Burke v. Town of Schererville

• Decision Date: 04 December 2000
• Docket Number: No. 45A03-9912-CV-461.,45A03-9912-CV-461.
• Citation: 739 N.E.2d 1086
• Parties: Gregory BURKE, Pat Clark, Mary Colclasure, Raymond Eggert, Mark Harwood, Timothy G. Henderlong, Dean Mcbrayer, Frank Morin, John Rosmanitz, Scott Spevacek, Michael Stallings, Terrell Taylor, Cathi Van Schouwen, Dennis Wilson, and a class of persons similarly situated, Appellants-Plaintiffs, v. TOWN OF SCHERERVILLE, Indiana, Appellee-Defendant.
• Court: Indiana Appellate Court

739 N.E.2d 1086

Gregory BURKE, Pat Clark, Mary Colclasure, Raymond Eggert, Mark Harwood, Timothy G. Henderlong, Dean Mcbrayer, Frank Morin, John Rosmanitz, Scott Spevacek, Michael Stallings, Terrell Taylor, Cathi Van Schouwen, Dennis Wilson, and a class of persons similarly situated, Appellants-Plaintiffs, v. TOWN OF SCHERERVILLE, Indiana, Appellee-Defendant.

No. 45A03-9912-CV-461.

Court of Appeals of Indiana.

December 4, 2000.

Michael L. Muenich, Michael L. Muenich, P.C., Highland, Indiana, Attorney for Appellants.

Todd J. Kaiser, T. Joseph Wendt, Ogletree, Deakins, Nash, Smoak & Stewart, Indianapolis, Indiana, Attorneys for Amicus Curiae Indiana Builders Association.

Ronald E. Ellberger, George T. Patton, Jr., J. Christopher Janak, Bose, McKinney & Evans LLP, Indianapolis, Indiana, David M. Austgen, Austgen, Reed & Decker, P.C., Crown Point, Indiana, Attorneys for Appellee. Karl L. Mulvaney, Candace L. Sage, Bingham Summers Welsh & Spilman LLP, Indianapolis, Indiana, Attorneys for Amici Curiae Indiana Association of Cities and Towns and Indiana Municipal Lawyers Association.

OPINION

KIRSCH, Judge

This case involves the dismissal of a declaratory action brought by Gregory Burke and other builders (collectively "Builders") against the Town of Schererville ("Town"), which: 1) challenges the validity of the Town's ordinances establishing sewer and water connection fees charged to persons seeking building permits; 2) seeks a refund of all fees collected by the Town under these allegedly invalid ordinances; and 3) seeks injunctive relief enjoining the Town from collecting such fees. On appeal, Builders raise several issues, which we consolidate and restate as: whether the Town's ordinances authorizing the collection of both sewer and water connection fees violate Indiana's Impact Fee Statute and exceed the Town's Home Rule power.

We affirm.

FACTS AND PROCEDURAL HISTORY¹

I. Sewer Connection Ordinances

Since at least 1975, the Town has imposed a flat-charge sewer connection fee upon all customers connecting to its sewer utility. Over the years, the Town periodically amended the amount of the sewer connection fee. In November 1976, the Town adopted Ordinance No. 648B, which established a new schedule of rates and a minimum tap-in charge² of $375 in order to produce revenue to cover the expenses of maintaining and operating the system, to provide funds for improvements, and to pay the principal and interest on outstanding revenue bonds. Record at 84. In October 1988, the Town enacted Ordinance No. 1085, which amended Ordinance No. 648B by increasing the sewer connection fee to $545. In November 1989, the Town adopted Ordinance No. 89-1131, which amended and restated Ordinance Nos. 648B and 1085 and established varying sewer connection fees based upon the cost of providing the anticipated usage for various types of customers. Ordinance No. 89-1131 states that the tap-in charge includes a fee for "capital improvements required to serve that use." Id.

Finally, on June 8, 1994, after conducting a public hearing, the Town adopted Ordinance No. 1239, which raised the fee for sewer connection to include a capacity charge for new customers. Under this Ordinance, the sewer connection fee is based upon a proportionate share of the costs to extend and expand the system to increase capacity in order to service new customers in areas not previously served. Id. at 75. Ordinance No. 1239 further states that "Each and every person and property owner . . . that shall connect to the sanitary sewer system . . . shall pay, in addition to the tap-in fee previously established and as might hereafter be amended, [a] capital buy[-]in charge as follows. . . ." Id. at 76. The Ordinance then provides a list of fees to be collected from different types of users. Id. A single-family dwelling unit is charged $1,362.³ Id. Builders did not attend the public hearing or otherwise voice objection to Ordinance No. 1239.

II. Water Connection Ordinance

On November 10, 1993, the Town enacted Ordinance No. 1257, which set the Town's water connection fees and also established a "System Development Charge" of $750 for new customers connecting to the Town's water utility. In relevant part, the Ordinance provides:

"In addition to the tap[-]in charge herein above established, each new customer shall be assessed a charge of $750.00 at the time of connection, which is calculated to be a pro rata portion of the utility's capital costs to develop the system, to extend to these new customers, so as not to have those capital costs be an inequitable burden upon existing customers."

