7th Circuit affirms dismissal of Indiana homeowners’ suit over Lake Michigan beach ownership

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Continuing a yearslong legal battle over property rights along Indiana’s Lake Michigan shoreline, the 7th Circuit Court of Appeals upheld the dismissal of a lawsuit brought by property owners who claimed an Indiana Supreme Court decision upholding public rights to the shoreline constituted an unlawful taking of their property.

U.S. District Judge Jon DeGuilio of the Indiana Northern District Court in April 2021 dismissed an attempt by property owners in the northwestern Indiana town of Porter to deny public access to Lake Michigan beaches.

The federal judge said there was no basis for lakefront property owners Raymond Cahnman and Randall and Kimberley Pavlock to seek to undo the landmark 2018 Indiana Supreme Court ruling in Gunderson v. State, 90 N.E.3d 1171 (Ind. 2018), which clarified that the shoreline of Lake Michigan up to its ordinary high-water mark is owned by the state and held in trust for the enjoyment of all Hoosiers.

Like the Gunderson plaintiffs, the Porter homeowners alleged their property deeds covered land that extends down to Lake Michigan’s low-water mark. Thus, they argued, when the high court determined the state has always held title to the land all the way up to the ordinary high-water mark, the justices “took” a portion of their property without just compensation in violation of the Fifth Amendment.

However, DeGuilio ruled that the issue wasn’t subject to review in federal court because states have sovereign immunity under the U.S. Constitution.

A 7th Circuit panel upheld the lower court ruling in a Wednesday decision, finding the homeowners lacked Article III standing because none of the named officials in the suit caused the asserted injury or are capable of redressing it.

“We are satisfied that the Owners have alleged injury in fact, insofar as they assert that their property was taken without just compensation. They fall short, however, when it comes to causation and redressability,” Circuit Judge Diane Wood wrote.

First, the 7th Circuit found that none of the defendants have the power to grant title to the homeowners in the face of the Gunderson decision and the subsequent House Enrolled Act 1385 that codified it.

“Even if we were to agree with the Owners, therefore, a judgment in their favor would be toothless,” Wood wrote. “… But the straightforward point is that none of the state defendants the Owners have named — not the Governor, not the Attorney General, not the Indiana Department of Natural Resources, and not the State Land Office — has the power to confer title on the Owners to land that Indiana’s highest court says belong to the state. No injunction we enter can fix that problem.”

The 7th Circuit also said the instant case is materially different from Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (2021), where the asserted injury was not the loss of a dispute about who held title but instead the uncompensated taking of property that they indisputably owned.

“Here, by contrast, ordering any of the named state defendants not to enforce a state property law cannot redress the Owners’ injuries, because non-enforcement will not change the content of the underlying law itself,” Wood wrote.

The appellate court also found the Porter homeowners failed to establish the related causation requirement for Article III standing, noting their injury is not traceable to the state defendants but to the independent action of the Indiana Supreme Court in settling the Gunderson dispute.

Additionally, it noted that if the owners never had title to the shoreline property under Indiana law, it could not have been “taken” by the state.

“The Owners contend that the Indiana Supreme Court’s decision in Gunderson v. Indiana unconstitutionally took their property without compensation. Because they have sued the Indiana Governor and several state executive officials who neither caused the asserted injury nor can redress it, they lack standing to sue under Article III of the Constitution,” Wood concluded. “We therefore AFFIRM the district court’s dismissal of the complaint for lack of subject-matter jurisdiction, although we modify it to a dismissal without prejudice.”

The case is Randall Pavlock, et al. v. Eric J. Holcomb, Governor of Indiana, et al., 21-1599.

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