Kimberly K. Robinson, in her official capacity as Trustee of Calumet Township, Indiana, and as a resident and taxpayer of Calumet Township v. Indiana Department of Local Government Finance

FILED
Apr 09 2018, 6:23 am

CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court

ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Leanna Weissmann INDIANA DEPARTMENT OF
Tony Walker LOCAL GOVERNMENT FINANCE
The Walker Law Group, P.C. Curtis T. Hill, Jr.
Indianapolis, Indiana Attorney General of Indiana

Patricia C. McMath
Deputy Attorney General
Indianapolis, Indiana

ATTORNEY FOR APPELLEE
TOWN OF GRIFFITH,
INDIANA
Joseph C. Chapelle
Barnes & Thornburg LLP
Indianapolis, Indiana

IN THE
COURT OF APPEALS OF INDIANA

Kimberly K. Robinson, in her April 9, 2018
official capacity as Trustee of Court of Appeals Case No.
Calumet Township, Indiana, and 45A03-1707-PL-1643
as a resident and taxpayer of Interlocutory Appeal from the
Calumet Township, Lake Superior Court
Appellant-Plaintiff, The Honorable John R. Pera,
Judge
v. Trial Court Cause No.
45D10-1611-PL-113
Indiana Department of Local
Government Finance and Town

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 of Griffith, Indiana,
Appellees-Defendants

Crone, Judge.

Case Summary
[1] Kimberly K. Robinson, in her official capacity as Trustee of Calumet

Township, Indiana, and as a resident and taxpayer of Calumet Township (“the

Trustee”), brings this discretionary interlocutory appeal from the trial court’s

order transferring this case to the Indiana Tax Court based upon the trial court’s

conclusion that the Tax Court has exclusive subject matter jurisdiction.

Specifically, the Trustee filed a complaint for declaratory judgment and

injunctive relief against the Indiana Department of Local Government Finance

(“the DLGF”) and the Town of Griffith (“the Town”) in the Lake Superior

Court in an effort to prevent the Town from seceding from Calumet Township.

Because the Town’s secession eligibility was based upon the DLGF’s

calculation of the statewide average township assistance property tax rate, the

Trustee challenged the DLGF’s method for calculating the tax rate and its

failure to follow administrative rulemaking procedures. The DLGF moved to

dismiss the case arguing that the trial court lacks subject matter jurisdiction over

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 this matter and that the Tax Court has exclusive subject matter jurisdiction.

Determining that this case “arises under” the tax laws, the trial court concluded

that it lacks subject matter jurisdiction and that the Indiana Tax Court has

exclusive jurisdiction. Therefore, the trial court ordered the case transferred to

the Tax Court.

[2] We conclude that the trial court indeed lacks subject matter jurisdiction, but we

express no opinion as to whether the Tax Court has acquired exclusive

jurisdiction at this procedural juncture. We further conclude that neither this

Court nor the trial court has authority to transfer this case to the Tax Court.

Accordingly, we affirm in part, reverse in part, and remand to the trial court

with instructions to dismiss this case.

Facts and Procedural History
[3] In 2013, the legislature enacted Indiana Code Chapter 36-1-1.5 which allows for

the territory of an “eligible municipality” to be transferred to an adjacent

township. An “eligible municipality” means a municipality located in a

township that has a township assistance property tax rate that is twelve times

higher than the statewide average township assistance property tax rate as

determined by the DLGF. Ind. Code § 36-1-1.5-2.1 In 2015, the DLGF issued

its first calculation of the statewide average township assistance property tax

1
According to the Trustee’s complaint, this law was passed for the purpose of taking “aim at Calumet
Township at the behest of the Town of Griffith.” Appellant’s App. Vol. 2 at 16.

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 rate using a “weighted average” method. Appellant’s App. Vol. 2 at 16.2

Under this formula, the statewide total township assistance levy for the year is

divided by the statewide total net assessed value upon which the township

assistance levies were assessed in that year. After the DLGF released its

calculation, the Town sought transfer out of Calumet Township. The DLGF

informed the Town that it was not eligible based upon the weighted average

calculation.

