19-044F.v16.htm

CADDNAR

Henry v. Underhill and Fidelity and Deposit Co. of Maryland, 16 CADDNAR 1

Administrative Cause Number: 19-044F

Administrative Law Judge: Sandra Jensen

Petitioner Counsel: David Jones

Respondent Counsel: Paul Blanton

Date: January 29, 2021

EDITOR’S NOTE: The original format of the Administrative Law Judge’s Findings of Fact, Conclusions of Law, and Final Order has been modified to correspond with CADDNAR format.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

WITH FINAL JUDGMENT

Procedural Background and Jurisdiction

1. On April 3, 2019, the Petitioners, James P. Henry, Jr. and Jane Henry (collectively referred to as Henry[1]), by Counsel, David P. Jones, filed correspondence (Complaint) with the Natural Resources Commission (Commission) alleging that Respondent, Charles Lester Underhill (Underhill), as a timber cutter and timber buyer, had “without a written contract…and without knowledge of [Henry], cut timber or acquired timber from [Henry] without payment.”

2. In their Complaint, Henry seeks damages from Underhill in the amount of three times the actual stumpage value of the wrongfully cut timber, which they alleged had a “standing value” of $23,402.

3. At the Prehearing Conference conducted on May 8, 2019, Underhill was represented by Counsel, Paul M. Blanton (Blanton). Blanton advised during a Status Conference conducted on January 15, 2020 of his anticipated withdrawal as Counsel for Underhill. The record does not reflect that Blanton filed a motion to withdraw; however, since January 15, 2020, Underhill has proceeded in a self-represented capacity.

4. On May 16, 2019, Henry filed their “Motion for Joinder of Necessary Party” to add Fidelity and Deposit Company of Maryland (Fidelity) as a Respondent to this proceeding alleging that Underhill obtained a surety bond from Fidelity, identified as LPM7620689, from which they seek contribution. On May 16, 2019, Henry’s motion was granted. Fidelity has been represented by Claims Counsel, Patricia H. Schroeder (Schroeder), throughout the pendency of this proceeding.

5. On June 21 , 2019, Blanton filed an “Answer, Defenses and Cross Claim of Defendant Charles Underhill”. The filing provides Underhill’s Answer to Henry’s Complaint and asserts eight affirmative defenses. The filing does not provide a cross claim against any other person as the title would suggest. The filing, in the fourth and seventh affirmative defenses, asserts that any damage Henry sustained was “caused solely by the Co-Defendant named in 51C01-1808-CT-179” and that Henry had been fully compensated through settlement or payment resulting from that case. However, Blanton, on behalf of Underhill, failed to identify the co-defendant, failed to seek to join the co-defendant as a party to this cause, and failed to assert a valid cross claim against the co-defendant or any other person.

6. During the Status Conference conducted on January 15, 2020, Schroeder advised that the bond at issue expired on May 10, 2018. She further represented that Fidelity would abide by any order issued by the Commission with respect to events occurring before the expiration of the bond but advised that Fidelity did not intend to appear or participate in any scheduled Administrative Hearing.

7. At the request of Underhill, on June 24, 2020, the Administrative Law Judge (ALJ) issued subpoenas for the attendance of two witnesses. Service of the subpoenas was the responsibility of Underhill.

8. After multiple continuances issued to address concerns about the COVID -19 pandemic, an Administrative Hearing was conducted on October 23, 2020. Henry appeared in person and by Counsel. Underhill appeared in person. These parties represented that necessary witnesses were in attendance and they were each prepared to proceed with the presentation of testimony and evidence. As expected, Fidelity did not appear or participate.

9. At the hearing, testimony was received from James P. Henry, Conservation Officer Eric Doane, Charles Lester Underhill, Charles Hellums and Sam Bond. Henry presented Exhibits 1, 1A, 2, and 2A, which are aerial photographs of the property in question; Exhibit 3, an IDNR Law Enforcement Incident Report Form 07-18-00792; and Exhibit 4, “Henry Timber Trespass Evaluation” prepared by C. S. Bond Forest Management. Underhill presented Exhibit A, a blank timber purchase contract template. Each of the exhibits was admitted without objection.

