City of Gary v. Major

Attorney for Appellants Attorney for Appellees

Michael J. Rappa Michael C. Dovellos

Johnson & Rappa, LLC Merrillville, Indiana

Merrillville, Indiana

____________________________________________________________________________

__

In the

Indiana Supreme Court

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No. 45S04-0401-CV-10

The City of Gary and Mayor Scott

KING, IN HIS OFFICIAL CAPACITY, AND THE

CITY OF GARY COMMON COUNCIL,

CONSISTING OF ROY PRATT, MARILYN

KRUSAS, ROBERT WHITE, MARY BROWN,

CAROLYN ROGER, JEROME PRINCE, ALEX

CHERRY, CHARLES HUGHES, AND KYLE

ALLEN, SR., IN THEIR OFFICIAL CAPACITY,

APPELLANTS (DEFENDANTS BELOW),

v.

Ronnie Major d/b/a Affordable Towing

and Associates, James Mako, Jr., d/b/a

Mako’s Towing, and Hewlin Major

d/b/a Hugh’s Towing,

Appellees (Plaintifffs below).

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Appeal from the Lake Superior Court, Room Number Three, No. 45D03-0009-CP-

2366

The Honorable James D. Danikolas, Judge

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On Petition To Transfer from the Indiana Court of Appeals, No. 45A04-0207-

CV-357

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February 10, 2005

Rucker, Justice.

The City of Gary, the Mayor of Gary, and members of the Gary City

Council appeal a trial court finding of contempt and a corresponding award

of monetary damages. We affirm the contempt finding but reverse the award

of damages.

Facts and Procedural History

Over the veto of then Mayor Thomas V. Barnes, the legislative body of

the City of Gary, the Gary City Council (“City Council”), passed an

ordinance in 1989 concerning the award of contracts for towing illegally

parked vehicles. The ordinance provided in pertinent part: “In order to

facilitate the removal of vehicles or parts, the City, with authorization

from the Common Council may employ personnel and acquire equipment,

property and facilities and/or enter into towing contracts as necessary . .

. .” Appellants’ App. at 33. Apparently a compromise was reached between

the legislative and executive branches of government and the ordinance lay

dormant for a number of years. Then, in 2000, the City Council established

a “Towing Committee”, a subcommittee of the City Council, that assumed the

responsibility of awarding towing contracts. Before the Committee was

established, Ronnie Major doing business as Affordable Towing & Associates,

James Mako, Jr. doing business as Mako’s Towing, and Hewlin Major doing

business as Hugh’s Towing (“Towing Companies”) had been performing towing

services under contracts negotiated with the executive branch of the City

of Gary. After the Committee was established the City Council cancelled

existing contracts with various private tow truck operators, including

those of the Towing Companies, and awarded the towing contracts to other

businesses.

On September 7, 2000, the Towing Companies filed a complaint for

declaratory and injunctive relief against the City of Gary, Scott King—the

Mayor of Gary—and members of the Gary City Council (referred to

collectively as “City”). Alleging damages in the amount of $100,000 for

each plaintiff, the complaint sought a declaration that the towing

ordinance violated an alleged statutory separation of powers.[1] More

specifically, according to the complaint, entering contracts on behalf of a

municipality is a function of the executive rather than the legislative

branch of city government. After conducting a hearing, the trial court

agreed with the Towing Companies and entered an order on January 17, 2001

declaring null and void all towing contracts entered by the City Council.

The trial court’s order also declared:

[T]he Executive Branch of Government of the City of Gary is

hereby ordered to establish a fair and equitable procedure for

the bidding and awarding of towing contracts to qualified towing

entities for the police ordered towing of vehicles in the City

of Gary with in [sic] which the [Towing Companies] shall

participate.

Appellants’ App. at 25. As for the Towing Companies’ request for damages,

the trial court’s order provided, “[t]his cause shall be set for hearing on

the issue of whether or not the Plaintiff’s [sic] are entitled to damages

because of the illegal and unlawful actions of the City of Gary Council

Towing Committee. . . .” Id. at 24-25. Apparently no such hearing was

ever conducted and the City did not appeal the trial court’s order.

Several months later, contending that the City had refused to comply

with the order, the Towing Companies filed a motion to find the City in

contempt of court and also asked the trial court to impose damages for

contempt in the amount of $150,000. While the contempt action was pending,

the Mayor of Gary issued an executive order that provided in pertinent

part:

Effective November 1, 2001 the City of Gary’s administrative

policy regarding the oversight of the licensing and conduct of

towing businesses in the City of Gary shall be as follows:

1. Oversight of the licensing and the conduct of towing

businesses within the City of Gary shall be conducted by the

designated Chairman of the Towing Committee as established by

ordinance of the Gary Common Council.

2. Said Chairman shall report in writing to the Office of the

Mayor on a quarterly basis commencing January 1, 2002 as to

the status of such licensing and conduct of said businesses.

