Elda Corp. v. Holliday, LLC

171 N.E.3d 124

ELDA CORPORATION and Anderson Mounds Theater, LLC, Appellants-Defendants,

v.HOLLIDAY, LLC, Appellee-Plaintiff.

Court of Appeals Case No. 20A-PL-2316

Court of Appeals of Indiana.

FILED May 17, 2021

Attorney for Appellants: Jonathon T. Cook, Anderson, Indiana

Attorney for Appellee: Nathaniel R. Sinn, Cleveland, Ohio

Altice, Judge.

Case Summary

[1] Elda Corporation (Elda) and Anderson Mounds Theater, LLC (Anderson Mounds) (collectively, Appellants) appeal the trial court's grant of partial summary judgment in favor of Holliday, LLC (Holliday), which determined that Holliday was entitled to use various improvements on a parcel of land and was not obligated to pay rent to Appellants.

Appellants contend that they are entitled to an order of ejectment against Holliday for immediate possession of the land, rent, and damages.

[2] We affirm.

Facts and Procedural History

[3] Elda became the record owner of approximately thirty acres of real property (the Land) in Madison County in 1955. In 1963, Elda granted a ground lease to Simon Property Group (Simon) that included buildings and paved parking areas (the Improvements Parcel). The monthly rent under the ground lease was $70,236.80, and Simon operated Mounds Mall on the property. Thereafter, in 1993, Simon transferred its interest in the ground lease and the Improvements Parcel to Bayview Malls, LLC (Bayview). Bayview subsequently transferred those interests to Anderson Mounds.

[4] From the outset, the Improvements Parcel was severed and identified separately from the Land by its own property tax parcel number. The parcels have been historically taxed separately as real property, and the Improvements Parcel has always been assessed to the ground lease tenant with a note stating, "Improvements on Leased Ground." Appellant's Appendix Vol. II at 29-31.

[5] At some point, Anderson Mounds failed to pay property tax on the Improvements Parcel. That parcel went up for tax sale, and IBYH, LLC (IBYH) purchased the Improvements Parcel at a tax sale on April 8, 2019. IBYH subsequently transferred the sale certificate to Holliday.

[6] At no point did Elda challenge the tax sale, and after the redemption period expired, Holliday applied for—and received—a tax deed to the Improvements Parcel on October 3, 2019. The tax sale certificate noted that the purchase was for "Improvements ONLY." Id. at 7, 18. The trial court subsequently corrected a clerical error on the certificate and ordered the county auditor to execute and deliver a tax deed to Holliday for the Improvements Parcel. The order also provided that "the tax deed ... is an estate in fee simple, free and clear of all liens and encumbrances created or suffered before or after the tax sale , except those liens granted priority under federal law, and liens of the state or any political subdivision thereof...." Appendix Vol. II at 26 (emphasis added).

[7] On November 13, 2019, Elda served Holliday with a "Notice to Quit, Notice of Default, Notice of Termination & Demand." Id. at 7-8, 20, 34-35. The notices demanded that Holliday either agree to the terms of the previous ground lease or "vacate the premises." Id. Elda claimed that Holliday was in unlawful possession of its land, beginning October 2019.

[8] As Elda threatened legal action against Holliday if it did not comply, Holliday sued Elda for a declaratory judgment on March 25, 2020. Among other things, Holliday requested the trial court to determine that Elda had no right to collect rent from Holliday or eject Holliday from the Land. Holliday claimed that the Improvements Parcel tax deed vested in it an estate in fee simple absolute, free and clear of the ground lease and all other encumbrances. Elda then filed a counterclaim seeking to eject Holliday from the premises and requested damages for Holliday's alleged wrongful occupation of the Land.

[9] On July 2, 2020, Elda filed a motion for "final partial summary judgment," requesting that the trial court enter an order of ejectment against Holliday, and to award attorney's fees and damages. Appellant's Appendix Vol. II at 46. Elda asserted that the ground lease was still valid and that Holliday has refused to pay rent for its continued occupation of the Land while operating on the Improvements Parcel.

[10] Holliday opposed Elda's motion and subsequently filed its own motion for summary judgment, requesting that the trial court determine as a matter of law that it owes no rent to Elda and that Elda lacks standing to seek ejectment. Holliday claimed that it was not bound by the previously recorded ground lease because the Improvements Parcel was severed from the Land, and it owned that parcel in fee simple absolute.

