Nordin v. Town of Syracuse
| Decision Date | 14 July 2022 |
| Docket Number | Court of Appeals Case No. 22A-CT-135 |
| Citation | 192 N.E.3d 205 |
| Parties | Julie NORDIN and Mike Nordin, Appellants-Plaintiffs, v. TOWN OF SYRACUSE, Appellee-Defendant |
| Court | Indiana Appellate Court |
Attorneys for Appellants: Jeffrey J. Stesiak, Ryan G. Milligan, Pfeifer Morgan & Stesiak, South Bend, Indiana
Attorneys for Appellee: Martin J. Gardner, Andria M. Oaks, Christopher J. Uyhelji, Gardner & Rans, P.C., South Bend, Indiana
[1] This Court has established distinct measures of damages for permanent damage to land and permanent damage to buildings. Gen. Outdoor Advert. Co. v. La Salle Realty Corp. , 141 Ind.App. 247, 218 N.E.2d 141 (1966). When land is permanently damaged, the measure of damages is the pre-damage market value of the land minus the post-damage market value. Id. at 150. When a building is permanently damaged—that is, when the cost of repairing the building exceeds the building's pre-damage market value—the proper measure of damages is the full pre-damage market value, without subtracting the post-damage market value. Id. at 151. The distinction exists because land generally cannot be completely destroyed, while a building that is beyond repair should be treated as if it's been completely destroyed. Id. In this case, which involves permanent damage to a building, the trial court applied the measure of damages for permanent damage to land. That is, the court subtracted the post-damage market value of the building from the pre-damage market value instead of awarding the full pre-damage market value. For this reason and the others discussed below, we reverse.
[2] In June 2018, Julie and Mike Nordin bought a property on Lake Wawasee in Syracuse, within walking distance of their farm. They paid $277,000. There is a cottage on the property that was built in the 1920s ("the Cottage"). The Cottage was unoccupied and in need of work at the time of the purchase, but the parties disagree as to the extent of work needed. The Town of Syracuse ("the Town") emphasizes that the 2017 county property-tax assessment for the Cottage (the structure alone, separate from the land) was only $14,700 and contends it was "an uninhabitable, dilapidated shell of a structure that needed an entirely new bathroom, new dry wall, new windows, new ceiling tiles, walls replaced, new plumbing, new faucets, a new stove, and a new foundation." Appellee's Br. p. 21. The Nordins acknowledge the Cottage was "older" and "quaint" but say it needed just "minor repairs" that they planned to complete themselves—painting, patching drywall, and installing flooring, a toilet, and a range. Appellants’ Br. pp. 5, 6.
[3] A week after the Nordins bought the property, before they had done any work, the Town issued a work order to shut off the water at the Cottage because a deposit had not yet been paid. But the water was already off, so when a worker turned the valve, the water was turned on. The Cottage was flooded with 6,000 gallons of water. A claim representative for the Town's insurer estimated the repair cost to be $55,928.44, reduced to $43,062.26 for "Non-recoverable Depreciation." Appellants’ App. Vol. III p. 36. After the flooding, the tax assessment for the Cottage was $14,300.
[4] In October 2018, the Nordins’ attorney sent the repair estimate to the Kosciusko County Area Plan Commission. The Plan Commission responded with a letter explaining that the Nordins’ property lies within a "special flood hazard area" and that "substantially improved/damaged structures" located within such an area "must be reconstructed in compliance with the Kosciusko County Flood Control Ordinance." Appellants’ App. Vol. IV p. 175. The Flood Control Ordinance defines "substantial damage" as "damage of any origin sustained by a structure whereby the cost of restoring the structure to it's [sic] before damaged condition would equal or exceed 50 percent of the market value of the structure before the damage occurred." Id. The Plan Commission determined that "based on the assessed value of the structure, $14,300[1 ] and the value of damage you provided set by the insurance company of $43,000 it appears that the structure sustained substantial damage and is subject to bringing the home into compliance with the Kosciusko County Flood Control Ordinance." Id.
[5] According to the Nordins (with no dispute from the Town), compliance with the Flood Control Ordinance would require elevating the "entire foundation" of the Cottage, meaning that "repair" of the existing structure is impossible—the only option is "a complete retrofit or rebuild." Appellants’ Br. pp. 4, 8, 21. As a result, the Nordins obtained two estimates for demolition of the Cottage and construction of a similar structure. One estimate was $255,000, and the second was $294,589.83. In addition, an appraiser estimated a replacement cost of $269,483.
