Sharece Rucker v. Mike Taylor and Sherie Taylor , 2013 Iowa Sup. LEXIS 27 ( 2013 )

IN THE SUPREME COURT OF IOWA
No. 11–1394
Filed March 22, 2013
SHARECE RUCKER,
Appellee,
vs.
MIKE TAYLOR and SHERIE TAYLOR,
Appellants.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Black Hawk County,
David F. Staudt, Judge.
Interlocutory review from denial by the district court of motion to
dismiss. DECISION OF COURT OF APPEALS AND JUDGMENT OF
DISTRICT COURT AFFIRMED; CASE REMANDED.
Sarah M. Kouri of the Law Office of Scott J. Idelman, Des Moines,
for appellants.
Hugh M. Field and Kate B. Mitchell of Beecher, Field, Walker,
Morris, Hoffman & Johnson, P.C., Waterloo, for appellee.
2
CADY, Chief Justice.
In this interlocutory review, we must decide if good cause existed
to excuse untimely service of process when the plaintiff, who failed to
negotiate an enforceable agreement with the defendant’s insurance
representative to delay service, took no action to institute service of
process of a lawsuit on the defendant within the time period required by
Iowa Rule of Civil Procedure 1.302(5). The district court held good cause
existed and denied defendant’s motion to dismiss. We transferred the
case to the court of appeals, and they affirmed. On further review, we
affirm the decision of the court of appeals and the judgment of the
district court. We remand for further proceedings.
I. Background Facts and Proceedings.
Sharece Rucker was involved in an automobile accident with Mike
and Sherie Taylor on January 15, 2009. Rucker sought legal assistance
from attorney Hugh Field to pursue a claim against the Taylors to recover
compensation for injuries she suffered from the accident. Field
corresponded with a claims representative for the Taylors’ insurance
company for the purpose of settling the claim. The correspondence was
primarily directed at updating the claims representative on Rucker’s
injuries and treatment status and was exchanged between April 3, 2009,
and December 8, 2010.
On December 8, 2010, Field sent a formal settlement demand
letter to the insurance company. On December 20, claims representative
Brent Kneip responded to the letter with a counteroffer for settlement.
On December 22, Field mailed a letter to Kneip stating in part:
We are filing the enclosed Petition at Law for [Sharece
Rucker], but will wait to serve it until our negotiations break
down. I will give you 21 days thereafter to seek counsel and
defend.
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I don’t see any reason why we shouldn’t be able to
work out a settlement.
Kneip did not respond to the December 22 letter.
On December 29, Rucker commenced an action against the Taylors
by filing a petition in district court as forecasted in the December 22
letter. See Iowa R. Civ. P. 1.301(1). Pursuant to court rules, she was
obligated to serve the Taylors with notice of the lawsuit within ninety
days. See id. r. 1.302(5). Rucker took no action to satisfy this
requirement, also as forecasted in the letter.
Instead, on January 13, 2011, Field sent another letter to Kneip,
enclosing some employment and medical records concerning Rucker.
Kneip responded to this letter on January 31. He thanked Field for the
January 13 letter and requested additional medical records. Nothing
was said about the December 22 proposal.
Nevertheless, Field and Kneip continued to negotiate during
February and March, periodically exchanging offers of settlement. Kneip
sent a settlement offer to Field on March 4, and Field made a
counteroffer in a letter dated March 16.
The next communication between the parties was a letter from
Field to Kneip on April 19. It requested an update on his March 16
settlement offer.
On March 29, the ninety-day period for service elapsed. On
April 4, a district court administrator notified Field that no proof of
service had been filed. The notice scheduled a conference to determine
the status of the action for April 26. Rucker then promptly served the
Taylors with original notice and a copy of the petition on April 13 and
April 15.
4
The Taylors subsequently filed a motion in district court to dismiss
the petition for failure to accomplish timely service of process. Following
a hearing on the motion, the district court denied the motion, stating:
The court finds that good cause exists for Plaintiff’s
failure to serve Defendants with notice of the lawsuit. The
court finds that good cause, in this case, as the claims
representative took advantage of the Plaintiff’s straight
forward offer to hold off serving the notice of the lawsuit in
return for the exchange of additional information and
continued settlement negotiations. From the affidavits and
the argument of counsel, it appears to the court Plaintiff’s
attorney clearly was operating under the assumption that by
continuing to correspond, negotiate, and exchange
documentation, Plaintiff’s counsel believed the allied claims
representative had accepted and/or acquiesced in Plaintiff’s
offer to hold off service pending negotiations.
