State v. Neff
| Decision Date | 27 February 2019 |
| Docket Number | Supreme Court Case No. 18S-IF-00478 |
| Citation | 117 N.E.3d 1263 |
| Parties | STATE of Indiana, Appellant/Cross-Appellee (Plaintiff Below), v. Beth A. NEFF, Appellee/Cross-Appellant (Defendant Below). |
| Court | Indiana Supreme Court |
ATTORNEYS FOR APPELLANT/CROSS-APPELLEE: Curtis T. Hill, Jr., Attorney General of Indiana, Patricia C. McMath, Deputy Attorney General, Indianapolis, Indiana
ATTORNEY FOR APPELLEE/CROSS-APPELLANT: Jeffrey M. Heinzmann, Heinzmann Law Office LLC, Fishers, Indiana
On Petition to Transfer from the Indiana Court of Appeals, No. 18A02-1708-IF-01933
Turning to the judiciary to remove a duly-elected public official from office is a radical departure from our usual democratic process because it risks silencing the collective voice of the people, spoken in each election. As such, it is a remedy rarely sought and even more rarely granted. This appeal involves such a request by the State to remove the Town of Yorktown's Clerk-Treasurer, Beth Neff, but it does not fall within the exceptionally rare category of cases that warrant removal. Under the statute relied on by the State for this removal action, a public official may be removed from office for only a general failure to carry out his or her required duties. Because the State has not shown that Neff's failures and errors constitute such a general failure, she is not subject to removal.
At all times relevant to this appeal, Beth Neff served as the elected Clerk-Treasurer of the Town of Yorktown and was responsible for, among other things, managing and keeping account of Yorktown's finances. In connection with these responsibilities, her office was subject to financial examination by the Indiana State Board of Accounts (the "SBOA"). Two such examinations by the SBOA, along with actions taken in response to those examinations, laid the foundation for this proceeding.
The first examination related to the 2012 calendar year, and the SBOA uncovered several deficiencies in Yorktown's financial records and processes. The deficiencies included improper bank account reconciliations, errors in Yorktown's report of its yearly financial activities, and a financial account showing a negative cash balance of approximately $ 140,000. In a November 2013 exit conference, the SBOA discussed the results of its examination with Neff, the Yorktown Town Council President, and the Yorktown Town Manager, and it provided some direction to Neff on avoiding future deficiencies.
The second examination related to the 2013, 2014, and 2015 calendar years, and the SBOA found that the deficiencies noted in the 2012 examination continued into 2013, 2014, and 2015. In fact, the SBOA Audit Manager who oversaw both examinations testified that Yorktown's financial records worsened after the first examination, and, as a practical matter, there were too many errors to identify. In an October 2016 exit conference, the SBOA again discussed the results of its examination with Neff, the Yorktown Town Council President, and the Yorktown Town Manager.
In response to the second examination, the Yorktown Town Council approved hiring an outside accounting firm to review Yorktown's books and to complete bank account reconciliations for the 2012, 2013, 2014, and 2015 calendar years. The accounting firm's review revealed over 150 errors that, without considering whether each error increased or decreased the balance of Yorktown's books, totaled approximately $ 3,090,000. The net effect of these errors was that Yorktown's books were understated by approximately $ 346,000. After completing the bank account reconciliations, the accounting firm was able to identify and propose adjustments to Yorktown's books to reduce the errors to just near $ 250. Yorktown initially contracted to spend $ 20,000 for this work but ultimately spent almost $ 70,000 after discovering the full extent of the work required.
On July 12, 2017, about a month after the outside accounting firm completed its work reviewing Yorktown's 2012, 2013, 2014, and 2015 books, the State, by the Delaware County prosecuting attorney, filed its Complaint for Removal from Office against Neff. Relying on Indiana Code section 5-8-1-35 (the "Removal Statute"), the State sought Neff's removal for her alleged "refus[al] or neglect[ ], on numerous occasions, to perform the official duties pertaining to the office of the Yorktown Clerk-Treasurer." Appellant's App. Vol. 2, p. 23, ¶ 4. The State brought three specific counts alleging that Neff failed to: (1) complete monthly accounting reconciliations; (2) follow the directions of the SBOA, the relevant state examiner; and (3) use the accounting and financial reporting systems adopted by the SBOA in its Accounting and Uniform Compliance Guideline Manual for Cities and Towns (the "SBOA Manual"). Neff sought dismissal of the complaint pursuant to Trial Rule 12(B)(6), but the trial court denied her motion.
