text:
    AT&T COMMUNICATIONS OF THE MIDWEST, INC., Appellant, v. IOWA UTILITIES BOARD, Appellee, Coon Rapids Municipal Communications Utility; Laurens Municipal Broadband Communications Utility; FiberComm, L.C.; Forest City Telecom, Inc.; Heart of Iowa Communications, Inc.; Independent Networks, L.C.; Lost Nation-Elwood Telephone Company; Office of Consumer Advocate, a Division of The Iowa Department of Justice; Goldfield Access Network, L.C.; and Iowa Association of Municipal Utilities, Intervenors-Appellees.
    No. 03-0648.
    Supreme Court of Iowa.
    Sept. 15, 2004.

      James F. Bendernagel and David M. Miles of Sidley Austin Brown & Wood L.L.P., Washington, D.C., and Richard W. Lozier, Jr. of Belin Lamson McCormick Zumbach Flynn, A P.C., Des Moines, for appellant.
    David J. Lynch, Des Moines, for appel-lee Iowa Utilities Board.
    Ivan T. Webber of Ahlers & Cooney, P.C., Des Moines, for intervenors-appel-lees Coon Rapids Municipal Communications Utility and Laurens Municipal Broadband Communications Utility.
    Robert F. Holz, Jr. and Diane M. Stahle of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, for intervenors-appel-lees FiberComm, L.C.; Forest City Tele-com, Inc.; Heart of Iowa'Communications, Inc.; Independent Networks, L.C.; and Lost Nation-Elwood Telephone Company.
    Dennis L. Puckett of Sullivan & Ward, P.C., Des Moines, for intervenor-appellee Goldfield Access Network, L.C.
    Michael R. May, Ankeny, for intervenor-appellee Iowa Association of Municipal Utilities.

      Jennifer Easier, Assistant Attorney General, Des Moines, for intervenor-appel-lee Office of Consumer Advocate.
   PER CURIAM.

The district court, sitting in review of agency action, affirmed in part and reversed in part a decision of the Iowa Utilities Board (IUB) in this dispute among providers of telephone service. We agree with the district court that the IUB correctly held AT&T constructively ordered services from the “competitive local exchange carriers” (CLECs) and must pay the tariffed rates for past services. Although we disagree with the district court’s ruling that the IUB could not establish a new rate in this proceeding, we agree that the IUB did not have authority to waive its own rule requiring all tariffs to include the “CCL charge.” Accordingly, we affirm the district court’s decision reversing the agency’s ruling setting a new rate. We remand the case to the district court for the entry of an order remanding the case to the IUB to determine a prospective rate consistent with this opinion.

This appeal is governed by the standards set forth in Iowa Code section 17A.19 (2001) of the Iowa Administrative Procedure Act (IAPA). Locate.Plus.Com, Inc. v. Iowa Dep’t of Transp., 650 N.W.2d 609, 612 (Iowa 2002). If the agency’s action meets one of the specified provisions contained in Iowa Code section 17A.19(10), we “shall reverse, modify, or grant other appropriate relief’ if we conclude a person’s substantial rights have been prejudiced because of the agency action. Iowa Code § 17A.19(10). Further, we must determine whether our application of the standards set forth in section 17A.19(1) generate the same result as reached by the district court. Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 589 (Iowa 2004).

This dispute arose over charges for telephone services. The appellees are all non-rate-regulated local exchange carriers certified by the IUB. They are known as CLECs because they operate in communities where there was already a local exchange carrier. Incumbent local exchange carriers (ILECs) were once the sole providers, but now the CLECs also provide local exchange services to Iowa communities. Both ILECs and CLECs are local exchange carriers (LEC). Interexchange carriers (IXC) provide customers with long-distance service.

CLECs face intense competition from other carriers when pricing services to the end users. But there are no competitive restraints on the prices that CLECs charge the IXCs, so that each CLEC has “a series of bottleneck monopolies over access to each individual end user.” Access Charge Reform Order, 16 F.C.C.R. 9923 ¶ 30 (April 27, 2001). AT&T contends that the CLECs thereby extorted much higher prices than the ILECs. The CLECs counter that their rate tariffs have been duly approved by the IUB and are in accord with Iowa law. Moreover, the CLECs emphasize that AT&T, never objected to these tariffs.

AT&T is an IXC providing long-distance services throughout Iowa. For AT&T to connect long-distance calls, it must purchase both originating and terminating access service from the callers’ local exchange carrier. This is because AT&T’s network does not extend all the way to the premises of the end users.

Nearly all of the nonrate-regulated local exchange carriers connect to interex-change carriers through the centralized equal access services of Iowa Network Services (INS). INS is a fiber-optic network and switching system designed to concentrate the long-distance traffic to and from the numerous independent'Iowa telephone companies. INS connects local exchange carriers with IXCs. So, instead of dozens of.local exchange carriers administering access with IXCs, INS coordinates those functions for its members.

INS entered an agreement with AT&T to provide centralized equal access with each participating phone company in February 1989. This agreement authorized INS to connect AT&T with new access service companies as they were added. Accordingly, INS has since connected AT&T to the new companies and traffic. AT&T has never attempted to modify this arrangement.

The ILECs charge less than the CLECs, and this dispute arises because AT&T refused to pay the CLECs’ higher rates. AT&T adopted a policy not to order services from the CLECs whose rates are higher than the ILECs. AT&T announced its policy and notified the CLECs. Though the .CLECs knew about AT&T’s new policy, they continued to provide “unordered” service and billed AT&T accordingly. Most of the CLECs had provided originating and terminating access to AT&T for several years. But then AT&T stopped paying the CLECs in mid-1999.

The CLECs filed this complaint with the IUB under Iowa Code section 476.11 (authorizing IÜB to determine terms and procedures for toll connections between two or more telephone companies). The IUB determined AT&T was in violation of Iowa Code sections 476.101(9) (prohibiting any action that disadvantages anyone who has chosen to receive services of another company), and 477.11 (requiring long-distance companies to furnish equal facilities to any local exchange and make the necessary connections) for refusing to accept and pay for the disputed access services. The IUB also held that AT&T had constructively ordered the access services. The IUB explained that it had authority under Iowa Code sections 476.3(1) and 476.11 to determine the lawfulness of the tariff rates and provide prospective remedial rate reduction, and it held the CLECs’ tariffs were unlawful and a deliberate abuse of their monopoly over access services.

The IUB also found that the CLECs’ access charges were not just, reasonable, and nondiscriminatory as required by Iowa Code section 476.3. The IUB ordered the CLECs to file new rates and to strike the three-cent-per-minute common carrier line (CCL) charge. But these new tariffs were only prospective; as for past services, AT&T was ordered to pay at the tariffed rates in effect when the services were rendered.

I. The district court held the IUB exceeded its statutory authority and violated due process when it examined the reasonableness of the CLECs’ access rates, and it lacked authority to waive the CCL charge because the IUB’s rule, Iowa Administrative Code rule 199 — 1.3, is ultra vires. The court based its holding on finding a violation of due process. Due process prescribes that all administrative hearings under Iowa Code section 17A.12 include a notice of a contested case, which provides the following:

b. A statement of the legal authority and jurisdiction under which the hearing is to be held.
c. A reference to the particular sections of the statutes and rules involved.
d. A short and plain statement of the matters asserted.

The court acknowledged that Iowa Code section 476.11, invoked by the CLECs in this proceeding, grants the IUB broad authority to determine the reasonableness of the rates. The court determined, however, that the CLECs’ complaint did not seek a review of the reasonableness of their rates. For this reason the court felt they had inadequate notice and a chance to prepare a defense of their rates.

The argument of whether the IUB violated the CLECs’ due-process rights is a constitutional question. Determining the constitutionality of an agency’s decision is exclusively a judiciary function, and we will, therefore, not give any deference to the agency’s determination in that regard. Iowa Code § 17A.19(U)(6); ABC Disposal Sys., Inc., v. Dep’t of Natural Rec., 681 N.W.2d 596, 605 (Iowa 2004). Our review on whether the CLECs’ due-process rights were violated is de novo. ABC Disposal, 681 N.W.2d at 605.

