Feb 29 2016, 9:24 am
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Wayne E. Uhl Eric A. Frey
Stephenson Morow & Semler Frey Law Firm
Indianapolis, Indiana Terre Haute, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Town of West Terre Haute, February 29, 2016
Indiana, Court of Appeals Case No.
84A01-1503-CT-106
Appellant-Defendant,
Appeal from the Vigo Superior
v. Court.
The Honorable J. Blaine Akers,
Special Judge.
Jody Roach, Cause No. 84D06-1306-CT-5193
Appellee-Plaintiff.
Shepard, Senior Judge
[1] The Town of West Terre Haute discharged its employee Jody Roach in the
course of addressing an audit of the Clerk-Treasurer’s office. The trial court
hearing Roach’s suit against the Town and other government actors granted
summary judgment to all defendants except the Town, which now appeals. We
reverse and remand.
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Issues
[2] The two issues presented in this appeal follow.
I. Does the Town’s failure to hold a pre-termination hearing
support Roach’s claim for money damages?
II. Is the Town entitled to summary judgment on Roach’s
defamation claim?
Facts and Procedural History
[3] Roach was an at-will employee of the Town in the office of the elected Clerk-
Treasurer, Melody Buchanan. She served as a utility clerk, and thus handled
the payment of public funds, including water bill payments. Roach received
funds from utility customers, put the cash or check in a drawer, issued the
customer a receipt, kept a copy, and posted the payment to each customer’s
account. She also filled out deposit slips and carried deposits to the bank.
Vickie Ashburn, the deputy clerk-treasurer, occasionally handled deposits when
Roach was busy with other duties.
[4] The State Board of Accounts conducted one of its periodic audits in early 2011,
covering 2009-2010. In about April 2011, field examiners Laura Ping and Katie
Elliott informed the town council president, Scott McClain, and Buchanan that
their preliminary investigation revealed missing funds and that they would
conduct further review. On June 28, 2011, McClain arrived at the town office
to meet with SBOA representatives about the audit. Looking out the window,
he saw police cars and officers accompanied by Ping and Elliott. Officers
escorted Buchanan, Ashburn, and Roach from the building and served McClain
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with search warrants authorizing the officers to take papers from the office.
McClain collected and surrendered all keys to the office.
[5] The Attorney General obtained a temporary restraining order seeking
prejudgment attachment and garnishment from Roach and the two others. The
request for the TRO alleged that, according to a preliminary report of SBOA,
Roach “wrongfully or negligently failed to properly account for, expend,
and/or deposit the funds of the Town, or otherwise committed several acts of
misfeasance, malfeasance, and nonfeasance which resulted in the
misappropriation or diversion of public funds.” Appellant’s Appendix at 161.
The Town’s loss was estimated at over $360,000. A deputy state examiner’s
affidavit in support of the TRO said the Town’s general ledger was materially
short, with short deposits on twenty-one of twenty-two days examined and that
only Buchanan, Ashburn, and Roach had access to the funds. On July 22,
2011, the court entered an agreed injunction freezing Roach’s real property and
vehicles and restricted her spending to no more than $1200 per month.
[6] In addition to the civil action brought by the Attorney General, Ashburn was
later arrested and charged with theft and RICO violations, eventually pleading
guilty to two counts of Class D felony theft. Roach and Buchanan were not
arrested or charged.
[7] The Attorney General issued a press release announcing the civil action to
freeze the assets of Buchanan, Ashburn, and Roach, while the investigation was
ongoing. He also noted that if SBOA issued a certified audit, he would proceed
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against the three to recover stolen funds in the civil action. The press release
also referenced the criminal charges against Ashburn. Local news articles
mentioned the civil proceeding against the three and the criminal charges
against Ashburn.
[8] Town council members issued a statement to which they referred the media:
It is our understanding that an investigation has been ongoing for
some time by the State Board of Accounts and the Indiana State
Police.
