Court Opinion

ID: 4441397
Source: CourtListenerOpinion
Date Created: 2019-09-25 16:06:26.875223+00
Date Added: 2024-06-11T14:45:52.235719
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                 No. 18-1904
                          Filed September 25, 2019

ERICK SKOGMAN and JENNIFER SKOGMAN,
     Plaintiffs-Appellants,

vs.

RICK EMERSON and PAULA EMERSON,
     Defendants-Appellees.
________________________________________________________________

      Appeal from the Iowa District Court for Linn County, Mitchell E. Turner,

Judge.

      Erick and Jennifer Skogman appeal the district court’s default judgment

order entered in their favor. AFFIRMED IN PART, REVERSED IN PART, AND

REMANDED.

      Erick J. Skogman of Elderkin & Pirnie, P.L.C., Cedar Rapids, for

appellants.

      Rick Emerson and Paula Emerson, Cedar Rapids, pro se appellees.

      Considered by Potterfield, P.J., and May and Greer, JJ.
                                        2

POTTERFIELD, Presiding Judge.

      Plaintiffs Erick and Jennifer Skogman appeal the district court’s default

judgment order entered in their favor against defendants Rick and Paula

Emerson. The Skogmans argue the district court erred by (1) dismissing Paula

as a defendant for all but the Skogmans’ holdover tenant claim; (2) holding the

Skogmans were not entitled to damages for some of their construction costs for

renovating; and (3) refusing to award punitive damages to the Skogmans.

      I.     Background Facts and Proceedings

      This appeal arises out of a real estate transaction between siblings Erick

and Jennifer Skogman and Rick Emerson. The Skogmans and Rick entered into

a contract under which the Skogmans agreed to sell a home to Rick for $115,000

on or around October 16, 2013. The property was sold “as is.” It had been built

in the 1920s, had its original electric wiring and plumbing, and would require

“significant materials and labor to update.” Part of that labor was to be supplied

by Rick, who agreed to “replace windows and roof by June 1, 2014” in lieu of a

down payment. Monthly payments for the home were set at $1000 plus 1/12 of

annual real estate taxes, special assessments, and annual insurance premiums,

starting on December 1, 2013. The contract increased the monthly payment to

$1200 starting December 1, 2016.

      Initially, Rick fulfilled the terms of the contract. He replaced the windows,

consistently made the monthly payments, and told the Skogmans he had

replaced the roof, as agreed to. But Rick eventually began to fall behind on the

payments, and in April 2017, the Skogmans filed a notice of foreclosure.

Pursuant to the notice and Iowa Code section 656.4 (2017), Rick had thirty days
                                       3

to either make the owed payments or forfeit the property, the payments he had

made, and any improvements he had made to the property. He did not make the

payments or vacate by the deadline. He and his wife, Paula, refused to vacate

the property, and, on May 15, the Skogmans filed an affidavit in support of

forfeiture. The next day, the Skogmans filed a notice to quit, and under the

contract Rick and Paula became holdover tenants as of May 16, 2017.

      The Skogmans regained the property on June 13, 2017, and found it

would need significant repairs.    The back half of the roof had never been

completed, despite earlier affirmative statements from Rick that it had.      The

property was flea-infested, and trash had been strewn throughout the building.

The second floor had been completely gutted, and some of the larger fixtures—

such as the refrigerator and a vanity—were missing. The electric wiring was

exposed throughout the second floor. Part of the kitchen floor had also been

removed.

      The Skogmans determined they would take a significant financial hit if

they sold the property as it was. They determined the entire building would need

to be renovated to attract a buyer. In the end, they spent $29,488 renovating the

property.   It is undisputed that the Skogmans went to significant lengths to

minimize the cost of renovating the building. They called in favors with business

associates to get services performed cheaply, bargain hunted supplies and

materials, and performed or supervised some of the renovations themselves.

