Judges affirm dismissal of city’s counterclaim without prejudice

The Indiana Court of Appeals held Tuesday that a dismissal based on the failure to provide an appraisal with an offer to purchase property for road work improvements was not an adjudication on the merits, allowing a city’s counterclaim for appropriation of the property to be dismissed without prejudice.

The city of Madison and Jefferson County entered into an interlocal agreement to improve Hutchinson Lane and needed about four acres of John Hutchinson’s land for temporary and permanent right-of-ways. The city was in charge of the road project.

The city offered Hutchinson around $25,000 for the property but didn’t include an appraisal. Hutchinson challenged the agreement between the city and county, after which Madison filed a counterclaim for appropriation of the property it needed for the project. The trial court held the agreement was valid and denied Hutchinson’s declaratory judgment action.

The trial court later dismissed the city’s counterclaim without prejudice and the city conceded that it didn’t comply with statute by not tendering an appraisal when it presented the acquisition offer.

In John A. Hutchinson v. The City of Madison, 39A01-1208-CC-394, the parties dispute whether the counterclaim should have been dismissed without prejudice. Hutchinson argued that the counterclaim should be dismissed with prejudice because a July 25, 2012, hearing was a “full-blown hearing” on the issue of whether the city complied with I.C. 32-24-1-3(c) and was an adjudication on the merits.

“We are not convinced that the failure to comply with Indiana Code Section 32-24-1-3(c) forever bars the state from acquiring that property so long as a property owner receives just compensation for the taking,” Judge Michael Barnes wrote. “This conclusion is supported by Indiana Code Section 32-24-1-8(d), which provides that, if a property owner objects to the proceedings and the objection is sustained, the complaint may be amended or the decision appealed. Although, as the parties acknowledge, the City cannot remedy the failure to provide an appraisal by amending the complaint, we believe this provision is indicative of the legislature’s intent to allow the City the opportunity to correct procedural errors and refile the complaint.”

The judges went on to find that given the city’s inherent authority to take private property and the statutory scheme for appropriating property, the dismissal based on the failure to provide an appraisal with an offer to purchase was not an adjudication on the merits.

They also held that the trial court properly determined that the interlocal agreement was valid.