                                                                   Jul 13 2015, 8:42 am




ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE TOWN
SANITARY DISTRICT OF THE CITY                              OF GRIFFITH, INDIANA, ET AL.
OF HAMMOND, INDIANA                                        Nicholas K. Kile
A. Scott Chinn                                             Bart A. Karwath
Jane Dall Wilson                                           Barnes & Thornburg LLP
Timothy J. Moriarty                                        Indianapolis, Indiana
Faegre Baker & Daniels LLP
                                                           ATTORNEYS FOR APPELLEE TOWN
Indianapolis, Indiana
                                                           OF HIGHLAND, INDIANA, ET AL.
Joseph P. Allegretti
Sanitary District of the City of                           Brian W. Welch
Hammond                                                    Margaret M. Christensen
Munster, Indiana                                           Bingham Greenebaum Doll LLP
                                                           Indianapolis, Indiana
ATTORNEYS FOR CROSS-APPELLEE                               Robert F. Tweedle
CITY OF HAMMOND, INDIANA                                   Law Offices of Robert F. Tweedle
Kristina C. Kantar                                         Highland, Indiana
City of Hammond Law Department                             Rhett L. Tauber
Hammond, Indiana                                           Jared R. Tauber
Kevin C. Smith                                             Tauber Law Offices
Smith Sersic                                               Schererville, Indiana
Munster, Indiana
                                                           ATTORNEYS FOR
                                                           APPELLEE/CROSS-APPELLANTS
                                                           CITY OF WHITING, INDIANA, ET
                                                           AL.
                                                           Michael A. Wukmer
                                                           Thomas K. Downs
                                                           Mark R. Alson
                                                           Audrey K. Hagedorn
                                                           Ice Miller LLP
                                                           Indianapolis, Indiana
                                                           William T. Enslen
                                                           Enslen, Enslen & Matthews
                                                           Hammond, Indiana




Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015                   Page 1 of 22
                                              IN THE
     COURT OF APPEALS OF INDIANA

Sanitary District of the City of                            July 13, 2015
Hammond, Indiana and the City                               Court of Appeals Case No.
of Hammond, Indiana,1                                       45A03-1404-PL-125
                                                            Appeal from the
Appellants-Defendants,
                                                            Lake Superior Court
         v.                                                 The Honorable John M. Sedia, Judge
                                                            Cause Nos. 45D01-1309-PL-79,
Town of Griffith, Indiana; Town                             45D01-1309-PL-83,
                                                            45D01-1309-PL-85
of Highland, Indiana, et al.; and
City of Whiting, Indiana, et al.,
Appellees-Plaintiffs,

         and

City of Whiting, Indiana, et al.,

Cross-Appellant-Plaintiff,

         v.

City of Hammond, Indiana,

Cross-Appellee-Defendant.




Kirsch, Judge.




1
 We note that the trial court granted the City of Hammond’s motion to dismiss it from the case. However,
“[u]nder Indiana Appellate Rule 17(A), ‘[a] party of record in the trial court or Administrative Agency shall
be a party on appeal.’” Hoosier Outdoor Adver. Corp. v. RBL Mgmt., Inc., 844 N.E.2d 157, 162 (Ind. Ct. App.
2006) (quoting Ind. Appellate Rule 17(A)).

Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015                           Page 2 of 22
[1]   This case focuses on whether the Sanitary District of the City of Hammond,

      Indiana (“the District”) had the authority to cancel three long-term wastewater

      services contracts between it and the Town of Griffith, Indiana, the Town of

      Highland, Indiana, and the City of Whiting, Indiana (collectively “the

      Customer Communities”). Claiming that the contracts had become financially

      untenable and that the Customer Communities would not agree to reform the

      contracts, the District made a formal finding under Indiana Code section 5-22-

      17-5 that funds were not appropriated or otherwise available to support the

      continuation of performance of the contracts and passed a resolution cancelling

      the contracts. The Customer Communities sued the District and filed motions

      for summary judgment and judgment on the pleadings. The trial court granted

      the motions and held that the District exceeded its statutory authority when it

      passed the resolution, that the resolution purporting to cancel the contracts had

      no effect, and that the contracts were to remain in full force. The trial court

      ordered the parties to arbitrate all disputes arising under the contracts. The

      District appeals, raising the following restated issues for our review:

