KATHRYN S. BARNHILL, Plaintiff, vs. IOWA DISTRICT COURT FOR POLK COUNTY, Defendant.
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IN THE COURT OF APPEALS OF IOWA
No. 7-573 / 06-0163
Filed October 24, 2007
KATHRYN S. BARNHILL,
Plaintiff,
vs.
IOWA DISTRICT COURT FOR
POLK COUNTY,
Defendant.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Douglas Staskal,
Judge.
Kathryn Barnhill appeals the district court’s ruling that she violated Iowa
Rule of Civil Procedure 1.413 and sanction of $25,000 to pay toward the
opposing party’s attorney fees. AFFIRMED.
Kathryn Barnhill of Barnhill & Associates, P.C., West Des Moines, pro se.
Wade Hauser III of Ahlers & Conney, P.C., Des Moines, and J. Stan
Sexton, Kansas City, Missouri, for defendant.
Heard by Mahan, P.J., and Miller and Vaitheswaran, JJ.
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MAHAN, P.J.
Kathryn Barnhill appeals the district court’s ruling that she violated Iowa
Rule of Civil Procedure 1.413 and sanction of $25,000 to pay toward the
opposing party’s attorney fees. We affirm.
I.
Background Facts and Proceedings
An understanding of the procedural history of this case is essential to
ruling on the issues presented to this court. As the district court notes, “This
case has a long and complex procedural history. The court file now comprises
twenty-one volumes.” Specific facts relevant to the merits of this appeal will be
stated in the analysis of this case where appropriate.
The original controversy arose from allegations that Tamko Roofing
Products, Inc. (Tamko) manufactured and sold defective roofing shingles which
were installed on plaintiffs’ homes or structures by plaintiff Jerry’s Homes, Inc.
(Jerry’s Homes).
In 1998 Jerry’s Homes, represented by Barnhill, filed suit
against Tamko in state court. The purpose of the lawsuit was to either compel
Tamko to repair the roofs on over 400 houses built by Jerry’s Homes or, in the
alternative, recover sufficient damages for Jerry’s Homes to make the repairs
itself. Jerry’s Homes asserted that Tamko promised it would repair the damages
to the shingles when problems first arose with the quality of the shingles. The
case was removed to federal court based on diversity. Most of the claims were
dismissed on summary judgment, including the claims for breach of express and
implied warranty and fraud. A jury returned a verdict in favor of Jerry’s Homes
for just over $1 million, but the federal magistrate judge granted Tamko’s posttrial motion to vacate the verdict. The magistrate’s ruling was affirmed on appeal
3
to the Eighth Circuit Court of Appeals. Jerry’s Homes, Inc. v. Tamko Roofing
Prods., Inc., 40 F. App’x 326 (8th Cir. 2002).
In March 2001 Barnhill filed a class action lawsuit in state court against
Tamko and David Humphreys, Tamko’s president and CEO. The class consisted
of persons who had either directly or indirectly purchased the allegedly defective
shingles through Jerry’s Homes. The class also included Jerry’s Homes, itself,
as a representative plaintiff. After its fourth and final amendment, the petition
made allegations against Tamko and Humphreys of (1) breach of express
warranty, (2) breach of implied warranty, (3) fraudulent misrepresentation,
(4) negligent misrepresentation, (5) rescission due to impermissible liquidated
damages, (6) rescission due to unconscionability of express warranty, and
(7) violation of a Missouri statute prohibiting unfair business practices.
The
petition asserted that Humphreys “at all times relevant hereto directed and
controlled the actions of [Tamko] with respect to the allegations herein.” For the
most part, the allegations made no distinction between Tamko and Humphreys.
Discovery was conducted throughout 2001. In late 2001 and early 2002,
plaintiffs filed a motion for class certification, and defendants filed motions for
summary judgment on every allegation of plaintiffs’ petition. Despite defendants’
urging during a status conference with the court that the summary judgment
motions be resolved before the class certification motion, the district court
scheduled the class certification motion for hearing. After the hearing, the court
certified the case as a class action against both defendants. Defendants made
an interlocutory appeal to the Iowa Supreme Court that ordered the district court
to rule on the pending motions for summary judgment. Judge Rosenberg then
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dismissed six of the seven counts against Humphreys and a substantial part of
the case against Tamko. In particular, he dismissed the claims of Jerry’s Homes
and another plaintiff on the ground that they were res judicata as a result of the
federal lawsuit. This left only the fraudulent misrepresentation claim pending
against Humphreys. On appeal, our court of appeals affirmed the dismissal of
the six claims against Humphreys and reversed the district court’s failure to grant
summary judgment on the final claim of fraudulent misrepresentation. Sharp v.
