ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENTS: GEROLD L. STOUT MARILYN S. MEIGHEN STOUT LAW FIRM ATTORNEY AT LAW Lowell, IN Carmel, IN
BRIAN A. CUSIMANO ATTORNEY AT LAW Indianapolis, IN
FILED IN THE Jun 05 2020, 3:20 pm
INDIANA TAX COURT CLERK Indiana Supreme Court Court of Appeals and Tax Court
DIOCESE OF NEWTON FOR THE ) MELKITES IN THE USA, INC., ) ) Plaintiff, ) ) v. ) Cause No. 20T-TA-00001 ) PEGGY HOLINGA KATONA, in her ) capacity as LAKE COUNTY TREASURER, ) and JOHN PETALAS, in his capacity ) as LAKE COUNTY AUDITOR, ) ) Defendants. )
ORDER ON DEFENDANTS’ MOTION TO DISMISS
FOR PUBLICATION June 5, 2020
WENTWORTH, J.
On January 15, 2020, the Plaintiff, Diocese of Newton for the Melkites in the USA,
Inc., filed a Complaint with this Court against the Defendants, the Lake County Treasurer
and the Lake County Auditor, alleging breach of contract regarding the settlement of a tax sale.1 Thereafter, the Defendants filed a motion to dismiss the Diocese’s case for,
among other things, lack of subject matter jurisdiction pursuant to Indiana Trial Rule
12(B)(1). The Court GRANTS the Defendants’ motion to dismiss.
BACKGROUND
In its Complaint, the Diocese claims that on or about March 25, 2014, it negotiated
a settlement agreement with the Defendants, pursuant to Indiana Code § 6-1.1-24-1.2, to
remove penalties from delinquent taxes owed on land located in Hammond, Indiana and
to remove the property from the Auditor’s tax sale. (Pl.’s Compl. at 2 ¶ 5.) Moreover, the
Diocese asserts that on or about that same date, it remitted the funds agreed to in the
settlement agreement; however, despite its performance, the Defendants did not properly
apply the funds and remove the penalties to which they agreed. (Pl.’s Compl. at 2 ¶¶ 7-
9.) Because the Diocese believed “it had a valid enforceable agreement with the
Defendants, [it believed it] was precluded from exercising its right to participate in the Tax
Amnesty Program provided for in I.C. 6-8.1-3-17(c) which occurred [in the Fall of] of
2015.” (Pl.’s Compl. at 3 ¶ 11.) As a result, the Diocese requested that this Court enter
“judgment against Defendants in an amount commensurate with its damages, an[d issue
an] Order compelling Defendants[’] specific performance to avoid recurring fines and
penalties plus costs and all other relief deemed just and proper in the premises.” (Pl.’s
Compl. at 3.)
1 The Tax Court uses different terminology than the courts of general jurisdiction, designating the document initiating litigation as a Petition, not a Complaint; a Plaintiff as a Petitioner; and the Defendant as a Respondent. See, e.g., Ind. Tax Court Rules 3-4. Throughout this Order, the Court will use the terminology used by the Petitioner even though it is incorrect.
2 On March 23, 2020, the Defendants filed a motion to dismiss the Diocese’s case
for lack of subject matter jurisdiction pursuant to Indiana Trial Rule 12(B)(1).2 On May
21, 2020, after briefing on the motion was complete, the Court took the matter under
advisement.
LAW & ANALYSIS
Subject matter jurisdiction is the power of a court to hear and determine a particular
class of cases. K.S. v. State, 849 N.E.2d 538, 540 (Ind. 2006). Subject matter jurisdiction
is not conferred upon a court by consent or agreement of the parties to litigation; rather,
it can only be conferred upon a court by the Indiana Constitution or by statute. State v.
Sproles, 672 N.E.2d 1353, 1356 (Ind. 1996). If a court does not have subject matter
jurisdiction, any judgment that it renders is void. State Bd. of Tax Comm’rs v. Ispat Inland,
Inc., 784 N.E.2d 477, 481 (Ind. 2003) (citation omitted).