10. The instant proceeding was initiated under the authority of Ind. Code § 25-36.5-1-3.2, which, in relevant part, states:

Sec. 3.2. (a) This section refers to an adjudicative proceeding against:

(1) a timber buyer; or

(2) a person who cuts timber but is not a timber buyer (referred to as a “timber cutter” in this section).

(b) The department may under IC 4-21.5-3-8 commence a proceeding against a timber buyer or a timber cutter if there is reason to believe that:

(1) the timber buyer or timber cutter has acquired timber from a timber grower under a written contract for the sale of the timber without payment having been made to the timber grower as specified in the contract; or

(2) if:

(A) there is no written contract for the sale of the timber; or

(B) there is a written contract for the sale of the timber but the contract does not set forth the purchase price for the timber;

the timber buyer or timber cutter has cut timber or acquired timber from the timber grower without payment having been made to the timber grower equal to the value of the timber as determined under IC 26-1-2.

(d) The necessary parties to a proceeding initiated under this section are:

(1) the timber grower; and

(2) the timber buyer or timber cutter.

(e) After the commencement of a proceeding under this section through the service of a complaint under IC 4-21.5-3-8, a party to the proceeding may move for the joinder of any of the following persons having a relationship to the site or subject of the complaint:

(1) The surety of the timber buyer.

(2) A timber buyer.

(3) A timber cutter.

(4) A landowner.

(5) An owner of land adjacent to the land from which the timber was cut.

(6) A consultant receiving a fee for services related to the timber.

(7) A professional surveyor performing an American Land Title Association and American Congress on Surveying and Mapping (ALTA/ACSM) land title survey.

(8) The department of natural resources, if the department has a relationship to the site or subject of the complaint as a landowner or owner of adjacent land.

(f) The complaint served under IC 4-21.5-3-8 to commence a proceeding under this section may seek the following:

(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 appropriated without payment.

(g) Notwithstanding subsection (f), the liability on the surety bond of a timber cutter is limited to the value of any timber wrongfully cut or appropriated.

(h) A proceeding under this section is governed by IC 4-21.5. Before a hearing is convened in the proceeding, a prehearing conference shall be conducted to provide the parties with an opportunity for settlement, including an opportunity for mediation.

(i) In determining the site for a hearing in a proceeding under this section, the administrative law judge shall consider the convenience of the parties.

(j) A final agency action in a proceeding under this section must address all issues of damage and responsibility and, after the completion of the opportunity for judicial review, may be enforced in a civil proceeding as a judgment.

11. The Commission is the “ultimate authority”, as that term is defined at Indiana Code § 4-21.5-1-15, with respect to adjudicatory proceedings initiated under Indiana Code §§ 25-36.5 et. seq and Indiana Code § 4-21.5-3.8. 312 IAC 14-1-2(d).

12. This proceeding is governed procedurally by the Administrative Orders and Procedures Act, commonly referred to as AOPA. See Ind. Code §§ 4-21.5-3 et seq.

13. Pursuant to Indiana Code § 25-36.5-1-3.2(c), a timber grower may initiate this proceeding.

14. The Commission possesses jurisdiction over the subject matter and over the persons of the parties.

Findings of Fact[2]

15. That facts in this proceeding are not in significant dispute.

16. Underhill admitted in his Answer that he is a timber cutter and a timber buyer as those terms are defined at 312 IAC 14-2-11 and 312 IAC 14-2-10, respectively.

17. Underhill presented no evidence or argument in support of the following asserted affirmative defenses:

a. That Henry fails to state a claim upon which relief may be granted.

b. That any damages suffered by Henry was caused in whole or in part by their own actions.

c. That Henry failed to mitigate their damages.

No further consideration will be given to these claims.

