Wsh Properties, L.l.c. Vs. Curt N. Daniels And Indian Creek Corporation

IN THE SUPREME COURT OF IOWA
No. 91 / 05–0404
Filed October 17, 2008
WSH PROPERTIES, L.L.C.,
Appellee,
vs.
CURT N. DANIELS and INDIAN CREEK CORPORATION,
Appellants.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Lucas County, John D.
Lloyd, Judge.
Plaintiff seeks further review of court of appeals’ decision reversing
district court’s denial of defendants’ motion for new trial. DECISION OF
COURT OF APPEALS AFFIRMED IN PART AND REVERSED IN PART.
DISTRICT COURT JUDGMENT AFFIRMED ON CONDITION AND CASE
REMANDED.
Curt N. Daniels, Chariton, pro se, and for appellant Indian Creek
Corporation.
James E. Nervig of Brick, Gentry, Bowers, Swartz, Stoltze & Levis,
P.C., Des Moines, for appellee.
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TERNUS, Chief Justice.
The defendants appealed the trial court’s denial of their motion for
new trial, claiming the jury’s excessive damage award was the result of
passion. The court of appeals held the trial court abused its discretion in
ordering a remittitur rather than a new trial in view of the trial court’s
impression the jury was motivated by anger and a desire to punish the
defendants. We granted further review. Upon our review of the record,
we conclude the defendants were not entitled to a new trial, but we
exercise our inherent authority to order a remittitur. Therefore, we
reverse that part of the court of appeals’ decision ordering a new trial,
affirm the balance of the court of appeals’ decision, and affirm on
condition the district court’s judgment.
I. Background Facts and Prior Proceedings.
The appellant, Indian Creek Corporation, owned and operated a
hog confinement facility on real estate that was sold to the appellee, WSH
Properties, L.L.C., at a tax sale after Indian Creek stopped paying taxes
on the property. (The appellant, Curt N. Daniels, is the sole owner of
Indian Creek.) After WSH obtained title to the property by tax deed, it
brought this replevin action against Daniels and Indian Creek to recover
certain property Daniels had removed from the confinement facility,
including pens, gates, crates, waterers, and feeders. WSH believed the
property removed by Daniels constituted taxable real property that was
included in the tax sale and deed. WSH sought return of the property
and associated damages incurred due to WSH’s inability to lease the real
estate without the disputed property.
The case proceeded to a jury trial. The trial court instructed the
jury that WSH’s right to possession of the property removed from the
premises depended upon proof that the property fell within the
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provisions of Iowa Code section 427A.1 (2001). This statute describes
what property, other than land, may be assessed and taxed as real
property. The jury found WSH was entitled to possession of all the
disputed property, and it valued the property at $299,850. The jury also
found WSH was entitled to damages in the amount of $533,952 for
wrongful detention of the disputed property.
The defendants filed a motion for new trial, contending the damage
amounts were not supported by the evidence and that the jury sought to
punish the defendants and were prejudiced against them. The trial court
rejected the defendants’ claim the verdict was the result of prejudice
against the defendants, concluding there was no evidence to support this
claim. The court did conclude, however, that the damage amounts were
not supported by the evidence and the jury was motivated by a desire to
punish the defendants. The court determined a remittitur was the
appropriate remedy.
With respect to the value of the equipment, the court reduced the
jury award from $299,850 to $120,000. The court noted the plaintiff’s
exhibit showing replacement cost figures totaling $299,850 included
$61,350 for items that were not taken. Moreover, the court concluded,
the proper measure of damages was the value of the property, not
replacement cost. The plaintiff’s own evidence placed a value of
$120,000 on the disputed property.
With respect to the damages for wrongful detention, the court
concluded the jury could have found damages for three years (from the
date the plaintiff discovered the property was missing to the time of trial),
and that the proper measure of damages would be the net market value
of the use of the property during this period. Although there was
evidence that gross rental income from the property had been as high as
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$206,000, the last lease in place prior to the plaintiff’s acquisition of the
property had a gross rent of only $100,000 per year. In addition, the
plaintiff’s expert testified the market had declined since the $206,000-
per-year lease, and the gross rental value during the relevant time was
$110,000 per year. The court found there was no reason in the record
for the jury to disregard the plaintiff’s own evidence. Therefore, the court
reduced the $533,952 jury award to $246,000 ($110,000 annual rental
value minus $28,000 per year for expenses for three years).
