Goosmann Law Firm, P.L.C. v. Hirschbach Motor Lines, Inc., and GR Equipment Leasing, Inc. ( 2024 )

IN THE COURT OF APPEALS OF IOWA
No. 23-0520
Filed October 2, 2024
GOOSMANN LAW FIRM, P.L.C.,
Plaintiff-Appellant,
vs.
HIRSCHBACH MOTOR LINES, INC., and GR EQUIPMENT LEASING, INC.,
Defendant-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Dubuque County, Monica Ackley,
Judge.
Plaintiff appeals the district court’s grant of summary judgment to
defendants regarding an attorney fee dispute. REVERSED AND REMANDED.
Mark E. Weinhardt of The Weinhardt Law Firm, Des Moines, for appellant.
Kevin H. Collins of Nyemaster Goode, PC, Cedar Rapids, for appellee.
Heard by Schumacher, P.J., and Badding and Langholz, JJ.
2
SCHUMACHER, Presiding Judge.
Goosmann Law Firm, P.L.C. (GLF) appeals the district court’s grant of
summary judgment to Hirschbach Motor Lines, Inc. and GR Equipment Leasing,
Inc. (referred to together as Hirschbach) on an attorney fee dispute. We determine
there are genuine issues of material fact about the meaning of the contingency fee
provision in the parties’ attorney fee contract. Accordingly, we reverse the grant
of summary judgment by the district court and remand for further proceedings.
I. Background Facts & Proceedings
GLF has represented Hirschbach in various legal matters since
approximately 2004. In 2020, Hirschbach retained GLF as it considered suing
Navistar, Inc., a company that supplied Hirschbach with new trucks.
GLF sent Hirschbach several options for payment of attorney fees. One
option was designated as a “Blended Fee,” with the notation, “Similar to the
successful arrangement in the SmartTruck litigation.[1] Reduced hourly rates of
$150 to $200 per hour. Plus Contingency fee: 20% of all monies recovered.” In
her deposition, Jeana Goosmann of GLF testified that when she and Hirschbach
formed the contract, she was contemplating the contingency fee would be paid
based on twenty percent of a single lump-sum cash payment, as Hirschbach was
not interested in continuing to do business with Navistar.
1 GLF represented Hirschbach in a previous lawsuit, referred to by the parties as
the SmartTruck litigation. GLF received a reduced hourly fee plus twenty percent
of the cash settlement amount. The record does not show that the settlement
agreement in the SmartTruck litigation involved more than a monetary settlement.
3
On May 28, 2020, GLF and Hirschbach entered into a written attorney fee
contract that provided Hirschbach would pay “a discounted hourly rate of 50% of
Attorneys rate that Client was previously paying.” The contract also provided:
CONTINGENT FEE: In the event of recovery, Client shall pay
Attorney a fee equal to 20% of the recovery, whether settled or by
obtaining judgment. Costs and expenses referred to in Paragraph 2
of this agreement will not be deducted from the fee. If Client
terminates Attorney’s employment before conclusion of the case,
Client shall pay the Attorney fee incurred at the time of the
termination at full hourly rate plus 20%.
GLF filed a lawsuit on behalf of Hirschbach against Navistar in federal court.
During negotiations, the nature of the settlement changed from a cash only
settlement to the payment of an amount of cash and purchase incentives for new
trucks. Navistar was interested in maintaining a business relationship with
Hirschbach.
Hirschbach and Navistar ultimately settled in December. Navistar agreed
to pay Hirschbach a cash settlement, subject to a confidentiality agreement. The
settlement agreement specifically states that twenty percent of this amount should
be paid to GLF. The settlement agreement also stated:
Contemporaneously with this Settlement Agreement, the
Parties shall jointly execute a Trade-in and New Purchase
Agreement (the “Purchase Agreement”) that shall be in the form
attached hereto as Exhibit B. Any alleged failure by any Party to
meet its obligations under the Purchase Agreement, or any other
legal claim arising from or relating to the Purchase Agreement, shall
have no effect on the validity of this Settlement Agreement or any of
its provisions, and the Parties’ sole remedies shall be those provided
under the Purchase Agreement.
