State v. Laughlin
| Docket Number | 23A-PL-937 |
| Decision Date | 29 November 2023 |
| Parties | State of Indiana and Indiana Department of Transportation, Appellants-Defendants, v. John Laughlin and Eileen Laughlin, Appellees-Plaintiffs. |
| Court | Indiana Appellate Court |
Appeal from the Hamilton Superior Court The Honorable Michael A Casati, Judge Trial Court Cause No. 29D01-2209-PL-7193
ATTORNEYS FOR APPELLANTS
Attorney General of Indiana
Natalie F. Weiss
Deputy Attorney General
Indianapolis, Indiana
ATTORNEY FOR APPELLEES
J. Eric Rochford
Thomas R. Malapit, Jr.
Malapit &Rochford
Indianapolis, Indiana
[¶1] In this interlocutory appeal, the State of Indiana and the Indiana Department of Transportation ("INDOT") (collectively, "the State") appeal the trial court's order of appropriation in an inverse condemnation action brought by John and Eileen Laughlin. The trial court entered an order of appropriation based only upon the initial pleadings filed in the action. When determining whether a taking occurred, the trial court did not hold a hearing, which is required by Indiana Code Section 32-24-1-6, or resolve factual issues through dispositive motions. On appeal, the State argues that the trial court erred by entering an order of appropriation without resolving factual issues as to whether a taking occurred. We agree that, in the inverse condemnation context, before entering an order of appropriation, the trial court must hold a fact-finding hearing or rule on other dispositive motions to determine whether a taking has occurred. Accordingly, we reverse and remand for further proceedings.
[¶2] The State raises one issue, which we restate as whether the trial court erred by entering an order of appropriation without resolving factual issues as to whether a taking occurred.
[¶3] In September 2022, the Laughlins filed a complaint against the State alleging inverse condemnation. The Laughlins alleged that they are the "owners/lessees of a billboard advertising sign [ ] and billboard advertising Sign Lease" located at the southwest corner of the intersection of 226th Street and U.S. 31 in Hamilton County. Appellant's App. Vol. II p. 17. The Laughlins alleged that the original term of the lease was eight years and that they had the right to renew the lease for ten successive eight-year terms. The Laughlins attached a copy of the sign lease to the complaint, but they did not attach the written renewals of the lease.
[¶4] According to the Laughlins, the State removed the sign as part of a project to improve U.S. 31 and 226th Street, and the State did not offer or pay compensation for the taking of the sign or sign lease. The Laughlins attached the following photograph of the sign to their complaint:
(Image Omitted)
[¶5] In response, the State filed their "Objections, Affirmative Defenses, and Motion to Dismiss." Id. at 25. The "Objections" section admitted or denied the allegations contained in each paragraph of the Laughlins' complaint. Next, the State asserted multiple affirmative defenses. Finally, the document included a motion to dismiss. The State alleged, in part, that the Laughlins' complaint failed to adequately describe their real estate interest and failed to describe their property interest by omitting their outdoor advertising permit.
[¶6] The trial court gave the Laughlins until December 22, 2022, to file a response. The trial court noted that it would "then rule on the pleadings filed or set this matter for hearing." Id. at 6. The Laughlins filed a response to the motion to dismiss. On January 25, 2023, the trial court denied the State's "Objections, Affirmative Defenses and Motion to Dismiss." Id. at 11.
[¶7] The Laughlins then filed a "Motion for Entry of Order of Appropriation of Real Estate and Appointment of Appraisers" on March 1, 2023. Id. at 44. The Laughlins alleged that "no objections remain and the only issue in this case is the amount of just compensation due to Plaintiffs resulting from Defendants' inverse condemnation." Id. at 45. The Laughlins requested that the trial court appoint appraisers.
[¶8] On March 2, 2023, the State filed a motion to reconsider the order denying the motion to dismiss based upon newly discovered evidence. The trial court denied the motion to reconsider.