The Indiana Tax Court is a court of limited jurisdiction. IND. CODE § 33-26-3-1
(2020). It exercises subject matter jurisdiction over two types of cases: 1) original tax
appeals and 2) actions for which jurisdiction has otherwise been specifically conferred
upon it by statute. See generally Ind. Tax Court Rule 2.
1. Jurisdiction Over Original Tax Appeals
This Court exercises exclusive jurisdiction over original tax appeals, i.e., any case
that 1) arises under the tax laws of Indiana and 2) is an initial appeal of a final
determination made by the Indiana Department of State Revenue (DOR), the Indiana
Board of Tax Review (Indiana Board), or the Department of Local Government Finance
2 The motion also asserted, in the alternative, that the Diocese’s case must be dismissed pursuant to Indiana Trial Rule 12(B)(6) for failure to state a claim upon which relief can be granted. (See Defs.’ Mot. Dismiss; Defs.’ Corrected Br. Supp. Mot. Dismiss at 6.) Given the Court’s ruling today, this alternative ground for dismissal will not be addressed. 3 (DLGF). I.C. § 33-26-3-1; Tax Ct. R. 2. If a litigant fails to comply with either one of these
statutory requirements when initiating an original tax appeal, the Court does not have
jurisdiction to hear the appeal. IND. CODE § 33-26-6-2(a) (2020).
The first of these two requirements is met when a case “‘arises under’ the tax laws
[because]: 1) an Indiana tax statute creates the right of action; or 2) the case principally
involves collection of a tax or defenses to that collection.” Sproles, 672 N.E.2d at 1357.
Accordingly, this prong acknowledges the Tax Court’s special expertise in the
interpretation and application of Indiana’s tax laws.
The second requirement, that the case is an initial appeal of a final determination
of one of Indiana’s three administrative tax agencies, satisfies the principle, basic to all
administrative law, that a party seeking judicial relief from an agency action must first
establish that all administrative remedies have been exhausted. See Ispat Inland, 784
N.E.2d at 482. Consequently, “[f]ailure to exhaust administrative remedies is a defect in
subject matter jurisdiction” and, accordingly, a court will be “completely ousted” from
hearing the case at all. State ex rel. Att’y Gen. v. Lake Super. Ct., 820 N.E.2d 1240, 1247
(Ind. 2005), cert. denied; Ispat Inland, 784 N.E.2d at 482. Thus, the lack of a final
determination from the DOR, the Indiana Board, or the DLGF is the equivalent of a failure
to exhaust administrative remedies that deprives this Court of subject matter jurisdiction
in a case.
Here, the Diocese contends that its case arises under the tax laws of Indiana
because it involves the interpretation, application, and enforcement of Indiana Code § 6-
1.1-24-2, which allows the removal of property from being sold at a tax sale if the taxpayer
and the county treasurer “agree to a mutually satisfactory arrangement” for the payment
4 of delinquent property taxes. (See Pl.’s Br. Supp. Resp. Defs.’ Mot. Dismiss (“Pl.’s Br.”)
at 1-3.) The Diocese concedes, however, that its lawsuit does not derive from a final
determination of the DOR, the Indiana Board, or the DLGF. (See Pl.’s Br. at 4-5.) Indeed,
the Diocese acknowledges that it did not apply for review by any of those administrative
agencies. (See Pl.’s Br. at 4-5 (acknowledging that tax sale disputes generally have been
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ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENTS: GEROLD L. STOUT MARILYN S. MEIGHEN STOUT LAW FIRM ATTORNEY AT LAW Lowell, IN Carmel, IN
BRIAN A. CUSIMANO ATTORNEY AT LAW Indianapolis, IN
FILED IN THE Jun 05 2020, 3:20 pm
INDIANA TAX COURT CLERK Indiana Supreme Court Court of Appeals and Tax Court
DIOCESE OF NEWTON FOR THE ) MELKITES IN THE USA, INC., ) ) Plaintiff, ) ) v. ) Cause No. 20T-TA-00001 ) PEGGY HOLINGA KATONA, in her ) capacity as LAKE COUNTY TREASURER, ) and JOHN PETALAS, in his capacity ) as LAKE COUNTY AUDITOR, ) ) Defendants. )
ORDER ON DEFENDANTS’ MOTION TO DISMISS
FOR PUBLICATION June 5, 2020
WENTWORTH, J.
