Hughes v. City of Gary

• Decision Date: 12 January 2001
• Docket Number: No. 45S00-0011-CV-636.,45S00-0011-CV-636.
• Citation: 741 N.E.2d 1168
• Parties: Charles HUGHES and Alex Cherry, Appellants (Plaintiffs Below), v. CITY OF GARY, et al., Appellees (Defendants Below).
• Court: Indiana Supreme Court

741 N.E.2d 1168

Charles HUGHES and Alex Cherry, Appellants (Plaintiffs Below), v. CITY OF GARY, et al., Appellees (Defendants Below).

No. 45S00-0011-CV-636.

Supreme Court of Indiana.

January 12, 2001.

Douglas M. Grimes, Gary, Indiana, Attorney for Appellants.

Hamilton L. Carmouche, Gilbert King, Willie Harris, James B. Meyer, Gary, Indiana, Thomas J. Brunner, Carl A. Greci, South Bend, Indiana, Attorneys for Appellees.

SHEPARD, Chief Justice.

Two members of the Gary city council appeal a trial court order that they post a $2.35 million bond or face dismissal of their lawsuit challenging the approval of funding for a $47 million public improvement project. We affirm the order to post bond and subsequent dismissal of the lawsuit.

Facts and Procedural History

Plaintiffs Charles Hughes and Alex Cherry are two of nine members of the Gary Common Council. On June 20, 2000, the Council considered a proposal that would pledge about one-third of the City's riverboat casino gaming revenues over the next four years as security for bonds that will finance part of certain public improvements, including:

the renovation of the Genesis Center,¹ the renovation, construction and equipping of the former Mercy Hospital as a public safety and police headquarters building, renovation of parking facilities to service the Genesis Center, the acquisition, construction and equipping of a professional baseball stadium, and certain environmental remediation and demolition associated with the City's efforts to redevelop the City's waterfront (collectively, the "Project"). . . .

(R. at 37.) The Gary Redevelopment Commission will issue the bonds, totaling $31 million. The overall estimated project cost is $47 million.

The Council's agenda for its meeting of June 20, 2000, included the resolution pledging the gaming proceeds. The Council voted unanimously to defer a vote on the resolution until the next regular meeting, scheduled for July 5, 2000.

On June 22, 2000, Gary Mayor Scott King called a special meeting of the Council for June 27th, for the sole purpose of a final reading and vote on the resolution. The Council met on June 27th, with all members present, and passed the resolution by a margin of five to four. Mayor King signed it on July 3, 2000.

The plaintiffs filed suit on July 19, 2000. On August 16th, the trial court certified the action as a public lawsuit as defined by Ind.Code § 34-6-2-124, and it held an interlocutory evidentiary hearing two days later. At that hearing, the defendants presented evidence that delays caused by the litigation exposed the City to increased expense and losses due to inflation in construction industry costs, financing risk, and potential breach of contractual commitments.

On August 28, 2000, the trial court stated, as a conclusion of law, that the plaintiffs had not presented a substantial question for trial. Under Ind.Code § 34-13-5-7(c) and (e), it therefore ordered the plaintiffs to post bond to cover the minimum potential costs of delays caused by the lawsuit, in the amount of $2.35 million. It further ordered, per the statute, that the suit be dismissed with prejudice if the plaintiffs failed to post the bond within ten days.

The plaintiffs did not post bond, and the court dismissed the action on September 8, 2000. The plaintiffs appealed. Because this matter involves significant public interest and substantial sums of money, we granted transfer on November 9, 2000, to expedite its resolution.²

I. Is There a Substantial Question to Be Tried?

It is undisputed that this action involves a public lawsuit under Ind.Code Ann. 34-13-5 (West 2000). Therefore, the following provisions of Ind.Code § 34-13-5-7 apply:

(a) At any time before the final hearing in a public lawsuit, the defendant may petition for an order of the court that the cause be dismissed unless the plaintiff posts a bond with surety to be approved by the court. The bond must be payable to the defendant for the payment of all damages and costs that may accrue by reason of the filing of the lawsuit if the defendant prevails.

(b) A hearing shall be held on a petition described in subsection (a) in the same manner as the hearing on temporary injunctions under IC 34-26-1. If, at the hearing, the court determines that the plaintiff cannot establish facts that would entitle the plaintiff to a temporary injunction, the court shall set the amount of bond to be filed by the plaintiff in an amount found by the judge to cover all damages and costs that may accrue to the defendants by reason of the pendency of the public lawsuit in the event the defendant prevails.

