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Graham v. Town of Brownsburg

Court of Appeals of Indiana

May 21, 2019

Sabrina Graham, et al., Appellants-Plaintiffs,
v.
Town of Brownsburg, Appellee-Defendant.

          Appeal from the Hendricks Circuit Court The Honorable Daniel F. Zielinski, Judge Trial Court Cause No. 32C01-1807-PL-109

          APPELLANTS PRO SE Kurt Disser Sabrina Graham Brownsburg, Indiana

          ATTORNEYS FOR APPELLEE Robert L. Hartley Maggie L. Smith Carly J. Tebelman FROST BROWN TODD LLC Indianapolis, Indiana

          Bailey, Judge.

         Case Summary

         [¶1] Sabrina Graham and Kurt Disser (collectively, "Graham/Disser") are domestic partners who own property in Brown Township, which is outside of the Town of Brownsburg ("the Town") corporate limits. However, they are customers of the Town's municipal water utility ("the Water Utility"). They filed, pro se, a lawsuit against the Town in which they sought declaratory and injunctive relief regarding the legality of a water rate ordinance the Town enacted in 2018. Graham/Disser now appeal the trial court's order granting summary judgment to the Town. They raise multiple issues on appeal, but we decide only the dispositive issue of whether the trial court erred in granting summary judgment to the Town on the grounds that Graham/Disser failed to exhaust their administrative remedies.

         [¶2] We affirm.

         Facts and Procedural History

         Adoption of Challenged Ordinance

         [¶3] The Town operates the Water Utility, which supplies water to customers in the Town and in some areas outside of the Town limits. The Water Utility also supplies unmetered water to public fire hydrants used by firefighters for fire suppression. Thus, the Water Utility incurs certain costs in providing water service for public fire protection both within and without of Town limits. The Indiana Code allows municipal water utilities to recover such costs. Ind. Code § 8-1.5-3-1 to -15.

         [¶4] Prior to 2002, the Water Utility was subject to the jurisdiction of the Indiana Utility Regulatory Commission ("IURC") and was required to seek IURC approval to establish or change any rates and charges to recover costs of providing water service for public fire protection. However, in 2002 the Water Utility withdrew from the jurisdiction of the IURC, as allowed by law. See I.C. § 8-1.5-3-9.1 (2002). Thereafter, the Water Utility's rates and charges were established by the Town Council passing rate ordinances. See I.C. § 8-1.5-3-8.1 (allowing a municipal legislative body to adopt and change utility rates and charges by adopting rate ordinances).

         [¶5] Until 2010, the Water Utility allocated its costs for water service for public fire protection to the Town itself and levied an annual hydrant fee on the Town. In 2010, the Town decided the Water Utility should instead recover such costs through customer rates, as permitted by law. See I.C. § 8-1-2-103(d) (2010) (providing that a municipality may fund public fire protection services through charges "in the basic rates of all customers of the utility within the municipality," rather than charges directly to the municipality). Therefore, the Town adopted Ordinance 2010-09 ("2010 Ordinance") under which Section 54.22 enacted a new charge for water service for fire protection, named "Public Fire Protection Charge" ("the Fee"), on all water customers. App. Vol. IV at 191-92. The ordinance also included a schedule under which the amount billed to a customer was related to the size of the customer's water meter. Id. Although the ordinance did not exempt customers outside the Town limits, the Water Utility charged the new rate only to customers within the Town limits.

         [¶6] In 2018, the Town decided to start charging the Fee to certain water customers outside of the Town limits. Therefore, the Town proposed Ordinance 2018-14 ("2018 Ordinance")-an amendment to Section 54.22-which reads as follows:

(A) Fire protection service fees. Pursuant to Indiana Code section 8-1-2-103(d), each user shall pay the fire protection service fees, which consist of (i) private and/or (ii) public. This fee applies to all Town residents on town water and any non-resident on Town water who is within 1, 000 ft of a town hydrant.

App. Vol. III at 125.

         [¶7] The 2018 Ordinance was introduced and first read during the regular public meeting of the Town Council on May 10, 2018. The Town scheduled a public hearing for June 28, 2018, to allow users of the water works, owners of property served or to be serviced by the water works, and other interested persons to be heard concerning the proposed rates and charges. The Town published a formal Notice of the public hearing and mailed it to users of the water works whose property is located outside the Town limits. The Notice informed ratepayers that, following adoption of the ordinance, they may challenge the ordinance under Indiana Code Sections 8-1.5-3-8.2 or 8-1.5-3-8.3.[1] The Town Council adopted the 2018 Ordinance on July 26, 2018.

         Relevant Municipally Owned Utility Law

         [¶8] Indiana Code Sections 8-1.5-3-1 to -15 govern the operation of municipally owned utilities, including water services, and Indiana Code Sections 8-1.5-3-8 to 8.3 govern utility rates and charges. Municipalities owning utilities must furnish reasonably adequate services, and they may charge "reasonable and just rates and charges" for those services. I.C. § 8-1.5-3-8. Before adopting an ordinance related to rates and charges, the municipality must hold a public hearing and give notice of the same. I.C. § 8-1.5-3-8.1. Objections to any such rates and charges are governed by Indiana Code Section 8-1.5-3-8.2, which provides, in relevant part:

(b) Owners of property connected or to be connected to and served by the works authorized under this chapter may file a written petition objecting to the rates and ...

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