INDIANA MUNICIPAL LAW – TOWN DOES NOT HAVE STANDING TO SEEK DECLARATORY JUDGMENT TO VALIDATE ITS OWN ORDINANCE AND MAY NOT LEGALLY IMPOSE A STORM WATER FEE ON PROPERTY OUTSIDE ITS MUNICIPAL BOUNDARIES

On July 14, 2009, the Indiana Court of Appeals issued an opinion in a case affecting Indiana municipal law, Board of Commissioners of Hendricks County v. Town of Plainfield, addressing whether a town had proper standing to ask for declaratory judgment to validate their own ordinance. The Court also addressed whether a town may exercise storm water jurisdiction and whether the town could charge storm water fees for property that was outside the corporate boundaries of the municipality.

On July 24, 2006, the Board of Commissioners (“Commissioners”) of Hendricks County adopted Ordinance No. 2006-15 (“County Ordinance”), which created a county storm water management board pursuant to Indiana law for the purpose of managing storm water. No fee structure was adopted.

Two weeks later, the Town Council of Plainfield (“Plainfield”), a town located in Hendricks County, adopted Ordinance No. 20-2006 (“Town Ordinance”) which established a Storm Water Department for the purpose of implementing storm water conditions and engaging in operation and maintenance activities to comply with both federal and state environmental laws. The Plainfield Town Ordinance authorized the new Storm Water Department “to impose a storm water fee on all property within the sewage works system service area.” The sewage works service area was defined by the Town Ordinance to include all property within the corporate boundaries of the municipality of Plainfield, but also included any property outside the corporate boundaries of Plainfield that used Plainfield’s services.

Robert Daum owned property within Plainfield’s sewage works service area, but outside the corporate boundaries of Plainfield. Plainfield sent notice to Daum stating that he, on behalf of himself and his two businesses, Daum LLC and Daum Trucking, Inc., would have to pay a storm water fee of $182.00 per month starting on September 29, 2006, and that this amount would increase to $364.00 per month on January 1, 2007. Daum paid the monthly bill under protest starting on January 1, 2007.

On May 10, 2007, Daum filed a two count amended complaint for declaratory judgment and refund of fees against Plainfield and the Commissioners. Daum alleged that the Town Ordinance violated or was inconsistent with Indiana law. He additionally alleged that if Plainfield is allowed to assess a storm water user fee for Daum’s use — the Commissioners would be prohibited from assessing a fee for the same services.

The Commissioners filed a cross-claim against Plainfield, alleging that the Town Ordinance was limited to property located within the corporate boundaries of Plainfield. On July 9, 2007, Plainfield filed a counterclaim for declaratory judgment asking the trial court to enter judgment which declared that the Town Ordinance was valid, lawful, proper, constitutional, and an enforceable municipal ordinance asking for all fees assessed pursuant to the Town Ordinance are valid and proper and deny Daum’s request for declaratory judgment and refund of fees.

The trial court issued its order on motions for summary judgment on May 13, 2008. The order denied Daum’s motion for summary judgment against Plainfield, denied the Commissioners’ motion for summary judgment against Plainfield, granted Plainfield’s motion for summary judgment against Daum, and declared the Plainfield Town Ordinance as valid, lawful, proper and enforceable. The case was appealed to the Indiana Court of Appeals by both Daum and the Commissioners.

Regarding the Plainfield defendants’ declaratory judgment, the Indiana Court of Appeals decided that while a municipality can file for declaratory judgment regarding its rights when the ordinance of another municipality or county affects the rights of that municipality, Indiana’s Uniform Declaratory Judgment Act does not contemplate a municipality can sue to have its own ordinance declared valid by the court system. Thus, Plainfield did not have standing under the Uniform Declaratory Judgment Act to file a counterclaim for declaratory judgment as to the validity of the Town Ordinance and Plainfield failed to state an actionable claim in its counterclaim for declaratory judgment.

After the Court reviewed multiple Indiana statutes and acts, the Court further found that under Ind. Code § 8-1.5-5-5(a)(2), Plainfield has authority to collect its storm water fee only within its corporate limits while Ind. Code § 8-1.5-5-5(a)(3) gives the Commissioners the power to impose storm water fees to those properties located outside of municipal corporate boundaries but that are within the county boundaries.

Plainfield attempted to argue that Ind. Code § 8-1.5-5-5(b) granted them jurisdiction over property outside the town boundaries through the use of the following language: “All territory in the district and all territory added to the district is considered to have received special benefit from the storm water collection.” The Indiana Court of Appeals determined that this language merely revealed that territory can be added to an existing district of a town after it has been established and that a town district is not static but may grow by means of annexation and provided no additional storm water jurisdiction for a town such as Plainfield. The Indiana Court of Appeals found that because Daum’s property was not within Plainfield’s corporate boundaries, the trial court erred in granting summary judgment in favor of Plainfield defendants and against Daum.

The Indiana Court of Appeals agreed with Daum’s contention that it was illegal for the Town Ordinance to charge a storm water fee on property located outside the corporate boundaries of Plainfield and declared invalid all provisions of the Town Ordinance, and ordered Plainfield to return all fees paid pursuant to the Town Ordinance.

The final contention on appeal was the issue of whether the trial court erred in failing to rule on Daum’s summary judgment motion against Plainfield or, alternatively, against Hendricks County regarding the validity of imposing storm water fees. The Indiana Court of Appeals found that Daum’s property did not fall within Plainfield’s storm water jurisdiction and that Plainfield had no authority to impose a storm water fee on Daum’s property, thus, there is no genuine issue of material fact with regard to whether Daum’s property is within Hendricks County’s storm water jurisdiction, therefore, subject to storm water fees pursuant to the Hendricks County Ordinance.

– See Board of Commissioners of Hendricks County v. Town of Plainfield, IN, Cause No. 32A05-0806-CV-342 (Ind. Ct. App. 2009).

Jeremy L. Fetty is an associate at Parr Richey whose practice focuses on corporate law, utility law, municipal law, and labor and employment law. The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.