Neil Conner, LinDa Stougard, and Dale Conner v. Eva Decker

• Court: Court of Appeals of Iowa
• Decided: November 27, 2019
• Docket: 18-1100
• Status: Published

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 18-1100 Filed November 27, 2019

NEIL CONNER, LINDA STOUGARD, and DALE CONNER, Plaintiffs-Appellants,

vs.

EVA DECKER, Defendant-Appellee.

Appeal from the Iowa District Court for Lucas County, John D. Lloyd,

Judge.

Three siblings appeal the district court’s order granting judgment

notwithstanding the verdict, vacating an award of punitive damages, and

granting a conditional new trial following the jury verdicts on their claims of

tortious interference with inheritance, unjust enrichment, and mistake.

AFFIRMED.

Tyler M. Smith of Smith Law Firm PLC, Altoona, and Alexander E.

Wonio, Des Moines, for appellants.

Alan M. Wilson of Miles Law Firm, Corydon, for appellee.

Considered by Bower, C.J., and Vaitheswaran and Tabor, JJ. 2

TABOR, Judge.

Siblings LinDa Stougard, Dale Conner, and Neil Conner allege Eva

Decker tortiously interfered with the inheritance they expected from their

mother, Harriette Conner.1 The siblings also claim Eva, the widow of their half-

brother, was unjustly enriched by taking joint ownership of Harriette’s personal

bank accounts and certificates of deposit. Finally, they believe Harriette was

mistaken as to the effect of that joint ownership. A jury ruled in their favor,

awarding $188,192 in compensatory damages and $15,066 in punitive

damages. But in response to Eva’s post-verdict motions, the district court

found inadequate evidence to support the tortious-interference theory, vacated

the punitive damage award, and granted a new trial on the issue of actual

damages unless the siblings file a remittitur reducing their judgment to

$142,600. The siblings appeal that order.

Because the jury’s finding of fraud or undue influence was not supported

by substantial evidence, the district court properly foreclosed recovery on that

theory. The district court also correctly decided punitive damages were

unavailable and a new trial was warranted in the absence of remittitur.

I. Facts and Prior Proceedings

Harriette Conner died in 2015 at the age of 91. This case involves the

inheritance she left to her children. She married Fred Conner in 1948 and

together they had three children, LinDa, Dale, and Neil.

1 Because many parties share surnames, we will use their first names for clarity. 3

Harriette and Fred also raised Ivan Decker, Harriette’s first child from a

prior marriage. Ivan was married to Eva and they lived in Chariton, Iowa. In

2001, Harriette and Fred retired and moved to Chariton. The following year,

Fred died. Ivan and Harriette then started holding joint bank accounts. Ivan

died in 2004.

Shortly after Ivan’s passing, Harriette asked LinDa, Dale, and Neil, their

thoughts on including Eva, Ivan’s widow, as an equal beneficiary in her will.

The siblings had no problem with that proposal. Harriette then visited a local

attorney and had a will prepared to reflect that decision. Harriette named Eva

as executor and attorney-in-fact. Harriette stated in her will that she devised

all of the rest, residue, and remainder of her property, both real and personal,

in equal shares (one quarter each) to LinDa, Dale, Neil, and Eva. She also

directed all taxes imposed due to her death be paid out of her residuary estate.

Harriette then arranged with her bank to add Eva as a joint holder for

her bank accounts and certificates of deposit. Eva became a joint account

holder with the right of survivorship in Harriette’s accounts. Eva testified

Harriette added her as a joint account holder for convenience—“after [my

husband] died she just asked me if I would be on the account with her, I mean

have my name on there so if something would happen to her, she got sick,

couldn’t write a check or something that I could do it for her.” Following

Harriette’s death, Eva retained possession of the joint accounts, including the

certificates of deposits. The total amount of the joint accounts was

$173,266.96. 4

Because the siblings did not receive any portion of the joint accounts,

they sued Eva. Their allegations included (1) tortious interference with

inheritance, (2) unjust enrichment, and (3) mistake. The siblings claim the

funds in the joint bank accounts and certificates of deposit should be distributed

according to Harriette’s will. The suit went to trial, and the jury found for the

siblings on all three causes of action. The jury awarded compensatory

damages in the amount of $85,655 for Harriette’s certificates of deposit and

$102,537 for her checking and savings accounts. The jury also awarded

$15,066 as punitive damages against Eva.

