Rowedder v. Anderson

• Decision Date: 15 June 2012
• Docket Number: No. 10–1172.,10–1172.
• Parties: Kristin L. ROWEDDER, as Conservator of Gary Kral, Appellee, v. Michael ANDERSON, Richard F. Rosener, Mark Helkenn, Raymond Helkenn, McCord Insurance & Real Estate Corp., Roger Preul, and Berneil Preul, Appellants, and Comstock Brothers, Merritt Daniel Comstock, Geary Steven Comstock, Douglas E. Comstock, and D.R. Franck, Defendants.
• Court: Iowa Supreme Court

814 N.W.2d 585

Kristin L. ROWEDDER, as Conservator of Gary Kral, Appellee,

v.Michael ANDERSON, Richard F. Rosener, Mark Helkenn, Raymond Helkenn, McCord Insurance & Real Estate Corp., Roger Preul, and Berneil Preul, Appellants,andComstock Brothers, Merritt Daniel Comstock, Geary Steven Comstock, Douglas E. Comstock, and D.R. Franck, Defendants.

No. 10–1172.

Supreme Court of Iowa.

June 15, 2012.

Michael P. Jacobs of Rawlings, Nieland, Killinger, Ellwanger, Jacobs, Mohrhauser & Nelson, L.L.P., Sioux City, for appellant Rosener.

Earl G. Greene, III, of Woodke & Gibbons, P.C., L.L.O., Omaha, Nebraska, for appellants Helkenns.

Brandon R. Tomjack of Baird Holm, LLP, Omaha, Nebraska, for appellant Anderson.

Sean A. Minahan, Patrick G. Vipon, and Gage R. Cobb of Lamson, Dugan & Murray, LLP, of Omaha, Nebraska, for appellants McCord Insurance and Preuls.

Mark McCormick of Belin McCormick, P.C., Des Moines, Robert L. Laubenthal and Marvin O. Kieckhafer of Smith Peterson Law Firm, LLP, Council Bluffs, for appellee Rowedder.

WIGGINS, Justice.

Parties seek further review of a court of appeals decision affirming a district court order awarding $1000 in sanctions against plaintiff's counsel and making the sanctions payable to the Crawford County Jury and Witness Fund. We conclude the trial court did not abuse its discretion in fixing the amount of the sanction. We also conclude, however, the court abused its discretion in making the sanction payable to the jury and witness fund. Given the preference in our rule toward compensating victims, on remand the district court should enter an order requiring the sanction be paid in equal parts to the parties seeking the sanctions.

I. Background Facts and Proceedings.

Between February 2004 and February 2005, Gary Kral, as the executor and sole heir of his father's estate, sold four forty-acre parcels of farmland located in CrawfordCounty and owned by his father's estate to four different buyers. Kral worked with Roger and Berneil Preul of McCord Insurance and Real Estate Corporation to sell the parcels. Kral primarily communicated with Roger about his desire to sell the parcels. In order to avoid capital gains taxes, Kral demanded each parcel be sold for $2000 per acre, which was the value placed on the land in the probate estate.

Michael Anderson purchased the first parcel in February 2004. Comstock Brothers, a partnership consisting of Merritt Daniel Comstock, Geary Steven Comstock, and Douglas Comstock, bought the second parcel in March. In May, Richard Rosener bought the third parcel. Finally, Raymond Helkenn purchased the fourth parcel in February 2005. All of the buyers paid $2000 per acre.

In August 2005, Kral met with attorney Bradley Nelson about evicting Helkenn's brother, Mark, who was living in one of Kral's rental properties. Nelson became concerned Kral lacked the mental ability to take care of his own financial matters. After examining Kral's bank records, Nelson discovered what he deemed to be suspicious checks totaling over $200,000 to certain individuals. Nelson became convinced these individuals were taking advantage of Kral. Nelson then petitioned the district court to establish a conservatorship for Kral, which Kral accepted voluntarily. The court appointed Kristin Rowedder, Nelson's office manager, as conservator for Kral in September 2005.

In May 2006, Rowedder, as conservator for Kral, filed suit against Anderson, the Comstocks, the Helkenn brothers, the Preuls, and McCord Insurance. Robert Laubenthal served as the attorney on behalf of Rowedder and Kral. In that capacity, he signed and filed the petition as well as subsequent pleadings, motions, and resistances.

The petition alleged the buyers, the Preuls, and their real estate company defrauded Kral by purchasing or facilitating the purchase of his land at “extremely low” prices, despite the fact that they knew or should have known that he was incompetent to conduct these transactions. The petition also alleged “certain of the defendants” ¹ conspired to divest Kral of his assets through real estate purchases. Finally, it alleged the Preuls and their real estate company were professionally negligent and breached a fiduciary duty to Kral in facilitating the sales. The petition sought to rescind the sales and requested that the court establish a constructive trust on each property.

