                                                                                 FILED
                                                                             Apr 09 2018, 6:23 am

                                                                                 CLERK
                                                                             Indiana Supreme Court
                                                                                Court of Appeals
                                                                                  and Tax Court




ATTORNEYS FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
Leanna Weissmann                                            INDIANA DEPARTMENT OF
Tony Walker                                                 LOCAL GOVERNMENT FINANCE
The Walker Law Group, P.C.                                  Curtis T. Hill, Jr.
Indianapolis, Indiana                                       Attorney General of Indiana

                                                            Patricia C. McMath
                                                            Deputy Attorney General
                                                            Indianapolis, Indiana

                                                            ATTORNEY FOR APPELLEE
                                                            TOWN OF GRIFFITH,
                                                            INDIANA
                                                            Joseph C. Chapelle
                                                            Barnes & Thornburg LLP
                                                            Indianapolis, Indiana




                                             IN THE
    COURT OF APPEALS OF INDIANA

Kimberly K. Robinson, in her                                April 9, 2018
official capacity as Trustee of                             Court of Appeals Case No.
Calumet Township, Indiana, and                              45A03-1707-PL-1643
as a resident and taxpayer of                               Interlocutory Appeal from the
Calumet Township,                                           Lake Superior Court
Appellant-Plaintiff,                                        The Honorable John R. Pera,
                                                            Judge
        v.                                                  Trial Court Cause No.
                                                            45D10-1611-PL-113
Indiana Department of Local
Government Finance and Town

Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018                       Page 1 of 12
      of Griffith, Indiana,
      Appellees-Defendants




      Crone, Judge.


                                               Case Summary
[1]   Kimberly K. Robinson, in her official capacity as Trustee of Calumet

      Township, Indiana, and as a resident and taxpayer of Calumet Township (“the

      Trustee”), brings this discretionary interlocutory appeal from the trial court’s

      order transferring this case to the Indiana Tax Court based upon the trial court’s

      conclusion that the Tax Court has exclusive subject matter jurisdiction.

      Specifically, the Trustee filed a complaint for declaratory judgment and

      injunctive relief against the Indiana Department of Local Government Finance

      (“the DLGF”) and the Town of Griffith (“the Town”) in the Lake Superior

      Court in an effort to prevent the Town from seceding from Calumet Township.

      Because the Town’s secession eligibility was based upon the DLGF’s

      calculation of the statewide average township assistance property tax rate, the

      Trustee challenged the DLGF’s method for calculating the tax rate and its

      failure to follow administrative rulemaking procedures. The DLGF moved to

      dismiss the case arguing that the trial court lacks subject matter jurisdiction over

      Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018   Page 2 of 12
      this matter and that the Tax Court has exclusive subject matter jurisdiction.

      Determining that this case “arises under” the tax laws, the trial court concluded

      that it lacks subject matter jurisdiction and that the Indiana Tax Court has

      exclusive jurisdiction. Therefore, the trial court ordered the case transferred to

      the Tax Court.


[2]   We conclude that the trial court indeed lacks subject matter jurisdiction, but we

      express no opinion as to whether the Tax Court has acquired exclusive

      jurisdiction at this procedural juncture. We further conclude that neither this

      Court nor the trial court has authority to transfer this case to the Tax Court.

      Accordingly, we affirm in part, reverse in part, and remand to the trial court

      with instructions to dismiss this case.


                                   Facts and Procedural History
[3]   In 2013, the legislature enacted Indiana Code Chapter 36-1-1.5 which allows for

      the territory of an “eligible municipality” to be transferred to an adjacent

      township. An “eligible municipality” means a municipality located in a

      township that has a township assistance property tax rate that is twelve times

      higher than the statewide average township assistance property tax rate as

      determined by the DLGF. Ind. Code § 36-1-1.5-2.1 In 2015, the DLGF issued

      its first calculation of the statewide average township assistance property tax




      1
       According to the Trustee’s complaint, this law was passed for the purpose of taking “aim at Calumet
      Township at the behest of the Town of Griffith.” Appellant’s App. Vol. 2 at 16.

      Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018                       Page 3 of 12
      rate using a “weighted average” method. Appellant’s App. Vol. 2 at 16.2

      Under this formula, the statewide total township assistance levy for the year is

      divided by the statewide total net assessed value upon which the township

      assistance levies were assessed in that year. After the DLGF released its

      calculation, the Town sought transfer out of Calumet Township. The DLGF

      informed the Town that it was not eligible based upon the weighted average

      calculation.


