Judgment for Brownsburg in water rate lawsuit upheld

The Indiana Court of Appeals has affirmed judgment for the Town of Brownsburg in a water utility dispute after concluding two customers failed to exhaust their administrative remedies before suing the utility in courts.

Domestic partners Sabrina Graham and Kurt Disser sued the Town of Brownsburg as customers of the town’s municipal water utility seeking declaratory and injunctive relief regarding the legality of a water rate ordinance enacted in 2018.

Until 2010, the water utility allocated its costs for water service for public fire protection to the town itself and levied an annual hydrant fee on the town. Then in 2010, it decided the water utility should instead recover such costs through customer rates, as permitted by law.

Ordinance 2010-09 was thus enacted, creating a new charge for water service for fire protection billed to all water customers. The ordinance did not exempt customers living outside the town limits, but only charged the new rate to those within the town limits.

However, in 2018, that fee was adjusted to include some customers outside of town, specifically any nonresident on town water within 1,000 feet of a town hydrant.

That applied to Graham and Disser, who own property in Brown Township, outside of the town’s corporate limits, but within 1,000 feet of a town fire hydrant. Although they voiced their concerns during a public hearing, the two never filed an administrative appeal of the 2018 ordinance.

Instead, Graham and Disser filed a pro se “Verified Petition for Declaratory Relief and Motion for Preliminary Injunction.” They argued among other things that the new ordinance was “void and invalid” for violating Indiana Code Section 8-1-2-103(d), and that it charged for a service for which Graham and Disser were already paying.

Their petition also sought a preliminary injunction enjoining enforcement of the 2018 ordinance. In response, the town arged Graham and Disser’s complaint failed to state a claim upon which relief may be granted and that the action was barred by the plaintiffs’ “failure to exhaust their remedies under I.C. § 8-1.5-3-8.2 and -8.3.”

The Hendricks Circuit Court ultimately denied Graham and Disser’s motion to reconsider and to strike portions of the town’s reply, instead granting the town’s motion for summary judgment on all claims.

An Indiana Court of Appeals panel concluded that the award of summary judgment was not in error, specifically on the grounds that Graham and Disser failed to exhaust their administrative remedies in Sabrina Graham, et al. v. Town of Brownsburg, 19A-PL-153.

“As owners of property connected to and served by the Water Utility and who attended the public hearing on the new water rates, they should have challenged those rates by filing a written petition with the Town Council within five days after the ordinance was adopted,” Judge L. Mark Bailey wrote.

“Pursuant to state law, the petitioner in the petition is to set forth the specific grounds for objection, thus affording the Town the opportunity to compile a factual record, review its actions in light of the stated objections, and correct any of its errors,” Bailey continued. “Because it is undisputed that Graham/Disser failed to file such a petition, this matter was not properly before the trial court.”

The appellate court further rejected the plaintiffs’ argument that pursuing remedies available to them would have been futile because they challenged the constitutionality of I.C. Section 8-1-2-103(d), as applied, and the Town does not have the power to declare a statute unconstitutional.

It concluded that the exhaustion requirement should not be dispensed with lightly on the grounds of “futility.”

“Graham/Disser may believe it is unlikely that the Town will grant them such relief on agency review, but ‘the mere fact that an administrative agency might refuse to provide the relief requested does not amount to futility,’” Bailey concluded. “Administrative review would not have been futile in this case.”

Thus, the appellate court concluded that Graham and Disser were required to exhaust their administrative remedies before seeking access to the courts and failed to do so, and the trial court therefore did not err in granting summary judgment to the town.