                                                                           FILED
                                                                    Jun 29 2018, 7:11 am

                                                                           CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court




ATTORNEY FOR APPELLANTS                                   ATTORNEY FOR APPELLEES
                                                          LAKE COUNTY AUDITOR,
Corbin R. Fowler
                                                          TREASURER AND COMMISSIONERS
Gary, Indiana
                                                          Randy H. Wyllie
                                                          Wieser & Wyllie, LLP
                                                          Schererville, Indiana
                                                          ATTORNEY FOR APPELLE
                                                          CALUMET TOWNSHIP ASSESSOR
                                                          JACKIE COLLINS
                                                          Kevin Chandler Smith
                                                          Smith Sersic
                                                          Munster, Indiana
                                                          ATTORNEYS FOR APPELLEE
                                                          LAKE COUNTY ASSESSOR
                                                          JEROME PRINCE
                                                          Tony Walker
                                                          Leanna Weissmann
                                                          The Walker Law Group, P.C.
                                                          Indianapolis, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

D.A.Y. Investments LLC,                                   June 29, 2018
Andy’s Truck & Equipment Co.,                             Court of Appeals Case No.
Gold Coast Rand Development                               45A03-1709-PL-2122
Co., Surplus Management                                   Appeal from the Lake Superior
Systems LLC, Gary II LLC and                              Court
Andrew Young,                                             The Honorable Bruce D. Parent,
Appellants-Plaintiffs/Cross-Appellees,                    Judge
                                                          Trial Court Cause No.
        v.                                                45D04-1601-PL-1



Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018                     Page 1 of 13
      Lake County, Indiana, Treasurer
      Peggy Holinga-Katona, Auditor
      John Petalas, Commissioners
      Roosevelt Allen, Jr., Gerry
      Scheub, Michael Repay, and
      Township Assessor Jackie
      Collins,
      Appellees-Defendants,

      and
      Assessor Jerome Prince,
      Appellee-Defendant/Cross-Appellant.




      Robb, Judge.



                                 Case Summary and Issue
[1]   D.A.Y. Investments, LLC; Andy’s Truck & Equipment Company; Gold Coast

      Rand Development Company; Surplus Management Systems, LLC; Gary II,

      LLC; and Andrew Young (collectively, “Owners”) sued Lake County, Indiana;

      Peggy Holinga-Katona, Treasurer; Jerome Prince, Assessor; John Petalas,

      Auditor; Roosevelt Allen, Jr., Gerry Scheub, and Michael Repay,

      Commissioners; and Jackie Collins, Township Assessor (collectively, “Lake

      County Defendants”), for specific performance of a settlement agreement the

      parties entered into regarding taxes due on properties owned by the Owners.

      The trial court granted the Lake County Defendants’ motion to dismiss alleging


      Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018   Page 2 of 13
      lack of subject matter jurisdiction, finding the Owners’ claims were based on

      disputes that should have been first addressed through an administrative

      process. The Owners appeal, raising the following issue for our review:

      whether the trial court abused its discretion in denying their motion to correct

      error after the trial court granted the Lake County Defendants’ motion to

      dismiss their complaint for lack of subject matter jurisdiction pursuant to

      Indiana Trial Rule 12(B)(1). Concluding the trial court did not have subject

      matter jurisdiction over this case arising under tax laws, we affirm.



                             Facts and Procedural History
[2]   Young owns approximately 1,800 properties in Lake County either individually

      or through his various business entities named above. In 2009, the Owners filed

      voluntary petitions for bankruptcy in federal court in Illinois. As part of the

      bankruptcy action, the Owners sought protection from Lake County with

      respect to taxes owed on those properties. On February 29, 2012, the

      bankruptcy court approved a written settlement agreement between the Owners

      and the Lake County Defendants. The settlement agreement provided, in

      pertinent part:


              1. That attached hereto and marked Exhibit A is a listing of all
              the properties that are the subject of the controversy herein . . . .
              The sixth column consists of the assessed valuation that the
              parties have agreed upon for the taxable years involved in each
              property to and including 2010 taxes, payable in 2011. . . .




      Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018        Page 3 of 13
        2. That pursuant to said Exhibit A, the parties now agree that
        the following amounts are due to Lake County for all taxes on all
        properties to and including 2010 taxes, payable 2011 . . . .


        3. To resolve all of the above pending appeals the [Owners] and
        the county assessor now agree as follows:


                A. The [Owners] shall pay the following sum to Lake
        County, Indiana: $904,954.58.
                ***
                C. The payment of the sum listed in paragraph 3a above
        shall settle all of the tax claims due and owing from the [Owners]
        for all of the property and years identified in paragraph 2.