              I. Whether the trial court erred in holding that the District was not
              statutorily authorized to cancel the wastewater services contracts
              pursuant to Indiana Code section 5-22-17-5(a); and
              II. Whether the trial court erred in ordering the parties into arbitration
              rather than conducting judicial review where there is no dispute as to
              performance under the Treatment Agreements.




      Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015          Page 3 of 22
[2]   We affirm.2


                                   Facts and Procedural History3
[3]   The District is a municipal corporation and statutorily-created special taxing

      district, which is comprised of the City of Hammond (“Hammond”) and the

      Town of Munster. The District operates a publicly-owned treatment works

      facility for the collection and treatment of sanitary sewage wastewater. In 1994,

      the District entered into individual wastewater collection and treatment

      agreements with the Town of Griffith (“Griffith”) and the Town of Highland

      (“Highland”) and, in 1995, with the City of Whiting (“Whiting”) (we will refer

      to the agreements collectively as “the Treatment Agreements”). Under the

      Treatment Agreements, the District accepted and treated wastewater from each

      of the Customer Communities. The current terms of each contract expire on

      December 31, 2018, with an option for the Customer Communities to extend

      the Treatment Agreements for an additional twenty-five years, through 2043.


[4]   Under the Treatment Agreements, the District was required to (1) “establish a

      user charge system which assures that each recipient of waste treatment services




      2
        The City of Whiting files a cross-appeal and raises the following restated and consolidated issue: whether
      the trial court erred in dismissing the City of Hammond from the litigation and in refusing to allow Whiting
      to conduct discovery before dismissing the City of Hammond. As we are affirming the trial court, we find
      that Whiting’s cross-appeal is moot.


      3
       Oral argument was heard on this case on February 11, 2015 in Indianapolis. We commend counsel on the
      quality of their written and oral advocacy.



      Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015                          Page 4 of 22
      will pay its proportionate share of the costs of operations and maintenance,”

      such payment is proportionate to the user’s contribution to the total wastewater

      system, (2) “review its user charges annually and revise them periodically to

      reflect actual treatment works operation and maintenance cost,” and (3)

      “generate sufficient revenue to offset the cost of all treatment works operation

      and maintenance.” Appellant’s App. at 46-47, 109-10, 449-50. The Treatment

      Agreements further provided that the Customer Communities “shall pay [their]

      fair share of the annual operation and maintenance costs, including

      replacement costs and payment-in-lieu of taxes, and capital costs not financed

      by debt, in proportion to [their] use of the facilities.” Id. at 56, 119, 459. The

      Treatment Agreements also contained provisions regarding procedures and

      methodologies by which the charges to the Customer Communities for

      operation and maintenance costs and capital costs would be modified, relating

      to and governing water flow, and addressing emergency water flow situations,

      where wastewater would be held in holding basins owned by the Customer

      Communities to reduce the flow into the District’s system. Id. at 56-69, 119-33,

      459-72. The Treatment Agreements additionally provided that any

      disagreements under the agreements must be submitted to binding arbitration.

      Id. at 69-71, 133-35, 472-74.


