IN THE SUPREME COURT OF IOWA

No. 17–0931

Filed November 16, 2018

STATE OF IOWA,

Appellee,

vs.

TERRAN ROACHE,

Appellant.

On review from the Iowa Court of Appeals. 

Appeal from the Iowa District Court for Story County, James B. 

Malloy, District Associate Judge. 

Defendant seeks further review of court of appeals decision affirming 

restitution judgment. DECISION OF COURT OF APPEALS VACATED; 

DISTRICT COURT JUDGMENT AFFIRMED IN PART AND REVERSED

IN PART. 

John L. Dirks of Dirks Law Firm, Ames, for appellant. 

Thomas J. Miller, Attorney General, Martha E. Trout, Assistant 

Attorney General, Jessica Reynolds, County Attorney, and Adam 

Kenworthy, for appellee. 
2

WATERMAN, Justice.

In this appeal, we review the level of scrutiny for a criminal 

restitution award. The operator of a training course for commercial truck 

drivers imposed a $1900 “fine” on its student for the loss of a paperback

study guide, a multiple of the full cost of the course that included the 

guide. The study guide was in a backpack stolen from the student’s 

parked car. The student has not paid the fine, and his automobile insurer 

determined the paperback guide had no value. The district court

presumed that $1900 far exceeded the actual cost to print the guide but 

nevertheless ordered the defendant who pled guilty to the theft to pay that 

amount in victim restitution. The defendant appealed to challenge that 

amount alone, and we transferred the case to the court of appeals, which 

affirmed. We assuaged our sticker shock by granting the defendant’s 

application for further review. 

We hold that the scope-of-liability analysis in sections 29 and 33 of 

the Restatement (Third) of Torts: Liability for Physical and Emotional Harm

(Am. Law Inst. 2010) [hereinafter Restatement (Third) of Torts] applies in 

criminal restitution determinations. For the reasons set forth below, we 

reverse the $1900 fine-based restitution award as punitive and 

unsupported by substantial evidence. 

I. Background Facts and Proceedings. 

On October 8 and 14, 2016, police received multiple reports of 

vehicle break-ins at a parking garage in Ames, Iowa. Officers interviewed

victims and reviewed surveillance video from security cameras. One victim 

reported that her stolen credit card was being used at a local liquor store 

and bar. Officers went to that vicinity and approached a man recognized 

from the video. The man, Terran Roache, attempted to flee. Officers 
3

apprehended him after a brief pursuit. Roache possessed property stolen 

from several of the victims and a tire iron. 

The State charged Roache with eleven counts: two counts of criminal 

mischief in the second degree in violation of Iowa Code sections 716.1, 

716.2, and 716.4; six counts of burglary in the third degree in violation of 

sections 713.1 and 713.6A(2); one count of possession of burglar’s tools in 

violation of section 713.7; one count of unlawful use of a credit card in 

violation of sections 715A.1, 715A.6(1), and 715A.6(2)(c); and one count of 

theft in the second degree in violation of sections 714.1 and 714.2(2). In 

January 2017, Roache, pursuant to a written plea agreement, entered a

guilty plea to one count of criminal mischief and one count of burglary.

He agreed to pay restitution on all eleven counts. In exchange, the State 

agreed to dismiss the remaining nine counts. At the plea hearing, after 

engaging in a colloquy with Roache, the district court accepted his guilty 

pleas. 

The district court sentenced Roache to an indeterminate prison term 

not to exceed five years for criminal mischief and two years for burglary,

with the sentences to run concurrently and with credit for time served.

The court dismissed the remaining counts but ordered Roache to pay 

restitution on all eleven counts consistent with his plea agreement. The 

court gave the State thirty days to file a pecuniary damages statement

itemizing the amount of restitution each victim was seeking. See Iowa 

Code § 910.3 (2016). 

The State submitted a pecuniary damages statement seeking a total 

of $4515.80 in restitution to reimburse Roache’s victims for vehicle 

damage and stolen property. The court approved the amount in full, but 

gave Roache thirty days to object. 
4

Roache timely filed a written objection to two items: $1900 to replace 

Jordan Hagedon’s stolen study guide and $958.72 to repair Haoran 

Wang’s windshield. Roache requested a hearing on his objections.

At the restitution hearing, Hagedon testified he found his Hyundai 

Santa Fe with a broken window and his backpack missing from the 

backseat. The study guide, a laptop, a laptop charger, a change of clothes, 

and prescription eyeglasses were inside the backpack. Neither the 

backpack nor its contents were recovered. Hagedon submitted a claim to 

his insurance company. The insurance company determined the study 

guide had no value, but reimbursed Hagedon for the cost of the remaining 

items, less his $500 deductible. Hagedon also sought the $500 deductible 

in restitution, and Roache does not dispute the award of that amount. 

Hagedon was enrolled in a course through Northland CDL Training 

& Licensing to obtain his commercial driver’s license (CDL). As part of the 

course, Northland issued Hagedon a “Pre-Trip Inspection Study Guide.”

The study guide was soft-covered, approximately six inches wide by eight

or ten inches long, and between a quarter- and half-inch thick. Two weeks 

before the theft, Hagedon had signed Northland’s “check-out agreement” 

for the study guide, which stated,

I, Jordan Hagedon am a student in the CDL Driver Prep. 

Course that includes the use of the “Pre-Trip Inspection Study 

Guide”, a published, marked and copyright[ed] booklet, and 

the sole property of Northland CDL Training, © 2012. 

I was made fully aware at the opening class session that I am 

responsible for returning aforementioned study guide. It was 

explained fully that if I did not complete ALL portions of the 

assignments I AM NOT eligible to continue with the CDL Skills 

testing conducted with a tractor/trailer by the college staff. 

By not returning the said study guide on my final testing date, 

I also fully understand that in addition to a fine for claiming 

the booklet was lost, I will be listed as incomplete for that 

assignment and may be deemed as not eligible to be tested for 

a CDL, thus having any test results become Null and Void. In 
5

that event, I fully understand and agree that I may not be 

issued a CDL regardless of the outcome of the Skills Testing. 

The “Pre-Trip Inspection Study Guide” text is copyright 

protected. Any use in an unauthorized manner, the copyright 

holders will pursue damages to the full extent of the copyright 

infringement laws, according to Chapter Five, Article 504 of 

the U.S. Copyright Act, each infringement carries a minimum 

$750 and maximum $30,000 penalty, while willful 

infringement carries a maximum penalty of $150,000. This 

in addition to court orders to pay all legal fees involved. 

I understand and agree with these terms and conditions on 

this date with my pledge to return the Pre-Trip Inspection 

Study Guide when I come for my final testing day or by mail 

to the above address if for any reason I do not complete the 

course. 

I am taking Study Guide Number 1895. 