The problematic aspect of the court’s ruling is its concluding
paragraph:
An overall look at the damages awarded by the jury
leaves the court with the abiding impression that the jury
was simply angry with the defendants and sought to punish
them accordingly. This led the jury to award damage
amounts that exceeded the reasonable amounts supported
by the evidence. Remittitur as to all amounts in excess of
those set out above is appropriate.
The court did not elaborate on the factual basis for its finding of passion
other than the excessiveness of the verdict. The court then conditionally
denied the defendants’ motion for new trial, provided the plaintiff filed a
remittitur of all damages in excess of those set out in the court’s ruling.
The plaintiff filed a remittitur, and the trial court then denied the
defendants’ motion for new trial and entered judgment against the
defendants for the reduced sums.
The defendants appealed, raising four issues: (1) the trial court
erred in failing to dismiss Daniels from the lawsuit; (2) the trial court
erred in failing to rule as a matter of law that the disputed property was
not subject to section 427A.1; (3) application of section 427A.1 deprived
the defendants of their property without due process of law; and (4) the
trial court abused its discretion in failing to grant a new trial on the basis
5
of passion and prejudice. The court of appeals rejected the first three
complaints, but found merit in the defendants’ contention they were
entitled to a new trial. Noting “it is clear the verdict is not supported by
the evidence,” the court concluded that, once “the district court expressly
found the verdict was the result of the jury’s anger with the defendants
and a desire to punish them by awarding excessive damages[,] . . . the
court abused its discretion when it nevertheless denied the defendants’
new trial request.”
We granted the plaintiff’s application for further review to consider
whether the district court abused its discretion in denying the
defendants’ motion for new trial. Although this court has authority to
consider any issue raised in the appeal, Hannan v. State, 732 N.W.2d 45,
50 (Iowa 2007), we limit our review to the new-trial issue.
II. Scope of Review.
It is necessary at the outset to identify the ruling that we are
reviewing. In the case before us, the trial court ordered a new trial on
the issue of damages unless the plaintiff accepted a remittitur of all
damage amounts above those set by the court in its decision. See Iowa
R. Civ. P. 1.1010(1) (giving trial court authority to “permit a party to
avoid a new trial . . . by agreeing to such terms or conditions as it may
impose”). Because the plaintiff accepted a remittitur of its damages, the
trial court overruled the defendants’ motion for new trial and entered a
judgment awarding damages in the reduced sums. Under our rules, this
judgment is “deemed of no force and effect” when an appeal is taken, and
the original judgment entered by the clerk on the jury’s verdict pursuant
to Iowa Rule of Civil Procedure 1.955 is “deemed reinstated.” Iowa R.
Civ. P. 1.1010(3). Therefore, we are not reviewing the trial court’s
decision to grant a conditional new trial; we are reviewing the trial court’s
6
denial of the defendants’ motion for new trial. See Montgomery Props.
Corp. v. Econ. Forms Corp., 305 N.W.2d 470, 478 (Iowa 1981).
“The standard of review of a denial of a motion for new trial
depends on the grounds for new trial asserted in the motion and ruled
upon by the court.” Vaughan v. Must, Inc., 542 N.W.2d 533, 542 (Iowa
1996). “If the motion and ruling are based on a discretionary ground,
the trial court’s decision is reviewed on appeal for an abuse of
discretion.” Id. “We review the district court’s denial of a motion for a
new trial based on the claim a jury awarded excessive damages for an
abuse of discretion.” Estate of Pearson ex rel. Latta v. Interstate Power &
Light Co., 700 N.W.2d 333, 345 (Iowa 2005). “An abuse of discretion
occurs when the court's decision is based on a ground or reason that is
clearly untenable or when the court's discretion is exercised to a clearly
unreasonable degree.” Pexa v. Auto Owners Ins. Co., 686 N.W.2d 150,
160 (Iowa 2004).
III. Discussion.
The defendants requested a new trial under Iowa Rule of Civil
Procedure 1.1004(4), (5), which states:
On motion, the aggrieved party may have an adverse
verdict . . . vacated and a new trial granted if any of the
following causes materially affected movant’s substantial
rights:
....
(4) Excessive or inadequate damages appearing to have
been influenced by passion or prejudice.
