Found.S Of East Chicago Inc v. City Of East Chicago
| Decision Date | 16 September 2010 |
| Docket Number | No. 49S02-0908-CV-00383.,49S02-0908-CV-00383. |
| Citation | 927 N.E.2d 900 |
| Parties | FOUNDATIONS OF EAST CHICAGO, INC., successor by merger to East Chicago Community Development Foundation, Inc. and Twin City Education Foundation, Inc., Appellant (Plaintiff below),v.CITY OF EAST CHICAGO, Appellee (Defendant below),andState of Indiana, Appellee (Intervenor-Defendant below). |
| Court | Indiana Supreme Court |
Peter J. Rusthoven, Mark J. Crandley, Deborah Pollack-Milgate, Paul L. Jefferson, Indianapolis, IN, Attorneys for Appellant Foundations of East Chicago, Inc.
Kathleen A. DeLaney, Amanda Couture, Indianapolis, IN, Attorneys for Amici Curiae Saint Stanislaus Church and School, the Twin City Ministerial Alliance, and the Northwest Indiana Federation, f/k/a Interfaith Federation.
Stephen J. Peters, David I. Rubin, Indianapolis, IN, Attorneys for Amici Curiae Neighbors Incorporated of Hammond, Indiana, St. Catherine Hospital, Inc., Workforce Development Services, Inc., Calumet College of St. Joseph, Inc., Janelle Scott, and The Hon. William H. Hudnut.
James A. Knauer, William Bock, III, Steven E. Runyan, Indianapolis, IN, Attorneys for Appellee City of East Chicago.
Gregory F. Zoeller, Attorney General of Indiana, Thomas M. Fisher, Solicitor General of Indiana, Heather L. Hagan, Deputy Attorney General, Indianapolis, IN, Attorneys for Appellee State of Indiana.
On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-0711-CV-00987.
At the outset of riverboat gambling in this state, the Indiana Gaming Commission issued a license for operation of a boat at East Chicago. It incorporated as a condition of this license the terms of a local economic development agreement between the operator and the City of East Chicago, with the result that certain gaming revenue flowed from the operator to several local entities. During its 2007 session, the Indiana General Assembly enacted a provision declaring that if the license at East Chicago transferred to a new operator (which it has), the City could void its agreement with the former operator.
The present appeal represents a challenge to the constitutionality of the 2007 legislation by certain recipients of the revenue. We conclude that the 2007 provision did not alter in any substantive way the statutory framework under which the Gaming Commission regulates licenses and license conditions, and thus find it unnecessary to rule on its constitutionality.
The original riverboat arrangements had been in place about a decade when a new city administration took office in East Chicago. The city government has been attempting to re-direct the considerable revenue (3.75% of the licensee's adjusted gross gaming revenue) that has been distributed to four local entities: the City itself, two non-profit foundations, and a for-profit corporation. Our decisions in two previous appeals arising out of this effort contain substantial background and details about the resulting struggle. In City of East Chicago v. East Chicago Second Century, Inc., 908 N.E.2d 611 (Ind.2009), we largely reinstated various claims the City had lodged against the profit and non-profit corporations receiving funds, and in Zoeller v. East Chicago Second Century, Inc., 904 N.E.2d 213 (Ind.2009), we reinstated the Attorney General's claims against the for-profit corporation.
In February 2007, as the foregoing suits were working their way through the court system, the two non-profits that were receiving funds (Twin City Education Foundation and East Chicago Community Development Foundation) dissolved themselves and merged their assets into a newly created non-profit called Foundations of East Chicago, Incorporated (“FEC”). (App. at 1918-24.)
About ten weeks later, the Indiana General Assembly passed the state's biennial budget. Tucked into the budget bill as Section 302 was the provision at issue today, a new subsection to Ind.Code § 4-33-6-7 (2008), which reads:
H.E.A. 1001, 115th Gen. Assem., 1st Reg. Sess. (Ind. 2007). The City subsequently adopted ordinances invoking this enactment, including amending the development agreements to provide that the City receive the casino revenue for distribution rather than FEC. ( See App. at 2057-59.)
