Fennelly v. A-1 Machine & Tool Co.
| Decision Date | 23 February 2007 |
| Docket Number | No. 05-1052.,05-1052. |
| Citation | 728 N.W.2d 181 |
| Parties | Bill FENNELLY, Scott County Treasurer, Appellant, v. A-1 MACHINE & TOOL CO., Appellee. |
| Court | Iowa Supreme Court |
Thomas C. Fritzsche, Assistant County Attorney, for appellant.
John T. Flynn of Brubaker, Flynn & Darland, P.C., Davenport, for appellee.
This appeal and cross-appeal is a companion case to Fennelly v. A-1 Machine & Tool Co., 728 N.W.2d 163, 2006 WL 2846986 (Iowa 2006) [hereinafter Fennelly I], and involves an action brought to collect property taxes from 1997-2001 after the district court dismissed the petition in Fennelly I. We are presented with the question of whether the district court properly granted summary judgment to A-1 Machine & Tool Co. (A-1) for the 1997 tax claim, and summary judgment to the Scott County Treasurer (Treasurer) for the 1998-2001 tax claims. We conclude the reversal of the district court judgment in Fennelly I necessitates reversing the 1997 tax claim judgment. We also conclude our decision in Fennelly I renders A-1's arguments based on res judicata inapplicable to the judgment for the 1998-2001 taxes. Moreover, we conclude A-1's remaining arguments against summary judgment for the 1998-2001 taxes are without merit. Finally, we conclude the parties' arguments concerning attorney fees and sanctions were either not preserved or are meritless. Accordingly, we affirm the district court in part, reverse in part, and remand for further proceedings.
The background facts of this case are set out in our opinion in Fennelly I. They involve a claim by the Treasurer to collect delinquent real property taxes from A-1 for the tax years 1989-2001. In Fennelly I, the district court dismissed the claim for each year, finding the claims for delinquent taxes from 1989-1996 were outside the statute of limitations and the claims for delinquent taxes from 1997-2001 could not be brought because the Treasurer did not first obtain a tax sale certificate. After the district court in Fennelly I granted summary judgment to A-1, and dismissed the petition to collect the delinquent taxes, the Treasurer filed a notice of appeal. He then obtained a tax sale certificate for the tax years from 1997-2001 (which was found lacking by the district court in Fennelly I), and filed a new action in district court to collect the delinquent taxes from 1997-2001.
A-1 moved to strike the 1997 and 1998 tax claims from the Treasurer's petition because of issue preclusion and the operation of the five-year statute of limitations. A-1 also moved to dismiss the petition and for summary judgment based on the operation of Iowa Rule of Civil Procedure (IRCP) 1.444 and IRCP 1.946, and our principles of claim preclusion. In its motion for summary judgment, A-1 also requested it be awarded the costs of defense, including reasonable attorney's fees and court costs under either IRCP 1.413 or the common law. A-1 later filed an affidavit in support of attorney's fees.
The Treasurer resisted A-1's motions, and claimed "[A-1's] conduct in bringing on this spurious motion for attorney's fees is itself abusive, and the Court should consider on its own initiative invoking sanctions against [A-1] under IRCP 1.413(1)." The Treasurer then moved for summary judgment. He claimed he was entitled to judgment as a matter of law on the tax claims from 1997-2001 because A-1's defenses were irrelevant and immaterial, and there were no material controversies between the parties.
The district court denied A-1's motions, but did not discuss A-1's request for attorney fees and costs. As a result, the Treasurer moved pursuant to IRCP 1.904(2) to enlarge the district court's ruling so a hearing could be set on A-1's application for attorney's fees and sanctions, and for the district court to consider awarding fees and sanctions to the Treasurer on its own initiative. The district court denied the Treasurer's motion because it believed a hearing at this stage in the proceedings was premature—as there had not been a trial on the merits and the Treasurer's motion for summary judgment was still pending.
Thereafter, A-1 moved for partial summary judgment regarding the 1997 tax claim. The district court entered judgment for A-1 on the 1997 tax claim based on issue preclusion. It found the district court's judgment in Fennelly I precluded the Treasurer from relitigating whether the statute of limitations applied, and the 1997 tax claim was not brought within the five year period. The district court entered judgment for the Treasurer on the claims for taxes from 1998-2001. It rejected all the arguments raised by A-1, including the argument the claims were barred by the doctrine of claim preclusion.
