Opinion
No. 4-321 / 03-1331.
August 26, 2004.
Appeal from the Iowa District Court for MuscatineCounty, Patrick J. Madden, Judge.
The plaintiffs appeal following an adverse summary judgment ruling that dismissed the majority of their claims against the defendants. AFFIRMED IN PART AND REVERSED IN PART.
Earl Payson, Davenport, for appellants James and Darlene Thompson.
Peter Thill of Betty, Neuman McMahon, L.L.P, Davenport, for appellants Stockton Realty Co., Winter Enterprises, L.L.C., and Lyndall and Nancy Winter.
Christopher Bruns and Robert Hogg of Elderkin Pirnie, P.L.C., Cedar Rapids, for City of Muscatine.
Matthew Nagle and Amy Reasner of Lynch Dallas, P.C., Cedar Rapids, for appellee Muscatine County Solid Waste Management Agency.
Heard by Mahan, P.J., and Zimmer and Eisenhauer, JJ.
Plaintiffs Lyndall and Nancy Winter, their companies Stockton Realty Company (Stockton) and Winter Enterprises, L.L.C., and James and Darlene Thompson, appeal following a district court partial summary judgment ruling. Based on the language of a written release, the ruling dismissed certain claims against defendants City of Muscatine (City) and the Muscatine County Solid Waste Management Agency (Agency). We affirm in part and reverse in part.
I. Background Facts Proceedings.
The plaintiffs, landowners and businesses, dissatisfied with the condition and operation of the City's landfill, brought suit in September 2001 against the Agency as the permit holder for the landfill, the City as the entity responsible for the landfill's operation, and Bernie Brauns d/b/a Brauns Waste Management (Brauns) as the entity the City had contracted with to provide for the landfill's day-to-day operations. The plaintiffs forwarded numerous tort, contract, and statutory claims against the defendants. The majority of those claims alleged the plaintiffs were damaged by improper operation, maintenance and control of the landfill. The City filed a counterclaim against Lyndall Winter, and a third-party claim against Winter Enterprises, L.L.C.
Stockton forwarded a breach of contract claim against the City; Stockton, the Winters, and Winter Enterprises, L.L.C. forwarded a claim of breach of oral contract against the City; Stockton and the Winters forwarded a claim of trespass against all three defendants; Stockton, the Winters, and the Thompsons forwarded a claim against the Agency alleging an agency relationship between the City and the Agency and the Agency's resulting liability for the City's actions; and Stockton, the Winters, and the Thompsons forwarded nuisance, negligence and res ipsa loquitor, hazardous conditions, unjust enrichment, negligent supervision, third-party beneficiary, and Iowa Code section 455B.11 (2001) claims, against all the defendants.
In September 2002 the Thompsons and the Winters, both individually and on behalf of Stockton, settled with and released Brauns. The release provided, in pertinent part:
As the only claim made by Winter Enterprises, L.L.C. was one for breach of contract by the City, it was not a party to the settlement with Brauns.
The undersigned [are] plaintiffs in the case of Stockton Realty Company, Lyndall Winter, Nancy Winter, James W. Thompson and Darlene Thompson v. Muscatine Solid Waste Commission, City of Muscatine, and Bernie Brauns d/b/a Brauns Waste Management, pending in the Iowa District Court. . . . The Plaintiffs claim that defendant . . . Brauns . . . [is] liable for injuries and damages arising out of the operation of the Muscatine County Landfill. [Brauns] den[ies] the validity of this claim.
In Consideration of . . . "the Settlement Proceeds" . . . the Plaintiffs . . . release, acquit and forever discharge [Brauns] . . . and all other persons, firms and corporations ("the Parties Released") from any and all liability whatsoever, including all claims, demands and causes of action of every nature the Plaintiffs may have or ever claim to have by reason of:
A. [Brauns's] operation of the Muscatine County Landfill [and nine additional factors related to Brauns's operation of the landfill].
. . . .