Eva moved for a new trial and for judgment notwithstanding the verdict

(JNOV). Among other points, she argued the jury returned inconsistent

answers to two questions submitted on the tortious-interference claim. The

district court discussed the jury’s finding that Eva acted in good faith throughout

her financial transactions with Harriette and concluded: “[N]o damage award

may be based on this theory of recovery.” The court also vacated the punitive

damage award of $15,066 and granted her motion for a new trial as to the

actual damages unless the siblings file a remittitur reducing their judgment to

$142,600. The siblings then moved to enlarge the ruling to clarify whether the

court “vacated the jury verdict in plaintiffs’ favor finding tortious interference by

defendant.” In response, the district court reasoned the jury’s finding that Eva

acted in good faith was a finding against the siblings on the tortious-interference

claim.

The siblings now appeal. 5

II. Scope and Standards of Review

Our review of a district court’s ruling on a motion for a new trial depends

on the basis of the motion. Winger v. CM Holdings, L.L.C., 881 N.W.2d 433,

445 (Iowa 2016). Tortious interference with inheritance is an action at law. See

Frohwein v. Haesemeyer, 264 N.W.2d 792, 795 (Iowa 1978). A motion for a

new trial based on inconsistent verdicts is a question of law, so we review for

correction of legal error. See Clinton Physical Therapy Servs. v. John Deere

Health Care, Inc., 714 N.W.2d 603, 609 (Iowa 2006), Westco Agronomy Co.,

LLC v. Wollesen, 909 N.W.2d 212, 219 (Iowa 2017).

We also review a district court’s ruling on a JNOV motion for errors at

law. Iowa R. App. P. 6.907; Smith v. Iowa State Univ. of Sci. and Tech., 851

N.W.2d 1, 18 (Iowa 2014). On that issue, we must decide if the siblings offered

substantial evidence to justify submission of the tortious interference claim to

the jury. See id. We view the evidence in the light most favorable to the

siblings—as the nonmoving parties. See id. The court should grant JNOV only

if reasonable minds would not accept the evidence as adequate to reach the

same findings. See Doe v. Cent. Iowa Health Sys., 766 N.W.2d 787, 790 (Iowa

2009).

We likewise review the order vacating the punitive-damage award for

correction of legal error. See Wolf v. Wolf, 690 N.W.2d 887, 893 (Iowa 2005).

But any award of punitive damages is discretionary, and we reverse only for an

abuse of that discretion. Brokaw v. Winfield-Mt. Union Cmty. Sch. Dist., 788

N.W.2d 386, 395 (Iowa 2010). 6

III. Analysis

A. Tortious Interference with Inheritance

A person who by fraud or other tortious means intentionally prevents

others from receiving from a third person an inheritance that they would

otherwise have received is subject to liability for the loss of the inheritance.

Huffey v. Lea, 491 N.W.2d 518, 521 (Iowa 1992) (citing Restatement (Second)

of Torts § 774B (1979)).2

The district court instructed the jury that to recover under their tortious-

interference-with-inheritance claim, the siblings had to prove these elements:

(1) [The siblings] had an expectation that they were receiving inheritance from [Harriette] upon her death; (2) [Eva] knew of the expectation; (3)(a) [Eva] intentionally and improperly interfered with the expectation by undue influence or fraud, or (b) [The siblings] have established a fiduciary or confidential relationship between [Eva] and Harriette and [Eva] has failed to meet her burden of proof [to show by clear, satisfactory, and convincing evidence that she acted in good faith throughout the financial transactions and that Harriette acted freely intelligently, and voluntarily.][3] (4) The interference caused damage to [the siblings]; and (5) The amount of the damage.

