Court Opinion

ID: 4433995
Source: CourtListenerOpinion
Date Created: 2019-08-28 15:03:56.558163+00
Date Added: 2024-06-11T14:53:07.209178
License: Public Domain

FILED
                                                                     Aug 28 2019, 8:42 am

                                                                         CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court

ATTORNEYS FOR APPELLANTS                                   ATTORNEYS FOR APPELLEES
Alice M. Morical                                           Paul L. Jefferson
Michael R. Limrick                                         McNeely Stephenson
Evan D. Carr                                               Indianapolis, Indiana
Hoover Hull Turner LLP                                     Grant M. Reeves
Indianapolis, Indiana                                      Barada Law Offices LLC
                                                           Rushville, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

The City of Lawrenceburg,                                  August 28, 2019
Indiana, the Mayor of the City of                          Court of Appeals Case No.
Lawrenceburg in his official                               19A-PL-263
capacity, and The Common                                   Appeal from the Decatur Superior
Council of the City of                                     Court
Lawrenceburg in their official                             The Honorable Matthew D.
capacities,                                                Bailey, Judge
Appellants-Defendants,                                     Trial Court Cause No.
                                                           16D01-1702-PL-89
        v.
Franklin County, Indiana, and
The Franklin County Board of
Commissioners in their official
capacities,
Appellees-Plaintiffs

Baker, Judge.

Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                           Page 1 of 22
[1]   The City of Lawrenceburg (Lawrenceburg) entered into an agreement with

      Franklin County (Franklin), pursuant to which Lawrenceburg would share its

      gaming tax revenue with Franklin by making annual payments of $500,000. In

      2014, Lawrenceburg stopped making those payments. Franklin sued for breach

      of contract and the trial court entered summary judgment in its favor.

      Lawrenceburg appeals, raising the following arguments: (1) the trial court

      erroneously determined that it had waived its defenses; (2) the agreement is

      void by statute; and (3) there are genuine issues of material fact regarding

      consideration, Franklin’s performance of its obligations, and the duration of the

      agreement. We hold that Lawrenceburg did not waive its defenses and that the

      agreement is void by statute. Consequently, we reverse and remand with

      instructions to enter judgment in favor of Lawrenceburg.

                                                      Facts     1

[2]   As the home dock of a riverboat casino, Lawrenceburg receives a percentage of

      Gaming Tax Revenue2 collected by the State each year. In 2005, Lawrenceburg

      created a revenue sharing program, pursuant to which it shared some of its

      Gaming Tax Revenue with surrounding counties, including Franklin.

      1
       We held oral argument in Indianapolis on July 22, 2019. We thank counsel for both parties for their
      superior written and oral presentations.
      2
        Gaming Tax Revenue, as defined by the agreement between the parties, “is the total amount received by []
      Lawrenceburg from the combined incomes of both the wagering taxes and admissions taxes” under Indiana
      Code sections 4-33-13-1 to -6 (“Wagering Tax Revenue”) and Indiana Code sections 4-33-12-1 to -6
      (“Admissions Tax Revenue”), respectively. Appellants’ App. Vol. II p. 100.

      Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                             Page 2 of 22
[3]   On January 17, 2006, Lawrenceburg and Franklin entered into a “Special

      Revenue Sharing Agreement” (the Agreement). Appellants’ App. Vol. II p.

      100. The recitals of the Agreement indicate that it was made “in consideration

      of the mutual covenants and promises contained herein[.]” Id. The Agreement

      required Lawrenceburg to make annual $500,000 payments to Franklin; those

      payments were to be made “from the net amount of Gaming Tax Revenues

      Lawrenceburg receives on an annual basis.” Id. at 101. The Agreement “is

      contingent upon Lawrenceburg’s continued receipt of Wagering Tax

      Revenue . . . .” Id. Both entities agreed that they had “the necessary power and

      authority to enter into this Agreement” and that they would “cooperate with

      each other in a marketing plan to promote tourism and development in each

      area.” Id.