        4. The parties further agree that the [Owners] herein will pay the
        above stated amount over a period of twenty-four (24) months
        subject to the following:


                 ***


                E. The [Owners] recognize that during the period of
        scheduled payments as set forth above, any of the real estate
        listed herein that they will continue to be the fee simple owners of
        will have taxes due and owing for the calendar year 2011,
        payable 2012 and 2012, payable 2013.


                 ***


        5. That the parties further agree that the property classification
        and assessed valuations used herein on each and every parcel of
        land are accepted by the parties as the basis upon which any tax
        increases or decreases occur and that these properties will be
        treated in the exact same manner as any other properties in Lake
        County, using the same methodologies as any other properties in

Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018   Page 4 of 13
              Lake County based on the agreed property classification
              assessment valuation found herein. Any property classified as
              residential will be taxed at the residential rate. Property classified
              as commercial or industrial will be taxed at the commercial rate.


              6. That the parties further agree and understand that there will
              be a general reassessment of all real estate in Lake County,
              Indiana in 2013 and that these properties will be treated in the
              same manner using the same methodologies as all other
              properties in Lake County, Indiana for said reassessment.


              ***


              9. This agreement covers all of the properties listed in said
              Exhibit A, and binds the parties, their heirs, successors, agents,
              and authorized personnel to its terms and conditions, and shall
              be enforceable in this court or any court in Lake County, Indiana
              that has constitutional or statutory authority for the venue of any
              cause of action that may be necessary to enforce this agreement.


      Appellants’ Appendix, Volume 3 at 4-6.


[3]   Pursuant to the agreement, the Owners paid the $904,954.58 due over two

      years.1 On December 30, 2016, the Owners filed a complaint in three counts

      against the Lake County Defendants: Count I, for specific performance; Count




      1
       It appears part of the agreement was to reduce or discount the amount of taxes Owners owed on the parcels.
      In other words, the Lake County Defendants accepted an amount less than the actual amount due and the
      Owners were brought current through the 2010/payable in 2011 tax year only by agreement.

      Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018                       Page 5 of 13
II for bad faith failure to settle a claim; and Count III in the alternative to

determine the validity, priority, and extent of liens.2 Count I alleged:


         22. [Lake County] Defendants have failed and refused to do
         what was required of them under the Agreement, including but
         not limited to; failing to re-classify each property as agreed,
         failing to assess the properties at the assessed valuations arrived
         at between the parties, failing to acknowledge and bill for each
         property at the agreed upon rates, failing to properly credit the
         tax payments made, failing to waive penalties and interest not
         specifically provided for in the Agreement, failing to properly
         publish the correct classifications and valuations agreed upon to
         the general public, failing to use the same methodologies for
         general reassessments to [Owners’] properties as apply to other
         properties in Lake County, Indiana, and failing and refusing to
         cooperate with [Owners] in addressing these issues.


Appellants’ App., Vol. 2 at 55. Count III alleged:


         32. [Owners] dispute the amount of the real estate tax lien claims
         of Lake County, Indiana and the Lake County Treasurer.


         ***


         34[-36]. More specifically, the Lake County [Defendants’] failure
         and refusal to issue tax bills to [Owners] based on the assessed
         valuations and proper classifications that the parties agreed to in
         the Agreement approved by the bankruptcy court on February



2
  In 2014, the Owners again sought bankruptcy protection and on May 15, 2015, filed in the bankruptcy court
a complaint against the Lake County Defendants for specific performance and damages based on the
settlement agreement. The settlement agreement itself stated that it was enforceable in bankruptcy court or in
any Lake County court that has jurisdiction. Because of a procedural defect, the underlying bankruptcy was
dismissed, and the complaint against the Lake County Defendants was also dismissed.

Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018                         Page 6 of 13
               29, 2012 has resulted in incorrect and excessive taxes being levied
               against [Owners] on their properties for taxes payable in the year
               2012[, 2013, and 2014].


               ***


               37. The Lake County [Defendants’] failure and refusal to issue
               tax bills to [Owners] based on the assessed valuations and proper
               classifications that the parties agreed to in the Agreement
               approved by the bankruptcy court on February 29, 2012 will
               certainly result in incorrect and excessive taxes being levied
               against [Owners] on their properties for taxes payable in the year
               2015, as well.


      Id., Vol. 2 at 57-58.


