                                                                             FILED
                                                                        Aug 10 2017, 8:35 am

                                                                             CLERK
                                                                         Indiana Supreme Court
                                                                            Court of Appeals
                                                                              and Tax Court




ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEES
James Patrick Fenton                                       Thomas Alan Hardin
Timothy Allen Manges                                       Shine & Hardin, LLP
Eilbacher Fletcher, LLP                                    Fort Wayne, Indiana
Fort Wayne, Indiana                                        Thomas Franklin Bedsole
                                                           Emily K. Cremeans
                                                           Margaret Lee Smith
                                                           Frost Brown Todd, LLC
                                                           Indianapolis, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

City of Fort Wayne,                                        August 10, 2017
Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                           02A05-1612-PL-2883
        v.                                                 Appeal from the Allen Superior
                                                           Court
Southwest Allen County Fire                                The Honorable Craig J. Bobay,
Protection District and Tera K.                            Judge
Klutz, in her official capacity as                         Trial Court Cause No.
Auditor of Allen County,                                   02D02-1605-PL-231
Indiana,
Appellees-Defendants.



Riley, Judge.




Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017                       Page 1 of 10
                                  STATEMENT OF THE CASE
[1]   Appellant-Plaintiff, the City of Fort Wayne (City), appeals the trial court’s

      dismissal of its Complaint for Declaratory Relief against Appellees-Defendants,

      the Southwest Allen County Fire Protection District (SWFD) and Tera K.

      Klutz, 1 in her official capacity as Auditor of Allen County, Indiana (Auditor),

      for lack of subject matter jurisdiction pursuant to Indiana Trial Rule 12(B)(1). 2


[2]   We reverse and remand.


                                                        ISSUE
[3]   The City raises one issue for our review, which we restate as: Whether the trial

      court committed reversible error by dismissing the City’s claim for lack of

      subject matter jurisdiction pursuant to Ind. T.R. 12(B)(1).


                        FACTS AND PROCEDURAL HISTORY
[4]   The SWFD is a fire protection district created in 1986 pursuant to state law.

      Beginning in December of 1987, the City effected a series of fifteen annexations

      of territory, formerly located within the SWFD. The first of these annexations

      took effect in December 1987, with the most recent being on January 1, 2006.

      Following the effective date of these annexations, the Fort Wayne Fire




      1
       On May 3, 2017, the Auditor filed a notice of substitution of party, notifying this court that the current
      auditor of Allen County is Nicholas D. Jordan.
      2
       We conducted oral argument in this cause on June 12, 2017, at the Court of Appeals’ Courtroom in
      Indianapolis, Indiana. We thank counsel of both parties for their thoughtful and excellent advocacy.

      Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017                          Page 2 of 10
      Department (FWFD) provided fire protection services to the areas within the

      annexed territories (Annexed Territories) that formerly were serviced by the

      SWFD. Subsequent to the annexations, neither the City, FWFD, or the

      FWFD Pension Fund received distributions of property tax revenue relating to

      the fire protection services from the Annexed Territories; rather, the Auditor

      continued to make these distributions to the SWFD.


[5]   By letter dated August 27, 2014, the City notified SWFD and the Auditor that

      pursuant to Indiana’s annexation statutes—enacted in Ind. Code §§ 36-8-11-16;

      -22—once the areas that were part of the SWFD were annexed by the City, and

      once the City began providing fire protection services to the Annexed

      Territories, the Annexed Territories were no longer part of the SWFD and the

      property tax revenues derived from these Annexed Territories should have been

      redirected to the applicable City fire protection funds.


[6]   Each year, the Department of Local Government Finance (DLGF) prepares a

      document, titled the 1782 Notice, 3 and sends it to the City. The 1782 Notice is

      based on assessed values information provided by the Auditor. This

      information submitted by the Auditor includes an allocation of the values to be

      directed, among others, to specific City or SWFD funds. The Auditor provides

      the total valuation of the Annexed Territories to the DLGF, based upon an

      understanding, rooted in an Unofficial Indiana Attorney General Advisory




      3
          The 1782 Notice is the notice of final budget recommendations pursuant to I.C. § 6-1.1-17-16(d).


      Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017                         Page 3 of 10
      Letter of July 6, 1988, that advised that the SWFD was grandfathered.

      Specifically, this Unofficial Letter advised that the annexing municipality

      cannot tax the annexed area within the fire protection district for fire protection

      services in order to avoid the risk of double taxation. Accordingly, the Auditor

      calculates the total assessed value of land within the boundaries of the SWFD,

      including the assessments of the Annexed Territories. The Auditor does not

      include the Annexed Territories now serviced by the FWFD in the calculation

      of the total attributable to the City and the FWFD.