[4]   After the Agreement was executed, the Lawrenceburg Common Council

      appropriated $500,000 in 2006 for Lawrenceburg’s first payment to Franklin.

      Lawrenceburg continued to make annual $500,000 payments through 2013.3

      According to Lawrenceburg, in 2013, it decided to stop making payments

      because of increased competition from nearby Ohio casinos and because of a

      projected 30% loss in its Gaming Tax Revenue for the following year. 4

      3
        It is unclear from the record whether, in the years following 2006 in which Lawrenceburg made payments
      to Franklin, Lawrenceburg appropriated funds for the payments.
      4
       Lawrenceburg actually realized a 49.1% loss in Gaming Tax and “true up” tax revenues in 2014.
      Appellants’ App. Vol. II p. 107.

      Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                            Page 3 of 22
[5]   According to Lawrenceburg, Franklin did nothing to earn the annual payments.

      It did not provide any services or goods, nor did it incur any non-trivial

      expenses in connection with the Agreement.

[6]   Franklin explains the reason for the Agreement, as well as its own obligation, as

      follows:

              In 2006, the issue of the distribution of local riverboat gaming
              monies was receiving special scrutiny by the Indiana Gaming
              Commission and the Indiana General Assembly. . . .
              Lawrenceburg was rightfully concerned with the possibility of
              seeing its wagering and admissions taxes lessening or ending
              completely, as almost all of its revenue for development
              remained at the local level, which conflicted with the policies of
              riverboat gaming. In an effort to keep as much money as
              possible, to comply with its statutory requirements, and to avoid
              potential difficulty with state lawmakers and governmental
              regulators, Lawrenceburg approached Franklin County so it
              could accurately represent that its economic development
              activities were, in fact, regional in scope.

              . . . Lawrenceburg identified an opportunity to further the
              footprint of its economic development by utilizing adjacent
              counties, including Franklin County, and in turn persuade the
              legislature to keep the wagering and admissions revenue flowing.
              In that effort to ensure that monies kept flowing to
              Lawrenceburg, the City of Lawrenceburg and Franklin County
              entered into [the Agreement], and a separate grant program, at
              Lawrenceburg’s invitation. This regional partnership was shown
              to and apparently had the intended effect of appeasing regulators
              and legislators looking at the issue. In exchange for the
              Agreement, Franklin County publicly supported Lawrenceburg’s
              riverboat revenue program. That support was effective, as
              Lawrenceburg kept its revenue.

      Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019           Page 4 of 22
      Appellees’ Br. p. 11-12 (internal citations omitted). In fashioning this

      explanation, Franklin does not cite to any specific documents or evidence

      related to this case or the Agreement; instead, it cites statutes and an unrelated

      case. It does direct our attention to two letters drafted by Franklin County:

          • On January 23, 2006, the Franklin County Board of Commissioners sent
            a letter thanking Lawrenceburg for its “contribution” of $500,000 and
            stating that Franklin supported Lawrenceburg in its “endeavors with
            your riverboat revenue.” Appellants’ App. Vol. II p. 142.
          • On January 28, 2006, the president of the Franklin County Council sent
            a letter thanking Lawrenceburg for including Franklin in its Revenue
            Sharing Program. The letter acknowledges that the Agreement will
            remain in effect only so long as Lawrenceburg “continues to enjoy
            financial stability and a steady flow of revenue. We also understand that
            this revenue flow would be subject to the decisions made by the Indiana
            State Legislature. We, the members of the County Council pledge to
            support your endeavor by contacting the necessary members of the State
            Legislature and extend to them how important this Revenue Sharing
            program is to all of the 9 surrounding counties included in the
            agreement.” The letter notes that the “sharing of this revenue with us
            and the other counties is truly a wonderful example of a neighbor helping
            others.” Id. at 145.