After discovery commenced, Rosener, the Comstocks, the Preuls, and McCord Insurance filed motions to compel discovery. These motions centered on Rowedder's answers to interrogatories relating to evidence of the alleged fraud and conspiracy. Rowedder's answers repeatedly indicated she could not provide the specifics of her allegations until after the completion of discovery. In December, the district court ordered Rowedder to answer all of the discovery requests by January 20, 2007, or be subject to sanctions. On January 23, Rowedder filed a motion seeking an extension of this deadline.

Meanwhile, the Helkenns offered to sell their parcel back to Kral for the purchase price. After Rowedder refused, the Helkenns filed a motion for sanctions alleging Rowedder brought the action to harass, cause unnecessary delay, and needlessly increase the cost of litigation.

The Comstocks, Rosener, and Anderson filed separate motions for summary judgment. Rowedder resisted each. Following a hearing, the district court entered summary judgments finding Rowedder had failed to show any facts supporting her allegations despite the court having given her several opportunities to do so. Rowedder later resisted separate motions for summary judgment filed by the Preuls, McCord Insurance, and the Helkenns. Nonetheless, the district court entered summary judgments.

In January 2008, the Helkenns filed a request for a hearing on their previously filed motion for sanctions. Anderson, Rosener, and the Comstocks also filed motions for sanctions. Rowedder filed a notice of appeal. In February, the court stayed all of the motions before it pending the disposition of Rowedder's appeal.

All of the defendants, except the Helkenns, moved to dismiss the appeal as to them, arguing Rowedder had not timely or properly perfected an appeal. We dismissed Rowedder's appeal without comment with respect to Anderson, the Comstocks, and Rosener, thereby upholding the summary judgments in their favor.

We transferred the balance of the appeal, which involved the claims against the Helkenns, the Preuls, and McCord Insurance, to the court of appeals. The court of appeals affirmed summary judgment in favor of the Helkenns, but reversed and remanded with respect to the claim of professional negligence against the Preuls and McCord Insurance.

On remand, the district court held a trial on the professional negligence claims against the Preuls and McCord Insurance. A jury found they did not breach any fiduciary duty but were negligent in the sales to Rosener and Helkenn. The jury awarded damages of $15,400. Rowedder filed a motion for a new trial. The Preuls and McCord Insurance moved for a directed verdict and later for judgment notwithstanding the verdict or, alternatively, a new trial. The district court denied these motions.

Meanwhile, following the dismissal of the appeal as to them, Rosener, Anderson, and the Helkenns renewed their motions for sanctions. These renewed motions asked the district court to sanction Rowedder and her attorneys. Rowedder resisted each motion.

The district court ordered sanctions against Rowedder's attorney, Laubenthal. In doing so, the court found that although Laubenthal's actions were not willful, vindictive, or taken in bad faith, the evidence demonstrated “the only actionable claims that ever existed were those against ... McCord Insurance and Real Estate and the Preuls.” The court noted Laubenthal did not have a prior history of sanctions. Further, the court stated it was presented with itemizations of attorney fees incurred by the various parties seeking sanctions, but not with evidence of Laubenthal's ability to pay any sanctions imposed by the court. It also stated its belief that each party personally paid its own legal fees because it was not presented with any indication the parties had insurance coverage for their legal fees. The court assessed a sanction of $1000 and directed payment to the Crawford County Jury and Witness Fund. The court did not order sanctions against Rowedder.

The Helkenns, Anderson, and Rosener filed notices of appeal. The Preuls and McCord Insurance appealed the negligence verdict. We transferred the case to the court of appeals. The court of appeals found sufficient evidence to support the jury verdict in favor of Rowedder and against the Preuls and McCord Insurance. The court rejected the arguments by Anderson, Rosener, and the Helkenns that the sanctions were too low and that the court should not have made the sanction payable to the jury and witness fund.

Rosener and the Helkenns filed applications for further review, which we granted.

II. Issues.

The court of appeals determined the district court did not abuse its discretion by awarding sanctions for $1000. The court of appeals also determined the order requiring the sanctions be paid to the Crawford County Jury and Witness Fund was proper under Iowa Rule of Civil Procedure 1.413(1). Finally, the court of appeals found the district court correctly overruled the motions of the Preuls and McCord Insurance for a directed verdict and for judgment notwithstanding the verdict or, alternatively, for a new trial. When we grant further review, we have the discretion to review all or part of the issues raised on appeal or in the application for further review. In re Marriage of Becker, 756 N.W.2d 822, 824 (Iowa 2008). In exercising our discretion, we choose only to review the amount of the sanctions and whether the court can require the sanction be paid to the jury and witness fund. Accordingly, we will let the court of appeals' determinations that the award of...