Tamko Roofing Prods., Inc., No. 02-0728 (Iowa Ct. App. Nov. 15, 2004). Judge
Staskal subsequently granted summary judgment in favor of Tamko on the two
remaining issues. We affirmed his dismissal of these claims. Sharp v. Tamko
Roofing Prods., Inc., No. 05-1372 (Iowa Ct. App. Oct. 11, 2006). At the end of
more than five years of litigation, every allegation was finally dismissed on
summary judgment.
Amidst these appeals, Humphreys filed a motion for sanctions against all
named plaintiffs and their attorney, Barnhill, pursuant to Iowa Code section
619.19 and Iowa Rule of Civil Procedure 1.413(1) asserting:
None of the claims pursued by plaintiffs in this case against
Humphreys were well grounded in fact or warranted by existing law
or a good faith argument for the extension, modification, or reversal
of existing law. For example and without limitation, Ms. Barnhill has
signed pleadings and motions while pursuing claims against
Humphreys for breach of contract and breach of contract-related
causes of action notwithstanding the fact that no contract between
Humphreys and plaintiffs ever existed. Therefore, it appears
plaintiff’s claims against Humphreys were interposed for improper
purposes of harassing Humphreys and causing needless and
wrongful costs of litigation.
After Humphreys filed a brief in support of his motion for sanctions,
Barnhill filed an original and amended resistance to the motion and a reply brief.
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On September 7, 2005, Judge Staskal declined to enter sanctions against the
plaintiffs, but found that Barnhill had violated Iowa Rule of Civil Procedure 1.413.
Specifically, he stated:
The major exception to the rule of independent corporate identity is
the doctrine of ‘piercing the corporate veil.’ The doctrine is not at
issue here. Barnhill does not claim that there was ever any basis in
fact or law for ignoring Tamko’s separate corporate existence.
Rather, the sole basis upon which she seeks to justify all of the
claims asserted against Humphreys is that corporate officers are
personally liable for the torts they commit even if they are acting on
behalf of their corporation. The very serious problem with this
argument at the outset is that only two of the five claims asserted in
the original Petition, and of the seven claims asserted in the
Petition as finally amended, are tort claims. . . . Barnhill makes no
attempt to explain the factual or legal bases for asserting the
rescission claim that was asserted against Humphreys in the
original Petition or the two rescission claims that were asserted
against him in the Petition as finally amended. It is obvious that
claims for rescission of a contract are contract, not tort, claims. It is
a violation of Rule 1.413 for an attorney, without explanation, to
assert a breach of contract claim against a corporate officer where
only the corporation is a party to the contract. Therefore, Barnhill
violated Rule 1.413 by asserting contract rescission claims against
Humphreys.
....
[T]he manner in which this [fraudulent misrepresentation] claim was
pled against Humphreys violated Rule 1.413 because Barnhill pled
facts that were literally untrue, as follows:
61. Defendant Tamko and Defendant Humphreys
made express representations to Plaintiffs and the
classes they represent.
63. Defendant Tamko and Defendant Humphreys
made these express representations in various
media both in writing and by oral sales
presentations when in fact they did not have a
reasonable basis for making those representations.
Supplemented Fourth Amended Class Action Petition. (emphasis
added). The allegations in paragraph 61 are not true as they
pertain to Humphreys because he had no contact with any of the
Plaintiffs except for an alleged conversation with an officer of
Jerry’s Homes in 1995. Further, even if a corporate officer is liable
for torts he personally commits, that does not make all of the
corporation’s acts the acts of that officer. While it would have been
acceptable for Barnhill to allege that Humphreys was responsible
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for the alleged misrepresentations, it is not acceptable, in the
court’s view, to allege that Humphreys made the representations in
the warranties and other literature.