After completely restoring the second floor and making significant renovations to

the rest of the building, they sold the home for $130,000 in December 2017.
                                           4

         The Skogmans initiated this suit on July 13, 2017. The complaint alleged

five causes of action. Count I claims Rick and Paula were holdover tenants

under Iowa Code section 562.2 between May 16 and June 13, allowing the

Skogmans to double the rent for that period pursuant to statute; count II claims

Rick and Paula intentionally damaged the home; count III claims Rick

fraudulently misrepresented that he had installed the roof; count IV claims Rick

and Paula intentionally inflicted emotional distress on the Skogmans by leaving a

“used marital aid” for them to find in the house and for threatening statements

Rick made to the Skogmans concerning the eviction; and count V claims Rick

and Paula abused process by threatening to file criminal charges against the

Skogmans.1

         Rick and Paula were served the petition on July 13 but did not file an

answer. On September 6, the Skogmans sent the Emersons a notice of intent to

file for default judgment. The Emersons did not respond until their prospective

counsel filed an appearance with the district court on September 15, requesting

an additional twenty days to address the case and file an answer. The district

court granted the request, and the Emersons filed their answer and a motion to

dismiss, which was denied.

         There were no further developments in the case until June 12, 2018. The

Emersons’ counsel moved for leave to withdraw, citing a lack of communication

with the Emersons.        The district court granted the motion, and there is no

indication the Emersons retained a different attorney. Neither the Emersons nor

any representative of theirs attended the August 24 pre-trial conference. The

1
    Count V was subsequently dismissed at the Skogmans’ request.
                                         5

district court held the Emersons in default; cancelled the scheduled jury trial; and,

on the Skogman’s request, scheduled “an evidentiary hearing to determine

damages” for September 26.

       At the evidentiary hearing, the Skogmans introduced evidence related to

the costs of repairing the property, their efforts to minimize those costs, and the

reduction in the property’s value caused by the Emersons. The district court

issued the default judgment on October 5. The district court first addressed the

presence of Paula Emerson in the suit and dismissed her as a party on all but

count I of the complaint:

       As previously recited, Paula was not a party to the contract for the
       purchase of the house, and consequently could not, as a matter of
       law, be held responsible for any fraudulent misrepresentations as
       alleged in count III of the petition. Further, no evidence was
       presented which would lead the court to conclude that Paula
       Emerson, as opposed to Rick Emerson, was responsible for any
       possible intentional infliction of emotional distress or intentional
       damage to the property. She was, however, one of the holdover
       tenants, and consequently may be held liable for those damages
       only. The court therefore finds that Paula Emerson should be
       dismissed as a party defendant as to counts II (intentional damage
       to property), III (fraudulent misrepresentation), and count IV
       (intentional infliction of emotional distress).

For count I, the district court found both Paula and Rick were holdover tenants at

the property from May 15 until June 13, and awarded the Skogmans $2400

under Iowa Code section 562.2.        The district court awarded the Skogmans

$15,000 on count II for damages caused by Rick and dismissed the intentional

property damage, fraudulent misrepresentation, and intentional infliction of

emotional distress claims against Paula.2       The district court determined no

2The district court’s dismissal resulted from the failure to prove damages against
Paula on Counts III and IV. “Though a defendant may default, he is still within
                                          6

damages were warranted for counts III and IV and declined to award punitive

damages. The Skogmans appeal.

        II.   Standard of Review

        “We review the trial court’s ruling on damages for correction of errors at

law.”    RC & CA Doghouse, L.L.C. v. Riccadonna, No. 11-1400, 2012 WL

2407383, at *8 (Iowa Ct. App. June 27, 2012) (citing Brokaw v. Winfield-Mt.

Union Cmty. Sch. Dist., 788 N.W.2d 386, 388 (Iowa 2010)). “Under this scope of

review, the trial court’s findings of fact have the force of a special verdict and are

binding on us if supported by substantial evidence.” Brokaw, 788 N.W.2d at 388.

“[W]e view the evidence in the light most favorable to the judgment.” Raper v.

