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An Eminent Domain Ruling Against the City of Kokomo
A Howard County judge ruled against the city of Kokomo this week in its appeal of a jury verdict that left the city on the hook for more than $300,000 in a controversial eminent domain case.
Howard Superior Court 2 Judge Brant Parry on Tuesday denied the city’s Motion to Correct Error, filed April 18, and its claims that the jury’s decision was excessive and not supported by Indiana law.
The case, however, is far from over and will take the city’s dispute with Kokomo Glass Shop Inc. to the state level.
“The City is disappointed with Judge Parry’s Order and will continue to pursue the appeal,” said Kokomo Corporation Counsel Beth Copeland in a statement sent to the Tribune on Wednesday.
The case will next appear before the Indiana Court of Appeals, where a panel of three judges will be randomly selected to hear it. A timeline has not yet been announced.
Parry’s order did not provide an explanation for why the city’s motion was denied.
How an Eminent Domain Action Became Involved
In mid-March, a jury in Howard Superior Court 2 awarded $305,600 to the family that owns Kokomo Glass for “the … property owner’s damages” after the city used eminent domain to obtain property in an area that will in coming years be home to a downtown hotel and conference center.
The property taken by the city, at 226 S. Main St., held “storage and manufacturing for the glass company,” according to court documents. The structure has been torn down.
Court filings note the Main Street property, comprising roughly 0.27 acres, was acquired by the city “as a means to further the hazard mitigation in the area and to further the economic development of the City of Kokomo.”
The area has also been targeted for trail improvements.
Kokomo Glass’ showroom and salesroom were located across the street at 226 S. Union St., which is now for sale and was not part of the city’s eminent domain move. The company, though, argued it could not operate at the Union Street location without the Main Street site.
Kokomo Glass has since relocated out of downtown Kokomo to 3030 S. LaFountain St.
After the jury’s ruling, the city filed its Motion to Correct Error in Howard Superior Court 2 in mid-April.
The city, represented in the appeal by Indianapolis attorney Blake J. Burgan, with Taft Stettinium & Hollister LLP, claims the jury verdict “was excessive because it included damages not recoverable under the Eminent Domain Act.”
As the city explained: “The evidence was undisputed (and the parties agreed the jury should be instructed) that the damages for the total taking of the Main Street Property were $100,000.”
But Kokomo Glass “also sought damages to the Union Street Property as the ‘residue’ of the two Properties treated as a whole.”
Therefore, during closing arguments, Kokomo Glass asked the jury to award “other damages,” referred to as residual damages, suffered by the company and owner Brad Newton due to the city’s eminent domain taking of the Main Street property.
Those included moving costs destroyed metal, appraisals, moving a sign, increased advertising, and more, noted the appeal.
The city, however, argued residual damage funds “are not recoverable in this eminent domain action.”
“No appraiser testified to any effect on the fair market value of the Union Street Property resulting from the taking of the Main Street Property,” notes the appeal.
“Instead the Residual Damages are all consequential damages, resulting primarily from the relocation of Kokomo Glass’s business from the Union Street Property to its new location.”
The city also cited a previous Indiana Court of Appeals ruling that found, “Indiana … denies relocation expenses as a part of ‘just compensation,’” in eminent domain cases.
“Thus, under Indiana law, the Residual Damages were not recoverable in this case,” according to the appeal.
Kokomo Glass Responds
Kokomo Glass, represented by attorney Katherine Noel, filed a response to the city’s motion on May 17.
In it, Noel argued the jury verdict was not excessive and was supported by the evidence presented at trial.
“The city … argues that the damages sought were not in the nature of damages to the residue,” she wrote. “This argument, too, fails. When only part of an owner’s property is taken, the damages must include the fair market value of the land that was taken, and any damage to the rest, or ‘residue,’ of the property.”
Noel said expert testimony showed the two downtown Kokomo Glass sites had “unity to title/ownership, they were contiguous, and they were used in the same way. Thus, all three elements were met in order to consider the damages to the residue.”
She said the city “presented no evidence whatsoever contrary to” the testimony, and later cited additional testimony claiming “it became impossible for Kokomo Glass Shop to operate at its previous location after the city took apart its manufacturing building.”
In its motion, the city pointed to what it believed was a lack of evidence – including exhibits it says were not admitted into evidence at trial and a lack of proof that certain expenses were ever paid – on numerous expense claims made by Kokomo Glass.
But Noel argued that the exhibits, which she said were offered and admitted into evidence, outlined specific damages like increased advertising and lost scrap metal that combines to more than $150,000 in damages.
“The City argues the evidence did not support these figures,” wrote Noel. “The Estate would argue this was the only evidence! The City failed to put on any evidence, but now wants to argue that the only evidence presented is somehow ‘not supported by the evidence.’
“This is nonsensical.”
Noel, meanwhile, went on to request more money for her clients, saying the court “erred in failing to award judgment interest dating back to the date of the taking [of the Main Street property].”
The judgment awarded interest accruing at 8 percent per year from Aug. 8, 2017, which Parry said in court documents was the day “the City of Kokomo … took possession of the property.”
But Noel claimed that date should have been Dec. 22, 2016, which she said was “the date of the taking,” or when the city initiated eminent domain.
Parry denied the request in his order Tuesday.
Noel could not be reached for comment.