Town of Newburgh v. Town of Chandler

Dec 23 2013, 6:01 am
FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE:
R. THOMAS BODKIN BRIAN W. WELCH
J. HERBERT DAVIS CARL A. HAYES
Bamberger, Foreman, Oswald & Hahn, LLP Bingham Greenebaum Doll LLP
Evansville, Indiana Indianapolis, Indiana
ATTORNEY FOR AMICUS CURIAE
BOARD OF COMMISSIONERS OF
WARRICK COUNTY:
S. ADAM LONG
Long & Mathies Law Firm, P.C.
Boonville, Indiana
ATTORNEY FOR AMICUS CURIAE
CITY OF BOONVILLE:
MARK K. PHILLIPS
Mark K. Phillips, Attorney at Law, P.C.
Boonville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
TOWN OF NEWBURGH, )
)
Appellant/Cross-Appellee, )
)
vs. ) No. 87A01-1305-CT-203
)
TOWN OF CHANDLER, )
)
Appellee/Cross-Appellant. )
APPEAL FROM THE WARRICK SUPERIOR COURT
The Honorable Lucy Goffinet, Special Judge
Cause No. 87D02-1204-CT-577
December 23, 2013
OPINION - FOR PUBLICATION
SHEPARD, Senior Judge
The legislature has authorized municipalities to provide sewer service up to four
miles from their corporate boundaries, and to regulate or even prohibit other entities from
doing so. When two towns each assert exclusive right to provide service in a zone where
their authority overlaps, how should their conflicting claims be resolved?
FACTS AND PROCEDURAL HISTORY
Acting under Indiana Code sections 36-9-2-16, -17, and -18 (1980), the towns of
Newburgh and Chandler in Warrick County have for decades been providing sewer
services in the four-mile rings outside their boundaries. Their four-mile rings somewhat
overlap.
On April 25, 2007, Newburgh adopted an ordinance exercising “an exclusive
license to furnish sewer service within the Regulated Territory, and all other utilities are
expressly prohibited from furnishing sewer service within the Regulated Territory, except
for those customers located in the Regulated Territory that are connected to another
sewer utility as of the date this Ordinance is adopted.” Appellant’s App. p. 76. The
“Regulated Territory” includes the overlapping area between Newburgh and Chandler.
About six weeks later on June 4, 2007, Chandler adopted an ordinance with the
same language, thus purporting to give Chandler an exclusive license to provide (and
expressly prohibiting others from providing) new sewer services to customers in the
overlapping area. Id. at 71-72.
2
Ruksam Development, LLC, approached both Newburgh and Chandler about the
feasibility and cost of providing sewer services to a subdivision it planned to develop in
the overlapping area. Newburgh’s estimate was a good deal higher than Chandler’s, so
Ruksam opted to request sewer services from Chandler. Shortly thereafter, Newburgh
sued Ruksam in Vanderburgh Circuit Court for violating the Newburgh ordinance.
In April 2012, Chandler sued Newburgh in Warrick Superior Court, seeking a
declaratory judgment that Newburgh’s ordinance could not prohibit Chandler from
providing new sewer services in the overlapping area. The parties filed cross-motions for
summary judgment and designations.1 After a hearing, the trial court denied both
motions. Upon Newburgh’s request, the court certified its order for interlocutory appeal,
and this Court accepted jurisdiction.
ISSUE
The issue presented by Newburgh’s appeal and Chandler’s cross-appeal is whether
the trial court erred by denying the cross-motions for summary judgment.
DISCUSSION AND DECISION
Summary judgment is appropriate only where the designated evidence shows there
is no genuine issue of material fact and the moving party is entitled to judgment as a
matter of law. Ind. Trial Rule 56(C); City of N. Vernon v. Jennings Nw. Reg’l Utils., 829
N.E.2d 1, 3 (Ind. 2005). All evidence must be construed in favor of the nonmoving party,
1
Each party also sought damages for the other’s alleged tortious interference with its business
relationship with Ruksam. Summary judgment was not sought on those claims.
3
and all doubts as to the existence of a material issue must be resolved against the moving
party. Id.Neither party really contends there are genuine issues of fact, so the question
would seem to be whether these facts entitle either town to judgment as a matter of law.
