Monroe Branstad v. State of Iowa Ex Rel., Natural Resources Commission and the Iowa Department of Natural Resources ( 2015 )

IN THE COURT OF APPEALS OF IOWA
No. 14-0205
Filed April 8, 2015
MONROE BRANSTAD,
Petitioner-Appellant,
vs.
STATE OF IOWA ex rel., NATURAL
RESOURCES COMMISSION and the IOWA
DEPARTMENT OF NATURAL RESOURCES,
Respondent-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Hancock County, Rustin T.
Davenport, Judge.
A petitioner appeals the district court’s refusal to award attorney fees in his
judicial review action against the Iowa Department of Natural Resources.
REVERSED AND REMANDED.
Christine E. Branstad of Branstad Law, P.L.L.C., Des Moines, and James
L. Pray of Brown, Winick, Graves, Gross, Baskerville, and Schoenebaum, P.L.C.,
Des Moines, for appellant.
Thomas J. Miller, Attorney General, David R. Sheridan, Assistant Attorney
General, and David L. Dorff, Assistant Attorney General Environmental Law
Division, for appellee.
Heard by Vogel, P.J., and Doyle and McDonald, JJ.
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VOGEL, P.J.
Monroe Branstad appeals the district court’s denial of his application for
attorney fees arising out of his judicial review petition. He claims the district court
incorrectly determined the exceptions to Iowa Code section 625.29 (2011),
applied to his case to preclude an award of attorney fees. He also claims the
district court should have concluded he was a “prevailing party” under that
statute. Because we find no exception applies to preclude the award of attorney
fees and conclude Branstad was the prevailing party, we reverse and remand to
the district court for a hearing to determine the amount of attorney fees Branstad
is entitled to recover.
I. Background Facts and Proceedings.
This action began with the discharge of sweet corn silage leachate from a
containment basin on Branstad’s property. The Iowa Department of Natural
Resources (the DNR) investigated the discharge and conducted a fish kill count
in the nearby Winnebago River. Branstad entered into a consent decree
admitting the discharge occurred but denied the discharge caused the fish kill in
the river and reserved the right to challenge any damage assessment. The DNR
issued a restitution assessment requiring Branstad to pay $61,794.49 in
restitution for killing over 31,000 fish. It extrapolated this number for the fish kill
based on its application of the American Fisheries Society Publication 24, which
estimates the number of fish killed based on sampling sites. However, only 2233
fish were actually counted.
Branstad appealed the restitution assessment, and the case proceeded to
an evidentiary hearing before an administrative law judge (ALJ) from the Iowa
3
Department of Inspections and Appeals. The ALJ issued a proposed decision
affirming the restitution assessment concluding “DNR personnel conducted an
investigation into the extent of the fish kill in accordance with the applicable rules
and procedures.” Branstad appealed this decision to the Iowa Natural
Resources Commission. In a vote of 4-to-1, the commission adopted the
proposed decision of the ALJ.
Branstad filed a petition for judicial review with the district court. The
district court articulated the claims made by Branstad as
(1) the agency erred by failing to consider the act-of-God defense;
(2) the agency erred by failing to find that the DNR incorrectly
applied the American Fisheries Society guidelines for fish kill
investigations; (3) the agency erred in finding causation; (4) the
statutes or rules relied upon by the agency are unconstitutionally
void for vagueness or are unconstitutional as applied; and (5) the
agency’s actions violate Branstad’s substantive and procedural due
process rights under the Fourteenth Amendment.
After receiving briefs from the parties, the district court issued its decision
rejecting Branstad’s act-of-God defense and causation challenge; however, the
court determined “the method used by the DNR to determine the number of dead
fish is inconsistent with its rules it adopted to implement Iowa Code [section]
481A.151(2).”1 The court reversed the agency’s decision and remanded the
case to the agency to recalculate the restitution owed based on the number of
dead fish actually counted. The agency ultimately issued a decision on remand
reducing the amount of restitution owed for the fish kill from $61,794.49 to
$5297.19. Branstad did not appeal this assessment.
1
Because the district court reversed the agency’s restitution assessment based on the
agency’s failure to comply with the guidelines it adopted, the court did not address
Branstad’s constitutional claims.
