Ainley Kennels & Fabrication, Inc. et al. v. City of Dubuque Copyright 2014
City of Dubuque Consent Items # 10.
ITEM TITLE: Ainley Kennels & Fabrication, Inc. et al. v. City of Dubuque
SUMMARY: City Attorney transmitting the Court's ruling regarding the lawsuit brought
by 18 manufacturing plaintiffs seeking rebates of natural gas franchise
fees.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File
ATTACHMENTS:
Description Type
❑ Staff Memo Staff Memo
❑ Court Order Supporting Documentation
THE CITY OF
DUB bE MEMORANDUM
Masterpiece on the Mississippi
M
BARRY LIND
CITY ATTORN Y
To: Mayo Roy D. Buol and
Members of the City Council
DATE: July 8, 2015
RE: Ainley Kennels & Fabrication, Inc., et al. v. City of Dubuque
Attached is the Court's ruling in this lawsuit which was brought by 18 manufacturing
plaintiffs' seeking rebates of natural gas franchise fees dating back to 2009. The total
amount of rebates sought is in excess of $400,000.
The Court has granted the City's motion for summary judgment, dismissing the case.
The gas franchise fee adopted in 2003 provided for a rebate of franchise fees paid by
entities exempt under state law for sales tax on natural gas used in manufacturing
"processing." None of these plaintiffs requested a rebate until 2013. Many other
manufacturers requested and received rebates during the ten year period between 2003
when the franchise fee was enacted, and 2013 because they filed timely, usually
annually, rebate requests with the City.
In February 2014, the City Council amended the natural gas franchise fee ordinance to
require that requests for rebates be filed by June 30 in the fiscal year in which the
franchise fee was paid. The amended ordinance also provided that any rebate for any
franchise fees paid prior to July 1, 2013 was declared void.
Because there were no material facts in dispute in the litigation, both sides filed motions
for summary judgment claiming that, based on those undisputed facts, each side
believed it was entitled to a judgment as a matter of law, the City asking for dismissal of
the case, and the plaintiffs asking for a judgment for the amount of the rebates.
Ainley Kennels & Fabrication, Inc., Automotive Enterprises Company d/b/a Automotive Industrial,
Dubuque Stamping & Mfg., Inc., Eagle Window & Door Mfg., Inc., Edwards Cast Stone Co., Rite-Hite
Corp. d/b/a Frommelt Safety Products, Grove Tools, Inc., Klauer Mfg. Co., Morrison Bros. Co., Rauen,
Inc., Rousselot Dubuque Inc., Smart Retract, Inc., F.H. Uelner Precision Tools & Dies, Inc., Union-
Hoermann Press, Inc., Welu, Inc. d/b/a Welu Printing Co., Giese Mfg. Company, Inc., Tri-State Industries,
Inc., Woodward Communications, Inc. d/b/a Telegraph Herald
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001-6944
TELEPHONE (563)583-4113/FAx (563)583-1040/EMAIL balesq@cityofdubuque.org
The City argued that (1) there is no inherent right to a rebate, the City Council
authorized the rebate in the fee ordinance and the City Council can and did take away
the rebate claims with the amended ordinance; (2) the franchise fees paid by the
plaintiffs were used for city services which benefited the plaintiffs and it would be
inequitable to require city taxpayers to refund those fees now; and (3) the plaintiffs
waited too long and without any legitimate excuse for such late requests for the rebates.
The plaintiffs argued that the ordinance amendment taking away their claims for rebates
was not legal and denying them rebates is a violation of their Due Process and Equal
Protection rights by treating them differently from manufacturers who received rebates
(the manufacturers who made timely rebate requests).
The effect of the Court's ruling is to uphold the amended ordinance which provided that
any rebate of any franchise fees which was not paid prior to July 1, 2013 is declared
void.
BAL:tIs
Attachment
cc: Michael C. Van Milligen, City Manager
Maureen A. Quann, Assistant City Attorney
Ken TeKippe, Finance Director
Jenny Larson, Budget Director
Ivan Webber, Esq.
F:\USERS\tsteckle\Lindahl\Franchise Fee Rebate Requests From Tax Exempt Entitites\Ainley Kennels et al.vs.City\MayorCouncil_CaseUpdate_CourtRuling_070815.doc
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E-FILED 2015 JUL 01 5:42 PM DUBUQUE-CLERK OF DISTRICT COURT
IN THE IOWA DISTRICT COURT,IN AND FOR DUBUQUE COUNTY
AINLEY KENNELS &FABRICATION,
INC.et.al., Case 01311 EQCV101386
Plaintiff,
ORDER
Vs.
CITY OF DUBUQUE
Defendant.
This matter comes before the Court upon the Defendant's motion for summary judgment.
All parties appeared through counsel.
This action is based on the City of Dubuque's billing of utilities. The billing statement
had a franchise fee on the pricing of services for utilities the city provided for the city residents.
The Plaintiffs are all businesses. It was their understanding that the billing statements would
have an exemption for these services. The billing did not. Plaintiffs argue they are entitled to
reimbursement for the franchise fees charged.
