COA orders landowner to comply with local ordinances

May 16, 2017

In the third appellate iteration of a case stemming from violations of Indianapolis environmental ordinances, the Indiana Court of Appeals has found a property owner allowed its tenant to violate the ordinances and ordered the owner to bring the property into compliance.

Beginning in May 1999, International Recycling, Inc. began leasing a property along East Washington Street in Indianapolis from FLM, LLC. The lease allowed IRI to use the property for the storage, mixing and removal of sand while also requiring full compliance with federal, state and local ordinances.

Then, IRI entered into an agreement with Daimler Chrysler Corporation, which provided that IRI would collect and transport foundry sand from Chrysler’s property to the FLM property and would find “beneficial reuses or other appropriate disposal” for the sand. However, IRI eventually stopped removing the sand from the FLM property, and “Black Mountain,” consisting of 105,000 tons of sand accumulated on the property.

Then in the fall of 2002, Chrysler stopped paying IRI, which resulted in IRI stopping payment to FLM and abandoning the foundry sand on the property. In May 2004, the Indiana Department of Environmental Management issued a notice of violation to FLM and IRI, ordering them to remove the sand.

After receiving multiple violations notices from IDEM and the Metropolitan Development Commission of Marion County, Indiana, FLM sought indemnification from IRI and its insurer for the amount it would cost to remove the sand. The Marion Superior Court ultimately released $1.7 million in damages to FLM, but FLM maintained that amount was still not enough to dispose of the sand.

The city filed a complaint against FLM in August 2013, alleging various ordinance violations, including failure to obtain a drainage permit, failure to conform with existing topography and exceeding 20 feet in height. FLM moved for summary judgment, asking the trial court to find as a matter of law that it did not “cause, suffer, or allow” the alleged ordinance violations.

The city filed a cross-motion for summary judgment, and the trial court found in favor of the city. FLM was ordered to bring the property into full compliance with city ordinances and pay a $500 fine.

In a Tuesday opinion in the case of FLM, LLC v. Metropolitan Development Commission of Marion County, Indiana, 49A02-1609-OV-2216, Indiana Court of Appeals Judge John Baker wrote the court found FLM’s claim “that it was unaware of a fifty-foot-tall, 105,000-ton, two-acres-wide mountain of sand on that Property to be wholly incredible.” However, there remains a material issue of fact as to FLM’s actual knowledge of Black Mountain, which makes summary judgment inappropriate only on that issue.

But FLM was at least constructively aware of the sand mountain, Baker wrote, so “its failure to take action … allowed the violations to occur.” Further, the appellate panel found “the fact that FLM claims it has insufficient funds to remove all the sand is wholly immaterial as to whether FLM has allowed Black Mountain to continue to exist. FLM has unquestionably and undeniably allowed this environmental hazard to remain, and it has done so for years.”

The case was remanded to Marion Superior Court for enforcement.


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