Court Opinion

ID: 4398809
Source: CourtListenerOpinion
Date Created: 2019-05-21 15:03:49.054039+00
Date Added: 2024-06-11T12:19:47.963125
License: Public Domain

FILED
                                                                       May 21 2019, 9:15 am

                                                                              CLERK
                                                                          Indiana Supreme Court
                                                                             Court of Appeals
                                                                               and Tax Court

APPELLANTS PRO SE                                          ATTORNEYS FOR APPELLEE
Kurt Disser                                                Robert L. Hartley
Sabrina Graham                                             Maggie L. Smith
Brownsburg, Indiana                                        Carly J. Tebelman
                                                           FROST BROWN TODD LLC
                                                           Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Sabrina Graham, et al.,                                    May 21, 2019
Appellants-Plaintiffs,                                     Court of Appeals Case No.
                                                           19A-PL-153
        v.                                                 Appeal from the Hendricks Circuit
                                                           Court
Town of Brownsburg,                                        The Honorable Daniel F. Zielinski,
Appellee-Defendant.                                        Judge
                                                           Trial Court Cause No.
                                                           32C01-1807-PL-109

Bailey, Judge.

Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019                                   Page 1 of 15
                                           Case Summary
[1]   Sabrina Graham and Kurt Disser (collectively, “Graham/Disser”) are domestic

      partners who own property in Brown Township, which is outside of the Town

      of Brownsburg (“the Town”) corporate limits. However, they are customers of

      the Town’s municipal water utility (“the Water Utility”). They filed, pro se, a

      lawsuit against the Town in which they sought declaratory and injunctive relief

      regarding the legality of a water rate ordinance the Town enacted in 2018.

      Graham/Disser now appeal the trial court’s order granting summary judgment

      to the Town. They raise multiple issues on appeal, but we decide only the

      dispositive issue of whether the trial court erred in granting summary judgment

      to the Town on the grounds that Graham/Disser failed to exhaust their

      administrative remedies.

[2]   We affirm.

                             Facts and Procedural History
                          Adoption of Challenged Ordinance
[3]   The Town operates the Water Utility, which supplies water to customers in the

      Town and in some areas outside of the Town limits. The Water Utility also

      supplies unmetered water to public fire hydrants used by firefighters for fire

      suppression. Thus, the Water Utility incurs certain costs in providing water

      service for public fire protection both within and without of Town limits. The

      Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019          Page 2 of 15
      Indiana Code allows municipal water utilities to recover such costs. Ind. Code

      § 8-1.5-3-1 to -15.

[4]   Prior to 2002, the Water Utility was subject to the jurisdiction of the Indiana

      Utility Regulatory Commission (“IURC”) and was required to seek IURC

      approval to establish or change any rates and charges to recover costs of

      providing water service for public fire protection. However, in 2002 the Water

      Utility withdrew from the jurisdiction of the IURC, as allowed by law. See I.C.

      § 8-1.5-3-9.1 (2002). Thereafter, the Water Utility’s rates and charges were

      established by the Town Council passing rate ordinances. See I.C. § 8-1.5-3-8.1

      (allowing a municipal legislative body to adopt and change utility rates and

      charges by adopting rate ordinances).

[5]   Until 2010, the Water Utility allocated its costs for water service for public fire

      protection to the Town itself and levied an annual hydrant fee on the Town. In

      2010, the Town decided the Water Utility should instead recover such costs

      through customer rates, as permitted by law. See I.C. § 8-1-2-103(d) (2010)

      (providing that a municipality may fund public fire protection services through

      charges “in the basic rates of all customers of the utility within the

      municipality,” rather than charges directly to the municipality). Therefore, the

      Town adopted Ordinance 2010-09 (“2010 Ordinance”) under which Section

      54.22 enacted a new charge for water service for fire protection, named “Public

      Fire Protection Charge” (“the Fee”), on all water customers. App. Vol. IV at

      191-92. The ordinance also included a schedule under which the amount billed

      to a customer was related to the size of the customer’s water meter. Id.

      Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019            Page 3 of 15
      Although the ordinance did not exempt customers outside the Town limits, the

      Water Utility charged the new rate only to customers within the Town limits.

[6]   In 2018, the Town decided to start charging the Fee to certain water customers

      outside of the Town limits. Therefore, the Town proposed Ordinance 2018-14

      (“2018 Ordinance”)—an amendment to Section 54.22—which reads as follows:

              (A) Fire protection service fees. Pursuant to Indiana Code section
              8-1-2-103(d), each user shall pay the fire protection service fees,
              which consist of (i) private and/or (ii) public. This fee applies to
              all Town residents on town water and any non-resident on Town
              water who is within 1,000 ft of a town hydrant.