The Taylors sought interlocutory review, and we transferred the
case to the court of appeals. The court of appeals affirmed the decision
of the district court. It rejected the Taylors’ argument that good cause
did not exist for failure to accomplish timely service of process because
no express agreement existed between the parties to suspend service.
The Taylors sought and were granted further review. They argued
that no agreement, either express or implied, was formed to justify the
failure to accomplish timely service. They asserted Rucker made no offer
that could create a contract to delay service of process because the
December 22 letter from Field never explicitly mentioned the ninety-day
service deadline, and Kneip was not a lawyer trained in the particulars of
court rules to understand the legal requirements of service of process.
Additionally, they argued Kneip never accepted any offer, and to hold
otherwise would impose an unfair affirmative duty on claims
representatives of insurance companies to respond to claimants’
attorneys making proposals to delay timely service. They argued this
5
duty would bind insurance companies to agreements they did not want
and did not expressly accept.
In response, Rucker asserted the parties formed an implied
agreement by continuing to negotiate after the proposal was made. She
also argued good cause existed to extend time for service because the
conduct of the insurance claims representative in continuing to negotiate
after the December 22 letter misled her attorney into believing the
Taylors would not seek a dismissal for failing to accomplish timely
service.
II. Scope of Review.
We review decisions by the district court to grant a motion to
dismiss for correction of errors at law. Crall v. Davis, 714 N.W.2d 616,
619 (Iowa 2006); see also Iowa R. App. P. 6.907. Ordinarily, the
pleadings in the case form the outer boundaries of the material subject
to evaluation in a motion to dismiss. Wilson v. Ribbens, 678 N.W.2d 417,
418 (Iowa 2004). As a consequence, district courts generally do not
consider facts outside the pleadings in evaluating a motion to dismiss.
Id. An exception to this rule exists when the grounds for the motion are
based on an alleged failure to provide timely service within the required
time frame. Carroll v. Martir, 610 N.W.2d 850, 856 (Iowa 2000). In such
a case, like this case, a court is permitted to consider facts outside the
pleadings. See id.
When the district court makes findings of fact, those findings “are
binding on appeal unless not supported by substantial evidence.”
McCormick v. Meyer, 582 N.W.2d 141, 144 (Iowa 1998). We are not
bound, however, by either the legal conclusions or application of legal
principles reached by the district court. Dennis v. Christianson, 482
N.W.2d 448, 450 (Iowa 1992).
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III. Discussion.
On many occasions in the past, we have interpreted the “good
cause” standard for justifying the failure to timely serve the original
notice and petition following the filing of a lawsuit. See, e.g., Crall, 714
N.W.2d at 620–21; Wilson, 678 N.W.2d at 620–22; Meier v. Senecaut, 641
N.W.2d 532, 541–43 (Iowa 2002); Henry v. Shober, 566 N.W.2d 190, 192–
93 (Iowa 1997); Alvarez v. Meadow Lane Mall Ltd. P’ship, 560 N.W.2d
588, 591 (Iowa 1997). Each occasion has given us the opportunity to
add greater clarity and meaning to the operative phrase “good cause”
found in our rule governing service. This case presents another
opportunity to interpret the rule, which follows the nature of the larger
process of judicial interpretation. No rule or statute can be written to
clearly direct the outcome of all circumstances to come, and it is the task
of courts to interpret enactments on a case-by-case basis. Thus,
decisions of courts interpreting rules and statutes in the context of the
facts of individual cases contribute to the growing understanding of the
rule or statute.
We begin by putting our service rule in perspective. A civil action
is commenced upon the filing of a petition in district court. Iowa R. Civ.