[5]   In a letter dated July 25, 2013, the District, through its legal counsel, sent notice

      to the Customer Communities “of the need to renegotiate the material terms

      and conditions” of the Treatment Agreements. Id. at 80, 143, 481. The letter

      provided that if the District and the Customer Communities could not


      Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015    Page 5 of 22
      “successfully negotiate new terms that address certain changed circumstances

      and current realities the [District’s] system is facing and provide sufficient

      revenue for system operation and improvements, then [the District] must avail

      itself of all contractual and legal remedies regarding the existing [Treatment

      Agreements].” Id. at 80, 143, 481. The letter further asserted that the Customer

      Communities (1) had exceeded their contract capacities for water flow, which

      was negatively impacting the District’s system, (2) were not contributing to the

      costs of certain capital projects, (3) had rates that were lower than the rates

      charged to Hammond’s own residents, and (4) were being subsidized by the

      District. Id. at 80-81, 143-44, 481-82. The District stated that a rate increase

      was required from the Customer Communities “under a new contractual

      agreement” and notified of its intent “to enforce the flow limitation by

      mechanically restricting the [Customer Communities’] flow into [the District.]”

      Id. at 81, 144, 482. The District further stated it would no longer execute any

      sanitary sewer certifications to permit new sewer connections in the Customer

      Communities. Id. at 81, 144, 482.


[6]   The Customer Communities wrote response letters to the District and disputed

      several of the District’s allegations. In addition to disagreeing with the

      District’s assertions, the Customer Communities reminded the District of their

      right to arbitration under the Treatment Agreements. On August 27, 2013, the

      District’s Board of Sanitary Commissioners (“the Board”) met and reviewed the

      Treatment Agreements. The Board considered the following issues: (1) the

      contract methodology for determining the rates paid by the Customer


      Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015      Page 6 of 22
      Communities had become outdated, resulting in the District’s residents paying

      a higher share of the costs; (2) capital improvements that the District was

      required to make under the Clean Water Act and the cost of these

      improvements; (3) the Customer Communities were exceeding wet weather

      flow limits contained in the Treatment Agreements, which negatively affected

      the District’s system; (4) such excessive flows had hindered the District’s

      completion and implementation of a mandated Long Term Control Plan; and

      (5) the District was operating at a net operating loss. Id. at 153-56. The Board

      made a determination that, “funds are not appropriated or otherwise available

      to support continuation of performance of the [Treatment Agreements].” Id. at

      157. The Board then passed Resolution 38-2013 and found that the Treatment

      Agreements were thereby cancelled. Id.


[7]   On August 28, 2013, the District sent letters to the Customer Communities

      informing them of its decision to cancel the Treatment Agreements. In the

      letter, the District provided “immediate assurance that [the District] will

      continue to perform the services contemplated by the [Treatment Agreements],

      including treating [the Customer Communities’] wastewater for a reasonable

      amount of time (to be negotiated between the parties), to allow [the Customer

      Communities] to make other arrangements for treatment of [the Customer

      Communities’] flow.” Id. at 85, 151, 492. The letter further informed the

      Customer Communities that, “[a]t no time during this Transition Period will

      [the District] take action to restrict flow (except as consistent with the former




      Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015    Page 7 of 22
      agreement), nor will it take any action against the interest of public health.” Id.

      at 85, 151, 492.


[8]   Shortly after receiving the District’s letter, notifying them that the Treatment

      Agreements had been canceled, the Customer Communities each filed a

      complaint against the District, asserting that the District’s purported

      cancellation of the Treatment Agreements was not authorized and seeking an

      order requiring the District to proceed to arbitration. Whiting and Highland

      both filed a complaint against Hammond in addition to the District. Both the

      District and Hammond filed motions to dismiss; Hammond sought dismissal

      on the basis that it was not a party to any of the Treatment Agreements, and the

      District sought dismissal on the basis that statutory judicial review was the only

      remedy available to the Customer Communities. Both Whiting and Griffith

      filed motions for judgment on the pleadings, or in the alternative, summary

      judgment; Highland filed a motion for judgment on the pleadings.


[9]   On January 8, 2014, the trial court issued an order, granting the Customer

      Communities’ dispositive motions. The trial court found that the District had

      no statutory authority to pass Resolution 38-2013 and that the Treatment

      Agreements should remain in full force and effect. The trial court further

      ordered into binding arbitration all disputes that arose under the Treatment

      Agreements. The District and Hammond filed motions to correct error, asking

      the trial court to clarify whether Hammond was dismissed from the cases. On

      March 20, 2014, the trial court granted the motions to correct error and



      Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015   Page 8 of 22
       specified that Hammond was dismissed from Whiting’s and Highland’s actions.

