Emp'rs Mut. Cas. Co. v. Van Haaften

• Citation: 815 N.W.2d 17
• Decision Date: 01 June 2012
• Docket Number: No. 11–0699.,11–0699.
• Parties: EMPLOYERS MUTUAL CASUALTY COMPANY, Appellee, v. Lacinda Ranee VAN HAAFTEN, Appellant.
• Court: United States State Supreme Court of Iowa

815 N.W.2d 17

EMPLOYERS MUTUAL CASUALTY COMPANY, Appellee,

v.Lacinda Ranee VAN HAAFTEN, Appellant.

No. 11–0699.

Supreme Court of Iowa.

June 1, 2012.

Brent D. Rosenberg of Rosenberg & Morse, Des Moines, for appellant.

John F. Fatino and S. Luke Craven of Whitfield & Eddy, P.L.C., Des Moines, for appellee.

WATERMAN, Justice.

This appeal presents a question of first impression in Iowa: whether an Alford plea preceding a deferred judgment on a felony theft charge has preclusive effect in a subsequent civil action against the defendant to recover stolen funds. A secretary at Prairie City–Monroe Community School District (PCM), Lacinda Van Haaften, allegedly embezzled from a student activity fund and faced criminal charges. The district court accepted her Alford plea ¹ to first-degree theft and entereda deferred judgment on that charge. PCM's subrogated insurer, Employers Mutual Casualty Company (EMCC), brought a civil action against Van Haaften to recover $66,749 it paid on the theft loss. The district court entered summary judgment in favor of EMCC in that amount, concluding Van Haaften's Alford plea precluded her from denying the theft or the amount. She appeals, contending her deferred judgment should have no res judicata effect in the civil case.

Our precedent allows third parties to use an Alford plea to preclude the defendant from relitigating essential elements of the criminal offense in a civil action because the district court is required under Iowa Rule of Criminal Procedure 2.8 to find the plea is supported by a factual basis. Van Haaften argues this precedent is inapplicable when a deferred judgment is granted. We disagree because the same judicial finding of a factual basis for the charge is required when the district court enters a deferred judgment after the Alford plea. Accordingly, we hold the victim of a crime (or the victim's subrogated insurer) may invoke the doctrine of issue preclusion in a civil action based on the defendant's Alford plea regardless of whether the defendant successfully complies with the conditions for the deferred judgment on the criminal charge.

We conclude EMCC was entitled to summary judgment on liability, but not for the full amount of EMCC's claimed damages. The preclusive effect of her Alford plea is limited to $10,000, the minimum amount required to support a charge of first-degree theft. EMCC must prove damages in excess of that amount. Genuine issues of material fact precluded summary judgment in excess of $10,000.

Accordingly, we affirm the district court's summary judgment establishing Van Haaften's civil liability to EMCC for theft and for damages of $10,000 based on issue preclusion. We reverse the summary judgment in excess of that amount and remand for a trial on the remaining damages sought by EMCC.

I. Background Facts and Proceedings.

Lacinda Van Haaften worked as a secretary and account manager for the athletic director at PCM beginning in May 2004. She was entrusted with day-to-day management of the “Student Activity Fund,” including processing invoices, preparing account reports, and depositing collections. In March 2008, the school board discovered irregularities with the activity fund after Van Haaften overstated the fund's balance by more than $22,000. PCM hired the certified public accounting (CPA) firm Nolte, Cornman & Johnson P.C. to independently audit the account. The CPA firm investigated the account's internal controls and tested account deposits and disbursements against athletic event revenue and expenses. The CPA firm's twenty-four-page, independent auditor's report concluded Van Haaften failed to deposit collections of $57,759.21 into the Student Activity Fund between September 1, 2004, and May 31, 2008.

The State charged Van Haaften by trial information with first-degree theft, a class “C” felony, under Iowa Code section 714.2(1) (2009). On June 1, 2010, the district court accepted Van Haaften's knowing and voluntary Alford plea of guilty to first-degree theft. During the colloquy, Van Haaften's attorney stated there was “evidence ... not contained in the minutes of testimony that is exculpatory in nature” and “that if this matter went to trial” the defense would rely on that evidence “as a basis for ... establishing reasonable doubt as to the defendant's guilt.” The district court, in response, decided it would not accept Van Haaften's plea unless she denied that “the evidence that [she would] present before a jury [could] overcome ... guilt beyond a reasonable doubt” as established in the minutes of testimony. Van Haaften's attorney agreed to take a ten-minute recess so he could discuss the plea with Van Haaften.

