Opinion
Court of Appeals Case No. 20A-PL-1000
03-30-2021
Janice STEELE and Kenneth Steele, Appellants-Defendants, v. STEUBEN LAKES REGIONAL WASTE DISTRICT, Appellee-Plaintiff
Case Summary
[1] The Steuben Lakes Regional Waste District ("the District") asked Kenneth and Janice Steele to voluntarily grant easements so the District could connect the Steeles’ two properties to the District's sewer system. When the Steeles refused to grant the requested easements without compensation, the District sought and obtained a court order requiring the Steeles to complete the connections themselves—at a cost of approximately $15,000-$20,000, including about $7,000 worth of equipment, per property—and to pay the District's attorney's fees. The Steeles now appeal, arguing the District cannot incentivize the granting of easements by requiring property owners who do not grant easements to pay the cost of connection. We agree, in part. Because the District has no enforceable legal right to go onto a property to install sewer equipment without an easement, the property owner can be required to arrange and pay for the necessary construction work. However, because the District can provide the necessary equipment without going onto the property, we hold it must provide that equipment even if the property owner refuses to voluntarily grant an easement. We also reverse the award of attorney's fees. Facts and Procedural History
[2] The District is a regional waste district established under Indiana Code article 13-26. Such a district has the power to "require connection to the district's sewer system of property producing sewage or similar waste, and require the discontinuance of use of privies, cesspools, septic tanks, and similar structures" if certain requirements are met. Ind. Code § 13-26-5-2(8). The Steeles own two properties near Lake Pleasant in Steuben County, within the District's service area.
[3] In November 2007, a developer that wanted the District's existing sewer system extended to a residential development it was planning agreed to construct the "Lake Pleasant Sewer Extension," at a cost of approximately $760,000. Ex. G. Upon completion, the extension would be turned over to the District. The District agreed to collect a reimbursement fee from any person who connected to the extension during the fifteen years following completion and to remit any such fees to the developer. The reimbursement amount was subject to 8% interest, growing from $2,586.13 in the first year (July 2008 to July 2009) to $7,595.96 in the fifteenth year (July 2022 to July 2023). Future connections were also subject to a $3,000 "capacity fee," payable to the District. Id.
[4] Eight years later, in May 2015, the District was planning an expansion of the Lake Pleasant sewer system. The District informed the Steeles construction was set to begin in April 2016 and their properties were included in the engineers’ plans. The District said it would be "installing grinder pump systems on individual properties, such as yours, which will then hook into the sewage collection system." Ex. K. "In order to do this," the District continued, "we will need a ‘Permanent Sewer Utility Easement’ from you." Id. The District enclosed an easement form and an application and explained:
If you fail to return the Easement and the application, you will still be a part of the Project and the District, as permitted by state law, will require you to connect. If you do not return the Easement, the District will bypass your property. Once the mainline is within three hundred (300) feet of your property, the District will proceed with a necessary connection action permitted under Indiana law. You will then be required, at a significant expense to you, to connect to the system.
Id. The Steeles did not grant the requested easements, and the District bypassed their properties.
[5] In February 2017, the District notified the Steeles the expansion project was completed at the end of 2016, the collection system was "ready and available" for their properties to connect, and their properties needed to be connected within ninety days. Exs. C, D. The Steeles failed to connect, and in March 2018 the District filed a petition seeking a court order requiring them to do so, at their own expense.
[6] As of March 2019, the Steeles had not answered the petition and there had been no other activity in the case, so the trial court scheduled a Trial Rule 41(E) hearing for the District to show cause why the case should not be dismissed. The District then requested a status conference, and the trial court canceled the Trial Rule 41(E) hearing. At the status conference in June 2019, the trial court scheduled a bench trial for August 21, 2019.
[7] On July 3, the Steeles filed an answer to the District's petition. They also asserted eight counterclaims, alleging: (1) their properties are exempt from the connection requirement; (2) the District's connection policy is "not authorized by Indiana law and is in direct contravention of the statutory authority of regional utility districts"; (3) the District's connection policy "violates equal protection [as] well as the privileges and immunity afforded the Defendants"; (4) requiring the Steeles to "destroy" their private septic system is a taking without just compensation and is contrary to Indiana law; (5) Indiana Code section 13-26-11-5, which authorizes billing and collection, "is unconstitutional in that it is a ‘taking’ by the government of the money of Defendants for nothing in return"; (6) the District dictating where on a property certain equipment must be located is contrary to Indiana law and a taking; (7) certain fees charged by the District are illegal; and (8) the District's "acts and omissions" have caused monetary damages. Appellants’ App. Vol. III pp. 5-10.
[8] After a change of judge, trial was rescheduled for January 8, 2020. On December 17, 2019, the Steeles filed an Application for Admission Under Trial Rule 8(D). Noting the District had not answered their counterclaims, the Steeles argued the allegations in the counterclaims must be deemed admitted under Trial Rule 8(D), which provides, in part, "Averments in a pleading to which a responsive pleading is required, except those pertaining to amount of damages, are admitted when not denied in the responsive pleading." The Steeles also filed an Application for Default Judgment. Later that day, the District filed an answer to the Steeles’ counterclaims and an opposition to their two applications. The trial court denied both of the Steeles’ applications.
[9] A bench trial was held as scheduled on January 8, 2020. The trial court then issued Findings of Fact and Conclusions of Law granting the District's petition and rejecting the Steeles’ counterclaims. The court ordered the Steeles, with respect to each of their properties, to "purchase a grinder pump and related equipment and have the equipment installed and connected to the District's system, at their own expense[.]" Appellants’ App. Vol. II pp. 18, 19. (The cost of doing so would be approximately $15,000-$20,000 for each property, including about $7,000 for the grinder pump and the other equipment.) The court also ordered the Steeles to pay the District $48,505.58: $7,445.06 in back user fees and penalties, $295.68 in back partial rates and penalties, a $3,000 capacity fee for each property, $1,920 in failure-to-connect penalties, a "Contractor reimbursement fee" of $6,029.92 for each property (the amount required by the 2007 extension agreement for connections made between July 2019 and July 2020), and $20,785 in attorney's fees.
[10] The Steeles now appeal.
