Armour v. City of India

• Decision Date: 04 June 2012
• Docket Number: No. 11–161.,11–161.
• Citation: 182 L.Ed.2d 998,132 S.Ct. 2073,566 U.S. 673
• Parties: Christine ARMOUR, et al., Petitioners v. CITY OF INDIANAPOLIS, INDIANA, et al.
• Court: U.S. Supreme Court

566 U.S. 673

132 S.Ct. 2073

182 L.Ed.2d 998

Christine ARMOUR, et al., Petitioners

v.CITY OF INDIANAPOLIS, INDIANA, et al.

No. 11–161.

Supreme Court of the United States

Argued Feb. 29, 2012.

Decided June 4, 2012.

Mark T. Stancil, Washington, DC, for Petitioners.

Paul D. Clement, Washington, DC, for Respondents.

Ronald J. Waicukauski, Carol Nemeth Joven, Price, Waicukauski & Riley LLC, Indianapolis, IN, R. Davy Eaglesfield III, Indianapolis, IN, Roy T. Englert, Jr., Counsel of Record, Mark T. Stancil, Daniel N. Lerman, Leif Overvold, Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, Washington, DC, for Petitioners.

Justin F. Roebel, Alexander P. Will, Office of Corporation Counsel, Indianapolis, IN, Paul D. Clement, Counsel of Record, George W. Hicks, Jr., Jeffrey M. Harris, Bancroft PLLC, Washington, DC, for Respondents.

Justice BREYER delivered the opinion of the Court.

For many years, an Indiana statute, the "Barrett Law," authorized Indiana's cities to impose upon benefited lot owners the cost of sewer improvement projects. The Law also permitted those lot owners to pay either immediately in the form of a lump sum or over time in installments. In 2005, the city of Indianapolis (City) adopted a new assessment and payment method, the "STEP" plan, and it forgave any Barrett Law installments that lot owners had not yet paid.

A group of lot owners who had already paid their entire Barrett Law assessment in a lump sum believe that the City should have provided them with equivalent refunds. And we must decide whether the City's refusal to do so unconstitutionally discriminates against them in violation of the Equal Protection Clause, Amdt. 14, § 1. We hold that the City had a rational basis for distinguishing between those lot owners who had already paid their share of project costs and those who had not. And we conclude that there is no equal protection violation.

I

A

Beginning in 1889 Indiana's Barrett Law permitted cities to pay for public improvements, such as sewage projects, by "apportion[ing]" the costs of a project "equally among all abutting lands or lots." Ind.Code § 36–9–39–15(b)(3) (2011) ; see Town Council of New Harmony v. Parker, 726 N.E.2d 1217, 1227, n. 13 (Ind.2000) (project's beneficiaries pay its costs). When a city built a Barrett Law project, the city's public works board would create an initial lot-owner assessment by "dividing the estimated total cost of the sewage works by the total number of lots." § 36–9–39–16(a). It might then adjust an individual assessment downward if the lot would benefit less than would others. § 36–9–39–17(b). Upon completion of the project, the board would issue a final lot-by-lot assessment.

The Law permitted lot owners to pay the assessment either in a single lump sum or over time in installment payments (with interest). The City would collect installment payments "in the same manner as other taxes." § 36 –9–37–6. The Law authorized 10–, 20–, or 30–year installment plans. § 36–9–37–8.5(a). Until fully paid, an assessment would constitute a lien against the property, permitting the city to initiate foreclosure proceedings in case of a default. §§ 36 –9–37–9(b), – 22.

For several decades, Indianapolis used the Barrett Law system to fund sewer projects. See, e.g., Conley v. Brummit, 92 Ind.App. 620, 621, 176 N.E. 880, 881 (1931) (in banc). But in 2005, the City adopted a new system, called the Septic Tank Elimination Program (STEP), which financed projects in part through bonds, thereby lowering individual lot owners' sewer-connection costs. By that time, the City had constructed more than 40 Barrett Law projects. App. to Pet. for Cert. 5a. We are told that installment-paying lot owners still owed money in respect to 24 of those projects. See Reply Brief for Petitioners 16–17, n. 3 (citing City's Response to Plaintiff's Brief on Damages, Record in Cox v. Indianapolis, No. 1:09–cv–0435) (SD Ind., Doc. 98–1 (Exh. A)). In respect to 21 of the 24, some installment payments had not yet fallen due; in respect to the other 3, those who owed money were in default. Reply Brief for Petitioners 17, n. 3.

B

This case concerns one of the 24 still-open Barrett Law projects, namely the Brisbane/Manning Sanitary Sewers Project. The Brisbane/Manning Project began in 2001. It connected about 180 homes to the City's sewage system. Construction was completed in 2003. The Indianapolis Board of Public Works held an assessment hearing in June 2004. And in July 2004 the Board sent the 180 affected homeowners a formal notice of their payment obligations.

