INDIGREEN, LLC v. RENU RECYCLING, INC.
ORDER denying Deft's 45 Motion for Partial Summary Judgment (see Order). Signed by Magistrate Judge Tim A. Baker on 8/14/2013 c/m. (SWM) Modified on 8/14/2013 (SWM).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
RENU RECYCLING, INC.,
ORDER ON DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT
The Smurfit-Stone Paper Mill in Carthage, Indiana consists of eighteen buildings on
nearly 200 acres of industrial and agricultural land. It operated as a paper mill from 1890 until it
closed in 2005. In late 2008, Plaintiff IndiGreen, LLC purchased the property for $50,000, and
hired Defendant Renu Recycling, Inc. to salvage the property. In December 2009, Renu
employees allegedly were performing salvage work on the property when a fire broke out in the
machine room building destroying the building and its contents. IndiGreen sued Renu for
negligence, and Renu now moves for partial summary judgment on the proper measure of
damages that may be awarded. [Docket No. 45.]
In Indiana, the proper measure of damages for injury to real estate depends on whether
the injury is permanent. “[I]f the injury is permanent, the measure of damages is the market
value of the real estate before the injury, less the market value of the real estate after the injury.”
Spesco, Inc. v. Gen. Elec. Co., 719 F.2d 233, 240 (7th Cir. 1983) (citing Gen. Outdoor Adver.,
Inc. v. LaSalle Realty Corp., 218 N.E.2d 141, 150 (Ind. 1966)). “[I]f the injury to the real estate
is not permanent, then the measure of damages is the cost of restoration.” Id. A permanent
injury is generally an injury that exceeds the cost of restoration. Baumholser v. Amax Coal Co.,
630 F.2d 550, 554 (7th Cir. 1980) (citing Gen. Outdoor, 218 N.E.2d at 151).
The parties have stipulated that restoring the machine room will cost over $2.6 million.
[Docket No. 47 at 2.] To determine whether the injury to the machine room exceeds the cost of
restoration, the fair market value must be determined. According to Renu, the fair market value
of the entire property before the injury—nearly 200 acres of industrial and agricultural land that
includes eighteen buildings—is equivalent to the $50,000 purchase price. Considering that only
the machine room building was destroyed, Renu contends that the fair market value of the
machine room building is less than $50,000, and therefore the injury is permanent and no more
than $50,000 is owed to IndiGreen if Renu is found negligent. But as IndiGreen points out, the
purchase price of the property is not conclusive as to the fair market value.
IndiGreen cites several factors that indicate it purchased the property well below fair
market value. For example, the $50,000 purchase price by itself does not reflect that IndiGreen
agreed as part of the purchase to release, indemnify, and covenant not to sue the seller for
environmental liabilities. [Docket No. 47 at 2.] Additionally, even Renu acknowledges that the
transaction price was not “normal” because the property no longer fit within the seller’s longrange capital plans and the seller was eager to sell the property. [Docket No. 50 at 5.]
Moreover, one month after IndiGreen purchased the property, it appraised for approximately
$4.5 million. [Docket No. 49-2 at 6.] Accordingly, there are genuine issues of material fact as to
the fair market value of the property and the machine room building.
Renu also argues that IndiGreen should not receive a windfall that permits it to restore
the machine room building because it was not worth over $2.6 million prior to the fire. As
discussed, there are genuine issues of material fact about the fair market value and condition of
the machine room building prior to the fire that must be resolved by a jury. At this stage, it is
premature for the Court to determine whether over $2.6 million in damages amounts to a
windfall. For these reasons, Renu’s motion for partial summary judgment [Docket No. 45] is
Tim A. Baker
United States Magistrate Judge
Southern District of Indiana
John M. Choplin II
NORRIS CHOPLIN & SCHROEDER LLP
David A. Eisenberg
MUCH SHELIST DENEBERG AMENT & RUBENSTEIN
Scott R. Fradin
MUCH SHELIST DENENBERG AMENT & RUBENSTEIN
James Leo McKnight
Thomas & Kampsen
300 S. Riverside Plaza
Chicago, IL 60606
Martin J. O'Hara
MUCH SHELIST, P.C.
Thomas A. Pastore
THOMAS PASTORE, PC
Bradley J. Wombles
NORRIS CHOPLIN & SCHROEDER
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