Further, in consideration of the payment of the Settlement Proceeds, the Plaintiffs agree that:
. . . .
By this Release, the Plaintiffs are not releasing the City [or the Agency] from any damages proximately caused by the negligence and/or acts of the City [or the Agency].
In October 2002 the Thompsons, the Winters, and Stockton dismissed their claims against Brauns with prejudice.
In May 2003 the City and Agency moved for summary judgment. The two remaining defendants asserted the written release of Brauns had also extinguished any claims against them arising from Brauns's conduct or operation of the landfill, that adequate notice for certain claims had not been provided as required under Iowa Code chapter 455B (2001), and that the City was exempt from suit pursuant to the discretional function immunity of section 670.4.
The court rejected the defendants' assertions regarding notice and immunity. The court also concluded that the plaintiffs did not intend to release the City or the Agency from liability for their own independent negligence and/or acts. However, after considering not only the language of the release, but also the fact that Brauns had agreed to indemnify the City "from all liability arising form the services performed by Brauns," and affidavits from various counsel, the court concluded that in releasing their claims against Brauns the plaintiffs had "extinguished any claims [they] have against [the defendants] for Brauns'[s] activities set forth in the release and for which [the defendants] might seek indemnification from Brauns." The court appeared to discount the plaintiffs' claim that the release did not sufficiently identify the City or the Agency pursuant to Iowa Code section 668.7, concluding that "[t]his is not a Chapter 668 case."
The court determined that the plaintiffs' claims against the City and the Agency for negligent supervision were among the released claims. The court reasoned the negligent supervision claims did not in fact address any "independent" acts by the City or the Agency, as "there is no way the plaintiffs can establish a negligent supervision claim for [the] direction of Brauns without first establishing some legal harm caused by Brauns's acts."
Accordingly, the court granted the defendants a partial summary judgment. Following post-ruling motions by the plaintiffs, the court clarified that the partial summary judgment ruling had dismissed all claims that "relate to or arise from the time during which Brauns . . . operated the Muscatine Landfill and from the operational areas for which Brauns was responsible pursuant to his contract with the City." It further clarified that the only preserved claims were those for problems predating, postdating or unrelated to Brauns's operation of the landfill.
The plaintiffs sought an interlocutory appeal of the district court's partial summary judgment ruling. While their application for interlocutory appeal was still pending the plaintiffs moved for a court order dismissing the remaining claims without prejudice. The motion asserted that the defendants' consented to the dismissal of all remaining issues. The district court granted the motion, and dismissed without prejudice all remaining claims, counterclaims and third-party claims. The plaintiffs then filed this appeal.
The plaintiffs were required to seek court approval for the dismissal without prejudice, as they had dismissed without prejudice a prior suit against the City and the Agency. See Iowa R. App. P. 1.943.
Several days after the plaintiffs filed their notice of appeal, our supreme court entered an order denying the application for interlocutory appeal.
On appeal the plaintiffs assert the district court erred in granting the defendants partial summary judgment, because the settlement agreement with Brauns did not release the City and the Agency from any liability. Alternatively, they assert that if the agreement did extinguish some of their claims against the City and the Agency, it did not extinguish their negligent supervision claims. The defendants assert that this court does not have jurisdiction to hear the appeal, as the district court never rendered a final judgment.
II. Scope and Standard of Review.
Summary judgment rulings are reviewed for the correction of errors at law. Iowa R. App. P. 6.4; General Car Truck Leasing Sys., Inc. v. Lane Waterman, 557 N.W.2d 274, 276 (Iowa 1996). Where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. Iowa R. Civ. P. 1.981(3); City of West Branch v. Miller, 546 N.W.2d 598, 600 (Iowa 1996).
III. Jurisdiction.
We first address the question of whether this court has jurisdiction to consider the merits of the appeal. The critical inquiry is whether a "final judgment" was rendered by the district court, as only final judgments are appealable of right. See Iowa R. App. P. 6.1(1). If a decision is interlocutory, a party must either wait to appeal the decision until after entry of final judgment, or file an application for interlocutory appeal. Iowa R. App. P. 6.1(3), 6.2(1).
