Court Opinion

ID: 9374844
Source: CourtListenerOpinion
Date Created: 2023-02-24 15:04:41.872159+00
Date Added: 2024-06-11T17:16:53.525735
License: Public Domain

IN THE SUPREME COURT OF IOWA

                                  No. 20–1663

            Submitted January 19, 2023—Filed February 24, 2023

LINCOLN SAVINGS BANK,

      Appellee,

vs.

DEBRA D. EMMERT,

      Appellant,

and

SIMPSON FURNITURE COMPANY, EMMERT MANAGEMENT, LLC, DALE T.
EMMERT, IOWA DEPARTMENT OF REVENUE and BERGEN PLUMBING, INC.,

      Defendants.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Black Hawk County, Linda M.

Fangman, Judge.

      A defendant seeks further review of the court of appeals decision that

affirmed a default judgment in a foreclosure case. DECISION OF COURT OF

APPEALS VACATED; DISTRICT COURT JUDGMENT REVERSED AND

REMANDED.

      McDermott, J., delivered the opinion of the court in which all participating

justices joined. McDonald and May, JJ., took no part in the consideration or

decision of the case.
                                         2

      Gregg A. Geerdes (argued), Iowa City, for appellant.

      David T. Bower (argued), Jeffrey W. Courter, and Roy R. Leaf of Nyemaster

Goode, P.C., Des Moines, for appellee.
                                         3

McDERMOTT, Justice.

      The initial steps in a typical lawsuit are straightforward. A plaintiff files a

petition with the court that alleges a claim against a defendant and then serves

the defendant with the petition. The defendant, in turn, files an answer or other

document responding to the petition within a specified time. If the defendant

fails to file any response by the deadline, the plaintiff may apply for a default

judgment against the defendant.

      But the law favors resolution of disputes on their merits, not through

procedural defaults. And to help ensure that defaults are entered based on

informed choice, not oversight, our rules of civil procedure require an extra step

in the process. The court will not give a default judgment unless the plaintiff first

sends, in writing, a “notice of intent” to file an application for default judgment.

The notice serves as a move-it-or-lose-it warning that the plaintiff intends to ask

for a default judgment unless the defendant files a response within ten days.

      When a defendant is known to be represented by a lawyer, our rules

require the plaintiff to send a copy of the notice of intent to the lawyer. The

question in this appeal—one that this court has never been presented with in

any previous case—is whether the plaintiff must send a copy of the notice of

intent to the defendant in addition to the defendant’s lawyer.

      I. The Foreclosure Lawsuit and Entry of the Default Judgment.

      Debra Emmert and her then-husband owned and operated a furniture

store and a related management company. The furniture store and management

company took out about $5 million in loans from Lincoln Savings Bank. As
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security for the loans, the bank took mortgages on two properties, security

interests in certain business and personal property, and a personal guaranty

from Emmert. When loan payments failed to arrive, the bank filed a petition to

foreclose the mortgages and security interests.

      The bank served the foreclosure lawsuit on an attorney named Phillip

Brooks. The parties dispute the scope of Brooks’s representation of Emmert in

this matter. Emmert argues that Brooks had represented her on a matter

unrelated to the bank’s foreclosure lawsuit (a replevin action), while the bank

argues that Brooks was communicating and holding himself out as Emmert’s

lawyer in the foreclosure lawsuit. Putting aside for the moment questions about

the scope of Brooks’s representation, the record shows that Brooks filed an

acceptance of service of the foreclosure petition on Emmert’s behalf and that

neither Brooks nor Emmert, nor anyone else acting on Emmert’s behalf, filed

any response to the petition.

      After the deadline to file a responsive pleading had passed, the bank

mailed a written notice of intent to file for a default judgment to Brooks. The

bank did not separately mail any notice of intent to Emmert. A few months later,

the bank filed its application for default judgment. The district court promptly

entered a default judgment against Emmert and the other defendants.

      Some months later, the bank asked the court for permission to amend the

petition against the defendants (even though the court had already entered a

default judgment) based on the bank’s purchase of a senior mortgage on one of

the foreclosed properties. The district court granted the bank permission to
                                          5

amend, and the bank refiled its petition against Emmert and the other

defendants. The bank sent Brooks a copy of the newly-amended petition by

certified mail.

