COA orders sewer dispute to be ‘plunged’ from docket

The Indiana Court of Appeals urged litigants to “move on in good faith” from a case that is a “waste of everyone’s resources” as it handed down its second decision in a nearly 20-year sewer dispute between a northern Indiana town and a local real estate owner.

“This long-running litigation has clogged the court system for nearly a decade,” Court of Appeals Judge John Baker wrote in overturning three trial court rulings in Hoagland Family Limited Partnership v. Town of Clear Lake, 18A-PL-2088. “It has been a conduit for a buildup of bile between the parties and has amassed a commodious volume of attorney fees. It is long since time to plunge this dispute from the judicial pipeline, and in resolving this appeal, we order both parties to move on in good faith as they finally eliminate this waste of everyone’s resources.”

At issue is the sanitary sewer system operated by the town of Clear Lake in Steuben County. Hoagland owns three parcels of real estate in the town, and even though those properties are within 300 feet of the town’s sewers, the properties contain their own septic systems.

The dispute dates as far back as 2001, when Hoagland declined a request to give Clear Lake an easement to connect the properties to the town sewer system. The city responded in 2003 with an ordinance requiring all properties within 300 feet of the sewer lines to connect to them, and in 2009 raised the penalty for noncompliance.

The Steuben Circuit Court ruled in Hoagland’s favor on ensuing litigation in 2016. However, the Indiana Court of Appeals reversed that ruling in 2017, determining state statute allowed Clear Lake to compel Hoagland’s connection to the municipal sewer line. The COA specifically ruled that Hoagland, not Clear Lake, had to take the first step toward connection by applying for connection permits before the town installed the necessary equipment.

The case was remanded for the determination of reasonable penalties against Hoagland, but “(t)hings did not go smoothly on remand,” Baker wrote. “In September 2017, the Town adopted revamped sewer ordinances creating new standards, specifications, and costs. Under the prior ordinance, Hoagland would have had to pay an aggregate amount of $600 to connect to the Town’s sewers; under the new ordinance, the cost skyrocketed to an aggregate amount of $23,400.”

Hoagland applied to connect to the municipal sewer line under the previous, cheaper ordinance, but the Town Council voted to require the property owner to pay the $23,400. The council also declined to initiate eminent domain proceedings to facilitate the sewer connection, opting instead for the costlier option of installing the necessary equipment on rights-of-way and/or existing easements.

The trial court upheld those decisions and granted the town’s request for Hoagland to pay $11,490 in penalties and $351,857.75 in attorney fees.

On appeal, the COA first addressed the issue of whether the trial court erred in ordering Hoagland to pay penalties. In finding the lower court did err, Baker said the penalty timeline was not triggered until the first appeal was certified, because Hoagland did not know until that time that it had to make the first move toward connecting to the municipal line.

“And within forty days of the certification of the First Appeal — far less than the ninety days contemplated by the ordinance — Hoagland did, indeed, apply for the permits,” Baker wrote. “Consequently, it was erroneous to order that Hoagland pay any penalty for a failure to connect when legally required to do so, and we reverse that portion of the trial court’s order.”

The trial court likewise erred in holding that Hoagland had to comply with the new, costlier ordinance when connecting to the municipal sewer system, the COA held. Baker noted Hoagland was within its rights to decline to “gift” an easement to the town that would allow the municipality to install the necessary equipment, and the town failed to install a “Y” in the public right-of-way that would allow for later connection to the sewer line.

“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,” Baker wrote.

Finally, the COA ruled in Hoagland’s favor on the issue of attorney fees, determining Hoagland has not refused to connect to the sewer line, but instead refused to connect by donating an easement. Thus, the attorney fees statute does not apply.

However, the appellate panel upheld the trial court’s denial of Hoagland’s request for $181,900 in discovery fines, finding the town complied with all discovery deadlines and provided the necessary documents.

“At oral argument, counsel for the Town explained that for connection to finally occur, there is a process that must be followed,” Baker concluded. “That process is triggered by the landowner – Hoagland – filing an application for connection permits. That step has been taken.

“On remand,” he said, “we order that both parties proceed in good faith through that process so that this issue can finally be laid to rest.”