The agreement was silent as to the amount of the fine Northland would 

charge Hagedon if he failed to return the study guide.

On October 10, two days after the theft, but before Roache’s arrest, 

Hagedon signed another Northland document that for the first time set the 

dollar amount of the fine at $1900, and stated,

I was made fully aware at the opening class session that I am 

responsible for the “Pre-Trip Inspection Study Guide” and by 

not returning it would result in a FINE (see attached copy of 

presentation slide, class handout and check-out agreement 

signed by the student). The “Pre-Trip Inspection Study Guide” 

book I was issued was Number 01895. 

By losing and not returning the said study guide on my final 

testing date, I also fully understand I will be charged a fine of 

4X the course tuition. The calculated charge for this course 

is $1,900 (one thousand, nine hundred dollars).1

The attached presentation slide describes the study guide and states, “You 

MUST Return [the study guide] To Us When You Come For Your Phase 3 

Training/Testing. YOU WILL BE CHARGED A FINE IF YOU LOSE IT!!!” 

The handout attached to the contract is a letter from Randy Grey, Lead 

Instructor, stating in part, “The Study Guide Is Copyright Protected And 

 1The record is unclear whether $1900 is the cost of the course or four times the 

course tuition. 
6

Is On LOAN To You. It MUST Be Returned When You Come For Final 

Testing. Failure to return it will result in a COSTLY FINE.” No dollar 

amount of the fine was mentioned in the handout or slide. 

Hagedon has not paid Northland any amount for the stolen study 

guide, but has an outstanding $1900 balance with Northland for the full 

amount of its fine. Hagedon testified that “[Northland has] been waiting 

for what we would hear from restitution.” Hagedon has completed 

Northland’s course and received his CDL. 

On cross-examination, Hagedon agreed that the value of the study 

guide was not $1900. The court asked Hagedon if he had talked to 

Northland about waiving the fine because the study guide was stolen. 

Hagedon replied,

I did. All they said was that they reiterated the fact that people 

have not returned them in the past, and they do charge the 

four times the cost of the class. And I did ask that, and they 

said that if I did get money out of the restitution, they’d like 

to see that, because it’s still a risk to them, I guess, with their 

copyrighting or their—they wrote that book, they publish that 

book themselves, and they didn’t want that getting out. And 

any restitution that came out of this, they would still like to 

get. I haven’t spoke[n] with them since probably the day of 

the class. 

Hagedon testified he did not know what would happen if he failed to pay 

the fine or if the fine was omitted from the restitution award. 

In a written ruling, the district court ordered Roache to pay 

$3557.08 in restitution, including $1900 for Hagedon’s study guide. In its 

ruling, the district court found

[t]he “damage” to the victim for failing to return the study 

guide came to $1,900. But for the defendant’s criminal 

actions, [Hagedon] would not have been assessed that “fine.” 

The Court would presume that $1,900 far exceeds the actual 

cost to print the study guide, but the actual cost of the study 

guide does not reimburse [Hagedon] for the loss he sustained

as a result of the defendant’s actions. 
7

Neither the State nor the victim introduced evidence on Wang’s $958.72 

claim for his windshield repair, and accordingly, the court disallowed that 

amount. 

Roache appealed, challenging only the $1900 restitution award for 

the study guide. We transferred the case to the court of appeals. The 

court of appeals determined that the $1900 award was supported by 

substantial evidence and Hagedon’s “loss” in that amount was causally 

related to Roache’s criminal activities. The court of appeals affirmed the 

district court’s restitution award in full. We granted Roache’s application 

for further review. 

II. Standard of Review. 

We review the district court’s restitution order for correction of 

errors at law. State v. Iowa Dist. Ct., 889 N.W.2d 467, 470 (Iowa 2017). 

“In reviewing a restitution order ‘we determine whether the court’s findings 

lack substantial evidentiary support, or whether the court has not properly 

applied the law.’ ” State v. Hagen, 840 N.W.2d 140, 144 (Iowa 2013) 

(quoting State v. Bonstetter, 637 N.W.2d 161, 165 (Iowa 2001)). “Evidence 

is substantial when a reasonable mind would accept it as adequate to 

reach a conclusion.” Bonstetter, 637 N.W.2d at 165 (quoting Hasselman 

v. Hasselman, 596 N.W.2d 541, 545 (Iowa 1999)). 

III. Analysis. 

We must decide whether the district court erred by including the

$1900 fine for the stolen study guide in the restitution order. We begin 

with an overview of the law governing restitution. We adopt the scope-ofliability analysis in the Restatement (Third) of Torts for criminal restitution 

cases. We then address Roache’s challenges to the $1900 award and 

conclude the district court erred by awarding that amount without 

substantial evidentiary support. 
8

A. Restitution Framework. “[T]he purpose of restitution is twofold. It not only serves to protect the public by compensating victims for 

criminal activities, but it also serves to rehabilitate the defendant.” State 

v. Izzolena, 609 N.W.2d 541, 548 (Iowa 2000). “Unlike other forms of penal 

sanctions, restitution forces the offender to answer directly for the 

consequences of his or her actions.” Bonstetter, 637 N.W.2d at 165. We 

thoroughly reviewed the history of criminal restitution in State v. Jenkins, 

788 N.W.2d 640, 642–43 (Iowa 2010) (surveying state and federal 

legislation and caselaw). 

Iowa Code chapter 910 governs criminal restitution. “Restitution is 

mandatory ‘[i]n all criminal cases in which there is a plea of guilty, verdict 

of guilty, or special verdict upon which a judgment of conviction is 

rendered.’ ” Hagen, 840 N.W.2d at 149 (alteration in original) (quoting 

Iowa Code § 910.2(1)). Restitution orders may include payment of 

pecuniary damages to the victim and payment of criminal fines, penalties, 

and surcharges to the clerk of court. Iowa Code §§ 910.1(4), .2(1); Hagen, 

840 N.W.2d at 149. Section 910.1 limits restitution for the victim’s 

pecuniary damages to those recoverable in a civil action and unreimbursed 

by insurance:

“Pecuniary damages” means all damages to the extent not 

paid by an insurer, which a victim could recover against the 

offender in a civil action arising out of the same facts or event, 

except punitive damages and damages for pain, suffering, 

mental anguish, and loss of consortium. Without limitation, 

“pecuniary damages” includes damages for wrongful death 

and expenses incurred for psychiatric or psychological 

services or counseling or other counseling for the victim which 

became necessary as a direct result of the criminal activity. 

Iowa Code § 910.1(3) (second emphasis added).2

 2In State v. Dubois, we held a victim was not required to submit a claim to

her insurer, noting the term “ ‘all damages to the extent not paid by an insurer’ 

means all amounts not actually paid. It does not mean amounts that might be 
9

Criminal restitution is further linked to civil tort recoveries through 

section 910.8, which provides, “[A]ny restitution payment by the offender 

to a victim shall be set off against any judgment in favor of the victim in a 

civil action arising out of the same facts or event.” Id. § 910.8. In State v. 

