CADDNAR

[CITE: Goldasich v. Hites, et al., 11 CADDNAR 165 (2007)]

 

[VOLUME 11, PAGE 165]

 

Cause #: 04-198F

Caption: Goldasich v. Hites, et al.

Administrative Law Judge: Lucas

Attorneys: Kallenbach; Mandeville; pro se (Millers)

Date: June 8, 2007

 

FINAL ADMINISTRATIVE JUDGMENT

Item (1) Larry Goldasich has an administrative judgment against Carl Hites in the amount of $7,125. 

Item (2) Larry Goldasich has an administrative judgment against Allen Miller and against Debbie Miller (also known as Deborah Miller) in the amount of $7,125.  This amount is joint and several with the judgment awarded against Carl Hites and described in Item (1).

Item (3) In addition to the amount described in Item (1), Larry Goldasich has an administrative judgment against Carl Hites in the amount of $1,000.  This amount is an individual liability of Carl Hites.

Item (4) Larry Goldasich has an administrative judgment and is entitled to forfeiture of the bond, posted with the Department of Natural Resources under the Timber Buyers Act on behalf of Carl Hites, against the Western Surety Company in the amount of $2,375.

Item (5) The recovery to which Larry Goldasich is entitled under this administrative judgment, apart from subsequent costs or interest, is in the total amount of $8,125.

Item (6) Carl Hites and the Western Surety Company are entitled to indemnification from Allen Miller and Debbie Miller, jointly and severally, for amounts which are paid to Larry Goldasich under Item (1), Item (3) and Item (4). 

Item (7) In addition to the indemnification described in Item (6), Carl Hites has an administrative judgment against Allen Miller and Debbie Miller, jointly and severally, in the amount of $2,000. 

Item (8) This administrative judgment addresses all issues of damage and responsibility over which the Natural Resources Commission has jurisdiction in this proceeding, and, after completion of the opportunity for judicial review under IC 4-21.5, may be enforced in a civil proceeding as a judgment.

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

 

[VOLUME 11, PAGE 166]

 

A. Statement of the Case and Jurisdiction

1. On October 26, 2004, Larry Goldasich (“Goldasich”) by his attorney initiated the proceeding when he filed a “Complaint” with the Natural Resources Commission (the “Commission”).  In the complaint, Goldasich outlined a claim against Carl Hites (“Hites”) and against his surety, Western Surety Company (“Western Surety”). The Complaint also sought relief against Allen Miller (“A-Miller”) and Debbie Miller, also known as Deborah Miller (“D-Miller”).  A-Miller and D-Miller are collectively referred to as the “Millers”. 

 

2. Goldasich’s claim is governed procedurally by IC 4-21.5 (sometimes referred to as the “Administrative Orders and Procedures Act” or “AOPA”) and rules adopted by the Commission at 312 IAC 3-1 to assist with its implementation of AOPA.

 

3. The regulation by the Department of Natural Resources (the “DNR”) of timber buyers and other persons associated with the enterprise of timber harvesting is provided in IC 25-36.5 (the “Timber Buyers Act”).

 

4. Goldasich contended Hites harvested approximately 40 trees on property owned by Goldasich in the fall of 2003 (the “timber harvest”) at the corner of County Road 900 North and County Road 100 West in Jasper County, Indiana (the “subject property”) and that the Millers approved the logging even though they did not own the subject property and were not authorized to give Hites approval for the timber harvest.

 

5. Hites is registered as a “timber buyer” under the Timber Buyers Act.  IC 25-36.5-1-2.

 

6. Every person registered as a timber buyer is required by IC 25-36.5-1-3 to post a bond or other appropriate surety to provide compensation to a timber grower if the timber buyer:

(a) fails to pay when due any amount due a timber grower for timber purchased;
(b) fails to pay legally determined damages for timber wrongfully cut by a timber buyer or his agent; or,
(c) commits any violation of the Timber Buyers Act.

 

7. Under the Timber Buyers Act, Western Surety is the surety for Hites and has posted a $7,000 bond with the DNR.

 

8. In the Complaint, Goldasich sought monetary damages for the devaluation of the subject property resulting from the timber harvest, punitive damages for conversion and trespass, and the reimbursement of attorney fees from Hites and the Millers.  Goldasich also sought forfeiture from Western Surety of the surety bond posted with the DNR under the Timber Buyers Act.

 

9. Personal service was made upon Hites, Western Surety, A-Miller and D-Miller.

 

10.  On February 27, 2006, Hites and Western filed a “Crossclaim” against the Millers in which they contended the timber harvest was authorized by the Millers on the subject property through the Millers’ misrepresentations to Hites and through their negligence.  The Crossclaim seeks to have the Millers indemnify Hites and Western Surety.

 

[VOLUME 11, PAGE 167]

 

11. The Commission is the “ultimate authority” for the Timber Buyers Act and for this proceeding under AOPA.  IC 14-10-2-3.

 

12. The Commission has jurisdiction over the subject matter and jurisdiction over the person of the parties.

 

B. Evidence at Hearing

 

13. Stephen Lucas was appointed administrative law judge for the Commission. He presided over a hearing that was conducted in Indianapolis on April 3, 2007.  A period was provided until May 3, 2007 for a party to file any post-hearing brief.  All of the parties exercised the opportunity, and a “Response to Claimant’s Extent of Damages Trial Brief” was also filed by Hites and Western Surety on May 15, 2007.  The proceeding is ripe for disposition.

