It Is A Judge’s Job To Determine Just Compensation In Eminent Domain Cases

In Utility Center, Inc. v. City of Fort Wayne, ___ N.E.2d ___ (Ind. 2013), Cause No. 90S04-1208-PL-450, the Indiana Supreme Court was faced with an interesting dilemma: does an eminent domain statute that provides for a de novo judicial rehearing of an administrative determination of just compensation require a new hearing, or is the court limited to the information presented in the administrative proceeding. The Court’s discussion revealed authority for either position, but the Court chose a more thorough judicial review.

Utility Center operated water and sewer facilities in Fort Wayne and the city wished to condemn these facilities. In Indiana, the eminent domain power of cities and towns is governed by I.C. Chapter 32-24-2. Under this Chapter, eminent domain proceedings begin when a municipal works board adopts a resolution declaring that the municipality wants to acquire the property. The municipal works board determines the amount of damages due. After administrative remedies are exhausted, an aggrieved party may “take an appeal” by filing “an original complaint” in the trial court. In such an appeal, “[t]he court shall rehear the matter of the assessment de novo and confirm, reduce, or increase the assessment.”

The proceedings followed this path, leading to an appeal by the Utility Center to the trial court, which requested a trial by jury. Cort Wayne argued that the judicial proceedings were limited to a review of the record before the board. The trial court agreed, the Court of Appeals affirmed, and the Supreme Court granted transfer.

The Court noted the tension between the dictionary definition of “de novo” and the judicial gloss that Indiana’s courts have placed upon that phrase in the context of a judicial review of an administrative decision. The dictionary would allow for a new hearing, while previous decisions “held that judicial review of administrative decisions is restrained and limited, even where statutory language suggests otherwise.” It resolved the case by relying on three principles.

First, the Court noted that the “rehear de novo“ language has been in the statute since 1905 and inferred that this was prior to the judicial decisions limiting judicial review of administrative decisions. Thus, the Court strictly construed the statute to its dictionary definition.

Second, the Court held that the determination of just compensation in eminent domain cases is a judicial function, rather than a legislative function. It relied on a substantial amount of Takings Clause jurisprudence when making this point.

Finally, the Court found the eminent domain procedure available to cities and towns was merely “an alternative and streamlined procedure for taking private property.”

We find it inconsistent that the Legislature would on the one hand provide a municipality the option of short circuiting the detailed procedure for condemnation under Chapter 1, attendant with a full “trial and judgment as in civil actions,” but on the other hand provide for judicial review only of the record before the public works board when the municipality exercises that option.

The Court’s decision will, of course, be important to those litigating eminent domain cases involving cities and towns. However, I suspect that the Court’s second point will have the widest impact. First, its invocation of constitutional principles in favor of a larger judicial role in the determination of just compensation should discourage any attempt to amend the statute to limit that judicial role. Second, the strong way that the Court endorsed “the inviolability of private property” will likely bleed over into the analysis of other eminent domain issues.

Lessons:

  1. A judicial appeal from an assessment of damages in an eminent domain proceeding under I.C. Chapter 32-24-2 can include a new hearing with trial and judgment as in all other civil actions.
  2. A hearing in such a proceeding could include a trial by jury.
  3. The determination of just compensation in eminent domain cases is a judicial function, rather than a legislative function.
Brad A. Catlin
Price Waicukauski & Riley, LLC
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