Discussion and Decision
I. Trial Rule 8(D)
[11] The Steeles first contend the trial court erred by denying their application to have the allegations in their counterclaims deemed admitted under Trial Rule 8(D). Again, that rule provides, in part, "Averments in a pleading to which a responsive pleading is required, except those pertaining to amount of damages, are admitted when not denied in the responsive pleading." The Steeles argue that "if a party fails to answer counterclaims then they are deemed admitted." Appellants’ Br. p. 15. They acknowledge the District did eventually file an answer to the counterclaims, but they emphasize the answer was untimely. However, we have held Trial Rule 8(D) does not apply where an answer denying the averments in a counterclaim has been filed, even if it was filed late. Dreyer & Reinbold, Inc. v. AutoXchange.com, Inc. , 771 N.E.2d 764, 768 (Ind. Ct. App. 2002), trans. denied.
In Dreyer & Reinbold , we stressed that our holding was based on the plain language of Trial Rule 8(D) and that "we do not condone untimely filing and failure to comply with the trial rules[.]" 771 N.E.2d at 768. We repeat that message here, not only to the District but also to the Steeles, who failed for more than a year to answer the District's initial petition.
[12] To avoid that holding, the Steeles assert in their reply brief that the District should not have been allowed "to file its answer ten (10) working days before the trial." Appellants’ Reply Br. p. 12. There are two problems with that argument. First, the Steeles cite nothing in the record indicating they raised this issue in the trial court. Second, even if they had, an issue cannot be raised for the first time on appeal in a reply brief. See Bowman v. State , 51 N.E.3d 1174, 1180-81 (Ind. 2016).
[13] The Steeles have failed to establish that the trial court erred by denying their application under Trial Rule 8(D).
The Steeles also argue the trial court abused its discretion by denying their motion for default judgment. However, their argument assumes the trial court erred by denying their Application for Admission Under Trial Rule 8(D). Appellants’ Br. pp. 16-19. Because we have rejected that claim, the Steeles’ default-judgment argument necessarily fails.
II. Order to Connect and Attorney's Fees
[14] Next, the Steeles argue the trial court erred by ordering them to connect their properties to the District's system at their own expense and to pay the District's attorney's fees. Where, as here, the trial court enters findings of fact and conclusions of law, we review for clear error. Salyer v. Washington Regular Baptist Church Cemetery , 141 N.E.3d 384, 386 (Ind. 2020). "A finding or conclusion is clearly erroneous if the appellate court's review leaves it with the firm conviction that a mistake has been made." Id.
The Steeles also make a cursory argument that the District's "actions" violated their rights under the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. Appellants’ Br. p. 31. They do not support this argument with any citations to authority or the record, nor do they say what relief they believe they are entitled to because of the alleged violation. Therefore, this argument is waived. See Ind. Appellate Rule 46(A)(8)(a) (requiring the appellant to support each contention in the argument section of their brief with "cogent reasoning" and "citations to the authorities, statutes, and the Appendix or parts of the Record on Appeal relied on"); City of Indianapolis v. Buschman , 988 N.E.2d 791, 795 (Ind. 2013).
[15] The Steeles do not dispute they can be required to connect. Again, Indiana Code section 13-26-5-2(8) gives the District the power to "require connection to the district's sewer system of property producing sewage or similar waste," and subsection (9) of the same statute authorizes the District "to apply to the circuit or superior court of the county in which the property is located for an order to force connection[.]" The Steeles’ position is that, under Steuben Lakes Regional Waste District v. Tucker , 904 N.E.2d 718 (Ind. Ct. App. 2009), the District cannot require a property owner who refuses to voluntarily grant the District an easement to complete the connection themselves at their own expense when a property owner who grants an easement has the connection done for them by the District, at no cost.
[16] In Tucker , the District wanted property owners to connect to a new sewer system. The District calculated a connection charge of $8,191.60 but offered a reduced charge of $2,775 for property owners who voluntarily granted easements. The Tuckers agreed to be connected, but "a dispute arose regarding the specific location of the easement" they were willing to give the District. Id. at 720. The District informed the Tuckers that if they did not grant an "acceptable" easement, they would have to pay the full connection charge. Id. The Tuckers filed a complaint for declaratory judgment against the District, alleging the demand for an easement was unconstitutional. The District responded with a counterclaim "alleging that the Tuckers’ refusal to consent to the connection of the sewer system resulted in the lost opportunity" to pay the reduced amount and requesting an order requiring the Tuckers to connect at the full cost and to pay the District's attorney's fees. Id. While the case was pending, the parties agreed to an easement, but the District still wanted the Tuckers to pay the full connection charge because they did not give an easement from the outset. The trial court granted summary judgment for the Tuckers, reasoning that the District "created a ‘Constitutional dilemma’ for the Tuckers by forcing them to either surrender their right to a condemnation proceeding or pay a higher connection charge and attorney fees." Id. The court ordered the Tuckers to pay only the reduced connection charge and denied the District's request for attorney's fees.
[17] The District appealed, and we affirmed. We explained that the District "was permitted to ask the property owners to donate or voluntarily convey easements" but that the refusal of a property owner to donate or voluntarily provide an easement did not permit the District "to forego statutory condemnation proceedings and assess a higher connection charge." Id. at 722. In other words, it was improper for the District to "incentivize" the Tuckers "to voluntarily give up their property by assessing two different connection charges." Id.
[18] In Tucker , we characterized the District's approach as "incentivizing" property owners to voluntarily give up their property. We could have just as easily characterized it as "penalizing" or "punishing" property owners for invoking their right to just compensation under the Fifth Amendment to the U.S. Constitution and Article 1, § 21 of the Indiana Constitution. Indeed, that is how we characterized the approach in a subsequent case. See Hoagland Fam. Ltd. P'ship v. Town of Clear Lake , 131 N.E.3d 731, 738 (Ind. Ct. App. 2019) ("Forcing Hoagland to pay the higher connection costs now in place is effectively punishing it for its refusal to gift an easement to the Town, which is bad public policy."), trans. denied.
