D.A.Y. Investments LLC, Andy's Truck & Equipment Co., Gold Coast Rand Development Co., Surplus Management Systems LLC, Gary II LLC and Andrew Young v. Lake County, Indiana

FILED
Jun 29 2018, 7:11 am

CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court

ATTORNEY FOR APPELLANTS ATTORNEY FOR APPELLEES
LAKE COUNTY AUDITOR,
Corbin R. Fowler
TREASURER AND COMMISSIONERS
Gary, Indiana
Randy H. Wyllie
Wieser & Wyllie, LLP
Schererville, Indiana
ATTORNEY FOR APPELLE
CALUMET TOWNSHIP ASSESSOR
JACKIE COLLINS
Kevin Chandler Smith
Smith Sersic
Munster, Indiana
ATTORNEYS FOR APPELLEE
LAKE COUNTY ASSESSOR
JEROME PRINCE
Tony Walker
Leanna Weissmann
The Walker Law Group, P.C.
Indianapolis, Indiana

IN THE
COURT OF APPEALS OF INDIANA

D.A.Y. Investments LLC, June 29, 2018
Andy’s Truck & Equipment Co., Court of Appeals Case No.
Gold Coast Rand Development 45A03-1709-PL-2122
Co., Surplus Management Appeal from the Lake Superior
Systems LLC, Gary II LLC and Court
Andrew Young, The Honorable Bruce D. Parent,
Appellants-Plaintiffs/Cross-Appellees, Judge
Trial Court Cause No.
v. 45D04-1601-PL-1

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 Lake County, Indiana, Treasurer
Peggy Holinga-Katona, Auditor
John Petalas, Commissioners
Roosevelt Allen, Jr., Gerry
Scheub, Michael Repay, and
Township Assessor Jackie
Collins,
Appellees-Defendants,

and
Assessor Jerome Prince,
Appellee-Defendant/Cross-Appellant.

Robb, Judge.

Case Summary and Issue
[1] D.A.Y. Investments, LLC; Andy’s Truck & Equipment Company; Gold Coast

Rand Development Company; Surplus Management Systems, LLC; Gary II,

LLC; and Andrew Young (collectively, “Owners”) sued Lake County, Indiana;

Peggy Holinga-Katona, Treasurer; Jerome Prince, Assessor; John Petalas,

Auditor; Roosevelt Allen, Jr., Gerry Scheub, and Michael Repay,

Commissioners; and Jackie Collins, Township Assessor (collectively, “Lake

County Defendants”), for specific performance of a settlement agreement the

parties entered into regarding taxes due on properties owned by the Owners.

The trial court granted the Lake County Defendants’ motion to dismiss alleging

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 lack of subject matter jurisdiction, finding the Owners’ claims were based on

disputes that should have been first addressed through an administrative

process. The Owners appeal, raising the following issue for our review:

whether the trial court abused its discretion in denying their motion to correct

error after the trial court granted the Lake County Defendants’ motion to

dismiss their complaint for lack of subject matter jurisdiction pursuant to

Indiana Trial Rule 12(B)(1). Concluding the trial court did not have subject

matter jurisdiction over this case arising under tax laws, we affirm.

Facts and Procedural History
[2] Young owns approximately 1,800 properties in Lake County either individually

or through his various business entities named above. In 2009, the Owners filed

voluntary petitions for bankruptcy in federal court in Illinois. As part of the

bankruptcy action, the Owners sought protection from Lake County with

respect to taxes owed on those properties. On February 29, 2012, the

bankruptcy court approved a written settlement agreement between the Owners

and the Lake County Defendants. The settlement agreement provided, in

pertinent part:

1. That attached hereto and marked Exhibit A is a listing of all
the properties that are the subject of the controversy herein . . . .
The sixth column consists of the assessed valuation that the
parties have agreed upon for the taxable years involved in each
property to and including 2010 taxes, payable in 2011. . . .

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 2. That pursuant to said Exhibit A, the parties now agree that
the following amounts are due to Lake County for all taxes on all
properties to and including 2010 taxes, payable 2011 . . . .

3. To resolve all of the above pending appeals the [Owners] and
the county assessor now agree as follows:

A. The [Owners] shall pay the following sum to Lake
County, Indiana: $904,954.58.
***
C. The payment of the sum listed in paragraph 3a above
shall settle all of the tax claims due and owing from the [Owners]
for all of the property and years identified in paragraph 2.

