Court Opinion

ID: 9397773
Source: CourtListenerOpinion
Date Created: 2023-05-26 14:04:45.894793+00
Date Added: 2024-06-11T17:19:27.397417
License: Public Domain

IN THE SUPREME COURT OF IOWA

                                 No. 22–0288

                  Submitted March 30, 2023—Filed May 26, 2023

IN THE MATTER OF THE ESTATE OF RUTH C. BISIGNANO, Deceased.

EXILE BREWING COMPANY, LLC,

      Appellant,

vs.

ESTATE OF RUTH C. BISIGNANO,

      Appellee.
_____________________________________

IN THE MATTER OF THE ESTATE OF FRANK J. BISIGNANO, Deceased.

EXILE BREWING COMPANY, LLC,

      Appellant,
vs.

ESTATE OF FRANK J. BISIGNANO,

      Appellee.

      Appeal from the Iowa District Court for Polk County, Craig E. Block, Judge.

      A business alleged to have misappropriated a decedent’s intellectual

property appeals the probate court’s reopening of the decedent’s and decedent’s

husband’s estates      to pursue the misappropriation claim; the          Estates

cross-appeal the denial of their request for attorney’s fees. AFFIRMED.

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

joined.
                                      2

      Kristina J. Kamler (argued) and Robert S. Keith of Engles, Ketcham, Olson

& Keith, P.C., Omaha, Nebraska, for appellant.

      Scott M. Wadding (argued), Matthew G. Sease, and Delaney J. Kozlowski

of Sease & Wadding, Des Moines, for appellees.
                                        3

McDERMOTT, Justice.

      The Estates of Ruth Bisignano and her husband Frank Bisignano sued

Exile Brewing Company based on the use of Ruth’s name and likeness in Exile’s

promotion and sale of its popular beer called “Ruthie.” To enable the estates to

pursue these claims, Frank Bisignano’s nephew first filed petitions in the probate

court to reopen the estates, as both estates had long since closed. The probate

court granted both motions to reopen, and the estates filed the civil lawsuit

against Exile. Exile sought to intervene in the probate case, filing a motion to

vacate the reopening orders. In this appeal, we must decide whether the probate

court erred in denying Exile’s request to intervene in the probate case and close

the Estates.

      I. Ruth Bisignano and Exile’s “Ruthie” Beer.

      Ruth Bisignano—“Ruthie,” as she was professionally known—owned and

operated a popular bar in Des Moines throughout the 1950s and ’60s called

“Ruthie’s Lounge.” She was famously (or, to some, scandalously) known for her

ability to serve beer by balancing two pint glasses on her chest in a bar trick she

referred to as the “well-balanced glass of beer.” The trick earned her both

attention in newspapers across the country and a premium price on drinks—

reportedly charging about three times as much as other bars in town. It also

earned her some legal trouble, although perhaps of the no-such-thing-as-bad-

publicity variety. Ruth was criminally charged several times for performing her

serving trick with allegations that included “indecent dress and behavior” and

“indecent behavior and running her lounge in a loud, boisterous manner with
                                         4

the juke box blaring.” And in 1955, the IRS came after Ruth for unpaid taxes

totaling   $44,694,   alleging   that   her   beer-balancing   trick   qualified   as

entertainment and made her bar subject to the tax on “cabarets.” In 1971, she

sold her bar and closed the door on her bartending and tavern-operating days.

      In 2012, Exile Brewing Company (Exile), taking Ruth and her

contributions to the beer and restaurant industry as an inspiration, named one

of its craft beers “Ruthie” and used Ruth’s image performing her serving trick on

bottles, cans, beer taps, and other paraphernalia. Today Ruthie is the

best-selling Iowa-made beer in the state. Before it began selling the Ruthie beer,

Exile searched for trademarks and products sold under the name “Ruthie,”

searched for pictures of Ruth, and searched for children, an estate, or a trust for

her. Exile alleges that the search came up empty, so it began selling the beer

using the name “Ruthie” and Ruth’s likeness. Exile applied for a federal

trademark for “RUTHIE” in 2019, which was granted in 2021.