Driscoll, we observed “the purpose of section 910.8 [is] to coordinate a 

criminal-restitution payment with a civil-damage award to prevent the 

victim from receiving a windfall.” 839 N.W.2d 188, 191 (Iowa 2013). The 

setoff provision also applies to reduce the restitution award by the amount 

recovered in the civil suit to avoid a double recovery. Id.

The state bears the burden of proof to recover damages due the 

victim. Bonstetter, 637 N.W.2d at 170. In Bonstetter, we set forth the 

procedure for determining the amount of restitution, including proof of 

causation, stating, 

In calculating a restitution order, the district court must 

find a causal connection between the established criminal act 

and the injuries to the victim. The damage must have been 

caused by the offender’s criminal act to justify the restitution 

order. Once the causal connection is established by a 

preponderance of the evidence, “the statute allows recovery of 

‘all damages’ . . . which the state can show by a 

preponderance of the evidence.” A restitution order is not 

excessive “if it bears a reasonable relationship to the damage 

caused.” 

Id. at 168 (alteration in original) (citations omitted) (first quoting State v. 

Ihde, 532 N.W.2d 827, 829 (Iowa Ct. App. 1995); then quoting State v. 

Mayberry, 415 N.W.2d 644, 647 (Iowa 1987)); see also Jenkins, 788 

N.W.2d at 647 (allowing district court review of factual causation in 

restitution claims by Crime Victim Compensation Program). 

“Generally, causation exists in criminal law, often without much 

fanfare, as a doctrine justifying the imposition of criminal responsibility by 

 

paid, could be paid, will be paid, or even should be paid by the insurer.” 888 

N.W.2d 52, 54–55 (Iowa 2016).
10

requiring a ‘sufficient causal relationship between the defendant’s conduct 

and the proscribed harm.’ ” State v. Tribble, 790 N.W.2d 121, 126 (Iowa 

2010) (quoting State v. Marti, 290 N.W.2d 570, 584 (Iowa 1980)). We 

previously observed that 

[c]ausation has two components: “(1) the defendant’s conduct 

must have in fact caused the plaintiff’s damages (generally a 

factual inquiry) and (2) the policy of the law must require the 

defendant to be legally responsible for the injury (generally a 

legal question).”

Berte v. Bode, 692 N.W.2d 368, 372 (Iowa 2005) (quoting Gerst v. Marshall, 

549 N.W.2d 810, 815 (Iowa 1996)); see also State v. Watts, 587 N.W.2d 

750, 751 (Iowa 1998) (“We have said that section 910.1(3) ‘connote[s] a 

requirement that the victim prove a prima facie case of liability premised 

on some civil theory such as fault or intentional tort. Proximate cause, of 

course, would be a necessary element of such a prima facie case.’ ”

(quoting State v. Starkey, 437 N.W.2d 573, 574 (Iowa 1989))). Factual 

causation is determined through a “but for” test: 

[T]he defendant’s conduct is a cause in fact of the plaintiff’s 

harm if, but-for the defendant’s conduct, that harm would not 

have occurred. The but-for test also implies a negative. If the 

plaintiff would have suffered the same harm had the 

defendant not acted negligently, the defendant’s conduct is 

not a cause in fact of the harm. 

Berte, 692 N.W.2d at 372 (quoting Dan B. Dobbs, The Law of Torts § 168, 

at 409 (2000)). 

In Thompson v. Kaczinski, we bifurcated proximate cause into 

factual cause and scope of liability and adopted the Restatement (Third) of 

Torts risk standard for civil tort actions. 774 N.W.2d 829, 837–39 (Iowa 

2009). This standard “is intended to prevent the unjustified imposition of 

liability by ‘confining liability’s scope to the reasons for holding the actor 

liable in the first place.’ ” Id. at 838 (quoting Restatement (Third) of Torts 
11

§ 29 cmt. d, at 496). “The scope-of-liability issue is fact-intensive as it 

requires consideration of the risks that made the actor’s conduct tortious 

and a determination of whether the harm at issue is a result of any of

those risks.” Id. To determine whether 

the plaintiff’s harm is beyond the scope of liability as a matter 

of law, courts must initially consider all of the range of harms 

risked by the defendant’s conduct that the jury could find as 

the basis for determining [the defendant’s] conduct tortious. 

Then, the court can compare the plaintiff’s harm with the 

range of harms risked by the defendant to determine whether 

a reasonable jury might find the former among the latter. 

Id. (alteration in original) (quoting Restatement (Third) of Torts § 29 cmt. 

d, at 496); see also Spreitzer v. Hawkeye State Bank, 779 N.W.2d 726, 

741–45 (Iowa 2009) (applying scope-of-liability analysis to determine 

damages recoverable for fraud). 

The scope of liability is broader for intentional torts. Spreitzer, 779 

N.W.2d at 741 (“We readily acknowledge legal causation for intentional 

torts often reaches a broader range of damages for harm than legal 

causation reaches in cases involving unintentional torts.”). The applicable 

Restatement section provides, “An actor who intentionally or recklessly 

causes harm is subject to liability for a broader range of harms than the 

harms for which that actor would be liable if only acting negligently.” 

Restatement (Third) of Torts § 33(b), at 562. However, “an actor who 

intentionally or recklessly causes harm is not subject to liability for harm 

the risk of which was not increased by the actor’s intentional or reckless 

conduct.” Id. § 33(c), at 562. 

We have not extended the Restatement (Third) of Tort’s scope-ofliability analysis to criminal cases, but we have referred to its factualcausation standard. In Tribble, we stated, “The conduct of a defendant is 

a ‘factual cause of harm when the harm would not have occurred absent 
12

the conduct.’ ” 790 N.W.2d at 127 (quoting Restatement (Third) of Torts 

§ 26, at 346). We limited our analysis in that felony murder case to factual 

causation. Id. at 127 n.1 (“The nature of the argument presented by 

Tribble in this case does not require us to consider the element of 

causation beyond a factual-cause analysis.”). We applied the Restatement 

(Third) of Torts factual-causation but-for test in several subsequent 

criminal cases. See State v. Tyler, 873 N.W.2d 741, 747–50 (Iowa 2016) 

(reviewing such cases). We expressly left open whether we would replace 

the legal or proximate cause analysis in criminal cases with the scope-ofliability approach of the Restatement (Third) of Torts. See id. at 750 (“[W]e 

need not resolve that question today either.”). 

