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FLM, LLC v. Metropolitan Development Commission of Marion County

Court of Appeals of Indiana

May 16, 2017

FLM, LLC, Appellant-Defendant,
Metropolitan Development Commission of Marion County, Indiana, Appellee-Plaintiff

         Appeal from the Marion Superior Court The Honorable Cynthia J. Ayers, Judge Trial Court Cause No. 49D04-1308-OV-31452

          ATTORNEYS FOR APPELLANT George M. Plews Jonathan P. Emenhiser Plews Shadley Racher & Braun LLP Indianapolis, Indiana

          ATTORNEYS FOR APPELLEE Donald E. Morgan Melissa Hayden Kramer Office of Corporation Counsel Indianapolis, Indiana

          Baker, Judge.

         [¶1] This case has been here before, in a different guise, on multiple occasions. FLM, LLC (FLM), leased property to International Recycling, Inc. (IRI). IRI proceeded to amass a veritable mountain of over 100, 000 tons of sand on the property, in violation of multiple ordinances, and then went out of business and abandoned the sand. The mountain of sand is over fifty feet high, covers two acres, and is leaching multiple toxic chemicals into the ground beneath it. It has been looming over neighboring properties, polluting the City of Indianapolis, and violating multiple ordinances for over fourteen years. We are concerned, as the citizens of Indianapolis should be, that it took the City so long to step in more forcefully and that, despite winning a nearly $2 million judgment from IRI's insurer, FLM has not done what needs to be done to remedy the situation.

         [¶2] The Metropolitan Development Commission of Marion County, Indiana (the City), eventually filed a claim against FLM in an attempt to require FLM to abate the ordinance violations on the property. FLM and the City filed cross-motions for summary judgment, and the trial court granted summary judgment in favor of the City. FLM now appeals, arguing that it did not cause, suffer, or allow its tenant's ordinance violations and should not, therefore, be held liable for them. It also contends that the City is empowered to enter the property and abate the violations for itself. Finding that FLM allowed the violations, we affirm and remand.


         The Creation of Black Mountain

         [¶3] FLM owns a property located at 3515 East Washington Street in Indianapolis (the Property). On May 14, 1999, IRI leased the Property from FLM. Pursuant to the Lease, IRI was permitted to use the Property for the "storage, mixing and removal" of sand. Appellant's App. Vol. III p. 175. The Lease required IRI to "comply fully with all federal, state and local environmental, health or safety statutes, rules, regulations, or ordinances." Id. at 179.

         [¶4] At some point, IRI entered into an agreement with Daimler Chrysler Corporation (Chrysler), pursuant to which IRI collected and transported foundry sand from Chrysler's foundry to the Property. The Chrysler Agreement provided that Chrysler paid IRI to remove the sand and that IRI was required to find beneficial reuses or other appropriate disposal for the sand.

         [¶5] After executing the Lease with FLM, IRI began depositing Chrysler's foundry sand onto the Property. Its right to do so was contingent on IRI's compliance with the Lease. For a period of time, IRI mixed the foundry sand with aggregate and then removed it from the Property for use as structural backfill for construction projects, but at some point, IRI stopped removing the sand from the Property. FLM did not authorize IRI to store the sand permanently on the Property. In June 2002, an environmental consultant reported that IRI was in compliance with applicable environmental guidelines.

         [¶6] At some point, the stored foundry sand reached 105, 000 tons-the "Black Mountain" it is known as today. Id. at 142. It is undisputed that Black Mountain surpassed twenty feet in height, was stockpiled without a required drainage permit, and altered the land in a manner that does not conform to existing topography. Id. at 186, 189.

         [¶7] In the fall of 2002, Chrysler-IRI's only customer and only source of revenue-stopped paying IRI. Once Chrysler stopped paying IRI, IRI could no longer continue its operations or remove the foundry sand from the Property. It stopped paying rent to FLM, abandoned the foundry sand on the Property, and eventually ceased all operations.

         [¶8] Around the time that Chrysler stopped paying IRI, the Indiana Department of Environmental Management (IDEM) began receiving complaints about Black Mountain; for example, one neighboring property owner complained that the sand was migrating onto its property and clogging drainage pipes. On May 17, 2004, IDEM issued a notice of violation to FLM and IRI and ordered them to remove the foundry sand.

         [¶9] By early 2004, the City had also learned of Black Mountain. In January 2004, the City issued a notice of municipal code violation under a sediment control ordinance, ordering FLM either to comply with drainage requirements or to remove the foundry sand.

         The Pursuit of Insurance Proceeds and Cost of Removal

         [¶10] After FLM received notices of violations from IDEM and the City, including orders to remove Black Mountain, FLM sought indemnification from IRI and IRI's insurer for the substantial amount of money it would cost to remove the sand from the Property. That litigation occupied the better part of the next decade, reaching this Court twice. See FLM, LLC v. Cincinnati Ins. Co., 24 N.E.3d 444 (Ind.Ct.App. 2014), on reh'g, 27 N.E.3d 1141 (Ind.Ct.App. 2015), trans. denied; FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d 1167 (Ind.Ct.App. 2012), trans. denied.

         [¶11] On July 16, 2013, the trial court overseeing the insurance litigation released to FLM $1.7 million in damages.[2] FLM recouped a portion of the award for its own damages, including funds for lost rent (totaling $495, 000), attorney fees (totaling $686, 741), and environmental consultant fees (totaling $9, 243.50).

         [¶12] FLM has done extensive research into the cost of removal of Black Mountain. It has learned the following:

• If contractors and/or projects willing to take the sand for reuse could be found, the removal would cost approximately $1.2 million. Despite intensive efforts, FLM has been unable to locate anyone willing to take the sand for reuse.
• Removal by disposal in a landfill will cost at least $2.3 million. This cost would require a commitment to dispose of all the sand-and pay the full $2.3 million-at once.
• Load-by-load removal of the sand would cost over $3.5 million.

         After recouping its own fees, FLM does not have sufficient funds to dispose of all the sand at a landfill or to remove it on a load-by-load basis.

         The City ...

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