      The ensuing events began to unfold just as before. No one filed any

response to the petition by the deadline. The bank mailed a written notice of

intent to file for a default judgment to Brooks (but not to Emmert). The bank

timely filed its application for default judgment, which the district court again

promptly granted. The bank thereafter provided information to the district court

for entry of a detailed foreclosure judgment that reflected the updated amount of

the debt and other particulars.

      But while that foreclosure judgment remained outstanding, lawyer Gregg

Geerdes filed an appearance in the case on Emmert’s behalf. Geerdes filed no

other documents with his appearance. About three weeks later, the court entered

the foreclosure judgment against Emmert and the other defendants. Within a

couple of hours, Geerdes filed a motion asking the court not to enter the

foreclosure judgment (too late, as it turned out) or, in the alternative, to set aside

the foreclosure judgment.

      The district court took no action on Geerdes’s motion not to enter, or to

set aside, the foreclosure judgment. Two weeks later, Emmert (represented by

Geerdes) appealed the foreclosure judgment. Nearly two months after filing the

appeal, she moved in the district court to set aside the default judgment and to

enlarge and reconsider the foreclosure judgment. We transferred the appeal to

the court of appeals. The court of appeals correctly concluded that the district
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court lacked the power to rule on the motions filed after her notice of appeal

because her appeal divested the district court of jurisdiction. See State v. Mallett,

677 N.W.2d 775, 777 (Iowa 2004). On Emmert’s other claims, the court of

appeals determined that the bank satisfied the notice rule by mailing the notice

of intent only to Brooks and affirmed the district court’s default judgment.

Emmert applied for further review, which we granted.

      Emmert is the only defendant challenging the notice and the resulting

default judgment. She makes two arguments relevant to our resolution of this

appeal, both centered on the “notice of intent” that the bank was required to

send. First, she argues that notice to Brooks was improper because Brooks was

not her attorney and had never been the attorney of record in this matter.

Second, she argues that even if Brooks had been serving as her lawyer in this

matter, sending notice to Brooks alone wasn’t enough—the bank needed to send

the notice of intent to her in addition to her lawyer.

     II. Iowa Rule of Civil Procedure 1.972 and Whether the Bank Was
Required to Send a Copy of the Notice of Intent to Emmert.

      The outcome of this appeal hinges on our construction of Iowa Rule of Civil

Procedure 1.972, which is the rule that sets out the requirements for obtaining

a default judgment. We review the interpretation of our rules of civil procedure

under a “correction of errors at law” standard, and thus we conduct our own

analysis without deference to the lower court’s interpretation. See McGrew v.

Otoadese, 969 N.W.2d 311, 319 (Iowa 2022). Failing to comply with the notice

provisions of the rule leaves the district court “without authority to enter the

order of default.” Dolezal v. Bockes, 602 N.W.2d 348, 352 (Iowa 1999). Despite
                                          7

the untold hundreds (if not thousands) of cases that have ended in default

judgments in Iowa courts in the decades since the notice-of-intent requirement

came into being, we’ve somehow never had a case addressing the particular

question before us.

      The rule states in relevant part:

             1.972(2) Application. . . . No default shall be entered unless
      the application contains a certification that written notice of
      intention to file the written application for default was given after
      the default occurred and at least ten days prior to the filing of the
      written application for default. A copy of the notice shall be attached
      to the written application for default. . . .

            1.972(3) Notice.

            a. To the party. A copy of the notice of intent to file written
      application for default shall be sent by ordinary mail to the last
      known address of the party claimed to be in default. No other notice
      to a party claimed to be in default is required.

             b. Represented party. When a party claimed to be in default is
      known by the party requesting the entry of default to be represented
      by an attorney, whether or not that attorney has formally appeared,
      a copy of notice of intent to file written application for default shall
      be sent by ordinary mail to the attorney for the party claimed to be
      in default. This rule shall not be construed to create any obligation
      to undertake any affirmative effort to determine the existence or
      identity of counsel representing the party claimed to be in default.

            c. Computation of time. The ten-day period specified in rule
      1.972(2) shall begin from the date of mailing notice, not the receipt
      thereof.

           d. Form of notice. The notice required by rule 1.972(2) shall be
      substantially as set forth in rule 1.1901, Form 10.

