IN THE COURT OF APPEALS OF IOWA
No. 3-1100 / 13-0157 Filed April 30, 2014
PATRICIA M. JOHNSON, Plaintiff-Appellee,
vs.
WAYNE VENTLING, D.O., a/k/a WAYNE L. VENTLING a/k/a WAYNE L. VENTLING II, MADONNA VENTLING, THELMA VENTLING, EPHRAIM HALGRIM FARMS, L.L.C., and HALGRIM FARMS, L.L.C., Defendants-Appellants. ________________________________________________________________
Appeal from the Iowa District Court for Hamilton County, Carl D. Baker,
Judge.
Appeal from the district court’s award of punitive damages, attorney fees,
and court costs. AFFIRMED IN PART AND REVERSED AND REMANDED IN
PART.
Steven P. Wandro, Michael R. Keller, and Kara M. Simons of Wandro &
Associates, Des Moines, for appellants.
James Kramer of Johnson, Kramer, Good, Mulholland, Cochrane &
Driscoll, P.L.C., Fort Dodge, and Bernard L. Shub Jr., San Antonio, Texas, for
appellee.
Heard by Tabor, P.J., and Mullins and McDonald, JJ. Vogel, J., takes no
part. 2
MCDONALD, J.
In this fraudulent conveyance action, Wayne Ventling appeals from the
December 31, 2012 district court ruling that awarded Patricia Johnson punitive
damages and attorney fees and assessed court costs to Ventling. The awards
were based on a December 1, 2011 judgment concluding certain real estate
transfers Ventling made were fraudulent, setting them aside, and enjoining
Ventling, his family, and his L.L.C.’s from further transfers. We affirm in part and
reverse and remand in part.
I.
Johnson and Ventling cohabited in Texas from 1982 to 1995. In 1995,
although the parties were not married, Ventling filed for divorce. The parties
agreed on the terms of a final decree, including a provision that Ventling pay
Johnson alimony and a property settlement. Ventling then moved to Iowa. Two
years after the decree was entered, Ventling stopped making the monthly
alimony payments. Johnson moved for enforcement of the decree in Texas and
eventually pursued collection efforts in Iowa.
In 2008, Johnson filed the instant action seeking to collect her Texas
judgment and to set aside as fraudulent certain property transfers between
Ventling, his sister, his mother, and two L.L.C.’s Ventling created. Discovery in
this case was protracted, voluminous, and contentious.
In December 2011, following a bench trial, the district court issued its
findings of fact, conclusions of law, and judgment, concluding the challenged
property transfers were fraudulent, setting them aside as void, and enjoining the
Ventling family and the two L.L.C.’s from any further transfers until Ventling paid 3
his debt to Johnson. The judgment also provided the “issue of (a) damages and
(b) appointment of a receiver to take charge of the assets will be addressed at a
subsequent hearing and upon written application by [Johnson] therefor.”
While the litigation in Iowa was proceeding, the parties were litigating the
enforceability of the Texas divorce decree. In March 2012, after a court in Texas
concluded the Texas decree was enforceable, Ventling paid the Texas judgment
and then filed motions for new trial and to amend or enlarge the December 2011
Iowa judgment. In the motion for new trial, Ventling contended his recent
payment of the Texas judgment was newly-discovered evidence entitling him to a
new trial. In the motion to amend, Ventling argued the Iowa judgment was
unnecessary because the debt to Johnson had been satisfied. The court found
the motion to amend was untimely and the motion for new trial based on newly-
discovered evidence failed because Ventling’s payment of the debt was not
newly-discovered evidence.
In the fall of 2012, the parties held a trial on damages pursuant to the
district court’s ruling issued in December 2011. In December 2012, the court
entered judgment against Ventling for punitive damages in the amount of
$75,000, attorney fees of $114,000, and court costs. This appeal followed.
II.
Although an action to set aside a conveyance as fraudulent is an equitable
action and our review is de novo, Hartford-Carlisle Sav. Bank v. Shivers, 552
N.W.2d 909, 910 (Iowa Ct. App. 1996), this Iowa action was filed and tried as a
law action; therefore, our review is for correction of errors at law. Iowa R. App. P. 4
6.907. A party alleging fraud must establish its existence by clear and convincing
evidence. See Benson v. Richardson, 537 N.W.2d 748, 756 (Iowa 1995).