[4]   In February 2016, the Attorney General of Indiana issued an advisory opinion

      that the Legislature likely intended that an “arithmetic mean” formula be used

      to calculate the statewide average township assistance property tax rate. Id. at

      78. This formula uses the sum of the tax rates imposed by all Indiana

      townships using an assistance levy, divided by the total number of those

      townships. In September 2016, the DLGF announced that it would calculate

      the statewide average township assistance property tax rate for 2016 using the

      arithmetic mean formula consistent with the Attorney General’s opinion.

      Because the Town believed that it was eligible for transfer based on the

      arithmetic mean calculation, the Town requested that the Lake County Election

      Board hold a special election to vote on the Town’s transfer out of Calumet

      Township. The Lake County Election Board granted the Town’s request for a

      special election.




      2
       Although this law took effect July 1, 2013, “a secession action could not be brought until 2015 at the
      earliest.” Appellant’s App. Vol. 2 at 16.

      Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018                          Page 4 of 12
[5]   In an effort to halt the process and to prevent the Town from transferring from

      Calumet Township, the Trustee filed a complaint for declaratory judgment and

      injunctive relief against the DLGF and the Town in the Lake Superior Court.

      The Trustee challenged the DLGF’s method for calculating the statewide

      average township assistance property tax rate and its failure to follow

      administrative rulemaking procedures in choosing its calculation method. The

      DLGF moved to dismiss the complaint for lack of subject matter jurisdiction,

      arguing that the Indiana Tax Court has exclusive subject matter jurisdiction.

      The trial court subsequently issued an order concluding that it lacks subject

      matter jurisdiction and transferred the case to the Tax Court. Upon the

      Trustee’s motion, the trial court certified its order for interlocutory appeal, and

      we accepted appellate jurisdiction.


                                       Discussion and Decision
[6]   The sole issue we address in this appeal is whether the Lake Superior Court has

      subject matter jurisdiction over the present dispute. Subject matter jurisdiction

      exists when the Indiana Constitution or a statute grants the court the power to

      hear and decide cases of the general class to which any particular proceeding

      belongs. Lorenz v. Anonymous Physician #1, 51 N.E.3d 391, 396 (Ind. Ct. App.

      2016). Therefore, 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.

      “Our standard of review for a trial court’s grant or denial of a motion to dismiss

      for lack of subject matter jurisdiction is a function of what occurred in the trial

      Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018   Page 5 of 12
      court.” Berry v. Crawford, 990 N.E.2d 410, 414 (Ind. 2013). Where, as here, the

      facts before the trial court are not in dispute, the question of subject matter

      jurisdiction is one of law and we review the trial court’s ruling de novo. Id.


[7]   All standard superior courts have “original and concurrent jurisdiction in all

      civil cases and in all criminal cases[.]” Ind. Code § 33-29-1-1.5(1). However, in

      1986, the legislature 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), cert. denied. The legislature intended that all

      challenges to the tax laws—regardless of the legal theory relied on—be tried in

      the Tax Court. State v. Sproles, 672 N.E.2d 1353, 1357 (Ind. 1996).

      Accordingly, the Tax Court is a court of limited jurisdiction that has exclusive

      subject matter jurisdiction over “original tax appeals” which include “any case

      that arises under the tax laws of Indiana and that is an initial appeal of a final

      determination” of a relevant agency. Ind. Code § § 33-26-3-1, -3. Thus, there

      are two statutory prerequisites to the Tax Court having exclusive subject matter

      jurisdiction. State ex rel. Zoeller v. Aisin USA Mfg., Inc., 946 N.E.2d 1148, 1152

      (Ind. 2011). First, the case must “arise under” the tax laws, and second, there

      must be a “final determination” by a relevant agency. Id. If the Tax Court has

      subject matter jurisdiction over a case, a trial court does not. Id.