However, there is a more egregious violation of Rule 1.413
in the assertion of this claim at all. One of the fundamental
elements of a misrepresentation claim is that the injured party relied
on the alleged misrepresentation. Thus, in the Petition, Barnhill
alleges:
74. Plaintiffs acted in reliance on the truth of the
representations and were justified in relying on the
representations.
Supplemented Fourth Amended Class Action Petition. At least the
majority, if not virtually all, of the Plaintiffs in this case, other than
Jerry’s Homes, did not themselves purchase Tamko shingles and,
therefore, could not possibly have relied on any representations
from anyone in deciding to purchase the shingles.
....
In summary, Barnhill asserted a claim of reliance on behalf
of a class of persons, the vast majority of whom undoubtedly had
no involvement whatsoever in choosing Tamko shingles and who
therefore could not possibly have relied on any representations in
deciding to purchase them. Moreover, when challenged in the
district court to specifically show evidence of a Plaintiff who did rely
on Tamko representations, she made false statements about the
evidence of reliance by the two Plaintiffs she chose.
In regards to the negligent misrepresentation claim the district court found:
[T]he law is clear that a claim of negligent misrepresentation
applies only to persons who are in the business of supplying
information. . . . It does not apply to product sellers who supply
information about the product in connection with its sale. . . . Even if
the [rule] did not apply to those who are “distributors and other
suppliers” of the Tamko shingles, those persons, with the exception
of Jerry’s Homes, are not Plaintiffs. It is hardly a defense to
asserting a frivolous claim against particular defendants to argue
that the claim should legitimately be asserted against someone
else.
[E]ven if [Humphreys] is personally guilty of making a negligent
misrepresentation, he is not personally in the business of selling
shingles or of selling information regarding the shingles.
Finally, one of the elements of this claim, like the fraudulent
misrepresentation claim, is that the Plaintiffs relied on the
information. Making that assertion violates Rule 1.413 for reasons
already discussed above.
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Regarding the claim of violation of the Missouri statute, the district court
stated:
Before asserting this claim specifically created by a state statute, a
reasonably competent attorney would stop to consider whether the
statute contained any jurisdictional or venue requirements. A
reasonably competent attorney would then discover what the court
of appeals pointed out – that the statute itself requires actions
under it to be brought in Missouri. Therefore, Barnhill’s assertion of
this claim violated Rule 1.413.
After Judge Staskal ruled that Barnhill violated rule 1.413, Barnhill filed a
response to his ruling. Her brief to this court is verbatim of her response to
Judge Skaskal’s ruling with the exception of one additional page. In his order
imposing sanctions, Judge Skaskal considered and rejected her arguments,
interpreting them as a motion to reconsider. In his order, Judge Staskal stated:
In summary, the pleadings and other documents filed by Barnhill in
this case have in general such a confusing, convoluted, selfcontradictory and elusively vague, ambiguous, indirect and
constantly shifting quality as to compel the conclusion that the case
was made up as it went along. It is as though Barnhill said
whatever needed to be said at each step to just get past the
moment, whether there was a legitimate basis for saying it or not.
In the process, Barnhill has violated Rule 1.413(1).
He then sanctioned Barnhill and ordered her to pay Humphreys $25,000 of the
nearly $150,000 he had incurred in attorney’s fees defending the case. Barnhill
appeals.
II.
Standard of Review
We review a decision on imposing sanctions for an abuse of discretion.
Mathias v. Glandon, 448 N.W.2d 443, 445 (Iowa 1989). The proper means to
review a trial court’s order imposing sanctions is by writ of certiorari.
Id.
Certiorari is a procedure to test whether a lower board, tribunal, or court
8
exceeded its proper jurisdiction or otherwise acted illegally.
Iowa R. Civ. P.
1.1401; Backstrom v. Iowa Dist. Court, 508 N.W.2d 705, 707 (Iowa 1993), cert
denied, 511 U.S. 1042 (1994).
“Relief through certiorari is strictly limited to
questions of jurisdiction or illegality of the challenged acts.” French v. Iowa Dist.
