Lucre Corp. v. County of Gibson

• Decision Date: 02 November 1995
• Docket Number: No. 63A04-9406-CV-250,63A04-9406-CV-250
• Parties: LUCRE CORPORATION, Appellant-Defendant, v. COUNTY OF GIBSON, State of Indiana, Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 150

657 N.E.2d 150

LUCRE CORPORATION, Appellant-Defendant, v. COUNTY OF GIBSON, State of Indiana, Appellee-Plaintiff.

No. 63A04-9406-CV-250.

Court of Appeals of Indiana.

Nov. 2, 1995.

Rehearing Denied Jan. 10, 1996.

Jeffrey A. Wilhite, Richard O. Hawley, Jr., Kahn, Dees, Donovan & Kahn, Evansville, for appellant.

Theodore J. Nowacki, J. Greg Easter, Bose McKinney & Evans, Indianapolis, Jerry D. Stillwell, Princeton, for appellee.

OPINION

RILEY, Judge.

Defendant-Appellant Lucre Corporation (Lucre) appeals from a judgment awarding it compensation for the appropriation of its property by Gibson County (County).

We affirm.

ISSUES

Lucre presents four issues for our review which we restate and consolidate as:

1. Did the trial court err by excluding evidence offered by Lucre?

2. Did the judgment deprive Lucre of just compensation based on the highest and best use of its property?

3. Did the judgment awarding compensation to Lucre violate an earlier bifurcation order?

FACTS

Lucre owned 261 acres of unimproved property which was the site of an abandoned strip mining operation located in Gibson County, Indiana. In 1992, the County hired an engineer to find a new landfill site to meet its future needs. Lucre's property was found to be suitable as a landfill and the County offered to purchase Lucre's property. When the County was unable to negotiate a purchase price, it sought to take the property by eminent domain. Towards that end, on March 24, 1992, the County filed a complaint for condemnation.

During a trial held on November 29, 1993, the jury heard testimony from experts who valued Lucre's property from $130,000.00 to $6,000,000.00. In addition, testimony revealed that as of the date of taking, no landfill operations were conducted or permitted under applicable law on the property, neither were other income-producing operations conducted on the property at that time. However, testimony did reveal that the highest and best use of Lucre's property was as a landfill.

The jury assessed the damages to Lucre in the amount of $130,500.00. It is from this judgment that Lucre now appeals.

DISCUSSION

I.

Lucre contends that the trial court erred by unduly restricting Lucre's testimony regarding the value of its property.

The admission of evidence is a matter of trial court discretion. Eversole v. Consol. Rail Corp. (1990), Ind.App., 551 N.E.2d 846, 854, reh'g denied, trans. denied. We will reverse a trial court decision on the admission of evidence only for an abuse of discretion, which occurs if the decision is clearly against the logic and effect of the facts and circumstances before the court or the reasonable, probable, and actual deductions to be drawn from those facts and circumstances. Id. Myers v. Myers (1990), Ind., 560 N.E.2d 39, 42. "The term 'discretion' implies the absence of a hard and fast rule or a mandatory procedure regardless of varying circumstances." Stone v. State (1989), Ind.App., 536 N.E.2d 534, 538, trans. denied. Thus, matters committed to the discretion of the trial court are those requiring an on-the-spot decision to be made in light of the trial judge's knowledge, sense of fairness and equity, and the facts and circumstances present in the courtroom. See id.

Lucre argues that his expert valuation witness should have been able to testify as to the value of the property utilizing the capitalization approach to valuation. "[T]here have not been an abundance of recent landfill sales in Gibson County, the jury should have heard testimony that the capitalization approach is used in the market regardless of where the property is located and regardless of whether a landfill is currently operating." Appellant's Brief at 7-8. We note that Lucre does not support this assertion with authority from this jurisdiction or elsewhere.

Capitalization is one of three well recognized methods of determining a property's fair market value taken by eminent domain. Annon II, Inc. v. Rill (1992), Ind.App., 597 N.E.2d 320, 326, reh'g denied, trans. denied. ¹ It is a method of computation which gives value to the land in relation to the income it produces. State Highway Comm'n v. Jones (1977), 173 Ind.App. 243, 245, 363 N.E.2d 1018, 1021.

[It] usually consists of arriving at an independent value of the land involved and adding to it the value of improvements arrived at by process of capitalization, i.e., converting reasonable or actual income at a reasonable rate of return (capitalization rate) into an indication of value. Land and improvements may be capitalized together in a single process.