The Town Board is and has been cooperating with the said
investigation. We as the Town Board are anxiously awaiting the
results of the said investigation. And will act accordingly at the
time to protect the citizens of the Town of West Terre Haute.
Town Board Members
Id. at 227.
[9] President McClain also participated in a news conference with Vigo County
Prosecutor Terry Modesitt. Statements attributable to McClain in media
reports covered only the logistics involved in the receipt of customers’ payments
of utility bills.
[10] Because Buchanan, Ashburn, and Roach were not permitted to enter the town
office, it was effectively closed for about a week. Arrangements were made
with local banks to receive utility payments, and customers were advised to
continue to make payments.
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[11] To address those staffing problems, McClain approached local resident Jim
Mann, who agreed to step in as deputy clerk-treasurer. Ashburn’s employment
was terminated in order to pay Mann for his services. Buchanan’s salary could
not be used to pay other salaries because she was an elected official still holding
office. The Town continued to pay Roach’s salary even though she was barred
from the office.
[12] The town council voted to terminate Roach’s employment on August 5, 2011,
in order to pay Ron Stevens, a person identified as being qualified to help Mann
conduct the Town’s business. The council’s minutes recording that vote also
said, “The reason for the termination will be revealed during the upcoming trial
of Vickie Ashburn, Jody Roach and Melody Buchanan.” Id. at 274. A letter
advising Roach of the termination was sent that same day.
[13] On August 11, 2011, McClain and Buchanan attended an exit conference with
SBOA to review the final results of the audit. For the period 2007 through
2011, the auditors identified some $371,800 as missing for which Buchanan and
Ashburn were jointly liable. None of the missing funds were attributable to
Roach. However, auditors did find evidence that Roach had cashed personal
checks from money paid by customers on more than one occasion. Roach’s
personal checks were deposited as part of the utility receipts. Roach
acknowledged that this had occurred. McClain signed a Corrective Action
Plan, which was made part of the audit, and included the fact of Roach’s
termination on August 5, 2011.
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[14] SBOA’s final audits found that Roach “bypassed the internal controls” by
removing cash from utility receipts and replacing them with personal checks.
Id. at 277. Only Ashburn was found to have stolen funds. The prejudgment
garnishment of Roach’s assets was dissolved, she was dismissed from the AG’s
civil action, and no criminal charges were filed against her. Media reports
stated that Roach was no longer part of the audit and that the Attorney General
was not proceeding against her.
[15] Roach filed a complaint on June 7, 2013, against the State of Indiana, the
SBOA, and the Town, alleging defamation/false light, negligence, malicious
prosecution of a civil action, and wrongful discharge and damage to reputation,
and seeking damages. The parties stipulated that the complaint did not assert
any claim under the Constitution or laws of the United States.
[16] The State, the SBOA, and the Town moved for summary judgment. After a
hearing, the trial court entered orders denying the Town’s motion, but granting
the State’s and the SBOA’s.
[17] Roach has not appealed from the orders in favor of the State and the SBOA, but
could still do so when all matters are concluded. The Town moved to certify
the trial court’s order against it for interlocutory appeal. The court granted the
motion, and we accepted jurisdiction.
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Discussion and Decision
Standard of Review
[18] Summary judgment is appropriate when the moving party demonstrates that
there is no genuine issue of material fact with respect to a particular claim or
element of a claim. Ind. Trial Rule 56(C); Woodruff v. Ind. Family & Soc. Servs.,
964 N.E.2d 784, 790 (Ind. 2012). Once the moving party has met its burden,
the non-moving party must come forward with properly designated evidence
affirmatively demonstrating a genuine issue of material fact. Id. All evidence
and reasonable inferences are construed in favor of the non-moving party. Id.
[19] On appellate review, we conduct de novo review of disputes where the facts are
uncontroverted. Id. If the law has been incorrectly applied to the facts, we
reverse. Id. If not, we will affirm a grant or denial of summary judgment upon
any theory supported by evidence in the record. Wagner v. Yates, 912 N.E.2d
805, 811 (Ind. 2009).
