Galbraith v. Planning Dept. of City of Anderson

• Decision Date: 27 January 1994
• Docket Number: No. 48A02-9210-CV-494,48A02-9210-CV-494
• Citation: 627 N.E.2d 850
• Parties: Daniel K. GALBRAITH, and Richard L. Galbraith, Appellants-Plaintiffs, v. PLANNING DEPARTMENT OF the CITY OF ANDERSON, Appellee-Defendant.
• Court: Indiana Appellate Court

Page 850

627 N.E.2d 850

Daniel K. GALBRAITH, and Richard L. Galbraith, Appellants-Plaintiffs, v. PLANNING DEPARTMENT OF the CITY OF ANDERSON, Appellee-Defendant.

No. 48A02-9210-CV-494.

Court of Appeals of Indiana Second District.

Jan. 27, 1994.

Mark Dudley, William J. Norton, Anderson, for appellants-plaintiffs.

William C. Kreegar, Anderson, for appellee-defendant.

SHIELDS, Judge.

Daniel K. and Richard L. Galbraith (the Galbraiths) claim the trial court erred in granting judgment for the City of Anderson's Plan Commission (the Plan Commission) ¹ in the Galbraiths' claim against the Plan Commission for taking their property without just compensation (inverse condemnation).

We affirm.

ISSUE

Does the rezoning of the Galbraiths' property as a floodway constitute a taking?

FACTS

On June 6, 1983, the Galbraiths purchased approximately one acre of real estate on contract from William P. and Anna Sczesny. At the time of the purchase, the real estate was improved with a commercial building used for business purposes and had been zoned B-2, General Business District, by the Madison County Board of Commissioners. At the time they initiated this action, the Galbraiths were still using the real estate for commercial purposes.

The real estate was annexed by the City of Anderson effective December 10, 1989. When the Galbraiths were notified of the annexation ordinance, Mr. Galbraith "talked with the Director of the City Plan Commission and the Director advised [him] that the annexation ordinance would not affect the zoning of my real estate." Record at 59 (emphasis in original).

Because the U.S. Department of Housing and Urban Development had previously designated the real estate as a "floodway" in 1978, and because the City of Anderson and Madison County had adopted the National Flood Insurance Program, federal regulations required that the subject real estate be zoned as a floodway when rezoning occurred. After the subject property was annexed, the City of Anderson adopted a zoning ordinance which designated the subject real estate as a "floodway."

According to the zoning ordinance, the floodway district shall allow agricultural uses and nature preserves by right along with park and recreational uses provided they do not involve the erection of any structure or obstruction, the opening of any excavation or the deposition of any material or substance. All other uses, except residential structures, may be allowed after a permit from Natural Resources has been issued for the same. In addition, a special exception from the Board of Zoning Appeals will have to be granted after the Record at 27.

issuance of the permit from Natural Resources.

Some time later, the Galbraiths' tenant requested a statement from the Plan Commission that the real estate was zoned to accommodate an auto sales business. The statement was required by the Indiana Bureau of Motor Vehicles to obtain a used car sales license. The Plan Commission refused to provide the statement.

An action against the Plan Commission was initiated by the Galbraiths on October 15, 1990. The Plan Commission filed a motion to dismiss. However, the Galbraiths submitted the affidavit of Richard Galbraith and evidence was heard at the hearing on the motion to dismiss. Further, the trial court in its judgment acknowledged that it considered matters outside the pleadings. Indiana Trial Rule 12(B) provides that

[i]f, on a motion, asserting the defense number (6), to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56.

Therefore, we treat the trial court's dismissal of the Galbraiths' amended complaint with prejudice as a summary judgment for the Plan Commission.