[11] Following a hearing on the pending motions, the trial court entered partial summary judgment in Holliday's favor on November 24, 2020, concluding that the Improvements Parcel was severed and taxed separately from the Land and that Holliday was the fee simple owner of the Improvements Parcel because Elda failed to challenge the tax sale and did not pursue any redemption rights. Thus, the trial court determined that Elda had no right to eject Holliday from the Land or collect rent for Holliday's exercise of its rights under the Improvements Parcel. In its order, the trial court included the following findings of fact and conclusions of law:

When ELDA authorized Simon to construct the Improvements, a new component of the real estate was created, a set of appurtenances which are collectively known as the Improvements. Simon and its various successors were constrained in their ability to use the Improvements by a contract with ELDA, the ground lease. Appurtenances and fixtures are considered part of the real estate.... I.C. 6-1.1-10-37(b) includes in the definition of ‘real property’ ‘a building or fixture situated on land located within this state.’ The significance of the definition is that all such interests, including improvements, are assessed as real estate....

...

There is no privity of contract between ELDA and Holliday. Crucially, in the oral argument of the summary judgment motions, ELDA agreed that the tax deed terminated the prior ground lease by operation of law. Thus, it appears ELDA has abandoned any potential privity of estate argument and that the ground lease was a covenant running with the land. ELDA has not argued that the ground lease runs with the land....

ELDA simply contends that, as the Improvements rest on the Ground, Holliday ipso facto is occupying the Ground. However, the Improvements are also part of the real estate in this case, one that has been separately created, and separately owned for over fifty years. The relationship between the prior owners of the Improvements and ELDA had been defined by a ground lease.

...

Normally, a building would be part of the land, and would thus, be owned by the landowner. However, the court concludes that the land and a building and/or other appurtenances, such as the improvements here, can be owned separately. Indeed, this is something that ELDA concedes as it agrees that Holliday owns the Improvements in ‘fee simple absolute.’

Certainly, the owner of a right relative to land may exercise that right without being deemed a trespasser on the land or impermissibly using the land. Such is the case with exercising an easement. The owner of an easement has right to access the land for purpose of utilizing that easement.... The owner of mineral or oil rights has a right to access.

[T]he circumstances of this case, in light of ELDA's voluntary concession that the ground lease is no more, indicate that the statute did clear ELDA's claim for ground rent.

How could ELDA have defended its interest and avoided the current predicament? .... In the agreed absence of privity of estate, ELDA could have paid the taxes on the Improvements and sought recompense from its ground lessee; or redeemed the Improvements. It did neither.

...

In summary, the parties agree that Holliday owns the Improvements in fee simple absolute and that ELDA has no ground lease with Holliday. As Holliday owns the Improvements, the court holds that it is entitled to use them. There is no ground lease to circumscribe Holliday's ability to use its property without payment to ELDA. The ground lease is no more because ELDA slept.

The court finds and orders as a matter of law that Holliday is not obligated to pay rent to ELDA for occupying and using the improvements.

The court further finds and orders as a matter of law that ELDA may not bring an ejectment action against Holliday.

Appendix Vol. II at 7-16 (emphasis in original). Elda now appeals.

Discussion and Decision

I. Standard of Review

[12] Our standard of review on summary judgment is well settled:

The party moving for summary judgment has the burden of making a prima facie showing that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012). Once these two requirements are met by the moving party, the burden then shifts to the non-moving party to show the existence of a genuine issue by setting forth specifically designated facts. Id. Any doubt as to any facts or inferences to be drawn therefrom must be resolved in favor of the non-moving party. Id. Summary judgment should be granted only if the evidence sanctioned by Indiana Trial Rule 56(C) shows there is no genuine issue of material fact and that the moving party deserves judgment as a matter of law.

A House Mechanics, Inc. v. Massey, 124 N.E.3d 1257, 1262 (Ind. Ct. App. 2019) (quoting Goodwin v. Yeakle's Sports Bar and Grill, Inc., 62 N.E.3d 384, 386 (Ind. 2016) ). We also note when, as here, the trial court enters findings of fact and conclusions of law in its summary judgment ruling, they aid our review, but they do not bind us. Supervised Estate of Kent, 99 N.E.3d 634, 637 (Ind. 2018). Nor is our standard of review or analysis altered by the parties’ filing of cross-motions for summary judgment...