Billboard vs. city: winner takes all

Law of the Land

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Feb. 17, 2010

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Law of the Land

Tara-Nicholle Nelson
Inman News

In the case Burkhart Advertising Inc. v. City of Fort Wayne, Burkhart leased property on which to install a billboard. The 10-year lease provided that, if Burkhart were forced to remove its billboard due to condemnation, it would be entitled to damages from the governmental entity taking the property.

The lease also provided that if the property's owner elected to construct a permanent building on the property, the owner had the right to terminate the lease and refund Burkhart Advertising Inc. any prepaid rents, so long as construction commenced within 90 days. (If construction did not commence within that time period, the lease gave Burkhart the right to reinstall its billboard.)

The owner also had the right to cancel the lease on the occurrence of other events outside its control.

Five years into the lease, the property's owner initiated plans to develop an office park on the property and applied for zoning and construction permits from the city. The city approved the property owner's development plans on the condition that Burkhart's billboard be removed.

The property owner then notified Burkhart that the billboard lease was being terminated and, when Burkhart did not remove the billboard, filed suit to force the billboard's removal.

Burkhart, in turn, sued the city, claiming that the city had violated the Fifth Amendment of the Constitution by improperly "taking" its property (via conditioning zoning approval on the billboard's removal) and had damaged Burkhart by interfering with its contract with the property owner.

Although the property owner soon abandoned its plans to develop the office park, Burkhart continued its lawsuit against the city. At trial, the court ruled in favor of the city, pointing out that the billboard was still in place and opining that if the property owner were again to apply for permission to build on the property, the only remedies available to Burkhart are those provided under contract law and the lease with property owner.

In a published opinion, the Court of Appeals of Indiana upheld the lower court's ruling. Because the billboard lease allowed for the property owner to terminate the lease for construction of a permanent building, the court explained, Burkhart would have been required to remove the billboard whether or not the city made the billboard's removal a condition of its zoning and building permits.

Accordingly, Burkhart did not even possess a compensable interest in the property, as required to make a valid claim under the Fifth Amendment. Additionally, the city did not interfere with or alter the terms of Burkhart's lease, which was a lease on the advertising company's own boilerplate form of contract.

As a result, the Court of Appeals ruled, the city did not improperly take Burkhart's property, and the trial court's ruling was affirmed.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.

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