Brown v. Monticello State Bank of Monticello, Iowa

• Decision Date: 19 December 1984
• Docket Number: No. 83-1116,83-1116
• Citation: 360 N.W.2d 81
• Parties: Ralph J. and Thomas B. BROWN, Appellants, v. MONTICELLO STATE BANK OF MONTICELLO, IOWA, Appellee.
• Court: Iowa Supreme Court

Page 81

360 N.W.2d 81

Ralph J. and Thomas B. BROWN, Appellants, v. MONTICELLO STATE BANK OF MONTICELLO, IOWA, Appellee.

No. 83-1116.

Supreme Court of Iowa.

Dec. 19, 1984.

Rehearing Denied Jan. 10, 1985.

Michael A. Stapleton, Dubuque, for appellants.

Robert C. Tilden and Iris E. Muchmore, of Simmons, Perrine, Albright & Ellwood, Cedar Rapids, for appellee.

Considered by REYNOLDSON, C.J., and McCORMICK, LARSON, SCHULTZ, and WOLLE, JJ.

SCHULTZ, Justice.

This appeal represents the second appeal arising from claims made by Ralph J. Brown and Thomas B. Brown against the Monticello State Bank. The Browns are cousins and residuary legatees under the will of decedent Howard B. Brady. The bank was conservator for Brady and acted as the executor of his estate in Jones County. In an earlier appeal, we consolidated several contested proceedings involving the same parties which arose from orders in the conservatorship and Brady's estate. In re Estate of Brady, 308 N.W.2d 68 (Iowa 1981). This appeal arises from the Browns' tort action which, in the recast petition, contains four separate counts charging the bank in its individual, rather than representative, capacity with malfeasance in its activities as a fiduciary in the Brady matters. Following district court rulings that granted the bank's motion for summary judgment on three of the four counts, we granted the Browns' application for interlocutory review.

In Brady we described Brady's activities prior to his death that led to litigation between the present parties in both Iowa and Wisconsin concerning the execution of his wills and his legal residence. 308 N.W.2d at 69-70. We will summarize the litigation. The bank, conservator of Brady in Jones County, Iowa, until his death, initiated the probate of decedent's will dated December 1974 in Jones County and was named coexecutor with Thomas B. Brown. The Browns initiated the probate of decedent's will dated March 1975 in Wisconsin and were named as coexecutors. The bank intervened in the Wisconsin estate proceedings, challenging decedent's residency in Wisconsin and the validity of the 1975 will. The Wisconsin court found decedent to be a Wisconsin resident at his death. Before the validity of the will was tried, the bank dismissed its petition of intervention. Later, the bank brought a declaratory judgment action in Jones County, again raising the issues of residency and the validity of the 1975 will. As a result of this action, the 1975 will prevailed; however, decedent's residency was established in Jones County. The 1975 will finally was probated in Jones County.

The result of this litigation did not solve the parties' differences, however. One group of contested proceedings traveled through the probate forum and culminated in our decision in Brady. In the meantime, in 1978, the Browns brought the present civil action, separate from the probate proceeding, against the bank. After amendments, this petition contained seven counts; however, three of the counts were transferred to the probate proceedings. The Browns recast their petition into four counts. Three counts succumbed to summary judgment motions by the bank. Count II is pending in the district court. Counts I and III alleged maladministration by the bank in its capacity as conservator and administrator and were dismissed by Judge Robert E. Ford. Later, count IV, a malicious prosecution action, was dismissed by Judge Paul J. Kilberg.

In this appeal, the Browns contest both rulings, generally urging that the court incorrectly applied the principles of issue preclusion. First, we will review the principles of summary judgment and issue preclusion; then we will address the rulings concerning the dismissed counts of maladministration and malicious prosecution.

Summary judgment is only proper when there is no genuine issue of fact and the moving party is entitled to judgment as a matter of law. Iowa R.Civ.P. 237(c). If, under the entire record, the only conflict concerns the legal consequences flowing from undisputed facts, entry of summary judgment is proper. Jacobs v. Stover, 243 N.W.2d 642, 643 (Iowa 1976). The moving party must show that he is entitled to judgment on the merits as a matter of law. Drainage District No. 119 v. Incorporated City of Spencer, 268 N.W.2d 493, 499 (Iowa 1978). Our task on review is to determine whether a genuine issue of fact exists and whether the law was applied correctly. Id. at 500.