Iowa R. Civ. P. 1.972(2)–(3).

      Emmert urges that we read paragraphs (a) and (b) of rule 1.972(3) as

conjunctive, as if the list is joined by the word and, thus requiring notice to the
                                        8

party and also to the party’s lawyer if the party is known to be represented. The

bank, conversely, urges that we read paragraphs (a) and (b) as disjunctive,

requiring notice to the party if the party is not known to be represented but

requiring notice only to the lawyer if the party is known to be represented.

      In 1997, we amended what is now rule 1.972 to include a notice-of-intent

mailing requirement. That rule change followed our decision a few years earlier

in Central National Insurance Co. of Omaha v. Insurance Co. of North America,

513 N.W.2d 750, 757 (Iowa 1994). In that case, a defendant tried to set aside a

default judgment because the plaintiff failed to notify the defendant’s lawyer

before filing an application for a default judgment. Id. at 754. At the time, our

default judgment rule was silent about any notice requirements before seeking

a default. Id. The defendant argued that the plaintiff’s failure to notify opposing

counsel violated longtime “custom and practice generally followed by attorneys”

in that county. Id.

      Construing the language of the rule at the time, we determined that the

rule afforded the defendant no relief; the custom and practice of attorneys in that

county wasn’t enough to impose a legal requirement. Id. But we rhapsodized

about the benefits of a potential rule requiring notice before a court could enter

a default judgment. Id. Such a rule, we said, might avoid “bungles”—excusable

oversights—that resulted in default judgments, thus making our rule “more fair

and consistent.” Id. at 757. We noted that one state, Pennsylvania, had already

adopted a rule requiring notice to all defaulting parties. Id. Our aspiration was

clearly stated: “Notice to all defaulting parties—not just those represented by
                                          9

counsel—should be given.” Id. And within a few years, we revised the rule to

require sending a written notice of intent before seeking a default judgment—as

it now appears in rule 1.972 (as block-quoted above).

      But while our discussion of the notice of intent in Central National

Insurance addressed the benefits of requiring notice, we didn’t explicitly define

who must be served notice. The text of the Pennsylvania rule that we referred to

specified that the notice go to both the party and the party’s lawyer, requiring

notice “mailed or delivered . . . to the party against whom judgment is to be

entered and to the party’s attorney of record, if any.” Pa. R. Civ. P. 237.1(a)(2)(ii)

(1994) (emphasis added). The text of Iowa’s rule tracks, but doesn’t mirror,

Pennsylvania’s rule.

      Both sides in this case nonetheless point to the Pennsylvania rule to

support their proposed construction. Emmert urges that we read Iowa’s rule to

correspond to Pennsylvania’s rule—and its requirement for notice to both party

and lawyer—based on our reference to it in Central National Insurance. The bank,

conversely, urges that we read the absence of the word and between “party” and

“attorney” in paragraphs (a) and (b) in rule 1.972(3) as a deliberate choice that

shows an intent not to require mailing of the notice to both party and lawyer as

Pennsylvania’s rule did.

      Both parties’ arguments on this point, in our view, put a little too high a

premium on our mention of the Pennsylvania rule. We noted it as one example

of a pre-default notice requirement, stating simply that “[o]ne state has done just

that,” followed by a cite to the rule number and this parenthetical note: “(ten
                                         10

days[’] notice of intent to take default required).” Cent. Nat. Ins., 513 N.W.2d at

757. Our mention of the Pennsylvania rule on the general issue of a notice

requirement, such as it was, provides dim light to illuminate the more granular

question presented in this case about the required recipients of the plaintiff’s

notice.

