Court Opinion

ID: 4218667
Source: CourtListenerOpinion
Date Created: 2017-11-08 17:08:37.457738+00
Date Added: 2024-06-11T09:23:31.719995
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 16-2148
                             Filed November 8, 2017

ROBERT W. MILAS, M.D.,
    Plaintiff-Appellant,

vs.

SOCIETY INSURANCE and ANGELA BONLANDER,
     Defendants-Appellees.
________________________________________________________________

      Appeal from the Iowa District Court for Scott County, Henry W. Latham II

(trial and motion to recuse) and Nancy S. Tabor (motion for summary judgment),

Judges.

      Plaintiff appeals following judgment entry in his claims for fraudulent

misrepresentation and breach of contract. AFFIRMED.

      Anthony J. Bribriesco, Andrew W. Bribriesco, and William J. Bribriesco of

Bribriesco Law Firm, P.L.L.C., Bettendorf, for appellant.

      Guy R. Cook and Aaron W. Lindebak of Grefe & Sidney, P.L.C., Des

Moines, for appellees.

      Considered by Danilson, C.J., McDonald, J., and Blane, S.J. Tabor, J.,

takes no part.
                                         2

MCDONALD, Judge.

      A treating physician brought an action for breach of contract, negligent

misrepresentation,   and   fraudulent   misrepresentation    against   a   workers’

compensation insurance carrier and its claims adjuster after the claims adjuster

approved an elective surgery for the physician’s patient but the carrier declined to

pay the physician’s entire fee for the elective surgery.        The district court

dismissed the misrepresentation claims on summary judgment. The claim for

breach of contract was tried to a jury. The jury found in favor of the physician

and awarded contract damages.        The physician timely filed this appeal.      He

contends the district court erred in dismissing his fraudulent misrepresentation

claim and erred in declining to submit the issue of punitive damages to the jury.

He also contends the district court should have granted his motion for recusal.

                                         I.

      In January 2012, Rickey Fitzgerald seriously injured himself while

performing work for Barker Apartments and filed a workers’ compensation claim.

Fitzgerald became dissatisfied with the medical care received, and he petitioned

for alternate care with Dr. Robert Milas.           The workers’ compensation

commissioner granted the petition, and Dr. Milas became Fitzgerald’s treating

physician. Dr. Milas recommended Fitzgerald undergo a cervical fusion to treat

Fitzgerald’s neck and back injuries. Dr. Milas sent a fee estimate to the workers’

compensation insurance carrier, Society Insurance, in the amount of $14,325.87.

A claims adjuster, Angela Bonlander, signed the estimate. The signed estimate

provided, “SIGNATURE FROM REPRESENTATIVE AT SOCIETY INSURANCE

WILL BE THE AUTHORIZATION FOR SURGERY.”
                                            3

          After receiving the signed estimate, Dr. Milas performed the cervical

fusion.     He submitted a bill to Society Insurance for $14,325.87.          Society

Insurance provided the bill to a third-party auditing service, Health Systems

International (HSI). Upon the recommendation of HSI, Society Insurance issued

a check to Dr. Milas for $1620.52. Dr. Milas rejected the check and demanded

he be paid in full. Two years later, Society Insurance sent Dr. Milas another

check for $4958.03. Dr. Milas rejected that payment.

          Dr. Milas brought this action against Society Insurance and Bonlander.

Dr.   Milas     asserted   claims   for   negligent   misrepresentation,   fraudulent

misrepresentation, and breach of contract.            Society Insurance moved for

summary judgment on all counts. The district court granted Society Insurance’s

motion for summary judgment on the fraudulent misrepresentation claim,

concluding there was no evidence showing the defendant had the intent to

deceive Dr. Milas in authorizing the elective surgery.

          The matter proceeded to trial on the negligent misrepresentation claim

and the breach-of-contract claim.         The first trial ended during the plaintiff’s

opening statement after the district court granted a motion for mistrial. Society

Insurance subsequently filed a second motion for summary judgment, seeking

dismissal of the negligent misrepresentation claim. The district court granted the

motion, concluding the defendants were not in the business of providing

information and were entitled to judgment as a matter of law.

