Hoefer v. Wisconsin Educ. Ass'n Ins. Trust

• Decision Date: 15 May 1991
• Docket Number: Nos. 90-11,90-105,s. 90-11
• Citation: 470 N.W.2d 336
• Parties: 67 Ed. Law Rep. 1285 Robert J. HOEFER and William H. Hoefer d/b/a The Administrators, Appellants, v. WISCONSIN EDUCATION ASSOCIATION INSURANCE TRUST and Sioux City Education Association, Appellees. Robert J. HOEFER d/b/a The Administrators, Appellant, v. SIOUX CITY COMMUNITY SCHOOL DISTRICT; Woodbury County; State of Iowa, and Dr. Thomas Padgett, Mary Beth Satterfield, Dr. James Hartje; and Patricia Van Bramer, as Individual Members of the Board of Education of the Sioux City Community School District, Appellees.
• Court: Iowa Supreme Court

Page 336

470 N.W.2d 336

67 Ed. Law Rep. 1285

Robert J. HOEFER and William H. Hoefer d/b/a The Administrators, Appellants, v. WISCONSIN EDUCATION ASSOCIATION INSURANCE TRUST and Sioux City Education Association, Appellees.

Robert J. HOEFER d/b/a The Administrators, Appellant, v. SIOUX CITY COMMUNITY SCHOOL DISTRICT; Woodbury County; State of Iowa, and Dr. Thomas Padgett, Mary Beth Satterfield, Dr. James Hartje; and Patricia Van Bramer, as Individual Members of the Board of Education of the Sioux City Community School District, Appellees.

Nos. 90-11, 90-105.

Supreme Court of Iowa.

May 15, 1991.

Rehearing Denied July 17, 1991.

Paul W. Deck of Deck & Deck, Sioux City, for appellants.

Charles D. Clausen of Friebert, Finerty & St. John, S.C., Milwaukee, Wis., for Wisconsin Educ. Ass'n Ins. Trust.

James L. Sayre of Sayre & Gribble, P.C., Des Moines, for Sioux City Educ. Ass'n.

Michael R. Hellige, Sioux City, for Sioux City Community School Dist. and individual appellees.

Considered en banc.

NEUMAN, Justice.

These two cases reach us on appeal from summary judgments entered in favor of defendants who were involved in securing a health benefits contract for employees of the Sioux City School District in 1983. Prior to 1983, plaintiffs Robert J. Hoefer and William H. Hoefer d/b/a The Administrators (hereinafter "Hoefer") had for many years serviced the account as the agent of Washington National Insurance Co. Faced with escalating premium costs, however, the Sioux City Community School District (hereinafter "school board") sought competitive bids and ultimately awarded the contract to defendant Wisconsin Education Association Insurance Trust (hereinafter "WEAIT").

Hoefer's loss of this business prompted a flurry of litigation over WEAIT's authority to furnish health coverage in this state. WEAIT claimed to be an "employee welfare benefit plan" subject to federal regulation under the Employment Retirement Income Security Act of 1974 (ERISA) and thus exempt from state insurance regulation. But in Wisconsin Education Association Insurance Trust v. Iowa State Board of Public Instruction, 804 F.2d 1059, 1065 (8th Cir.1986), WEAIT's claim of federal preemption was defeated when the United States Court of Appeals ruled that WEAIT's practice of furnishing benefits to members and nonmembers of the sponsoring union disqualified it as an ERISA trust. We subsequently held that Iowa Code section 509A.6 (1983) prohibited Iowa school boards from contracting for health coverage with unregulated entities like WEAIT, even upon the mutual consent of the school board and union. Sioux City Community School Dist. v. Iowa State Bd. of Pub. Instruction, 402 N.W.2d 739, 7

44 (Iowa 1987).

Armed with these decisions, Hoefer proceeded to sue nearly everyone involved in the fateful decision to contract with WEAIT. These are the cases now before us.

In one action, Hoefer sued WEAIT and the Sioux City Education Association (hereinafter "union") on theories of fraud, conspiracy, and tortious interference with prospective business relations. In essence, Hoefer claimed that WEAIT and the union (1) knew WEAIT lacked authority to bid but bid anyway, (2) misrepresented WEAIT's ERISA status to the school board, (3) used the union to illegally pressure the school board into accepting WEAIT's bid, (4) intentionally interfered with Hoefer's prospective contract with the school district, and (5) conspired to perpetuate the fraud concerning WEAIT's legal status. Hoefer sought substantial damages from lost commissions and expense of preparing a useless bid, plus attorney fees and punitive damages.

In the second suit, Hoefer accused the school district and four individual school board members of fraud, promissory estoppel, tortious interference with prospective business advantage, and unlawful disbursement of public funds. Both the school district and the individual defendants responded by asserting immunity from suit under Iowa Code chapter 613A (1987).

Following discovery, defendants moved for summary judgment in each case, contending that the assembled record of sworn testimony and exhibits revealed an utter lack of evidence supporting any of plaintiffs' claims as a matter of law. The district court sustained the motions, concluding that defendants' actions, though arguably mistaken when viewed in retrospect, were done in good faith. Moreover, the court held that Hoefer could claim no resulting damages because his bid ranked only seventh place in all bids considered by the school board. It is from these decisions that Hoefer appeals. We affirm.

