# State of Indiana ex rel. Curtis T. Hill, Attorney General of Indiana v. William J. Pfister, Richard A. Sopko, Travelers Insurance Companies, Western Surety Insurance Company (mem. dec.)

> Indiana Court of Appeals · June 24, 2019

URL: https://www.frixlaw.com/law-library/cases/4409501

## Case

- **Court:** Indiana Court of Appeals
- **Decided:** June 24, 2019
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), FILED
this Memorandum Decision shall not be Jun 24 2019, 8:28 am
regarded as precedent or cited before any CLERK
court except for the purpose of establishing Indiana Supreme Court
Court of Appeals
the defense of res judicata, collateral and Tax Court

estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES
Curtis T. Hill, Jr. PFISTER AND SOPKO
Attorney General of Indiana Greg A. Bouwer
Jeff Carroll
Frances Barrow Koransky Bouwer & Poracky, P.C.
Deputy Attorney General Dyer, Indiana
Indianapolis, Indiana
ATTORNEY FOR APPELLEE OHIO
FARMERS
Stephen C. Wheeler
Smith Fisher Maas Howard &
Lloyd, P.C.
Indianapolis, Indiana

IN THE
COURT OF APPEALS OF INDIANA

State of Indiana ex rel. Curtis T. June 24, 2019
Hill, Attorney General of Court of Appeals Case No.
Indiana, 18A-PL-771
Appellant-Plaintiff, Appeal from the Lake Circuit
Court
v. The Honorable Marissa J.
McDermott, Judge
William J. Pfister, Richard A. Trial Court Cause No.
Sopko, Travelers Insurance 45C01-1705-PL-51
Companies, Western Surety

Court of Appeals of Indiana | Memorandum Decision 18A-PL-771 |June 24, 2019 Page 1 of 21
Insurance Company, and Ohio
Farmers Insurance Company,
Appellees-Defendants.

Brown, Judge.

[1] The State of Indiana ex rel. Curtis T. Hill, Jr., Attorney General of Indiana (the

“State”) appeals the trial court’s entry of summary judgment in favor of

William J. Pfister, Richard A. Sopko, and Ohio Farmers Insurance Company

(“Ohio Farmers”). The State raises several issues which we consolidate and

restate as whether the court erred in entering summary judgment. We affirm.

Facts and Procedural History

A. Background

[2] This appeal stems from a complaint brought by the State against Pfister and

Sopko, officials of the School Town of Munster, Lake County (the “School

Town”), and Ohio Farmers, 1 pursuant to Ind. Code § 5-11 et seq., seeking to

recover funds related to allegations of “malfeasance, misfeasance, and/or

nonfeasance on the part of Pfister and Sopko” occurring from July 1, 1999, to

June 30, 2014. Appellant’s Appendix Volume II at 47.

1
The State also sought recovery from parties that do not participate in this appeal.

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1. Pfister’s Contracts

[3] From July 1, 1999, through February 1, 2009, the School Town entered into

twelve Superintendent’s Contracts with Pfister that contained provisions for

various fringe benefits. Pfister’s contracts from 1999 to 2003 were signed by the

President and Secretary of the Board of School Trustees (the “Board”), and his

contracts from 2004 to 2009 were signed by the President, Vice President,

Secretary, and two members of the Board. 2

[4] Pfister’s contracts from 1999 to 2000 stated that the School Town shall pay his

“annual contribution to the Indiana State Teachers[’] Retirement Fund.” 3

Appellant’s Appendix Volume III at 69, 74, 80. The June 27, 2001 contract

stated that it shall pay his “annual contribution to the Indiana State Teachers[’]

Retirement Fund, plus an additional 2% toward his Indiana Teacher

Retirement Fund.” Id. at 85. The June 27, 2002 contract stated that it shall pay

his “annual contribution to the Indiana State Teachers[’] Retirement Fund, plus

2
According to the version of the School Town’s Bylaws and Policies which was designated in support of
Pfister and Sopko’s summary judgment motion, the Board consists of five members and serves as the
governing body for, and conducts the supervision of, the School Town, which is a body corporate capable of
suing and being sued. The Board exercises executive power by appointing the Superintendent and annually
“evaluate[s] the performance of the Superintendent.” Appellant’s Appendix Volume III at 60. As an
outcome of the evaluation of the Superintendent’s performance, the Board “judge[s] the advisability of
retention of the Superintendent” and is better prepared to “determine the Superintendent’s advisory and
benefit package.” Id. at 61. Further, the School Town’s Bylaws and Policies provide that, “[i]f the services of
the superintendent are found to be unsatisfactory to the Board, the Superintendent shall be notified in writing
by the President, as approved by the Board, that his/her contract will expire upon the expiration date set
forth in the contract.” Id. at 62.
3
Two Superintendent’s Contracts, dated June 21 and October 20, 2000, contain the same relevant language
as the July 1, 1999 contract.

