Hammond v. Graoch Associates No. 52, L.P.
| Decision Date | 23 July 2009 |
| Docket Number | No. 45A03-0809-CV-455.,45A03-0809-CV-455. |
| Citation | 909 N.E.2d 1086 |
| Parties | The City of HAMMOND, a Municipal Corporation, Appellant-Defendant, v. GRAOCH ASSOCIATES #52, L.P., a Washington Limited Partnership, d/b/a River Park Apartments, Appellee-Plaintiff. |
| Court | Indiana Appellate Court |
David W. Westland, Jack A. Kramer, Tara K. Tauber, Tauber Westland & Bennett P.C., Schererville, IN, Attorneys for Appellant.
Gary K. Matthews, Enslen, Enslen and Matthews, Hammond, IN, Attorney for Appellee.
In 2005, the City of Hammond condemned an apartment complex owned by Graoch Associates # 52 L.P. The City and Graoch agreed to prorate Graoch's 2005 property taxes based on the 2004 bill. The City received a credit and agreed to pay Graoch's tax bill when it came due. After the condemnation was complete and the compensation was paid, we decided Southtown Properties, Inc. v. City of Fort Wayne, 840 N.E.2d 393 (Ind.Ct.App.2006), trans. denied 855 N.E.2d 1010 (Ind.2006). Graoch believed that, pursuant to Southtown, it owed no property taxes for 2005, and therefore sought to recoup the money credited to the City. Graoch obtained a declaratory judgment against the Lake County Assessor, Treasurer, and Auditor (collectively, "Lake County") that Graoch did not owe 2005 property taxes. The trial court also ordered judgment against the City, finding the money credited for payment of taxes had to be returned under theories of mistake, unjust enrichment, failure of consideration, and money had and received.
We conclude the trial court erred by applying Southtown to this case. Because Southtown does not apply, Graoch does owe property taxes for 2005. We reverse the judgment of the trial court and remand for a hearing on attorney fees and costs.
Graoch owned property in Hammond commonly known as River Park Apartments. Graoch had a "very contentious" relationship with the City. (Tr. at 18.) The City felt River Park was responsible for a disproportionate amount of crime and safety issues, but Graoch felt the City was unfairly targeting River Park. Graoch filed several lawsuits against the City.
When Thomas McDermott, Jr., ran for mayor of Hammond, one of his campaign promises was to close River Park. McDermott was elected, and he contacted Graoch about acquiring the property. Graoch was not interested in selling because it would owe a substantial prepayment penalty on its mortgage.
The City and Graoch then began negotiating a global settlement agreement that would resolve the lawsuits pending against the City and transfer the property to the City via condemnation proceedings. The City filed a condemnation petition on January 27, 2005, and an agreed order was entered the next day. The agreed order provided the City would pay Graoch $14,247,500 for the property, subject to the rights of lien holders.
On November 28, 2005, the parties entered a Proration Agreement that addressed several issues regarding the operation of River Park while the City was in the process of appropriating funds to pay Graoch. At issue in this appeal is the provision of that agreement concerning payment of property taxes:
Graoch shall pay all [property taxes] that accrued prior to the date of Condemnation Funding, and the City shall pay all such amounts accruing on or after the date of Condemnation Funding. ... In the event that a current statement of taxes or assessments applicable to the Property are [sic] not available for the current year, such taxes and assessments shall be prorated based upon the last ascertainable tax bill or assessment statement, and the taxes and assessments shall NOT be re-prorated between the parties upon issuance of the actual tax bill or assessment statement.
Closing was on November 30, 2005. At that time, the 2005 property tax bill was not available. Pursuant to the Proration Agreement, property taxes were prorated based on the 2004 bill. The City was given a credit of $259,140.92 with the understanding that it would pay Graoch's 2005 property tax bill when it came due.
On January 13, 2006, this Court decided Southtown, in which we held that for purposes of determining liability for property taxes, the condemning authority's title relates back to the date the condemnation petition was filed. Under Southtown, Graoch would not be liable for 2005 property taxes because the City filed its condemnation action on January 27, 2005, which is prior to the assessment date. See Ind.Code § 6-1.1-1-2(1) (). After Southtown was decided, Graoch asked the City to return the money Graoch had paid toward 2005 property taxes, but the City refused.