          The matter proceeded to trial on the claim for breach of contract. Prior to

the second trial, Dr. Milas moved to recuse the presiding judge. The district court

denied the motion. Dr. Milas sought interlocutory review of the order denying the
                                          4

motion. That, too, was denied. The jury returned a verdict finding Dr. Milas and

Society Insurance entered into a contract and finding Dr. Milas and Bonlander

had not entered into a contract. The jury found Society Insurance breached the

contract and awarded Dr. Milas $14,325.87. Dr. Milas now appeals.

                                         II.

       In his first claim of error, Dr. Milas argues the district court erred in

dismissing his claim for fraudulent misrepresentation. Dr. Milas contends Society

Insurance, in signing the estimate, made a false representation that it would pay

the proposed surgical fees knowing it intended to negotiate the fees at a later

date. He contends this is a triable issue of fact.

       This court reviews a district court’s grant of summary judgment for

correction of errors at law. See Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d

494, 500 (Iowa 2013). A district court properly grants summary judgment when

there is no genuine issue of material fact and the moving party is entitled to

judgment as a matter of law. See id. at 501. An issue of fact is material if “the

dispute is over facts that might affect the outcome of the suit, given the

applicable law.” Weddum v. Davenport Cmty. Sch. Dist., 750 N.W.2d 114, 117

(Iowa 2008).    “An issue of fact is ‘genuine’ if the evidence is such that a

reasonable finder of fact could return a verdict or decision for the nonmoving

party.” Huck v. Wyeth, Inc., 850 N.W.2d 353, 362 (Iowa 2014). “We can resolve

a matter on summary judgment if the record reveals a conflict concerning only

the legal consequences of undisputed facts.” Boelman, 826 N.W.2d at 501. The

burden is on the moving party to show it is entitled to judgment as a matter of

law. Sallee v. Stewart, 827 N.W.2d 128, 133 (Iowa 2013).
                                          5

       There   are    seven   elements     of   fraudulent   misrepresentation:    (1)

representation, (2) falsity, (3) materiality, (4) scienter, (5) intent to deceive, (6)

justifiable reliance, and (7) resulting injury or damage. Air Host Cedar Rapids,

Inc. v. Cedar Rapids Airport Comm’n, 464 N.W.2d 450, 453 (Iowa 1990).

Scienter and intent to deceive are closely related elements of fraudulent

misrepresentation, and the same general analysis applies for each. See Van

Sickle Constr. Co. v. Wachovia Comm. Mortg., Inc., 783 N.W.2d 684, 688 (Iowa

2010). “Scienter and intent to deceive may be shown when the speaker has

actual knowledge of the falsity of his representations or speaks in reckless

disregard of whether those representations are true or false.”           Id. (citation

omitted).

       On the summary judgment record, Dr. Milas failed to create a triable issue

of fact on these two elements. There was no evidence in the summary judgment

record showing the defendants made a false representation, had actual

knowledge of a false representation, or spoke in reckless disregard of whether

any representation was true or false.           The fact that Society Insurance’s

employee, Angela Bonlander, knew the claim would be submitted to a bill review

company does not by itself show a misrepresentation because notwithstanding a

contract obligation to pay a sum certain there is no harm in later asking if a

contract obligee is willing to take a lower payment. The statement by Bonlander

that she knew Society Insurance intended to negotiate the fees notwithstanding

her signature to authorize the surgery was not presented until trial.

       “Speculation is not sufficient to generate a genuine issue of fact.” Hlubek

v. Pelecky, 701 N.W.2d 93, 96 (Iowa 2005). In the absence of any evidence from
                                          6

which a jury could infer scienter and intent to deceive, the district court correctly

granted summary judgment. See, e.g., Cannon v. Bodensteiner Implement Co.,

No. 15-0741, 2017 WL 1086787, at *4 (Iowa Ct. App. Mar. 22, 2017) (affirming

dismissal of fraudulent misrepresentation claim where there were “no facts

supporting the scienter and intent elements of [the] claim or creating a genuine

issue material fact as to those elements”); Polar Insulation v. Garling Const., Inc.,

No. 15-1051, 2016 WL 6396208, at *3 (Iowa Ct. App. Oct. 26, 2016) (affirming

dismissal of fraudulent misrepresentation claim on summary judgment where

claim was “largely an extension of [the plaintiff’s] breach-of-contract claim in that

