IS A REDUCTION IN MY BUSINESS DUE TO A GOVERNMENTAL HIGHWAY PROJECT COMPENSABLE?

Recently, the Indiana Supreme Court decided that a business that loses customer traffic due to a State highway expansion project is not entitled to compensation.1 In State of Indiana v. Kimco of Evansville, Inc., the State took, by eminent domain, a strip of land in front of a shopping center to expand a state highway.2 As a result, southbound drivers could not longer access the shopping center through one of the main entrances and the shopping center lost the ability to widen or change the main entrance in the future.3 The State paid the shopping center for the strip of land, but refused to compensate the shopping center for “consequential damages” resulting from the reduced customer flow.4

The Court held that under Indiana law, the physical taking of the strip of land and the State’s “coincident roadway improvements” were two distinct governmental actions.5 In this case, the reduction in customer traffic to the shopping center did not qualify as a taking.6 The Court acknowledged a compensable taking would have occurred had the state project highway completely eliminated all points of access to the shopping center.7 However, in this case, the highway project did not eliminate access to the main entrance for northbound drivers and there was another access point for southbound drivers.8 Finally, the Court explained that commercial property owners do not have property rights in the “free flow of traffic” past their properties nor do they have a right to “unlimited access” to adjacent property at any point along a State highway.9 Thus, the State’s “coincident roadway improvements” that reduced customer flow and revenues to the shopping center did not constitute a compensable taking.10

Erin Casper Borissov was an associate (now partner) at Parr Richey Obremskey Frandsen & Patterson LLP, with offices in Indianapolis and Lebanon practicing in the areas of energy and telecommunications law and corporate law.

The statements contained herein are matters of opinion only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

1State of Indiana v. Kimco of Evansville, Inc., 902 N.E.2d 206, 208 (Ind. 2009).
2Id.at 208.
3Id.at 214.
4Id.at 209.
5Id.at 216.
6Id.at 214.
7Id.at 214.
8Id.at 214.
9Id.at 214-15.
10Id.at 216.