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each year an additional 2% toward an annuity of his choice.” Id. at 91. The

June 27, 2003 contract stated that it shall pay his “annual contribution to the

Indiana State Teachers[’] Retirement Fund, plus each year an additional 4%

toward an annuity of his choice.” Id. at 97. The language from Pfister’s 2003

contract appeared in each of his contracts from 2004 to 2009.

2. Sopko’s Contracts

[5] From July 1, 1998, through July 1, 2011, the School Town entered into

fourteen Assistant Superintendent’s Contracts with Sopko, 4 and on July 1,

2012, it entered into a Superintendent’s Contract with him that provided that he

would “devote his entire time and energy to his duties as . . . Superintendent.”

Id. at 207. Each of Sopko’s contracts contained provisions for various fringe

benefits, his contracts from 1998 to 2005 were signed by the President and

Secretary of the Board, and his contracts from 2006 to 2012 were signed by the

President, Vice President, Secretary, and two members of the Board.

[6] Sopko’s contracts from 1998 to 2000 stated that the School Town shall pay his

“annual contribution to the Indiana State Teachers’ Retirement Fund.” Id. at

138. His June 27, 2001 contract stated that it shall pay his “annual contribution

to the Indiana State Teachers’ Retirement Fund, plus an additional 2% toward

4
According to the School Town’s Bylaws and Policies which Pfister and Sopko designated, the assistant
superintendent is considered an administrator, and the Board “approve[s] the employment, fix[es] the
compensation and establish[es] the term of employment for each administrator.” Appellant’s Appendix
Volume III at 63. Further, the Board “give[s] written notice of renewal or refusal to renew” an assistant
superintendent’s contract. Id. at 65.

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his Indiana Teacher Retirement Fund.” Id. at 151. His June 27, 2002 contract

stated that it shall pay his “annual contribution to the Indiana State Teachers’

Retirement Fund, plus each year an additional 2% toward an annuity of his

choice.” Id. at 156. His June 27, 2003 contract stated that it shall pay his

“annual contribution to the Indiana State Teachers’ Retirement Fund, plus each

year an additional 3% toward an annuity of his choice.” Id. at 161. The

language from Sopko’s 2003 contract appeared in each of his contracts from 2004

to 2011, and his 2012 superintendent’s contract does not mention annuity

contributions in the section detailing fringe benefits.

3. Accounts Payable Vouchers and Voucher Registers

[7] In November 2003, the School Town’s Director of Financial Operations and

Treasurer, Janice Swanson, signed an Accounts Payable Voucher for the School

Town that reported that school year’s initial deposit to pension bond funds to

payee “Valic” for “Group #1456, 401A Account, CS3-Plan 2, Subgroup #1

(William Pfister & Richard Sopko).” Appellant’s Appendix Volume III at 217.

Each year from 2004 through 2013, she signed an Accounts Payable Voucher

that reported an amount for that school year’s employer retirement contribution

to payee “Valic” for “Group #1456, 401A Account, CS3-Plan 2, Subgroup #1 -

William Pfister & Richard Sopko.” Id. at 222. Accord id. at 227, 232, 237, 243,

248; Appellant’s Appendix Volume IV at 5, 11, 17, 23. In 2014, she signed an

Accounts Payable Voucher for that school year’s employer retirement

contribution to payee “Valic” for “Group #1456, 401A Account, CS3-Plan 2,

Subgroup #1 for Richard A. Sopko.” Id. at 29. On each of the 2003-2014

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Vouchers, Swanson’s signature appears below the statement, “I hereby certify

that the attached invoice(s), or bill(s), is (are) true and correct and I have

audited same in accordance with IC 5-11-10-1.6.” 5 Appellant’s Appendix

Volume III at 217. Accord id. at 227, 232, 237, 243, 248; Appellant’s Appendix

Volume IV at 5, 11, 17, 23, 29.

