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Tuesday, November 20, 2007

Ind. Decisions - "Pabey wins latest round in casino cash bout"

Patrick Guinane reports today in the NWI Times, in a story that begins:

INDIANAPOLIS | East Chicago Mayor George Pabey's administration scored a tremendous -- but perhaps temporary -- victory Monday in a long-simmering legal feud with three Pastrick-era groups that control millions in local casino cash.

Marion County Superior Court Judge S.K. Reid dismissed a request by the Foundations of East Chicago for a permanent injunction against a new state law stripping the nonprofit of a $6 million annual subsidy it has received for more than a decade.

Former Mayor Robert Pastrick brokered the economic development deal, as well as another $2 million annual subsidy to a for-profit firm known as East Chicago Second Century, as part of a 1994 agreement to bring riverboat gambling to the lakefront city.

Pabey, who ousted Pastrick at the polls three years ago, persuaded the General Assembly this spring to pass legislation giving city government control of the $8 million in yearly payments if the East Chicago casino changed hands. Ameristar Casinos closed its $675 million acquisition of the casino two months ago, but the court battle prevented the community development cash from flowing to the city. * * *

It's unclear whether the development cash will change hands anytime soon. An Ameristar spokeswoman didn't immediately return a phone call seeking comment Monday evening. And Russell Taylor, the foundations' executive director, vowed to challenge Reid's 53-page opinion.

"We firmly believe that the court's decision today is mistaken, and the special legislation that the Pabey administration snuck through in the final hours of this year's General Assembly violated numerous provisions of the Indiana and United States Constitutions," Taylor said in a written statement. "We will promptly appeal and are confident that this unconstitutional legislation will be struck down."

Reid wrote that her decision does not override any aspect of a preceding court battle between the Pabey administration, Foundations and Second Century, which now is before the Indiana Court of Appeals.

But Reid declared, for the first time, that the casino subsidies are "public funds" intended for the benefit of the citizens of East Chicago and not contractual obligations to the foundations and Second Century.

Reid further ruled Foundations of East Chicago lacks standing to claim the casino cash because the 1994 agreement Pastrick brokered promised the funds to a pair of nonprofits -- East Chicago Community Development Foundation and Twin City Education Foundation -- and not the consolidated entity the foundations formed earlier this year. The 1994 agreement gave the city appointments to the nonprofits' advisory boards, while the consolidation froze out the city, Reid noted.

While ruling that Foundations of East Chicago lacked the authority to sue, Reid still went on to dismiss all of the various legal arguments the nonprofit made against the new law -- signed by the governor in May -- that gave the city control of the casino cash.

A story by Christin Nance Lazerus of the Gary Post-Tribune focuses on other aspect of the case:
EAST CHICAGO -- The Foundations of East Chicago Inc. lost a legal challenge on a state budgetary provision that would end its lucrative agreement with the Resorts Casino.

On Monday, Judge S.K. Reid of Marion Superior court dismissed the foundation's claims that a line item is not appropriate in the state budget. The decision is subject to appeal.

Attorney Carmen Fernandez, representing the city, said budget bills commonly include provisions specific to individual communities.

Here is a link to an ILB posting of the 53-page opinion. Be warned that it is a scanned document and is nearly 3 MB in size.

Observations. The ILB was particularly interested in the fact that the legislation which was the subject of this opinion is found in SECTION 302 of the state budget bill. One of the challenges posed to the legislation is the "Single Subject Challenge," which is discussed in the opinion beginning on p. 29, para. 73.

However, this discussion falls victim to the same failings as have some decisions of higher Indiana Courts - treating the same subject limitation of Art. 4, Sec. 19 has if it has always read the same.

In fact, the provision has been changed several times over the years, included fairly recently. For instance, from 1960 to 1974, the Indiana Constitution provided:

Sec. 19. Every act, amendatory act, or amendment of a code shall embrace but one subject and matters properly connected therewith; which subject shall be expressed in the title. But if any subject shall be expressed in an act, amendatory act, or amendment of a code, which shall not be expressed in the title, such act, amendatory act, or amendment of a code shall be void only as to so much thereof as shall not be expressed in the title. The requirements of this paragraph shall not apply to original enactments of codifications of law.

Every amendatory act and every amendment of a code shall identify the original act or code, as last amended, and the sections or subsections amended shall be set forth and published at full length. The identification required by this paragraph may be made by citation reference.

With the constitutional amendment ratified in 1974, the provision now reads:
Sec. 19. An act, except an act for the codification, revision or rearrangement of laws, shall be confined to one subject and matters properly connected therewith.
What is most important to note is that there is no longer a requirement that the subject of the act be expressed in the title, and thus the test to be applied is of necessity different that that relied upon pre-1974. However, this change is not noted in Indiana's higher court decisions, which continue to cite cases where the decision turned on the title of the act.

And yesterday's trial court opinion continues this -- paragraph 73 cites Dague v. Piper Aircraft Corp. ((I981), a post-1974 opinion, which relied on earlier opinions that turned on the title of the act at issue.

As I wrote at p. 21 of "Enforcing Indiana's Constitutional Requirement that Laws be Limited to One Subject," 44 Res Gestae 9 (2001), discussing Dague: "In its analysis, as exemplified in the following quotation, the Court used the title-body and notice-of-content rationale relevant before the 1974 amendment to the Constitution."

Posted by Marcia Oddi on November 20, 2007 12:36 PM
Posted to Ind. Trial Ct. Decisions