       The District now appeals.


                                       Discussion and Decision
[10]   In its order, the trial court granted the Customer Communities’ motions for

       summary judgment and judgment on the pleadings and found the District had

       no authority to pass Resolution 38-2013 and to cancel the Treatment

       Agreements. A judgment on the pleadings pursuant to Indiana Trial Rule

       12(C) is proper only when there are no genuine issues of material fact and the

       facts shown by the pleadings clearly entitled the movant to judgment. Holmes v.

       Celadon Trucking Servs. of Ind., Inc., 936 N.E.2d 1254, 1255 (Ind. Ct. App. 2010)

       (citing Wagle v. Henry, 679 N.E.2d 1002, 1004 (Ind. Ct. App. 1997)). If, on a

       motion for judgment on the pleadings, matters outside the pleadings are

       presented to and not excluded by the court, the motion shall be treated as one

       for summary judgment and disposed of as provided in Trial Rule 56. Id. at

       1255-56. “Matters outside the pleadings” are those materials that would be

       admissible for summary judgment purposes, such as depositions, answers to

       interrogatories, admissions, and affidavits. Fox Dev., Inc. v. England, 837 N.E.2d

       161, 164 (Ind. Ct. App. 2005).


[11]   When reviewing a Rule 12(C) motion, we may look only at the pleadings and

       any facts of which we may take judicial notice, with all well-pleaded material

       facts alleged in the complaint taken as admitted. Consol. Ins. Co. v. Nat’l Water

       Servs., LLC, 994 N.E.2d 1192, 1196 (Ind. Ct. App. 2013), trans. denied. The


       Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015   Page 9 of 22
       pleadings consist of a complaint and an answer, a reply to any counterclaim, an

       answer to a cross-claim, a third-party complaint, and an answer to a third-party

       complaint. Id. “Pleadings” also consist of any written instruments attached to

       a pleading, pursuant to Ind. Trial Rule 9.2. LBM Realty, LLC v. Mannia, 981

       N.E.2d 569, 576 n.10 (Ind. Ct. App. 2012); see also Ind. Trial Rule 10(C) (“A

       copy of any written instrument which is an exhibit to a pleading is a part

       thereof for all purposes.”).


[12]   Here, the parties did not designate evidence outside the pleadings for judicial

       consideration, and nothing in the record suggests that the trial court considered

       any evidence outside of the pleadings in reaching its decision. Therefore, we

       shall treat the Customer Communities’ motions as motions for judgment on the

       pleadings. A motion for judgment on the pleadings pursuant to Rule 12(C)

       attacks the legal sufficiency of the pleadings. Fox Dev., Inc., 837 N.E.2d at 165.

       The test to be applied when ruling on a Rule 12(C) motion is whether, “in the

       light most favorable to the non-moving party and with every intendment

       regarded in his favor,” the complaint is sufficient to constitute any valid claim.

       Id. In applying this test, we may look only at the pleadings, with all well-

       pleaded material facts alleged in the complaint taken as admitted, supplemented

       by any facts of which the court will take judicial notice. Id. The standard of

       review is de novo, and we will affirm the trial court’s grant of a Rule 12(C)

       motion for judgment on the pleadings when it is clear from the face of the

       pleadings that one of the parties cannot in any way succeed under the operative

       facts and allegations made therein. Id.


       Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015   Page 10 of 22
[13]   In the present case, the trial court’s decision rests on conclusions regarding the

       applicability of a statute. The interpretation of a statute is a legal question that

       is reviewed de novo. Carter v. Carolina Tobacco Co., 873 N.E.2d 611, 625 (Ind.