[8] At each regular meeting held in June of the School Town’s Board, from 2000

until 2004, from 2006 until 2007, and from 2009 until 2013, the Board

approved, by motion, an Accounts Payable Voucher Register that had been

“hand delivered to each [Board] member before the public meeting that was

held to approve them.” 6 Appellant’s Appendix Volume III at 214. Documents

titled “Accounts Payable Voucher Register,” which stated “We have examined

the vouchers on the foregoing Accounts Payable Voucher Register consisting of

___ pages and, except for vouchers not allowed as shown on the register, such

vouchers are hereby allowed in the total amount of . . . ,” were signed by the

President, Vice President, Secretary, and two members of the Board, and

approved each year from 2003 to 2014. Id. at 216. Accord id. at 221, 226, 231,

236, 242, 247; Appellant’s Appendix Volume IV at 4, 10, 16, 22, 28.

5
Ind. Code § 5-11-10-1.6 (2003) provided that the “fiscal officer of a governmental entity may not draw a
warrant or check for payment of a claim unless . . . the fiscal officer audits and certifies before payment that
the invoice or bill is true and correct.” (Subsequently amended by Pub. L. No. 1-2005, § 78 (eff. July 1,
2005); Pub. L. No. 169-2006, § 4 (eff. July 1, 2006); Pub. L. No. 182-2009(ss), § 77 (eff. January 1, 2010).
6
In 2005, according to the June 6 minutes of a Regular Board Meeting, the Accounts Payable Voucher was
“presented at Special Board Meeting on June 10, 2005.” Appellant’s Appendix Volume V at 209. The
record does not contain a copy of the minutes of June 20, 2005 Special Board Meeting.

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4. The Ohio Farmers’ Policies

[9] On or about July 1, 1997, Ohio Farmers issued Policy No. CBP 5634356

(“Policy No. 1”) to the School Town. Policy No. 1 indicated that the policy

period was from July 1, 1997, to July 1, 2000, and stated the policy “Consists

Of The Following Coverage Parts: Commercial Crime Coverage Part.”

Appellant’s Appendix Volume II at 182. In the “General Conditions”

subsection under the Crime General Provisions, it states “Discovery Period for

Loss: We will pay only for covered loss discovered no later than one period

from the end of the policy period.” Id. at 192. Ohio Farmers did not renew

Policy No. 1.

[10] On July 1, 2002, Ohio Farmers issued Policy No. 5260158 (“Policy No. 2”) to

the School Town. Policy No. 2 indicated the policy period was from July 1,

2002, to July 1, 2005, and stated that the policy “Consists Of The Following

Coverage Parts: Commercial Crime Coverage Part.” Id. at 220. In the

“General Conditions” subsection under the “Crime General Provisions (Loss

Sustained Form),” it stated “Extended Period to Discover Loss: We will pay

only for covered loss discovered no later than 1 year from the end of the Policy

Period.” Exhibit IX at 17-18. Accord id. at 46-47, 78-79.

[11] On July 1, 2005, Ohio Farmers issued a renewal of Policy No. 2 (“Policy No. 2

Renewal”) for the period from July 1, 2005, to July 1, 2008, to the School

Town. Policy No. 2 Renewal contains the same statements regarding the

“Extended Period to Discover Loss” as Policy No. 2. Ohio Farmers did not

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renew Policy No. 2 Renewal at its expiration on July 1, 2008. Further, since

the expiration of Policy No. 2 Renewal, Ohio Farmers “has not written an

Employee Dishonesty policy” for the School Town. Appellant’s Appendix

Volume VIII at 158.

5. State Board of Accounts’ Biennial Audit Reports

[12] Pursuant to Ind. Code § 5-11-1-9(a), the State Board of Accounts (the “SBOA”)

conducted regular biennial audit examinations of the School Town during the

time period relevant to this appeal. 7 As part of the audit process, the SBOA

requested that Pfister provide documents, including the Superintendent’s and

Assistant Superintendent’s Contracts into which he and Sopko entered, and he

did so. The SBOA issued six audit reports (collectively, the “Biennial Audit

Reports”), each covering two-year increments and together spanning from July

1, 2001, to June 30, 2013. In an initial letter addressed to the School Town,

each Biennial Audit Report stated:

