Justices: Gary Housing Authority’s taking of private property upheld, but property owner entitled to damages hearing

Although the Gary Housing Authority can proceed with its administrative taking of privately owned property, the property owner will get a chance to make its case for damages after the Indiana Supreme Court ordered the entry of summary judgment for the owner as well as a damages hearing.

Justice Mark Massa wrote for the unanimous Supreme Court that reversed and remanded in 624 Broadway, LLC v. Gary Housing Authority, 22S-CT-140.

The property dispute began in March 2019, when the Gary Housing Authority sued 624 Broadway LLC to acquire property that the authority wanted to use as part of its plans to redevelop the downtown Gary area for mixed residential and commercial uses. After moving to dismiss the lawsuit, the housing authority instead initiated an administrative taking under Indiana Code Chapter 32-24-2, which only required notice by publication for nonresident owners like 624 Broadway, which was located in Schererville.

The housing authority adopted a resolution to acquire the property and selected Sept. 19 as the day it would receive and hear remonstrances. Notices of the resolution and meeting were published twice in local newspapers, but John Allen, 624 Broadway’s registered agent, only learned of the meeting from a reporter on Sept. 9.

llen attended the meeting and addressed the housing authority, which ultimately confirmed the taking, assessed $75,000 in damages and set a meeting on written remonstrances for Oct. 17. Notice was again only provided by publication, and Allen and 624 Broadway submitted written remonstrances.

624 Broadway also asked the housing authority to postpone the Oct. 17 so that its appraiser could assess the property, but the housing authority declined. Then, one day before the scheduled hearing, the property owner sued the housing authority and sought a temporary restraining order to prevent the meeting.

The Lake Superior Court denied that request and the housing authority proceeded to award $75,000 in damages. 624 Broadway’s appraiser inspected the property one day after the meeting and issued a report valuing it at $325,000.

624 Broadway later amended its complaint to allege that its due process rights were violated when notice of the meetings was only provided by publication, depriving it of the ability to adequately prepare for the meetings. The parties moved for summary judgment, which was granted to the housing authority.

624 Broadway appealed, and the Court of Appeals of Indiana affirmed and reversed in part, finding chiefly that the notice was constitutionally deficient because it “was not reasonably calculated to reach Allen.” The COA also determined the deficiency was not harmless and thus remanded with instructions to enter summary judgment for 624 Broadway and to vacate the taking.

That initial opinion was later “substituted” to clarify one issue, but the end result remained the same.

The high court on Monday likewise reversed the summary judgment ruling.

“The federal Constitution establishes important limits on the government’s ability to take private property for public use: It must provide just compensation, a hearing on just compensation, and sufficient notice,” Massa wrote in the Monday opinion. “… The Housing Authority only provided notice of the taking and its hearings by publication — even though it knew how to provide personal notice. Its deficient notice deprived 624 Broadway of a meaningful damages hearing.

“… The Housing Authority admittedly knew the identity and address of 624 Broadway’s registered agent. Indeed, its Sept. 19 damages resolution included his address,” Massa continued. He added, “Yet once it transitioned to an administrative taking, it apparently became incapable of sending a letter or email to 624 Broadway.

“And administrative taking may be a ‘streamlined procedure for taking private property’ … but it cannot Circumvent the Constitution,” he wrote. “… Because the Housing Authority knew how to provide personal notice, its notice by publication was a ‘mere gesture.’”

Further, even though 624 Broadway did learn about and speak at the meetings, the notice-by-publication was still prejudicial because, according to the Supreme Court, “(h)ad the Housing Authority provided constitutionally sufficient notice at the outset, it is probable that 624 Broadway would have presented its appraisal before or at the final meeting.”

“… (G)iven the significant disparity between the owner’s $325,000 appraisal, the Housing Authority’s $24,000 appraisal (which lacked an updated interior inspection), and the final $75,000 award, we are not confident that 624 Broadway’s appraisal did not affect the Housing Authority’s decision on just compensation,” Massa wrote.

However, the high court parted ways with the Court of Appeals on a key point: The justices determined they could not “vacate the Housing Authority’s taking — statutorily authorized and for a public purpose — simply because insufficient notice may have impacted the damages award.”

Instead, the court remanded for a damages hearing where 624 Broadway can present its appraisal and other pertinent evidence, as well as for the entry of summary judgment in its favor.