Iowa has also endorsed the doctrine of "pragmatic finality," which allows for an appeal even absent a district court judgment, provided there is a sufficient assurance of finality as to all issues. See Estate of Countryman v. Farmers Co-Op Ass'n, 679 N.W.2d 598, 601-02 (Iowa 2004). However, the doctrine is not applicable in this matter.
We agree with the defendants that the partial summary judgment ruling is not, in and of itself, a final judgment. The ruling specifically preserved claims against both the City and the Agency, and thus did not dispose of all remaining parties and issues. See Iowa R. App. P. 6.1(1), .5(3); Ahls v. Sherwood/Div. of Harsco Corp., 473 N.W.2d 619, 621 (Iowa 1991).
The plaintiffs point out a ruling that disposes of less than the entire case may nevertheless be deemed a final judgment, provided it "completely disposes of one or more claims which are distinct and separable from the undecided claims." Mason City Prod. Credit Ass'n v. Van Duzer, 376 N.W.2d 882, 885 (Iowa 1985) (citing McGuire v. City of Cedar Rapids, 189 N.W.2d 592, 596-97 (Iowa 1971)). However our review of case law convinces us that this doctrine, known as the McGuire rule, is not to be applied where, as here, the partial summary judgment ruling dismissed only some of the claims pending against each defendant.
Our supreme court has explained that the rule's application is dependent on the distinction created by multiple defendants with severable interests:
Thus, dismissal of one defendant could have no effect on the other. It was this independent basis of liability against each defendant which provide[s] the "distinct line of demarcation," which render[s] the causes of action against each defendant separable from those against the other. Therefore, while the McGuire rule would not apply to all cases involving multiple defendants, it could not apply to any case not involving multiple defendants.
Shoemaker v. City of Muscatine, 275 N.W.2d 206, 208 (Iowa 1979) (citations omitted). Moreover, as noted by the Shoemaker court, in civil cases such as this the need for prompt disposition "is outweighed by the policy favoring avoidance of piecemeal appeals." Id. at 209.
The plaintiffs nevertheless assert that a final judgment was rendered in this matter, and the district court action finally resolved, when the remaining claims against the City and the Agency were dismissed without prejudice. See Estate of Countryman v. Farmers Co-Op Ass'n, 679 N.W.2d 598, 601-02 (Iowa 2004) (providing that finality occurs when there is a "sufficient assurance that the case was fully concluded and that there were no remaining issues to be tried by the district court"). The defendants, however, assert that the plaintiffs intend to reassert these claims if they are successful on appeal. They contend that, as the claims may be later revived, the dismissal without prejudice cannot lead to a final judgment. Although no Iowa case has ruled on finality in such circumstances, the defendants point to numerous jurisdictions that have reached this same conclusion. See, e.g., Chappelle v. Beacon Communications Corp., 84 F.3d 652, 654 (2d Cir. 1996); Horwitz v. Alloy Auto. Co., 957 F.2d 1431, 1437 (7th Cir. 1992); State Treasury v. Barry, 168 F.3d 8, 12-13 (11th Cir. 1999).
Given the language of the motion to dismiss, it is clear this is in fact the plaintiffs' intent.
Such a position is not universal, however. In Great Rivers Co-op. of Southeastern Iowa v. Farmland Industries, Inc., 198 F.3d 685, 689-90 (8th Cir. 1999), the Eighth Circuit determined an order granting the plaintiffs' request to dismiss its remaining claims without prejudice was a final judgment, even though it was clear the plaintiffs would be allowed to reinstate those claims should their appeal of the partial summary judgment ruling prove successful. While the circuit court clearly disapproved of the method employed in that and similar cases, describing such appeals as "manufactured" and "a clear evasion of the judicial and statutory limits on appellate jurisdiction," it nevertheless concluded the dismissal order was a "clear and unequivocal manifestation by the trial court of its belief that the decision made, so far as [the court] is concerned, is the end of the case." Great Rivers, 198 F.3d at 688-89 (citation and internal quotation marks omitted).