[7]   On November 18, 2015, Franklin sued Lawrenceburg for breach of contract. In

      Lawrenceburg’s answer, it did not raise any affirmative defenses. Franklin

      moved for summary judgment, arguing that the Agreement was a valid and

      enforceable contract that could be terminated only if there was a complete

      failure of Lawrenceburg’s Gaming Tax Revenue stream. Lawrenceburg filed a

      cross-motion for summary judgment, arguing that the Agreement was void

      pursuant to Indiana Code section 36-4-8-12(b) because it purported to obligate

      the city to pay money that had not been appropriated. It also argued that the
      Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019         Page 5 of 22
Agreement was unenforceable because it was not supported by consideration

and did not have a finite durational term. Following briefing and a hearing, the

trial court entered summary judgment in favor of Franklin on August 10, 2018.

In pertinent part, it found and held as follows:

        4.       The Agreement acknowledges adequate consideration.

                                                  ***

        9.       The Wagering Tax revenue that is shared pursuant to the
                 Agreement is appropriated to Lawrenceburg by the State
                 of Indiana. These funds are State money collected
                 pursuant to a State tax.

                                                  ***

        12.      Annually, Lawrenceburg has continued to receive
                 wagering tax revenue in amounts exceeding $500,000.

        13.      Franklin County has fully performed under the
                 Agreement.

        14.      There are no genuine issues of material fact.

        15.      The Agreement has a sufficient term of duration. The
                 duration of the Agreement is the period of time that
                 Lawrenceburg continues to receive Wagering Tax revenue
                 in an amount sufficient to make the agreed payment to
                 Franklin County.

        16.      The Agreement is a valid and enforceable contract.

Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019         Page 6 of 22
              17.      Lawrenceburg has breached the Agreement, and Franklin
                       County has suffered damages.

              18.      Pursuant to Indiana Trial Rule 8(A), Lawrenceburg’s
                       failure to plead illegality and lack of consideration results
                       in waiver of those issues.

              19.      The Wagering Tax revenue funds shared under the
                       Agreement are appropriated by the State of Indiana and
                       paid to Lawrenceburg pursuant to IC 4-33-13-6.

              20.      IC 4-33-13-6(b) specifically allows units of local
                       government to enter into agreements to share Wagering
                       Tax revenue with other units of local government.

              21.      Lawrenceburg’s argument that the contract is void because
                       it requires the payment of public funds beyond the amount
                       appropriated at the time of the execution of the Agreement
                       is without merit.

      Appealed Order p. 1-3. Following a hearing, on January 23, 2019, the trial

      court ordered Lawrenceburg to pay Franklin damages in the amount of $2.5

      million plus prejudgment interest, for a total award of approximately $3.1

      million. Lawrenceburg now appeals.

                                    Discussion and Decision
[8]   Lawrenceburg argues that the trial court should not have granted summary

      judgment in favor of Franklin. Instead, Lawrenceburg claims that summary

      judgment should have been granted in its own favor or, alternatively, that there

      are genuine issues of fact rendering summary judgment improper.

      Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019               Page 7 of 22
[9]    Our standard of review on summary judgment is well established:

               We review summary judgment de novo, applying the same
               standard as the trial court: “Drawing all reasonable inferences in
               favor of . . . the non-moving parties, summary judgment is
               appropriate ‘if the designated evidentiary matter shows that there
               is no genuine issue as to any material fact and that the moving
               party is entitled to judgment as a matter of law.’” Williams v.
               Tharp, 914 N.E.2d 756, 761 (Ind. 2009) (quoting T.R. 56(C)). “A
               fact is ‘material’ if its resolution would affect the outcome of the
               case, and an issue is ‘genuine’ if a trier of fact is required to
               resolve the parties’ differing accounts of the truth, or if the
               undisputed material facts support conflicting reasonable
               inferences.” Id. (internal citations omitted).

       Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014).

[10]   The interpretation of a statute is a question of law to which we apply a de novo

       standard of review. Kaser v. Barker, 811 N.E.2d 930, 932 (Ind. Ct. App. 2004).

                                                   I. Waiver
[11]   The trial court found, and Franklin continues to argue on appeal, that

       Lawrenceburg has waived its argument that the Agreement is void by statute.

       According to Franklin, this argument amounts to an affirmative defense that

       should have been, but was not, pleaded in Lawrenceburg’s answer.

