Indiana Utility Law – Municipal Eminent Domain and Condemnation of a Utilities Company: Utility Center, Inc. v. City of Fort Wayne, 985 N.E.2d 731 (Ind. 2013)

The Indiana Supreme Court recently reversed the judgment of a trial court which had granted a city’s motion to strike the jury trial request of a utility companies and the city’s motion for partial judgment on the pleadings in a case where the utility company challenged the compensation amount awarded for condemnation of its property by a city’s board of public works under an eminent domain statute.

In Utility Center, Inc. v. City of Fort Wayne, 985 N.E.2d 731 (Ind. 2013), the City of Fort Wayne (“the City”) through its Board of Public Works (“the Board”) passed a resolution appropriating and condemning a fraction of water and sewer facilities owned by Aqua Indiana, Utility Center, Inc. (“Utility Center”) that served approximately 12,000 customers. In 2003, the Board assessed damages of $17,202,499.50, but then adjusted them to $14,759,500.00 in 2004. Utility Center then challenged the condemnation by alleging that the City failed to follow proper eminent domain or condemnation statutes.

The trial court granted summary judgment in favor of the City which the Court of Appeals later reversed. Following this opinion, the Board updated their appraisal amount for damages to be $16,910,500.00. Utility Center appealed the Board’s decision and requested a jury trial. The City moved to strike this request which the Trial Court granted. The question of this appeal is, under eminent domain proceedings, to what extent of the evidentiary record trial courts may review. The city argued the trial court is limited to a review of the record before the Board. Utility Center argued the trial court may hear a full evidentiary hearing before a jury.

Although the statute states that the trial court is to hear the matter “de novo”, the Indiana Supreme Court noted that de novo review does not always mean a new hearing. Administrative order appeals are constricted to whether the order was made in line with proper legal procedures, based on evidence, and not volatile of any constitutional, statutory, or legal principles.

The Indiana Supreme Court discussed how condemnation must be strictly construed in light of the long standing equity principles of private property ownership. The entity wanting to take property must have the authority to do so along with providing the owner of the property just compensation for it. The judicial system makes the determination of just compensation while the legislative body regulates the necessity of the taking. After the necessity of the taking is determined, the legislative body must grant authority to the entity wanting to take the property, and must put in place a procedure to protect the rights of the property owners.

In Indiana, a municipality has the option of condemning property either under the general eminent domain statute (Chapter 1 of Indiana Code 32-24-1) or the eminent domain statute for cities and towns (Chapter 2 of Indiana Code 32-24-2). Chapter 2 allows municipalities an “alternative and streamlined procedure for taking private property.” The Indiana Supreme Court understood the intent of the legislature as providing a municipality the opportunity to condemn property through a municipal works board. It is inconsistent to restrict the trial courts ability to review only the public works board record while allowing a municipality to circumvent the detailed procedure of condemnation. Therefore, the Indiana Supreme Court ultimately held that under IC 32-24-2-10, the trial court may hear the matter de novo including a jury trial, if the party so requests.

Jeremy Fetty is a partner in the law firm of Parr Richey Obremskey Frandsen & Patterson with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.

The statements contained herein are matters of opinion and general information 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.