P. 1.301(1). Our rules of procedure then require a plaintiff to serve the
defendant with process within ninety days of filing the petition or risk
dismissal either upon motion of the defendant or on the initiative of the
court. Id. r. 1.302(5). The rule specifies in pertinent part:
If service of the original notice is not made upon the
defendant . . . within 90 days after filing the petition, the
court, upon motion or its own initiative after notice to the
party filing the petition, shall dismiss the action without
prejudice as to that defendant . . . . If the party filing the
papers shows good cause for the failure of service, the court
shall extend the time for service for an appropriate period.
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Id.
Although the wording of the rule does not expressly permit a
defendant who was served beyond the ninety-day period to move for
dismissal, we have held a defendant may move for dismissal. See Meier,
641 N.W.2d at 541–42. Our prior cases also suggest the rule impliedly
enables a plaintiff to assert good cause for delay in service in a resistance
to a motion to dismiss. See id. at 542–43 (examining plaintiff’s assertion
of good cause after court granted defendant’s motion to dismiss); Wilson,
678 N.W.2d at 419–23 (same).
Regarding a showing of good cause, we have said:
“[T]he plaintiff must have taken some affirmative action to
effectuate service of process upon the defendant or have
been prohibited, through no fault of his [or her] own, from
taking such an affirmative action. Inadvertence, neglect,
misunderstanding, ignorance of the rule or its burden, or
half-hearted attempts at service have generally been waived
as insufficient to show good cause. Moreover, intentional
nonservice in order to delay the development of a civil action
or to allow time for additional information to be gathered
prior to ‘activating’ the lawsuit has been held to fall short of
[good cause].”
Henry, 566 N.W.2d at 192–93 (quoting Vincent v. Reynolds Mem’l Hosp.,
Inc., 141 F.R.D. 436, 437–38 (N.D.W.Va. 1992)).
We elaborated on this definition in Wilson, stating:
“[G]ood cause is likely (but not always) to be found when the
plaintiff’s failure to complete service in timely fashion is a
result of the conduct of a third person, typically the process
server, the defendant has evaded service of the process or
engaged in misleading conduct, the plaintiff has acted
diligently in trying to effect service or there are
understandable mitigating circumstances. . . .”
Wilson, 678 N.W.2d at 421 (quoting 4B Charles A. Wright & Arthur R.
Miller, Federal Practice and Procedure § 1137, at 342 (3d ed. 2002)).
8
This elaboration in Wilson illustrates the influence of the facts of
each case in the interpretive process. In Henry, the plaintiffs’ out-of-
state attorney was engaged in settlement negotiations with the
defendant’s insurance claims representative over plaintiffs’ claim for
injuries. 566 N.W.2d at 191. Eventually, faced with the expiration of the
statute of limitations, he contacted an Iowa attorney to file a lawsuit.
Henry, 566 N.W.2d at 191. The lawsuit was filed, but no action was
taken to pursue service of process. Id. Instead, the out-of-state attorney
continued to negotiate with the claims representative. See id. After
settlement negotiations broke down some time later and service was
accomplished, the defendant moved for dismissal for the failure by
plaintiffs to make timely service of process. Id.
We affirmed the decision of the district court to dismiss the case.
Id. at 193. We held that the defendant’s insurance representative’s
knowledge that the petition had been filed and continued settlement
negotiations with plaintiff’s counsel did not establish good cause. Id. at
192–93. We found good cause based on these circumstances would
undermine the purpose of the rule to move cases along in the court
system once they had been filed. See id. at 193.
On the other hand, in Wilson, the parties sought to form an
agreement to delay service for the purpose of continuing their settlement
negotiations, which they memorialized in a pair of letters exchanged
shortly after the plaintiff filed a petition in district court. 678 N.W.2d at
418–19. After a long period of negotiations and an exchange of medical
records, negotiations broke down and the defendant sought dismissal
based on untimely service, which the district court granted. Wilson, 678
N.W.2d at 419.
9
Although the plaintiff in Wilson, as in Henry, purposely did not
timely serve the defendant because of the ongoing, good-faith settlement
negotiations between the parties, we found, unlike in Henry, good cause
could exist. Id. at 422. We reached this conclusion, even though the
conduct of the parties—the agreement to delay service—undermined the
underlying purpose of the service rule to move cases along, as in Henry.
