Hendricks County, Indiana v. Gwyn L. Green , 120 N.E.3d 1118 ( 2019 )

FILED
Mar 19 2019, 9:27 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Mark J. Crandley Ryan P. Sink
Barnes & Thornburg, LLP Indianapolis, Indiana
Indianapolis, Indisana
AMICUS CURIAE
Probation Officers Professional
Association
Fred Anthony Paganelli
Stephanie L. Grass
Thomas D. Perkins
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Hendricks County, Indiana, et March 19, 2019
al., Court of Appeals Case No.
Appellants-Defendants, 18A-PL-2528
Appeal from the Boone Superior
v. Court
The Honorable Matthew C.
Gwyn L. Green, Kincaid, Judge
Appellee-Plaintiff. Trial Court Cause No.
06D01-1711-PL-1416
Riley, Judge.
Court of Appeals of Indiana | Opinion 18A-PL-2528 | March 19, 2019 Page 1 of 13
STATEMENT OF THE CASE
[1] Appellants-Defendants, Hendricks County, Indiana (County) and Hendricks
County Courts, 1 appeal the trial court’s decision on Appellee-Plaintiff’s, Gwyn
L. Green (Green), motion for judgment on the pleadings, concluding that
Green was entitled to a cash payout of her paid-time-off (PTO) as a form or
earned wages under Indiana’s Wage Payment Statute at the time of her
resignation as a probation officer from the Hendricks County Courts. 2
[2] We affirm.
ISSUES
[3] The County presents us with two issues on appeal, which we restate as:
(1) Whether the County may decline to pay cash for unused PTO pursuant
to Indiana’s Wage Payment Statute and in accordance with the County’s
employee manual; and
(2) Whether the Wage Payment Statute waives sovereign immunity even
though the Statute is silent as to whether it applies to government
entities.
1
Appellant-Defendant, Hendricks County Courts, filed a notice of non-involvement with this court as it does
not have an interest in this appeal. We accepted the notice on January 31, 2018. However, facts with respect
to Hendricks County Courts will be included in so far as they are relevant to this appeal.
2
We acknowledge that the Probation Officers Professional Association of Indiana, Inc. filed an Amicus Curiae
Brief with this court in support of Green.
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FACTS AND PROCEDURAL HISTORY
[4] Green worked as a probation officer for the Hendricks County Courts from
October 1993 until her voluntary resignation on September 29, 2017. At the
time of her resignation, Green had accrued 331 hours of unused PTO. Instead
of taking the time off, she sought to recover the accumulated hours as a cash
payment pursuant to the provisions of the employee manual for the Hendricks
County Probation Department, which stated that “[r]egardless of notice given,
upon resignation, the Department shall pay for personal time which has
accrued not exceeding 420 hours.” (Appellant’s App. Vol. II, p. 17).
[5] The County maintains that its own employee manual which sets the policies
applicable to all County employees is applicable to probation officers. Pursuant
to the County’s manual, employees are not granted a cash payout for PTO
when they resign. Instead, “[a]ccrued PTO will only be paid out upon
retirement or disability retirement to eligible employees.” (Appellant’s App.
Vol. II, p. 87). This policy was sent to all County employees and it is
undisputed that Green received a copy.
[6] On or about October 6, 2017, the Hendricks County Courts sought an
appropriation from the County to pay Green’s accrued and unused PTO. The
County Council rejected the request, voting 7-0 to deny because “if this payout
was awarded, contrary to [the County] Policy Manual, there would be a good
argument for other employees to receive the same standing.” (Appellant’s App.
Vol. II, p. 28).
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[7] On November 21, 2017, Green filed a Complaint against the County and the
Hendricks County Courts, seeking a cash payment of her accumulated PTO
pursuant to the Indiana Wage Payment Statute. The County answered the
Complaint and moved for summary judgment on February 22, 2018. Green
opposed the motion for summary judgment and, on March 9, 2018, moved for
judgment on the pleadings, claiming a right to her PTO payment as a matter of
law. On June 11, 2018, the trial court denied the County’s motion for summary
judgment. On September 28, 2018, following a hearing, the trial court entered
an Order concluding that Green is “adjudged to be employed by the Hendricks
County Courts and entitled to compensation in the principal amount of
$11,075.26.” (Appellant’s App. Vol. II, p. 11). The trial court reached this
conclusion holding that “The Hendricks County Courts, and not [the County]
(fiscal body), sets the salary and controls the terms, condition, and privileges of
Probation Officers. See Ind. Code § 11-13-1-1 []; Ind. Code § 11-13-1-8 []; Ind.
