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A Grant County couple cannot “rely on the state to bail them out” and are not entitled to compensation for damages related to the construction of a massive dam on their property, the Court of Appeals of Indiana affirmed Wednesday.
According to court records, in the late 1990s, John and Mae Moriarity built a dam on their Grant County property that rose more than 20 feet in certain spots, creating a roughly 30-to-40-acre pond that contained over 100 acre-feet of water.
After learning about the dam, the Indiana Department of Natural Resources ordered the Moriaritys to make changes, fearing safety deficiencies could cause the structure to burst and endanger nearby homeowners.
The Moriaritys first litigated, and lost, a claim that their dam did not fall within DNR’s jurisdiction. A split Indiana Supreme Court concluded that the Moriaritys must either modify the illegal dam to comply with Indiana Code Chapter 14-27-7.5, the Dam Safety Act, or remove it.
While that case worked its way through the courts, the Moriaritys also pursued an inverse condemnation action. They claimed the DNR’s action in forcing them to modify or remove their illegal dam constituted a regulatory taking that entitled them to just compensation.
The Grant Circuit Court dismissed the Moriaritys’ inverse condemnation complaint, finding that the facts “[did] not support a finding of a regulatory taking by the DNR.”
The Moriaritys appealed and claimed they met the low bar necessary to survive dismissal of their inverse condemnation claim.
The Court of Appeals affirmed the trial court’s dismissal of the complaint, finding the Moriaritys’ complaint did not successfully plead a regulatory taking.
Judge Leanna Weissmann wrote the opinion for the appellate court.
According to Weissmann, given that no physical invasion occurred, the Moriaritys largely allege the second category of a per se taking: the loss of all economic or productive use of their property.
“But even if such a loss occurred, the Moriaritys’ claim fails because the government may affect a total regulatory taking without compensation where ”background principles of nuisance and property law’ independently restrict the owner’s intended use of the property,’” Weissmann wrote, citing Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 538 (2005).
The Moriaritys never possessed a right to build an illegal dam, Weissmann continued, and they are not entitled to compensation because the state forced them to remove or modify it.
According to the appellate court, DNR is requiring the Moriaritys to fix or remove the dam because of the hazard it poses to them and their neighbors.
“To find for the Moriaritys here would be like endorsing the lake-bed owner’s unpermitted landfilling operation and then — once the threat of flooding arises — forcing the State to pay the owner to undo his own actions that created the danger in the first place. Such a result is absurd,” Weissmann wrote.
She added that the character of the government action supports finding no regulatory taking occurred.
“In regulating the Moriaritys’ dam, the DNR is acting to promote the common good and ensure public safety from the risk that a potentially deficient dam will fail and flood nearby landowners. These facts are the hallmark of a permissible government action,” Weissmann wrote, citing Duke Energy Ind., LLC v. Bellwether Props., LLC, 192 N.E.3d 1003 (Ind. Ct. App. 2022).
Judges Patricia Riley and Cale Bradford concurred.
The case is John E. Moriarity, Mae E. Moriarity, and C-A-R-E Auto Auction, Inc. v. State of Indiana, Indiana Natural Resources Commission, and Indiana Department of Natural Resources, 22A-PL-2899.
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