Both parties then moved pursuant to IRCP 1.904(2) to clarify the district court's order. Neither of these motions requested the court to consider the parties' original applications for attorney fees and sanctions. The Treasurer, however, later requested the court to set an evidentiary hearing regarding the parties' "cross-applications" for IRCP 1.413(1) relief in its resistance to A-1's IRCP 1.904(2) motion. A-1 then resisted the Treasurer's IRCP 1.904(2) motion and made no mention of its application for IRCP 1.413(1) relief.
The district court's order regarding the parties' IRCP 1.904(2) motions declared the issues regarding IRCP 1.413(1) relief moot. Subsequently, the Treasurer moved for an order nunc pro tunc to clarify what the district court meant when it held the claims for attorney fees or sanctions were moot. The Treasurer did so because he did not agree with A-1's interpretation of the district court's order. A-1 interpreted the order to mean it could still request common-law attorney fees (but not fees or sanctions under IRCP 1.413(1)), whereas the Treasurer believed the district court meant A-1's dual application for fees and sanctions under both the common-law and IRCP 1.413(1) was moot.
In the nunc pro tunc order, the Treasurer specifically requested the district court deny as moot A-1's dual application for attorney fees and sanctions under both the common law and IRCP 1.413(1), and also decline the Treasurer's request for the court to consider on its own initiative sanctioning A-1 under IRCP 1.413(1). The court declined the Treasurer's motion, emphasizing it had already concluded
The Treasurer appealed from the judgment for A-1 on the 1997 tax claim. A-1 cross-appealed from the judgment for the Treasurer on the 1998-2001 tax claims.
Our review in summary-judgment appeals is for the correction of errors at law. Stewart v. Sisson, 711 N.W.2d 713, 715 (Iowa 2006).
A motion for summary judgment should only be granted if, viewing the evidence in the light most favorable to the non-moving party, "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
Otterberg v. Farm Bureau Mut. Ins. Co., 696 N.W.2d 24, 27 (Iowa 2005) (quoting Iowa R. Civ. P. 1.981(3)). We generally review decisions concerning attorney fees for an abuse of discretion, but decisions regarding common-law attorney fees are reviewed de novo. Fennelly I, 728 N.W.2d at 167; see In re Benson, 545 N.W.2d 252, 258 (Iowa 1996) ().
The district court granted summary judgment for A-1 on the 1997 taxes based on issue preclusion. The court determined the statute-of-limitations issue had already been litigated and decided (in favor of A-1) by the district court in Fennelly I, and the Treasurer was precluded from relitigating it again in this action. Because the court in Fennelly I decided the five-year statute of limitations applies to the Treasurer, and the Treasurer filed Fennelly II more than five years after the claim for 1997 taxes accrued, it entered summary judgment for A-1 on this claim.
On appeal in Fennelly I, we held the statute of limitations did not apply to the Treasurer. Thus, we have before us a judgment based on a judgment subsequently reversed. This situation is covered by section 16 of the Restatement (Second) of Judgments. That section provides:
A judgment based on an earlier judgment is not nullified automatically by reason of the setting aside, or reversal on appeal, or other nullification of that earlier judgment; but the later judgment may be set aside, in appropriate proceedings, with provision for any suitable restitution of benefits received under it.
Restatement (Second) of Judgments § 16, at 145 (1982). A comment to the section states when an appeal from the second judgment is pending when the first judgment is reversed, "[t]he court should then normally set aside the later judgment." Id. § 16 cmt. c, at 147. Therefore, we reverse the summary judgment for A-1 on the 1997 taxes.
We next consider A-1's argument on cross-appeal that the Treasurer was precluded from suing again for the 1997-2001 taxes, after obtaining the tax sale certificates found lacking in the original action brought by the Treasurer to collect the taxes. A-1 argues the operation of IRCP 1.444 and IRCP 1.946, in conjunction with the doctrine of res judicata, prohibits the Treasurer from bringing the second action. A-1 raised these arguments previously in its motion to dismiss and motion for summary judgment. The district court, however, denied the motions, holding IRCP 1.444 did not apply, the summary judgment in Fennelly I was not an adjudication on the merits under IRCP 1.946, and, therefore, res judicata did not apply. A-1...
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