Case Title: Weaver Const. Co. v. Heitland

Citation: 348 N.W.2d 230

Docket Number: 83-803

State: iowa

Court: Iowa Supreme Court

Date: 1984-05-16T00:00:00Z

Document:
348 N.W.2d 230 (1984) WEAVER CONSTRUCTION COMPANY, Appellee, v. George HEITLAND, d/b/a Heitland Construction Company, Appellant. No. 83-803. Supreme Court of Iowa. May 16, 1984. *231 Lee B. Blum, Hampton, for appellant. James P. Walters, of High & Walters, Iowa Falls, for appellee. Considered by REYNOLDSON, C.J., and McCORMICK, SCHULTZ, CARTER and WOLLE, JJ. WOLLE, Justice. Defendant's appeal raises two questions requiring us to interpret the Iowa statute governing offers to confess judgment. Defendant availed itself of one of the four methods which Iowa Code chapter 677 (1983) provides for shifting "costs" of an action to a plaintiff who rejects a defendant's formal offer to confess judgment. See generally Sheer Construction, Inc. v. W. Hodgman and Sons, Inc., 326 N.W.2d 328, 333 (Iowa 1982) (describing elements of the four methods of offering to confess judgment under chapter 677). When the plaintiff obtained a judgment in a lesser amount than defendant had offered prior to trial, defendant requested that the trial court assess against plaintiff (1) all court costs, not just those incurred from the time of the offer, and (2) reasonable attorney fees as part of the court costs. The trial court, however, refused defendant's requests and assessed against plaintiff only the costs incurred after the time of defendant's formal offer. We affirm. Defendant made its offer to confess in accordance with Iowa Code sections 677.7 through 677.10, inclusive, which provide: The total of $997.07 in court costs was taxed against the parties. The court determined that section 677.10 required plaintiff to pay only the costs incurred after the offer to confess judgment was made $827.47. The costs incurred prior to that time$169.60were taxed to defendant. Defendant contends that the court should instead have charged plaintiff with all of the taxable costs of the action, arguing that section 677.10 specifically provides in part that when a plaintiff's recovery does not exceed the offer, "he cannot recover costs." We agree with the trial court's interpretation of section 677.10 and not with defendant's interpretation. Defendant's reading of the section would give effect only to the four words it singles out. We believe a more sensible reading, which gives effect to all words and phrases in the section, is that the plaintiff who recovers less than defendant's offer cannot recover all costs ordinarily recoverable by a prevailing party, but must pay those costs that are incurred after the time of the offer. This reading is also consistent with this court's interpretation of the same statutory language in Keeney v. Iowa Power & Light Co.: 250 Iowa 887, 891, 96 N.W.2d 918, 921 (1959) (dictum). The trial court properly allowed plaintiff to recover the costs incurred before defendant made its offer to confess. The trial court found that defendant's attorney fees of $4,700 and out-of-pocket expenses of $46.20, incurred after plaintiff rejected its offer to confess judgment, were reasonable in amount. The trial court refused, however, to assess those amounts against plaintiff as "costs". Its well-reasoned opinion concluded: The legislature has in selected areas provided for the taxation of reasonable attorney fees as part of costs. See Iowa Code §§ 598.2 (contempt in dissolution actions), 553.12(4) (violation of state anti-trust laws), 472.33 (appeals from condemnation juries) (1983). Such action clearly demonstrates that the legislature, when it wants to, can and does provide for the assessment of attorney fees against the losing party. Defendant's argument that no one change would do more to promote settlements, discourage the filing *233 of frivolous lawsuits, and the maintenance of stubbornly litigious actions than the adoption of the English rule of awarding attorney's fees to the successful party is best directed to the legislature where the balancing of the competing interests on so basic a social issue is better left. This trial court declines the invitation to disregard so long a line of clear precedent as exists in the nonallowance of attorney fees as costs unless expressly authorized by statute. We agree with these reasons which the trial court gave for its decision. It is also appropriate, however, that we expand on this rationale and answer several of defendant's policy arguments. Defendant argues that Iowa Code chapter 677 should be given a very liberal interpretation because its laudable purpose is to encourage early settlements and discourage unnecessary and costly litigation. We agree that our statute authorizing offers to confess judgment tends to serve those purposes and should receive a liberal construction. See Tilton v. Iowa Power and Light Co., 250 Iowa 583, 587, 94 N.W.2d 782, 784 (1959); Harrison v. Iowa Midland R.R., 36 Iowa 323, 326-27 (1873). Like other provisions and proceedings within the Iowa Code, chapter 677 "shall be liberally construed with a view to promote its objects and assist the parties in obtaining justice." Iowa Code § 4.2 (1983). We do not agree, however, that the word "costs" should be so liberally stretched as to include attorney fees. As the trial court correctly noted, our legislature has explicitly provided in some statutes that a prevailing party may recover attorney fees as well as costs. We believe the legislative intent of chapter 677 is clear; attorney fees are not included in the cost-shifting which the statute allows because attorney fees are not explicitly mentioned in the statute. Defendant also contends that allowance of attorney fees under chapter 677 would be so beneficial to the functioning of our court system that we should interpret "costs" to include attorney fees as a matter of court rule and inherent court power. Recently, however, we answered a similar contention in Smith v. Board of Supervisors, 320 N.W.2d 589, 593 (Iowa 1982), holding that the trial court did not have the inherent power to award attorney fees as costs to the prevailing party in the absence of an applicable statute or agreement so providing. Defendant has not persuaded us that we should retreat from what we said and held so recently in the Smith case. Finally, we have grave doubt whether chapter 677 is an appropriate vehicle for initiating a more widespread practice of allowing the prevailing litigant to recover attorney fees as part of court costs. Only a defendant may take advantage of that statute by making a formal settlement offer and thereby pressuring the plaintiff to accept that offer. If a party who rejects an offer of settlement should sometimes be required to pay the other party's full expense of further litigation, fundamental fairness suggests that defendants as well as plaintiffs should be subjected to that sanction. The trial court correctly applied Iowa Code section 677.10 (1983) in deciding what costs each party should recover from the other. AFFIRMED.