      App. Vol. III at 125.

[7]   The 2018 Ordinance was introduced and first read during the regular public

      meeting of the Town Council on May 10, 2018. The Town scheduled a public

      hearing for June 28, 2018, to allow users of the water works, owners of property

      served or to be serviced by the water works, and other interested persons to be

      heard concerning the proposed rates and charges. The Town published a

      formal Notice of the public hearing and mailed it to users of the water works

      whose property is located outside the Town limits. The Notice informed

      ratepayers that, following adoption of the ordinance, they may challenge the

      Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019            Page 4 of 15
      ordinance under Indiana Code Sections 8-1.5-3-8.2 or 8-1.5-3-8.3.1 The Town

      Council adopted the 2018 Ordinance on July 26, 2018.

                     Relevant Municipally Owned Utility Law
[8]   Indiana Code Sections 8-1.5-3-1 to -15 govern the operation of municipally

      owned utilities, including water services, and Indiana Code Sections 8-1.5-3-8

      to 8.3 govern utility rates and charges. Municipalities owning utilities must

      furnish reasonably adequate services, and they may charge “reasonable and just

      rates and charges” for those services. I.C. § 8-1.5-3-8. Before adopting an

      ordinance related to rates and charges, the municipality must hold a public

      hearing and give notice of the same. I.C. § 8-1.5-3-8.1. Objections to any such

      rates and charges are governed by Indiana Code Section 8-1.5-3-8.2, which

      provides, in relevant part:

               (b) Owners of property connected or to be connected to and
               served by the works authorized under this chapter may file a
               written petition objecting to the rates and charges of the utility so
               long as:

                        (1) the petition contains the names and addresses of the
                        petitioners;

      1
        The procedures in Indiana Code Section 8-1.5-3-8.3(d) apply only to rates on property located outside the
      corporate boundaries that exceed by a certain percentage the rates charged on property within the corporate
      boundaries. It provides that IURC review and adjustment of such rates may be sought by either the
      municipality itself or the lesser of (1) ten percent of all or (2) twenty-five utility customers who own property
      located outside of the corporate boundaries. Given that the plaintiffs are only two utility customers with one
      property outside the Town limits, this section is not applicable to this case.

      Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019                                      Page 5 of 15
                    (2) the petitioners attended the public hearing provided
                    under section 8.1 of this chapter;

                    (3) the written petition is filed with the municipal
                    legislative body within five (5) days after the ordinance
                    establishing the rates and charges is adopted under section
                    8.1 of this chapter;

                    (4) the written petition states specifically the ground or
                    grounds of objection; and

                    (5) a petition has not been filed with the commission under
                    section 8.3 of this chapter or under IC 36-9-23-26.1[2]
                    appealing the same rates and charges of the utility.

          (c) Unless the objecting petition is abandoned, the municipal
          clerk shall file in the office of the clerk of the circuit or superior
          court of the county a copy of the rate ordinance or ordinances
          together with the petition. The court shall then set the matter for
          hearing at the earliest date possible, which must be within twenty
          (20) days after the filing of the petition with the court. The court
          shall send notice of the hearing by certified mail to the
          municipality and to the first signer of the petition at the address
          shown on the petition. All interested parties shall appear in the
          court without further notice, and the municipality may not
          conduct any further proceedings concerning the rates and charges
          until the matters presented by the petition have been heard and
          determined by the court.

          ***

2
    That statute relates to rates and charges of sewage works.

Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019                  Page 6 of 15
              (e) Upon the date fixed in the notice, the court shall, without a
              jury, hear the evidence produced. The court may confirm the
              decision of the municipal legislative body or sustain the objecting
              petition. The order of the court is final and conclusive upon all
              parties to the proceeding and parties who might have appeared at
              the hearing, subject only to the right of direct appeal. …

              (f) If the court sustains the petition, or if the petition is sustained
              on appeal, the municipal legislative body shall set the rates and
              charges in accordance with the decision of the court.

                                         Procedural History
[9]   Graham/Disser are water customers who live outside of the Town’s boundaries

      and within 1,000 feet of a fire hydrant. They attended the June 28, 2018, public

      hearing on the 2018 Ordinance and voiced their concerns. However, they did

      not file an administrative appeal of the 2018 Ordinance. Instead, on July 30,

      2018, Graham/Disser filed, pro se, a “Verified Petition for Declaratory Relief

      and Motion for Preliminary Injunction” in the Hendricks Circuit Court. The

      Petition sought a declaration that the 2018 Ordinance is “void and invalid”

      because it: (1) violates Indiana Code Section 8-1-2-103(d); (2) charges for a

      service for which Graham/Disser were already paying; (3) violates their

      “rights” by charging the Fee to water customers outside of Town limits but

      within 1,000 feet of a fire hydrant but not charging similarly-situated non-water

      customers; and (4) was implemented for the purpose of harassing those who

      remonstrated against an on-going annexation action. App. Vol. II at 17-21.