Code § 36-2-16.5-3[.]” (Appellant’s App. Vol. II, p. 9).
[8] The County now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
[9] On appeal, the County contends that the trial court erred by granting Green’s
motion for judgment on the pleadings. A judgment on the pleadings pursuant
to Indiana Trial Rule 12(C) attacks the legal sufficiency of the pleadings.
Shepherd v. Truex, 823 N.E.2d 320, 324 (Ind. Ct. App. 2005). In reviewing a
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trial court’s decision on a motion for judgment on the pleadings, this court
conducts a de novo review. Id. We will affirm the trial court’s grant of a Trial
Rule 12(C) motion for judgment on the pleadings when it is clear from the face
of the pleadings that one of the parties cannot in any way succeed under the
operative facts and allegations made therein. Id. In addition, when we
consider a motion for judgment on the pleadings, we deem the moving party to
have admitted “all facts well pleaded, and the untruth of his own allegations
which have been denied.” Id. (quoting New Trend Beauty Sch., Inc. v. Indiana
State Bd. of Beauty Culturist Examiners, 518 N.E.2d 1101, 1103 (Ind. Ct. App.
1988)). All reasonable inferences are drawn in favor of the nonmoving party
and against the movant. Id.
[10] When reviewing a Trial Rule 12(C) motion, we may look only at the pleadings
and any facts of which we may take judicial notice, with all well-pleaded
material facts alleged in the Complaint taken as admitted. Consol. Ins. Co. v.
Nat’l Weather Servs., LLC, 994 N.E.2d 1192, 1196 (Ind. Ct. App. 2013). “The
‘pleadings’ consist of a complaint and an answer, a reply to any counterclaim,
an answer to a cross-claim, a third-party complaint, and an answer to a third-
party complaint.” Id. “Pleadings” also consist of any written instruments
attached to a pleading, pursuant to Ind. Trial Rule 9.2. Id.
II. Unused PTO
[11] Indiana has established a system of governmental checks and balances that
divides the authority over the courts’ administration between the judiciary and
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the executive branches. The judiciary is an independent branch of the
government and is constitutionally obligated to keep the courts open for the
administration of justice. Ind. Const. art. 1 § 12. The power of the judiciary is,
therefore of necessity, coequal to its duties. Knox Co. Council v. State ex. Rel.
McCormick, 29 N.E.2d 405, 408 (Ind. 1940). Because courts are constitutionally
obligated to be open and because the operation of a probation office is a court-
related function, the courts have the corresponding constitutional power to pay
probation officers at a level sufficient to attract and maintain qualified
personnel. Noble Co. Council v. State ex rel. Fifer, 125 N.E.2d 709,714-17 (Ind.
1955). As such, the Indiana Legislature has determined that “probation officers
serve at the pleasure of the courts that appoint them.” I.C § 11-13-1-1(c).
[12] The task of adopting rules and regulations prescribing minimum standards
applicable to probation officers was assigned by the Legislature to the Board of
Directors of the Judicial Conference of Indiana. I.C. § 11-13-1-8(b)(2). Using a
central judicial entity with special expertise to establish minimum salary levels
for probation officers, rather than having separate determinations in each
county, is more efficient and insures fairness and some degree of uniformity in
the setting of salaries by trial courts statewide. Matter of Madison Co. Probation
Officers’ Salaries, 682 N.E.2d 498, 501 (Ind. 1997).
[13] However, while the power of appointment and establishment of minimum
salary levels fall squarely within the province of the judiciary, our Legislature
has also determined that “the salary of a probation officer shall be paid out of
the county, city, or town treasury by the county auditor or city controller.” I.C.
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§ 11-13-1-1(c). “In consultation with (1) at least one (1) judge of a court or
division of a court authorized to impose probation; and (2) at least one (1)
probation officer; the county, city or town fiscal body shall adopt a salary
schedule setting the compensation of a probation officer. The salary schedule
must comply with the minimum compensation requirements for probation
officers adopted by the judicial conference of Indiana under I.C. § 11-13-1-8.”
I.C. § 36-2-16.5-3. As such, the county, city, or town fiscal body shall fix the
salary of a probation officer based on the salary schedule adopted under this
chapter. I.C. § 36-2-16.5-4. “Unless otherwise specified in the salary schedule,
a probation officer is entitled to the same benefits, holidays, and hours as other
county, city, or town employees.” I.C. § 36-2-16.5-5.
