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Grdinich v. Plan Commission for Town of Hebron

Court of Appeals of Indiana

February 28, 2019

Jon R. Grdinich and JRG, LLC, an Indiana Limited Liability Corporation, Appellants-Defendants-Counterplaintiffs-Third-Party Plaintiffs,
v.
Plan Commission for the Town of Hebron, Indiana, Appellee-Plaintiff-Counterdefendant, and Town of Hebron, Indiana, and Town Council for the Town of Hebron, Indiana, Appellees-Third-Party Defendants

          Appeal from the Porter Superior Court The Honorable Roger V. Bradford, Judge Trial Court Cause No. 64D01-1611-PL-10626

          ATTORNEYS FOR APPELLANTS William W. Gooden Michael P. Maxwell, Jr. Kristin A. McIlwain Clark Quinn Moses Scott & Grahn LLP Indianapolis, Indiana

          ATTORNEY FOR APPELLEES Sheri Bradtke McNeil Kopka Pinkus Dolin PC Crown Point, Indiana

          CRONE, JUDGE.

         Case Summary

         [¶1] The Plan Commission for the Town of Hebron, Indiana ("the Plan Commission"), initiated the underlying action by filing a complaint for a mandatory injunction against Jon R. Grdinich and JRG, LLC, an Indiana Limited Liability Corporation (collectively "Grdinich"), asking the trial court to order Grdinich to remove a pond from his property. The proceedings ultimately led to Grdinich's filing of a second amended counterclaim against the Plan Commission and a third-party complaint against the Town of Hebron, Indiana, and the Town Council for the Town of Hebron, Indiana (collectively "the Town"), which contained six counts relevant to the pond and one count of inverse condemnation based on the existence of an underground drainage pipeline on Grdinich's property. The Plan Commission and the Town (collectively "Appellees") moved to dismiss Grdinich's second amended counterclaim and third-party complaint for failure to exhaust administrative remedies and state claims upon which relief can be granted. The trial court issued an order granting their motion to dismiss.

         [¶2] Grdinich now appeals the order dismissing his second amended counterclaim and third-party complaint, arguing that Counts 1-5 and 7 do not require exhaustion of administrative remedies and that they state claims for which relief can be granted.[1] We conclude that the trial court improperly dismissed Grdinich's claims based on the pond, but that the inverse condemnation claim was properly dismissed. Accordingly, we affirm in part, reverse in part, and remand.

         Facts and Procedural History

         [¶3] In November 2016, the Plan Commission filed a complaint for mandatory injunction against Grdinich with the following allegations: Grdinich requested and received a building permit from the Town to build a house on property in Hebron; the property is located in an "R1" residential district; Grdinich built a house and a pond on the property; the Hebron Municipal Code of Ordinances ("the Ordinance") does not permit a pond in an R1-zoned district unless the pond meets certain requirements; and Grdinich's pond does not meet those requirements. Appellants' App. Vol. 2 at 15-16. The Plan Commission requested an order requiring Grdinich to immediately remove the pond in its entirety.

         [¶4] In January 2017, Grdinich filed an answer, a counterclaim against the Plan Commission, and a third-party complaint against the Town. Appellees' App. Vol. 2 at 15. In May 2017, Grdinich filed an amended counterclaim and third-party complaint, which contained five counts: Count 1, a claim for declaratory judgment that the pond is in compliance with and does not violate the Ordinance; Count 2, a preliminary and permanent injunction restraining Appellees from removing the pond; Count 3, a claim of equitable estoppel seeking a judgment estopping Appellees from taking any action to restore the pond to its prior condition or otherwise modify the pond; Count 4, a 42 U.S.C. § 1983 claim alleging that the Plan Commission's action regarding the pond was done without proper and fair notice to Grdinich, thereby depriving him of due process; and Count 5, an inverse condemnation claim alleging that Appellees own an underground storm drainage pipeline on his property for which they have no easement and for which he has not received just compensation. Appellants' App. Vol. 2 at 30, 32, 34, 36, 37.

         [¶5] In June 2017, Appellees filed a motion to dismiss Grdinich's amended counterclaim and third-party complaint, arguing that he failed to exhaust administrative remedies with the Hebron Board of Zoning Appeals ("BZA") and that the amended counterclaim and third-party complaint were unsupported by sufficient operative facts to state claims upon which relief can be granted. Id. at 55-58. Following a hearing, [2] in September 2017, the trial court issued an order granting Appellees' motion to dismiss.