[19] Here, when the Steeles declined to voluntarily grant easements to their two properties, the District could have obtained easements through an eminent-domain proceeding that would have resulted in just compensation to the Steeles. See Ind. Code § 13-26-5-6(a) (authorizing a district to "condemn for the use of the district public or private land, easements, rights, rights-of-way, franchises, or other property within or outside the district required by the district for the accomplishment of the district's purposes according to the statutory procedure for the appropriation of land or other property taken by an eligible entity"); see also Ind. Code § 13-26-5-2(18). Instead, it sought a court order requiring the Steeles to complete the connections themselves, at their own expense. Under Tucker , this was improper—in part. As the District notes, without an easement, it has "no lawful authority to come onto the owner's property" to install sewer equipment. Appellee's Br. p. 18. As such, it makes sense to require the Steeles to do that work, at their own expense. However, the District can provide the grinder pump and the other necessary equipment without going onto the Steeles’ property, and the Steeles’ refusal to voluntarily grant easements does not affect the cost of that equipment, which is significant: approximately $7,000 per property. Because the District covers the cost of this equipment for property owners who grant easements, it must, under Tucker , do the same for property owners who do not voluntarily grant easements.
The dissent contends the District should be allowed to access the Steeles’ property and install necessary sewer equipment without an easement or permission from the Steeles to connect them to the sewer system, much like government agencies are authorized to deal with unsafe buildings. We see at least two problems with that proposition. First, at no point in this litigation has the District claimed to have such authority. In fact, the main reason the District asked for easements in the first place is that it does not believe it has unfettered authority to enter onto private property to install sewer equipment. Second, the case relied on by the dissent, City of Angola v. Croxton , 185 Ind. 250, 112 N.E. 385 (1916), has been implicitly overruled by the U.S. Supreme Court. In Croxton , our Supreme Court held that there was no constitutional taking issue with a statute that allowed cities to install sewer infrastructure on private property and then assess the costs to the landowner. But in Loretto v. Teleprompter Manhattan CATV Corp. , the U.S. Supreme Court held that there is a constitutional taking issue with a statute where, as here, there is a "permanent physical occupation authorized by government." 458 U.S. 419, 426, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982). As Loretto stated, the constitutional taking issue exists regardless of "the public interests that it may serve." Id. This further explains why the District requested an easement instead of arguing it is entitled to force its way onto the Steeles’ properties to install the sewer equipment.
[20] Our holding appears to be consistent with the position taken by the District in another recent case. After briefing was completed in this appeal, the District submitted as additional authority the opinion of the United States District Court for the Northern District of Indiana in Bezingue v. Steuben Lakes Regional Waste District , No. 1:19-CV-81-HAB, 507 F.Supp.3d 1021 (N.D. Ind. Dec. 14, 2020). There, the court explained:
In one part of that opinion, the court discussed our decision in Tucker and, in dicta, expressed "serious misgivings about the logical basis" for that decision. 2020 WL 7338494 *6. We do not share those misgivings. In any event, the District does not reference that part of the opinion, and it does not otherwise argue Tucker was wrongly decided.
Connection to the sanitary sewer system requires the installation of a grinder station on each connecting parcel of land. Each landowner is given two options with respect to the grinder station. Option #1 requires the landowner to provide Defendant an easement, for free as Plaintiffs repeatedly note, that allows Defendant to install and maintain the grinder station and install a lateral connection to the main line. Option #2 allows the landowner to decline to give the easement, leaving the landowner responsible for the installation and maintenance of the grinder station. In both scenarios, the landowner is provided the grinder station and related hardware free of charge and the actual connection fee (i.e., the initial amount charged by Defendant to use its sanitary sewer line) is the same.
Neither the record in this case nor the opinion in Bezingue indicates why the District is treating landowners differently in the two cases.
[21] For the foregoing reasons, we affirm the part of the trial court's order requiring the Steeles to connect and to pay for the construction work but reverse the part requiring them to pay for the equipment. And because the Steeles have no obligation to connect until the District provides the necessary equipment, we also reverse the part of the order requiring them to pay $7,445.06 in back user fees and penalties, $295.68 in back partial rates and penalties, and $1,920 in failure-to-connect penalties. The other fees—a $3,000 capacity fee for each property and a $6,029.92 "Contractor reimbursement fee" for each property—are not affected by our holding. On remand, the trial court shall issue a revised order that reflects the above holdings and that establishes deadlines for the District to provide the necessary equipment and for the Steeles to complete the connections.
The Steeles claim they are required to pay higher capacity fees and contractor-reimbursement fees because of their failure to grant easements. They are incorrect. The capacity fee is the same ($3,000) for every new connection. Tr. pp. 30, 50. The Steeles point out that under the 2007 extension agreement, the developer's "Original 11 lots" were exempt from the capacity fee, see Ex. G, but there is no evidence that had anything to do with the granting of easements. As for the contractor-reimbursement fee, the amount increases every year, but that is based on the accrual of interest under the 2007 extension agreement, not on whether the property owner grants an easement. See id.
[22] Our decision in Tucker also compels us to reverse the trial court's award of attorney's fees to the District. Indiana Code section 13-26-5-2(9) empowers a district to sue for an order to force connection "with the cost of the action, including reasonable attorney's fees of the district, to be assessed by the court against the property owner in the action." Addressing this statute in Tucker , we said:
It appears that the Tuckers have always agreed to connect to the sewer. They only refused to voluntarily grant the Waste District the specific easement it requested. As a result, the Waste District threatened to nearly triple the Tuckers’ connection charge. The Tuckers then filed an action seeking to stop the Waste District from demanding a specific easement and increasing the connection charge, and the Waste District counter-claimed.
This litigation arose out of the dispute regarding the easement and the threat of an increased connection charge, not the Tuckers’ failure to connect to the sewer after the easement was procured and sewer was constructed. The Waste District has not established that it is entitled to attorney fees for the litigation associated with the procurement of the easement and the determination of the appropriate connection charge.
904 N.E.2d at 723 (citation omitted). See also Hoagland Fam. Ltd. P'ship , 131 N.E.3d at 738 (reaching the same holding under a similar statute applicable to municipal sewage works).
