                                                                                  FILED
                                                                             Apr 06 2017, 10:01 am

                                                                                  CLERK
                                                                              Indiana Supreme Court
                                                                                 Court of Appeals
                                                                                   and Tax Court




ATTORNEYS FOR APPELLANT –                                   ATTORNEY FOR APPELLEE
TOWN OF CLEAR LAKE                                          Jonathan O. Cress
Jeffrey P. Smith                                            Cress Law Group P.C.
David K. Hawk                                               Angola, Indiana
Hawk, Haynie, Kammeyer                                      Diana C. Bauer
& Smith, LLP                                                Bauer Legal LLC
Fort Wayne, Indiana                                         Fort Wayne, Indiana
ATTORNEYS FOR AMICI CURIAE –
ASSOCIATION OF CITIES AND TOWNS
AND THE INDIANA MUNICIPAL
LAWYERS ASSOCIATION
Nicholas K. Kile
Mark J. Crandley
Barnes & Thornburg LLP
Indianapolis, Indiana



                                             IN THE
    COURT OF APPEALS OF INDIANA

Town of Clear Lake,                                         April 6, 2017
Appellant-Plaintiff,                                        Court of Appeals Case No.
                                                            76A05-1606-PL-1241
        v.                                                  Appeal from the Steuben Circuit
                                                            Court
Hoagland Family Limited                                     The Honorable Allen N. Wheat,
Partnership,                                                Judge
Appellee-Defendant                                          Trial Court Cause No.
                                                            76C01-1006-PL-425



Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017                      Page 1 of 16
      Baker, Judge.


[1]   The Town of Clear Lake (the Town) appeals the judgment of the trial court,

      which granted summary judgment to Hoagland Family Limited Partnership

      (Hoagland) and denied the Town’s motion for partial summary judgment. The

      trial court ruled that until the Town made its sewer system accessible through

      the installation of a grinder pump, it could not enforce penalties against

      Hoagland for failure to connect to the sewer system. Hoagland also argues that

      several alleged procedural errors made by the Town should preclude the Town

      from compelling connection to the sewer system. Finding that the Town does

      have the authority to compel Hoagland’s connection to its sewer system and no

      procedural error, we reverse and remand.


                                                      Facts     1




[2]   Hoagland owns three parcels of real estate (“the properties”) located in the

      Town. Although the Town operates a sanitary sewer system, Hoagland’s

      properties are not connected to it and contain their own septic systems. Each of

      the properties are within 300 feet of the Town’s sewers. In May 2001, as the

      Town prepared to install its sewer system, it requested an easement for each of

      the properties so that it could connect them to the sewer system, but Hoagland

      declined the request.




      1
       We held oral argument on March 10, 2017, in Indianapolis. We thank both parties and amicus for their
      excellent and informative oral advocacy.

      Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017                     Page 2 of 16
[3]   In 2003, the Town passed the following ordinance:


                 The owners of all houses, buildings or properties used for human
                 occupancy, employment, recreation or other purposes situated
                 within the town and which [sic] the property line is within 300
                 feet of the sanitary sewer is [sic] required at his or her expense to
                 install suitable toilet facilities therein and to connect such
                 facilities directly with the proper sewer in accordance with the
                 provisions of this chapter.


      Clear Lake, Ind., Code of Ordinances § 51.51(A). The Town also adopted an

      ordinance mandating that “[n]o authorized[2] person shall uncover, make any

      connections with or opening into, use, alter, or disturb any public sewer or

      appurtenance thereto without first obtaining a written permit from the Town

      Council.” Id. at § 51.52(A)(1). “[T]he owner or his or her agent shall make

      application on a special form furnished by the town. The permit applications

      shall be supplemented by any plans, specifications, or other information

      considered pertinent in the judgment of the Inspector.” Id. at § 51.52(A)(2).


[4]   In April 2005, after the Town had installed its system, Hoagland filed an action

      alleging that the Town had inversely condemned its land by running a sewer

      main under Hoagland’s property. This suit ended in October 2010 with a

      settlement between the parties.




      2
          We question whether the drafters of the ordinance intended to refer to “unauthorized” persons.


      Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017                             Page 3 of 16
[5]   Eight months after Hoagland filed the complaint against the Town, the Town

      passed a Resolution directing the Town’s attorney to take legal action against

      several residents who had not connected to the sewer system; Hoagland’s three

      properties were on the list. Appellant’s App. p. 518.