[W]e conducted our audit in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable

7
The SBOA is tasked with “examin[ing] all accounts and all financial affairs of every public office and
officer, state office, state institution, and entity.” See Ind. Code § 5-11-1-9(a) (1999) (subsequently amended
by Pub. L. No. 4-2005, § 25 (eff. February 9, 2005); Pub. L. No. 213-2007, § 2 (eff. July 1, 2007); Pub. L. No.
217-2007, § 2 (eff. July 1, 2007); Pub. L. No. 172-2011, § 12 (eff. May 10, 2011); and Pub. L. No. 280-2013, §
3 (eff. May 11, 2013)). Ind. Code § 5-11-1-16(c) (1993) provided that “public office” means “the office of any
and every individual who for or on behalf of the state or any municipality . . . holds, receives, disburses, or
keeps the accounts of the receipts and disbursements of any public funds,” while subsection 16(a) provided
that “municipality” means “any county, township, city, town, school corporation, special taxing district, or
other political subdivision of Indiana.” (Subsequently amended by Pub. L. No. 104-2014 (eff. March 25,
2014)).

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assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinions.

Appellant’s Appendix Volume IV at 41. Accord id. at 86, 125, 182, 231;

Appellant’s Appendix Volume V at 29.

B. SBOA Special Investigation Report, the State’s Complaint, and Subsequent

Proceedings

[13] On July 24, 2015, Attorney Kathleen M. Maicher, representing the School

Town, sent a letter to the Office of the Prosecuting Attorney of Lake County and

the SBOA which indicated that, “[p]ursuant to Indiana Code § 5-11-1-27(j),” she

wished to advise them of suspected misappropriation of School Town funds by

then-former superintendents Pfister and Sopko and which referenced the

“benefits and severance payments to be paid under the Superintendent’s

contract.” Appellant’s Appendix Volume IV at 32. The letter indicated in part

that contracts for both administrators contained references to an “Annuity Starter

401(a)” and that Pfister proposed in 2000-2001 that the School Town pay him

and Sopko an additional 2% toward their Indiana Teacher Retirement Fund and

the Board agreed. Id. at 33. The letter also stated:

In the 2003-2004 school year contract, [Pfister] proposed raising
[the School Town’s] annuity contribution to 4% of his salary and

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to raise [Sopko’s] annuity to 3% of his salary and [the School
Town] agreed. [Pfister and Sopko], however, interpreted the
annuity starter clause to mean that each year the stated
percentage would be added to the figure from the prior year
resulting in an ever increasing percentage that would be
multiplied against their total salary to calculate the amount of
their annuity payment.

Most of the School Board members thought that the percentage
identified in the contracts (i.e., 2% and later 4% for [Pfister] and
2% and later 3% for [Sopko]) would be a constant number
multiplied each year against [Pfister’s and Sopko’s] increasing
salary to calculate the amount of the Annuity Starter payment.
The members were not informed of the exact amount of the
annuity contributions.

The dramatic financial consequences of [Pfister’s and Sopko’s]
interpretation of the contract were obvious. By the time they
chose to retire, the multiplier against their salaries had increased
to 42% and 36%, respectively.

Id. at 33-34.

[14] On October 25, 2015, SBOA field examiner Karen Tetrault was assigned to

investigate the School Town’s financial records, books, accounts, and contracts

from July 1, 1999, to June 30, 2014, due to suspected malfeasance, misfeasance,

and/or nonfeasance. On June 8, 2016, the SBOA issued Special Investigation

Report B46414 (the “Special Investigation Report”), based on an investigation

limited to “Salary Contracts, Payroll Records and Annuity payments,” and

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referred it to the Indiana Attorney General’s Office pursuant to Ind. Code § 5-11-

5-1(a). 8 Appellant’s Appendix Volume V at 137.