Iowa Code chapter 910 expressly relies on civil liability principles to 

determine restitution for a crime victim’s pecuniary damages. Iowa Code 

§ 910.1(3); see also id. § 910.8 (providing for setoffs for recoveries in civil 

action and criminal restitution proceedings). Accordingly, we now hold 

that the Restatement (Third) of Torts’ risk standard for scope of liability 

applies in criminal restitution determinations. Against this backdrop, we

turn to the issues presented in Roache’s appeal. 

B. Factual Causation. Roache claims his actions were not the 

factual cause of the $1900 fine. Roache concedes that his theft resulted 

in Hagedon’s loss of the study guide, but contends the guide’s value is 

negligible. Roache argues that there was no substantial evidence 

supporting the district court’s finding that his actions were the factual 

cause of Hagedon’s $1900 fine. Instead, Roache asserts the $1900 fine 

resulted from Hagedon’s voluntary execution of the agreement with 

Northland after the theft. We readily conclude that Roache’s actions were 

the factual cause of Hagedon’s loss of the study guide. But for the theft, 
13

the study guide would not have been lost, and Hagedon would not have

faced liability to Northland for his failure to return the guide. 

C. Scope of Liability. Roache also argues that Hagedon’s $1900 

fine after the theft falls outside the scope of liability. The State argues that 

Roache’s act of stealing an expensive item in a backpack falls within the 

scope of liability for the theft and that he is therefore liable for the $1900 

fine. The district court did not expressly address scope of liability in its 

restitution order. The court of appeals, however, determined that 

“Hagedon’s loss was also within the scope of liability of Roache’s action, as 

it was likely—and presumably Roache’s hope—that the backpack he stole 

from Hagedon’s car would contain valuable items.” We agree that a stolen 

item’s reasonable value falls within the scope of liability for theft. But,

here, we must consider the role of a third party, Northland, that imposed 

the $1900 fine on Hagedon. 

“Restitution damages are to be determined . . . in the same manner 

as in a civil case.” Watts, 587 N.W.2d at 751–52. Thus, we consider 

whether Hagedon could recover the $1900 fine from Roache in a civil 

action. Roache’s theft was an intentional act. The intentional tort of 

conversion is the civil counterpart to theft. State v. Taylor, 506 N.W.2d 

767, 768 (Iowa 1993). Liability for intentional torts extends to a broader

range of harms than merely negligent conduct. Restatement (Third) of 

Torts § 33(b), at 562. Roache’s theft of the study guide exposed Hagedon 

to liability to Northland for loss of the guide. The victim of a tort may seek

indemnity from the tortfeasor for the victim’s liability to a third party 

resulting from the tort. See, e.g., Peters v. Lyons, 168 N.W.2d 759, 770–

71 (Iowa 1969) (allowing recovery under indemnity theory for liability to 

third party). See generally Wells Dairy, Inc. v. Am. Indus. Refrigeration, 
14

Inc., 762 N.W.2d 463, 471–72 (Iowa 2009) (discussing equitable 

indemnity). 

Essentially, the State on behalf of Hagedon, as the crime victim,

seeks indemnity from the criminal/tortfeasor Roache for Hagedon’s 

liability to Northland resulting from the theft of the study guide. But 

liability in what amount? Could Northland enforce its $1900 fine and 

collect it in full from Hagedon? The State as the party seeking indemnity 

in Hagedon’s shoes “has the burden of proving [it] is entitled to the relief 

requested.” In re Marriage of Ginsberg, 750 N.W.2d 520, 522 (Iowa 2008); 

see also Bonstetter, 637 N.W.2d at 170 (indicating state bears burden of 

proving amount of criminal restitution). We look to general principles of 

the law of damages to determine whether the State met its burden of proof 

as to restitution for the $1900 fine. 

D. Roache’s Avoidable Consequences Defense. Roache argues

that Hagedon, by acquiescing to an excessive $1900 fine, failed to protect 

his own interests and minimize his damages after the theft and that the 

doctrine of avoidable consequences would bar him from recovering the fine 

in a civil action. Under the doctrine of avoidable consequences, 

a party cannot recover damages that result from 

consequences that a party could reasonably have avoided. 

The doctrine comes into play after a legal wrong occurs, but 

while some damage may still be averted, and bars recovery 

only for such damages. The doctrine is akin to mitigation of 

damages in contract actions when plaintiffs must attempt to 

reduce damages after an injury occurs. 

Olson v. Prosoco, Inc., 522 N.W.2d 284, 291 (Iowa 1994) (citations omitted).

The doctrine of avoidable consequences is a comparative fault 

principle. See, e.g., Coker v. Abell-Howe Co., 491 N.W.2d 143, 150 (Iowa 

1992) (“We hold that the Iowa legislature adopted the avoidable 

consequences doctrine as an element of fault in Iowa Code section 668.1.”). 
15

“Tort theories dealing with fraud and intentional torts are not included in 

the definition of ‘fault’ to which chapter 668[, Iowa’s comparative fault 

statute,] applies.” State v. Wagner, 484 N.W.2d 212, 216 (Iowa Ct. App. 

1992) (addressing restitution for kidnapping and insurrection during a 

prison riot). An intentional wrongdoer cannot raise the victim’s 

comparative fault as a defense. Id.; see also Tratchel v. Essex Grp., Inc., 

452 N.W.2d 171, 180–81 (Iowa 1990), abrogated on other grounds by 

Comes v. Microsoft Corp., 775 N.W.2d 302, 309–10 (Iowa 2009); see also

Mulhern v. Catholic Health Initiatives, 799 N.W.2d 104, 117 (Iowa 2011) 

(“Tratchel remains good law for the proposition that an intentional 

tortfeasor cannot reduce his liability by raising a defense of the victim’s 

comparative negligence.”). Further, in Wagner, the court of appeals 

“determine[d] comparative fault principles do not apply to restitution for 

criminal acts under Iowa Code chapter 910.” 484 N.W.2d at 216. We 

agree as to intentional criminal acts. Accordingly, the avoidable 

consequences doctrine is inapplicable here. 

E. Evidentiary Support for the $1900 Restitution Award. To 

prove the $1900 amount of restitution for the stolen study guide, the State 

presented Hagedon’s testimony, as well as the agreements Hagedon signed 

and the accompanying documents. Roache argues Hagedon has no legal 

duty to pay the fine and has suffered no injury. For that reason, Roache 

argues there is not substantial evidence to support the $1900 restitution 

award.

1. The State’s burden to prove restitution. The restitution statute 

“allows recovery of ‘all damages’ . . . which the state can show by a 

preponderance of the evidence.” Bonstetter, 637 N.W.2d at 168 (quoting 

Ihde, 532 N.W.2d at 829). A crime victim is entitled to recover in 

restitution the amount that “a victim could recover against the offender in 
16

a civil action arising out of the same facts or event, except punitive 

damages and damages for pain, suffering, mental anguish, and loss of 

consortium.” Iowa Code § 910.1(3). 

