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Appeals Court Decides Wymberley Eminent Domain Case

n Wymberley Sanitary Works v. Batliner et al., Cause Nos. 22C01-0607-PL-475, -476, -477, and -478, the Court of Appeals overturned the trial court’s dismissal of eminent domain complaints against various landowners (the “Landowners”). In Wymberley, the utility brought four eminent domain actions against four property owners that were consolidated by the trial court. The Landowners objected to the eminent domain action, and the trial court dismissed the eminent domain complaints and ordered Wymberley to pay the Landowners’ attorney fees. Wymberley appealed that decision, and the Landowners appealed the amount of attorney fees that the trial court awarded.

The Court of Appeals reversed the trial court’s decision. In its decision, the Court of Appeals stated that to exercise eminent domain power, a utility must establish that it 1) made the statutorily required offer to purchase the property interest, 2) that the proposed taking is needed for a public purpose, and 3) that there is a current need for the taking.

The Landowners argued that Wymberley should have provided them with an appraisal or other evidence used to establish the offer price. Wymberley admitted that it did not provide an appraisal, but argued that the offer was provided before an appraisal was required under I.C. 32-24-1-3(c). Before that statute was amended, Wymberley did not have an appraisal requirement. Therefore, Wymberley prevailed on that issue.

The Landowners also objected to the eminent domain action because they alleged that it was not for a public use. They argued that the eminent domain decision enhanced Wymberley’s bottom line and that Wymberley was using bad faith to take their property. The court disagreed, stating that “[t]o the contrary, the factual findings establish that this sewer line will service a subdivision, providing sewer service to all of the homeowners who plan to purchase property therein.” In addition, the court stated that service “to those homeowners is a public use.”

Finally, the appeals court stated that there was a current need for the taking. Although the trial court ruled that the proposed development was not a present need for the eminent domain action, the appeals court noted that the area plan commission had granted primary plat approval to the subdivisions conditioned on the extension of sewer service. The court held that the trial court’s decision would “impede development in Indiana because utility takings would be permitted to serve new developments only after those developments are finally approved, or perhaps even fully constructed.” In addition, the Landowners argued that Wymberley’s selection of a route for its sewer system was arbitrary and capricious. The Court of Appeals rejected that argument.

The Landowners argued that Wymberley acted in bad faith because it broke a promise to the IURC that it would use public rights-of-way, because Wymberley promised the IURC that it would provide service to as many customers as possible and the route selected only served the proposed development, because Wymberley did not acquire the easements by voluntary agreement, and because Wymnberley waived its right to argue about the bad faith finding. The court rejected those arguments. Additionally, the court overturned the award for attorney fees to the Landowners. The court stated that “[e]ven if we agreed with the trial court that Wymberley acted in bad faith in its dealings with the Landowners before the lawsuit was filed, neither caselaw nor the plain language of the statute support an award of attorney fees for actions taken outside the litigation.”

The Landowners filed a petition to transfer this decision to the Indiana Supreme Court. Bingham McHale LLP will continue monitoring this case for further developments.

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