On September 14, 2006, Graoch filed suit against the City. On May 23, 2007, Graoch filed an amended complaint that added the Lake County Treasurer, Auditor, and Assessor as defendants. The amended complaint requested a declaration that no property taxes accrued in 2005 and sought the return of the $259,140.92 on theories of mutual mistake, unjust enrichment, and breach of contract.
On August 29, 2008, the trial court entered judgment for Graoch. The trial court concluded that Southtown applied, and therefore Graoch did not owe property taxes for 2005. The court ordered Lake County to "conform [its] records accordingly and remove [Graoch] from any such tax liability shown on [its] records." (Appellant's App. at 22.) The court found the Proration Agreement (Id. at 15.) The court found the parties were mutually mistaken in their belief that Graoch would owe property taxes in 2005 and that those taxes would be a lien on the property. The court concluded the "law is with Graoch and against the City of Hammond on Graoch's claims for declaratory relief, restitution, unjust enrichment, failed consideration, and money had and received," (id. at 22), and entered judgment against the City in the amount of $259,140.92 plus costs and prejudgment interest.
The trial court entered findings of fact and conclusions of law pursuant to Ind. Trial Rule 52. Our standard of review in such cases is well-settled:
[W]e apply the following two-tiered standard of review: whether the evidence supports the findings and whether the findings support the judgment. The trial court's findings and conclusions will be set aside only if they are clearly erroneous, that is, if the record contains no facts or inferences supporting them. A judgment is clearly erroneous when a review of the record leaves us with a firm conviction that a mistake has been made. We neither reweigh the evidence nor assess the credibility of witnesses, but consider only the evidence most favorable to the judgment. We review conclusions of law de novo.
Staresnick v. Staresnick, 830 N.E.2d 127, 131 (Ind.Ct.App.2005) (citations omitted), reh'g denied.
This case requires us to determine whether Southtown applies retroactively to condemnations that were completed before Southtown was decided.1 On October 30 2003, the City of Fort Wayne filed a petition to condemn property owned by Southtown Properties, Inc. The Allen County Auditor and Treasurer were named as parties due to tax liens on the property. Allen County sought $241,804.87 for delinquent 2002 taxes and for estimated 2003 and 2004 taxes. The trial court determined Allen County was entitled to that amount and its participation in the proceedings was no longer required. A trial was held September 13 to 16, 2004, to determine just compensation. Fort Wayne tendered the award sometime thereafter.
Southtown appealed, arguing it should not be liable for 2004 property taxes. The holder of the legal title in fee on March 1 of any year is liable for the real estate taxes assessed for that year.2 Therefore, we had to determine whether Southtown held legal title in fee as of March 1, 2004.
In concluding that Southtown was liable for 2004 taxes, the trial court relied on Lake Erie & Western Railway Co. v. Kinsey, 87 Ind. 514 (1882). We summarized Kinsey as follows:
In Kinsey, a railroad company filed a condemnation action, paid the $50.00 awarded by the appraisers, and took possession of the land. After the landowner filed his exceptions to the appraisers' award, a jury trial was held and just compensation was determined to be $790.00. The railroad company refused to pay the higher amount, but also refused to vacate the land. The landowner filed suit for possession, and the trial court entered judgment in his favor. On appeal, the railroad company argued that title passed on the day it paid the $50.00 appraiser's award and that the landowner's only remedy was to attempt to enforce the judgment for compensation, not to retake possession.
Our Supreme Court held:
The payment of the amount awarded by the appraisers gives the corporation a right to the immediate possession and a prima facie claim to the land subject to an appeal in ten days after the award is filed. If no appeal is taken, at the end of the ten days the title vests and relates back to the date of payment. If an appeal is taken no title vests, and the corporation has no greater right than that of a license under the statute to hold possession and proceed with the construction of its road pending litigation. When the compensation has been finally fixed on appeal, then the corporation must pay or tender the compensation so fixed, and on failure to do so it acquires no title to the land, and its license to hold possession and prosecute its work ceases. Just compensation must be first made or tendered. The verdict of the jury and the judgment of the court determine what that just compensation is.
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The amount found due on appeal must be paid or...
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