18. Henry owns property located at 4212 Butler Ridge Road, Shoals, Indiana, that includes a 40- acre wooded tract. Testimony of Henry; Exs. 1, 2, and 3.

19. Of the 40-acre tract, an approximate 20-acre portion located south of power lines that traverse the property in a generally east-west direction is the property at issue in this proceeding. Testimony of Henry, Underhill, Charles Hellums and Sam Bond; Exs. 1, 1A, 2, and 2A. This portion of Henry’s property will hereafter be referred to as the “Subject Property”.

20. Timber was previously harvested from the Subject Property in 1984 and Henry was contemplating another timber harvest from the Subject Property in 2018. While potential timber contractors were evaluating the property, they discovered the recent timber harvest and notified Henry. Testimony of Henry.

21. Henry had not given anyone permission to cut timber from the Subject Property since 1984. Id.

22. In June 2018, Conservation Officer Eric Doane (Doane), investigated the matter of the timber harvested from the Subject Property. After interviewing several people, Doane determined that Underhill had cut the timber from the Subject Property at the direction of Charles Hellums (Hellums). Testimony of Doane; Ex. 3.

23. From the investigation, Doane established that the evidence did not support a conclusion that Underhill had “knowingly or intentionally” cut Henry’s timber without authorization from the standpoint of a criminal charge. Testimony of Doane.

24. During the Administrative Hearing Underhill appeared genuinely apologetic for what had occurred, and he acknowledged his mistake in believing and accepting Hellums’ representations. Id.

25. Hellums told Doane during an interview that “Underhill was not at fault since [Hellums] had showed [Underhill] the property lines and told him where he could cut” but through testimony at the Administrative Hearing, Hellums agreed only that “some of it was my fault”. Testimony of Hellums; Ex. 3.

26. It is reasonably concluded that Underhill did not intentionally harvest timber from the Subject Property without authorization.

27. Hellums’ property is situated immediately south of and adjoins the Subject Property. Testimony of Doane; Exs 1 and 2.

28. In 2016, Underhill entered a contract with Hellums to harvest timber. Testimony of Underhill and Hellums.

29. Hellums represented to Underhill that he owned the Subject Property. Testimony of Underhill and Hellums; Ex. 3.

30. Hellums walked the boundary of his own property and the Subject Property with Underhill. The two men identified survey pins that, in Underhill’s opinion, supported statements Hellums made about the boundary line location and his ownership of the Subject Property. Testimony of Underhill and Hellums.

31. Hellums maintained “tree stands” on the Subject Property for hunting. Exhibit 3.

32. Hellums placed flags along powerlines that cross what was later determined to be the Subject Property. Hellums instructed Underhill that if he stayed south of the powerlines while harvesting timber he would be on Hellums’ property. Testimony of Underhill and Hellums.

33. Underhill harvested timber only within the property boundaries identified by Hellums. Id.

34. Underhill acknowledged that he did not use online property GIS records or view a plat book to verify the boundaries of Hellums’ property. However, Underhill testified that before beginning the timber harvest he contacted the Martin County Surveyor who confirmed[3] Hellums’ ownership of the Subject Property. No evidence was presented to refute Underhill’s testimony and it is accepted as truthful.

35. Sam Bond (Bond) Bond confirmed that before property ownership information became available on the internet a person had to obtain the information from a county surveyor through the use of plat books. Testimony of Bond. He testified “if you want to sometimes get the latest data on a property change, you’ll need to go to the courthouse and see if it’s been changed.” Id. This testimony is important to a determination regarding treble damages.

36. Hellums also testified that both the Martin County Surveyor and Recorder had confirmed to him, that he was the owner of the Subject Property.[4]

37. Underhill added “Charles told me he had…the whole property was surveyed. He took me around and showed me actual survey pins.” Hellums agreed that this occurred.

38. The evidence that Underhill obtained confirmation about the ownership of the Subject Property from the Martin County Surveyor is important to the determination of treble damages.

