State of Indiana v. Monroe Liberty, LLC (mem. dec.) ( 2016 )

MEMORANDUM DECISION
FILED
Pursuant to Ind. Appellate Rule 65(D),
Jul 15 2016, 8:37 am
this Memorandum Decision shall not be
regarded as precedent or cited before any CLERK
Indiana Supreme Court
court except for the purpose of establishing Court of Appeals
and Tax Court
the defense of res judicata, collateral
estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Gregory F. Zoeller Thomas R. Malapit, Jr.
Attorney General of Indiana Joshua A. Brown
McKinney & Malapit, P.C.
David L. Steiner
Muncie, Indiana
Deputy Attorney General
Indianapolis, Indiana
Yasmin L. Stump
J. Eric Rochford
Yasmin L. Stump Law Group, PC
Carmel, Indiana
IN THE
COURT OF APPEALS OF INDIANA
State of Indiana, July 15, 2016
Appellant-Plaintiff, Court of Appeals Case No.
53A05-1508-PL-1009
v. Interlocutory Appeal from the
Monroe Circuit Court
Monroe Liberty, LLC, The Honorable Frances G. Hill,
Appellee-Defendant Judge
Trial Court Cause No.
53C06-1402-PL-402
Crone, Judge.
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Case Summary
[1] The State of Indiana brings this interlocutory appeal in an eminent domain
action involving the taking of real property owned by Monroe Liberty, LLC, for
the extension of I-69 from Evansville to Indianapolis. This action is in the
damages phase, which has yet to be tried by the jury. 1 The subject of this
appeal is the “Trial Order for June 23, 24, 2015” (“the Order”), denying the
State’s motion in limine. On appeal, the State contends that the trial court
erred in refusing to exclude certain evidence and testimony. Specifically, the
State asserts that certain evidence and testimony pertaining to the highest and
best use and/or the value of Monroe Liberty’s property is inadmissible because
that evidence and testimony are based wholly or partly on the construction and
completion of I-69, the project for which the property is being taken. 2 Because
we conclude that the evidentiary issues raised by the State are not ripe for our
review, we dismiss the State’s appeal.
Facts and Procedural History
[2] Monroe Liberty is owned and managed by Leo Hickman. On or about
February 15, 2011, Monroe Liberty purchased a vacant house on 2.818 acres
(“the Property”), commonly known as 2201 West Fullerton Pike, Bloomington.
1
The first phase of an eminent domain proceeding concerns the propriety of the taking itself, while the
second phase deals with the issue of just compensation. Hass v. State, Dep’t of Transp., 843 N.E.2d 994, 998
(Ind. Ct. App. 2006), trans. denied.
2
Monroe Liberty purports to file a cross-appeal, but it does not ask for relief from any part of the Order. Its
argument is not actually a cross-appeal but simply a counter-argument in support of the trial court’s rulings.
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The purchase price was $58,500. The Property is located on the southeastern
quadrant of State Road 37 and Fullerton Park. Monroe Liberty spent
approximately $46,700 to improve the house and began leasing it for residential
use. The Property is zoned Agriculture/Rural Reserve (“AG/RR”), which
permits general agricultural and residential uses. The Property is also located
within the Business/Industrial Overlay District, which permits uses limited to
those allowed in light industrial and heavy industrial districts.
[3] The State offered Monroe Liberty $52,800 to acquire a 1.240-acre rectangular
strip of the Property for the construction of I-69. This strip does not contain the
rental house. Monroe Liberty rejected the State’s offer.
[4] On February 27, 2014, the State filed its eminent domain complaint. The trial
court found that the State’s taking was appropriate, and the action proceeded to
the damages phase. Pursuant to Indiana Code Section 32-24-1-9, the trial court
appointed three impartial appraisers.
[5] Monroe Liberty retained Steven M. Shockley to provide an appraisal. Monroe
Liberty also enlisted Herman Bernitt, formerly a licensed real estate agent, to
testify as an expert regarding the highest and best use and the value of the
Property. Bernitt had advised Hickman to purchase the Property in 2011. In
addition, Monroe Liberty enlisted Michael L. Carmin, a real estate attorney, to
serve as an expert on local zoning ordinances, describe the procedure for
rezoning the Property from AG/RR to commercial, and provide his opinion
that rezoning the Property for commercial purposes is very probable.
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[6] In June 2015, the State filed its motion in limine and brief in support thereof.
