CITY OF EVANSVILLE, Indiаna on Behalf of its DEPARTMENT OF REDEVELOPMENT, Plaintiff-Appellant, v. O. Gene REISING; Auditor and Treasurer of Vanderburgh County, Defendants-Appellees.
No. 82A01-8906-CV-209
Court of Appeals of Indiana, First District
Dec. 20, 1989.
547 N.E.2d 1106
Charles C. Griffith, Johnson, Carroll and Griffith, P.C., Evansville, for defendants-appellees.
RATLIFF, Chief Judge.
STATEMENT OF THE CASE
The City of Evansville (City), on behalf of its Department of Redevelopment, appeals the judgment against it and for O. Gene Reising in the City‘s action to appropriate, by its power of eminent domain, real property owned by Mr. Reising. We reverse.
FACTS
We will consider the evidence of record most favorable to Reising, who prevailed in the trial court. In 1982, the City of Evansville‘s Redevelopment Commission (Commission) initiated a project designаted as the Walnut Centre Redevelopment Area Project (Project). The Commission approved and adopted a declaratory resolution, a redevelopment plan, and an amended declaratory resolution and redevelopment plan for the area. The plan commission of the area issued a written order approving the declaratory resolutions and redevelopment plans. Finally, the Common Council of the city passed a resolution de-
The City placed a notice to the general public in an Evansville newspaper advising the public of the foregoing and of a public hearing to be held on August 16, 1982, to receive and hear remonstrances or support for the project and to determine the public utility and benefit of the project. No written remonstrances were filed, but two citizens other than Reising, spоke at the hearing stating that there were many unsolved problems, there was no assurance that merchants would relocate to the Project and thirty-five percent (35%) of the residents of the area were senior citizens owning their own property and living on fixed incomes. The two citizens opined that those residents could not afford to buy property in another area if forced by the Project to relocate. After the hearing, the Commission took final action, determining the public utility and benefit of the proposed Project and approving, ratifying and confirming its own prior resolution and amended resolution declaring the area to be blighted.
In 1987, the Commission, оn separate occasions, offered to purchase two parcels of real estate in the Project area from O. Gene Reising (Reising), but Reising failed to respond to either offer. For more than forty (40) years, Reising has operated a business, commonly known as the Cut Rate Market, on a portion of his property. The market provides retail services to families in the immediate neighborhood, including the sale of grocery items, check cashing services, credit arrangements for the purchase of food and delivery services for home-bound individuals. After Reising failed to respond to the purchase offers, the City exercised its power of eminent domain and instituted a condemnation proceeding to acquire Reising‘s property.1 At the time the City offered to purchase Reising‘s property and throughout the condemnation action, federal Community Development Block Grant funds were the only source of revenue used to acquire property for the Project.
The trial court found for Reising in the eminent domain proceeding and entered findings of fact and conclusions of law. Among other findings, the trial court found that the neighborhood served by Reising‘s market is composed of predominantly black, poor individuals and that no other retail facility within the area provides exactly the same services as Reising‘s market. The court also found that the City‘s acquisition of Reising‘s real estate would result in the termination of the market and deprive the neighborhood of essential retail services generally available to other, predominantly white, neighborhoods within the City.
Based on those findings of fact the trial court concluded that the City had the burden of proving the Project area was not an economic development area and the burden of proving that in using federal Community Development Block Grant funds the City would not discriminate against individuals on the basis of race. The trial court also concluded that the redevelopment area was an economic development area pursuant to
The trial court also found that the use of the federal funds in the manner contemplated by the City would result in race discrimination against some individuals and would have a disruptive effect upon hous-
Further facts will be provided as necessary to the discussion.
ISSUES
- Whether the trial court applied the correct burdens of proof in the condemnation proceeding.
- Whether the trial court had jurisdiction to determine whether the City‘s purpose for the Project area was for redevelopment of a blighted area or for economic development of the area.
- Whether the trial court had jurisdiction to determine whether the City had violated federal nondiscrimination statutes in its use of Community Development Block grant monies.
DISCUSSION AND DECISION
Issue One
The City contends that the trial court‘s conclusions of law, that the City had the burden of proving that the Walnut Centre Redevelopment Area Plan is not an economic development area plan and of proving that the use of the federal Community Development Block Grant (CDBG) monies will not result in discrimination of individuals on the basis of race, were clearly erroneous and contrary to law. We will not set aside the findings or the judgment of a trial court‘s decision made after a bench trial unless the findings are, or the judgment is, clearly erroneous.