 

14. D-Miller did not participate in the hearing.  A “Final Order of Default against Debbie Miller” was entered on May 14, 2007.  The default applied as to any issue of liability or responsibility by a party against D-Miller but did not determine damages against D-Miller and in favor of another party.  The default specified that the extent of D-Miller’s responsibility for damages would be determined from the evidence adduced at the hearing of April 3, 2007 and from the record as a whole.  The instant disposition determines those damages.

 

15. Testimony by Goldasich is unrefuted that he is the owner of the subject property near Wheatfield in Jasper County which contains approximately five acres of wooded land and six acres of land in cultivation.  The subject property shares a common border, which is approximately 990 feet long, with approximately five acres owned by D-Miller (the “D-Miller property”).  Goldasich purchased the subject property and adjoining real estate in 1972.  The original parcel included approximately 27 acres, which Goldasich later caused to be subdivided.  The D-Miller property is included among the original 27 acres, although D-Miller purchased the D-Miller property from a subsequent purchaser and not directly from Goldasich.

 

16. Goldasich never gave Hites or any other person permission to harvest timber from the subject property.  Goldasich considers himself a “conservator”[1] of the subject property and planted trees in 1973.  The tree plantings in 1973 were primarily pines, and these are not at issue.

 

17. Goldasich lives in Pickerington, a suburb of Columbus, Ohio.

 

[VOLUME 11, PAGE 168]

 

18. Goldasich obtained an appraisal from Bruce Wakeland of Wakeland Forestry Consultants, Inc. of trees alleged by Goldasich to have been harvested from the subject property and at issue in this proceeding.  On February 28, 2004, Bruce Wakeland provided Goldasich with a written appraisal which stated in substantive part:

 

On February 28, 2004 Matt Fromm, who is a forester employed by Wakeland Forestry Consultants Inc. and myself completed the fieldwork for the appraisal of trees on approximately 3 acres that had been harvested in 2003 on property owned by Larry Goldasich and located in section 12 of Walker Township of Jasper County, Indiana.  Our purpose was to appraise the 2003 stumpage timber value of the harvested trees.  The harvest area was larger than just the Goldasich woodland, and included additional acreage adjoining to the east.  The property lien between these two ownerships was not marked.  With the help of a 2001 survey plat map provided by the owner to the east I was able to locate survey markers for this Goldasich east line at both the southeast and northeast corners of the Goldasich woodland.  I then established the property lines between the two properties using a compass to connect these survey markers.

 

INVENTORY

 

Because the harvest had just recently been completed it was easy to locate and identify the tree stumps that were part of this harvest.  Matching treetops that went with those stumps was more difficult because most of them had been moved from where they fell during the logging.  We found and measured stumps for 40 merchantable trees that had been harvested.  Data collected to help determine the timber volumes and values of the 40 harvested trees included, tree species, stump diameters outside the bark of the tree top at the cut off, and defects in the stumps or other remaining parts of the harvested tree.  I also observed the quality, diameters, tapers, and tree heights of the remaining trees in the woods and surrounding properties to better understand and predict the volume and quality of the harvest trees.

 

Logging—I would describe this harvest as a commercial clear cut.  I did not observe excessive logging damage for this type of harvest.  I would consider this an average logging job for a clear cut with regard to damage to the residual trees and to the soil.  I therefore did not do any inventory for damage to the side or add any value for our appraisal to compensate for logging damage.

 

TREE VOLUMES

 

To determine the volumes of the 40 harvested trees I used Doyle tree scale.  Tree scale uses total merchantable height and tree DBH (diameter at 4.5 feet above ground) to determine volume.  In appraisals such as this a trees merchantable height is usually determining by measuring from the stump to the treetop, but many of the treetops had been moved during logging.  For trees with moved tops I used the average tree height of the residual and harvested trees.  The diameter at breast height of each tree was estimated by measuring stump heights, stump diameters, and by using average tree tapers, which were determined by measuring stump to DBH measurements of on site residual trees.  After merchantable tree length and DBH have been estimated the tree volume can then be obtained by using a volume table.

 

[VOLUME 11, PAGE 169]

 

Volume Estimate Summary

Species                         # of Trees         Estimated Bd.Ft. Volume Doyle

Black Oak                    30                     8719

White Oak                      9                    1971

Black Cherry                  1                     105

Totals                           40 trees 10,795 Bd.Ft.

 

TREE QUALITY

 

Tree quality is very important when appraising timber value.  We have several ways to determine the quality of harvested and removed trees.  I use observations of the quality of remaining and surrounding trees.  I looked for signs of defects in the tree stumps and considered stump diameters and stump heights.  I also used my knowledge of the general timber quality in this part of Jasper County and on these soil types.  I determined that the quality of the harvested trees were fair to poor with most logs being grade 3, which is often referred to as pallet grade.