I. Pre-Termination Hearing
[20] Roach alleges that the Town’s failure to hold a pre-termination or name-
clearing hearing supports her claim for money damages.
[21] As the parties stipulated that no federal grounds were being asserted, Roach’s
argument is based on Article I, Section 12 of our state constitution:
All courts shall be open; and every person, for injury done to him
in his person, property, or reputation, shall have remedy by due
course of law. Justice shall be administered freely, and without
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purchase; completely, and without denial; speedily, and without
delay.
[22] Although the analysis of claims under the due process clause of the federal
constitution and Indiana’s due course of law clause have been conflated in the
past, recent cases note the significant differences between them. McIntosh v.
Melroe Co., 729 N.E.2d 972, 975-76 (Ind. 2000). Section 12 requires courts to be
open to claims based on rules of law derived either from common law or
prescribed by statute. Id. at 979. “If the law provides no remedy, Section 12
does not require that there be one,” said the Supreme Court. Id.
[23] In Cantrell v. Morris, 849 N.E.2d 488, 499 (Ind. 2006), the Court noted: “Article
I, Section 12 does not specify any particular remedy for any particular wrong.”
Id. The definition of wrongs and specification of remedies is left to the
legislature and the common law. Id. Under Section 12, the courts must be
open for individuals to litigate claims based on rules of law. Indiana case law
construing the Open Courts Clause does not support the notion that it creates a
substantive right of action.
[24] In this respect, Indiana reflects the historic reasons why state constitutions
contain open courts provisions. In the years running up to the American
Revolution, colonials saw acts interfering with court operation by royal
governors and other representatives of the Crown as a tool of repression. These
acts ran all the way up to literally causing the courts to be “closed” rather than
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“open” for civil litigation. Such was the experience during the struggle over the
1
Stamp Act.
[25] It was these episodes, especially in colonies such as Delaware and
Massachussetts, that led to open courts provisions, the first of which was
adopted by Delaware in 1776. These clauses sought to assure an independent
judiciary that could administer justice without interference, according to
2
substantive sources such as common law or statutes.
[26] “As a general rule, Indiana employment relationships are terminable at the will
of either party.” Speckman v. City of Indianapolis, 540 N.E.2d 1189, 1192 (Ind.
1989). Roach was an at-will employee, and Section 12 does not provide a
specific remedy for violations of state constitutional rights. Thus, her claim that
the Town’s failure to hold a pre-termination hearing supports her claim for
money damages fails. The trial court erred by denying the Town summary
judgment on this point.
II. Defamation
[27] Roach’s defamation claim, by contrast, invokes established grounds of common
law.
1
The Blackwell Encyclopedia of the American Revolution 117 (Jack P. Greene & J.R. Pole eds., 1991).
2
Jonathan M. Hoffman, By the Course of the Law: The Origins of the Open Courts Clause of State
Constitutions, 74 Or. L. Rev. 1279 (1995).
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[28] “A defamatory communication is one that tends to harm a person’s reputation
by lowering the person in the community’s estimation or deterring third persons
from dealing or associating with the person.” Baker v. Tremco Inc., 917 N.E.2d
650, 657 (Ind. 2009). Whether a communication is defamatory is a question of
law for the court, unless the communication is susceptible to either a
defamatory or a non-defamatory interpretation. Id. In that event, the matter
may be submitted to the jury. Id. “Any statement actionable for defamation
must not only be defamatory in nature, but false.” Trail v. Boys & Girls Clubs of
Nw. Ind., 845 N.E.2d 130, 136 (Ind. 2006).