A correct application of the law would have required the City to prove that the area where Reising‘s property was located had beеn declared a blighted area and that the City had instituted condemnation proceedings against Reising‘s property only after making a purchase offer which was rejected by Reising. The burden of proof then should have shifted to Reising to prove his objections to the condemnation action. Thus, Reising should have had the burden of proving that the City‘s redevelopment plan was treating the Walnut Centre Redevelopment Area as an economic development area instead of as a blighted area. Reising also should have had the burden of proving that the City‘s use of federal CDBG funds to purchase his property would result in racial discrimination and disruption of housing patterns. The trial court‘s assignment of the burdens of proof was clearly erroneous and contrary to law. Before applying the correct burdens of proof to the findings of fact made by the trial court, however, we must discuss additional issues. Even if the trial court had used the correct burdens of proof in arriving at its conclusions of law, the court‘s application of the law to the facts
Issue Two
One of Reising‘s objections to the City‘s condemnation complaint was that the City had no right to exercise its power of eminent domain. Reising premised his argument on the contention that the City‘s real purposе in implementing its redevelopment plan was to achieve the results of an economic development area, instead of to rehabilitate a blighted area.
“(a) A person who filed a written remonstrance with the redevelopment commission under section 17 of this chapter and is aggrieved by the final action taken may, within ten (10) days after that final action, file in the office of the clerk of the circuit or superior сourt a copy of the order of the commission and his remonstrance against that order, together with his bond conditioned to pay the costs of his appeal if the appeal is determined against him. The only ground of remonstrance that the court may hear is whether the proposed project will be of public utility and benefit. The burden of proof is on the remonstrator.
(b) An appeal under this section shall be promptly heard by the court without a jury. All remonstrances upon which an appeal has been taken shall be consolidated and heard and determined within thirty (30) days after the time of the filing of the appeal. The court shall hear evidence оn the remonstrances, and may confirm the final action of the commission or sustain the remonstrances. The judgment of the court is final and conclusive, unless an appeal is taken as in other civil actions.”
The City admits, and we agree, that a trial court could properly decide whether a public body is using subterfuge and bad faith in seizing a citizen‘s property, whether the public body has no real intention of applying the property to the public purpose and use alleged and to decide whether a public body is acting outside its power and scope of authority in an arbitrary and capricious mannеr. See Derloshon v. City of Fort Wayne (1968), 250 Ind. 163, 234 N.E.2d 269. See also Department of Conservation v. Barber (1964), 246 Ind. 30, 200 N.E.2d 638 (trial court is restricted in condemnation proceeding to determining the following as objections to taking: (1) whether proceedings legal, (2) whether department had authority to condemn, (3) whether property was for private or public purpose, and (4) whether condemnation was fraudulent, capricious or illegal.)
We could also note that in 1982, when the redevelopment commission determined that the Project area was blighted, no statutory distinction existed between a blighted area and an economic development area.
Issue Three
Reising‘s second premise for his argument in the trial court that the City had no right to exercise its power of eminent domain to acquire his real estate was that the City‘s acquisition of Reising‘s real estate would result in the termination of his grocery business and related services to the surrounding residents. Because many of the residents are poor and African-American, Reising alleges that the termination of his market would be discriminatory. The trial court concluded that because the City was planning to acquire Reising‘s property with federal CDBG funds, the City must comply with nondiscrimination provisions in federal statutes. Specifically, the court said in its Conclusions of Law:
“4. The Court further finds that the plaintiff has failed to meet its burden with regard to the use of the Community Development Block Grant monies and hereby determines that the use of said Federal monies in the manner contemplated by the plaintiff will result in the discrimination of [sic] certain individuals on the basis of race, in violation of
42 USC § 5309 and furthermore, that the use of said monies as contemplated by the plaintiff will have a disruptive effect upon housing patterns in the immediate area in contravention of the intent of42 USC § 1441(A) .”
We find the trial court‘s conclusion erroneous for several reasons. First, Congress declared its national housing policy in
Our second reason for disagreeing with the trial court‘s conclusion is as follows: Reising argues that the City is in violation of
“the Secretary is authorized to (1) refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted; (2) exercise the powers and functions provided by Title VI of the Civil Rights Act of 1964 (
42 U.S.C. 2000d ); (3) exercise the powers and functions provided for in section 5311(a) of this title; or (4) take such other action as may be provided by law.”
Section 5309(c) provides that when the matter is rеferred to the Attorney General, the Attorney General may bring a civil action in any appropriate United States district court for such relief as may be appropriate, including injunctive relief.
A question arises of whether Reising had standing to raise the objection that the funding of the City‘s Project with CDBG funds was a violation of the federal
Assuming arguendo that Reising meets the constitutional requirements for standing, even though his real estate has not yet been taken by condemnation, prudential сonsiderations require us to hold that Reising did not have standing to raise the question of whether the City had violated § 5309 by using the CDBG monies to acquire Reising‘s real estate. The Act‘s primary objective, as stated in § 5301(c), is to develop urban communities “by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income.” Reising‘s interest in retaining his real estate and continuing his market is not an interest protected by the HCDA.3 Clearly, HUD is a more competent governmental institution than are state courts to address whether the HCDA‘s nondiscrimination provision has been violated and to monitor the expenditurе of CDBG funds. Finally, Reising is not asserting his own legal rights or interests, but has presented evidence and made arguments that the residents of the area surrounding his market, which area is within the Walnut Centre Project area, are being discriminated against and are being dislocated. Because of the above prudential considerations we hold that Reising did not have standing to raise the issue of the City‘s alleged discriminatory use of CDBG grant funds.