      The Petition also sought a preliminary injunction enjoining enforcement of the

      2018 Ordinance. The Town filed its Answer on August 20, 2018, and raised

      Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019                   Page 7 of 15
       the affirmative defenses that: (1) the complaint fails to state a claim upon which

       relief may be granted; and (2) the action is barred by the plaintiffs’ “failure to

       exhaust their remedies under Ind. Code § 8-1.5-3-8.2 and -8.3.” App. Vol. III at

       13.

[10]   The parties subsequently engaged in discovery and related negotiations, and the

       Town voluntarily delayed implementation of the 2018 Ordinance. On

       September 14, Graham/Disser filed their third discovery request which

       included five requests for admissions. The Town served its response to the

       requests for admissions on October 16, which was seven days past the due date

       for the admissions.

[11]   On October 4, 2018, Graham/Disser filed an amended complaint under which

       they added claims that: (1) the 2018 Ordinance violates Article 1, Section 23 of

       the Indiana Constitution; (2) the “fee is not a fee but rather an additional tax; a

       tax that is being unfairly assessed onto only certain persons. This fee is a

       constitutional violation,” id. at 38-39 (emphasis omitted); (3) the “fee/tax …

       creates unequal assessment,” App. Vol. III at 39; (4) to the extent Indiana Code

       Section 8-1-2-103(d) allows the Fee to be unequally “assessed” to water

       customers outside of Town limits who are within and without of 1,000 feet of a

       fire hydrant, it violates “the constitution,” id. at 40; and (5) the original water

       service fee enacted under the 2010 Ordinance “was not properly adopted,” id. at

       41.

       Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019             Page 8 of 15
[12]   Because the Town did not file an answer to the amended complaint by the

       October 31 due date, Graham/Disser moved for default judgment. In doing so,

       they noted that the admissions they had requested of the Town in their third

       discovery request were deemed admitted under Trial Rule 36 because the Town

       did not timely answer the request. On November 14, the Town filed its answer

       to the amended complaint in which it raised the same affirmative defenses. The

       trial court denied Graham/Disser’s motion for default judgment.

[13]   On November 27, the Town filed a Motion for Summary Judgment on all of

       Graham/Disser’s claims and also on the Town’s exhaustion of administrative

       remedies affirmative defense. Graham/Disser filed their response, including

       their affidavits, on December 27. On January 9, 2019, the Town filed its reply

       regarding summary judgment, and it moved to strike portions of

       Graham/Disser’s affidavits and to withdraw its admissions pursuant to Trial

       Rule 36(B). The trial court granted the Town’s motion to strike and its motion

       to withdraw its admissions. Graham/Disser then filed a motion to reconsider

       the order allowing the Town to withdraw its admissions and moved to strike

       certain portions of the Town’s summary judgment reply. On January 13, 2019,

       the trial court denied Graham/Disser’s motions to reconsider and to strike, and

       issued an order granting the Town’s motion for summary judgment “on all

       Plaintiff’s claims.” Appealed Order at 1. Graham/Disser now appeal the order

       permitting the Town to withdraw its admissions, the order striking portions of

       their affidavits, and the order granting the Town summary judgment.

       Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019        Page 9 of 15
                                  Discussion and Decision
                                          Standard of Review
[14]   The Town moved for summary judgment on the grounds that there are no

       disputed questions of material fact and it is entitled to judgment as a matter of

       law on all issues, including Graham/Disser’s failure to exhaust their

       administrative remedies. Our standard of review for summary judgment is well

       settled. When reviewing a grant or denial of summary judgment, we apply the

       same standard as the trial court. Holmes v. Celadon Trucking Serv. of Ind., Inc.,

       936 N.E.2d 1254, 1256 (Ind. Ct. App. 2010).

               The party moving for summary judgment has the burden of
               making a prima facie showing that there is no genuine issue of
               material fact and that the moving party is entitled to judgment as
               a matter of law. Once these two requirements are met by the
               moving party, the burden then shifts to the non-moving party to
               show the existence of a genuine issue by setting forth specifically
               designated facts.

       Daviess-Martin Cty. Joint Parks & Recreation Dep’t v. Estate of Abel by Abel, 77
N.E.3d 1280, 1285 (Ind. Ct. App. 2017) (citations omitted). All designated

       evidence and reasonable inferences must be construed in favor of the non-

       moving party, and doubts must be resolved against the moving party. Bleeke v.

