Venard v. Winter, 93-1651

• Decision Date: 23 November 1994
• Docket Number: No. 93-1651,93-1651
• Parties: William VENARD, Appellant, v. Michael WINTER, Appellee.
• Court: Iowa Supreme Court

Page 163

524 N.W.2d 163

William VENARD, Appellant, v. Michael WINTER, Appellee.

No. 93-1651.

Supreme Court of Iowa.

Nov. 23, 1994.

H. Daniel Smith of Sherrets, Smith & Gardner, P.C., Omaha, NE, for appellant.

Dennis M. Gray and Matthew G. Woods of Peters Law Firm, P.C., Council Bluffs, for appellee.

Considered by McGIVERIN, C.J., and LARSON, CARTER, LAVORATO, and SNELL, JJ.

LAVORATO, Justice.

This legal malpractice case presents two questions. First, what statute of limitations governs this case? Second, can a plaintiff avoid the consequences of not designating experts within the time requirements of Iowa Code section 668.11 (1989) by voluntarily dismissing the action and refiling an identical one? The answer to the first question is that the five-year limitation period in Iowa Code section 614.1(4) governs this case. The answer to the second question is "yes."

We affirm that part of the district court ruling denying the defendant's motion to dismiss on the statute of limitations question. We reverse that part of the court's ruling sustaining the defendant's motion to dismiss on the voluntary dismissal question. We remand for further proceedings consistent with this opinion.

Michael Winter represented William Venard in an action to foreclose a mechanic's lien regarding improvements to Venard's property. The property was then sold at a sheriff's sale and was never redeemed within the one-year redemption period. See Iowa Code § 628.3. The last day for redemption was June 8, 1990.

On June 11, 1992, Venard sued Winter for legal malpractice. In his petition Venard alleged, among other things, the following: (1) pursuant to an oral agreement Venard employed Winter to represent him in the foreclosure action; (2) Venard had the money to redeem the property but Winter told him to wait until just before the expiration of the redemption period to do so; (3) through Winter's efforts, Venard and the party who purchased the property agreed that Venard would redeem the property before the expiration of the one-year period of redemption and that Venard would be notified to do so before then; and (4) despite Winter's continued representation of Venard, Winter did not take the necessary steps to complete the redemption of the property before the redemption period expired.

Winter answered in September and promptly began discovery by serving Venard with interrogatories. One of the interrogatories asked for the identification of expert witnesses. Venard designated his expert witnesses past the deadline in section 668.11 for designating them.

Later, Winter filed a motion for summary judgment. The motion alleged that Venard failed to comply with the time requirements for expert witness designation in section 668.11, and that without such witnesses he could not establish a prima facie case. Before the court could rule, Venard voluntarily dismissed his action pursuant to Iowa Rule of Civil Procedure 215.

Five days later, Venard filed this action. The petition is identical to the petition in the first action with the exception that he now alleges additional theories. Those theories include (1) breach of contract, (2) constructive fraud, and (3) negligent misrepresentation.

Winter promptly filed a motion to dismiss the petition. The motion is based on two grounds. First, the present action is barred by the two-year statute of limitations in Iowa Code section 614.1(2). Second, the present action should be dismissed because Venard voluntarily dismissed the first action after he failed to designate expert witnesses within the time requirements of section 668.11.

The district court concluded that the five-year statute of limitations for unwritten contracts in Iowa Code section 614.1(4) applied and overruled Winter's first ground for dismissal. The court agreed as to Winter's second ground and sustained the motion. Venard appeals from the court's dismissal.

A district court's order sustaining or overruling a motion to dismiss does not depend on the court's discretion. The ruling must rest on legal grounds and is subject to review by us. Weber v. Madison, 251 N.W.2d 523, 525 (Iowa 1977). Our task then is to decide whether the district court's ruling on both grounds was legally correct. Iowa R.App.P. 4.

Winter did not appeal the court's ruling on the statute of limitations question but contends here that this ruling was in error. The issue was preserved, however, because a successful party need not cross-appeal to preserve error on a ground urged but ignored or rejected by the district court. Johnston Equip. Corp. v. Industrial Indem., 489 N.W.2d 13, 16 (Iowa 1992). Winter raised the issue in his motion to dismiss but the district court rejected it.