[14] Focusing on I.C. § 36-2-16.5-5’s promulgation that “a probation officer is
entitled to the same benefits” as other county employees, the County contends
that the trial court’s Order to require the County to make a cash payment of
Green’s PTO violates the County’s policy for its employees, as the County’s
own employee manual unequivocally prohibits the use of County funds to pay
unused PTO when—as in the case before us—an employee resigns. On the
other hand, Green characterizes the PTO as a deferred compensation which,
pursuant to I.C. § 36-2-16.5-5, is not regulated by the County’s employee
manual.
[15] “Deferred payment of compensation that accrued during an employee’s tenure
is a wage.” Swift v. Speedway Superamerica, LLC, 861 N.E.2d 1212, 1215 (Ind.
Ct. App. 2007). “Common forms of deferred compensation include various
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forms of PTO, pension benefits, retirement savings plans, stock options,
healthcare plans, annuities, etc.” Id. Unlike present compensation, which is
generally provided for by contract, deferred compensation may be provided for
by contract, by policy, or a combination of the two. Id. In Die & Mold, Inc. v.
Western, 448 N.E.2d 44, 46-47 (Ind. Ct. App. 1983) (internal quotations
omitted), which involved a dispute about vacation time, we concluded, as an
issue of first impression, that
[v]acation pay is in the nature of deferred compensation in lieu of
wages earned each week the employee works, and is payable at
some later time. An agreement to give vacation pay to
employees made before they perform their service, and based
upon the length of service and time worked is not a gratuity but
rather is in the form of compensation services. And when the
services are rendered, the right to receive the promised
compensation is vested, as much as the right to receive wages or
other forms of compensation.
See also McCausland v. Walter USA, Inc., 918 N.E.2d 420, 427 (Ind. Ct. App.
2009) (“compensated vacation pay is considered a wage and is subject to the
provisions of the Wage Payment Statute.”) As such, employment
compensation and wages are contingent on working, whereas an employment
benefit is independent and exclusive of an employee’s actual work schedule.
Accordingly, as Green’s PTO is a deferred compensation which must be
considered as part of her wages, her PTO is not subject to the confines of I.C. §
36-2-16.5-5, which by its own explicit terms does not include deferred
compensation or wages, and therefore the PTO cannot be regulated by the
County’s employee manual.
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[16] In an effort to bring PTO within the list of benefits regulated by I.C. § 36-2-16.5-
5, the County points to the General Assembly’s mandate that probation officers
must receive at least the minimum salary set by a schedule promulgated by the
Judicial Center of Indiana. See I.C. §§ 36-2-16.5-3; 11-13-1-8. This minimum
salary, as determined by the Judicial Center of Indiana, is “the gross salary paid
to a probation officer and does not include the employer’s contributions to
PERF/retirement program, disability, medical or other insurance programs, or
deferred compensation.” (Appellant’s App. Vol. II, p. 113). The Judicial
Center of Indiana categorizes gross salary and deferred compensation as two
separate items; at the same time, the definition also distinguishes deferred
compensation from an employer’s contributions to the employee’s benefits of
PERF/retirement program, disability, and medical or other insurance
programs. Therefore, it is clear that even the Judicial Center of Indiana does
not view deferred compensation as an equivalent to employee’s benefits.
[17] Moreover, the County’s own employee manual belies the fact that probation
officers must be treated similar to other County employees. Page (i) of the
County’s handbook states that:
while these personnel policies apply to most County employees,
they do not apply to all employees. Elected Officials, unless
otherwise provided by law, are generally exempt from these
policies. Likewise, employees of Hendricks County courts
should confirm with their respective court whether they are
covered by these policies.
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(Appellant’s App. Vol. II, p. 45). The Hendricks County Courts’ request,
seeking an appropriation from the County to pay Green’s accrued and unused
PTO, clearly signaled that the courts considered the County’s PTO policy
inapplicable to probation officers, as they are employees of the courts.
[18] As established court employees, probation officers’ salaries are fixed by the
courts through the Judicial Conference of Indiana and are paid out of the
county or city treasury. Because judicial precedents categorize deferred
compensation as wages or salary, the determination as to whether deferred
compensation can be cashed out falls statutorily within the ambit of the
judiciary, as I.C. § 36-2-16.5-5 expressly mandates only benefits to be within the
province of the executive branch, i.e., the County. Therefore, we affirm the trial
court’s Order. 3
III. Sovereign Immunity
[19] Even though we find that Green has a viable claim and is entitled to a cash
payment for PTO, the County now contends that its sovereign immunity under
the Wage Payment Statute nevertheless bars Green’s claim.
