Shea v. Lorenz
| Decision Date | 09 July 2015 |
| Docket Number | No. 14–0898.,14–0898. |
| Parties | Alice M. SHEA, Plaintiff–Appellant, v. Theresa LORENZ and Mark Lorenz, Defendants–Appellees/Cross–Appellants, and Kristin Ostrander, Valerie Bisanz, Thomas Lorenz, Heidi Lorenz, Rob E. Dickinson and R.E. Dickinson Investment Advisors, LLC, Defendants–Appellees. |
| Court | Iowa Court of Appeals |
John Werner of John Werner, P.L.C., Toledo, and Gary J. Shea of Gary J. Shea Law Offices, Cedar Rapids, for appellant.
David J. Skalka of Croker, Huck, Kasher, DeWitt, Anderson & Gonderinger, L.L.C., Omaha, Nebraska, for cross-appellant Theresa Lorenz and appellees Kristin Ostrander, Valerie Bisanz, Thomas Lorenz, and Heidi Lorenz.
A.W. Tauke of Stuart Tinley Law Firm L.L.P., Council Bluffs, for appellees Dickinson and R.E. Dickinson Investment Advisors, L.L.C.
Brett Ryan of Watson & Ryan, P.L.C., Council Bluffs, for cross-appellant Mark Lorenz.
Heard by VOGEL, P.J., and POTTERFIELD and MULLINS, JJ.
Alice Shea appeals, and Theresa Lorenz and Mark Lorenz cross-appeal, the district court's decision following a bench trial that involved the transfer of certain investment accounts owned by William (Bill) Lorenz before his death. Bill was ordered to pay his former spouse, Alice, traditional alimony in the amount of $2000 per month until her death or remarriage. This alimony obligation was ordered to be a lien against Bill's estate. However, Bill changed the beneficiary designation of the investment accounts to his children, which resulted in the investment accounts passing outside the estate, depriving Alice of these funds to satisfy the alimony obligation. When Bill's estate became insufficient to satisfy Alice's claim for alimony, Alice sued Bill's children and Bill's financial advisor, seeking satisfaction of her alimony claim.
The district court granted summary judgment to Bill's financial planner and allowed the remaining claims to proceed to a bench trial. The court found Theresa, Bill's daughter and his agent under his general power of attorney, liable for the fraudulently transferred funds and established a constructive trust to pay Alice's alimony funded by all probate and nonprobate property Theresa received from Bill. The claims against all of Bill's other children were dismissed.
Alice appeals the district court's decision to grant summary judgment to the financial planner, claiming there were disputed material facts that made her claim not ripe for summary judgment. Alice also appeals the district court's decision to dismiss all other defendants and enter judgment only against Theresa, claiming everyone who received funds from the accounts that were fraudulently transferred should be liable up to the full amount of the funds received. In addition, Alice claims Theresa should be responsible for the full amount of the alimony claim because of Theresa's role in the fraudulent transfer. Finally, Alice asserts she is entitled to punitive damages from Theresa and should be awarded attorney fees under common law.
In her cross-appeal, Theresa first maintains that the district court should have granted her motion to dismiss, which alleged the court lacked subject matter jurisdiction, the case was precluded by res judicata, the case was barred by the one-year Nebraska statute of limitations, and the claims made by Alice were not ripe. Theresa also attacks a number of the district court's factual findings and claims no constructive trust should have been imposed. Finally, she asserts the court should not have permitted expert testimony from Bruce Willey.
In his cross-appeal, Mark, Theresa's brother and one of Bill's children dismissed by the district court, claims the district court's decision finding a fraudulent transfer and unjust enrichment was in error, as was its decision to impose a constructive trust. He also claims the court should have made the judgment against Theresa to only include the funds in the investment accounts Theresa received from Bill.1 Finally, he claims the court abused its discretion when it failed to sanction Alice's attorney pursuant to Iowa Rule of Civil Procedure 1.413 and Iowa Code section 619.19 (2011).
