Property Rights in the Dock: Siwinskis vs. Ogden Dunes

October 17, 2011

For the use of the membership only (808 words)

When the Indiana State Supreme Court behaves as a micro legislature, setting aside Rule of Law to pursue its notion of the sublime, it opens itself to political criticism — and here comes some on the issue of property rights.

In a myopic ruling in Siwinski vs. the town of Ogden Dunes, Justice Steven David led the court in deciding that homeowners couldn’t lease their property even short-term if located in an area zoned for single-family residences.

Justice David, you will recall, was the Mitch Daniels appointee who led the majority in arguing that Hoosiers had no right to resist police entering their homes, even if that entry was later determined unlawful.

It is not hyperbolic, then, to argue there is a tendency on this court to treat private property as a mere abstraction. That contention was put to a member of the Indiana Policy Review Foundation, an attorney with a national reputation in real-estate law. The answer:

“The problem in its broadest sense is that judges such as Justice David do not approach cases involving property rights with any sense that a liberty interest is implicated. If a perceived ‘speech’ or ‘privacy’ issue is involved, their radars automatically pick up all sorts of limiting penumbras, and they immediately launch into their balancing of ‘preferred’ rights versus plebeian ones. For our Indiana judges, property interests may occasionally rise to the level of ‘rights’ but in their opinion should be approached with the presumption that they are subject to ‘reasonable’ regulation (i.e., regulation that suits their fancies). Reverse the presumption and you would get a vastly different result.”

For certain, no radar lit up for the town attorney or zoning board of Ogden Dunes. They read the ordinance to mean that single-family homes couldn’t be rented out for periods of fewer than even 30 days. The town considered itself sullied in the amount of $40,000, the fine it levied on Steven and Lauren Sierpinski for renting out their home five times. A trial court ordered them to pay up.

An appellate court unanimously decided that this interpretation was dangerously vague. The Supreme Court disagreed, though, with only a Bayh appointee, bless him, deferring to the appellate decision, to wit:

“. . . the renters of the Sierpinski’s’ property used the house for eating, sleeping, and other activities typically associated with a residence or dwelling place. Nothing in the designated evidence established that any commerce or other activities not associated with a residence were ever conducted on the Sierpinski’s’ property. Nor did the evidence show that, at any time, the property was occupied by more than a single family simultaneously. Under the trial court’s overly broad construction of the ordinance, the Siwinskis would be prohibited from, and subject to substantial fines for, such things as having weekend guests or allowing family members to use the property while they were away as the property would then not be occupied exclusively as a residence by one family.”

Most important to our point here, the appellate court noted that when a ruling on a right so critical as property is ambiguous it should be read to favor the property owner and not be extended by implication: “Because zoning ordinances limit the free use of property, they are in derogation of the common law and must be strictly construed.”

Investors, i.e., wealth and job creators, hate vagueness. And the Supreme Court’s derogation of property rights comes as the real-estate market works to salvage the value locked in foreclosed homes by leasing them. Justice David, of course, works in the opposite direction. His position has cost Indiana residents more than can be accurately calculated in an economy where home ownership has fallen to its lowest point since the Depression.

For outside elite enclaves such as Ogden Dunes, young families and the retired can keep themselves afloat renting homes in single-family districts. These include the moderately priced suburbs where much of Indiana’s middle-class lives. And we Siwinskis not only lose actual rental income but speculative value in future rental income, which in turn reduces our property’s assessment for the purposes of sale, mortgage and taxation.

Finally, there are the real-estate developments that will never materialize because the court has made them unfeasible if not illegal. In sum, Judge David’s opinion is a billboard at the Indiana border reading, “Don’t Invest Here; Your Property Won’t Be Safe.”

And unlike the lost Solyndra millions, there was no press conference detailing the malfeasance. At the moment the clerk certified the court’s ruling, the money simply, quietly disappeared from the Indiana economy — poof!

But somebody will hold a press conference, namely Justice David announcing his name on the 2012 ballot for retention. At that time, voters should carefully review all recent Indiana Supreme Court “opinions.” And please know that the word is used here in its political rather than legal sense. — Craig Ladwig


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