Alice M. Shea v. Theresa Lorenz and Mark Lorenz, defendants-appellees/cross-appellants, and Kristin Ostrander, Valerie Bisanz, Thomas Lorenz, Heidi Lorenz, Rob E. Dickinson and R.E. Dickinson Investment Advisors, LLC
This text of Alice M. Shea v. Theresa Lorenz and Mark Lorenz, defendants-appellees/cross-appellants, and Kristin Ostrander, Valerie Bisanz, Thomas Lorenz, Heidi Lorenz, Rob E. Dickinson and R.E. Dickinson Investment Advisors, LLC (Alice M. Shea v. Theresa Lorenz and Mark Lorenz, defendants-appellees/cross-appellants, and Kristin Ostrander, Valerie Bisanz, Thomas Lorenz, Heidi Lorenz, Rob E. Dickinson and R.E. Dickinson Investment Advisors, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
IN THE COURT OF APPEALS OF IOWA
No. 14-0898 Filed July 9, 2015
ALICE M. SHEA, Plaintiff-Appellant,
vs.
THERESA LORENZ and MARK LORENZ, Defendants-Appellees/Cross-Appellants,
and
KRISTIN OSTRANDER, VALERIE BISANZ, THOMAS LORENZ, HEIDI LORENZ, ROB E. DICKINSON and R.E. DICKINSON INVESTMENT ADVISORS, LLC, Defendants-Appellees. ________________________________________________________________
Appeal from the Iowa District Court for Pottawattamie County, James M.
Richardson, Judge.
Both sides appeal the district court’s decision in this action over the
transfer of assets from a decedent’s estate. AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED.
John Werner of John Werner, P.L.C., Toledo, and Gary J. Shea of Gary J.
Shea Law Offices, Cedar Rapids, for appellant.
David J. Skalka of Croker, Huck, Kasher, DeWitt, Anderson &
Gonderinger, L.L.C., Omaha, Nebraska, for cross-appellant Theresa Lorenz and
appellees Kristin Ostrander, Valerie Bisanz, Thomas Lorenz, and Heidi Lorenz. 2
A.W. Tauke of Stuart Tinley Law Firm L.L.P., Council Bluffs, for appellees
Dickinson and R.E. Dickinson Investment Advisors, L.L.C.
Brett Ryan of Watson & Ryan, P.L.C., Council Bluffs, for cross-appellant
Mark Lorenz.
Heard by Vogel, P.J., and Potterfield and Mullins, JJ. 3
MULLINS, J.
Alice Shea appeals, and Theresa Lorenz and Mark Lorenz cross-appeal,
the district court’s decision following a bench trial that involved the transfer of
certain investment accounts owned by William (Bill) Lorenz before his death. Bill
was ordered to pay his former spouse, Alice, traditional alimony in the amount of
$2000 per month until her death or remarriage. This alimony obligation was
ordered to be a lien against Bill’s estate. However, Bill changed the beneficiary
designation of the investment accounts to his children, which resulted in the
investment accounts passing outside the estate, depriving Alice of these funds to
satisfy the alimony obligation. When Bill’s estate became insufficient to satisfy
Alice’s claim for alimony, Alice sued Bill’s children and Bill’s financial advisor,
seeking satisfaction of her alimony claim.
The district court granted summary judgment to Bill’s financial planner and
allowed the remaining claims to proceed to a bench trial. The court found
Theresa, Bill’s daughter and his agent under his general power of attorney, liable
for the fraudulently transferred funds and established a constructive trust to pay
Alice’s alimony funded by all probate and nonprobate property Theresa received
from Bill. The claims against all of Bill’s other children were dismissed.
Alice appeals the district court’s decision to grant summary judgment to
the financial planner, claiming there were disputed material facts that made her
claim not ripe for summary judgment. Alice also appeals the district court’s
decision to dismiss all other defendants and enter judgment only against
Theresa, claiming everyone who received funds from the accounts that were 4
fraudulently transferred should be liable up to the full amount of the funds
received. In addition, Alice claims Theresa should be responsible for the full
amount of the alimony claim because of Theresa’s role in the fraudulent transfer.
Finally, Alice asserts she is entitled to punitive damages from Theresa and
should be awarded attorney fees under common law.
In her cross-appeal, Theresa first maintains that the district court should
have granted her motion to dismiss, which alleged the court lacked subject
matter jurisdiction, the case was precluded by res judicata, the case was barred
by the one-year Nebraska statute of limitations, and the claims made by Alice
were not ripe. Theresa also attacks a number of the district court’s factual
findings and claims no constructive trust should have been imposed. Finally, she
asserts the court should not have permitted expert testimony from Bruce Willey.
In his cross-appeal, Mark, Theresa’s brother and one of Bill’s children
dismissed by the district court, claims the district court’s decision finding a
fraudulent transfer and unjust enrichment was in error, as was its decision to
impose a constructive trust. He also claims the court should have made the
judgment against Theresa to only include the funds in the investment accounts
Theresa received from Bill.1 Finally, he claims the court abused its discretion
1 First, while Mark challenges what he calls the district court’s finding of unjust enrichment, we note the district court did not reach a decision on Alice’s unjust enrichment claim. Secondly, we decline to address the first three claims made by Mark as he was a prevailing party as to these issues at the district court. The district court dismissed all of Alice’s claims against Bill’s children except Theresa. Mark prevailed, and he therefore has no injury with respect to these first three claims. While Mark can certainly defend the district court’s decision rendered in his favor, he is not entitled to challenge the district court’s decision rendered against Theresa. See Ackerman v. Lauver, 242 N.W.2d 342, 347 (Iowa 1976) (noting a party cannot appeal a judgment 5
when it failed to sanction Alice’s attorney pursuant to Iowa Rule of Civil
Procedure 1.413 and Iowa Code section 619.19 (2011).
I. Background Facts and Proceedings.
Alice and Bill were married in 1988, but their marriage became strained,
and in 2005, Bill filed for dissolution. During the dissolution proceeding, Bill
signed a general power of attorney for business affairs appointing his daughter,
Theresa, as his attorney-in-fact. The power of attorney became effective upon
Bill’s doctor’s certification that he had a physical or mental incapacity that
rendered him unable to conduct and manage his business affairs. Bill’s doctor
signed this certification in June 2006 during the dissolution proceeding.2 Theresa
actively participated in the dissolution proceeding on behalf of her father,
including signing documents such as Bill’s affidavit of financial status and writing
checks from Bill’s accounts.
During the dissolution proceeding, it was discovered that Bill had certain
investment accounts that named his children as beneficiaries. This was in
contravention to the couple’s prenuptial agreement. So, on August 23, 2006,
both Theresa and Bill signed a beneficiary change form, naming a trust
established in Bill’s will the beneficiary of the accounts. Bill’s attorney, Allison
rendered between two other litigants). The only issue Mark is able to raise in his cross- appeal is the district court’s rejection of his motion for sanctions against Alice, as that is the only issue he lost, and we will address that claim later in this opinion. See Wassom v. Sac Cnty. Fair Ass’n, 313 N.W.2d 548, 550 (Iowa 1981) (“A party may appeal only from an adverse judgment. A familiar and long-established rule prohibits any appeal from a finding or conclusion of law not prejudicial, no matter how erroneous, unless the judgment itself is adverse.”). 2 Theresa testified that her father was getting overwhelmed by the dissolution proceedings and was suffering from dementia. 6
Heffern, informed Alice’s dissolution attorney that the change had been made to
be in compliance with the couple’s prenuptial agreement, but she also advised
Free access — add to your briefcase to read the full text and ask questions with AI
IN THE COURT OF APPEALS OF IOWA
No. 14-0898 Filed July 9, 2015
ALICE M. SHEA, Plaintiff-Appellant,
vs.
THERESA LORENZ and MARK LORENZ, Defendants-Appellees/Cross-Appellants,
and
KRISTIN OSTRANDER, VALERIE BISANZ, THOMAS LORENZ, HEIDI LORENZ, ROB E. DICKINSON and R.E. DICKINSON INVESTMENT ADVISORS, LLC, Defendants-Appellees. ________________________________________________________________
Appeal from the Iowa District Court for Pottawattamie County, James M.
Richardson, Judge.
Both sides appeal the district court’s decision in this action over the
transfer of assets from a decedent’s estate. AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED.
John Werner of John Werner, P.L.C., Toledo, and Gary J. Shea of Gary J.
Shea Law Offices, Cedar Rapids, for appellant.
David J. Skalka of Croker, Huck, Kasher, DeWitt, Anderson &
Gonderinger, L.L.C., Omaha, Nebraska, for cross-appellant Theresa Lorenz and
appellees Kristin Ostrander, Valerie Bisanz, Thomas Lorenz, and Heidi Lorenz. 2
A.W. Tauke of Stuart Tinley Law Firm L.L.P., Council Bluffs, for appellees
Dickinson and R.E. Dickinson Investment Advisors, L.L.C.