[4]   The Lake County Defendants filed a motion to dismiss alleging lack of subject

      matter jurisdiction.3 After a hearing, the trial court issued an order granting the

      motion to dismiss:


               18. The Court found that the [Owners’] claims were all based
               upon disputes with the [Lake County Defendants] over tax lien
               amounts, incorrect or excessive taxes, errors resulting in
               improper tax bills, improper tax assessments, improper tax
               classifications, incorrect tax valuations, and their appeal of
               certain tax assessments. These allegations are principally



      3
        The Lake County Defendants also filed motions to dismiss premised on the individually named defendants
      not being the real parties in interest. The trial court denied those motions as moot. Lake County Assessor
      Jerome Price has filed a cross-appeal raising the issue of whether he should be dismissed from this litigation.
      Because of our resolution of the Owners’ appeal, we need not address this issue, as the entire lawsuit is
      dismissed. Although Price invites us to answer the question to “provide clarity for other Indiana
      practitioners,” Joint Brief of Appellees at 20, we decline to do so, as we do not issue advisory opinions. INS
      Investigations Bureau, Inc. v. Lee, 709 N.E.2d 736, 742 (Ind. Ct. App. 1999), trans. denied.

      Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018                           Page 7 of 13
        involved with the collection of a tax or defenses to those attempts
        at collection.


        19. The legislature provided the [Owners] with an administrative
        procedure for the review and appeal of tax assessments under IC
        6-1.1-15-1.


        20. The [Owners] chose to file the present lawsuit without first
        availing themselves to those administrative remedies created for
        their protection.


        ***


        22. Accordingly, this Court found that it lacked subject matter
        jurisdiction to hear this matter against any of the [Lake County
        Defendants].


Id., Vol. 2 at 36. The Owners filed a motion to correct error. The trial court

held a hearing and then issued an order denying the motion:


        22. After a careful re-evaluation of the underlying facts and the
        underlying motions, and a review of the updated filings of each
        party the Court found that it did not abuse its discretion under
        Trial Rule 59 as its decision to dismiss for lack of jurisdiction was
        logical and consistent with the facts and circumstances of the
        present case, and the inferences which could be drawn therefrom.


Id., Vol. 2 at 24. Owners now appeal the trial court’s denial of its motion to

correct errors related to its dismissal of their complaint.



                           Discussion and Decision

Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018    Page 8 of 13
                                      I. Standard of Review
[5]   Generally, a trial court has wide discretion to correct errors, and we will reverse

      only for an abuse of that discretion. Paulsen v. Malone, 880 N.E.2d 312, 313

      (Ind. Ct. App. 2008). An abuse of discretion occurs when the trial court’s

      action is against the logic and effect of the facts and circumstances before it and

      the inferences that may be drawn therefrom, or if it is based on impermissible

      reasons or considerations. Id.


[6]   In arguing that the trial court abused its discretion by denying their motion to

      correct error, the Owners assert their complaint is grounded in contract—not

      tax—law, and the trial court had jurisdiction to enforce the settlement

      agreement at issue. The trial court agreed with the Lake County Defendants

      that the complaint asserted issues of tax assessments and amounts, and found it

      lacked subject matter jurisdiction because the Owners failed to exhaust their

      administrative remedies. We apply a de novo standard of review to issues of

      law such as subject matter jurisdiction. Jackson v. Holiness, 961 N.E.2d 48, 50

      (Ind. Ct. App. 2012). Subject matter jurisdiction is the power of a given

      tribunal to hear and determine a general class of cases. Id. Subject matter

      jurisdiction is conferred by the constitution or state statutes. Id.


                              II. Subject Matter Jurisdiction
[7]   The primary issue in this appeal is whether the Lake Superior Court has

      jurisdiction over this case. The Lake Superior Court has subject matter

      jurisdiction over all civil and criminal cases, Ind. Code § 33-29-1.5-2(1), except

      Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018   Page 9 of 13
      where exclusive jurisdiction has been conferred by law upon a different court,

      State ex rel. Zoeller v. Aisin USA Mfg., Inc., 946 N.E.2d 1148, 1152 (Ind. 2011). In

      creating the Indiana Tax Court in 1986, 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). The Tax

      Court has limited but exclusive jurisdiction over any case that “arises under”

      the tax laws and that is an initial appeal of a final determination by a relevant

      agency. Ind. Code § 33-26-3-1. If the Tax Court has jurisdiction, the trial court

      does not. Aisin USA Mfg., Inc., 946 N.E.2d at 1152. Our supreme court has

      interpreted the “arise 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.” Id. at 1153. The challenge need

      not be to the collection of taxes directly; challenges to earlier steps in the

      taxation or assessment process also arise under the tax laws. Id.