[plaintiff] claims [defendants] intended to deceive by not paying” and noting the

“[f]ailure to fulfill obligations under a contract does not necessarily support a

claim for fraudulent misrepresentation”); Scholapkohl v. Am. Family Mut. Ins. Co.,

No. 15-1612, 2016 WL 5407957, at *8 (Iowa Ct. App. Sept. 28, 2016) (affirming

summary judgment where there was no evidence of intent to deceive regarding

the terms of an insurance contract); D & W Dev., Inc. v. City of Milford, No. 12-

0579, 2013 WL 2145735, at *6 (Iowa Ct. App. May 15, 2013) (affirming dismissal

of fraudulent misrepresentation claim where there was no evidence of scienter or

intent to deceive).

                                         III.

       Dr. Milas requested the jury be instructed on punitive damages. The court

declined to give the instruction. Dr. Milas appeals that decision. We review the

failure to give a jury instruction for correction of error at law. See Beyer v. Todd,

601 N.W.2d 35, 38 (Iowa 1999).        Failure to give jury instructions on issues

supported by substantial evidence is error. See Meck v. Iowa Power & Light Co.,
                                        7

469 N.W.2d 274, 276 (Iowa Ct. App. 1991). Instructional error warrants reversal

if it resulted in prejudice. See Rudolph v. Iowa Methodist Med. Ctr., 293 N.W.2d

550, 555 (Iowa 1980).

      Punitive damages may not be awarded unless the jury finds “by a

preponderance of clear, convincing, and satisfactory evidence, the conduct of the

defendant from which the claim arose constituted willful and wanton disregard for

the rights or safety of another.” Iowa Code § 668A.1 (2013). When the claim for

punitive damages arises out of contract action, an award of punitive damages is

allowed only “when the breach (1) constitutes an intentional tort, and (2) is

committed maliciously, in a manner that meets the standards of Iowa Code

section 668A.1 (1993).” Magnusson Agency v. Pub. Entity Nat’l Co-Midwest, 560

N.W.2d 20, 29 (Iowa 1997).       Legal malice is conduct exhibiting “willful and

wanton disregard for the rights or safety of another.” Schultz v. Sec. Nat’l Bank,

583 N.W.2d 886, 888 (Iowa 1998).

      We cannot conclude the district court erred in declining to instruct the jury

on punitive damages. There is not substantial evidence in support of such an

instruction. Society Insurance’s use of a third-party audit service to advise on

fees and negotiate fee payment does not constitute an independent tort.

Similarly, the decision to negotiate fees is not evidence of legal malice. The

mere fact the jury found a breach of contract here is insufficient to require an

instruction on punitive damages. See The Hansen Co. v. Rednet Env. Servs.,

L.L.C., No. 16-0735, 2017 WL 4570406, at *4–7 (Iowa Ct. App. Oct. 11, 2017);

Polar Insulation, 2016 WL 6396208, at *4 (affirming decision to not instruct the

jury on punitive damages for a claim of breach of contract).
                                          8

                                          IV.

         In his last claim of error, Dr. Milas contends the trial judge should have

recused himself from this proceeding. Prior to the second trial, Dr. Milas filed a

motion for recusal.     Dr. Milas argued the court should have recused itself

because the court had an ex parte communication with Society Insurance’s

counsel, because the court “showed an unfavorable disposition towards” Dr.

Milas and Dr. Milas’s counsel, and because the court “made clear evidentiary

error” against Dr. Milas. The district court denied the motion for recusal.

         The burden of showing grounds for recusal is on the party seeking

recusal. See Campbell v. Quad City Times, 547 N.W.2d 608, 611 (Iowa Ct. App.

1996).     This burden is substantial and we will not overturn the trial judge’s

decision absent an abuse of discretion. See State v. Millsap, 704 N.W.2d 426,

432 (Iowa 2005). To show an abuse of discretion, a party must show the court

exercised its discretion “on grounds or for reasons clearly untenable or to an

extent clearly unreasonable.” In re Estate of Olson, 479 N.W.2d 610, 613 (Iowa

Ct. App. 1991).