After the recess, Van Haaften admitted the minutes of testimony establish her guilt beyond a reasonable doubt and that she could not present evidence to create reasonable doubt. The district court then asked Van Haaften:

[B]ased upon what you have told me, the minutes of evidence would establish as alleged in Count I that ... you either directly committed or aided and abetted or conspired with another or entered into a common scheme ... to unlawfully take possession and/or control of the property of another; to wit, deposits from the Prairie City Monroe Community School District Activity Fund totaling $57,759.21 with the intent to deprive the rightful owner thereof. Did you understand all of that?

Van Haaften responded, “Yes, your honor.” Van Haaften's attorney responded, “Your honor, the record should reflect my client is tendering an Alford plea of guilty to that charge and I think she will acknowledge that is what she is doing.” The district court accepted her plea.

The district court informed Van Haaften at the plea hearing that she has a right to file a motion in arrest of judgment to challenge the legality of the plea until sentencing and judgment is entered. Van Haaften did not file any motion challenging her plea. The district court held a sentencing hearing on July 12, six weeks after the plea colloquy, and entered a deferred judgment that placed Van Haaften on probation for three years and imposed a $1000 civil fine. The deferred judgment order stated:

The Court upon questioning the Defendant has determined that the Defendant understands her rights and the consequences of such plea of guilty; that said plea was knowingly, intelligently, and voluntarily made and that there is an adequate factual basis for said plea. Accordingly, the Court has accepted said plea of guilty, finds the Defendant guilty of the crime alleged, and hereby enters judgment of guilty thereupon. Upon inquiry, no legal cause has been shown to prevent sentencing on this date.

EMCC provided insurance coverage to PCM and paid PCM $66,749 for losses caused by Van Haaften's theft. In return, PCM assigned its claims against Van Haaften to EMCC. On September 24, EMCC filed this equitable subrogation claim against Van Haaften to recover the $66,749 it paid to PCM. EMCC's amended petition alleged Van Haaften is precluded from relitigating her theft in this civil action. Van Haaften denied those allegations in her answer. EMCC moved for summary judgment on grounds that Van Haaften's guilty plea has preclusive effect. Van Haaften resisted. She supported her resistance with her affidavit denying the theft allegations, and she argued her deferred judgment is not a final judgment for res judicata purposes. On April 12, 2011, the district court after an unreported hearing granted EMCC's summary judgment by calendar entry. On June 3, the district court entered judgment for $66,749.21 plus interest and costs. Van Haaften timely filed her notice of appeal.

We retained the appeal to decide whether an Alford plea resulting in a deferred judgment has preclusive effect in a subsequent civil action.

II. Scope of Review.

We review a district court's summary judgment ruling for errors at law. Gardner v. Hartford Ins. Accident & Indem. Co., 659 N.W.2d 198, 201 (Iowa 2003). Summary judgment is appropriate if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Id. “Whether the elements of issue preclusion are satisfied is a question of law.” Grant v. Iowa Dep't of Human Servs., 722 N.W.2d 169, 173 (Iowa 2006). Issue preclusion therefore is appropriately adjudicated by summary judgment. See, e.g., Brown v. Monticello State Bank, 360 N.W.2d 81, 84 (Iowa 1984). We view the evidence in the light most favorable to the nonmoving party. C & J Vantage Leasing Co. v. Outlook Farm Golf Club, LLC, 784 N.W.2d 753, 756 (Iowa 2010).

III. Van Haaften's Guilty Plea Has Preclusive Effect.

Issue preclusion, sometimes referred to as collateral estoppel, is a form of res judicata. Winnebago Indus., Inc. v. Haverly, 727 N.W.2d 567, 571 (Iowa 2006). Issue preclusion prevents parties “ ‘from relitigating in a subsequent action issues raised and resolved in [a] previous action.’ ” Soults Farms, Inc. v. Schafer, 797 N.W.2d 92, 103 (Iowa 2011) (quoting Hunter v. City of Des Moines, 300 N.W.2d 121, 123 (Iowa 1981)). The doctrine “serves a dual purpose: to protect litigants from ‘the “vexation of relitigating identical issues with identical parties or those persons with a significant connected interest to the prior litigation,” ’ and to further ‘the interest of judicial economy and efficiency by preventing unnecessary litigation.’ ” Haverly, 727 N.W.2d at 571–72 (quoting Am. Family Mut. Ins. Co. v. Allied Mut. Ins. Co., 562 N.W.2d 159, 163 (Iowa 1997)). Issue preclusion also “ ‘tends to prevent the anomalous situation, so damaging to public faith in the judicial system, of two authoritative but conflicting answers being given to the very same question.’ ” Grant, 722 N.W.2d at 178 (quoting Robert C. Casad & Kevin M. Clermont, Res Judicata: A Handbook on Its Theory, Doctrine, and Practice 113 (2001)). A plaintiff may offensively use issue preclusion “in [a] second action [by relying] upon a former judgment against the defendant to...