4. The parties further agree that the [Owners] herein will pay the
above stated amount over a period of twenty-four (24) months
subject to the following:

***

E. The [Owners] recognize that during the period of
scheduled payments as set forth above, any of the real estate
listed herein that they will continue to be the fee simple owners of
will have taxes due and owing for the calendar year 2011,
payable 2012 and 2012, payable 2013.

***

5. That the parties further agree that the property classification
and assessed valuations used herein on each and every parcel of
land are accepted by the parties as the basis upon which any tax
increases or decreases occur and that these properties will be
treated in the exact same manner as any other properties in Lake
County, using the same methodologies as any other properties in

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 Lake County based on the agreed property classification
assessment valuation found herein. Any property classified as
residential will be taxed at the residential rate. Property classified
as commercial or industrial will be taxed at the commercial rate.

6. That the parties further agree and understand that there will
be a general reassessment of all real estate in Lake County,
Indiana in 2013 and that these properties will be treated in the
same manner using the same methodologies as all other
properties in Lake County, Indiana for said reassessment.

***

9. This agreement covers all of the properties listed in said
Exhibit A, and binds the parties, their heirs, successors, agents,
and authorized personnel to its terms and conditions, and shall
be enforceable in this court or any court in Lake County, Indiana
that has constitutional or statutory authority for the venue of any
cause of action that may be necessary to enforce this agreement.

Appellants’ Appendix, Volume 3 at 4-6.

[3] Pursuant to the agreement, the Owners paid the $904,954.58 due over two

years.1 On December 30, 2016, the Owners filed a complaint in three counts

against the Lake County Defendants: Count I, for specific performance; Count

1
It appears part of the agreement was to reduce or discount the amount of taxes Owners owed on the parcels.
In other words, the Lake County Defendants accepted an amount less than the actual amount due and the
Owners were brought current through the 2010/payable in 2011 tax year only by agreement.

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II for bad faith failure to settle a claim; and Count III in the alternative to

determine the validity, priority, and extent of liens.2 Count I alleged:

22. [Lake County] Defendants have failed and refused to do
what was required of them under the Agreement, including but
not limited to; failing to re-classify each property as agreed,
failing to assess the properties at the assessed valuations arrived
at between the parties, failing to acknowledge and bill for each
property at the agreed upon rates, failing to properly credit the
tax payments made, failing to waive penalties and interest not
specifically provided for in the Agreement, failing to properly
publish the correct classifications and valuations agreed upon to
the general public, failing to use the same methodologies for
general reassessments to [Owners’] properties as apply to other
properties in Lake County, Indiana, and failing and refusing to
cooperate with [Owners] in addressing these issues.

Appellants’ App., Vol. 2 at 55. Count III alleged:

32. [Owners] dispute the amount of the real estate tax lien claims
of Lake County, Indiana and the Lake County Treasurer.

***

34[-36]. More specifically, the Lake County [Defendants’] failure
and refusal to issue tax bills to [Owners] based on the assessed
valuations and proper classifications that the parties agreed to in
the Agreement approved by the bankruptcy court on February

2
In 2014, the Owners again sought bankruptcy protection and on May 15, 2015, filed in the bankruptcy court
a complaint against the Lake County Defendants for specific performance and damages based on the
settlement agreement. The settlement agreement itself stated that it was enforceable in bankruptcy court or in
any Lake County court that has jurisdiction. Because of a procedural defect, the underlying bankruptcy was
dismissed, and the complaint against the Lake County Defendants was also dismissed.

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 29, 2012 has resulted in incorrect and excessive taxes being levied
against [Owners] on their properties for taxes payable in the year
2012[, 2013, and 2014].

***

37. The Lake County [Defendants’] failure and refusal to issue
tax bills to [Owners] based on the assessed valuations and proper
classifications that the parties agreed to in the Agreement
approved by the bankruptcy court on February 29, 2012 will
certainly result in incorrect and excessive taxes being levied
against [Owners] on their properties for taxes payable in the year
2015, as well.

Id., Vol. 2 at 57-58.