4
Branstad subsequently filed a motion for an award of attorney fees in the
judicial review action, asserting under Iowa Code section 625.29 he was entitled
to fees and expenses as the prevailing party and submitting an affidavit itemizing
the $70,720.19 claim. The district court denied the motion concluding three of
the exceptions in section 625.29 applied to preclude the award of attorney fees
and expenses. Branstad now appeals claiming the district erred in denying his
request.
II. Scope and Standard of Review.
Our review is for correction of errors at law. Iowa R. App. P. 6.907. We
must determine whether the district court correctly applied the applicable law with
respect to the award of attorney fees arising out of a judicial review action.
Medco Behavioral Care Corp. of Iowa v. State Dep’t of Human Servs., 553
N.W.2d 556, 561 (Iowa 1996).
III. Attorney Fees Under Section 625.29.
Iowa Code section 625.29 provides, in part and relevant to this appeal:
1. Unless otherwise provided by law, and if the prevailing
party meets the eligibility requirements of subsection 2, the court in
a civil action brought by the state or an action for judicial review
brought against the state pursuant to chapter 17A other than for a
rulemaking decision, shall award fees and other expenses to the
prevailing party unless the prevailing party is the state. However,
the court shall not make an award under this section if it finds one
of the following:
a. The position of the state was supported by substantial
evidence.
b. The state’s role in the case was primarily adjudicative.
c. Special circumstances exist which would make the award
unjust.
The district court did not address whether Branstad was a “prevailing
party” under this statute; instead, it relied on the exceptions found in (a) “The
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position of the state was supported by substantial evidence,” (b) “The state’s role
in the case was primarily adjudicative,” and (c) “Special circumstances exist
which would make the award unjust” to deny Branstad’s request for attorney
fees. The application of any one of these exceptions would suffice to deny
Branstad his claim for attorney fees and expenses. See Iowa Code § 625.29(1)
(“However, the court shall not make an award under this section if it finds one of
the following.” (emphasis added)). We first turn our attention to those
exceptions.
A. Substantial Evidence. In concluding substantial evidence supported
the State’s position, the district court noted the State was successful in proving
Branstad caused the fish kill, in defending against the act-of-God defense, and in
overcoming the challenges to the impact of the recent heavy rain and diverse fish
habitats on the fish kill count. The court noted the State only lost on the issue of
whether the fish kill count was conducted according to the American Fisheries
Society Special Publication 24, which then led to a substantial reduction in the
damages assessed.
In the underlying action, the State had for many years asserted the
publication was only a guideline and relied on the expertise of its biologist to
exercise his discretion in applying that publication to the unique circumstances of
each fish kill investigation. In support of its position, the State cited the language
of the publication that noted the methods “are guidelines only” and recommended
that fishery managers “use professional judgment and expertise to conduct
specific studies.” The advisory of the publication also noted that “[e]ach kill is
unique and requires some adaptation of the general methods.” The district court
6
noted that while it had concluded the counting method utilized by the DNR was
not authorized by the agency rules, “a reasonable mind could accept the DNR
fish count as an accurate number of dead fish. Accordingly, the fish count meets
the substantial evidence test.”
In his appeal, Branstad claims the district court failed to identify the
“position” of the State that was supported by substantial evidence. Branstad
maintains that the State’s overarching position was that he was liable for more
than $61,000 in restitution based on the fish kill investigation and faulty
calculation of 31,000 dead fish, when only 2233 had actually been counted. He
claims causation was not an issue before the court in light of the consent decree
in which he admitted the silage leachate escaped his containment basis which
led to an old county tile line, which led to a stream and a drainage ditch, which
led to the river. He likewise states the act-of-God defense and challenges to the
heavy rainfall event and diverse habitats were alternative explanations for the
number of dead fish inaccurately calculated by the DNR. Branstad asserts he
should not be penalized for asserting, but not prevailing, on his alternative
arguments. Branstad also claims the substantial evidence exception should not
be applied here because the primary issue of the case was a legal question—
whether the DNR followed the correct methodology when it counted the fish—not
a factual question.
