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John C. & Maureen G. Osborne Revocable Family Trust v. Town of Long Beach

Court of Appeals of Indiana

May 30, 2017

John C. & Maureen G. Osborne Revocable Family Trust; Timothy J. and Anna Voortman; Christopher Lyons; and Duneland Development, LLC, Appellants/Cross-Appellees-Plaintiffs,
v.
The Town of Long Beach, Indiana; The Long Beach, Indiana Town Council; The Building Commission of the Town of Long Beach, Indiana; The Advisory Plan Commission of the Town of Long Beach; The Board of Zoning Appeals of the The Town of Long Beach, Indiana; Jane Starr Neulieb; Peter Byvoets; Robert Lemay; Larry Wall; John Wall; Joseph Jogmen; Patrick Cannon; Michael Gorman; and Aaron Tomsheck, all in their official capacities as members of the Long Beach, Indiana Town Council, Advisory Plan Commission, Board of Zoning Appeals, Building Commission, and Building Commissioner, [2] Appellees/Cross-Appellants-Defendants, and The Long Beach Community Alliance, Inc., an Indiana not-for-profit corporation; and James Neulieb, an Individual, Appellees/Cross-Appellants-Defendants.

         Appeal from the LaPorte Superior Court The Honorable Richard R. Stalbrink, Jr., Judge Trial Court Cause No. 46D02-1602-PL-204

          ATTORNEYS FOR APPELLANTS Matthew T. Albaugh Shawn M. Doorhy Faegre Baker Daniels LLP Indianapolis, Indiana

          ATTORNEYS FOR APPELLEE TOWN OF LONG BEACH, INDIANA [1] L. Charles Lukmann, III Charles F.G. Parkinson Julie A. Paulson Connor H. Nolan Harris Welsh & Lukmann Chesterton, Indiana

          ATTORNEYS FOR APPELLEE LONG BEACH COMMUNITY ALLIANCE, INC. Kurt R. Earnst Braje, Nelson & Janes, LLP Michigan City, Indiana Patricia F. Sharkey Environmental Law Counsel, P.C. Chicago, Illinois

          ATTORNEY FOR APPELLEE JAMES NEULIEB Gregory S. Colton Law Office of Gregory S. Colton Valparaiso, Indiana

          ATTORNEYS FOR AMICUS CURIAE, INDIANA ASSOCIATION OF CITIES AND TOWNS AND INDIANA MUNICIPAL LAWYERS ASSOCIATION Brian W. Welch Melissa J. Buckley Bingham Greenebaum Doll LLP Indianapolis, Indiana ATTORNEY FOR AMICUS CURIAE CONSERVATION LAW CENTER Jeffrey B. Hyman Conservation Law Center Bloomington, Indiana

          Kirsch, Judge.

         [¶1] John C. & Maureen G. Osborne Revocable Family Trust, Timothy J. & Anna Voortman, and Christopher Lyons (together, "Homeowners") each own a residence along the Lake Michigan shoreline in Long Beach, Indiana. Each Homeowner sought to construct a seawall due to concern about a possible breach of their respective septic systems by Lake Michigan waters. After building permits were issued to Homeowners for the seawalls, The Long Beach Community Alliance, Inc. ("LBCA")[4] and James Neulieb[5] ("Neulieb") each filed an administrative appeal of the building permits with the Board of Zoning Appeals of the Town of Long Beach ("BZA"), and, thereafter, stop work orders were issued, which prevented construction on the seawalls from proceeding. Homeowners and their contractor, Duneland Development, LLC ("Duneland" and, together with Homeowners, "Plaintiff Owners") filed in the trial court a twelve-count complaint for declaratory and injunctive relief ("the Complaint") against The Town of Long Beach, Indiana, the Town Council, the Building Commission, the Advisory Plan Commission, the BZA, certain individuals in their official capacities as members of the aforementioned municipal entities (collectively, "Town Defendants"), as well as LBCA and Neulieb. Thereafter, the Town Defendants, LBCA, and Neulieb each filed a motion to dismiss, which the trial court denied by orders on April 8 and April 19, 2016 (together, "the April Orders"). On July 5, 2016, the trial court issued an "Order Denying [Plaintiff Owners'] Motions for Injunctive Relief and Declaratory Judgment" ("the July 5 Order").