We do not find any due-process violations. The CLECs must have known from the beginning that tariff rates were a core issue in the dispute. They were also aware that the IUB’s authority under Iowa Code section 476.11 was broad, general, and comprehensive for telephone companies in Iowa. N.W. Bell Tel. Co. v. Hawk-eye State Tel. Co., 165 N.W.2d 771, 775 (Iowa 1969). This authority is not affected by which of the parties files a complaint.

Indeed, as the IUB points out, other statutes impose an affirmative duty on the IUB to assure that tariff rates are lawful and will foster competition. Iowa Code §§ 476.1, 476.95(2). The parties thoroughly contested the rate issue during the five-day hearing and offered evidence and thereafter submitted briefs. The CLECs certainly were not blindsided by a determination of this issue.

II. As a part of its decision, the IUB waived one of its own rules, Iowa Administrative Code rule 199 — ■ 22.14(2)(d)(l). This rule requires that all intrastate access tariffs must include the CCL charge, a three-cent-per-minute charge for both originating and terminating access. Pursuant to Iowa Code section Í7A.9A, the legislature has delegated authority to the IUB to waive its own rules upon petition. Iowa Code § 17A.9A. The CLECs contend, however, that the IUB has no authority to sua sponte waive one of its rules.

The district court ruled the IUB lacks authority to waive one of its own rules sua sponte, finding that Iowa Code section 17A.9A requires that “a ‘person’ must bring the petition [for waiver] in order to insure the IUB does not arbitrarily and capriciously set aside policy developed through a formal rulemaking process.” In determining whether the IUB had the authority to waive one of its own rules sua sponte, we must determine whether the IUB’s waiver sua sponte was “[b]eyond the authority delegated to the agency by any provision of law or in violation of any provision of law.” Iowa Code § 17A.19(10)(6).

The IAPA clearly requires that a “person” must petition the agency before the agency can waive one of its rules. Iowa Code § 17A.9A(1). If a party requests a waiver, the IAPA contains' specific safeguards and procedures. Iowa Code § 17A.9A(2)-(5). The IUB, however, has its own waiver rule, which provides in relevant part:

In response to a request, or on its own motion, the board may grant a waiver from a rule adopted by the board, in whole or in part, as applied to a specific set. of circumstances....

Iowa Admin. Code r. 199 — 1.8. Although the IUB’s rule allows the IUB to grant a waiver from one of its own rules, this rule is inconsistent with the clear and unambiguous terms of section 17A.9A and beyond the authority delegated to the IUB. Therefore, we conclude the IUB’s waiver of one of its own rules, Iowa Administrative Code rule 199 — 22.14(2)(d)(l), was improper.

III. AT&T contends that Iowa Code section 477.11 only requires IXCs to connect physically with local exchange carriers and does not require IXCs to purchase the CLECs’ intrastate access services. This contention is contrary to our holding in Northwestern Bell Telephone Co., 165 N.W.2d at 775, in which we explained that:

[Iowa Code] section 488.11 [now section 477.11] makes abundantly clear its purpose is to insure that any local telephone exchange within the state ... which desires connection with the lines of a long distance telephone company shall have such facilities furnished it on an equal basis in order to avoid discrimination among various exchanges.

AT&T makes a similar claim respecting Iowa Code section 476.101(9). Under section 476.101(9), AT&T cannot “take any action that disadvantages a customer who has chosen to receive services from another telecommunications carrier.” Accordingly, AT&T contends that refusing to purchase calls from the. CLECs has not disadvantaged any end users, since AT&T has never blocked any calls. We agree, though, with the IUB:

If the Board were to rule that AT&T can refuse to pay these CLEC access .charges, the inevitable result would be call blocking by the CLEC or by AT&T, with the result that the CLECs’ customers would be unable to receive calls from other callers who use AT&T services and unable to place calls to persons who use AT&T’s toll-free numbers.

Whether the IUB erroneously interpreted Iowa Code sections 477.11 and 476.101(9) is guided by one of two enumerated provisions of Iowa Code section 17A.19(10). See ABC Disposal, 681 N.W.2d at 602. Paragraph (c) of Iowa Code section 17A.19(10) permits relief from agency action:

Based upon an erroneous interpretation of a provision of law whose interpretation has not clearly been vested by a provision of law in the discretion of the agency.

Iowa Code § 17A.19(10)(c). Paragraph (J) allows relief when agency action is:

Based upon an irrational, illogical, or wholly unjustifiable interpretation of a provision of law whose interpretation has clearly been vested by a provision of law in the discretion of the agency.

Iowa Code § 17A.19(10)(Z).

We conclude that Iowa Code section 17A.19(10)(i) applies to our review of this issue. The IUB has been granted broad authority by the legislature to regulate the rates and services of public utilities. Iowa Code § 476.1. Additionally, the legislature has granted the IUB regulatory authority pertaining to enforcement of civil penalties. Iowa Code § 476.1B(l)(d); see also Iowa Code § 476.3 (providing the IUB authority to investigate complaints).

We hold the IUB’s interpretation of Iowa Code sections § 477.11 and § 476.101(9) was not “[b]ased upon an irrational, illogical, or wholly unjustifiable interpretation of the law.”

IV. AT&T argues that the IUB erred because the constructive-order doctrine does not apply here. Whether the IUB correctly interpreted and applied this doctrine is a legal question. Because the legislature has not delegated any special authority or power to the IUB to interpret the constructive-order doctrine, our review is for the correction of errors. Iowa Code § 17A.19(10)(c), 11(5); see also P.D.S.I. v. Peterson, 685 N.W.2d 627, 633 (Iowa 2004). “We are free to substitute our judgment de novo” for the IUB’s interpretation and application of the constructive-order doctrine. ABC Disposal, 681 N.W.2d at 596. The IUB’s factual determinations, however, are “clearly vested by a provision of law in the discretion of the agency” pursuant to Iowa Code chapter 476, which grants the IUB the broad authority to regulate the rates and services of public utilities. Iowa Code § 17A.19(10)(/'). Pursuant to this broad general power, the IUB must necessarily make factual determinations to determine those rights. P.D.S.I, 685 N.W.2d at 633. We are therefore bound to the IUB’s factual determination if supported by substantial evidence. Iowa Code § 17A.19(10)(/); Mosher v. Dep’t of Inspections & Appeals, 671 N.W.2d 501, 508 (Iowa 2003).

As mentioned, the IUB found AT&T constructively ordered the services. Under the “constructive order” doctrine, a party constructively ordered a carrier’s services when the party “(1) is interconnected in such a manner that it can expect to receive access services; (2) fails to take reasonable steps to prevent the receipt of the access services; and (3) does in fact receive such services.” Advamtel, L.L.C. v. AT&T Corp., 118 F.Supp.2d 680, 685 (E.D.Va.2000). AT&T argues that the “constructive order” doctrine arises only when the tariff does not define “order” and is therefore needed to fill a gap with a common-law definition. We reject the argument because the “constructive order” doctrine applies to those situations in which the services are not ordered in the manner prescribed by the tariff. Id. at 684-85.

Alternatively, AT&T argues that, even if the constructive-order doctrine was applicable, the IUB used the wrong test for determining whether there was a constructive order. AT&T thinks the test used creates a strict-liability standard. And this test creates a strict-liability standard that would always result in a constructive order. We think these contentions were correctly rejected in Advamtel, 118 F.Supp.2d at 684-85 (holding tariff rates apply under the filed-rate doctrine even though AT&T had not ordered the services it prescribed) (citing United Artists Payphone Corp. v. New York Tel. Co., 8 F.C.C.R. 5563 ¶ 13 (Aug. 18, 1993)). We are not persuaded by AT&T’s attempt to distinguish this case from the holding in Advamtel.

V. The IUB ordered a reduction in the tariffs due from AT&T for connecting through them, but only prospectively— from the date of its order. AT&T complains that, because the tariffs were found to be unreasonable, a reduction should have been ordered to apply retroactively as well.