      In their treatise on interpreting texts, Justice Scalia and Bryan Garner

discuss the “conjunctive/disjunctive canon” and how to construe multi-element

lists that include, or fail to include, conjunctions such as and or or. Antonin

Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 116–25

(2012) [hereinafter Scalia & Garner]. They describe a rhetorical technique—

called asyndeton—in which “drafters will omit conjunctions altogether between

the enumerated items.” Id. at 118–19. When a drafter does not include a

conjunction, the text “is generally considered to convey the same meaning . . .

as though and were inserted between the items.” Id. at 119. In other words,

“asyndeton (absence of conjunction) is normally equivalent to syndeton (use of

the conjunction and).” Id. at 124. This interpretative canon generally supports

Emmert’s argument that paragraphs (a) and (b) of rule 1.972(3) should be read

in the conjunctive form.

      The bank argues that the reference to “notice” in its singular form

throughout the rule indicates that only one notice is required. The bank recites

that the rule requires the application for default judgment include a certification

that “written notice of intention to file” the application was given and that “a copy

of the notice shall be attached.” Iowa R. Civ. P. 1.972(2) (emphases added). These
                                          11

references to notice in the singular seem to point in the bank’s direction. But

other language in the rule blunts the force of the bank’s argument. The language

from rule 1.972(2) (“[a] copy of the notice”) and paragraphs (a) (“[a] copy of the

notice of intent”) and (b) (“a copy of notice of intent”) of rule 1.972(3) all refer to

delivery of a copy of the notice, not an actual notice of intent document itself.

Id. rs. 1.972(2), 1.972(3)(a)–(b). In this way, the rule seems to contemplate that

the lawyer might retain an original version but make copies of the notice (1) for

filing with the application for default judgment under rule 1.972(2), and (2) for

mailing under rule 1.972(3). Reading the rule in full, the use of “notice” in the

singular does little to advance the bank’s proposed construction.

      We also find the rule’s headings instructive. Although titles and headings

can’t override the plain words of a text, they are permissible aids in resolving

textual ambiguities. Des Moines Flying Serv., Inc. v. Aerial Servs. Inc., 880 N.W.2d

212, 220–21 (Iowa 2016) (citing Scalia & Garner at 221). The heading to

paragraph (a) of rule 1.972(3) uses the phrase “[t]o the party,” and paragraph (b)

uses the phrase “[r]epresented party.” Iowa R. Civ. P. 1.972(3)(a)–(b). If the

mailing requirements were meant to be disjunctive, one might expect paragraph

(a) to have a more descriptive heading that refers to the party’s lack of

representation, such as “unrepresented party” (or even, “to the party not known

to be represented by an attorney”). The headings as written suggest that

paragraph (a) requires a notice mailed “to the party” regardless of whether the

party is represented, with paragraph (b) requiring an additional notice when the

party is “represented.” Id.
                                         12

      Paragraph (d) of rule 1.972(3) further supports a conjunctive reading of

this rule. Titled “Form of notice,” paragraph (d) states that “[t]he notice required

by rule 1.972(2) shall be substantially as set forth in rule 1.1901, Form 10.” Id. r.

1.972(3)(d). Here is the entirety of Form 10:

      Several points stand out. The addressee that’s identified (“TO:”) suggests

insertion only of the “(defendant)” and not, for instance, “(or defendant’s counsel,

as applicable).” And the language of the actual notice itself makes repeated

reference to “YOU.” In the context of the addressee line, we can expect that the

“YOU” refers to the defendant. Reading the language of the notice leaves no doubt

about this. “YOU”—the party in this lawsuit—are in default; not the lawyer. A

default will be entered against “YOU”—the defendant; a default judgment isn’t
                                         13

entered against the lawyer. “YOU”—the defendant—may lose your property or

important rights; the lawyer doesn’t have property or rights at stake in the case.

“YOU”—the party in this lawsuit—should seek legal advice at once; the lawyer

obviously doesn’t need to seek advice since the lawyer is the one presumed to

possess the legal knowledge. The required notice form, in our view, supports a

conjunctive interpretation of the rule that requires notice mailed to the defendant

in all cases, with a copy to the defendant’s lawyer if the defendant is represented.