       Ct. App. 2007) (citing Golden Rule Ins. Co. v. McCarty, 755 N.E.2d 1104, 1106

       (Ind. Ct. App. 2001), trans. denied). Statutory interpretation is the responsibility

       of the court and within the exclusive province of the judiciary. McCarty, 755

       N.E.2d at 1106-07 (citing Miller Brewing Co. v. Bartholomew Cnty. Beverage Co.,

       674 N.E.2d 193, 200 (Ind. Ct. App. 1996), trans. denied). The first and often the

       last step in interpreting a statute is to examine the language of the statute. Id. at

       1107. When confronted with an unambiguous statute, we do not apply any

       rules of statutory construction other than to give the words and phrases of the

       statute their plain, ordinary, and usual meaning. Id.


                                 I. Authority to Pass Resolution
[14]   The District argues that the trial court erred when it concluded that the District

       did not have statutory authority to pass Resolution 38-2013 and to cancel the

       Treatment Agreements. The District claims that it was within its statutory

       authority to cancel the Treatment Agreements pursuant to Indiana Code

       section 5-22-17-5. The District contends that the trial court’s determination that

       the Treatment Agreements were excluded from the provisions of Article 22 was

       in error because such contracts were specifically authorized under the plain

       language of Indiana Code section 5-22-6-1 and were not excluded under

       Indiana Code section 5-22-1-3(a)(1).



       Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015    Page 11 of 22
[15]   In this case, the District cancelled the Treatment Agreements pursuant to

       Indiana Code section 5-22-17-5, which states, in pertinent part, “[w]hen the

       fiscal body of the governmental body makes a written determination that funds

       are not appropriated or otherwise available to support continuation of

       performance of a contract, the contract is considered canceled.” Ind. Code § 5-

       22-17-5(a). The District alleged that, because of financially dire circumstances

       surrounding the long-term Treatment Agreements, the Board determined that

       the District could no longer afford performance under the Treatment

       Agreements and, therefore, passed Resolution 38-2013, which mirrored the

       contract cancellation language in Indiana Code section 5-22-17-5. Because they

       followed the language of the statute, the District asserted that it properly

       cancelled the Treatment Agreements because Indiana Code section 5-22-17-5

       applied to the District.


[16]   In its order finding that the District had no statutory authority to cancel the

       Treatment Agreements, the trial court found that, although the District

       followed the procedure under Indiana Code section 5-22-17-5 when it cancelled

       the Treatment Agreements, section 5-22-17-5 did not apply to the Treatment

       Agreements. This is because the Treatment Agreements fell under an exception

       set forth in Indiana Code section 5-22-1-3(a)(1), which provides that Article 22,

       which is entitled the Public Purchasing Statute, does not apply to contracts

       between governmental bodies. The language of Indiana Code section 5-22-1-

       3(a)(1) states, in pertinent part: “[T]his article does not apply to the following

       types of activities . . .[a] contract between governmental bodies except for a


       Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015   Page 12 of 22
       contract authorized under this article.” The trial court further found that the

       Treatment Agreements were not agreements authorized under Article 22 (“the

       Public Purchasing Statute”). The trial court concluded that, because the

       Treatment Agreements fell under an exclusion to the Public Purchasing Statute,

       Indiana Code section 5-22-17-5(a) did not apply, and the District had no

       statutory authority to pass Resolution 38-2013 and cancel the Treatment

       Agreements.


[17]   Under the plain language of section 5-22-1-3(a)(1), the Public Purchasing

       Statute does not apply to contracts between governmental bodies except for

       certain contracts authorized under the Public Purchasing Statute. The District

       concedes, and agrees with the trial court, that the Treatment Agreements are

       contracts between governmental bodies and would, therefore, be excluded

       unless authorized. However, the District claims that the Treatment Agreements

       are authorized under the Public Purchasing Statute because they are authorized

       under Indiana Code section 5-22-6-1, which states, “[t]he purchasing agency of

       a governmental body may purchase services using any procedure the

       governmental body or the purchasing agency of the governmental body

       considers appropriate.” We disagree.


