Court Opinion

ID: 3198753
Source: CourtListenerOpinion
Date Created: 2016-04-28 15:04:51.683331+00
Date Added: 2024-06-11T07:39:12.629030
License: Public Domain

FILED
                                                                Apr 28 2016, 9:54 am

                                                                     CLERK
                                                                 Indiana Supreme Court
                                                                    Court of Appeals
                                                                      and Tax Court

ATTORNEYS FOR APPELLANT                                 ATTORNEY FOR APPELLEES
Alex C. Intermill                                       Stephen R. Buschmann
Curtis T. Jones                                         Thrasher Buschmann & Voelkel, P.C.
Bryan H. Babb                                           Indianapolis, Indiana
Jonathan W. Hughes
Bose McKinney & Evans LLP
Indianapolis, Indiana

______________________________________________________________________________

                                          In the
                            Indiana Supreme Court
                            _________________________________

                                   No. 30S01-1510-MI-626

TOWN OF FORTVILLE,
                                                        Appellant (Respondent below),

                                             v.

CERTAIN FORTVILLE ANNEXATION
TERRITORY LANDOWNERS,
                                                      Appellees (Petitioners below).
                            _________________________________

              Appeal from the Hancock Circuit Court, No. 30C01-1310-MI-1832
                          The Honorable Richard D. Culver, Judge
                          _________________________________

     On Petition To Transfer from the Indiana Court of Appeals, No. 30A01-1410-MI-442
                          _________________________________

                                       April 28, 2016

Rucker, Justice.
         In this involuntary annexation case the trial court determined, after a bench trial, that a
statutory requirement for annexation had not been met. Because the trial court’s judgment is not
clearly erroneous, we affirm.

                                  Facts and Procedural History

         On March 28, 2013 the Town of Fortville (“Fortville”) adopted Resolution 2013-3A
proposing to annex 5,944 acres of land adjacent to the municipality. In July 2014, following
notice and public hearings, Fortville adopted Ordinance 2013-3A and Resolution 2013-7A
annexing a reduced area of 644 acres (the “Annexation Territory”). In the meantime a number of
landowners (“Remonstrators”) comprising ninety-three (93) percent of the owners of parcels
within the affected area filed a petition challenging the proposed annexation. Prior to a hearing
on the petition, the parties entered various stipulations which had the effect of narrowing the
issues for trial to a single determination, namely: whether the Annexation Territory is needed
and can be used by the municipality for its development in the reasonably near future. After a
hearing the trial court entered judgment in favor of the Remonstrators ordering that Fortville’s
annexation shall not take place. In essence the trial court concluded the evidence did not support
Fortville’s contention that it needed the Annexation Territory for its development in the
reasonably near future. In support of its judgment the trial court issued detailed findings of fact
and conclusions of law.

         Fortville appealed contending: (1) the trial court erred as a matter of law by not giving
substantial deference to the municipality’s decision to proceed with annexation, and (2) there
was sufficient evidence to demonstrate the Annexation Territory was needed and can be used for
Fortville’s development in the reasonably near future. Focusing primarily on this latter claim,
the Court of Appeals reversed the trial court’s judgment concluding the trial court failed to apply
the proper legal standard in assessing whether Fortville needed and could use the Annexation
Territory in the reasonably near future. See Town of Fortville v. Certain Fortville Annexation
Territory Landowners, 36 N.E.3d 1176, 1179 (Ind. Ct. App. 2015), vacated. Having previously
granted transfer we now affirm the judgment of the trial court. Additional facts are set forth
below.

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                       Annexation Procedure and the Standard of Review

        “The framework of Indiana’s annexation laws has long featured three basic stages: (1)
legislative adoption of an ordinance annexing certain territory and pledging to deliver certain
services within a fixed period of time; (2) an opportunity for remonstrance by affected
landowners; and (3) judicial review.” City of Carmel v. Steele, 865 N.E.2d 612, 615 (Ind. 2007)
(citation omitted). Although the applicable statutes have undergone several revisions over the
years,1 certain general propositions of law have long applied. Id. at 615-16. For instance,
annexation statutes invest in the governing body of a municipality the exclusive authority to
annex territory. Id. at 616. And as a legislative function annexation becomes a question subject
to judicial intervention only upon review as provided by statute. Id.