39. The evidence establishes that during Doane’s 2018 investigation the Martin County Surveyor confirmed that he had “recently marked the property line” and was able to provide an aerial photograph of the Subject Property which reflected the logging roads associated with the 2016 timber harvest.

40. Henry did not solicit evidence from the Martin County Surveyor or the Martin County Recorder or offer any other evidence in opposition to Underhill’s and Hellums’ testimony that they sought and received confirmation that the Subject Property was within the boundary of Hellums’ property in or before 2016. There is no evidence in the record to explain the discrepancy between the property ownership information provided to Underhill in 2016 and the ownership information provided to Doane in 2018.

41. Bond, who has been a consulting forester since 1977, was engaged by Henry in July 2018 to prepare a “timber trespass evaluation” intended to identify from where trees had been harvested and “kind of reconstruct” them in order to establish a value. Testimony of Bond; Ex. 4.

42. Bond has prepared 50 or more timber trespass evaluations during his career. Id.

43. In 2018, Bond used Google Earth, a free GIS website, to identify ownership of and the property lines for the Subject Property laid over an aerial photograph that produces images similar to those provided in Exhibits 1 and 2. Testimony of Bond.

44. The property lines and ownership of the Subject Property were readily obtainable using online GIS imagery in 2018. Testimony of Doane and Bond; Ex. 3 and 4.

45. Henry presented no evidence upon which a conclusion can be reached that the same information that was readily available to Bond using online GIS resources in 2018 was available in 2016 when Underhill made inquiry of the Martin County Surveyor that confirmed Hellums’ ownership of the Subject Property. Lack of evidence in this regard is important to a determination of treble damages.

46. The evidence established that the Subject Property has been in the Henry family since well before 1984. Reasonably it is concluded that the online records would not have been in need of updating because the property ownership had changed, however, that does not eliminate the possibility that property records, including records within the possession of the Martin County Surveyor or online GIS records were corrected, revised or updated between 2016 and 2018. Lack of evidence associated with this point is very important to a determination of treble damages.

47. A discrepancy exists with respect to the ownership information received by Hellums and Underhill from the Martin County Surveyor and the ownership information available to Doane and Bond in 2018.

48. The discrepancy is not explained by the evidence and is particularly troublesome when coupled with evidence establishing that at a time in close proximity to Doane commencing his investigation in June 2018, the Martin County Surveyor had marked the boundary of the Subject Property. Exhibit 3.

49. The contract between Hellums and Underhill called for a fifty-fifty split of the proceeds of the sale of the timber harvested. Underhill delivered the harvested timber to the sawmill and the sawmill provided a check for one-half the sale price to each Underhill and Hellums. Testimony of Underhill.

50. Hellums received approximately $30,000 from the timber harvest conducted by Underhill. Ex. 3. By the terms described by Underhill in his testimony, it is reasonably concluded that Underhill was also paid approximately $30,000 from the sale of the timber under his contract with Hellums.

51. It is not known was portion of the approximate total $60,000 received by Underhill and Hellums was attributable to the timber harvested from the Subject Property.

52. Underhill acknowledged that he cut approximately 3 loads of timber off the Subject Property and estimated the total value of the timber harvested from the Subject Property to be $12,000 - $13,000. Id. Underhill did not offer testimony describing how he arrived at the valuation and Underhill’s demeanor during this testimony indicates the estimate provided was more an educated guess than a true calculation.

53. The contract entered into between Underhill and Hellums specifies that the “seller represents that he/she owns good title to the premises…” and Underhill believed Hellums to be solely responsible to Henry for their damages. Testimony of Underhill, Exhibit A.

54. Underhill had not, as of the date of the Administrative Hearing, compensated Henry in any way for the timber harvested from the Subject property. Testimony of Underhill.