      II. Reopening the Estates.

      When Ruth died intestate in 1993, her husband Frank Bisignano served

as the administrator of her estate. The list of assets on the final report and

inventory for her estate didn’t include the name “Ruthie” or Ruth’s name and

likeness as property. Ruth’s estate was closed in 1993.

      Frank died intestate three years later. His niece, Andrea Huntsman, served

as the administrator of Frank’s estate. The list of assets on the final report and

inventory for his estate likewise didn’t include the name “Ruthie” or Ruth’s name

and likeness as property. The final report listed Frank’s heirs as his three
                                        5

then-living siblings: Barbara Hamand, Rose Medici, and Alfonso Bisignano.

Frank’s estate was closed in 1999.

      Fred Huntsman is Frank Bisignano’s nephew and the son of Frank’s

deceased sister Barbara Hamand. In March 2020, Huntsman filed a petition to

reopen Frank’s estate, alleging that he “hired an attorney to investigate and

pursue potential claims against a corporation” that, if successful, would benefit

Frank’s estate. The probate court promptly granted the motion to reopen Frank’s

estate and appointed Huntsman as administrator. In September 2020,

Huntsman filed a petition to reopen Ruth’s estate on the same grounds. The

probate court promptly granted the motion to reopen Ruth’s estate, too, and

appointed Huntsman as administrator.

     III. The Estates’ Civil Lawsuit and Exile’s Motion to Vacate and Close
the Estates.

      In June 2020, Huntsman, as administrator of Frank’s estate, filed a

lawsuit in Iowa district court against Exile alleging common law appropriation of

Ruth’s name and likeness, appropriation of the commercial value of Ruth’s

identity and infringement of the right of publicity, common law misappropriation

of trade values, consumer fraud under Iowa Code chapter 714H, common law

deceptive marketing, and common law trade and service mark infringement.

Exile moved to dismiss the lawsuit, arguing, among other things, that Frank’s

estate lacked standing, the court lacked jurisdiction, and a statute of limitations

violation. The district court denied the motion in August 2020. Exile filed an

answer and affirmative defenses to the petition a month later, and the litigation

moved forward.
                                         6

      Exile argued to the district court in the motion to dismiss proceedings that

Ruth’s estate, not Frank’s, was the appropriate plaintiff in the civil action. The

petition to reopen Ruth’s estate in probate court (in September 2020) soon

followed. Frank’s estate then moved to add Ruth’s estate as a plaintiff in the civil

case, which the district court granted. In June 2021, the estates moved for

partial summary judgment on certain claims. Exile resisted and, in August, filed

a cross-motion for summary judgment that the estates resisted.

      While those summary judgment motions were pending in the civil case,

Exile filed a motion in the probate court to vacate, dismiss, and close both

estates. Exile, describing itself as an “interested party” in the estates, argued

that the probate court lacked jurisdiction to reopen the estates under Iowa Code

section 633.489, that Huntsman lacked standing to serve as the administrator,

and that any intellectual property rights that the estates could have in Ruth’s

image or likeness had been waived. These arguments were identical to some of

the arguments that Exile was making in the civil lawsuit. The estates resisted,

arguing that the probate court must strike Exile’s motion because it was not an

interested party in the estates. The estates argued, in the alternative, that the

probate court should reject Exile’s arguments on the merits because the

reopening orders complied with section 633.489 and there had been no waiver

of Ruth’s intellectual property rights allowing Exile’s use.

      In November, the probate court denied Exile’s motion. The probate court

held that Exile had no right to intervene in the probate proceedings and instead

was an interloper in the case. The probate court thus struck Exile’s motion to
                                          7

vacate, dismiss, and close the estates. The probate court further determined that

even if Exile could intervene, the potential claims against Exile described in

Huntsman’s petition to reopen were “new property” that authorized reopening

the estates under Iowa Code section 633.489. The probate court didn’t decide

whether Ruth’s intellectual property passed to her heirs or into the public

domain, specifically leaving the issue for resolution in the civil lawsuit. Exile filed

a motion to reconsider, which the probate court denied. The probate court also

denied the estates’ application for attorney’s fees.

