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Forced Sewer Connection Case Does Not Constitute a Public Lawsuit; $9 Million Bond Not Required
Posted in Government

The Indiana Court of Appeals recently found that a lawsuit by property owners against a utility does not constitute a “public lawsuit.” This distinction is important because a public lawsuit requires that a bond be posted.  In Buse v. Luce Twp. Regional Sewer District, issued August 9, 2011, the property owners can proceed with their lawsuit against a regional sewer district without the need to post a $9 million bond (the sewer district alleged that the lawsuit jeopardized a $9 million grant from the Office of Community and Rural Assistance). In Buse, the sewer district announced plans to extend a sewer line across a number of properties, including the plaintiffs’ properties. The sewer district required connections despite allegedly functioning septic systems. The sewer district also enacted enhanced fees for property owners who did not provide free easements. In addition, the sewer district sought fees from properties adjacent to the sewer line that would be beneficiaries. The sewer district argued the lawsuit filed by the property owners constituted a public lawsuit, which under statute requires a bond to proceed, in this case, a $9 million bond. The trial court agreed. In reversing the trial court, the court relied on a 1999 Indiana Supreme Court case that outlined two reasons why the suit was not a “public lawsuit.”

First, the property owners did not bring the lawsuit as taxpayers, but rather as individuals. Second, and most importantly, the property owners brought the lawsuit “to protect only their individual interests in their own real property.” This was the controlling factor, according to the court. The property owners were attempting to avoid the imposition of additional fees and costs directly against them and to avoid penalties for excluding the regional sewer district from their properties. It is important to note that while the case involved a regional sewer district, the holding also applies to municipalities.

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