Court Opinion

ID: 3181031
Source: CourtListenerOpinion
Date Created: 2016-02-29 16:21:20.688908+00
Date Added: 2024-06-11T10:03:17.008325
License: Public Domain

Feb 29 2016, 9:24 am

      ATTORNEY FOR APPELLANT                                       ATTORNEY FOR APPELLEE
      Wayne E. Uhl                                                 Eric A. Frey
      Stephenson Morow & Semler                                    Frey Law Firm
      Indianapolis, Indiana                                        Terre Haute, Indiana

                                                   IN THE
           COURT OF APPEALS OF INDIANA

      Town of West Terre Haute,                                   February 29, 2016
      Indiana,                                                    Court of Appeals Case No.
                                                                  84A01-1503-CT-106
      Appellant-Defendant,
                                                                  Appeal from the Vigo Superior
              v.                                                  Court.
                                                                  The Honorable J. Blaine Akers,
                                                                  Special Judge.
      Jody Roach,                                                 Cause No. 84D06-1306-CT-5193
      Appellee-Plaintiff.

      Shepard, Senior Judge

[1]   The Town of West Terre Haute discharged its employee Jody Roach in the

      course of addressing an audit of the Clerk-Treasurer’s office. The trial court

      hearing Roach’s suit against the Town and other government actors granted

      summary judgment to all defendants except the Town, which now appeals. We

      reverse and remand.

      Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016                     Page 1 of 13
                                                      Issues
[2]   The two issues presented in this appeal follow.

              I.       Does the Town’s failure to hold a pre-termination hearing
                       support Roach’s claim for money damages?
              II.      Is the Town entitled to summary judgment on Roach’s
                       defamation claim?

                                 Facts and Procedural History
[3]   Roach was an at-will employee of the Town in the office of the elected Clerk-

      Treasurer, Melody Buchanan. She served as a utility clerk, and thus handled

      the payment of public funds, including water bill payments. Roach received

      funds from utility customers, put the cash or check in a drawer, issued the

      customer a receipt, kept a copy, and posted the payment to each customer’s

      account. She also filled out deposit slips and carried deposits to the bank.

      Vickie Ashburn, the deputy clerk-treasurer, occasionally handled deposits when

      Roach was busy with other duties.

[4]   The State Board of Accounts conducted one of its periodic audits in early 2011,

      covering 2009-2010. In about April 2011, field examiners Laura Ping and Katie

      Elliott informed the town council president, Scott McClain, and Buchanan that

      their preliminary investigation revealed missing funds and that they would

      conduct further review. On June 28, 2011, McClain arrived at the town office

      to meet with SBOA representatives about the audit. Looking out the window,

      he saw police cars and officers accompanied by Ping and Elliott. Officers

      escorted Buchanan, Ashburn, and Roach from the building and served McClain

      Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 2 of 13
      with search warrants authorizing the officers to take papers from the office.

      McClain collected and surrendered all keys to the office.

[5]   The Attorney General obtained a temporary restraining order seeking

      prejudgment attachment and garnishment from Roach and the two others. The

      request for the TRO alleged that, according to a preliminary report of SBOA,

      Roach “wrongfully or negligently failed to properly account for, expend,

      and/or deposit the funds of the Town, or otherwise committed several acts of

      misfeasance, malfeasance, and nonfeasance which resulted in the

      misappropriation or diversion of public funds.” Appellant’s Appendix at 161.

      The Town’s loss was estimated at over $360,000. A deputy state examiner’s

      affidavit in support of the TRO said the Town’s general ledger was materially

      short, with short deposits on twenty-one of twenty-two days examined and that

      only Buchanan, Ashburn, and Roach had access to the funds. On July 22,

      2011, the court entered an agreed injunction freezing Roach’s real property and

      vehicles and restricted her spending to no more than $1200 per month.

[6]   In addition to the civil action brought by the Attorney General, Ashburn was

      later arrested and charged with theft and RICO violations, eventually pleading

      guilty to two counts of Class D felony theft. Roach and Buchanan were not

      arrested or charged.

[7]   The Attorney General issued a press release announcing the civil action to

      freeze the assets of Buchanan, Ashburn, and Roach, while the investigation was

      ongoing. He also noted that if SBOA issued a certified audit, he would proceed

      Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 3 of 13
       against the three to recover stolen funds in the civil action. The press release

       also referenced the criminal charges against Ashburn. Local news articles

       mentioned the civil proceeding against the three and the criminal charges

       against Ashburn.