Additionally, “This Settlement Agreement, together with the attached Exhibits,
constitutes the entire agreement between the Parties regarding the subject matter
hereof . . . .”
4
Exhibit B of the settlement agreement—the Purchase Agreement—gave
Hirschbach beneficial terms for the purchase of new trucks from Navistar. It also
set out terms for the trade-in value of old trucks based on months in service and
mileage. GLF contends that in addition to twenty percent of the cash settlement
Hirschbach received, it is entitled to twenty percent of the benefit Hirschbach
obtained from the Purchase Agreement as attorney fees under the contingent fee
provision.
Goosmann gave this statement:
Soon after I discussed the concept of a business solution with
Hirschbach’s leadership, in or around October 2020, on a warm fall
day I was talking to my client Hirschbach on a video call when Paul
Herzog[2] asked Brad Pinchuk[3] whether or not the legal fees applied
to the value Hirschbach would receive from Navistar in a potential
business deal resolution that did not involve a simple cash payment.
Mr. Pinchuk clearly responded, “Yes, we are paying 20% on the deal
value total as a success fee to legal.”[4] As a result, while he created
the first spreadsheet containing potential settlement terms on the
video call with me, Mr. Herzog included legal fees at 20% of the total
deal value. That was the first of a number of spreadsheets analyzing
a potential business solution, and every spreadsheet from there on
included legal fees at 20% of the total value of the deal.
....
. . . On or around November 16, 2020, while discussing
settlement deal items, Brad asked me if a total settlement value
between [proposed figure] was acceptable to me and my law firm
given the contingent fee arrangement GLF and Hirschbach had. It
was plain he understood that GLF’s contingent fee would apply to
the business value Hirschbach would obtain from the settlement, not
just an upfront cash payment. Mr. Pinchuk wanted to know if our firm
would be satisfied with the contingent fee based on that proposed
deal value. I confirmed that yes it was.
2 Herzog is the chief financial officer of Hirschbach.
3 Pinchuk is the president of Hirschbach.
4 Goosmann also testified about this conversation in her deposition. She stated
that during a telephone call Pinchuk was asked by Herzog, “Are we calculating
legal at twenty percent of the total deal or just cash?” Pinchuk replied, “The total
deal.”
5
Goosmann stated, “The Purchase Agreement was an exhibit to the
Settlement Agreement because the Purchase Agreement was an integral part of
the settlement. Under no circumstances would Hirschbach have settled the
Navistar lawsuit for the [cash settlement] payment contemplated in the Settlement
Agreement and nothing more.”
In a deposition, Pinchuk was asked about Hirschbach’s obligation to GLF
based on Exhibit B:
A. According to our agreement, no. What I volunteered to
Jeana was that I would—we would evaluate again the economic
differences of these two trucks over time, and if that ended up
generating an economic benefit to us, that we would share twenty
percent of that with Jeana.
Q. Why would you share twenty percent of that with Jeana if
that caused an economic benefit to you?
A. I thought it was the right thing to do.
Q. Why was it the right thing to do?
A. Because I thought it was the right thing to do. Again, it
wasn’t part of our agreement; and if I was going to get additional
economic value, I thought I should share that.
Q. Did you ever say to Ms. Goosmann that under your
agreement you owed her firm nothing more than [twenty percent of
the cash settlement]?
A. No. I said if there was an economic benefit in comparing
these two trucks over the course of the lifespan of them, the four to
six years, there was an economic benefit there, that I would share
twenty percent of that with her.
When asked about a spreadsheet with a notation of legal fees at twenty percent,
Herzog stated in a deposition:
A. Well, you know, when it changed to an all-cash deal—or,
you know, when the transaction in total changed from all cash, when
it was cash, give me [cash settlement]—we would have preferred just
to get [cash settlement], much cleaner, because we would use that
money to cover the losses on selling the [trucks] in the open market;
right? I mean, that’s the whole value proposition here.