Id. at 67. After a hearing on June 12, 2002, the trial court found the

City in contempt and ordered the City to pay the Towing Companies $150,000

in damages.

The City appealed arguing in part: (i) the trial court should not have

found it in contempt because the order of January 17, 2001 was unclear and

thus the City was not in willful disobedience of the order, and (ii) the

trial court erred in awarding damages because no evidence was introduced to

support the award. Finding the January 17, 2001 order unlawful, the Court

of Appeals reversed the judgment of the trial court. See City of Gary v.

Major, 792 N.E.2d 962 (Ind. Ct. App. 2003). Having previously granted the

Towing Companies’ petition to transfer, we now affirm in part and reverse

in part the trial court’s judgment.

Discussion

I.

Indiana Code § 34-47-3-1 provides in relevant part: “A person who is

guilty of any willful disobedience of any process, or any order lawfully

issued: (1) by any court of record . . . is guilty of an indirect contempt

of the court that issued the process or order” (emphasis added).

Consistent with this statutory provision, our courts have long held that

“[i]ndirect contempt is the willful disobedience of any lawfully entered

court order of which the offender has notice.” Andrews v. State, 505

N.E.2d 815, 830 (Ind. Ct. App. 1987) (emphasis added) (citing I.C. § 34-4-7-

3, the predecessor to I.C. § 34-47-3-1). See also Mitchell v. Mitchell,

785 N.E.2d 1194, 1198 (Ind. Ct. App. 2003); Packer v. State, 777 N.E.2d

733, 738 (Ind. Ct. App. 2002); Macintosh v. Macintosh, 749 N.E.2d 626, 629

(Ind. Ct. App. 2001), trans. denied; Myer v. Wolvos, 707 N.E.2d 1029, 1031

(Ind. Ct. App. 1999), trans. denied; Hanson v. Spolnik, 685 N.E.2d 71, 82

(Ind. Ct. App. 1997), trans. denied. In this case, according to the Court

of Appeals, the trial court’s order was not “lawfully entered” and

consequently not enforceable by means of contempt. This was so because the

City had no duty to “establish a fair and equitable procedure for the

bidding and awarding of towing contracts.” Major, 792 N.E.2d at 966. Our

understanding of a “lawfully entered” order in the context of a contempt

finding is slightly different from that of our colleagues.

In general, contempt of court involves disobedience of a court which

undermines the court’s authority, justice, and dignity. Hopping v. State,

637 N.E.2d 1294, 1297 (Ind. 1994). But the authority of a court to

sanction a party for contempt is not a matter of legislative grace.

Rather, among the inherent powers of a court is that of maintaining its

dignity, securing obedience to its process and rules, rebuking interference

with the conduct of business, and punishing unseemly behavior. State v.

Shumaker, 200 Ind. 623, 157 N.E. 769, 775 (1927). Viewed in this light, the

statutory definition of indirect contempt is merely a legislative

recognition of our courts’ inherent power to cite and punish for contempt.

See In re Contempt of Crenshaw, 708 N.E.2d 859, 861 (Ind. 1999); Skolnick

v. State, 180 Ind. App. 253, 388 N.E.2d 1156, 1162 (1979).

The law in Indiana is well settled that a person cannot be held in

contempt of court for failure to obey an order if the issuing court had no

jurisdiction to give the order. State ex rel. Leffingwell v. Super. Ct.

No. 2 of Grant County, 262 Ind. 574, 321 N.E.2d 568, 576 (1974). Such an

order is void and unenforceable. See, e.g., State ex rel. Taylor v. Cir.

Ct. of Marion County, 240 Ind. 94, 162 N.E.2d 90, 92 (1959) (order

declaring striking workers in contempt of court void and unenforceable

because a specific statutory provision declared trial courts lack

jurisdiction to issue a restraining order involving a labor dispute).

However, an order that is void because the court lacks jurisdiction to

enter it is distinguished from an order that is otherwise invalid. Thus,

“[a]lthough a defendant cannot be held in contempt of a void order, a

defendant may be held in contempt of an erroneous order . . . .

Accordingly, a defendant may not challenge a contempt finding based upon

the prior order’s non-jurisdictional irregularities. A party must follow

an erroneous order. The only remedy from an erroneous order is appeal and

disobedience thereto is contempt.” Carson v. Ross, 509 N.E.2d 239, 243

(Ind. Ct. App. 1987) (citations omitted), trans. denied; accord Crowl v.

Berryhill, 678 N.E.2d 828, 830 (Ind. Ct. App. 1997) (“A party’s remedy for

an erroneous order is appeal and disobedience of the order is contempt.”).

Jurisdiction is comprised of three elements: (1) jurisdiction of the

subject matter; (2) jurisdiction of the person; and (3) jurisdiction of

the particular case. Troxel v. Troxel, 737 N.E.2d 745, 749 (Ind. 2000).