[4] In February 2016, the Attorney General of Indiana issued an advisory opinion

that the Legislature likely intended that an “arithmetic mean” formula be used

to calculate the statewide average township assistance property tax rate. Id. at

78. This formula uses the sum of the tax rates imposed by all Indiana

townships using an assistance levy, divided by the total number of those

townships. In September 2016, the DLGF announced that it would calculate

the statewide average township assistance property tax rate for 2016 using the

arithmetic mean formula consistent with the Attorney General’s opinion.

Because the Town believed that it was eligible for transfer based on the

arithmetic mean calculation, the Town requested that the Lake County Election

Board hold a special election to vote on the Town’s transfer out of Calumet

Township. The Lake County Election Board granted the Town’s request for a

special election.

2
Although this law took effect July 1, 2013, “a secession action could not be brought until 2015 at the
earliest.” Appellant’s App. Vol. 2 at 16.

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[5] In an effort to halt the process and to prevent the Town from transferring from

Calumet Township, the Trustee filed a complaint for declaratory judgment and

injunctive relief against the DLGF and the Town in the Lake Superior Court.

The Trustee challenged the DLGF’s method for calculating the statewide

average township assistance property tax rate and its failure to follow

administrative rulemaking procedures in choosing its calculation method. The

DLGF moved to dismiss the complaint for lack of subject matter jurisdiction,

arguing that the Indiana Tax Court has exclusive subject matter jurisdiction.

The trial court subsequently issued an order concluding that it lacks subject

matter jurisdiction and transferred the case to the Tax Court. Upon the

Trustee’s motion, the trial court certified its order for interlocutory appeal, and

we accepted appellate jurisdiction.

Discussion and Decision
[6] The sole issue we address in this appeal is whether the Lake Superior Court has

subject matter jurisdiction over the present dispute. Subject matter jurisdiction

exists when the Indiana Constitution or a statute grants the court the power to

hear and decide cases of the general class to which any particular proceeding

belongs. Lorenz v. Anonymous Physician #1, 51 N.E.3d 391, 396 (Ind. Ct. App.

2016). Therefore, a motion to dismiss for lack of subject matter jurisdiction

presents a threshold question concerning the court’s power to act. Curry v.

D.A.L.L. Anointed, Inc., 966 N.E.2d 91, 95 (Ind. Ct. App. 2012), trans. denied.

“Our standard of review for a trial court’s grant or denial of a motion to dismiss

for lack of subject matter jurisdiction is a function of what occurred in the trial

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 court.” Berry v. Crawford, 990 N.E.2d 410, 414 (Ind. 2013). Where, as here, the

facts before the trial court are not in dispute, the question of subject matter

jurisdiction is one of law and we review the trial court’s ruling de novo. Id.

[7] All standard superior courts have “original and concurrent jurisdiction in all

civil cases and in all criminal cases[.]” Ind. Code § 33-29-1-1.5(1). However, in

1986, the legislature created the Indiana Tax Court to channel tax disputes into

a single specialized tribunal, thereby ensuring the uniform interpretation and

application of the tax laws. State ex. rel. Ind. Att'y Gen. v. Lake Superior Court, 820

N.E.2d 1240, 1247 (Ind. 2005), cert. denied. The legislature intended that all

challenges to the tax laws—regardless of the legal theory relied on—be tried in

the Tax Court. State v. Sproles, 672 N.E.2d 1353, 1357 (Ind. 1996).

Accordingly, the Tax Court is a court of limited jurisdiction that has exclusive

subject matter jurisdiction over “original tax appeals” which include “any case

that arises under the tax laws of Indiana and that is an initial appeal of a final

determination” of a relevant agency. Ind. Code § § 33-26-3-1, -3. Thus, there

are two statutory prerequisites to the Tax Court having exclusive subject matter

jurisdiction. State ex rel. Zoeller v. Aisin USA Mfg., Inc., 946 N.E.2d 1148, 1152

(Ind. 2011). First, the case must “arise under” the tax laws, and second, there

must be a “final determination” by a relevant agency. Id. If the Tax Court has

subject matter jurisdiction over a case, a trial court does not. Id.