       Lemmon, 6 N.E.3d 907, 917 (Ind. 2014). However, “when the facts are

       undisputed and the question is only one of law, our review is de novo.” Id.

       Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019             Page 10 of 15
[15]   Here, there are no disputed questions of material fact related to the dispositive

       issue of exhaustion of administrative remedies. Therefore, our review is de

       novo.

                        Exhaustion of Administrative Remedies
[16]   It is well-established that “a claimant with an available administrative remedy

       must pursue that remedy before being allowed access to the courts.” Turner v.

       City of Evansville, 740 N.E.2d 860, 861 (Ind. 2001).3 This is true even when

       neither a statute nor agency4 rule specifically mandates exhaustion as a

       prerequisite to judicial review. Austin Lakes Joint Venture v. Avon Utils., Inc., 648
N.E.2d 641, 644 (Ind. 1995). Thus, where an administrative remedy is readily

       available, “filing a declaratory judgment action is not a suitable alternative” to

       exhaustion. Carter v. Nugent Sand Co., 925 N.E.2d 356, 360 (Ind. 2010).

[17]   The exhaustion doctrine is supported by strong policy reasons and

       considerations of judicial economy.

       3
         The Town cites cases indicating that failure to exhaust administrative remedies “creates a jurisdictional
       defect.” Town Br. at 24 (quoting Common Council of City of Hammond v. Matonovich, 691 N.E.2d 1326, 1328
       (Ind. Ct. App. 1998). However, “our supreme court has indicated that failure to exhaust administrative
       remedies constitutes procedural error,” not jurisdictional error. Grdinich v. Plan Comm’n for Town of Hebron,
       120 N.E.3d 269, 274-75 (Ind. Ct. App. 2019) (citing First Am. Title Ins. Co. v. Robertson, 19 N.E.3d 757, 760
       (Ind. 2014), amended on reh’g on other grounds, 27 N.E.3d 768 (Ind. 2015)).
       4
          We note that the doctrine of exhaustion of administrative remedies does not apply only to “agencies” as
       defined under Administrative Orders and Procedures Act (AOPA), Title 4, Article 21.5 of the Indiana Code;
       it also applies in non-agency situations where there are available statutory remedies. Id.; see also, e.g.,
       Indianapolis-Marion Cty. Pub. Library v. Shook, LLC, 835 N.E.2d 533, 538 (Ind. Ct. App. 2005) (noting “the
       exhaustion doctrine essentially applies to cases that involve statutory or administrative remedies”).

       Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019                                   Page 11 of 15
               The exhaustion requirement serves to avoid collateral, dilatory
               action ... and to ensure the efficient, uninterrupted progression of
               administrative proceedings and the effective application of
               judicial review. It provides an agency with an opportunity to
               correct its own errors, to afford the parties and the courts the
               benefit of the [agency’s] experience and expertise, and to compile
               a [factual] record which is adequate for judicial review.

       Johnson v. Celebration Fireworks, Inc., 829 N.E.2d 979, 982 (Ind. 2005) (alteration

       in original) (quoting Austin Lakes, 648 N.E.2d at 644).

[18]   Here, in challenging the 2018 Ordinance, Graham/Disser had an

       administrative remedy available to them under Indiana Code Section 8-1.5-3-

       8.2. As owners of property connected to and served by the Water Utility and

       who attended the public hearing on the new water rates, they should have

       challenged those rates by filing a written petition with the Town Council within

       five days after the ordinance was adopted. Id.5 Pursuant to state law, the

       petitioner in the petition is to set forth the specific grounds for objection, thus

       affording the Town the opportunity to compile a factual record, review its

       actions in light of the stated objections, and correct any of its errors. Id.

       Because it is undisputed that Graham/Disser failed to file such a petition, this

       matter was not properly before the trial court. E.g., Turner, 740 N.E.2d at 861-

       62.

       5
         There is no allegation or evidence that a petition had been filed with the IURC under Indiana Code Section
       8-1.5-3-8.3, which would have precluded a remedy under section 8.2. I.C. § 8-1.5-3-8.2(b)(5).

       Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019                               Page 12 of 15
[19]   There are exceptions to the general requirement to exhaust administrative

       remedies. For example, exhaustion is not required where it would be futile,

       e.g., Scheub v. Van Kalker Family Ltd. P’ship, 991 N.E.2d 952, 958 (Ind. Ct. App.

       2013), where the agency action is ultra vires, e.g., Ind. Dep’t of Envtl. Mgmt. v.