[18]   The language of Indiana Code section 5-22-6-1 does not explicitly authorize

       contracts such as the Treatment Agreements. It is a procedural statute that

       merely acknowledges that the purchasing agency of a governmental body may

       purchase services using any procedure it considers appropriate. Indiana Code

       section 5-22-6-1 has been interpreted by this court as recognizing the discretion

       Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015   Page 13 of 22
granted to governmental entities in awarding contracts for services and that

strict bidding procedures need not be followed in awarding government

contracts for services. See Hamrick’s Diesel Serv. & Trailer Repair, LLC v. City of

Evansville ex rel. Bd. of Pub. Works, 935 N.E.2d 764, 767 (Ind. Ct. App. 2010)

(concluding that unsuccessful bidder on government contract for services did

not have standing in suit against city for damages after contract was awarded to

bidder that did not meet requirements specified in bid announcement), trans.

denied; Harmony Health Plan of Ind., Inc. v. Ind. Dep’t of Admin., 864 N.E.2d 1083,

1091-92 (Ind. Ct. App. 2007) (concluding that unsuccessful bidder on

government contract for services lacked standing to seek judicial review of the

rejection of its bid as it was not harmed when not awarded the contract because

government body had authority to exercise discretion under public purchasing

statutes to decide who would receive contracts to provide services), trans. denied;

Trans-Care, Inc. v. Bd. of Comm’rs of the Cnty. of Vermillion, 831 N.E.2d 1255, 1259

(Ind. Ct. App. 2005) (concluding that unsuccessful bidder lacked standing to

challenge government body’s award of contract for provision of services to

another business because when party submits a proposal to perform personal

services, it has no legal right to have its bid considered because the procurement

of personal services is not included within the scope of the Public Purchasing

Statute). Thus, section 5-22-6-1 merely gives a governmental body discretion in

deciding the procedures it wants to use for purchasing services and is, therefore,

not a specific authorization for governmental bodies to enter into contracts to

purchase services.


Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015    Page 14 of 22
[19]   We conclude that, because the Treatment Agreements are contracts between

       governmental bodies, they are excluded from the scope of the Public

       Purchasing Statute unless otherwise authorized in the Public Purchasing

       Statute. Contrary to the District’s contention, we do not find that Indiana Code

       section 5-22-6-1 specifically authorizes contracts for services between

       governmental bodies. As such, under Indiana Code section 5-22-1-3(a)(1), the

       Public Purchasing Statute does not apply to the Treatment Agreements, and the

       District was not within its statutory authority to cancel the Treatment

       Agreements pursuant to Indiana Code section 5-22-17-5. The trial court did not

       err in its determination that the District did not have statutory authority to

       cancel the Treatment Agreements.


[20]   The District also argues that the trial court erred when it failed to order judicial

       review of the District’s decision to cancel the Treatment Agreements. The

       District asserts that, pursuant to Indiana Code section 5-22-19-1, because the

       Treatment Agreements were subject to the Public Purchasing Statute, and

       because it followed the requirements of Indiana Code section 5-22-17-5 in

       cancelling the agreements, its determination was final and conclusive and

       subject to judicial review under Indiana Code section 5-22-19-2. We note that

       the statutory sections under which the District contends that judicial review is

       required are part of the Public Purchasing Statute. As such, because we have

       concluded that the Public Purchasing Statute does not apply to the Treatment

       Agreements, judicial review under Indiana Code sections 5-22-19-1 and -2 is

       likewise not available.


       Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015   Page 15 of 22
                                                II. Arbitration
[21]   The District argues that the trial court erred when it ordered the parties to

       participate in arbitration for any disputes arising under the Treatment

       Agreements. The District contends that the complaints filed by the Customer

       Communities did not identify any disputes over any aspect of performance of

       the contracts, and therefore, arbitration under the agreements is not required.

       The District alleges that the only dispute raised by the Customer Communities

       concerned the attempted cancellation of the Treatment Agreements. The

       District further asserts that there are no pending disputes arising under the

       Treatment Agreements because the District has not restricted flow since passing

       Resolution 38-2013 and no requests for sewer certifications have been

       presented; accordingly, there is nothing to arbitrate.