Our standard of review of the IUB’s order is the same as in Issue III. The district court correctly affirmed the IUB on this issue. ' The filed-rate doctrine provides that the legal rights of the utility in the customer are measured exclusively by the published tariff. “Unless and until suspended or set aside, this rate is made, for all purposes, the legal rate, as between carrier and shipper.” Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 126, 110 S.Ct. 2759, 2765-66, 111 L.Ed.2d 94, 108 (1990) (quoting Keogh v. Chicago & N.W. Ry., 260 U.S. 156, 163, 43 S.Ct. 47, 49, 67 L.Ed. 183, 187 (1922)), cited with approval in Teleconnect Co. v. U.S. West Communications Co., 508 N.W.2d 644, 647 (Iowa 1993). So the tariff rate on file was applicable and enforceable until it was found to be unlawful. Although the IUB may have ordered retroactive application of the reduction of tariffs, it certainly was not compelled to do so. The IUB’s interpretation was not “[bjased upon an irrational, illogical, or wholly unjustifiable interpretation of a provision on law.” See Iowa Code § 17A.19(10)(Z). AT&T cannot institute a challenge to the rate merely by not paying the bill. The district court was right in so holding.

Accordingly, we affirm the district court’s decision affirming the IUB’s ruling that AT&T constructively ordered services from the CLECs and must pay the tariffed rates for past services. We also affirm the district court’s decision reversing that portion of the IUB ruling setting a prospective rate. We remand to the district court, which must then return the case to the IUB to proceed in a manner consistent with this opinion. Tax costs on appeal one-half to AT&T and one-half to the CLECs.

AFFIRMED AND REMANDED.

      . In Iowa the main providers were GTE (now Iowa Telecom) and U.S. West (now Qwest). This situation changed when Congress passed the Telecommunications Act of 1996 and Iowa passed similar legislation in 1995. Iowa Code § 476.101 (1997); Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, 11 F.C.C.R. 15,499 ¶¶ 1, 8-9 (August 8, 1996); First Report and Order, Access Charge Reform Order, 12 F.C.C.R. 15982 ¶¶ 1, 9, 263 (May 16, 1997).

      . For example, FiberComm charged 8.5 cents per minute access — five times more than Qwest, the competing ILEC. Likewise, Goldfield and Laurens both charged 8.5 cents per minute — again five times higher than Iowa Telecom, the competing ILEC.

      . Iowa Administrative Code rule 199— 22.14(4) requires that LECs give IXCs notice of their access tariffs. Under rule 199— 22.14(5), IXCs may file a resistance with the IUB respecting any changes to access tariffs.

      . The CLECs note that, while at first AT&T only participated in the interLATA (Local Access and Transport Area) market, on February 10, 1995, AT&T expanded its participation through INS to also include intraLATA. AT&T thereby recognized that INS coordinates centralized equal access processes for participating carriers.

      . AT&T has never paid for the access services since implementing this policy. In addition, AT&T implemented various internal controls, such as creating a "scrub list” to remove the CLECs' customers from AT&T’s outbound telemarketing and mass mailing lists. AT&T also explored the possibility of reconfiguring the network to block calls originating from or terminating on the CLECs’ local switches. Apparently, however, that option was impractical because the CLECs' traffic is managed by the INS’s tandem switch, which commingles LECs access service. Finally, AT&T attempted to negotiate competitive access rates with the CLECs; this worked with some CLECs but not with others.


source: Caselaw Access Project

author: CADY, Justice.

license: Public Domain

text:
    Ron L. NICHOLS and Jurly Nichols, Appellants, v. CITY OF EVANSDALE, Iowa, Appellee.
    No. 03-1385.
    Supreme Court of Iowa.
    Oct. 6, 2004.

      Jay A. Nardini of Nardini Law Office, Cedar Falls, for appellants.

      William G. Nicholson of Rush & Nicholson, P.L.C., Cedar Rapids, for appellee.
   CADY, Justice.

This appeal requires us to consider the rights and remedies of parties to an exchange of parcels of land when both parties were unaware of sewer lines beneath the surface of one of the parcels. The district court rejected the plaintiffs’ claims for trespass, rent, and declaratory relief and granted the defendant an easement. On our de novo review, we affirm the decree of the district court in part, reverse in part, and remand for a hearing on damages for trespass.

I. Background Facts and Proceedings

The origins of this dispute extend back to April 1997, when Ron and Jurly Nichols and the City of Evansdale, Iowa exchanged parcels of land. The Nichols owned a parcel of land located at 122 Brown Street (hereinafter Brown Street Property). The City was interested in acquiring this land in order to extend a road, Industrial Drive, to connect with Brown Street. The City owned a larger, undeveloped parcel of land one block away. This lot was 215 feet by 108 feet and was bordered on three sides by Trail Avenue, Evans Road, and Gilbert Drive (hereinafter Gilbert Drive Property). The Nichols were in the business of selling modular homes and were interested in acquiring the Gilbert Drive Property in order to subdivide it into two lots, erect a modular home on each, and sell each parcel. Consequently, the City quitclaimed its interest in the Gilbert Drive Property to the Nichols, and the Nichols quitclaimed their interest in the Brown Street Property to the City. The quitclaim deed for the Gilbert Drive Property did not reserve any easements.

After the exchange, the Nichols purchased three modular homes: two twenty-eight-foot by forty-eight-foot models and one twenty-eight-foot by sixty-foot model. The Nichols built one of the smaller homes on the western half of the Gilbert Drive Property. When the Nichols connected the home to the sewer system, the City Waste Water Superintendent informed them that there were sewer mains running beneath the eastern portion of the property. Ron Nichols claimed this was the first time he learned of the existence of the utilities beneath his land. However, he took no action concerning the existence of the utilities at this time.

In March 1999, the Nichols began plans to place the other smaller modular home on the eastern half of the property. In preparing for the construction, they confirmed that the City did have two sewer mains located under the eastern half of the property. The location of the sewers made it impractical to erect the home on the property. Thus, the Nichols eventually sold the home and erected it on another lot.

In April 1999, the Nichols located a prospective buyer for the larger modular home, who was interested in erecting it on the eastern half of the Gilbert Drive Property. However, when the prospective buyer discovered the location of the underground utilities, he declined to proceed with the purchase. A city ordinance required buildings on the property to be set back twenty-five feet from the street. In addition, the City required easements to span between eight and fifteen feet on either side of the sewer mains. Thus, the larger home could not be erected in the desired position on the lot.

The Nichols asked the City to move the sewer mains. The City refused. It claimed it would cost approximately $75,000 and would require closing Evans Road for weeks. Instead, the City offered the Nichols $9000 and then $10,000 to purchase a utility easement. The City also offered the Nichols $20,000 to purchase the eastern half of the Gilbert Street Property, although the entire Gilbert Street Property only had an. assessed value of $18,090. The Nichols refused the City’s offers and insisted the City move the sewer mains. Additionally, on March 28, 2000, Ron Nichols sent a letter to the City demanding $350 per month in rent for the Gilbert Street Property, beginning April 1, 2000. The City did not respond to his demand.

On November 14, 2001, the Nichols filed a petition against the City, seeking a declaratory judgment that the City had “no legal right to have its sewer lines passing through and under [the Nichols’] property” and asked the court to order the City to remove the sewer lines at its own expense. The Nichols further asserted that' the presence of the sewer lines constituted a trespass and that they were entitled to $350 per month in rent from April 1, 2000 until the sewer lines were removed.

The City counterclaimed. Due to a mutual mistake as to the existence of sewer lines on the Gilbert Drive Property, it alleged it was entitled to reformation of the deed to either exclude the portion of land containing the sewer lines from the transfer or to reserve a utility easement for the placement and maintenance of the sewer lines. Alternatively, the City claimed the Nichols should be ordered to reconvey to the City the portion of land on which the sewer lines are located.

The district court issued its decree following a bench trial. The court found that

[although the City did not reserve an easement for public utilities in its deed and their location was unknown at the time of the exchange, there is no dispute that the City never intended to deed its •sewer mains to. the Nichols and the Nichols never intended to accept the sewer mains and assume responsibility for maintaining them.