[6] The Nordins sued the Town for negligence, seeking damages for "damage to property, loss of use of property, and lost rental income." Appellants’ App. Vol. II p. 16. The Town moved for summary judgment, acknowledging the Nordins are entitled to damages but arguing the damages are limited to the difference in the fair market value of the Cottage before and after the flooding. Relying on the Cottage's pre-flooding tax assessment of $14,700 and post-flooding tax assessment of $14,300, the Town proposed a damages award of $400. The Town asserted the Cottage was "significantly deteriorated" and "uninhabitable" before the flooding and therefore a larger damages award would be a "windfall" for the Nordins. Id. at 29. The Town also argued that because the Cottage was uninhabitable even before the flooding, the Nordins cannot recover for loss of use or lost rental income. The trial court agreed with the Town on both issues and granted its motion, awarding the Nordins only $400 in damages.
[7] The Nordins now appeal.
[8] The Nordins contend the trial court erred by granting the Town's motion for summary judgment. We review such motions de novo, applying the same standard as the trial court. Hughley v. State , 15 N.E.3d 1000, 1003 (Ind. 2014). That is, "The judgment sought shall be rendered forthwith if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Ind. Trial Rule 56(C).
[9] The Nordins argue the trial court erred by awarding them only $400 for the physical damage to the Cottage. As they note, the trial court based its ruling on General Outdoor Advertising Co. v. La Salle Realty Corp. , 141 Ind.App. 247, 218 N.E.2d 141 (1966). The Nordins contend the court should not have relied on General Outdoor at all. In the alternative, they assert that even if General Outdoor controls the trial court erred in calculating damages as a matter of law.
[10] Before addressing those issues, we note an obvious error the Nordins missed. In General Outdoor , this Court distinguished between damage to land and damage to buildings. We explained that when land is "permanently" damaged, "the measure of damages is the market value of the real estate before the injury, less the market value after the injury[.]" Id. at 150. But when, as here, a building is "permanently" damaged—which occurs when the cost of repairing the building exceeds the market value of the building before the damage—the "proper measure of damages" is "the market value before the injury," without subtracting the post-damage market value. Id. at 151 ; see also City of Marion v. Taylor , 785 N.E.2d 663, 665 (Ind. Ct. App. 2003), trans. denied ; Warrick Cnty. v. Waste Mgmt. of Evansville , 732 N.E.2d 1255, 1258 (Ind. Ct. App. 2000) ; Sanborn Elec. Co. v. Bloomington Athletic Club , 433 N.E.2d 81, 88 (Ind. Ct. App. 1982). The reason for the distinction is that land "can never be completely destroyed," while a building that cannot be repaired should be treated as if it's been destroyed, even if it's still standing. Gen. Outdoor , 218 N.E.2d at 151.
[11] Here, the trial court used the measure of damages for permanent damage to land :
The costs of restoration exceed the fair market value of the cottage prior to the incident in question; accordingly, Plaintiffs have suffered a permanent injury to these improvements. Plaintiffs’ damages equal the difference between the fair market value of their cottage prior to the incident ($14,700.00), less the fair market value of the cottage after the incident ($14,300.00), or $400.00.
Appellants’ App. Vol. II pp. 10-11. But this case involves damage to a building, so to adhere to General Outdoor , the court should have awarded the Nordins the full amount of what it found to be the pre-flooding market value of the Cottage, $14,700, without deducting the post-flooding market value. While the Cottage was not reduced to a pile of rubble, it was destroyed in that it cannot be repaired and is therefore useless in its current state. The Nordins should be compensated accordingly, notwithstanding the fact that Kosciusko County assessed the Cottage at $14,300 for property-tax purposes even after the flooding.
[12] Before simply ordering $14,700 in damages, though, we must address the Nordins’ arguments. In support of their first contention—that the trial court should not have used the General Outdoor measure of damages at all—they rely on the following passage from the opinion:
It should be noted that this court is not of the opinion that the measure of damages which we are following in this case will be equally applicable in all possible fact situations: for example, here we do not have a problem of a permanent damage which might involve salvage proceeds or demolition costs. Any measure of damages must be flexible enough to vary with the necessities of the situation.
218 N.E.2d at 152. This language certainly shows, as the Nordins contend, that General Outdoor established a "proper" measure of damages,...
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