Opinion
No. 6-013 / 05-0380
Filed March 15, 2006
Appeal from the Iowa District Court for Linn County, Larry J. Conmey (denial of jury trial) and David M. Remley (trial), Judges.
Glenn Chadima appeals from a judgment allocating funds between him and his mother's estate. AFFIRMED.
Peter C. Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for appellant.
David E. Mullin of Mullin, Laverty Hanrahan, P.C., Cedar Rapids, for appellee.
Heard by Huitink, P.J., and Vaitheswaran and Eisenhauer, JJ.
In this declaratory judgment filed by US Bank, the executor of the Estate of Gladys Chadima ("Estate"), the executor asked the district court to divide funds received by Gladys and her son, Glenn Chadima, to settle a lawsuit. The district court did so, and Glenn appeals, asserting the district court erred (1) in overruling his demand for a jury trial and (2) in its allocation of the settlement proceeds between himself and the Estate. We affirm the judgment of the district court.
I. Background.
Gladys Chadima owned 109 shares and Glenn Chadima owned 123 shares of Hubbard Ice Fuel Company ("Hubbard Ice"), a family-held corporation. The business had not been profitable in several years and had not paid a dividend since 1984, but continued to increase in value because of investment gains. Because business losses were consuming investment gains, the largest shareholder filed a petition for judicial dissolution in April 1994.
While the judicial dissolution was pending, the corporation's board of directors approved the sale of substantially all of the corporation's physical assets to another business. On June 13, 1995, Hubbard Ice's board approved a payment price of $1,259.82 per share. Because they believed the value of the assets to be $2,043.89 per share, Gladys and Glenn dissented from the sale. On June 30, 1995, Hubbard Ice redeemed all shares held by Gladys and Glenn for $1,295.72, the slight increase in share price being attributable to accrued interest.
Glenn filed an action to contest the sale of assets and accused Hubbard Ice of breach of fiduciary duty and intentional interference with contracts. In response, Hubbard Ice asserted the dissenters' rights of Gladys and Glenn. Gladys and Glenn were represented by Peter Riley, but he was disqualified and Pat Roby appeared for Gladys and Glenn. While this action was pending, Hubbard Ice offered to pay $175,000 to settle all claims asserted by Gladys and Glenn. Gladys and Glenn rejected this offer. In May 1996, Roby wrote a letter to Riley, stating:
I still don't understand why they are offering this much money, given the fact that we have literally no chance of success on any of the claims currently being asserted in the pending litigation. I hope that this offer will be accepted and that it will be accepted immediately.
Gladys and Glenn accepted the offer in December 1996, and the net proceeds of $158,332.92 were deposited by the Tom Riley Law Firm in a special trust account at US Bank. At the time of trial, the account had a balance of $195.005.50.
For convenience, all banking institutions that have since been acquired by US Bank, N.A., will be referred to as US Bank.
Gladys Chadima died in June 1999, with a will dividing her estate equally among her three children. US Bank was appointed as the executor of her Estate. Because the Estate was being administered by US Bank's trust department and the special trust account containing the settlement proceeds was in the retail division, the executor of the Estate did not know of the special trust account until the fall of 2000.
In May 2001, US Bank filed its petition for declaratory judgment. Glenn answered and later demanded a jury trial. The court overruled the jury demand and, in December 2004, the district court entered judgment dividing the settlement proceeds as follows: "$111,749.39 to Glenn and $83,256.11 to the estate of Gladys Chadima." This allocation, which adopted the proposal of the executor, paralleled the relative ownership interests that Glenn and Gladys had in Hubbard Ice, with a small additional allocation to Glenn based on the nuisance value of his tort claims against Hubbard Ice. The district court overruled Glenn's posttrial motion, and he appealed.
II. Was Glenn Chadima Entitled to a Jury Trial?
We first consider whether Glenn was entitled to a jury trial. In overruling Glenn's jury demand, the district court concluded the claims asserted by the Estate were equitable in nature.
On appeal, the Estate asserts Glenn did not preserve error on this issue for two reasons: the demand was not timely filed and the demand was only made once. We disagree with both reasons. Regarding the first reason, the district court, instead of denying the demand based on its tardiness, ruled on the merits of the demand, and we will as well. Second, the Estate cites no authority requiring a party who has unsuccessfully demanded a jury trial to restate the demand at any other point to preserve error.