APPRAISAL

 

To estimate the stumpage timber value for the 40 harvested trees I have used values from 9 comparable timber sales which were selected from over 200 sealed bid timber sales that we have conducted and sold for clients in that time period.  Stumpage value means the harvest value of trees still standing in the woods and before the costs associated with harvest are added.  Based on comparable timber sales, and my knowledge of timber markets and values, and my volume and quality estimates, I would appraise the stumpage value of these 40 harvested trees to be as follows.  40 harvested trees.  10,795 Bd.Ft. @ $.22/Bd.Ft.=$2375

 

Attached to the appraisal was a listing of “Comparable Timber Sales” which is not included in these Findings.  Also included was a summary of Bruce Wakeland’s education, certifications and current professional services.  Included among these is that he was awarded a Bachelor of Science in Forestry from Purdue University in 1972, is a Certified Forester, has several professional affiliations, and has been engaged in the timber and forestry industry since his graduation from Purdue University.

 

19. The appraisal described in Finding 18 was admitted into evidence as Claimant’s Exhibit A, in accordance with IC 4-21.5-3-26(a) pertaining to hearsay, over timely objections by Hites and Western Surety.

 

20. Goldasich testified he obtained a written opinion by Joan Kamminga-Majerik, a Broker and Realtor with substantial experience in Jasper County, including an opinion as to diminution in the value of the subject property that was based upon “market statistics”. 

 

21. In a letter dated January 13, 2006, Kamminga-Majerik stated in part:

 

Based on market statistics regarding vacant land, I feel the removal of the mature trees and the subsequent required clean up of scrubs and stumps has damaged the value as well as the potential for future development of the afore mentioned property.  Addressing the five (5) acres that have been affected, I find that in its original condition would have brought approximately sixty five thousand dollars ($65,000.00).  I find that in its present state the value to be at approximately twenty five thousand dollars ($25,000).

 

[VOLUME 11, PAGE 170]

 

22. The written opinion described in Finding 20 and Finding 21 was admitted into evidence as Claimant’s Exhibit D, in accordance with IC 4-21.5-3-26(a) pertaining to hearsay, over timely objections by Hites, Western Surety and A-Miller.

 

23. Goldasich testified his opinion was that the harvest of timber by Hites had, “to me as an owner”, diminished the value of the subject property “in the neighborhood of $30,000 to $40,000.”

 

24. Goldasich also testified with regard to photographs he took at the subject property.  He said a portable sawmill was set up on the subject property after trees were harvested.  The photographs depicted debris associated with the harvest, slabs on a pile, sawdust in the vicinity of the former sawmill and “used oil cans and maintenance scraps from the process”.  The photographs were admitted into evidence as a group, without objection, as Claimant’s Exhibit B.

 

25. Goldasich testified that on January 18, 2005, he obtained a written estimate in the amount of $5,500 from Russell’s Tree Service in DeMotte, Indiana of the costs required to “remove scraps, logs and brushing resulting from previous tree removals,” as well as to “[g]rind any stumps 6 [inches] and above” located on the subject property.  He later testified he believed this estimate was reasonable but would not include tree plantings or similar restorations.

 

26. The estimate described in Finding 25 was admitted into evidence as Claimant’s Exhibit C, in accordance with IC 4-21.5-3-26(a) pertaining to hearsay, over timely objections by Hites, Western and A-Miller.

 

27. Goldasich testified that the pursuit of this proceeding has required him to investigate and quantify the extent of the damage, as well as to attend prehearing conferences.  From his residence in Pickerington, Ohio to the subject property is a 650-mile round trip by automobile, and he has made at least five such trips in the pursuit of his claims against the Respondents.  He has also made a round trip of 370 miles from Pickerington to Indianapolis to attend the hearing.  Goldasich testified he was seeking reimbursement for mileage at a rate of 45 cents a mile, the rate he understood to be the approved reimbursement amount from the federal government.  He testified he was also seeking reimbursement for lodging expenses in the amount of $350.

 

28. On cross-examination by Hites and Western Surety, Goldasich testified he also wished to be reimbursed for his attorney fees expended in preparation for this proceeding.

 

29. Carl Hites is a timber buyer who has been engaged in the business for 57 years, and his father was also a timber buyer.  Hites testified he has five employees, and the newest of them has five years of business experience.  Hites is currently licensed as a timber buyer under the Timber Buyers Act, and he has been properly licensed since the statute was enacted in 1972.

 

[VOLUME 11, PAGE 171]

 

30. Effective March 18, 2003, Western Surety increased the amount of its bond for Hites, as required for timber buyers under the Timber Buyers Act, from $6,500 to $7,000.  Respondent Exhibit 4.

 

31. Hites testified he had not previously been the subject of a proceeding by a landowner for compensation under the Timber Buyers Act.  On one occasion, a timber cutter for Hites cut a tree that went across a fence of a neighboring landowner and “tore his fence up.  It cost me $3,750 to put it back.”  Hites said he replaced the fence.

 

32. Hites testified the subject property was characterized by “low-grade, black oak timber” which was typically used for pallets or in steel mills for blocking.  None of the timber harvested from the subject property was veneer quality.