The notice made clear that each homeowner could pay the entire assessment—$9,278 per property—in a lump sum or in installments, which would include interest at a 3.5% annual rate. Under an installment plan, payments would amount to $77.27 per month for 10 years; $38.66 per month for 20 years; or $25.77 per month for 30 years. In the event, 38 homeowners chose to pay up front; 47 chose the 10–year plan; 27 chose the 20–year plan; and 68 chose the 30–year plan. And in the first year each homeowner paid the amount due ($9,278 upfront; $927.80 under the 10–year plan; $463.90 under the 20–year plan, or $309.27 under the 30–year plan). App. to Pet. for Cert. 48a.

The next year, however, the City decided to abandon the Barrett Law method of financing. It thought that the Barrett Law's lot-by-lot payments had become too burdensome for many homeowners to pay, discouraging changes from less healthy septic tanks to healthier sewer systems. See id., at 4a–5a. (For example, homes helped by the Brisbane/Manning Project, at a cost of more than $9,000 each, were then valued at $120,000 to $270,000. App. 67.) The City's new STEP method of financing would charge each connecting lot owner a flat $2,500 fee and make up the difference by floating bonds eventually paid for by all lot owners citywide. See App. to Pet. for Cert. 5a, n. 5.

On October 31, 2005, the City enacted an ordinance implementing its decision. In December, the City's Board of Public Works enacted a further resolution, Resolution 101, which, as part of the transition, would "forgive all assessment amounts ... established pursuant to the Barrett Law Funding for Municipal Sewer programs due and owing from the date of November 1, 2005 forward." App. 72 (emphasis added). In its preamble, the Resolution said that the Barrett Law "may present financial hardships on many middle to lower income participants who most need sanitary sewer service in lieu of failing septic systems"; it pointed out that the City was transitioning to the new STEP method of financing; and it said that the STEP method was based upon a financial model that had "considered the current assessments being made by participants in active Barrett Law projects" as well as future projects. Id., at 71–72. The upshot was that those who still owed Barrett Law assessments would not have to make further payments but those who had already paid their assessments would not receive refunds. This meant that homeowners who had paid the full $9,278 Brisbane/ Manning Project assessment in a lump sum the preceding year would receive no refund, while homeowners who had elected to pay the assessment in installments, and had paid a total of $309.27, $463.90, or $927.80, would be under no obligation to make further payments.

In February 2006, the 38 homeowners who had paid the full Brisbane/Manning Project assessment asked the City for a partial refund (in an amount equal to the smallest forgiven Brisbane/Manning installment debt, apparently $8,062). The City denied the request in part because "[r]efunding payments made in your project area, or any portion of the payments, would establish a precedent of unfair and inequitable treatment to all other property owners who have also paid Barrett Law assessments ... and while [the November 1, 2005, cutoff date] might seem arbitrary to you, it is essential for the City to establish this date and move forward with the new funding approach." Id., at 50–51.

C

Thirty-one of the thirty-eight Brisbane/Manning Project lump-sum homeowners brought this lawsuit in Indiana state court seeking a refund of about $8,000 each. They claimed in relevant part that the City's refusal to provide them with refunds at the same time that the City forgave the outstanding Project debts of other Brisbane/Manning homeowners violated the Federal Constitution's Equal Protection Clause, Amdt. 14, § 1 ; see also Rev. Stat. § 1979, 42 U.S.C. § 1983. The trial court granted summary judgment in their favor. The State Court of Appeals affirmed that judgment. 918 N.E.2d 401 (2009). But the Indiana Supreme Court reversed. 946 N.E.2d 553 (2011). In its view, the City's distinction between those who had already paid their Barrett Law assessments and those who had not was "rationally related to its legitimate interests in reducing its administrative costs, providing relief for property owners experiencing financial hardship, establishing a clear transition from [the] Barrett Law to STEP, and preserving its limited resources." App. to Pet. for Cert. 19a. We granted certiorari to consider the equal protection question. And we now affirm the Indiana Supreme Court.

II

A

As long as the City's distinction has a rational basis, that distinction does not violate the Equal Protection Clause. This Court has long held that "a classification neither involving fundamental rights nor proceeding along suspect lines ... cannot run afoul of the Equal Protection Clause if there is a rational relationship between the disparity of treatment and some legitimate governmental purpose." Heller v. Doe, 509 U.S. 312, 319–320, 113 S.Ct. 2637, 125 L.Ed.2d 257 (1993) ; cf. Gulf, C. & S.F.R. Co. v. Ellis, 165 U.S. 150, 155, 165–166, 17 S.Ct. 255, 41 L.Ed. 666 (1897). We have made clear in analogous contexts that, where "ordinary commercial transactions" are at issue, rational basis review requires deference to reasonable underlying legislative judgments. United States v. Carolene Products...