Brett Ryan of Watson & Ryan, P.L.C., Council Bluffs, for cross-appellant
Mark Lorenz.
Heard by Vogel, P.J., and Potterfield and Mullins, JJ. 3
MULLINS, J.
Alice Shea appeals, and Theresa Lorenz and Mark Lorenz cross-appeal,
the district court’s decision following a bench trial that involved the transfer of
certain investment accounts owned by William (Bill) Lorenz before his death. Bill
was ordered to pay his former spouse, Alice, traditional alimony in the amount of
$2000 per month until her death or remarriage. This alimony obligation was
ordered to be a lien against Bill’s estate. However, Bill changed the beneficiary
designation of the investment accounts to his children, which resulted in the
investment accounts passing outside the estate, depriving Alice of these funds to
satisfy the alimony obligation. When Bill’s estate became insufficient to satisfy
Alice’s claim for alimony, Alice sued Bill’s children and Bill’s financial advisor,
seeking satisfaction of her alimony claim.
The district court granted summary judgment to Bill’s financial planner and
allowed the remaining claims to proceed to a bench trial. The court found
Theresa, Bill’s daughter and his agent under his general power of attorney, liable
for the fraudulently transferred funds and established a constructive trust to pay
Alice’s alimony funded by all probate and nonprobate property Theresa received
from Bill. The claims against all of Bill’s other children were dismissed.
Alice appeals the district court’s decision to grant summary judgment to
the financial planner, claiming there were disputed material facts that made her
claim not ripe for summary judgment. Alice also appeals the district court’s
decision to dismiss all other defendants and enter judgment only against
Theresa, claiming everyone who received funds from the accounts that were 4
fraudulently transferred should be liable up to the full amount of the funds
received. In addition, Alice claims Theresa should be responsible for the full
amount of the alimony claim because of Theresa’s role in the fraudulent transfer.
Finally, Alice asserts she is entitled to punitive damages from Theresa and
should be awarded attorney fees under common law.
In her cross-appeal, Theresa first maintains that the district court should
have granted her motion to dismiss, which alleged the court lacked subject
matter jurisdiction, the case was precluded by res judicata, the case was barred
by the one-year Nebraska statute of limitations, and the claims made by Alice
were not ripe. Theresa also attacks a number of the district court’s factual
findings and claims no constructive trust should have been imposed. Finally, she
asserts the court should not have permitted expert testimony from Bruce Willey.
In his cross-appeal, Mark, Theresa’s brother and one of Bill’s children
dismissed by the district court, claims the district court’s decision finding a
fraudulent transfer and unjust enrichment was in error, as was its decision to
impose a constructive trust. He also claims the court should have made the
judgment against Theresa to only include the funds in the investment accounts
Theresa received from Bill.1 Finally, he claims the court abused its discretion
1 First, while Mark challenges what he calls the district court’s finding of unjust enrichment, we note the district court did not reach a decision on Alice’s unjust enrichment claim. Secondly, we decline to address the first three claims made by Mark as he was a prevailing party as to these issues at the district court. The district court dismissed all of Alice’s claims against Bill’s children except Theresa. Mark prevailed, and he therefore has no injury with respect to these first three claims. While Mark can certainly defend the district court’s decision rendered in his favor, he is not entitled to challenge the district court’s decision rendered against Theresa. See Ackerman v. Lauver, 242 N.W.2d 342, 347 (Iowa 1976) (noting a party cannot appeal a judgment 5
when it failed to sanction Alice’s attorney pursuant to Iowa Rule of Civil
Procedure 1.413 and Iowa Code section 619.19 (2011).
I. Background Facts and Proceedings.
Alice and Bill were married in 1988, but their marriage became strained,
and in 2005, Bill filed for dissolution. During the dissolution proceeding, Bill
signed a general power of attorney for business affairs appointing his daughter,
Theresa, as his attorney-in-fact. The power of attorney became effective upon
Bill’s doctor’s certification that he had a physical or mental incapacity that
rendered him unable to conduct and manage his business affairs. Bill’s doctor
signed this certification in June 2006 during the dissolution proceeding.2 Theresa
actively participated in the dissolution proceeding on behalf of her father,
including signing documents such as Bill’s affidavit of financial status and writing
checks from Bill’s accounts.
During the dissolution proceeding, it was discovered that Bill had certain
investment accounts that named his children as beneficiaries. This was in
contravention to the couple’s prenuptial agreement. So, on August 23, 2006,
both Theresa and Bill signed a beneficiary change form, naming a trust
established in Bill’s will the beneficiary of the accounts. Bill’s attorney, Allison
rendered between two other litigants). The only issue Mark is able to raise in his cross- appeal is the district court’s rejection of his motion for sanctions against Alice, as that is the only issue he lost, and we will address that claim later in this opinion. See Wassom v. Sac Cnty. Fair Ass’n, 313 N.W.2d 548, 550 (Iowa 1981) (“A party may appeal only from an adverse judgment. A familiar and long-established rule prohibits any appeal from a finding or conclusion of law not prejudicial, no matter how erroneous, unless the judgment itself is adverse.”). 2 Theresa testified that her father was getting overwhelmed by the dissolution proceedings and was suffering from dementia. 6
Heffern, informed Alice’s dissolution attorney that the change had been made to
be in compliance with the couple’s prenuptial agreement, but she also advised
Alice’s counsel that, in her opinion, after the dissolution decree was entered the
prenuptial agreement would no longer be binding on the parties.
The court issued the dissolution decree on November 22, 2006,
concluding among other things that Bill owed Alice a property equalization
payment of $113,761 and Alice was entitled to alimony in the amount of $2000
per month for the rest of her life or until she remarries. The decree provided that
Bill’s alimony obligation survived his death and would be a lien against his estate.
Following the dissolution proceeding, the beneficiary designation of the
investment accounts was changed back to Bill’s children. Bill alone signed the
beneficiary change forms on June 6, 2007, despite the fact the power of attorney
was still in place. This change made the accounts payable to Bill’s children upon
his death, without first passing through his estate.
Alimony payments were consistently made to Alice until Bill’s death on
February 20, 2010. Thereafter, Theresa, as Bill’s personal representative under
the Nebraska probate estate, continued to make the alimony payments out of the
assets in Bill’s estate. However, because of the insufficiency of the assets, the
alimony payments ceased after February 1, 2013, and no further payments have
been made.
Alice sued all of Bill’s children, as beneficiaries of the accounts, along with
Bill’s financial planner, who managed the accounts in question, alleging the
parties engaged in a scheme to avoid paying her alimony. Theresa, along with 7
some of Bill’s other children, filed a motion to dismiss the action. The court
denied the motion to dismiss, concluding the facts surrounding the allegations in
the petition gave the court personal and subject matter jurisdiction, the resolution
of the asserted claims did not need to occur as part of the estate proceeding in
Nebraska because the court could order a constructive trust that could be
administered in Iowa apart from the probate estate. And while unsure whether
future alimony could be converted to a lump sum judgment, the equitable claims
were viable and ripe for determination.
Thereafter, the financial planner, Rob E. Dickinson and R.E. Dickinson
Investment Advisors, L.L.C. (Dickinson) filed a motion for summary judgment.
Dickinson maintained there was no evidence that it acted in concert with Theresa
and Bill to deprive Alice of her alimony. Dickinson maintained that while
beneficiary change forms were provided at the request of Bill and/or Theresa and
at the direction of Bill’s attorney, no advice or direction as to the execution of
those forms was provided. Further, Dickinson claimed it was not liable for fraud
because no representations were ever made to Alice and no actions were taken
to deceive her regarding the accounts. Finally, Dickinson claims that any actions
taken to distribute the funds in the accounts to Bill’s children pursuant to the
beneficiary designation were done in good faith based on Bill’s designation.
Alice resisted the motion for summary judgment, but the court granted the
motion on May 16, 2013, finding:
A thorough review of the evidence does not show anything that indicated Dickinson did some act intended to deprive Alice of her monthly alimony. . . . To keep Dickinson in this case simply because [Alice] believe[s] the Defendants used Dickinson as the 8
vehicle to accomplish their alleged nefarious scheme is inappropriate. This record contains nothing by which this Court can justify keeping Dickinson in the case.
Later, Theresa and Bill’s other children also moved for summary
judgment, but that motion was denied by the court. The court noted Alice’s
counsel acknowledged that the constructive trust was the main claim being made
and that all other claims alleged in the petition were theories by which a
constructive trust might be imposed.
The case proceeded to a bench trial on March 18, 2014. The court issued
its decision March 25, dismissing with prejudice all defendants except Theresa.
With respect to Bill’s other children, the court stated:
[A]ll other defendants were not active participants in the underlying course of events. These other defendants simply received a beneficiary check from the Schwab accounts. No viable cause of action has been presented against them. Therefore, with the exception of Theresa Lorenz, this cause of action is dismissed against them with prejudice.
