SGB Financial Services v. Consolidated City of Indianapolis

• Decision Date: 20 December 2000
• Docket Number: No. 00-1637,00-1637
• Citation: 235 F.3d 1036
• Parties: (7th Cir. 2000) SGB Financial Services, Inc., doing business as Timber Ridge Apartments, Plaintiff-Appellant, v. Consolidated City of Indianapolis-Marion County, Indiana, et al., Defendants-Appellees
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1036

235 F.3d 1036 (7th Cir. 2000)

SGB Financial Services, Inc., doing business as Timber Ridge Apartments, Plaintiff-Appellant, v. Consolidated City of Indianapolis-Marion County, Indiana, et al., Defendants-Appellees.

No. 00-1637

In the United States Court of Appeals For the Seventh Circuit

Argued December 5, 2000

Decided December 20, 2000

Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 98-977-C H/G--David F. Hamilton, Judge.

Before Posner, Easterbrook, and Evans, Circuit Judges.

Easterbrook, Circuit Judge.

Indianapolis put the Timber Ridge Apartments on its "acquisition list" of properties that the city plans to acquire (by negotiation or condemnation) eventually. SGB Financial Services, which owns the 26 buildings in the Timber Ridge complex, asked Indianapolis either to disclaim any interest in acquiring the property or to complete the transaction swiftly; when the city failed to do either, SGB brought this suit under 42 U.S.C. sec.1983, contending that the city had accomplished a taking just by listing the apartments. SGB offered to prove that it had become unable to sell the buildings at a profit, or borrow funds to improve them, because potential buyers and lenders feared that Indianapolis would acquire the property at a low price. This sounds like an argument that Indiana courts do not award full market value in condemnation proceedings, for it must be the anticipated buyout price rather than a property's simple presence on the list that affects how lenders and potential purchasers deal with owners in the meantime. If the state pays full market price in the event of an acquisition, then buyers will be willing to pay the market price in prior transactions, and owners will make (and lenders will fund) all cost-justified improvements whether or not an acquisition occurs. If, on the other hand, state courts systematically award inadequate compensation, then prices of property will fall in anticipation, whether or not the property appears on a formal list. (The mayor's statement at a press conference that the city was looking into acquiring a parcel for a highway or school would have the same effect as listing.) But the district court did not decide whether anticipation of an improperly low award in the future could support relief now; instead the court dismissed the case because Indiana offers SGB a forum in which to pursue an inverse- condemnation claim. 2000 U.S. Dist. Lexis 7204 (S.D. Ind. Feb. 7, 2000).

Indiana has authorized inverse-condemnation actions (that is, property owners' suits seeking compensation for what they say are takings). I.C. sec.32-11-1-12. Because the takings clause of the fifth amendment (applied to the states by the fourteenth, see Chicago, Burlington & Quincy R.R. v. Chicago, 166 U.S. 226 (1897)), does not forbid takings but simply requires "just compensation" for the property, a state violates the Constitution only by refusing to pay up. If the state offers a forum that will decide whether a taking has occurred and, if so, will fix just compensation--that is, if the state entertains inverse-condemnation suits--it is hard to see how the state could be thought in violation of the Constitution. And if the state is not violating the Constitution, there is no basis for relief under sec.1983. This is the chain of reasoning behind Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 172 (1985), which held that a takings claim does not accrue until available state remedies have been tried and proven futile. "Available" is an important qualifier. If the state does not offer just compensation even for admitted takings then there is a real constitutional problem. But Indiana offers financial relief via inverse-condemnation suits.

SGB argues, however, that Indiana's courts are not open to the kind of claim it wants to make. For this proposition SGB relies exclusively on Reel Pipe & Valve Co. v. Indianapolis, 633 N.E.2d 274 (Ind. App. 1994), where a panel of the state's intermediate appellate court rejected an inverse-condemnation claim based on a property's presence on Indianapolis's acquisition list. According to SGB, Reel Pipe holds that as a matter of law placement on an acquisition list cannot be a taking; the city, by contrast, insists that the opinion holds only that a particular property owner had not established a financial loss. We need not decide which reading is right--and not only because the Supreme Court of Indiana has yet to speak. (That court's denial of transfer in Reel Pipe, like a denial of certiorari by the Supreme Court of the United States, does not telegraph any particular view of the merits.) SGB treats state remedies as available only if the property owner is likely to prevail; but that is not what Williamson County says. Its stands instead for the proposition that there is no uncompensated taking--that is, nothing to litigate under sec.1983--until the state has established (a) what it has taken, and (b) its refusal to pay "just compensation." A final decision about the disposition of the plaintiff's property, coupled with a lack of any financial remedy (for example, the absence of inverse-condemnation actions in state court) could satisfy both (a) and (b); but efforts to predict how state courts will...