         [¶6] In October 2017, Grdinich filed a second amended counterclaim and third- party complaint, in which he again alleged Counts 1 through 5 and added two new counts related to the pond: Count 6, a claim for declaratory judgment that he exhausted his administrative remedies; and Count 7, a promissory estoppel claim seeking a judgment estopping Appellees from taking any action to restore the pond to its prior condition or otherwise modify the pond. Id. at 113, 115. In the second amended counterclaim and third-party complaint, Grdinich alleged the following facts. When he bought the property in February 2015, there was a preexisting unimproved half-acre pond. Id. at 88. He applied for and received a building permit from the Town to construct his residence and improve the pond. Id. at 88. He completed the residence and improvement to the pond and was issued a certificate of occupancy from the Town in September 2015. Id. at 90. In April 2016, the Town issued a notice of building violation to Grdinich ordering him to return his property to its original grade. Id. at 92-93. That same month, Grdinich also received a letter from the Plan Commission informing him that the pond was a non-permitted use and instructing him to restore his property to its condition prior to the construction of the pond. Id. at 93.

         [¶7] In November 2017, Appellees filed a motion to dismiss the second amended counterclaim and third-party complaint. Id. at 132; Appellees' App. Vol. 2 at 64 (memorandum in support of motion). Grdinich filed a response. Appellants' Supp. App. Vol. 2 at 3. In April 2018, following a hearing, the trial court issued an order granting Appellees' motion to dismiss as to all counts. This appeal ensued.

         Discussion and Decision

         [¶8] Grdinich contends that the trial court erred in granting Appellees' motion to dismiss as to Counts 1-5 and 7. As a preliminary matter, we note that Appellees asserted in their motion to dismiss that Grdinich's claims required dismissal for failure to exhaust administrative remedies pursuant to Indiana Trial Rule 12(B)(1) and for failure to state claims upon which relief can be granted pursuant to Trial Rule 12(B)(6). In the past, Indiana courts treated the failure to exhaust administrative remedies as a question of subject matter jurisdiction, and motions to dismiss on this basis were brought under Trial Rule 12(B)(1). Appellees took this route in their motion to dismiss. However, our supreme court has indicated that failure to exhaust administrative remedies constitutes procedural error that does not implicate the trial court's subject matter jurisdiction. First Am. Title Ins. Co. v. Robertson, 19 N.E.3d 757, 760 (Ind. 2014), amended on reh'g on other grounds, 27 N.E.3d 768 (Ind. 2015); see also Ellis v. State, 58 N.E.3d 938, 940-41 (Ind.Ct.App. 2016), trans. denied; Alkhalidi v. Ind. Dep't of Corr., 42 N.E.3d 562, 565 (Ind.Ct.App. 2015); Rudisel v. State, 31 N.E.3d 984, 988 (Ind.Ct.App. 2015); but see D.A.Y. Inv. LLC v. Lake Cty., 106 N.E.3d 500, 506 (Ind.Ct.App. 2018) ("Failure to exhaust administrative remedies is therefore a defect in subject matter jurisdiction."), trans. denied; John C. & Maureen G. Osborne Revocable Family Tr. v. Town of Long Beach, 78 N.E.3d 680, 695-96 (Ind.Ct.App. 2017) ("[F]ailure to exhaust administrative remedies deprives the trial court of subject matter jurisdiction."), trans. denied. Appropriately, on appeal neither party approaches the failure to exhaust administrative remedies as a question of subject matter jurisdiction. However, neither party makes any attempt to suggest which Trial Rule 12(B) subsection, if any, applies to a motion to dismiss for failure to exhaust administrative remedies, and neither party provides a standard for appellate review of a trial court's grant of a motion to dismiss for failure to exhaust administrative remedies.

         [¶9] We observe that Trial Rule 12(B)(1) and 12(B)(6) motions to dismiss are treated differently at both the trial level and the appellate level. For instance, in ruling on a motion to dismiss for lack of subject matter jurisdiction under Trial Rule 12(B)(1), "the trial court may consider not only the complaint and motion but also any affidavits or evidence submitted in support." City of Fort Wayne v. Sw. Allen Cty. Fire Prot. Dist., 82 N.E.3d 299, 303 (Ind.Ct.App. 2017), trans. denied (2018). The appellate standard of review is dependent on what happened in the trial court. Id. Thus, when exhaustion of ...


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