See id. at 423 (“[T]he court system has a keen interest, notwithstanding
the wishes of the parties, to keep the wheels of justice in motion.”). We
found the additional fact in Wilson of an agreement between the parties
to delay service could support good cause. Id. at 422. Thus, we
implicitly modified Henry’s conclusion, holding good-faith settlement
negotiations can satisfy the good-cause standard when accompanied by
an agreement between the parties to delay service. See id.
Yet, our holding in Wilson was not predicated on the enforceability
of the agreement. See id. (“[W]e remain highly skeptical of the utility of
agreements delaying service . . . .”). In fact, we referred to the agreement
as an “alleged agreement.” Id. Instead, Wilson expanded the scope of
good cause in two ways. First, the case directed an inquiry into the role
of the corresponding conduct of the parties in causing the plaintiff to fail
to timely serve the defendant. See id. Second, the case injected
consideration of the principles of estoppel that seek to prevent unjust
results. See id. at 423.
For sure, courts can always enforce the service rule on their own
initiative to achieve its purposes, independent of the course of conduct of
the parties. See Iowa R. Civ. P. 1.302(5). Additionally, a defendant may
also uphold the purpose of the service rule by moving to dismiss for
untimely service. See Meier, 641 N.W.2d at 541–42. But, in both
instances, good cause must be considered in deciding to dismiss a
10
petition for untimely service, and Wilson informs us that this standard
considers all the surrounding circumstances, including circumstances
that would make it inequitable for a defendant to successfully move to
dismiss. See 678 N.W.2d at 422–23. In Henry, it was not inequitable for
the defendant to move to dismiss when his insurance representative only
continued to negotiate a settlement and did nothing to make the plaintiff
think service was unnecessary. See 566 N.W.2d at 191, 192–93. In
Wilson, it was inequitable for the defendant to move to dismiss after
allegedly agreeing to delay service. See 678 N.W.2d at 422. In the end,
the results of both cases are consistent with our long-standing approach
that dismissal for failing to timely accomplish service of process is
appropriate when the failure results from “ ‘[i]nadvertence, neglect,
misunderstanding, ignorance of the rule or its burden, or half-baked
attempts at service.’ ” See id. at 421 (quoting Henry, 566 N.W.2d at 192–
93).
Of course, this case would be quickly resolved on the basis of stare
decisis if Rucker’s attorney and the Taylors’ insurance claims
representative had entered into an express agreement, as was done in
Wilson. Rucker, nevertheless, argues the same result is achieved with an
implied agreement. We agree with Rucker that the holding in Wilson
applies equally to implied agreements.
We have said of implied contracts:
A contract may be express or implied. When the parties
manifest their agreement by words the contract is said to be
express. When it is manifested by conduct it is said to be
implied in fact. Both are true contracts formed by a mutual
manifestation of assent by the parties to the same terms of
the contract. The differentiation arises from the method of
proving the existence thereof.
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Ringland-Johnson-Crowley Co. v. First Cent. Serv. Corp., 255 N.W.2d 149,
152 (Iowa 1977); accord Cassaday v. De Jarnette, 251 Iowa 391, 397,
101 N.W.2d 21, 25 (1960); see also Newman v. City of Indianola, 232
N.W.2d 568, 574 (Iowa 1975) (holding that a request to the city that it
service 500 feet of land manifested assent to pay reasonable costs for
service); Restatement (Second) of Contracts § 4 (1981) (“A promise may
be stated in words either oral or written, or may be inferred wholly or
partly from conduct.”).
Or, as the Restatement (Second) of Contracts states:
Contracts are often spoken of as express or implied. The
distinction involves, however, no difference in legal effect,
but lies merely in the mode of manifesting assent. Just as
assent may be manifested by words or other conduct,
sometimes including silence, so intention to make a promise
may be manifested in language or by implication from other
circumstances, including course of dealing or usage of trade
or course of performance.
Restatement (Second) of Contracts § 4 cmt. a at 14; see also 1 Joseph M.
Perillo, Corbin on Contracts § 1.19, at 55, 57–58 (rev. ed. 1993).