You know, when it changed from an all-cash deal, you know,
Brad told me that, you know, he thought it was, you know, the right
6
thing to do or fair to Jeana to give her, you know, a cut of the
economic value of this—you know, this transaction; right?
Q. When did you and Mr. Pinchuk have that conversation?
A. Oh. That would have been—I don’t know, I—mid-October?
You know, when we—sort of when we ended up—I don’t remember.
It would have been October. I really didn’t get involved in this until
October.
Hirschbach did not pay GLF more than the attorney fees associated with the cash
payment received in the settlement agreement. GLF sued Hirschbach for unpaid
legal fees, claiming the attorney fees paid “represents a small fraction” of the
attorney fees owed to GLF. Hirschbach’s answer stated:
It is admitted Defendants have communicated that the
Attorney Fee Contract contemplates contingent fees “in the event of
recovery” and based on a percentage of “the recovery.” It is
affirmatively stated that Plaintiff agreed that “recovery” would be
calculated based on a series of events which were to occur in the
future, many of which have not yet materialized.
Hirschbach’s answers also stated, “It is admitted that additional amounts may be
due and owing to Plaintiff if the Attorney Fee Contract is enforceable under Iowa
law and if and when Defendants obtain additional ‘recovery.’”
Hirschbach moved for summary judgment. It claimed that under the
contingent fee provision, GLF was entitled to twenty percent of the cash payment.
Hirschbach asserted GLF had been paid twenty percent of this amount, and had
no right to any additional payment for attorney fees. It claimed it should not have
to pay attorney fees based on estimates concerning the future business
relationship between Hirschbach and Navistar.
GLF resisted Hirschbach’s motion for summary judgment. It disputed some
portions of Hirschbach’s statement of undisputed facts. GLF claimed there were
genuine issues of material fact about whether the contingency fee provision
7
applied only to a “recovery” as a cash settlement or whether a “recovery” could
also include the value of a business settlement. It stated Hirschbach’s statements
and conduct following the settlement agreement showed it understood GLF’s
contingent fee would apply to the business value Hirschbach obtained from the
settlement agreement, including from the Purchase Agreement.
The district court granted the motion for summary judgment. The court
found there was no ambiguity in the term “recovery,” stating the parties’ intent was
clear from their email exchanges “at the time of the execution of the contract.” The
court found the parties intended the term “recovery” to mean a lump-sum payment.
And, the court determined, “The trade-in provisions and the purchase agreement
were a separate and distinct matter that would be dealt with over the next 48
months.” The court concluded that if the contingent fee contract was intended to
include attorney fees based on future events, this should have been specifically
spelled out in the contingent fee contract. GLF appeals the district court’s ruling.
II. Standard of Review
We review a district court’s decision granting summary judgment for the
correction of errors of law. Jones v. Univ. of Iowa, 836 N.W.2d 127, 139 (Iowa
2013). Summary judgment may be granted if “there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of law.”
Iowa R. Civ. P. 1.981(3). The record is reviewed in the light most favorable to the
nonmoving party. Deeds v. City of Marion, 914 N.W.2d 330, 339 (Iowa 2018).
The party seeking summary judgment has the burden to establish there are
no genuine issues of material fact. Morris v. Steffes Group, Inc., 924 N.W.2d 491,
496 (Iowa 2019). There is a genuine issue of material fact “if reasonable minds
8
can differ on how an issue should be resolved.” Banwart v. 50th St. Sports, L.L.C.,
910 N.W.2d 540, 544 (Iowa 2018). “[A] court deciding a motion for summary
judgment must not weigh the evidence, but rather simply inquire whether a
reasonable jury faced with the evidence presented could return a verdict for the
nonmoving party.” Clinkscales v. Nelson Sec., Inc., 697 N.W.2d 836, 841 (Iowa
2005).
“[T]o successfully resist a motion for summary judgment, the resisting party
must set forth specific evidentiary facts showing the existence of a genuine issue
of material fact.” In re Est. of Henrich, 389 N.W.2d 78, 80 (Iowa Ct. App. 1986). A
party cannot rest on mere allegations or a denial of the pleadings. Iowa R. Civ.