As to Theresa, the court concluded Alice proved her claim of fraudulent transfer
and ordered
[a] constructive trust shall be formed with Defendant Theresa Lorenz personally responsible for said alimony obligation to the extent of all probate and nonprobate funds received by her from Bill. A judgment lien shall be imposed against all real and personal property of said Defendant to assure the corpus of said trust. Defendant shall execute and deliver said monthly alimony obligation to Plaintiff in a manner and form as she performed as executor.
Following the decision, Mark, along with the other dismissed siblings, filed
a motion for sanctions against Alice and her attorney for alleged frivolous filings.
The court rejected this motion. 9
Alice, Theresa, and Mark appeal the district court’s decision.
II. Scope and Standard of Review.
We review the district court’s decision arising from a bench trial and
arising from a motion for summary judgment for correction of errors at law.
Chrysler Fin. Co. v. Bergstrom, 703 N.W.2d 415, 418 (Iowa 2005) (bench trial);
Otterberg v. Farm Bureau Mut. Ins. Co., 696 N.W.2d 24, 27 (Iowa 2005)
(summary judgment). With respect to the district court’s decision following the
bench trial:
The district court’s findings of fact have the force of a special verdict and are binding on us if supported by substantial evidence. Evidence is substantial if a reasonable person would accept it as adequate to reach a conclusion. Evidence is not insubstantial merely because we may draw different conclusions from it; the ultimate question is whether it supports the finding actually made, not whether the evidence would support a different finding. In determining whether substantial evidence exists, we view the evidence in the light most favorable to the district court’s judgment. If the district court’s findings are ambiguous, they will be construed to uphold, not defeat, the judgment.
Chysler Fin., 703 N.W.2d at 418–19 (internal citations and quotation marks
omitted).
To the extent that the parties on appeal challenge the district court’s
discretionary actions such as admitting evidence from expert witnesses or
deciding whether to impose sanctions, we review those claims for abuse of
discretion. See Leaf v. Goodyear Tire & Rubber Co., 590 N.W.2d 525, 531 (Iowa
1999) (“We are committed to a liberal rule on the admission of opinion testimony,
and only in clear cases of abuse would the admission of such evidence be found 10
to be prejudicial.”); see also Barnhill v. Iowa Dist. Ct., 765 N.W.2d 267, 272 (Iowa
2009) (“We review a district court’s decision on whether to impose sanctions for
an abuse of discretion.”). Similarly, we review a district court’s refusal to award
punitive damages for an abuse of discretion. Brokaw v. Winfield-Mt. Union Cmty.
Sch. Dist., 788 N.W.2d 386, 395 (Iowa 2010).
While we normally review a district court’s decision on a request for
attorney fees for abuse of discretion, our review is de novo when the request for
attorney fees is based on common law, rather than on a statute or a contract.
Fennelly v. A-1 Machine & Tool Co., 728 N.W.2d 163, 167 (Iowa 2006).
III. Motion to Dismiss.
We first address the motion to dismiss Theresa and some of her siblings
filed in response to Alice’s lawsuit. The motion raised a number of issues which
the district court rejected. On appeal, Theresa claims (1) the district court did not
have subject matter jurisdiction over this case in light of the Nebraska probate
action, (2) Alice’s claim is barred by res judicata or issue preclusion, (3) the
Nebraska one-year statute of limitations applies to bar Alice’s claim, and (4) the
matter was not ripe for consideration because Alice was still receiving alimony
payments when the suit was filed.
A. Subject Matter Jurisdiction. Theresa claims the Nebraska probate
court has original and exclusive subject matter jurisdiction of all matters relating
to Bill’s estate. Because Nebraska’s probate court has subject matter
jurisdiction, Theresa claims the Iowa courts do not. 11
Subject matter jurisdiction is “the authority of a court to hear and
determine cases of the general class to which the proceedings in question
belong, not merely the particular case then occupying the court’s attention.”
Alliant Energy-Interstate Power & Light Co. v. Duckett, 732 N.W.2d 869, 874–75
(Iowa 2007) (emphasis added). “A court may have subject matter jurisdiction but
for one reason or another may not be able to entertain a particular case. In such
a situation we say the court lacks authority to hear that particular case.” Id. at
875.
There is no question here that Iowa courts have subject matter jurisdiction
over actions brought by its citizens claiming a fraudulent transfer of funds
executed within the borders of the state alleged to have been done in order to
contravene an Iowa judgment. See generally Iowa Code ch. 684 (outlining the
fraudulent transfer cause of action). We conclude Theresa is not actually
challenging the Iowa court’s subject matter jurisdiction but is instead challenging
the court’s authority to hear this particular case in light of the fact that Bill’s estate
is being probated in Nebraska. It is her contention the proper venue for Alice’s
claim is in the Nebraska probate action, not in the Iowa district court.
The funds in question passed outside of Bill’s estate when he died as they
were pay-on-death accounts. In this litigation in Iowa, Alice did not assert claims
against Bill or his estate to recover the fraudulently transferred funds. Here, she
only sued the recipients of those funds, making claims in equity and under the
fraudulent transfer act. The fact Alice had other causes of action available to her 12
and other remedies in other jurisdictions3 does not deprive the Iowa courts of the
authority to decide the claims Alice brought against Bill’s children. We therefore
conclude the Iowa court had both subject matter jurisdiction and the authority to
hear this particular case.
B. Res Judicata. Theresa next claims the district court should have
granted her motion to dismiss based on res judicata. Theresa maintains that
Alice’s claims against Bill’s children for the return of the funds in the investment
accounts and her claim against Theresa for not halting the transfer of those funds
or for failing to recover those funds is barred by the Nebraska probate court’s
decision. Theresa also claims on appeal that Alice’s assertions that her alimony
award was a lien on Bill’s assets or somehow restricted Bill’s estate planning are
barred by the dissolution decree.
With respect to the Nebraska probate action, Theresa claims that
Nebraska’s law provides a remedy when transfers from pay-on-death
3 See Nebraska Revised Statute section 30-2726 (Reissue 2008), which provides, in part: (a) If other assets of the estate are insufficient, a transfer resulting from a right of survivorship or POD designation under sections 30-2716 to 30-2733 is not effective against the estate of a deceased party to the extent needed to pay claims against the estate, statutory allowances to the surviving spouse and children, taxes, and expenses of administration. (b) A surviving party or beneficiary who receives payment from an account after death of a party is liable to account to the personal representative of the decedent for a proportionate share of the amount received to which the decedent, immediately before death, was beneficially entitled under section 30-2722, to the extent necessary to discharge the amounts described in subsection (a) of this section remaining unpaid after application of the decedent’s estate. A proceeding to assert the liability for claims against the estate and statutory allowances may not be commenced unless the personal representative has received a written demand by the surviving spouse, a creditor, a child, or a person acting for a child of the decedent. The proceeding must be commenced within one year after death of the decedent. 13
designations leave a creditor of an estate unsatisfied. That remedy is for the
creditor to bring a demand within the probate proceeding to have the pay-on-
death assets brought back into the estate. See Neb. Rev. Stat. § 30-2726(a).
However, in this case, Alice did not file suit against Bill’s estate or sue
Theresa in her capacity as the estate’s personal representative. In the Iowa
litigation, she was not seeking to return the pay-on-death funds to the estate but
seeking to establish a constructive trust whereby the fraudulently transferred
funds would be made available to her to satisfy her alimony claim. She was also
seeking attorney fees and punitive damages for the actions Theresa took in
assisting her father in transferring these assets beyond the reach of Bill’s estate.
Because of the differences in the causes of action, we conclude the Nebraska
probate case does not preclude Alice’s Iowa lawsuit.
In an analogous case, our supreme court determined an action contesting
a will and a separate tort action for the intentional interference with a bequest are
two separate actions and are not required to be pursued at the same time in the
same court. See Huffey v. Lea, 491 N.W.2d 518, 521 (Iowa 1992). The court in
Huffey explained:
Stated simply, in a will contest, the testator’s intent or mental state is the key issue; in an intentional interference case, the wrongdoer’s unlawful intent to prevent another from receiving an inheritance is the key issue. Because of the differences in proof, the actions are not the same nor will the same evidence necessarily support both actions. In addition, the recovery demanded in the will contest and in this action for intentional interference is not the same. In the will contest, the recovery demanded was the setting aside of the will procured by undue influence. In this action for intentional interference, the recovery demanded is for attorney fees, value of Huffey’s time lost in his farm operation, and mental anguish 14
incurred in contesting the will. Obviously, the setting aside of the will did not provide Huffey with recovery of his consequential damages. Huffey also requested an award of punitive damages based on intentional and malicious conduct of defendants. An adequate remedy has not been provided by the mere setting aside of the will.
Id.