[12]   Indiana Trial Rule 8(C) provides that a responsive pleading “shall set forth

       affirmatively and carry the burden of proving” affirmative defenses, including

       “illegality.” Here, Lawrenceburg’s answer did not assert any affirmative

       defenses, nor did it ever seek to amend its answer to add any. Instead, it argued

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019         Page 8 of 22
       that the Agreement was void by statute for the first time in the summary

       judgment proceedings. The parties disagree as to whether Lawrenceburg’s

       argument that the Agreement is void by statute qualifies as the affirmative

       defense of illegality. As explained below, we need not resolve that issue to find

       that no waiver occurred here.

[13]   Generally, courts of this State have a strong preference for deciding matters on

       the merits as opposed to legal technicalities. E.g., Mizen v. State ex rel. Zoeller, 72
N.E.3d 458, 466-67 (Ind. Ct. App. 2017), trans. denied. Therefore, even if we

       assume solely for argument’s sake that Lawrenceburg’s argument that the

       Agreement is void by statute amounts to the affirmative defense of illegality as

       set forth in Indiana Trial Rule 8(C), we will consider whether Franklin was

       prejudiced by the sequence of events in this case.

[14]   In Mizen, this Court considered a defendant who asserted a statute of limitations

       defense—also an affirmative defense explicitly included in Trial Rule 8(C)—for

       the first time at summary judgment. The trial court found that the defense was

       waived for failure to plead it, but we reversed:

               [T]here is a presumption that issues can be raised as they, in good
               faith, are developed. In order to rebut this presumption, the
               party against whom the new issue is raised may make an
               affirmative showing of prejudice. In order to demonstrate
               prejudice, the party must show that it will be deprived of, or
               otherwise seriously hindered in the pursuit of some legal right if
               injection of the new issue is permitted.

       Id. at 467 (internal quote marks and citations omitted).

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019           Page 9 of 22
[15]   Here, as in Mizen, Franklin had ample time to, and did, respond to

       Lawrenceburg’s arguments made at summary judgment. Franklin designated

       no evidence showing prejudice from the timing of Lawrenceburg’s arguments,

       nor could it, given that the argument that the Agreement was void by statute is

       a purely legal argument that did not necessitate a fully developed factual record

       to address. Franklin’s argument that the only way to raise an affirmative

       defense is through an answer or motion to amend an answer is overly technical

       and fails to account for our predilection to resolve issues on their merits when

       possible.5

[16]   Here, where the expenditure of municipal funds is at the heart of the matter,

       Franklin cannot claim to have been unfairly surprised by Lawrenceburg’s

       argument that Indiana Code section 36-4-8-12(b) applies, nor should this Court

       be deprived of addressing that issue. Given that Franklin cannot show that it

       was deprived of, or otherwise seriously hindered in the pursuit of, some legal

       right, we find that the timing of Lawrenceburg’s void by statute argument did

       not bar its introduction into the proceedings. In other words, Lawrenceburg did

       not waive the argument, and the trial court erred by concluding otherwise.

       5
         Franklin maintains that we routinely consider waiver under Trial Rule 8(C) without any discussion of
       prejudice. But in the cases cited by Franklin for this proposition, prejudice was not discussed because it
       either was not argued, was not raised until after judgment was entered, or was not necessary to find that the
       amendment should have been allowed. See Appellees’ Br. p. 16-17. In any event, given that Franklin does
       not argue (nor could it) that we are prohibited from considering prejudice with respect to a waiver argument,
       it is our prerogative to do so and here, we so choose.

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                              Page 10 of 22
                                          II. Void By Statute
[17]   Indiana Code section 36-4-8-12(b) (section 12(b)) provides that “a city

       department, officer, or employee may not obligate the city to any extent beyond

       the amount of money appropriated for that department, officer, or employee.

       An obligation made in violation of this section is void.” See Bd. of Pub. Works v.

       L. Cosby Bernard & Co., 435 N.E.2d 575, 577 (Ind. Ct. App. 1982) (observing

       that section 12(b) “is unambiguous in its condemnation of any attempt to bind a

       municipality in the absence of an appropriation”).

