COA splits, reverses for family in eminent domain dispute

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A split Court of Appeals of Indiana has reversed for a family in an eminent domain dispute, concluding the town that acquired their property must adhere to Indiana Code and pay them 150% of the fair market value of the property.

Siblings David Guzzo, Robert Guzzo and Betty Jo Keller requested that the town of St. John compensate them at the statutory rate of 150% of the fair market value of their property when the town acquired the land in 2014.

Thursday’s opinion marks the second appeal in the dispute between the parties, as the COA in 2018 affirmed the grant of partial summary judgment to the town before the Indiana Supreme Court granted transfer. The COA originally determined that the Guzzos were entitled to only 100% of their fair market value to the property.

The high court granted transfer to the case in March 2019 after hearing oral argument on petition to transfer. That April, the Indiana Legislature amended the name of the category of property that was entitled to 150% of the fair market value compensation.

Specifically, Indiana Code § 32-24-4.5-8(2)(b) was amended to provide for 150% of the fair market value for residential property in an eminent domain action that began before July 1, 2019, “and with respect to which the fair market value of the parcel has not been determined under IC 32-24-1 before July 1, 2019).

Additionally, effective July 1, 2019, the Legislature added a statute to define “residential property” as used in the amended version of I.C. 32-24-4.5-8. The new statute, I.C. 32-24-4.5-6.2, defined residential property as “real property that consists of: (1) a single[-]family dwelling that is not owned for the purpose of resale, rental, or leasing in the ordinary course of the owner’s business; and (2) the land on which the dwelling is located.”

Responding to the amended state code, the Guzzos filed a Notice of Change in Law and Verified Motion to Remand with the Supreme Court, and the case went back to Lake Superior Court.

However, in June 2020, the trial court denied the Guzzos’ partial summary judgment motion.

In September 2021, the trial court entered its final judgment determining the Guzzos were owed $1.28 million, but again denied the Guzzo’s argument that it should have enhanced compensation of 150% of fair market value.  The trial court also determined the town was required to pay “interest at the statutory rate pursuant to Indiana Code § 32-24-1-11(d)(6)[.]”

Before the Court of Appeals a second time, a split panel found for the family.

The Guzzos argued the trial court’s interpretation of I.C. 32-24-4.5-8 and 32-24-4.5-6.2 was erroneous, and the majority agreed.

“When entering its order, the trial court ignored the plain language of INDIANA CODE § 32-24-4.5-6.2, which specifically provides that residential property means ‘real property that consists’ of ‘a single[-]family dwelling that is not owned for purposes of resale, rental, or leasing’ and ‘the land on which the dwelling is located,’” Judge Rudolph Pyle wrote. “… (I)nstead of applying the plain language of the statute, the trial court improperly relied on the Fiscal Impact Statement (from the 2019 legislation) and injected a personal use requirement into the definition of residential property.

“… Because the Guzzos’ real property consisted of property containing a single-family dwelling that was not owned for purposes of resale, rental, or leasing, we conclude that the trial court erred by denying the Guzzos’ request for the Town to compensate the Guzzos at the statutory rate of 150% of the fair market value of the Property as residential property under INDIANA CODE § 32-24-4.5-8(a)(2),” Pyle concluded.

While Judge Leanna Weissmann joined Pyle in the majority, Judge Margret Robb wrote a four-page dissenting opinion, arguing that the Fifth Amendment allows governments to take private property only for “public use” with a “just compensation. “

“In sum, I do not believe the Property is the sort of property the legislature intended to protect when it amended Indiana Code section 32-24-4.5-6.2,” Robb wrote. “I agree with the trial court that the Guzzos are not entitled to enhanced compensation because the Property does not meet the definition of ‘residential property,’ and I would therefore affirm the trial court.”

The case is David Joseph Guzzo, Robert Glenn Guzzo, and Betty Jo Keller v. Town of St. John, Lake County, Indiana, 21A-PL-2213.

Indiana Lawyer managing editor Jordan Morey contributed to this report.

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