[8]    Town council members issued a statement to which they referred the media:

               It is our understanding that an investigation has been ongoing for
               some time by the State Board of Accounts and the Indiana State
               Police.

               The Town Board is and has been cooperating with the said
               investigation. We as the Town Board are anxiously awaiting the
               results of the said investigation. And will act accordingly at the
               time to protect the citizens of the Town of West Terre Haute.

                                             Town Board Members
       Id. at 227.

[9]    President McClain also participated in a news conference with Vigo County

       Prosecutor Terry Modesitt. Statements attributable to McClain in media

       reports covered only the logistics involved in the receipt of customers’ payments

       of utility bills.

[10]   Because Buchanan, Ashburn, and Roach were not permitted to enter the town

       office, it was effectively closed for about a week. Arrangements were made

       with local banks to receive utility payments, and customers were advised to

       continue to make payments.

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 4 of 13
[11]   To address those staffing problems, McClain approached local resident Jim

       Mann, who agreed to step in as deputy clerk-treasurer. Ashburn’s employment

       was terminated in order to pay Mann for his services. Buchanan’s salary could

       not be used to pay other salaries because she was an elected official still holding

       office. The Town continued to pay Roach’s salary even though she was barred

       from the office.

[12]   The town council voted to terminate Roach’s employment on August 5, 2011,

       in order to pay Ron Stevens, a person identified as being qualified to help Mann

       conduct the Town’s business. The council’s minutes recording that vote also

       said, “The reason for the termination will be revealed during the upcoming trial

       of Vickie Ashburn, Jody Roach and Melody Buchanan.” Id. at 274. A letter

       advising Roach of the termination was sent that same day.

[13]   On August 11, 2011, McClain and Buchanan attended an exit conference with

       SBOA to review the final results of the audit. For the period 2007 through

       2011, the auditors identified some $371,800 as missing for which Buchanan and

       Ashburn were jointly liable. None of the missing funds were attributable to

       Roach. However, auditors did find evidence that Roach had cashed personal

       checks from money paid by customers on more than one occasion. Roach’s

       personal checks were deposited as part of the utility receipts. Roach

       acknowledged that this had occurred. McClain signed a Corrective Action

       Plan, which was made part of the audit, and included the fact of Roach’s

       termination on August 5, 2011.

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 5 of 13
[14]   SBOA’s final audits found that Roach “bypassed the internal controls” by

       removing cash from utility receipts and replacing them with personal checks.

       Id. at 277. Only Ashburn was found to have stolen funds. The prejudgment

       garnishment of Roach’s assets was dissolved, she was dismissed from the AG’s

       civil action, and no criminal charges were filed against her. Media reports

       stated that Roach was no longer part of the audit and that the Attorney General

       was not proceeding against her.

[15]   Roach filed a complaint on June 7, 2013, against the State of Indiana, the

       SBOA, and the Town, alleging defamation/false light, negligence, malicious

       prosecution of a civil action, and wrongful discharge and damage to reputation,

       and seeking damages. The parties stipulated that the complaint did not assert

       any claim under the Constitution or laws of the United States.

[16]   The State, the SBOA, and the Town moved for summary judgment. After a

       hearing, the trial court entered orders denying the Town’s motion, but granting

       the State’s and the SBOA’s.

[17]   Roach has not appealed from the orders in favor of the State and the SBOA, but

       could still do so when all matters are concluded. The Town moved to certify

       the trial court’s order against it for interlocutory appeal. The court granted the

       motion, and we accepted jurisdiction.

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 6 of 13
                                      Discussion and Decision
                                            Standard of Review
[18]   Summary judgment is appropriate when the moving party demonstrates that

       there is no genuine issue of material fact with respect to a particular claim or

       element of a claim. Ind. Trial Rule 56(C); Woodruff v. Ind. Family & Soc. Servs.,

       964 N.E.2d 784, 790 (Ind. 2012). Once the moving party has met its burden,

       the non-moving party must come forward with properly designated evidence

       affirmatively demonstrating a genuine issue of material fact. Id. All evidence

       and reasonable inferences are construed in favor of the non-moving party. Id.