When reviewing a restitution award, we must “determine whether 

the court’s findings lack substantial evidentiary support.” Hagen, 840 

N.W.2d at 144 (quoting Bonstetter, 637 N.W.2d at 165). We will not find 

the restitution order is “excessive if it bears a reasonable relationship to 

the damage caused.” Bonstetter, 637 N.W.2d at 168. We must determine

whether substantial evidence supports the $1900 restitution award.

2. Restitution for crime victim’s obligations to a third party. The State 

on behalf of Hagedon is seeking indemnification from Roache for the fine 

Northland imposed for the stolen study guide. Our cases permit the party 

seeking indemnity (the indemnitee) to recover from the wrongdoer (the 

indemnitor) the amount the indemnitee “has been compelled to pay as a 

natural consequence of the [indemnitor]’s negligence or other wrong.” In 

re Marriage of Ginsberg, 750 N.W.2d at 522–23 (alteration in original) 

(quoting Howell v. River Prods. Co., 379 N.W.2d 919, 921 (Iowa 1986)); see 

also Iowa Dep’t of Human Servs. ex rel. Palmer v. Unisys Corp., 637 N.W.2d 

142, 156–57 (Iowa 2001) (describing indemnity and subrogation as forms 

of restitution to recover what one “has been compelled to pay” and 

recognizing the party seeking restitution must first pay the obligation 

(quoting Am. Sur. Co. of N.Y. v. Bethlehem Nat’l Bank of Bethlehem, 314 

U.S. 314, 317, 62 S. Ct. 226, 228 (1941))).3 Hagedon has not been 

“compelled to pay” any part of the $1900 fine. He simply acknowledged 

 3Parties may nevertheless file pleadings asserting claims for restitution before 

paying the amount at issue, with the court imposing restrictions on enforcement until 

the claim is paid. See Unisys Corp., 637 N.W.2d at 157. 
17

Northland’s outstanding balance for his “fine” in that amount without 

expressly agreeing to pay it. 

In Iowa, Chicago & Eastern Railroad Corp. v. Pay Load, Inc., the 

United States District Court for the Northern District of Iowa addressed 

Iowa tort damages in a somewhat analogous situation. 348 F. Supp. 2d 

1045 (N.D. Iowa 2004). A truck driver employed by the defendant failed to 

stop at a grade crossing, resulting in a train–truck collision that destroyed 

a locomotive the plaintiff had been leasing from a third party. Id. at 1048–

49. Applying Restatement (Second) of Torts section 927, and comment m

thereto,4 the federal district court noted, 

Here, under the terms of the lease, IC & E is obligated, upon 

demand by First Union, in the event of loss or destruction of 

a locomotive, to pay First Union a pre-determined amount as 

set forth in a Stipulated Loss Schedule which is attached to 

the lease. Such a loss appears to fall squarely within the 

framework of comment m. Moreover, such a result is in 

keeping with the principles underlying the allowance of 

damages in tort actions. 

Iowa, Chi. & E. R.R., 348 F. Supp. 2d at 1053; Restatement (Second) of 

Torts § 927 cmt. m, at 542 (Am. Law Inst. 1979). No party challenged this 

liquidated-damages provision as an unenforceable penalty. “[T]he court 

conclude[d] that in order to permit IC & E full compensation it will be 

entitled to seek to recover the amount set forth in the lease’s Stipulated 

Loss Schedule.” Iowa, Chi. & E. R.R., 348 F. Supp. 2d at 1053. 

Importantly, however, the court conditioned recovery on proof the plaintiff 

will actually be required to pay the amount stipulated in the lease. Id. (“[I]f 

 4Comment m states in part, 

m. Further loss. The person entitled to the value of a thing taken 

or destroyed by a tortfeasor is entitled to recover for any further loss 

suffered by him as the result of the deprivation, subject to the rules stated 

in §§ 912 and 917 as to certainty and causation. 

Restatement (Second) of Torts § 927 cmt. m, at 542. 
18

the evidence at trial establishes that IC & E will not be required to pay 

First Union the amount set forth in the lease’s Stipulated Loss Schedule, 

but instead a lesser amount, IC & E will not be permitted to seek such

damages.”). Here, the State failed to prove Hagedon actually will be 

“compelled to pay” Northland’s $1900 fine and failed to rebut Roache’s 

argument that the fine is an unenforceable penalty. 

3. Northland’s unpaid fine alone is insufficient. The amount actually 

paid because of the wrongdoing is evidence of the amount recoverable 

through indemnification, particularly when the amount paid is fixed 

through an arm’s-length transaction. See In re Marriage of Ginsberg, 750 

N.W.2d at 522–23. The amount billed is not conclusive in tort cases, and 

fact finders consider whether the plaintiff has paid the amount charged as 

a factor in determining whether that amount was reasonable. See Pexa v. 

Auto Owners Ins., 686 N.W.2d 150, 156 (Iowa 2004) (“The amount charged, 

standing alone, is not evidence of the reasonable and fair value of the 

services rendered. The billed amount is relevant only if that figure was 

paid or an expert witness has testified to the reasonableness of the 

charges.” (Citations omitted.)); see also Stanley v. State, 197 N.W.2d 599, 

606–07 (Iowa 1972) (“The amount charged, without payment, is not 

evidence of the propriety of the charges.”). Indeed, it is speculative whether 

Northland will attempt to collect any amount from Hagedon beyond 

whatever Roache pays in court-ordered restitution. And no expert or lay 

witness testified that the $1900 amount was reasonable. 

Bonstetter is instructive. John Bonstetter was convicted of 

embezzling over $422,000 from his employer. 637 N.W.2d at 164. In the 

restitution hearing, the state submitted a bill in the amount of $19,763 for 

the cost of an audit, and the sentencing court included that amount in the 

restitution award. Id. Bonstetter challenged the audit award on appeal, 
19

and we reversed, concluding the auditor’s bill alone (without proof the 

victim paid it) was insufficient to meet the state’s burden of proof that the 

cost of this audit was reasonable and necessary. Id. at 169–70 (holding 

“the inclusion of the costs of the audit as an item of damage was not 

supported by substantial evidence”). 

The State argues that Hagedon has suffered $1900 in damages. The 

record shows, however, that Hagedon has not paid the $1900 fine and that 

Northland to date has not attempted to collect the fine from him. Hagedon 

testified Northland was “waiting for what we would hear from restitution.” 

When the court asked whether Hagedon talked to Northland about waiving 

the fine, Hagedon stated, “[A]ny restitution that came out of this, they 

would still like to get. I haven’t spoke[n] with them since probably the day 

of the class.” Hagedon did not know what would happen if the court did 

not include the fine in the restitution award or if he failed to pay the fine. 