Both parties agree that there are four prerequisites to the application of the doctrine of issue preclusion. Hunter v. City of Des Moines, 300 N.W.2d 121, 125 (Iowa 1981); Mauer v. Rohde, 257 N.W.2d 489, 497 (Iowa 1977). These prerequisites are as follows:

(1) The issue concluded must be identical.

(2) The issue must have been raised and litigated in the prior action.

(3) The issue must have been material and relevant to the disposition of the prior action, and

(4) The determination made of the issue in the prior action must have been necessary and essential to the resulting judgment.

Mauer, 257 N.W.2d at 497 (citations omitted).

I. Maladministration. On appeal, the parties' initial quarrel is centered on the court's reliance on issue preclusion in dismissing counts I and III. In both counts the Browns allege maladministration by the bank in its fiduciary capacity. In count I they seek compensation for their emotional injuries, and in count III they request special damages arising out of their own farming operation. The court determined that the same issues and claims of maladministration were litigated in the probate proceedings and held the Browns were precluded from relitigating those issues that previously had been decided adversely to them.

A. Matters litigated in probate. The Browns contend that their contest of the bank's final reports, which was undertaken in their capacity as successor-executor, should not preclude this litigation concerning the bank's alleged wrongful actions as fiduciary. These claims concerning the bank's alleged improper performance of certain duties in its fiduciary capacity were detailed in the probate files and repeated in the briefs by reference to those files. The objections were overruled in the probate proceedings, and those rulings were affirmed in Brady. We do not agree with the Browns' contention.

We conclude the trial court correctly used issue preclusion to eliminate the relitigation of claims made and rejected in the probate proceedings. The Browns filed their objections to the final reports in their fiduciary capacity, but they were given notice of these reports in their individual capacity and had an opportunity to make the same objections. Although the Browns seek different damages, their claim of misconduct is the same. All four requirements of issue preclusion have been met, and the Browns are precluded from relitigating the same claims.

B. Litigation concerning the validity of the 1975 will. The remaining allegation of wrongdoing found in counts I and III concerns the bank's actions in probating the 1974 will, then challenging the validity of the 1975 will in Wisconsin and Iowa. The bank asserts that the trial court correctly applied issue preclusion to these claims, since the final report was approved by a court order which was affirmed by this court in Brady. The Browns assert that the issues are not identical to those affirmed in Brady. In Brady we determined that no legitimate estate interest was served by the declaratory judgment action, 308 N.W.2d at 72; thus, the Browns claim this "issue is alive and forms the keystone of the Browns' suit against the bank."

We agree that the Browns have had their day in court concerning all the issues and have lost, with the exception of the Jones County declaratory judgment action. The Browns conclude the bank's litigation in the declaratory judgment action was one of many wrongful acts during the administration. They charge the bank with malice and willfulness, in substance the same claims made in count IV, the Browns' malicious prosecution action. Without the charge of malice, no action would lie against the bank for maladministration in bringing an action to determine the validity of a subsequent will. We hold that these claims properly belong in count IV in which the Browns clearly charged the bank with malicious litigation arising out of the same actions. Consequently, we hold the trial court correctly dismissed this count. We do not deprive the Browns of their day in court; they may litigate this issue in count IV. We further grant the right to timely amend count IV to include any claims based on malicious litigation that are not included in that count, but are included in counts I and III.

II. Malicious prosecution. Two issues originate from the Browns' claims of malicious prosecution which are contained in count IV. The first issue originates from the allegation that the bank wrongfully brought a declaratory judgment action in Iowa. While the Browns concede that an element of malicious prosecution is the termination of the prior litigation favorable to them, they urge this only requires success on the portion of the suit that serves as a source for their malicious prosecution action and does not require a successful result on an incidental and peripheral issue. The second issue arises out of their allegation that the bank wrongfully acted by intervening in the Wisconsin probate proceedings. They maintain our holding in Brady, that the bank acted in good faith and for cause in its intervention in the Wisconsin proceedings, did not preclude their action for malicious prosecution predicated on the bank's intervention. We shall discuss these issues separately.

A. Iowa declaratory judgment action. One of the Browns' claims of malicious prosecution in count IV is based on the bank's declaratory judgment action in Jones County. In the prior action, the bank sought a judgment declaring two facts: (1) decedent was a resident of Iowa...