THE CITY OF INDIANAPOLIS, INDIANA, and THE INDIANAPOLIS DEPARTMENT OF PUBLIC WORKS, Appellants-Defendants,
EVELYN COX, Appellee-Plaintiff
APPEAL FROM THE MARION SUPERIOR COURT. The Honorable Patrick L. McCarty, Judge. Cause No. 49D03-0704-PL-17837.
ATTORNEYS FOR APPELLANTS: ALEXANDER P. WILL, MAGGIE L. SMITH, Frost Brown Todd LLC; ANDREW P. SEIWERT, Office of Corporation Counsel, Indianapolis, Indiana.
ATTORNEYS FOR APPELLEES: WILLIAM T. ROSENBAUM, Rosenbaum Law, P.C., Indianapolis, Indiana; STEPHEN J. HYATT, Stephen J. Hyatt & Associate, Indianapolis, Indiana.
SHEPARD, Senior Judge. MATHIAS, J., and PYLE, J., concur.
SHEPARD, Senior Judge
Owen Cox and Evelyn Cox initiated a class action against the City of Indianapolis, claiming that the City acted illegally in the course of changing its method for financing sanitary sewer improvement projects. The trial court entered summary judgment for the plaintiffs and awarded damages and prejudgment interest.
In the course of oral argument before this panel, counsel for Evelyn Cox acknowledged that it would be consistent with the statutes and constitutional provisions
under which they bring this case for the City to make various kinds of forgiveness, either to individual property owners or to groups of them, as the circumstances might warrant. We think counsel's acknowledgement was appropriate, and that it reflects why Cox's claims must fail. We reverse and remand.
FACTS AND PROCEDURAL HISTORY
Prior to 2005, the City financed neighborhood sewer improvements through a widely-employed set of statutes known as the " Barrett Law," which authorizes municipalities to recover the costs of sewer projects by dividing the costs among the properties that benefit and imposing assessments on the owners. See, e.g., Ind. Code § 36-9-39-15 (1993). Property owners may elect to pay assessments in a lump sum or by installments over periods as long as thirty years. See Ind. Code § 36-9-37-8.5 (2001).
In January 2001, the City determined that the Coxes would be assessed $9,075 for a sewer improvement project in their neighborhood. The Coxes signed a " Barrett Law Waiver" that set a ten-year payment program for their assessment. Appellant's App. p. 467. Later in 2001, the Coxes refinanced their house and paid off their Barrett Law debt in two payments, one in October and the other in November.
In 2005, the City developed a new financing plan called the Septic Tank Elimination Program (STEP). Under STEP, property owners would no longer bear a proportional share of the costs of a project in their neighborhood. Instead, each property owner would pay a one-time $2,500 connection fee, and the remaining construction costs would be covered by increases in sewer fees paid by all users county-wide.
As the City prepared to launch STEP, it had to decide what to do about installment payments not yet payable under the Barrett Law system. It chose to forego these future payments. On October 31, 2005, the City-County Council passed General Ordinance No. 107-2005, which enacted STEP. On December 7, 2005, the City's Board of Public Works passed a resolution forgiving Barrett Law debts due and owing from the date of November 1, 2005 forward.
In late 2005, the Coxes learned that their neighbors who had been paying on installment plans had been relieved from doing so. Appellant's App. p. 207. A year later, in December 2006, the Coxes sent the City a demand for a refund with interest of " all payments which they made, which were required to be made on or after November 1, 2005." The City denied their request.
The Coxes subsequently filed a " Claim Form" with the Marion County Auditor requesting a " partial refund" in the amount of $4,537.50. The Auditor notified the Coxes that they should direct their claim to the Department of Public Works (DPW). The Coxes then sent the form to DPW, but the record does not indicate what response it gave, if any.
The Coxes filed suit on April 30, 2007, in the Marion Superior Court. They alleged that the City's refusal to refund a portion of their assessment violated Indiana Code section 36-9-39-17 (1993), which we discuss below. They requested a pro rata refund comparable to the forgiveness provided to those with unpaid installment plan debts. They requested certification of a class of similarly-situated property owners, and the trial court agreed to certify the class.
Next, the Coxes moved for partial summary judgment, asserting a claim under the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution.
The City removed the case to the U.S. District Court for the Southern District of Indiana, which eventually granted summary judgment to the Coxes on their constitutional claim but found against them on their claim under Indiana Code section 36-9-39-17.
Meanwhile, a similar case styled as City of Indianapolis v. Armour wended its way through the appellate process in Indiana's courts. The U.S. Supreme Court eventually resolved that case, concluding that the City did not violate the Equal Protection Clause by refusing to grant pro rata refunds to citizens who had paid their assessments in lump sums while forgiving installment payments due after STEP's enactment. Armour v. City of Indianapolis, 132 S.Ct. 2073, 2084, 182 L.Ed.2d 998 (2012).
After the Supreme Court handed down Armour, the District Court in this case vacated its previous grant of summary judgment to the Coxes on their Equal Protection claim. The court further vacated its grant of summary judgment to the City on Indiana Code section 36-9-39-17 and remanded that claim back to state court.
On remand, the parties again filed cross-motions for summary judgment. In their reply brief in support of their motion for summary judgment, the Coxes argued for the first time (over the City's objection about timeliness) that termination of installment plan debts without providing pro rata refunds to lump-sum payers violated article 10, section 1 and article 1, section 23 of the Indiana Constitution.
The court granted the Coxes' motion for summary judgment and denied the City's cross-motion. It determined that the City violated Indiana Code section 36-9-39-17 or, in the alternative, violated an " implied contract," by failing to refund a pro rata share of the Coxes' payments. Appellant's App. p. 12. The court also ordered the City to pay the class $2,783,702.59 (described in the judgment as " damages" ) plus prejudgment interest at 8% per annum, starting on November 1, 2005. This appeal followed.
The issues on appeal are as follows:
I. Whether Cox's statutory claim and Indiana Constitutional claims are barred by the Indiana Tort Claims Act.
II. Whether Cox's Indiana Constitutional claims are procedurally barred.
III. Whether the City's refusal to provide a pro rata refund violated Indiana Code section 36-9-39-17.
IV. Whether the City's refusal to provide a pro rata refund violated the Indiana Constitution.
V. Whether the trial court wrongly awarded pre-judgment interest.
As is readily apparent, should the City prevail on one or more of these issues, Cox's suit would fail altogether and thus make certain other issues moot. We have elected to address most of these, taking a pass on the question of pre-judgment ...