Id. at 85. The Ordinance further states that it shall become effective immediately upon approval of the Indiana Utility Regulatory Commission ("IURC"). According to Builder's Second Amended Complaint, the IURC approved Ordinance No. 1257 in December 1993. Builders did not voice objection to Ordinance No. 1257.

Both the water connection fee and the sewer connection fee are one-time charges applying to all new customers seeking services, not simply to newly constructed buildings and residences.

III. Builders' Challenge to the Ordinances

Builders filed their original Complaint on January 12, 1998, apparently challenging the sewer connection fees charged by the Town.⁴ On February 3, 1998, Builders amended the Complaint.

The First Amended Complaint contained three counts challenging only the sewer connection fees charged by the Town. The first count, entitled "EXCESSIVE LICENSE FEE," consisted of a claim that the sewer tap-in charges are "obviously and largely beyond what is needed for the inspection services rendered [by the Town] and therefore violate Ind.Code § 36-1-3-8 (hereinafter "Home Rule Statute") and constitute an unconstitutional revenue tax." Record at 7. The second count, entitled "UNREASONABLE AND EXCESSIVE SERVICE CHARGE," further alleged that under the Home Rule Statute, the sewer connection fees constitute an unconstitutional revenue tax because the charges bear no reasonable relation to "reasonable and just rates for services rendered" or to the actual cost of service provided by the Town. Id. The third count, entitled "ILLEGAL IMPACT FEES," alleged that the sewer connection fees also amount to impact fees for which the Town failed to properly adopt an impact fee ordinance pursuant to the statutory requirements of IC XX-X-X-XXXX.⁵ The Town concedes that it did not adopt an impact fee ordinance.

The Town subsequently filed a motion to dismiss the complaint pursuant to Ind. Trial Rules 12(B)(1) and 12(B)(6). In its motion, the Town contended that the trial court lacked subject matter jurisdiction because Builders failed to preserve their right to judicial review by not following the exclusive statutory appeal procedure specified in the Municipal Sewage Works Act, IC XX-X-XX-XX.1. The Town further contended that Builders failed to state a claim for relief in that Builders failed to allege any facts indicating that they may be entitled to relief under the Municipal Sewage Works Act. Additionally, the Town claimed that Builders failed to state a claim for relief because they voluntarily paid the sewer connection fees. Reciting the rule that fees and taxes voluntarily paid to a municipality may not later be recovered in absence of a statute authorizing recovery, the Town claimed that the case should be dismissed because Builders have no right to a refund of the fees.

After conducting a hearing, the trial court granted the Town's motion to dismiss the First Amended Complaint on December 9, 1998. In its Order, the trial court stated that the motion was being granted pursuant to T.R. 12(B)(6) for failure to state a claim. On December 16, 1998, Builders filed a Second Amended Complaint containing eight counts for relief, including the three previously dismissed sewer connection claims as well as five new claims for relief. Counts I through III are identical to the three claims relating to the sewer connection fees that the trial court dismissed for failure to state a claim for relief. Counts IV through VI are essentially identical to Counts I-III, with the exception that these three new claims challenge the Town's water connection fees and seek a refund of such fees. Count IV, entitled, "EXCESSIVE LICENSE FEE FROM WATER SYSTEM DEVELOPMENT CHARGE," alleges that the Town's water system development fees violate the Home Rule Statute and constitute an unconstitutional revenue tax in that the fees are beyond the actual cost of the water tap or other services rendered. Count V, entitled, "UNREASONABLE AND EXCESSIVE WATER SYSTEM DEVELOPMENT CHARGE," alleges that the water system development fees violate the Home Rule Statute and amount to an unconstitutional revenue tax in that the fees bear no reasonable relation to "reasonable and just rates for services rendered" or to the actual cost of services rendered by the Town. Id. at 90. Count VI, entitled "ILLEGAL IMPACT FEE FROM WATER SYSTEM DEVELOPMENT CHARGE," alleges that the water system development charges are impact fees, which are invalid because the Town failed to adopt an impact fee ordinance authorizing the charges.

Count VII is a declaratory judgment claim, seeking a declaration that the ordinances establishing the sewer and water connection fees are invalid and an order refunding these fees. Finally, Builders in Count VIII request injunctive relief from collection of the fees pending the outcome of the case.

In response, the Town filed its Motion to Dismiss the Second Amended Complaint on March 11, 1999, relying again upon lack of subject matter jurisdiction and failure to state a claim upon which relief may be granted. After conducting a hearing, the trial court dismissed the Second Amended Complaint on November 16, 1999. This appeal ensued.

DISCUSSION AND DECISION

Builders appeal the trial court's dismissal of their Second Amended Complaint alleging that the Town's sewer and water connection fees are...