55. Hellums paid Henry $5,000[5] for the timber that was harvested. Testimony of Hellums.

56. In fulfilling the effort to “reconstruct” the trees, Bond completed a partial field evaluation but determined that it was “not practical” to get to all the stumps or to identify all the stumps on foot. Bond testified that between 2016, when the timber was harvested, and 2018, when he was engaged, “all the undergrowth had come up” plus there were “tops to deal with” that made it difficult to get through the woods. Bond conclude that attempting to identify and reconstruct the trees in this way would have negatively impacted the evaluation’s accuracy. Testimony of Bond; Ex. 4.

57. “Google overflights had occurred at the time the timber was harvested” by Underhill. Because Google Earth photographs from 2016 depicted logs that had been skidded out, cut to length, and staged near a road for loading, Bond concluded that the Google Earth photos had been taken when Underhill’s harvest was nearing completion. It was evident to Bond from the skidder trails depicted in the photographs that the staged logs had come from the Subject Property. Id.

58. Bond testified that he established a grid system for the aerial photos obtained using Google Earth and was able to enlarge the photo sufficiently to identify and count tree tops and stumps to establish the number of trees that had been harvested by Underhill in 2016.

59. Bond affirmed that “you could really tell the difference” between the stumps from trees harvested in 1984 and the stumps from trees cut recently. It is recognized that while Bond reviewed the photographs in 2018, two years after the harvest, the photographs had captured images of the stumps in 2016, within days of when the trees were cut. It is reasonable to believe that stumps from trees cut over 20 years prior would be easily distinguishable from stumps of trees cut within days of the photo being taken.

60. Using a measuring tool associated with Google Earth Pro, Bond was able to determine the approximate height of several trees by measuring from the stump to the associated treetop identified on the ground. Id. To ensure the accuracy of the online measuring tool, Bond visited the site and obtain actual measurements of stumps and tops that were visible in the aerial photo and that could be accessed on foot. Ex. 4.

61. Nearly everything that was merchantable had been harvested. Some of the trees harvested were smaller and of low-grade and most likely would have been sold for use in constructing pallets. Some of the trees harvested were high-quality. Testimony of Bond; Ex. 4.

62. Bond determined from a combination of field and computer work that on average the diameter of the timber harvested was 19 inches at breast height (4.5 feet above the ground) and the average length of merchantable timber was 40 feet. Id.

63. Bond acknowledges that customarily, “to assess the volume and valuation of trees after a harvest, a reconstruction by species of each tree is made from the stumps and remaining tops.” Ex. 4, emphasis added. Because, in this situation, the usual method of identifying the tree species was not viable, Bond conducted a field survey of the portion of Henry’s property immediately north of the power lines. In this way Bond was able to compare the tree stand and actual field measurements of trees in the unharvested area that were similar to those in the immediately adjoining Subject Property to further evaluate the quality of the timber harvested. He concluded that the timber stand on the Subject Property would have been characterized as “average”. Testimony of Bond; Ex. 4.

64. Through a combination of his use of Google Earth Pro, in conjunction with field work that was possible, Bond concluded that 185 trees of average quality had been harvested from the Subject Property. He further estimated that the timber yielded an estimated average volume of 230 board feet per tree for a total of 42,550 board feet. Id.

65. Using the “Indiana Forest Products Price Report and Trend Analysis” relied upon by the Indiana Department of Natural Resources, Division of Forestry, an average quality tree-stand in 2016 was valued at $0.55 per board foot. By calculation Bond determined that the stumpage value of the timber harvested from the Subject Property would be $23,402. Id.

66. Aside from Underhill’s concern that stumps from the timber harvest occurring in 1984 were counted by Bond, the process undertaken by Bond and the ultimate stumpage value calculation established by Bond were not contested by Underhill. The process and the stumpage value calculation are accepted as reasonable.

67. Neither party moved to join Hellums as a party to the instant proceeding.

Conclusions of Law

68. Henry bears the ultimate burden of proof regarding the allegations contained within his Complaint. Hornaday v. Ammerman, et al., 8 CADDNAR 112, 113 (1999). Similarly, Underhill bears the ultimate burden of proof with respect to his asserted affirmative defenses. Pike Lumber Co., Inc. v. Cruse Timber, et al., 10 CADDNAR 28, 34 (2005).

