City of New Albany v. Bd. of Comm'rs of the Cnty. of Floyd

• Decision Date: 23 March 2020
• Docket Number: Supreme Court Case No. 19S-MI-674
• Citation: 141 N.E.3d 1220
• Parties: CITY OF NEW ALBANY , Appellant (Intervenor/Counterclaimant below), v. BOARD OF COMMISSIONERS OF the COUNTY OF FLOYD , Appellee (Plaintiff/Counterclaim Defendant below).
• Court: Indiana Supreme Court

141 N.E.3d 1220

CITY OF NEW ALBANY , Appellant (Intervenor/Counterclaimant below),

v. BOARD OF COMMISSIONERS OF the COUNTY OF FLOYD , Appellee (Plaintiff/Counterclaim Defendant below).

Supreme Court Case No. 19S-MI-674

Supreme Court of Indiana.

Argued: February 20, 2020

Decided: March 23, 2020

ATTORNEYS FOR APPELLANT: Brian J. Paul, Anne K. Ricchiuto, Jane Dall Wilson, Stephanie L. Gutwein, Faegre Drinker Biddle & Reath LLP, Indianapolis, Indiana, Shane L. Gibson, New Albany, Indiana

ATTORNEYS FOR APPELLEE: Richard R. Fox, Kristi L. Fox, Fox Law Offices, New Albany, Indiana, Bart A. Karwath, Mark J. Crandley, Barnes & Thornburg, LLP, Indianapolis, Indiana

On Petition to Transfer from the Indiana Court of Appeals, No. 18A-MI-1627

David, Justice.

In this dispute about the ownership of a criminal justice center, we hold that the turn-over provision in the lease between the county and the building authority is valid and enforceable. Thus, we affirm the trial court.

Facts and Procedural History

In the 1950s, Floyd County and the City of New Albany formed the New Albany, Floyd County Indiana Building Authority ("the Building Authority") to issue bonds to finance a city-county building. Between 1991 and 1992, the Building Authority again issued bonds in order to finance a criminal justice center ("The Center"). This Center is adjacent to the City-County Building and is home to the City's police department and the County's Sheriff's department and jail. Pursuant to an inter-local agreement, the Building Authority would own the Center, the County would lease it and the City would sublease space from the County. The County would finance the lease by using tax revenues from both the County and the City.

To that end, in September of 1992, the County and the Building Authority executed a lease with a fifteen-year term starting in 1993. The lease terms included a turn-over provision ("the Turn-Over Provision") which provided:

In the event [the County] has not exercised its option to purchase the [Center] in accordance with Section 9 hereof and has not exercised its option to renew this Lease in accordance with Section 10 hereof, then, upon expiration of this Lease and upon full performance by [the County] of its obligations under this Lease, the [Center] shall become the absolute property of [the County], and, upon [the County's] request, [the Building Authority] shall execute proper instruments conveying to [the County] all of [the Building Authority's] title thereto.

Appellant's App. Vol. III at 16–17.

The lease also included a statutory application provision which provided that:

[the Building Authority] was organized for the purpose of constructing and erecting the City County Building and leasing the same to [the County] under the provisions of the Indiana Code 36-9-13. All provisions herein contained shall be construed in accordance with the provisions of said Chapter, and to the extent of inconsistencies, if any, between the covenants and agreements in this Lease and provisions of said Chapter, the provisions of said Chapter shall be deemed to be controlling and binding upon [the Building Authority] and [the County].

Id . at 18.

The lease expired in September 2008, and thereafter, the City and the County continued to occupy the Center, splitting the costs proportionally, based on the amount of space each occupied. In 2015, the County began negotiations with Building Authority for renovations of the Center. In 2018, the County requested that the Building Authority transfer title of the Center to the County pursuant to the Turn-Over Provision in the parties' lease.

The Building Authority declined to transfer title and the County filed suit in April of 2018, seeking declaratory judgment and specific performance, among other things. At the county's request, the trial court expedited the proceedings. In May 2018, the trial court granted the City of New Albany's request to intervene. In June 2018, the trial court entered declaratory judgment in favor of the County, concluding that the Turn-Over Provision in the lease was valid pursuant to Indiana Code section 36-9-13-22(a)(6). It ordered that the title be given to the County and dismissed all other pending claims.

The City appealed arguing that under Indiana Code section 36-9-13, the Turn-Over Provision was not valid. The Court of Appeals agreed and further held, sua sponte, that the County, as a holdover tenant could still exercise the purchase option in the lease. City of New Albany v. Bd. of Comm'rs of Cty. of Floyd , 125 N.E.3d 636, 641 (Ind. Ct. App. 2019), adhered to on reh'g , 130 N.E.3d 660 (Ind. Ct. App. 2019), and trans. granted, opinion vacated , 138 N.E.3d 961 (Ind. 2019).

Both parties petitioned for transfer, which we granted. Ind. Appellate Rule 58(A).

Standard of Review

Matters of statutory interpretation are reviewed de novo . Rodriguez v. State , 129 N.E.3d 789, 793 (Ind. 2019). This Court "presumes that the legislature intended for the statutory language to be applied in a logical manner consistent with the statute's underlying policy and goals." Nicoson v. State , 938 N.E.2d 660, 663 (Ind. 2010).

Discussion and Decision

At issue is whether the Turn-Over Provision in the lease is valid. The County argues that it is, and the City argues it is not. The disagreement hinges on whether the Turn-Over Provision is consistent with Indiana Code section 36-9-13 et seq. as the lease states that:

[the Building Authority] was organized for the purpose of constructing and erecting the City County Building and leasing the same to [the County] under the provisions of the Indiana Code 36-9-13. All provisions herein contained shall be construed in accordance with the provisions of said Chapter, and to the extent of inconsistencies, if any, between the covenants and agreements in this Lease and provisions of said Chapter, the provisions of said Chapter shall be deemed to be controlling and binding upon [the Building Authority] and [the County].

Appellant's App. Vol. III at 18.

Indiana Code Section 36-9-13-22 provides a list of various powers specifically given to the board of directors of building authorities. The only power listed therein related to the transfer of property provides that a building authority "may ... acquire real or personal property by gift, devise, or bequest and hold, use, or dispose of that property for the purposes authorized by this chapter." Ind. Code. § 36-9-13-22(a)(6).

Our Court of Appeals held and the City argues that use of the word "that" meant that only property gifted, devised or bequested could be disposed (or in this case, turned over). However, the County argues that Indiana Code section 36-1-11-8 provides for a transfer to the government:

A transfer or exchange of property may be made with a governmental entity upon terms and conditions agreed upon by the entities as evidenced by adoption of a substantially identical resolution by each entity. Such a transfer may be made for any amount of

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