We, like the court in Great Rivers, question the practice employed in this case. Similarly, we believe that by obtaining the district court order dismissing their remaining claims without prejudice, the plaintiffs have essentially "manufactured" an appeal. We are also concerned that such tactics will in fact increase the possibility of piecemeal appeals. See Dannenberg v. Software Toolworks Inc., 16 F.3d 1073, 1075-76 (9th Cir. 1994) (discussing concerns of possible multiple appeals, conservation of judicial resources, and manipulation of the appellate process). However, when we review our supreme court's pronouncements on finality, we are led to the conclusion that the district court proceedings in this matter have been reduced to final judgment.
A final judgment or decision is one
"that finally adjudicates the rights of the parties, and it must put it beyond the power of the court which made it to place the parties in their original positions. It is a determination which may be enforced by execution or in some similar manner."
Wesley Ret. Servs., Inc. v. Hansen Lind Meyer, Inc., 594 N.W.2d 22, 28 (Iowa 1999) (quoting Crowe v. De Soto Consol. Sch. Dist., 246 Iowa 38, 40, 66 N.W.2d 859, 860 (1954)). In contrast, a ruling is considered interlocutory if "it is not finally decisive of the case." IBP, Inc. v. Al-Gharib, 604 N.W.2d 621, 627 (Iowa 2000) (citations and internal quotation marks omitted). Given these standards, the district court's dismissal order is, in the most basic sense, a final judgment. The district court action has ended, and the district court itself divested of jurisdiction.
In addition, we have reviewed Ahls v. Sherwood/Division of Harsco Corp., 473 N.W.2d 619 (Iowa 1991). Although Ahls did not address the question before us, the supreme court's discussion of numerous federal cases suggests that Iowa's rules of finality will tolerate, if not actually endorse, the method employed in this case. See Ahls, 473 N.W.2d at 622-23. Finally, we hesitate to apply a standard that requires appellate courts to judge the intent or motivation of the parties seeking a dismissal without prejudice, or to judge the effects of consent to the dismissal by the opposing party.
Accordingly, we conclude the plaintiffs have appealed from a final judgment, and thus this court has jurisdiction to consider the appeal. We therefore turn to the question of whether the district court correctly determined that the release signed by the plaintiffs released not only Brauns, but also the City and the Agency for any "claims that relate to or arise from" Brauns's operation of the landfill.
IV. Release.
The plaintiffs challenge the district court partial summary judgment ruling in three respects. First, the plaintiffs assert that the language of the release was unambiguous, and the district court therefore erred in using extrinsic evidence to determine the intent of the parties. Second, they contend that, because negligence and comparative fault are issues in this matter, the release must comply with the specificity requirements of Iowa Code section 668.7. Third, the plaintiffs assert that, even if the release did extinguish the majority of their claims, the court erred when it concluded the release extinguished their claims for negligent supervision.
Before we can address the plaintiffs' contentions we find it necessary to note that section 668.7 governs only "the effects of releases under [chapter 668,] Iowa's comparative fault statute." Dumont v. Keota Farmers Co-op., 447 N.W.2d 402, 405 (Iowa Ct.App. 1989). While some counts in the petition allege an act or omission that would constitute "fault" under chapter 668, many do not. See Iowa Code § 668.1(1). Thus, the analysis this court must undertake differs slightly, depending on the nature of the claim to be released.
For claims not subject to chapter 668, our interpretation of the release is guided solely by general contract principals. See Verne R. Houghton Ins. Agency, Inc. v. Orr Drywall Co., 470 N.W.2d 39, 42 (Iowa 1991). The key is ascertaining the parties' intent. Id. Absent ambiguity, the intent of the parties is governed by what the release itself says. Id. To determine whether the release is ambiguous, we look to not only the isolated language at issue, but the release as a whole, as well as the accompanying surrounding circumstances. See Grinnell Mut. Reins. Co. v. Jungling, 654 N.W.2d 530, 536 (Iowa 2002); Walsh v. Nelson, 622 N.W.2d 499, 503 (Iowa 2001).