Alice and Bill were married in 1988, but their marriage became strained, and in 2005, Bill filed for dissolution. During the dissolution proceeding, Bill signed a general power of attorney for business affairs appointing his daughter, Theresa, as his attorney-in-fact. The power of attorney became effective upon Bill's doctor's certification that he had a physical or mental incapacity that rendered him unable to conduct and manage his business affairs. Bill's doctor signed this certification in June 2006 during the dissolution proceeding.2 Theresa actively participated in the dissolution proceeding on behalf of her father, including signing documents such as Bill's affidavit of financial status and writing checks from Bill's accounts.
During the dissolution proceeding, it was discovered that Bill had certain investment accounts that named his children as beneficiaries. This was in contravention to the couple's prenuptial agreement. So, on August 23, 2006, both Theresa and Bill signed a beneficiary change form, naming a trust established in Bill's will the beneficiary of the accounts. Bill's attorney, Allison Heffern, informed Alice's dissolution attorney that the change had been made to be in compliance with the couple's prenuptial agreement, but she also advised Alice's counsel that, in her opinion, after the dissolution decree was entered the prenuptial agreement would no longer be binding on the parties.
The court issued the dissolution decree on November 22, 2006, concluding among other things that Bill owed Alice a property equalization payment of $113,761 and Alice was entitled to alimony in the amount of $2000 per month for the rest of her life or until she remarries. The decree provided that Bill's alimony obligation survived his death and would be a lien against his estate.
Following the dissolution proceeding, the beneficiary designation of the investment accounts was changed back to Bill's children. Bill alone signed the beneficiary change forms on June 6, 2007, despite the fact the power of attorney was still in place. This change made the accounts payable to Bill's children upon his death, without first passing through his estate.
Alimony payments were consistently made to Alice until Bill's death on February 20, 2010. Thereafter, Theresa, as Bill's personal representative under the Nebraska probate estate, continued to make the alimony payments out of the assets in Bill's estate. However, because of the insufficiency of the assets, the alimony payments ceased after February 1, 2013, and no further payments have been made.
Alice sued all of Bill's children, as beneficiaries of the accounts, along with Bill's financial planner, who managed the accounts in question, alleging the parties engaged in a scheme to avoid paying her alimony. Theresa, along with some of Bill's other children, filed a motion to dismiss the action. The court denied the motion to dismiss, concluding the facts surrounding the allegations in the petition gave the court personal and subject matter jurisdiction, the resolution of the asserted claims did not need to occur as part of the estate proceeding in Nebraska because the court could order a constructive trust that could be administered in Iowa apart from the probate estate. And while unsure whether future alimony could be converted to a lump sum judgment, the equitable claims were viable and ripe for determination.
Thereafter, the financial planner, Rob E. Dickinson and R.E. Dickinson Investment Advisors, L.L.C. (Dickinson) filed a motion for summary judgment. Dickinson maintained there was no evidence that it acted in concert with Theresa and Bill to deprive Alice of her alimony. Dickinson maintained that while beneficiary change forms were provided at the request of Bill and/or Theresa and at the direction of Bill's attorney, no advice or direction as to the execution of those forms was provided. Further, Dickinson claimed it was not liable for fraud because no representations were ever made to Alice and no actions were taken to deceive her regarding the accounts. Finally, Dickinson claims that any actions taken to distribute the funds in the accounts to Bill's children pursuant to the beneficiary designation were done in good faith based on Bill's designation.
Alice resisted the motion for summary judgment, but the court granted the motion on May 16, 2013, finding:
A thorough review of the evidence does not show anything that indicated Dickinson did some act intended to deprive Alice of her monthly alimony.... To keep Dickinson in this case simply because [Alice] believe[s] the Defendants used Dickinson as the vehicle to accomplish their alleged nefarious scheme is inappropriate. This record contains nothing by which this Court can justify keeping Dickinson in the case.
Later, Theresa and Bill's other children also moved for summary judgment, but that motion was denied by the court. The court noted Alice's counsel acknowledged that the constructive trust was the main claim being made and that all other claims alleged in the petition were theories by which a constructive trust might be imposed.
The case proceeded to a bench trial on March 18, 2014. The court issued its decision March 25, dismissing with prejudice all defendants except Theresa. With respect to Bill's other children, the court stated:
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