The court concluded that the parties did not have a landlord-tenant relationship and that the City thus did not owe the Nichols rent, that the presence of the sewer lines did not constitute a trespass, and that “the City has an easement by implication over the Nichols’ property even though not reserved in the City’s deed and even though the Nichols were unaware of the location of the sewer mains when they acquired the property.” The court ordered that “the City ha[d] the right to record a corrective deed excepting its sewer lines from the conveyance- to [the Nichols] and reserving easements, 16’ wide, lying 8’ on each side of [the City’s] sewer mains for their maintenance, repair, and replacement.” The Nichols appeal.

II. Standard of Review

“Review in equity cases shall be de novo.” Iowa R.App. P. 6.4. “While weight will be given to findings of the trial court, this court will not abdicate its function as triers de novo on appeal.” Hansen v. Chapin, 232 N.W.2d 506, 509 (Iowa 1975) (citing State ex rel. Turner v. Younker Bros., Inc., 210 N.W.2d 550, 567 (Iowa 1973)).

III. Ownership of the Sewer Lines

Under the common law, “[w]hoever owns the soil owns everything up to the sky and down to the depths.” Black’s Law Dictionary 1712 (8th ed.2004) (defining the legal maxim cujus est solum, ejus est us-que ad coelum et ad inferos). However, Iowa Code section § 557.3 provides: “Every conveyance of real estate passes all the interest of the grantor therein, unless a contrary intent can be reasonably inferred from the terms used.” Iowa Code 557.3 (2003) (emphasis added). This provision mirrors the principle, expressed by this court many times, that “[i]n interpreting a deed the intent of the grantor is the polestar.” Skoog v. Fredell, 332 N.W.2d 333, 334 (Iowa 1983) (citing Schenck v. Schenck, 242 Iowa 1289, 1291, 50 N.W.2d 33, 34-35 (1951); 23 Am.Jur.2d Deeds § 159, at 205-OS (1965); 26 C.J.S. Deeds § 82, at 807-09 (1956)); accord Hawk v. Rice, 325 N.W.2d 97, 99 (Iowa 1982) (“The grantor’s intent is controlling, and it is ascertained by applying general contract principles.”) (citing Flynn v. Michigan-Wisconsin Pipeline Co., 161 N.W.2d 56, 64-65 (Iowa 1968)); In re Fleck’s Estate, 261 Iowa 434, 154 N.W.2d 865, 867 (Iowa 1967) (“ ‘The primary rule of construction is that the real intention of the parties, particularly that of the grantor, is to be sought and carried out whenever possible ....’” (Citation omitted.)).

The record clearly shows, as the district court found, “that the City never intended to deed its sewer mains to the Nichols and the Nichols never intended to accept the sewer mains and assume responsibility for maintaining them.” The mayor of Evansdale, John Mardis, testified that the City claims ownership of the sewer lines on the Gilbert Drive Property. In addition, Mr. Nichols testified that he had no knowledge of the sewer lines prior to the land-swap, thus demonstrating that he could not have intended to accept them. Further, he testified that when the Waste Water Superintendent first mentioned the location of the sewer lines, “I didn’t believe that it — truthfully believe that there was a line under there ‘cause I didn’t figure the City would sell me the sewer system.” Accordingly, we conclude the parties did not intend the sewer lines to pass to the Nichols as part of the land-swap. See Opperman v. M.I. Dehy, Inc., 644 N.W.2d 1, 3 (Iowa 2002) (“Although we are not bound by the district court’s factual findings, we give weight to those findings, especially when witness credibility is in issue.”) (citing Iowa R.App. P. 6.14(6)(g); Norwest Bank v. Philips Realty Co., 594 N.W.2d 3, 6 (Iowa 1999)).

Having established that the parties did not intend the sewer lines to pass, we look to general contract principles to determine their ownership:

Since a sale is a consensual transaction, the subject matter which passes is to be determined by the intent of the parties, as revealed by the terms of their agreement in light of the surrounding circumstances.
Thus, in determining whether an article secreted in the ostensible subject matter also passes by the sale the courts have looked to the terms of the contract and the situation of the parties. Where both buyer and seller were ignorant of the existence or presence of the concealed valuable, and the contract was not broad enough to indicate an intent to convey all the contents, known or unknown, the courts have generally held that as between the owner and the purchaser, title to the hidden article did not pass by the sale.

W.E. Shipley, Annotation, Title to Unknown Valuables Secreted in Articles Sold, 4 A.L.R.2d 318, 319 (1949). Here, neither the City nor the Nichols were aware of the presence of sewer lines on the Gilbert Drive Property, and the quitclaim deed from the City to the Nichols did not pass “all the contents, known or unknown.” Id. Accordingly, title to the sewer lines did not pass by the land-swap, and the City retains ownership.

Nevertheless, the Nichols claim that the presence of the sewer lines on the Gilbert Drive Property constitutes a continuing trespass. A person is liable for trespass to land if he or she “fails to remove from the land a thing which he is under a duty to remove.” Restatement (Second) of Torts § 158(c) (1982). If the City had an easement over the Nichols’ property, it had no duty to remove the sewer lines and is not liable for trespass. Accordingly, we must first address whether the city had such an easement.

There are four ways to create an easement: (1) by express grant or reservation, (2) by prescription, (3) by necessity, and (4) by implication. Kahl v. Clear Lake Methodist Camp Ass’n, 265 N.W.2d 622, 624 (Iowa 1978) (citing Phillips v. Griffin, 250 Iowa 1350, 1354, 98 N.W.2d 822, 824 (1959)). An express easement is an interest in land, which is within the statute of frauds and must be in writing. 25 Am. Jur.2d Easements § 15 (2004). It is undisputed that the Nichols did not expressly grant an easement to the City and that the City did not expressly reserve an easement in its quitclaim deed to the Nichols. Thus, no -express easement was created.

An easement by prescription ' is akin to adverse possession. Yet, instead of acquiring title to the property; the putative easement-holder acquires the right to legally use the property. Johnson v. Raster, 637 N.W.2d 174, 178 (Iowa 2001) (citing Collins Trust v. Allamakee County Bd. of Supervisors, 599 N.W.2d 460, 463-64 (Iowa 1999)). “Under Iowa law, an easement by prescription is created when a person uses another’s land" under a claim of " right or color of title, openly, notoriously, continuously, and hostilely for ten years or more.” Id. (citing Iowa Code § 564.1 (1999); Collins Trust, 599 N.W.2d at 463). Clearly, the City never acquired an easement by prescription in this case because the Nichols did not own the Gilbert Drive Property for the requisite ten years. It is unnecessary to consider the other elements.

An easement by necessity is a form of implied easement, 25 Am.Jur.2d Easements § 30, but it “is separate, and we have always recognized it as such.” Schwob v. Green, 215 N.W.2d 240, 244 (Iowa 1974) (citations omitted). “One significant difference is that an easement by implication requires a showing the parties intended such , a right to exist. An easement by necessity involves no such intent.” Id. ■ In order to establish an easement by necessity, the putative easement-holder must establish: (1) unity of title to the dominant and servient ’ estates at some point prior to severance, (2) severance of title, and (3) necessity of the easement. Kennedy v. Bedenbaugh, 352 S.C. 56, 572 S.E.2d 452, 454 (2002) (citation omitted); 25 Am.Jur.2d Easements §§ 33, 35. The doctrine of easement by necessity is most commonly applied when a landowner parcels out a landlocked portion of his or her land and conveys it to another. 1 Restatement (Third) of Property: Servitudes § 2.15 cmt. b (2000). Under these circumstances, courts may imply an easement by necessity across the seller’s land to provide the purchaser of the landlocked parcel with access to a public road. See id. illus. 1-2.

The City did not claim an easement by necessity in this case, so we will not address its applicability to the facts on appeal. See DeVoss v. State, 648 N.W.2d 56, 61-62 (Iowa 2002) (stating that the supreme court can affirm “a district court ruling on a ground other than the one upon which the district court relied provided the ground was urged in that court” (citations omitted)). Consequently, we turn to consider the existence of an easement by implication.

