Recovery case against former bookkeeper to continue in part

A case seeking to recover public funds from a former Jennings County bookkeeper will continue after the Indiana Supreme Court determined two of the three claims brought by the state were not governed by the discovery rule and, thus, were timely filed. The third claim, however, was untimely.

In the case of Cathy Jo Robertson v. State of Indiana, 19S-PL-432, the Indiana Attorney General’s Office filed a complaint in 2017 to recover funds from Cathy Jo Robertson after results from a special investigation conducted by the Indiana State Board of Accounts in 2014 revealed she had diverted more than $61,000 in public funds for her personal gain. The “checks-substituted-for-cash” scheme was carried out while Robertson was working as a Jennings County bookkeeper.

Robertson filed a motion to dismiss the OAG’s complaint pursuant to Indiana Trial Rule 12(B)(6), asserting the complaint was subject to a two-year statute of limitations that was not met. However, the Indiana Court of Appeals determined the statute of limitations period did not begin to run until after the OAG received the final report in 2016, thus making the complaint timely.

In a Monday opinion, Indiana Supreme Court justices reversed in part, affirmed in part and remanded, first affirming the Jennings Superior Court’s denial of Robertson’s motion to dismiss the two counts alleging misappropriation of public funds.

The high court agreed with the trial court and Court of Appeals that the Indiana Legislature did not intend for the discovery rule to apply to claims brought pursuant to Indiana Code § 5-11-5-1(a).

“That is, the plain language of the statute does not require the OAG to take any action until it receives a verified final report,” Justice Steven David wrote for the high court. “Therefore, the statute controls instead of the default discovery rule for when claims under this statute must be brought. To hold otherwise would require us to rewrite the statute such that the permissive ‘may’ would become a ‘shall’ with regard to the OAG instituting legal action after receiving a preliminary report.”

The justices thus held that the statute of limitations for the OAG’s complaint to recover public funds pursuant to I.C. 5-11-5-1(a) did not begin until the OAG received from SBOA the final, verified report in 2016.

However, the court reversed the trial court’s denial of Robertson’s motion to dismiss Count III, which was a claim for additional relief under the Crime Victims Relief Act.

The court found that the CVRA claim was untimely. Specifically, it noted that a different statute — I.C. 34-24-3-1 — governs with regard to that claim.

“This statute does not provide a limitations period, and thus, the default discovery rule applies as there is no legislative intent to the contrary and our case law, discussed above, is clear that the two-year limitations period applies to these claims,” the justices wrote. “… The OAG knew or should have known of its injury by December 11, 2014, when the SBOA provided the OAG with a copy of its preliminary report and the complaint was not filed until May of 2017, more than two years later.”

The high court therefore remanded for further proceedings consistent with the opinion.

Concurring in judgment with a separate opinion, Justice Geoffrey Slaughter wrote to address the high court’s approval of using Trial Rule 12(B)(6) to decide the merits of an affirmative defense “contrary to our recent case law.”

“We held unanimously in Bellwether Properties, LLC v. Duke Energy Indiana, Inc., 87 N.E.3d 462 (Ind. 2017), that dismissal under Trial Rule 12(B)(6) is ‘rarely appropriate when the asserted ground for dismissal is an affirmative defense,’” Slaughter wrote. “…The Court does not mention Bellwether or the legal principle we announced there. This omission risks leaving the reader with the misconception that a 12(B)(6) motion is the proper procedural vehicle for defeating an untimely claim. Most of the time, it is not.”