Punitive damages awards are reviewed for correction of errors at law.
See Wolf v. Wolf, 690 N.W.2d 887, 893 (Iowa 2005). Punitive damages are only
appropriate when a tort is committed with “either actual or legal malice.” Jones v.
Lake Park Care Ctr., Inc., 569 N.W.2d 369, 378 (Iowa 1997). A plaintiff must
prove by a preponderance of clear, convincing, and satisfactory evidence the
defendant’s conduct constituted a willful and wanton disregard for the rights of
another. See Iowa Code § 668A.1(1)(a) (2011); Hockenberg Equip. Co. v.
Hockenberg’s Equip. & Supply Co., 510 N.W.2d 153, 156 (Iowa 1993). Because
an award of punitive damages is always discretionary, our review is for an abuse
of discretion. See Wilson v. IBP, Inc., 589 N.W.2d 729, 732 (Iowa 1999).
An award of common-law attorney fees is reviewed de novo. See Wolf,
690 N.W.2d at 896; Hockenberg Equip. Co., 510 N.W.2d at 158. A plaintiff
seeking common-law attorney fees must prove that the culpability of the
defendant’s conduct exceeds the punitive-damage standard, which requires
“willful and wanton disregard for the rights of another.” Hockenberg Equip. Co.,
510 N.W.2d at 159.
III.
A.
Ventling claims the court “erred in voiding the transfers as fraudulent and
in enjoining future transfer.” As relevant here, Iowa Code section 684.4 provides:
1. A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the 5
debtor made the transfer or incurred the obligation under any of the following circumstances: a. With actual intent to hinder, delay, or defraud any creditor of the debtor.
The statute also lists factors or “badges of fraud” that may be considered in
determining actual intent in paragraph “a.” Iowa Code § 684.4(2)(a)-(k); see
Ralfs v. Mowry, 586 N.W.2d 369, 373 (Iowa 1998) (“A court considering a claim
of fraudulent conveyance looks for ‘badges or indicia of fraud’ . . . .”). The district
court found four badges of fraud in this case: (1) the numerous transactions were
among family members (insiders), (2) Ventling retained control of the properties
after the transfers, (3) Ventling had been sued and was threatened with suit, and
Free access — add to your briefcase to read the full text and ask questions with AI
IN THE COURT OF APPEALS OF IOWA
No. 3-1100 / 13-0157 Filed April 30, 2014
PATRICIA M. JOHNSON, Plaintiff-Appellee,
vs.
WAYNE VENTLING, D.O., a/k/a WAYNE L. VENTLING a/k/a WAYNE L. VENTLING II, MADONNA VENTLING, THELMA VENTLING, EPHRAIM HALGRIM FARMS, L.L.C., and HALGRIM FARMS, L.L.C., Defendants-Appellants. ________________________________________________________________
Appeal from the Iowa District Court for Hamilton County, Carl D. Baker,
Judge.
Appeal from the district court’s award of punitive damages, attorney fees,
and court costs. AFFIRMED IN PART AND REVERSED AND REMANDED IN
PART.
Steven P. Wandro, Michael R. Keller, and Kara M. Simons of Wandro &
Associates, Des Moines, for appellants.
James Kramer of Johnson, Kramer, Good, Mulholland, Cochrane &
Driscoll, P.L.C., Fort Dodge, and Bernard L. Shub Jr., San Antonio, Texas, for
appellee.
Heard by Tabor, P.J., and Mullins and McDonald, JJ. Vogel, J., takes no
part. 2
MCDONALD, J.
In this fraudulent conveyance action, Wayne Ventling appeals from the
December 31, 2012 district court ruling that awarded Patricia Johnson punitive
damages and attorney fees and assessed court costs to Ventling. The awards
were based on a December 1, 2011 judgment concluding certain real estate
transfers Ventling made were fraudulent, setting them aside, and enjoining
Ventling, his family, and his L.L.C.’s from further transfers. We affirm in part and
reverse and remand in part.
I.