(c) If the plaintiff does not file a bond with sureties approved by the court within ten (10) days after the order to do so is entered, the suit shall be dismissed.

Under this statute, plaintiffs must introduce sufficient evidence that there is a substantial issue to be tried in order to avoid the bond requirement. Boaz v. Bartholomew Consol. School Corp., 654 N.E.2d 320, 322-23 (Ind. Tax Ct.1995) (citing Johnson v. Tipton Community School Corp., 253 Ind. 460, 464-65, 255 N.E.2d 92, 94 (1970)).

The purpose of the public lawsuit statute and its related bond requirement is "to protect the public against a `flood of harassing litigation' which obstructs and delays public improvement at prohibitive costs. . . ." Johnson, 253 Ind. at 464, 255 N.E.2d at 94 (quoting State ex rel. Haberkorn v. DeKalb Circuit Court, 251 Ind. 283, 288, 241 N.E.2d 62, 65 (1968)). The statutes:

provide for a vehicle for the citizens and taxpayers of the community to be represented in a suit that questions the validity of the actions taken by the local government unit for public construction, but at the same time provide for a means to limit the delay and frustration of the public project by those citizens who would bring an action or a series of actions for the sole purpose of delaying or changing the financing and construction of the proposed project.

Pepinsky v. Monroe County Council, 461 N.E.2d 128, 132 (Ind.1984).

Plaintiffs assert that, because they have raised two substantial questions for trial, the trial court erred in ordering them to post bond. These claims are: (1) that the resolution is invalid because the June 27, 2000 meeting was not properly convened, and (2) that the Council improperly delegated its powers in the resolution.

A. The "Special Order" Ordinance. At its June 20th meeting the Council voted unanimously to move its next regular meeting from July 4th to July 5th. It also voted to defer final action on the redevelopment resolution to the July 5th meeting. The Mayor's call of a special Council meeting for June 27th derived from Gary Ordinance 842 § 32.07(A) ("[s]pecial meetings of the Common Council may be held at the Council Chamber at any time on call of the Mayor or on call of any three or more members of the Common Council.") (See R. at 338.)

Plaintiffs argue that the Council's deferral of the final resolution vote from June 27th to July 5th converted the matter to a "special order" falling under Gary Ordinance 842 § 32.24. (Appellants' Br. at 14.) This ordinance states: "A matter before the Common Council may be set down as a special order of business at a time certain only by consent of a majority vote of all the members-elect of the Common Council." (See R. at 339.)

Nothing in the record supports the assertion that the Council did anything other than put the matter over to its next scheduled meeting as a normal item of business. The trial court's factual finding that "[i]n the minutes of the June 20, 2000 meeting, the vote to defer action on [the resolution] is not designated as a special order" is accurate. (R. at 197.) Therefore, the court correctly concluded that Mayor King acted within his statutory authority when he called the June 27th special meeting for a vote on the resolution, and that a two-thirds Council vote was not required to take the matter up on that date.

B. The Council's Delegation of Power. The plaintiffs claim that the resolution is invalid because the Council failed to allocate the total anticipated $31 million in bond proceeds among the various components of the redevelopment project. (Appellants' Br. at 15.) In their statement of the case, they say³ that the resolution violates Ind.Code Ann. § 36-4-6-18 (West 2000), which gives a city's legislative body the power to "pass ordinances, orders, resolutions, and motions for the government of the city, the control of the city's property and finances, and the appropriation of money." They assert that the resolution impermissibly "confers arbitrary power and unregulated discretion on the Commission to appropriate and spend the bond proceeds." (Appellants' Br. at 15.)

In support of their argument on improper delegation, the plaintiffs cite two cases, but neither is relevant to the issue of whether the Council resolution is sufficiently detailed. (Appellants' Br. at 15-16.) They offer no further justification for their claim that the Council has overstepped its statutory authority. The plaintiffs therefore raise no substantial question of improper delegation.⁴

II. Record Supports the Court's Findings

The plaintiffs argue that many of the trial court's findings of fact are unsupported by evidence of record. We review a trial court's findings of fact under a "clearly erroneous" standard and do not reweigh evidence or determine the credibility of witnesses. Ind. Trial Rule 52; Chidester v. City of Hobart, 631 N.E.2d 908, 910 (Ind.1994). We consider the evidence most favorable to the judgment, with all reasonable inferences drawn in favor of the judgment. Id. (citations omitted).

Three of the disputed findings basically establish that the Council passed the resolution, which contained provisions described above, by a five to four margin.⁵ The plaintiffs correctly point out that the June 27th Council meeting minutes contained in the record only evidence approval of an amendment to the...