[15] On May 23, 2017, the State filed a Complaint to Recover Public Funds against

Pfister, Sopko, Ohio Farmers, and others, alleging that the Special Investigation

Report had “disclosed malfeasance, misfeasance, and/or nonfeasance on the

part of Pfister and Sopko” and “was placed by the State Examiner with the

Attorney General pursuant to Ind. Code § 5-11-5-1(a).” Appellant’s Appendix

Volume II at 47. Counts I and II of the Complaint allege: from 2001 to 2012,

Pfister was wrongfully paid in excess of his contracted Annuity Starter in the

total amount of $359,728.94 and, as a direct and proximate result of his

multiple breaches of duty, the School Town suffered a pecuniary loss of

$463,922.75; that, during the same period, Sopko was wrongfully paid in excess

of his contracted Annuity Starter in the total amount of $311,198.75 and, as a

direct and proximate result of his multiple breaches of duty, the School Town

suffered a pecuniary loss of $377,475.28; and that the SBOA had incurred

$10,053.32 of additional audit costs as a result of the breaches of duty of Pfister

and Sopko. Counts III and IV seek treble damages in the amount of

$1,391,768.25 from Pfister and $1,132,425.84 from Sopko, respectively, and

state that the State was a party suffering a pecuniary loss and “on behalf of the

8
Ind. Code § 5-11-5-1(a) (2016) provided in relevant part that, if an examination made under the article
“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 and the inspector
general.” Subsequently amended by Pub. L. No. 188-2016, § 5 (eff. July 1, 2016).

Court of Appeals of Indiana | Memorandum Decision 18A-PL-771 |June 24, 2019 Page 11 of 21
School Town” was entitled to the relief described in Ind. Code § 34-24-3-1. 9 Id.

at 56-57. Count VII alleges that three crime insurance policies covering Pfister

provided “$5,000 in coverage from July 1, 1997 to July 1, 2000, $5,000 in

coverage from July 1, 2002 to July 1, 2005, and $5,000 in coverage from July 1,

2005 to July 1, 2008,” and that, as a result of Pfister’s actions, Ohio Farmers

was jointly and severally liable in the amount of $15,000. 10 Id. at 61. The State

attached copies of Policy Nos. 1 and 2 and Policy No. 2 Renewal to the

Complaint.

[16] On October 26, 2017, Pfister and Sopko filed a motion for summary judgment

and designated the School Town’s Bylaws and Policies; Pfister and Sopko’s

superintendent and assistant superintendent contracts, the attendant Accounts

Payable Voucher Registers for the School Town, and an Affidavit of Business

Records Custodian For Authenticating Written Documents Relating to Docket

Voucher Registers by Swanson; the SBOA’s Biennial Audit Reports; the

SBOA’s Special Investigation Report; and the minutes of regular meetings held

in June of the School Town’s Board from 2000 until 2007 and from 2009 until

9
Ind. Code § 34-24-3-1 (2011), which is often referred to as the Crime Victims Relief Act and is titled
“Pecuniary loss as result of property offenses,” provides in part that a person, with “an unpaid claim on a
liability that is covered by IC 24-4.6-5” or who “suffers a pecuniary loss as a result of a violation of IC 35-43,
IC 35-42-3-3, IC 35-42-3-4, or IC 35-45-9,” may bring a civil action for: “[a]n amount not to exceed three (3)
times . . . the actual damages of the person suffering the loss,” “[t]he costs of the action,” “[a] reasonable
attorney’s fee,” and “[a]ll other reasonable costs collection.” Subsequently amended by Pub. L. No. 276-
2019, § 1 (eff. July 1, 2019).
10
The initial complaint named defendant Westfield Companies in Count VII. (61) An entry in the
chronological case summary dated August 7, 2017, states “Order dated 07-31-17, Court Grants order
Suibstitution [sic] [Ohio Farmers] for Westfield Companies As the Real Party Defendant In Interest For
Count VII of Complaint.” Appellant’s Appendix Volume II at 13.

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2013. The Accounts Payable Voucher Registers included copies of checks from

the School Town payable to Valic and the School Town’s Accounts Payable

Vouchers. The records contained in the Account Payable Voucher Register for

2007 included a document titled “Annuity Contribution to Valic for

Superintendent and Assistant Superintendent Per Supplemental Contracts” and

states that the “Employer Contribution Pension Accounts” for Pfister was “22%

of Salary[,] $164,440 x .22 = $36,177” and for Sopko was “18% of Salary[,]

$137,766 x .18 = $24,798.” Appellant’s Appendix Volume III at 238.