      In January 2022, the district court ruled on the summary judgment

motions. It took no action on Exile’s standing and jurisdiction arguments,

deferring instead to the probate court’s ruling that the estates were properly

reopened. The district court went on to deny both sides’ summary judgment

motions. Soon thereafter, the estates successfully moved to amend their petition

in the civil lawsuit to replace their common law claim for trade and service mark

infringement with a claim for deceptive advertising and false designation of origin

under the Lanham Act, 15 U.S.C. § 1125(a). In April 2022, Exile removed the

civil lawsuit to federal court based on federal question jurisdiction.

      Exile appealed the probate court’s ruling. The estates cross-appealed the

probate court’s denial of their application for attorney’s fees. We’ve consolidated

Ruth’s and Frank’s probate cases for appeal based on the identical issues

presented.
                                         8

      IV. Exile’s Intervention in the Probate Estates.

      We begin with the probate court’s threshold determination that Exile is an

interloper with no ability to challenge the estates’ reopening. As the probate court

noted, the probate code includes no provisions that address a party’s

intervention in a probate proceeding. But Iowa Code section 633.34 provides that

unless otherwise stated, all actions triable in probate apply the Iowa Rules of

Civil Procedure. Rule 1.407 provides for two ways to intervene in a case:

intervention as a matter of right and permissive intervention. Iowa R. Civ. P.

1.407(1), (2).

      The rule on intervention as of right (as relevant here) states that “anyone

shall be permitted to intervene in an action . . . [w]hen the applicant claims an

interest relating to the property or transaction which is the subject of the action”

and “is so situated that the disposition of the action may as a practical matter

impair or impede the applicant’s ability to protect that interest” unless the

interest is otherwise adequately protected by another party. Id. r. 1.407(1)(b)

(emphasis added).

      The rule on permissive intervention (as relevant here) states that “anyone

may be permitted to intervene in an action . . . [w]hen an applicant’s claim or

defense and the main action have a question of law or fact in common.” Id.

r. 1.407(2)(b) (emphasis added). The permissive intervention subrule concludes

with this: “In exercising its discretion, the court shall consider whether the

intervention will unduly delay or prejudice the adjudication of the rights of the

original parties.” Id. r. 1.407(2) (unnumbered paragraph). A later subrule guides
                                          9

courts on its consideration of permissive intervention applications, stating that

courts shall consider “and grant or deny the application as the circumstances

require.” Id. r. 1.407(4).

      In In re Estate of DeVoss, we noted the confusion that surrounds the

appellate standard of review from denials of intervention because of the two

different types of intervention. 474 N.W.2d 539, 541 (Iowa 1991). In DeVoss, two

heirs appealed the district court’s denial of their attempt to intervene as of right

in a probate case. Id. at 542. We affirmed the district court, determining that the

heirs’ interest “was too remote . . . to entitle them to intervention.” Id. On the

standard of review, we remarked that most intervention appeals will “revolve

around an evaluation of the ‘interest’ claimed by the party seeking to intervene,”

and stated that review thus should be “on error, with some deference given to

the district court’s discretion.” Id. at 541.

      A. Intervention as of Right.

      Exile argues that it was entitled to intervention as of right because it seeks

to “defin[e] the property rights that Huntsman actually inherited through

intestate succession” and to “ensur[e] that Huntsman is not granted, through

the probate proceedings, rights that encroach upon the trademark rights that

Exile was already vested with” through its use and registration of the “Ruthie”

trademark.

      But neither ground establishes—as required by the rule—that Exile would

be left “so situated that the disposition of the action may as a practical matter

impair or impede the applicant’s ability to protect that interest.” Iowa R. Civ. P.
                                         10

1.407(1)(b). The disposition of the probate matter will not “impair or impede”

Exile’s ability to protect the property interest that they assert. The property rights

dispute between the estates and Exile is the subject of a separate civil lawsuit

now pending in federal court. Exile is entitled to pursue—and has been pursuing,

for several years now—its claims and defenses in the civil litigation to protect its

alleged property interest. The probate court did not rule on the merits of Exile’s

property claims, leaving Exile free to address those claims in the civil lawsuit.

