Residents not entitled to refund for alleged Barrett Law violations

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The city of Indianapolis does not have to pay nearly $3 million in damages to residents who paid in full their share of the costs of sewer improvements. A couple sued after discovering the city had changed its financing plan and forgave future payments by those who still owed the city.

Evelyn and Owen Cox filed their class action in 2007, claiming the city acted illegally in the course of changing its method for financing sanitary sewer improvement projects. The Coxes were assessed $9,075 in fees based on Barrett Law and signed a waiver that set a 10-year payment program. They paid off their debt in two payments in 2001.

In 2005, the city developed a new financing plan that instead would have each property owner pay a one-time $2,500 connection fee, with the remaining costs covered by increased sewer fees paid by all users. As a result in the change, the city decided to forego future installment payments still owed under the Barrett Law system.

The Coxes sought a refund from the city in late 2006 after learning that some neighbors’ debts were forgiven. After it was denied, they sued in April 2007 in state court. The case was moved to federal court. While this case was pending, the U.S. Supreme Court ruled on a similar issue in City of Indianapolis v. Armour, 132 S. Ct. 2073, 2084,182 L. Ed. 2d 998 (2012) and found that the city didn’t violate the constitution by refusing to grant pro rata refunds to residents. The federal court then sent the case back to state court.

It was then that the Coxes first raised state constitution claims. The state court ruled in favor of the Coxes, determining the city violated I.C. 36-9-39-17 by not refunding a pro rata share of the Coxes’ payment. Judge Patrick McCarty ordered the city to pay $2,783,702.59 in damages to the class, plus prejudgment interest dating back to Nov. 1, 2005.

The state argued in The City of Indianapolis, Indiana, and the Indianapolis Department of Public Works v. Evelyn Cox, 49A02-1309-PL-792, that the Coxes’ statutory and state constitutional claims are barred by the Indiana Tort Claims Act and those constitutional claims are procedurally barred. Owen Cox passed away while this appeal was pending.

The appeals court found the Coxes did not comply with the ITCA by timely submitting a request for a refund. The Coxes discovered in late 2005 the city had forgiven neighbors’ install plan debts but didn’t submit a request for a refund until December 2006, way past the 180 days in which a claim must be filed after discovery of a loss. The judges also found that the five-year delay in asserting the state law claims was unreasonable under the circumstances of this case.  

Finally, the court found the city did not violate I.C. 36-9-39-17, the statutes know as Barrett Law.

“Fair treatment in assessments appears to be the general principle behind section 36-9-39-17, as it contemplates that some properties’ assessments may be reduced or credited under specific circumstances. However, the statute does not even contain the word ‘refunds,’ and the circumstances discussed in section 17 are not present here. Considering the plain language of the statute as a whole, it cannot be read to state that when a municipality forgives some or all of a property owner’s assessment, the municipality must provide pro rata refunds to neighboring property owners,” Senior Judge Randall T. Shepard wrote.

The case is remanded with instructions to grant the city’s cross-motion for summary judgment.

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