         [¶2] On July 29, 2016, Plaintiff Owners filed, pursuant to Indiana Appellate Rule 14(A) or 14(D), an appeal as of right of the July 5 Order, which Plaintiff Owners view as an interlocutory order. On or near the same time, LBCA and Neulieb, who view the July 5 Order as a final order that disposed of all claims, filed an appeal of the April 19 Order that denied their respective motions to dismiss. This court consolidated LBCA's and Neulieb's appeal with Plaintiff

         Owners' appeal.[6]

         [¶3] Numerous issues are raised by the consolidated appeal. We first address the following preliminary issue:

         I. Whether this court has subject matter jurisdiction to hear the cross-appeal issues raised by appellees LBCA, Neulieb, and Town of Long Beach concerning the trial court's denial of their respective motions to dismiss in the April Orders.

         We next address the following dispositive cross-appeal issue:

         II. Whether the trial court erred when it denied the motions to dismiss filed, separately, by Town Defendants, LBCA, and Neulieb, each of which asserted that the trial court lacked subject matter jurisdiction because Plaintiff Owners failed to exhaust their administrative remedies.

         [¶4] We reverse the trial court's April 8 Order that denied the motions to dismiss filed by Town Defendants, LBCA, and Neulieb.

         Facts and Procedural History

         [¶5] This litigation stems from Homeowners' desire to build a seawall on each of their respective lakefront residential lots, which are located on Lake Shore Drive in the Town of Long Beach, at the southern shore of Lake Michigan.[7]Homeowners maintain that storms and waves have damaged their properties and have put their septic systems in imminent peril of being breached; they assert that construction of the seawalls is necessary to avoid discharge of septic contents onto the beach and into Lake Michigan and to protect their properties. Homeowners also claim that, without the seawalls, their homes could be damaged to the point of being uninhabitable, and no new septic field could be constructed given the size of their lots. Before applying for building permits, the Homeowners filed applications in May and July, 2015 with the BZA, asking for a variance from the view protection ordinance found in the Town Code at 154.060.[8] The BZA held public hearings on the proposed development standards variances on August 13, October 13, November 10, November 24, and December 8, 2015.

         [¶6] During the public hearings, Homeowners presented testimony from a contractor, a surveyor, an engineer, and an appraiser regarding Homeowners' claim that there was an urgent need for the seawalls. Neulieb and LBCA, among others, posed oral and written objections to the seawalls asserting, among other things, that the seawalls would be located in fragile dune and floodplain locations and could accelerate or cause beach erosion of Lake Michigan beaches and dunes that, according to LBCA, "are held in trust for Long Beach residents as members of the public by the State of Indiana and as Long Beach homeowners by the Town of Long Beach, " as well as those beaches and dunes "which are owned by neighboring private property owners, including LBCA members." LBCA Br. at 22-23; LBCA Addendum at 30. In November 2015, Homeowners' engineer, in response to the erosion concerns, wrote a letter to the BZA stating that "[t]he seawalls as proposed will not adversely affect the surrounding areas" and "do not present [] erosion risks[.]" Appellants' App. Vol. II at 89-90. At the conclusion of the December 8, 2015 hearing, the BZA granted Homeowners' requested variance from the view protection ordinance, Long Beach Ordinance 154.060.[9] Id. at 56. The BZA's December 8, 2015 decision included findings that "construction of the proposed seawall[s] is an absolute necessity to avoid discharge of septic contents . . . as well as to protect the [Homeowners'] propert[ies]" and that "[t]he proposed design of the seawall[s] is the minimum design (size, location, height, etc.) necessary to prevent a septic discharge and other property damage." Id. at 97-98, 104-05, 111-12. No party appealed that decision.