Newburgh claims Chandler is prohibited from providing new sewer services to
customers in the overlapping area because Newburgh was the first to adopt an ordinance
to that effect. Chandler disagrees, contending among multiple counterarguments that the
fact that both towns have long provided sewer services in the overlapping area vitiates the
effect of Newburgh’s ordinance.
The parties’ arguments rest on Indiana Code sections 36-9-2-16 and -18. Section
16 provides that a municipality “may regulate the furnishing of the service of collecting,
processing, and disposing of waste substances and domestic or sanitary sewage. This
includes the power to fix the price to be charged for that service.” For purposes of Title
36, “‘[r]egulate’ includes license, inspect, or prohibit.” Ind. Code § 36-1-2-15 (1980).
Section 36-9-2-18 further provides that “[a] municipality may exercise powers
granted by sections 2, 3, 14, 16, and 17 of this chapter in areas within four (4) miles
outside its corporate boundaries.”
Read together, these statutes give municipalities several powers, including the
authority to prohibit the furnishing of sewer services within four miles of their
boundaries. These powers, though, are not self-executing. The Code provides how they
must be exercised:
4
(a) If there is a constitutional or statutory provision requiring a specific
manner for exercising a power, a unit wanting to exercise the power must do
so in that manner.
(b) If there is no constitutional or statutory provision requiring a specific
manner for exercising a power, a unit wanting to exercise the power must . . .
(1) if the unit is a county or municipality, adopt an ordinance
prescribing a specific manner for exercising the power . . . .
Ind. Code § 36-1-3-6 (1993). Here, there are no constitutional or statutory provisions
requiring a specific manner for exercising the powers conferred by Sections 16 and 18. A
municipality wanting to exercise one of these powers must therefore adopt an ordinance
prescribing a specific manner by which it will act.
To that end, Newburgh says, it adopted the April 2007 ordinance asserting
exclusive license to provide, and prohibiting others from providing, new sewer services
to customers in the overlapping area. Acknowledging Chandler adopted a similar
ordinance six weeks later, Newburgh argues its ordinance prevails because it was adopted
first.
This state’s courts have long used a first-in-time rule, in the absence of other
legislative direction, to resolve disputes when two municipalities possess concurrent and
complete jurisdiction of a subject matter. See Taylor v. City of Fort Wayne, 47 Ind. 274,
282 (1874) (group of citizens prevailed where it initiated proceedings to incorporate new
town before city initiated proceedings to annex same territory); Ensweiler v. City of Gary,
169 Ind. App. 642, 645, 350 N.E.2d 658, 659 (1976) (city prevailed where it initiated
annexation proceedings before group of citizens initiated proceedings to incorporate same
territory as new town).
5
Chandler claims Newburgh’s ordinance was not first-in-time because both towns
had been “regulating” sewer services in the sense that they had adopted various
ordinances for delivery of service. For example, Chandler points to a 1974 contract in
which it agreed to provide sewer services to a customer just south of its boundary. It also
points generally to 143 pages of its own ordinances adopted as early as 1965 regarding its
own sewer system. None of its designated evidence, though, shows that it adopted an
ordinance, prior to the ones each town adopted in 2007, prohibiting all others from
providing new sewer services in the overlapping area.
Noting that “regulate,” in terms of Section 16, includes fixing prices, licensing,
inspecting, or prohibiting, Chandler argues the statutory definition of “regulate” should
not be parsed to allow Newburgh to be first-in-time to regulate by “prohibiting” in light
of the fact that both towns had long been “fixing prices,” “licensing,” and “inspecting.”
This, says Chandler, would be a “word game [that] defies logic and reality.” Appellee’s
Br. p. 18.
Of course, this is not a common law case but rather one in which particular
statutes govern. We do our best to apply the Code sections the General Assembly has
enacted. As respects this dispute, the question is: when two municipalities have been
“regulating”—say, by providing service to various customers in an overlapping area or
even barring users from discharging sewage into natural outlets—do they both lose their
authority to “regulate” by “prohibiting” others from providing service?
The discussion in Brenwick Associates, LLC v. Boone County Redevelopment
Commission, 889 N.E.2d 289 (Ind. 2008), is instructive. The dispute there arose when
6
Boone County established an economic development area (“EDA”) that included land
that the town of Whitestown was attempting to annex. Whitestown argued it initiated
annexation proceedings before Boone County initiated EDA proceedings and should thus
prevail pursuant to Taylor v. City of Fort Wayne and Ensweiler v. City of Gary. As noted
above, those cases involved disputes between citizens who wanted to incorporate new
towns on the one hand and cities that wanted to annex the same land on the other.
