Lawrence v. Grinde

• Decision Date: 19 July 1995
• Docket Number: No. 93-1663,93-1663
• Citation: 534 N.W.2d 414
• Parties: Larry LAWRENCE, Appellant, v. David GRINDE and Childers & Vestle, P.C., Appellees.
• Court: Iowa Supreme Court

Page 414

534 N.W.2d 414

Larry LAWRENCE, Appellant, v. David GRINDE and Childers & Vestle, P.C., Appellees.

No. 93-1663.

Supreme Court of Iowa.

July 19, 1995.

Tom Riley, Peter C. Riley, and Christopher L. Bruns of Tom Riley Law Firm, P.C., Cedar Rapids, for appellant.

Hugo C. Burdt and Matthew J. Nagle of Lynch, Dallas, Smith & Harmon, P.C., Cedar Rapids, for appellees.

Considered en banc.

SNELL, Justice.

This is an action for damages claimed by plaintiff against defendant lawyer and his law firm arising out of their preparation of plaintiff's bankruptcy petition. A jury awarded plaintiff damages of $700,000 for emotional distress, and $52,000 for economic loss which included an award of $14,233.49 damages for payment of attorney fees. The defendants filed a motion for judgment notwithstanding the verdict and a motion for new trial. The court denied the motions but ordered a remittitur of damages exceeding $5000 for emotional distress and damages exceeding $14,233.49 for attorney fees. Plaintiff agreed with the remittitur regarding economic loss but appealed from the rest of the judgment. Defendants cross-appealed. We now affirm on plaintiff's appeal and reverse on defendants' cross-appeal.

I. Factual and Procedural Background

In 1979, Larry Lawrence started his own health and fitness center in Cedar Rapids, Iowa. In March 1986, he moved his equipment to the Cedar Rapids Racquet Club and Fitness Center located on Blairs Ferry Road. Soon thereafter, Lawrence's business failed.

In July of 1986, Lawrence entered into a settlement agreement with an associate, Sheldon Rabinowitz, under which Lawrence agreed not to pursue a potential claim against Rabinowitz in return for a payment of $10,000. The agreement provided that Rabinowitz would directly pay the $10,000 to Lawrence's mother-in-law, Opal Bradley, to partially satisfy a $20,000 debt Lawrence had incurred from Bradley to support the startup of his business. Lawrence and his wife thereafter retained the Cedar Rapids law firm of Dumbaugh & Childers, P.C. in order to pursue a chapter seven bankruptcy. Dumbaugh & Childers, P.C. has since changed its name to Childers & Vestle, P.C. Dumbaugh & Childers assigned attorney David Grinde and paralegal David Marner to the Lawrence bankruptcy.

The law firm provided the Lawrences with a statement of financial affairs questionnaire and schedules to fill out. In response to two questions which sought to identify any possible preferential transfers, the Lawrences wrote "$10,000 to Bradley?" The Lawrences discussed the Rabinowitz and Schillig settlements with Grinde.

After reviewing the Lawrences' questionnaire, Marner compiled and communicated to Grinde a list of questions he had with regard to matters that needed to be answered before the forms could be finalized. One question involved the meaning of "$10,000 to Bradley?" Grinde told Marner they would treat the matter by listing the Bradleys as unsecured creditors. On the final version of the schedules, in response to a question asking generally whether Lawrence had made any assignments or reached any settlements in the year before the filing of the petition, the parties entered "No." In response to a question asking whether Lawrence had made any payments on debts during the year immediately preceding the filing of the bankruptcy, the final answer the parties gave was "Normal as well as possible."

Lawrence subsequently sued Chuck Schillig, the owner of the Cedar Rapids Racquet Club, the Small Business Administration, United States Bank, St. Luke's Hospital, and the president of St. Luke's, Sam Wallace, for business interference. These parties reached a settlement agreement prior to completion of the action. During discovery in this action, the federal government apparently learned about the transfer to the Bradleys and based on this transaction, indicted Larry Lawrence for bankruptcy fraud in June of 1991. In the government's bill of particulars, it claimed that Lawrence had made false claims in his bankruptcy action by failing to disclose the $10,000 transfer.

In the bankruptcy fraud action, Lawrence retained another Cedar Rapids law firm, and Lawrence's attorney subpoenaed attorney David Grinde to testify on behalf of Lawrence. Grinde did not ultimately testify upon the subpoena of Lawrence's attorney but did testify after the government subpoenaed him. The federal court found Lawrence not guilty of all charges. Two regional newspapers, the Des Moines Register and the Cedar Rapids Gazette, published a number of articles discussing Lawrence's indictment and acquittal.