[23] Here, Kenneth testified the Steeles did not want to give the District an easement over their land for free but were otherwise willing to connect. Tr. p. 62. The District cites no evidence to the contrary. While it may be that the Steeles did not want to connect, there is no indication they refused to connect. Rather, this litigation arose out of a good-faith dispute about how the connection will be accomplished—with or without an easement. And now, the Steeles have prevailed in that dispute in part, on the issue of payment for the grinder pump and other equipment. Therefore, under Tucker , the District is not entitled to attorney's fees. We reverse the trial court's order awarding the District those fees.
[24] Affirmed in part, reversed in part, and remanded for further proceedings.
Weissmann, J., concurs.
Bailey, J., concurs in part and dissents in part with opinion.
Bailey, Judge, concurring in part and dissenting in part. [25] "It is the commonest exercise of the police power of a state ... to provide for a system of sewers, and to compel property owners to connect therewith." Hutchinson v. City of Valdosta , 227 U.S. 303, 308, 33 S.Ct. 290, 57 L.Ed. 520 (1913) (quoted by Town of Clear Lake v. Hoagland Fam. Ltd. P'ship , 75 N.E.3d 1081, 1085 (Ind. Ct. App. 2017), trans. denied (" Hoagland I ")). Indeed, doing so is not only "salutary," but also "necessary to the public health." Id. Therefore, to avoid the dire public-health consequences associated with the unsanitary disposal of human excrement—including disease caused by the consumption of contaminated well water—our legislature has historically permitted local officials to require that a landowner, at his own expense, construct a private connection to an available public sewer.
[26] Indeed, in 1914, our legislature gave cities the power to "regulate the making of private connections with sewers ... and to compel owners of property to bring such connections inside the curb of streets." Burns’ Annotated Indiana Statutes § 8655 (1914). Our legislature further allowed cities, "on default of the owner's making such connections, to authorize the proper city officials to do so at the owner's expense, and to make such expense a lien on the property[.]" Id. This sort of broad statutory authorization is not unusual in the context of public sewers. See, e.g. , 11 Eugene McQuillin, Municipal Corporations § 31:28 ("Municipalities are generally authorized to compel property owners to make connection with a sewer within a reasonable distance when the public health requires it, and to pay the costs and expenses involved," which "may be provided for by statute or ordinance, in the exercise of the police power." (footnotes omitted)); 64 C.J.S. Municipal Corporations , § 1289 (2021) (observing that "[t]he duty of making improvements may, by valid provisions in statutes, charters, or ordinances, be imposed on the owners of the property benefitted").
[27] Notably, in the early 1900s, litigation emerged in Angola involving landowners who "failed ... to make the [sewer] connections to their lots as required by [an] ordinance," at which point "the city employed workmen to furnish the material and make the connections, and assessed the cost thereof against [the] lots." City of Angola v. Croxton , 185 Ind. 250, 112 N.E. 385 (1916). The landowners filed a lawsuit "to enjoin the enforcement of the assessment so made, upon the ground that the ordinance in question [was] invalid." Id. The case reached the Indiana Supreme Court. Id. On appeal, the Court explained that, in this context, exercising the police power to cause the required connection did not amount to an unconstitutional taking of private property. Id. at 386. The Court noted that "[a]ll authorities agree that the constitutional provision against taking private property without compensation is not intended as a limitation on the police power, subject to which all property is held." Id. The Croxton Court ultimately determined that "[t]he ordinance under which the assessment was made [was] valid, and the assessment in obedience to its provisions [was] not void." Id. [28] Now, more than a century later, this Court is asked to resolve a similar case. Here, the Steuben Lakes Regional Waste District (the "District") includes real property owned by Janice Steele and Kenneth Steele (the "Steeles"). After the District developed a public sewer in the Steeles’ neighborhood, the Steeles failed to connect. The District filed suit seeking an order to force connection to the sewer line. The litigation was resolved in favor of the District. As part of its judgment, the trial court ordered the Steeles to pay attorney's fees and rejected a claim that the District should provide the Steeles with approximately $7,000 worth of sewer equipment. The majority concludes that the trial court erred in resolving these issues. I write separately because, although I concur with the majority in part, I take exception to its treatment of these two issues. Indeed, although the applicable statutes have changed since our Supreme Court addressed similar issues in Croxton , the essential legal principles have not. Thus, I would adhere to the analytical framework set forth long ago in Croxton .
The majority mischaracterizes the holding in Croxton , stating that Croxton "allowed cities to install sewer infrastructure on private property and then assess the costs to the landowner." Slip op. at ¶ 19 n.4. The majority omits that cities could construct the infrastructure only if the landowner failed to do so as required by law, so construction was necessary to bring the landowner into compliance. Croxton , 112 N.E. at 386.
The majority also cursorily concludes that the U.S. Supreme Court, sub silentio , overruled the Indiana Supreme Court, implicitly determining that a law causing a landowner to construct a private connection to a public sewer, without compensation, amounts to a taking. Curiously, in so concluding, the majority does not cite to a case involving the police power or, specifically, a case involving a regulation promoting the public health. Rather, the majority cites to a case involving a state law that required a private landowner, without compensation, to allow a cable television company to install a permanent cable line on his private property. Loretto v. Teleprompter Manhattan CATV Corp. , 458 U.S. 419, 421-22, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982). The Loretto Court noted that even if there was a public interest in having cable television lines installed, that public interest did not create an exception to the constitutional requirement of providing just compensation for the ongoing physical trespass. See id. at 426, 102 S.Ct. 3164 (determining that "a permanent physical occupation authorized by government" amounts to a taking). The Court did not—as the majority asserts—create a gigantic limitation on the police power , overruling longstanding state precedent. See id. Further, Loretto involved the ongoing presence of a cable line owned by a third party. See id. Yet, requiring a landowner to construct his own sewer line, then constructing the private line when he fails to comply with the law, is not tantamount to a permanent occupation; it is always the landowner's line, whether the landowner builds the line by choice or is brought into compliance.