Additional records contained in the Account Payable Voucher Register further

indicate that the employer contribution to pension accounts for Pfister was

“30% of Salary[,] $177,964 x .30 = $53,389” in 2009, “34% of Salary[,]

$182,888 x .34 = $62,182” in 2010, “38% of Salary[,] $177,501 x .38 = $67,450”

in 2011, and “42% of Salary[,] $178,101 x .42 = $74,802” in 2012; and for

Sopko was “24% of Salary[,] $152,747 x .24 = $36,659” in 2009, “27% of

Salary[,] $156,806 x .27 = $42,338” in 2010, “30% of Salary[,] $152,619 x .30 =

$45,786” in 2011, “33% of Salary[,] $154,643 x .33 = $51,032” in 2012, and

“36% of Salary[,] $155,243 x .36 = $55,887” in 2013. 11 Id. at 249; Appellant’s

Appendix Volume IV at 6, 12, 19, 24.

[17] Also on October 26, 2017, Ohio Farmers filed a Motion for Partial Summary

Judgment Against Count VII of the Complaint and, in support of its motion, a

11
The Account Payable Voucher with an invoice date of “2/15/2013” indicates that Sopko’s employer
retirement contribution for 2012-2013 was “$55,887.00.” Appellant’s Appendix Volume IV at 23.

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Notice of Filing Discovery Request and Discovery Response that contained the

State’s responses to Ohio Farmers’ first set of interrogatories. The State’s

answer to Question 2(e) references a “four (4) page e-mail stream,” attached to

the first set of interrogatories as Exhibit 1, and states that “the e-mails

accurately set forth [the State’s] position that the loss [set forth in Complaint

VII] was discovered by the School Town in June/July 2015; however, the loss

was not discovered by [the State] until [the Special Investigation Report] was

issued on June 8, 2016.” Appellant’s Appendix Volume VIII at 139.

[18] On November 16, 2017, Pfister and Sopko filed a Motion to Compel and

requested that the State produce the notes and paperwork associated with the

Biennial Audit Reports. On November 22, 2017, the State filed a response in

opposition to Ohio Farmer’s motion for partial summary judgment, and on

November 28, 2017, it filed a response in opposition to Pfister and Sopko’s

motion for summary judgment. On December 8, 2017, the State filed a

response in opposition to Pfister and Sopko’s motion to compel, in which it

indicated that the work papers and notes accompanying four of the Biennial

Audit Reports had been destroyed “pursuant to the Records and Retention

Schedule” and were no longer in existence and argued that Pfister and Sopko’s

document requests would require the State to “spend hundreds of exhaustive

hours compiling and preparing work papers for prior SBOA audit reports

clearly irrelevant to the present matter.” Appellant’s Appendix Volume VI at

185.

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[19] On January 25, 2018, the court held a hearing on the summary judgment

motions and entered a Miscellaneous Order that set Pfister and Sopko’s motion

to compel for a hearing and required the State to bring to the hearing a

“detailed privilege log as well as copies of the responsive documents it has not

produced so that the court may conduct an in camera inspection of the same.”

Appellant’s Appendix Volume X at 198.

[20] On March 27, 2018, the court entered an order granting summary judgment in

favor of Pfister as to the treble damages claim and as to all claims for repayment

of monies paid out before May 23, 2012; in favor of Sopko as to the treble

damages claim and “as to all claims for repayment except as to the annuity

payment of February 15, 2013” and any non-annuity payment paid before May

23, 2012; and in favor of Ohio Farmers on Count VII of the Complaint.

Appellant’s Appendix Volume II at 43.

Discussion

[21] The issue is whether the trial court erred in entering summary judgment in

favor of Pfister, Sopko, and Ohio Farmers. Summary judgment is appropriate

only where there is no genuine issue of material fact and the moving party is

entitled to judgment as a matter of law. Ind. Trial Rule 56(C); Mangold ex rel.

Mangold v. Ind. Dep’t of Natural Res., 756 N.E.2d 970, 973 (Ind. 2001). All facts

and reasonable inferences drawn from those facts are construed in favor of the

nonmovant. Mangold, 756 N.E.2d at 973. Our review of a summary judgment

motion is limited to those materials designated to the trial court. Id. We must

carefully review a decision on summary judgment to ensure that a party was
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not improperly denied its day in court. Id. at 974. In reviewing a grant of

summary judgment we face the same issues as the trial court and follow the

same process. Klinker v. First Merchs. Bank, N.A., 964 N.E.2d 190, 193 (Ind.

