the road project. At the conclusion of the Take Hearing, the trial court entered a preliminary order overruling the Landowners' objections and found that the City had properly exercised its power of eminent domain through the Acquisition Resolution.

The City thereafter submitted a proposed order of appropriation, to which Great Lakes Inland Marina, Inc. objected. On August 21, 1995, the trial court adopted the City's proposed order of appropriation. In the Order of Appropriation, which contained findings of fact and conclusions of law, the trial court found, among other things, that the existing public access to the City's lakefront was provided by Calumet Avenue and that Calumet Avenue did not provide adequate access to the lakefront. The trial court further found that the construction of the...