[7]   On May 11, 2016, the City filed its Complaint for Declaratory and Other Relief

      against SWFD and the Auditor, seeking a declaration that the City is entitled to

      receive the property tax revenues of the Annexed Territories. On July 27, 2016,

      the Auditor filed her Motion to dismiss Plaintiff’s Request, arguing that the trial

      court did not have subject matter jurisdiction over the City’s claim because the

      City had failed to exhaust the administrative remedies available to it. On

      August 8, 2016, the Auditor filed a complementary motion to dismiss, in which

      the Auditor sought a complete dismissal of the City’s Complaint based on a

      lack of subject matter jurisdiction because the claims asserted fell within the

      exclusive jurisdiction of the Indiana Tax Court. The SWFD joined in the

      Auditor’s motions. On October 30, 2016, following a hearing, the trial court

      issued its Order, granting the Auditor’s and SWFD’s motions to dismiss.


[8]   The City now appeals. Additional facts will be provided if necessary.




      Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017   Page 4 of 10
                                DISCUSSION AND DECISION
                                              I. Standard of Review


[9]    “Subject matter jurisdiction is the power to hear and determine cases of the

       general class to which the proceedings then before the court belong.” B.R. ex

       rel. Todd v. State, 1 N.E.3d 708, 712 (Ind. Ct. App. 2013), trans. denied. As such,

       “[a] motion to dismiss for lack of subject matter jurisdiction presents a threshold

       question concerning the court’s power to act. Curry v. D.A.L.L. Anointed, Inc.,

       966 N.E.2d 91, 95 (Ind. Ct. App. 2012), trans. denied. Actions taken by a court

       lacking subject matter jurisdiction are void. Id. The party challenging the

       subject matter jurisdiction has the burden of establishing that jurisdiction does

       not exist. Hood’s Garden v. Young, 976 N.E.2d 80, 83 (Ind. Ct. App. 2012).


[10]   In ruling on a motion to dismiss for lack of subject matter jurisdiction, the trial

       court may consider not only the complaint and motion but also any affidavits or

       evidence submitted in support. GKN Co. v. Magness, 744 N.E.2d 397, 400 (Ind.

       Ct. App. 2001). In addition, the trial court may weigh the evidence to

       determine the existence of the requisite jurisdictional facts. Id. Our standard of

       review is dependent “on what happened in the trial court.” Id. at 401. When,

       as here, “the facts before the trial court are not in dispute, then the question of

       subject matter is purely one of law.” Id. Under those circumstances no

       deference is afforded to the trial court’s conclusion because appellate courts

       independently, and without the slightest deference to trial court determinations,

       evaluate those issues they deem to be questions of law. Bader v. Johnson, 732


       Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017   Page 5 of 10
       N.E.2d 1212, 1216 (Ind. 2000). Thus, we review de novo a trial court’s ruling on

       a motion to dismiss under Trial Rule 12(B)(1) where the facts before the trial

       court are undisputed. Id.


                                             II. Exclusive Jurisdiction


[11]   The Allen Superior Court has “original and concurrent jurisdiction in all civil

       cases and in all criminal cases.” Ind. Code § 33-29-1-1.5. In 1986, the General

       Assembly created the Indiana Tax Court to channel tax disputes into a single

       specialized tribunal, thereby ensuring the uniform interpretation and

       application of the tax laws. State ex. rel. Ind. Att’y Gen. v. Lake Superior Court, 820

       N.E.2d 1240, 1247 (Ind. 2005), reh’g denied, cert. denied, 546 U.S. 927 (2005). As

       such, the tax court has exclusive subject matter jurisdiction over “original tax

       appeals.” I.C. §§ 33-26-3-1; -3. Accordingly, if the tax court has jurisdiction

       over this case, then the trial court does not.


[12]   Though exclusive, the tax court’s jurisdiction is limited to “original tax

       appeals.” I.C. § 33-26-3-3. An original tax appeal is a case that arises under tax

       laws and it must be an initial appeal of a final determination of a state revenue

       agency. Id. A case arises under the tax laws if (1) “an Indiana tax statute

       creates the right of action,” or (2) “the case principally involves collection of a

       tax or defenses to that collection.” State v. Sproles, 672 N.E.2d 1353, 1357 (Ind.

       1996). Our supreme court has construed the tax court’s jurisdictional mandate

       broadly, so as to ensure a “single authoritative voice on state tax matters.” State

       ex rel. Zoeller v. Aisin USA Mfg., Inc. 946 N.E.2d 1148, 1153 (Ind. 2011), reh’g


       Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017   Page 6 of 10
       denied; Garwood v. State, 77 N.E.3d 204, 215 (Ind. Ct. App. 2017). For example,

       any case challenging the collection of a tax or assessment arises under the tax

       laws, whether the challenge is premised on constitutional, statutory, or other

       grounds. State v. Costa, 732 N.E.2d 1224, 1224-25 (Ind. 2000). And the

       challenge need not be to the collection directly—challenges to earlier steps in

       the taxation or assessment process will also be characterized as arising under

       the tax laws. See, e.g., Lake Superior Court, 820 N.E.2d at 1247 (challenging

       reassessment of property valuations on which property-tax calculation would be

       based). In sum, a case principally involves a tax collection or the defenses

       thereto if the taxpayer contests or challenges tax liability imposed on her by the

       tax laws. Garwood, 77 N.E.3d at 205.


