Opinion ID: 2210378
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Heading: Disbursement of Punitive Damage Award Pursuant to Iowa Code Section 668A.1(2)(b).

Text: The other issue which we must consider is the method employed by the trial court in disbursing the punitive damage award under Iowa Code section 668A.1(2)(b). The district court ordered that taxable court costs and plaintiff's reasonable attorney fees first be paid from the $15,000 punitive damage award and that plaintiff be paid twenty-five percent of the amount remaining after payment of those fees and costs. The remaining amount of the punitive damage award was disbursed to the civil reparations fund. The parties agree that, in situations where a defendant's willful and wanton conduct is not directed specifically at the claimant, this statute was designed to divert a portion of a resulting punitive damage award to a public purpose. Unfortunately, notwithstanding this agreement as to the purpose of the legislation, no party to this appeal has provided a principled interpretation of the statutory language as this affects how the necessary calculations are to be made in carrying out the statutory prescription. Plaintiff asserts that he was entitled to no less than twenty-five percent of the gross award, irrespective of the fact that certain of his fees and expenses are also being paid from the award. Defendant and intervenor dispute this claim. We are faced with an issue of first impression. The language of the statute is not a model of clarity. We must therefore resolve this issue by seeking out the most likely meaning of the disputed language in light of its apparent purpose. This requires our consideration, as nearly as possible, of the full implication of the statutory language. See Willis v. City of Des Moines, 357 N.W.2d 567, 570-71 (Iowa 1984). The pertinent language of the statute reads as follows: a. If the answer or finding pursuant to subsection 1, paragraph  b , is affirmative [that defendant's conduct was directed specifically at the claimant], the full amount of the punitive or exemplary damages awarded shall be paid to the claimant. b. If the answer or finding pursuant to subsection 1, paragraph b, is negative [that defendant's conduct was not directed specifically at the claimant], after payment of all applicable costs and fees, an amount not to exceed twenty-five percent of the punitive or exemplary damages awarded may be ordered paid to the claimant, with the remainder of the award to be ordered paid into a civil reparations trust fund administered by the state court administrator. Iowa Code § 668A.1(2)(a), (b) (emphasis added). The first question which arises in interpreting this language is whether the words may be ordered paid to the claimant, mean, as intervenor suggests, that the allocation to be made between the claimant and the civil reparations fund is entirely discretionary with the trial judge. We answer this question in the negative. Although the use of the word may ordinarily suggests a power rather than a duty, see Iowa Code § 4.1(36), this rule is not to be slavishly followed where the contrary is indicated by the context. Wolf v. Lutheran Mut. Life Ins. Co., 236 Iowa 334, 340-41, 18 N.W.2d 804, 808 (1945). The context within which this particular language appears necessarily takes into account the possibility that payment of the designated costs and fees may so reduce the gross punitive damage award that less than twenty-five percent remains. We conclude that within the context of the statute not to exceed twenty-five percent was intended to prescribe distribution of twenty-five percent of the award to the plaintiff, or less, if that amount is not available after payment of fees and costs. We are also persuaded that, contrary to the interpretation of the district court, the fractional percentage to be paid plaintiff is tied to the amount of punitive or exemplary damages actually awarded rather than the amount remaining after payment of fees and costs. Another question which arises in the application of section 668A.1(2)(b) is the determination of what is included within applicable costs and fees to be paid from the punitive damage award. We agree with the district court that this language contemplates payment of the applicable costs and fees from the gross punitive damage award prior to distributing any portion thereof to the claimant or the civil reparations fund. The district court determined that the word fees included plaintiff's reasonable attorney fees applicable to the recovery of the punitive damage award. The court determined that this could be measured by a reasonable contingent fee agreement. We conclude that this interpretation comports with the intent of the legislation. We disagree, however, with the district court's determination that the term costs as used in this litigation means taxable court costs. Under Iowa Code section 625.1, the taxable court costs are recoverable from the losing party as a matter of right and should be included in the plaintiff's judgment against that party. The judgment against the defendant for punitive damages is an additional obligation over and above the obligation for costs. There is no indication in either the language or subject matter of section 668A.1(2)(b) which suggests that, in satisfying a punitive damage obligation, a defendant may simultaneously satisfy that party's separate liability for costs. We believe that the applicable costs contemplated by this statute are the reasonable costs of litigation specifically attributable to the punitive damage claim which are not otherwise assessed against the defendant in the cost judgment entered pursuant to section 625.1. This includes, but is not limited to, the nontaxable portion of deposition costs, and those expert witness fees reasonably incurred but which exceed the limit provided in Iowa Code section 622.72. Based on the determinations which we have made, we affirm the judgment of the district court awarding actual and punitive damages. We reverse the district court's order disbursing punitive damages and remand the case to that court for a new section 668A.1(2)(b) allocation consistent with our interpretation of that statute. The costs of appeal are assessed fifty percent to appellee and fifty percent to the intervenor-appellee. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.