Gray v. Oliver

• Decision Date: 22 May 2020
• Docket Number: No. 18-2076,18-2076
• Citation: 943 N.W.2d 617
• Parties: Jefferie Scott GRAY, Janice Gray, and J.G., as Successors in Interest to James Lee Hohenshell, Appellants, v. Michael B. OLIVER, Oliver Law Firm, P.C., and Oliver Gravett Law Firm, P.C., Appellees.
• Court: Iowa Supreme Court

943 N.W.2d 617

Jefferie Scott GRAY, Janice Gray, and J.G., as Successors in Interest to James Lee Hohenshell, Appellants,

v.Michael B. OLIVER, Oliver Law Firm, P.C., and Oliver Gravett Law Firm, P.C., Appellees.

No. 18-2076

Supreme Court of Iowa.

Filed May 22, 2020

Jonathan Kramer and Zachary James Hermsen of Whitfield & Eddy, P.L.C., Des Moines, for appellants.

Joseph A. Cacciatore of Ervanian & Cacciatore, L.L.P., Des Moines, for appellees.

McDONALD, Justice.

The narrow question presented in this appeal is whether judgment creditors can levy on their judgment debtor, obtain the judgment debtor’s chose in action for legal malpractice against the attorney representing the judgment debtor in the litigation giving rise to the judgment, and prosecute the claim for legal malpractice against the attorney as the successors in interest to their judgment debtor. For the reasons expressed below, we conclude the judgment creditors cannot prosecute the legal malpractice claim as successors in interest to their former litigation adversary.

I.

The facts of this case are not disputed. In 2013, James Hohenshell’s stepdaughter invited some of her girlfriends to the Hohenshell home for a party. One of the girls was thirteen-year-old J.G. Hohenshell provided alcohol to J.G. and the other girls. After J.G. became intoxicated and sick, Hohenshell carried J.G. to his bedroom and forcibly raped her. In November 2014, Hohenshell pleaded guilty to one count of committing lascivious acts with a minor and five counts of providing alcohol to a minor and was sentenced to incarceration. "At the guilty-plea proceeding, Hohenshell entered his plea with a smirk on his face and a chuckle." Gray v. Hohenshell , No. 17-1100, 2019 WL 325015, at *2 (Iowa Ct. App. Jan. 23, 2019).

In August 2015, Janice and Jeff Gray, individually and as parents and next friends of J.G., filed a civil suit against Hohenshell. They asserted claims for: "(1) assault, sexual assault, and battery; (2) intentional infliction of emotional distress; (3) negligent infliction of severe emotional distress; (4) negligent supervision; and (5) loss of services and consortium." Id. at *2. Hohenshell hired Michael Oliver of the Oliver Law Firm, P.C., and its successor Oliver Gravett Law Firm, P.C., to defend the suit. Hohenshell did not contest liability. The parties tried the issue of damages to a jury. The jury awarded compensatory damages to J.G. in the amount of $50 million, loss of consortium damages to each parent in the amount of $1 million, and punitive damages in the amount of $75 million. The total verdict was $127 million.

It would be fair to say Oliver did not vigorously defend the suit. The Grays offered to settle the suit for a confession of judgment in the amount of $2 million or for an amount "well into the six figure range" that included evidence of an ability to pay. Oliver did not respond to the Grays’ settlement demands. Oliver did not conduct any discovery. Oliver did not resist the Grays’ motions for summary judgment with respect to liability. Oliver did not resist the admission of the Grays’ trial exhibits. Oliver did not make any objections to the Grays’ prospective juror questionnaires. Oliver did not provide juror questionnaires of his own. Oliver did not put on much of a defense at the trial on damages. Oliver did not put on any evidence on Hohenshell’s behalf. It would also be fair to say there may have been legitimate reasons for Oliver’s inaction. The record is silent on the issue.

Hohenshell retained new counsel after trial in the civil suit and sought appellate relief. On appeal, Hohenshell argued "(1) the verdict was influenced by passion or prejudice, (2) the compensatory damages award was not supported by the evidence, and (3) the punitive damages award was excessive and violate[d] his due process rights." Id. at *1. The Grays vigorously defended the award on appeal. They argued it would be an affront to justice to disturb the civil award:

[Hohenshell] is asking this Court to agree with him that while raping a child may not be good, ... it’s not $127,000,000 bad. He is further asking that if the Court agrees with this astounding assertion, it should then substitute its judgment of such heinous acts for the jury’s and thereby put a defacto [sic] arbitrary ceiling on what a jury can award as a verdict when a defendant rapes a child. [The Grays] believe this assertion and request is abhorrent, contrary to the very tenants upon which the civil justice system was created and cultivated, and an affront to justice.

