State v. Kimco of Evansville, Inc.

Decision Date04 March 2009
Docket NumberNo. 82S01-0806-CV-308.,82S01-0806-CV-308.
PartiesSTATE of Indiana, Appellant (Plaintiff below), v. KIMCO OF EVANSVILLE, INC., n/k/a KCH Acquisition, Inc., The Franklin Life Insurance Company, and Vanderburgh County, Indiana, Appellees (Defendants below).
CourtIndiana Supreme Court

Douglas D. Church, Fishers, IN, Attorney for Amici Curiae Indiana Association of Cities and Towns, Indiana Municipal Lawyers Association.

Gerard T. Carmody, Kelley F. Farrell, Erwin O. Switzer, St. Louis, MO, R. Thomas Bodkin, Evansville, IN, Attorneys for Appellees.

On Petition to Transfer from the Indiana Court of Appeals, No. 82A01-0607-CV-301

BOEHM, Justice.

In State v. Ensley, 240 Ind. 472, 164 N.E.2d 342 (1960), this Court held that roadway improvements that reduce or interfere with traffic flow to a commercial property do not constitute takings of a property right of the owner of the property. We reaffirm Ensley and hold that the shopping center owners are not entitled to consequential damages from street reconfigurations that affect traffic flow through the center and prevent expansion of existing points of ingress or egress, but leave existing points in place.

Facts and Procedural History

Kimco owns the Plaza East Shopping Center in Evansville. Plaza East is an open-air shopping complex bordered by Lloyd Expressway on the south and Green River Road on the west. As shown on the schematic diagram in Appendix A, retail stores are located on the north and east sides of a roughly square property, and a parking area occupies the area to the south and west. There are two main entrances/exits to the center, both on Green River Road.1 The southern entrance has three lanes and opens into Plaza East's parking lot. The northern entrance has two lanes and is situated near the northern strip of storefronts.

Before the construction at issue in this case, both northbound and southbound traffic on Green River Road could use the southern entrance to enter or exit the center. The northern entrance provided access for both north and southbound traffic, but permitted only northbound exits (right turns) due to a "no left turn" sign and a concrete divider in the entrance.2

In 2000, the State filed its Complaint seeking to acquire a 0.154-acre strip of land along the western border of Plaza East to widen Green River Road and improve traffic flow to and from Lloyd Expressway. The State also sought the "permanent extinguishment of all rights and easements of ingress and egress to, from and across" Green River Road along the length of the acquired property. As a practical matter this would preclude Plaza East from adding new entrances on Green River Road or widening its existing access points. The State also requested a temporary construction easement giving the State access to the center's parking lot for the duration of the project. In October 2000, the trial court issued an Order of Appropriation allowing the State to proceed with the condemnation. Kimco requested a jury trial on the issue of damages.3

In the ensuing four and one-half years, the State added and reconfigured the lanes on Green River Road, modified the Lloyd Expressway intersection, and installed a raised median in Green River Road that prevented southbound traffic from using the center's southern entrance for ingress or egress. The State created a merge lane on the eastern side of Green River Road for northbound traffic exiting from Lloyd Expressway. Northbound motorists on Green River Road now must use the merge lane, defined by a solid white line in the 0.154-acre strip, to access Plaza East's southern entrance. Finally, the northern entrance was changed to permit full ingress and egress by removing the concrete divider and allowing exiting traffic to turn left onto South Green River. The width of both the northern and southern entrances to Plaza East remained unchanged.

The case proceeded to trial in February 2006. During Kimco's case-in-chief, evidence of "loss of access" at Plaza East and its effect on the shopping complex included testimony that (1) the new median and merge lane restricted motorists' access to the mall's southern entrance; (2) the impaired access at the southern entrance, combined with allowing left turns at the northern drive, created unsafe congestion at the northern entrance near the Plaza East storefronts; (3) the road reconfigurations made the shopping complex undesirable to retail tenants; and (4) Plaza East's occupancy had dropped by nearly forty percent due to the access problems. Kimco's appraiser testified that Plaza East depreciated from a preconstruction value of $7,300,000 to roughly $5,000,000 due in large part to the access issues. He assessed the value of the property acquired by the State at $67,000 for the strip and $8,400 for the temporary construction easement, and assigned a value of $2,233,000 to the impaired access and any remaining "cost-to-cure," i.e., damage to the residual property.