Lawrence then brought a legal malpractice action against Grinde, R. Fred Dumbaugh, and the law firm of Dumbaugh & Childers for negligently handling his bankruptcy case. Lawrence sought to recover the costs associated with his defense of the criminal action and sought damages for injury to his reputation and emotional distress. The district court granted the defendants' motion for directed verdict on the issue of damage to Lawrence's reputation, but denied a motion to adjudicate law points the defendants asserted, and allowed the jury to consider Lawrence's emotional distress and economic loss claims.

Following a trial, the jury found that the defendants were negligent and awarded Lawrence $700,000 for severe emotional distress and $52,000 for economic loss. The defendants thereafter filed a motion for judgment notwithstanding the verdict, and an alternative motion for new trial. The court denied the defendants' motions but ordered a remittitur of the economic loss including attorney fees in excess of the amount Lawrence actually incurred, that being in excess of $14,233.49. The court also reduced the $700,000 emotional distress award to $5000. A remittitur of the amount exceeding $5000 was ordered on the ground that substantial evidence existed only for an award of such damages. The court found there was no evidence of lost wages as a result of the defendants' acts nor was there evidence that Lawrence sought physical or psychiatric treatment because of the defendants' acts.

Lawrence has appealed the district court's decision and the defendants have cross-appealed on the issue of whether Lawrence could properly recover severe emotional distress damages in this action. On appeal, Lawrence argues: (1) the trial court erred in granting the defendants' motion for directed verdict on the issue of reputation damages because Lawrence introduced evidence from which the jury could have inferred injury to his reputation; and (2) the court erred in ordering a remittitur of the jury's emotional distress damages because the reduction was unreasonable and the court failed to give Lawrence the option of taking a new trial. The defendants assert in their cross-appeal that the trial court erred in submitting the issue of emotional distress damages to the jury because such damages are not recoverable for legal malpractice claims which arise out of economic transactions.

II. Damages to Reputation

A. Standard and Scope of Review

The defendants assert Lawrence has failed to preserve his challenge to the district court's grant of the defendants' motion for directed verdict for our review. The defendants contend that the law required Lawrence to file a motion for new trial following the grant of directed verdict in order to allow the trial court the opportunity to correct any error it might have made. The defendants' contention is in error. In order for a party to preserve error when challenging the grant of a motion for directed verdict, the party merely needs to challenge the motion and inform the trial court of the grounds for the challenge so that the trial court may pass on those grounds. Cf. 75A Am.Jur.2d Trial § 931, at 502-03 (1991); Henkel v. R & S Bottling Co., 323 N.W.2d 185, 187 (Iowa 1982). Our review is then limited to those grounds the challenger has raised. Cf. Spaur v. Owens-Corning Fiberglas Corp. 510 N.W.2d 854, 858 (Iowa 1994); Federal Land Bank v. Woods, 480 N.W.2d 61, 65 (Iowa 1992); Bartels v. Cair-Dem, Inc., 255 Iowa 834, 845, 124 N.W.2d 514, 521 (1963); McClaine v. Alger, 150 Mich.App. 306, 388 N.W.2d 349, 352 (1986).

The law requires a party to file a motion requesting the trial court to enlarge or amend its findings in order to preserve an issue for appeal only when the court fails to resolve an issue, claim, defense, or legal theory the parties have properly submitted to it for adjudication. Iowa R.Civ.P. 179(b); Fisher v. Keller Indus., Inc., 485 N.W.2d 626, 630 n. 2 (Iowa 1992); Farmers State Bank v. United Cent. Bank, 463 N.W.2d 69, 73 (Iowa 1990); State Farm Mut. Auto. Ins. Co. v. Pflibsen, 350 N.W.2d 202, 206 (Iowa 1984). In the case at hand, the defendants moved for directed verdict on the ground that Lawrence had failed to provide evidence which demonstrated he had experienced damage to his reputation. The record indicates Lawrence resisted this motion and raised the precise challenges to the motion he raises on appeal. The trial court therefore had the opportunity to consider the challenges Lawrence now requests us to consider. The record demonstrates no error preservation problem exists with regard to this issue.

We review a trial court's grant of a motion for directed verdict for correction of errors of law. Iowa R.App.P. 4; cf. Spaur, 510 N.W.2d at 858; Beeman v. Manville Corp. Asbestos Fund, 496 N.W.2d 247, 254 (Iowa 1993). We view the evidence in the light most favorable to the nonmoving party and afford the nonmovant every legitimate inference that we can reasonably deduce from the evidence. Henkel, 323 N.W.2d at 187. We must determine whether reasonable minds could differ on the issue presented, and if such is the case, the grant of directed verdict was inappropriate and a jury question exists. Beeman, 496 N.W.2d at 254.

B. Comparison to Libel and Slander Per Se

Plaintiff posits error by the trial court in directing a defendants' verdict by reference to cases...