Johnson and Ventling cohabited in Texas from 1982 to 1995. In 1995,
although the parties were not married, Ventling filed for divorce. The parties
agreed on the terms of a final decree, including a provision that Ventling pay
Johnson alimony and a property settlement. Ventling then moved to Iowa. Two
years after the decree was entered, Ventling stopped making the monthly
alimony payments. Johnson moved for enforcement of the decree in Texas and
eventually pursued collection efforts in Iowa.
In 2008, Johnson filed the instant action seeking to collect her Texas
judgment and to set aside as fraudulent certain property transfers between
Ventling, his sister, his mother, and two L.L.C.’s Ventling created. Discovery in
this case was protracted, voluminous, and contentious.
In December 2011, following a bench trial, the district court issued its
findings of fact, conclusions of law, and judgment, concluding the challenged
property transfers were fraudulent, setting them aside as void, and enjoining the
Ventling family and the two L.L.C.’s from any further transfers until Ventling paid 3
his debt to Johnson. The judgment also provided the “issue of (a) damages and
(b) appointment of a receiver to take charge of the assets will be addressed at a
subsequent hearing and upon written application by [Johnson] therefor.”
While the litigation in Iowa was proceeding, the parties were litigating the
enforceability of the Texas divorce decree. In March 2012, after a court in Texas
concluded the Texas decree was enforceable, Ventling paid the Texas judgment
and then filed motions for new trial and to amend or enlarge the December 2011
Iowa judgment. In the motion for new trial, Ventling contended his recent
payment of the Texas judgment was newly-discovered evidence entitling him to a
new trial. In the motion to amend, Ventling argued the Iowa judgment was
unnecessary because the debt to Johnson had been satisfied. The court found
the motion to amend was untimely and the motion for new trial based on newly-
discovered evidence failed because Ventling’s payment of the debt was not
newly-discovered evidence.
In the fall of 2012, the parties held a trial on damages pursuant to the
district court’s ruling issued in December 2011. In December 2012, the court
entered judgment against Ventling for punitive damages in the amount of
$75,000, attorney fees of $114,000, and court costs. This appeal followed.
II.
Although an action to set aside a conveyance as fraudulent is an equitable
action and our review is de novo, Hartford-Carlisle Sav. Bank v. Shivers, 552
N.W.2d 909, 910 (Iowa Ct. App. 1996), this Iowa action was filed and tried as a
law action; therefore, our review is for correction of errors at law. Iowa R. App. P. 4
6.907. A party alleging fraud must establish its existence by clear and convincing
evidence. See Benson v. Richardson, 537 N.W.2d 748, 756 (Iowa 1995).
Punitive damages awards are reviewed for correction of errors at law.
See Wolf v. Wolf, 690 N.W.2d 887, 893 (Iowa 2005). Punitive damages are only
appropriate when a tort is committed with “either actual or legal malice.” Jones v.
Lake Park Care Ctr., Inc., 569 N.W.2d 369, 378 (Iowa 1997). A plaintiff must
prove by a preponderance of clear, convincing, and satisfactory evidence the
defendant’s conduct constituted a willful and wanton disregard for the rights of
another. See Iowa Code § 668A.1(1)(a) (2011); Hockenberg Equip. Co. v.
Hockenberg’s Equip. & Supply Co., 510 N.W.2d 153, 156 (Iowa 1993). Because
an award of punitive damages is always discretionary, our review is for an abuse
of discretion. See Wilson v. IBP, Inc., 589 N.W.2d 729, 732 (Iowa 1999).
An award of common-law attorney fees is reviewed de novo. See Wolf,
690 N.W.2d at 896; Hockenberg Equip. Co., 510 N.W.2d at 158. A plaintiff
seeking common-law attorney fees must prove that the culpability of the
defendant’s conduct exceeds the punitive-damage standard, which requires
“willful and wanton disregard for the rights of another.” Hockenberg Equip. Co.,
510 N.W.2d at 159.
III.
A.
Ventling claims the court “erred in voiding the transfers as fraudulent and
in enjoining future transfer.” As relevant here, Iowa Code section 684.4 provides:
1. A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the 5
debtor made the transfer or incurred the obligation under any of the following circumstances: a. With actual intent to hinder, delay, or defraud any creditor of the debtor.