In any event, Hagedon completed Northland’s training course and 

obtained his CDL despite his $1900 outstanding balance with Northland 

for the loss of the study guide. We conclude that Northland’s unpaid fine 

is akin to the unpaid billing invoice in Bonstetter and is insufficient without 

more to support the restitution award. 

4. Methods of calculating damages. We next consider whether other 

evidence supports the restitution award. “We have said that tort damages 

are not limited by the reasonable contemplations of the parties. Instead, 

the amount of direct injury is compensated, whether its extent was 

contemplated or not.” R.E.T. Corp. v. Frank Paxton Co., 329 N.W.2d 416, 

420 (Iowa 1983). “In civil cases, we will affirm a damage award if it is 

within a reasonable range of the evidence.” Watts, 587 N.W.2d at 752. 

[T]here is a recognized distinction between proof of the fact 

that damages have been sustained and proof of the amount of 

those damages. One cannot recover if it is speculative and 
20

uncertain as to whether the damages claimed have actually 

been sustained, but if the uncertainty lies only in the amount 

of damages, recovery may be had if there is proof of reasonable 

basis from which the amount may be inferred. 

Id. (quoting Natkin & Co. v. R.F. Ball Constr. Co., 255 Iowa 1156, 1167, 123 

N.W.2d 415, 422 (1963)). With regard to reviewing damage awards, we 

stated, 

Although it may not be possible to value the property with 

absolute certainty as of a particular date, an award of 

damages may still stand so long as the figure has a reasonable 

basis and is not speculative, possible or imaginary, 

particularly where the conduct of the wrongdoers has 

rendered it difficult to ascertain the damages suffered with the 

precision otherwise possible. 

Id. (quoting 22 Am. Jur. 2d Damages § 430, at 515–16 (1988)). 

i. Replacement cost or actual value. One measure of damages is the 

replacement cost of the study guide. “The general rule in Iowa for repairs 

or for replacement [of property] is the fair and reasonable cost of

replacement or repair, but not to exceed the value of the property 

immediately prior to the loss or damage.” State v. Urbanek, 177 N.W.2d 

14, 16 (Iowa 1970). 

Roache argues that the $1900 fine has no reasonable relationship 

to the actual replacement cost of the study guide. The study guide was 

soft covered, approximately six inches wide by eight or ten inches long, 

and between a quarter- and half-inch thick. The State presented no 

evidence regarding the replacement cost of the study guide. The district 

court “presume[d] that $1,900 far exceeds the actual cost to print the 

study guide.” Hagedon testified without objection at the restitution 

hearing that his insurance company determined the study guide had no 

value and that $1900 was the amount of the fine, but “not the actual value 

of the book.” The State did not show the guide’s value exceeds the cost of 
21

the course tuition that included use of the guide—yet Northland 

admittedly imposed a fine of four times the cost of tuition. 

The study guide’s contents may well have value as intellectual 

property, but the State presented no expert or lay testimony to prove such 

value. No copyright infringement, trade secret, or business competition 

injury was shown to justify the $1900 amount. 

ii. Hagedon’s damages for breach of contract. The State argues the 

$1900 restitution award is supported by the evidence showing Hagedon’s 

liability for breach of Northland’s contract as liquidated damages for loss 

of the study guide. The parties agree on the applicable general principles 

of contract law but disagree as to the result when those principles are 

applied to this evidentiary record. 

Damages for breach of contract . . . are limited to “those 

injuries which may reasonably be considered as arising 

naturally from the breach of contract itself, or such as may 

reasonably be supposed to have been in the contemplation of 

the parties, at the time of contracting, as a probable result of 

the breach.” 

R.E.T. Corp., 329 N.W.2d at 420 (emphasis added) (quoting Meyer v. 

Nottger, 241 N.W.2d 911, 920 (Iowa 1976)). 

When the amount of damages resulting from a breach of contract is 

uncertain, 

[d]amages for breach by either party may be liquidated in the 

agreement but only at an amount that is reasonable in the 

light of the anticipated or actual loss caused by the breach 

and the difficulties of proof of loss. A term fixing unreasonably 

large liquidated damages is unenforceable on grounds of 

public policy as a penalty. 

Rohlin Constr. Co. v. City of Hinton, 476 N.W.2d 78, 80 (Iowa 1991) (quoting 

Restatement (Second) of Contracts § 356(1), at 157 (Am. Law Inst. 1981)).

We consider two factors in determining whether a liquidateddamages provision constitutes an unenforceable penalty: (1) “the 
22

anticipated or actual loss caused by the breach” and (2) “the difficulty of 

proof of loss.” Id. (quoting Restatement (Second) of Contracts § 356(1)

cmt. b, at 157–58); see also City of Davenport v. Shewry Corp., 674 N.W.2d 

79, 85 (Iowa 2004) (same). “The greater the difficulty either of proving that 

loss has occurred or of establishing its amount with the requisite certainty, 

the easier it is to show that the amount fixed is reasonable.” Rohlin Constr. 

Co., 476 N.W.2d at 80 (quoting Restatement (Second) of Contracts § 356(1) 

cmt. b, at 158).

The State argues that the contract documents support the $1900 

restitution award based on Hagedon’s purported contractual liability to 

Northland in that amount. Roache responds that the amount of the fine 

is an unenforceable penalty rather than a valid contractual liquidateddamages provision. 

We agree with the State that the uncertain value of the study guide 

permits its loss to be set through a liquidated-damages provision in 

Northland’s contract with its students such as Hagedon. But Roache 

argues Hagedon never agreed to the $1900 amount when he signed his 

contract for the training course. See Golden Sun Feeds, Inc. v. Clark, 258 

Iowa 678, 683, 140 N.W.2d 158, 161 (1966) (“The phrase ‘liquidated 

damages’ means a sum stipulated and agreed upon by the parties, at the 

time of entering into a contract, as being payable as compensation for 

injuries in the event of a breach.” (emphasis added) (quoting 22 

Am. Jur. 2d Damages § 212, at 297 (1965))). The State responds that 

Hagedon’s initial contract made clear he would be assessed a costly fine 

in an unspecified amount for loss of the study guide and that after the 

theft, he signed a second Northland document acknowledging the $1900 

amount of the fine. In our view, this paper trail remains inadequate to 

establish Hagedon’s legal obligation to pay Northland that amount for the 
23

loss of the study guide because an excessive amount can be an 

unenforceable penalty. 

The State failed to meet its burden to prove $1900 is reasonably 

related to the anticipated damages for Hagedon’s breach of the Northland 

contract. As noted, the State offered no testimony to support an 

intellectual property value for the guide or its replacement cost. 

