Title: Matter of Estate of Lau

State: iowa

Issuer: Iowa Supreme Court

Document:

442 N.W.2d 109 (1989) In the Matter of the ESTATE OF Aaron Drexel LAU, Deceased. Brenda J. Lau VanDeWALKER, Appellee, v. Carol Latham LAU, Appellant. No. 88-138. Supreme Court of Iowa. June 14, 1989. *110 Darold J. Jack, Oelwein, for appellant. John W. Hofmeyer, III, Oelwein, for appellee. Considered by McGIVERIN, C.J., and HARRIS, CARTER, SNELL, and ANDREASEN, JJ. SNELL, Justice. The issue raised by this appeal is whether a judicial equitable lien and a judgment lien on decedent's real property are subject to classification under Iowa Code section 633.425 as debts of the estate that shall not be paid until administration costs, burial expenses, taxes, and medical expenses of the decedent's last illness have been satisfied. Both the district court and the court of appeals determined the liens have priority to the secured property over these debts and charges. We affirm. On December 9, 1983, the marriage of Aaron Lau and claimant, Brenda Lau VanDeWalker, was dissolved. The dissolution decree provided that: The decree also required Aaron to pay $75 per week as child support. On January 10, 1987, Aaron died. At the time of his death, Aaron had not made any of the property settlement payments and, in addition, claimant had obtained a judgment lien for $3350 for unpaid back child support. Accordingly, claimant filed a claim against Aaron's estate for the past due property settlement and child support amounts, as well as a claim for future child support. These claims were disallowed by Carol Lau, the administrator of the estate and Aaron's surviving spouse, so claimant requested a hearing. The district court thereafter entered the following ruling: The court also levied a $100 sanction on the administrator's attorney for misstating a previous ruling of the court. Upon the administrator's appeal of both of these rulings, we transferred the case to the court of appeals, which affirmed. We then granted the administrator's application for further review. I. The administrator contends the priority of claimant's liens is governed by section 633.425, which provides: The parties do not dispute that the assets of Aaron's estate are insufficient to pay in full the debts and charges of the estate. However, claimant contends her liens are not debts of the estate, so as to be subject to section 633.425. We agree. "Debts" are defined in section 633.3(10) as including "liabilities of the decedent which survive, whether arising in contract, tort, or otherwise." No mention is made of the liens placed on property to secure the payment of these liabilities. In fact, section 633.414 provides: And section 633.423, discussing the procedure for the payment of secured claims, provides in pertinent part: Respected commentators have interpreted section 633.423 as follows: S. Kurtz and R. Reimer, Iowa Estates: Taxation And Administration, § 13.12 at p. 440 (1975) (emphasis added and citations omitted). The clear import of this is that claimant's enforcement of the liens against the secured property is not affected by the preference provisions of section 633.425. Those provisions would only apply if claimant sought to have her claims satisfied with estate assets on which she did not have a lien. This court implied as much as long ago as 1876, when it was noted that a secured "creditor, at his option, could enforce [his] claim, either against the lands or the proceeds of the personal property in the hands of the administrator." Black v. Black, 42 Iowa 694, 696 (1876). Similarly, in In re Estate of Butterfield, 196 Iowa 633, 634, 195 N.W. 188, 188-89 (1923), this court held that a bank was not compelled to exhaust its mortgage security on a homestead before it could file its note as a general claim *112 against decedent's estate. The court stated the bank The distinction between the making of a claim for the payment of a debt of an estate and the enforcement of a lien on secured property for the same purpose has long been recognized. We therefore conclude claimant's liens have priority over the debts and charges listed in section 633.425. II. The administrator's attorney, Darold Jack, challenges the imposition of the $100 sanction, which was made by the court sua sponte. On July 2, 1987, in its adjudication of law points, the district court determined in claimant's favor (1) that the estate's interest in the decedent's homestead could not be greater than the interest of the decedent at his death, and (2) that a judgment lien creditor could enforce his lien against the estate's property without permission of the probate court, although foreclosure might be required before execution, levy, or sheriff's sale. Also on July 2, in its ruling on a motion for summary judgment, the district court ordered that claimant's claims be allowed "as claims of the class recognized in Iowa Code section 633.425(8)." With respect to claimant's attempts to enforce her liens, the court refused to enter judgment against the real estate, since claimant had not yet complied with the provisions of Iowa Code chapter 654. In the administrator's motion to strike, filed December 28, 1987, Jack averred that "[o]n July 2, 1987, this court denied said claimant's motion to adjudicate points of law." The district court found that this statement was a misrepresentation of the court's order. Jack contends he did not willfully mislead the district court; he just confused the two court rulings discussed above. Iowa Rule of Civil Procedure 80(a) provides in pertinent part: The rule does not require a finding that the attorney's conduct be willful. The district court also found that during oral arguments on January 11, 1988, Jack adamantly stood firm with his position. The court stated that Jack's ignoring the court's rulings adverse to his client added to the claimant's frustration. Jack either failed to make reasonable inquiry with respect to the court's ruling or falsely certified in his motion to strike that the information was well grounded in fact. Our review of the record reveals ample support for the district court's conclusion. We conclude the court did not abuse its discretion by ordering Jack to pay $100 of claimant's attorney fees. DECISION OF COURT OF APPEALS AFFIRMED; JUDGMENT OF DISTRICT COURT AFFIRMED.