Court Opinion

ID: 4382356
Source: CourtListenerOpinion
Date Created: 2019-03-29 15:04:17.227109+00
Date Added: 2024-06-11T07:49:48.705391
License: Public Domain

FILED
                                                                      Mar 29 2019, 6:03 am

                                                                          CLERK
                                                                      Indiana Supreme Court
                                                                         Court of Appeals
                                                                           and Tax Court

ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
Ann C. Coriden                                             Curtis T. Hill, Jr.
Coriden Glover, LLC                                        Attorney General of Indiana
Columbus, Indiana
                                                           Frances Barrow
ATTORNEYS FOR AMICUS CURIAE                                Deputy Attorney General
LIBERTY MUTUAL INSURANCE                                   Indianapolis, Indiana
Kevin D. Koons
Jennifer L. Watt
Kroger, Gardis & Regas, LLP
Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Cathy Jo Robertson,                                        March 29, 2019
Appellant-Defendant,                                       Court of Appeals Case No.
                                                           18A-PL-1002
        v.                                                 Appeal from the Jennings Superior
                                                           Court
State of Indiana ex rel. Curtis T.                         The Honorable Roger L. Duvall,
Hill, Jr., Attorney General of                             Special Judge
Indiana,                                                   Trial Court Cause No.
Appellee-Plaintiff,                                        40D01-1705-PL-67

Ronald Bloemer, Auto-Owners
Insurance Company, and
OneBeacon Insurance Company,
Defendants.

Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019                            Page 1 of 12
      Najam, Judge.

                                            Statement of the Case
[1]   Cathy Jo Robertson appeals the trial court’s denial of her Indiana Trial Rule

      12(B)(6) motion to dismiss a complaint to recover public funds filed by the

      Office of the Indiana Attorney General (“OAG”), which alleged that Robertson

      had diverted public funds from Jennings County for her personal gain during

      her tenure as a bookkeeper for the Clerk of the Circuit Court of Jennings

      County (“the Clerk’s Office”).1 Robertson raises one issue for our review,

      namely, whether the trial court erred when it denied her motion to dismiss the

      OAG’s complaint on the ground that the complaint had been filed outside the

      two-year statute of limitations.2 Because we hold that the two-year limitations

      period did not begin to run until after the OAG received the final, verified

      report of the Indiana State Board of Accounts (“SBOA”), and because the

      OAG’s complaint against Robertson was filed within two years of the OAG

      having received the final report, we affirm the trial court’s denial of Robertson’s

      motion to dismiss.

                                     Facts and Procedural History
[2]   In 2014, the SBOA conducted a special investigation of the records of the

      Clerk’s Office. The SBOA’s investigation was limited to a review of records

      1
        Ronald Bloemer, Auto-Owners Insurance Company, and OneBeacon Insurance Company, named
      defendants below, do not participate in this interlocutory appeal.
      2
          Liberty Mutual Insurance has filed a brief of amicus curiae in support of Robertson.

      Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019                         Page 2 of 12
      associated with the deposit of funds from January 1, 2009, through April 8,

      2011, during which time Robertson was a bookkeeper for the Clerk’s Office. As

      a result of the investigation, the SBOA compiled a report in which it stated that

      Robertson had diverted $61,393.73 from the county using a “checks substituted

      for cash” scheme. Appellant’s App. Vol. II at 29.

[3]   On December 10, 2014, the SBOA discussed the report with Robertson. The

      next day, the SBOA requested that Robertson refund the money to the county.

      On December 11, the SBOA sent a letter to Jennings County officials and

      included the report with the letter. In the letter, the SBOA stated that it had

      also forwarded a preliminary, unverified report “to the office of the Indiana

      Attorney General and the local Prosecuting Attorney.” Id. at 28. That letter

      provided that the “Official Response to this report has not been examined or

      verified for its accuracy.” Id. Thereafter, SBOA investigators verified the

      report on January 21, 2016. On January 22, the SBOA published the signed

      and verified report and placed a copy of the final report with the OAG.

[4]   Based on the results of the special investigation, the OAG filed a complaint to

      recover public funds against Robertson on May 5, 2017, pursuant to Indiana

      Code Section 5-11-5-1. In Counts I and II of the complaint, the OAG alleged

      that Robertson had misappropriated public funds in the amount of $61,393.73.3

      In Count III, the OAG sought treble damages pursuant to the Crime Victim

      3
        Count I of the complaint related to actions that were alleged to have occurred between January 1, 2009,
      and December 31, 2010. Count II of the complaint related to actions that were alleged to have occurred
      between January 1 and April 8, 2011.

      Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019                              Page 3 of 12
      Relief Act (“CVRA”) in the amount of $184,181.19. The OAG included a copy

      of the SBOA’s published verified report as an exhibit to its complaint.

[5]   Thereafter, Robertson filed a motion to dismiss the OAG’s complaint pursuant

      to Indiana Trial Rule 12(B)(6). In her motion to dismiss, Robertson asserted

      that the OAG’s complaint was subject to a two-year statute of limitations and

      that the OAG had not timely filed its complaint. Specifically, Robertson

      asserted that the OAG’s claim had accrued between January 1, 2009, and April

      8, 2011, as that was the time period during which she was employed as a

      bookkeeper for the Clerk’s Office. In the alternative, Robertson argued that,

      even if the statute of limitations did not begin to run until the OAG had

      discovered the alleged loss of funds, the OAG’s complaint was still time barred

      because the OAG had actual notice of her alleged offenses when the SBOA had

      placed its unverified report with the OAG on December 11, 2014.

[6]   Following a hearing, the trial court determined that the plain language of

      Indiana Code Section 5-11-5-1 provided that “the statute of limitations during

      which the Office of the Indiana Attorney General could institute an action for

      the recovery of monies commenced on January 22, 2016,” when the SBOA

      placed its verified report with the OAG. Id. at 14. The trial court concluded

      that the OAG had filed its complaint within two years of that date and,

      accordingly, denied Robertson’s motion to dismiss. This interlocutory appeal

      ensued.

      Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019        Page 4 of 12
                                      Discussion and Decision
[7]   Robertson contends that the trial court erred when it denied her Indiana Trial

      Rule 12(B)(6) motion to dismiss the OAG’s complaint. As the Indiana

      Supreme Court has stated:

              We review de novo the trial court’s grant or denial of a motion
              based on Indiana Trial Rule 12(B)(6). Babes Showclub v. Lair, 918
              N.E.2d 308, 310 (Ind. 2009). Such a motion tests the legal
              sufficiency of a claim, not the facts supporting it. Charter One
              Mortgage Corp. v. Condra, 865 N.E.2d 602, 604 (Ind. 2007).
              Viewing the complaint in the light most favorable to the non-
              moving party, we must determine whether the complaint states
              any facts on which the trial court could have granted relief. Id. at
              604-05.

      Caesars Riverboat Casino, LLC v. Kephart, 934 N.E.2d 1120, 1122 (Ind. 2010).

      Further, this appeal presents a question of statutory interpretation. “Matters of

      statutory interpretation, which inherently present pure questions of law, are

      reviewed de novo.” Paquette v. State, 101 N.E.3d 234, 237 (Ind. 2018).

[8]   Robertson specifically contends that the trial court erred when it denied her

      motion to dismiss because the OAG filed its complaint after the statute of

      limitations had run. “A motion to dismiss for failure to state a claim [upon]

      which relief [can] be granted is an appropriate means of raising the statute of

      limitations.” Brown v. Vanderburg Cty. Sheriff’s Dep’t, 85 N.E.3d 866, 869 (Ind.

      Ct. App. 2017).

      Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019         Page 5 of 12
[9]    Here, the OAG filed its complaint against Robertson pursuant to Indiana Code

       Section 5-11-5-1. Accordingly, we begin our analysis by reviewing that statute.

       As this court has recently stated, “[t]he primary purpose of statutory

       interpretation is to ascertain and give effect to the intent of the legislature. The

       best evidence of legislative intent is the statutory language itself, and we strive

       to give the words in a statute their plan and ordinary meaning.” 21st

       Amendment, Inc. v. Ind. Alcohol & Tobacco Comm’n, 84 N.E.3d 691, 696 (Ind. Ct.

       App. 2017) (citations and quotations marks omitted).

[10]   Indiana Code Section 5-11-5-1(a) (2018) provides, in relevant part, that,

       whenever the SBOA conducts an examination, “a report of the examination

       shall be made.” That report “must include a list of findings and shall be signed

       and verified by the examiner making the examination.” I.C. § 5-11-5-1(a).

       Further, “[i]f an examination discloses malfeasance, misfeasance, or

       nonfeasance in office or of any officer or employee, a copy of the report, signed

       and verified, shall be placed by the state examiner with the attorney general[.]”

       Id. (emphasis added).

[11]   Additionally, Indiana Code Section 5-11-5-1(d) provides that, if, during an

       examination, a field examiner determines that a substantial amount of public

       funds has been misappropriated and that the malfeasance or misfeasance that

       resulted in the misappropriation was committed by an officer or an employee of

       the officer, the examiner “shall” report that determination to the state

       examiner. However, “[a]fter receiving a preliminary report under subsection

       (d), the state examiner may provide a copy of the report to the attorney

       Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019          Page 6 of 12
       general.” I.C. § 5-11-5-1(e) (emphasis added). The attorney general likewise

       “may” then institute and prosecute civil proceedings against the officer or

       employee based on the preliminary report. Id.