In our view an order is not “lawfully entered” in the context of a contempt

finding only where the court lacks one of these three elements. Neither

before the Court of Appeals nor before this Court has the City alleged the

trial court lacked jurisdiction to enter its order of January 2001.[2] At

most, the order was erroneous. However, “[t]he only remedy from an

erroneous order is appeal . . . .” Carson, 509 N.E.2d at 243. We

emphasize that the City did not appeal the trial court’s original order of

January 17 and so we are not presented with any question about the merits

of the order or whether it was correct. The only issue is whether there

was sufficient evidence before the trial court to demonstrate that the City

was in willful disobedience of the trial court’s order.

II.

The City contends the trial court abused its discretion in entering

its order of contempt. The City’s argument in this regard is not entirely

consistent. On the one hand the City argues that the order was vague and

unclear, and thus the City did not know what was expected of it. On the

other hand the City argues the Mayor’s executive order did exactly what the

court ordered (thus undermining the assertion that the City was unaware of

what it was ordered to do).

In order to be held in contempt for failure to follow the court’s

order, a party must have willfully disobeyed the court order. Ind. High

School Athletic Ass’n v. Martin, 765 N.E.2d 1238, 1241 (Ind. 2002). The

order must have been so clear and certain that there could be no question

as to what the party must do, or not do, and so there could be no question

regarding whether the order is violated. Id. A party may not be held in

contempt for failing to comply with an ambiguous or indefinite order.

Otherwise, a party could be held in contempt for obeying an ambiguous order

in good faith. Bowyer v. Ind. Dep’t of Natural Resources, 798 N.E.2d 912,

918 (Ind. Ct. App. 2003). The determination of whether a party is in

contempt of court is a matter left to the discretion of the trial court.

Hancz v. City of South Bend, 691 N.E.2d 1322, 1324 (Ind. Ct. App. 1998).

We will reverse a trial court’s finding of contempt only if there is no

evidence or inference therefrom to support the finding. Id.

In this case the trial court’s order required the executive branch of

government of the City of Gary “to establish a fair and equitable procedure

for the bidding and awarding of towing contracts to qualified towing

entities for the police ordered towing of vehicles in the City of Gary with

in [sic] which the [Towing Companies] shall participate.” Appellants’ App.

at 25. Contrary to the City’s contention, the order appears to us to be

decidedly unambiguous. The language is direct, declarative, and includes

no conflicting terms or provisions. In fact at the contempt hearing the

City made no assertion that the order was unclear or that it did not know

what the order required it to do. Rather, the City argued that the Mayor’s

executive order represented compliance with the trial court’s order. See

Tr. at 5-8. The City made this same claim before the Court of Appeals.

See Br. of Appellants at 7-8.

Although apparently motivated by the trial court’s order of January

17, 2001, the Mayor’s executive order fell far short of compliance with the

trial court’s order. Indeed a review of the hearing transcript and the

City’s brief reveals that the heart of the City’s argument was not so much

that the executive order complied with the trial court’s directive, but

rather the City addressed the underlying justification for the trial

court’s order, namely: that the authority to award contracts was an

executive function rather than a legislative one. Apparently conceding

that this was an executive function,[3] the City argued, for example:

The Executive Order established a valid and legal process for

the awarding of towing contracts within the City of Gary, in

which the the [sic] power to enter into towing contracts

remained with the Executive Branch of the City of Gary, and did

not violate the Indiana Statutes with regard to the separation

of powers. The Executive Order made clear that the authority to

enter into towing contracts rests with the Mayor—this authority

has not been delegated to the Common Council or the Towing

Committee.

Id. at 5. The City also argued, “[T]he executive order makes clear that

the authority to make a contract is still with the mayor. There’s nothing

in this Executive Order No. 4 that says that he’s going to delegate the

contracting authority to the council.” Tr. at 5-6.

These arguments miss the mark. It is not enough to say that the Mayor

of Gary has retained and not delegated an executive branch function.

Rather, the question is whether the executive branch of the government of

the City of Gary “establish[ed] a fair and equitable procedure for the

bidding and awarding of towing contracts” as ordered by the trial court.

Clearly it did not, and the City makes no credible claim to the contrary.

The only evidence the City presented to demonstrate compliance with

the trial court’s order of January 17, 2001 was the Mayor’s executive

order. This was not sufficient. The trial court therefore did not abuse

its discretion in finding the City in contempt of court.[4] We have a

different view however on the question of damages.

III.

Once a party has been found in contempt of court, monetary damages may

be awarded to compensate the other party for injuries incurred as a result

of the contempt. Cowart v. White, 711 N.E.2d 523, 532 (Ind. 1999). In

determining an amount of damages the trial court may take into account “the

inconvenience and frustration suffered by the aggrieved party . . . .” Id.

at 532 (quoting Thomas v. Woollen, 255 Ind. 612, 266 N.E.2d 20, 22 (1971)).