On January 15, 2020, the Plaintiff, Diocese of Newton for the Melkites in the USA,
Inc., filed a Complaint with this Court against the Defendants, the Lake County Treasurer
and the Lake County Auditor, alleging breach of contract regarding the settlement of a tax sale.1 Thereafter, the Defendants filed a motion to dismiss the Diocese’s case for,
among other things, lack of subject matter jurisdiction pursuant to Indiana Trial Rule
12(B)(1). The Court GRANTS the Defendants’ motion to dismiss.
BACKGROUND
In its Complaint, the Diocese claims that on or about March 25, 2014, it negotiated
a settlement agreement with the Defendants, pursuant to Indiana Code § 6-1.1-24-1.2, to
remove penalties from delinquent taxes owed on land located in Hammond, Indiana and
to remove the property from the Auditor’s tax sale. (Pl.’s Compl. at 2 ¶ 5.) Moreover, the
Diocese asserts that on or about that same date, it remitted the funds agreed to in the
settlement agreement; however, despite its performance, the Defendants did not properly
apply the funds and remove the penalties to which they agreed. (Pl.’s Compl. at 2 ¶¶ 7-
9.) Because the Diocese believed “it had a valid enforceable agreement with the
Defendants, [it believed it] was precluded from exercising its right to participate in the Tax
Amnesty Program provided for in I.C. 6-8.1-3-17(c) which occurred [in the Fall of] of
2015.” (Pl.’s Compl. at 3 ¶ 11.) As a result, the Diocese requested that this Court enter
“judgment against Defendants in an amount commensurate with its damages, an[d issue
an] Order compelling Defendants[’] specific performance to avoid recurring fines and
penalties plus costs and all other relief deemed just and proper in the premises.” (Pl.’s
Compl. at 3.)
1 The Tax Court uses different terminology than the courts of general jurisdiction, designating the document initiating litigation as a Petition, not a Complaint; a Plaintiff as a Petitioner; and the Defendant as a Respondent. See, e.g., Ind. Tax Court Rules 3-4. Throughout this Order, the Court will use the terminology used by the Petitioner even though it is incorrect.
2 On March 23, 2020, the Defendants filed a motion to dismiss the Diocese’s case
for lack of subject matter jurisdiction pursuant to Indiana Trial Rule 12(B)(1).2 On May
21, 2020, after briefing on the motion was complete, the Court took the matter under
advisement.
LAW & ANALYSIS
Subject matter jurisdiction is the power of a court to hear and determine a particular
class of cases. K.S. v. State, 849 N.E.2d 538, 540 (Ind. 2006). Subject matter jurisdiction
is not conferred upon a court by consent or agreement of the parties to litigation; rather,
it can only be conferred upon a court by the Indiana Constitution or by statute. State v.
Sproles, 672 N.E.2d 1353, 1356 (Ind. 1996). If a court does not have subject matter
jurisdiction, any judgment that it renders is void. State Bd. of Tax Comm’rs v. Ispat Inland,
Inc., 784 N.E.2d 477, 481 (Ind. 2003) (citation omitted).
The Indiana Tax Court is a court of limited jurisdiction. IND. CODE § 33-26-3-1
(2020). It exercises subject matter jurisdiction over two types of cases: 1) original tax
appeals and 2) actions for which jurisdiction has otherwise been specifically conferred
upon it by statute. See generally Ind. Tax Court Rule 2.
