COA reverses reopening of dismissed eminent domain action

Homeowners challenging a Lake County public construction project must challenge the project’s impact on their property through a new inverse condemnation action, the Indiana Court of Appeals has ruled, reversing a ruling allowing the homeowners to reopen a previously dismissed lawsuit.

Defendants Paul and Heather House lived in a home on 45^th Avenue in Gary, an area Lake County was hoping to improve. As part of that improvement plan, the county in May 2019 filed to take the Houses’ front yard through eminent domain, which would include relocating a septic system in the front yard to another part of the property.

The Houses filed a counterclaim, alleging that because they could not successfully move the septic system, the county was seeking a full, rather than a partial, taking. The couple moved for summary judgment, which the county challenged as untimely and against statute. The Lake Superior Court ruled in favor of the Houses and ordered the cause to proceed as an entire taking.

Two days later, the county moved to voluntarily dismiss its complaint for condemnation because it had revised its improvement plan and would no longer need to acquire the Houses’ front yard. The trial court entered an order for dismissal with prejudice and assessed the county $8,438.50 in attorney fees.

But in May 2020, the Houses moved to reopen the case, arguing they had procured the new project plans and discovered that a 45th Avenue ditch would be within 25 feet of their septic field, a violation of what was known as the 25-Foot Rule. The couple argued the new plan would go against the county’s stated intention of not impacting their property and would instead constitute a taking.

The county, however, argued that it had revised its plans again and had received state approval for a plan that would have no negative impact on the Houses’ property, including the septic field. If the Houses believed the new plans would impact the property, the proper venue would be an inverse condemnation action, it argued.

Ultimately, the trial court ruled under Indiana Trial Rule 41(F) that the Houses had shown good cause to withdraw the dismissal agreement, thus reopening the case. It also prohibited the county from disturbing the property pending further order of the court.

In reversing that decision on Wednesday, COA Judge Patricia Riley wrote that “(i)t is undisputed that the new plans for the Project materially differed from those which formed the basis of the County’s original condemnation complaint. Indeed, the revised plans did not require a physical taking of the Parcel by the County, as sought in the original condemnation action.”

“Under these circumstances, we agree with the County that the trial court’s reinstatement of the condemnation case was an abuse of its discretion because the Houses did not truly seek to reinstate the condemnation proceedings. Rather, as in Suarez-Torres, they sought to litigate a new claim based on an entirely different putative taking than the one alleged in the original complaint,” Riley wrote, referencing Suarez-Torres v. Panaderia Y Reposteria Espana, Inc., 988 F.3d 542 (1st Cir. 2021).

The panel further agreed with the county that the Houses could have pursued an inverse condemnation action against the new plans but chose not to. The panel also noted that the parties did not sign and file a dismissal agreement, so there was nothing to withdraw under the Indiana Trial Rules.

“The legislature has fixed a procedure for property owners such as the Houses to pursue a claim of a taking, and we are not at liberty to dictate another result,” Riley wrote.

For their part, the Houses challenged the COA’s jurisdiction over the appeal, arguing the trial court had not issued injunctive relief subject to review. The panel, however, said the trial court “interpreted the relief sought as one for injunctive relief, and the Houses did not object when the trial court ruled at the hearing that it was extending its previously-entered injunction for sixty days while the parties engage in mediation.

“In addition, we cannot credit the Houses’ argument that the trial court did not issue an injunction because the work on the Project continues. This contention rests upon facts that are not before us in the appellate record, and the issue of whether an injunction has been issued is separate and distinct from the issue of whether a party is in compliance with injunctive relief that has been ordered,” Riley wrote. “In short, we conclude that the court has jurisdiction over this appeal.”

The case is Lake County, Indiana v. Paul G. House, Jr., Heather A. House, Mortgage Electronic Registration Systems, Inc., for Ditech Financial, LLC, Amy L. Lejeune, and Any Other Interested Parties, 20A-PL-1675.