(5) Error in fixing the amount of the recovery, whether
too large or too small, in an action upon contract or for
injury to or detention of property.
“Passion” within the meaning of rule 1.1004(4) includes anger. See
Collins v. State, 102 So. 880, 882 (Fla. 1925) (“Passion is the state of
mind produced when the mind is powerfully acted upon and influenced
7
by something external to itself [and] . . . is one of the emotions of the
mind known as anger, rage, sudden resentment, or terror.”); Murphy v. S.
Pac. Co., 101 P. 322, 327 (Nev. 1909) (holding the word “passion,” as
applied to a jury’s action, “mean[s] anger, resentment, heat, absence of
reflection, disregard of the rights of others, and kindred motives”).
In ruling on the defendants’ motion for new trial, the court did not
specify whether its ruling was based on paragraph (4) or paragraph (5) of
rule 1.1004. The court stated it was “convinced that the damage awards
are not entirely proper and a remittitur is necessary and appropriate.” It
then discussed the jury’s error in using replacement cost rather than fair
market value to compensate the plaintiff for the removed property and
the jury’s use of outdated rental income in assessing the plaintiff’s
wrongful-detention damages. After explaining the basis for its reduction
of the damages awarded by the jury, the court concluded by stating its
“impression” that the jury was motivated to award the higher amounts by
anger toward the defendants. If it were not for these concluding
remarks, a person reading the trial court’s decision would conclude the
court found the damages erroneous or contrary to the evidence, but not
so excessive as to indicate passion on the part of the jury.
The precise basis for the court’s decision is important because it
affects the appropriate relief to be granted by the trial court.
If the verdicts are the result of passion and prejudice a
new trial should be granted, but if they are merely excessive
because not supported by sufficient evidence even in the
absence of passion and prejudice justice may be effectuated
by ordering a remittitur of the excess as a condition for
avoiding a new trial.
Schmitt v. Jenkins Truck Lines, Inc., 170 N.W.2d 632, 659 (Iowa 1969).
The court may also order a remittitur to correct an error by the jury in its
calculation of damages. 66 C.J.S. New Trial § 104, at 220 (1998) (“Where
8
the damages awarded . . . are clearly excessive, and the illegal portion is
distinguishable from the legal, the defect usually may be remedied by a
remittitur of the excess, if it can be readily calculated with reasonable
certainty.”).
Here, an experienced trial judge was left “with the abiding
impression that the jury was simply angry with the defendants and
sought to punish them accordingly,” yet the court did not order a new
trial. (Emphasis added.) Perhaps the court did not believe its
“impression” was firm enough to warrant a finding of passion that would
support a new trial. Our decision does not turn on this speculative
explanation for the trial court’s action, however. Regardless of the
reason the trial court had for stopping short of granting a new trial, we
think its refusal was proper because the only basis in the record for the
court’s impression the jury was motivated by passion was the size of the
verdict, and that circumstance is readily explained by the evidence
presented to the jury with respect to the plaintiff’s damages.
We begin our analysis with the proposition that a flagrantly
excessive verdict raises a presumption that it is the product of passion or
prejudice. See Allen v. Lindeman, 259 Iowa 1384, 1398, 148 N.W.2d
610, 619 (1967) (“ ‘A verdict should not be disturbed unless it is so
flagrantly excessive as to raise a presumption that it was the result of
passion, prejudice, or undue influence.’ ” (quoting Glatstein v. Grund,
243 Iowa 541, 557, 51 N.W.2d 162, 172 (1952)); accord Schmitt, 170
N.W.2d at 659 (stating new trial may be granted when verdict “raises a
presumption that it is the result of passion, prejudice or other ulterior
motive”). On the other hand, not every excessive verdict results from
passion or prejudice. See Miller v. Town of Ankeny, 253 Iowa 1055,
1063, 114 N.W.2d 910, 915 (1962); Curnett v. Wolf, 244 Iowa 683, 689,
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57 N.W.2d 915, 919 (1953); accord 58 Am. Jur. 2d New Trial § 313, at
313 (2002) (“[T]he fact that a damage award is large does not in itself . . .
indicate that the jury was motivated by improper considerations in
arriving at the award.”). For example, in Jurgens v. Davenport,
Rock Island & Northern Ry., 249 Iowa 711, 88 N.W.2d 797 (1958), this
court concluded a jury verdict was not so excessive as to show passion or
prejudice entitling the defendant to a new trial, yet the verdict was
“beyond the fair province of the jury to award upon the evidence before
it.” 249 Iowa at 723, 88 N.W.2d at 805; see also 58 Am. Jur. 2d New
Trial § 456, at 413–14 (“Remittitur may be proper when a jury, although
not acting under the type of passion or prejudice that would warrant a
new trial, nonetheless awards an amount that is unreasonable given the
evidence.”).