[¶9] On March 29, 2023, the trial court entered an "Order of Appropriation and Appointment of Appraisers." Id. at 13. In the order, the trial court found: "Defendants have appropriated Plaintiffs' real estate interest as described in their Complaint for Inverse Condemnation." Id. at 14. The trial court then appointed three appraisers pursuant to Indiana Code Section 32-24-1-7(c). The State filed a motion for clarification, which the trial court denied. The State now appeals.[1]
[¶10] The State challenges the trial court's failure to resolve factual issues as to whether a taking occurred before entering an order of appropriation. "When the State exercises its inherent authority to take private property for public use, the United States Constitution requires just compensation for that taking." Town of Linden v Birge, 204 N.E.3d 229, 234 (Ind. 2023) ). "If the government takes property but fails to initiate eminent domain proceedings, an affected property owner may recover money damages from the State by suing for inverse condemnation." Id. (citing Ind. Code § 3224-1-16). Indiana Code Section 32-24-1-16 authorizes an inverse condemnation proceeding and provides: "A person having an interest in property that has been or may be acquired for a public use without the procedures of this article or any prior law followed is entitled to have the person's damages assessed under this article substantially in the manner provided in this article." The term "article," in this context, refers to the statutes governing eminent domain actions, Indiana Code Article 32-24.
[¶11] In an inverse condemnation action, "[t]he owner rather than the condemnor brings the action." Ctr. Townhouse Corp. v. City of Mishawaka, 882 N.E.2d 762, 770 (Ind.Ct.App. 2008), trans. denied. There are two stages in an inverse condemnation action. Id. "The first stage determines whether a compensable taking has occurred." Id. "At this stage the landowner must show that he has a property interest that has been taken for a public use without having been appropriated pursuant to eminent domain laws." Id. "If the trial court, acting as finder of fact in the first stage, determines that a taking has occurred, the matter proceeds to the second stage, at which the court appoints appraisers, and damages are assessed." Id. Here, we are concerned with the procedures used by the trial court in the first stage.
[¶12] In general, an action for inverse condemnation "requires the claimant to show (1) a taking or damaging (2) of private property (3) for public use (4) without payment of just compensation (5) by a government entity." Town of Linden, 204 N.E.3d at 234 (citing Murray v. City of Lawrenceburg, 925 N.E.2d 728, 731 (Ind. 2010)). "A taking by inverse condemnation includes any substantial interference with private property that destroys or impairs one's free use, enjoyment, or interest in the property." Ind. Dep't of Nat. Res. v. Houin, 191 N.E.3d 241, 249 (Ind.Ct.App. 2022), trans. denied; see also Burkhart Advert., Inc. v. City of Fort Wayne, 918 N.E.2d 628, 632 (Ind.Ct.App. 2009), trans. denied. "Ordinarily, the question of whether a particular interference is substantial is a question of fact." Houin, 191 N.E.3d at 249; see also Indiana &Michigan Elec. Co. v. City of Anderson, 176 Ind.App. 410, 420, 376 N.E.2d 114, 121 (1978) ().
[¶13] Unfortunately, the procedures for determining whether a taking has occurred in an inverse condemnation action are not spelled out in Indiana Code Chapter 32-24-1. Rather, Indiana Code Section 32-24-1-16, the only statute that addresses inverse condemnation actions, requires that the landowner's claim for inverse condemnation be considered "substantially in the manner provided" by the eminent domain statutes. Accordingly, in determining procedures for considering an inverse condemnation action, we must look to those eminent domain statutes. Some of those statutes, however, simply are inapplicable to inverse condemnation proceedings. See, e.g., Ind. Code § 32-24-1-5.5 ().
[¶14] In general, after the State files an eminent domain action, the landowners must file "objections" to the proceedings, which the trial court will sustain or overrule. See Ind. Code § 32-24-1-8. The objections statute also provides: I.C. § 32-24-1-8(c). It is clear, however, that the statutes also require the trial court to hold a hearing on the matter. Indiana Code Section 32-24-1-6 details the notice to be sent to the landowner requiring the landowner to "appear before the court" and to file objections within thirty days.
[¶15] In the context of an inverse condemnation action, our Courts have held that whether a taking has occurred involves a factual determination by the trial court, and the parties must be given the opportunity to present evidence or a designation of evidence. Our trial courts have used typical litigation practices to make that factual determination. See, e.g., Town of Linden, 204...
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