Ct., 546 N.W.2d 911, 913 (Iowa 1996). Although our review is for an abuse of
discretion, we will correct erroneous application of the law. Weigel v. Weigel,
467 N.W.2d 277, 280 (Iowa 1991). The district court’s findings of fact, however,
are binding on us if supported by substantial evidence. Zimmermann v. Iowa
Dist. Ct., 480 N.W.2d 70, 74 (Iowa 1992).
An abuse of discretion occurs when the district court exercises its
discretion on grounds or for reasons clearly untenable or to an extent clearly
unreasonable. Schettler v. Iowa Dist. Ct., 509 N.W.2d 459, 464 (Iowa 1993). A
ground is unreasonable if it is not based on substantial evidence. Id. at 464-65.
We are only permitted to sustain the proceedings below, annul the proceedings
wholly or in part, or prescribe the manner in which either party may proceed.
Harris v. Iowa Dist. Ct., 570 N.W.2d 772, 776 (Iowa Ct. App. 1997). We may not
substitute an amended order for that of the district court. Id.
III.
Merits
The district court found that Barnhill violated Iowa Code section 619.19
(2005) and Iowa Rule of Civil Procedure 1.413(1). The statute and rule are
identical in substance. Iowa Code section 619.19 reads as follows:
The signature of a party, the party’s legal counsel, or any
other person representing the party, to a motion, pleading, or other
paper is a certificate that:
1.
The person has read the motion, pleading or other paper.
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2.
To the best of the person’s knowledge, information, and
belief, formed after reasonable inquiry, it is grounded in fact and is
warranted by existing law or a good faith argument for the
extension, modification, or reversal of existing law.
3.
It is not interposed for any improper purpose, such as to
harass or cause an unnecessary delay or needless increase in the
cost of litigation.
....
If a motion, pleading, or other paper is signed in violation of
this section, the court, upon motion or upon its own initiative, shall
impose upon the person signing, the represented party, or both, an
appropriate sanction, which may include an order to pay the other
party or parties the amount of the reasonable expenses incurred
because of the filing of the motion, pleading, or other paper,
including a reasonable attorney fee.
By signing her name, the signor is certifying that she: (1) has read the document,
(2) has concluded after reasonable inquiry into the facts and law that there is
adequate support for the filing, and (3) is acting without any improper motive.
Weigel, 467 N.W.2d at 280. These are referred to as the “reading, inquiry, and
purpose elements.” Id. It is only whether the attorney made a reasonable inquiry
into the facts and the law that is at issue in the present case.
The primary goal of this rule and statute is to require a high degree of
professionalism in the practice of law by discouraging parties and their attorneys
from filing frivolous lawsuits. Id. at 282; see also Mathias, 448 N.W.2d at 445.
The rule was adopted in response to a growing concern over misuse and abuse
of the litigation process. Mathias, 448 N.W.2d at 445. An attorney’s advocacy
role does not supersede her role as an officer of the court. See Weigel, 467
N.W.2d at 282. The statute requires sanctions to be imposed upon a finding of a
violation of the statute to reduce the reluctance of courts to impose sanctions on
attorneys who violate their responsibility to the court and other parties. Mathias,
448 N.W.2d at 445.
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In determining whether there has been a violation of the statute, the
attorney’s actions must be judged objectively. Weigel, 467 N.W.2d at 281. We
must decide whether the attorney’s actions were reasonable under the
circumstances known at the time she signed the documents.
Id. at 280.
Hindsight gained afterward through discovery, hearings, and evidence cannot be
considered. Id. at 280-81. We must compare the attorney’s actions to that of a
reasonably competent attorney admitted to practice law in Iowa.
Id. at 281.
Although the statute focuses on the circumstances present upon signing, the rule
may also be violated by the signing of a series of filings creating a pattern of
conduct. Mathias, 448 N.W.2d at 447. The rule applies to each filing. Id. Other
sanctions are available to address abusive tactics not related to the signing of
pleadings, motions, and other papers.
Cf. Iowa R. Civ. P. 1.517, 1.602(5),
1.701(6).