The Supreme Court easily distinguished Taylor and Ensweiler, noting that the
first-in-time rule was implicated in those cases “because the territory in question simply
could not be both a new town and within the respective cities.” Brenwick, 889 N.E.2d at
294. The first-in-time rule did not apply in Brenwick, it explained, because annexation
and establishment of an EDA were not the same subject matter. Id. Moreover,
Whitestown’s initiation of annexation proceedings did not preclude Boone County from
establishing the EDA (at least until annexation was complete), and Boone County’s
establishment of the EDA did not preclude Whitestown from completing annexation. Id.
at 295.
Before Newburgh’s 2007 ordinance, the situation was similar to that in Brenwick.
That is, neither town precluded the other from providing sewer service to particular
customers in the overlapping area. It was not until the towns each decided to exercise
exclusive jurisdiction that a conflict arose. At that point, the situation fit within Taylor
and Ensweiler because new sewer services could not be provided exclusively by
Newburgh at the same time they were provided exclusively by Chandler.
7
Chandler also questions the notion that Section 36-9-2-16 actually empowers a
municipality to prohibit all others from providing sewer services. It points to legislation
about the effect of issuance of an Indiana Utility Regulatory Commission certificate of
territorial authority to a sewage disposal company: “no other sewage disposal company
shall render sewage disposal service in the area.” Ind. Code § 8-1-2-89(g) (1992).
Chandler says this demonstrates that the General Assembly is altogether able to create
explicit authority to exclude when it so intends—and did not use such language in
Section 16.
To be sure, this IURC statute is very explicit about barring another provider, but it
is hard to see much ambiguity in the statutes about municipal sewer service that govern
this case. The Code authorizes municipalities to regulate sewer service and says that this
regulation includes the power to “prohibit.” This is exactly what Newburgh did when it
adopted its 2007 ordinance.
Chandler also argues that because the legislature gave it the statutory power to
provide sewer services within four miles outside its boundaries, Newburgh may not take
away that statutory power by adopting an ordinance. This argument is misplaced.
Newburgh is not trumping any statute with its ordinance. While Sections 16 and 18
confer certain powers, towns must adopt ordinances to exercise them. The Newburgh
ordinance simply exercises the statutory authority conferred on the town, just as
Chandler’s later ordinance was drafted to do.
Chandler nonetheless cites a provision of the Home Rule Act that says a
municipality “does not have . . . [t]he power to impose duties on another political
8
subdivision, except as expressly granted by statute.” Ind. Code § 36-1-3-8(a)(3) (2005).
The Indiana Supreme Court, however, has held that this provision does not bar
municipalities “from enforcing against other political subdivisions those regulations of
general applicability which are specifically authorized by statute.” City of Crown Point
v. Lake Cnty., 510 N.E.2d 684, 686 (Ind. 1987); see Town of Avon v. W. Cent.
Conservancy Dist., 957 N.E.2d 598, 606 (Ind. 2011) (town entitled to regulate other
political units’ attempt to take water from aquifer pursuant to its ordinance adopted under
statutory authority).
Chandler then argues that City of North Vernon v. Jennings Northwest Regional
Utilities, 829 N.E.2d 1 (Ind. 2005), compels a decision in its favor. There, the Jennings
County Commissioners petitioned the Indiana Department of Environmental
Management to form a regional water and sewer district for the northwest portion of
Jennings County. IDEM granted the request, established Jennings Northwest Regional
Utilities, and authorized JNRU to provide sewer service in areas just outside North
Vernon’s corporate boundaries. At the time the order was entered, North Vernon was
already providing sewer services to areas IDEM identified as JNRU’s service district.
When a new elementary school in one of those areas opted to obtain sewer services from
North Vernon, JNRU sued North Vernon, seeking a declaratory judgment that JNRU had
the exclusive right to serve the school.