        Because a municipality’s authority to annex territory is defined by statute, the court’s role
is to determine whether the municipality has exceeded its statutory authority, and whether it has
met the conditions imposed by the statute. Rogers v. Mun. City of Elkhart, 688 N.E.2d 1238,
1239-40 (Ind. 1997). Although the burden of pleading is on the landowner, “the burden of proof
is on the municipality to demonstrate compliance with the statute.” Id. The court sits without a
jury and enters judgment on the question of annexation after receiving evidence and hearing
argument from both sides. Ind. Code § 36-4-3-12.

        Once the trial court has decided whether to approve an annexation ordinance, either the
municipality or the landowner may seek appellate review. Where, as here, the trial court upon its
own motion enters special findings of fact and conclusions of law, we apply the standard of
review set forth in Indiana Trial Rule 52. Chidester v. City of Hobart, 631 N.E.2d 908, 909 (Ind.
1994). We review issues of fact for sufficiency of the evidence and look to the record only for
inferences favorable to the judgment. Id. at 910. We will not set aside findings or judgments
unless clearly erroneous. “Findings are clearly erroneous only when the record contains no facts

1
  See Id. at 615-16 n.1 (observing “Indiana’s statutory annexation scheme dates to 1824, and for much of
the State’s history aggrieved property owners had virtually no recourse to contest annexation. In 1991
and 2001, the Legislature extensively revised the annexation statutes” (internal citations omitted)).
Indeed recent legislative enactments further limit a municipality’s ability to involuntarily annex certain
agricultural lands. See generally Ind. Code ch. 36-7-4.

                                                    3
to support them either directly or by inference.” Yanoff v. Muncy, 688 N.E.2d 1259, 1262 (Ind.
1997) (quotation and citation omitted). And a “judgment is clearly erroneous if it applies the
wrong legal standard to properly found facts.” Id. (citation omitted). In order to determine that a
finding or conclusion is clearly erroneous, an appellate court’s review of the evidence must leave
it with the firm conviction that a mistake has been made. Id. (citation omitted). This case does
not meet that standard.

                                            Discussion
                                                 I.

       Fortville first contends the trial court erred as a matter of law because it failed to give
substantial deference to Fortville’s decision to annex. We of course recognize that “annexation
‘is essentially a legislative function’” and that “courts play only a limited role in annexations and
must afford the municipality’s legislative judgment substantial deference.” In re Annexation of
Certain Territory to City of Muncie, 914 N.E.2d 796, 801 (Ind. Ct. App. 2009) (citing City of
Fort Wayne v. Certain Southwest Annexation Area Landowners, 764 N.E.2d 221, 224 (Ind.
2002)). But that does not mean a trial court’s role is to sustain blindly an annexation decision
simply because it is the product of legislative decision-making. Rather, the court is obligated to
ensure the annexing municipality has “not exceeded its authority and that the statutory conditions
for annexation have been satisfied.” Chidester, 631 N.E.2d at 910; accord Bradley v. City of
New Castle, 764 N.E.2d 212, 216 (Ind. 2002) (“The trial court’s role is to decide whether the
municipality has operated within its authority and satisfied the statutory conditions for
annexation.”); City of Aurora, 165 N.E.2d at 145 (“The court is . . . simply given the power to
determine, in the event there is a remonstrance filed, whether certain conditions imposed by the
statute are met.”). The judgment of the court simply establishes the fact that the conditions of
the statute necessary to overcome a remonstrance have or have not been met; and if they have
met the statutory requirements then the trial court is bound to approve annexation of the affected
territory. Chidester, 631 N.E.2d at 910.

                                                 4
       Based on our review of the record, we are satisfied the trial court fulfilled its obligation to
consider only whether the statutory conditions for annexation have been satisfied. We thus turn
to Fortville’s second contention.

                                                 II.

       Indiana Code section 36-4-3-13 outlines in detail the various requirements that must be
satisfied before a proposed annexation may take place. As indicated earlier, prior to trial the
parties entered into various stipulations concerning the statutory requirements leaving but one for
the trial court’s determination: “[t]hat the territory sought to be annexed is . . . needed and can
be used by the municipality for its development in the reasonably near future.” I.C. § 36-4-3-
13(c)(2) (2013).

