The Indiana Court of Appeals ruled that a 2006 revenue sharing contract between the City of Lawrenceburg and Franklin County was void from the start.
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(Lawrenceburg, Ind.) - The Indiana Court of Appeals has reversed a lower court’s ruling and determined that the City of Lawrenceburg does not have to write a $500,000 check to Franklin County each year.
The city and county inked an agreement in 2006 that Lawrenceburg would provide a half-million to Franklin County. However, then-Mayor Dennis Carr’s administration moved in 2013 to cease the payments as the city’s riverboat gaming revenue fell markedly from the levels it had been in 2006.
But the agreement never included an expiration date or cancellation clause. That prompted a 2015 lawsuit from Franklin County alleging breach of contract. The county sought damages, as well as future and past payments.
The county won in the opinion of a Decatur County judge last August. Following a damages hearing in December, Judge Matthew Bailey awarded Franklin County $3.092 million in damages – the equivalent of five years worth of the missed $500,000 payments, plus nearly $600,000 in interest.
Lawrenceburg quickly appealed the decision. On Wednesday, the Indiana Court of Appeals sided with the city. The three-judge panel found that the money would have to be appropriated in the city’s budget each year, but it was not, and thus in violation of state statute.
“The 2006 Lawrenceburg government was free to enter into a revenue sharing agreement with Franklin. It was even free to make that agreement last for a lengthy number of years. It was simply required, pursuant to section 12(b) to appropriate all the funds required to fulfill the agreement at the time if was executed,” Judge John G. Baker wrote in the majority opinion.
READ THE COURT OF APPEALS RULING HERE (PDF).
Essentially, the agreement was void from the start because future city administrations could not be on the financial hook for the 2006 administration’s actions, judges Baker and Edward W. Najam agreed.
In a separate opinion agreeing in part and dissenting in part, Judge Margaret G. Robb agreed that Lawrenceburg did not waive its argument that the agreement was void under state law. But, she disagreed that the agreement in this context was void from the outset based on legislative intent of the state appropriations law.
Robb took Lawrenceburg’s past administrations to task.
“If Lawrenceburg’s position is correct, then it extended an offer and entered into a contract it should have known was illegal from the start, and yet it paid out $4,000,000 under that illegal contract, in the process of doing a poor job of protecting its citizens from fiscal overreaching,” Robb wrote, concluding that she would uphold the lower court’s summary judgment to Franklin County.
With the majority ruling for Lawrenceburg, the appellate court has remanded the case back to the trial court in Decatur County to issue judgment in favor of the city.
“We are extremely happy with the outcome and we think it’s a fair ruling,” said Mayor Kelly Mollaun.
It’s unclear if Franklin County will try to appeal to the Indiana Supreme Court. County attorney Grant Reeves did not respond to a Wednesday email request for comment.
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