[4] The Lake County Defendants filed a motion to dismiss alleging lack of subject

matter jurisdiction.3 After a hearing, the trial court issued an order granting the

motion to dismiss:

18. The Court found that the [Owners’] claims were all based
upon disputes with the [Lake County Defendants] over tax lien
amounts, incorrect or excessive taxes, errors resulting in
improper tax bills, improper tax assessments, improper tax
classifications, incorrect tax valuations, and their appeal of
certain tax assessments. These allegations are principally

3
The Lake County Defendants also filed motions to dismiss premised on the individually named defendants
not being the real parties in interest. The trial court denied those motions as moot. Lake County Assessor
Jerome Price has filed a cross-appeal raising the issue of whether he should be dismissed from this litigation.
Because of our resolution of the Owners’ appeal, we need not address this issue, as the entire lawsuit is
dismissed. Although Price invites us to answer the question to “provide clarity for other Indiana
practitioners,” Joint Brief of Appellees at 20, we decline to do so, as we do not issue advisory opinions. INS
Investigations Bureau, Inc. v. Lee, 709 N.E.2d 736, 742 (Ind. Ct. App. 1999), trans. denied.

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 involved with the collection of a tax or defenses to those attempts
at collection.

19. The legislature provided the [Owners] with an administrative
procedure for the review and appeal of tax assessments under IC
6-1.1-15-1.

20. The [Owners] chose to file the present lawsuit without first
availing themselves to those administrative remedies created for
their protection.

***

22. Accordingly, this Court found that it lacked subject matter
jurisdiction to hear this matter against any of the [Lake County
Defendants].

Id., Vol. 2 at 36. The Owners filed a motion to correct error. The trial court

held a hearing and then issued an order denying the motion:

22. After a careful re-evaluation of the underlying facts and the
underlying motions, and a review of the updated filings of each
party the Court found that it did not abuse its discretion under
Trial Rule 59 as its decision to dismiss for lack of jurisdiction was
logical and consistent with the facts and circumstances of the
present case, and the inferences which could be drawn therefrom.

Id., Vol. 2 at 24. Owners now appeal the trial court’s denial of its motion to

correct errors related to its dismissal of their complaint.

Discussion and Decision

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 I. Standard of Review
[5] Generally, a trial court has wide discretion to correct errors, and we will reverse

only for an abuse of that discretion. Paulsen v. Malone, 880 N.E.2d 312, 313

(Ind. Ct. App. 2008). An abuse of discretion occurs when the trial court’s

action is against the logic and effect of the facts and circumstances before it and

the inferences that may be drawn therefrom, or if it is based on impermissible

reasons or considerations. Id.

[6] In arguing that the trial court abused its discretion by denying their motion to

correct error, the Owners assert their complaint is grounded in contract—not

tax—law, and the trial court had jurisdiction to enforce the settlement

agreement at issue. The trial court agreed with the Lake County Defendants

that the complaint asserted issues of tax assessments and amounts, and found it

lacked subject matter jurisdiction because the Owners failed to exhaust their

administrative remedies. We apply a de novo standard of review to issues of

law such as subject matter jurisdiction. Jackson v. Holiness, 961 N.E.2d 48, 50

(Ind. Ct. App. 2012). Subject matter jurisdiction is the power of a given

tribunal to hear and determine a general class of cases. Id. Subject matter

jurisdiction is conferred by the constitution or state statutes. Id.

II. Subject Matter Jurisdiction
[7] The primary issue in this appeal is whether the Lake Superior Court has

jurisdiction over this case. The Lake Superior Court has subject matter

jurisdiction over all civil and criminal cases, Ind. Code § 33-29-1.5-2(1), except

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 where exclusive jurisdiction has been conferred by law upon a different court,

State ex rel. Zoeller v. Aisin USA Mfg., Inc., 946 N.E.2d 1148, 1152 (Ind. 2011). In

creating the Indiana Tax Court in 1986, 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). The Tax

Court has limited but exclusive jurisdiction over any case that “arises under”

the tax laws and that is an initial appeal of a final determination by a relevant

agency. Ind. Code § 33-26-3-1. If the Tax Court has jurisdiction, the trial court

does not. Aisin USA Mfg., Inc., 946 N.E.2d at 1152. Our supreme court has

interpreted the “arise 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.” Id. at 1153. The challenge need

not be to the collection of taxes directly; challenges to earlier steps in the

taxation or assessment process also arise under the tax laws. Id.