69. In his sixth asserted affirmative defense, Underhill alleges that the instant proceeding is barred by the applicable statute of limitations. The statute of limitation applicable to Ind. Code § 25-36.5 et seq. is 10 years. DNR v. Shields, 14 CADDNAR 19 (2015), Ind. Code § 34-11-1-2(a). The timber harvest at issue occurred in 2016 and was discovered by Henry in 2018. This proceeding was initiated in 2018, the same year as the discovery and only two years after the occurrence.

70. This proceeding is not barred by the statute of limitations.

Liability of Timber Buyer

71. Underhill is a timber buyer and a timber cutter. Indiana Code § 25-36.5-1-1

72. Henry is a timber grower. Id.

73. Underhill did not acquire Henry’s timber under any type of contract or agreement and Underhill has not compensated Henry in an amount equal to the value of the timber and for these reasons Henry is entitled to initiate the instant proceeding. Indiana Code § 25-36.5-1-3.2(b & c).

74. As relevant to this proceeding, the appropriate damages that may be awarded to Henry upon the presentation of satisfactory evidence includes, “damages equal to three (3) times the stumpage value of any timber that is wrongfully cut or appropriated without payment.” Indiana Code § 25-36.5-1-3.2(f).

75. The stumpage value of the timber harvested is concluded to be $23,402.

76. Henry is most certainly entitled to recover the stumpage value of the timber harvested.

77. If the evidence supports the imposition of full treble damages, the maximum damage award that may be entered in this proceeding is $70,206.

78. Henry asserts that a determination associated with the imposition of treble damages in this instance should be determined through a consideration of Beeman v. Marling, 646 N.E.2d 382 (Ind. App. 1995). In Beeman, the court concluded that Ind. Code § 25-36.5-1-17(a) imposed strict liability with respect to the imposition of full treble damages. At 383.

79. It is observed that Ind. Code § 25–36.5–1–17(a), upon which Beeman was based, was repealed in 1993. P.L.220–1993, SEC.10.

80. In conjunction with the repeal of Ind. Code § 25-36.5-1-17(a), the current statute, Ind. Code § 25-36.5-1-3.2(f), was enacted. P.L. 220-1993, SEC. 3

81. With respect to the imposition of treble damages, the 1993 amendment marked a significant change:

Before 1993, the treble damages clause provided a timber buyer or timber cutter who "cut any timber which he has not previously purchased shall, in lieu of the normal penalties" pay the timber grower "three (3) times the stumpage value of the timber." The treble damages clause does not allow a timber buyer or a timber grower the defense of mistake of fact as to ownership of real estate where timber is located. Neither is a timber grower required to show the person who wrongfully cut timber acted with malicious intent. Beeman v. Marling, 646 N.E.2d 382 (Ind. App. 1995). 29.

Amendments made to the Timber Buyers Act in 1993 made a number of fundamental changes. Among these was to replace the mandatory structure for treble stumpage damages with a new arrangement by which a timber grower may seek treble damages through an adjudicatory proceeding before the Commission.

Since the statutory amendments of 1993, the Commission has exercised discretion to demand less than the full impact of the treble damages clause where doing so would work an injustice. Beeman v. Pendley & Zurich N. Amer., 9 Caddnar 53 (2002) and Pollack v. Coats, 8 Caddnar 124 (1999).

Fischer v. Stodghill and Hartford Fire Insurance Company, 10 CADDNAR 147, 160-161, (2005), McClure v. Perry & Richardson, 13 CADDNAR 96 (2013), Gallien v. Sloan Logging, Pendley & Zurich N. Am., 9 Caddnar 40 (2002), Hagan, et al. v. Lewis, Cincinnati Insurance Co., Martin and US Fidelity & Guaranty Co., 7 Caddnar 146 (1996); Guy W. Pollock v. Dale Coats, 8 Caddnar 124 (1999).