The determination of damages in a contempt proceeding is within the trial

court’s discretion, and we will reverse an award of damages only if there

is no evidence to support the award. Meade v. Levett, 671 N.E.2d 1172,

1181 (Ind. Ct. App. 1996).

The trial court awarded the Towing Companies $150,000 in damages for

the City’s contemptuous conduct. The City complains the trial court abused

its discretion in doing so because there was no evidence submitted to

support the award.

The record shows that in their motion for contempt, the Towing

Companies sought damages in the amount of $150,000. No supporting

documents were included with the motion to justify damages in any amount.

And at the contempt hearing, no evidence was introduced or argument made to

support an award of damages. Rather, the written order finding the City in

contempt declared, “[t]here being no argument presented by the Defendants

to contradict the damages requested, the Court now orders damages in the

amount of $150,000.00.” Appellants’ App. at 10.

We disagree with the trial court on this point. The City’s silence on

the question of damages is of no moment. Absent some evidence in the

record demonstrating that the Towing Companies suffered injury as a result

of the City’s contemptuous conduct, there was simply no basis to enter an

award of damages. On this issue the judgment of the trial court is

reversed.[5]

Conclusion

The judgment of the trial court is affirmed in part and reversed in

part. This cause is remanded for further proceedings not inconsistent with

this opinion.

Shepard, C.J., and Dickson, Sullivan and Boehm, JJ., concur.

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[1] As authority for this proposition, the Towing Companies relied on three

statutes, which read in pertinent part:

The powers of a city are divided between the executive and legislative

branches of its government.

Ind. Code § 36-4-4-2(a).

a) All powers and duties of a city that are executive or

administrative in nature shall be exercised or performed by the

city executive, another city officer, or a city department.

b) An ordinance of the city legislative body requiring an executive or

administrative function to be performed may:

(1) Designate the department that is to perform that function . .

. .

I.C. § 36-4-4-3.

The legislative power of a city is vested in its legislative body.

All powers and duties of a city that are legislative in nature shall

be exercised or performed by its legislative body.

I.C. § 36-4-4-4(a).

[2] Responding to the Towing Companies’ complaint for declaratory and

injunctive relief, the City filed a motion to dismiss under Indiana Trial

Rule 12(B)(6), which the trial court denied. In its supporting memorandum

the City argued, among other things, that pursuant to Indiana Code section

36-4-4-5 this cause should be heard by the Lake Superior Court sitting en

banc. The Statute provides in pertinent part:

(a) If uncertainty exists or a dispute arises concerning the

executive or legislative nature of a power or duty exercised or

proposed to be exercised by a branch, officer, department, or

agency of the government of a municipality, a petition may be

filed in the circuit court of the county in which the

municipality is located by . . . any person who alleges and

establishes to the satisfaction of the court that he is or would

be adversely affected by the exercise of the power; however, in

a county having a superior court that has three (3) or more

judges, the petition shall be filed in the superior court and

shall be heard and determined by the court sitting en banc.

Although the City did not say so in express terms, its argument could

be viewed as a challenge to the trial court’s jurisdiction. However, after

receiving an adverse ruling on its motion to dismiss, the City did not

advance this argument any further. We express no view on the merits of the

City’s now apparently abandoned claim.

[3] We do not resolve in this opinion whether, as a matter of law, awarding

municipal contracts is an executive versus a legislative function. We do

observe however that the long established rule in this jurisdiction is that

municipal officers have no power to enter contracts except where that

authority is expressly granted by statute; and municipal officers must

pursue and exercise such authority in strict compliance with the mode

prescribed by statute. Contracts made by officers without following the

prescribed mode are void and unenforceable. Bd. of Commissioners of Henry

County v. Gilles, 138 Ind. 667, 38 N.E. 40, 42 (1894); State ex rel. Keith

v. Common Council of Michigan City, 138 Ind. 455, 37 N.E. 1041, 1044

(1894); Platter v. Bd. of Commissioners of Elkhart County, 103 Ind. 360, 2

N.E. 544, 554 (1885).

[4] We observe that the trial court actually found the “Defendants” to be

in contempt. Appellants’ App. at 10. However, as a purely technical

matter, no named defendant was ordered by the trial court to do anything.

And that is especially so with regard to the City Council and its members.

Rather, it was the “Executive Branch” of government which the trial court

ordered to establish a fair and equitable procedure for bidding and

awarding towing contracts. Id. at 25. Mayor Scott King, as head of the

executive branch of government in the City of Gary, is thus the only

defendant to whom the trial court’s contempt finding applied.

[5] We express no opinion on whether the Towing Companies are entitled to

damages on their original complaint. That issue is not before us.