They further argued, "The jury award is not the shocking part of this case. It is the reprehensible and vile actions of [Hohenshell] that shock the conscience. The jury award is absolutely commensurate to the acts." The court of appeals agreed with the Grays, and it affirmed the civil judgment against Hohenshell. See Hohenshell , 2019 WL 325015, at *11.

While the appeal from the Grays’ suit against Hohenshell was pending, the Grays caused to be issued a writ of execution on the $127 million judgment against Hohenshell. The sheriff levied on the following property belonging to Hohenshell:

All right, title and interest of James Lee Hohenshell in Claims of any Kind or Nature against Michael Oliver, against Oliver Law Firm, PC, or against Oliver Gravett Law Firm, PC, each at 974 73rd Street, #10, Windsor Heights, Iowa 50324.

The Grays purchased this right for $5000 at the sheriff’s sale. At the time the Grays executed on their judgment and purchased Hohenshell’s claims against Oliver, Hohenshell had not asserted any claim for legal malpractice against Oliver, nor has he ever, according to the record.

In November 2017, while the Grays were still defending the $127 million judgment against Hohenshell on appeal, they filed this malpractice claim against Oliver as successors in interest to Hohenshell. In their petition, they asserted three counts against Oliver: legal malpractice, breach of fiduciary duty, and breach of written contract. All of the claims arose out of and related to Oliver’s representation of Hohenshell in the Grays’ suit against Hohenshell. The Grays asserted Oliver "was negligent in failing to persuade" Hohenshell to confess judgment or otherwise settle their suit. The Grays asserted Oliver provided an inadequate defense of Hohenshell in their suit against Hohenshell. The Grays claimed Oliver’s malpractice "proximately caused damages to Hohenshell equal to the greater of either the amount the jury award in the lawsuit exceeded the value of such award were counsel to have represented Hohenshell with competence or the value of Hohenshell’s payments to Oliver."

Oliver sought summary judgment on all claims asserted against him. He contended public policy considerations precluded the involuntary assignment of Hohenshell’s legal malpractice claim to Hohenshell’s adversaries in the very suit that gave rise to Hohenshell’s chose in action. The district court granted Oliver’s motion for summary judgment. The district court held that "as a matter of law the public policy of the State of Iowa prohibits the assignment of a legal malpractice claim to an adversarial party in the underlying lawsuit." The Grays filed a motion to enlarge or amend, which the district court denied. The Grays timely filed this appeal.

II.

We "review a district court ruling on a motion for summary judgment for correction of errors at law." Wells Fargo Equip. Fin., Inc. v. Retterath , 928 N.W.2d 1, 5 (Iowa 2019) (quoting Jahnke v. Deere & Co. , 912 N.W.2d 136, 141 (Iowa 2018) ). "Summary judgment is appropriate ‘when the moving party has shown "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." ’ " Id. (quoting Jahnke , 912 N.W.2d at 141 ).

III.

The Grays contend the district court erred in granting Oliver’s motion for summary judgment. First, they contend the district court lacked the power to determine a question of public policy. Second, they contend it is contrary to Iowa law to disallow the assignment and prosecution of a claim for legal malpractice. Third, they contend disallowing the assignment and prosecution of a claim for legal malpractice is unconstitutional. We address each contention in turn.

A.

The Grays first argue the district court did not have "the power, without prior precedent or statutory authority, to establish new public policies or to interpret unwritten public policies of the State of Iowa in the first instance." They argue this power is specifically reserved for the supreme court. In support of their argument, the Grays rely on article V of the Iowa Constitution, which establishes the judicial department.

The Grays’ argument is a nonstarter. The district court had the constitutional and statutory authority to resolve the viability of the Grays’ legal claim. The Iowa Constitution provides, "The district court shall be a court of law and equity ... and have jurisdiction in civil and criminal matters arising in their respective districts, in such manner as shall be prescribed by law." Iowa Const. art. V, § 6. The Iowa Code provides, "The district court has all the power usually possessed and exercised by trial courts of general jurisdiction ...." Iowa Code § 602.6101 (2018). Determining the merits or demerits of a common law issue based on considerations of public policy is a question of law within the constitutional and statutory power of the district court. See, e.g. , 33 Carpenters Constr., Inc. v. State Farm Life & Cas. Co. , 939 N.W.2d 69, 81 (Iowa 2020) (upholding district court’s finding that a contract was void as a matter of public policy); Lloyd v. Drake Univ. , 686 N.W.2d 225, 226 (Iowa 2004) (upholding district court’s finding that defendant’s actions did not violate public policy); Fitzgerald v. Salsbury Chem., Inc. , 613 N.W.2d 275, 282 (Iowa 2000) ("It is generally recognized that the existence of a public policy ... presents questions of law for the court to resolve."). Indeed, we...