[18]   Franklin argued, and the trial court appeared to agree, that because the State

       appropriated money for the Gaming Tax Revenue to be provided to

       Lawrenceburg, it was not then required for Lawrenceburg to also appropriate—or

       encumber—the money to be paid to Franklin. But we agree with

       Lawrenceburg that this conclusion is based on a fundamental misunderstanding

       of the process:

               The State appropriates and provides Gaming Tax Revenue to
               Lawrenceburg’s fiscal officer—at which point the money may be
               deposited into either the city’s general fund, a riverboat fund
               established by statute, or both. Wherever it is deposited, the
               money then “may be used for any legal or corporate purpose of
               the” city. . . . Thus, once received from the State, Gaming Tax
               Revenue is Lawrenceburg’s to spend—subject to the statutorily-
               required appropriations process.

       Appellants’ Br. p. 18-19 (internal footnote and citations omitted). In other

       words, “[t]he State’s appropriation transfers funds into only Lawrenceburg’s

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019        Page 11 of 22
       accounts. For those funds to leave Lawrenceburg’s hands requires further

       action by the city council: an appropriation.” Reply Br. p. 7.

[19]   The trial court found it significant that the legislature has explicitly allowed

       agreements between municipalities to share gaming revenues. Appealed Order

       p. 3 (citing Ind. Code § 4-33-13-6 (the revenue sharing statute)). Initially, we

       note that, in relevant part, the revenue sharing statute merely declines to

       prohibit the recipient of gaming funds from sharing the revenue with other units

       of government. Id. at -6(b). We interpret this to mean that Lawrenceburg may

       share its gambling revenue with Franklin without Franklin having to provide

       actual consideration in the form of goods or services.

[20]   Moreover, we agree with Lawrenceburg that the statutes are easily harmonized:

       the revenue sharing statute grants Lawrenceburg the authority to enter into

       revenue sharing agreements, and section 12(b) prescribes the method for doing

       so. “If that method—appropriation of payments—is not followed, then the

       revenue sharing agreements (like any other municipal contract) are void.”

       Appellants’ Br. p. 19. If Lawrenceburg paid “$500,000 per year of its Gaming

       Tax Revenue . . . , perpetually into the future and without the oversight and

       appropriation of its legislative body,” the city would be in violation of multiple

       Indiana statutes governing municipal contracts and spending. Id. at 20.

[21]   Franklin argues, essentially, that the revenue sharing statute operates as an

       exception to section 12(b). According to Franklin, funds that are incorporated

       into a revenue sharing agreement need not be appropriated by the

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019        Page 12 of 22
       municipalities. We do not find this argument compelling. Had the General

       Assembly intended the revenue sharing statute to be an exception to the

       appropriation requirement of section 12(b), it could have—and would have—

       explicitly said so. Cf. White River Conservancy Dist. v. Commw. Eng’rs, Inc., 575
N.E.2d 1011, 1015 (Ind. Ct. App. 1991) (observing that the public contract at

       issues would otherwise be “void and contrary to law” because the municipality

       did not appropriate funds to cover its costs but finding that a statutory exception

       under I.C. § 36-1-12-3.5 allowed contracts to be entered into without an

       appropriation of funds for the services at issue, so the contract was valid).

       Because the legislature did not indicate that the revenue sharing statute operates

       as an exception to section 12(b), we must harmonize the statutes as described

       above.

[22]   There are good public policy reasons for requiring municipalities to appropriate

       all necessary funds before entering into contracts. First, this process enables

       public comment and involvement, shedding needed sunlight onto

       municipalities as they decide how to spend their funds. Specifically, the State

       disburses gambling revenue one year at a time. When the funds arrive, they

       belong to the municipality—here, Lawrenceburg—and how those funds shall be

       spent is subject to an annual budget process requiring public notice and a public

       decision by the City Council to appropriate the funds. See I.C. § 36-4-8-12(b)

       (stating that an “obligation made in violation of this section is void”).