[6]   In May 2009, the Town amended its penalty ordinance. Whereas the penalty

      for violation of a Town ordinance had been set at a minimum of $100 and a

      maximum of $1000, the new penalty for failure to connect to the sewer system

      was $500, per day, per property, with no express limit. CLC § 51.99(B). 3


[7]   On January 12, 2010, the Town gave Hoagland notice that Hoagland must

      connect the properties to the Town’s sewer system within ninety days:

              you are hereby given notice that the Town of Clear Lake will
              proceed to compel connection of the above described properties
              to the Town of Clear Lake sewer system unless all of said
              properties are connected to the sewer system within ninety (90)
              days. You are further given notice that any use of privies,
              cesspools, septic tanks, or similar structures must be discontinued
              within ninety days (90) from today. Failure to connect to the
              Clear Lake sewer system within ninety (90) days may subject the
              Hoagland Family Limited Partnership to fines, court costs and
              attorney fees as allowed by Indiana Code and the Town of Clear
              Lake Ordinances.




      3
       A previous zoning administrator of the Town, David Gardiner, testified that “it sure looked like” the Town
      had a “get Hoagland policy.” Appellant’s App. p. 557.

      Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017                       Page 4 of 16
      Appellant’s Supp. App. p. 68. This letter also informed Hoagland that since it

      had been “benefit[ting]” from the sewer system to which its properties were not

      yet connected, the Town was also demanding immediate payment of $4,537.38

      in back charges for each property, or a total of $13,612.14. Id.


[8]   After Hoagland did not take any action, the Town filed a complaint in which it

      asked for an order requiring connection, sewer charges that Hoagland allegedly

      should have been paying plus a further ten percent penalty pursuant to local

      ordinance, $500 per property per day for each day Hoagland remained

      unconnected, an order requiring the discontinuance of any private septic

      systems, and attorney fees and costs. In its answer, Hoagland argued that the

      Town’s claims were barred because they were compulsory counterclaims that

      should have been asserted during the previous litigation involving inverse

      condemnation, that the Town’s notice to connect was defective, and that the

      sewer system was generally illegal.


[9]   After competing motions for summary judgment and hearings on those

      motions, on May 4, 2016, the trial court granted summary judgment to

      Hoagland and denied it to the Town. The Town stipulated that Hoagland

      cannot complete a connection to the sewer system without the presence of

      grinder pumps, that the Town has not installed any grinder pumps through

      which Hoagland could connect to the sewers, and that the Town had not

      commenced any eminent domain proceedings to put grinder pumps on

      Hoagland’s property. The trial court noted that the Town’s claimed penalties

      had exceeded $2.9 million by the time of the last hearing. It ruled that

      Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017   Page 5 of 16
       Hoagland’s compelled connection with the Town’s sewer system would involve

       a taking of land and that, under Article One, Section 21 of the Indiana

       Constitution, the Town could not proceed until it had assessed and tendered

       just compensation to Hoagland. The Town now appeals.


                                      Discussion and Decision
[10]   When reviewing an entry of summary judgment, the Court of Appeals stands in

       the shoes of the trial court, applying the same standards in deciding whether to

       affirm or reverse. AutoXchange.com, Inc. v. Dreyer & Reinbold, Inc., 816 N.E.2d

       40, 47 (Ind. Ct. App. 2004). Thus, on appeal this Court determines whether

       there is a genuine issue of material fact and whether the trial court correctly

       applied the law. Id. The entry of summary judgment will be reversed where the

       law has been incorrectly applied to the facts. Markey v. Estate of Markey, 38

       N.E.3d 1003, 1006 (Ind. 2015).


[11]   Indiana Code section 36-9-23-30(a) permits a municipality operating a sewage

       system to require connection to the system and to order the discontinuance of

       the use of any private sewage system. The only limitations on the exercise of

       this power are that there must be “an available sanitary sewer within three

       hundred (300) feet of the property line of the affected property” and that the

       municipality gives the property owner ninety days’ notice. I.C. § 36-9-23-30(b).

       Municipalities may enforce “reasonable penalties” against a person failing to

       make a connection, and a court “shall” assess court costs and reasonable

       attorney fees against the property owner. Id. at -30(c); -30(d).


       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017   Page 6 of 16
                                            I. Eminent Domain
[12]   Although the trial court’s ruling depended in part on the law of eminent

       domain, a government order to connect a property to a sewer system does not,

       by itself, involve a “taking.” As the United States Supreme Court has held, “It

       is the commonest exercise of the police power of a state or city to provide for a

       system of sewers, and to compel property owners to connect therewith. And

       this duty may be enforced by criminal penalties.” Hutchinson v. City of Valdosta,

       227 U.S. 303, 308 (1913); see Alperstein v. Three Lakes Water & Sanitation, 710

       P.2d 1186, 1189 (Colo. Ct. App. 1985) (“Numerous state courts have followed

       [the Supreme Court’s] holding that personal notice and a hearing are not

       required prior to ordering connection to a public sewer system”).