The statute also lists factors or “badges of fraud” that may be considered in
determining actual intent in paragraph “a.” Iowa Code § 684.4(2)(a)-(k); see
Ralfs v. Mowry, 586 N.W.2d 369, 373 (Iowa 1998) (“A court considering a claim
of fraudulent conveyance looks for ‘badges or indicia of fraud’ . . . .”). The district
court found four badges of fraud in this case: (1) the numerous transactions were
among family members (insiders), (2) Ventling retained control of the properties
after the transfers, (3) Ventling had been sued and was threatened with suit, and
(4) Ventling removed or concealed assets by transferring them into the L.L.C.’s.
See Iowa Code § 684.4(2)(a), (b), (c), (g).
The badges of fraud cited by the court, along with the surrounding
circumstances of the “convoluted scheme” of transfers, the fact Ventling paid the
Texas judgment without recourse to the transferred property as soon as the Iowa
property transfers were voided, the timing of the creation of the L.L.C.’s and the
transfers into them as it relates to the Texas judgments against Ventling, and the
lengths Ventling went to avoid paying Johnson what he owed her, all support the
court’s finding the transfers were done with the “actual intent to hinder, delay, or
defraud” Johnson, his judgment creditor. See Iowa Code § 684.4(1)(a); see also
Generic Farms v. Stensland, 518 N.W.2d 800, 803 (Iowa Ct. App. 1994). Also
implicit in the district court’s findings and conclusions is a determination Ventling
as well as his mother and sister were not credible. We affirm the district court’s
carefully-considered determination the transfers were fraudulent. 6
B.
Ventling contends the district court erred in awarding punitive damages in
the amount of $75,000. In considering Johnson’s claim for punitive damages, the
district court quoted at length from its 2011 ruling concerning the fraudulent
nature of the transfers, Ventling’s purpose behind them, and his “willful and
wanton misconduct” in failing to comply with discovery rules and his “obstruction
of” the discovery process. The 2011 judgment recites in detail Ventling’s
persistent course of conduct and the underlying intent directed at Johnson.
Giving deference to the district court’s credibility assessments, there is sufficient
evidence to support the court’s conclusion. The court also concluded, “As a
result of the fraudulent real estate and personal property machinations
undertaken by Ventling, Johnson has incurred actual damages, including the cost
of prosecuting this action.” There is sufficient evidence of actual damage to
Johnson to support an award of punitive damages. See Hockenberg Equip. Co.,
510 N.W.2d at 156; Pringle Tax Serv., Inc. v. Knoblauch, 282 N.W.2d 151, 154
(Iowa 1979). We affirm the district court’s award of punitive damages.
C.
Ventling contends the award of common-law attorney fees is not
warranted because Johnson failed to meet her burden of proof. The court’s
detailed discussion of the badges of fraud and the court’s evaluation of Ventling’s
conduct in these proceedings provides sufficient evidence to support the district
court’s decision to award attorney fees. See Hockenberg Equip. Co., 510
N.W.2d at 159. However, there is insufficient evidence to support the amount of
attorney fees awarded. Neither the Texas nor Iowa attorney appears to have a 7
fee agreement with Johnson. The hourly rate was changed during the
proceedings without any consultation with Johnson. The Texas attorney
provided only very general, summary information about his fees and “didn’t bring”
much of the documentation he claimed to have in his office. Neither attorney
submitted a detailed, itemized accounting of the work done or fees charged. We
therefore reverse the district court’s award of common-law attorney fees.
IV.
The district court correctly determined the challenged transfers were
fraudulent and set them aside. The evidence supports the court’s award of
punitive damages. There is insufficient evidence to support the amount of
common-law attorney fees awarded. We affirm the district court on Ventling’s
fraudulent transfer and punitive damages claims. The court has considered all
claims raised by the parties, whether or not expressly addressed in this opinion.
Any claims not specifically addressed are either disposed of by our resolution of
the issues addressed, not preserved, or without merit. We reverse the district
court’s award of attorney fees and remand for entry of judgment consistent with
this opinion.
AFFIRMED IN PART AND REVERSED AND REMANDED IN PART.