Branstad’s claim that the consent decree resolved the causation issue is
not entirely accurate. The consent decree itself specifically provided that while
Branstad admitted there was a discharge from his property into the river, the
decree stated Branstad “denie[d] that the discharge admitted herein caused the
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death of the fish” and Branstad “further reserves the right to contest any claim for
damages brought by the DNR.” In Branstad’s petition for judicial review, he
asserted he was entitled to relief because the State “incorrectly and without any
basis in fact, assumes that all of the dead fish that were found were killed by a
release of contamination” and asserted he “did not cause the alleged fish kill or,
in the alternative, should not be assessed 100% of the fish kill.” The district court
articulated one of Branstad’s claims in its judicial review decision as “(3) the
agency erred in finding causation.” The court found that once the discharge was
remediated, the water quality improved and ultimately held substantial evidence
supported the agency’s finding of causation.
Similarly, Branstad’s act-of-God defense and his challenge to the fish kill
count based on the significant rain event and diverse fish habitats were also
raised in Branstad’s judicial review petition and addressed by the district court in
its decision. However, Branstad primarily attacked the faulty methodology
employed by the DNR to calculate the total number of dead fish and the
associated restitution assessed. Therefore, Branstad is correct to articulate the
State’s position as whether he was liable for more than $61,000 in restitution
based on the fish kill investigation. We must analyze whether the State’s position
in response to Branstad’s claim is sustained by substantial evidence.
Substantial evidence under Iowa Code section 625.29(1)(a) has been
defined as “evidence a reasonable mind could accept as adequate to reach a
conclusion.” In re Property Seized from McIntyre, 550 N.W.2d 457, 460 (Iowa
1996). We look only at the evidence supporting the State’s case, and a finding
can be supported by substantial evidence even though “two inconsistent
8
conclusions might be inferred from the same evidence.” Id. at 459–60.
“Substantial evidence is more than a scintilla of evidence, but it need not be a
preponderance of evidence.” Id. at 460. Branstad bears the burden to prove the
State’s position is not supported by substantial evidence. See id. at 459.
The district court held the methodology employed by the DNR to calculate
the total number of fish killed was flawed. The State’s argument in support of the
methodology it employed was that the American Fishery Societies’ publication
was only a “guideline” and that its employee was using his professional judgment
and expertise to adjust the methodology to the local conditions.
The district court, citing Iowa Code section 481A.151(2), disagreed, as the
enabling statute requires “rules” to be followed when investigating fish kills. The
district court found:
Although the language in AFS 24 discusses the rules as guidelines,
once the DNR adopted the AFS 24 as rules of the State of Iowa,
they were no longer guidelines. To allow the DNR to choose a
methodology contrary to the AFS 24 violates the requirement that
the rules should provide fair notice to the public, and that the rules
will be consistently applied. The actual method used by the DNR in
this case was not a method that was subject to review prior to the
adoption of the DNR regulations. Further, the DNR’s decisions
regarding sampling are contrary to the sampling methods that are
suggested by the AFS 24.
The DNR employed the “narrow streams accessible at and beyond road
crossings” methodology while Branstad argued it should have used the
“completely accessible streams” method. The court, finding the Winnebago
River to be navigable, agreed with Branstad. It further found that even the
incorrect method the DNR employed was not consistently followed in this
investigation, leading to even greater prejudice to Branstad.
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DNR failed to recognize the American Fisheries Society Publication 24
was not a guideline, but was in fact a regulation to follow, once it was adopted by
the agency. It also failed to correctly interpret its own regulation in order to select
the proper methodology to apply to a fish kill investigation on the Winnebago
River. In addition, it failed to even apply this incorrect methodology it had chosen
properly as the DNR investigator admitted to not following his own rules
regarding which sample cites to choose. We conclude substantial evidence does
not support the State’s position that Branstad was responsible for approximately
$61,000 in restitution for the fish kill event. Thus, contrary to the district court’s
finding, the substantial-evidence exception does not apply here to preclude an
award of attorney fees to Branstad.
B. Primarily Adjudicative. The district court also relied on the statutory
exception found in section 625.29(1)(b)—“The state’s role in the case was
primarily adjudicative”—to preclude an award of attorney fees to Branstad. The
court concluded the agency’s role “was to settle and decide issues raised by
[Branstad]” and that the agency “went far beyond fact finding and investigation.”
