Whalen v. Connelly

• Decision Date: 20 December 2000
• Docket Number: No. 98-2070.,98-2070.
• Citation: 621 N.W.2d 681
• Parties: Michael L. WHALEN, Appellant, v. John E. CONNELLY, J. Edward Connelly Associates, Inc., Successor to Della III, Inc., President Casinos, Inc., and PRC-Iowa, Inc., Appellees.
• Court: Iowa Supreme Court

621 N.W.2d 681

Michael L. WHALEN, Appellant, v. John E. CONNELLY, J. Edward Connelly Associates, Inc., Successor to Della III, Inc., President Casinos, Inc., and PRC-Iowa, Inc., Appellees.

No. 98-2070.

Supreme Court of Iowa.

December 20, 2000.

As Amended on Denial of Rehearing January 31, 2001.

Mark McCormick of Belin Lamson McCormick Zumbach Flynn, P.L.C., Des Moines, and Martha L. Shaff and Jean Dickson Feeney of Betty, Neuman & McMahon, Davenport, for appellant.

R. Richard Bittner and Jeffrey S. Bittner of Carlin, Hellstrom & Bittner, Davenport, and Lawrence C. Friedman and Fernando Bermudez of Thompson Coburn L.L.P., St. Louis, Missouri, for appellees.

Considered en banc.

SNELL, Justice.

This is the third time these parties have been to the Iowa Supreme Court. This appeal involves enforcing the judgment from the first decision made by this court. Whalen v. Connelly, 545 N.W.2d 284 (Iowa 1996) (Whalen I). The judgment of the district court on the appeal is reversed. The judgment of the district court on the cross-appeal is affirmed.

I. Factual Background and Proceedings

Whalen I involved a dispute over how much Michael L. Whalen should be paid for his share of the riverboat gambling partnership with the defendants, collectively referred to as The Connelly Group, L.P. (TCG). Id. at 290-92. The district court held in a declaratory judgment that Whalen was entitled only to what TCG had originally offered to tender to him in 1993—$61,531.45 and 55,904 shares of stock. Id. at 292. Whalen appealed the judgment to our court arguing he was entitled to a more favorable buyout under the partnership agreement. We affirmed the declaratory judgment on March 20, 1996. Id. at 292, 296.

While the appeal was pending, Whalen sought the money and shares from TCG. In a letter of demand, Whalen informed TCG no appeal was pending. TCG knew this to be incorrect because it had already received notice of the appeal. TCG refused to surrender the money and stock because of the pendency of the appeal. Whalen's appeal to this court in Whalen I was unsuccessful. By the time Whalen's stock was delivered to him in May 1996, it had depreciated substantially. For this reason, Whalen filed the present and third appeal, which we will refer to as Whalen III, claiming a division of TCG illegally converted his property under the Iowa tender law, Iowa Code chapter 538, by keeping it until the appeal was resolved.

In the interest of providing a complete background we mention Whalen's second appeal briefly. Whalen v. Connelly, 593 N.W.2d 147 (Iowa 1999) (Whalen II). This was a derivative claim. Whalen was again unsuccessful. Whalen II has no relation to the present facts or suit.

Whalen III revolves around Whalen's assertion that J. Edward Connelly Associates, Incorporated¹ and PRC-Iowa, Incorporated,² collectively referred to here as "Connelly," committed the tort of conversion by refusing to deliver the judicially determined buyout to Whalen pending his appeal in Whalen I. Connelly filed a counterclaim which charged Whalen with malicious prosecution for his suit in Whalen I. This appeal involves Whalen as the Appellant/Cross-Appellee and Connelly as the Appellee/Cross-Appellant.

A. Whalen's Claim and the District Court's Disposition

Whalen argues that under the Iowa tender law Connelly should have honored his demand for the stock while the Whalen I appeal was pending. See Iowa Code §§ 538.4, .7 (1997). Whalen sought delivery of the stock on January 16, 1995. At that time, the stock's value was $9.50 per share. The stock's value plummeted to $2.37 per share by April 1, 1996. Because the stock depreciated after the time Whalen made his demand, which Connelly refused, Whalen claims Connelly committed the tort of conversion. Whalen seeks damages for this reduction in market value plus interest.

At the district court, Whalen filed a motion for partial summary judgment asking the court to find that as a matter of law the Iowa tender law applied, and that Connelly should have immediately paid Whalen upon his demand. Its failure constituted conversion. Whalen did not seek summary judgment on the issue of the amount of damages. Connelly filed its own motion for summary judgment on the conversion issue. The court denied Whalen's motion in favor of Connelly's resistance and granted Connelly's motion for summary judgment.

