Indiana Supreme Court Vacates Judgment on Due Process Grounds

The Indiana Supreme Court handed a property owner a nice win before the Labor Day Weekend.  The short opinion is a quick read and available here.  The Gary Housing Authority was engaged in redevelopment for affordable housing and it “strictly followed” the statutory and administrative procedures for acquiring private property.  The notice provisions of the statute only called for notice by publication and the Housing Authority “twice published notice of the resolution and upcoming meeting in two area newspapers of general circulation.”  (Sound familiar?  It should, our Local Redevelopment and Housing Law also requires notice by publication and individual mail notice. N.J.S.A. 40A:12A-6 – more on this in a moment, and see note 1, Indiana statute was amended to require individual mail notice).

The property owner got wind of the hearing from a local reporter and attended.  The meeting proceeded over the owner’s objection and the taking was affirmed and damages were set at $75,000 based on the Housing Authority’s appraisal.  A date for written “remonstrances” was set forth one month later, October 17.  The owner timely filed written remonstrances and requested that the meeting be adjourned to allow its appraiser to assess the value.  On October 16, the property owner filed suit seeking injunctive relief.  The injunction was denied and the Housing Authority affirmed the award of damages at $75,000.  The property owners’ appraiser issued his report two weeks later, opining that the property was worth $325,000.  The owner then amended its lawsuit to claim “that the Housing Authority’s decision to only provide notice by publication violated its federal due process rights and deprived it of the ability to adequately prepare for the hearings.” Slip op. at 3.  The owner was denied relief in the trial court.  The intermediate appellate court granted relief by vacating the taking and remanding.

The Indiana Supreme Court took the case before the remand.  The Supreme Court affirmed the vacation of the damages award but reversed the appellate court’s vacation of the taking.  The Court reasoned that the statutory notice was constitutionally deficient – “Certainly, a statute can provide more protection than the Constitution. But when a statute provides less, the government must do more.”  “Notice by publication may be sufficient “where it is not reasonably possible or practicable to give more adequate warning,” like when the intended recipient is missing. Mullane, 339 U.S. at 317. But it “is not enough with respect to a person whose name and address are known or very easily ascertainable and whose legally protected interests are directly affected by the proceedings in question.” Schroeder v. City of New York, 371 U.S. 208, 212–13 (1962).” Slip op. at 5-6.

However, it held that the Housing Authority’s taking for affordable housing – which strictly followed the statutory takings’ procedure – was for a valid public use and would be sustained.  “A court cannot enjoin or reverse a lawful taking when an adequate legal remedy— compensation—is available.”  The Supreme Court reversed the damages award only and remanded for a damages hearing on constitutional just compensation.

Notice provided in New Jersey redevelopment proceedings were historically more nefarious.  The local governing body would direct the planning board to “study” whether an area was “in need of redevelopment” and the planning board would mail out individual notices and publish notices of the meeting in the local newspaper.  The meeting would have a funny way of occurring on July 3, or December 24, or the last week of August (i.e. when nobody was around).  The notice would not mention eminent domain or condemnation.  When property owners would appear at the meeting, the planning boards and/or its attorney would make a statement that ‘this is only the first step in the long process’; ‘we are only making a recommendation’; ‘we’re not deciding whether your property may be condemned’…..  The statements were largely true, but what they didn’t say was that the planning board hearing was the only opportunity for the property owner to speak or present evidence, that the governing body generally ‘rubber-stamped’ the “recommendation”, and further that the property owners were not entitled to separate notice of the governing body’s action (which could occur within days of a planning board meeting), even though the time to appeal the condemnation determination ran from the governing body’s resolution.  All told, in most cases, by the time the owners found out about the condemnation of their property, it would be too late to challenge the “in need of redevelopment” designation.

Fortunately, the historical practices and perspectives changed in New Jersey redevelopment proceedings nearly 20 years ago. After several unsuccessful court battles, where NJ courts would routinely reject challenges to redevelopment designations as being “too late” even where property owners failed to receive proper notice, the law changed in 2008, when an appellate court held the redevelopment notices of the past, whether they deliberately or ignorantly misled people in failing to realize that their properties could be taken, could not be used anymore.  See Township of Harrison v. DeRose, 398 N.J. Super. 361 (App. Div. 2008)(preserving right to challenge redevelopment taking if redevelopment notices are not adequate).  After DeRose, the New Jersey Local Redevelopment and Housing law was amended in 2013 to codify its holding and to statutorily require that adequate notice be provided for redevelopment proceedings to be given repose from later court challenges.

Both the Indiana and New Jersey changes in the law underscore the importance of adequate notice, being an integral part of due process, especially where constitutional rights are at stake.