[22]   In its order, the trial court directed that all disputes that arose under the

       Treatment Agreements were ordered into binding arbitration. Paragraph 10A

       of the Treatment Agreements outlines the arbitration process to be utilized “[i]f

       a dispute arises concerning any right or obligation under this agreement,

       including capacity reservation of rights or allocation of capital costs for existing

       or future improvements by the District.” Appellant’s App. at 69, 133, 472. Thus,

       by entering into the Treatment Agreements with the Customer Communities,

       the District agreed that, if a dispute arose regarding rights or obligations under

       the Treatment Agreements, such dispute would be submitted to binding

       arbitration. Arbitration was, therefore, the method that all of the parties agreed

       to use if a contractual dispute arose during the contractual period, and the

       Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015    Page 16 of 22
       Treatment Agreements require arbitration when a dispute arises concerning any

       right or obligation under the Treatment Agreements. We, therefore, conclude

       that the trial court did not err when it ordered the parties into binding

       arbitration as to all disputes concerning the Treatment Agreements.


[23]   We further conclude that, even if we accepted the District’s argument that it

       was authorized to cancel the Treatment Agreements pursuant to Indiana Code

       section 5-22-17-5, such cancellation would have been premature because the

       Treatment Agreements require arbitration when disputes arise. All of the

       District’s issues that formed the basis for its purported cancellation of the

       Treatment Agreements were disputes that arose concerning rights and

       obligations under the agreements and were, therefore, required to be sent to

       arbitration for resolution. Therefore, the Treatment Agreements required

       arbitration before the District could have even attempted to cancel the contracts

       pursuant to Indiana Code section 5-22-17-5. Because the District did not

       submit its issues to arbitration, it did not follow the provisions of the Treatment

       Agreements that it entered into with the Customer Communities, and even if it

       had been statutorily authorized, the District could not have cancelled the

       Treatment Agreements without first submitting its disputes to arbitration.


[24]   We conclude that the trial court did not err in finding that the District lacked

       statutory authority to cancel the Treatment Agreements because the Public

       Purchasing Statute did not apply to the Treatment Agreements. The trial court

       also did not err in ordering the parties to arbitration for all disputes concerning

       the Treatment Agreements, as arbitration was mandated by the Treatment

       Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015     Page 17 of 22
       Agreements for all such disputes. We further determine that, even if the Public

       Purchasing Statute did apply to the Treatment Agreements, pursuant to

       paragraph 10A, the parties were required to submit to arbitration before any

       other action could be taken regarding any disputes the parties had under the

       Treatment Agreements.4


[25]   Affirmed.


       Crone, J., concurs.


       Robb, J., dissents with separate opinion.




       4
         Under the procedural posture of this case, we are unaware of what, if any, steps the District took to
       reconcile its disputes with the Customer Communities under the Treatment Agreement prior to its first
       communication to the Customer Communities alerting them of the issues. However, we do note that the
       Treatment Agreements required that operation and maintenance rates be reviewed annually and contained
       procedures for how to compute adjusted rates annually. Appellant’s App. at 58-60, 122-24, 461-64. The
       Treatment Agreements also included procedures on how to determine the Customer Communities’
       participation in capital costs associated with new projects. Id. at 61-63, 125-27, 464-66. We, therefore,
       believe that, in the future, when encountering disputes regarding rates or capital costs, the District should first
       adhere to the contract provisions contained in the Treatment Agreements, which the parties, by entering into
       and signing the Treatment Agreements, agreed to abide by during the contract term.

       Court of Appeals of Indiana | Opinion 45A03-1404-PL-125 | July 13, 2015                              Page 18 of 22
                                                    IN THE
           COURT OF APPEALS OF INDIANA

       Sanitary District of the City of
       Hammond, Indiana and the City
       of Hammond, Indiana,
       Appellants-Defendants,

               v.

