Split COA rules for barred IU frat house owner in dispute with city

A split appellate court has affirmed for a southern Indiana property owner in a dispute over a former Indiana University fraternity house after the university decided to no longer recognize the fraternity. In doing so, the panel struck down a local Bloomington ordinance that deferred to IU in regulating fraternities and sororities.

Since 2016, property owner UJ-Eighty Corp. had leased one of its properties near the Indiana University campus to the Gamma-Kappa Chapter of Tau Kappa Epsilon fraternity. Concerns arose between UJ-Eighty and the city of Bloomington in February 2018 when IU notified TKE members that its fraternity would no longer be recognized. Thus, all members living in the house had to move out.

Although most of the men found other housing and left the property, two members continued to live there. But because the property no longer met Bloomington’s Unified Development Ordinance definition of a “Fraternity/Sorority House,” the city issued two notices of violation to UJ-Eighty.

The Bloomington Board of Zoning Appeals affirmed the issuance of the violation notices, but the Monroe Circuit Court granted UJ-Eighty’s petition for judicial review. The trial court concluded that the city had improperly delegated authority to IU to determine whether the property was being used by students in a sanctioned fraternity. It also found the ordinance to be unconstitutional under the Due Process Clause of the 14th Amendment of the United States Constitution and Article 4, Section 1 of the Indiana Constitution.

The BZA appealed in City of Bloomington Board of Zoning Appeals v. UJ-Eighty Corporation, 19A-PL-00457, arguing that the trial court erred in finding that Bloomington delegated zoning authority to the university in contravention of federal and state constitutions. But a majority panel of the Indiana Court of Appeals affirmed the trial court, agreeing that the city improperly delegated authority to IU.

First, the majority noted that Bloomington provided no mechanism for reviewing the university’s decision, leaving both the city and property manager bound by IU’s decision. It further rejected the BZA’s contention that “[c]odifying a requirement for university affiliation is not an impermissible delegation of zoning authority[.],” finding that the ordinance went beyond defining fraternities or sororities as “entities affiliated with universities.”

“Additionally, it should be noted that the amendment to the Ordinance is also clearly arbitrary and unreasonable; the amendment created a situation where the University was allowed to act, but UJ-Eighty would be punished,” Judge Rudolph Pyle III wrote for the majority, joined by Judge Margret Robb.

“It was the University’s action (removing TKE from the list of sanctioned fraternities) which triggered the ordinance violation that the City sought to enforce against UJ-Eighty,” the majority continued. “As a result, allowing a third party to engage in actions, following whatever procedures it deems necessary, that trigger zoning violations against a property owner arbitrarily and unreasonably deprives the property owner of its due process rights under the Fourteenth Amendment.”

Dissenting from the majority, Judge L. Mark Bailey in a separate opinion argued that UJ-Eighty did not meet the “heavy burden” of demonstrating there is “no set of circumstances under which the [law] can be constitutionally applied.”

“To the extent the majority characterizes the Ordinance as ‘clearly arbitrary and unreasonable’ because ‘UJ-Eighty took no affirmative action to violate the Ordinance,’ this case arose because UJ-Eighty chose to rent its property,” Bailey wrote. “Its tenants did not satisfy the definition in the Ordinance — and I discern nothing arbitrary or unreasonable about holding a landlord accountable for ensuring use of its property complies with the law.”

The dissenting judge further disagreed with the majority’s conclusion that the city delegated power to the university.

“Under the unique circumstances of this case — involving the interrelationship of independent arms of government that are protecting students in a university town — I would conclude UJ-Eighty failed to demonstrate that the Ordinance and its attendant procedures are deficient,” Bailey wrote.