FEC filed this action challenging the validity of Section 302 under numerous provisions of the United States and Indiana Constitutions. The Attorney General intervened to defend the statute's validity. After conducting a bench trial, the trial court entered judgment against FEC, holding that FEC did not have standing to maintain the challenge and rejecting its constitutional arguments.
FEC appealed, and a divided Court of Appeals affirmed in a manner that produced a majority result, but not a majority opinion. Foundations of East Chicago, Inc. v. City of East Chicago, 905 N.E.2d 30 (Ind.Ct.App.2009). We granted transfer. 919 N.E.2d 550 (Ind.2009) (table).
FEC challenges the trial court's ruling that it “lacked standing” to challenge the statutory section at issue. (Appellant's Br. at 1, 14-17.) It urges that the court mistakenly permitted the City to re-litigate standing arguments earlier resolved adverse to the City in a different division of the Marion Superior Court, where Judge Cale Bradford allowed FEC to substitute as a party under Ind. Trial Rule 25 for the two non-profits that had been receiving funds. (Appellant's App. at 14-15.) Thus, FEC submits, “the trial court here usurped the exclusive jurisdiction of its sister Marion Superior Court, improperly engaging in ‘appellate review’ of a coordinate tribunal's decision.” (Appellant's Br. at 15.) It also contends that the court overlooked undisputed evidence of the board-structure changes implemented in forming the merged FEC entity. In any event, the FEC says it has standing to challenge the statute.
The City, by contrast, argues that the litigation earlier before Judge Bradford was largely a dispute over whether the local corporations possessed third-party beneficiary rights that might limit the ability of the actual parties to the local development agreement. It says the procedural decision rendered by Judge Bradford was not a final judgment entitled to any preclusive effect in other cases. (City's Br. at 17-18.)
The City's larger point about FEC's status is one of considerable force. The entity before us today bears scant resemblance in structure to the two non-profit foundations that had been receiving funds in accordance with the license and the local development agreement between the City and the riverboat operator. Whether FEC is entitled to receive funds under the gaming license, as Twin City and ECCDF did, is first and foremost a matter of administrative law for the Indiana Gaming Commission to decide. We deem that to be an open question.
By contrast, whether FEC has a sufficient interest to be a party in the litigation before us is a judicial question to be resolved by reference to the law of standing.
The judicial doctrine of standing focuses on whether the complaining party is the proper party to invoke the court's power. State ex rel. Cittadine v. Indiana Dept. of Transp., 790 N.E.2d 978 (Ind.2003). Courts seek to assure that litigation will be actively and vigorously contested. Schloss v. City of Indianapolis, 553 N.E.2d 1204 (Ind.1990). It is generally insufficient that a plaintiff merely has a general interest common to all members of the public. Terre Haute Gas Corp. v. Johnson, 221 Ind. 499, 45 N.E.2d 484 (1942). Standing requires that a party have “a personal stake in the outcome of the lawsuit and must show that he or she has sustained or was in immediate danger of sustaining, some direct injury as a result of the conduct at issue.” Higgins v. Hale, 476 N.E.2d 95, 101 (Ind.1985).
At least for now, FEC is receiving substantial revenue from the casino license and the original local development agreements. The fact that Section 302 has the potential to set in motion events under which the Commission might eliminate that flow of money is sufficient to find standing under these circumstances.
As the local corporations argued in the two earlier appeals, FEC contends that Section 302 directly impairs contract rights it possesses as a beneficiary of the agreements the City and the operator tendered to the Gaming Commission. (Appellant's Br. at 17-18.) Specifically, FEC contends that the section “directly and purposely authorizes the City to eliminate the Foundations' contract rights.” (Appellant's Br. at 18.) The Attorney General and the City both argue, however, that Section 302 does not substantially impair any such interests because FEC had no reasonable expectation that its ability to receive riverboat revenue would continue indefinitely. (State's Br. at 10; City's Br. at 2.)
Standard judicial practice clothes every statute with a presumption of constitutionality. Boehm v. Town of St. John, 675 N.E.2d 318 (Ind.1996). The party challenging the constitutionality of a statute bears the burden of proof, and all doubts are resolved against that party. Id. If there are two reasonable interpretations of a statute, one of which is constitutional and the other not, we will choose the path which permits upholding the statute. Id.
The legislature enacted the Riverboat Gambling Act, Ind.Code § 4-33-1-1 et...
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