[8] As for the first statutory prerequisite to the exclusive jurisdiction of the Tax

Court, a case “arises under” the tax laws if: (1) an Indiana tax statute creates a

right of action; or (2) the case principally involves collection of a tax or defenses

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 to that collection. Sproles, 672 N.E.2d at 1357. Our supreme court has

interpreted the “arises under” language broadly to include “any case

challenging the collection of a tax or assessment … whether the challenge is

premised on constitutional, statutory, or other grounds.” Aisin, 946 N.E.2d at

1153. Moreover, “the challenge need not be to the collection directly—

challenges to the earlier steps in the taxation or assessment process arise under

the tax laws.” Id.

[9] Other panels of this Court had occasion to consider the “arises under” concept

in Wayne Township v. Indiana Department of Local Government Finance, 865

N.E.2d 625 (Ind. Ct. App. 2007), clarified on rehearing, 869 N.E.2d 531, trans.

denied, and City of Fort Wayne v. Southwest Allen County Fire Protection District, 82

N.E.3d 299 (Ind. Ct. App. 2017), trans. denied (2018). In Wayne Township, we

sua sponte addressed the Hamilton Superior Court’s jurisdiction over the

Township’s lawsuit against the DLGF and the Marion County Auditor

challenging the DLGF’s calculation of the Township’s maximum permissible

property tax levy. 865 N.E.2d at 627.3 The Township challenged the DLGF’s

calculation because it effectively reduced the amount of tax revenues the

Township would receive from Marion County’s county option income tax

(“COIT”). Id. Although noting that the case was unique in that it involved

“warring governmental entities rather than a taxpayer versus the government,”

3
The petitioner in Wayne Township originally filed its lawsuit in the Tax Court. The Tax Court transferred
the case to the Marion Superior Court pursuant to the parties’ stipulation. The case was again transferred
pursuant to the parties’ stipulation to the Hamilton Superior Court. It is well settled that parties cannot
confer subject matter on a court by consent or agreement. Wayne Twp., 865 N.E.2d at 627.

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 we concluded that the case certainly arose under the tax laws of this state

because it “principally involve[d]” the Township’s attempt to collect a tax,

namely what it believed to be its fair share of Marion County’s COIT, based on

its assertion that the DLGF inaccurately calculated the Township’s maximum

permissible property tax levy. Id at 628. Thus, we concluded that the trial court

lacked subject matter jurisdiction. Id.4

[10] In contrast, in City of Fort Wayne, we concluded that the Allen Superior Court

did have subject matter jurisdiction over an annexation dispute even though the

allocation of tax revenues was at issue. 82 N.E.3d at 304. Specifically, the City

filed a complaint seeking a declaration that it was entitled to receive property

tax revenues relating to fire protection services from certain annexed territories.

We emphasized that, unlike in Wayne Township, the parties did not dispute any

tax assessment, did not request a change in tax levies, and were not attempting

to collect a tax. Id. Indeed, “[n]o calculation to determine a specific tax

assessment [needed to] be made, and no interpretation of tax laws [was]

required.” Id. Rather, the City’s dispute merely centered on the intended

recipient of taxes already assessed and collected and thus it was not

“quintessentially [a] tax matter.” Id. (citing Aisin, 946 N.E.2d at 1153).

4
In addition to concluding that the trial court lacked subject matter jurisdiction, we concluded that the Tax
Court had exclusive jurisdiction and ordered the case transferred to the Tax Court. As we will discuss more
fully below, we clarified on rehearing that whether the DLGF’s certification of the Township’s maximum
permissible property tax levy for purposes of the COIT distribution constituted a “final determination” for
purposes of the Tax Court’s jurisdiction remained at issue, and we did not have authority to transfer the case
to the Tax Court and mandate that it consider the merits. Wayne Twp., 869 N.E.2d at 533.

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[11] The present facts are similar to Wayne Township and dissimilar to City of Fort

Wayne. Based on the circumstances presented, we find the “arises under” test

“relatively straightforward and easy to apply” here. Aisin, 946 N.E.2d at 1153.

