Lerdall Const. Co., Inc. v. City of Ossian

• Decision Date: 21 April 1982
• Docket Number: No. 66059,66059
• Citation: 318 N.W.2d 172
• Parties: LERDALL CONSTRUCTION COMPANY, INC., Appellant, v. CITY OF OSSIAN, Raymond Wenthold, Ronald Becker, Howard Bodensteiner, and Clem Blocker, both individually and in their official capacities as Mayor and Councilmen of the City of Ossian, Iowa, Appellees.
• Court: Iowa Supreme Court

Page 172

318 N.W.2d 172

LERDALL CONSTRUCTION COMPANY, INC., Appellant, v. CITY OF OSSIAN, Raymond Wenthold, Ronald Becker, Howard Bodensteiner, and Clem Blocker, both individually and in their official capacities as Mayor and Councilmen of the City of Ossian, Iowa, Appellees.

No. 66059.

Supreme Court of Iowa.

April 21, 1982.

Carlton G. Salmons of Austin & Gaudineer, Des Moines, for appellant.

Robert H. Story of Anderson & Story, Cresco, for appellees.

Considered by LeGRAND, P. J., and HARRIS, ALLBEE, LARSON, and SCHULTZ, JJ.

ALLBEE, Justice.

Plaintiff construction company filed a petition seeking recovery for part of the cost of constructing a sanitary sewer system for defendant City of Ossian, Iowa. In addition to the city, the petition named as defendants the mayor and city councilmen, both individually and in their official capacities. The petition alleged that the city, by and through the mayor and councilmen, requested bids for replacement of the city's sanitary sewer system, which was to be a "public improvement" under Iowa statutes, and subsequently contracted with plaintiff to do the project; that defendants thereafter orally amended the contract to include additional work; that plaintiff performed as contracted; and that the city refused to pay $100,000 allegedly due and owing for the additional work. Plaintiff sought recovery under six legal theories, alleging that all defendants were liable jointly and severally under the first four: (1) breach of express contract; (2) breach of implied contract; (3) quantum meruit; (4) negligence by the city, its agents and its employees; (5) intentional tortious interference by the individual defendants with plaintiff's performance of its contract with the city; and (6) ratification and acquiescence by the city of the intentional torts allegedly committed by the individual defendants.

The city separately filed an answer admitting the contract was a public improvement contract, but denying most other allegations. On the same date, the individual defendants filed a motion to dismiss the petition as to them, asserting that because plaintiff's action was based on its contract with the city, it stated a claim upon which relief could be granted against only the city and not the individual defendants. Trial court sustained, as to each count of the petition, the individual defendants' motion to dismiss. Plaintiff appeals from that order of dismissal.

At our direction, the parties have briefed the question of whether we have jurisdiction over this matter, either as an appeal of right under Iowa R.App.P. 1(a) or as an interlocutory appeal pursuant to Iowa R.App.P. 1(c) and 2. Upon consideration, we find that we do not have jurisdiction and that the appeal must therefore be dismissed.

I. Rule 1(a).

Trial court's order sustaining the individual defendants' motion to dismiss became a "final adjudication in the trial court" under Iowa R.Civ.P. 86 when plaintiff failed to plead over within the time permitted by that rule. ¹ See McGuire v. City of Cedar Rapids, 189 N.W.2d 592, 594, 596 (Iowa 1971). Under Iowa R.App.P. 1(a), two kinds of trial court orders are appealable as a matter of right: (1) "[a]ll final judgments and decisions," and (2) "any final adjudication in the district court under R.C.P. 86, involving the merits or materially affecting the final decision." (Emphasis added.)

As explained in Goldstein v. Brandmeyer, 243 Iowa 679, 684, 53 N.W.2d 268, 271 (1952), a final adjudication under rule 86 "means [that] the particular point or question is settled so far as the trial court is concerned"; it does not necessarily mean that the adjudication is "final" for purposes of appeal. (Emphasis in original.) Nevertheless, the test for whether a rule 86 adjudication is appealable of right is not whether it is "final," but whether it "involv[es] the merits or materially affect[s] the final decision." Iowa R.App.P. 1(a). The comment to Iowa R.App.P. 1 provides the following explanation:

In 1945, the court amended former R.C.P. Rules 331 and 332 [now this Rule and R.A.P. No. 2] to make one exception to the ["finality"] dilemma. This involves one who stands on his pleadings under R.C.P. Rule 86, thus suffering a "final adjudication". If such adjudication involves the merits or materially affects the final decision, he may choose between appealing from it as a matter of right; or later assigning it as error on appeal from the later judgment. He has this choice, whether the ruling is "final" or not. He thus escapes the difficulties of "finality".

But as to such adjudications under R.C.P. Rule 86, this amendment revives the former difficulties of when an order "affected the merits" or the decision, which were abolished by the original Rules. The party affected by R.C.P. Rule 86 must now wrestle with them if he appeals at once under [rule 1(a) ]. He can avoid them by postponing his appeal. This is because [rules 1(b) and 2] always allow this adjudication to be assigned as error on appeal from a later judgment; regardless of whether R.C.P. Rule 86 has produced finality, or has affected the merits. Rule 86 adjudications are, then, reviewable on appeal from the later final judgment.

5 Iowa Rules Civ.Proc.Ann., appellate rule 1, at 113 (West 1978) (comment on appellate rule 1).

In Forte v. Schlick, 248 Iowa 1327, 1331, 85 N.W.2d 549, 552 (1957), it was noted that the phrase "involving the merits or materially affecting the final decision" in rule 1(a) "is the same as that in section 12823, paragraph 4, Code, 1939, and generally similar provisions in earlier Codes commencing with the Code of 1851, to the effect that appeals might be taken from 'An intermediate order involving the merits or materially affecting the final decision.' " The court went on to suggest that the corresponding language of rule 1(a) should be interpreted as it had been in cases decided under those pre-rule Code sections. The pre-rule interpretation is well stated in the following excerpt:

To determine whether an intermediate order involves the merits or materially affects the final decision, we said in the Dorman case at page 1019 of 213 Iowa, page 438 of 241 N.W. [Dorman v. Credit Reference & Reporting Co., 213 Iowa 1016, 241 N.W. 438], that the order should be tested by the following question: "Will the party aggrieved thereby be deprived of some right which cannot be protected by an appeal from the final judgment? ... If the ruling or order complained of is inherent in the final judgment and may be presented on appeal therefrom, this is the procedure that must be followed."

Commercial Credit Corp. v. Interstate Finance Corp., 233 Iowa 375, 377-78, 9 N.W.2d 369, 370-71 (1943).

Applying the foregoing test, we find that trial court's dismissal of the individual defendants does not deprive plaintiff of any right which cannot be protected by an appeal from the final judgment. If plaintiff fails to obtain a judgment against the remaining defendant, City of Ossian, plaintiff may challenge the propriety of the individual defendants' dismissal on an appeal from the final judgment in the city's favor. Iowa R.App.P. 1(b); 5 Iowa Rules Civ.Proc.Ann., supra, at 113. Then, if an appellate court finds that the pre-trial dismissal was erroneous, plaintiff will have an opportunity, on remand, to try its case against the individual defendants.

Although we find that trial court's order of dismissal does not meet the test of "involving the merits or materially affecting the final decision," as explained above, we must also consider plaintiff's contention that the dismissal is appealable of right under the theory explained in McGuire v. City of Cedar Rapids, 189 N.W.2d at 595-98. McGuire...