 

33. Hites testified that a tree spotter, Roger Risner, came to Hites and informed him A-Miller had “some trees for sale”.  Afterwards, Hites went to see A-Miller.  “He sold me these 40 trees or whatever it was.”  In addition, A-Miller asked Hites to cut a tree behind the Millers’ house.  He testified that A-Miller represented he owned the trees all the way to the field line, an area which included the entirety of the uncultivated subject property.  Hites saw no markers which were inconsistent with an assumption the Millers’s property included all of the wooded area.  Hites testified he believed A-Miller when A-Miller said he owned the trees.

 

34. On cross-examination, Hites testified he had no familiarity with A-Miller before contracting with A-Miller to harvest the trees.  He did not know whether A-Miller was honest and did not check A-Miller’s reputation in the community.  Hites did not check records in the Jasper County courthouse as to ownership of the subject property.  He testified, “I have been in this business for 57, and I have never went to the courthouse.”

 

35. On cross-examination, Hites said A-Miller showed him the area, and Hites counted 40 trees that he estimated were worth about $50 each.  On direct examination, Hites testified, “I offered [A-Miller] $2,000 for his trees, and he took it.”  On cross-examination, he testified a landowner may take the first offer, a second or later offer following negotiations, or a landowner may reject every offer.  Hites conceded he might have paid $2,200 for the timber had the Millers bargained for more money.

 

36. Three or four days after the negotiations between Hites and A-Miller, Hites delivered Official Check 785097006 to D-Miller.  The check was dated October 8, 2003 on the Lafayette Bank & Trust from “Carl Hites” and was in the amount of $2,000 made payable to “Allen Miller”.  Hites informed D-Miller the check was in compensation for the trees, and she accepted the check.  Respondent Exhibit 3.

 

37. Hites testified a woman stopped while he was harvesting the trees from the subject property and told him he was “cutting somebody else’s trees” rather than those of the Millers.  “I was dealing with [A-Miller] and not some lady that stopped along the road.  I didn’t know her….  I didn’t pay any attention to it, really.  But we already had it half-cut by then.”  On cross-examination, Hites testified the timber harvest required approximately one month for completion.

 

[VOLUME 11, PAGE 172]

 

38. Hites testified the first communication he received on behalf of Goldasich was a letter from Goldasich’s former attorney.  Upon receipt, Hites went to A-Miller and asked, “What’s this all about?  He said, ‘I’ll take care of it.’”  Hites said his first direct communications with Goldasich were at the initial prehearing conference held in this proceeding.  The prehearing conference was held on December 3, 2004.  See “Report of Prehearing Conference” (December 7, 2004).  Hites testified that, during the prehearing conference, A-Miller repeated he would “take care of it.”

 

39. Hites testified “truthfully, right now, I don’t know where I cut trees at,” although he expressed the perspective “Mr. Miller certainly owns something there, I would think.”  He added that “possibly I cut Mr. Miller’s, and possibly I cut Mr. Goldasich’s….  Who owns what, I have no idea.”

 

40. Hites testified he was willing and able to remove the pile of slabs and the pile of sawdust.  “But when you cut trees…, the stumps and the tops belong to the landowner.”

 

41. Jack Edward Nelson is a consultant forester with a B.S. in Forestry from Southern Illinois University.  He started his career in the fall of 1970 as a forester for the State of Indiana.  He was assigned to the region for Northwestern Indiana, an assignment which included Jasper County.  After 2 ½ years, he left state government and was employed by a private consulting firm which specialized in forestry and Christmas tree management.  He worked for the company for 14 months then returned to state employment as a District Forester for the Department of Natural Resources.  From then until 2005, he served in a variety of state management positions pertaining to forestry, including a period when he managed licensure under the Timber Buyers Act.  In 2005, Nelson retired from state government but continued employment in the timber industry as a consultant forester. 

 

42. Nelson testified that most sawmills in the Kankakee River Basin of Northwest Indiana “are smaller mills and or portable sawmills”, and “usually the timber was marginal at best.”  Previously, a lot of timber harvested from the area was used for blocking in the steel mills, and more recently it has been used for pallets.  “Most of the area is not considered to have real good timber.”

 

43. Nelson testified he examined the subject property and the D-Miller property.  He observed “very poor quality timber”.  Typical of the uplands in the area, the soils are very sandy.  In addition, most of the area “was burned repeatedly up until the ‘50s and ‘60s.”

 

44. Using a tape measure, Nelson attempted to determine the boundary between the subject property and the D-Miller property.  Nelson testified he observed evidence of timber harvested from both sides of what he estimated to be the line.  He also testified, however, that A-Miller identified a nondescript site to be the supposed corner of his (in actuality, D-Miller’s) property.  This site was based upon a length of 185 feet provided by A-Miller.  Nelson determined the line identified by A-Miller was probably inaccurate.  The determination was based upon a warranty deed, provided to Nelson by Hites’s attorney, which indicated a length of 230 feet.  Nelson testified he did not return to the site and re-evaluate whether timber was harvested from both sides of the corrected line.

 

[VOLUME 11, PAGE 173]

 

45. Nelson testified many of the tree stumps showed internal rot, a symptom typical of trees in Northwest Indiana that grow in sandy soils and are stressed by fires.  On cross-examination by A-Miller, Nelson testified he did not count how many trees were cut.