Ultimately, I am not sure why the majority likens the public's interest in consuming cable television to its interest in consuming sanitary drinking water. As discussed throughout this dissent, regulations requiring private connection to a public sewer are anchored in the police power, which is "[t]he power of the state to establish all regulations that are reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the community[.]" Atlantic Coast Line R. Co. v. City of Goldsboro , 232 U.S. 548, 558, 34 S.Ct. 364, 58 L.Ed. 721 (1914). As the U.S. Supreme Court explained in 1914, that police power "can neither be abdicated nor bargained away," and "all ... property rights are held subject to its fair exercise." Id. Therefore, "the enforcement of uncompensated obedience to a regulation established under this power for the public health or safety is not an unconstitutional taking of property without compensation [.]" Id. (emphasis added).
Although the police power is not absolute, connecting to a sewer is "so salutary" and "so necessary to the public health," Hutchinson , 227 U.S. at 308, 33 S.Ct. 290, that causing private connection does not amount to a taking, Croxton , 112 N.E. at 386. The state's authority to cause compliance with a safety-based regulation is not a novel legal concept, nor one that has been implicitly or explicitly overruled. See, e.g. , 409 Land Tr. v. City of S. Bend , 709 N.E.2d 348, 351 (Ind. Ct. App. 1999) (determining that no taking occurred when a city demolished a landowner's unsafe building as provided by law, noting that "[a]ttempts ... to enforce building and safety codes do not amount to a taking"), trans. denied. ; City of Gary v. Ruberto , 171 Ind.App. 1, 354 N.E.2d 786, 790 (1976) (noting that, in general, "[t]he legislature may, without infringing constitutional prohibitions against the taking of property without compensation, require adherence to regulations enacted in the exercise of the general police power for purposes of public health, safety, or welfare."). Indeed, just a few years ago, the U.S. Supreme Court recognized the ongoing vitality of the police power, noting that caselaw "recognizes that reasonable land-use regulations do not work a taking" and that regulations may be "upheld ... as a legitimate exercise of the government's police power." Murr v. Wisconsin , ––– U.S. ––––, 137 S. Ct. 1933, 1947, 198 L.Ed.2d 497 (2017).
Several years later, our Supreme Court addressed a challenge to a similar ordinance that allowed a local board to "require the owners of ... abutting property to make private connections with the sewer, gas and water mains in [the] street, alley or public place by bringing such connections inside the curbs" and, if a landowner failed to timely comply with the ordinance, "to cause such connection[ ] to be made," with the cost of making the connection to be assessed as a "lien on the real estate." Hobbs v. City of S. Bend , 194 Ind. 369, 142 N.E. 854 (1924). in upholding the ordinance, our Supreme Court noted that the enabling statute not only granted the "power to enact ordinances to regulate the making of private water connections," including compelling the construction of a connection, but that—upon noncompliance—the statute also granted the power to "make such connections and to charge the expense to the property as an improvement lien[.]" Id.
Background
[29] To promote public health, the Indiana General Assembly has authorized the creation of regional districts "[t]o provide for the collection, treatment, and disposal of sewage[.]" Ind. Code § 13-26-1-1 ; cf. I.C. § 13-26-5-2.6 (allowing sewage-control measures that "protect human health and the environment"). The District was established as a municipal corporation under the foregoing statutory framework. See I.C. § 13-26-2-10(a). As a municipal corporation, the District possesses all powers "expressly granted by statute" as well as any implied power that is "indispensable to the attainment of the declared objects and purposes of the [municipal] corporation." Clay Twp. of Hamilton Cnty. ex rel. Hagan v. Clay Twp. Reg'l Waste Dist. , 838 N.E.2d 1054, 1065 (Ind. Ct. App. 2005) (quoting Health & Hosp. Corp. of Marion Cnty. v. Marion Cnty. , 470 N.E.2d 1348, 1355 (Ind. Ct. App. 1984), trans. denied ); cf. City of Gary v. Ind. Bell Tel. Co., Inc. , 732 N.E.2d 149, 155 n.3 (Ind. 2000) (contrasting the powers of a municipal corporation with those of a governmental unit subject to the Home Rule Act).
[30] Under the enabling statutes, the District has the authority to construct a sewer. I.C. § 13-26-5-2(5). Moreover, our legislature also authorized the District to require private landowners to connect to an available public sewer, because a sewer main without lateral lines would not further the public-health objectives animating Article 13-26. See I.C. § 13-26-5-2(8) & (9) ; cf. Hutchinson , 227 U.S. at 308, 33 S.Ct. 290 (recognizing a state's power to compel connection). There are limited statutory exceptions to the requirement to connect to a sewer (the "Connection Requirement"). See I.C. §§ 13-26-5-2.5 (providing an exception for property with an eligible septic system) & -2.6 (providing an exception for property of at least ten acres with areas for sewage). No such exception applies to the Steeles.
[31] To ensure that landowners connect, the District may obtain an interest in private property, such as an easement, through negotiations with the landowner or the exercise of eminent domain. See I.C. § 13-26-5-2(5), (13) & (18). With that property interest, the District may directly undertake the connection work. See id. However, the District is not obligated to obtain a property interest. Rather, it may instead elect to develop only the main sewer infrastructure in the public right-of-way. See I.C. § 13-26-5-2(8). Once the main line is completed, the District may "require connection" by nearby landowners. See id. (setting forth distances triggering the Connection Requirement, including where a sewer is "within three hundred (300) feet of ... the property line, if the property is adjacent to a body of water, including a lake, river, or reservoir"). In sum, the District may either (1) take steps to physically connect properties to the public sewer or (2) require that landowners take those steps to physically connect. In either case, the landowner must comply with the Connection Requirement. Indeed, a landowner cannot avoid the Connection Requirement by failing to take steps to connect while insisting that the District obtain an easement. See id. ; Croxton , 112 N.E. at 385 (upholding an ordinance compelling landowners to "lay connecting pipes from the ... sewer mains in the street to the inside of the curb line of their respective lots," with the failure to timely do so resulting in the city being authorized to "make [the] connections" at the landowner's expense).
[32] As to the Connection Requirement, the District has enforcement authority under Article 13-26. That is, pursuant to Section 13-26-5-2(9), the District may "[p]rovide by ordinance for a reasonable penalty, not to exceed one hundred dollars ($100) per day, for failure to connect[.]" The District may also "apply to the circuit or superior court of the county in which the property is located for an order to force connection[.]" I.C. § 13-26-5-2(9). When the District obtains an order to force connection, "the cost of the action, including reasonable attorney's fees[,] ... [are] to be assessed ... against the property owner[.]" Id.