[13]   Relying upon the annexation statute, as enacted in I.C. § 36-8-11-22, the City

       contends in its Complaint that the “property tax revenues derived from [the

       Annexed Territories] should have been and should now and in the future be

       directed to the City, specifically to the FWFD and Fire Pension funds.”

       (Appellant’s App. Vol. II, p. 25). Annexation is an essentially legislative

       function. Bradley v. City of New Castle, 764 N.E.2d 212, 215 (Ind. 2002). It is

       subject to judicial review only as provided by statute, and “[t]he larger object of

       the annexation statute is, as it always has been, to permit annexation of

       adjacent urban territory.” Id. Indiana Code section 36-8-11-22 provides:


               Any area that is part of a fire protection district and is annexed
               by a municipality that is not part of the district ceases to be a part
               of the fire protection district when the municipality begins to
               provide fire protection services to the area.

       Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017   Page 7 of 10
       Focusing on that part of the statute stating “ceases to be a part of,” the City

       maintains that because it is now providing fire protection services to the

       Annexed Territories, these Annexed Territories ceased to be part of SWFD,

       and therefore, the corresponding tax assessments for fire protection services

       should be allocated to the City.


[14]   In response, the Auditor advocates for the application of Indiana’s tax laws—

       specifically I.C. §§ 33-26-3-1; -2(1), the general statute conferring limited

       jurisdiction on the tax court—as they view the case of one involving the

       distribution of tax revenues. Extending the Auditor’s argument, SWFD

       maintains that where one government entity seeks to increase its share of tax

       revenue, the case arises under the tax laws of Indiana. In support of its

       assertion, SWFD relies on Wayne Twp. v. Ind. Dept. Of Local Government Finance,

       865 N.E.2d 625, 628 (Ind. Ct. App. 2007), in which we determined that the tax

       court had exclusive jurisdiction because the case “principally involve[d] Wayne

       Township’s attempt to collect a tax, namely what it believes to be its fair share

       of Marion County’s Option Income Tax based on its claim that the DLGF

       inaccurately calculated Wayne Township’s maximum permissible property tax

       levy.”


[15]   Based on the specific facts before us, we determine that the present case is an

       annexation case and requires no consideration of substantive tax law. The

       parties do not dispute the tax assessments and do not request a change in tax

       levies, nor are the parties attempting to collect a tax. No calculation to

       determine a specific tax assessment must be made, and no interpretation of tax

       Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017   Page 8 of 10
       laws is required. Rather, the City’s dispute merely centers on the intended

       recipient of taxes already assessed and collected, pursuant to I.C. § 36-8-11-22.

       This is not “quintessentially [a] tax matter.” Zoeller, 946 N.E.2d at 1153.


[16]   Although annexation inevitably affects the allocation of tax revenue among

       units of government within the annexed area, it does not automatically follow

       that an action for a declaratory judgment with respect to an annexation statute

       arises under Indiana tax law and involves a dispute as to the interpretation of a

       tax law. See Zoeller, 946 N.E.2d 1155 (“Every case that this [c]ourt has held

       arises under Indiana tax law has involved a dispute as to the interpretation or

       application of a tax law.”). Here, there is no tax law that needs interpreted or

       applied for the trial court to declare whether the City is entitled to property tax

       revenue derived from the Annexed Territories. A trial court is not ousted of its

       jurisdiction to interpret I.C. § 36-8-11-22, an annexation statute, merely because

       the Auditor and the DLGF have exclusive responsibility for calculating the

       allocation of tax revenue within the Annexed Territories. 4 Accordingly, we

       conclude that the trial court has subject matter jurisdiction over this dispute.

       We reverse the trial court’s Order and remand for further proceedings.




       4
         One of the primary---and often repeated—arguments by the Auditor and SWFD at the oral argument posits
       that because the City’s claim revolves around tax levies or tax rates, the City should have brought its claim
       first before the DLGF and pursued an administrative review of the dispute in accordance with I.C. §§ 6-1.1-
       17-5; -6; and -15, with an appeal to the tax court. It is clear that the City could have taken that route, and
       may still pursue that course if the Auditor and/or DLGF fail to comply with the declaratory judgment. But
       the statutory path beginning with the Auditor, followed by the DLGF, and ultimately the tax court does not
       deprive the trial court of jurisdiction to interpret the annexation statute. See Ind. Trial Rule 57 (“The
       existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is
       appropriate.”)

       Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017                        Page 9 of 10
                                              CONCLUSION
[17]   Based on the foregoing, we conclude that the trial court has subject matter

       jurisdiction to decide the City’s request for declaratory judgment.


[18]   Reversed and remanded.
[19]   Najam, J. and Bradford, J. concur




       Court of Appeals of Indiana | Opinion 02A05-1612-PL-2883 | August 10, 2017   Page 10 of 10