       Town of Griffith, Indiana; Town
       of Highland, Indiana, et al.; and
       City of Whiting, Indiana, et al.,                           Court of Appeals Case No.
                                                                   45A03-1404-PL-125
       Appellees-Plaintiffs,

               and

       City of Whiting, Indiana, et al.,

       Cross-Appellant-Plaintiff,

               v.

       City of Hammond, Indiana,

       Cross-Appellee-Defendant.




       Robb, Judge, dissenting

[26]   I respectfully dissent from the majority’s determination that the District did not

       have statutory authority to cancel the Treatment Agreements pursuant to



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       Indiana Code section 5-22-17-5 and was therefore not entitled to judicial

       review.


[27]   Indiana Code section 5-22-17-5(a) provides that “[w]hen the fiscal body of the

       governmental body makes a written determination that funds are not

       appropriated or otherwise available to support continuation of performance of a

       contract, the contract is considered canceled.” In order to be entitled to cancel

       a contract pursuant to this provision, the contract must be subject to the Public

       Purchasing Statute, which was enacted in 1997 and, in general, governs “every

       expenditure of public funds by a governmental body,” Ind. Code § 5-22-1-1,

       subject to certain exceptions and limitations, Ind. Code §§ 5-22-1-2, 5-22-1-3;

       City of Fort Wayne v. Pierce Mfg., Inc., 853 N.E.2d 508, 512 (Ind. Ct. App. 2006).

       As relevant to this case, the Public Purchasing Statute does not apply to “[a]

       contract between governmental bodies except for a contract authorized under this

       article.” Ind. Code § 5-22-1-3(a)(1) (emphasis added). As all parties concede

       this is a contract between governmental entities, the Treatment Agreements are

       therefore not subject to the Public Purchasing Act unless they are authorized

       under Indiana Code article 5-22. The District contends the Treatment

       Agreements are so authorized; the trial court concluded and the majority agrees

       they are not. I agree with the District.


[28]   The District relies on Indiana Code section 5-22-6-1 as the authority for the

       Treatment Agreements. According to that section, “[t]he purchasing agency of

       a governmental body may purchase services using any procedure the

       governmental body or the purchasing agency of the governmental body

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       considers appropriate.” Governmental bodies may “may adopt rules” and

       “establish policies” to that end. Ind. Code § 5-22-6-2. In other words, under

       Indiana Code chapter 5-22-6, “government bodies are afforded nearly absolute

       discretion in purchasing services.” Hamrick’s Diesel Serv. & Trailer Repair, LLC v.

       City of Evansville ex rel. Bd. of Pub. Works, 935 N.E.2d 764, 766 (Ind. Ct. App.

       2010). The majority interprets this section as “merely giv[ing] a governmental

       body discretion in deciding the procedures it wants to use for purchasing

       services” and not as a specific authorization to actually purchase those services.

       See slip op. at ¶ 18.


[29]   I believe this interpretation too narrowly construes Indiana Code section 5-22-6-

       1. There would be no reason for the legislature to set forth in the Public

       Purchasing Statute that a governmental body has discretion in deciding how to

       purchase services if it was not also authorizing the governmental body to make

       the purchase in the first place. I believe the intent of the legislature is effected

       by interpreting the statute as follows: the governmental body may purchase

       services and may use any procedure the governmental body considers

       appropriate.


[30]   Again, Indiana Code section 5-22-1-3(a)(1) excludes from the Public Purchasing

       Statute contracts between governmental bodies unless the contracts are

       authorized under the statute itself. Because I agree with the District that the

       Treatment Agreements were authorized by Indiana Code section 5-22-6-1, I

       would hold that the trial court erred in determining the District was not

       statutorily authorized to cancel the agreements. The District made the

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determination required by Indiana Code section 5-22-17-5 to cancel the

Treatment Agreements, and the merits of that determination are now subject to

judicial review. Ind. Code § 5-22-19-2. I would reverse and remand for the trial

court to review the District’s determination accordingly.




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