In view of this precedent, we will first consider whether the verdict
is so excessive as to raise a presumption that it was motivated by
passion or prejudice on the part of the jury. As we examine the record to
make this determination, we are guided by the following rule: “ ‘In
considering the contention the verdict is so excessive as to . . . show it is
the result of passion and prejudice we must take the evidence in the
aspect most favorable to plaintiff which it will reasonably bear.’ ”
Townsend v. Mid-Am. Pipeline Co., 168 N.W.2d 30, 33 (Iowa 1969)
(quoting Shover v. Iowa Lutheran Hosp., 252 Iowa 706, 718, 107 N.W.2d
85, 92 (1961)); accord Kuta v. Newberg, 600 N.W.2d 280, 284 (Iowa 1999)
(stating in cases involving claims of excessive damages, we “view the
evidence in the light most favorable to the plaintiff”).
A review of the record in this case reveals an evidentiary source for
the jury’s calculation of damages. As noted above, the court reduced the
damages awarded by the jury for the value of the removed equipment
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from $299,850 to $120,000. The court focused on a plaintiff’s exhibit
that showed a total replacement cost of $299,850, but included $61,350
for property that was not removed. On the other hand, viewing the
evidence most favorably to the plaintiff, there was testimony from the
plaintiff’s expert that the cost to replace the items taken from the facility
“would have been nearly $300,000.” In addition, the jury cannot be
faulted for using replacement cost as the measure of recovery. Evidence
of the replacement cost was admitted, and the jurors were simply
instructed that, if they determined the plaintiff was entitled to possession
of the property, they were also to “determine the value of that property as
of the date of trial.” They were not instructed that “value” meant market
value, not replacement cost. Under these circumstances, we do not
believe the jury’s award of replacement cost at a level proposed by the
plaintiff’s expert was so far outside the range of evidence as to suggest
the jury was motivated by passion. See Schmitt, 170 N.W.2d at 660–61
(holding new trial cannot be based on claim of prejudice arising from
jury’s reliance on evidence admitted without objection).
A similar view can be reasonably taken of the jury’s award of
$533,952 for wrongful detention. The jury used a $206,000-per-year
figure for gross rentals based on an actual lease for the property in
question. This figure was reduced by $28,000 for expenses, and the net
amount was awarded for a three-year period. The trial court concluded
the only aspect of this damage calculation subject to criticism was the
gross rental value used by the jury. The plaintiff’s expert testified that
the market had declined since the $206,000-per-year lease and the
current gross rental value was $110,000. The jury was instructed:
Consider expert testimony just like any other testimony.
You may accept it or reject it. You may give it as much
weight as you think it deserves, considering the witness’
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education and experience, the reasons given for the opinion,
and all the other evidence in the case.
In view of the evidence and the instructions, we do not think the jury was
so far outside the bounds of the record that its verdict raises a
presumption of passion. See Engman v. City of Des Moines, 255 Iowa
1039, 1049, 125 N.W.2d 235, 241 (1963) (concluding verdict was not “so
large as to show passion and prejudice”).
We think the evidentiary basis for the jury’s assessment of
damages dispels any presumption that the excessiveness of the verdict
was motivated by passion. Once the presumption of passion that might
arise from a flagrantly excessive verdict is dispelled, we must look for
some other indication in the proceedings that would support a finding
the jury was angry with the defendants and motivated to punish them.