This case “principally involves” a collection of a tax or assessment, in that

Calumet Township challenges the DLGF’s calculation method for determining

the statewide average township assistance property tax rate. The calculation of

this rate unquestionably involves substantive tax laws and greatly affects each

township’s budgetary processes.5 See, e.g., Ind. Code §§ 6-1.1-17-3, 6-1.1-20.3-

6.7. The propriety of the DLGF’s tax rate calculation method is at the core of

this case, as it is crucial to the determination of the Town’s eligibility to transfer

from Calumet Township and avoid paying its share of the township assistance

tax. Although not a direct challenge to a tax collection, this case clearly

revolves around an earlier step in the taxation or assessment process. We

disagree with the Trustee that her legal theory that the DLGF violated

administrative rulemaking procedures in choosing its calculation method brings

this case within the trial court’s subject matter jurisdiction. Rather, this case

squarely involves interpretation and application of substantive tax law by a state

agency charged with implementing that law and, as such, “arises under” the tax

laws of this state.

5
The Trustee’s complaint makes clear that Calumet Township intentionally crafted a budget that would keep
the township assistance property tax rate less than twelve times the statewide average based on a weighted
average calculation method. Appellant’s App. at 17.

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[12] Having concluded that the present matter arises under the tax laws, we turn to

the second statutory prerequisite to the Tax Court’s exclusive jurisdiction,

namely that there be a “final determination” by a relevant agency such as the

DLGF.6 For purposes of Tax Court jurisdiction, a final determination is an

order that determines the rights of, or imposes obligations on, the parties as a

consummation of the administrative process. State Bd. of Tax Com’rs v. Ispat

Inland, Inc., 784 N.E.2d 477, 481 (Ind. 2003). This is a basic principle of

administrative law that a party is required to exhaust its administrative

remedies before an agency prior to obtaining judicial review. Id. The lack of a

“final determination” by a tax-related agency, which is equivalent to a failure to

exhaust administrative remedies, deprives the Tax Court of subject matter

jurisdiction. Wayne Twp., 865 N.E.2d at 628. Moreover, a party cannot

circumvent the “final determination” requirement basis for the Tax Court’s

exclusive jurisdiction over tax appeals by filing an action in a trial court instead

of with the relevant administrative agency. Marion Cty. Auditor v. Revival Temple

Apostolic Church, 898 N.E.2d 437, 445 (Ind. Ct. App. 2008), trans. denied (2009).

[13] Based on the limited record before us, we are unable to determine whether the

Trustee has exhausted her administrative remedies and obtained a “final

determination” by the DLGF to confer subject matter jurisdiction on the Tax

Court. So, what does this mean for the Lake Superior Court and its order

6
The DLGF is “a relevant agency whose ‘final determinations’” are within the exclusive subject matter
jurisdiction of the Tax Court. Wayne Twp., 865 N.E.2d at 629; see Ind. Tax Court Rule 3(C).

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 transferring this case to the Tax Court? As we clarified on rehearing in Wayne

Township, “whether or not there is a ‘final determination’ here by the DLGF,

this case does not belong in a court of general jurisdiction. It might not belong

in the Tax Court, either, if there is not a ‘final determination.’” 869 N.E.2d at

533. We concluded that we lacked authority to transfer the case to the Tax

Court and effectively mandate that it consider the merits, but noted that the Tax

Court, “with its greater expertise,” was best suited to determine if the DLGF’s

decision constituted an appealable final determination. Id. We will follow that

logic here as well.

[14] In sum, we agree with the Lake Superior Court’s conclusion that it lacks subject

matter jurisdiction. We express no opinion as to whether the Trustee has

exhausted her administrative remedies such that the Tax Court has acquired

jurisdiction at this procedural juncture. As neither the trial court nor this Court

has the authority to transfer this case and mandate that the Tax Court consider

the merits, we simply direct that the action in the trial court be dismissed for

lack of subject matter jurisdiction. Accordingly, we affirm that part of the trial

court’s order determining that it lacks subject matter jurisdiction, reverse that

part of the order transferring this case to the Tax Court, and remand to the trial

court with instructions to dismiss the case.

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[15] Affirmed in part, reversed in part, and remanded.

Bailey, J., and Brown, J., concur.

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