P. 1.981(5). “Although our rules of procedure allow a nonmoving party to resist
summary judgment, the burden is still on the moving party ‘to show the district
court that there was no genuine issue of material fact and that it was entitled to a
judgment as a matter of law.’” Otterberg v. Farm Bureau Mut. Ins. Co., 696
N.W.2d 24, 27 (Iowa 2005) (citation omitted).
III. Discussion
A. The district court determined the Purchase Agreement was “a separate and
distinct matter” from the settlement agreement. Hirschbach furthers this argument
on appeal, stating the Purchase Agreement was “a separate, standalone,
integrated contract.”
The settlement agreement incorporates the Purchase Agreement, stating,
“Contemporaneously with this Settlement Agreement, the Parties shall jointly
execute a Trade-in and New Purchase Agreement (the ‘Purchase Agreement’) that
shall be in the form attached hereto as Exhibit B.” Under the paragraph heading,
9
“Entire Agreement,” the settlement agreement provides, “This Settlement
Agreement, together with the attached Exhibits, constitutes the entire agreement
between the Parties regarding the subject matter hereof . . . .” (Emphasis added.)
The Purchase Agreement is attached as Exhibit B.5
The record does not support a finding that the Purchase Agreement was “a
separate and distinct matter” from the settlement agreement. The language of the
settlement agreement shows the exhibits to the settlement agreement are included
within the entirety of the agreement, meaning the Purchase Agreement is included
within the settlement agreement. We conclude the district court erred by
concluding the Purchase Agreement was “a separate and distinct matter” from the
settlement agreement.
B. The term “recovery” is used only in the contingent fee provision of the
written attorney fee contract signed by GLF and Hirschbach. The contract
provides, “In the event of recovery, Client shall pay Attorney a fee equal to 20% of
the recovery, whether settled or by obtaining judgment.” The term “recovery” is
not defined in the written attorney fee contract. The term is not specifically limited
to only monetary recovery, nor is it written expansively to include any type of
recovery.
In granting summary judgment to Hirschbach, the district court found as a
matter of law that the term “recovery” in the contingent fee provision meant a single
monetary payment. The court found the term “recovery” was not ambiguous. GLF
argues the term is ambiguous and could be interpreted to mean Hirschbach’s total
5 Exhibit A is the dismissal of the lawsuit Hirschbach filed in federal court against
Navistar.
10
recovery in the settlement, which would include the benefits received from the
Purchase Agreement.
Contract “[i]nterpretation involves ascertaining the meaning of contractual
words; construction refers to deciding their legal effect.” Payton v. DiGiacomo, 874
N.W.2d 673, 677 (Iowa Ct. App. 2015) (quoting Fashion Fabrics of Iowa, Inc. v.
Retail Investors Corp., 266 N.W.2d 22, 25 (Iowa 1978)). We engage in contract
interpretation to determine the meaning of words in a contract. Rick v. Sprague,
706 N.W.2d 717, 723 (Iowa 2005). To determine the meaning of “recovery” in the
parties’ attorney fee contract, we engage in interpretation, rather than construction.
See id.The Iowa Supreme Court has stated:
The primary goal of contract interpretation is to determine the
parties’ intentions at the time they executed the contract. See Hartig
Drug Co. [v. Hartig], 602 N.W.2d [794,] 797 [(Iowa 1999)].
Interpretation involves a two-step process. First, from the words
chosen, a court must determine “what meanings are reasonably
possible.” Restatement (Second) of Contracts § 202 cmt. a, at 87
(1981). In so doing, the court determines whether a disputed term is
ambiguous. A term is not ambiguous merely because the parties
disagree about its meaning. Hartig Drug Co., 602 N.W.2d at 797. A
term is ambiguous if, “after all pertinent rules of interpretation have
been considered,” “a genuine uncertainty exists concerning which of
two reasonable interpretations is proper.” Id.