[12]   Here, the SBOA conducted its examination and compiled a report in 2014. On

       December 11, the SBOA sent a letter to Jennings County officials along with

       that report. In that letter, the SBOA stated that a copy of the report had been

       sent to the OAG. But the SBOA also stated that the “Official Response to this

       report has not been examined or verified for its accuracy.” Appellant’s App.

       Vol. II at 28. Only some time thereafter, on January 21, 2016, did SBOA

       examiners verify and sign the report, which the SBOA then placed with the

       OAG the next day.

[13]   In other words, it is clear that the report that the SBOA sent to the OAG on

       December 11, 2014, was a preliminary report as contemplated by Indiana Code

       Section 5-11-5-1(e).4 The SBOA report did not become the final report under

       Indiana Code Section 5-11-5-1(a) until the examiners verified the report on

       January 21, 2016. And the OAG did not have notice of the final report until

       January 22, 2016.

       4
         To the extent the OAG asserts that it did not receive the preliminary report in 2014, the face of its
       complaint demonstrates that the SBOA sent the report. Further, to the extent that the OAG asserts that the
       contents of the audit report are confidential and that the OAG is unable to see the report until the report is
       published, we can discern no basis to support that argument from Indiana Code Section 5-11-5-1. Rather, the
       plain language of that statute provides that the state examiner may provide a copy of the preliminary report
       to the OAG.

       Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019                               Page 7 of 12
[14]   On appeal, the parties agree that the OAG’s complaint is subject to a two-year

       statute of limitations. Indeed, there is no dispute that Counts I and II of the

       complaint are subject to a two-year statute of limitations pursuant to Indiana

       Code Section 34-11-2-4(2).5 And both parties agree that Count III is also

       subject to a two-year statute of limitations. See Prime Mortg. USA, Inc., v.

       Nichols, 885 N.E.2d 628, 638 (Ind. Ct. App. 2008). But the parties dispute when

       the OAG’s claims against Robertson accrued. Robertson asserts that the

       OAG’s claims against her accrued on December 11, 2014, when the OAG

       received a copy of the preliminary report from the SBOA.6 However, the OAG

       contends that its claims did not accrue until January 22, 2016, when it received

       a copy of the final signed and verified report from the SBOA. Accordingly, in

       this case of first impression, we must determine whether the OAG’s claims

       under Indiana Code Section 5-11-5-1 accrue and, thus, whether the statute of

       limitations begins to run when the OAG receives a copy of a preliminary report

       or whether the claims accrue only when the OAG receives the SBOA’s final,

       verified report. We hold that, as a matter of law, the OAG’s claims under

       Indiana Code Section 5-11-5-1 do not accrue until it receives the SBOA’s final

       report that has been signed and verified.

       5
         In its response to Robertson’s motion to dismiss, the OAG asserted that its complaint against Robertson
       was subject to a five or six-year statute of limitations pursuant to Indiana Code Section 34-11-2-6(c).
       However, on appeal, the OAG does not make any argument under that statute. Rather, the OAG simply
       contends that its action to recover funds “was timely under a two-year statute of limitations.” Appellee’s Br.
       at 13 (emphasis removed).
       6
         Robertson also briefly asserts that the claims against her accrued between January 1, 2009, and April 8,
       2011, as that was the time period when she was employed as a bookkeeper in the Clerk’s Office. However,
       Robertson does not cite any authority to support her contention nor does she argue that the discovery rule
       does not apply.

       Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019                                Page 8 of 12
[15]   Although the SBOA has discretion to provide a copy of the preliminary report

       to the OAG pursuant to Indiana Code Section 5-11-5-1(e), which discretion the

       SBOA here exercised in December 2014, those reports are not signed or

       verified. Such preliminary reports are not final and are subject to change as the

       SBOA continues its examination. Contrary to Robertson’s argument on

       appeal, we cannot agree that our legislature intended for the statute of

       limitations to begin to run when the OAG receives a copy of an unverified

       report that is not yet final and that is still subject to change.

