Hearity v. Iowa Dist. Court for Fayette County

• Decision Date: 17 May 1989
• Docket Number: No. 88-673,88-673
• Citation: 440 N.W.2d 860
• Parties: Robert J. HEARITY, Plaintiff, v. IOWA DISTRICT COURT FOR FAYETTE COUNTY, Defendant. Thomas George DeTIMMERMAN et al., Plaintiffs, v. CITY OF OELWEIN, et al., Defendants.
• Court: Iowa Supreme Court

Page 860

440 N.W.2d 860

Robert J. HEARITY, Plaintiff, v. IOWA DISTRICT COURT FOR FAYETTE COUNTY, Defendant.

Thomas George DeTIMMERMAN et al., Plaintiffs, v. CITY OF OELWEIN, et al., Defendants.

No. 88-673.

Supreme Court of Iowa.

May 17, 1989.

Rehearing Denied May 30, 1989.

Robert J. Hearity, Oelwein, pro se.

E.R. McCann and Jim D. DeKoster of Swisher & Cohrt, Waterloo, and James R. Hellman of Mosier, Thomas, Beatty, Dutton, Braun & Staack, Waterloo, for defendant district court.

Considered by McGIVERIN, C.J., and SCHULTZ, CARTER, LAVORATO and NEUMAN, JJ.

McGIVERIN, Chief Justice.

Plaintiff in certiorari, Robert J. Hearity, represented Thomas DeTimmerman and his parents, Charles and Luetta DeTimmerman, as their attorney in a lawsuit against the City of Oelwein and two Oelwein police officers in the Iowa district court for Fayette County. The court granted a motion for summary judgment by the City and the police officers to enforce a settlement. The district court, the defendant in certiorari here, then ordered sanctions against Hearity personally for exercising bad faith in signing and filing documents in the DeTimmerman lawsuit in violation of Iowa Rule of Civil Procedure 80(a). Hearity appealed, contending that the district court unlawfully ordered the sanctions and that the sanctions assessed were otherwise excessive. We treat this appeal as an application for issuance of a writ of certiorari. Iowa R.App.P. 304. Accordingly, we sustain the writ in part and annul the writ in part.

I. Background facts and proceedings. On May 20, 1984, two Oelwein police officers, Kevin Smith and Bob Barker, arrested Thomas DeTimmerman for public intoxication, resisting arrest, and assaulting a police officer. During the arrest, DeTimmerman was allegedly beaten by the officers. DeTimmerman's subsequent criminal trial resulted in his acquittal of all charges.

On May 16, 1985, DeTimmerman and his parents filed suit against the City of Oelwein and the two arresting officers alleging assault, false imprisonment, malicious prosecution, violation of DeTimmerman's constitutional rights, willful, wanton and reckless misconduct, intentional infliction of emotional distress, and actual malice. The DeTimmermans, who were represented by attorney Robert Hearity, sought actual and punitive damages. The defendants were served with original notice of the action.

On June 4, Hearity was contacted by counsel for the Iowa Insurance Guaranty Association (guaranty association) and was advised that the insurance company which insured the City of Oelwein and its police officers, Ideal Mutual Insurance Company, was involved in insolvency proceedings in the state of New York. Counsel orally and by letter informed Hearity that the Ideal insolvency hampered the preparation of the City's and the officers' defense. He stated that, by operation of law, proceedings in all cases which involved parties insured by Ideal were stayed until February 7, 1986. He further requested that Hearity not seek default judgments on claims on which the insolvent insurer had an obligation to defend the City or the officers. Hearity agreed not to seek such defaults.

On July 8, 1985, Hearity caused a default to be entered by the clerk of district court for $200,000 against the two police officers relative to the punitive damage counts of DeTimmermans' petition. See Iowa R.Civ.P. 232(b).

On July 15, counsel for the guaranty association in behalf of the two defendants filed a motion to set aside the defaults. Iowa R.Civ.P. 236. Counsel pointed out that, pursuant to Iowa Code section 515B.15, the district court action was stayed by effect of the insurer's insolvency proceeding, which was then still pending in the state of New York. Counsel also requested that the district court award attorney fees incurred in moving to set aside the defaults.

On September 4, the district court granted the motion to set aside the defaults and stayed the proceedings for sixty days. The guaranty association's request for attorney fees, however, was denied.

On December 18, Hearity again caused defaults to be entered by the clerk of court in favor of DeTimmermans; on this occasion judgment was against both the police officers and the City for $1,600,000. Once again, on January 27, 1986, the district court, after motion in behalf of defendants, set aside the defaults.

The City and the two Oelwein police officers then filed an answer and otherwise prepared for trial.

