COA partially rules for town in property, ITCA dispute

An Indiana town will receive partial judgment from the Court of Appeals of Indiana on fraud and constructive fraud claims brought against it by a property owner who claimed the town backed out on its promise to purchase his land.

Ashok K. Sethi and the Meena Sethi Trust sued the town of Cicero, Indiana, over the town’s order to demolish and its unfulfilled promise to purchase an abandoned commercial property he owned in Hamilton County.

The property, known as the NRG site, included a large, uninsured industrial building, a pole building  and a separate smokestack that the town expressed interest in purchasing in 2014.

By 2017, the local fire department declared the building unsafe and the town’s attorney, Aaron Culp, informed Sethi he either needed to “secure or demolish” the structure to “eliminate” its violations of the town’s nuisance ordinances.

The town council then ordered the building and smokestack to be demolished in an emergency order after the structures caught fire.

Sethi, who was not present during a meeting regarding the issue, later objected but eventually demolished all structures on the property.

Sethi demanded that the town pay for the rebuilding of the demolished property and all other costs incurred, to which Culp responded that “[A]ny claim that Cicero is liable to you or in any way owes you money for the demolition or other expenses associated with your property is without merit.”

Discussions between the town and Sethi continued from 2014 to 2018, during which time Sethi gave the town access to the property to assess the cost of demolition and redevelopment and to conduct environmental assessments. But the town never executed an offer to purchase or an agreement to purchase the property as promised.

By October 2018, Sethi filed the first complaint alleging breach of implied contract, constructive fraud, actual fraud and deception regarding the own’s stated intention to purchase the property. In July 2020, Sethi filed a second amended complaint alleging fraud, constructive fraud and unjust enrichment/quantum meruit.

The Hamilton Circuit Court granted Cicero’s January 2021 motion for summary judgment on Sethi’s fraud and constructive fraud claims, finding that Sethi had not substantially complied with the notice requirements of the Indiana Tort Claims Act.

However, the trial court did not address Sethi’s claims that the town should be estopped from raising the notice defense and that fraudulent concealment precluded the notice defense.

Sethi filed a motion to correct error, which the trial court partially granted. It concluded that Sethi had designated evidence that created a genuine issue of material fact regarding whether estoppel bars the town’s ITCA notice defense.

But the trial court denied Sethi’s motion on the fraudulent concealment issue, holding that, as a matter of law, the designated evidence did not support that claim.

Cicero appealed and Sethi cross-appealed, bringing the Court of Appeals of Indiana to affirm in part, reverse in part and remand in the case of Town of Cicero v. Ashok K. Sethi and Meena Sethi Trust, 21A-PL-1193.

On the estoppel issue, the COA initially noted that Sethi did not lack knowledge or the means of knowledge concerning the facts that underlie their fraud and constructive fraud claims.

The appellate court found that Sethi’s characterization of Culp’s assertion of immunity as a “false statement of law” was not supported by the evidence. Culp’s claim of immunity was merely a general denial of liability to Sethi’s unspecified claim for damages, it concluded, and thus Culp’s statement was neither a misrepresentation of either law or fact.

The COA noted that there had been several years of correspondence between Ashok, members of the town council and Culp, and as such Culp’s statement that he was ordered “to stop re-answering the same questions and claims” from Ashok did not mean it was a directive for Ashok to stop communicating with the town.

“Sethi contends, in effect, that Ashok was induced by Culp’s statement to believe that filing a notice of tort claim was not required, in other words, that Culp’s email excused him from compliance with the ITCA notice requirements,” Judge Edward Najam wrote for the court. “Culp’s email does not support that inference. While Sethi may have, in fact, relied on Culp’s statement, Sethi had no right to rely on the statement as a legal excuse for his failure to comply with the ITCA notice requirements.”

Thus, the COA concluded that Sethi’s claim contained no allegation of fraud or constructive fraud. It further rejected Sethi’s contention that the town had any duty to inform them of the ITCA notice requirements.

“We conclude that Sethi has not designated evidence from which a jury could conclude either that the Town made a misrepresentation of fact or law upon which Sethi reasonably relied or that Sethi exercised due diligence in filing an ITCA notice, both of which are required here to perfect a bona fide estoppel claim,” Najam wrote. “On remand, we instruct the trial court to enter partial summary judgment for the Town on Sethi’s fraud and constructive fraud claims.”

On cross-appeal, the COA concluded that Sethi has not shown that a genuine issue of material fact exists regarding whether they substantially complied with the ITCA notice requirement.

Lastly, it held that the trial court did not err when it found that, as a matter of law, Sethi’s designated evidence did not show there is a genuine issue of material fact regarding Sethi’s fraudulent concealment counter to the town’s ITCA notice defense.