State, 688 N.W. 29, 36 (Iowa 2004).           “Evidence is not insubstantial merely

because we may draw different conclusions from it; the ultimate question is

whether it supports the finding actually made, not whether the evidence would

support a different finding.” Brokaw, 788 N.W.2d at 393.

the pale of the law and is entitled to just treatment. He has a right to expect and
to demand that plaintiff’s recovery shall be confined, and responsive, to his
pleaded demand.” Hallett Const. Co. v. Iowa State Highway Comm’n, 154
N.W.2d 71, 73–74 (Iowa 1967); see also Hansman v. Gute, 215 N.W.2d 339, 343
(Iowa 1974) (“Defendant may in effect even defeat the action by showing that no
damages were caused to plaintiff by the matters alleged.” (citations omitted)).
                                           7

       An award of punitive damages is always discretionary. Id. at 395. “[W]e

review the trial court’s refusal to award punitive damages for an abuse of

discretion.” Id. (citing Wilson v. IBP, Inc., 589 N.W.2d 729, 732 (Iowa 1999)).

       III.   Discussion

       On appeal, the Skogmans allege the district court erred by (1) dismissing

Paula as a defendant from all claims except for claim I; (2) finding the Skogmans

were not entitled to damages for all of their construction costs; and (3) finding the

Emersons did not act with legal malice and refusing to award punitive damages.

We consider each of their arguments in turn.

              a. Dismissal of Paula Emerson from all claims except count I

       The Skogmans first argue the district court improperly modified the default

judgment by removing Paula from all claims except count I. We conclude the

district court erred in dismissing Paula from count II but correctly dismissed her

from counts III and IV.3

       While the district court did not specify, it appears the court ordered the

evidentiary hearing pursuant to Iowa Rule of Civil Procedure 1.973(2). Where a

plaintiff does request a specific amount of damages in their complaint, rule

1.973(2) allows the district court to “hear any evidence or accounting required to

warrant the judgment.” Iowa R. Civ. P. 1.973(2). After the evidentiary hearing,

the district court determined “no evidence was presented which would lead the

3
  The Skogmans argue the district court erred by modifying the default judgment
pursuant to Iowa Rule of Civil Procedure 1.977. Their argument conflates the default
entered by the clerk of court prior to the evidentiary hearing with the default judgment
and order they presently appeal. See 12 Iowa Prac. Series § 41:41 Default judgments-
In general (noting default judgment is a two-step process: entry of default and judgment
on default). The district court’s entry of default judgment is not a modification under
Iowa Rule of Civil Procedure 1.977.
                                         8

court to conclude that Paula Emerson . . . was responsible for any possible

intentional infliction of emotional distress or intentional damage to the property”

and dismissed Paula from all claims except count I.         But the district court’s

determination ignores the effect of the entry of default.        Once default was

entered, all of the Skogmans’ material allegations were accepted as true, and all

they needed to prove was their damages. Olver v. Tandem HCM, Inc., No. 10-

0225, 2010 WL 4885252, at *3 (Iowa Ct. App. Nov. 24, 2010) (“Upon entry of

default, ‘all the plaintiff’s material allegations are taken as true and the

determination of the amount of damages to be awarded is all that remains to be

done.’” (quoting Hallett Constr. Co. v. Iowa State Highway Comm’n, 154 N.W.2d

71, 74 (Iowa 1967))).

       With this principle in mind, we consider whether the Skogmans can

recover against Paula. For count II, the petition alleges both Rick and Paula

caused extensive property damage by allowing the property to fall into disrepair,

removing fixtures, and otherwise causing extensive damage to the property.

Taken as true, these allegations are sufficient to find Paula liable for the damage

done to the property, and the district court erred by dismissing Paula as a

defendant from the intentional property damage claim.

       For count III, the district court correctly noted the petition does not allege

any facts showing either that Paula was a party to the contract or she

fraudulently misrepresented the state of the roof to the Skogmans. Additionally,

the Skogmans did not provide evidence to that effect at the evidentiary hearing.