Walsh v. Nelson, 622 N.W.2d 499, 503 (Iowa 2001)
The court has also stated:
Any determination of meaning or ambiguity should only be made in
the light of the relevant evidence of the situation and relations of the
parties, the subject matter of the transaction, preliminary
negotiations and statements made therein, usages of trade, and the
course of dealing between the parties. But after the transaction has
been shown in all its length and breadth, the words of an integrated
agreement remain the most important evidence of intention.
11
Id. (quoting Restatement (Second) of Contracts § 212 cmt. b (emphasis added)
(citation omitted)).
The general rules for interpretation of contracts are set out in Restatement
(Second) of Contracts section 202 as follows:
(1) Words and other conduct are interpreted in the light of all
the circumstances, and if the principal purpose of the parties is
ascertainable it is given great weight.
(2) A writing is interpreted as a whole, and all writings that are
part of the same transaction are interpreted together.
(3) Unless a different intention is manifested,
(a) where language has a generally prevailing
meaning, it is interpreted in accordance with that meaning;
(b) technical terms and words of art are given their
technical meaning when used in a transaction within their technical
field.
(4) Where an agreement involves repeated occasions for
performance by either party with knowledge of the nature of the
performance and opportunity for objection to it by the other, any
course of performance accepted or acquiesced in without objection
is given great weight in the interpretation of the agreement.
(5) Wherever reasonable, the manifestations of intention of
the parties to a promise or agreement are interpreted as consistent
with each other and with any relevant course of performance, course
of dealing, or usage of trade.
“To the extent necessary to reveal the parties’ intent, extrinsic evidence is
admissible.” DuTrac Cmty. Credit Union v. Radiology Grp. Real Est., L.C., 891
N.W.2d 210, 216 (Iowa 2017).
If the language of a contract is ambiguous, so that extrinsic evidence is
admissible, “a question of interpretation is left to the trier of fact unless ‘the
evidence is so clear that no reasonable person would determine the issue in any
way but one.’” Fausel v. JRJ Enters., Inc., 603 N.W.2d 612, 618 (Iowa 1999)
(quoting Restatement (Second) of Contracts § 212 cmt. e). “But if the issue
depends on evidence outside the writing, and the possible inferences are
12
conflicting, the choice is for the trier of fact.” Restatement (Second) of Contracts
§ 212 cmt. e.
Black’s Law Dictionary defines “recovery” as:
1. The regaining or restoration of something lost or taken away. The
collection of charged-off bad debt that has been previously written
off against the allowance for doubtful accounts. 2. The obtainment
of a right to something (esp. damages) by a judgment or decree.
3. Common Recovery.[6] 4. An amount awarded in or collected from
a judgment or decree.
Recovery, Black’s Law Dictionary (11th ed. 2019) (citation omitted).
The definition of “recovery” is not limited to a lump sum monetary payment,
as found by the district court. The term can mean “a right to something (esp.
damages) by a judgment or decree.” Id. (emphasis added). As noted above, the
settlement agreement and the Purchase Agreement are part of the same
agreement. “A writing is interpreted as a whole, and all writings that are part of the
same transaction are interpreted together.” Restatement (Second) of Contracts
§ 202(2). We determine there is a genuine issue of material fact about whether
the “something” Hirschbach received as a result of negotiations with Navistar was
a cash payment and purchasing incentives.
Looking at the four corners of the settlement agreement between
Hirschbach and Navistar, we determine the district court erred by finding as a
matter of law that the term “recovery” in the contingent fee agreement was limited
to Hirschbach’s recovery of the cash settlement agreement, disregarding
6 The term “common recovery” is separately defined as “[a]n elaborate legal
proceeding, full of legal fictions, in which a tenant in tail disentailed a fee-tail
estate.” Common Recovery, Black’s Law Dictionary (11th ed. 2019). Common
recoveries were abolished in the early 19th century. Id.
13
Hirschbach’s recovery in the Purchase Agreement that was an integrated part of
the settlement agreement. We determine it was an error for the district court to
conclude Hirschbach’s recovery was limited to what it received from only part of
the total agreement.
We conclude the district court improperly granted summary judgment to
Hirschbach. We reverse the court’s decision and remand for further proceedings.
REVERSED AND REMANDED.