[23]   Second, this process prevents one administration from binding the next

       administration in perpetuity. Were we to accept Franklin’s interpretation of the

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019          Page 13 of 22
       revenue sharing agreement, the 2006 Lawrenceburg government could require

       the 2056 Lawrenceburg government to spend $500,000 annually on this

       agreement—even if the priorities of the citizens and government had changed,

       even if the City’s budget had been dramatically altered, even if life as we know

       it were fundamentally different. We simply cannot countenance such a result.

[24]   Third, if Franklin’s interpretation were correct, municipalities would be free to

       contract away funds that they have not yet received—and do not know

       (1) whether they will continue to receive them from year to year, or (2) if they

       do receive the funds, how much they will receive. In the very different context

       of dissolution of marriages, we have held that a retirement plan held by one

       spouse cannot be divided as a marital asset unless the spouse has a present

       vested interest in the plan. E.g., Bingley v. Bingley, 935 N.E.2d 152, 155-56 (Ind.

       2010). Here, likewise, Lawrenceburg may not expend funds that it has not

       appropriated or contract to appropriate, encumber, or expend anticipated

       revenue in which it does not have a present vested interest.

[25]   The 2006 Lawrenceburg government was free to enter into a revenue sharing

       agreement with Franklin. It was even free to make that agreement last for a

       lengthy number of years. It was simply required, pursuant to section 12(b), to

       appropriate all the funds required to fulfill the agreement at the time it was

       executed. Thus, had Lawrenceburg intended to pay Franklin $500,000

       annually for ten years, it would have had to have encumbered $5 million at the

       time the agreement was executed. In that way, while the city would have had

       to honor the agreement for its duration, all the necessary funds would have

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019       Page 14 of 22
       been accounted for at the outset, meaning that future administrations would not

       be on the financial hook.

[26]   Unfortunately, that is not what occurred in this case. It is undisputed that at

       the time the Agreement was executed, no money had been appropriated by

       Lawrenceburg to fulfill it. Shortly thereafter, Lawrenceburg appropriated

       $500,000 for the first year’s payment, but that action cannot save a contract that

       was void ab initio.6 Because the Agreement was void from the outset, any

       payments made by Lawrenceburg to Franklin thereafter were gratuitous, and

       Franklin has no legal right to demand their continuation or to receive damages

       for their cessation.7 Therefore, the trial court should have entered summary

       judgment in favor of Lawrenceburg.8

       6
        It is well settled that an otherwise invalid public contract cannot be rescued and ratified by the subsequent
       conduct of the parties. See Miller v. City of Evansville, 244 Ind. 1, 5, 189 N.E.2d 823, 825 (1963).
       7
        If Franklin had rendered services to Lawrenceburg over the years for which it was not compensated, it
       would, in theory, be entitled to quantum meruit compensation. But it has never made that argument, nor
       does the record suggest that it rendered any services beyond writing letters in 2006 and providing generic
       public support.
       8
         Franklin asks that, rather than direct that judgment be entered in favor of Lawrenceburg, we remand so that
       it can be determined whether the Gaming Commission relied on the Agreement in allowing Lawrenceburg to
       keep its license. If the Agreement is a term and condition of a gaming license, Lawrenceburg did not have
       the authority to unilaterally terminate or alter it. City of E. Chi. v. E. Chi. Second Century, Inc., 908 N.E.2d 611,
       623-24 (Ind. 2009). But this argument misses the point—the Agreement was void ab initio. Whether this
       result affects Lawrenceburg’s gaming license is a matter for the Gaming Commission to consider. The
       resolution of that issue does not change our conclusion here that the Agreement was void and, as a result,
       Franklin does not have the right to enforce it.

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                                    Page 15 of 22
[27]   The judgment of the trial court is reversed and remanded with instructions to

       enter final judgment in favor of Lawrenceburg.

       Najam, J., concurs.
       Robb, J., concurs in part and dissents in part with a separate opinion.