The court noted a full evidentiary hearing was held in front of an ALJ whose
decision was affirmed by the Iowa Natural Resource Commission. The district
court likened the case to Remer v. Board of Medical Examiners, 576 N.W.2d 598(Iowa 1998), and held the agency’s role was to determine whether the restitution
assessment was appropriate and consider Branstad’s defenses and alternate
theories of causation. Because the agency investigated and adjudicated
Branstad’s actions, the court applied the primarily adjudicatory exception to
preclude the award of attorney fees here.
10
In Remer, the supreme court concluded the board of medical examiners’
role was primarily adjudicative where “following a lengthy investigation, the board
filed formal disciplinary charges against Remer,” notice was served on Remer,
and “the case was contested in a full evidentiary hearing before a three-member
panel of the board.” 576 N.W.2d at 603. An ALJ assisted the three-member
panel in conducting the hearing. Id. While the charges brought against Remer
were ultimately dismissed, the court concluded the State’s role was still primarily
adjudicative as “[t]he panel of the board proceeded with a full evidentiary hearing
with all elements in place to effectuate an adjudication.” Id.To clarify when an agency’s role is primarily adjudicative versus
investigatory, the Remer court cited Citizens’ Aide/Ombudsman v. Rolfes, 454
N.W.2d 815, 817 (Iowa 1990). There the agency was found to serve primarily an
investigative function requesting and receiving information, and issuing
subpoenas to compel testimony and production of documents but was not
involved in adjudicating legal rights, duties, or privileges. Citizens’
Aide/Ombusdman, 454 N.W.2d at 817. The Remer court also cited the case of
Hannah v. Larche, 363 U.S. 420, 440-41 (1960), from the United States Supreme
Court, where that court noted the Civil Rights Commission’s duties consisted of
investigating allegations of discrimination, collecting information and reporting its
activities, findings, and recommendations to the President and Congress. The
Supreme Court noted the agency,
does not adjudicate. It does not hold trials or determine anyone’s
civil or criminal liability. It does not issue orders. Nor does it indict,
punish, or impose any legal sanctions. It does not make
determinations depriving anyone of his life, liberty, or property. In
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short, the Commission does not and cannot take any affirmative
action which will affect an individual’s legal rights.
Hannah, 363 U.S. at 441.
Branstad asserts the DNR’s role in this case was not adjudicative but
prosecutorial or executive. He distinguishes this case from Remer on a number
of grounds. He points out the DNR assessed restitution against him based on its
investigation prior to any adjudicative hearing on the merits of the case and
before Branstad could even participate in the process. He only received an
evidentiary hearing on the restitution because he appealed the assessment. In
contrast, the board of medical examiners in Remer only filed charges against
Remer after its investigation. 576 N.W.2d at 603. Remer was then provided an
opportunity to plead his case in a full evidentiary hearing, and it was only after
this hearing before the agency that any adverse action against Remer could be
taken. Id.Another point of distinction between Remer and this case involves the
tribunal who heard the evidentiary hearing and the personnel that prosecuted the
case. In Remer the hearing took place before a three-member panel of the
agency board, assisted by an ALJ. Id. The board’s panel issued its proposed
decision that became final when no appeal was taken. Id. The attorney general
prosecuted the case, not the agency’s personnel. Id. at 599. The hearing in
Branstad’s case took place before an impartial ALJ from the Iowa Department of
Inspections and Appeals, not before the DNR or the Iowa Natural Resource
Commission. The DNR—the very agency which issued the restitution
assessment—was the prosecutor in the action before the ALJ and neither the
12
DNR nor the Commission issued the decision. While the Iowa Natural Resource
Commission did vote to adopt the ALJ’s proposed ruling, the evidentiary hearing
did not take place before that agency.