         [¶7] On December 14, 2015, each of the three Homeowners filed an application with the Building Commission for a building permit for a proposed seawall. On December 30, 2016, the then-Building Commissioner, Aaron Tomsheck, approved the applications and issued a building permit to each of the three Homeowners ("Building Permits"). The next day, Homeowners commenced construction efforts, which continued for the next month and included bringing in equipment, purchasing steel sheet piling, excavating, and driving sheet piles into the ground.

         [¶8] On January 25, 2016, LBCA filed administrative appeals to the BZA, pursuant to Indiana Code section 36-7-4-918.1[10] and Long Beach Ordinance 154.153[11] challenging the legality of the three Building Permits issued on December 30, 2015. LBCA challenged the legality of the issuance of the three Building Permits on the basis that not all Long Beach ordinances had been complied with and Homeowners had not obtained all needed variances including those to comply with the following Long Beach Ordinances: 154.072 regarding accessory uses and structures; 154.112 regarding changes in dune topography; 154.091 regarding special BZA approval of construction within a regulated floodplain; Chapter 155 governing construction in floodplains, including specifically the requirements to obtain a floodplain permit and comply with the General Standards in 155.50; and Chapter 156 governing storm water management planning to avoid diversion of floodwater onto neighboring properties, acceleration of erosion, and sediment transport and disposition. Appellants' App. Vol. II at 174-215.

         [¶9] The same day, Neulieb also filed an administrative appeal challenging the three building permits, asserting that the permits were issued in violation of the side-yard setback requirement of Long Beach Ordinance 154.077, which requires that structures be placed no closer than six feet from the side property lines; the Homeowners' building plans indicated that their proposed seawalls would be built within one foot of the side property lines, contrary to the ordinance. Id. at 217-18.

         [¶10] On January 26, 2016, the then-Building Commissioner Aaron Tomsheck ("Tomsheck") issued a stop work order for each of the building permits pursuant to automatic stay provisions of Indiana Code section 36-7-4-1001(a) triggered by the filing of the administrative appeals.[12]

         [¶11] On February 2, 2016, Plaintiff Owners filed the Complaint in the trial court against the Town Defendants, LBCA, and Neulieb (together, "the Defendants"). Appellants' App. Vol. II at 46-82. The Complaint contained six counts for declaratory judgment and six counts for injunctive relief:

Count I: Declaratory judgment that the BZA lacked authority to consider LBCA's January 26, 2016 administrative appeal regarding the propriety of the building permits issued to Homeowners;
Count II: Declaratory judgment that LBCA lacked standing to file its administrative appeals;
Count III: Injunction to enjoin the BZA from taking any action on LBCA's administrative appeal;
Count IV: Declaratory judgment that the BZA lacked authority to consider Neulieb's January 26, 2016 administrative appeal regarding the propriety of the building permits issued to Homeowners;
Count V: Declaratory judgment that Neulieb lacked standing to file his administrative appeal;
Count VI: Injunction to enjoin the BZA from taking any action on Neulieb's administrative appeal;
Count VII: Declaratory judgment that the stop work orders (issued pursuant to Indiana Code section 36-7-4-1001(a) upon the filing of the administrative appeals) were invalid;
Count VIII: Injunction to enjoin Town Defendants from enforcing allegedly invalid stop work orders;
Count IX: Declaratory judgment that certain individually named defendants (Jane Starr Neulieb, Larry Wall, John Wall, Peter Byvoets, Robert Lemay, Patrick Cannon, Joseph Jogmen, and Michael Gorman) each had conflicts of interest with the Plaintiffs due to association with LBCA and were disqualified from participating in municipal activities relating to Plaintiffs' construction of their seawalls, including participating in BZA, APC, and Town Council proceedings related to the administrative appeals;
Count X: Injunction to enjoin defendants Jane Starr Neulieb Larry Wall, John Wall, Peter Byvoets, Robert Lemay, Patrick Cannon, Joseph Jogmen, and Michael Gorman, from participating in their official capacities in any municipal activities relating to Plaintiffs' construction of their seawalls, including participating in the administrative appeals or the appointment of new or replacement members on the BZA;
Count XI: Injunction to enjoin the Defendants from communicating with the BZA regarding proceedings related to the construction of seawalls or to the building permits, if communications would violate Town of Long Beach Zoning Ordinance § 154.153(B); and
Count XII: Injunction to enjoin the Defendants from unlawfully interfering with the construction of Homeowners' seawalls.