[33] Whereas penalties, costs, and attorney's fees are assessable "against the property owner in the action," the actual statutory "order to force connection" contemplates construction work on the subject property. Id. Therefore, upon proof that a landowner has failed to comply with the Connection Requirement without justification, the trial court may issue an order requiring connection to the sewer. See id. If a landowner fails to comply with the connection order, the municipal corporation may initiate contempt proceedings. See, e.g., Reynolds v. Reynolds , 64 N.E.3d 829, 832-35 (Ind. 2016) (noting that a trial court has the inherent power to coerce compliance through civil contempt proceedings). However, contempt proceedings are not the only way of obtaining compliance with the court's connection order. Rather, our legislature implicitly vested the court with all power necessary "to force connection." See I.C. § 13-26-5-2(9) ; cf. Croxton , 112 N.E. at 385 (applying a 1914 connection statute providing that the city, rather than the court, may "compel the owners of property to bring such connections" and, if the landowner is in "default," make the connection "at the owner's expense"). Thus, in lieu of pursuing contempt proceedings for ongoing noncompliance, a municipal corporation may instead seek a court order causing the connection, e.g. , a court order permitting it to undertake the connection work on behalf of the landowner. See I.C. § 13-26-5-2(9) (authorizing an action to enforce the Connection Requirement through "an order to force connection"). That connection work would be conducted at the landowner's expense. See id. [34] To illustrate the scope of the court's authority to force connection, it is helpful to compare the instant statutory framework with the framework designed to address an unsafe building, i.e. , a building that is "a hazard to the public health" or "dangerous to a person[.]" I.C. § 36-7-9-4. Indeed, the purpose of the law in both contexts is to avoid catastrophe and reduce or eliminate risk to the public.
The statute authorizes the trial court to issue an "order to force connection." Id. The majority seems to read this statute as though the trial court may issue an order to force connection only if the District has first paid for an easement. See Slip op. at ¶ 19 n.4. The statute does not require as much. Moreover, the Indiana Supreme Court long ago recognized that compensation is not constitutionally required when forcing private connection to a sewer line. See Croxton , 112 N.E. at 386. Next, as to the majority's assertion that "[t]he dissent contends the District should be allowed to access the Steeles’ property and install necessary sewer equipment without an easement or permission from the Steeles to connect them to the sewer system," Slip op. at ¶ 19 n.4, the majority omits the most critical point herein. That is, the District may eventually construct the connection to the sewer—just as the city officials did in Croxton —but only if the District has first obtained a court order permitting the action. See I.C. § 13-26-5-2(9) (authorizing the court to issue an "order to force connection"). Again, the court is statutorily authorized to issue an order causing physical connection. See id. Notably, however, although the court is authorized to issue an order causing connection, it need not immediately exercise that power. Rather, the court may tailor its approach to the circumstances, possibly extending the time within which to connect and/or imposing a penalty pursuant to the ordinance that is coercive or otherwise commensurate with the public cost of noncompliance. See id. In any case, it is up to the district to request specific relief and it is up to the court to determine whether the relief requested is appropriate under the circumstances. See id.
[35] In the context of unsafe buildings, our legislature created an initial process whereby a public body may "issue an order requiring action relative to any unsafe premises[.]" I.C. § 36-7-9-5 (authorizing, inter alia , an order requiring (1) "removal of trash, debris, ... or a public health hazard in and about the unsafe premises," (2) "repair or rehabilitation," (3) or "demolition and removal"). The order must contain, among other things, "[t]he action that the order requires," "[t]he period of time in which the action is required to be accomplished," and "[a] statement briefly indicating what action can be taken by the enforcement authority if the order is not complied with." Id. Upon noncompliance with the order, the enforcement authority may eventually "cause the action required by [the] order ... to be performed[.]" I.C. § 36-7-9-10. Moreover, "[w]hen action required by an order is performed by the enforcement authority or by a contractor," the landowner is ultimately liable for the "actual cost of the work performed" as well as a "processing expense" that reflects the public cost of "the technical, administrative, and legal actions" necessary to pursue an enforcement action. I.C. § 36-7-9-12. In some instances, the landowner may also be liable for penalties. See I.C. § 36-7-9-7.5.
[36] In the instant context, our legislature could have created an initial process mirroring that which is applicable to unsafe buildings. Indeed, our legislature could have given the District complete enforcement authority to cause connection and recoup the connection costs—just as it once authorized cities to construct a sewer connection without first obtaining a court order. See Burns’ Annotated Indiana Statutes § 8655 (1914). Today, however, our legislature has created a judicial process that empowers the trial court to issue an order (1) requiring connection and, if necessary, (2) causing connection. I.C. § 13-26-5-2(9) (authorizing the court to issue "an order to force connection"). Our legislature did not prescribe the content of an order to force connection or specify what happens if a landowner continues to fail to connect. However, the lack of specificity does not negate adherence to principles of due process.
[37] In this case, the trial court ordered the Steeles to connect "to the District's sanitary sewer line within 120 days of the date of [the] [o]rder, at their own expense." App. Vol. 2 at 18 & 19. In the next line, however, the trial court specified that the Steeles "are to purchase a grinder pump and related equipment and have the equipment installed and connected to the District's system, at their own expense, within 90 days of the date of [the] [o]rder." Id. From the face of the order, then, it is unclear whether the Steeles have ninety days to comply or an additional thirty days to comply. Moreover, in ordering connection, the court did not specify the consequences for failing to comply.
[38] In light of the ambiguity in the connection order (which is currently stayed pending appeal) and in light of the underlying interests of due process, I would remand for clarification regarding (1) the deadline for the Steeles to comply with the connection order and (2) the action the District may take if the Steeles do not comply with the connection order, which includes seeking the court's permission to construct the lateral line on their behalf. See I.C. § 36-7-9-5(b) (requiring, in the context of unsafe buildings, that an order contain a deadline as well as the action the enforcement authority may take upon noncompliance). Moving forward, as courts preside over these statutory connection actions, it would behoove courts, absent further direction from the legislature, to follow the general procedural framework applicable in the related context of unsafe buildings. See generally, e.g. , I.C. §§ 36-7-9-5 & -10.