[13]   On the other hand, the trial court is clearly correct that connection to the

       Town’s sewer system will eventually involve a governmental taking; Robert

       Hull, the Superintendent of the Town, explained, “You cannot hook to our

       system without a grinder pump.” Appellant’s App. 512. The Town’s

       ordinances make clear that the grinder pumps will be owned and operated by

       the Town, not the property owner. CLC § 51.62. It is well settled that the

       Town will need to conduct eminent domain proceedings in order to obtain an

       easement on which to place the grinder pump. E.g., Loretto v. Teleprompter

       Manhattan CATV Corp., 458 U.S. 419, 426 (1982) (“We conclude that a

       permanent physical occupation authorized by government is a taking without

       regard to the public interests that it may serve”).



       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017   Page 7 of 16
[14]   The dispute between the parties centers on whether the Town or Hoagland has

       to act first. Hoagland points to the language in the Indiana Code: the Town is

       only permitted to order connection if there is “an available sanitary sewer.” I.C.

       § 36-9-23-30(a) (emphasis added). Without availability, the Town has no

       authority to compel connection. Town Superintendent Hull agreed in a

       deposition that without a grinder pump on the property, “the Town’s sanitary

       system would be unavailable to that property owner.” Appellant’s App. p. 508.

       Likewise, Town Council member Alan Korte “agree[s] that the town sanitary

       sewer system is unavailable to the Hoagland Family Limited Partnership

       property without the installation of the grinder pump . . . .” Id. at 488.

       Hoagland argues that summary judgment was appropriately granted in its favor

       because the undisputed evidence, including the precise testimony of Town

       officials, shows that until the Town builds a grinder pump, the sewer system is

       not available.


[15]   The Town counters that its January 2010 letter, which explicitly ordered

       connection to its sewer system, implicitly ordered Hoagland to apply for a

       permit to connect to the sewer system. Such an application will contain

       information useful to the Town in deciding where to put grinder pumps. “Until

       such action is taken by the property owner, the size, location, and necessity of

       easements cannot be determined.” Appellant’s Br. p. 10. The Town further

       asserts that, depending on the plans submitted by Hoagland, the three

       properties might be served by a single grinder pump; therefore, the Town argues

       that it cannot be forced to first obtain the easements for the grinder pumps


       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017     Page 8 of 16
       because it cannot know where to place the easements. The Town also suggests

       that Hoagland’s properties might be served by grinder pumps located on other

       properties.4


[16]   Ordinances are treated as if they stand on the same footing as an act of the

       legislature; therefore, the rules applying to statutory construction apply equally

       to ordinances. Lutz v. City of Indianapolis, 820 N.E.2d 766, 770 (Ind. Ct. App.

       2005). The primary rule of statutory construction is to ascertain and give effect

       to the intent of the drafters, and the plain language of the statute (or ordinance)

       is the best evidence of the drafters’ intent. Id. All words must be given their

       plain and ordinary meaning unless otherwise indicated. City of Indianapolis v.

       Campbell, 792 N.E.2d 620, 624 (Ind. Ct. App. 2003).


[17]   We recognize that both parties have defensible interpretations of the relevant

       statutes and ordinances. And we acknowledge that it is every American’s

       birthright to be displeased at governmental orders. Ultimately, however, we

       believe that the Town’s interpretation of the law is correct. The word

       “available” in the statute can only be read to refer to a working sanitary system.

       Because it is undisputed that the Town is operating a working sanitary system,

       there was an “available” sanitary sewer within 300 feet of the properties, and




       4
         Hoagland argues that this final contention was never presented to the trial court, that the Town stipulated
       that it would eventually need to put a grinder pump on Hoagland’s property, and that therefore the Town is
       estopped from pursuing this particular line of reasoning. Because our conclusion would not change based on
       how this argument is decided, we decline to address it.

       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017                         Page 9 of 16
       therefore the Town has the statutory authority to order Hoagland to connect to

       it.


[18]   While Hoagland is understandably not happy about the prospect of

       disconnecting a septic system for which it paid and installing a lateral line to

       reach the sewer system it does not want to use, its reading of the law would

       require the Town to be more intrusive and dictatorial. In the name of defending

       its property rights from the overreaching Town, Hoagland is demanding that

       the Town take absolute control over where the grinder pump will be placed and

       where it will need to run its lateral line to meet the grinder pump.


