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Friday, April 14, 2006

Ind. Law - Parallels between the Toll Road suit and the Fort Wayne Airport suit [Revised and Expanded]

The ILB is struck by the parallels between Bonney v. Indiana Finance Authority, a suit filed Wednesday contesting the toll road deal, and the case of SMDfund v. Fort Wayne Airport Authority, decided by the Indiana Supreme Court on Aug. 2, 2005.

On Sept. 13, 2004 the Indiana Supreme Court granted transfer in the case of SMDfund, Inc. et al. v. Fort Wayne-Allen County Airport Authority (6/28/04 AllenCirCt), via the infrequently used Rule 56 which permits an appeal directly from the trial court "upon a showing that the appeal involves a substantial question of law of great public importance and that an emergency exists requiring a speedy determination."

The trial court decision in SMDfund.

This ILB entry from 9/21/04 summarizes the trial court decision. The trial judge defined the issue as: "Whether the doctrine of the statute of limitations precludes citizens from contesting the constitutionality of a statute that provides a basis for the formation of an airport authority 17 years after the statute was enacted."

Plaintiffs asserted that the 1985 statute authorizing the airport authority was unconstitutional as "special legislation". As the trial judge noted: "To this day, Allen County is the only county in Indiana that meets the requirements of the specific population bracket stated in the statute."

The Plaintiffs argue that the statute of limitations does not apply to this lawsuit because the [airport] statute should be considered special legislation therefore allowing Plaintiffs to bring a claim at anytime. The Plaintiffs base this reasoning from a case in which property owners filed a remonstrance and presented a petition in opposition to annexation by the defendant city. Municipal City of South Bend v. Kimsey. 78 1 N.E.2d 683 (Ind. 2003).
Relying on the 10-year general statute of limitations, IC 34-11-1-2, the Airport Authority asserted that the statute precluded the plaintiffs from contesting the constitutionality of the airport authority statute.

[Note: I've read the trial court opinion again this weekend, and below is my revised analysis of the reasoning ...]

First, the trial court stated that if the statute was unconstitutional because it violated the restriction of Art. 4, Sec. 23 against use of a special law "where a general law could be made applicable," then it had been unconstitutional from the date of its enactment.

A facial challenge is a claim that the "mere enactment" of a statute is unconstitutional. * * * An as-applied challenge focuses on the effect of a statute's application to specific property and individuals. * * *

In a facial challenge, the statute of limitations begins to run on the date the statute was enacted. * * *

Since Indiana does not have a statute of limitations that applies specifically to a constitutional challenge premise[d] on special legislation, the general statute of limitations [of 10 years] would apply * * *.

The trial court reasoned that if Plaintiffs' claim was to be successful, then the statute at issue would have to be special legislation. But if it was, the court continued, then the 10 year statute of limitations would have begun to run at the time of the law's enactment 17 years before, in 1985, and would act to bar the suit. The trial court concluded:
The Authority's motion for summary judgment requests that Plaintiffs' claim be barred because the statute of limitations precludes any challenge to the constitutionality of the statute.

Plaintiffs' claim was filed more than 17 years after the enactment of the challenged statute. Because * * * Plaintiffs filed a facial challenge, the general statute of limitations of ten years bars Plaintiffs from filing such a claim.

The ILB made one point after reviewing the opinion that is worth repeating here:
If upheld, would this decision mean that the General Assembly can protect its statutes from constitutional challenge by simply passing a law limiting the time for challenge (or perhaps totally prohibiting challenge)? Or does the separation of powers play a part here?
Well, it was that question in the back of my mind this week as I read about the toll road suit.

The Supreme Court decision in SMDfund.

From the ILB entry of August 2, 2005:

Today's 9-page ruling, by Justice Boehm, with the other four justices concurring, begins with the somewhat disappointing:
The plaintiffs challenge the constitutionality of the statute creating the Fort Wayne-Allen County Airport Authority. The Authority was created in 1985 pursuant to a statute the plaintiffs now contend violates the prohibition in the Indiana Constitution against special legislation. We hold that laches bars this claim.
At page 8 Boehm writes:
In short, laches bars the plaintiffs’ claim. Because we hold that the plaintiffs’ claim is barred by laches, we need not address the statute of limitations issue which was the basis of the trial court’s ruling reaching the same result. We affirm the trial court’s entry of summary judgment for the defendants.
The Supreme Court thus avoided the question of whether the General Assembly by law could limit the time for challenge of a statute's constitutionality, by stating that the right to challenge the constitutionality of a statute, even apparently a statute that was void ab initio and in every application, could be lost by the passage of time.