Northland’s own description of the $1900 amount as a “fine” supports the 

conclusion that it is an unenforceable penalty rather than a valid 

liquidated-damages amount. Northland could not compel Hagedon to pay 

such a penalty in a civil action. For that reason, Hagedon would be unable 

to seek indemnification from Roache in that amount in a civil action for 

breach of contract. 

iii. Punitive damages. Roache argues the $1900 fine constitutes an 

award of punitive damages prohibited by the governing statute. See Iowa 

Code § 910.1(3) (“ ‘Pecuniary damages’ means all damages . . . except 

punitive damages and damages for pain, suffering, mental anguish, and 

loss of consortium.”). Punitive damages are distinct from pecuniary or 

actual damages. “Punitive damages exist to punish a defendant who has 

‘intentionally violated another’s rights.’ ” Papillon v. Jones, 892 N.W.2d 

763, 771 (Iowa 2017) (quoting Ackelson v. Manley Toy Direct, L.L.C., 832 

N.W.2d 678, 686 (Iowa 2013)). Punitive damages also serve to deter 

similar misconduct by the defendant and others in the future. Id. 

Northland’s documents show it threatens students with a “costly fine” to 

deter students from retaining the study guides and punish those who fail 

to return them. Given the lack of any evidence of the study guide’s actual 

value, we conclude Northland’s $1900 fine was punitive. For that 

additional reason, the $1900 fine must be excluded from the restitution 

award. See Iowa Code § 910.1(3). 
24

Sentencing courts should not rubber-stamp victim restitution 

claims. The sentencing court in this case clearly explained its reasoning 

for awarding restitution, as did the court of appeals in affirming the $1900 

award, which facilitated our review. Nevertheless, we reach a different 

conclusion. In our view, the State failed to meet its burden of proof, and 

the amount of pecuniary damages awarded in restitution for this study 

guide is unsupported by substantial evidence. Perhaps Northland could 

have enforced a smaller amount in a valid liquidated-damages provision 

with its students. Northland’s assessment of the $1900 fine for its paper 

study guide invokes the adage, “pigs get fat, hogs get slaughtered.” 

IV. Disposition. 

For these reasons, we vacate the decision of the court of appeals and 

reverse the district court’s restitution order as to the $1900 award for the 

study guide. We affirm the restitution judgment as modified. 

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT 

JUDGMENT AFFIRMED IN PART AND REVERSED IN PART. 

All justices concur except Mansfield, J., who dissents. 
25

#17–0931, State v. Roache

MANSFIELD, Justice (dissenting).

I respectfully dissent. I believe the court is looking at the wrong law, 

thereby leading it to the wrong result.

The restitution statute authorizes “payment of pecuniary damages 

to a victim.” Iowa Code § 910.1(4) (2016). “Pecuniary damages” means 

all damages to the extent not paid by an insurer on an 

insurance claim by the victim, which a victim could recover 

against the offender in a civil action arising out of the same 

facts or event, except punitive damages and damages for pain, 

suffering, mental anguish, and loss of consortium. 

Id. § 910.1(3). So the relevant question is what damages could Jordan 

Hagedon, the victim, recover from Terran Roache, the defendant, in a civil 

action.

As the court ultimately recognizes, this is an issue of damages, not 

scope of liability. The loss of the CDL study guide was certainly within the 

scope of liability; Roache took the backpack that contained this study 

guide. The Third Restatement has not yet addressed the subject of 

damages for intentional torts to property. See Restatement (Third) of 

Torts: Liab. for Physical & Emotional Harm Introduction, at 1–2 (Am. Law 

Inst. 2010) (“Determining the recoverable damages and their amount is 

beyond the scope of this Restatement and remains within the Second 

Restatement’s coverage until future installments of the Restatement Third, 

Torts.”). Hence, we revert to prior law.

The Second Restatement provides that damages for conversion of a 

chattel include the value of the chattel and “the amount of any further 

pecuniary loss of which the deprivation has been a legal cause.” 

Restatement (Second) of Torts § 927, at 534 (Am. Law Inst. 1979). In State 

v. Taylor, which involved court-ordered restitution in a theft case, we 

quoted and relied on this provision. See 506 N.W.2d 767, 768, 769 (Iowa 
26

1993). There we concluded that theft was analogous to conversion, and 

the university’s recoverable restitution in a theft case included not only 

the uninsured loss but also $14,425 for the audit the university had to 

perform. Id. at 768–69.

So the only issue for me is whether Hagedon in fact has to pay the 

fine. The record leaves some doubt.

It is notable that Hagedon agreed in writing at the outset to pay a 

fine if the copyrighted study guide was not returned. After the theft 

occurred, and before it had been solved, Hagedon signed a further 

agreement to pay $1900 for the loss of the study guide. I give weight to 

this agreement because it was not developed for purposes of the restitution 

hearing but was in fact a binding, arm’s length commitment by Hagedon 

to pay $1900.

On the other hand, Hagedon’s testimony at the restitution hearing 

was inconclusive. He said he was told Northland has charged the $1900 

in the past, but he did not know if he would actually be charged the $1900 

if he was unable to get it included in the restitution award. 

The district court found,

The “damage” to the victim for failing to return the study guide 

came to $1,900. But for [Roache’s] criminal actions, 

[Hagedon] would not have been assessed that “fine.” The 

Court would presume that $1,900 far exceeds the actual cost 

to print the study guide, but the actual cost of the study guide 

does not reimburse [Hagedon] for the loss he sustained as a 

result of [Roache’s] actions. The amount claimed for damages 

for Jordan Hagedon is approved in the amount of $1,900.00 

for the study guide and $500.00 for his insurance deductible.

The majority correctly states that restitution proceedings are 

reviewed for correction of errors at law. See State v. Hagen, 840 N.W.2d 

140, 144 (Iowa 2013). If substantial evidence supports the district court’s 

factual finding, we are bound to affirm it. See id. Because substantial 
27

evidence supports the fact-finding here, I would affirm. Although the 

evidence would probably also support a contrary finding that Hagedon is 

not actually obligated to pay the $1900, it is not our job to reweigh the 

evidence. 

I do not think liquidated-damages caselaw has much relevance here. 

This isn’t a breach of contract case between Hagedon and Northland CDL 

Training & Licensing, subject to a breach-of-contract measure of damages. 

It’s a hypothetical tort claim by Hagedon against Roache. Usually tort 

defendants must compensate victims as they find them.

More relevant, in my view, is a decision of the United States District 

Court for the Northern District of Iowa addressing tort damages in a 

somewhat analogous situation. In Iowa, Chicago & Eastern Railroad Corp. 

v. Pay Load, Inc., a truck driver employed by the defendant failed to stop 

at a grade crossing, resulting in a train–truck collision that totally 

destroyed a locomotive the plaintiff had been leasing from a third party. 