3
The County also maintains that the trial court’s Order acts as a mandate of funds without applying the
mandate protection of Indiana Trial Rule 60.5. The County is correct that, if the trial court had ordered
Green to be paid and the County had refused to pay her, the Trial Rule 60.5 mandate procedure could be
employed to order that the funds be paid to Green. However, this is not yet the dispute before us. Rather,
here the parties’ argument revolves around the applicability of the County’s employee manual in light of I.C.
§ 36-2-16.5-5, and thus the trial court’s Order is more akin to a declaratory judgment. Moreover, a mandate
ordering a county to release funds must be initiated by a court as there is no private cause of action to compel
a mandate of funds. See T.R. 60.5; Knoebel v. Clark Co. Superior Court No. 1, 901 N.E.2d 529, 533 (Ind. Ct.
App. 2009).
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[20] A statutory claim against the government exists only when a statute “clearly
evinces” the General Assembly’s intention to waive sovereign immunity.
Essermann v. Ind. Dep’t of Envtl. Mgmt., 84 N.E.2d 1185, 1191-92 (Ind. 2017). A
presumption exists that the General Assembly did not waive sovereign
immunity, and our supreme court in Esserman has required a “high bar for
overcoming the presumption.” Id. As such, a statute must contain “an
affirmative ‘expression’ or ‘declaration’ of the legislature’s intention to waive
the State’s immunity” and requires that there is a “waiver of sovereign
immunity only when the statute at issue contains an unequivocal statement that
clearly evinces the legislature’s intention to subject the State to suit for the
specific statutory claims asserted.” Id. at 1192
[21] Turning to the Wage Payment State, Indiana Code section 22-2-5-1 identifies
“[e]very person, firm, corporation, limited liability company, or association,
their trustees, lessees, or receivers appointed by any court, doing business in
Indiana” as being subject to the provisions of the Statute. Although the Statute
appears to be silent with respect to governmental entities or public employees,
our supreme court extended in Naugle v. Beech Grove City Schools, 864 N.E.2d
1058 (Ind. 2007), the definition of person in I.C. § 22-2-5-1 to encompass
“bodies politic and corporate,” as defined in I.C. § 1-1-4-17(17). Specifically, in
finding that public school entities are subject to claims under the Wage
Payment Statute, the Naugle court held:
The Wage Payment Statute applies to ‘[e]very person, firm,
corporation, limited liability company, or association, their
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trustees, lessees, or receivers appointed by any court, doing
business in Indiana . . ..’ Indiana Code section 1-1-4-5(17)
extends the definition of a ‘person’ to include ‘bodies politic and
corporate.’ Moreover, Indiana Code section 20-26-2-4 defines a
school corporation as ‘a local public school corporation
established under Indiana law . . .’ Thus, Beech Grove is a
‘person’ and a ‘corporation’ as these terms are used in the Wage
Payment Statute[.]
Id. (emphasis added). The Naugle holding is consistent with earlier opinions
from the court of appeals that assumed, without specific discussions, that the
Wage Payment Statute applied to governmental employers. See Abner v. Dep’t of
Health of State of Ind. Ex rel. Ind. Soldiers’ and Sailors’ Children’s Home, 777 N.E.2d
778, 784 (Ind. Ct. App. 2002), trans. denied; Cox v. Town of Rome City, 764
N.E.2d 242, 249-50 (Ind. Ct. App. 2002); Schwartz v. Gary Cmty. Sch. Corp., 762
N.E.2d 192, 198 (Ind. Ct. App. 2002), trans. denied; Hendershot v. Carey, 616
N.E.2d 412 (Ind. Ct. App. 1993), overruled on other grounds by St. Vincent Hosp.
and Health Care Ctr. v. Steele, 766 N.E.2d 699, 703 (Ind. 2002). The failure of the
Legislature to change the Statute to exclude governmental employers in light of
these decisions supports our supreme court’s extended interpretation of the
Statute. See In re Adoption of Infant Child Baxter, 799 N.E.2d 1057, 1062 (Ind.
2003).
[22] The Wage Payment Statute clearly envisages employees, public or private, as
the persons included in the Statute and there is no reason to believe it was the
intent of the Legislature to exclude the County from liability under the Statute.
County employees rely on their wages to the same extent as employees in the
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private sector, and nothing in the Wage Payment Statute supports excluding
them from its protection. Accordingly, as it is undeniable that the County is a
body politic, it is subject to the Wage Payment Statute and cannot claim
sovereign immunity.
CONCLUSION
[23] Based on the foregoing, we hold that, as court employees, probation officers are
entitled to a cash payout of unused PTO in accordance with the Court’s
employee manual and the County is not entitled to sovereign immunity under
the Wage Payment Statute.
[24] Affirmed.
[25] Kirsch, J. and Robb, J. concur
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