COA: Credit union did not have property right to flow of traffic on US 31

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A federal credit union with a branch located in northern Indiana did not have a cognizable property right to the flow of traffic on U.S. 31 past its property and, thus, cannot claim the Indiana Department of Transportation committed inverse condemnation by refiguring that stretch of road, the Indiana Court of Appeals ruled Friday.

In early 2006, AAA Federal Credit Union completed construction on a new branch building on a plot of land in South Bend, which had direct access to U.S. 31. However, after completion of a U.S. 31 improvement project between Plymouth and South Bend, the road became a divided highway, which required a “more or less circuitous” route to access the highway from AAA’s property.

In 2014, AAA brought an action for inverse condemnation against the Indiana Department of Transportation. After a two-day bench trial, the St. Joseph Superior Court entered findings of fact, conclusions of law and judgment for INDOT, prompting the appeal in AAA Federal Credit Union v. Indiana Department of Transportation, 71A03-1609-PL-2091.

The Indiana Court of Appeals affirmed, with Judge Paul Mathias noting there are two complementary rules for landowners abutting reconfigured highways. First, the right of the landowner to ingress and egress over public roads is a cognizable property right, and second, the landowner has no cognizable property right in the free flow of traffic past his property.

“The traffic-flow rule denies recovery to landowners who complain that, as a result of highway improvement or reconfiguration, the landowner’s invitees must take a more circuitous or inconvenient route to the land, while the points of ingress and egress over the land remain unaffected,” Mathias wrote, noting the instant case is controlled by this rule.

In support of its argument, AAA claimed the project deprived the property of its best use as a site for the branch, but Mathias said that argument “conflates the measure of damages for a compensable taking with the inquiry into whether such a taking happened at all… .”

Further, the credit union argued it was entitled to “free-floating consideration” of its allegedly reduced property value under Biddle v. BAA Indianapolis, L.L.C., 860 N.e.2d 570, 575 (Ind. 2007), Lingle v. Chevron U.S.A. Inc. 544 U.S. 528, 537 (2005) and Penn Central Transportation Company v. City of New York, 438 U.S. 104 (1978), but the appellate court also rejected that argument, noting findings and decisions in those cases do not support AAA’s position because there was no legal “taking.”

“The trial court ruled, ‘The cases are rather clear. There has been no taking under Indiana and federal law,’” Mathias wrote. “’It is understandable that the property owner (is upset because it) has lost the very easy direct access from the very busy old US 31, but under Indiana eminent domain law, this situation does not involve a legal ‘taking.’”

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