Yet, “[a]n implied-in-fact contract requires mutual manifestation of
assent.” Nichols v. City of Evansdale, 687 N.W.2d 562, 574 (Iowa 2004).
Mutual assent is ordinarily manifested through offer and acceptance,
within our contract principles. See Anderson v. Douglas & Lomason Co.,
540 N.W.2d 277, 285 (Iowa 1995); see also Restatement (Second) of
Contracts § 22(1) (“The manifestation of mutual assent to an exchange
ordinarily takes the form of an offer or proposal by one party followed by
an acceptance by the other party or parties.”).
We objectively analyze whether a contract has been formed.
Anderson, 540 N.W.2d at 285. “ ‘The standard is what a normally
constituted person would have understood [the words] to mean, when
used in their actual setting.’ ” Id. at 286 (quoting N.Y. Trust Co. v. Island
12
Oil & Transp. Corp., 34 F.2d 655, 656 (2d Cir. 1929)) (alteration in
original). In other words, “[t]he test for an offer is whether it induces a
reasonable belief in the recipient that he can, by accepting, bind the
sender.’ ” Id. (quoting Architectural Metal Sys., Inc. v. Consol. Sys., Inc.,
58 F.3d 1227, 1229 (7th Cir. 1995)).
Additionally, it is important to recognize for the purposes of this
case that “[e]ven though a manifestation of intention is intended to be
understood as an offer, it cannot be accepted so as to form a contract
unless the terms of the contract are reasonably certain.” Restatement
(Second) of Contracts § 33(1) at 92. “The fact that one or more terms of a
proposed bargain are left open or uncertain may show that a
manifestation of intention is not intended to be understood as an offer or
as an acceptance.” Id. § 33(3) at 92; see also Anderson, 540 N.W.2d at
286; Architectural Metal Sys., 58 F.3d at 1229 (“A lack of essential detail
would negate . . . a belief [that an acceptance could bind the offeror],
since the sender could not reasonably be expected to empower the
recipient to bind him to a contract of unknown terms.”).
Applying these principles, we conclude there was no implied
contract in this case to apply the Wilson holding. The December 22 letter
fell short of an offer to modify the ninety-day service requirement. The
letter contained only a vague allusion suggesting that service would
occur at some point in the future once negotiations fail. But, it was too
vague to constitute an offer to alter the rule by delaying service in
exchange for a promise not to seek a dismissal.
Furthermore, we recognize that silence does not normally
constitute an acceptance of an offer. See Prestype Inc. v. Carr, 248
N.W.2d 111, 120 (Iowa 1976). Here, the insurance claims representative
took no action to accept any offer. We recognize that exceptions to the
13
general rule exist, but none are applicable to this case. See Restatement
(Second) of Contracts § 69 at 164.
With no express or implied contract to serve as the basis for good
cause, we return to consider whether the circumstances of this case can
nevertheless satisfy the good-cause standard of rule 1.302(5). We begin
by reiterating that Wilson does not require proof of an enforceable
contract before good-faith settlement negotiations can support a finding
of good cause. See 678 N.W.2d at 422. Instead, good cause requires an
examination of all of the surrounding facts to determine if they reveal
“understandable mitigating circumstances.” See id. at 421, 422 (citation
and internal quotation marks omitted).
With respect to the conduct of Rucker in this case, we observe that
her attorney, Field, communicated his plan to purposely delay service of
process to the Taylors’ insurance representative, unlike the plaintiff in
Henry, but like the plaintiff in Wilson. Compare Henry, 566 N.W.2d at
191, with Wilson, 678 N.W.2d at 419. With respect to the conduct of the
Taylors in this case, their insurance representative had actual knowledge
that Rucker’s attorney did not intend to timely serve process, unlike the
defendant in Henry, but like the defendant in Wilson. Compare Henry,
566 N.W.2d at 191, with Wilson, 678 N.W.2d at 419. In Henry, the
defendant was only aware that the petition had been filed, not that the
plaintiff would not be pursuing timely service of process. 566 N.W.2d at
192. Thus, this case is much closer to Wilson than Henry, both on the
facts and the underlying critical rationale to avoid an unjust result.
