Errett v. Rasmussen
| Decision Date | 21 May 1976 |
| Docket Number | Civ. No. 75-130-2. |
| Citation | 414 F. Supp. 402 |
| Parties | J. W. ERRETT and the Firestone Tire & Rubber Company, Plaintiffs, v. Clark RASMUSSEN, Clerk of the District Court, Polk County, Iowa, et al., Defendants. |
| Court | U.S. District Court — Southern District of Iowa |
B. A. Webster and Charles H. Dick, Jr., Des Moines, Iowa, for plaintiff.
Leo E. Gross and Eric F. Schwarz, Des Moines, Iowa, for defendants Kerrigan.
Ray A. Fenton, Polk County Atty., and John H. King, Charles S. Crook, III, and James W. Ramey, Asst. County Atty., Des Moines, Iowa, for defendant Rasmussen.
Before STEPHENSON, Circuit Judge, and HANSON and STUART, District Judges.
This lawsuit involves a constitutional challenge to Rule 337 of the Iowa Rules of Civil Procedure, which requires judgment debtors in Iowa to obtain a bond in the amount of 125 percent of the judgment against them, guaranteeing full payment of that judgment, in order to prevent levy and seizure upon their non-exempt assets pending appeal. Plaintiffs assert that this supersedeas bond requirement violates the equal protection and due process clauses of the Fourteenth Amendment to the United States Constitution. They seek a declaratory judgment to that effect, pursuant to 28 U.S.C. § 2201 (1970), as well as a permanent injunction enjoining the application of Rule 337 against them. This Court's jurisdiction is invoked under 28 U.S.C. § 1331 (1970), and a three-judge court has been convened herein pursuant to 28 U.S.C. § 2281 (1970). On November 6, 1975, the case was submitted to the Court on the basis of the record, which includes a stipulation of facts, and oral arguments.
1. On September 8, 1969 a tort action was filed in the District Court of Polk County, Iowa by Edward and Lebera Kerrigan. Named as a defendant was one of the plaintiffs herein, J. W. Errett. The suit was based on allegations of Errett's negligence in the discharge of his duties as a manager at the Des Moines, Iowa plant of the Firestone Tire & Rubber Company; Edward Kerrigan had been injured in an industrial accident at Firestone. A jury verdict was rendered in the Kerrigans' favor in December of 1974, and judgment was entered against Errett in the amount of $203,500.00, plus costs, on January 15, 1975. On February 4, 1975, Errett filed a notice of appeal to the Supreme Court of Iowa, and his appeal was perfected on that date.
2. Plaintiff Errett retired from his position at Firestone in 1973, and moved to Arkansas. Upon the entry of judgment against him in Polk County District Court, and prior to the filing of any supersedeas bond, the Kerrigans filed a "Petition to Register Foreign Judgment" in the Circuit Court of Benton County, Arkansas, deposed Mr. Errett, and prepared to levy upon his non-exempt assets. To forestall the impending levy, Errett executed a supersedeas bond on May 1, 1975 (Exhibit A to plaintiffs' Amended and Substituted Complaint). This bond was challenged by the Kerrigans, and ruled to be insufficient by District Court Judge Wade Clarke on May 8, 1975. Judge Clarke's ruling stated that the bond failed to comply with the condition of Rule 337 "that the surety will satisfy and perform the judgment if affirmed."
3. On May 13, 1975, a Petition for Writ of Supervisory Control was filed with the Iowa Supreme Court by Errett. The writ asserted that Errett's proffered bond "guarantees that the Kerrigans' ability to enforce the Judgment will not be impaired pending appeal," and that by doing so it effectively preserved the financial status quo pending appeal, thereby complying with Rule 337. The writ also asserted that "To the extent that Rule 337 requires Errett to obtain a Bond guaranteeing full payment of the Judgment" it denied him due process of law and equal protection of the law contrary to the Fourteenth Amendment.
4. The writ was argued before two members of the Iowa Supreme Court, and denied in a two-sentence ruling on May 20, 1975. Soon thereafter, Firestone procured a supersedeas bond meeting the 125 percent requirement of Rule 337(b) through the Fidelity & Casualty Insurance Company. As far as the record reflects, this bond is still in effect; Errett's appeal to the Iowa Supreme Court is still pending; and there has been no levy on his non-exempt property.
Section 684.18 of the Code of Iowa (1975), provides that:
The supreme court shall have the power to prescribe all rules of pleading, practice and procedure, and the forms of process, writs and notices, for all proceedings of a civil nature in all courts of this state, for the purpose of simplifying the same, and of promoting the speedy determination of litigation upon its merits. Said rules shall neither abridge, enlarge, nor modify the substantive rights of any litigant.
Iowa Rule of Civil Procedure 337, promulgated under § 684.18 provides in part as follows:
It is the stipulation of the parties to this case that:
The purported inability of Mr. Errett to personally compile the wherewithal to post a supersedeas bond, and hence prevent execution on his non-exempt assets pending appeal, forms the basis of plaintiffs' constitutional attack on Rule 337. Plaintiffs' assert three Fourteenth Amendment-based challenges to the Rule: they allege that its enforcement deprives them of their property without due process of law; that it is an arbitrary and capricious requirement denying them procedural due process while a good faith appeal is exercised; and that it invidiously discriminates against them, denying them equal protection of the law.
Defendants directly contest plaintiffs' arguments on the constitutional merits of the statute, and in addition have raised three separate legal issues by way of motions to dismiss: that plaintiffs' claim is moot; that the plaintiffs lack standing to pursue said claim; and that plaintiffs' prior submission to the Iowa Supreme Court of the constitutional issue raised herein deprives this Court of jurisdiction. In addition, the Kerrigans' trial brief asserts that the plaintiffs are estopped from challenging Rule 337. In an order filed on September 8, 1975, this Court overruled defendants' standing and mootness arguments, and reserved ruling on the appellate-jurisdiction-res judicata issue. Upon a full review of the record herein, and the arguments of counsel presented to this Court on November 6, 1975, it is the Court's conclusion that the September 8, 1975 Order in this cause should be vacated, and the case dismissed because the issue is moot as to Errett, and Firestone is estopped from challenging the Rule.
Plaintiff Errett's original complaint in this cause framed the constitutional issue in its purest form. It depicted an individual plaintiff possessing assets of "substantially less than $75,000.00," who sought to protect his non-exempt property while pursuing a good faith appeal of a $203,500.00 judgment against him. In order to invoke Rule 337, to forestall execution, Errett would have to post full cash or cash equivalent collateral on a $256,000.00 bond — a stipulated impossibility. Thus, the complaint squarely presented the issues of the constitutionality of a requirement which made it virtually impossible for a judgment debtor worth less than 125% of the judgment against him to "protect his property" while pursuing an appeal. The Amended and Substituted Complaint filed in this case on July 2, 1975, however, substantially altered the situation just described. The primary changes were the addition of Firestone as a party plaintiff, and the assertion that on May 29, 1975, Firestone procured for Errett a supersedeas bond fully complying with the requirements of Rule 337.
The parties' October 31, 1975 stipulation of facts further affects the complexion of the case. This stipulation disclosed the parties' perception of the possible liability of two individuals, Firestone's Des Moines plant engineer and manager, to the Kerrigans. This liability would be based on the same incident for which Errett has been found liable. It was further stipulated that:
The KERRIGANS have offered to release Mr. ERRETT from any personal liability on their...
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