We conclude the district court did not err by dismissing Paula as a defendant

from count III.
                                          9

       Finally, for count IV, the only allegation against Paula is that she and Rick

“left a used marital aid on display for petitioners to dispose of.” At the evidentiary

hearing, the Skogmans did not provide any evidence showing they suffered

emotional distress, and they denied either seeking counseling or taking

medication in response to Rick and Paula’s actions.         This allegation, even if

accepted as true and coupled with the evidence presented at the hearing, is

insufficient to establish a claim of intentional infliction of emotional distress

against Paula. See Smith v. Iowa State Univ., 851 N.W.2d 1, 26 (Iowa 2014) (“In

order for a plaintiff to successfully bring a claim of intentional infliction of

emotional distress, he or she must demonstrate four elements: ‘(1) outrageous

conduct by the defendant; (2) the defendant intentionally caused, or recklessly

disregarded the probability of causing, the emotional distress; (3) plaintiff

suffered severe or extreme emotional distress; and (4) the defendant’s

outrageous conduct was the actual and proximate cause of the emotional

distress.’” (quoting Barreca v. Nickolas, 683 N.W.2d 111, 123–24 (Iowa 2004))).

We conclude the district court did not err by dismissing Paula as a defendant

from count IV.

              b. Construction Costs

       The Skogmans next argue the district court erred by declining to award

them their requested damages of $29,488 for their construction costs.            The

district court noted that, while the Skogmans did spend $29,488 working on the

property before it was sold, it was unclear how much was spent repairing

damages the Emersons had caused:
                                       10

      This was a 100-year-old house with obsolete knob and tube wiring,
      antiquated plumbing and HVAC, and a stone foundation. Plaintiffs
      are entitled to be put back into the same position they would [have]
      been had the damage not been done. They are not entitled to
      significantly improve the property at the defendant’s expense,
      charging him for items for which there is categorically no evidence
      that he damaged in any way. Items such as painting the main area
      and garage, foundation sealing, stucco repairs, adding gutters to
      the home, painting the steps, crown molding repairs, replacing the
      front and back deck, adding a dishwasher, landscaping, staging,
      lawn mowing and utilities are not recoverable under this record.
      Other items of damage, such as the rewiring of areas where the
      wiring was not exposed because of the defendant’s removal of the
      drywall, remodeling the bathroom, and painting some areas are
      partially recoverable on this record. Quite honestly, it is impossible
      on this record to determine precisely what was necessary to
      remedy the damage done by [Emerson] versus what was desirable
      to put the house in sale-ready condition to someone who is not
      buying a “fixer-upper.”

“As a general rule, the party seeking damages bears the burden of proving them;

if the record is uncertain and speculative as to whether a party has sustained

damages, the factfinder must deny recovery.”          Data Documents, Inc. v.

Pottawattamie Cty., 604 N.W.2d 611, 616 (Iowa 2000). “[A] fact finder may allow

recovery provided there is a reasonable basis in the evidence from which the fact

finder can infer or approximate the damages.” Miller v. Rohling, 720 N.W.2d 562,

572 (Iowa 2006) (quoting Sun Valley Iowa Lake Ass’n v. Anderson, 551 N.W.2d

621, 641 (Iowa 1996)). A party’s testimony as to value is generally sufficient to

support an award of damages. Id.

      It is difficult to discern how much of the $29,488 spent on construction

costs was incurred to repair the damage caused by the Emersons. Evidence

suggests $7387 of the costs were attributable entirely to repairing damage

caused by the Emersons including completing the roof and repairing the kitchen

floor the Emersons removed. But for other expenses, the amount spent repairing
                                            11

damage the Emersons caused is less certain. The Skogmans seek damages for

$2500 to paint the entire property; $3750 to rewire the second floor and some

areas of the first floor; $2650 to install drywall, at least in part on the second floor;

and $3465 to fix the bathroom, although there is no evidence suggesting the

Emersons damaged the bathroom in such a way to require extensive repairs, if

any work. And there is no evidence the Emersons caused any damage to the

foundation, plumbing, or the garage, all of which the Skogmans renovated and

now seek compensation for the costs incurred. The district court determined

slightly more than half of the Skogmans’ construction costs—$15,000 of the

requested $29,488—was attributable to repairing damage caused by the

Emersons.      Without better information in the record, we cannot say that

determination is in error.4

               c. Punitive Damages

       Finally, the Skogmans argue they are entitled to punitive damages, which

they requested in conjunction with their claims of fraudulent misrepresentation

and intentional infliction of emotional distress. In the default judgment order, the