348 F. Supp. 2d 1045, 1048–49 (N.D. Iowa 2004). Applying Restatement 

(Second) of Torts § 927, and comment m thereto,5 the federal district court 

noted,

Here, under the terms of the lease, IC & E is obligated, upon 

demand by First Union, in the event of loss or destruction of 

a locomotive, to pay First Union a pre-determined amount as 

set forth in a Stipulated Loss Schedule which is attached to 

the lease. Such a loss appears to fall squarely within the 

framework of comment m. Moreover, such a result is in 

keeping with the principles underlying the allowance of 

damages in tort actions.

 5Comment m states in part, 

m. Further loss. The person entitled to the value of a thing taken 

or destroyed by a tortfeasor is entitled to recover for any further loss 

suffered by him as the result of the deprivation, subject to the rules stated 

in §§ 912 and 917 as to certainty and causation.

Restatement (Second) of Torts § 927 cmt. m, at 542.
28

Id. at 1053. The court went on to conclude that “in order to permit IC & 

E full compensation it will be entitled to seek to recover the amount set 

forth in the lease’s Stipulated Loss Schedule.” Id. However, “if the 

evidence at trial establishes that IC & E will not be required to pay First 

Union the amount set forth in the lease’s Stipulated Loss Schedule, but 

instead a lesser amount, IC & E will not be permitted to seek such 

damages.” Id.

This simple and straightforward analysis should apply with equal 

force here. If Hagedon will have to pay the $1900, it should be awarded 

as restitution; if not, it shouldn’t. Substantial evidence supports the 

district court finding that Hagedon actually owes the $1900.

Rather than giving us a clear and precise explanation for why it is 

overturning the district court’s award of restitution, the majority offers a 

series of partial explanations. I find them unpersuasive.

For example, the majority states that Roache should not have to 

indemnify Hagedon for the $1900 because Hagedon “simply 

acknowledged” this amount “without expressly agreeing to pay it.” I do 

not follow this distinction. After the theft, Hagedon agreed in writing that 

he “will be charged” the $1900. To me, that is an agreement to pay it. 

Again, notwithstanding the text of the written agreement, Hagedon could 

not confirm at the hearing that he actually would be charged the $1900 if 

it wasn’t included in the restitution award. Still, there was enough in the 

record to sustain the district court’s finding that an actual loss of $1900 

would be incurred by Hagedon.

Next, consider the duo of cases cited by the majority relating to the 

recovery of medical expenses in personal injury cases. Undeniably, our 

law limits injured plaintiffs to recovery of “reasonable and necessary” costs 

of medical care. Pexa v. Auto Owners Ins., 686 N.W.2d 150, 156 (Iowa 
29

2004); see also Stanley v. State, 197 N.W.2d 599, 606 (Iowa 1972). We 

have a long-standing corollary rule that in proving the reasonable value of 

medical services, the amount billed is relevant only if it has been paid or 

if an expert witness testified to its reasonableness. See Pexa, 686 N.W.2d 

at 156; Stanley, 197 N.W.2d at 606–07. Any patient who receives a bill 

nowadays from a health care provider would understand why we have that 

rule and would agree that it makes sense. But it is a rule for medical 

expenses in personal injury cases, not for every category of tort damages. 

The court’s implication to the contrary is incorrect. Compare Restatement 

(Second) of Torts § 927, at 534 (relating to damages for conversion or 

destruction of a thing), with id. § 924, at 523 (relating to personal injury 

damages and indicating that reasonable medical expenses are 

recoverable).

Nor is this a case like State v. Bonstetter, 637 N.W.2d 161 (Iowa 

2001). The issue there, as in Taylor, was whether the cost of an audit 

could be recovered. Id. at 168. But no evidence was presented except the 

$19,763 auditor’s bill. Id. at 169–70. We concluded, 

[P]resentation to the court of the bill alone is not enough to 

prove the costs of the audit are necessary, fair, and 

reasonable. Some other proof is necessary before we can 

conclude the audit was a reasonable, fair, and necessary 

element of damage.

Id. at 170.

I think it is self-evident that a $19,763 audit bill as a restitution item 

in an embezzlement case is not self-explanatory and requires something 

more than just the bill. Notably, we said in Bonstetter that testimony from 

a witness that the audit fees were “necessary, fair, and reasonable” was 

not required; all that was needed was “evidence to support the conclusion 

the audit is necessary, fair, and reasonable.” Id. at 169. Here, by contrast, 
30

the State submitted more than a bill: it presented two separate contracts

plus testimony from Hagedon.

Most of all, as I’ve already noted, the majority relies on liquidated 

damages law. But even if this body of contract law were relevant, I would 

disagree with the majority’s liquidated-damages analysis. 

To begin with, the $1900 are not liquidated damages. This amount 

was agreed upon after the breach occurred, not before. Cf. Restatement 

(Second) of Contracts § 356 cmt. a, at 157 (Am. Law Inst. 1981) (explaining 

that a liquidated-damages clause “effectively provide[s] in advance the 

damages that are to be payable in the event breach”). “In a contract of 

accord for breach of a previously broken contract, the parties may agree 

on what terms of settlement they will accept . . ., however unfavorable the 

accord may be to the party in default.” 24 Richard A. Lord, Williston on 

Contracts § 65:5 (4th ed.), Westlaw (database updated Nov. 2018). 

Additionally, even if the $1900 could be viewed as liquidated 

damages, the majority misallocates the burden of proof. Under our 

caselaw, stipulated-damages clauses are presumptively valid. See Gordon 

v. Pfab, 246 N.W.2d 283, 288 (Iowa 1976) (“A party who contends that a 

liquidation clause is in reality a penalty has the burden to plead that fact 

and prove the actual damages in the trial court.”); see also Heaberlin v. 

Heaberlin, 255 Iowa 403, 409, 122 N.W.2d 841, 844 (1963) (citing cases). 

It is not the proponent’s burden to prove validity of the clause, but the 

burden of the party contesting the clause to prove its invalidity. 

Nor is the issue the “value” of the study guide. Rather, the issue is 

the potential damage that would befall Northland if its copyrighted, 

proprietary study guide began to circulate, where others could copy it for 

their purposes such as to offer their own CDL course. How much is that 

damage, and how difficult is it to estimate? See Restatement (Second) of 
31

Contracts § 356 cmt. b, at 158 (“The greater the difficulty either of proving 

that loss has occurred or of establishing its amount with the requisite 

certainty, the easier it is to show that the amount fixed is reasonable.”).

Lastly, whether the $1900 is denominated a fine or liquidated 

damages in the parties’ agreements has little significance. See id. cmt. c, 

at 159 (“Neither the parties’ actual intention as to its validity nor their 

characterization of the term as one for liquidated damages or a penalty is 

significant in determining whether the term is valid.”).

For the foregoing reasons, I would uphold the district court’s 

restitution award as supported by substantial evidence. In my view, the 

majority’s criticisms are more aptly directed to our laws regarding fines, 

surcharges, and restitution generally, rather than to anything the district 

court or anyone else did in this particular case.