See Allen, 259 Iowa at 1398, 148 N.W.2d at 619 (stating “it must
affirmatively be shown prejudice and passion existed before this court
should interfere with a verdict”); Peak v. Rhyno, 200 Iowa 864, 867, 205
N.W. 515, 516 (1925) (refusing to order a new trial on the basis of
passion or prejudice, stating “it is not shown that the verdict for plaintiff
was the result of passion or prejudice on the part of the jury, by the mere
fact that the amount awarded may appear to us, upon the record, to be
excessive”); see also Goettelman v. Stoen, 182 N.W.2d 415, 421 (Iowa
1970) (finding prejudice based on introduction of “inflammatory
evidence”). See generally Waddell v. Peet’s Feeds, Inc., 266 N.W.2d 29,
32 (Iowa 1978) (reversing trial court’s grant of a new trial when there was
nothing in the record to indicate prejudice or passion); Kaiser v. Stathas,
263 N.W.2d 522, 526 (Iowa 1978) (same). The defendants contend on
appeal that “jurors don’t like hog farms or hog farmers” and that the
testimony of plaintiff’s principal, John Holtz, “was calculated to cast in
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the jurors’ minds that [the defendants] were polluters and thieves.” The
defendants made the same argument to the trial court in its motion for
new trial, but the trial court, in concluding the verdict was not the result
of prejudice against the defendants, stated there was “no evidence to
support any of these claims.” The court also stated that it had “observed
nothing during the course of the trial, including the voir dire, which
suggested in the slightest any prejudice against the defendants.”
Consistent with this conclusion, the trial court’s only stated reason for
its impression that the jury was angry with the defendants was “[a]n
overall look at the damages awarded by the jury.” Thus, the trial court,
“with [the] benefit of seeing and hearing the witnesses, observing the jury
and having before it all incidents of the trial,” did not find anything more
than the excessiveness of the verdict to indicate passion or prejudice.
Schmitt, 170 N.W.2d at 660. We give weight to this factual determination
by the trial court. Id. Based on the evidentiary support for the jury’s
verdict and the absence of any other indication in the record that the
jury was angry with the defendants, we believe a finding of passion is not
supported and a new trial was not warranted. Accordingly, we hold the
trial court did not abuse its discretion in denying the defendants’ motion
for new trial.
Although we have concluded there is no basis for finding the jury’s
verdict was the result of passion, we may still exercise our inherent
power to order a remittitur as a condition to avoid a new trial. See
Engman, 255 Iowa at 1049, 125 N.W.2d at 241 (ordering remittitur
notwithstanding conclusion verdict was not so excessive as to indicate
passion or prejudice); Jesse v. Wemer & Wemer Co., 248 Iowa 1002,
1021, 82 N.W.2d 82, 91–92 (1957) (same). A remittitur may be
appropriate when (1) the jury’s damage award was not justified by the
13
evidence before it, Miller v. Young, 168 N.W.2d 45, 52–53 (Iowa 1969); In
re Ronfeldt’s Estate, 261 Iowa 12, 28, 152 N.W.2d 837, 847 (1967); (2)
the jury failed to respond to the evidence, Larew v. Iowa State Highway
Comm’n, 257 Iowa 64, 67, 130 N.W.2d 688, 689 (1964); or (3) the wrong
measure of damages was applied, 66 C.J.S. New Trial § 104, at 204.
Here, we agree with the trial court that the jury used the wrong
standard—replacement cost—to measure the value of the removed
property. See Murray v. Conrad, 346 N.W.2d 814, 821 (Iowa 1984) (“The
general rule is that the measure of damages for conversion is the fair and
reasonable market value of the property at the time of the taking.”). We
also agree there was no basis in the record for the jury to ignore the
uncontroverted testimony of the plaintiff’s own expert witness that the
rental value of the property during the pertinent time period was
$110,000, the market having declined since the $206,000-per-year lease
was in place. Therefore, we hold a remittitur is appropriate in the
amounts determined by the district court.
IV. Disposition.
We reverse that portion of the court of appeals’ decision reversing
the district court’s denial of the defendants’ motion for new trial, affirm
the court of appeals’ decision on the remaining issues, and conditionally
affirm the trial court’s denial of the defendants’ motion for new trial. If,
within fifteen days of the issuance of procedendo, the plaintiff files with
the clerk of the district court a remittitur of all damages in excess of the
amount established by the trial court’s posttrial order, the judgment of
the district court shall be affirmed. If the plaintiff does not file a
remittitur, the district court shall set the case for a new trial. See Kuta,
600 N.W.2d at 285 (providing for similar disposition in case imposing
remittitur on appeal).
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DECISION OF COURT OF APPEALS AFFIRMED IN PART AND
REVERSED IN PART. DISTRICT COURT JUDGMENT AFFIRMED ON
CONDITION AND CASE REMANDED.
All justices concur except Baker, J., who takes no part.