[16]   Further, when we interpret a statute, “we are mindful of both what it does say

       and what it does not say.” ESPN, Inc. v. Univ. of Notre Dame Police Dep’t, 62

       N.E.3d 1192, 1195-96 (Ind. 2016) (quotation marks omitted). “We may not

       add new words to a statute which are not the expressed intent of the

       legislature.” Ind. Alcohol & Tobacco Comm’n v. Spirited Sales, LLC, 79 N.E.3d

       371, 376 (Ind. 2017). Here, the language of Indiana Code Section 5-11-5-1(e) is

       merely permissive. Indeed, the SBOA “may” provide a copy of the preliminary

       report to the OAG, at which point the OAG “may” institute civil proceedings

       against the defendant. I.C. § 5-11-5-1(e). We cannot read into the statute a

       requirement where there is not one. If we were to hold that the two-year statute

       of limitations begins to run when the OAG receives the preliminary report, we

       would, in effect, oblige the OAG to act on a preliminary report, which would

       transform a permissive statute into a mandatory statute. In other words, we

       would require the OAG to take action or otherwise risk having the statute of

       Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019         Page 9 of 12
       limitations run even though action on a preliminary report is not required under

       the plain language of the statute.

[17]   On the other hand, the plain language of Indiana Code Section 5-11-5-1(a) is

       clear. If, upon the completion of an examination, the SBOA concludes that

       malfeasance, misfeasance, or nonfeasance in any office or of any officer or

       employee occurred, a copy of the signed and verified final report “shall” be

       placed by the SBOA with the OAG. I.C. § 5-11-5-1(a). At that point, the OAG

       “shall” diligently institute civil proceedings against the defendant. Id. It is clear

       that the OAG is required to act under I.C. § 5-11-5-1(a) after it receives the final

       report from the SBOA. It is also clear that the legislature has required the OAG

       to take action only when the OAG receives the final report and not when it

       receives a preliminary report. Thus, we decline to hold that the statute of

       limitations begins to run prior to the time the OAG is required to act.

[18]   Still, the amicus contends that “[a]ny information or knowledge that the State

       Examiner or his subagents acquire in carrying out [their] duties is imputed to

       the State” and the OAG. Br. of Amicus Curiae at 9. Additionally, Robertson

       asserts that any information that the Jennings County officials received from

       the SBOA is also imputed to the OAG.7 We cannot agree on these facts.

       Indiana Code Section 5-11-5-1 is clear. The OAG obtains information from the

       SBOA that requires action from the OAG only when the SBOA has placed a

       7
         Neither Robertson nor the amicus contends that the SBOA or Jennings County is in privity with the OAG,
       as was the case in Becker v. State, 992 N.E.2d 697, 701 (Ind. 2013) (holding that the local prosecutor and the
       DOC were in privity for purposes of res judicata).

       Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019                               Page 10 of 12
       signed and verified final report with the OAG. We therefore decline to hold

       that any information obtained by the SBOA or that the SBOA has given to the

       county is automatically imputed to the OAG.

[19]   Further, Robertson and the amicus assert that, by holding that knowledge is not

       imputed to the OAG and that the statute of limitations does not begin to run

       until the OAG receives the final report, the SBOA would be able to

       “indefinitely toll the statute of limitations by delaying publication of the

       report.” Appellant’s Br. at 15. Insofar as Robertson and the amicus contend

       that the SBOA can toll the statute of limitations indefinitely by prolonging an

       investigation, the contrary intent of the General Assembly is clear. The statute

       of limitations does not begin to run until the OAG receives the final report from

       the SBOA. Further, Indiana Code Section 5-11-5-1 does not prescribe a time

       limit for conducting an examination. And, again, we cannot read a

       requirement into the statute where there is none. Rather, it is clear that the

       legislature understood that some investigations by the SBOA would take longer

       than others and, accordingly, declined to place a time restriction on the SBOA

       to conduct an investigation.

[20]   To the extent that Robertson and the amicus assert that the SBOA can toll the

       statute of limitations indefinitely by withholding placement of the final report

       with the OAG, we again disagree. Indiana Code Section 5-11-5-1(a) requires

       the SBOA to file a copy of the final signed and verified report “immediately.”

       And, here, SBOA examiners signed and verified the report on January 21,

       2016, and then promptly placed a copy with the OAG on January 22.

       Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019        Page 11 of 12
[21]   In sum, we hold that the statute of limitations for the OAG’s complaint to

       recover public funds does not begin to run until the OAG receives the final,

       verified report from the SBOA. In the present case, the OAG received the final,

       verified report from the SBOA on January 22, 2016. Accordingly, the OAG’s

       claim accrued and the statute of limitations began to run on that date. And the

       OAG filed its complaint against Robertson on May 5, 2017, less than two years

       after the OAG had received the final report. Accordingly, the OAG timely filed

       its complaint, and the trial court did not err when it denied Robertson’s motion

       to dismiss. We affirm the trial court.

[22]   Affirmed.

       Pyle, J., and Altice, J., concur.

       Court of Appeals of Indiana | Opinion 18A-PL-1002 | March 29, 2019     Page 12 of 12