IY. Easement by Implication

The district court concluded the City had an easement by implication over the Gilbert Drive Property. While the court correctly noted that “[a]n easement by implication exists when the owner of two parcels employs one so as to create a servitude on the other and then transfers one parcel without a specific grant or reservation of easement in the conveyance,” see McKeon v. Brammer, 238 Iowa 1113, 1119, 29 N.W.2d 518, 522 (Iowa 1947), and that “[e]asements by implication ... can be gained in underground pipes and tile lines,” see id., these principles do not resolve the doctrine’s application to this case. We have stated that an easement by implication requires

“1, a separation of the title; 2, a showing that, before separation took place,, the use giving rise to the easement was so long continued and obvious that it was manifest it was intended to be permanent; and 3, it must appear that the easement is continuous rather than temporary, and that it is essential to the beneficial enjoyment of the land granted or retained.”

Tamm, Inc. v. Pildis, 249 N.W.2d 823, 838 (Iowa 1976) (quoting Wymer v. Dagnillo, 162 N.W.2d 514, 517 (Iowa 1968)).

The district court apparently found that the relevant unity of title was between the Gilbert Drive Property, which the City owned before the Nichols, and the three city streets surrounding it. However, “[f|or the necessary unity of ownership for an implied easement to exist, the adjoining lots must be owned as a unit, not under separate deeds treated as separate properties.” 25 Am.Jur.2d Easements § 25. The City did not own the Gilbert Drive Property and the streets as a unit and then carve out the Gilbert Drive Property and deed it to the Nichols, as is required. Rather, the City owned them separately, as separate properties. Thus, the relevant unity of title is lacking.

Moreover, it is far from clear that the use of the land (i.e., the presence of the sewer lines) was sufficiently apparent for the City to have retained an implied easement over it. We have previously observed “the words ‘apparent’ and ‘visible’ have not been considered synonymous.” McKeon, 238 Iowa at 1122, 29 N.W.2d at 523 (citing G.R.B., Annotation, Implied Easements in Respect of Drains, Pipes, or Sewers upon Severance of Tract, 58 A.L.R. 824, 832 (1929)). Rather, “apparent” in this context refers to “susceptibility of ascertainment on reasonable inspection by persons ordinarily conversant with the subject.” 25 Am.Jur.2d Easements § 26; accord Wiesel v. Smira, 49 R.I. 246,142 A. 148, 151 (1928), cited with approval in McKeon, 238 Iowa at 1124, 29 N.W.2d at 524; see also 3 Herbert T. Tiffany, The Law of Real Property § 784 (Basil Jones ed., 3d ed.1939) (stating that a use is apparent “if its existence was indicated by signs which must necessarily have been seen, or which might have been seen or known on a careful inspection by a person ordinarily conversant with the subject, although not readily or entirely visible”). The American Law Institute, apparently finding this definition strained and unrealistic, has in the Restatement (Third) of Property: Servitudes excepted underground utilities from the requirement that the prior use be apparent. See 1 Restatement (Third) of Property: Servitudes § 2.12 (requiring that either “existence of the prior use was apparent or known to the parties” or “the prior use was for underground utilities serving either parcel”). A comment to this Restatement section explains: “Implying the servitude will normally impose a relatively slight economic burden, while the costs of relocating the utility lines will often be high.” Id. cmt. g.

The City asserts that the prior use was apparent because there were manholes at each end of the diagonal along which the sewer lines ran and because there was a sewer location map “available to Nichols had he made a ‘reasonably prudent investigation.”' We need not decide whether these factors make the City’s prior use of the Gilbert Drive Property apparent, nor need we decide whether to take the Restatement (Third)’s approach of not requiring prior use for underground utilities to be apparent. Even assuming the City’s prior use was apparent, or that it is not required to show that it was, the most essential requirement for an easement by implication is lacking: the easement would not be necessary to the beneficial enjoyment of what the City claims is the dominant tenement — i.e., Trail Avenue, Evans Road, and Gilbert Drive. See Wymer, 162 N.W.2d at 517 (stating that the implied easement must be “essential to the beneficial enjoyment of’ the dominant tenement); Farmers Mechanics Sav. Bank v. Campbell, 258 Iowa 1238, 1249, 141 N.W.2d 917, 923 (Iowa 1966) (“necessary to the reasonable enjoyment of the property”); 1 Restatement (Third) of Property: Servitudes § 2.12(2) (“[Continuance of the prior use [must be] reasonably necessary to enjoyment of the parcel, estate, or interest previously benefited by the use.”); 25 Am.Jur.2d Easements § 29 (“To imply an easement on the severance of property from the fact that one part of the property has been subjected to a use for the benefit of another part, it is essential that such use be necessary and not merely convenient to the beneficial enjoyment of the dominant tenement.”); see also Schwob, 215 N.W.2d at 244 (explaining that while “strict necessity need not be proven, ... mere inconvenience is not enough”).

Thus, we conclude that the City failed to acquire an easement over the Gilbert Drive Property by express reservation, by prescription, by necessity, or by implication. Notwithstanding, the City, in its counterclaim, asserted that its deed to the Nichols should be reformed based on the doctrine of mutual mistake as to the absence of underground utilities on the Gilbert Drive Property. We therefore turn to consider this claim.

V. Mutual Mistake

“A mistake is a belief that is not in accord with the facts.” Restatement (Second) of Contracts § 151 (1981). As we have recently explained,

Mistakes involving contracts “can be made in the formation, integration, or performance of a contract.” Mistake in expression, or integration, occurs when the parties reach an agreement but fail to accurately express it in writing. Mistakes in the formation of contracts include mistakes in an underlying assumption concerning matters relevant to the decision to enter into a contract. In this category of mistake, the agreement was reached and expressed correctly, yet based on a false assumption.

State ex rel. Palmer v. Unisys Corp., 637 N.W.2d 142, 151 (Iowa 2001) (citations omitted).

When the mistake is in the expression of the contract, the proper remedy is reformation, and “it normally makes no difference if the mistake is mutual or unilateral.” Id. (citation omitted); accord Merle O. Milligan Co. v. Lott, 220 Iowa 1043, 1046, 263 N.W. 262, 263-64 (1935) (“[A] mistake to justify the reformation of a contract must have been in drawing the instrument, and not in making the contract out of which it grew; that is, it must occur in reducing to writing the contract upon which the parties had agreed; and in all cases it must relate to something within the contemplation of the parties in making the contract, to something agreed upon, but not contained in the written contract.”); Restatement (Second) of Contracts § 155 (“Where a writing that evidences or embodies an agreement in whole or in part fails to express the agreement because of a mistake of both parties as to the contents or effect of the writing, the court may at the request of a party reform the writing to express the agreement

When the mistake is in the formation of the contract, on the other hand, avoidance is the proper remedy. United States v. Williams, 198 F.3d 988, 994 (7th Cir.1999) (citation omitted); Restatement (Second) of Contracts § 155 cmt. b; see also id. § 202 (“Reformation is the appropriate remedy when the mistake is one as to expression, while voidance is the proper remedy where a mistake as to a basic assumption on which the contract was based has a material effect on the agreed exchange of performances.”). Specifically, when

a mistake of both parties at the time a contract was made as to a basic assumption upon which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake.

Id. § 152(1).

In this case, the mistake was in the formation of the contract, not in the expression of the contract. It is undisputed that neither party was aware that the sewer lines ran under the Gilbert Drive Property. Thus, they cannot have reached an agreement with respect to the sewer lines that was mistakenly expressed or omitted from the quitclaim deed. Consequently, the mistake was not in the expression, and reformation is not the proper remedy. “Courts are not at liberty, under the guise of reformation, to rewrite the parties’ agreement and foist upon the parties a contract they never made.” 66 Am. Jur.2d Reformation of Instruments § 1 (2001).