[8]   As for the first statutory prerequisite to the exclusive jurisdiction of the Tax

      Court, a case “arises under” the tax laws if: (1) an Indiana tax statute creates a

      right of action; or (2) the case principally involves collection of a tax or defenses

      Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018     Page 6 of 12
      to that collection. Sproles, 672 N.E.2d at 1357. Our supreme court has

      interpreted the “arises under” language broadly to include “any case

      challenging the collection of a tax or assessment … whether the challenge is

      premised on constitutional, statutory, or other grounds.” Aisin, 946 N.E.2d at

      1153. Moreover, “the challenge need not be to the collection directly—

      challenges to the earlier steps in the taxation or assessment process arise under

      the tax laws.” Id.


[9]   Other panels of this Court had occasion to consider the “arises under” concept

      in Wayne Township v. Indiana Department of Local Government Finance, 865

      N.E.2d 625 (Ind. Ct. App. 2007), clarified on rehearing, 869 N.E.2d 531, trans.

      denied, and City of Fort Wayne v. Southwest Allen County Fire Protection District, 82

      N.E.3d 299 (Ind. Ct. App. 2017), trans. denied (2018). In Wayne Township, we

      sua sponte addressed the Hamilton Superior Court’s jurisdiction over the

      Township’s lawsuit against the DLGF and the Marion County Auditor

      challenging the DLGF’s calculation of the Township’s maximum permissible

      property tax levy. 865 N.E.2d at 627.3 The Township challenged the DLGF’s

      calculation because it effectively reduced the amount of tax revenues the

      Township would receive from Marion County’s county option income tax

      (“COIT”). Id. Although noting that the case was unique in that it involved

      “warring governmental entities rather than a taxpayer versus the government,”


      3
        The petitioner in Wayne Township originally filed its lawsuit in the Tax Court. The Tax Court transferred
      the case to the Marion Superior Court pursuant to the parties’ stipulation. The case was again transferred
      pursuant to the parties’ stipulation to the Hamilton Superior Court. It is well settled that parties cannot
      confer subject matter on a court by consent or agreement. Wayne Twp., 865 N.E.2d at 627.

      Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018                         Page 7 of 12
       we concluded that the case certainly arose under the tax laws of this state

       because it “principally involve[d]” the Township’s attempt to collect a tax,

       namely what it believed to be its fair share of Marion County’s COIT, based on

       its assertion that the DLGF inaccurately calculated the Township’s maximum

       permissible property tax levy. Id at 628. Thus, we concluded that the trial court

       lacked subject matter jurisdiction. Id.4


[10]   In contrast, in City of Fort Wayne, we concluded that the Allen Superior Court

       did have subject matter jurisdiction over an annexation dispute even though the

       allocation of tax revenues was at issue. 82 N.E.3d at 304. Specifically, the City

       filed a complaint seeking a declaration that it was entitled to receive property

       tax revenues relating to fire protection services from certain annexed territories.

       We emphasized that, unlike in Wayne Township, the parties did not dispute any

       tax assessment, did not request a change in tax levies, and were not attempting

       to collect a tax. Id. Indeed, “[n]o calculation to determine a specific tax

       assessment [needed to] be made, and no interpretation of tax laws [was]

       required.” Id. Rather, the City’s dispute merely centered on the intended

       recipient of taxes already assessed and collected and thus it was not

       “quintessentially [a] tax matter.” Id. (citing Aisin, 946 N.E.2d at 1153).




       4
         In addition to concluding that the trial court lacked subject matter jurisdiction, we concluded that the Tax
       Court had exclusive jurisdiction and ordered the case transferred to the Tax Court. As we will discuss more
       fully below, we clarified on rehearing that whether the DLGF’s certification of the Township’s maximum
       permissible property tax levy for purposes of the COIT distribution constituted a “final determination” for
       purposes of the Tax Court’s jurisdiction remained at issue, and we did not have authority to transfer the case
       to the Tax Court and mandate that it consider the merits. Wayne Twp., 869 N.E.2d at 533.

       Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018                          Page 8 of 12
[11]   The present facts are similar to Wayne Township and dissimilar to City of Fort

       Wayne. Based on the circumstances presented, we find the “arises under” test

       “relatively straightforward and easy to apply” here. Aisin, 946 N.E.2d at 1153.