When a release is governed by the requirements of section 668.7, a slightly different analysis applies. Section 668.7 provides, in relevant part:
A release, covenant not to sue, or similar agreement entered into by a claimant and a person liable discharges that person from all liability for contribution, but it does not discharge any other persons liable upon the same claim unless it so provides.
(Emphasis added). This section, in an effort to eliminate uncertainty or mistakes as to the identity of individuals or entities, requires the specific identification of parties to be released. Aid Ins. Co. v. Davis County, 426 N.W.2d 631, 635 (Iowa 1988). In judging whether release language is sufficiently specific, courts are to rely upon the language of the agreement itself, rather than extrinsic evidence. Britt-Tech Corp. v. American Magnetics Corp., 463 N.W.2d 26, 30 (Iowa 1990) ("For reasons it must have deemed sufficient, the legislature structured the sufficiency of a release on its wording, not on the subjective intent of the parties.").
We have assessed the release under general contract principles only, and we have applied the requirements of section 668.7. In doing so, we reach the same, ultimate conclusion. Without reference to any extrinsic evidence, the release does extinguish claims against the City or the Agency that seek to hold the City and the Agency liable for damages proximately caused by Brauns's operation of the landfill. This would include any claim seeking to hold the City and the Agency vicariously liable for Brauns's actions, and any claim that does not depend on the independent fault or action of the City or the Agency.
Both the plaintiffs and the defendants assert that the language of the release is unambiguous. We agree.
The release states that, in addition to Brauns, the plaintiffs are releasing "all other persons, firms and corporations . . . from any and all liability whatsoever, including all claims, demands and causes of action of every nature the Plaintiffs may have or ever claim to have by reason of" Brauns's operation of the landfill. It is arguable that this language, viewed in isolation, creates uncertainty as to the identity of those other persons, firms or corporations, and thus is ambiguous. See Aid Ins. Co., 426 N.W.2d at 635 (stating section 668.7 was intended to "eliminate the ambiguity factor"). However, as previously noted, our consideration is not limited to the isolated language, but extends to the release as a whole, as well as surrounding circumstances. Grinnell Mut. Reins. Co., 654 N.W.2d at 536; Walsh, 622 N.W.2d at 503.
The release makes it clear that the City and the Agency are parties to the litigation involving the plaintiffs and Brauns. Other than two claims for direct breach of contract by the City, all the plaintiffs' claims against the City and the Agency in that litigation rely on, as an element of proof, one or more of the specified activities related to operation of the landfill. Thus, the City and the Agency are persons or corporations potentially liable for damages caused by Brauns's operation of the landfill.
In addition, the release preserves to the plaintiffs only those claims against the City and the Agency where the plaintiffs' damages were caused by "the negligence and/or acts" of the City and the Agency. Because this language limited the types of claims preserved by the plaintiffs, it cannot be read as preserving all of the plaintiffs' claims against the City and the Agency. Moreover, if the "all other persons, firms and corporations" language does not apply to the City or the Agency, then the language preserving certain claims was simply unnecessary. Such an interpretation runs contrary to the established rule that,
"[b]ecause an agreement is to be interpreted as a whole, it is assumed in the first instance that no part of it is superfluous; an interpretation which gives a reasonable, lawful, and effective meaning to all terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect."
American Soil Processing, Inc. v. Iowa Comprehensive Petroleum Underground Storage Tank Fund Bd., 586 N.W.2d 325, 334 (Iowa 1998) (citations omitted).
When the release language is read as a whole, it draws a clear line of demarcation between liability arising by reason of Brauns's actions, and liability arising by reason of the actions of the City and the Agency. We agree with the district court that the release freed the City and the Agency from liability for those claims not subject to chapter 668, and which seek to hold the City and the Agency liable, not for their own actions, but for damages proximately caused by Brauns's operation of the landfill.
