Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-06-02825/USCOURTS-ca8-06-02825-0/pdf.json

Parties Involved:
Jan Reis
Appellee
Hulon Walker
Appellant

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 06-2825

___________

Jan Reis, *

*

Plaintiff/Counter *

Defendant - Appellee, *

* Appeal from the United States

v. * District Court for the

* Southern District of Iowa.

Hulon Walker, *

*

Defendant/Counter *

Plaintiff - Appellant. *

___________

Submitted: January 8, 2007

Filed: June 25, 2007

___________

Before LOKEN, Chief Judge, BYE and SHEPHERD, Circuit Judges.

___________

LOKEN, Chief Judge.

Jan Reis served as director of quality assurance and chief operating officer for

Care Initiatives, a non-profit corporation headquartered in West Des Moines, Iowa.

Reis commenced this diversity action against Hulon Walker, the corporation’s

president and chief executive officer, asserting state law claims for assault, battery,

and intentional infliction of emotional distress based on allegations that during her

employment Walker made unwanted sexual advances. After Walker counterclaimed

for abuse of process, Reis moved to dismiss her claims without prejudice and

Walker’s counterclaim for failure to state a claim on which relief can be granted. The

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The Honorable RONALD E. LONGSTAFF, United States District Judge for

the Southern District of Iowa.

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district court1

 granted both motions. Walker appeals the dismissal of his counterclaim.

We review a Rule 12(b)(6) dismissal de novo, accepting the claimant’s allegations of

fact as true and affirming “only if it is clear that no relief could be granted under any

set of facts that could be proved consistent with the allegations.” Ring v. First

Interstate Mortgage, Inc., 984 F.2d 924, 926 (8th Cir. 1993) (quotation omitted). We

affirm.

Abuse of process under Iowa law is the use of legal process in an improper or

unauthorized manner. The second element, which is “difficult to establish,” requires

at a minimum proof that the defendant “used the legal process primarily for an

impermissible purpose or illegal motive.” Johnson v. Farm Bureau Mut. Ins. Co., 533

N.W.2d 203, 209 (Iowa 1995). Typically, that means a motive to obtain some

advantage collateral to the allegedly abusive process. Thus, abuse of process cases

usually involve “some form of extortion.” Schmidt v. Wilkinson, 340 N.W.2d 282,

284 (Iowa 1983) (quoting Restatement (Second) of Torts § 682 cmt. b). The demand

for collateral advantage that evidences an impermissible purpose “may precede the

issuance of process and still be actionable, so long as the process does in fact issue at

the defendant’s behest, and as part of the attempted extortion.” Fuller v. Local Union

No. 106 of United Bhd. of Carpenters & Joiners, 567 N.W.2d 419, 422 (Iowa 1997)

(quotation omitted). 

Because Iowa is a notice pleading State, the Supreme Court of Iowa has held

that it was error to dismiss an abuse-of-process complaint alleging that defendant

“improperly used the civil process against plaintiffs primarily to accomplish purposes

for which the civil process was not designed.” Schmidt, 340 N.W.2d at 283. Like the

complaint in Schmidt, Walker’s counterclaim set forth this allegation, almost

verbatim. If the complaint had stopped with this notice pleading, it would no doubt

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have survived a threshold motion to dismiss. But, again like the complaint in

Schmidt, Walker’s complaint went on to allege an improper purpose. In Schmidt,

plaintiff, a police officer, alleged that defendant sued primarily for the purpose of

avoiding criminal prosecution. The Supreme Court of Iowa stated that this

“conceivably states a form of extortion.” 340 N.W.2d at 285. Here, Walker alleged

that Reis “made a financial demand on Care Initiatives in exchange for releasing

alleged claims against Care Initiatives and . . . Walker” and then “instituted these

proceedings . . . for her stated purpose of coercing a settlement from Care Initiatives.”

The district court concluded this is not an improper purpose as a matter of Iowa law.

We agree.

The Supreme Court of Iowa has repeatedly held that, because settlements are

favored, commencing a lawsuit or adding a claim to gain leverage for a settlement, or

in the expectation of a settlement, is not an abuse of that process. See Johnson, 533

N.W.2d at 209; Wilson v. Hayes, 464 N.W.2d 250, 267 (Iowa 1990); Brody v. Ruby,

267 N.W.2d 902, 905-06 (Iowa 1978); see also Asay v. Hallmark Cards, Inc., 594

F.2d 692, 695 (8th Cir. 1979). Walker argues that these cases are distinguishable

because Reis directed her settlement demand to Care Initiatives, a third party, and

“there is no Iowa authority for the proposition that attempting to extort payment from

a third party by threatening litigation against another is not abuse of process.” That

may be literally true. But there is Iowa authority that judicial process is not abusive

simply because the settlement being pursued by use of the process includes parties

other than the target of that process. 

In Wilson v. Hayes, after successfully defending a medical malpractice suit,

defendant sued the plaintiff’s attorney for abuse of process, alleging that the attorney

continued to pursue the malpractice claim on behalf of his client, instead of dismissing

the suit, in order to obtain a personal release for the attorney. The attorney of course

was a not a party to the malpractice suit. But the Supreme Court of Iowa nonetheless

rejected this abuse-of-process claim, concluding that seeking a personal release for the

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attorney fell within the rule in its earlier Brody decision that pursuit of settlement is

not an abuse of process. 464 N.W.2d at 267. 

Here, the district court concluded that, because Care Initiatives was Reis’s

employer, and because Walker’s alleged misconduct was employment related, “it is

at least understandable why plaintiff would choose to take her settlement demands

directly to Care Initiatives.” We conclude this was a sound application of the

Supreme Court of Iowa’s decisions in Brody and Wilson. Reis made a “financial

demand” to settle her yet-unasserted claims against both Care Initiatives and Walker.

Settlement of the entire dispute obviously required resolution of all claims. In these

circumstances, it was not an abuse of process to commence a lawsuit asserting her

claims against Walker for the purpose of settling the entire dispute, regardless whether

the prior settlement demands were directed to Care Initiatives. 

Relying on our decision in Asay, 594 F.2d at 695-96, Walker further argues that

his counterclaim should not have been dismissed because he also alleged that he has

suffered mental anguish and collateral damage to his personal and business reputation.

But these were damage allegations, not allegations of an additional purpose that could

satisfy the improper purpose element of the tort of abuse of process. To assert the

theory that Reis commenced the lawsuit for the improper purpose of damaging

Walker’s reputation would require amending his counterclaim. Such an amendment

was filed in the district court in Asay, 594 F.2d at 694, but not here. We decline to

consider a theory not preserved in the district court.

The judgment of the district court is affirmed.

______________________________

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