The verdict form asked: “Did [Eva] intentionally and improperly interfere

with the siblings’ inheritance by undue influence or fraud?” The jurors

2 The supreme court differentiated between will contests, which focus on the testator’s intent, and tortious interference, where the key issue is “the wrongdoer’s unlawful intent to prevent another from receiving an inheritance.” Huffey, 491 N.W.2d at 521. 3 The court instructed the jury if it found a confidential relationship existed between Harriette and Eva, it could presume their financial transactions were “the product of undue influence or fraud.” Then the burden of proof shifted to Eva to prove by clear, satisfactory, and convincing evidence that she acted in good faith throughout the financial transactions and Harriette acted freely, intelligently, and voluntarily. The presumption was rebutted if Eva carried that burden. Neither party challenges these jury instructions on appeal. 7

answered “yes.” The jurors also decided a confidential relationship existed

between Eva and Harriette. And then they answered “yes” to this question:

“Did [Eva] establish by clear, satisfactory and convincing evidence that she

acted in good faith throughout the financial transactions with Harriette Conner

and that Harriette Conner acted freely, intelligently, and voluntarily?”

The siblings believe the jury correctly decided Eva engaged in tortious

interference with their inheritance by undue influence or fraud. They argue

steps (3)(a) and (3)(b) in the above-quoted jury instruction offer two

independent paths for establishing tortious interference with inheritance.

Under their reasoning, only under step (3)(b) (where a confidential relationship

exists) does the jury have the opportunity to exonerate Eva by her showing of

good faith. The siblings contend the district court was mistaken in using the

jury’s finding of Eva’s good faith to cut off both paths to recovery. They assert

“the jury’s verdict that Decker committed tortious interference with inheritance

against the Conner family, but not Harriette, is not inconsistent in light of the

jury instructions and supporting law.”

The siblings misconstrue the jury instructions. Steps (3)(a) and (3)(b)

do not spell out alternative means of committing tortious interference with

inheritance. Rather, step (3)(a) lists two ways to intentionally interfere—“by

undue influence or fraud.” See Huffey, 491 N.W.2d at 521 (describing

“necessary proof in an action for intentional interference with a bequest” as the

use of “fraud, duress, or other tortious means”). Then step (3)(b) (when read

in conjunction with a companion instruction) allows the jury to presume the

existence of either undue influence or fraud if Eva had a confidential 8

relationship with Harriette.4 In that instance, the burden shifted to Eva—as the

recipient of the bank holdings—to show the fairness of the transactions by

clear, satisfactory and convincing evidence. See Laufert v. Wegner, 62 N.W.2d

758, 759 (Iowa 1954). Once Eva met her burden to show she acted in good

faith and that Harriette did not succumb to undue influence in making her

financial decisions, then the siblings failed in their proof of intentional

interference.5

And contrary to the siblings’ contention, the jury’s answers on the verdict

form were “so logically and legally inconsistent” that they cannot be reconciled.

See Hoffman v. Nat’l. Med. Enters. Inc., 442 N.W.2d 123, 127 (Iowa 1989)

(reiterating test for inconsistent verdicts). The only financial transactions at

issue were the joint accounts. Eva cannot have acted in good faith in regard

to those accounts (with Harriette acting freely, intelligently, and voluntarily) and

simultaneously have interfered with the siblings’ inheritance of the funds in

those accounts by committing acts of fraud or by exerting undue influence on

Harriette.

4 Step 3(b) is a burden-shifting measure that enabled the siblings to benefit from the presumption that Eva took advantage of her dominant influence over Harriette. See Oehler v. Hoffman, 113 N.W.2d 254, 256 (Iowa 1962) (“The gist of the doctrine of confidential relationship is the presence of a dominant influence under which the act is presumed to have been done. [The] [p]urpose of the doctrine is to defeat and correct betrayals of trust and abuses of confidence.”); see also Estate of Herm, 284 N.W.2d 191, 200 (Iowa 1979) (finding transactions presumptively fraudulent based on confidential relationship between conveyor and alleged recipient). 5 The siblings contend the jury could have found Eva committed tortious interference with inheritance by acts directed against them, separate from her undue influence on Harriette. But the siblings’ petition alleged tortious interference based strictly on the relationship between Eva and Harriette and their joint ownership of the bank accounts. And the siblings presented no evidence at trial that Eva committed other acts of fraud against them. 9

After finding that inconsistency, we turn to the question of remedy. The

verdict form requires the jury to reach “special written findings” (in other words,

special verdicts) on the contested elements of intentional interference. See

Iowa R. Civ. P. 1.933. When, as here, the jury gives inconsistent answers on

a special verdict form, the district court has two choices: ask the jury to resume

deliberations or grant a new trial. See Iowa R. Civ. P. 1.934; Clinton Physical

Therapy Servs. P.C. v. John Deere Health Care, Inc., 714 N.W.2d 603, 612

(Iowa 2006) (explaining “inconsistent answers that constitute special findings

cannot support a judgment”).