      Further, Exile is ill-suited to challenge the probate court’s appointment of

Huntsman as a special administrator of these estates. An “interested person” in

probate is generally “one whose ‘interests are directly affected by a diminution of

the [estate] assets.’ ” In re Est. of Boyd, 634 N.W.2d 630, 638–39 (Iowa 2001)

(alteration in original) (emphasis added) (quoting In re Est. of Plumb, 129 N.W.2d

630, 632–33 (Iowa 1964)). Exile makes no claim that it would suffer by a

diminution of assets in the estate; indeed, the opposite is true since Exile argues

it will suffer if the court doesn’t prevent an asset (the cause of action to enforce

Ruth’s intellectual property rights) from entering the estates. Exile is not an heir

at law, a beneficiary under any testamentary instrument, a creditor of the estates

or the decedents, or any other claimant seeking estate assets. Rather, Exile’s role

is merely that of a potential debtor to the estates if it’s held liable in the civil

lawsuit for misappropriating Ruth’s name or likeness. Cf. In re Troester’s Est.,

331 N.W.2d 123, 127 (Iowa 1983) (noting the district court’s determination “that

appellants as possible debtors of the estate were not interested parties to the

estate proceedings and could not intervene in the proceedings”). The probate
                                        11

court didn’t rule that Huntsman inherited Ruth’s intellectual property rights.

Exile is free to raise in the civil lawsuit whether there are any name, image, and

likeness rights and whether any such rights are inheritable.

      That Exile’s interest is only a potential one at this point is another strike

against intervention. Contingent interests, we have said, “are insufficient to allow

intervention by right.” DeVoss, 474 N.W.2d at 542. Exile’s interest in the estates

depends on its property interest in Ruth’s image and likeness, and that interest

depends on the outcome of the trademark and civil litigation matters that are

underway. We find no error in the district court’s determination that Exile failed

to establish that it was an interested party entitled to intervention as of right.

      B. Permissive Intervention.

      Exile also argues that it was entitled to permissive intervention. We will

afford a district court a relatively greater measure of deference in our review of a

permissive intervention decision considering that the court “exercis[es] its

discretion” in deciding whether an applicant “may be permitted to intervene”

under the permissive intervention rule. See Iowa R. Civ. P. 1.407(2) (emphases

added). As Judge Friendly once noted about the similarly-worded federal rule,

“[A] denial of permissive intervention has virtually never been reversed.” United

States v. Hooker Chems. & Plastics Corp., 749 F.2d 968, 991 n.19 (2d Cir. 1984).

      In analyzing whether Exile’s “claim or defense” involves a common

question of law or fact in the probate proceeding, Iowa R. Civ. P. 1.407(2)(b), we

return to the discussion of Exile’s role as potential debtor only and its lack of

any interest in these estates. The petition for estate reopening is an equitable
                                         12

action, while claims for misappropriation of a person’s name and likeness and

claims to quiet title in intellectual property are legal actions. The narrow scope

of a petition to reopen an estate presents no overlapping issue with the resolution

of a claim for misappropriation of a person’s name and likeness or to quiet title

in intellectual property. Stated simply, Exile cannot show that it “will gain or lose

by the direct legal operation and effect of the judgment” to reopen the Estates.

DeVoss, 474 N.W.2d at 542 (quoting Faircloth v. Mr. Bos. Distiller Corp.,

245 So. 2d 240, 244 (Fla. 1970), overruled in part on other grounds by Nat’l

Distrib. Co. v. Off. of Comptroller, 523 So. 2d 156, 158 (Fla. 1988)). Whether Exile

gains or loses will be determined through the resolution of the claims in the civil

lawsuit, not by the probate court’s order to reopen the estates. Again, Exile is

free to raise in the civil lawsuit whether any name, image, and likeness rights

existed or still exist and, if so, whether those rights are inheritable.

      In considering applications for permissive intervention, the rule directs

that courts “grant or deny the application as the circumstances require.” Iowa

R. Civ. P. 1.407(4). The probate court found no circumstance that would require

permitting Exile to intervene and, on the contrary, determined that intervention

would constitute outright interference by an interloper. See Cooper v. Erickson,

239 N.W. 87, 89 (Iowa 1931) (“What the intervener in fact does ask is

independent relief in what really amounts to an independent action. That does

not constitute the intervener a party as such, but makes of him a mere

interloper.”); Mass. Bonding & Ins. v. Novotny, 202 N.W. 588, 590 (Iowa 1925)

(stating that a person without a legal basis to intervene “is considered a mere
                                          13

‘interloper’ who acquires no rights by his unauthorized interference”). We find no

error in the probate court’s denial of Exile’s request for permissive intervention.