       Twin Eagle LLC, 798 N.E.2d 839, 844 (Ind. 2003), where exhaustion would

       cause irreparable injury, S. Bend Fed’n of Teachers v. Nat’l Educ. Ass’n—S. Bend,

       180 Ind. App. 299, 311, 389 N.E.2d 23, 31 (Ind. Ct. App. 1979), or where other

       equitable considerations preclude exhaustion, Barnette v. U.S. Architects, LLP, 15
N.E.3d 1, 10 (Ind. Ct. App. 2014).

[20]   Graham/Disser contend that pursuing the administrative remedies available to

       them would have been futile because they challenged the constitutionality of

       Indiana Code Section 8-1-2-103(d), as applied, and the Town does not have the

       power to declare a statute unconstitutional. However, “[e]stablished

       administrative procedures may not be bypassed simply because a party raises a

       constitutional issue; otherwise they could be circumvented by the mere

       allegation of a constitutional deprivation.” Barnette, 15 N.E.3d at 10. Rather,

               [e]ven if the ground of the complaint is the unconstitutionality of
               the statute, which may be beyond the agency’s power to resolve,
               exhaustion of administrative remedies may still be required
               because administrative action may resolve the case on other
               grounds without confronting broader legal issues.

       Outboard Boating Club of Evansville, Inc. v. Ind. State Dep’t of Health, 952 N.E.2d
340, 344 (Ind. Ct. App. 2011) (quoting Twin Eagle, 798 N.E.2d at 844), trans.

       denied; see also State v. Sproles, 672 N.E.2d 1353, 1360-61 (Ind. 1996) (noting
       Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019            Page 13 of 15
       arguments that would allow taxpayers to bypass administrative procedures in

       constitutional challenges must be addressed to the legislature as “[r]equiring

       exhaustion of administrative remedies even in constitutional cases is well

       within legislative discretion”). Thus, the exhaustion requirement “should not

       be dispensed with lightly on grounds of ‘futility.’” Johnson, 829 N.E.2d at 984

       (quotations and citation omitted). To prevail upon a claim of futility, “one

       must show that the administrative agency was powerless to effect a remedy or

       that it would have been impossible or fruitless and of no value under the

       circumstances.” Id.

[21]   In this case, the Town had the power to supply a remedy. It could decide on

       administrative review that, for example, the ordinance must be changed or

       repealed because it erroneously charges customers twice for the same service, as

       Graham/Disser allege; such a decision would resolve the case and make the

       constitutionality of Indiana Code Section 8-1-2-103(d), as applied, moot. Or

       the Town could decide that the ordinance should be repealed because it was

       enacted solely for the purpose of harassing annexation remonstrators like

       Graham/Disser, as they also claim. Graham/Disser may believe it is unlikely

       that the Town will grant them such relief on agency review, but “the mere fact

       that an administrative agency might refuse to provide the relief requested does

       Court of Appeals of Indiana | Opinion 19A-PL-153 | May 21, 2019         Page 14 of 15
       not amount to futility.” Johnson, 829 N.E.2d at 984. Administrative review

       would not have been futile in this case.6

[22]   Nor do we discern any other exception to the exhaustion requirement. The

       Town’s action was not ultra vires; it had legal authority to adopt and/or amend

       a rate ordinance. I.C. § 8-1.5-3-8 and -8.1. Graham/Disser do not allege that

       exhaustion would have caused them irreparable injury; in fact, the Town

       voluntarily delayed implementation of the 2018 Ordinance. And

       Graham/Disser point to no other equitable consideration that would preclude

       exhaustion, such as equitable estoppel. See, e.g., Barnette, 15 N.E.3d at 10.

                                                   Conclusion
[23]   Because Graham/Disser were required to exhaust their administrative remedies

       before seeking access to the courts and failed to do so,7 the trial court did not err

       in granting summary judgment to the Town.

[24]   Affirmed.

       Riley, J., and Pyle, J., concur.

       6
         Graham/Disser also state in one sentence of their reply brief that this case was properly before the trial
       court because “at least one of the issues falls within the ‘primary jurisdiction’ of the courts rather than with
       the government agencies.” Reply Br. at 9. However, to the extent they raised the issue of “primary
       jurisdiction,” that issue is waived because (1) Graham/Disser failed to provide cogent argument and citation
       to relevant authority as required by Appellate Rule 46(A)(8), and (2) an issue may not be raised for the first
       time in a reply brief, e.g., Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 977 (Ind. 2005).
       7
         Given our holding, Graham/Disser’s claims regarding the withdrawal of admissions and partially stricken
       affidavits are moot.

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