But the district court did not grant a new trial on the intentional

interference claim. Instead it ruled “no damage award may be based on this

theory of recovery.” Like the parties, we read the district court’s ruling on this

point as the grant of Eva’s JNOV motion.

In reviewing the grant of JNOV, we must decide whether substantial

evidence exists to support the elements of the siblings’ intentional-interference

claim, justifying the court’s submission of that cause of action to the jury. See

Doe v. C. Iowa Health Sys., 766 N.W.2d 787, 790 (Iowa 2009). Even viewing

the evidence in the light most favorable to the siblings, this record lacks

substantial proof Eva engaged in fraud or undue influence. Eva agreed to

Harriette’s request that she be a joint holder on Harriette’s bank accounts.

Eva’s husband, Ivan, had been a joint holder on his mother’s bank accounts

before his death. The siblings did not identify any fraudulent acts by Eva.

When counsel asked LinDa: “What evidence do you have that Eva Decker in

any way exerted any undue influence on your mother?” LinDa responded: 10

“Can’t answer that.” Dale testified he wasn’t around to see any acts of undue

influence or fraud. And Neil candidly testified his mother made her own

financial decisions: “She did what she wanted. That was her money, her cash.

Whatever she wanted to do, she did on her own.” On this record, the district

court properly granted Eva’s JNOV motion on the intentional-interference

B. Punitive Damages

The siblings next contend the district court erred in vacating the

punitive-damage award.6 After granting JNOV on the intentional-interference

claim, the district court reasoned the remaining verdicts on unjust enrichment

and mistake did not support a recovery of punitive damages. The siblings

believe the district court erroneously decided that because a claim for tortious

6 The court instructed the jury that it could award punitive damages if the siblings have proven by a preponderance of clear, convincing and satisfactory evidence [Eva’s] conduct constituted a willful and wanton disregard for the rights or safety of another and caused actual damage to [the siblings.] Punitive damages are not intended to compensate for injury but are allowed to punish and discourage [Eva] and others from like conduct in the future. You may award punitive damages only if [Eva’s] conduct warrants a penalty in addition to the amount you award to compensate for [the siblings’] actual injuries. There is no exact rule to determine the amount of punitive damages, if any, you should award. You may consider the following factors: 1. The nature of [Eva’s] conduct that harmed [the siblings.] 2. The amount of punitive damages that will punish and discourage like conduct by [Eva]. You may consider [Eva’s] financial condition or ability to pay. You many not award punitive damages solely because of [Eva’s] wealth or ability to pay. 3. [The siblings’] actual damages. The amount awarded for punitive damages must be reasonably related to the amount of actual damages you award to [the siblings.] 4. The existence and frequency of prior similar conduct. 11

interference could not stand, the punitive-damage award likewise fell. The

siblings insist a jury may award punitive-damages as a stand-alone claim by

finding the defendant acted with a willful and wanton disregard for the rights of

another. But the siblings cite no case law to support their stand-alone

proposition. Absent any authority, we decline to entertain their position.

In fact, the wording of Iowa Code section 668A.1(1) (2018) undermines

the siblings’ argument. That section directs the district court to instruct the jury

to answer special interrogatories “[i]n a trial of a claim involving the request for

punitive or exemplary damages.” Iowa Code § 668A.1(1). To award punitive

damages, the jury must decide “[w]hether, 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.” Id. § 668A.1(1)(a) (emphasis added). That provision contemplates

the existence of an underlying claim, not a free-floating bid for punitive

damages based on willful and wanton conduct. See generally Holcomb v.