 

46. Nelson testified the timber harvest by Hites appeared to be a “normal logging” operation.  He observed “very little of what I would call ‘residual damage’; that is, where a skidder is moving along through the woods and the log bangs up against a standing tree, and it causes damage to the base similar to what your lawn mower does to trees.”  Also, because the soils were very sandy, “there really wasn’t much rutting.”  He said the logging residue was typical for a logging job, and “the standard within the business is that the tops are left.  If a landowner has a neighbor who wants to cut firewood, that’s great.  Mother Nature is pretty good about taking care of things, and within a few years, the material decomposes.”  Normally, slabs and sawdust residue from a portable sawmill are not taken away from the site.

 

47. Nelson did not provide a value for the harvested timber.  He indicated his experience was that the harvest would have little or no appreciable consequence to the realty value of the subject property.

 

48. Timothy H. Webb is a real estate appraiser and is a Certified General Real Estate Appraiser, licensed in Indiana and Illinois.  He obtained a B.S. in Agriculture from Purdue University in 1974.  He was a staff appraiser for the Indiana Department of Transportation from 1974 to 1978 and worked as an appraiser for Farmcraft Service, Inc. from 1978 until 2004.  Since that date he operated Webb Appraisers from his home in Oxford, Indiana.

 

49. On cross-examination by Goldasich, Webb testified most of his appraisal work is directed to agricultural land with a significant fraction also directed to commercial land.  He testified that 5% or fewer of the appraisals he performs are for residential land.

 

50. Using a sales comparison approach, Webb appraised the subject property at $40,000 as of April 24, 2006.  He testified he determined the highest and best use was for a rural residential site.  Webb characterized the subject property as containing five acres, with two acres of cropland and the remainder being “low density woods”.  On cross-examination by A-Miller, he acknowledged his appraisal showed the portions of cropland and woodland to be approximately equal.

 

51. Webb did not provide a comparison of the value of the subject property before and after the timber harvest by Hites.  Making comparison among four properties he used for determining comparable sales, some of which had mature trees and some of which did not, Hites concluded the harvest would have no impact on the value of the subject property.

 

[VOLUME 11, PAGE 174]

 

52. Duane McCoy is the Timber Buyer Licensing Forester for the Division of Forestry of the Indiana Department of Natural Resources, a position he has held for a little more than one year.  McCoy administers the Timber Buyers Act for the Division of Forestry.  He testified that his responsibilities as the Timber Buyer Licensing Forester include administering a database, keeping track of complaints against Timber Buyers, and assisting Conservation Officers with investigating claims of timber theft.

 

53. McCoy testified that the records of the Department of Natural Resources indicate Hites has been a licensed timber buyer since 1974.  These records do not show any complaint has been filed against Hites under the Timber Buyers Act.  McCoy acknowledged that records concerning complaints were not maintained for all periods back to 1974, and grievances against timber buyers could be resolved without a person filing a complaint with the Division of Forestry.

 

54. Larry Slawnikowski is a resident of rural Wheatfield in Jasper County, Indiana.  He owns approximately eleven acres of wooded real estate that is located approximately ¼ mile east of the subject property.  Slawnikowski testified he approached Hites for a possible timber sale because the black oaks on Slawnikowski’s real estate were beginning to suffer from oak wilt.  Slawnikowski testified he and Hites “walked off my piece of land.  He wanted to see what I owned, and we talked and dickered a little bit about price.  We settled on a price.”  Slawnikowski testified Hites came to his door with a contract and with a check.  “It was all cut and dried from there on.  I signed the contract, and we agreed to the price.”  Hites “was on time.  He told me it would take about four weeks, and that’s approximately what it took him.”  Slawnikowski testified Hites told him “what he would do, and he did exactly what he told me he would do.  I didn’t have one problem whatsoever.  The place looked like what he told me it would look like when it was done.  Of course, I’ve got a lot of branches all over, you know, to go out there and clean it up.  But I have people out there now cutting it up.” 

 

55. Allen Miller (A-Miller) testified on his own behalf.  He stated his wife, Debbie Miller (D-Miller), owned the D-Miller property before A-Miller met her.  He acknowledged “property-line problems” with the Millers’ neighbors to the east, the Greers.  When the Greers caused a survey to be performed, the survey indicated that ¾ of the Millers’ backyard was owned by the Greers.  A-Miller testified that at the time the Greers had their survey performed, D-Miller determined to have the remainder of her property boundaries also surveyed.

 

56. The survey described in Finding 55 was performed by Michael G. Kingman, an Indiana Registered Land Surveyor, in early 2001.  In a deposition, Kingman testified the four corners of the D-Miller property were marked with irons and evidenced by off-set laths, the latter of which he would have typically marked with florescent orange flags.  When asked whether either of the Millers questioned the marking of the western boundary (the common line with the subject property), Kingman responded “No, there was no mention of that.”  Respondent Exhibit 2.

 

[VOLUME 11, PAGE 175]

 

57. On direct examination, A-Miller testified that when he made the agreement with Hites for the timber sale, A-Miller believed his wife owned the property from which the timber was harvested.  After the timber was harvested, a law enforcement officer showed A-Miller where the officer believed the common line with the subject property was located.  A-Miller testified it was then he learned his beliefs as to the location of the property line had been mistaken.  On cross-examination by Goldasich, A-Miller testified he did not look at the Kingman’s 2001 survey until after the 2003 timber harvest.