[29] Defamation can be defamatory per se or defamatory per quod. Id. Defamation
per se involves a communication imputing: “(1) criminal conduct; (2) a
loathsome disease; (3) misconduct in a person’s trade, profession, office, or
occupation; or (4) sexual misconduct.” Baker, 917 N.E.2d at 657. The
communication must be made with malice, publication, and damage. Id. The
plaintiff is entitled to presumed damages as a natural and probable consequence
of defamation per se. Kelley v. Tanoos, 865 N.E.2d 593, 597 (Ind. 2007). This is
so because the words imputing one of those conditions are so naturally and
obviously harmful that one need not prove their injurious character. Cortez v.
Jo-Ann Stores, Inc., 827 N.E.2d 1223, 1230 (Ind. Ct. App. 2005). The
defamatory nature of the communication must appear without reference to
extrinsic facts or circumstances. Id. A person alleging defamation per quod
must demonstrate the same elements without reference to extrinsic facts or
circumstances, but must additionally demonstrate special damages. Id.
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[30] A plaintiff must include the alleged defamatory statement in the complaint.
Trail, 845 N.E.2d at 136. Roach’s complaint alleges that the actions of the
SBOA were false and defamatory because they placed her in a false light by
accusing her of a crime, specifically embezzlement. The complaint then alleges
that the Town terminated her employment immediately after SBOA’s
preliminary audit results were shared with the town council. No specific
defamatory statement by the Town is included in Roach’s complaint.
[31] In support of Roach’s position as respects summary judgment, counsel cites
news articles reporting on a press conference or conferences attended by town
board president McClain during which the allegations against Buchanan,
Ashburn, and Roach were discussed. The only reported comments attributable
to board president McClain involved his explanation of a new utility meter
reading system, where to make payments while the utility office was closed,
and assurances that the Town was financially sound.
[32] Roach also argues that McClain did not speak up about Roach’s substantial
exoneration by the final audit during a news conference he attended. Further,
she claims that she was defamed when a Corrective Action Plan, signed by
McClain, in which the only references to Roach were that she and Buchanan
had disregarded controls over payment receipts by substituting personal checks
in place of cash received from customers was published. The plan also
mentioned Roach’s termination on August 5, 2011. Last, Roach cites the town
council minutes from the meeting at which Roach was terminated (“reason for
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the termination will be revealed during the upcoming trial of Vickie Ashburn,
Jody Roach, and Melody Buchanan.”) Appellant’s Appendix at 274.
[33] Roach agrees that none of the statements attributed to the Town were false. A
defamation claim must be premised on a defamatory statement that is false.
McClain denied making a defamatory statement about Roach and denied
hearing anyone else associated with the Town make defamatory statements
against her.
[34] Roach is unable to identify a defamatory statement made by the Town.
Instead, she claims that McClain’s failure to say anything, his presence at news
conferences where the allegations were discussed, and the termination of her
employment prior to her exoneration, amount to defamation.
[35] As our Supreme Court said in Trail, “this allegation does not actually assert,
nor relate to, any actionable defamatory statement. Rather, the allegation
merely refers to the speculative effect the defendants’ non-actionable silence has
had on Trail’s reputation. It would be an odd use of the defamation doctrine to
hold that silence constitutes actionable speech.” 845 N.E.2d at 137.
[36] Roach’s case differs in this respect from Glasscock v. Corliss, 823 N.E.2d 748 (Ind.
Ct. App. 2005), trans. denied. The defamatory statements were that Corliss had
been fired because of discrepancies in her expense reports and that she had
bought gifts for her family and friends. The only fair inference was that Corliss
had committed misconduct by purchasing gifts for her family with company
funds, thereby constituting a defamatory communication. 823 N.E.2d at 753.
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[37] We agree with the Town that there is no genuine issue of material fact
precluding summary judgment in its favor. The court erred by denying the
Town’s motion on this point.
Conclusion
[38] In light of the foregoing, we reverse the decision of the trial court and remand
with instructions to grant the Town’s motion for summary judgment.
[39] Reversed and remanded.
Riley, J., and Robb, J., concur.
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