[19]   On appellate review, we conduct de novo review of disputes where the facts are

       uncontroverted. Id. If the law has been incorrectly applied to the facts, we

       reverse. Id. If not, we will affirm a grant or denial of summary judgment upon

       any theory supported by evidence in the record. Wagner v. Yates, 912 N.E.2d

       805, 811 (Ind. 2009).

                                    I. Pre-Termination Hearing
[20]   Roach alleges that the Town’s failure to hold a pre-termination or name-

       clearing hearing supports her claim for money damages.

[21]   As the parties stipulated that no federal grounds were being asserted, Roach’s

       argument is based on Article I, Section 12 of our state constitution:

               All courts shall be open; and every person, for injury done to him
               in his person, property, or reputation, shall have remedy by due
               course of law. Justice shall be administered freely, and without

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 7 of 13
               purchase; completely, and without denial; speedily, and without
               delay.
[22]   Although the analysis of claims under the due process clause of the federal

       constitution and Indiana’s due course of law clause have been conflated in the

       past, recent cases note the significant differences between them. McIntosh v.

       Melroe Co., 729 N.E.2d 972, 975-76 (Ind. 2000). Section 12 requires courts to be

       open to claims based on rules of law derived either from common law or

       prescribed by statute. Id. at 979. “If the law provides no remedy, Section 12

       does not require that there be one,” said the Supreme Court. Id.

[23]   In Cantrell v. Morris, 849 N.E.2d 488, 499 (Ind. 2006), the Court noted: “Article

       I, Section 12 does not specify any particular remedy for any particular wrong.”

       Id. The definition of wrongs and specification of remedies is left to the

       legislature and the common law. Id. Under Section 12, the courts must be

       open for individuals to litigate claims based on rules of law. Indiana case law

       construing the Open Courts Clause does not support the notion that it creates a

       substantive right of action.

[24]   In this respect, Indiana reflects the historic reasons why state constitutions

       contain open courts provisions. In the years running up to the American

       Revolution, colonials saw acts interfering with court operation by royal

       governors and other representatives of the Crown as a tool of repression. These

       acts ran all the way up to literally causing the courts to be “closed” rather than

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 8 of 13
       “open” for civil litigation. Such was the experience during the struggle over the
                        1
       Stamp Act.

[25]   It was these episodes, especially in colonies such as Delaware and

       Massachussetts, that led to open courts provisions, the first of which was

       adopted by Delaware in 1776. These clauses sought to assure an independent

       judiciary that could administer justice without interference, according to
                                                                               2
       substantive sources such as common law or statutes.

[26]   “As a general rule, Indiana employment relationships are terminable at the will

       of either party.” Speckman v. City of Indianapolis, 540 N.E.2d 1189, 1192 (Ind.

       1989). Roach was an at-will employee, and Section 12 does not provide a

       specific remedy for violations of state constitutional rights. Thus, her claim that

       the Town’s failure to hold a pre-termination hearing supports her claim for

       money damages fails. The trial court erred by denying the Town summary

       judgment on this point.

                                                 II. Defamation
[27]   Roach’s defamation claim, by contrast, invokes established grounds of common

       law.

       1
           The Blackwell Encyclopedia of the American Revolution 117 (Jack P. Greene & J.R. Pole eds., 1991).
       2
        Jonathan M. Hoffman, By the Course of the Law: The Origins of the Open Courts Clause of State
       Constitutions, 74 Or. L. Rev. 1279 (1995).

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016                      Page 9 of 13
[28]   “A defamatory communication is one that tends to harm a person’s reputation

       by lowering the person in the community’s estimation or deterring third persons

       from dealing or associating with the person.” Baker v. Tremco Inc., 917 N.E.2d

       650, 657 (Ind. 2009). Whether a communication is defamatory is a question of

       law for the court, unless the communication is susceptible to either a

       defamatory or a non-defamatory interpretation. Id. In that event, the matter

       may be submitted to the jury. Id. “Any statement actionable for defamation

       must not only be defamatory in nature, but false.” Trail v. Boys & Girls Clubs of

       Nw. Ind., 845 N.E.2d 130, 136 (Ind. 2006).

