State v. Bishop, 32S01-0302-CV-72.

• Decision Date: 31 December 2003
• Docket Number: No. 32S01-0302-CV-72.,32S01-0302-CV-72.
• Parties: STATE of Indiana, Appellant (Plaintiff below), v. Stephen BISHOP, Molly Bishop, Dale Gladden and Hendricks County, Indiana, Appellees (Defendants below).
• Court: Indiana Supreme Court

800 N.E.2d 918

STATE of Indiana, Appellant (Plaintiff below), v. Stephen BISHOP, Molly Bishop, Dale Gladden and Hendricks County, Indiana, Appellees (Defendants below).

No. 32S01-0302-CV-72.

Supreme Court of Indiana.

December 31, 2003.

Steve Carter, Attorney General, Janet Parsanko, Deputy Attorney General, Office of Attorney General, Indianapolis, IN, Attorneys for Appellant.

William O. Harrington, Danville, IN, Marvin Mitchell, Indianapolis, IN, Attorneys for Appellee.

ON PETITION TO TRANSFER FROM THE INDIANA COURT OF APPEALS, No. 32A01-0106-CV-238

SHEPARD, Chief Justice.

This is an eminent domain proceeding in which the State condemned land adjoining an interstate highway in order to build an interchange. We consider two questions we have never addressed before. First, does a party who has filed objections to the report of court-appointed appraisers have an absolute right to withdraw the objections? Second, by what method does one assess the fair market value of a billboard that is taken in condemnation? We affirm in part and reverse in part.

Statement of Facts

On December 6, 1996, the State of Indiana filed an action to appropriate a portion of Stephen and Molly Bishop's real estate for the purpose of constructing a cloverleaf interchange at the intersection of Interstate 70 and State Road 267 in Hendricks County. The State had previously offered the Bishops about $99,400 to purchase the land, which is located along I-70 east of State Road 267 and is divided by I-70 into northern and southern parcels. The State condemned 1.177 acres, 0.681 acres of the northern parcel and 0.496 of the southern parcel, upon which four billboards were located. The residue of the Bishops' land was some 73 acres.

The court-appointed appraisers filed their report on November 14, 1997, assessing the fair market value of the land as $23,565 and the fair market value of improvements to the land as $167,945 (for a total value of $191,510). On December 10, 1997,¹ the State filed exceptions to the appraisers' report as to the value of the improvements. The Bishops did not file exceptions.

In early 1998, the State deposited $191,510 with the clerk of the court.² The Bishops filed a request for payment of the appraisers' amount. The State had no objection so the court ordered the clerk to pay the Bishops the amount on deposit. About this time, the Bishops sold most of the billboards to an outdoor advertising company for $2000 and gave an easement to place them along the Interstate at a price of $598,000.

The court entered a scheduling order on June 7, 1999, setting the case for trial on April 11, 2000. The parties filed witness and exhibit lists and undertook discovery. An attempt at mediation failed to produce a settlement. On March 28, 2000, the State moved to withdraw its exceptions and asked for entry of judgment.³ The Bishops objected to the State's request to withdraw its exceptions, and on May 4, 2000, the trial court denied the motion.

On April 18, 2000, the Bishops filed a motion in limine, seeking to prohibit testimony about compensation other than fair market value, by which they meant the State's desire to pay the value of the land taken, the value of the one billboard taken, and the cost to move the remaining three billboards onto the Bishops' remaining property. The State filed a brief in opposition. After a hearing, the trial court issued an order on January 31, 2001, prohibiting the State from presenting any evidence regarding the cost of relocating the billboards or mentioning that the Bishops have billboards on their remaining property. The State subsequently filed a motion in limine to prohibit evidence of lost income or profits or the use of the capitalization of income approach to determining fair market value. The motion was denied.

The trial occurred in March 2001, and the jury returned a verdict of $595,000. The court deducted the money the State had already paid, then added $102,195.78 in interest and $2,500 in litigation expenses.

The State appealed, and the Court of Appeals affirmed. State v. Bishop, 775 N.E.2d 335 (Ind.Ct.App.2002). We granted transfer.

The State alleges three errors by the trial court: (1) the denial of its motion to withdraw its exceptions, (2) the admission of evidence regarding capitalization of income, and (3) the exclusion of evidence regarding the cost to move the existing billboards. We will address the denial of the motion to withdraw exceptions first and the two contentions regarding the proper measure of damages second.