         The Iowa Code of Judicial Conduct provides, “A judge shall uphold and

apply the law, and shall perform all duties of judicial office fairly and impartially.”

Iowa Code of Judicial Conduct R. 51:2.2. “A judge shall disqualify himself or

herself in any proceeding in which the judge’s impartiality might reasonably be

questioned . . . .” Iowa Code of Judicial Conduct R. 51:2.11(A). The Iowa Code

of Judicial Conduct enumerates certain circumstances in which the judge must

recuse himself. See Iowa Code of Judicial Conduct R. 51:2.11(A)(1)-(6). One

such circumstance is when the “judge has a personal bias or prejudice
                                          9

concerning a party or a party’s lawyer, or personal knowledge of facts that are in

dispute in the proceeding.” Iowa Code of Judicial Conduct R. 51:2.11(A)(1). The

enumerated circumstances are nonexclusive, however, and the judge is

disqualified “whenever the judge’s impartiality might reasonably be questioned.”

Iowa Code of Judicial Conduct R. 51:2.11 cmt. 1. “Before recusal is necessary,

actual prejudice must be shown.” State v. Biddle, 652 N.W.2d 191, 198 (Iowa

2002).

         The record shows Society Insurance’s counsel did have a brief ex parte

communication with the court during the course of trial for the purpose of

informing the court counsel wanted to make a record on an issue.                  The

communication was permissible, routine, and not cause for concern. See Iowa

Code of Judicial Conduct R. 51:2.9 (allowing “ex parte communication for

scheduling . . . provided . . . the judge makes provision promptly to notify all other

parties of the substance of the ex parte communication and gives the parties an

opportunity to respond”). The court immediately notified Dr. Milas’s counsel of

the substance of the communication and gave his counsel an opportunity to

respond. This incident does not serve as grounds for recusal.

         Dr. Milas also contends the district court showed an unfavorable

disposition toward Dr. Milas and his counsel. At one point during trial, outside of

the presence of the jury, the court said, “[Counsel], it appears to me that Dr.

Milas is kind of staring me down. I—it’s very uncomfortable.” The remainder of

the evidence on this point consists of counsel’s affidavit stating the district court’s

tone and temperament were inappropriate, without providing detail.
                                         10

       Dr. Milas also contends the court made an evidentiary error by admitting a

record that contained hearsay. Dr. Milas does not challenge the admission of the

exhibit by itself; he merely challenges the court’s impartiality, citing the admission

of this exhibit as proof of bias. Assuming without deciding the court did make an

evidentiary error, that alone is not proof of any bias and it would not cause a

reasonable person to question the court’s impartiality.

       With respect to these last two points, we cannot conclude the district court

abused its discretion in denying the motion. The judge has the duty to decide.

The judge is duty-bound to “hear and decide matters assigned to the judge,

except when disqualification is required by rule 2.11 or other law.” Iowa Code of

Judicial Conduct R. 51:2.7.

       Judges must be available to decide the matters that come before
       the court. Although there are times when disqualification is
       necessary to protect the rights of litigants and preserve public
       confidence in the independence, integrity, and impartiality of the
       judiciary, judges must be available to decide matters that come
       before the courts. Unwarranted disqualification may bring public
       disfavor to the court and to the judge personally.

Iowa Code of Judicial Conduct R. 51:2.7 cmt. 1. It has thus been observed that

mere speculation of partiality is not sufficient; “[t]here is as much obligation for a

judge not to recuse when there is no occasion for him to do so as there is for him

to do so when there is.” Hinman v. Rogers, 831 F.2d 937, 939 (10th Cir. 1987).

Here, Dr. Milas’s claims are mere speculation unsupported by the record. See,

e.g., In re Marriage of McGruder, No. 06-1089, 2007 WL 3376899, at *4 (Iowa Ct.

App. Nov. 15, 2007) (affirming denial of request for recusal where counsel

complained of the judge’s tone and tenor). There was no basis for the district
                                        11

court judge to ignore the duty to decide. We affirm the district court’s denial of

Dr. Milas’s motion for recusal.

                                        VI.

       For the foregoing reasons, we affirm the judgment of the district court.

       AFFIRMED.