In October 1987, shortly before trial in the underlying action was scheduled, Hearity received an offer from defense counsel proposing settlement of the case for $2,000. On instruction from his clients, Hearity orally accepted this offer and notified the district court of the settlement. While this final settlement was pending, the agreement received publicity in the local newspaper. The DeTimmermans subsequently refused to sign the final settlement documents, allegedly because they were surprised to discover that a release form contained a denial of liability by the City and its officers.

Thereafter, the City and the officers amended their answer to allege that the October 1987 settlement agreement extinguished the DeTimmermans' claims. Defendants filed a motion for summary judgment to enforce the agreement. DeTimmermans, by their attorney, Hearity, filed a resistance to the motion. Defendants also filed a motion for sanctions in the form of attorney fees against DeTimmermans and Hearity. Upon hearing, DeTimmermans and Hearity argued that the release-from-liability clause, contained in the final settlement document drafted by defendants' counsel, was an additional condition not in the oral agreement; thus, their rescission was justified. The City and the officers, on the other hand, contended that DeTimmermans rescinded the agreement for an improper purpose; namely, because they were offended by the published newspaper reports.

The district court granted the motion for summary judgment of the City and the officers.

In a separate order, the district court also imposed a sanction of $7,557.15 against attorney Hearity due to his conduct and filing of documents in taking the two defaults and resisting imposition of the final settlement. The amount of the sanction represented the expense in attorney fees to defendants in causing the two default judgments to be set aside. The district court found that Hearity acted in bad faith and for improper purposes in violation of Iowa Rule Civil Procedure 80(a) in these matters.

Although DeTimmermans did not appeal from the order granting summary judgment, Hearity appealed from the imposition of sanctions against him. Hearity now challenges the propriety of the sanctions in general and alternatively argues that the sanctions imposed against him were unjustified, excessive and an abuse of discretion.

Although the district court is the nominal defendant in certiorari, the City, Smith and Barker are the underlying defendants in interest in the present proceeding.

II. Certiorari. Hearity sought review of the district court's sanction order by filing a notice of appeal.

Review of a district court's order imposing sanctions is not by appeal, but rather is by application for issuance of a writ of certiorari. See Pettes v. State, 418 N.W.2d 53, 57 (Iowa 1988); cf. Bush v. Iowa Dist. Court, 369 N.W.2d 424, 425 (Iowa 1985) (certiorari proper means to review trial court order fixing attorney's fees). Nevertheless, we proceed as though the proper form of review had been sought. Iowa R.App.P. 304; State v. Iowa Dist. Court, 419 N.W.2d 398, 398 (Iowa 1988).

A writ of certiorari shall be granted where an inferior tribunal has exceeded its jurisdiction or otherwise acted illegally. Iowa R.Civ.P. 306; State v. West, 320 N.W.2d 570, 573 (Iowa 1982). We are restricted under this procedure to sustaining the proceedings below, or annulling the proceedings wholly or in part and prescribing the manner in which either party may proceed. Iowa R.Civ.P. 316; State v. Iowa Dist. Court, 236 N.W.2d 54, 55-56 (Iowa 1975). We may not substitute an amended decree or order for that of the district court. Iowa R.Civ.P. 316.

In the present case, we treat Hearity's notice of appeal from the court's sanction order as a petition for writ of certiorari. We grant the writ and now review the assignments of error in a certiorari context.

III. District court's authority to assess attorney fees as a sanction. It is argued that the authority of the district court to assess attorney fees as a sanction is derived from the court's inherent power and from Iowa Rule of Civil Procedure 80(a). We examine each source of authority separately to determine whether the district court acted illegally or exceeded its jurisdiction in this regard.

A. Inherent power. The district court has inherent power to exercise its jurisdiction, to maintain and regulate cases proceeding to final disposition within its jurisdiction, and, when necessary, to punish contempt. The court's inherent power alone, however, does not authorize the court to assess attorney fees as a sanction against a litigant or counsel.

In Thorn v. Kelly, 257 Iowa 719, 726, 134 N.W.2d 545, 548 (1965), we stated that

[t]he right to recover attorney fees as part of the costs does not exist at common law. They cannot be so allowed in the absence of a statute or agreement expressly authorizing it. In order that they may be so taxed the case must come clearly within the terms of the statute or agreement. Indeed the court does not have inherent power to tax costs even to the losing party.

Accord Harris v. Short, 253 Iowa 1206, 1210, 115 N.W.2d 865, 867 (1962) ("[I]t is well settled in this and other jurisdictions that neither a court of law nor equity has inherent power to tax [attorney fees as] costs.... The costs taxable in favor of the successful party and against the losing party are only such costs as are authorized by statute."); see also Weaver Const. Co. v. Heitland, 348...