82. Treble damages are “punitive in nature.” Brownsburg Community School Corporation v. Natare Corporation, 824 N.E.2d 336, 343 (Ind. 2005). Statutes that are penal in nature should be strictly construed. Panther Brands, LLC v. Indy Racing League, LLC, 126 N.E.3d 898, 907 Ind. App. 2019).

83. As noted in Crowe v. Eiler, Fidelity and Deposit Company of Maryland, & DNR, 15 CADDNAR 54 (2019), the Commission has concluded that discretion in the assessment of treble damages “may most appropriately be applied where the timber buyer or timber cutter acts with all due diligence, but because of misdirection or connivance of another, is caused to err.” See also, O’Neal v. Bowers and Spurgeon, 13 CADDNAR 64, (2012).

84. The Commission has affirmed the conclusions established in Beeman that the “treble damages clause does not allow a timber buyer the defense of mistake of fact as to ownership of real estate where timber is located. Neither is a timber grower required to show the person who wrongfully cut timber acted with malicious intent.” At 67.

85. The Commission’s focus is upon the “[p]rimary responsibility … to exercise due diligence to assure activities are restricted to lands where the timber buyer is authorized to harvest timber.” Id.

86. In Fischer v. Stodghill and Hartford Fire Insurance Company, 10 CADDNAR 147, 156 (2005) the Commission determined that a timber buyer’s reliance solely upon the representations of another person with respect to property ownership is not consistent with the exercise of due diligence. The Commission stated, “By itself, reliance upon persons in possession of real estate as to ownership of the real estate is generally inadequate to show due diligence. A county recorder provides evidence of title not persons who happen to live on the land.” (Emphasis added).

87. In Pollock v. Coats, 8 CADDNAR 124, 125 (1999), the Commission concluded that a judgment awarding only two times the stumpage value of the timber was appropriate where the timber buyer “consulted with an immediate adjacent neighbor, … identified the southeast corner stone and … used a compass in order to determine the line between the real estate owned by the claimants and the real estate owned by [the landowners for] whom he was cutting at the time.” The conclusion was that a judgment in the amount of two times the stumpage value “adequately penalize [the timber buyer] for his careless compass work and would fairly compensate the claimants …” Similarly, a judgment of only two times the stumpage value of the timber was awarded in The Adams Group v. Beckman, Meehan, and Ohio Casualty Ins. Co. 8 CADDNAR 134, 137 (1999), after the Commission concluded that the degree of fault should be reduced for a timber buyer who relied upon a survey that later proved to be incorrect.

88. Conversely, the Commission has routinely concluded that there has been a complete failure to exercise due diligence when timber buyers or cutters harvest timber from neighboring properties after ignoring readily apparent boundary line fences, are present and witness to landowner discussions that clearly reveal uncertainty with respect to the property boundary, or in instances where the timber buyer relies solely upon a property owners’ representation of the boundary line. See Rose Acre Farms, Inc. v. Ault and Curry, 8 CADDNAR 138 (1999), Crowe v. Eiler, supra, and Hill v. Patton and Slater, 12 CADDNAR 337 (2011).

89. The question in this instance with respect to Henry’s claim for an award of treble damages is whether, based upon the available evidence, they proved that Underhill’s efforts to verify the ownership of the Subject Property constitutes a lack of due diligence.

90. It is not disputed that Underhill walked the property boundary with Hellums and it is similarly not disputed that the two men identified survey pins Underhill interpreted to support Hellums’ claims of ownership of the Subject Property. This effort, alone, would not have constituted an exercise of due diligence.

91. In this instance, however, it is uncontested by Henry that Underhill had obtained confirmation from the Martin County Surveyor that Hellums owned the Subject Property before he began his timber harvest.

92. The fact that Hellums’ testified that he had also, at a time before 2016, also confirmed with the Martin County Recorder and Surveyor that he was the owner of the Subject Property supports Underhill’s testimony.