Importantly, the action by the insurance representative in this case
in continuing to negotiate with Rucker’s attorney with knowledge that
Rucker did not plan to timely serve the petition made it inequitable for
the Taylors to subsequently seek dismissal of the case after an inquiry by
14
the court administrator into the absence of service prompted Rucker to
serve the Taylors. While mere knowledge by the insurance representative
of the existence of a lawsuit is not relevant to the good-cause
determination, see Henry, 566 N.W.2d at 192, knowledge by the
insurance representative in this case that Rucker’s attorney did not plan
to pursue timely service is relevant under the circumstances. This
knowledge would have informed the insurance representative that his
continued negotiations would help to reinforce expectations by Rucker’s
attorney that he did not need to take action to comply with the service
rule.
The Taylors were not obligated to respond to the plan by Rucker to
delay service. Yet, their actions in not responding to his plan and
continuing to negotiate with knowledge that Rucker was going to delay
service made it “understandable” for Rucker not to timely serve, and
these actions brought the doctrine of estoppel into play to make it
inequitable for the Taylors to seek a dismissal under the circumstances.
By engaging in the precise conduct attorney Field requested under his
plan, the Taylors insurance representative gave Field an impression the
plan was acceptable.
Because the substantive rights of a plaintiff can be at stake
through the application of a statute of limitations, it is important that the
good-cause standard under rule 1.302(5) not be applied too narrowly. As
observed under the analogous federal rule,
[a] dismissal without prejudice under Rule 4(m) for failure to
serve process is intended to leave the plaintiff in the same
position as if the action never had been filed. This raises a
difficult question when the statute of limitations has expired
between the filing of the complaint and the dismissal of the
action for noncompliance with Rule 4(m). Although
technically the dismissal is without prejudice, realistically if
the plaintiff's action is now barred by the running of the
15
limitations period his or her rights have effectively been
terminated.
4B Wright & Miller § 1137, at 399. Indeed, the 1993 advisory
committee’s note to Federal Rule 4(m) states that “[r]elief may be justified
. . . if the applicable statute of limitations would bar the refiled action.”
Fed. R. Civ. P. 4(m) advisory committee’s note. Federal courts thus
consider as a factor in their determination whether a dismissal would
ultimately be prejudicial to the plaintiff, particularly when the delay in
service is a result of misleading conduct by the defendant. See Ditkof v.
Owens-Illinois, Inc., 114 F.R.D. 104, 105 (E.D. Mich. 1987). Because our
rule is exceedingly similar to Rule 4(m), we find federal court
interpretations persuasive. Wilson, 678 N.W.2d at 420–21.
Moreover, one federal court has noted that the time limit for
service was not meant to be “enforced harshly and inflexibly.” See United
States v. Ayer, 857 F.2d 881, 885–86 (1st Cir. 1988). Indeed, it was
intended “to be a useful tool for docket management, not an instrument
of oppression.” Id.; accord Floyd v. United States, 900 F.2d 1045, 1049
(7th Cir. 1990). Therefore, federal courts limit the “harsh sanction” of
dismissal (even a nonprejudicial one) to cases “in which non-service was
the result of mere inadvertence.” D’Amario v. Russo, 750 F. Supp. 560,
563 (D.R.I. 1990) (citation and internal quotation marks omitted).
IV. Conclusion.
We conclude the district court did not commit legal error by
concluding good cause existed for the failure to accomplish timely service
of process. We affirm the decision of the court of appeals and the
judgment of the district court.
DECISION OF COURT OF APPEALS AND JUDGMENT OF
DISTRICT COURT AFFIRMED; CASE REMANDED.
All justices concur except Waterman and Mansfield, JJ., who
dissent.
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#11–1394, Rucker v. Taylor
WATERMAN, Justice. (dissenting).
I respectfully dissent. Today’s majority effectively overrules our
precedent requiring the defendant’s agreement or misleading conduct
amounting to an estoppel to extend Iowa Rule of Civil Procedure
1.302(5)’s ninety-day deadline to serve suit papers and replaces that
clear, bright-line rule with an amorphous standard. A party may now
evade the ninety-day service requirement without an agreed extension
simply by negotiating and sending a letter the majority acknowledges
contained only a vague allusion suggesting that service
would occur at some point in the future once negotiations
fail. But, it was too vague to constitute an offer to alter the
rule by delaying service in exchange for a promise not to
seek a dismissal.