While primarily adjudicative is not defined in the statute, the Remer court
determined, based on a dictionary definition, an agency’s role is primarily
adjudicative if the “agency’s function principally or fundamentally concerns
settling and deciding issues raised.” Id. at 601. In addition, pursuant to the
statute, we are look at the State’s role “‘in the case’ at bar, not its role in other
cases or as a general matter.” Id.The State asserts that the “State’s role” should be interpreted broadly to
include not only the DNR’s investigation and assessment, but also the ALJ’s
decision—as it was employed by the Iowa Department of Inspections and
Appeals—and the action taken by the Iowa Natural Resource Commission. See
Iowa Code § 625.29(1)(b) (“The state’s role in the case was primarily
adjudicative.” (emphasis added)). We are mindful that the exception should not
be interpreted to swallow the rule. See Remer, 576 N.W.2d at 604 (Carter, J.,
concurring specially) (“I write separately to stress that in my view all
administrative action that results in a contested case hearing does not
necessarily fall under that statute. Almost all administrative action that causes
adverse consequences to a party seeking attorney fees under section 625.29 will
have gone through a contested case hearing process. That is a necessary
consequence of the rule requiring exhaustion of administrative remedies. But,
this does not mean that the administrative action that is the subject of the
complaint was itself primarily adjudicative.”).
13
Here, the State was unable to articulate any agency action that would not
qualify as primarily adjudicative under its interpretation of this exception, and nor
can we. We will not interpret the statute so broadly. See Samuel A. Thumma
& Barbara J. Dawson, The Iowa Equal Access to Justice Act: Is Recovery
Available, 39 Drake L. Rev. 431, 450–51 (1989–90) (noting that if the “‘primarily
adjudicative’ exception” is broadly interpreted, it “would render the Iowa EAJA
totally ineffective.”); see also Citizens’ Aide/Ombudsman, 454 N.W.2d at 817(noting that agency action is characterized as “rule-making, contested case, and
other agency action” and determining the office of Citizens’ Aide is “other agency
action” as that agency’s functions include investigation and receipt of information
only).
We focus on the role of the DNR, and not the role of the ALJ, as the DNR
was the agency that investigated the fish kill and assessed the restitution against
Branstad, prior to any opportunity for a hearing, and then prosecuted the
administrative appeals. We conclude Remer is not controlling in this case as its
facts are sufficiently distinguishable. Instead, we conclude the facts here show
the State’s role was not primarily adjudicative as the DNR investigated and
prosecuted the case against Branstad. To contest the initial restitution
assessment, Branstad was left with filing an appeal in order to be entitled to an
evidentiary hearing, and that evidentiary hearing took place before an impartial
ALJ, not before the agency investigating the case. Because we conclude the
State’s role in this case was not primarily adjudicative, contrary to the district
court’s finding, we conclude this exception does not apply to preclude an award
of attorney fees to Branstad.
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C. Special Circumstances. Finally, the district court applied the
exception found in section 625.29(1)(c)—“Special circumstances exist which
would make the award unjust”—to preclude an award of attorney fees. The court
held the State clearly established Branstad’s actions caused the fish kill and
while it was ultimately held he would be responsible for killing 2233 fish, “it
cannot be seriously argued that these were the only fish killed as a result of the
silage runoff.” The court clearly considered the damage done by the runoff from
Branstad’s containment basin as precluding an award of attorney fees to
Branstad even if Branstad did the public a service by bringing this action to
challenge the DNR’s fish kill calculation methods.
Branstad maintains the restitution for the fish kill was not intended to be
punitive, and thus, the district court’s consideration of the damage he did to the
river and the wildlife was not proper. While there is no Iowa case law articulating
what special circumstances make an award unjust, Branstad points to federal
case law interpreting similar language in the federal act as a “safety valve” to
ensure the government is not deterred from advancing, in good faith, novel
arguments extending or interpreting the law. U.S. Dep’t of Labor v. Rapid
Robert’s, Inc., 130 F.3d 345, 347 (8th Cir. 1998). The exception also permits
courts to deny awards where equitable considerations so dictate. Id. Branstad
claims this exception is to be applied in cases where individuals repeatedly
violate the law but escape the legal consequences on a technicality. He
maintains this case does not fit that mold.
The State disagrees, asserting that Branstad achieved a significant
reduction in the restitution amount, not because his actions did not result in the
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killing of a multitude of fish, but because the methodology the State used to
arrive at a total figure was improper. This left the State uncompensated for a
significant number of fish that it claims were killed as a result of Branstad’s illegal
discharge. The State maintains to permit an award of attorney fees here would
have a chilling effect on the State’s advancement of good faith restitution claims
against persons responsible for killing or injuring wildlife. Thus, the State asserts
using the “safety valve” of section 625.29(1)(c) to prevent an award of attorney
fees to Branstad is proper in this case.