It seems perhaps a short step from a holding that a patently unconstitutional statute could become unchallengeable though the passage of time via laches, and the same result via the application of a statute of limitations (although one turns on the inaction of a plaintiff, and the other upon a limitation set by the General Assembly.)

Some reactions to the SMDfund ruling.

This ILB entry from August 4, 2005 quoted from an editorial in the Fort Wayne News-Sentinel that concluded:

A group called SMDfund filed a lawsuit in 2003 challenging the law that created the airport authority. The law, the suit said, violated the state constitution’s prohibition on special legislation that affects only certain communities instead of the whole state. Lawmakers historically have gotten around that provision by using population limits instead of naming specific locations. The airport-authority legislation, for example, allowed a city-county airport authority in any county populated by more than 300,000 but less than 400,000 people. Guess which Indiana county is the only one of 92 to fit that category?

The Indiana Supreme Court had always looked the other way instead of confronting such fiction. But in 2003, justices struck down an annexation law in St. Joseph County because it was contrary to one applying to the rest of Indiana. That made a lot of people nervous.

Which the court probably realizes. This week, it ruled against SMDfund, but on the narrow, technical grounds that the group shouldn’t have waited 17 years before challenging the law. Of course, the group had no reason to challenge the law before the Supreme Court signaled that it might take such a challenge seriously.

Nobody should relax too much because of this ruling. The court left another shoe up in the air, which it could drop at any time.

This ILB entry from September 5, 2005 quotes from an opinion piece in the Fort Wayne Journal Gazette from Joe Tocci, "a Fort Wayne resident and chairman of the SMDfund, which represents Smith Field supporters." Some quotes:
Like any other legal complaint, courts can’t proceed on a constitutional matter except when brought in a specific case. SMDfund v. Fort Wayne-Allen County Airport Authority, et al., was such a case. At the lawsuit’s filing, the 2003 Supreme Court’s Kimsey ruling was a watershed that could halt the General Assembly’s addiction to making special laws beneficial to local elites and otherwise confine them to making uniform policy beneficial to all of us. * * *

Each time an Indiana court excused bracketed populations, its decision bolstered legal precedent and emboldened Indiana’s legislators to do it again until it is now routine. The remarkable thing is that for more than 20 years, Indiana courts have found excuses for allowing this transparent device to disguise the constitutional violation.

The Kimsey ruling suddenly changed everything. When the Indiana Supreme Court defined explicitly, for the first time, the only legal exception to our Constitution’s prohibition, the justices seemed to be signaling they’d finally had enough. Thirty-one days after Kimsey, SMDfund asked the court to try the high court’s new criteria against the airport authority’s circumstance.

The airport authority’s claim that we waited 17 years is nonsense. The high court’s reliance on it is stunning. When the Supreme Court upheld dismissal of SMDfund, the justices rescinded the Kimsey notice, and by doing so unanimously, the justices may have emboldened the legislature to resume the log rolling with the highest impunity since 1850.

This week's toll road suit.

As reported by the Fort Wayne Journal Gazette and quoted in this ILB entry yesterday:

The legislation authorizing the public-private partnership gave opponents of the plan only a 15-day window to dispute the deal – and that deadline was Wednesday.
HEA 1008 (PL 47-2006), a 107-page bill, at p. 41 adds a new Article 8-15.5 to the Indiana Code, titled "Public-Private Agreements for Toll Road Projects."

Chapter 6 is titled "Selection of Operator by RFP." Section 12 (IC 8-15.5-6-12), at p. 47, provides:

Sec. 12. Any action to contest the validity of a public-private agreement entered into under this chapter may not be brought after the fifteenth day following the publication of the notice of the designation of an operator under the public-private agreement as provided in section 11 of this chapter.
The first question is, "Does this 15-day statute of limitations apply to the agreement, or to the authorizing statute?"

Clearly, by its terms, the limitation applies to the agreement. If HEA 1008 is successfully challenged, the result could impact the validity of the agreement itself.

In past decades, laws creating quasi-public authorities such as the State Office Building Commission and the Toll Road Commission that authorized the issuance of revenue bonds, were never implemented until a friendly "test case" was brought, posing every possible challenge to the validity of the statute. It was a given that until the Supreme Court ruled that the law met every test, Wall Street would not underwrite the financing.

What if a challenge to the new toll road law had not been filed until, say, five years from now?

Perhaps the plaintiffs in Bonney are doing the State a favor, whatever way the suit turns out.

Posted by Marcia Oddi on April 14, 2006 11:47 AM
Posted to Indiana Law