1. Jurisdiction Over Original Tax Appeals
This Court exercises exclusive jurisdiction over original tax appeals, i.e., any case
that 1) arises under the tax laws of Indiana and 2) is an initial appeal of a final
determination made by the Indiana Department of State Revenue (DOR), the Indiana
Board of Tax Review (Indiana Board), or the Department of Local Government Finance
2 The motion also asserted, in the alternative, that the Diocese’s case must be dismissed pursuant to Indiana Trial Rule 12(B)(6) for failure to state a claim upon which relief can be granted. (See Defs.’ Mot. Dismiss; Defs.’ Corrected Br. Supp. Mot. Dismiss at 6.) Given the Court’s ruling today, this alternative ground for dismissal will not be addressed. 3 (DLGF). I.C. § 33-26-3-1; Tax Ct. R. 2. If a litigant fails to comply with either one of these
statutory requirements when initiating an original tax appeal, the Court does not have
jurisdiction to hear the appeal. IND. CODE § 33-26-6-2(a) (2020).
The first of these two requirements is met when a case “‘arises under’ the tax laws
[because]: 1) an Indiana tax statute creates the right of action; or 2) the case principally
involves collection of a tax or defenses to that collection.” Sproles, 672 N.E.2d at 1357.
Accordingly, this prong acknowledges the Tax Court’s special expertise in the
interpretation and application of Indiana’s tax laws.
The second requirement, that the case is an initial appeal of a final determination
of one of Indiana’s three administrative tax agencies, satisfies the principle, basic to all
administrative law, that a party seeking judicial relief from an agency action must first
establish that all administrative remedies have been exhausted. See Ispat Inland, 784
N.E.2d at 482. Consequently, “[f]ailure to exhaust administrative remedies is a defect in
subject matter jurisdiction” and, accordingly, a court will be “completely ousted” from
hearing the case at all. State ex rel. Att’y Gen. v. Lake Super. Ct., 820 N.E.2d 1240, 1247
(Ind. 2005), cert. denied; Ispat Inland, 784 N.E.2d at 482. Thus, the lack of a final
determination from the DOR, the Indiana Board, or the DLGF is the equivalent of a failure
to exhaust administrative remedies that deprives this Court of subject matter jurisdiction
in a case.
Here, the Diocese contends that its case arises under the tax laws of Indiana
because it involves the interpretation, application, and enforcement of Indiana Code § 6-
1.1-24-2, which allows the removal of property from being sold at a tax sale if the taxpayer
and the county treasurer “agree to a mutually satisfactory arrangement” for the payment
4 of delinquent property taxes. (See Pl.’s Br. Supp. Resp. Defs.’ Mot. Dismiss (“Pl.’s Br.”)
at 1-3.) The Diocese concedes, however, that its lawsuit does not derive from a final
determination of the DOR, the Indiana Board, or the DLGF. (See Pl.’s Br. at 4-5.) Indeed,
the Diocese acknowledges that it did not apply for review by any of those administrative
agencies. (See Pl.’s Br. at 4-5 (acknowledging that tax sale disputes generally have been
filed in the county circuit and superior courts of the county where the property is located
for resolution).) Consequently, the Diocese’s case is not an original tax appeal subject to
this Court’s jurisdiction.
2. Other Jurisdiction Conferred By Statute
In addition to original tax appeals, the General Assembly has given the Tax Court
“any other jurisdiction conferred by statute.” IND. CODE § 33-26-3-2 (2020). The Diocese
contends that Indiana Code § 6-1.1-24-4.6 confers jurisdiction upon this Court to hear its
appeal. (See Pl.’s Br. at 5-6.)
The Diocese explains that a court has statutory authority to resolve an issue
regarding a tax sale because “[a]nnually, the county treasurer and the county auditor shall
make application for judgment and order for [a tax] sale. The application shall be made
as one (1) cause of action to any court of competent jurisdiction.” (See Pl.’s Br. at 5-6
(quoting IND. CODE § 6-1.1-24-4.6(b) (2020) (emphasis added)).) Due to the Tax Court’s
expertise regarding the tax laws of Indiana, the Diocese reasons that “the only court with
competent jurisdiction to interpret and apply a tax statute is the Tax Court.” (Pl.’s Br. at
7 (emphasis added).) The Court, however, does not find the Diocese’s rationale
persuasive.