I. Scope of review.

At the heart of both appeals lies Hoefer's claim that these controversies were not properly resolved by summary judgment. Our review of such a challenge is well settled. Like the trial court, we first determine whether any genuine issues of material fact are in dispute. If there are none, then we determine whether the trial court correctly decided that the moving party is entitled to judgment as a matter of law. Iowa R.Civ.P. 237(c); see KMEG Television, Inc. v. Iowa State Bd. of Regents, 440 N.W.2d 382, 384 (Iowa 1989); Blessing v. Norwest Bank Marion, N.A., 429 N.W.2d 142, 143 (Iowa 1988).

The defendants, as the moving parties, carry the burden of showing that no issue of material fact exists. Fogel v. Trustees of Iowa College, 446 N.W.2d 451, 454 (Iowa 1989). The resisting party is afforded every legitimate inference that can be reasonably deduced from the evidence. Id. A fact question is generated if reasonable minds could differ on how the issue should be resolved. Id.; Henkel v. R and S Bottling Co., 323 N.W.2d 185, 187-88 (Iowa 1982).

While intentional torts, like the fraud claims asserted here, are generally poor candidates for summary judgment because of the subjective nature of motive and intent, see State Sav. Bank v. Allis-Chalmers Corp., 431 N.W.2d 383, 386 (Iowa App.1988), the rule is not absolute and, as the district court wisely noted, "there is no genuine issue of fact if there is no evidence." Put another way, the party resisting summary judgment "may not rest upon the mere allegations or denials of his pleading." Iowa R.Civ.P. 237(e). The resistance must set forth specific facts constituting competent evidence to support a prima facie claim. Fogel, 446 N.W.2d at 454; Prior v. Rathjen, 199 N.W.2d 327, 330 (Iowa 1972). This requirement weeds out "[p]aper cases and defenses" in order "to make the way for litigation which does have something to it." Fogel, 446 N.W.2d at 454 (quoting Gruener v. Cedar Falls, 189 N.W.2d 577, 580 (Iowa 1971)).

Our task is to review the record made in support of and in resistance to the motion to determine whether summary judgment was properly granted. Blessing, 429 N.W.2d at 143; Fogel, 446 N.W.2d at 454. We concern ourselves only with those factual issues that "materially affect the narrow issue posed by the motion for summary judgment." Farm Bureau Mut. Ins. Co. v. Milne, 424 N.W.2d 422, 424 (Iowa 1988). Factual disputes falling outside this narrow scope do not furnish grounds for reversing the court's judgment.

With these principles in mind, we consider the issues raised by each appeal. Material facts revealed by the pleadings, affidavits and sworn testimony will be detailed as they become pertinent to the parties' arguments.

II. Hoefer's suit against WEAIT and the union.

A. Procedural issue. Before challenging the merits of the adverse judgment, Hoefer contests the way in which the matter came before the court. A brief procedural history is required to understand plaintiff's claim.

Hoefer prevailed against defendants' motions to dismiss filed in 1986, and again prevailed when the defendants moved for summary judgment in July 1988. These latter motions were heard by Judge Dewey Gaul who first sustained--and on further consideration, overruled--the movants' request for judgment as a matter of law. The case was then scheduled for trial in September 1989 before Judge Richard Vipond.

When Judge Vipond reviewed the file in anticipation for trial, he decided that the defendants' unsuccessful summary judgment motions should be set for rehearing and reconsideration. During the intervening year additional discovery had occurred. Each party was allowed to brief and argue the issues anew. Judge Vipond ruled adversely to Hoefer who now claims the judge had no authority to reverse Judge Gaul's earlier ruling.

While it may be uncommon for a district court to reconsider a motion sua sponte, Iowa adheres to the general rule that a district court judge may review and change a prior interlocutory ruling of another district judge in the same case. Iowa Elec. Light & Power Co. v. Lagle, 430 N.W.2d 393, 396 (Iowa 1988); State v. Wrage, 279 N.W.2d 4, 6 (Iowa 1979); State v. Richards, 229 N.W.2d 229, 233 (Iowa 1975); Kuiken v. Garrett, 243 Iowa 785, 793, 51 N.W.2d 149, 154 (1952). When exercised with discretion, the rule enhances the court's integrity by refusing to give either party a "vested right to require the court to perpetuate its mistake." Kuiken, 243 Iowa at 793, 51 N.W.2d at 154. Moreover, we have concluded that a change of judges makes little difference "since it is the same court." Richards, 229 N.W.2d at 233.

Hoefer urges us to abandon the rule on grounds that it fosters judge-shopping, creates mini-appellate courts within the districts, causes unnecessary delay, and breeds uncertainty in decision making. We fully recognize that, taken to the extreme, the rule could lead to the evils Hoefer predicts. Such a case is not before us, however.

None of the litigants sought out Judge Vipond to obtain a more favorable ruling. Once he made the decision to reconsider Judge Gaul's ruling, he gave the parties time to brief the issues anew. Substantial time had elapsed since the earlier ruling; additional discovery arguably altered the complexion of the case. Finally, no delay occurred because the judge's final decision was rendered prior to...