I. Can a Party Withdraw Its Exceptions?

The State argues that a party has an absolute right to withdraw its exceptions to the appraisers' report, and says the trial court thus erred in disallowing the State's motion to withdraw. The State correctly observes that when the only party to file exceptions to the appraisers' report later withdraws those exceptions, no issues remain for the trial court to decide. State v. Redmon, 205 Ind. 335, 186 N.E. 328 (1933). The State is incorrect, however, in its position that a party has an absolute right to withdraw.

Although Denny v. State, 244 Ind. 5, 189 N.E.2d 820 (1963), appeared to presume an absolute right to withdraw exceptions, subsequent cases have held that a pretrial order can restrict a party's ability to withdraw. See State v. Blount, 154 Ind.App. 580, 290 N.E.2d 480 (1972)

(party may ordinarily withdraw exceptions if its motion is timely but when a party agrees to a pretrial order limiting the parties' ability to change the trial plan, then does not seek to modify it, the party has no basis to object when judge denies its motion); McGill v. Muddy Fork of Silver Creek Watershed Conservancy District, 175 Ind. App. 48, 370 N.E.2d 365 (1977) (in absence of an express agreement or order, motion was timely and party could withdraw); Public Serv. Co. of Ind. v. Rounder, 423 N.E.2d 666, 667 (Ind.Ct.App.1981) ("Absent an express pretrial agreement, a pretrial order or other controlling order, a party may withdraw its exceptions to an appraisers' award.").

In Daugherty v. State, 699 N.E.2d 780 (Ind.Ct.App.1998), the Court of Appeals recognized that the practical effect of these cases was to place the decision whether to grant or deny the motion at the discretion of the trial court. As Judge Kirsch wrote:

The effect of the Blount decision and the subsequent cases that recognized this exception was to create a rule that was regulated through the trial court's discretion. Our decision here makes explicit what was implied in Blount: a party does not have an absolute right to withdraw exceptions to the appraisers' report; rather, the withdrawal of exceptions is subject to the trial court's discretion. While the court in the exercise of such discretion may ordinarily allow the withdrawal, it may deny the request to withdraw or condition the withdrawal upon such terms and conditions as the court deems necessary to avoid injustice.

Id. at 782.

We conclude that the exercise of discretion concerning withdrawal, based on factors such as timeliness and inconvenience to opposing parties is more likely to produce just outcomes than a rule conferring an absolute right of withdrawal. The Daugherty court held that "[t]he trial court in exercising its discretion should allow the withdrawal of exceptions except in instances where injustice would result." 699 N.E.2d at 782-83. We emphasize what the Daugherty court said—reiterated by the Court of Appeals in this case: parties who wish to insure a trial on the merits should file their own timely exceptions, and those who file should recognize that they may not be permitted to withdraw those exceptions and terminate litigation which they have begun.

The State argues alternatively that the trial court abused its discretion in denying the motion. The Daugherty court proposed the following non-exclusive factors for the trial court to consider in making its determination:

[1] the length of time between the filing of the appraisers' report and the motion to withdraw, [2] whether the withdrawing party is attempting to do so on the eve of the trial, [3] whether the withdrawing party and trial court have been put on notice of the other party's dissatisfaction with the report, either that be through the filing of belated exceptions or otherwise, and [4] the extent of trial preparation which has already occurred, including the securing of expert witnesses and the extent of discovery.

Id. at 783. We adopt this approach, emphasizing that the factors are not a four-part test but are merely a non-exclusive list of circumstances for the trial judge to consider when exercising discretion. Appellate courts will reverse only where the court's 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." Lucre Corp. v. County of Gibson, 657 N.E.2d 150, 152 (Ind.Ct.App.1995).

Following this approach, we cannot say it was an abuse of discretion for the trial court to deny the State's motion. The State filed its exceptions to the appraisers' report on December 9, 1997, and did not seek to withdraw its exceptions until two years and four months later—fifteen days before the scheduled trial. In addition, the State was arguably put on notice of the Bishops' dissatisfaction with the report through information exchanged during discovery or during mediation. Finally, the Bishops claim that they had exchanged interrogatories, retained two expert witnesses and "spent several tens of thousands of dollars on attorneys' fees, appraisers and other expenditures." (App. at 189.)

The trial court might well have allowed the withdrawal, or conditioned it upon the payment of the Bishop's litigation expenses. Filing a request to withdraw after two years and four months may be understandable in cases where a party conducted discovery and attempted mediation then realized...