5 The use of the word “any” preceding the phrase “court of competent jurisdiction” in
Indiana Code § 6-1.1-24-4.6(b) indicates that more than one court is able to resolve an
issue pertaining to a tax sale. As the Diocese has acknowledged, issues involving tax
sales are typically heard in Indiana’s circuit and superior courts – courts of general
jurisdiction – in the county where the subject property is located. (See Pl.’s Br. at 4-5.)
While this practice would not preclude the Tax Court from being “a court of competent
jurisdiction” capable of resolving tax sale issues, the plain statutory language in the Tax
Court’s enabling statutes provides otherwise. See, e.g., Johnson Cty. Farm Bureau
Co-op. Ass’n, Inc. v. Indiana Dep’t of State Revenue, 568 N.E.2d 578, 581 (Ind. Tax Ct.
1991) (explaining that statutory words and phrases shall be taken in their plain ordinary,
and usual sense), aff’d, 585 N.E.2d 1336 (Ind. 1992).
Indiana Code § 33-26-3-3 instructs that in cases other than original tax appeals,
“[t]he tax court does not have jurisdiction . . . unless . . . the tax court has otherwise been
specifically assigned jurisdiction by statute.” IND. CODE § 33-26-3-3(2) (2020) (emphasis
added). In other words, for a statute to confer jurisdiction upon the Tax Court, it must do
so with specificity.
For example, the General Assembly conferred jurisdiction to the Tax Court to hear
appeals from a probate court regarding Indiana’s former inheritance tax.3 Under the
relevant statutory scheme, determinations of an individual’s inheritance tax liability were
first determined by the DOR and then by the appropriate county probate court. See, e.g.,
IND. CODE § 6-4.1-1-2 (2020) (defining probate court for purposes of the tax); IND. CODE §
6-4.1-5-8 (2020) (indicating that a taxpayer who challenges a DOR determination of
3 The inheritance tax was repealed in 2013. See, e.g., IND. CODE § 6-4.1-1-0.5 (2020). See also https://www.in.gov/dor/files/inheritance.pdf (last visited May 29, 2020). 6 inheritance tax due does so with the appropriate probate court). Jurisdiction over appeals
from the probate court involving inheritance tax were specifically conferred upon this
Court by the explicit language of Indiana Code § 6-4.1-7-7: “A probate court’s
redetermination of inheritance tax . . . may be appealed to the tax court in accordance
with the rules of appellate procedure.” IND. CODE § 6-4.1-7-7 (2020) (emphasis added).
In another example, although the requirements of an original tax appeal are not
met, the General Assembly conferred jurisdiction to the Tax Court to decide appeals still
pending with the Indiana Board beyond their statutory deadline for issuing a final
determination. See IND. CODE § 6-1.1-15-4(e)-(h) (2020) (providing that the Indiana Board
must conduct hearings and issue final determinations on appeals within a certain amount
of time). If the Indiana Board fails to meet the prescribed deadlines, the party that initiated
the appeal “may . . . petition for judicial review under [Indiana Code § 6-1.1-15-5].” IND.
CODE § 6-1.1-15-4(i)(2) (2020). In turn, Indiana Code § 6-1.1-15-5 states that “[i]n order
to obtain judicial review under this section, a party must[] file a petition with the Indiana
tax court[.]” IND. CODE § 6-1.1-15-5(b)(1) (2020) (emphasis added).
Therefore, as Indiana Code § 33-26-3-3(2) provides and the examples illustrate, a
statute cannot confer jurisdiction upon this Court of limited jurisdiction unless the statutory
language “specifically assigns jurisdiction” to the Tax Court. Because Indiana Code § 6-
1.1-24-4.6(b) does not do so, it cannot confer subject matter jurisdiction to the Tax Court.
7 CONCLUSION
For the aforementioned reasons, the Court does not have subject matter
jurisdiction over the Diocese’s case. As a result, the case is now DISMISSED.
SO ORDERED this 5th day of June, 2020.
Martha Blood Wentworth, Judge Indiana Tax Court
DISTRIBUTION: Gerold L. Stout, Marilyn S. Meighen, Brian A. Cusimano