2012). Under Trial Rule 56(C), the moving party bears the burden of making a

prima facie showing that there are no genuine issues of material fact and that it is

entitled to judgment as a matter of law. Id. If it is successful, the burden shifts

to the nonmoving party to designate evidence establishing the existence of a

genuine issue of material fact. Id.

[22] The State argues that its actions to recover public funds and for treble damages

were timely. It contends that the authority of the Attorney General derives only

from statutes and that an action to recover public funds, under Ind. Code § 5-

11-5-1(a), is not conditioned on the competent and diligent efforts of local

governments. It further contends that the Attorney General had no means of

discovering the information in the Special Investigation Report until June 8,

2016, when it was first placed with him as required by Ind. Code § 5-11-5-1(a).

The State points, in a notice of additional authority, to this Court’s recent

decision in Robertson v. State ex rel. Hill (filed March 29, 2019), Ind. App. No.

18A-PL-1002. 12

12
By separate order, we grant Pfister and Sopko’s March 29, 2019 Motion for Leave to Submit Supplemental
Brief Addressing Additional Authority and the State’s April 12, 2019 Motion for Leave to File Reply
Regarding Notice of Additional Authority. Further, by separate order, we deny Ohio Farmers’ November
12, 2018 Motion to Dismiss Appeal as to Ohio Farmers.

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[23] The general purpose of a statute of limitations is to encourage the prompt

presentation of claims. Russo v. S. Developers, Inc., 868 N.E.2d 46, 48 (Ind. Ct.

App. 2007) (citing Havens v. Ritchey, 582 N.E.2d 792, 794 (Ind. 1991)). In

Indiana, statutes of limitations “are enacted upon the presumption that one

having a well-founded claim will not delay in enforcing it.” V. Ganz Builders &

Dev. Co., Inc. v. Pioneer Lumber, Inc., 59 N.E.3d 1025, 1032 (Ind. Ct. App. 2016)

(quoting Morgan v. Benner, 712 N.E.2d 500, 502 (Ind. Ct. App. 1999), reh’g

denied, trans. denied), reh’g denied, trans. denied.

[24] Under Indiana’s discovery rule, a cause of action accrues, and the limitations

period begins to run, when a claimant knows or in the exercise of ordinary

diligence should have known of the injury. Cooper Indus., LLC v. City of S. Bend,

899 N.E.2d 1274, 1280 (Ind. 2009) (citing Wehling v. Citizens Nat’l Bank, 586

N.E.2d 840 (Ind. 1992)). The accrual of a cause of action is a question of law,

“as ‘it is well-established in Indiana law that it is the courts’ responsibility to

determine, based on the facts of each case, when the cause of action accrues.’”

Prime Mortg. USA, Inc. v. Nichols, 885 N.E.2d 628, 639 (Ind. Ct. App. 2008)

(quoting Autocephalous Greek-Orthodox Church of Cyprus v. Goldberg & Feldman

Fine Arts, Inc., 917 F.2d 278, 288 (7th Cir. 1990), reh’g denied). For an action to

accrue, it is not necessary that the full extent of the damage be known or even

ascertainable, but only that some ascertainable damage has occurred. Cooper

Indus., LLC, 899 N.E.2d at 1280 (citing Pflanz v. Foster, 888 N.E.2d 756, 759

(Ind. 2008)). “A statute of limitations defense is particularly appropriate for

summary judgment determination.” V. Ganz Builders & Dev. Co., Inc., 59 N.E.3d

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at 1032 (quoting Stickdorn v. Zook, 957 N.E.2d 1014, 1021 (Ind. Ct. App. 2011)).

If the undisputed facts establish “that the complaint was filed after the running

of the applicable statute of limitations, the trial court must enter judgment for

the defendant.” Martin v. Brown, 716 N.E.2d 1030, 1033 (Ind. Ct. App. 1999).

[25] Ind. Code § 5-11-1-27(j) (2015), to which Attorney Maicher’s letter to the

SBOA cited, provides that “[a]ll erroneous or irregular material variances,

losses, shortages, or thefts of political subdivision funds or property shall be

reported immediately” to the SBOA, and Ind. Code § 5-11-1-27(c) (2011), from

which subsection -27(j) originated, provided that “[a]ll erroneous or irregular

variances, losses, shortages, or thefts of local government funds or property

shall be reported immediately” to the SBOA. (Subsequently amended by Pub.

