Austin Lakes Joint Venture v. Avon Utilities, Inc.

622 N.E.2d 970, 1993 Ind. App. LEXIS 1250, 1993 WL 426333
CourtIndiana Court of Appeals
DecidedOctober 25, 1993
DocketNo. 32A01-9211-CV-389
StatusPublished
Cited by1 cases

This text of 622 N.E.2d 970 (Austin Lakes Joint Venture v. Avon Utilities, Inc.) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Austin Lakes Joint Venture v. Avon Utilities, Inc., 622 N.E.2d 970, 1993 Ind. App. LEXIS 1250, 1993 WL 426333 (Ind. Ct. App. 1993).

Opinion

ROBERTSON, Judge.

Austin Lakes Joint Venture brought suit for breach of contract, fraud, promissory estoppel, and specific performance against [972]*972Avon Utilities, Inc. and Donald L. Groninger (Avon Utilities). The trial court granted Avon Utilities’ motion to dismiss for lack of subject matter jurisdiction. Austin Lakes appeals and raises the following issue:

Where (1) a sewage treatment utility fraudulently induces a developer to locate a subdivision in the utility’s service area by misrepresenting its capacity to serve the subdivision, and (2) no Indiana statute authorizes any administrative agency to resolve claims of fraud, contract breaches, promissory estoppel, and specific performance, is the customer barred by the Doctrines of Primary Jurisdiction and Exhaustion of Remedies from presenting these claims against the utility and its president in an Indiana court?

We reverse.

Austin Lakes is the developer of real estate known as Austin Lakes Estate Subdivision, which consists of 101 acres subdivided into 238 lots spread among five separate sections or phases. Avon Utilities operates a sanitary sewer service facility and sewage treatment plant and is the utility which would provide these services to the subdivision.

In connection with initial communications about the land, Austin Lakes received assurances, from Donald L. Groninger, President of Avon Utilities, that Avon Utilities would be able to service the 101 acres for the entire subdivision’s capacity through existing lines and that Avon Utilities was operating at only one-half of its then existing capacity. Groninger confirmed these representations after Austin Lakes had closed on the purchase of the first section of the subdivision and also represented that Avon Utilities was in good standing and was in compliance with applicable agency regulations. In light of these representations, Austin Lakes arranged for construction financing for the subdivision homes and arranged permits for approvals pertinent to the continuation of the development.

On or about August 11, 1989, the Indiana Department of Environmental Management (IDEM) informed Austin Lakes that its construction permit had been denied because of serious waste treatment noncompliance by Avon Utilities. Austin Lakes learned that the IDEM had cited, criticized, and fined Avon Utilities and had refused hookup approvals for the utility because Avon Utilities had discharged raw or excess sewage into the White Lick Creek and because it had agreed to provide sewage treatment for new developments beyond its capacity. In response to the IDEM’s actions, Avon Utilities had entered into an agreed order with the IDEM, apparently under the authority of Ind.Code 13-7-11-2, to make capital improvements to its plant.

After Austin Lakes had learned of these matters, Avon Utilities assured Austin Lakes that it could bring itself into compliance within two weeks by submitting a plan and working with the State. Avon Utilities then represented that it would do so. In light of this, Austin Lakes obtained lines of credit to continue with the Subdivision. Avon Utilities later represented that it had made commitments which would bring it into compliance to the State, but it had not done so. The denial of hookup approval brought the development to a standstill.

Austin Lakes eventually gained approval for the first section of its subdivision, which consists of forty-one hookups, but did not appeal the denial of its first application for the construction permit. Austin Lakes instead brought suit against Avon Utilities, which eventually filed a motion to dismiss the complaint pursuant to Ind.Trial Rule 12(B)(1): lack of jurisdiction over the subject-matter. Avon Utilities contended that the trial court had no subject matter jurisdiction over the case because Austin Lakes had not exhausted its administrative remedies with the Indiana Utility Regulatory Commission (IURC) or with the IDEM and because these agencies had primary jurisdiction over the issues presented. The trial court granted the motion, and Austin Lakes appeals.

When a trial court is confronted with a motion to dismiss under T.R. 12(B)(1), it must, then, decide upon the com[973]*973plaint, the motion, and any affidavits or other evidence submitted whether or not it possesses the authority to further adjudicate the action. Cooper v. County Board of Review of Grant County (1971), 150 Ind.App. 232, 276 N.E.2d 533. The motion, however, is not converted into a motion for summary judgment under T.R. 56. See Mid-States Aircraft Engines v. Mize Co., Inc. (1984), Ind.App., 467 N.E.2d 1242, 1246-1247. Federal appeals courts review de novo the dismissal of a complaint for failure to allege subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). Love v. U.S. (9th Cir.1989), 871 F.2d 1488. We will do likewise under our T.R. 12(B)(1).

Avon Utilities first contends that Austin Lakes should have appealed the IDEM’s denial of its permit and thereby have exhausted its administrative remedies. An exception to the general exhaustion rule exists, however, where the administrative remedy would be futile. Ahles v. Orr (1983), Ind.App., 456 N.E.2d 425. An appeal of the denial of Austin Lakes’ permit would have been futile because Avon Utilities could not service all of the lots, as it had promised to do, due to excess flows and noncompliance with its own authoritative permits. Because of these shortcomings, Avon Utilities was operating under an agreed order, apparently under I.C. 13-7-11-2, which was to bring it into compliance.

Also, Avon Utilities claims that Austin Lakes should have appealed the denial of the permit because, if the appeal were granted, the administrative law judge could have ordered hook-ups and thereby eliminated or ameliorated any damages or costs associated with delay in obtaining sewage disposal services. Avon Utilities claims the administrative law judge would likely have done so, as Austin Lakes gained approval for forty-one hookups some three months after the original denial. This claim, however, does not address the issue which is the basis of this appeal. We conclude below that the trial court improperly dismissed the ease for lack of subject matter jurisdiction. Avon Utilities’ mitigation of damages claim belongs in the trial court.

Finally, Avon Utilities claims that Austin Lakes really seeks a review and reversal of the permit denial “without giving IDEM the opportunity to resolve the issue and measure the impact on our environment.” Austin Lakes must, however, independent of the matters before the IURC, still apply for a construction permit before it can construct its sewer lines. If, as Avon Utilities is brought into capacity, it needs to make any capital alterations, then it may have to submit an application for a permit from the IDEM to do so. The IDEM will be involved, as usual, in the construction of the sewer and the service of the lots.

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Related

Austin Lakes Joint Venture v. Avon Utilities, Inc.
648 N.E.2d 641 (Indiana Supreme Court, 1995)

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Bluebook (online)
622 N.E.2d 970, 1993 Ind. App. LEXIS 1250, 1993 WL 426333, Counsel Stack Legal Research, https://law.counselstack.com/opinion/austin-lakes-joint-venture-v-avon-utilities-inc-indctapp-1993.