In this case the proof required to sustain an action in the Nebraska
probate action under Nebraska Revised Statute section 30-2726(a) is different
from the proof necessary to sustain a claim under Iowa’s Uniform Fraudulent
Transfer Act (UFTA). See Iowa Code § 684.12. The focus in the probate action
would be on the validity of Alice’s alimony claim against the estate and whether
the assets in Bill’s estate were sufficient to satisfy that claim, whereas the focus
in the UFTA action was on whether fraud was committed in attempting to
circumvent the dissolution decree by removing assets from Bill’s estate. In
addition, the recovery sought is different in the two actions. In the Iowa UFTA
action, Alice can seek attorney fees and punitive damages unavailable to her in
the Nebraska probate court.4
4 We also note that the Court of Appeals of Nebraska has issued its appeal decision in Bill’s probate action where it was determined that Alice is unable to recover the pay-on- death funds under Nebraska Revised Statute section 30-2726(a). The court in Nebraska concluded that despite receiving Alice’s timely demand to recover those funds, Theresa, in her capacity as personal representative, failed to timely bring an action against the recipients of those funds, including herself, as required by section 30-2726(b), which provides: A proceeding to assert the liability for claims against the estate and statutory allowances may not be commenced unless the personal representative has received a written demand by the surviving spouse, a creditor, a child, or a person acting for a child of the decedent. The proceeding must be commenced within one year after death of the decedent. See In re Estate of Lorenz, 858 N.W.2d 230, 245–47 (Neb. Ct. App. 2014). The Court of Appeals of Nebraska did not address what the ramifications would be due to Theresa’s 15
As to the Iowa dissolution proceeding, Bill and Theresa’s actions to move
assets out of Bill’s estate had not yet occurred at the time of the dissolution
proceeding. It is thus not possible to conclude that Alice is somehow precluded
by that decision from bringing her current UFTA action. In fact, the dissolution
court specifically provided that Alice could bring a subsequent action in the event
Bill attempted to “dissipate, conceal, or dispose of assets in an effort to avoid his
court ordered obligation.” The dissolution proceeding therefore has no preclusive
effects on the current lawsuit.
C. Nebraska Statute of Limitations. Theresa also maintains that Alice’s
claim should be barred by the one-year statute of limitations found in Nebraska
Revised Statutes section 30-2726(b)—“The proceeding must be commenced
within one year after death of the decedent.” The Nebraska one-year statute of
limitations does not prevent Alice from bringing this UFTA proceeding in Iowa
district court. The statute of limitations applicable to Alice’s claim here is found in
Iowa Code section 684.9, and Theresa makes no claim that Alice is barred by
this statute of limitations.
D. Ripeness. Finally, Theresa claims the district court erred in failing to
dismiss Alice’s claim for ripeness. Theresa maintains that at the time Alice
brought this lawsuit, Bill’s estate was still paying her monthly alimony support and
were it not for Alice’s “meritless litigiousness” in the probate proceeding, the
estate would have still been paying her support. Theresa concludes that the
failure to bring the action as required by this code section because that issue was not before them. Id. at 247. However, the Nebraska Court of Appeals decision may not be the final resolution of these issues as the parties advised at oral argument that the Nebraska Supreme Court has now sustained Theresa’s petition for further review. 16
estate ran out of money to pay Alice’s claim because the estate was forced to
defend Alice’s lawsuits and the money was spent on lawyers rather than on her
alimony.
“A case is ripe for adjudication when it presents an actual, present
controversy, as opposed to one that is merely hypothetical or speculative.” State
v. Iowa Dist. Ct., 616 N.W.2d 575, 578 (Iowa 2000). Until there was proof that
Bill’s estate was unable to meet its alimony obligation to Alice, Theresa asserts
Alice did not have a ripe claim. However, under the UFTA, the insolvency of the
debtor is only one factor to consider in proving whether a fraudulent transfer has
occurred. See Iowa Code § 684.4(2) (detailing eleven factors that can be
considered to determine whether a debtor had “actual intent” to hinder, delay or
defraud any creditor). Thus, in order to maintain an action under the UFTA, Alice
need not have waited until Bill’s estate became insolvent in order to sue.
Even if we were to conclude that Bill’s estate needed to cease making
alimony payments to Alice before her claim became ripe, the estate had given
Alice notice that the final alimony payment would be on February 1, 2013, and
the matter proceeded to trial a year later in March 2014. Thus, even under
Theresa’s analysis, this case was ripe by the time it went to trial.5
We thus conclude the district court correctly denied Theresa’s motion to
dismiss Alice’s claims.
5 We will not conclude Alice’s claim lacks ripeness because some of the estate’s assets were spent on lawyers defending the claims Alice brought in the probate action. We will not fault Alice for bringing these claims against the estate. 17
IV. Summary Judgment to Dickinson.
Alice claims the district court improperly granted summary judgment to
Dickinson for several reasons. First, Alice claims that the trial court viewed the
facts in a light more favorable to Dickinson, granting inferences and conclusions
in Dickinson’s favor, rather than in her favor as required by applicable burden of
proof. Next, Alice claims that in granting summary judgment for Dickinson the
court wrongfully concluded that all of Dickinson’s contentions would be adopted
by a fact finder as a matter of law and that Alice’s evidence would be
disregarded. Alice also claims the court improperly focused on the fact Dickinson
did not owe a duty to her but rather owed a duty to Bill. Finally, Alice asserts the
court did not sufficiently address the factual issues involved.
Summary judgment is appropriate when no genuine issue of material fact
exists and the moving party is entitled to judgment as a matter of law. Iowa R.
Civ. P. 1.981(3). When the facts are undisputed and the only issue is the legal
consequence of those facts, summary judgment may be entered. Lubben v. Chi.
Cent. & Pac. R.R. Co., 563 N.W.2d 596, 597 (Iowa 1997). In order for Alice to
overcome a motion for summary judgement, she must come forth with specific
facts demonstrating the existence of genuine issues for the trial. Iowa R. Civ. P.
1.981(5). Inferences drawn from the facts must be resolved in Alice’s favor. See
Knapp v. Simmons, 345 N.W.2d 118, 121 (Iowa 1984). An inference is legitimate
if it is rational, reasonable, and otherwise permissible under the governing
substantive law; an inference is not legitimate if it is based upon speculation or
conjecture. Phillips v. Covenant Clinic, 625 N.W.2d 714, 718 (Iowa 2001). 18
Summary judgement is not proper if reasonable minds could draw different
inferences. Knapp, 345 N.W.2d at 121.
In her lawsuit, Alice claims Dickinson engaged in a civil conspiracy with
Bill and Theresa to fraudulently transfer assets out of Bill’s estate to avoid the
alimony obligation and/or that Dickinson aided and abetted Bill and Theresa to do
the same. Alice claims Dickinson knew his actions were wrongful. Alice also
claims in her statement of disputed facts that Dickinson knew of Bill’s mental
disability and Theresa’s power of attorney, and therefore Dickinson should not
have let Bill sign the document to change his beneficiaries.6
Our court has relied on the Restatement (Second) of Torts section 876 to
set the parameters of conspiracy and aiding and abetting. See Wright v. Brooke
Grp. Ltd., 652 N.W.2d 159, 171-74 (Iowa 2002). Conspiracy is an agreement of
two or more persons acting together to accomplish an unlawful purpose, or to
accomplish a lawful purpose by unlawful means. Basic Chems., Inc. v. Benson,
251 N.W.2d 220, 233 (Iowa 1977) (citing Stover v. Hindman, 159 N.W.2d 422
(Iowa 1968)). The principal element of conspiracy is the agreement, involving
mutual mental action and an intent to commit the act that results in injury. Id.
Wrongful conduct forming the base of a civil conspiracy claim must be either an
intentional tort or actionable in the absence of conspiracy. Wright, 652 N.W.2d at
174. Speculation, relationship, or association and companionship alone do not
establish a conspiracy. Ezzone v. Riccardi, 525 N.W.2d 388, 398 (Iowa 1994).
6 Alice does not seek to invalidate the beneficiary designation based on Bill’s incapacity. Therefore, Dickinson’s knowledge of the active power of attorney is not a material fact with respect to Dickinson’s liability. See Phillips, 626 N.W.2d at 717 (noting summary judgment is appropriate where there is no genuine issue of material fact). 19
But, conspiracy is normally established by circumstantial evidence, and courts
are liberal in allowing proof of circumstances to show whether a conspiracy
exists. Stover, 159 N.W.2d at 425.