We would also note that several federal courts have considered whether the language of § 5309 permits a private cause of action. Of the four courts which have considered the question, three of them have determined that some or all litigants are nоt permitted to bring private causes of action.
All four of the above courts relied upon the four factors laid out in Cort v. Ash (1975), 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26, 36, which should be considered when a court is deciding whether a federal statute provides a private cause of action: (1) whether the plaintiff is part of a class for whose special benefit the statute in question was created; (2) whether there is implicit or explicit legislative intent to create or deny a private remedy; (3) whether a private cause of action is consistent with the underlying goals of the legislative framework so as to imply a remedy for the plaintiff; and (4) whether the cause of action is one usually relegatеd to state law. All four of the courts determined that the fourth factor was irrelevant to their analysis of § 5309, a federal housing statute whose purposes are to generate federal funds and administer their expenditure. People‘s Housing Development Corporation v. City of Poughkeepsie, New York (S.D.N.Y.1976), 425 F.Supp. 482 (nonprofit corporation contracting to provide service to city under housing rehabilitation program not among class for whose special benefit HCDA enacted and had no private cause of action under § 5309); Latinos Unidos de Chelsea v. Secretary of Hous-
Finally, we hold that an eminent domain proceeding is not a proper vehicle for consideration of the question of whether the acquisition of a land parcel with CDBG funds might result in racial discrimination or a disruрtion of housing patterns. While it is true that
“Any defendant may object to such proceedings on the grounds that the court has no jurisdiction either of the subject-matter or of the person, or that the plaintiff has no right to exercise the power of eminent domain for the use sought, or for any other reason disclosed in the complaint or set up in such objections“,
we do not interpret the provision to mean that a condemnee may raise any objection whatsoever. As noted in Issue Two, a trial
In Joint County Park Board of Ripley, Dearborn and Decatur Counties our supreme court stated that “causes which would ordinarily constitute grounds for abatement, demurrer or answer may be presented in objections ...” 228 Ind. at 109, 88 N.E.2d at 688. The court held that an objection that the condemnor lacked funds to pay any final judgment awarded to them was an improper objection. Id. at 116, 88 N.E.2d at 691. In addition, other courts have held various objections and defenses raised in eminent domain proceedings were impropеr. See Indianapolis Water Co. v. Lux (1946), 224 Ind. 125, 64 N.E.2d 790 (objection questioning motive of condemnor improper); Sisters of Providence of St. Mary‘s of the Woods v. Lower Vein Coal Co. (1926), 198 Ind. 645, 154 N.E. 659 (defense that condemnor intends to divert property to a use other than the use for which it is sought is improper); Matlock v. Bloomington Water Co. (1925), 196 Ind. 271, 146 N.E. 852 (defense that condemnor‘s plant not yet in operation improper); Richland School Township of Fulton County v. Overmyer (1905), 164 Ind. 382, 73 N.E. 811 (defenses that a lesser quantity of land than that sought to be condemned would suffice or that another location would be more convenient and could be had for a lesser price improper); City of Lebanon v. Public Service Co. of Indiana (1938), 214 Ind. 295, 14 N.E.2d 719 (defenses that no funds appropriated for the property sought to be acquired or that funds were not available to pay award at time of taking improper).
Even if Reising had had standing to bring an actiоn and a private remedy had been available under
In summary, Reising could not raise the issue of the Project area being intended by the City as an economic development area or the issues of racial discrimination and disruption of housing patterns as objections to the condemnation complaint. The trial court had nо jurisdiction to consider those issues in the condemnation proceeding. Therefore, we will apply the correct burdens of proof to the trial court‘s findings of fact and make the following conclusions of law: we find that the City properly described the tracts of Reising‘s land which it wished to acquire, Finding of Fact 3, R. 111-112, and had made a purchase offer for Reising‘s property, which Reising had rejected, Finding of Fact 5, R. 112-113. The City is engaged in the Walnut Centre Redevelopment Area Project, having initiated the projects through resolutions adopted by the Evansville Redevelopment Commission and the Common Council of the City of Evansville in 1982 pursuant to
Reversed and remanded.
SHIELDS, P.J., concurs.
BAKER, J., concurs in result with separate opinion.
BAKER, Judge, concurring.
Although I concur in the result reached by the majority, I am not so convinced that
As noted by the majority, our supreme court has excluded similar objections and defenses as that proffered by the condemnee in this case. See Indianapolis Water Co. v. Lux (1946), 224 Ind. 125, 64 N.E.2d 790; Sisters of Providence of St. Mary‘s of the Woods v. Tower View Coal Co. (1926), 198 Ind. 645, 154 N.E. 659. In both of these cases, the intent and motive of the condemnor was attacked. Here, Mr. Reising seeks to do the same.
In the event our supreme court were to allow a collateral attack of a condemnation proceeding, I see no compelling prudential consideration to preclude the courts of this state from scrutinizing the City‘s actions for violations of federal law. This is especially true when public funds are utilized to dispossess a segment of our citizenry from their property.