The State unsuccessfully moved for judgment on the evidence at the close of Kimco's case on the ground that impaired access at Plaza East was not compensable. Following the close of the evidence, the State objected to the "submission of the issue of compensability of access rights to the jury" and reiterated its prior objection to the admission of loss-of-access evidence. The trial court, over objection of the State, instructed the jury as follows:

In order for you to award damages for loss of access, Kimco must have suffered a particular, private injury resulting from a substantial and material interference with Kimco's rights of ingress and egress which are special and peculiar to this property and when no other reasonable means of access are available.

You may not award damages for loss of access if the remaining access is merely more inconvenient or difficult, as long as it is reasonable.

"Other reasonable means of access," as used in this instruction, does not mean access that is reasonable for some other use of the land. Rather, it refers to the access that will permit the land to be used for that purpose regarded as its highest and best use immediately before the taking.

The jury awarded Kimco $2,300,000.4

The State appealed, arguing that the trial court erred by admitting Kimco's loss-of-access evidence and by giving the quoted instruction. See State v. Kimco of Evansville, Inc., 881 N.E.2d 987 (Ind.Ct. App.2007). The Court of Appeals affirmed, concluding that the sum of the State's roadway improvements created an injury to Plaza East that amounted to more than mere inconvenience, and that Kimco suffered a taking of its access rights as a matter of law. Id. at 995. The Court of Appeals held that the trial court therefore properly admitted Kimco's loss-of-access evidence and that the court properly instructed the jury on the compensability of lost access. Id. We granted transfer.

There is no dispute in this case that the State's appropriation of the 0.154-acre strip and the temporary construction easement were compensable takings entitling Kimco to damages. These physical takings, apart from the roadway improvements, were valued at no more than $100,700.5 Therefore, the jury award of $2.3 million is sustainable only if Plaza East's impaired access is compensable.

Standard of Review

The State challenges the jury verdict as excessive. In particular, the State appeals the admission of evidence relating to the median, merge lane, and traffic flow problems at Plaza East, and the loss-of-access instruction to the jury. These claims all turn on the State's contention that any effects on the access to Plaza East from the State's roadway improvements are not compensable as a matter of law. We therefore review under a de novo standard. See Biddle v. BAA Indianapolis, LLC, 860 N.E.2d 570, 575 (Ind.2007).

I. The Constitutional Background

Article I, section 21 of the Indiana Constitution provides that "No person's property shall be taken by law, without just compensation; nor, except in case of the State, without such compensation first assessed and tendered." The Fifth Amendment of the U.S. Constitution similarly provides that "nor shall private property be taken for public use, without just compensation." The Fifth Amendment's Takings Clause applies to the states via the Due Process Clause of the Fourteenth Amendment. Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 160, 101 S.Ct. 446, 66 L.Ed.2d 358 (1980); Chi., Burlington & Quincy R.R. v. City of Chicago, 166 U.S. 226, 241, 17 S.Ct. 581, 41 L.Ed. 979 (1897). We have held that the state and federal takings clauses are textually indistinguishable and are to be analyzed identically. Cheatham v. Pohle, 789 N.E.2d 467, 472-73 (Ind.2003) (citing B & M Coal Corp. v. United Mine Workers of Am., 501 N.E.2d 401, 406 (Ind.1986)).

There is no question that an exercise of eminent domain, such as the condemnation of the 0.154-acre strip in this case, is a constitutional "taking." Other forms of governmental action, however, are "takings" only if they meet the prevailing federal standard, which is that government action effects a taking if it deprives an owner of all or substantially all economic or productive use of his or her property. Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 538-40, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005). Factors considered under the foregoing test include the economic impact of the regulation on the property owner, the extent to which the regulation has interfered with distinct investment-backed expectations, and the character of the government action. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). The effects of the road improvements on Plaza East, if viewed separately from the taking of the 0.154-acre strip, plainly do not meet the Lingle test. Presumably for this...

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