The district court found that, based on the facts known to Barnhill when
she signed the original and four supplemented petitions between March 2001
and March 2002, as well as other court filings thereafter, there was no
reasonable support in the law to assert the claims made against Humphreys, the
president and C.E.O. of Tamko. The final amended petition alleged the following
against Humphreys:
(1) breach of express warranty, (2) breach of implied
warranty, (3) fraudulent misrepresentation, (4) negligent misrepresentation,
(5) rescission based on an impermissible liquidated damages clause, (6)
rescission based on the unconscionability of an express warranty, and (7)
violation of a Missouri unfair business practices act.
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The relevant factors to consider in determining whether an attorney made
a reasonable inquiry into the law include: (1) the amount of time that was
available to the signer to research and analyze the relevant legal issues, (2) the
complexity of the factual and legal issue in question, (3) the clarity or ambiguity of
existing law, (4) the plausibility of the legal positions asserted, (5) the extent to
which counsel had to rely upon other counsel to conduct the legal research and
analysis underlying the position asserted, (6) the resources reasonably available
to the signer to devote to the inquiry, and (7) the extent to which the signer was
on notice that further inquiry might be appropriate. Mathias, 448 N.W.2d at 44647. We note that Barnhill had ample time to research the facts and the law. This
case was brought subsequent to the dismissal of a similar federal case. There is
no assertion that Barnhill had to rely on others for her legal and factual research.
In her brief, she states that she personally did extensive research. In addition,
the longevity of these proceedings afforded her the opportunity to personally
depose many witnesses.
Keeping these factors in mind, we proceed to our
analysis.
A. Breach of Express and Implied Warranties
The district court was correct when it found there was no reasonable basis
for a breach of warranty claim against Humphreys. As the district court points
out, a breach of warranty claim is a contract claim. An officer of a corporation is
not liable for the contracts of the corporation unless personally guaranteed by the
officer, and Barnhill never made any claim for piercing the corporate veil. See
Iowa Code § 490.830(4) (2001).
Barnhill, however, argues that a breach of
warranty claim can be a tort claim when it involves safety hazards. Regardless
12
of whether this contention is supported by law, there were never any allegations
that the shingles caused harm to any person or property. Therefore, the alleged
inadequacy of the shingles was only a “defect of suitability and quality,” which, as
Barnhill points out, is litigated through contract law.
Relative to the breach of warranty claims, Barnhill may have correctly
interpreted the dicta in Tomka v. Hoechst Celanese Corp., 528 N.W.2d 103 (Iowa
1995), as providing for a warranty claim within tort law, but the facts of this case
fail to support such a claim. Tomka holds that when a product fails in its intended
purpose the action is within contract law, but when the product causes harm
beyond the consequences of its failure to satisfy its intended purpose, the action
is within tort law. Tomka, 528 N.W.2d at 107. Barnhill alleged only that the
shingles were inadequate to accomplish their purpose of protecting the buildings
from the weather. There was never a claim made that the shingles caused harm
to any person or property. The relief sought in the lawsuit was only repair or
replacement of the shingles, not compensation for damages caused by the
shingles. Stating that the shingles were blowing off is not a sufficient assertion to
make a claim for personal or property damage beyond that caused by the failure
of the shingles to protect the buildings.
Barnhill points out that the uniform jury instructions do not require a
description of the damages, but merely the amount of damages. From this she
concludes that there was no requirement that she claim damages to a person or
property. Yet, it is fundamental in our legal system that, in order to prove an
amount of damages, the injury suffered must be proven.
See Patterson v.
Patterson’s Estate, 189 N.W.2d 601, 605 (Iowa 1971) (stating that “[i]f it is
13
speculative and uncertain whether damages have been sustained, recovery is
denied”). Any reasonable attorney licensed to practice law would know this.
Given the facts known to Barnhill at the point at which she signed the petitions
and other court documents, no reasonable attorney would have found the facts
sufficient to support a breach of warranty claim under a tort theory. Therefore,
there was no basis for such a claim against Humphreys, as CEO and president
of Tamko.
B. Fraudulent Misrepresentation
The petition alleged that Tamko and Humphreys made express written
and oral representations that Tamko shingles were of superior, long-lasting
quality when Humphreys knew the shingles would not meet this standard due to
a major defect. Further, the petition alleged that Humphreys limited the warranty
in an unfair and unconscionable manner in light of the defect. Barnhill claims that
Humphreys should be held liable because he was in charge of all corporate
operations, including warranties, research, and development.
