Huber v. Franklin County Community School Corp. Bd. of Trustees, 24S01-8704-CV-392

• Decision Date: 04 May 1987
• Docket Number: No. 24S01-8704-CV-392,24S01-8704-CV-392
• Citation: 507 N.E.2d 233
• Parties: 39 Ed. Law Rep. 275 Marilyn HUBER, Appellant, v. FRANKLIN COUNTY COMMUNITY SCHOOL CORPORATION BOARD OF TRUSTEES, Appellee.
• Court: Indiana Supreme Court

Page 233

507 N.E.2d 233

39 Ed. Law Rep. 275

Marilyn HUBER, Appellant, v. FRANKLIN COUNTY COMMUNITY SCHOOL CORPORATION BOARD OF TRUSTEES, Appellee.

No. 24S01-8704-CV-392.

Supreme Court of Indiana.

May 4, 1987.

Kevin W. Ault, Clarkson Law Offices, Rushville, for appellant.

Lowell C. McMillin, Mullin, McMillin & Rychener, Brookville, for appellee.

SHEPARD, Chief Justice.

This case is the culmination of a two-year-old dispute over the construction of a new high school in Franklin County. Appellant Marilyn Huber was elected to the Franklin County Community School Corporation Board of Trustees after running on the ticket of the Franklin County Taxpayers Association, a group which has mounted consistent opposition to the new school. When Huber's effort to defeat the project in her official capacity failed, she filed this lawsuit in her role as an individual residing in Franklin County. Her complaint questioned thirty-three aspects of the project, including financing, construction and location, and sought an injunction halting progress on it.

The trial court dismissed her lawsuit on the basis of Ind.Code Sec. 34-4-17-5 ("Public Lawsuits--Testing Public Improvements") and enjoined both Huber and other litigants affiliated with the Franklin County Taxpayers' Association from filing further suits "delaying or hindering" the construction and financing of the new school. Huber appealed and both parties sought immediate transfer from the Court of Appeals to this Court pursuant to Appellate Rule 4(A)(10). We granted transfer and now affirm.

The facts are generally undisputed. On December 20, 1984, the Franklin County Community School Corporation Board of Trustees adopted a resolution to construct a new high school. In June 1985, the board approved contracts with a construction manager, an architect, a legal adviser and a financial consultant to direct the project.

Huber and eight other citizens, acting under the name "Franklin County Community School Corporation Taxpayers," filed a remonstrance with the school board, the county auditor and the Indiana State Board of Tax Commissioners on September 19, 1986. The remonstrance questioned the legality, feasibility and cost of the school construction project. Two officers of the Franklin County Taxpayers Association signed that remonstrance.

Construction bids were advertised and received in October 1986. The board's construction manager sought to change the terms of his contract. The school board held an executive session on November 10 to discuss the construction manager's request and proceeded to approve the change during its public meeting that same evening. In his capacity as attorney for the Franklin County Taxpayers Association, Huber's counsel informed the board's attorney that the board's executive session had not complied with the Open Door Law and that any business conducted during both the session and the subsequent public meeting was therefore void. Ind.Code Sec. 5-14-1.5-1 to -7. The board's attorney agreed and advised the board by letter that it should consider anew the contract matter without reference to the illegal meeting.

The board consequently scheduled a special meeting for November 24 to reconsider the contract change and address other matters related to construction. Only hours before that meeting began, the Franklin County Taxpayers Association and its officers filed a suit in Franklin Circuit Court under the Indiana Open Door Law, seeking to render the Board's action on the contract void. The suit also sought to enjoin the board from taking further action on the construction manager's contract and from future conduct violating the Open Door Law. During the special meeting that evening, which apparently complied with the Open Door Law, the construction manager explained his request and the board again approved the change. The board also approved the creation of a separate municipal building corporation which would lease and maintain the new school after the school board constructed it.

On December 8, 1986, the school board conducted a public hearing on the proposed lease. The attorney representing the Franklin County Taxpayers Association expressed objections, but the board approved the lease. The requisite state agencies approved the project, and the lease was executed on December 15, 1986. Notice of that action occurred on December 17, the same day that the school board filed a petition with the State Board of Tax Commissioners seeking approval of the lease. On January 9, 1987, a remonstrance against the lease was filed with the school board and with the county auditor by four Franklin County residents, including Marilyn Huber. The objections raised in Huber's complaint are largely the same as those raised in the remonstrance.