I. The Applicable Statute of Limitations.

Winter relies on Iowa Code section 614.1(2), and Venard relies on Iowa Code section 614.1(4). Those provisions provide in relevant part:

Actions may be brought within the times herein limited, respectively, after their causes accrue, and not afterwards, except when otherwise specially declared:

....

2. Injuries to person or reputation--relative rights--statute penalty. Those founded on injuries to the person or reputation, including injuries to relative rights, whether based on contract or tort ... within two years.

....

4. Unwritten contracts--injuries to property--fraud--other actions. Those founded on unwritten contracts, those brought for injuries to property ... within five years....

The actual nature of the action determines the proper statute of limitations. This determination turns on the nature of the right sued upon and not on the elements of relief sought for the claim. Sandbulte v. Farm Bureau Mut. Ins. Co., 343 N.W.2d 457, 462 (Iowa 1984). Accord Barrett v. Burt, 250 F.Supp. 904, 905 (S.D.Iowa 1966) ("An inquiry regarding the appropriate statute of limitations to be applied must be premised upon the real nature of the action rather than the theory of recovery.") (interpreting Iowa Code section 614.1).

Applying these principles in a legal malpractice case, a local federal district court in Barrett held that the five-year limitation in what is now Iowa Code section 614.1(4) applied. Barrett, 250 F.Supp. at 906. In Barrett, the clients sued their lawyer for damages because he allegedly failed to include in a sales contract an effective provision transferring the clients' contractual obligation to the buyer. The court explained its conclusion this way:

The cause of action herein allegedly arose out of the defendant's failure to prepare properly a contract for the plaintiffs. The relationship between the plaintiffs and the defendant was in effect created through an unwritten contract for services and it is an alleged breach of a duty arising from that relationship which provides the basis for the plaintiffs' cause of action herein. The injury related only to plaintiffs' liability to pay certain real estate commissions. The plaintiffs have not suffered a personal injury, within the meaning and intent of that portion of [s]ection 614.1 requiring actions for such injuries to be brought within two years from the time they accrue. There would be no basis therefore for applying the two year limitation on the ground that the plaintiffs have suffered injuries to the person.

... The plaintiffs' cause of action in this instance falls within the statutory provision requiring actions "founded on unwritten contracts" or "those brought for injuries to property" to be instituted within five years.

Barrett, 250 F.Supp. at 905-06; see also Debra T. Landis, Annotation, What Statute of Limitations Governs Damage Action Against Attorney for Malpractice, 2 A.L.R. 4th 284, 292-94 (1980) (collecting cases holding that in legal malpractice actions statute of limitations for unwritten contracts governs).

We think the federal district court's reasoning is on the mark. Similarly, here, Venard's cause of action arose out of a relationship between Venard and Winter that was created pursuant to an oral unwritten agreement for services. Specifically, Winter was to take the necessary steps to complete the redemption of the property before the redemption period expired. Winter's alleged failure to do so was a breach of this duty arising from their relationship, and that breach provides the basis for Venard's cause of action. See Smith v. Smith, 513 N.W.2d 728, 730 (Iowa 1994) (in reviewing rulings on motions to dismiss we accept the allegations of the petition as true).

The injury related to Venard's loss of his property. Contrary to Winter's contention, Venard suffered no personal injury within the meaning of the two-year statute of limitations. So there would be no basis for applying the two-year limitation.

Also, contrary to Winter's contention, Venard suffered no injury to any "relative rights" within the meaning of the two-year statute of limitations. Section 614.1(2)--the two-year statute--applies only to actions "founded on injuries to the person or reputation, including injuries to relative rights." Iowa Code § 614.1(2) (emphasis added). Injuries to relative rights are included in this statutory provision

only if they are also injuries to the person or reputation. The phrase "relative rights" does not expand the scope of the statute. It merely explains a particular type of injury which is to be included in the phrase "injuries to the person or reputation." Thus, unless an injury to the person or reputation is present, an injury to a purported "relative right" does not come within the two year statute of limitations.

Barrett, 250 F.Supp. at 906. Accord Brown v. Liberty Mut. Ins. Co., 513 N.W.2d 762, 764-65 (Iowa 1994); Clark v. Figge, 181 N.W.2d 211, 214 (Iowa 1970). An injury to the person or reputation is not present in Venard's cause of action.

As in Barrett, we think Venard's cause of action falls within the statutory provision requiring actions "founded on unwritten contracts" or "those brought for injuries to property" to be...