       This case “principally involves” a collection of a tax or assessment, in that

       Calumet Township challenges the DLGF’s calculation method for determining

       the statewide average township assistance property tax rate. The calculation of

       this rate unquestionably involves substantive tax laws and greatly affects each

       township’s budgetary processes.5 See, e.g., Ind. Code §§ 6-1.1-17-3, 6-1.1-20.3-

       6.7. The propriety of the DLGF’s tax rate calculation method is at the core of

       this case, as it is crucial to the determination of the Town’s eligibility to transfer

       from Calumet Township and avoid paying its share of the township assistance

       tax. Although not a direct challenge to a tax collection, this case clearly

       revolves around an earlier step in the taxation or assessment process. We

       disagree with the Trustee that her legal theory that the DLGF violated

       administrative rulemaking procedures in choosing its calculation method brings

       this case within the trial court’s subject matter jurisdiction. Rather, this case

       squarely involves interpretation and application of substantive tax law by a state

       agency charged with implementing that law and, as such, “arises under” the tax

       laws of this state.




       5
         The Trustee’s complaint makes clear that Calumet Township intentionally crafted a budget that would keep
       the township assistance property tax rate less than twelve times the statewide average based on a weighted
       average calculation method. Appellant’s App. at 17.

       Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018                      Page 9 of 12
[12]   Having concluded that the present matter arises under the tax laws, we turn to

       the second statutory prerequisite to the Tax Court’s exclusive jurisdiction,

       namely that there be a “final determination” by a relevant agency such as the

       DLGF.6 For purposes of Tax Court jurisdiction, a final determination is an

       order that determines the rights of, or imposes obligations on, the parties as a

       consummation of the administrative process. State Bd. of Tax Com’rs v. Ispat

       Inland, Inc., 784 N.E.2d 477, 481 (Ind. 2003). This is a basic principle of

       administrative law that a party is required to exhaust its administrative

       remedies before an agency prior to obtaining judicial review. Id. The lack of a

       “final determination” by a tax-related agency, which is equivalent to a failure to

       exhaust administrative remedies, deprives the Tax Court of subject matter

       jurisdiction. Wayne Twp., 865 N.E.2d at 628. Moreover, a party cannot

       circumvent the “final determination” requirement basis for the Tax Court’s

       exclusive jurisdiction over tax appeals by filing an action in a trial court instead

       of with the relevant administrative agency. Marion Cty. Auditor v. Revival Temple

       Apostolic Church, 898 N.E.2d 437, 445 (Ind. Ct. App. 2008), trans. denied (2009).


[13]   Based on the limited record before us, we are unable to determine whether the

       Trustee has exhausted her administrative remedies and obtained a “final

       determination” by the DLGF to confer subject matter jurisdiction on the Tax

       Court. So, what does this mean for the Lake Superior Court and its order




       6
         The DLGF is “a relevant agency whose ‘final determinations’” are within the exclusive subject matter
       jurisdiction of the Tax Court. Wayne Twp., 865 N.E.2d at 629; see Ind. Tax Court Rule 3(C).

       Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018                      Page 10 of 12
       transferring this case to the Tax Court? As we clarified on rehearing in Wayne

       Township, “whether or not there is a ‘final determination’ here by the DLGF,

       this case does not belong in a court of general jurisdiction. It might not belong

       in the Tax Court, either, if there is not a ‘final determination.’” 869 N.E.2d at

       533. We concluded that we lacked authority to transfer the case to the Tax

       Court and effectively mandate that it consider the merits, but noted that the Tax

       Court, “with its greater expertise,” was best suited to determine if the DLGF’s

       decision constituted an appealable final determination. Id. We will follow that

       logic here as well.


[14]   In sum, we agree with the Lake Superior Court’s conclusion that it lacks subject

       matter jurisdiction. We express no opinion as to whether the Trustee has

       exhausted her administrative remedies such that the Tax Court has acquired

       jurisdiction at this procedural juncture. As neither the trial court nor this Court

       has the authority to transfer this case and mandate that the Tax Court consider

       the merits, we simply direct that the action in the trial court be dismissed for

       lack of subject matter jurisdiction. Accordingly, we affirm that part of the trial

       court’s order determining that it lacks subject matter jurisdiction, reverse that

       part of the order transferring this case to the Tax Court, and remand to the trial

       court with instructions to dismiss the case.




       Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018   Page 11 of 12
[15]   Affirmed in part, reversed in part, and remanded.


       Bailey, J., and Brown, J., concur.




       Court of Appeals of Indiana | Opinion 45A03-1707-PL-1643 | April 9, 2018   Page 12 of 12
