Appeals court rules for Indianapolis in dispute over trouble condo’s receivership

Court orders in favor of the city of Indianapolis in the latest of long-running disputes over a dilapidated condominium development on the city’s northeast side were upheld on appeal Tuesday, including an order that the condo corporation and members pay half of a receiver’s fees.

The litigation is the third appeal involving the Towne & Terrace condominium near 42nd Street and Post Road. Built in 1964, the condos, many units of which are owned by the city, have fallen into disrepair and have been left vacant and boarded up, creating a “hotbed for crime,” court records say.

At issue in Tuesday’s appeal was a Marion Superior Court order that denied Towne & Terrace’s petition for writ of execution and instructions to receiver and granted the receiver’s motion for an order compelling production of documents, all of which was affirmed by the Indiana Court of Appeals in Towne & Terrace, Corp, et al. v. City of Indianapolis, 20A-OV-496.

 In November 2019, Towne & Terrace asked the court for an order requiring the city to pay all of the receiver’s fees. A receiver, Ronald M. Katz of Katz Korin Cunningham PC, had been appointed that August to “receive, manage, protect, request demolition of and/or sell, if necessary, all real estate owned by the City and located within the Towne and Terrace boundaries.”

According to a prior appeal, the city in 2017 owned at least 49 units in Towne & Terrace. Towne & Terrace asked the court to instruct the receiver to immediately sell the property “before the expenses of the receivership eat up the value of those properties.” At least one company that owned 22 occupied units in the development testified to being interested in purchasing the city’s units.

But counsel for the receiver said the court didn’t appoint a receiver to merely sell the property quickly, but rather to conduct a thorough analysis, which was being done.

“On February 19, 2020, the court entered an order granting the City’s motion for preliminary injunction, denying Towne & Terrace Corp.’s Petition for Writ of Execution and Instructions to Receiver, granting the Receiver’s Motion for Order Compelling Production of Documents, and ordering that Towne & Terrace be responsible for half of the Receiver’s expenses,” Judge Elaine Brown wrote for the panel. “… (W)e affirm the trial court’s February 19, 2020 order.”

“The court’s December 6, 2019 Order on Emergency Requests for Relief by Both the Receiver and the City referenced the ‘the recent complete and absolute refusal by Towne & Terrace to allow the Receiver and/or the City’s attorneys to attend and vote at said board meetings’ and stated that ‘[t]he dangerous condition of the neighborhood has created a hotbed for criminal and other illegal activities at Towne & Terrace which must be remediated as soon as possible’ and ‘[t]he Receiver has been granted extensive powers over the City’s properties to find solutions, however, his progress has been hindered by continuing adversarial contentious litigation,’” Brown wrote.

“Under these circumstances, we cannot say reversal of the trial court’s order that Towne & Terrace be responsible for half of the Receiver’s expenses is warranted.”

The panel likewise concluded Marion Superior Judge Cynthia Ayers did not abuse her discretion in granting the city’s request for a preliminary injunction that permitted “all owners of real property within Towne & Terrace’s territorial boundaries to vote on all issues at its annual meeting of members and any special meeting, and a prohibitory injunction enjoining Towne & Terrace from enforcing any resolution, bylaw, article, covenant, or restriction that has the effect of denying any property owner the right to attend, participate in, or vote at any meeting of members or the Board of Directors of Towne & Terrace.”

The COA also found denial of Towne & Terrace Corp.’s petition for writ of execution and instructions to receiver was proper. The panel rejected Towne & Terrace’s claim that the city had been permitted under the order to demolish buildings owned by nonparties.

Further, the panel affirmed the court’s order compelling production of documents, specifically contact information for each board member and unit owner as well as itemizations of per-unit income received by Towne & Terrace, delinquencies, liabilities and expenditures.

The appeals court previously upheld establishment of the receivership after a 2018 ruling in favor of Towne & Terrace in the city’s initial nuisance litigation.