Cathy Jo Robertson v. State of Indiana ex rel. Curtis T. Hill, Jr., Attorney General of Indiana Ronald Bloemer, Auto-Owners Insurance Company, and OneBeacon Insurance Company , 121 N.E.3d 588 ( 2019 )

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.
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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.
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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.
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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.
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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).
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[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
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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.
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[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.
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[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
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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).
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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.
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[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.
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