It is abundantly clear that the mutual mistake present in this case is the type of mistake that would make the contract voidable by the parties. See Restatement (Second) of Contracts § 152 (“Where a mistake of both parties at the time a contract was made as to a basic assumption upon which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake .... ”). However, a mutual mistake in the formation of a contract doés not render it void; it merely renders it voidaftfe. First State Bank v. Shirley Ag Serv., Inc., 417 N.W.2d 448, 452 (Iowa 1987) (citing Restatement (Second) of Contracts § 152, at 385).

A voidable contract is one where one or more parties have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract,, or by ratification of the contract to extinguish the power of avoidance.

Restatement (Second) of Contracts § 7. In the case of a voidable contract, if neither party seeks avoidance, the court cannot void the contract, and the contract remains valid. First State Bank, 417 N.W.2d at 452 (citing Poole v. Poole, 219 Iowa 70, 74, 257 N.W. 305, 307 (1934)).

Accordingly, while the parties made a mutual mistake in the formation, of the contract, because reformation is not the proper remedy and neither party sought to avoid the contract, the transaction between the Nichols and the City was valid, and the quitclaim deed the City gave the Nichols on April 15, 1997 must be given effect as it was originally written. The district court erred when it ruled that the City “ha[d] the right to record a corrective deed ... reserving easements, 16' wide, lying 8' on each side of each of [the City’s] sewer mains for their maintenance, repair, and replacement.”

We conclude the agreement between the parties cannot be reformed to reserve an easement to the City. Under the unique facts of this case, the City had no legal right to have its sewer lines running beneath the Nichols’ property free from any accountability to the Nichols. Thus, we turn to the Nichols’ trespass claim.

VI. Trespass

As previously stated, “fail[ing] to remove from the land a thing which [a person] is under a duty to remove” constitutes a trespass. Restatement (Second) of Torts § 158(c); accord 75 Am.Jur.2d Trespass § 52 (1991); see also Indep. Sch. Dist. v. DeWilde, 243 Iowa 685, 693, 53 N.W.2d 256, 261 (1952) (holding that when tile drain was laid beneath plaintiffs property without lawful right, “its presence there [wa]s illegal and constitute[d] a continuing trespass” (citations omitted)). Because the City has no legal right to have its sewer lines on the Nichols’ property and has failed to remove them, it is committing a continuing trespass.

The Nichols assert that under such circumstances, they are entitled to a “mandatory injunction.” However, at least when no statute expressly authorizes injunctive relief, “[t]he decision to issue an injunction ... [is] a discretionary function of the court based on the traditional principles of equity and the specific circumstances of the case.” Worthington v. Kenkel, 684 N.W.2d 228, 232 (Iowa 2004) (citing Kent Prods., Inc. v. Hoegh, 245 Iowa 205, 211, 61 N.W.2d 711, 714 (1953)).

Specifically, the following factors are considered in determining whether to enjoin a tort:

(a) the nature of the interest to be protected,
(b) the relative adequacy to the plaintiff of injunction and of other remedies,
(c) any unreasonable delay by the plaintiff in bringing suit,
(d) any related misconduct on the part of the plaintiff,
(e) the relative hardship likely to result to defendant if an injunction is granted and to plaintiff if it is denied,
(f) the interests of third persons and of the public, and
(g) the practicability of framing and enforcing the order or judgment.

Restatement (Second) of Torts § 936(1). Moreover, “[i]njunctive relief is an extraordinary remedy that is granted with caution and only when required to avoid irreparable damage.” Skow v. Goforth, 618 N.W.2d 275, 277-78 (Iowa 2000) (citing Sear v. Clayton County Zoning Bd. of Adjustment, 590 N.W.2d 512, 515 (Iowa 1999)).

Considering the foregoing factors and principles in our de novo review, we conclude that the Nichols have not shown they are entitled to injunctive relief in this case. Foremost, the Nichols can be adequately compensated by damages. Mr. Nichols conceded that it is possible to place either a forty-eight-foot or a sixty-foot home on the eastern half of the Gilbert Drive Property without the sewer lines causing a problem. He requests an injunction for the removal of the sewer lines in order to place a sixty-foot home with an attached garage on the property facing Evans Road. However, he admitted that he did not know whether he was going to put a forty-eight-foot or a sixty-foot home on the eastern half at the time he received the Gilbert Drive Property or even at the time he ordered the homes. Nichols obtained the property to place a modular home thereon and sell it, and he is still able to do so. He cannot come to a court in equity and ask the City to remove the sewer lines at great expense and disruption to the public just because he insists on making one specific use of the property when he admits he did not acquire the property for that specific use. See Riggs v. Meka, 236 Iowa 118, 122, 17 N.W.2d 101, 103 (1945) (“One seeking equity must do equity and be in court with clean hands.”); Burns v. Prudential Ins. Co. of Am., 229 Iowa 616, 618, 294 N.W. 906, 907 (1940) (“He who seeks equity must at least offer to do equity.”); Coulter v. Smith, 201 Iowa 984, 988, 206 N.W. 827, 828 (1926) (“The plaintiff can ask equity only on condition that he does equity.”).

Although injunctive relief is not warranted here, the Nichols have established a claim of trespass and, as such, are entitled to damages. See 75 Am. Jur.2d Trespass § 117 (“From every unlawful entry, or every direct invasion of the person or property of another, the law infers some damage.”). The measure of damages for trespass is either the diminution of the property value caused by the encroachment or the cost to remove the encroachment. See White v. Citizens Nat’l Bank, 262 N.W.2d 812, 817 (Iowa 1978); Restatement (Second) of Torts §§ 929-30; 75 Am.Jur.2d Trespass §§ 130, 133. Because we have already concluded that the City is not obligated to remove the sewer lines, the Nichols are entitled to damages equal to the difference between the value of the Gilbert Drive Property on April 15, 1997 and the value it would have had on that date if the City’s sewer lines were not running beneath the land. We reject all other claims for damages based on trespass. We remand to the district court for a determination of damages based on the diminution in the value of the Gilbert Drive Property. See In re Marriage of Bergfeld, 465 N.W.2d 865, 871 (Iowa 1991) (noting that an “appellate court may remand an equity ease for further proceedings when essential to effectuate justice”) (citing Wolf v. Murrane, 199 N.W.2d 90, 101 (Iowa 1972)); accord Iowa R.App. P. 6.26 (“[I]f it appears from the record that the material facts relating [to an issue] were not fully developed at the trial or if in the opinion of the appellate court the ends of justice will be served thereby, a new trial shall be awarded of such issue or the whole case.”); see also Weinhold v. Wolff, 555 N.W.2d 454, 466 (Iowa 1996) (remanding a case reviewed de novo to the district court to calculate diminution in value damages for nuisance).

VII. The Nichols’ Claim for Rent

Generally, a claim for rent based on occupancy of property and a claim for trespass are mutually exclusive. See Hawkeye Land Co. v. Laurens State Bank, 480 N.W.2d 854, 857 (Iowa 1992) (citing 49 Am.Jur.2d Landlord and Tenant § 1116 (1970)). However, the Nichols’ claim for rent in this case is not based solely on the trespass, but the implied-in-fact contract derived from its written demand to the City for the payment of $350 per month commencing April 1, 2000.

An implied-in-fact contract requires mutual manifestation of assent. Frank Millard & Co. v. Housewright Lumber Co., 588 N.W.2d 440, 442 (Iowa 1999) (citing Ringland-Johnson-Crowley Co. v. First Cent. Serv. Corp., 255 N.W.2d 149, 152 (Iowa 1977)). Generally, silence or inaction does not constitute a manifestation of assent. Restatement (Second) of Contracts § 69 cmt. a; E. Allan Farns-worth, Contracts § 3.14 (3d ed.1999) (stating it is a “fundamental ... tenet that mere silence is not acceptance”). There are exceptions to this general rule when: (1) “an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation,” Restatement (Second) of Contracts § 69(l)(a); (2) “the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer,” id. § 69(l)(b); (3) because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept,” id. § 69(l)(c); and (4) in some circumstances, when the offeree “does any act inconsistent with the offeror’s ownership of offered property,” id. § 69(2).