Motions for summary judgment are authorized by IRCP 1.981. The summary judgment
procedure is intended to permit a party to pierce allegations of fact in the pleadings and to obtain
relief by summary judgment where the facts set forth in detail in affidavits, depositions,
interrogatories and admissions on file at the time of hearing show that there are no genuine issues
of fact to be tried. Drainage District No. 119, Clay County v. Incorporated City of Spencer, 268
N.W.2d 493 (Iowa 1978).
The purpose of a Motion for Summary Judgment is to avoid a useless trial which results
in unnecessary delay and expense. David v. Comito,204 N.W.2d 607 (Iowa 1973). Pursuant to
Iowa Rule of Civil Procedure 1.981, such a motion is authorized for this purpose. The burden is
on the moving party for summary judgment to show the absence of any genuine issue of material
fact. Knapp v. Simmons, 345 N.W.2d 118 (Iowa 1984). The Court is to examine the record in
the light most favorable to the party opposing the Motion for Summary Judgment to determine
whether the movant has met its burden of proof. Sandbulte v.Farm Bureau Mutual Insurance
Company, 343 N.W.2d 457(Iowa 1984). Every legitimate inference that reasonably can be
deduced from evidence should be afforded the non-moving parry. (IRCP 1.981) A fact question
is generated if reasonable minds can differ on how factual issues should be resolved. Knapp v.
Simmons, 345 N.W.2d 118 (Iowa 1984).
The court's function at the summary judgment stage is not to weigh evidence or establish
the truth of the matter,but to determine whether there are genuine issues for trial. See Quick v.
Donaldson Co., Inc., 90 F.3d 1372, 1376-77(8"'Cir. 1996).
E-FILED 2015 JUL 01 5:42 PM DUBUQUE-CLERK OF DISTRICT COURT
ANALYSIS
The actions of the City Manager are non-discretionary functions concerning the return of
the franchise fees collected by the City of the utility bills. The Plaintiffs are exempt entities
under the city ordinance. There is nothing to determine beyond that assessment. The City must
return the funds collected as it was done so in violation of the rights of the exempt entities which
are specifically spelled out in the ordinance.
The City cannot retroactively impose a rule or ordinance that prohibits the return of the
fees by limitation of time. This is an improper taking. The City argues that the money has
already been used and the source of the funds necessary for the return of the collected fees is not
available. This is not a defense, nor is it logical. The City cannot collect the fees against these
entities. It bears not on the decision for its return, that the City has already spent the fees.
In saying this, however,the Court is cognizant of the fact that the City has a duty and
responsibility to act reasonably with the residents' money. The City acts as a steward of the
residents' taxes. The money collected by the City is there for use of the welfare, maintenance
and advancement of the lives of us who chose to live here.
The Court has found in Zager v. City of Dubuque, 789 N.W.2d 634 (Iowa 20 10)that the
retroactive application of a corrective ordinance is proper. The reason it is proper relates to the
nature of the City's obligation as a steward of the residents' taxes. To put the city in a position
to have to now conjure revenues to replace what has already been taken and spent, places a very
heavy burden on the City and its financial management. The end run places the financial burden
directly into the laps of the City's residents. For this reason,
"Provided that the retroactive application of a statute is supported by a legitimate
legislative purpose furthered by a rational means,judgments about the wisdom of such
legislation remain within the exclusive province of the legislative and executive branches
Carlton, 512 U.S. at 30-31, 114 S.Ct. at 2022, 129 L.Ed.2d at 28 (quoting Pension
Benefit Guar. Corp., 467 U.S. at 729, 104 S.Ct.at 2718, 81 L.Ed.2d at 611); accord
{"pageset°:"S12*656 Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 19, 96 S.Ct. 2882,
2894, 49 L.Ed.2d 752, 768-69 (1976)
"Our function is not that of a super-legislature which weighs the wisdom of legislation;
we look only to whether the means chosen by the State are rational and reasonably necessary to
the accomplishment of the State's purpose."Zaber at 656 citing State v. Miner, 331 N.W.2d at
689(citation omitted).For the present, our legislature has reserved to itself the power to
determine whether to ratify unauthorized local taxes on a case-by-case basis. We must defer to a
constitutional exercise of that judgment. Zaber at 655.
ORDER
IT IS THEREFORE ORDERED that the motion for summary judgment is hereby
GRANTED. There exists no material issue of fact to generate a question for a trial. The City is
E-FILED 2015 JUL 01 5:42 PM DUBUQUE-CLERK OF DISTRICT COURT
not under an obligation to return the franchise fees collected herein by the City against these
Plaintiffs as a result of the ordinance passed by the City prohibiting the return of the same for a
five year take-back period from the date of collection.
Cross-motion for summary judgment is DENIED.
E-FILED 2015 JUL 01 5:42 PM DUBUQUE-CLERK OF DISTRICT COURT
State of Iowa Courts
Type: OTHER ORDER
Case Number Case Title
EQCV101386 E AINLEY KENNELS ET AL V CITY OF DUBUQUE
So Ordered
Monica Ackley,District Court Judge,
First Judicial District of Iowa
Electronically signed on 2015-07-01 17:42:50 page 4 of 4