Although Barnhill briefed several pages arguing to this court that
Humphreys should be held liable for fraudulent misrepresentation because of his
numerous acts of approving the representations made, the district court gave
Barnhill the benefit of the doubt that Humphreys’ actions were sufficient to hold
him liable for such representations. Notwithstanding, the district court found that
Barnhill had violated rule 1.413 by stating the untrue facts in the petition that
Humphreys actually made the representations and by making false statements in
court documents that the class of plaintiffs relied on the representations in
purchasing the Tamko shingles.
14
Barnhill claims the assertions in the petition that Humphreys made the
false representations were supported by facts.
Specifically she claims
Humphreys made these representations through the warranties and advertising
materials because he had the final authority as to their contents. The court
points out that it is not correct to allege that Humphreys made the
representations, even if he was responsible for the representations in the
warranties and literature.
In addition, Barnhill points to the evidence that
Humphreys had a conversation with Ron Grubb, the president of Jerry’s Homes,
in which he told Grubb that the problems with the shingles had been fixed
because they had changed their sealant in 1995 or 1996. However, there was
no evidence that any other plaintiff even knew who Humphreys was. Barnhill
claimed in her “Statement of Contested Facts” that plaintiff Hollinger had relied
on the information when he selected Tamko shingles. However, the district court
found Hollinger’s deposition testimony that he relied on the twenty-five year
warranty to be insufficient to conclude that he relied on the false information. We
agree with the judgment of the district court.
Barnhill asserts that “a plaintiff who alleges fraud by deceit is not required
to prove reasonable reliance on the fraudulent misrepresentation by deceit.”
Regardless of whether this statement of the law is reasonable, the fact remains
that Barnhill made a false assertion in the petition and throughout the litigation
that plaintiffs did, in fact, rely on the representations. Barnhill claims the law
does not require her to prove reliance in cases of material nondisclosure
because of the difficulty of proving reliance on information not present. Instead,
she claimed reliance can be inferred. Even so, the vast majority of the class of
15
plaintiffs did not participate in the decision to place Tamko shingles on their
house. Therefore, there could be no reasonable inference of reliance on the part
of these individuals.
Barnhill’s numerous statements to the court as to the
participation of the individual class members in selecting the shingles for their
homes was often times unsupported by the facts. As this court noted when this
case was before it, there were only three plaintiffs who stated they had seen a
product brochure. Sharp, No. 02-0728 (Iowa Ct. App. Nov. 15, 2004). The facts
fail to support the contention that the class of approximately seven hundred
people in any way relied on information provided by Tamko.
C. Negligent Misrepresentation
The district court found three reasons why Barnhill’s claim of negligent
misrepresentation was a violation of rule 1.413: (1) The law is clear that no claim
of negligent misrepresentation could be enforced against Tamko or Humphreys
because claims of negligent misrepresentation apply only to persons who are in
the business of supplying information; (2) Even if Humphreys is personally guilty
of making negligent misrepresentations, he is not personally in the business of
selling shingles or information regarding those shingles; and (3) Barnhill cannot
prove plaintiffs’ reliance on the information.
Barnhill claims the court’s reliance on Meier v. Alfa-Laval, Inc., 454
N.W.2d 576 (Iowa 1990), is misplaced. Specifically, she notes that Meier does
not specifically hold that a manufacturer can never be liable for negligent
misrepresentation. We agree with the district court that the Meier case clearly
precluded
Tamko
and
Humphreys
from
being
liable
for
negligent
misrepresentation because they were not in the business of supplying
16
information. In Meier the Iowa Supreme Court found that the law warranted a
claim of negligent misrepresentation against neither the seller nor the
manufacturer of a product because neither was in the business of supplying
information. Meier, 454 N.W.2d at 582. Research of Iowa law suggests no other
theory of holding a manufacturer liable for negligent misrepresentation.
D. Rescission
The rescission claims made against Humphreys are obviously contract
claims and were invalid for the same reasons as the warranty claims. These
reasons have been sufficiently set out above and in the district court’s ruling.
Therefore, no further analysis is required.