       The trial court determined Fortville’s “evidence does not support a conclusion for the
need for annexation in the near future.” Order at 7, ¶ R. Disagreeing with the trial court, the
Court of Appeals was of the view that in reaching its determination “the trial court was looking
for evidence of physical construction in the area in the near future to fulfill Fortville’s burden of
showing that the Annexation was needed and could be used by Fortville for its development in
the reasonably near future.” Town of Fortville, 36 N.E.3d at 1179 (emphasis added). In
reversing the trial court’s judgment, the Court of Appeals relied on a footnote from this Court’s
opinion in Chidester, 631 N.E.2d at 913 n.6, to conclude:

               our Supreme Court—in upholding the trial court’s finding that the
               City of Hobart needed and could use the land to be annexed—
               noted that the trial court found that the City needed and could use
               the land for “transportation linkages with other developing areas,
               to control adjacent development on its borders, and to prevent
               conflicting land uses.” Therefore, it seems that a municipality
               need not demonstrate immediate plans to build on the annexed land
               in order to show that it needs and can use the land for its
               development in the reasonably near future.

Town of Fortville, 36 N.E.3d at 1180.

                                                 5
       Our colleagues read the Chidester footnote too broadly. At stake in that case was a
portion of the statute that required “a city’s annexation plan show that the city will promptly
provide the annexed territory with municipal services equivalent to those it already provides in
similar areas of the existing city.” 631 N.E.2d at 910. After examining the evidence we noted
the trial court “concluded that the fiscal plan and the evidence established that Hobart will
provide equivalent capital and non-capital services to like areas of the annexed territory.” Id. at
911. In a footnote in a section addressing the challengers’ waived constitutional claims—one
being that the annexation constituted a taking without just compensation under the Fifth and
Fourteenth Amendments because Hobart merely wanted to increase its tax revenues—we said:

               the current statute’s demand that the city need and can use the
               territory carries with it the requirement that cities demonstrate
               more than an interest in increased tax revenues. . . . In this case,
               the record amply supports Judge Richards’ earlier findings and
               conclusion . . . that Hobart needed and could use the annexed
               territory for transportation linkages with other developing areas, to
               control adjacent development on its borders, and to prevent
               conflicting land uses.

Id. at 913. Although we affirmed the trial court’s judgment based on the facts presented, we do
not read the Chidester footnote as standing for the broader proposition that physical construction
is an inappropriate consideration in determining whether the territory sought to be annexed is
needed and can be used by the municipality for its development in the reasonably near future.

       In any event, assuming for the sake of argument the trial court improperly relied on the
absence of any proposed “bricks and mortar” development, the trial court’s findings demonstrate
the trial court did consider non-brick and mortar evidence as well. For example, the trial court’s
judgment contained the following findings and conclusions:

               8. The proposed Annexation Territory squares the western
               boundary of the town and connects the northern and southern
               sections of the town.

               9. Over fifty percent (50%) of the Remonstrators live in houses
               that connect with a road that is within the town’s current
               boundaries.

                                                6
10. Territory just north and west of the Annexation Territory has
seen growth and development.

***

12. Fortville operates its own municipal water and sewer utilities
and has invested significant amounts of money in both utilities
over the last several years. The annexation area is included within
the town[’]s agreed upon service area.

13. The Annexation Territory currently receives various town
services . . . [but] Fortville does not receive a portion of the taxes
paid by land owners in the Annexation Territory . . . .

***

32. Fortville presented a number of reasons that it desired to annex
the Annexation Territory, including:

   A. The annexation will produce additional tax revenues for
      [Fortville] (Ex 2, pg 5)[;]

   B. Residents of the Annexation Territory use roads that
      Fortville is required to maintain due to prior annexations,
      creating an unfair tax situation[;]

   C. The need to control zoning in the Annexation Territory;

   D. The desire to control sewer service outside the town limits
      although Fortville currently has the exclusive right to place
      sewers in the Annexation Territory and beyond. . . .[;]

   E. The desire to protect nearby areas from competition for the
      provision of water service, although:

       (1) The control of water service in an area is on a “first
           come” basis;

       (2) There was no evidence that Citizens Utilities has any
           intent to attempt to provide water service to the
           [A]nnexation [T]erritory;

       (3) Fortville has the authority to extend water service
           outside its corporate boundaries and into the
           Annexation Territory anytime it wishes, thus
           establishing water service control in the area;

                                  7
                       (4) Fortville has agreed to extend its water service into
                           Hamilton County into a proposed development called
                           Vermillion (Ex 15), citing the fact that the extension of
                           such service is reasonable since the development is
                           fairly assured to take place[;]

                       (5) Fortville does not wish to extend its water service into
                           the Annexation Territory at the present time, because
                           unlike Vermillion, Fortville has no expectation that the
                           Annexation Territory will be developed in the
                           reasonably near future, thus lacking a sufficient number
                           of water customers to justify the cost of installation of
                           water mains[;]