Attorney's Fees
[39] Indiana Code Section 13-26-5-2(9) provides that, in an action for "failure to connect," the "reasonable attorney's fees of the district ... [are] to be assessed by the court against the property owner in the action." Here, the Steeles failed to connect and the District succeeded in obtaining an order to force connection. As part of the order, the trial court assessed attorney's fees against the Steeles.
[40] On appeal, the majority concludes that the attorney's fees were not recoverable because, "[w]hile it may be that the Steeles did not want to connect, there is no indication they refused to connect." Slip op. at ¶ 23 (emphases removed). The majority seems to focus on whether the Steeles subjectively intended to connect.
This case differs from Hoagland Fam. Ltd. P'ship v. Town of Clear Lake , 131 N.E.3d 731 (Ind. Ct. App. 2019), trans. denied. In that case, this Court reversed the imposition of attorney's fees where there was evidence that a "Y" connector had not yet been installed on the main line so as to allow for lateral connection. Hoagland , 131 N.E.3d at 738. Here, the Steeles have not contended that the District failed to install a "Y" connector. Moreover, there is also evidence that the Steeles’ property could be connected. See Tr. Vol. 2 at 81-83.
[41] Yet, Section 13-26-5-2(9) is not drafted to allow consideration of a landowner's subjective intent. Rather, the statute imposes attorney's fees upon the objective "failure to connect." I.C. § 13-26-5-2(9). From a public-policy perspective, it makes sense that our legislature chose to draft the statute in this fashion, electing not to include exceptions that would impede the goal of furthering the public health. Moreover, it is also worth noting that a municipal corporation like the District is funded by charging those within the District who are "provided with sewage ... services[.]" I.C. § 13-26-5-2(7). When charging those users, the District is expressly authorized to recoup its "expenses" as well as the "principal or interest" on its obligations. Id. Thus, in mandating compliance with the Connection Requirement, our legislature laid the cost of noncompliance at the feet of the recalcitrant landowner. To do otherwise would impose an unfair financial burden on those landowners within the District who have complied with the Connection Requirement. See id.
[42] Ultimately, because it is undisputed that the Steeles failed to connect, I would affirm the trial court's decision to assess attorney's fees. However, as to the actual fees assessed, I cannot say that the record is sufficiently developed to support awarding $20,785 in attorney's fees to obtain a basic order to connect. This is a relatively simple matter that requires proof that a landowner, without justification, failed to connect. Although other issues may emerge through litigation, the fee-shifting statute applies only to those fees incurred (1) to obtain the initial order to connect and, if necessary, (2) to take further action due to noncompliance. See I.C. § 13-26-5-2(9). Had this case progressed to later stages and required action to enforce the connection order, the amount of attorney's fees sought might have been warranted. However, this case has not progressed to those later stages. Rather, it has resulted only in a basic order to connect.
[43] Therefore, upon this limited record, I would remand for further factual development regarding the reasonableness of the attorney's fees requested.
As an example, I question the reasonableness of charging for a site visit when (1) the primary factual issue presented in the District's petition was whether the Steeles had connected and (2) it was undisputed that they failed to connect. Indeed, on July 3, 2019, the Steeles admitted the following allegation in their answer: "The Steeles have failed to connect either the Garage or Residence to the District's sanitary sewer line, and further, have failed to discontinue use of any privies, cesspools, septic tanks, or similar structures." App. Vol. 2 at 35; App. Vol. 3 at 3. Yet, on September 3, 2019, counsel for the District conducted a site inspection causing a charge of $852.50, "including travel." Ex. Vol. 2 at 77. That charge was later assessed against the Steeles.
Sewer Equipment
[44] As earlier discussed, the District was established under a statutory framework designed to protect public health. See I.C. § 13-26-5-2. To further that aim, the District's core powers include (1) constructing public sewers and (2) facilitating public connection through, if necessary, pursuing an action to force connection. Id. Within this statutory framework, it is sound public policy to incentivize early connection. By doing so, the District minimizes ongoing use of private waste systems that potentially pose risks to public health. Further, by offering financial incentives, the District lowers the cost of connection, making it easier for those within the District to comply with the Connection Requirement.
[45] In this case, the District adopted an incentive program. Under the terms, if a landowner granted an easement, the District would take all steps necessary to connect to the main line. That is, in exchange for an easement, the District would provide the equipment necessary to connect, which is approximately $7,000 worth of equipment, and it would also perform the connection work. After connection, the District would conduct ongoing maintenance services. [46] Notably, a landowner is not obligated to accept the incentive. Instead, the landowner may retain all property rights and take an alternative path to fulfilling the Connection Requirement, i.e. , obtaining equipment, selecting a contractor to perform the work, and bearing responsibility for maintenance.
It appears that the cost of the equipment and the connection work is passed on to the landowner through a "Reimbursement Amount" that is collected and remitted to the private entity that developed the sewer. See Ex. Vol. 2 at 68; Tr. Vol. 2 at 33 (noting that the Reimbursement Amount reflects "a fee that the contractor is charging" to connect). Nonetheless, the District ultimately bears responsibility for the connection process. It also bears responsibility for ongoing maintenance, a service not reflected in the Reimbursement Amount. See Ex. Vol. 2 at 87 (explaining in a letter to landowners that, although the "grinder pump systems and the piping ... to the sewage collection system will remain the property of the District, ... the District will maintain them"). Because the District agrees to bear responsibility for the connection process as well as the ongoing maintenance of the lateral line, the District's program is perhaps best characterized as providing in-kind compensation—i.e. , payment "[i]n goods or services rather than money"—in exchange for the grant of an easement. In Kind , Black's Law Dictionary (11th ed. 2019). Moreover, because the District ultimately offers to bear those responsibilities, I take exception to the Steeles’ contention that the District is imposing higher costs on landowners who "fail[ ] to give the District an easement for free[.]" Br. of Appellant at 5.
[47] Although the Steeles have not granted an easement, the Steeles suggest that they are nevertheless entitled to the $7,000 worth of sewer equipment. Indeed, according to the Steeles, it is improper for the District to adopt a program that conditions eligibility for the sewer equipment on the granting of an easement.