[8] The Owners repeatedly state that this case is grounded in contract law and

therefore is not a tax law case. See, e.g., Transcript at 45 (Owners’ counsel

stating at motion to correct error hearing, “This proceeding is subject to

contract law. Contract law, equitable law, but not tax court.”); Appellants’

Brief at 8 (stating the Owners’ claim “is a breach of contract claim against Lake

County in which [they] assert that Lake County failed to satisfy the terms of the

Settlement Agreement”). They argue the settlement agreement required the

Lake County Defendants to assess their 1,800 parcels at the values agreed to

and listed in Exhibit A, that reassessment of the parcels at those values was a

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material term of the settlement agreement, and that the Lake County

Defendants’ failure to do so was a material breach of the agreement. They

argue tax laws have nothing to do with whether the agreement was breached. If

the settlement agreement set forth agreed assessed values for future years, then

it would be within the trial court’s purview to say whether the Lake County

Defendants breached the agreement and to order the Lake County Defendants

to collect taxes based on those agreed assessed values. However, paragraph 1 of

the settlement agreement specifically states that the attached list of properties

and assessed values “consists of the assessed valuation that the parties have

agreed upon for the taxable years involved in each property to and including 2010

taxes, payable in 2011.” Appellants’ App., Vol. 3 at 4 (emphasis added). The

Lake County Defendants made no agreement to assess the Owner’s property at

a certain value going forward. Instead, pursuant to paragraph 5, the parties

agreed the properties “will be treated in the exact same manner as any other

properties in Lake County, using the same methodologies . . . .” Id., Vol. 3 at

6.4 Therefore, it is not possible to determine if the Lake County Defendants

appropriately assessed the Owners’ property based on the settlement agreement

alone. The general manner and methodology of tax assessment in Lake County

determines the appropriate assessments for the Owners’ property.

4
The Owners stated at the motion to dismiss hearing that they “kept trying and trying and trying to get those
properties reassessed,” but conceded that “going forward [they] would accept any changes in valuations that
were required by law to any other property, just do it fairly. [They] didn’t expect those values to stay the
same.” Transcript at 20-21.

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[9] As the supreme court stated in Aisin USA Mfg., Inc., if the case “principally

involves the collection of a tax or defenses to the collection of a tax,” it arises

under the tax laws and is subject to the Tax Court’s exclusive jurisdiction

regardless of the grounds on which the challenge is premised. 946 N.E.2d at

1153-54. That the Owners’ have styled their claim as a breach of contract does

not negate the fact that it is, in essence, a claim challenging the assessment or

collection of taxes as “incorrect and excessive.” Appellants’ App., Vol. 2 at 57-

58.

[10] Because this is a case claiming error in the assessed value of property, Indiana

Code chapter 6-1.1-15 governs procedures for review and appeal of the

assessments. Ind. Code § 6-1.1-15-1.1(a)(1). There are several steps, starting

with the taxpayer seeking review by filing notice with the relevant county or

township official, Ind. Code § 6-1.1-15-1.1(a), and ending with a final

determination by the Indiana Board of Tax Review, Ind. Code § 6-1.1-15-4.

Once the Indiana Board of Tax Review has rendered a final determination, the

taxpayer may file a petition for judicial review with the Indiana Tax Court.

Ind. Code § 6-1.1-15-5. It does not appear the Owners have availed themselves

of this administrative process for any tax year of which they now complain the

assessments were in error.

[11] Where applicable, the requirement that a party exhaust its administrative

remedies prior to seeking judicial review of an agency action is a jurisdictional

prerequisite to judicial review. Outboard Boating Club of Evansville, Inc. v. Ind.

State Dep’t of Health, 952 N.E.2d 340, 343 (Ind. Ct. App. 2011), trans. denied.

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 Failure to exhaust administrative remedies is therefore a defect in subject matter

jurisdiction. Marion Cty. Auditor v. Revival Temple Apostolic Church, 898 N.E.2d

437, 445 (Ind. Ct. App. 2008), trans. denied. As it is the taxpayer’s responsibility

to exhaust all administrative remedies, the taxpayer cannot “circumvent the

‘final determination’ requirement basis for the Indiana Tax Court’s

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

of with the relevant administrative agency.” Id. A trial court is not vested with

subject matter jurisdiction simply based on the lack of a final determination by a

tax-related agency. Id. In other words, the subject matter of the Owners’ claim

is one within the exclusive jurisdiction of the Tax Court. The fact that the

Owners may have forfeited an appeal to the Tax Court by failing to avail

themselves of that process for adjudicating their claim does not give the Lake

Superior Court subject matter jurisdiction over this case.

Conclusion
[12] The trial court did not abuse its discretion in denying the Owners’ motion to

correct error of the order granting the Lake County Defendants’ motion to

dismiss. The judgment of the trial court is affirmed.

[13] Affirmed.

Najam, J., and Altice, J., concur.

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