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Wednesday, March 04, 2009

Ind. Decisions - Supreme Court holds that the shopping center owners are not entitled to consequential damages from street reconfigurations that affect traffic flow

In State of Indiana v. Kimco of Evansville, Inc., et al, a 14-page, 3-2 opinion, Justice Boehm writes:

In State v. Ensley, 240 Ind. 472, 164 N.E.2d 342 (1960), this Court held that roadway improvements that reduce or interfere with traffic flow to a commercial property do not constitute takings of a property right of the owner of the property. We reaffirm Ensley and hold that the shopping center owners are not entitled to consequential damages from street reconfigurations that affect traffic flow through the center and prevent expansion of existing points of ingress or egress, but leave existing points in place. * * *

The jury awarded Kimco $2,300,000.

The State appealed, arguing that the trial court erred by admitting Kimco‘s loss-of-access evidence and by giving the quoted instruction. See State v. Kimco of Evansville, Inc., 881 N.E.2d 987 (Ind. Ct. App. 2007). The Court of Appeals affirmed, concluding that the sum of the State‘s roadway improvements created an injury to Plaza East that amounted to more than mere inconvenience, and that Kimco suffered a taking of its access rights as a matter of law. The Court of Appeals held that the trial court therefore properly admitted Kimco‘s loss-of-access evidence and that the court properly instructed the jury on the compensability of lost access. We granted transfer. * * *

There is no question that an exercise of eminent domain, such as the condemnation of the 0.154-acre strip in this case, is a constitutional "taking." Other forms of governmental action, however, are "takings" only if they meet the prevailing federal standard, which is that govern-ment action effects a taking if it deprives an owner of all or substantially all economic or produc-tive use of his or her property. Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 538–40 (2005). Factors considered under the foregoing test include the economic impact of the regulation on the property owner, the extent to which the regulation has interfered with distinct investment-backed expectations, and the character of the government action. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978). The effects of the road improvements on Plaza East, if viewed separately from the taking of the 0.154-acre strip, plainly do not meet the Lingle test. Presumably for this reason Kimco presents its case in terms of Indiana case law. Because recent constitu-tional takings cases to some extent have modified Indiana case law, a discussion of these consti-tutional cases is useful background. [ILB - the review follows on pp. 6-7.] * * *

Indiana law has specifically addressed the damages to adjacent landowners from reconfigured highways. Many of the principles applicable to this case come from this Court‘s opinion in State v. Ensley, 240 Ind. 472, 164 N.E.2d 342 (1960). * * *

The principles announced in Ensley have since been applied and clarified in a series of eminent domain cases dealing with traffic flow issues and rights of ingress/egress. Each of these cases addresses a unique set of facts, but collectively they affirm the distinction first drawn in Ensley: although an elimination of rights of ingress and egress constitutes a compensable taking, the mere reduction in or redirection of traffic flow to a commercial property is not a compensable taking of a property right. * * *

Given the record testimony assessing the compensable takings at no more than $100,700, the $2,300,000 verdict is excessive as a matter of law. The judgment of the trial court is reversed and the cause remanded for proceedings consistent with this opinion.

Shepard, C.J., and Sullivan, J., concur.
Dickson and Rucker, JJ., dissent, believing that the Court of Appeals correctly decided this case.

Appendix A - [Before and after diagrams]

Here is the ILB entry from Aug. 25, 2008 that includes links to the COA opinion and oral argument webcast.

Posted by Marcia Oddi on March 4, 2009 10:07 AM
Posted to Ind. Sup.Ct. Decisions