We reach a similar conclusion when we apply the requirements of section 668.7. It is clear that the language "all other persons, firms and corporations," standing alone, does not "sufficiently identify the tortfeasors to be discharged" as required by section 668.7 Britt-Tech Corp., 463 N.W.2d at 29. However, we agree with the defendants that the release, when read as a whole, "sufficiently identified [the parties to be released] in a manner that the parties to the release would know who was to be benefited." Aid Ins. Co., 426 N.W.2d at 633.
The City and the Agency are specifically identified within the release, if not in fact in direct conjunction with "all other persons, firms and corporations." In addition, by explicitly reserving claims based on the City and the Agency's own acts, the release implicitly identifies the City and the Agency as two of the persons or corporations with potential liability for damages arising by reason of Brauns's operation of the landfill. As previously noted, if the release was not meant to apply to the City or the Agency, then the language reserving certain claims was simply unnecessary. While the better course would have been to specifically identify the City and the Agency in conjunction with the "all other" language, we conclude the release, when read as a whole, sufficiently identifies the City and the Agency.
We do not, however, agree with the district court's determination that the release of liability arising "by reason of" Brauns's acts and omissions released the City and the Agency from liability for negligent supervision of Brauns, or for any other claim forwarded by the plaintiffs that sought to hold the City and the Agency liable based on the City and the Agency's own negligence or acts.
The defendants urge this court to uphold the district court's ruling on the negligent supervision claims, noting that, as an element of negligent supervision, there must be proof of some wrong committed by the one supervised, in this case Brauns. See Schoff v. Combined Ins. Co. of America, 604 N.W.2d 43, 53 (Iowa 1999). They reason that, because Brauns has been released, and is no longer subject to suit, there is no "wrong" which can support a negligent supervision claim. By this argument, the defendants confuse the plaintiffs' ability to establish that Brauns committed an actionable wrong with the plaintiffs' present ability to file suit against Brauns for that wrong.
The tort of negligent supervision is aimed at the independent negligent action, or personal fault, of the principal. See Restatement (Second) Agency § 213 (1958). It does not seek to hold the principal liable for duties or responsibilities delegated to the agent, which the agent then negligently fails to perform. Id. cmt. j. In other words, the wrongful act of the agent, while a factual cause of a plaintiff's damages, is not in and of itself the breach which legally caused those damages; it is a breach by the principal of its own duty to use reasonable care in supervising the agent. Thus, a claim for negligent supervision against the City and the Agency is a claim based upon the alleged "negligence and/or acts" of the City and the Agency. Such claims were specifically preserved by the release. Accordingly, the district court erred in concluding the general release language extinguished any liability of the City and the Agency for negligent supervision. V. Conclusion.
The defendants further assert that the district court erred in rejecting their affirmative defense and concluding the plaintiffs provided adequate notice under Iowa Code section 455B.111. To the extent we uphold the dismissal of the plaintiffs' claims, the issue is moot. To the extent the defendants are asking us to address this issue in the context of any claims based on any direct actions of the City and the Agency, or for times before and after Brauns's operation of the landfill, those claims have been dismissed.
We conclude the district court did not err in ruling that the release signed by the Thompsons, the Winters and Stockton released not only Brauns, but also any claim the plaintiffs might assert against the City and the Agency where the City and the Agency's liability allegedly arose, not from the City's and the Agency's own acts, but from Brauns's operation of the landfill. The court properly noted that the plaintiffs maintained a right to assert any claim allegedly arising out of the City and the Agency's own acts, or operation of the landfill unrelated to the acts and omissions of Brauns. The district court erred, however, in concluding that the plaintiffs' negligent supervision claims were among those that allegedly arose from the acts and omissions of Brauns; those claims asserted the personal fault of the City and the Agency. We therefore reverse that portion of the court's ruling. We remand this matter to the district court for further action not inconsistent with this opinion.