Under our existing precedent, exceeding the ninety-day deadline
was deemed to be presumptively abusive and shifted the burden to the
plaintiff to show justification. See Meier v. Senecaut, 641 N.W.2d 532,
542 (Iowa 2002). We had also made it clear that settlement
negotiations—even if done in good faith—were not an adequate
justification. See Henry v. Shober, 566 N.W.2d 190, 193 (Iowa 1997).
However, an agreement to extend service could be an adequate
justification. See Wilson v. Ribbens, 678 N.W.2d 417, 422–23 (Iowa
2004). We have also indicated that conduct by the defendant amounting
to a waiver or estoppel could be an adequate justification. See id. at 423.
This framework, I believe, provided clear guidance to the bar and
to district courts. The majority now casts aside that framework and
substitutes a new, circular approach under which “good cause” can be
shown by “an examination of all of the surrounding facts to determine if
they reveal ‘understandable mitigating circumstances,’ ” quoting Wilson
17
without acknowledging the court was referring to an agreement to delay
service. See id. at 421. With respect, it is not a workable standard to
allow unspecified “understandable mitigating circumstances” to excuse
untimely service in the absence of an agreed extension.
We squarely held in Henry that “settlement negotiations, even if
done in good faith, do not constitute adequate justification or good cause
for delaying service.” 566 N.W.2d at 193. We aptly observed:
If we were to allow delays in service for ongoing
settlement negotiations, plaintiffs would have no incentive to
serve the defendant within a reasonable time. Further, we
do not see how service of the original notice and petition is a
hindrance to the settlement process. Prompt service allows a
defendant to investigate the claims and prepare its defense,
thus contributing to its evaluation of a case. If the parties
wish to continue settlement discussions beyond the
limitations period, the plaintiff should secure a statute of
limitations extension, in writing, from the defendant and the
defendant’s insurer.
Henry, 566 N.W.2d at 193. What has changed?
In Wilson, we reiterated that “good-faith settlement negotiations
standing alone do not constitute good cause for delays in service beyond
the ninety-day limit.” 678 N.W.2d at 422. We noted the Henry rule “is
consistent with the decisions of a number of other courts, federal and
state, applying Federal Rule of Civil Procedure 4(m) or similar state
rules.” Wilson, 678 N.W.2d at 422 (surveying authorities). Indeed, a
federal district court recently echoed our observations in Henry:
Moreover, this Court rejects the basic premise that
negotiations to resolve an action can constitute good cause
for failing to serve. The Federal Rules of Civil Procedure
provide clear, fixed dates by which action must be taken for
many salutary purposes. Opposing parties have the benefit
of being able to know (or at least predict) when action will be
taken against them; clients have the assurance that their
counsel will be required to afford timely attention to their
case; and the court system is assured that parties will not
“reserve a table” by filing a complaint, and then negotiate
18
endlessly at their leisure while the court’s docket becomes
crowded with aging, dormant cases.
Rees v. Bd. of Cnty. Comm’rs, Civ. Action No. 07-CV-00230-MSK-KLM,
2008 WL 3285256, at *2 (D. Colo. Aug. 7, 2008).
In Wilson, we held that an agreement to delay service may
constitute “good cause” under rule 1.302. 678 N.W.2d at 422. That
unanimous opinion began by acknowledging “[t]he judicial system has a
keen interest in the prompt and effective administration of justice.”
Wilson, 678 N.W.2d at 418. We expressed skepticism “of the utility of
agreements delaying service or extending the statute of limitations in
pending litigation in the hope of settlement.” Id. at 422. But, we
acknowledged that some federal courts found good cause for delay “if the
parties had entered into an agreement to extend the service period.” Id.
We noted it would be “highly misleading” for an insurer to agree to an
extension and then file a motion to dismiss for untimely service. Id.
That is not what happened with Rucker. Our decision in Wilson made
clear that settlement negotiations alone, in the absence of defendant’s
agreement to extend the deadline, fell short of establishing good cause
for delayed service. Id.