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019        Page 16 of 22
                                                   IN THE
           COURT OF APPEALS OF INDIANA

       The City of Lawrenceburg,                                   Court of Appeals Case No.
       Indiana, the Mayor of the City of                           19A-PL-263
       Lawrenceburg in his official
       capacity, and The Common
       Council of the City of
       Lawrenceburg in their official
       capacities,
       Appellants-Defendants,

               v.

       Franklin County, Indiana, and
       The Franklin County Board of
       Commissioners in their official
       capacities,
       Appellees-Plaintiffs,

       Robb, Judge, concurring in part and dissenting in part.

[28]   I agree with Part I of the majority opinion holding that Lawrenceburg has not

       waived its argument that the Agreement was void by statute. And I agree with

       much of what the majority says regarding appropriations in Part II. However, I

       disagree that this agreement in this context is void ab initio and therefore dissent

       from the majority’s resolution.

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                      Page 17 of 22
[29]   The legislative intent behind allowing riverboat gambling is “to benefit the

       people of Indiana by promoting tourism and assisting economic development.”

       Ind. Code § 4-33-1-2. To that end, and in the interest of assisting economic

       development in the state as a whole and not just in the specific locations

       allowed to engage in riverboat gambling, Indiana Code section 4-33-13-6(b)

       provides that local governments receiving wagering tax revenue are not

       prohibited from entering into agreements with other units of local government

       to share the revenue they have received. And this is exactly what

       Lawrenceburg has done. The designated evidence shows Lawrenceburg

       approached Franklin County in December 2005 with the following offer:

               The City of Lawrenceburg, with the assistance of Senator Nugent
               and Representative Bischoff, is preparing a Revenue Sharing
               program for year 2006 that involves [Franklin County]. First, we
               are proposing a $10,000,000 economic development grant
               program that will serve nine (9) surrounding counties including
               Franklin. In addition, we would like to develop a direct revenue
               sharing arrangement with Franklin County. We are proposing a
               $500,000 contribution for 2006 and each year thereafter for
               [Franklin] County to use for general purposes.

               The inauguration of these programs this year, and their
               continuation into the future, will depend upon Lawrenceburg
               continuing to enjoy financial stability. . . .

               ***

               We look forward to working with your County Council to
               develop a long term relationship that improves the quality of life
               in Franklin County and beyond.

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019       Page 18 of 22
       Appellant’s App., Vol. II at 141. Franklin County graciously accepted

       Lawrenceburg’s offer of a “$500,000 contribution for 2006 and thereafter[,]” id.

       at 142, and acknowledged both that the “sharing of this revenue with us and the

       other counties is truly a wonderful example of a neighbor helping others” and

       that the “agreement can only remain in place if the City of Lawrenceburg

       continues to enjoy financial stability and a steady flow of revenue[,]” id. at 145.

       For eight years, Lawrenceburg paid Franklin County $500,000 each year –

       $4,000,000 total – until suddenly it decided the Agreement was void ab initio

       because it did not comply with Indiana Code section 36-4-8-12(b).

[30]   I have several problems with this position. First, this cannot be the result the

       legislature intended. In allowing revenue sharing and encouraging economic

       development across a broad base, the legislature had to anticipate agreements

       such as the one at hand. If revenue sharing agreements are subject to Indiana

       Code section 36-4-8-12(b), then the terms of such agreements would have to

       include a fixed dollar amount for a fixed number of years and the total amount

       would have to be appropriated and set aside in a separate fund at the outset. 9 If

       a local government had that kind of money, it would not need the economic

       boost provided by gaming revenue. Under Lawrenceburg’s position, the ability

       9
         At oral argument, the parties were asked whether it would have been better had the Agreement provided for
       Franklin County to have received a percentage of the wagering tax revenues. This would in fact be a worse
       situation because even if the Agreement included a fixed term of years, it would be impossible to know the
       amount to be paid under the Agreement in advance.

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                            Page 19 of 22
       to craft an agreement that is in harmony with both the appropriations statute

       and the purpose behind the revenue sharing statute is so unlikely as to be a

       virtual impossibility – and clearly the legislature intended for it to be possible.

