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Civil: No Consequential Damages For Condemnations That Affect Only Traffic Flow
Posted in Litigation

In a 3-2 opinion Wednesday, the Indiana Supreme Court held that “shopping center owners are not entitled to consequential damages from street reconfigurations that affect traffic flow through the center and prevent expansion of existing points of ingress or egress, but leave existing points in place.”

The issues in State v. Kimco of Evansville, Inc. arose after the State sought to acquire a 0.154-acre strip of land along the western border of the Plaza East Shopping Center in Evansville.  The State needed the land in order to widen one road and improve traffic flow to and from another.  The reconfiguration resulted in lane modifications that prevented traffic in one direction from accessing the shopping center directly.  It also prevented the shopping center from adding to or widening existing access points along the road.

The Indiana Supreme Court's opinion provided an appendix showing these before-and-after diagrams of the property:

The owner of the shopping center sued for “loss of access” damages arising from the condemnation, and a jury awarded Kimco $2.3 million.  The State appealed the judgment.

The Indiana Court of Appeals affirmed in this published opinion, concluding that Kimco had suffered a taking of its access rights as a matter of law and that the trial court properly instructed the jury on compensability of lost access.

The Indiana Supreme Court granted transfer and, in an opinion by Justice Boehm, reversed the judgment.  In its opinion, the Court reaffirmed its holding in State v. Ensley, 164 N.E.2d 342 (Ind. 1960), that “roadway improvements that reduce or interfere with traffic flow to a commercial property do not constitute takings of a property right of the owner of the property.”  The key distinction from Ensley, the Court wrote, was this:  “although an elimination of rights of ingress and egress constitutes a compensable taking, the mere reduction in or redirection of traffic flow to a commercial property is not a compensable taking of a property right.”

Although the shopping center in Kimco could not widen or move its entrances, and the traffic flow to the shopping center had been redirected, the Indiana Supreme Court explained, “[n]either of the property’s existing points has been eliminated or narrowed as a result of the condemnation.  Nor have any of the reconfigurations deprived the owners of their rights of ingress or egress.”

In sum, the Court wrote, “The only substantive allegation is that traffic flow to the shopping complex has been encumbered.  Under Ensley and its progeny, these consequences from the State’s roadway improvements are not compensable because no property right has been taken.”

Chief Justice Shepard and Justice Sullivan joined in the opinion.  Justices Dickson and Rucker dissented, believing that the Indiana Court of Appeals correctly decided the case.

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