Opinion
No. 4-010 / 03-0010
Filed February 27, 2004
Appeal from the Iowa District Court for Johnson County, Cynthia H. Danielson, Judge.
Lewis Investments, Inc. appeals the district court's foreclosure decree and award of attorney fees. AFFIRMED.
Martin A. Diaz, Iowa City, for appellant.
Davis L. Foster of Foster Law Office, Iowa City, for appellees.
Heard by Sackett, C.J., and Vaitheswaran and Eisenhauer, JJ.
An administratively dissolved corporation appeals a foreclosure decree, contending the president of the corporation had no authority to enter into the underlying loan. The corporation also challenges the district court's award of attorney fees. We affirm.
I. Background Facts and Proceedings
The facts are essentially undisputed. Lewis Investments, Inc. incorporated in the State of Missouri and later acquired property in Iowa City. After the acquisition, Missouri administratively dissolved the corporation for failure to file an annual report.
Its original name was Keo-Luray, Inc.
Several months later, the president of Lewis Investments, Richard Blackburn, obtained a loan on behalf of the corporation from Hawkeye State Bank. The loan was secured by the property.
Hawkeye State Bank assigned its interest in the Iowa City property to Iver and Ann Cairns. After the corporation defaulted on its loan payments, the Cairnses filed a foreclosure action. Lewis Investments responded that Richard Blackburn could not bind the corporation to the loan agreement because he lacked authority to act following the administrative dissolution. The district court rejected this defense and entered judgment in rem against the property, for $17,404.98 plus interest. The court ordered foreclosure and awarded the Cairnses attorney fees of $20,423.46. This appeal followed.
II. Authority to Enter Into Loan
On appeal, Lewis Investments reiterates its argument that Blackburn, as president of Lewis Investments, lacked authority to enter into the loan transaction following the administrative dissolution of the corporation. The company contends the transaction, therefore, became voidable. The Cairnses respond that the debt was incurred by the corporation to wind up and liquidate the business. On our de novo review of this foreclosure proceeding, we agree with the Cairneses.
Iowa Code section 490.1421(3) (1999) provides that "[a] corporation administratively dissolved continues its corporate existence but shall not carry on any business except that necessary to wind up and liquidate its business and affairs under § 490.1405. . . ." Section 490.1405 lists certain authorized wind-up activities, including disposal of properties that will not be distributed in kind to its shareholders. Iowa Code § 490.1405(1)(b).
The parties do not seriously dispute that Iowa law governs this transaction, as both the note and the security agreement specify that Iowa law governs.
The company does not dispute that the loan agreement listed the borrower as Lewis Investments and was signed by Blackburn as president of Lewis Investments. The company also does not contest bank records revealing the following purpose of the loan:
To remodel existing home. Their plans are to sell this property within the next two years. It appears that Tom Lepic will help line up the contractors for the repairs and remodeling and will most probably list the property as well.
Instead, Lewis Investments contends this evidence is far from conclusive, as Blackburn extended the loan for another three years. However, Lewis Investments cites no authority requiring wind up within a specified time frame. We conclude the cited purpose for the loan fits within the authorized wind-up activities contained in Iowa Code section 490.1405(1)(b). Accordingly, we agree with the district court that Blackburn, as president of Lewis Investments, had "authority to grant the mortgages to Hawkeye."
In light of our conclusion, we need not address Lewis Investment's second argument that actions outside the scope of Iowa Code section 490.1405(1)(b) are voidable. We also find it unnecessary to address its contention that the assignment of the mortgage to the Cairnses was invalid.
III. Attorney Fees
Lewis Investments also challenges the district court's award of attorney fees. Our review of the award is for an abuse of discretion. Equity Control Assoc., Ltd. v. Root, 638 N.W.2d 664, 670 (Iowa 2001).
Counsel for the Cairnses requested $35,433.76 in fees and costs. At a hearing on the request, he conceded that certain entries in his affidavit related to another matter. The district court awarded $20,423.46. Lewis Investments claims the court should only have awarded $5782.50 because, in his view, 1) "there is a tremendous amount of overlap between this foreclosure action and other litigation," 2) the issue in this case is not "factually demanding" and 3) the fee award exceeds "the amount of money being foreclosed."
The district court is "an expert on the issue of reasonable attorney fees." Id. at 674. It is "not required to state the precise basis of its award," nor is it "obligated to separately address each entry on the attorney's fee statement and explain why it was allowed or not allowed." Id.
We have reviewed the entries from August 1999 to October 2002 and excluded those that the Cairnses' attorney said were unrelated to the foreclosure action. Our calculation is within $400 of the district court's. Additionally, we cannot say with certainty that the remaining items Lewis Investments seeks to exclude are unrelated to this action. For example, Lewis Investments suggests we exclude entries concerning Blackburn's deposition, research of personal liability issues, telephone conferences with opposing counsel and with the bank vice-president, as well as copying and postage fees. In the absence of evidence that these entries are unrelated to this action, we conclude the district court did not abuse its discretion in including them in the award.
As for Lewis Investments' argument that the issues in this case are not "factually demanding," we note that the company raised a corporate liability issue as well as fact-based arguments not previously addressed by our courts.
Finally, our highest court has rejected the argument that a fee award may not exceed the amount of damages. See Public Fin. Co. v. Van Blaricome, 324 N.W.2d 716, 726 (Iowa 1982) (stating amount of attorney fees awarded is to be determined by value of time reasonably spent, and not by amount of consumer's recovery).
IV. Disposition
We affirm the decree of foreclosure and the attorney fee award.
AFFIRMED.
Eisenhauer, J., concurs; Sackett, C.J., concurs in part and dissents in part.
I concur with the majority opinion in all respects except I would award no more than $6,000 in attorney fees.