 

58. On cross-examination by Hites, A-Miller testified D-Miller received the check from Hites that is described in Finding 36.  After endorsing the check, he returned it to D-Miller.

 

59. On cross-examination by Hites, A-Miller testified he incorrectly identified the boundaries of the D-Miller property, although A-Miller said he did not then understand the information was incorrect.

 

C. Standard of Care for Determining Ownership of the Subject Property

60. The Commission has consistently held that a timber buyer must exercise due diligence, under the Timber Buyers Act, in ascertaining that the person with whom he contracts to purchase timber is the owner of land from which timber is to be harvested. Beeman v. Pendley & Zurich N. Amer., 9 Caddnar 53, 56 (2002).  To similar effect is Pike Lumber Co., Inc. v. Cruse Timber, et al., 10 Caddnar 28 (2005).

61. A timber buyer who relies upon a person’s oral claim of real estate ownership does not satisfy due diligence.  A county recorder provides evidence of title and not a person who claims title or who happens to live on the land. Fischer v. Stodghill and Hartford Fire Insurance Company, 10 Caddnar 147, 156 (2005).

62. Hites relied exclusively and blindly on the oral representation by A-Miller that A-Miller owned the subject property.  Warned by a citizen from the community that he was harvesting timber owned by other than A-Miller, when by Hites’s own testimony only half of a one-month harvest was completed, he chose to ignore the warning and to continue with the harvest.  Hites’s conduct does not even approach satisfying the requisite due diligence for ascertaining the ownership of the subject property.

63. Hites failed to meet a reasonable standard of care for determining ownership of the subject property.  He must properly be held liable under the Timber Buyers Act for this lack of due diligence.

D. Compensation Under the Timber Buyers Act

 

64. Six persons offered opinions concerning the financial consequences of the timber harvest.  Four of these were directed mostly to perceived consequences for the fair-market value of the subject property as realty.  These opinions differed dramatically, from conclusions there was little or no damage to conclusions that damages were in the range of $40,000.  Two opinions included consideration of the impact upon stumpage value of the harvested timber.

[VOLUME 11, PAGE 176]

 

65. The factors to be considered are set forth in IC 25-36.5-1-3.2(f).  They provide that a complaint under the Timber Buyer’s Act may seek:

 

(1) Damages in compensation for damage actually resulting from the wrongful activities of a timber buyer or timber cutter.

 

(2) Damages equal to three (3) times the stumpage value of any timber that is wrongfully cut or appropriate without payment.

 

66. The Timber Buyers Act does not define what constitutes “damage actually resulting from the wrongful activities” under IC 25-36.5-1-3.2(f)(1).  Neither has the Commission defined the phrase by rule.  The Court of Appeals of Indiana provided insight into proper interpretation of the phrase in Wright v. Reuss, 434 N.E.2d 925, 930.  The costs for repairing fences, repairing ruts, and removing felled but unharvested trees and debris might appropriately be included.  The costs for replacing felled trees would not. 

 

67. More directly, the import of IC 25-36.5-1-3.2(f)(1) is stated in Roberts v. Voorhees, 453 N.E.2d 342, 343 (1983 Ind. App.) as the secondary goal of the Timber Buyers Act.  The primary goal of the Timber Buyers Act is to insure that a landowner (a “timber grower” as defined by IC 25-36.5-1-1) is compensated for the harvest of standing timber.  The secondary goal is to protect the landowner “from damage to his land resulting from improper logging methods.” 

 

68. Applying Wright v. Reuss and Roberts v. Voorhees, the Commission has determined IC 25-36.5-1-3.2(f)(1) authorizes compensation for repairs to damaged fencing and compensation for repairing ruts.  Industry standards are relevant to determining whether a timber buyer properly conducted a timber harvest.  Rose Acre Farms, Inc. v. Ault and Curry, 8 Caddnar 138 (1999).  Similarly, the Commission has found compensable the costs of equipment rental (including a back hoe) to repair ruts, to restore the contour of a swale, to reseed the swale and to remove debris.  Zwahlen v. McDurmon and Ohio Casualty Insurance Company, 7 Caddnar 45 (1994).

 

69. Nelson and Wakeland provided the most pertinent evidence concerning whether the timber harvest met industry standards.  Both concluded the harvest did generally satisfy industry standards.  Both concluded damages to residual trees and to the soil were within acceptable ranges. 

 

70. Hites operated a portable sawmill on the subject property.  Goldasich testified that Hites left piles of sawdust in the vicinity of the former sawmill, slabs in a pile, and “used oil cans and maintenance scraps from the process”.  Hites testified he was now willing to remove the piles of sawdust and the slabs, but he offered no testimony regarding the used oil cans and other scraps.

 

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71. For the most part, Hites achieved a minimum standard for his conduct of the timber harvest, but this standard was not met in association with reclamation at the site of the former portable sawmill.  Hites should have addressed the sawdust pile and the slabs before leaving the field.  More importantly, his treatment of the used oil cans is a violation of state statutes and does not meet minimum industry standards.  See, generally, IC 13-11-2-42, IC 13-11-2-99, IC 13-11-2-144 and IC 13-30-2-1.  Hites should be assessed damages of $1,000 in favor of Goldasich with respect to reclamation at the former portable sawmill site.