The majority cites no intervening change in the law or trend in the
decisions of federal courts or other states applying equivalent rules. Nor
does the majority contend that requiring an agreed extension in lieu of
timely service has proven with experience to be unfair or impractical. To
the contrary, I believe the common practice is to either accomplish
service within ninety days or secure an agreed extension. Indeed,
Rucker’s counsel candidly stated he expected to be “chewed out” at oral
argument before our court for his failure to get an “explicit” agreement to
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delay service. There is no good reason to undermine the clarity of rule
1.302(5) or abandon our precedent here.
It nearly goes without saying that the doctrine of stare
decisis is one of the bedrock principles on which this court is
built. It is an important restraint on judicial authority and
provides needed stability in and respect for the law.
Kiesau v. Bantz, 686 N.W.2d 164, 180 (Iowa 2004) (Cady, J., dissenting).
Stare decisis should carry special weight, I believe, when we are
interpreting our own rule. “If that rule is now found to be too harsh and
inelastic, we have reserved the power to ourselves . . . to amend it.”
Stolar v. Turner, 236 Iowa 628, 651, 19 N.W.2d 585, 595 (1945) (Smith,
J., dissenting). I recognize there is a tension between expediting
litigation and accommodating the desire of parties to engage in continued
settlement negotiations. However, if we are going to shift the balance in
this area, it makes far more sense to do so by promulgating a proposed
rule change and inviting public comment.1
The majority acknowledges there was no agreement, either
expressed or implied, to extend the time for service. Rucker never
contended that the defendant engaged in conduct that would amount to
an estoppel to excuse the untimely service. Nevertheless, the majority
says that dismissal is inequitable because of “the action by the insurance
representative in this case in continuing to negotiate with Rucker’s
attorney with knowledge that Rucker did not plan to timely serve the
petition”—essentially the argument we rejected in Henry. The majority
tries to distinguish Henry on grounds that the adjuster in that case was
unaware plaintiff’s counsel planned to delay service. Nothing in Henry
1Until now, we seemingly had landed in favor of moving cases along. “To do
otherwise permits cases to sit in the system growing whiskers, an unnecessary and
most undesirable result.” Wilson, 678 N.W.2d at 424.
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indicates that distinction made a difference. To the contrary, the Henry
court stated, “It is irrelevant whether or not State Farm knew the Henrys
intended to file a lawsuit.” 566 N.W.2d at 192. So, why would
knowledge regarding a plan to delay service of process matter? In any
event, we reiterated in Wilson—a case in which the insurer knew plaintiff
planned to delay service—that good-faith negotiations were insufficient to
excuse untimely service. Wilson, 678 N.W.2d at 422.
The majority also states, “The Taylors were not obligated to
respond to the plan by Rucker to delay service. Yet, their actions in not
responding to his plan and continuing to negotiate” make dismissal
“inequitable.” This strikes me as doubly incorrect. In the first place, we
are holding in this case that the insurer did have a duty to respond if it
wanted to be able to assert the ninety-day deadline for service. Second,
we are, in effect, shifting the burden that was previously on the plaintiff
to show “justification.” Meier, 641 N.W.2d at 542.
I prefer to see cases resolved on their merits, and I think there is
something to be said for amending our rule to conform to Federal Rule of
Civil Procedure 4(m). Under that rule, even if the plaintiff fails to show
“good cause” for not serving the defendant by the deadline, the district
court has discretion to extend the time for service. See Fed. R. Civ. P.
4(m) (providing that, if a defendant is not timely served, the court “must
dismiss the action without prejudice against that defendant or order that
service be made within a specified time” (emphasis added)). This would
have given the district court the flexibility to do what it did in this case.
A significant advantage of this approach is that it allows for some
play in the joints. District courts would have the ability either to afford
or to deny relief to the plaintiff in a case like this without being subject to
an appellate reversal. Unfortunately, under the majority’s approach, the
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legal rule is ill-defined and the district court has no discretion in
applying it. This seems to me likely to lead to increased appellate
litigation in this area.
For the foregoing reasons, I respectfully dissent.
Mansfield, J., joins this dissent.