None of these exceptions is applicable to the facts of this case. Thus, the City’s silence and inaction in response to Mr. Nichols’ offer to enter into a landlord-tenant relationship did not constitute acceptance. Accordingly, there was no contract for rent between the parties, express or implied-in-fact, and the City does not owe the Nichols rent.

VIII. Conclusion

For the foregoing reasons, we affirm the portion of the district court’s decision holding the City retained ownership of the sewer lines on the Gilbert Drive Property and finding it was not liable to the Nichols for rent. We reverse the district court’s ruling that the City reserved an easement by implication over the property and was therefore entitled to record a correction deed. Finally, we reverse the district court’s conclusion that the presence of the sewer lines on the property did not constitute a trespass, and we remand for a determination of the amount of damages owed to the Nichols on that claim.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

All justices concur except LARSON, J., who takes no part.

      . It is unclear why the City did not complete proceedings to acquire an easement using its power of eminent domain. See Iowa Code § 6A.4(6) (2003). In any event, if the City needs to go onto the Nichols property to maintain the sewer lines without being liable for trespass, it must either purchase an easement from the Nichols or condemn an easement under the procedure set forth in Iowa Code chapter 6B.

      . We note that while damages for loss of use and discomfort and annoyance may be recoverable in some cases of trespass to land, see 75 AmJur.2d Trespass § 130, such damages are not appropriate in this case. Loss-of-use damages are available when the trespasser dispossesses the landowner of the land or prevents his or her use of the land. See Restatement (Second) of Torts § 931 illus. 1. The City did not dispossess the Nichols of the Gilbert Drive Property and did not prevent them from using the land — at most, as discussed above, the presence of the sewer lines prevented one specific use of a portion of the property.
      A landowner who is also an occupant of the land may recover damages for discomfort and ■annoyance. See id. § 929(l)(c). However, “[t]he owner of land who is not an occupant is not entitled to recover for these harms except as they may have affected the rental value of his land.” Id. cmt. e. The Nichols were not occupants of the land and were not renting out the land. Thus, they cannot recover damages for discomfort and annoyance.


author: TERNUS, Justice.

text:
    Dennis A. WILSON and Mary G. Wilson, Appellees, v. Steven C. VANDEN BERG and Torgerson & Vanden Berg Law Offices, Appellants.
    No. 02-2089.
    Supreme Court of Iowa.
    Oct. 6, 2004.

      Chester C. Woodburn III of Hansen, McClintock & Riley, Des Moines, for appellants.
    Dennis A. Wilson and Mary G. Wilson, Mason City, pro se.

   TERNUS, Justice.

The appellees, Dennis and Mary Wilson, were dissatisfied with legal services rendered by the appellant, Steven C. Vanden Berg, in connection with the Wilsons’ purchase of a residence in Mason City, Iowa. The Wilsons successfully sued Vanden Berg and his firm, Torgerson & Vanden Berg Law Offices,, for breach of contract and fraud. On appeal to the district court, the magistrate’s award of compensatory and punitive damages was affirmed. This court granted discretionary review, and we now affirm the judgment against Vanden Berg and his law firm.

I. Background Facts and Proceedings.

Viewed in a light most favorable to the plaintiffs, see Poole v. Hawkeye Area Cmty. Action Program, Inc., 666 N.W.2d 560, 565 (Iowa 2003), the record shows the following facts. In March 2001 the Wil-sons, residents of Wisconsin, purchased a house in Mason City through a Mason City real estate agent, after having viewed the home and its features on the Internet website of a local newspaper. They were interested in this particular house due to the advertised lot size — 200' by 142'. When the Wilsons later discovered the house they had purchased sat on a 100' by 142' lot, they sought legal advice.

The Wilsons met with Vanden Berg, a Mason City lawyer, on June 14, 2001, for a free initial consultation. After explaining the nature of their problem, they informed Vanden Berg that the smaller lot size hindered their plan to put an addition onto their home, which was needed before Mary’s elderly parents, the Hengfusses, could move to Iowa to live with them. The Wilsons were also concerned about using a local attorney in a matter that might require suit against a local realtor. After Vanden Berg assured them he had no conflict of interest based on any relationship with the selling agent, Scott Huff, the Wilsons signed an attorney fee contract and paid Vanden Berg a $500 retainer.

On June 26, 2001, in response to a request from Vanden Berg, the Wilsons provided the defendant with copies of several documents pertinent to the real estate dispute. Over the next several months Van-den Berg repeatedly misplaced the necessary documents, causing the Wilsons to provide him with the same set of papers on five separate occasions.

Mary Wilson wrote to Vanden Berg on August 24, 2001, to find out what action Vanden Berg had taken on the matter. She informed him they wanted to move forward quickly so they could proceed with their plan to move Mary’s parents to Iowa. Vanden Berg replied on October 2, 2001, stating he had recently left a message for Huff to call Vanden Berg and that he had talked to Huff previously so Huff had had time to consider Vanden Berg’s “possible representation in this matter.” (Emphasis added.) He also advised the Wilsons for the first time that if the Hengfusses were on the title to the house, they would also need to be his clients. Again he claimed not to have received the necessary documents and asked that they be provided as soon as possible “so that whoever handles your case could make a demand to [Huffs] insurance company on short notice.” (Emphasis added.)

On November 8, 2001, the Wilsons and Hengfusses met with Vanden Berg so the Hengfusses could sign the same attorney fee contract previously executed by the Wilsons. This meeting fueled the Wilsons’ concern about Vanden Berg’s resolve to advocate their position. In particular, they were troubled by Vanden Berg’s comment that “people don’t sue in this town.” Further alarm was generated when Van-den Berg called Huff in their presence and, without identifying himself, began his conversation with Huff by stating, “Hey buddy, what’s up?”

Due to continued inaction by Vanden Berg and growing concerns about Vanden Berg’s ability to represent them effectively, the Wilsons decided to hire a new attorney. Before they could do so, however, on January 7, 2002, Vanden Berg wrote to the Wilsons, terminating his representation of them. He stated the Wilsons may have a claim against Huff, but they would have to obtain other counsel because the apparent need to bring a lawsuit would result in “potential conflicts with realtors in the area” with whom Vanden Berg worked. Vanden Berg enclosed a bill for services rendered and a refund check in the amount of $80.00. The bill was dated January 9, 2002; it included charges totaling $510 and showed an unexplained “client credit” of $90.

The Wilsons were appalled at Vanden Berg’s billing statement and wrote to him on January 11, 2002, expressing their disagreement. They were particularly upset at the charges attributable to Vanden Berg’s repeated phone calls to obtain copies of the paperwork in view of the fact these calls were necessitated by his inability to keep track of the documents in his office. The Wilsons questioned the accuracy of the bill in other respects and stated they thought the only legitimate charges totaled $85. Given the prior refund of $80, they demanded an additional refund of $835.

Receiving no response, the Wilsons filed the present small claims action on April 23, 2002. They sought damages in the amount of $4000 for “misrepresentation, conflict of interest, broke our attorney-client privilege and took our money, did nothing and billed us with false charges.” In response, on May 29, 2002, Vanden Berg sent a “corrected” bill, dated February 4, 2002, with the explanation that his staff had mistakenly used an hourly rate of $85 rather than $90 on the prior bill. Van-den Berg offered to “credit” the difference of $30 if the Wilsons would accept the prior check for $80 and an additional $75 enclosed with the May 2002 letter and dismiss their lawsuit. In a subsequent letter, Vanden Berg informed the Wilsons that the bank account upon which the $80 check had been issued was now closed, so that check could not be cashed.

The Wilsons did not accept Vanden Berg’s offer, and the matter proceeded to trial before a magistrate on August 23, 2002. The magistrate rejected Vanden Berg’s pretrial motion to dismiss based on the Wilsons’ lack of an expert witness. In addition to reciting the facts previously reviewed, Mary Wilson told the magistrate that on July 25, 2002, Vanden Berg told the Wilsons that he had talked to the judge hearing their case and the judge agreed the Wilsons had no chance of winning and should settle. Vanden Berg disputed such a conversation with the plaintiffs.