Our court has again relied on the principles of the Restatement (Second)
of Torts section 876(b) to set the parameters of aiding and abetting. See Heick
v. Bacon, 561 N.W.2d 45, 51 (Iowa 1997); Ezzone, 525 N.W.2d at 397-98; Tubbs
v. United Cent. Bank, N.A., 451 N.W.2d 177, 182 (Iowa 1990). Aiding and
abetting is when one person is subject to liability for harm caused by the tortious
conduct of another because that person knows the other’s conduct constitutes a
breach of duty and gives substantial assistance or encouragement to the other
so to conduct himself. Restatement (Second) of Torts § 876; Tubbs, 451 N.W.2d
at 177. Factors to consider in determining whether the defendant gave
substantial assistance include: the nature of the act encouraged, the amount of
assistance given, the presence or absence at the time of tort, the relation to the
primary tortfeasor, and the defendant’s state of mind. Restatement (Second) of
Torts § 876. To be a “substantial factor in causing the resulting tort,” it is
required that the encouragement or assistance given to the alleged aider and
abettor be a proximate cause of the tort causing injury. Heick, 561 N.W.2d at 52.
The facts set out in the motion for summary judgment and in the
resistance do not contain material differences. Those facts show Dickinson
provided forms to Bill which, when sent to Schwab and approved by Schwab,
would allow Bill to change the beneficiaries on the accounts to his seven
children. After Bill’s death, Dickinson mailed out the distribution election forms to 20
Bill’s beneficiaries. While the facts also show that Dickinson was at least
somewhat aware of the alimony obligation Bill owed to Alice, and that changing
the beneficiaries to Bill’s children would prevent the money in the Schwab
accounts from being a part of Bill’s estate to pay Alice’s alimony, these facts
alone are not enough.
To make a prima facie case of conspiracy, Alice would have to show that
Dickinson and Theresa or Bill had made an agreement to defraud Alice and that
Dickinson’s facilitation of the beneficiary forms was, by itself, a tortious act to
accomplish that goal. Even construing the facts in Alice’s favor, as we must in a
motion for summary judgment, there is no evidence to support Alice’s claim
beyond her mere allegations.
With respect to the aiding-and-abetting claim, Alice would have to show
that Dickinson knew Bill and Theresa’s actions in changing the beneficiaries
constituted a breach of duty and that he gave “substantial assistance” to Theresa
and Bill. Considering that all of the forms Dickinson provided to Bill were
available online and through other means, Dickinson’s involvement in providing
the forms to Bill to sign does not to rise to the level of substantial assistance.
Without evidence of other “substantial assistance,” we agree with the district
court that it was inappropriate to keep Dickinson in the case based solely on
Alice’s allegations that something nefarious occurred.
Alice claims the district court improperly interpreted the facts and
inferences in a light more favorable to Dickinson. However, the district court did
not say it was interpreting inferences in favor of Dickinson, but instead, the court 21
said it would have to engage in “rank speculation” in order to draw the inferences
Alice asked the court to draw. Alice also claims in granting summary judgment,
the district court disregarded her evidence. We disagree. The district court
properly concluded there was no evidence that supported Alice’s contentions.
Next, Alice asserts the district court improperly focused on the fact that
Dickinson did not have a duty toward Alice, but toward Bill. On this issue, the
district court stated that “[Dickinson] clearly does not have a personal obligation.
That obligation belongs to William Lorenz and his Estate.” Aiding and abetting
does not require that one has a personal duty, but it does require one to know
that the other’s conduct constitutes a breach of their duty. See Restatement
(Second) of Torts § 876(b). Dickinson testified he thought Bill’s estate included
other assets from which the alimony obligation would have been paid, and Alice
did not offer any evidence that would indicate Dickinson was aware Bill and
Theresa’s action breached a duty.
Finally, Alice claims that the district court did not articulate the factual
issues involved in violation of Iowa Rule of Civil Procedure 1.904(1). However,
rule 1.904(1) requires a court, who tries an issue of fact without a jury, to
specifically find the facts in writing. Alice’s claims against Dickinson were not
tried to the court but were resolved by summary judgment decision. Therefore,
rule 1.904(1) is not applicable. No similar requirement is found in the rules
governing summary judgment proceedings. See Iowa Rs. Civ. P. 1.981–.983.
We find the district court acted properly in granting Dickinson summary
judgement. 22
V. Trial and Judgment.
Next we address claims made by Alice and Theresa that occurred either
during trial or as part of the court’s decision. Theresa asserts the court erred in
admitting the expert testimony of Bruce Willey. She also challenges the court’s
factual findings on a number of grounds. Alice claims the court should not have
dismissed Bill’s other children from the lawsuit since they were the recipients of
the fraudulently transferred funds. She also asserts Theresa should be liable for
the total amount of funds that were fraudulently transferred, not just the funds
Theresa received. Finally, she claims the court should have awarded her
punitive damages and common law attorney fees.
A. Expert Testimony. First, Theresa asserts that the district court should
not have admitted expert testimony from Bruce Willey. Willey testified as an
expert for Alice and offered testimony that there was no other reasonable estate
planning purpose to change the beneficiaries of the account other than to avoid
paying Alice her alimony. He also criticized those involved in Bill’s estate
planning as there were no calculations done to determine the assets needed to
satisfy Alice’s alimony claim. Finally, as an attorney in the practice of estate
planning, it was his opinion that all of Bill’s assets should have come into the
estate to be available to pay Alice’s claim before Bill’s children received any
inheritance in order to be in compliance with the dissolution decree.
At trial, Theresa’s attorney objected to Willey’s testimony under Iowa
Rules of Evidence 5.701 and 5.702 because his testimony went to the ultimate
question of law that the court was to decide. The court permitted the testimony, 23
concluding the objection “really is to any weight that the court will give to this
testimony.”
Iowa Rule of Evidence 5.702 provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.
“We are committed to a liberal rule on the admission of opinion testimony.” Leaf,
590 N.W.2d at 531. There is no challenge that Willey was not an expert based
on his knowledge or skill. Theresa faults the district court for admitting this
testimony because she believes Willey opined on the ultimate legal conclusion
and whether the facts satisfied the legal standard in this case. This, she claims,
is improper. We note the case law she cites in support of her claim pertains to
opinions offered by lay witnesses under rule 5.701,7 not expert witnesses. See
State v. Cromer, 765 N.W.2d 1, 10 (Iowa 2009).
In contrast, an expert can offer opinions that touch upon an ultimate fact in
a case. Grismore v. Consol. Prods. Co., 5 N.W.2d 646, 655 (Iowa 1942) (“[T]he
fact that the matter inquired about is a vital and controlling fact in the trial, or is
even the ultimate fact, which the jury are to pass upon and determine, is no
reason why the opinion should not be received.”). We therefore conclude the
7 Iowa Rule of Evidence 5.701 provides: If the witness is not testifying as an expert, the witness’s testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding of the witness’s testimony or the determination of a fact in issue. (Emphasis added.) 24
court did not abuse its discretion in admitting Willey’s testimony and giving that
testimony whatever weight the court determined, as the fact finder, it should
have. However, even if we were to conclude that Willey’s testimony crossed the
line and should not have been admissible, the court did not reference Willey’s
testimony at all in its decision. Thus, it clearly gave Willey’s opinion little, if any,
weight, and Theresa cannot prove she was prejudiced by its admission. See
Mohammed v. Otoadese, 738 N.W.2d 628, 633 (Iowa 2007) (noting “the
erroneous admission of evidence does not require reversal ‘unless a substantial
right of the party is affected’” (citation omitted)).
B. Dismissal of Bill’s Children Other than Theresa. Next, Alice claims
the court should not have dismissed Bill’s other children from the action because,
as recipients of fraudulently transferred funds, they must return the funds
received irrespective of their knowledge or complicity in the fraud. In support of
her claim, Alice cites the UFTA in Iowa Code chapter 684.8
A transfer is fraudulent under the UFTA when a debtor, among other
things, makes a transfer or incurs an obligation if the debtor did so “with actual
intent to hinder, delay, or defraud any creditor of the debtor.” Iowa Code
§ 684.4(1)(a). If the claim is proved, a creditor may obtain any of the following
remedies:
8 She also bases her claims against the other children on Iowa Code section 630.16 and unjust enrichment. In addition, Alice claims the other children’s failure to appear for trial after being directed to personally appear by the court should result in a default judgment against them. Because we conclude Bill’s other children are liable to Alice under the UFTA to the extent of their receipt of fraudulently transferred funds, we need not reach these alternative claims made by Alice. 25
a. Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim. b. A remedy by any special action available under this subtitle, including attachment or other provisional remedy, against the asset transferred or other property of the transferee. c. Subject to applicable principles of equity and in accordance with applicable rules of civil procedure, any of the following: (1) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property. (2) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee. (3) Any other relief the circumstances may require.
Id. § 684.7. The creditor must prove the fraudulent transfer by clear and
convincing evidence. Benson v. Richardson, 537 N.W.2d 748, 756 (Iowa 1995).
The district court concluded that Alice had proved all elements of her claim
for fraudulent transfer by the required burden. However, it also found that no
viable cause of action had been presented against Bill’s other children,
dismissing them from the case. As the court determined the transfer by Bill and
Theresa, as Bill’s power of attorney, was fraudulent under the UFTA, Alice is able
to avoid the transfer to the extent necessary to satisfy her lifetime alimony claim.
