COA affirms declaratory judgment in case involving Clinton Co. sheriff who hired wife as jail matron

The Court of Appeals of Indiana affirmed a trial court’s declaratory judgment in a case involving Clinton County’s sheriff and his wife, ruling that it was not unlawful for a sheriff to appoint his wife as a jail matron and appoint a legal deputy of his choosing, but the county’s commissioners have oversight over contracts with that deputy that might encumber the county’s general fund.

The Tippecanoe Circuit Court’s order made no determination regarding any criminal activity in the case.

According to court records, in January 2019, Richard Kelly began his term as Clinton County’s sheriff.

Kelly appointed his spouse, Ashley Kelly, as the jail matron and manager of the jail commissary for the sheriff’s office.

The sheriff also appointed a legal deputy to serve the sheriff’s office.

The Indiana State Board of Accounts and Indiana State Police investigated the use of the jail’s commissary fund.

The Indiana Attorney General’s Office has also filed a complaint to recover public funds from the Clinton County sheriff and his wife, who are also facing conflict of interest and official misconduct charges for alleged misuse of jail commissary funds.

In March 2021, the Board of Commissioners of Clinton County filed a complaint for emergency preliminary injunctive relief requesting an order prohibiting Kelly from expending any further money from the commissary fund.

In April 2021, an amended complaint was filed adding, as plaintiff, the County Council of Clinton County. The trial court issued an order on June 14, 2021, denying the board’s and council’s request for a preliminary injunction.

On June 25, 2021, the sheriff’s office and Kelly filed a counterclaim for declaratory judgment requesting that the trial court make the following determinations:

(A) Ind. Code §§ 36-2-2-2, 36-1-3-5(a)(2), and 36-8-10-212 allow elected officers, including Sheriff Kelly, to execute their own contracts subject to their budgets;

(B) Ind. Code § 36-8-10-10.6 provides that Kelly is entitled to appoint a legal deputy, neither the board nor the council approve the contract for the legal deputy, and the Council must appropriate a reasonable amount to pay the legal deputy;

(C) Ind. Code § 36-8-10-21 provides for the commissary fund and neither the board nor the council approve contracts for personnel regarding the commissary, including contracts for commissary manager;

(D) Kelly did not unlawfully pay legal fees from the commissary fund when there was a resolution in place for him to pay expenses for contracting with professional consultants;

(E) Kelly was entitled to pay for legal fees from the commissary for the defense of this and other actions challenging the operation of the fund.  The counterclaim alleged no contract needed approval by the board and council given that no public funds were used to pay the commissary manager.

In October 2021, the board and council filed a motion to dismiss their complaint, and the trial court granted the motion.

Both the Clinton County board and council and Kelly and the sheriff’s office filed motions for summary judgment.

In their motion, Kelly and the sheriff’s office stated they filed the declaratory judgment action to prevent the interference of the board and council in the operations of the sheriff’s office.

In her affidavit, Ashley Kelly stated that she served as the jail matron as an employee of the sheriff’s office and also provided services as the commissary manager, which was a contractor position, and that her compensation as commissary manager was based on sales.

In their summary judgment motion, the board and council argued that the board as the county executive is the only entity in county government allowed to enter into contracts and that there are financial limits to the sheriff’s ability to contract and pay for a legal deputy.

On July 7, 2022, the court entered an order finding that the sheriff and his wife created Leonne LLC to receive profits from the sale of commissary items, with Ashley Kelly as a 51% member, and Richard Kelly as a 49% member.

The order stated the agreements to hire and pay Ashley Kelly and/or deposit profits into Leonne LLC were not submitted to the county for approval, and “[c]onversely, the former commissary manager, Nancy Ward, wife of former Sheriff Jeff Ward, signed annual contracts with the county, along with conflict of interest disclosures.”

The trial court declined to enter declaratory relief regarding the sheriff’s authority to appoint a legal deputy of his choosing or whether the council must appropriate a reasonable amount to pay that deputy.

It also ruled that it was not unlawful for the sheriff to appoint his wife as the jail matron and declined to enter declaratory relief on the broad question of whether elected officers can execute their own contracts subject to their budgets.

Also, the trial court found that Indiana Code § 36-8-10-21 provides for the sheriff’s commissary fund, and the county must approve contracts regarding the distribution of profits from the commissary fund.

Further, the trial court found that during the period of time when Council Resolution 2017-05 was in place, it was not unlawful for the sheriff to pay legal fees from the commissary fund for legal work of the sheriff’s office, without approval of the county.

It found that during the period of time when that resolution was not in place, the sheriff was still entitled to pay for legal fees from the sheriff’s commissary fund for all matters related to expenses of operating the commissary, without approval of the county.

The appellate court affirmed the trial court’s ruling and expressed no opinion as to any criminal actions or the sheriff’s office and Kelly’s ability to recover attorney fees.

Writing for the court, Judge Elaine Brown said that, to the extent Kelly and the sheriff’s office requested the trial court to make the determination that elected officers, including Kelly, are allowed to execute their own contracts subject to their budgets, the trial court stated that requests for declaratory relief “must be limited to specific cases and controversies to avoid unintended consequences and judicial overreach” and “decline[d] the invitation to answer this broad question of law.”

“We agree the trial court was not required to enter the broad declaratory judgment requested by Appellants. We find no error in this respect,” Brown wrote.

The appellate court agreed that Ind. Code § 36-8-10-10.6 provides that the sheriff may appoint a legal deputy and that the council and board do not have the authority to reject the sheriff’s selected legal deputy.

The court also found that the trial court’s determination that agreeing upon a reasonable rate for the legal deputy’s fees as an inherent part of the appointment is reasonable and consistent with the intent of state law.

“The court’s limited determination seeks to avoid rendering superfluous the language in the foregoing statutes. We do not disturb the trial court’s limited determinations under these circumstances. For the foregoing reasons, we affirm the trial court,” Brown wrote.

Judges L. Mark Bailey and Leanna Weissmann concurred.

The case is The Clinton County Sheriff’s Office and Sheriff Richard Kelly v. The Board of Commissioners of Clinton County and the County Council of Clinton County, 22A-PL-2640.