 

72. Based upon Roberts v. Voorhees and Wright v. Reuss, and as consistently applied by the Commission, the conclusion is that the Timber Buyers Act was not intended to provide compensation based upon alleged diminution to the fair market value of the underlying real estate as a result of a timber harvest.  The Commission cannot properly award compensation for Goldasach’s claim of diminution in value to the subject property.

 

73. The evidence is unrefuted that Hites paid A-Miller (with delivery to D-Miller) $2,000 on a first offer for the 40 harvested trees.  Hites conceded he might have paid A-Miller $2,200 if A-Miller had not taken the first offer.

 

74. Although some of the trees referenced in Finding 73 could have been located on the D-Miller property, there is a reasonable inference the trees were all located on the subject property.  Hites conceded he is now guessing where the trees were located.  A-Miller’s testimony lacks credibility as to location of the D-Miller property.  Nelson’s testimony regarding harvested trees is largely dependent upon measurements, made using inaccurate distances provided by A-Miller, so Nelson’s testimony is also unconvincing.  D-Miller did not participate in the hearing.  The preponderance of the evidence is that all 40 trees were located on the subject property.

 

75. Based upon the testimony of Hites, the value of the trees harvested from the subject property probably exceeds $2,200.  Hites is an experienced businessman, who would be expected to achieve a bargain price, and the value of the trees might reasonably be inferred to approach $3,000.

 

76. Wakeland determined the value of the 40 harvested trees was $2,375.  The methodologies applied by Wakeland, including application of the Doyle Rule, are consistent with methodologies previously approved by the Commission for determining stumpage values under the Timber Buyers Act.  Gallien v. Sloan Logging, Pendley, and Zurich N. Am., 9 Caddnar 40 (2002), citing Hornaday v. Ammerman, et al., 8 Caddnar 112 (1999) and Hagan, et al. v. Lewis, Cincinnati Insurance Co., Martin and US Fidelity & Guaranty Co., 7 Caddnar 146 (1996).  Wakeland’s analysis was also precise as to species.  His written report is easily the most precise and persuasive for determining the value of timber harvested from the subject property, and the value determined is generally consistent with testimony offered by Hites.

 

77. The preponderance of the evidence is that the value of the timber from the 40 trees harvested from the subject property was $2,375.

 

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D. Unauthorized Timber Harvest and Financial Responsibility of Hites

 

78. With respect to the 40 trees, Goldasich is a “timber grower” as the term is used under the Timber Buyers Act. IC 25-36.5-1-1 and IC 25-36.5-1-3.2(c).

 

79. As a “timber buyer”, Hites entered a contract with the Millers to harvest trees on Jasper County land that A-Miller represented to Hites as being owned by him.  D-Miller actively participated in the misrepresentation by receiving deliver of Hites’s $2,000 payment of the timber. 

 

80. Hites harvested trees pursuant to the contract during a one-month period in the fall of 2003.  This harvest included logging of the 40 trees.

 

81. Hites did not contract with Goldasich to harvest the 40 trees nor did Goldasich otherwise acquiesce in the harvest by Hites.  Hites has not compensated Goldasich for harvest of the 40 trees.

 

82. Goldasich seeks relief under IC 25-36.5-1-3.2(f)(2) for “Damages equal to three (3) times the stumpage value of any timber that is wrongfully cut or appropriated without payment.”  This remedy is sometimes referred to as the Timber Buyers Act “treble damages clause”.

 

83. The purpose of the treble-damages clause is “to insure that timber buyers will exercise care in cutting of timber and to protect landowners from careless felling of their timber.”  Wright v. Reuss, cited previously, at 929.

 

84. Before conducting the timber harvest, Hites did no research to confirm oral representations by A-Miller that the subject property was owned by A-Miller.  Even when warned by a local citizen that A-Miller was not the owner, Hites made no effort to research the ownership of the subject property.  

 

85. Goldasich is entitled to recover from Hites three times the stumpage value of the 40 trees.

 

86. The 40 trees have a stumpage value of $2,375.  Three times that value is in the amount of $7,125.  Goldasich is entitled to recover from Hites the amount of $7,125 under IC 25-36.5-1-3.2(f)(2).  In addition, Goldasich is entitled to recover $1,000 from Hites under IC 25-36.5-1-3.2(f)(1) as described in Finding 71.  Goldasich is entitled to an administrative judgment against Hites in the total amount of $8,125.

 

E. Financial Responsibility of the Millers

 

87. In addition to the responsibility of the timber buyer, a “landowner” and “an owner of land adjacent to the land from which the timber was cut” are among the class of persons who may be liable for a wrongful timber harvest. IC 25-36.5-1-3.2(e)(4).  This responsibility is also appropriately placed in a person who falsely claims to be a landowner.

 

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88. A-Miller and D-Miller are both persons who are responsible under the Timber Buyers Act for timber harvested from the subject property.