As such, the recipients of the funds that were fraudulently transferred, under
section 684.7, are responsible to Alice to the extent that the funds are needed to
satisfy her claim. See Iowa Code § 684.8(2) (“[T]he creditor may recover
judgment for the value of the asset transferred . . . or the amount necessary to
satisfy the creditor’s claims, whichever is less. The judgment may be entered
against either of the following: (a) The first transferee of the asset or the person
for whose benefit the transfer was made.”) 26
The other children assert they should not be responsible because they
had no knowledge of the conduct of Bill or Theresa and were unaware they were
beneficiaries of the accounts until Bill’s death. Under the UFTA, a transfer will
not be considered voidable if a first transferee took in good faith and for a
reasonably equivalent value. See id. § 684.8(1). Bill’s other children did not
appear for trial or offer any evidence. While there is no evidence to prove they
acted to defraud Alice, their good faith acceptance of the transfer only insulates
them from liability under the UFTA if they gave Bill something of reasonably
equivalent value in exchange for the transfer. See id. There is simply no
evidence to support a finding to that effect.
We therefore conclude the district court erred in dismissing Bill’s other
children, specifically Kristin Ostrander, Mark Lorenz, Valerie Bisanz, Thomas
Lorenz, and Heidi Lorenz,9 as they are responsible to pay Alice, as Bill’s creditor,
the amount necessary to satisfy her claim to the extent of their receipt of the
fraudulently transferred funds. This case should be remanded to the district court
to enter a judgment in favor of Alice against each of the listed Lorenz children in
the amount of the funds each child received from Bill’s Schwab accounts.
C. Claims Between Theresa and Alice. The district court concluded the
Alice proved the elements of civil conspiracy and aiding and abetting against
Theresa. The court also concluded Alice proved she was damaged by Theresa’s
action and that a fraudulent transferred occurred. Theresa challenges the district
9 The Estate of Matthew Lorenz and Debbie Lorenz were dismissed from the case by Alice before trial in this case. Therefore, any judgment entered did not affect their interest in the funds received from Bill upon his death. 27
court’s decision by asserting a number of the court’s factual findings are
unsupported. Specifically she asserts the record does not support the findings
(1) that Bill or Theresa made a fraudulent transfer or acted to frustrate the
dissolution decree, (2) that the beneficiary changes frustrated the dissolution
decree and that Theresa knew the changes were improper, (3) that there was a
conflict in the record as to who—Bill or Theresa—made the beneficiary change,
(4) that Theresa concealed assets, (5) that Bill and Theresa were one person
after Theresa became Bill’s attorney-in-fact and that she can be personally liable
for following Bill’s directives, and (6) that Theresa was a co-conspirator or acted
in concert to commit a wrong against Alice when Theresa only complied with
Bill’s directives and the advice of Bill’s attorney.
Alice defends these factual findings, and further asserts the court should
have ordered Theresa to be responsible for the entire amount of the funds that
were fraudulently transferred to Bill’s children in light of her role as Bill’s power of
attorney when the transfer was made. Because Theresa’s actions amounted to
an intentional tort, Alice claims this makes her jointly and severally liable for the
entire amount.
Findings of fact in a jury-waived case have the effect of a special verdict
and are the equivalent of a jury verdict. McCune v. Muenich, 124 N.W.2d 130,
131 (Iowa 1963). The court’s judgment on appeal will not be disturbed if it is
supported by substantial evidence. Id. “Evidence is substantial or sufficient
when a reasonable mind would accept it as adequate to reach the same
findings.” Connolly v. Bain, 484 N.W.2d 207, 210 (Iowa 1993). We will not weigh 28
the evidence or the credibility of witnesses. McCune, 124 N.W.2d at 131. The
evidence will be construed in the light most favorable to the verdict. Id.
1. Fraudulent Transfer Occurred. Theresa maintains that when Bill
signed the beneficiary change forms in 2007 no transfer actually occurred. He
remained the owner of the accounts until his death, the beneficiaries did not
obtain any interest in the accounts during Bill’s lifetime, and no funds were
removed from Bill’s assets at that time. Theresa further contends that at Bill’s
death, he did not make a transfer because he no longer owned the accounts but
the account holder, Schwab, made the actual transfer upon Bill’s death. Theresa
goes on to assert that even if a transfer occurred in 2007 or at Bill’s death, the
evidence does not support the conclusion that the transfer was done to defraud
Alice because the transfer was made based on the advice of Bill’s dissolution
attorney.
A transfer is defined under the UFTA as “every mode, direct or indirect,
absolute or conditional, voluntary or involuntary, of disposing of or parting with an
asset or an interest in an asset, and includes payment of money, release, lease,
and creation of a lien or other encumbrance.” Iowa Code § 684.1(11). A transfer
is made, according to the statutory provisions, “when it becomes effective
between the debtor and the transferee.” Id. § 684.6(3). We conclude this broad
definition includes the act of designating a beneficiary on a pay-on-death account
as it is a direct mode of disposing of a conditional future interest in the asset.
The fact that the beneficiary designation could have been changed during Bill’s
lifetime or that the account could have been liquidated before Bill’s death makes 29
the transfer conditional, but nonetheless it still is a transfer under this statutory
definition. The transfer became effective when Bill made the designation.
With respect to the evidence that the designation was made with an actual
intent to hinder, delay, or defraud, it appears Theresa claims that the transfer
cannot be found to be fraudulent because it was made based on the advice of
Bill’s dissolution attorney. That attorney testified that in her opinion the
dissolution decree did not restrict Bill’s estate planning because the decree
awarded him ownership of the accounts in question. In her opinion, the
dissolution court did not put any specific duties on Bill to maintain certain assets
or a certain amount of money to pay Alice her alimony claim upon his death. The
attorney considered the changing of the beneficiary designation to be maintaining
the status quo as Bill had previously designated his children as the beneficiaries
of these accounts before the dissolution proceeding and she had alerted Alice’s
counsel that the beneficiary designation would be changed back when the
dissolution decree was entered. She considered the plan to be reasonable and
in compliance with the dissolution decree.
Further, she expected Alice’s counsel to bring an enforcement action if
Alice disagreed with her interpretation of the dissolution decree language, and
Bill’s counsel felt comfortable having to justify the action to the court if it ever
became subject to the court’s review. According to counsel, she did not consider
the estate planning decision to be secretive and fully expected Alice and her
counsel to be aware of the beneficiary change. 30
It is unclear how Alice or her counsel would have been aware of the
beneficiary change as there was no reporting requirement in the dissolution
decree and the account was not public record. Bill’s counsel did send Alice’s
attorney a letter during the dissolution proceeding indicating the beneficiary
designation change had been made to bring the account into compliance with the
prenuptial agreement. The letter went on to say that in her opinion the prenuptial
agreement would be no longer binding when the decree was issued. However,
counsel never specifically informed Alice or her attorney that Bill planned to
change the beneficiary designation back to his children when the dissolution
decree was entered. Apparently, Bill’s counsel expected Alice’s attorney to read
between the lines of the letter in order to realize that the beneficiary designation
would likely be changed following the dissolution decree. Alice and her attorney
were apparently supposed to know this would occur despite the dissolution
court’s later direction in a posttrial order that Alice could seek court intervention
should Bill “dissipate, conceal, or dispose of assets in an effort to avoid his court
ordered obligation.”
It is now clear that neither Alice nor her attorney knew of the beneficiary
change until after Bill’s death. Theresa, as personal representative of Bill’s
estate, failed to identify the accounts in the probate inventory. While the
accounts passed outside of the estate, such that they did not need to be
identified in the probate inventory, failing to disclose their existence in the 31
probate inventory further kept Alice in the dark as to their existence and Bill’s
beneficiary change.10
In finding factual support for the intent to defraud element, the district court
noted that the issue of lifetime alimony was a hotly contested issue during the
dissolution proceedings and that Bill, Theresa, and Bill’s attorney remained
frustrated by the lifetime alimony award. Following the dissolution, a “common
plan” was concocted between Bill, Theresa, and Bill’s attorney to keep certain
assets from becoming part of Bill’s estate. While Bill’s counsel thought the plan
was “reasonable,” she knew the effect was to remove the assets from the reach
of Alice’s alimony award, and she acknowledged in retrospect that the funds
remaining in the estate were inadequate to pay Alice’s claim. Both Bill’s counsel
and Theresa assert Bill made the ultimate decision to change the beneficiary
designation, but at the time the designation was made, Bill’s physician had
determined that he was incapable of conducting and managing his business
affairs. Clearly, both Bill’s counsel and Theresa provided assistance and
guidance to Bill in deciding the beneficiary change should be made and provided
assistance in executing that change.