93. Consistent with the Commission’s previous conclusion in Fischer, supra, that “a county recorder” is the best source of property information, Henry’s own witness, Bond, affirmed that the best method to identify the most current information about property ownership or boundary lines would be to consult with officials at the county courthouse. Based upon this finding and Bond’s testimony, Underhill acted in the best manner possible to obtain the most accurate property ownership information.

94. During the Administrative Hearing, Henry accurately highlighted the fact that Underhill did not make use of available online GIS property ownership resources. Henry did not, however, bring forth evidence that Underhill’s use of this type resource in 2016 would have yielded information different than what he received from the Martin County Surveyor.

95. As the party having the burden of proof, to be awarded treble damages it was Henry’s responsibility to establish that Underhill did not act with due diligence in identifying the ownership of the Subject Property. Henry failed to refute the evidence that Underhill had in 2016, before the timber harvest, consulted with the Martin County Surveyor and obtained confirmation that Hellums owned the Subject Property. Henry failed to establish that Underhill’s reliance upon the information received from the Martin County Surveyor was unreasonable. Henry further failed to establish that Underhill’s failure to utilized available online GIS data in 2016 would have produced information different than what was provided by the Martin County Surveyor.

96. Henry has failed to establish that Underhill failed to exercise due diligence in his efforts to identify the ownership of the Subject Property.

97. Based upon the available evidence an award of treble damages is not appropriate.

Setoff – Underhill’s Affirmative Defenses

98. In addressing Underhill’s claims that Henry’s damages were caused by Hellums or that Henry is equitably estopped from pursuing their claims against Underhill due to settlement with Hellums, it is appropriate to consider the settlement Henry reached with Hellums.[6]

99. The evidence establishes that Hellums previously compensated Henry $5,000 for the timber harvested from the Subject Property.

100. With respect to any judgment awarded to Henry against Underhill in this proceeding, Underhill shall be entitled to an offset in the amount of $5,000. Crowe, supra.

Liability of Surety

101. Underhill, as a licensed timber buyer, possessed a surety bond issued by Fidelity, identified as LPM7620689.

102. Under Ind. Code § 25-36.5-1-3.2(g), the liability of a surety is limited to the actual value of the timber wrongfully harvested or the full value of the surety bond issued, whichever is less.

Final Judgment

103. Henry is awarded an administrative judgment against Underhill in the amount of $23,402.

104. Underhill is granted an offset in the amount of $5,000, which represents a portion of the damages previously paid to Henry by Hellums for the value of the timber.

105. As a result of the setoff, Underhill’s total liability under the administrative judgment is reduced to $18,402.

106. Henry is granted an administrative judgment and is entitled to forfeiture of the surety bond issued by Fidelity, identified as LPM7620689, in the amount of $18,402 or the limits of the surety bond, whichever is less.

107. The administrative judgment addresses all issues of damage and responsibility among the parties under Ind. Code § 25-36.5. After completing the opportunity for judicial review under Ind. Code §§ 4-21.5, this judgment may be enforced in a civil proceeding as a judgment.

108. The issuance of this administrative judgment shall not be interpreted to preclude a claim for subrogation initiated by Fidelity or Underhill.

[1] The singular version is used for ease of reference.

[2] A Finding of Fact more appropriately construed as a Conclusion of Law or a Conclusion of Law more appropriate considered a Finding of Fact shall so be considered.

[3] The ALJ recognizes that the representations of the Martin County Surveyor, as recounted by Underhill, constitutes hearsay. However, under Ind. Code § 4-21.5-3-26(a), “The administrative law judge may admit hearsay evidence. If not objected to, the hearsay evidence may form the basis for an order.” This testimony was elicited on Henry’s Counsel’s direct examination of Underhill, was not objected to, and Henry’s counsel made no motion to strike the testimony.

[5] This payment was made in settlement of a cause of action initiated in the Martin County court.

[6] Underhill’s fourth, fifth and seventh affirmative defenses are addressed here together.