The Indiana Supreme Court acknowledged that IDEM expressly granted JNRU the
power to provide sewer services in the area where the school was located and that our
Home Rule Act provides that a municipality “may exercise any power it has to the extent
9
that the power . . . is not expressly granted to another entity.” Ind. Code § 36-1-3-5(a)(2)
(1993). Nonetheless, it found that strict application of this provision, which would result
in judgment for JNRU, was at odds with the express grant of statutory authority given to
municipalities to operate sewer facilities within and without their corporate boundaries.
Strict application was also at odds with the statutory scheme of the Home Rule
Act, which demonstrated “a legislative intent to provide counties, municipalities, and
townships with expansive and broad-ranging authority to conduct their affairs.” North
Vernon, 829 N.E.2d at 5. The Court thus held that “where there is an overlap between
the service area of a regional district and the service area of a municipality, and absent a
resolution during the IDEM permitting process, under the ‘expressly granted’ provision
of the Home Rule Act, the district prevails unless the municipality was already providing
services to the area at the time the district’s service area was created.” Id. at 7. The
Court thus concluded that North Vernon had the exclusive right to provide sewer services
to the school. Id.
Chandler claims North Vernon supports its argument for two reasons, neither of
which are persuasive. First, it notes that the opinion is silent on whether North Vernon
ever adopted an ordinance to exercise exclusive authority and urges us to conclude that
its provision of service was enough to do so. The opinion’s silence as to the adoption of
an ordinance, though, may be for the benign reason that the parties did not identify it as
an issue. Regardless, as noted above, the Code is clear that a municipality wanting to
exercise the powers conferred by Section 36-9-2-16 must adopt an ordinance prescribing
a specific manner for doing so.
10
Second, Chandler asserts that it was North Vernon’s provision of sewer services in
the disputed area before JNRU’s service area was created that led the Court to rule for
North Vernon. As in that case, Chandler argues, it should prevail because it was
providing services in the overlapping area before Newburgh adopted its 2007 ordinance.
This argument does not account for the reason the Supreme Court found North Vernon’s
provision of sewer services determinative: the establishment of JNRU’s service area
conflicted with both the express statutory authority allowing municipalities to provide
sewer services outside their boundaries as well as the Home Rule Act’s policy providing
municipalities with expansive authority to conduct their affairs. The determinative factor
in North Vernon, a dispute between a municipality and a regional sewer district, simply
does not carry over to the case before us, a dispute between two municipalities.
Finally, Chandler and two amici curiae, the Warrick County Commissioners and
the City of Boonville, argue that enforcement of Newburgh’s 2007 ordinance will chill
economic development. They allege Newburgh enforces its ordinance only in situations
where significant sewer service fees are expected, which makes developers hesitant to
invest in projects in Newburgh’s extraterritorial service area for fear they will be
subjected to lawsuits if they choose a cheaper sewer provider. Chandler and amici also
point out that having competing sewer service providers benefits customers and has been
the norm for decades. They further note that a town could stake its claim to a particular
area irrespective of its ability to provide service there.2
2
Chandler also argues that Newburgh should be judicially estopped from claiming exclusivity because it
sought to intervene in a Utility Regulatory Commission proceeding in which Chandler was seeking
11
These arguments possess some weight. Resolution of disputes like the one before
us by a commission in the executive branch could likely produce more effective and
efficient results. The creation of such mechanisms, however, is in the domain of the
legislature and not the courts. The statutes as they exist authorized Newburgh’s
ordinance prohibiting others from providing new sewer services to customers within four
miles of its corporate boundaries.
CONCLUSION
We therefore affirm the trial court’s denial of summary judgment to Chandler,
reverse its denial of summary judgment to Newburgh, and remand with instructions to
enter summary judgment for Newburgh.
Affirmed in part, reversed in part, and remanded.
BAKER, J., and BROWN, J., concur.
exclusive license for water service. There, Newburgh argued that service should be “open and subject to
customer choice.” Appellee’s App. p. 380. To be sure, Newburgh’s earlier statements provide some
awkwardness in this litigation, but the Indiana Supreme Court has regularly held that estoppel is not
usually applicable to government units. See, e.g., Biddle v. BAA Indianapolis, LLC, 860 N.E.2d 570, 581
(Ind. 2007); Dep’t of Local Gov’t Fin. v. Commonwealth Edison Co. of Ind., Inc., 820 N.E.2d 1222, 1228
(Ind. 2005).
12