Rowen v. LeMars Mut. Ins. Co. of Iowa

• Decision Date: 14 November 1984
• Docket Number: No. 83-1131,83-1131
• Citation: 357 N.W.2d 579
• Parties: Marla ROWEN, Mary E. Farnsworth, For Themselves and all Other Policyholders-Members of LeMars Mutual Insurance Company of Iowa, and for Themselves and All Others Similarly Situated, Appellants, v. LeMARS MUTUAL INSURANCE COMPANY OF IOWA, Appellee, Alice Alesch, Executor of the Estate of John Alesch, a/k/a John H. Alesch, Clyde Eastman, Alice W. Alesch, M.H. Tappan, W.K. Tappan, P.G. Vandermeer, M.H. Gearke, John M. Vollmar and Burton Dull, and The Iowa Mutual Insurance Company of DeWitt, Iowa, Raymond A. Brown, William Couch, George S. Howes, Carl J. Smith, Carman G. Smith, and Alesch, Inc., Margaret A. Sevenich, Mark Kay Buffington and Jane M. Warnock, Defendants.
• Court: Iowa Supreme Court

Page 579

357 N.W.2d 579

Marla ROWEN, Mary E. Farnsworth, For Themselves and all Other Policyholders-Members of LeMars Mutual Insurance Company of Iowa, and for Themselves and All Others Similarly Situated, Appellants, v. LeMARS MUTUAL INSURANCE COMPANY OF IOWA, Appellee, Alice Alesch, Executor of the Estate of John Alesch, a/k/a John H. Alesch, Clyde Eastman, Alice W. Alesch, M.H. Tappan, W.K. Tappan, P.G. Vandermeer, M.H. Gearke, John M. Vollmar and Burton Dull, and The Iowa Mutual Insurance Company of DeWitt, Iowa, Raymond A. Brown, William Couch, George S. Howes, Carl J. Smith, Carman G. Smith, and Alesch, Inc., Margaret A. Sevenich, Mark Kay Buffington and Jane M. Warnock, Defendants.

No. 83-1131.

Supreme Court of Iowa.

Nov. 14, 1984.

Michael R. Mundt and D.R. Franck of Franck, Mundt, Nepper & Franck, Denison, for appellants.

Robert D. Mishne of Klass, Whicher & Mishne, Sioux City, for appellee LeMars Mutual Insurance Company of Iowa.

Thomas J. Miller, Atty. Gen., and Fred M. Haskins, Asst. Atty. Gen., for amicus curiae Commissioner of Insurance.

Considered by REYNOLDSON, C.J., and McCORMICK, LARSON, SCHULTZ, and CARTER, JJ.

McCORMICK, Justice.

This is the fourth appeal in a derivative action brought by policyholders of LeMars Mutual Insurance Company (LeMars) to annul the takeover of LeMars by Iowa Mutual Insurance Company of DeWitt (Iowa Mutual). Prior appeals are reported at 230 N.W.2d 905 (Iowa 1975), 282 N.W.2d 639 (Iowa 1979), and 347 N.W.2d 630 (Iowa 1984). In the most recent appeal this court decided certain financial issues arising from the court-ordered separation of the two companies. The present appeal is taken by the plaintiff policyholders from the district court's decision of the remaining issue in the case, an order establishing a plan for election of a new board of directors for LeMars. We find that we have jurisdiction of the appeal and that the district court did not abuse its discretion in adopting the election plan proposed by the LeMars interim board.

In its initial decree ordering separation of LeMars from Iowa Mutual, the district court stated it would appoint an interim board of directors to govern LeMars. The court also said:

As soon as practicable, the court shall also order and supervise the election of a new board of directors for LeMars Mutual. Interim directors shall be eligible to succeed themselves. The successor board shall not be elected until the interim board has had full opportunity to assess the present status of LeMars Mutual, consult with the Iowa insurance commissioner, retain competent management for the company and establish and implement a plan for the careful separation of LeMars Mutual and Iowa Mutual.