4 Sackman, Nichols on Eminent Domain Sec. 12.32(3)(c), at 12-577 (3d rev. ed. 1981) (Parentheses supplied).

In J.J. Newberry Co. v. City of East Chicago for and on Behalf of Dept. of Redevelopment (1982), Ind.App., 441 N.E.2d 39, 42, we found that a "proper application of the capitalization of income method requires that 'the property is in good condition and capable of producing the income to be capitalized.' " Id. at 42 (quoting 29A C.J.S. Eminent Domain Sec. 168(2), at 724-25 (1965)). Further, " 'income cannot be capitalized to produce a residual value where the appropriated land is neither producing income nor equipped to do so.' " Id. Although Lucre's property was found to be suitable for landfill use, it was neither improved nor producing income as a landfill or otherwise as of the date of taking. The trial court precluded evidence of the capitalization value of the property because the property was currently not producing income. We cannot, in light of our precedent, say that the trial court abused its discretion in excluding this testimony. See also Jones, 173 Ind.App. at 254, 363 N.E.2d at 1025 (The capitalization method of determining value was admissible because the case involved the appropriation of land suitable for quarrying which was a part of an ongoing quarrying operation. The capitalization of income was not used to project future profits and to compensate the owner for lost profits, but rather it was used to calculate the fair market value of the land at the time of the taking.).

Lucre also offered as evidence an option agreement which contained a $2,000.00-per-acre price for the property. In 1978, the City of Evansville paid $1.00 for an option to purchase Lucre's property for $2,000.00 an acre. The option had to be exercised by November 11, 1978, but could be renewed until January 11, 1979 for an additional $2,000.00. The agreement was neither renewed nor exercised by Evansville. Although the trial court allowed the option document into evidence, Lucre argues that it erred when it redacted the amount of the offer.

Although Indiana courts have not addressed the admissibility of an option agreement to prove value directly, precedent suggests that option agreements are inadmissible to prove value. A mere offer to sell is properly excluded as evidence of value. Warren v. Wheeler (1991), Ind.App., 566 N.E.2d 1096, 1099, trans. denied; State v. Lincoln Memory Gardens, Inc. (1961), 242 Ind. 206, 177 N.E.2d 655. In Lincoln Memory Gardens, the trial court excluded testimony of an offer to sell property in a condemnation case, and our supreme court affirmed this decision holding:

A mere offer to buy or sell property is not a measure of the market value of a similar property. It is incompetent to prove the market value of the property because the asking price is only the opinion of one who is not bound by his statement, and is too unreliable to be accepted as a correct test of value.

Id. at 213, 177 N.E.2d at 658. Further, in Gradison v. State (1973), 260 Ind. 688, 300 N.E.2d 67, our supreme court upheld a trial court's refusal to admit a proposed lease by a gravel-mining company to lease a portion of property at a stated sum per acre because the lease "would have imposed no obligation upon the offeror, until such time as it elected to exercise its rights thereunder. It was, therefore, more in the nature of an option than of a binding lease or sale." Id. at 710, 300 N.E.2d at 82. The court in Gradison also stated that "[w]e are aware that a few other jurisdictions have, under circumstances where there was no better evidence offered, accepted evidence of bona fide offers under rigid standards.... We have not previously admitted such evidence and, although not determinative upon the issues in that case, we indicated in Marposon [ ] v. State [ ] (1982), Ind. , 287 N.E.2d 857, that we probably would not." Gradison, 260 Ind. at 710, 300 N.E.2d at 82. Considering our precedent, we cannot say the trial court in this case abused its discretion when it redacted the option price from the agreement.

Lucre further argues that offers have been held to be admissible to prove the existence of an active market or demand for the property, and to support the feasibility of a property's highest and best use. See Appellant's Brief at 13. However, in this case the unexercised Evansville option was over fourteen years old, and thus, not indicative of the market at the time of the taking, and the record reveals ample testimony to the use of the property as a landfill. Further, the option was admitted, albeit redacted, and was available to prove any issue, save valuation of the property. We see no error here.

Lucre next argues that the trial court erred by omitting evidence of a recent sale of property. However, Lucre neglects to provide citation to authority in support of this claim or cogent argument on this issue. Therefore, consideration of this issue has been waived. Ind.Appellate Rule 8.3(A)(7); J.L. v. Mortell (1994), Ind.App., 633 N.E.2d 300, 303, trans. denied. Notwithstanding waiver, Lucre's assertion cannot succeed.

"Evidence of sales made subsequent to the taking are not admissible unless made almost simultaneously with the taking." Gradison, 260 Ind. at 705, 300 N.E.2d at 79. The property sale in question took place in October, 1993, more than a year and a half after March 24, 1992, the date of the...