 

89. The Millers misrepresented to Hites the location of the D-Miller property line.  This misrepresentation was made in spite of the Millers having had the boundaries of the D-Miller property determined and marked by a professional survey just two years before the timber sale, a survey originally prompted by a property line dispute with another neighbor of the Millers.  Viewing the conduct of the Millers in the most generous and positive light, they performed irresponsibly and recklessly.

 

90. As a result of the Millers’ misrepresentation concerning the D-Miller property line, Hites was induced to contract with A-Miller to harvest timber from the subject property.  As a result of the misrepresentation, the Millers were wrongly enriched by a $2,000 payment from Hites.

 

91. This timber consisted of the 40 trees, the total stumpage value of which is $2,375.  Three times that value is in the amount of $7,125.  Goldasich is entitled to compensation from the A-Miller and D-Miller, jointly and severally, in the amount of $7,125.

 

92. The liability of Hites and of the Millers to Goldasich under the Timber Buyers Act, in the amount of $7,125, is joint and several.  Hites is additionally individually liable to Goldasich for the $1,000 amount described in Finding 71.

 

93. The crossclaims by Hites and Western Surety should be granted against the Millers.  A-Miller and D-Miller are jointly and severally liable to indemnify Hites and Western Surety for amounts required to be paid by Hites and Western Surety as a consequence of this administrative judgment, except for the $1,000 amount described in Finding 71.  In addition, A-Miller and D-Miller should be ordered to reimburse Hites for the $2,000 payment by which the Millers were unjustly enriched for the payment of timber they did not own.

 

F. Financial Responsibility of the Western Surety Company

 

94. As the surety for Hites under the Timber Buyers Act, Western Surety is liable to Goldasich for the stumpage value of timber wrongfully cut and appropriated.

 

95. IC 25-36.5-1-3.2(g) limits any judgment against the Western Surety to the value of timber wrongfully cut or appropriated.

 

96. The 40 trees have a stumpage value of $2,375.

97. Western Surety is liable to Goldasich in the amount of $2,375.  Upon demand on the bond to the Department of Natural Resources, the Department of Natural Resources shall cause forfeiture the amount of $2,375 to Goldasich.

 

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G. Litigation Expenses under the Timber Buyers Act

 

98. Goldasich seeks relief for expenses directly or indirectly incurred in preparation for this proceeding. These may be generally categorized as “litigation expenses”.

 

99. Goldasich offered testimony pertaining to travel expenses, attorney fees, real estate and timber harvest appraisal fees, site restoration estimates and similar administrative costs.

 

100. Indiana does not ordinarily allow for the recovery of litigation expenses as damages. “Expenses of litigation and attorney fees may not be included in damages unless they are provided for by some prior contract or statue.” Bituminous, Inc. v. Culligan Fyrprotexion, Inc., 437 N.E.2d 1360, (Ind. App. 1982) cited in Pike Lumber Co., Inc. v. Cruse Timber, et al., 10 Caddnar 28, 38 (2005).

 

101. A state administrative agency has only the powers conferred on it by the Indiana General Assembly. Powers not within the agency’s legislative grant of authority may not be assumed by the agency nor implied to exist in its powers.  Bell v. State Board of Tax Commissioners, 615 N.E.2d 816, 819 (Ind. Tax Ct. 1995), citing Fort Wayne Education Association, Inc. v. Aldrich, 527 N.E.2d 201, 216 (Ind. Ct. App. 1988).  The Commission has only the powers granted specifically by the Indiana General Assembly.  Pratt v. Indianapolis Water Co. and DNR, 9 Caddnar 17 (2001).

 

102. The Indiana General Assembly has conferred power upon the Department of Natural Resources and upon the Commission to award litigation expenses in some instances. Under proper circumstances, the Commission may award litigation expenses in its administration of statutes pertaining to surface coal mining, oil and gas production, entomology, and the possession of wild animals.  These statutory authorities are coordinated and implemented, by rule, at 312 IAC 3-1-13.

 

103. The Indiana General Assembly has not authorized the Commission to award litigation expenses under the Timber Buyers Act.  The Commission lacks the legal authority to award litigation expenses under the Timber Buyers Act.  Booker and Booker v. Mason and Shorter, cited in Pike Lumber Co., Inc. v. Cruse at p. 38. 

 

104. Under the Timber Buyers Act, Goldasich cannot be awarded his litigation expenses.

 

H. Treble Damages in Certain Civil Actions by Crime Victims

 

105. Goldasich also seeks relief under IC 34-24-3 which provides a victim of a crime committed under IC 35-43, IC 35-42-3-3, IC 35-3-4 or IC 35-4-9 may bring a civil action against the person who caused the loss.  This statutory chapter authorizes qualified victims to receive compensation for a broad range of litigation expenses, including attorney fees, and for three times the actual damages the person suffered from the loss.

 

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106. As stated in Finding 101, a state administrative agency has only the powers conferred on it by the Indiana General Assembly.  Powers not within the agency’s legislative grant of authority may not be assumed by the agency nor implied to exist in its powers.  The Commission has only the powers granted specifically by the Indiana General Assembly.

 

107. The relief authorized by IC 34-24-3 can be provided only by a civil court.  The Indiana General Assembly has not authorized the Commission to grant relief under IC 34-24-3.

 

108. The Commission lacks jurisdiction to grant Goldasich an award under IC 34-24-3.