[29]   Defamation can be defamatory per se or defamatory per quod. Id. Defamation

       per se involves a communication imputing: “(1) criminal conduct; (2) a

       loathsome disease; (3) misconduct in a person’s trade, profession, office, or

       occupation; or (4) sexual misconduct.” Baker, 917 N.E.2d at 657. The

       communication must be made with malice, publication, and damage. Id. The

       plaintiff is entitled to presumed damages as a natural and probable consequence

       of defamation per se. Kelley v. Tanoos, 865 N.E.2d 593, 597 (Ind. 2007). This is

       so because the words imputing one of those conditions are so naturally and

       obviously harmful that one need not prove their injurious character. Cortez v.

       Jo-Ann Stores, Inc., 827 N.E.2d 1223, 1230 (Ind. Ct. App. 2005). The

       defamatory nature of the communication must appear without reference to

       extrinsic facts or circumstances. Id. A person alleging defamation per quod

       must demonstrate the same elements without reference to extrinsic facts or

       circumstances, but must additionally demonstrate special damages. Id.

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 10 of 13
[30]   A plaintiff must include the alleged defamatory statement in the complaint.

       Trail, 845 N.E.2d at 136. Roach’s complaint alleges that the actions of the

       SBOA were false and defamatory because they placed her in a false light by

       accusing her of a crime, specifically embezzlement. The complaint then alleges

       that the Town terminated her employment immediately after SBOA’s

       preliminary audit results were shared with the town council. No specific

       defamatory statement by the Town is included in Roach’s complaint.

[31]   In support of Roach’s position as respects summary judgment, counsel cites

       news articles reporting on a press conference or conferences attended by town

       board president McClain during which the allegations against Buchanan,

       Ashburn, and Roach were discussed. The only reported comments attributable

       to board president McClain involved his explanation of a new utility meter

       reading system, where to make payments while the utility office was closed,

       and assurances that the Town was financially sound.

[32]   Roach also argues that McClain did not speak up about Roach’s substantial

       exoneration by the final audit during a news conference he attended. Further,

       she claims that she was defamed when a Corrective Action Plan, signed by

       McClain, in which the only references to Roach were that she and Buchanan

       had disregarded controls over payment receipts by substituting personal checks

       in place of cash received from customers was published. The plan also

       mentioned Roach’s termination on August 5, 2011. Last, Roach cites the town

       council minutes from the meeting at which Roach was terminated (“reason for

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 11 of 13
       the termination will be revealed during the upcoming trial of Vickie Ashburn,

       Jody Roach, and Melody Buchanan.”) Appellant’s Appendix at 274.

[33]   Roach agrees that none of the statements attributed to the Town were false. A

       defamation claim must be premised on a defamatory statement that is false.

       McClain denied making a defamatory statement about Roach and denied

       hearing anyone else associated with the Town make defamatory statements

       against her.

[34]   Roach is unable to identify a defamatory statement made by the Town.

       Instead, she claims that McClain’s failure to say anything, his presence at news

       conferences where the allegations were discussed, and the termination of her

       employment prior to her exoneration, amount to defamation.

[35]   As our Supreme Court said in Trail, “this allegation does not actually assert,

       nor relate to, any actionable defamatory statement. Rather, the allegation

       merely refers to the speculative effect the defendants’ non-actionable silence has

       had on Trail’s reputation. It would be an odd use of the defamation doctrine to

       hold that silence constitutes actionable speech.” 845 N.E.2d at 137.

[36]   Roach’s case differs in this respect from Glasscock v. Corliss, 823 N.E.2d 748 (Ind.

       Ct. App. 2005), trans. denied. The defamatory statements were that Corliss had

       been fired because of discrepancies in her expense reports and that she had

       bought gifts for her family and friends. The only fair inference was that Corliss

       had committed misconduct by purchasing gifts for her family with company

       funds, thereby constituting a defamatory communication. 823 N.E.2d at 753.

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 12 of 13
[37]   We agree with the Town that there is no genuine issue of material fact

       precluding summary judgment in its favor. The court erred by denying the

       Town’s motion on this point.

                                                  Conclusion
[38]   In light of the foregoing, we reverse the decision of the trial court and remand

       with instructions to grant the Town’s motion for summary judgment.

[39]   Reversed and remanded.

       Riley, J., and Robb, J., concur.

       Court of Appeals of Indiana | Opinion 84A01-1503-CT-106 | February 29, 2016   Page 13 of 13