[19]   The Town does not know where sewage will exit the Hoagland homes; if the

       Town were to place the grinder pump based on its own whim, it would likely

       cost Hoagland (and other residents in a similar position) even more money to

       accommodate the Town’s placement. Under the Town’s reading, Hoagland

       can propose the most cost-effective method of extending the lateral lines and the

       Town will accommodate Hoagland by placing the grinder pump where

       Hoagland deems most convenient. Indeed, we find it highly likely that, if the

       Town or other governmental entities were to attempt to dictate the placement of

       grinder pumps on residents’ properties, such actions would lead to a significant

       amount of litigation in which residents would ask courts to allow them to

       engage in precisely the type of process the Town is currently proposing. Just as

       courts require parties to mitigate their damages in tort and contract disputes, we

       favor an interpretation of the law that minimizes the costs and other burdens

       residents will face.

       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017   Page 10 of 16
[20]   Hoagland argues that the Town is attempting to find an end run around the

       requirement to pay just compensation for a governmental taking of property.

       We do not find this argument persuasive. To be clear, Hoagland was perfectly

       within its rights to reject the Town’s request to voluntarily donate an easement

       on which to place the grinder pumps. Nor is Hoagland required to accept any

       offer of compensation the Town may put forth for an easement on its property.

       Hoagland has the right to force the Town to initiate eminent domain

       proceedings, through which a court with the aid of assessors will ensure that the

       Town pays just compensation for the physical occupation of the grinder pump

       on the property.


[21]   In sum, because the Town is operating a functioning sanitary sewer within 300

       feet of the properties, there is an “available” sewer under the meaning of

       Indiana Code section 36-9-23-30(a). Accordingly, the Town has the authority

       to compel Hoagland’s connection to the sewer system. Finally, the Town’s

       proposed process—having Hoagland submit an application with plans and

       schematics of the easiest and most convenient method of extending a lateral

       line to the sewer—is more economical and less burdensome than Hoagland’s

       proposal of forcing the Town to take property and ask questions later. Partial

       summary judgment should have been awarded to the Town on this issue.




       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017   Page 11 of 16
                                II. Alleged Procedural Defects
[22]   Hoagland argues that the Town committed several procedural defects that

       prohibit the Town from compelling Hoagland’s connection to the sewer system,

       now or at any point in the future.


[23]   First, Hoagland argues that the trial court’s grant of summary judgment can be

       affirmed based on the statute of limitations. It points to a public notice given to

       Hoagland, telling it to connect to the sewer system by December 1, 2004.

       Appellant’s App. p. 668. When municipalities are attempting to judicially

       enforce an ordinance, such an action must be brought within two years of the

       alleged conduct. Ind. Code § 36-1-6-3; 34-28-5-1.


[24]   We do not find this argument persuasive: Hoagland’s violation of the

       municipal ordinance has occurred every day since he was ordered to connect to

       the sewer system, and is occurring right now. It is well settled that right now is

       within the two-year statute of limitations.


[25]   Second, Hoagland argues that all of the Town’s claims in the present suit

       should be barred under Indiana Trial Rule 13(A) as unpled compulsory

       counterclaims. It argues that the Town was fully aware of its claim against

       Hoagland for not connecting to the sewers when it filed its answer in the inverse

       condemnation case on August 4, 2005. Hoagland says that both cases arose

       from the same transaction or occurrence, that the present claim was mature

       within the time of pleading, that there were no third parties over whom the trial



       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017   Page 12 of 16
       court lacked jurisdiction, and that the initial claim has been reduced to

       judgment. Estate of McCullough, 492 N.E.2d 1093, 1095-96 (Ind. Ct. App. 1986).


[26]   A counterclaim is only compulsory where it arises from the same aggregate set

       of operative facts as the opposing party’s claim. Hilliard v. Jacobs, 927 N.E.2d

       393, 401 (Ind. Ct. App. 2010). Here, the only commonality between the two

       cases is that they involve sewers. We retain the hope that most of these

       situations can be resolved without resorting to litigation, and we hesitate to

       encourage municipalities to sue their residents so that their claims will not be

       barred later. Hoagland’s argument is unavailing.


[27]   Third, Hoagland argues that several of the Town’s statements and

       representations resulted in the waiver of its claims. It points to an August 2001

       letter in which the Town stated, “If your easement is not signed by October 1,

       2001, your property will be excluded from the Initial Project.” Appellant’s

       App. p. 623. Hoagland also points to several letters in which the Town

       described the eminent domain process. Hoagland argues that by not exercising

       its powers of eminent domain long ago, the Town “excluded” him from the

       project and cannot now compel him to join.