                   F. The desire to protect its Wellhead Protection Area (Ex 22),
                      a small part of the Southern tip of which extends into the
                      Annexation Territory[;]

                   G. The desire to round out its boundaries[;]

                   H. That it responds to dispatched police runs in the
                      Annexation Territory.

Order at 2, 4-5. The court concluded that “Fortville’s anticipation that residential growth will
occur in Fortville based on the growth in Fishers and McCordsville is reasonable. Although the
evidence suggests a long-term inevitability to annexation, the evidence does not support a
conclusion for the need for annexation in the near future.” Id. at 7, ¶ R. In sum the trial court
considered physical as well as non-physical development in reaching its conclusion.

       Unrebutted evidence shows that Fortville has no plans to build roads through the territory
such as the transportation linkages as in Chidester, Fortville’s Ex. 2 at 11-12 (no additional street
lights are currently proposed, no current cost estimate of capital improvements to support road
and street improvements because no proposed projects existed); or provide sanitary sewer service
until unspecified development moves into the Annexation Territory, Id. at 6; or provide parks
and recreation services to the Annexation Territory, Id. at 14 (hypothetical developers will be
required to provide green space for future parks and recreation demands, but no current plans).

                                                 8
       The evidence also shows that none of the Remonstrators have been approached by
developers interested in their land. Tr. at 160 (testimony of Remonstrator Reichenbach); Tr. at
168 (testimony of Remonstrator Kingen); Tr. at 174 (testimony of Remonstrator Garst); Tr. at
184 (testimony of Remonstrator Hulburt). Further, Fortville has presented no evidence it plans
to encourage or entice Remonstrators to sell their land in order to aid the town’s development.
See Tr. at 50 (testimony of Town Council President William Hiday: “[N]obody’s putting that
proverbial gun to their head” to push Remonstrators to sell their farmland). It is not necessary
that these specific 644 acres must be developed with brick and mortar projects in order to further
the town’s development. But the evidence does not show how with the addition of this land to
Fortville the town will develop in any other way or in any other direction in the reasonably near
future, aside from the Annexation Territory providing an increased tax base from which to
recoup police protection fees, road maintenance fees, and fire hydrant protection fees. See Br. of
Appellant at 5-8 (“Remonstrators receive these services without contributing toward that cost”;
“none of the tax dollars paid by the Remonstrators go towards paying for maintenance of that
road [that borders Fortville and the Annexation Territory]”; “none of their tax dollars go to
[Fortville] to offset the associate costs [of police protection]”; “Remonstrators . . . pay none of
the hydrant rentals but receive the same benefit of having reliable and ample water supply for
fire suppression as [Fortville] citizens, but only [Fortville] citizens pay for that benefit”). But we
note an increased tax base cannot be the only reason to support the “needed and can be used for
its development in the reasonably near future” requirement of an annexation. See City of
Aurora, 165 N.E.2d at 148; accord Chidester, 631 N.E.2d at 913 n.6.

       Fortville also argues it is concerned about preserving its water utility and the Annexation
Territory can be used to prevent other providers from establishing a presence in the area. But
even without the annexation, Fortville is able to establish its water presence in the Annexation
Territory because it is “first come, first served.” Tr. at 56. It simply does not wish to do so at
this time because there is no pending development in need of water services. Tr. at 112
(Fortville’s witness Daniel Cutshaw explaining it is a risk for a water provider to expand water
lines “unless somebody is wanting them or paying for them”). In fact, the Fortville water utility
has expanded its service to a subdivision near Fishers because there was demand for the water—
but no demand for water in the Annexation Territory. Tr. at 110.

                                                  9
       The trial court’s findings also reflect Fortville annexed 775 acres in 2007 which included
500 acres of farm land that had yet to be developed, and “Fortville presented no evidence of
impending development on any of that annexed land.” Order at 3, ¶ 23. Further, no residential
building permits have been issued in the Annexation Territory since 2007, and only seventeen
building permits have been issued in all of Fortville since 2009. Id. at ¶ 25, 27. The evidence
supports these findings. For these reasons, the trial court’s decision upholding the remonstrance
and denying annexation because Fortville has failed to meet its burden in showing the
Annexation Territory is needed and can be used for Fortville’s development in the reasonably
near future is not clearly erroneous.

                                          Conclusion

       We affirm the judgment of the trial court.

Rush, C.J., and Dickson, David and Massa, JJ., concur.

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