City of Indianapolis v. Armour
| Decision Date | 10 May 2011 |
| Docket Number | No. 49S02–1007–CV–402.,49S02–1007–CV–402. |
| Citation | 946 N.E.2d 553 |
| Parties | CITY OF INDIANAPOLIS, et al., Appellants (Defendants below),v.Christine ARMOUR, et al., Appellees (Plaintiffs below). |
| Court | Indiana Supreme Court |
OPINION TEXT STARTS HERE
Jonathan L. Mayes, Chief Litigation Counsel, Justin F. Roebel, Assistant Corporation Counsel, Office of Corporation Counsel, Indianapolis, IN, Attorneys for Appellants.Thomas E. Wheeler, Anthony W. Overholt, Jo Angela Woods, Indianapolis, IN, Attorneys for Amici Curiae Indiana Association of Cities and Towns and Indiana Municipal Lawyers Association.Ronald J. Waicukauski, R. Davy Eaglesfield, III, Jana K. Strain, Indianapolis, IN, Attorneys for Appellees.
On Petition to Transfer from the Indiana Court of Appeals, No. 49A02–0901–CV–84
The City of Indianapolis abandoned the Barrett Law method of financing sewer improvements in favor of a new system that imposes less of a financial burden on property owners. To ease the transition, the City discharged all outstanding Barrett Law assessments owing as of November 1, 2005, but did not give refunds to those property owners who had previously paid their Barrett Law assessments in full or in part. We hold that the City did not violate the Equal Protection Clause of the Fourteenth Amendment because forgiving only the outstanding assessment balances was rationally related to a legitimate governmental interest.
Indiana's Barrett Law 1 authorizes municipalities to provide or require public improvements and fund those improvements by levying special assessments against the benefitted properties. Town Council of New Harmony v. Parker, 726 N.E.2d 1217, 1227 n. 13 (Ind.2000) (quoting Porter v. City of Tipton, 141 Ind. 347, 40 N.E. 802, 803 (1895)). The costs of Barrett Law projects are generally “apportioned equally among all abutting lands or lots” benefitted by the improvement. I.C. § 36–9–39–15(b)(3).
Prior to 2006, the City of Indianapolis (“City”) used Barrett Law to fund sanitary sewer projects.
In April, 2001, the City sent a letter to property owners in the Northern Estates neighborhood notifying them that their properties were to be part of the Brisbane/Manning Barrett Law Sanitary Sewers Project (“Brisbane/Manning Project”), under which their properties were to be connected to City sewers, eliminating the use of septic tanks in the neighborhood. In July, 2004, after complying with then-existing regulatory procedures, the Indianapolis Board of Public Works (“Board”) levied a $9,278 special assessment against each parcel subject to the project.2
Property owners were given the option of paying the special assessment up front in its entirety or paying it in monthly installments over a 10–, 20–, or 30–year period. Those choosing the installment plan were charged an annual interest rate of 3.5% and a statutory lien 3 was placed on their properties. Of the approximately 180 parcels covered by the project, property owners of 142 parcels elected to pay their special assessments in installments. 4 The owners of the remaining parcels chose to pay up front in a single lump-sum payment. The plaintiffs in this case are the owners of 31 of those parcels on which the assessment was paid up front.
The following year, the City–County Council of Indianapolis–Marion County (“Council”) enacted a general ordinance under which the Barrett Law method of financing sewer projects was discontinued in favor of the Septic Tank Elimination Program (“STEP”). See Indianapolis–Marion County, Ind., City–County General Ordinance No. 107, 2005 (Oct. 31, 2005); see also Appellant's App. 320–35. The Council's action responded to two concerns. First, the City faced a public health crisis because of the continued use of out-of-date septic tanks on many properties. Second, the Barrett Law system was imposing too heavy a financial burden on middle- and low-income taxpayers, given that the average assessment under a Barrett Law project was approximately $10,000. 5
At the time STEP was adopted, the Brisbane/Manning Project was one of more than 40 Barrett Law projects in existence. As with the Brisbane/Manning Project, some taxpayers subject to these other Barrett Law projects had elected to pay their assessments in full and some in installments. As part of the transition from Barrett Law to STEP, the Board passed Resolution 101, 2005 (“Resolution 101”), Appellant's App. 337, 350, forgiving all outstanding assessment balances on the 40–plus Barrett Law projects owing as of November 1, 2005.
As a result of Resolution 101, the owners of the 142 parcels in Northern Estates who had elected to pay their Barrett Law assessments over a period of years were discharged from their debts, along with all other taxpayers from other 40–plus Barrett Law projects who had outstanding balances due.