This portion of the decree was affirmed in the second appeal. See 282 N.W.2d at 657. In upholding the provision this court said that the traditional policy of courts to keep hands off corporate affairs had to give way to the responsibility of an equity court to fashion unusual relief to meet unusual circumstances. Id. The separation of the companies having subsequently been completed, the time came for the district court to decide the manner in which the new LeMars board was to be elected.

LeMars, through its interim board, devised an election plan that was submitted to the court for approval. Plaintiffs, in their capacity as policyholders, objected to the plan, and a hearing was held. The court decided to accept the plan and ordered it carried out, reserving jurisdiction in the case only "to police, amend, extend, and to resolve disputes concerning [the] plan, any elections held pursuant thereto, and of any matters requiring court approval thereunder." Plaintiffs appealed and this court raised an issue of finality of the district court order. The jurisdictional issue was briefed by the parties and was ordered submitted with the appeal.

I. Jurisdiction. Appeals are available as of right only from final orders, and we lack jurisdiction of appeals from interlocutory orders unless permission to appeal is granted. See Iowa R.App. 1 and 2. Ordinarily a final judgment conclusively adjudicates all of the rights of the parties. If it stands, the court cannot put the parties in their original positions. Shoemaker v. City of Muscatine, 275 N.W.2d 206, 208 (Iowa 1979).

We have recognized that it is not always clear whether an order is final. To allow for the small fraction of cases where a party may improvidently attempt an appeal as of right from an order that is determined to be interlocutory, we added Iowa Rule of Appellate Procedure 1(c) to permit the papers in those cases to be treated as an application for interlocutory appeal under rule 2. In so doing, we did not change the standard for determining when interlocutory review should be granted. See In Interest of Long, 313 N.W.2d 473, 477 (Iowa 1981). Because interlocutory review is granted very sparingly, no party should take an appeal as of right from an interlocutory order in the hope it will be saved from dismissal by application of rule 1(c).

In the present case, the district court resolved the final issue in the litigation but did not foreclose the parties from raising additional issues during the course of implementation of the election plan. If plaintiffs are precluded from challenging the plan now, however, their objections will become moot because the district court's jurisdiction terminates only when the plan has been carried out. If the plan were carried out, the court would not be able to return the parties to their former positions. The adjudication lacks finality only if it makes a difference that the district court reserved jurisdiction to decide issues that may arise while the adjudication is being implemented. We find that the adjudication is final because the case falls within the rule that a case may have more than one final order. See Green v. Advance Homes, Inc., 293 N.W.2d 204, 207 (Iowa 1980); Lyon v. Willie, 288 N.W.2d 884, 887 (Iowa 1980); Johnson v. Johnson, 188 N.W.2d 288, 293 (Iowa 1971).

The situation is analogous to the one in Green. There a landowner sued a contractor alleging that its road excavation had deprived her farmland of lateral support. She sought damages and a mandatory injunction requiring restoration of the land to its prior condition. The trial court entered a judgment in the landowner's favor, including a provision ordering the contractor to submit a plan for restoring lateral support. 293 N.W.2d at 206. Upon the contractor's appeal, this court held that the judgment was final. We reasoned that the judgment settled the relative rights of the parties, "leaving only the particulars of the equitable relief to be worked out." Id. at 207. The district court went one step further in the present case by adjudicating the particulars of equitable relief, leaving unsettled only issues that might arise during implementation of the plan.

We hold that the district court decision was final for purposes of appeal. Plaintiffs thus had a right to appeal and we have jurisdiction.

II. The merits of the election plan. Pursuant to its initial decree the district court appointed eleven persons to an interim board of directors for LeMars. The board employed new management for LeMars and established and carried out procedures to separate LeMars from Iowa Mutual as directed by the court. Iowa Mutual controlled LeMars for approximately ten years and it took more than two years to separate the two companies. Finally in December 1982 the LeMars interim board determined that its tasks were complete and that the court should adopt a plan for supervising the election of a new board.

The plan proposed by LeMars called for a reduction in board size to nine members, the number called for in the LeMars bylaws. The interim board was to be reduced to that size by attrition or resignation of named members, if necessary. Board members were divided into three categories with three directors to be replaced at the annual...