Justices rule in favor of sewer facility operator in condemnation action

A case involving a compensation award for condemnation initiated by Fort Wayne’s Board of Public Works that may appear at first blush as a “no brainer” is actually not as simple as it seems, the Indiana Supreme Court pointed out Thursday.

At issue in Thursday’s decision in Utility Center, Inc. d/b/a Aqua Indiana, Inc. v. City of Fort Wayne, Indiana, 90S04-1208-PL-450, is the scope of judicial review when a property owner challenges the compensation awarded for condemnation of its property by a city’s board of public works under an eminent domain statute applicable to cities and towns.

Utility Center Inc. owned and operated certain water and sewer facilities in Fort Wayne. In 2002, the city’s Board of Public Works passed a resolution to condemn the facility’s north system. Utility Center challenged the condemnation, which was ultimately affirmed by the Indiana Supreme Court in 2007.

Afterward, Utility Center filed a written remonstrance with the board challenging the $16.9 million assessment of damages, which the board confirmed. Utility Center appealed to the trial court and sought a jury trial. The city moved for partial judgment on the pleadings on the grounds that the trial court was limited to a review of the record before the board. The trial court ruled in favor of the city.

I.C. 34-24-1 and -2 deal with eminent domain procedures; Chapter 2 deals with proceedings initiated by a municipal works board. The board initiated the proceedings under Chapter 2 in this case.

“At stake in this case is what does it mean to say, in the context of a Chapter 2 eminent domain proceeding, that ‘[t]he court shall rehear the matter of the assessment de novo.’ More precisely: What did the Legislature intend in this context? The City argues the trial court is limited to a review of the record before the Board. Utility Center counters the trial court’s review includes a full evidentiary hearing before a jury,” Justice Robert Rucker wrote.

“In short our courts have long held that judicial review of administrative decisions is restrained and limited, even where statutory language suggests otherwise. However, the question remains whether the Legislature intended this limited review under the facts presented here,” he continued.

Rucker pointed out that eminent domain statutes must be strictly construed as to the extent of power and the manner of its exercise. Also, the inviolability of private property has been a central tenet of American life since before the country’s founding.

“Because the determination of just compensation is a judicial rather than a legislative function, … and recognizing the extent to which protecting the ownership of private property is woven into the fabric of our jurisprudence, we are not persuaded the Legislature intended a limited role of the judiciary when declaring that an aggrieved party may ‘take an appeal’ of the compensation awarded by an administrative municipal board and that ‘[t]he court shall rehear the matter of the assessment de novo . . . .’ I.C. § 32-24-2-11(a). Rather we are convinced the opposite is true,” he wrote.

The justices concluded that “rehear the matter of the assessment de novo” contemplates a new hearing with trial and judgment as in all other civil actions, and a trial by jury where a party so requests.

The case is remanded for further proceedings.