Branstad significantly reduced the restitution owed, based on correcting
an illegal and long-standing method used by the DNR across the state for
determining a fish kill. The action brought by Branstad also had the effect of
forcing the DNR to acknowledge that what it considered to be its loose
“guidelines” were in fact standardized “rules,” so that in the future, the public is
put on notice as to the methods utilized. The future fish kill counts will be more
accurate and follow more closely the methods set out in the American Fishery
Society Publication 24. This action served the public good, and we conclude
there are no special circumstances that would make an award of attorney fees
and expenses to Branstad unjust. Because we conclude an award of attorney
fees would not be unjust in this case, contrary to the district court’s finding, we
conclude this exception does not apply here to preclude an award of attorney
fees to Branstad. Having found none of the exceptions the district court relied on
to deny Branstad an award of attorney fees applicable, we now must turn our
attention to whether Branstad was a prevailing party—an issue not reached by
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the district court in light of its rulings on the exceptions in Iowa Code section
625.29(1)(a)–(c).
D. Prevailing Party. The term “prevailing party” is not defined in the
statute. “Absent legislative definition or a particular and appropriate meaning in
law, we give words their plain and ordinary meaning. We also consider the
context in which the term is used.” Remer, 576 N.W.2d at 601 (citations
omitted). Where the term is not defined by the legislature, we turn to dictionaries
for guidance. Id. Black’s Law Dictionary defines prevailing party as “A party in
whose favor a judgment is rendered, regardless of the amount of damages
awarded. Also termed successful party.” Black’s Law Dictionary 1154 (8th ed.
2004). In a Fair Labor Standards Act case, our supreme court has recognized
the United States Supreme Court’s explanation of when a party prevails as
“when actual relief on the merits of his claim materially alters the legal
relationship between the parties by modifying the defendant’s behavior in a way
that directly benefits the plaintiff.” Dutcher v. Randall Foods, 546 N.W.2d 889,
895 (Iowa 1996). While no Iowa court has defined what it means to be a
prevailing party under section 625.29,2 we conclude a party need not have
prevailed on every issue, or every asserted defense, in order to be considered a
prevailing party. See Hensler v. City of Davenport, 790 N.W.2d 569, 589 (Iowa
2010) (noting a factor to consider when awarding attorney fees in a federal civil
2
In the article, The Iowa Equal Access to Justice Act: Is Recovery Available, 39 Drake L.
Rev. 431, 466 (1989-90), the authors note the lack of Iowa case law defining the term
prevailing party and recommend the definition be “a litigant who succeeds on a
significant issue on the merits in the final outcome of the litigation and receives some of
the benefit sought in the litigation.” The authors also recommend a three-prong inquiry
“(1) did a litigant succeed on a significant issue on the merits; (2) was the litigation final;
and (3) did the litigant receive a benefit?”
17
rights action is to consider “the level of the prevailing party’s success in the
litigation” implying a party can be a prevailing party without winning on all issues).
While Branstad did not obtain relief on every ground or defense he raised
in contesting the restitution assessment, he did succeed in demonstrating the
adverse financial consequences when the DNR utilized a faulty fish count
methodology. His success on this major issue resulted in significantly reducing
the amount of restitution assessed against him from $61,794.49 to $5297.19. He
also succeeded in compelling the DNR to follow the regulations it adopts
specifically with regard to fish kill counts. The future fish kills counts will be more
accurate and follow more closely the methodology the agency has adopted. We
conclude Branstad in this case was a prevailing party.
IV. Conclusion.
Because we conclude Branstad is a prevailing party under section 625.29,
and none of the exceptions apply to preclude an award of fees and expenses, we
remand this case to the district court for a determination of an appropriate award
under section 625.29. The court should also consider an award of appellate
attorney fees. See Schaffer v. Frank Moyer Constr., Inc., 628 N.W.2d 11, 23
(Iowa 2001) (noting that the mechanics lien statute did not limit an award of
attorney fees to those incurred in the district court and therefore the statute
contemplated an award of appellate attorney fees as well).
REVERSED AND REMANDED.