4
  The Skogmans also argue the district court should have awarded them $7200 for the
revenue they lost over the six months it took to renovate and sell the property after they
regained possession. This issue appears to have only been raised in relation to the
Skogmans’ holdover tenant claim. The district court noted chapter 656 did not allow the
Skogmans to recover rental damages after the Emersons vacated the property and
declined to award the Skogmans damages on their holdover tenancy claim for the time
between when the Emersons moved out and the property was sold. The Skogmans did
not appeal that ruling. Insofar as the Skogmans claim they should receive $7200 in
relation to their intentional property damage claim, that argument was not raised or ruled
on by the district court, so it is not preserved for our review. See Meier v. Senecaut¸ 641
N.W.2d 532, 538 (Iowa 2002) (“It is a fundamental doctrine of appellate review that
issues must ordinarily be both raised and decided by the district court before we will
decide them on appeal.”).
                                          12

district court declined to award punitive damages, citing a lack of malice on the

Emersons’ part.

       The standard for awarding punitive damages is set by Iowa Code section

668A.1. Under that provision, the plaintiff must show the defendant acted with

“willful and wanton disregard for the rights or safety of another.” Iowa Code

§ 668A.1(a). A showing of willful and wanton disregard requires a showing of

actual or legal malice. McClure v. Wallgreen Co., 613 N.W.2d 225, 231 (Iowa

2000). “Actual malice is characterized by such factors as personal spite, hatred,

or ill will. Legal malice is shown by wrongful conduct committed or continued

with a willful or reckless disregard for another’s rights.” Id. (citations omitted).

       We begin by again noting the Skogmans’ material allegations are

accepted as true. Hallett, 154 N.W.2d at 74. But the petition does not request

punitive damages and does not allege any of the Emersons’ actions amounted to

willful and wanton disregard for the Skogmans’ rights or evince personal hatred

or spite for the Skogmans.          At most, the petition claims Rick Emerson

misrepresented that he had completed the roof when in fact he had not and that

he had made some threatening statements to the Skogmans after they

threatened to remove him from the property. Accepted as true, these facts do

not establish the Emersons’ “persistent course of conduct” necessary to show

willful and wanton disregard. Wolf v. Wolf, 690 N.W.2d 887, 893 (Iowa 2005)

(quoting Hockenberg Equip. Co. v. Hockenberg’s Equip. & Supply Co., 510

N.W.2d 153, 156 (Iowa 1993)). The other evidence on the record does not lead

to a contrary conclusion. At the evidentiary hearing, the Skogmans testified Rick

had sent them threatening text messages and the Emersons “were actively
                                         13

damaging property to cause us as much damage as possible.” The district court

disagreed with this characterization:

       Mr. Emerson bought a 100-year-old “as is” house with the obvious
       intent to update it and improve it through his own “sweat equity”
       and then attempt to sell it at a profit. Whether he underestimated
       the scope of that undertaking and its attendant cost, or other events
       occurred in his life making the project more difficult, it is clear that
       he was not successful in his attempt. This is not to say, however,
       that he did not at least attempt to work on the house. The fact that
       it was in a state of “disassembly” at the time of the forfeiture is not
       particularly relevant to the issue of whether he was intentionally
       attempting to cause the plaintiffs emotional distress. Similarly, the
       fact that a dead animal (the court assumes it was a rodent of some
       kind) was found in the house, or that the house was filthy or flea
       infested is in no way dispositive.

In light of the Skogmans’ failure to request punitive damages in their petition, and

the record presented at the damages hearing, we cannot say the district court

abused its discretion by concluding the Skogmans had not shown the Emersons

acted with malice or by and declining to award punitive damages.

       IV.    Conclusion

       For the above reasons, the district court order entering default judgment

on the Skogmans’ holdover tenancy, fraudulent misrepresentation, and

intentional infliction of emotional distress claims is affirmed. We reverse the

district court’s dismissal of Paula Emerson as a defendant to the Skogmans’

intentional damage to property claim and remand the matter to the district court

for entry of judgment against Rick and Paula Emerson. Substantial evidence

supports the district court’s award of compensatory damages in the amount

awarded, and the district court did not abuse its discretion by declining to award

punitive damages.

       AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.