The district court found the appeal filed by Whalen prevented him from obtaining his property. It held the conversion claim unwarranted, as Whalen had placed ownership and value of the property in issue by filing an appeal. In his appeal in Whalen I, Whalen sought more money for his property interest and was less concerned with obtaining stock ownership. As such, the district court recognized: "Had [Whalen] been successful in his appeal, he may not have been entitled to any stock...." Therefore, Whalen was precluded from seeking satisfaction until he dismissed his appeal. The district court was persuaded that Whalen's appeal attacked the very judgment he was seeking to collect. Finally, the court concluded that the Iowa tender rule did not apply because it was dealing with a Delaware partnership.

B. Connelly's Counterclaim and the District Court's Disposition

Connelly filed a counterclaim against Whalen alleging the Whalen I suit constituted malicious prosecution. Connelly argued that discovery documents showed Whalen knew his claim in Whalen I had no merit. To show the special damages Iowa requires in a malicious prosecution suit, Connelly produced its expenses totaling more than one million dollars to defend Whalen I.

Whalen made a motion for summary judgment against this counterclaim. He argued that the mere cost of the suit was not enough to show special damages. The district court granted this motion in favor of Whalen. It found Connelly could not show any special damages that would support a malicious prosecution suit. On appeal, Connelly alleges it has other injury, but it failed to plead the specifics of those injuries or develop them in detail through discovery.

II. Scope and Standard of Review

The appeal and cross-appeal come to us from rulings granting summary judgment. We review a grant or denial of summary judgment for correction of errors at law. Iowa R.App. P. 4; Whalen II, 593 N.W.2d at 152. Summary judgment is proper when no material dispute exists. If reasonable minds could disagree, summary judgment is improper. Dickerson v. Mertz, 547 N.W.2d 208, 212 (Iowa 1996). As such, the court will affirm if the entire record including pleadings, discovery, and affidavits on file shows there is no genuine issue of material fact such that the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 237(c); Whalen II, 593 N.W.2d at 152.

Our determination involves deciding whether the district court correctly applied the law. See Krause v. Krause, 589 N.W.2d 721, 724 (Iowa 1999). Under this standard, we will review the grant of summary judgment on Connelly's motion against Whalen's conversion claim in a light most favorable to Whalen. We will review the grant of summary judgment on Whalen's motion against Connelly's malicious prosecution claim in the light most favorable to Connelly.

III. Issues on Appeal

A. Conversion—Appeal

The issue presented on direct appeal is whether Whalen can successfully bring a conversion claim against Connelly for failing to turn over Whalen's property upon his demand resulting in a great depreciation of worth when (1) an appeal filed by Whalen was pending which placed the value and possession of the property in issue; (2) the Iowa tender law may require Connelly to turn the property over; but (3) Iowa law may not apply because Connelly is a Delaware partnership.

1. Procedural Barriers

Connelly argues this claim is precluded by our decision in Whalen I. The applicable issue in Whalen I dealt with what Whalen was entitled to as a buyout from TCG. Whalen I, 545 N.W.2d at 292. That amount has been judicially decided. The issue here is whether Connelly violated the Iowa tender law, thereby committing conversion, when it refused to deliver the property demanded by Whalen during the pendency of the appeal.

Claim preclusion is generally implicated where there has been a full and fair opportunity to litigate the claim—the claim was litigated, or it could have been, but was not. See Iowa Elec. Light & Power Co. v. Lagle, 430 N.W.2d 393, 397 (Iowa 1988); Tigges v. City of Ames, 356 N.W.2d 503, 508 (Iowa 1984). "A second claim is likely to be considered precluded if the acts complained of, and the recovery demanded, are the same, or when the same evidence will support both actions." Geneva Corp. Fin. v. G.B.E. Liquidation Corp., 598 N.W.2d 331, 334 (Iowa App. 1999) (citing Riley v. Maloney, 499 N.W.2d 18, 20 (Iowa 1993); Leuchtenmacher v. Farm Bureau Mut. Ins. Co., 460 N.W.2d 858, 860 (Iowa 1990); B & B Asphalt Co. v. T.S. McShane Co., 242 N.W.2d 279, 286 (Iowa 1976)). Moreover, claim preclusion is implicated when "the claim for relief litigated in the previous proceeding was the same as the claim of the present action." Id. (citing West v. Wessels, 534 N.W.2d 396, 398 (Iowa 1995)).

The present claim deals with property owed to Whalen and an alleged tort that arose after the commencement of Whalen I. The facts of the conversion are different from those presented in Whalen I. Whalen is not challenging the judgment in Whalen I. The tort of conversion could never have been made an issue in the earlier case. Whalen's conversion claim is not precluded by our disposition in Whalen I.

We likewise dispose of Connelly's allegation that Whalen is barred from bringing his conversion claim because of the doctrine of election of remedies. "We note that this doctrine is designed to prevent double recovery for a single injury, not to prevent recourse to alternative remedies." Hartford-Carlisle Sav. Bank v. Van Zee, 569 N.W.2d 386, 389 (Iowa 1997) (citing 25 Am.Jur.2d Election of...