      The bank argues that reading rule 1.972 to require mailing a notice to both

a party and the party’s lawyer would run afoul of attorney ethics rules, and thus

that such an interpretation could not have been intended. The ethics rule in

question, Iowa Rule of Professional Conduct 32:4.2(a), forbids a lawyer to

communicate “about the subject of the representation with a person the lawyer

knows to be represented by another lawyer in the matter, unless the lawyer has

the consent of the other lawyer or is authorized to do so by law or a court order.”

But the carveout at the end of the ethics rule—“unless the lawyer . . . is

authorized to do so by law”—leaves this argument begging the question. In other

words, the argument’s premise (requiring notice to a represented party violates

an ethics rule) assumes the truth of the conclusion (the default notice rules

shouldn’t require violations of an ethics rule). If we construe rule 1.972 to require

notice to both the party and the party’s lawyer, no ethical violation occurs

because the lawyer is authorized to do so by law. The ethics rule thus doesn’t

illuminate, let alone dictate, the requirements of our notice rule.
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      The bank also argues that we must construe the text to find service of the

notice sufficient when sent only to the party’s lawyer since such a reading avoids

disharmony with our procedural rules about service of other papers in lawsuits.

Iowa Rule of Civil Procedure 1.442(1) states that “[u]nless the court otherwise

orders, everything required to be filed by the rules in this chapter . . . [including]

every written notice . . . shall be served upon each of the parties.” The next rule

states that when a party is represented by a lawyer, service “shall be made upon

the attorney unless service upon the party is ordered by the court.” Id. at

1.442(2). But this argument, much like the one before, begs the question. The

premise assumes that service on both the defendant and the defendant’s lawyer

isn’t required by another rule. If we construe rule 1.972(3) to require service on

the party in addition to the party’s lawyer, there’s no disharmony with rule 1.442.

Cf. Iowa R. Civ. P. 1.517(1)(e) (entitled “Notice to litigants” and requiring that an

order compelling discovery be served on both counsel and the party or parties

whose conduct necessitated the motion to compel).

      As a final matter, we return to a point we made in Central National

Insurance about the benefits of requiring a notice-of-intent mailing before

seeking a default judgment. Notice helps to avoid the “bungles”—excusable

neglect in responding to the petition—that prevent parties from defending

against claims on the merits. 513 N.W.2d at 757. There exists “a longstanding

policy in our state favoring the resolution of legal disputes on the merits,” and

consistent with that longstanding policy, “default judgments are disfavored.”

No Boundry, LLC v. Hoosman, 953 N.W.2d 696, 699 (Iowa 2021). Our default
                                         15

judgment rules rest on the notion that a defendant’s failure to respond to a

lawsuit communicates an intent to concede the claim and accept the

consequences, akin to a knight in Arthurian legend declaring “I yield” to

surrender in a swordfight. See T.H. White, The Once and Future King 62, 344

(1939). Construing rule 1.972 as we do today—requiring plaintiffs to send the

ten-day notice of intent to file an application for default to both the party and, if

known, the party’s counsel—provides stronger protection against default

judgments entered based on oversight instead of volition.

      III. Conclusion.

      We hold that rule 1.972(3) required the bank to mail notice of intent to

both Emmert and Emmert’s lawyer. The bank’s failure to comply with the rule’s

notice provisions left the district court without authority to enter the default

judgment against Emmert. See Dolezal, 602 N.W.2d at 353. Today’s decision

does not affect the finality of judgments. If notice of intent was not mailed as

required by rule 1.972(3) and a judgment was entered before the date of this

decision, that judgment may be attacked only by an otherwise proper and timely

postjudgment motion or appeal. Because we find in Emmert’s favor on her

challenge on this ground, we need not resolve her separate argument that Brooks

did not represent her in this matter and thus that mailing to Brooks alone was

insufficient.

      We vacate the court of appeals decision, reverse the district court’s default

judgment, and remand this case to the district court to proceed against Emmert
                                    16

only since only she has mounted a challenge to the default judgment. The

judgment entered against other defendants remains undisturbed.

     DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT

JUDGMENT REVERSED AND REMANDED.

     McDonald and May, JJ., take no part.