We conclude substantial evidence supports the district court’s conclusion
that the transfer here was made with the actual intent to hinder, delay, or defraud
10 The Nebraska Court of Appeals noted the problem with the current Nebraska statutory language, in cases such as these, where a creditor may not know of the existence of nonprobate transfers in order to request the personal representative take action to retrieve those transfers in order to satisfy a creditor’s claims. See Lorenz, 858 N.W.2d at 247–48. The court also noted that the personal representative may have a conflict of interest in keeping this information quiet and not taking action in a timely manner when that person is also a nonprobate transfer beneficiary. Id. This decision of the Nebraska Court of Appeals is currently pending in the Nebraska Supreme Court on further review. 32
Alice. See id. § 684.4(1) (“A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor . . . if the debtor made the transfer . . . (a.) With actual
intent to hinder, delay, or defraud any creditor of the debtor.”).
2. Frustration of the Dissolution Decree. Next, Theresa claims the court
erred in finding the beneficiary change resulted in a total frustration of the
dissolution decree. She again asserts the beneficiary change was not a
“transfer” within the meaning of the statute. We again reject this assertion for the
reasons stated above. She also claims there is no support for the conclusion
that she knew the beneficiary change was improper since she relied on the
advice from Bill’s attorney.
The district court made specific credibility findings against Theresa noting
that her testimony placed her truth and veracity in question. The court found her
testimony regarding her lack of knowledge that the plans were designed to
frustrate the alimony obligation not believable. We give deference to the district
court’s credibility findings. See McCune, 124 N.W.2d at 131 (“[W]e will not weigh
the evidence or the credibility of the witnesses.”). We conclude the evidence
supports the court’s factual finding that Theresa knew the beneficiary change
resulted in the frustration of the decree.
3. Who Made the Beneficiary Change. Theresa claims the court erred in
making a finding that the record conflicts as to who made the decision to change
the beneficiary designation. Theresa asserts the record undisputedly shows that
Bill made the decision and that she was not in any way involved in the process. 33
In stating that the record conflicted as to who made the decision to make
the beneficiary change, the district court was pointing out that while Bill signed
the forms, a physician had previously determined he was unable to handle his
normal business affairs. Theresa asserts that any such finding calling into
question Bill’s mental capability was unnecessary here because Alice never
attempted to invalidate the beneficiary designation by claiming Bill lacked the
mental capacity to execute the beneficiary designation. In addition, Theresa
maintains that both she and Bill’s attorney testified Bill had the mental capacity to
make the change and understood his decision.
While is it correct that there was no claim seeking to invalidate the
beneficiary designation based on Bill’s incapacity, Alice did assert claims of
conspiracy and aiding and abetting thereby making Bill’s mental capacity and the
“assistance” offered by Theresa and Bill’s attorney a valid factual inquiry. We
find no error in the court’s factual finding on this issue.
Restatement (Second) of Torts section 876, entitled, “Persons Acting in
Concert,” provides:
For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he (a) does a tortious act in concert with the other or pursuant to a common design with him, or (b) knows that the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself, or (c) gives substantial assistance to the other in accomplishing a tortious result and his own conduct, separately considered, constitutes a breach of duty to the third person.
This restatement section has been held to specifically provide for joint and
several liability when someone gives substantial encouragement or assistance to 34
another’s tortious conduct. Reilly v. Anderson, 727 N.W.2d 102, 107 (Iowa
2006).
Alice asserts that the record makes it clear that Theresa acted in concert
to aid and abet Bill to fraudulently transfer assets in order to prevent Alice from
receiving her alimony after Bill’s death. Because Theresa held Bill’s general
power of attorney, the district court considered them to be one in the same.
Theresa claims this was an improper finding as she acted only to carry out her
father’s instructions and followed the direction of Bill’s attorney in the dissolution
proceeding.
Through the exercise of her power of attorney during the dissolution
proceeding, Theresa located and accounted for all of Bill’s assets. The
dissolution decree provided that Alice’s alimony claim would be a lien against
Bill’s estate, assuming Bill predeceased Alice. Theresa understood that this
meant before any of the children could inherit from Bill’s estate, Alice’s support
would have to be paid. Theresa was aware her father was unhappy with the
alimony award. Theresa participated in a meeting with Bill’s dissolution attorney
to discuss ways to fund the alimony obligation. There, the decision was made to
change the beneficiary designations on the investment accounts back to Bill’s
children rather than the trust created in Bill’s will.
Theresa claimed at trial that she did not know why the beneficiary change
was made except that this is what her father wanted to do. In fact, Theresa
maintained that while she understood the money in the accounts would now go
to Bill’s children upon his death, she testified she did not understand the 35
difference between estate and nonestate assets and she did not understand that
changing the beneficiary designation took these accounts out of the estate.
Unlike the previous beneficiary change, Theresa did not sign the form as her
father’s power of attorney.11 The district court took this as evidence that Theresa
knew the change was not proper.
The court concluded Theresa conspired with and provided substantial
assistance to Bill to transfer substantial assets out of his estate and to his
children, and the net result was that Bill’s estate was reduced by approximately
$380,000.12 We find substantial evidence supports the district court’s decision
and also conclude by virtue of these findings, Theresa should be liable for the full
amount of the fraudulently transferred funds, not just the funds she received from
her father, as a joint tortfeasor for providing substantial assistance to Bill knowing
the transfer of these funds breached Bill’s support obligation.
4. Concealing of Assets. Next, Theresa asks that we “reverse the trial
court’s finding that [she] concealed assets.” She points out that she was not
obligated as the personal representative of her father’s estate to list the accounts
in question on the probate inventory as they passed outside of the estate upon
Bill’s death.
The district court found that Theresa’s testimony lacked credibility:
Theresa’s acts of concealing assets and her testimony place her truth and veracity at question. Ron Dickinson testified that he
11 This made sense in light of the fact the power of attorney prevented Theresa from making gifts to herself from Bill’s property because Theresa was included among the new beneficiaries of the investment accounts. 12 With an alimony obligation of $2000 per month, the assets diverted out of the estate would have provided over fifteen years of support for Alice. 36
advised Theresa that some of the Schwab monies may have to be returned and placed in the estate. In the Nebraska probate proceedings, the inventory was silent as to the Schwab accounts even though they were an asset at the time of Bill’s death. She may have made a false assertion in the probate proceedings. [13] Theresa in executing an affidavit of domicile for Schwab made a misleading or false assertion. She made an affirmation that all debts of the decedent as well as claims against the estate were provided for or paid. This court does not find Theresa’s testimony believable as to her lack of knowledge of the plans designed to frustrate the alimony obligation.
The act of concealing assets was one of the many factors that went into
the court’s determination that Theresa lacked credibility. We give deference to
the district court’s credibility findings. See id. The court was clear that in addition
to not telling Alice of the existence of these funds, whether or not Theresa had a
duty to disclose, Theresa also made other false and misleading statements in the
probate court relating to the payment of Alice’s alimony claim. These findings
support the court’s credibility determination as well as its conclusion that Theresa
concealed assets.
5. Power of Attorney and Co-conspirator—Personal Liability. Next,
Theresa claims the court erred in concluding that she and her father became one
person by virtue of the power of attorney and erred in finding that she, as Bill’s
attorney-in-fact, can be personally liable for executing Bill’s directives. Theresa
claims there is no basis in law to reverse vicarious liability making agents
responsible for the direction of the principals.
13 In the Nebraska probate action, Theresa, as personal representative for Bill’s estate, filed an answer to Alice’s petition for allowance of claims in which Theresa stated Alice’s statements of claim were improper and properly denied and that Bill’s will had made adequate provision for future alimony by the establishment of “William F. Lorenz Alimony Trust.” No such trust had been established. 37
As we have discussed, Theresa’s actions, as Bill’s power of attorney,
provided substantial encouragement and assistance to Bill in transferring funds
out of Bill’s estate in order to thwart the alimony award. The principles of agency
will not protect an agent who commits a tort in the course of the agency
relationship. See Restatement (Third) of Agency §§ 7.01 (“An agent is subject to
liability to a third party harmed by the agent’s tortious conduct.”); 8.09 cmt c.
(“[A]n agent has no duty to comply with a directive to commit a crime or an act
the agent has reason to know will be tortious.”).
The district court concluded that the plan to remove the assets in the
investment accounts from Bill’s estate was a “common plan” between Bill,
Theresa, and Bill’s attorney devised to isolate Bill’s assets from his estate to
ensure Bill’s children received the money, thwarting the alimony award. Theresa
communicated with the financial planner about the changes that would be made
and escorted Bill to the financial planner’s office. She then, after Bill’s death,
worked with the financial planner’s office to effectuate the transfer of the funds to
herself and her siblings and failed to take action as personal representative to
collect those funds after Alice demanded, as a creditor, the estate recover those
nonprobate funds under the Nebraska statutes. See Lorenz, 858 N.W.2d at
246–47. We find no error in the court’s conclusion that Theresa was a co-
conspirator and acted in concert with Bill to hinder, delay, or defraud Alice’s
ability to collect on the alimony order. Theresa’s actions amounted to an
intentional tort, so her status of Bill’s agent in this case will not protect her from
personal liability. 38
D. Punitive Damages. Alice also claims that the court erred in failing to
address her claim for punitive damages against Theresa. Alice notes that the
court did make the necessary findings to justify an award of punitive damages.