[48] The majority sides with the Steeles. The majority suggests that incentivizing the grant of an easement is tantamount to a taking. Yet, as earlier discussed, the constitutional concerns associated with takings do not apply in this context because requiring connection is anchored in the police power of the state. See Croxton , 112 N.E. at 386. The majority also suggests that an incentive program amounts to a penalty on those who do not participate. In this respect, the majority seems to think it better public policy to offer no incentive, making it more difficult for all landowners to comply with the Connection Requirement.
At one point, the majority finds support in a factual recitation in a federal case. Yet, the instant facts differ.
[49] In expressing concerns about incentive systems, the majority focuses on a nonbinding case that disapproved of incentivizing the grant of an easement. See Steuben Lakes Reg'l Waste Dist. v. Tucker , 904 N.E.2d 718 (Ind. Ct. App. 2009) (involving a higher connection charge for those who refused to grant an easement). In that case, the court disapproved of the incentive program in part because the district "point[ed] to no statutory authority allowing it [to] assess higher connection charges for residents who do not voluntarily provide easements." Id. at 721. In focusing on the Tucker case, the majority declines to address the gravamen of the issue, which is whether—regardless of whether it is actually sound public policy to adopt an incentive program—the District has been statutorily authorized to adopt the very incentive program it adopted here.
[50] In my view, it is certainly the Steeles’ prerogative to decline the incentive and instead connect to the main line without the District's assistance. However, I cannot say that the District is without authority to facilitate connection by incentivizing the granting of an easement. Rather, in enacting Article 13-26, our legislature conferred vast powers regarding the construction, operation, and management of sewers. See I.C. § 13-26-1-1 (specifying that the purpose of this type of district is "[t]o provide for the collection, treatment, and disposal of sewage"); I.C. § 13-26-5-4 (conferring the power to "adopt and enforce rules" to "accomplish the purpose of a district"); I.C. § 13-26-5-2(2) (authorizing the District to "[m]ake contracts in the exercise of the rights, powers, and duties conferred upon the district"); I.C. § 13-26-5-2(5) (authorizing the District to "[c]onstruct, acquire, lease, operate, or manage works and obtain rights, easements, licenses, money, [and] contracts"); I.C. § 13-26-5-2(10) (authorizing the District to "[c]ontrol and supervise all property, ... easements, licenses, ... or other property rights and interests conveyed ... or assigned to the district").
The Indiana legislature has provided municipal corporations with broad discretion to implement the authority granted under the enabling legislation. See I.C. § 13-26-5-2. For example, a municipal corporation may—as the District did here—adopt an ordinance that permits each landowner to construct a private lateral line, in contrast to an ordinance that requires the District to obtain an easement because the ordinance reserves in the District control of all aspects of the sewer system. See Ex. Vol. at 14 (contemplating the installation of a sewer "grinder pump ... by a developer or property owner"). Under the instant type of ordinance, without more, the landowner maintains (1) control of the private lateral line and (2) ownership of the equipment he installs on his property. Thus, because the municipal corporation does not control the private lateral line, it need not obtain an easement. See, e.g. , Bezingue v. Steuben Lakes Reg'l Waste Dist. , No. 1:19-CV-81-HAB, 507 F.Supp.3d 1021, ––––, 2020 WL 7338494, at *8 (N.D. Ind. Dec. 14, 2020) ("The necessity for an easement does not exist here. The landowners will own the equipment and can choose to permit [the municipal corporation] to install and maintain the equipment or not."). Of course, as previously stated, rather than allow for private lateral lines, a municipal corporation may instead pass an ordinance "reserv[ing] in itself the exclusive right to construct the lateral sewers," maintaining public control over all the sewer lines. McQuillen , supra , § 31:28. The Tucker case involved this latter type of ordinance that reserved control of the entire sewer system to the municipal corporation and "required the installation of grinder pumps on some residents’ property that would be maintained by the Waste District." 904 N.E.2d at 719. Unlike the ordinance at issue, the control-based ordinance in Tucker required the municipal corporation to obtain an easement. See Bezingue , 2020 WL 7338494, at *8 ("Where the sewer district retains ownership of the connection equipment, ‘[it] will need to conduct eminent domain proceedings in order to obtain an easement on which to place the grinder pump.’ " (quoting Hoagland I , 75 N.E.3d at 1085 )).
In Tucker , this Court disapproved of incentivizing the grant of an easement in a reservation-of-control ordinance, where the landowner had no choice but to have the municipal corporation physically invade its property and install sewer equipment that the municipal corporation would be maintaining. 904 N.E.2d at 720. In other words, under the control-based ordinance in Tucker , the municipal corporation would always need an easement—either through private negotiations or the exercise of eminent domain. See id. Because that control-based ordinance required an easement, the Tucker case presented concerns that incentivizing the grant of an easement would create a " ‘Constitutional dilemma’ " for the landowners, i.e. , "forcing them to either surrender their rights to a condemnation proceeding or pay a higher connection charge." Id. at 720. In this case, however, the incentive program does not present the concerns identified in Tucker . Indeed, because the Steeles could always construct a private lateral line, the Steeles did not have the right to a condemnation proceeding.
[51] I would conclude that incentivizing connection—including offering goods and services in exchange for an easement—falls within the powers conferred to the District under Article 13-26. Because the Steeles did not accept the terms of the incentive program, I cannot say that the Steeles are entitled to the sewer equipment without cost. Moreover, because the Connection Requirement is not conditioned on the District first purchasing an easement, I cannot say that the Steeles, by insisting on an easement, may avoid statutorily authorized penalties and other financial ramifications imposed for their ongoing failure to connect. I therefore cannot join the majority in reversing on this issue.
It is well-settled that a municipal corporation may not take arbitrary or capricious action. See, e.g. , Yankee Park Homeowners Ass'n, Inc. v. LaGrange Cty. Sewer Dist. , 891 N.E.2d 128, 130-31 (Ind. Ct. App. 2008), trans. denied. In my view, there is nothing patently arbitrary or capricious about the instant incentive program.
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[52] Regarding the issues discussed herein, I respectfully dissent. On all other issues, I concur.