E. Violation of Missouri Statute
Even though Barnhill points out that violation of the Missouri statute was
never pled against Humphreys, he was in fact required to defend against the
claim. In her resistance to defendants’ motion for summary judgment filed with
the court, Barnhill concluded that “material facts exist which impose personal
liability on Defendant Humphreys and preclude summary judgement in favor of
Defendant Humphreys on the issue of violation of the Missouri Unfair Business
Practices Act.”
Barnhill argues that the jurisdiction and venue requirements of the
Missouri statute could be read to require only that the challenge be brought in
any court in which the transaction took place.
This is not a reasonable
interpretation of the statute.
Even giving Barnhill the benefit of the doubt that it was proper to pursue
some of the claims she raised, she still made additional claims against
17
Humphreys that were not supported by the law and facts and thus not proper.
Humphreys was forced to defend himself against these improper claims. The
district court, therefore, did not abuse its discretion in granting Humphreys motion
for sanctions and subsequently sanctioning Barnhill $25,000.
AFFIRMED.
Miller, J., concurs; Vaitheswaran, J., dissents.
18
VAITHESWARAN, J. (dissenting)
I respectfully dissent. Plaintiffs’ counsel named the president of Tamko
individually on the ground that he “directed and controlled” the actions of Tamko.
Subsequent filings articulated her view that Mr. Humphreys “directed, authorized,
or participated” in the claimed conduct. This allegation finds support in Iowa law.
See Haupt v. Miller, 514 N.W.2d 905, 907 (Iowa 1994) (“As a general rule,
corporate officers are individually liable to third parties for their torts, even when
occurring while they act in their official corporate capacity” and “To maintain a tort
claim against a director in his or her personal capacity, a plaintiff must first show
that the director specifically authorized, directed or participated in the allegedly
tortious conduct.”).
Therefore, I believe the fourth amended petition was
“grounded in fact” and “warranted by existing law or a good faith argument for
extension, modification, or reversal of existing law.” Iowa R. Civ. P. 1.413(1).
In reaching this conclusion, I have considered defense counsel’s assertion
that plaintiffs’ counsel may have made unsubstantiated verbal statements to the
court. I believe this assertion is irrelevant to the sanctions analysis. See Mathias
v. Glandon, 448 N.W.2d 443, 447 (Iowa 1989); Mark S. Cady, Curbing Litigation
Abuse and Misuse: A Judicial Approach, 36 Drake L. Rev. 483, 496 (1986-87)
(“misstatements of law, failure to disclose directly adverse authority and omission
of critical facts may violate an attorney’s code of ethics, but they do not violate an
attorney’s duty to make a legal inquiry under the rule unless no ‘plausible good
faith argument’ is advanced”) (citation omitted).
I have also considered defense counsel’s critique of the factual allegations
against Mr. Humphreys, including the choice of words in those allegations.
19
Given our state’s emphasis on notice-pleading, “[t]he lack of factual specificity in
the pleadings must not be used as the gauge in determining a violation of the
standard.” Cady, 36 Drake L. Rev. at 494.
Nor is it relevant that the plaintiffs were ultimately unsuccessful in their
efforts to pin liability on Mr. Humphreys. Id. at 492 (“The rule does not establish
a standard which results in sanctions simply because the factual claim later falls
victim to summary adjudication.”). While certain counts of the fourth amended
petition were weaker on the merits than others, “the duty [under rule 1.413] is not
breached when merely one argument or sub-argument behind a valid pleading or
motion is without merit.” Id. at 496.
Rule 1.413 recognizes the right of attorneys to make good faith arguments
for modification of existing law. To that end,
Close scrutiny of an attorney’s duty under the rule can have the
effect of stifling legal creativity, repressing vigorous advocacy,
multiplying expansive satellite litigation over sanctions, and creating
a danger of arbitrary and inconsistent enforcement. The rule was
not intended to chill an attorney’s enthusiasm or creativity in
pursuing legal or factual theories.
Id. at 495 (citation omitted).
There is no question “the line between an abusive claim and zealous
advocacy can be extremely fine.”
Id. at 497.
I am not convinced plaintiffs’
counsel crossed that line. Accordingly, I would reverse the sanctions rulings.
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