Alice asserts Theresa planned and participated in a scheme to transfer hundreds
of thousands of dollars to avoid paying the alimony judgment. Alice claims this
conduct is even more egregious considering Theresa was acting at a time when
Bill’s doctor had determined he was incapable of conducting or managing his
own business affairs. She asks that we send a strong message and enter a
punitive damage award here.
Punitive damages “exist to punish the defendant and to deter the
offending party and like-minded individuals from committing similar acts.” Ryan
v. Arneson, 422 N.W.2d 491, 496 (Iowa 1988). While “[f]raud is one of the
recognized grounds for exemplary damages,” “not every fraud case permits an
exemplary damage award.” Holcomb v. Hoffschneider, 297 N.W.2d 210, 213-14
(Iowa 1980). There needs to be aggravating circumstances to justify an award of
punitive damages. Id. at 214. Under Iowa Code section 668A.1(1)(a), in order to
be awarded punitive damages, a party must show “by a preponderance of clear,
convincing, and satisfactory evidence, the conduct of the defendant from which
the claim arose constituted willful and wanton disregard for the rights or safety of
another.”
Willful and wanton conduct is shown when an “actor has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow, and which thus is usually accompanied by a conscious indifference to the consequences.” 39
Cawthorn v. Catholic Health Initiatives Iowa Corp., 743 N.W.2d 525, 529 (Iowa
2007) (citation omitted).
The award of punitive damages is discretionary, and it is never awarded
as a matter of right. Brokaw, 788 N.W.2d at 395. It was within the district court’s
discretion to award punitive damages, if it felt the award was deserved. Id.; see
also Peters Corp. v. N.M. Banquest Investors Corp., 188 P.3d 1185, 1197 (N.M.
2008) (“We review a trial court’s decision not to award punitive damages for
abuse of discretion, and we will only reverse that decision if it is ‘contrary to logic
and reason.’” (citations omitted)).
While it did not specifically articulate its reasons in the initial decision, the
court clearly decided punitive damages were not called for in this case when it
denied Alice’s posttrial motion. While some of the court’s factual findings in this
case could support an award of punitive damages, we cannot conclude that the
court’s failure to make such an award was an abuse of discretion or was contrary
to logic or reason. We therefore affirm the court’s denial of punitive damages in
this case.
E. Attorney Fees. Finally, Alice asserts the court should have awarded
her common law attorney fees. Our review of the district court’s decision to deny
the request is de novo. Fennelly, 728 N.W.2d at 167. For attorney fees to be
awarded when there is no statute or contract providing for such an award, the
conduct of the losing party must “exceed[ ] the punitive-damage standard, which
requires ‘willful and wanton disregard for the rights of another.’” Id. at 181
(citations omitted). The conduct “‘must rise to the level of oppression or 40
connivance to harass or injure another.’ Put another way, the standard
‘envisions conduct that is intentional and likely to be aggravated by cruel and
tyrannical motives.’” Id. (citation omitted). Upon our de novo review, we agree
such an award in this case is not warranted and affirm the district court’s decision
on this ground.
VI. Remedy—Constructive Trust.
Next, Theresa challenges the court’s decision to impose a constructive
trust to ensure Alice’s alimony is paid. She also claims it was error for the court
to require her to pay into that trust all probate and nonprobate funds she received
from Bill. Theresa claims that Iowa Code section 630.16 is inapplicable to
establish a constructive trust in this case, and we agree. 14 But that code section
is not the only way to establish a constructive trust in Iowa.
A constructive trust is a remedy, applied for purposes of restitution, to prevent unjust enrichment. It is an equitable doctrine. In Loschen v. Clark, 127 N.W.2d 600, 603 (Iowa 1964), we approved the following definition: A constructive trust is a creature of equity, defined . . . as a remedial device by which the holder of legal title is held to be a trustee for the benefit of another who in good conscience is entitled to the beneficial interest. So, the doctrine of constructive trust is an instrument of equity for the maintenance of
14 Iowa Code section 630.16 provides: At any time after the rendition of a judgment, an action by equitable proceedings may be brought to subject any property, money, rights, credits, or interest therein belonging to the defendant to the satisfaction of such judgment. In such action, persons indebted to the judgment debtor, or holding any property or money in which such debtor has any interest, or the evidences of securities for the same, may be made defendants. The judgment debtor of the dissolution proceeding in this case is Bill, who is deceased. The property Alice attempts to recover is not property of Bill’s estate, but the property that automatically passed to his children at his death. Thus, this code section does not provide the relief Alice seeks. 41
justice, good faith, and good conscience, resting on a sound public policy requiring that the law should not become the instrument of designing persons to be used for the purpose of fraud. .... Constructive trusts fall into three categories: (1) those arising from actual fraud; (2) those arising from constructive fraud (appropriation of property by fiduciaries or others in confidential relationships); and (3) those based on equitable principles other than fraud. One seeking the remedy must establish the right by clear, convincing, and satisfactory evidence. The distinguishing feature of the constructive trust is that it arises by construction of the court and ordinarily the result is reached regardless of and contrary to any intention to create a trust.
Slocum v. Hammond, 346 N.W.2d 485, 493 (Iowa 1984) (internal citations
In addition, under Iowa Code section 684.7(1)(c)(3), a creditor, who has
established a fraudulent transfer, has the following remedies:
a. Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim. b. A remedy by any special action available under this subtitle, including attachment or other provisional remedy, against the asset transferred or other property of the transferee. c. Subject to applicable principles of equity and in accordance with applicable rules of civil procedure, any of the following: (1) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property. (2) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee. (3) Any other relief the circumstances may require.
If the creditor has a judgment against the debtor, the creditor “may levy execution
on the asset transferred or its proceeds.” Iowa Code § 684.7(2). Under these
provisions, we conclude the court was well within its rights to grant Alice the
remedy she sought—the establishment of a constructive trust. 42
With respect to the scope of the trust, the evidence at trial established that
Bill gave gifts and other property to his children after the dissolution decree and
up to the time of his death including Christmas gifts, forgiveness of loans, and
gifts of other personal property. However, there was no testimony or findings of
the district court that these actions were taken by Bill with the actual intent to
hinder, delay, or defraud Alice’s collection of her alimony decree. See Iowa
Code § 684.4(1)(a). Thus, the scope of the constructive trust should be limited to
the money the children received from the Schwab investment accounts.
VII. Mark’s Claims.
In the sole claim on appeal we address, Mark asserts the court abused its
discretion in denying his motion for sanctions against Alice. He claims the court
should have granted his motion for sanctions against Alice for pursuing what he
claims was a “frivolous” lawsuit. As we have already concluded there is merit to
Alice’s claims and affirm the judgment entered in her favor with a few
modifications, we find no abuse of discretion in the district court’s denial of
Mark’s request for sanctions.
VIII. Conclusion.
In conclusion, we determine the court properly denied the pretrial motion
to dismiss filed by Theresa and some of her siblings and properly granted
Dickinson’s summary judgment motion. The court’s findings of fact are
supported by the evidence, but we reverse the district court’s dismissal of claims
against Bill’s other children because they are responsible to Alice to the extent
that they received funds from the Schwab accounts. We also conclude the court 43
erred in failing to order Theresa to be jointly and severally liable for the total
amount of the fraudulently transferred funds from Bill’s Schwab accounts. We
remand this matter to the district court to enter an order for the establishment of a
constructive trust to include all of the funds Bill’s children specified herein
received from the Schwab accounts upon Bill’s death. Each child shall be
responsible up to the amount they received from these accounts, except the
Estate of Matthew Lorenz and Debbie Lorenz who were dismissed by Alice prior
to trial. Theresa shall be jointly and severally liable for the full amount of the
fraudulently transferred funds from the Schwab accounts. Finally, we affirm the
district court’s refusal to award punitive damages and attorney fees in this case
and its denial of sanctions against Alice.
Costs on appeal are assessed one-third to each of the following: Alice
Shea, Theresa Lorenz, and Mark Lorenz.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Related
Cite This Page — Counsel Stack
Alice M. Shea v. Theresa Lorenz and Mark Lorenz, defendants-appellees/cross-appellants, and Kristin Ostrander, Valerie Bisanz, Thomas Lorenz, Heidi Lorenz, Rob E. Dickinson and R.E. Dickinson Investment Advisors, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alice-m-shea-v-theresa-lorenz-and-mark-lorenz-iowactapp-2015.