[28]   Hoagland neglected to quote the very next sentence in the Town’s August 2001

       letter: “In the future you will be required to connect to the wastewater system

       at your own expense . . . .” Id. The Town’s representations were fairly

       straightforward; Hoagland could choose to join the sewer system from its

       initiation or be required to join later. We find no waiver.


       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017   Page 13 of 16
[29]   Finally, Hoagland argues that the amended penalties ordinance, CLC § 51.99,

       was not properly passed and therefore cannot be enforced. The ordinance bears

       a date of April 13, 2009, but was not published in a local newspaper until May

       21, 2009, past the thirty-day limit set by statute. Ind. Code § 36-5-2-10; Ind.

       Code § 5-3-1-2(h). Further, Hoagland argues that the language in CLC §

       51.99(B)(1), “when legally required to do so,” is ambiguous and vague, such

       that it would be an unconstitutional basis for punishment.


[30]   The Town highlights the testimony of the Clerk-Treasurer, who stated that

       while the ordinance has April 13, 2009, written on it, this was a scrivener’s

       error. Appellant’s App. p. 1425-26. There is a wealth of other evidence

       indicating that, in fact, the ordinance was passed, after several readings, on

       May 11, 2009, which renders the May 21, 2009, publication timely. There are

       notations on the ordinance regarding the readings of the ordinance, town

       council minutes, and a notice of a public hearing in the local paper, all of which

       show a publication date of May 11 rather than April 13. Id. Finally, we find

       that the phrase, “when legally required to do so,” has an obvious meaning

       when combined with the previous sentence regarding “the town . . .

       compel[ling] connection by any property producing sewage or similar waste to

       the sewer system . . . .” CLC § 51.99(B). The Town’s penalty ordinance was

       properly promulgated.


[31]   In short, none of Hoagland’s arguments regarding the statute of limitations,

       compulsory counterclaims, waiver, or invalidity of the Town’s ordinances are



       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017   Page 14 of 16
       availing. None render summary judgment in Hoagland’s favor appropriate or

       partial summary judgment in the Town’s favor inappropriate.5


                                        III. Future Proceedings
[32]   Because the trial court ruled in Hoagland’s favor, it never reached the issue of

       penalties, which will need to be determined on remand. While the issue is not

       squarely before us, we would be remiss if we did not make a few comments.


[33]   Although the Town is authorized by statute to establish and enforce penalties

       against those refusing to connect to its sewer system, this authority is not

       unlimited; the Town is only authorized to establish “reasonable penalties for

       failure to make a connection . . . .” I.C. § 36-9-23-30(c) (emphasis added). Any

       penalty set above a reasonable amount is unauthorized, unlawful, and

       unenforceable. Because the issue is not before us, we cannot rule on what

       penalty would qualify as “reasonable,” but we have little difficulty saying that a

       penalty of $2.9 million is nowhere near it. Such a penalty is confiscatory, most

       likely unconstitutional, and will not be countenanced.


[34]   We would also like to express our sincere hope that the parties can work

       together more amicably to achieve what is clearly the end result: at some point,




       5
         Hoagland requests that we award it damages and attorney fees under Indiana Appellate Rule 66. We are
       always hesitant to grant such a request, lest we chill the exercise of litigants’ right of appeal. We are even
       more hesitant where the claim is made against the winning side—Hoagland’s request is denied.

       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017                           Page 15 of 16
       after some procedure, Hoagland will connect to the Town’s sanitary sewer

       through a Town-provided grinder pump.


[35]   This type of litigation tends to clog up the court system. Our courts are not

       flush with resources, and they are prone to getting backed up. When the system

       gets backed up, it produces unnecessary and unhealthy strains, which makes it

       more difficult for parties to obtain relief. And when these cases cannot be

       discharged, it is impossible for our court system to stay regular—and that

       means taxpayer resources down the drain. We can understand that, after such

       a long process, the parties are not overflowing with goodwill. But we hope that,

       before the case stalls and stagnates, they can put this big mess behind them.


[36]   The judgment of the trial court is reversed and remanded with instructions to

       award partial summary judgment to the Town and for further proceedings

       consistent with this opinion.


       Mathias, J., and Pyle, J., concur.




       Court of Appeals of Indiana | Opinion 76A05-1606-PL-1241 | April 6, 2017   Page 16 of 16