On January 10, the Franklin Circuit Court conducted a hearing on the Open Door lawsuit which the Taxpayers Association had filed on November 24. Upon the school board's motion, the court declared the case a public lawsuit under Ind. Code Secs. 34-4-17-1 to -8. ¹ After denying plaintiffs' request for a temporary injunction and determining that they were unlikely to succeed on the merits, the trial court ordered the plaintiffs to post a bond of $2,764,800 within ten days in compliance with Ind.Code Sec. 34-4-17-5. ² The plaintiffs did not post the bond within the ten days. Accordingly, the trial court dismissed the complaint on January 21. The Association did not appeal.

Plans for the new school proceeded. On February 18, the School Property Tax Control Board conducted a hearing on the proposed lease and considered the remonstrances. After obtaining that board's recommendation, the State Board of Tax Commissioners approved the lease on March 2, concluding that it was fair and reasonable.

The School Board then advanced to the next stage of the process--financing. On March 11, it advertised the sale of first mortgage bonds to finance construction of the new high school. Appellant filed this suit in the Franklin Circuit Court on March 17 to enjoin the sale of the bonds, originally scheduled for April 2, 1987.

The school board requested that the trial court declare Huber's action a public lawsuit under Ind.Code Sec. 34-4-17-5 and dismiss it for want of jurisdiction under Ind.Code Sec. 34-4-17-8. ³ After an evidentiary hearing, the trial court granted the board's requests, prompting this appeal.

The cornerstone of Huber's argument on appeal is that the suit brought by the Franklin County Taxpayers Association under the Open Door Law should not have foreclosed her subsequent action.

The Public Lawsuit statute was designed to protect municipalities from "a flood of harrassing litigation which obstructs and delays public improvement." Barnett v. City of Indianapolis (1973), 158 Ind.App. 1, 5, 301 N.E.2d 526, 528. The legislature has recognized that even meritless litigation, brought by a vocal minority, can delay public improvements and add millions of dollars in increased construction costs. The statute neither affords new remedies nor confers new rights to bring "public suits"; its goal is to require those attacking governmental decisions to bring their suits as class actions and to put a stop to serial litigation. Hatcher v. Board of Commissioners of Lake County (1972), 155 Ind.App. 27, 290 N.E.2d 801.

This Court affirmed the constitutionality of this legislative framework shortly after the General Assembly passed the Public Lawsuit statute:

[U]nder the state law prior to adoption of [34-4-17-1 et seq.] a determined plaintiff could keep a suit in being from two to six years; and in many cases the mere filing of the action delayed beyond saving the intricate planning of the project regardless of the merits of the action.

If litigation is filed and a legal opinion cannot be given, bonds will remain unsold or undelivered. If this persists for any project for more than six months to a year, construction contractors in inflationary times cannot stand by their bids, and the project as planned and the litigation opposing it became moot. In the meantime taxpayers, in those cases where the endeavor is legally correct, have suffered substantially by increased construction costs.

State ex rel. Haberkorn v. DeKalb Circuit Court (1968), 251 Ind. 283, 289, 241 N.E.2d 62, 66.

For a plaintiff who cannot establish facts which would entitle him to a temporary injunction, the statute's requirement of a bond (Ind.Code Sec. 34-4-17-5) allows the plaintiff to pursue his claim without subjecting the municipal corporation to the damage which a meritless suit would cause. On the other hand, a plaintiff who is able to make a preliminary showing that he has a meritorious claim need not post the bond; he may obtain an injunction prohibiting the municipal corporation from proceeding on a disputed project until the plaintiff's claim is settled. Vigo County School Corporation v. Crockett (1974), 159 Ind.App. 420, 307 N.E.2d 510.

With these principles in mind, we turn to the merits of the case before us. Huber cannot now question the trial court's January 1987 determination that the Franklin County Taxpayers Association complaint was a public lawsuit. Aside from the fact that the decision appears to be in accord with Pepinsky v. Monroe County Council (1984), Ind., 461 N.E.2d 128, the Taxpayers Association did not appeal and thus the doctrine of res judicata bars relitigation of that determination.

Furthermore, there is no dispute that Huber's action was also a public lawsuit. Her complaint attacks numerous aspects of the school's construction, financing and leasing, and thus falls squarely within Ind.Code Sec. 34-4-17-1. See Teperich v. North Judson-San Pierre High School Building Corp. (1971), 257 Ind. 516, 275 N.E.2d 814, cert. denied (1972), 407 U.S. 921, 92 S.Ct. 2462, 32 L.Ed.2d 806. While Huber testified that she brought the suit on her own, the harm alleged in her complaint would be suffered by all taxpayers and the remedy sought...