[8]   The Owners repeatedly state that this case is grounded in contract law and

      therefore is not a tax law case. See, e.g., Transcript at 45 (Owners’ counsel

      stating at motion to correct error hearing, “This proceeding is subject to

      contract law. Contract law, equitable law, but not tax court.”); Appellants’

      Brief at 8 (stating the Owners’ claim “is a breach of contract claim against Lake

      County in which [they] assert that Lake County failed to satisfy the terms of the

      Settlement Agreement”). They argue the settlement agreement required the

      Lake County Defendants to assess their 1,800 parcels at the values agreed to

      and listed in Exhibit A, that reassessment of the parcels at those values was a


      Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018   Page 10 of 13
material term of the settlement agreement, and that the Lake County

Defendants’ failure to do so was a material breach of the agreement. They

argue tax laws have nothing to do with whether the agreement was breached. If

the settlement agreement set forth agreed assessed values for future years, then

it would be within the trial court’s purview to say whether the Lake County

Defendants breached the agreement and to order the Lake County Defendants

to collect taxes based on those agreed assessed values. However, paragraph 1 of

the settlement agreement specifically states that the attached list of properties

and assessed values “consists of the assessed valuation that the parties have

agreed upon for the taxable years involved in each property to and including 2010

taxes, payable in 2011.” Appellants’ App., Vol. 3 at 4 (emphasis added). The

Lake County Defendants made no agreement to assess the Owner’s property at

a certain value going forward. Instead, pursuant to paragraph 5, the parties

agreed the properties “will be treated in the exact same manner as any other

properties in Lake County, using the same methodologies . . . .” Id., Vol. 3 at

6.4 Therefore, it is not possible to determine if the Lake County Defendants

appropriately assessed the Owners’ property based on the settlement agreement

alone. The general manner and methodology of tax assessment in Lake County

determines the appropriate assessments for the Owners’ property.




4
  The Owners stated at the motion to dismiss hearing that they “kept trying and trying and trying to get those
properties reassessed,” but conceded that “going forward [they] would accept any changes in valuations that
were required by law to any other property, just do it fairly. [They] didn’t expect those values to stay the
same.” Transcript at 20-21.

Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018                         Page 11 of 13
[9]    As the supreme court stated in Aisin USA Mfg., Inc., if the case “principally

       involves the collection of a tax or defenses to the collection of a tax,” it arises

       under the tax laws and is subject to the Tax Court’s exclusive jurisdiction

       regardless of the grounds on which the challenge is premised. 946 N.E.2d at

       1153-54. That the Owners’ have styled their claim as a breach of contract does

       not negate the fact that it is, in essence, a claim challenging the assessment or

       collection of taxes as “incorrect and excessive.” Appellants’ App., Vol. 2 at 57-

       58.


[10]   Because this is a case claiming error in the assessed value of property, Indiana

       Code chapter 6-1.1-15 governs procedures for review and appeal of the

       assessments. Ind. Code § 6-1.1-15-1.1(a)(1). There are several steps, starting

       with the taxpayer seeking review by filing notice with the relevant county or

       township official, Ind. Code § 6-1.1-15-1.1(a), and ending with a final

       determination by the Indiana Board of Tax Review, Ind. Code § 6-1.1-15-4.

       Once the Indiana Board of Tax Review has rendered a final determination, the

       taxpayer may file a petition for judicial review with the Indiana Tax Court.

       Ind. Code § 6-1.1-15-5. It does not appear the Owners have availed themselves

       of this administrative process for any tax year of which they now complain the

       assessments were in error.


[11]   Where applicable, the requirement that a party exhaust its administrative

       remedies prior to seeking judicial review of an agency action is a jurisdictional

       prerequisite to judicial review. Outboard Boating Club of Evansville, Inc. v. Ind.

       State Dep’t of Health, 952 N.E.2d 340, 343 (Ind. Ct. App. 2011), trans. denied.

       Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018    Page 12 of 13
       Failure to exhaust administrative remedies is therefore a defect in subject matter

       jurisdiction. Marion Cty. Auditor v. Revival Temple Apostolic Church, 898 N.E.2d

       437, 445 (Ind. Ct. App. 2008), trans. denied. As it is the taxpayer’s responsibility

       to exhaust all administrative remedies, the taxpayer cannot “circumvent the

       ‘final determination’ requirement basis for the Indiana Tax Court’s

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

       of with the relevant administrative agency.” Id. A trial court is not vested with

       subject matter jurisdiction simply based on the lack of a final determination by a

       tax-related agency. Id. In other words, the subject matter of the Owners’ claim

       is one within the exclusive jurisdiction of the Tax Court. The fact that the

       Owners may have forfeited an appeal to the Tax Court by failing to avail

       themselves of that process for adjudicating their claim does not give the Lake

       Superior Court subject matter jurisdiction over this case.



                                                Conclusion
[12]   The trial court did not abuse its discretion in denying the Owners’ motion to

       correct error of the order granting the Lake County Defendants’ motion to

       dismiss. The judgment of the trial court is affirmed.


[13]   Affirmed.


       Najam, J., and Altice, J., concur.




       Court of Appeals of Indiana | Opinion 45A03-1709-PL-2122 | June 29, 2018   Page 13 of 13