L. No. 184-2015, § 6 (eff. July 1, 2015)). Ind. Code § 34-11-2-6 provides that an

action against a public officer “growing out of a liability incurred by doing an

act in an official capacity, or by the omission of an official duty, must be

commenced within five (5) years after the cause of action accrues.” Claims for

treble damages brought under the Crime Victims Relief Act (“CVRA”) are

subject to a two-year statute of limitations. See Mizen v. State ex rel. Zoeller, 72

N.E.3d 458, 466 (Ind. Ct. App. 2017) (“It is long settled that ‘because the

substance of a claim under [the CVRA] is punitive rather than compensatory,

such claims are subject to a two-year statute of limitations.’”) (quoting Prime

Mortg. USA, Inc. v. Nichols, 885 N.E.2d 628, 638 (Ind. Ct. App 2008)), trans.

denied.

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[26] The State’s May 23, 2017 complaint sought to recover funds paid to Pfister and

Sopko over a span of approximately thirteen years ending in 2013, pursuant to

twenty-seven employment contracts which the School Town entered into

beginning in 1998. The record reveals that various members of the Board

signed each contract. We note that Swanson, the School Town’s Director of

Financial Operations and Treasurer, signed Accounts Payable Vouchers each

year from 2003 to 2014. From 2000 until 2004, from 2006 until 2007, and from

2009 until 2013, the Board allowed payments to Pfister and Sopko, and

examined and approved the relevant Account Payable Voucher Registers –

which included the Accounts Payable Vouchers, documents noting the specific

amount and salary percentage of the annuity contributions to Pfister and

Sopko’s accounts, and copies of the checks made to them. We also observe that

the SBOA conducted six regular biennial audit examinations of the School

Town during this period. We conclude under these circumstances that the

causes of action brought against Pfister and Sopko for amounts paid before May

23, 2012, five years prior to the May 23, 2017 complaint filed by the State, are

barred by the statute of limitations.

[27] To the extent that the State points to Robertson and argues that no claim exists

for an action to recover public funds until the SBOA publishes its audit report

and finds that a public official has committed malfeasance, misfeasance, or

nonfeasance, we find Robertson distinguishable. Specifically, we note that

Robertson involved an interlocutory appeal of a motion to dismiss under Ind.

Trial Rule 12(B)(6) and a defendant who “assert[ed] that the . . . claims against

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her . . . accrued . . . when the [Office of the Attorney General] received a copy

of the preliminary report from the SBOA,” and that this Court observed in a

footnote that she did not argue that the discovery rule did not apply to her case.

Robertson, slip op. at 3. See id. at 3 n.6 (“Robertson also briefly asserts that the

claims against her accrued . . . [during] 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.”).

[28] To the extent that the State maintains that Ohio Farmers is liable for the policy

amounts of Policy Nos. 1 and 2 and Policy No. 2 Renewal to cover allegations

regarding Pfister if it were to prevail in its claims against him, and argues that

the policies qualified as public bonds “notwithstanding the requirements of

Indiana Code section 5-4-1-18,” we note that the cases to which the State cites

do not stand for the proposition that a loss discovery period contained in a

“crime insurance policy” under Ind. Code § 5-4-1-18(d) is against public policy.

Appellant’s Brief at 27. We observe that Ind. Code § 5-4-1-18 required, during

the relevant periods, that “[t]hose employees directed to file an individual bond

by the fiscal body” of a city, town, or county shall file one, except for as

provided in a relevant subsection which stated that the fiscal body of a city,

town, county, or township “may by ordinance authorize the purchase of . . . a

crime insurance policy,” see Ind. Code § 5-4-1-18 (1996) (subsequently amended

by Pub. L. No. 28-2004, § 56 (eff. July 1, 2003); Pub. L. No. 146-2008, § 34 (eff.

July 1, 2008)), and that the State does not point to the record to indicate that

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these requirements were met. The period for Policy No. 2 Renewal expired on

July 1, 2008, and the complaint against Ohio Farmers was brought in 2017.

Under these circumstances, we conclude that the court did not err in granting

summary judgment in favor of Ohio Farmers.

[29] For the foregoing reasons, we affirm the trial court’s entry in favor of summary

judgment of Pfister, Sopko, and Ohio Farmers.

[30] Affirmed.

May, J., and Mathias, J., concur.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4409501. Public record. Not legal advice.