Ace Rent-A-Car, Inc. v. Indianapolis Airport Authority

Citations: 612 N.E.2d 1104; 1993 Ind. App. LEXIS 434; 1993 WL 132229Docket: 49A05-9205-CV-00166

Court: Indiana Court of Appeals; April 29, 1993; Indiana; State Appellate Court

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Car rental companies, specifically Ace Rent-A-Car, Inc., Enterprise Leasing of Indianapolis, Inc., and A. Mac Frugal Company (d/b/a Thrifty Car Rental), challenged a seven percent fee imposed by the Indianapolis Airport Authority (IAA) in a lawsuit claiming the ordinance allowing the fee was invalid, the fee was unreasonable, and it constituted an unauthorized income tax. Following motions for summary judgment from both parties, the trial court ruled in favor of IAA, leading Ace Rent-A-Car to appeal. 

The appeal raised three main issues: 1) whether the fee should be limited to covering repair and maintenance costs of airport roadways; 2) whether the seven percent fee constituted an unauthorized tax on income; and 3) whether the fee was reasonable. 

Ace Rent-A-Car operates near the Indianapolis International Airport and utilizes airport roadways for its shuttle service to transport customers, without engaging in other airport property activities. The IAA, established under Indiana law to manage the airport, has the authority to set reasonable charges for facility users but lacks broad taxing powers, primarily relying on user fees. The fee structure for off-airport car rental companies was changed in December 1990, increasing the fee from a flat rate to seven percent of all sales for rentals originating at the airport, a change made without a clear explanation or cost basis.

Ace Rent-A-Car sought relief to prevent the fee's implementation, but upon IAA's motion to dismiss, the trial court treated it as a summary judgment motion. After a hearing, the court ruled in favor of IAA, providing detailed findings and conclusions, which led to Ace's appeal. The appellate court affirmed the trial court's decision.

The court reviews summary judgment rulings by applying the same standard as the trial court, focusing on evidence designated under Ind. Trial Rule 56(C) without assessing its weight or credibility. Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Evidence must be viewed in favor of the opposing party, with any doubts resolved against the moving party. In cases of cross motions for summary judgment, each motion must be considered separately, again favoring the non-moving party.

Ace Rent-A-Car argues that the trial court's findings in support of its judgment include information not in the record, asserting that this undermines the judgment. However, specific findings provide a basis for the appellant to challenge the trial court's reasoning and facilitate appellate review, although they do not alter the reliance on Rule 56(C) materials. The review standard remains focused on whether a genuine issue of material fact exists and whether the moving party is entitled to judgment as a matter of law.

Ace Rent-A-Car claims the trial court wrongly denied its summary judgment motion, arguing that any fee imposed by the Indianapolis Airport Authority (IAA) should be based on a cost analysis and limited to repair and maintenance costs for airport roadways. Ace Rent-A-Car asserts that the 7% fee is based on revenue unrelated to roadway use, referencing a precedent in which the Indiana Supreme Court upheld a user fee related to facility use. However, the court disagrees with Ace Rent-A-Car’s interpretation, stating that while fees may vary based on usage, the specifics of how "use" is measured were not addressed in the cited case.

Courts in various jurisdictions have upheld user fees based on the benefits derived from the existence of airports. In cases such as *Alamo Rent-a-Car v. Sarasota-Manatee Airport Authority*, a broad interpretation of "use" was supported, emphasizing that the overall airport facility benefits the user. Similarly, *Helmerick Drive-It Yourself, Inc. v. Erie Municipal Airport Authority* affirmed that fees based on customer volume were justified due to the airport serving as a marketplace for rental companies. 

Ace Rent-A-Car benefits indirectly from airport operations, as evidenced by its shuttle service for passengers, which affirms that user fees are an appropriate measure of usage. The fees imposed by the Indiana Airport Authority (IAA) are not solely for cost recoupment but also reflect a fair assessment of economic benefit derived from the airport's presence. 

Ace Rent-A-Car's argument that the seven percent fee constitutes an unauthorized tax is rejected; the distinction between a tax and a user fee is made clear. A tax is compulsory and does not correlate with specific benefits, while a user fee is optional and directly linked to the use of public facilities. Since Ace Rent-A-Car pays the fee only when benefiting from airport services, it qualifies as a user fee under Indiana law.

Finally, Ace Rent-A-Car contends that the fee is unreasonable, challenging the IAA's authority to impose such charges. However, the relevant Indiana statute allows the airport authority to adopt reasonable charges, and Ace Rent-A-Car does not dispute the statute itself, only the reasonableness of the fee. The IAA's ordinance, which sets the fee at seven percent of rental sales from airport customers, is within its authority as defined by the statute.

Governmental actions, such as ordinances enacted under police power, must reasonably promote the health, order, morals, or safety of society. Ordinances are presumptively valid, placing the burden of proof on the challenger to demonstrate their invalidity. In this case, Ace Rent-A-Car argued that the Indiana Airport Authority (IAA) did not justify the reasonableness of a seven percent fee imposed by Ordinance 3-1990, claiming a requirement for a cost analysis or study. However, Ace Rent-A-Car provided no supporting authority for this claim, and research revealed none. The IAA possesses the statutory authority to set reasonable charges, and the ordinance is presumed valid, making the fee presumptively reasonable. Ace Rent-A-Car did not meet its burden of proof to contest this presumption. The trial court's decision to grant summary judgment in favor of IAA was affirmed.