       We must presume the legislature intended logical application of the revenue

       sharing provision, see Piotrowski v. State, 3 N.E.3d 1051, 1054 (Ind. Ct. App.

       2014), but the majority’s adoption of Lawrenceburg’s argument on this issue

       makes no logical sense.

[31]   Second, not only can this result not be what the legislature intended, but it is

       clearly not what Lawrenceburg intended, either. The offer it made to Franklin

       County was to include Franklin County in an economic development grant

       program with other surrounding counties and also to create an ongoing direct

       revenue sharing agreement with Franklin County. See Appellant’s Appl, Vol. II

       at 141. Thus, Lawrenceburg’s assertion that every payment after the first year

       was in the nature of a grant rather than a payment under the Agreement is

       disingenuous, as the Agreement and the grant program are two separate things

       and Franklin County was invited to participate in both. Moreover, if

       Lawrenceburg is correct that the Agreement was void ab initio, then it was just

       gifting $500,000 per year to Franklin County while requiring nothing from

       Franklin County. At least under the Agreement, Franklin County was

       obligated to cooperate in promoting tourism and development in the area. 10

       10
         In its brief, Lawrenceburg raised the issue that the Agreement was not supported by consideration.
       Although the majority does not address that issue, and I do not believe it is necessary to discuss it at length

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                                  Page 20 of 22
[32]   Finally, it is unclear whether Lawrenceburg actually did go through the

       appropriations process each year to account for the $500,000 it paid to Franklin

       County from 2006 through 2013. Lawrenceburg stated in its motion to

       reconsider the grant of summary judgment to Franklin County that

       Lawrenceburg made appropriations through 2013, see Appellant’s App., Vol. II

       at 150, but stated at the oral argument that the payments after the first year were

       entirely gratuitous. Regardless, under Lawrenceburg’s argument, even the first

       year’s payment was gratuitous because although $500,000 was appropriated for

       that year, the total sum for the entire length of the Agreement was not

       appropriated and Lawrenceburg was never obligated by the Agreement to give

       Franklin County money. Lawrenceburg asserts the purpose of section 36-4-8-

       2(b) is to further the “vitally important policy” of “protecting the public by

       preventing public officials from contractually obligating a city to pay money

       without the oversight of its legislative body[.]” Brief of Appellants at 12. If

       Lawrenceburg’s position is correct, then it extended an offer and entered into a

       contract it should have known was illegal from the start, and yet it paid out

       $4,000,000 under that illegal contract, in the process doing a poor job of

       protecting its citizens from fiscal overreaching.

[33]   Here, the Agreement was for Lawrenceburg to share its wagering tax revenues

       with Franklin County in the amount of $500,000 for as long as Lawrenceburg

       herein, I do note that under Lawrenceburg’s argument that the Agreement was void ab initio, it conceded it
       essentially gave the money to Franklin County for no reason, which would have been an irresponsible use of
       Lawrenceburg’s funds.

       Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                            Page 21 of 22
received at least that much in wagering tax revenue.11 The legislature clearly

contemplated such an agreement in enacting Indiana Code section 4-33-13-6(b).

Applying section 36-4-8-12(b) to void the Agreement is illogical and contrary to

legislative intent. I would affirm the trial court’s grant of summary judgment to

Franklin County.12

11
   As Franklin County pointed out at the summary judgment hearing, “a contract with [a] municipality is
meaningless if they choose not to appropriate funds.” Transcript, Volume 2 at 18. Lawrenceburg conceded
at the oral argument that failing to appropriate a sufficient amount at the outset of a contract can be a way to
avoid a contract later. In other words, in this case, Lawrenceburg is – many years after the fact – using the
appropriations statute as a way to avoid an agreement it participated in for eight years but no longer wishes
to acknowledge.
12
  Because this is specific to statutorily allowed revenue sharing of riverboat wagering taxes between local
governments, I do not believe this result would open the floodgates to agreements circumventing the
appropriations requirement. Once in receipt of the funds, properly appropriating the funds before spending
them is required.

Court of Appeals of Indiana | Opinion 19A-PL-263 | August 28, 2019                                 Page 22 of 22