In relevant part, the State sought to exclude as inadmissible the reports and/or
testimony of Shockley, Carmin, Bernitt, and Hickman, contending that they
relied on the completion of I-69 to form their opinions on the highest and best
use and the value of the Property.
[7] On June 18 and 19, 2015, the trial court held a preliminary hearing on expert
qualifications. On June 23 and 24, 2015, the trial court held a hearing on the
admissibility of testimony and evidence, including the remaining issues raised
by the State’s motion in limine. Based on the evidence provided at these two
hearings, as well as witness depositions, the trial court issued the Order, which
in relevant part provides as follows:
Argument was heard on the State’s motion to exclude testimony
on the basis of the [Project Rule], set out in State v. Sovich, 252
N.E.2d 582 (Ind. 1969). The court rules that the [Project Rule],
as stated in Southtown Properties, Inc. v. City of Fort Wayne, 840
N.E.2d 393, 400 (Ind. Ct. App. 2006) is a rule of relevancy that is
applicable to this proceeding. The court adopts the restatement
of Sovich from Southtown Properties that “evidence of changes in
the value of property brought about by the project for which the
property is being taken is irrelevant to the determination of the
value of the property on the date of the condemnation, i.e. the
date the condemnation action is filed.” Southtown Properties at
400. This ruling by the court excludes any offered evidence
(testimony, exhibits) on the effect of the construction or
completion of the I-69 Highway project on the highest and best
use for which the taken property is adaptable as of the date of
taking … and the fair market value of the taken property on the
date of taking. ….
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All witnesses are subject to the above stated ruling of exclusion.
The court finds … that some witnesses considered the effect of
the construction and completion of the I-69 Highway project in
formulating their opinions of highest and best use, value of
surrounding real estate, and determination of fair market value.
The court also finds that the testimony … of all the witnesses
challenged by [the State] considered additional factors that are
relevant, besides the I-69 Highway project, in formulating their
opinions. Some of the challenged witnesses, but not all, testified
in person or by deposition (in essence) that their opinions would
not change or were not based solely or significantly upon, the
construction or completion of the I-69 Highway project. Because
the opinions of the witnesses are based upon multiple factors that
are relevant, the court denies the request of [the State] to exclude
the testimony of a witness on the grounds that the witness stated
… that the witness “considered” the construction or completion
of the I-69 Highway in forming his opinion of highest or best use
or fair market value or the value of surrounding real estate as to
the property taken. [The State] may ask on cross examination if
the witness based his opinion on the I-69 Highway project and
the witness may testify as is necessary to answer the question.
The court anticipates objections regarding whether the answer of
a witness may include the relevancy of the I-69 Highway project
to his/her opinion and whether [the State] has opened the door
to testimony about the I-69 Highway project and how that affects
highest and best use or valuation of the property taken.
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Appellant’s App. at 20-21. The Order also includes determinations specifically
with respect to Hickman, Bernitt, and Carmin. 3 This interlocutory appeal
ensued.
Discussion and Decision
[8] The State asserts that the trial court abused its discretion by denying its motion
in limine. Specifically, the State contends that reports and/or testimony of
Shockley, Hickman, Bernitt, and Carmin regarding the highest and best use
and/or the value of the Property is inadmissible because it violates the Project
Rule adopted in State v. Sovich, 253 Ind. 224, 252 N.E.2d 582 (1969), and
restated in Southtown Properties, Inc. v. City of Fort Wayne ex rel. Dep’t of
Redevelopment, 840 N.E.2d 393 (Ind. Ct. App. 2006), trans. denied.
[9] In Sovich, our supreme court articulated the Project Rule as follows: “neither an
increase nor a decrease in the market value of the property sought to be taken,
which is brought about by the same project for which the property is being
3
The trial court found that Monroe Liberty agreed that Hickman will not testify as an expert, but that he
can testify to his opinions on value and highest and best use within the confines of Evidence Rule 701. The
trial court also found that “[h]e can testify as to intent to purchase the subject project for commercial
purposes but not as to an intended specific future use such as a gas station.” Appellant’s App. at 21. As for
Bernitt, the trial court concluded that Monroe Liberty qualified him as an expert on highest and best use but
that he is not qualified as an expert on fair market valuation. The trial court also found that Bernitt may
testify as a skilled witness on commercial sales that “he has personally been involved in if he clarifies his
involvement on the record.” Id. at 22. Finally, the trial court found that the parties agreed that Carmin’s
written report would not be offered into evidence and that neither the Monroe County Urbanizing Plan nor
any ordinances or statutes that went into effect after the date of taking would be offered into evidence or
testified to by Carmin.