      Because we affirm the district court’s judgment on the threshold issue

denying Exile’s attempt to intervene in the matter and striking Exile’s motion to

vacate, dismiss, and close the estates, we need not address the merits of the

other issues raised in that motion.

      V. The Estates’ Request for Attorney’s Fees.

      The estates cross-appeal the probate court’s denial of their request for

attorney’s fees. As a basis for their request, they recite Exile’s statement in the

civil action that Ruth’s estate was the proper plaintiff to bring the claim, only to

later move to vacate the order reopening Ruth’s estate after her estate was added

as a plaintiff. The estates also argue that Exile pursues a frivolous end run of

the district court’s summary judgment ruling by repackaging previously-rejected

arguments in this appeal.

      The estates ask us to enforce rule 1.413, which permits an award of

attorney’s fees as a sanction for filings “interposed for any improper purpose,

such as to harass or cause an unnecessary delay or needless increase in the cost

of litigation.” Iowa R. Civ. P. 1.413(1). The rule states that by signing a filing, the

lawyer certifies “to the best of counsel’s knowledge, information, and belief,

formed after reasonable inquiry, it is well grounded in fact and is warranted by

existing law or a good faith argument for the extension, modification, or reversal

of existing law.” Id. Compliance with the rule is based on “an objective, not

subjective, standard of reasonableness under the circumstances.” Barnhill v.
                                         14

Iowa Dist. Ct., 765 N.W.2d 267, 272 (Iowa 2009). We thus review a district court’s

decision regarding the imposition of sanctions under rule 1.413 for abuse of

discretion and, on review, will correct erroneous applications of the law.

Homeland Energy Sols., LLC v. Retterath, 938 N.W.2d 664, 684 (Iowa 2020).

      Imposing a fee-shifting sanction is a rare exception to our general rule that

losing litigants don’t pay the victor’s attorney’s fees. In re Guardianship of Radda,

955 N.W.2d 203, 214–15 (Iowa 2021). We consider a variety of factors in

evaluating compliance with the rule, including the time available to investigate

and research facts, the complexity of factual and legal issues, the clarity or

ambiguity of existing law, and the plausibility of the legal positions asserted.

Retterath, 938 N.W.2d at 710. Arguments “made in good faith” weigh against a

sanction. Id. In In re Guardianship of Radda, for instance, we determined that

even though a party presented questions of first impression that lacked merit,

the arguments weren’t frivolous within the meaning of rule 1.413(1). 955 N.W.2d

at 215. In rejecting the estates’ request to impose a fee-shifting sanction against

Exile, the probate court noted that Exile supported its arguments with statutes,

caselaw, and facts, and found nothing facetious or frivolous about Exile’s motion.

      The primary purpose of sanctions under rule 1.413(1) is to deter frivolous

litigation, not to compensate the winning side. First Am. Bank v. Fobian Farms,

Inc., 906 N.W.2d 736, 745 (Iowa 2018). Exile, in the probate court’s view, had a

reasonable basis for the arguments it presented, and we agree. Exile engaged in

no misconduct warranting a sanction, and we find no error in the probate court’s

refusal to sanction Exile with a fee-shifting award in this case.
                                        15

      VI. Conclusion.

      Our holding in this appeal rests exclusively on the probate court’s decision

to reject Exile’s attempt to intervene and to strike Exile’s motion to vacate,

dismiss, and close. We advance no views and take no position on the existence

or inheritability of Ruth’s name, image, and likeness rights. Exile’s only

connection to the probate proceedings is as a potential debtor to the estates. We

will not turn the probate court’s simple reopening of the estates into a second

litigation over whether or to whom the potential debt is owed where Exile has no

other connection to the estates. Exile has the opportunity to raise its defenses in

the civil lawsuit to determine whether it is in fact a debtor.

      We affirm the probate court’s grant of the estates’ motion to strike Exile’s

motion to dismiss, vacate, and close, and affirm the related denial of Exile’s

motion to intervene. We also affirm the probate court’s denial of the estates’

request for attorney’s fees.

      AFFIRMED.