Sixteen days after the State filed its Complaint and within the Removal Statute's twenty-day deadline, the trial court held a summary hearing on the merits. See Ind. Code § 5-8-1-35(a) (2017). A few days later, the trial court issued its written findings of fact, conclusions of law, and judgment in favor of Neff. It found that "Neff failed to reconcile [Yorktown's] books for forty-eight consecutive months [;] ... did not follow [SBOA] directives; violated the [SBOA] Manual that should have directed her in doing her job; and committed errors that resulted in over $ 3 million in total errors affecting over thirty accounts ." Appellant's App. Vol. 2, p. 81 (emphases in original). However, it also found that Neff was completing the other work of her office, including fulfilling her non-financial duties. Id. at 84. After discussing this Court's precedent interpreting the Removal Statute and applicable constitutional provisions, the trial court concluded that the Removal Statute applies in three situations: "complete failures to act, the inability to act due to mental conditions, or crimes." Id. Because Neff was successfully completing some of her duties as Clerk-Treasurer, the trial court concluded that she had committed misfeasance rather than nonfeasance; that is, she had not completely failed to carry out her duties. Id. Thus, the trial court entered judgment in her favor. Id.
The State appealed, arguing that the Removal Statute does not require the State to show a failure to fulfill all duties, all the time, to remove a public official. Instead, the State contended that pervasive failures involving critical duties suffice for removal. In response, Neff argued in favor of the trial court's judgment, but she also cross-appealed the trial court's denial of her motion to dismiss the complaint. The Court of Appeals agreed generally with the State and held that "an officeholder like Neff need not abandon each and every statutory duty before removal from office may be warranted." State v. Neff , 103 N.E.3d 635, 642 (Ind. Ct. App. 2018). It concluded that the Removal Statute applied because Neff "neglected to perform a critical, official, and mandatory duty of her office for an extended period of time." Id. at 643. Thus, it reversed the trial court. Id. at 643–44.
We granted Neff's petition to transfer to address the merits of the State's complaint for removal, thereby vacating the Court of Appeals opinion in part. See Ind. Appellate Rule 58(A). We summarily affirm the portion of the Court of Appeals opinion regarding Neff's cross-appeal. See App. R. 58(A)(2).
The parties do not dispute the trial court's factual findings regarding what Neff did or did not do.1 Instead, they disagree as to the standard for removing a public officer under the Indiana Constitution and the Removal Statute. This disagreement concerning the meaning of our Constitution and statutes presents us with a question of law, which we review de novo. Horton v. State , 51 N.E.3d 1154, 1157 (Ind. 2016). See also State v. McRoberts , 207 Ind. 293, 298–300, 192 N.E. 428, 430–31 (1934) ().2
Although public officials are normally voted in and out of office, our Constitution provides ways to remove an official outside of an election in certain circumstances. See Ind. Const. art. 6, §§ 7 – 8. One such way is through a judicial proceeding pursuant to the Removal Statute. I.C. § 5-8-1-35. But judicial removal State ex rel. Ayer v. Ewing , 231 Ind. 1, 16, 106 N.E.2d 441, 447 (1952) (Emmert, J., concurring) (citation omitted). As a result, we exercise restraint and caution in considering petitions for removal. Bateman v. State , 214 Ind. 138, 149, 14 N.E.2d 1007, 1011 (1938) ().
With this cautious approach in mind, we consider two related questions in this appeal. First, under what circumstances do the Indiana Constitution and the Removal Statute allow for the judicial removal of a public official? Second, should Neff have been removed? We address each question in turn.
The judiciary's removal power originates from two provisions of the Indiana Constitution. Article 6, section 7 provides, "All State officers shall, for crime, incapacity, or negligence, be liable to be removed from office, either by impeachment ... or by a joint resolution of the General Assembly ...." Article 6, section 8 states more generally that "[a]ll State, county, township, and town officers, may be impeached, or removed from office, in such manner as may be prescribed by...
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