See Appellants' Br. at 34-35 (summarizing counts). The next day, Plaintiff Owners filed an Application for Temporary Restraining Order and Preliminary Injunction ("Application").

         [¶12] At the BZA's February 9, 2016 meeting, three members[13] of the BZA recused themselves from considering the administrative decision appeals filed by LBCA, citing a possible conflict of interest pursuant to Indiana Code section 36-7-4-909(A)(1). Appellants' App. Vol IX at 89-93 (transcript reflecting that Michael Gorman, John Kocher, and Meg Kanyer recused themselves); see also LBCA Addendum at 24. In March 2016, individuals were appointed to replace those who had recused themselves, pursuant to Indiana Code section 36-7-4-907 and -909 and Long Beach Ordinance 154.153. Id. at 157.

         [¶13] On February 26, 2016, LBCA filed with the trial court a motion to dismiss, asserting that the Plaintiff Owners' lawsuit sought to prevent LBCA and its members from exercising their constitutionally protected rights to petition for review of the building permits, and, therefore, it constituted a Strategic Lawsuit Against Public Participation ("SLAPP") brought to deter public opposition to the proposed seawalls. LBCA asked the trial court to dismiss the Complaint pursuant to Indiana's Anti-SLAPP statutes, Indiana Code chapter 34-7-7. LBCA's motion to dismiss also sought dismissal of the Complaint (1) pursuant to Trial Rule 12(b)(6) for failure to state an actionable claim against LBCA or any other defendant and (2) for lack of jurisdiction due to the Plaintiff Owners' "attempt to circumvent [the] pending administrative proceeding" and failure to exhaust administrative remedies as required by Indiana Code 36-7-4-1604 and 36-7-4-1016(a). LBCA App. Vol. III at 2.

         [¶14] Neulieb also filed a motion to dismiss the Complaint, similar in substance to that filed by LBCA, asking the trial court to dismiss the Complaint pursuant to Indiana's Anti-SLAPP statutes and alleging that the trial court lacked jurisdiction over the subject matter due to Homeowners' failure to exhaust administrative remedies.

         [¶15] On March 14, 2016, the Town Defendants filed a motion to dismiss pursuant to Indiana Trial Rule 12(B)(1) and 12(B)(6). With regard to T.R. 12(B)(1), Town Defendants argued that the trial court lacked subject matter jurisdiction because the Homeowners had failed to exhaust their administrative remedies. Town's App. Vol. II at 7-9, 14-17. With regard to T.R. 12(B)(6), the Town Defendants argued that the Complaint failed to state a cause of action against certain Town Defendants, including the Town Council, the Advisory Plan Commission, Jane Starr Neulieb, and Patrick Cannon. Id. at 8-9, 17-20.

         [¶16] Meanwhile, in the BZA proceedings, Tomsheck issued on March 16, 2016, Certificates of Imminent Peril and rescinded the stop work orders, but the next day, Tomsheck issued a second set of stop work orders, one for each property, on the basis that "the plans submitted for the seawall[s] do not comply with the 6 ft. side yard setbacks required in the R-2 zone[, ]" and the seawalls required an additional variance from the side-yard setback ...


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