DISCUSSION

Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Ind.Trial Rule 56(C). The moving party bears the burden of establishing a prima facie case, based upon the designated material, that a genuine issue of material fact does not exist; any doubt must be resolved in favor of the nonmoving party. Oelling v. Rao (1992), Ind., 593 N.E.2d 189, 190. Once the moving party has sustained its burden of establishing this prima facie case, the nonmovant "may not rest upon the mere allegations or denials in his pleadings," but, based upon designated material, "must respond by setting forth specific facts showing that there is a genuine issue for trial." Id.; T.R. 56(E). On appeal from the grant of summary judgment, we apply the same standard as the trial court, Babcock v. Lafayette Home Hosp. (1992), Ind.App., 587 N.E.2d 1320, 1323, and affirm the grant of summary judgment if the record demonstrates that a genuine issue of material fact does not exist and that the moving party is entitled to judgment as a matter of law.

The Galbraiths argue that the trial court erred in entering judgment for the Plan Commission because the zoning of their property as a floodway constitutes a taking, in that the value of their real property has been diminished by the rezoning from $60,000 to $1,000. Thus, according to the Galbraiths, a taking has occurred in the form of a diminishment of the value of their property occasioned by the change in zoning which altered the "highest and best use" of their property. ² See Taylor-Chalmers, Inc. v. Board of Comm'rs of LaPorte County (1985), Ind.App., 474 N.E.2d 531, 532-33.

Indiana courts have long held that a zoning ordinance which permanently prevents a landowner from utilizing his property in a manner to which it is reasonably adapted is unconstitutional as a confiscation of property without just compensation. Metropolitan Dev. Comm'n of Marion County v. I. Ching (1984), Ind.App., 460 N.E.2d 1236, 1237 (citations omitted). However, not every restriction placed upon private property constitutes a taking, and our supreme court has drawn a distinction between "a parcel of property [that] is not zoned for its best and most profitable use and a situation where the present zoning restriction results in a deprivation of one's property rights." Young v. City of Franklin (1986), Ind., 494 N.E.2d 316, 317-18 (citation omitted). As Justice Holmes wrote, "property may be regulated to a certain extent[; however], if the regulation goes too far it will be recognized as a taking." Pennsylvania Coal Co. v. Mahon (1922), 260 U.S. 393, 415, 43 S.Ct. 158, 160, 67 L.Ed. 322. In Young, our court noted that a property owner is not entitled to the highest and best use of his land; however, a taking occurs when all reasonable use of the property is prevented by the land use regulation. Young, 494 N.E.2d at 318 (citing City of Anderson v. Associated Furniture & Appliances, Inc. (1981), Ind., 423 N.E.2d 293, 296). Thus, a zoning regulation "goes too far," that is, is confiscatory, when it denies the property owner "all economically beneficial or productive use of land." Lucas v. South Carolina Coastal Council (1992), --- U.S. ----, ----, 112 S.Ct. 2886, 2893, 120 L.Ed.2d 798 (citations omitted).

Frequently, the question is limited to whether the zoning ordinance, as applied to a particular parcel of real estate by a decision of the Board of Zoning Appeals, has gone "too far." Here, however, because the provisions of the zoning ordinance require action by both the Department of Natural Resources (Natural Resources) and the Board of Zoning Appeals, the question is whether the zoning ordinance as implemented by either administrative agency has gone "too far," that is, has deprived the Galbraiths of all economically beneficial or productive use of their property.

The Plan Commission, however, argues that this issue is not before this court, and was not before the trial court, because the Galbraiths have not exhausted their administrative remedies.

In response, the Galbraiths argue that the exhaustion principle is not applicable to this case because their claim falls with the Euclid doctrine. In Village of Euclid v. Ambler Realty Co. (1926), 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 the United States Supreme Court held that a plaintiff may seek judicial relief without exhausting administrative procedures if he attacks the constitutionality of the ordinance in its entirety. Id. at 386, 47 S.Ct. at 117. Although Indiana has never formally adopted the Euclid rule, our supreme court has distinguished claims that an entire zoning ordinance is unconstitutional from those where the ordinance is unconstitutional as applied to the petitioner's property. In City of South Bend v. Marckle (1939), 215 Ind. 74, 18 N.E.2d 764, the court opined that in the former circumstance the remedy is a direct action, while in the latter the petitioner is required to exhaust his administrative remedies before seeking judicial review "even though the illegality arises out of a...