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taken, may be considered in determining the value of the property.” 253 Ind. at
234, 252 N.E.2d at 588. 4
[10] In Southtown, another panel of this Court discussed the Project Rule in the
context of the Indiana Rules of Evidence, which were adopted subsequent to
Sovich. The Southtown court explained, “We believe that the rule announced in
Sovich is essentially a rule of the relevancy of evidence.” 5 840 N.E.2d at 400.
The Southtown court stated, “Sovich basically stands for the proposition that
evidence of changes in the value of property brought about by the project for
which the property is being taken is irrelevant to the determination of the value
of the property on the date of condemnation, i.e., the date the condemnation
action is filed.” Id.[11] Based on our review of Sovich and Southtown, we agree with the trial court’s
statement of the Project Rule. On appeal, the parties vigorously dispute
whether any or all of the challenged witnesses actually relied on the
construction and completion of I-69 in reaching their opinions as to the highest
and best use and/or the value of the Property. They also disagree on various
aspects related to the scope of the Project Rule, such as whether the Project
4
In Gradison v. State, 260 Ind. 688, 300 N.E.2d 67 (1973), the supreme court declined to apply Sovich to
valuation of the residue in a condemnation action. In so doing, the Gradison court concluded that valuation of
the residue may include consideration of “benefits derived by the residue from the improvements resulting
from the condemnation project.” Id. at 710, 300 N.E.2d at 82.
5
Pursuant to the Indiana Rules of Evidence, “[i]rrelevant evidence is not admissible” and, with some
exceptions, “[r]elevant evidence is admissible.” Ind. Evid. Rule 402. Evidence is relevant if “it has any
tendency to make a fact more or less probable than it would be without the evidence” and “the fact is of
consequence in determining the action.” Ind. Evid. Rule 401.
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Rule excludes evidence of highest and best use and/or valuation if that
evidence is based even in part on the project for which the property is being
taken.
[12] We observe that “[o]rdinarily the denial of a motion in limine can occasion no
error; the objectionable occurrence is the improper admission of items in
evidence.” Perry v. Gulf Stream Coach, Inc., 871 N.E.2d 1038, 1047 (Ind. Ct.
App. 2007). “A trial court’s ruling on a motion in limine does not determine
the ultimate admissibility of the evidence; that determination is made by the
trial court in the context of the trial itself.” Gibson v. Bojrab, 950 N.E.2d 347,
350 (Ind. Ct. App. 2011). “If the trial court errs by admitting evidence, the
exclusion of which was sought by the motion in limine, then the error is in
admitting the evidence at trial in violation of an evidentiary rule, not in denying
the motion in limine.” Bova v. Gary, 843 N.E.2d 952, 955 (Ind. Ct. App. 2006).
[13] We note that an appeal of a motion in limine is a discretionary interlocutory
appeal. 6 “[O]ur decision whether or not to accept a discretionary interlocutory
appeal is entirely discretionary.” Bridgestone Americas Holding, Inc. v. Mayberry,
854 N.E.2d 355, 358-59 (Ind. Ct. App. 2006), summarily aff’d in relevant part by
878 N.E.2d 189, 191 n.2 (Ind. 2007). “It is well established that we may
reconsider a ruling by our motions panel.” Wise v. State, 997 N.E.2d 411, 413
(Ind. Ct. App. 2013). “More specifically, we have the authority to reconsider
6
Such appeals are governed by Indiana Appellate Rule 14(B), which provides, “An appeal may be taken
from … interlocutory orders if the trial court certifies its order and the Court of Appeals accepts jurisdiction
over the appeal.”
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our motions panel’s initial ruling on a motion to accept interlocutory
jurisdiction.” Id.[14] We conclude that the evidentiary issues raised by the State are not ripe for our
review. These issues are fact-sensitive, and we will be in a far superior position
to decide these questions after the trial is held and the precise character of the
evidence and the nature of the objections are available to us. The Order’s
suppositions regarding specific questions and the consequences of those
questions are advisory at best and speculative at worst. We are not insensitive
to the parties’ dilemma in wading into this difficult area, but our ability to
render an opinion on the issues raised is constrained by not having specific
rulings or specific evidence before us. Because we conclude that the issues are
not ripe for review, we dismiss the State’s appeal.
[15] Dismissed.
Robb, J., and Pyle, J., concur.
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