March 18, 2011
In
Clinton County v. Clements, Case No. 54A01-1008-PL-407, Clinton County sued its former auditor, Clements, for negligence, actual fraud, and intentional interference with contractual relations claims. Clements won and asked for Clinton County to pay her attorney's fees. On appeal, the Court held that Clements was entitled to attorney's fees under
I.C. § 34-13-3-5.
less..
During her term as County Auditor, Clements began to investigate software for the evaluation and assessment of property taxes. She received proposals from various companies and presented two of them to the County Council, who chose one. After the County Council's vote, the County's current vendor offered to make the necessary changes at a substantially smaller cost. At some point, a dispute arose between the County and the vendor it selected. The County then filed a complaint against the vendor and Clements. The complaint alleged that Clements knowingly misrepresented to County officials that the cost of continuing to use the county's former vendor would have been similar to the cost of using the current vendor.
Clements moved for summary judgment, claiming governmental immunity, and the trial court granted that motion. Clements then filed a motion to require the County to reimburse her for attorney fees and costs based on I.C. § 34-13-3-5. The trial court found that I.C. § 34-13-3-5 was ambiguous and was intended to apply only "where a third party claimant has filed a claim against a governmental employee personally." Therefore, it denied Clements's request for attorney's fees. Both Clements and the County appealed.
On appeal, the County argued that immunity cannot be granted on summary judgment any time the plaintiff merely alleges intentional misconduct or fraud. The Court disagreed.
Clements did not move for partial summary judgment. If granted summary judgment on her immunity claim, she was entitled to a full judgment in her favor on the County's claims. Clements argued to the trial court that her actions were "discretionary" and that she was entitled to immunity. Once Clements met her initial burden of proving the absence of a genuine issue of material fact and the appropriateness of judgment as a matter of law, which she did, the County was required to respond by designating specific facts establishing a genuine issue for trial. The County did not address Clements's argument that her actions were discretionary. Rather, the County argued that her actions were intentional misconduct. However, the County could not meet its burden by merely pointing out that its complaint alleged intentional misconduct.
The Court then addressed whether Clements was entitled to attorney's fees. I.C. § 34-13-3-5 provides as follows:
The governmental entity shall provide counsel for and pay all costs and fees incurred by or on behalf of an employee in defense of a claim or suit for a loss occurring because of acts or omissions within the scope of the employee’s employment, regardless of whether the employee can or cannot be held personally liable for the loss.
In
State v. Evans, 810 N.E.2d 335 (Ind. 2004), the Indiana Supreme Court held that this statute did not apply to a complaint against a county prosecutor for reimbursement of public funds that were "misappropriated, diverted or unaccounted for," but left for another day whether "the statute would afford reimbursement to a defendant who prevails."
The situation left for another day in Evans is the situation we have before us now. Although our supreme court concluded in Evans that it would be absurd to require the Attorney General to finance both sides of the litigation against the prosecutor accused of misappropriating funds during the litigation, it specifically left open the possibility of reimbursing an employee who prevails in such an action. Here, the County sued Clements, but Clements has prevailed on summary judgment. As our supreme court noted, the statute’s objective is to "protect officeholders from litigation by those dissatisfied with the decisions they make," which is exactly the situation here. The County was dissatisfied with decisions made regarding the tax software and filed an unsuccessful and, at best, highly questionable action against Clements.
...
Here, we conclude that interpreting Indiana Code Section 34-13-3-5(e) to preclude payment of Clements's attorney fees would be unjust. Where, as here, a county has filed an unsuccessful and highly questionable action against its former auditor, it would be unjust to deny her request for reimbursement of her attorney fees. We conclude that Clements is entitled to reimbursement of her attorney fees under a plain reading of Indiana Code Section 34-13-3-5(e).
The Court's criticism of the wisdom of the County's action makes the scope of its holding unclear. While it likely intended that I.C. § 34-13-3-5 allows for reimbursement of attorney's fees anytime the State or a political subdivision brings an unsuccessful action against a person entitled to governmental immunity, it does not clearly make such a holding. Rather, its emphasis on the "highly questionable" nature of the lawsuit means that litigants are likely to disagree on whether I.C. § 34-13-3-5 applies in these situations only when a political subdivisions lawsuit is unsuccessful or when it is both unsuccessful
and highly questionable.
Lessons:
- If a political subdivision sues a former official of that subdivision, then the former official can have her attorney's fees repaid if the suit is "unsuccessful and highly questionable."
- It is unclear whether the fact that a lawsuit was "highly questionable" is a factor in the Court's analysis or merely dicta.
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