Turning to the merits, we conclude the district court correctly overruled the demand. Jury trials are available in actions seeking declaratory judgments where the declaratory relief sought is legal in nature. See Iowa R. Civ. P. 1.1108. Where a party seeks declaratory relief that is equitable in nature, no jury trial is available. Here, although this petition was filed on the law docket and was given a trial court case number with a law prefix, we conclude the Estate's desired relief was equitable in nature. The "essential nature" of the claim, not the caption of the pleading, determines whether an action is legal or equitable and, consequently, the availability of a jury trial. See Carstens v. Central Nat'l Bank Trust Co., 461 N.W.2d 331, 333 (Iowa 1990). Moreover, an action is not an action at law merely because money is sought as a remedy. Id. This action was to determine the division of the settlement funds, and the "essential nature" of the claim is equitable. See, e.g., id.; McAnulty v. Peisen, 208 Iowa 625, 226 N.W. 144 (1929); Hum v. Ulrich, 458 N.W.2d 615, 616-17 (Iowa Ct.App. 1990).
III. Was Glenn Chadima Entitled to All of the Settlement Proceeds?
Glenn argues he was entitled to all of the settlement proceeds. The district court disagreed, and so do we. In attacking the district court's allocation, he makes two arguments. First, he argues he was entitled to a greater share because of the value of his tort claims against Hubbard Ice. Second, he argues his family would have wanted him to have all of the settlement proceeds. We note settlement agreements are to be interpreted using the rules for interpreting contracts. See, e.g., Phipps v. Winneshiek County, 593 N.W.2d 143, 146 (Iowa 1999).
A. Value of Glenn's and Gladys's Claims.
The district court allotted a small amount to Glenn based on the nuisance value of his suit against Hubbard Ice. He argues his lawsuit had more value than that allocated to it by the district court. After our review of the record, we concur in attorney Roby's assessment of Glenn's claims: they had no chance of success. The district court, who described Roby as "an aggressive and experienced attorney," gave great weight to his assessment, which has ample support in the record before us, and we will as well. Glenn's tort claims against Hubbard Ice had no more value than that assigned by the district court in its declaratory ruling.
In a related vein and relying on attorney Roby's letter, Glenn argues the dissenter's rights claims had no value and his tort claims had at least some value. Therefore, he asserts all of the settlement proceeds should be allocated to him. We disagree. As noted above, from our review of the record and giving suitable weight to the opinion of attorney Roby we conclude Glenn's tort claims had, at most, nuisance value. If the dissenter's rights claims had no value, we believe Glenn and Gladys are entitled to share in this windfall in proportion to their ownership of Hubbard Ice, which is the allocation proposed by the Estate and adopted by the district court.
B. Wishes of Gladys and Family Members.
Glenn's second argument has no merit. He argues his mother would want him to have all of the settlement money because she did not need it. The evidence of Gladys's intent, most of which is based on Glenn's assertions, is immaterial because there is no evidence at all that Gladys made a completed gift, either during her lifetime or by will, of her share of the settlement proceeds to Glenn. Absent such a gift, Glenn has no entitlement to a greater portion of the settlement proceeds.
In addition, Glenn points to a letter from the attorney for Hubbard Ice, which stated the settlement offer was motivated by "a willingness to share with Glenn" a large portion of investment gains realized by Hubbard Ice "above and beyond what Glenn would have been entitled to receive." We have closely reviewed this letter. Although the shareholders of Hubbard Ice may have desired to share some investment earnings with Glenn, this letter does not require the negative inference that they did not wish to share a portion of these investment earnings with Gladys. In any event, the truest measure of Hubbard Ice's intent is the written settlement agreement, which does not allocate the settlement proceeds in a manner now sought by Glenn. Had the parties so intended, they could have drafted the settlement agreement so that Glenn received all of the settlement; however, they did not.
The district court equitably divided the settlement proceeds.
IV. Conclusion.
We have considered all issues presented and affirm the judgment of the district court.