The plaintiffs in this lawsuit complain that Resolution 101 provided no relief for Northern Estates taxpayers who had paid their Barrett Law assessments in full for the Brisbane/Manning Project. But it was not just the Brisbane/Manning taxpayers who had paid their assessments in full who did not receive refunds; no taxpayers in any of the 40–plus Barrett Law projects received any refunds of the amounts they had paid, including those who had paid some but not all of their installments—thousands of taxpayers, some of whom had paid all, some a lot, and some only a little of their respective assessments. Conversely, it was not only the Brisbane/Manning taxpayers who had elected the installment plan who had their outstanding balances forgiven; all taxpayers in all of the 40–plus Barrett Law projects had their outstanding balances forgiven, including those who had paid some but not all of their installments—thousands of taxpayers, some of whom owed all, some a lot, and some only a little of their respective assessments.
In February, 2006, the plaintiffs, who, to repeat, had each paid their Barrett Law assessments in full, petitioned the Board for a refund in an amount equal to the assessments discharged for those property owners who had paid the most under an installment plan.6 In March, 2006, the Board sent a letter to the plaintiffs denying their refund request. Appellant's App. 317–18. It reasoned that there were many other Barrett Law projects subject to forgiveness and that issuing refunds to the plaintiffs “would establish a precedent of unfair and inequitable treatment to all other property owners who have also paid Barrett Law assessments.” Id. at 318. And although November 1, 2005, “might seem arbitrary to [the plaintiffs], it [was] essential for the City to establish this date and move forward with the new funding approach.” Id.
In July, 2007, the plaintiffs filed their complaint against the City and several of its officials 7 seeking, among other things, a Barrett Law assessment refund. In their federal claim under 42 U.S.C. § 1983 (2006), the plaintiffs alleged that the City had violated their federal constitutional rights to due process and equal protection under the Fourteenth Amendment. 8 In March, 2008, the plaintiffs moved for summary judgment on their federal constitutional claims. The City filed a cross-motion for summary judgment, arguing that the federal claims must fail because the City had a rational basis for refusing to grant the plaintiffs relief. The trial court denied the City's motion, granted the plaintiffs' motion, and entered judgment against the City for $380,914.16.9
On appeal, the plaintiffs abandoned their due process claim and sought to have the trial court's judgment sustained on equal protection grounds only. The Court of Appeals affirmed, finding that the City did not have a rational basis for granting relief to those who were paying their Barrett Law assessments in installments and denying relief to those who had paid up front in a lump sum. City of Indianapolis v. Armour, 918 N.E.2d 401, 409–19 (Ind.Ct.App.2009), reh'g denied. The Court of Appeals also held that the City could remedy the violation only by issuing refunds to the plaintiffs. Id. at 419.
The City sought, and we granted, transfer, City of Indianapolis v. Armour, 940 N.E.2d 821 (Ind.2010) (table), thereby vacating the opinion of the Court of Appeals, Ind. Appellate Rule 58(A). Amici Curiae, the Indiana Association of Cities and Towns and the Indiana Municipal Lawyers Association, filed a brief in support of the City's Petition to Transfer.
The only issue presented is whether the City's forgiveness of all outstanding Barrett Law assessments as part of its transition to STEP violated the plaintiffs' rights under the Equal Protection Clause, which provides that “[n]o State shall ... deny to any person within its jurisdiction the equal protection of the laws.” U.S. Const. Amend. XIV, § 1. A law attacked on equal protection grounds will be upheld if it survives rational basis review, unless the classification is drawn along suspect lines or infringes the exercise of fundamental constitutional rights, in which case it must survive heightened judicial scrutiny. FCC v. Beach Communications, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 124 L.Ed.2d 211 (1993); Nordlinger v. Hahn, 505 U.S. 1, 10, 112 S.Ct. 2326, 120 L.Ed.2d 1 (1992).
Because Resolution 101 neither involves a suspect classification nor inhibits the exercise of a fundamental constitutional right, the parties agree that it is not subject to heightened judicial scrutiny and must be analyzed under the rational basis standard. But they offer differing interpretations and applications of that standard, which requires us to examine the intricacies of the standard itself.
Rational basis is the most deferential standard of review. Under this standard, courts will not invalidate a law merely because it is deemed unwise, unfair, or unsound, or because there are “more reasonable” or “more effective” policy choices that could have been made. Beach Communications, 508 U.S. at 313–14, 113 S.Ct. 2096; Ind. Aeronautics Comm'n v. Ambassadair,...
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