Hoffschneider, 297 N.W.2d 210, 214 (Iowa 1980) (explaining fraud is a

recognized ground for punitive damages, but not every fraud case permits such

an award; “circumstances of aggravation are present in the fraud cases

allowing such damages”). 12

We see no error in the district court’s finding that punitive damages

were unavailable for the remaining claims of unjust enrichment7 and mistake.8

Those claims did not require proof that Eva acted with any malice. See

McClure v. Walgreen Co., 613 N.W.2d 225, 230 (Iowa 2000) (explaining

punitive damages are only available when the plaintiff can show actual or legal

malice because they serve as a form of punishment and to deter others’

egregious conduct). Instead, the doctrine of unjust enrichment is “based upon

the concept of implied contract.” Kunde v. Est. of Bowman, 920 N.W.2d 803,

807 (Iowa 2018). And when a claim for punitive damages arises out of a

contract action, an award of punitive damages is allowed only when the breach

constitutes an intentional tort, and is committed maliciously, in a manner that

meets the standards of Iowa Code section 668A.1. See Milas v. Soc’y Ins.,

No.16-2148, 2017 WL 6513967, at *3 (Iowa Ct. App. Dec. 20, 2017), aff’d by

an equally divided court, 2019 WL 2313392, at *1 (Iowa, 2019); see also Edible

Arrangements Intern., Inc. v. Chinsammy, No. 10-3214-cv, 2011 WL 5222777,

7 To recover under their unjust enrichment claim, the siblings had to show: 1. [Eva] was enriched by taking joint ownership of Harriette Conner’s certificates of deposits and personal bank accounts; 2. [Eva’s] enrichment was at the expense of [the siblings]; 3. It would be unjust to allow [Eva] to retain the monies under the circumstances; and 4. The amount of damages. 8 To recover under their mistake claim, the siblings had to show: 1. Hariette Conner was mistaken as to a basic assumption regarding facts upon which she relied in making the joint ownership designations. 2. The effect of the mistake is that the joint ownership designations defeated Harriette Conner’s true intentions. 3. [Eva] need not have been aware that Harriette Conner made a mistake. Proof of both of these propositions must be clear, convincing, and satisfactory evidence. 13

at *2 (2nd Cir. Nov. 3, 2011) (finding punitive damages not available in unjust

enrichment actions because “relief comes in the form of restitution”). Similarly,

“[n]o punitive damages are allowed with a ‘mere mistake.’” Cedar Falls Bldg.

Ctr., Inc. v. Vietor, 365 N.W.2d 635, 640 (Iowa Ct. App. 1985).

Because the siblings did not prove their claim of intentional interference,

we affirm the district court’s decision to vacate the award of $15,066 in punitive

damages.

C. Compensatory Damages and Conditional New Trial

In addition to the punitive damages, the jury awarded a total of $188,192

in compensatory damages. The district court also disagreed with that amount

and offered two alternatives—new trial or remittitur.

The district court found the amount in dispute could not exceed

$173,266.96—the amount in Harriette’s bank accounts that passed to Eva.

The district court pointed out the trial and the verdict forms focused on those

accounts. The court relied on Iowa Waste Systems., Inc. v. Buchanan County.,

617 N.W.2d 23, 30 (Iowa Ct. App. 2000), stating, “damages under a claim of

unjust enrichment are limited to the value of what was inequitably retained.”

Here, the value of what was inequitably retained equaled three quarters of

$173,266.96 or $129,950. The court also found the siblings paid, from the

residuary portion of the estate according to the will, approximately $12,650 of

the inheritance taxes related to the bank accounts Eva received. So the court

decided the compensatory damages should not exceed $142,600. We agree

with the district court’s calculations. 14

The district court offered the siblings the alternative resolutions of

reducing their judgment to $142,600 or having a new trial limited to the issue

of actual damages. See Iowa Rs. Civ. P. 1.1004(6), 1.1010. “The trial court

has broad discretion in granting a new trial conditioned upon a remittitur to a

set amount. We will not interfere with its ruling on a motion for new trial unless

there appears to have been an abuse of discretion.” Grant v. Thomas, 118

N.W.2d 545, 548 (Iowa 1962). Here, the jury’s award of compensatory

damages was not supported by substantial evidence. We find no abuse of

discretion in the court’s order for conditional new trial or remittitur.