Opinion ID: 1299870
Heading Depth: 1
Heading Rank: 4

Heading: Kemin's Cross-Appeal as to Application of Comparative Fault Principles.

Text: On its cross-appeal, Kemin contends that the court should have entered judgment on the jury's verdict on its contract claim unreduced by the amount of its own comparative fault as determined on the negligence claim. It advances two reasons for this contention: (1) that the comparative fault law contained in Iowa Code chapter 668 is inapplicable to actions that only seek recovery for economic loss, and (2) that in this multicount litigation it was entitled to a separate verdict based on breach of contract. In support of its first contention, Kemin relies on the federal court decision in Ethyl Corp. v. BP Performance Polymers, Inc., 33 F.3d 23 (8th Cir.1994), applying Iowa law. In that case, the court determined that the comparative fault principles established in chapter 668 did not apply to a breach-of-warranty claim seeking entirely economic losses. The court indicated its belief that under Iowa law a claim for purely economic loss is recoverable only in contract and not in tort. It relied for this conclusion on Nelson v. Todd's Ltd., 426 N.W.2d 120, 123-25 (Iowa 1988). Our reading of the Nelson decision indicates that it was limited to deciding whether purely economic injuries without accompanying physical injury are recoverable under a theory of strict liability in tort. Nelson, 426 N.W.2d at 123. The case does not speak to the specialized situation of professional negligence. Fault is defined as follows in Iowa Code section 668.1(1) (1995): As used in this chapter fault means one or more acts or omissions that are in any measure negligent or reckless toward the person or property of the actor or others, or that subject a person to strict tort liability. The loss of general business revenues would appear not to be property of the actor or others, so as to be included in this definition. But, a specifically identified account receivable, which can be established in a specific amount under the evidence in the case, is a chose in action. We are satisfied that a chose in action is sufficiently recognized in our law as property, see Gartin v. Taylor, 577 N.W.2d 410 (Iowa 1998) (recognizing that chose in action is property that may be transferred); Iowa Code § 626.21 (providing for the transfer of a chose in action in satisfaction of a judgment), that a negligent act destroying the chose satisfies the statutory definition of fault. With respect to Kemin's second contention, it acknowledges that a professional negligence claim against an accounting firm may be brought under a tort theory. This was approved in American Trust & Savings Bank v. United States Fidelity & Guaranty Co., 439 N.W.2d 188, 190 (Iowa 1989). Kemin argues, however, that a tort recovery is not the exclusive form of action. When both breach-of-contract and tort theories are advanced, Kemin argues, the jury should be permitted to render a verdict on both, and the plaintiff should then be able to claim the benefit of the most favorable theory of recovery on which a favorable verdict is rendered. At first glance, it may appear that Kemin's contention is supported by Woods v. Schmitt, 439 N.W.2d 855 (Iowa 1989). In that case, an action was brought against an attorney for both breach of contract and negligence based on an alleged failure to discover a cloud on the title to real estate when examining the abstract for the buyers. The jury returned a verdict against the attorney on both contract and negligence theories. In connection with the negligence verdict, the jury also found the buyers to be guilty of contributory fault of thirty-five percent. The district court permitted the plaintiff to accept judgment on the full amount of the contract verdict with no reduction for comparative fault. We affirmed that determination. Woods, 439 N.W.2d at 867. Although that was the result in Woods, the contract verdict in that case was not challenged in the district court and had to be accepted by this court as a fait accompli. In the present litigation, the district court set the contract verdict aside on Peat Marwick's motion. We believe that Kemin's theory is analogous to an argument that this court rejected in Long v. Jensen, 522 N.W.2d 621 (Iowa 1994). In that case, a guest who fell on steps at a friend's residence sued the friend's landlord based on a covenant of repair in the lease. Both negligence and breach-of-contract theories were presented to the jury, and the jury found defendant to be liable on both theories. On the negligence claim, the plaintiff was found to be guilty of comparative fault of thirty-five percent. The guest argued that because the jury found for her on her contract theory she should not suffer any reduction in the damages awarded. In rejecting that contention, we held that the clause in the lease merely established a duty element of a negligence cause of action and that the comparative fault reduction of the plaintiff's recovery was warranted. Long, 522 N.W.2d at 624. We are satisfied that the same principle should be applied in the present litigation. Almost all relationships involving professional services arise from an offer and acceptance that would constitute a simple contract. Nevertheless, a claim that a provider of professional services has failed to meet the standard of care that the law has placed on that party is essentially a negligence cause of action. To hold otherwise would render inapplicable those provisions of chapter 668 that are specifically tailored to actions involving professional negligence. See Iowa Code §§ 668.11 (disclosure of expert witnesses in cases involving licensed professionals), .12 (statute of repose as applied to licensed engineers and architects). We have considered all issues presented and conclude that, for the reasons discussed in division III of this opinion, the judgment of the district court should be reversed and the case remanded to that court for a new trial on all issues. Costs of appeal are assessed to Kemin. REVERSED AND REMANDED.