In a ruling dated September 4, 2002, the magistrate first stated unequivocally that she had not talked with Vanden Berg prior to the trial concerning the merits of the Wilsons’ case. She then made findings of fact consistent with those set out above. She found several billing entries suspicious, including a $51 charge for the “free” initial consultation, charges for phone calls to locate the paperwork, and an entry relating to a call to the sheriffs department, which even Vanden Berg struggled to relate to the Wilsons’ case. In addition, the magistrate questioned a charge for preparation of a document for a client conference; the Wilsons did not receive any documents and there was not a client conference until a month later. Similarly, the magistrate found odd Van-den Berg’s “credit” to the Wilsons, noting the work allegedly done and not billed was unidentified and undocumented.

With respect to the breach-of-contract claim, the magistrate found that the Wil-sons were prepared to litigate their dispute and there was nothing in the parties’ contract that limited Vanden Berg’s representation to negotiations only. The magistrate concluded that once Vanden Berg realized that a lawsuit would have to be filed, he ended his services due to a conflict of interest. She also concluded Van-den Berg must have known when he agreed to represent the Wilsons that his relationship with Scott Huff would prevent him from advocating for the Wilsons as fully as necessary. Based on this “transgression,” together with Vanden Berg’s “inaccurate and suspicious billings,” the magistrate held Vanden Berg had breached his contract with the Wilsons.

The magistrate also found fraudulent misrepresentation by Vanden Berg based on his assurances to the Wilsons that he had no conflict of interest that would prevent him from representing their interests. She noted there was no evidence that anything occurred after Vanden Berg undertook the Wilsons’ case that gave rise to his later conflict. She concluded “[h]e took the Wilsons’ case and their money hoping that the matter would involve nothing more than negotiations with Mr. Huffs insurance carrier.” As a result, the Wil-sons’ case was significantly delayed, and they paid a retainer for work of little or no value. Based on Vanden Berg’s breach of contract and fraud, the court ordered Van-den Berg to make a full refund of the $500 retainer.

The magistrate also considered punitive damages. Finding Mary Wilson’s testimony more credible than Vanden Berg’s, she found Vanden Berg acted with reckless disregard when he entered into a contract with the Wilsons knowing he could not “represent them in an unencumbered and zealous manner.” The magistrate awarded punitive damages of $3500.

Vanden Berg appealed the magistrate’s ruling to the district court. See Iowa Code § 631.13(1) (2001). A district associate judge denied Vanden Berg’s request to submit additional evidence, rejecting the defendant’s contention that he had not been given an adequate opportunity to defend himself. See id. § 631.13(4)(a) (giving reviewing judge discretion to hear additional evidence). The judge then proceeded to decide the appeal on the record, which included the pertinent documents and a tape recording of the hearing before the magistrate.

In its subsequent ruling, the district court gave deference to the magistrate’s findings of fact, particularly with respect to the credibility of the witnesses. In addition, the court specifically found the magistrate’s determination that Vanden Berg was not credible was supported by the inconsistencies in his billing statements and the nature and content of Vanden Berg’s testimony. In particular, the court noted Vanden Berg failed to provide an adequate explanation as to why he was unaware of a potential conflict of interest at the time he accepted the Wilsons’ retainer; he made unconvincing denials of the allegations that he lost the plaintiffs’ paperwork; and he could not explain why he billed for conversations with the sheriff. The court concluded the defendant “accepted money under false pretenses ... and billed [the plaintiffs] for services he did not perform.” He affirmed the magistrate’s award of compensatory damages of $500. In addition, the district court found that punitive damages were warranted.

We granted Vanden Berg’s petition for discretionary review. See Iowa Code § 631.16. He raises, in general, the following issues: (1) the district court abused its discretion in refusing to allow additional evidence; (2) the district court failed to conduct a de novo review; (3) there was not substantial evidence to support the finding that Vanden Berg breached his contract with the Wilsons; (4) there was not substantial evidence to establish fraud; and (5) there was insufficient evidence to support an award of punitive damages. We consider each issue in turn.

II. Presentation of Additional Evidence.

A judge hearing an appeal of a small claims action has discretion to “order that additional evidence be presented relative to one or more issues.” Iowa Code § 631.13(4)(a). Vanden Berg claims the district court abused its discretion to permit additional evidence because such evidence was necessary to protect Vanden Berg’s rights and to provide an adequate record for rendering judgment on appeal. He specifically asserts the small claims petition did not adequately apprise him that the Wilsons’ claim involved anything more than a dispute over his fees.

The district associate judge rejected Vanden Berg’s arguments, and we find no abuse of discretion in his doing so. In their petition, the Wilsons sought $4000 in damages, an amount far in excess of the $335 paid to Vanden Berg for his services. Moreover, this damage claim was expressly based not only on Vanden Berg’s alleged false billing, but also on his “misrepresentation” and “conflict of interest.” ■ In addition to the petition, Mary Wilson’s testimony at trial extensively addressed Vanden Berg’s false representation that he had no conflict in suing a local realtor. Furthermore, she specifically requested punitive damages.

Given the allegations of the plaintiffs’ petition and the Wilsons’ testimony at trial, we understand ■ why the district court concluded Vanden Berg had adequate notice of the claims asserted against him and an adequate opportunity to litigate those claims at the hearing • before the magistrate. The conclusion that the defendant had notice of and an opportunity to defend against the plaintiffs’ claims provides a reasonable basis for the court’s refusal to permit Vanden Berg to offer additional evidence. Therefore, we find no abuse of discretion. See Pexa v. Auto Owners Ins. Co., 686 N.W.2d 150, 160 (Iowa 2004) (“An abuse of discretion occurs when the court’s decision is based on a ground or reason that is clearly untenable or when the court’s discretion is exercised to a clearly unreasonable degree.”). The court properly refused to consider the additional evidence the defendant sought to introduce.

III. De Novo Revieiv.

Vanden Berg also complains that the district associate judge did not conduct a “de novo hearing” as required by Iowa law. We note initially that a party appealing a small claims ruling is not entitled to another trial. As section 631.13(4) clearly provides, “[t]he appeal shall be promptly heard upon the record thus filed without further evidence.” Iowa Code § 631.13(4)(u) (emphasis added). To the extent the defendant is contending that he had a statutory right to be heard orally on his appeal of the initial ruling, we reject that contention. Cf. Hyde v. Anania, 578 N.W.2d 647, 650-51 (Iowa 1998) (holding no procedural due process violation where clerk’s failure to notify defendant of small claims court’s ruling deprived defendant of opportunity to appeal ruling to district court; initial hearing in small claims court gave defendant “all the due process to which he was entitled”). In its ruling denying Vanden Berg’s application to submit additional evidence, the district court stated the parties would have twenty days from the date of its order to submit written briefs. Thus, Vanden Berg had the opportunity to be heard on his appeal.

As noted, the defendant also asserts the district court’s review was not de novo. See Witcraft v. Sundstrand Health & Disability Group Benefit Plan, 420 N.W.2d 785, 787 (Iowa 1988) (“In an appeal from a small claims action, the district court conducts a de novo review on the record before the magistrate.”). In considering this contention, it is important to keep in mind that neither the magistrate nor the district court was required to issue findings of fact and conclusions of law in this small claims action. See Jack Moritz Co. Mgmt. v. Walker, 429 N.W.2d 127, 128 (Iowa 1988). The reviewing court need only “briefly state its reasons for reaching [its] decision.” Id.

Viewed from this perspective, we think the district court’s occasional references to the magistrate’s findings and conclusions being supported by the evidence or being consistent with the law were merely the court’s way of stating that it had reached its decision for the same reasons that prompted the magistrate to rule in favor of the plaintiffs. Our interpretation of the district court’s decision is supported by other statements made by the court in its ruling that indicate the court understood the nature of its review. For example, the reviewing court began its discussion of the issues by noting that the magistrate’s findings of fact were only entitled to “some deference.” Later the court made several express factual findings and legal conclusions without any reference to or reliance upon the magistrate’s findings and conclusions. For example, the court stated, “Vanden Berg accepted money under false pretenses, performed no valuable services, lost paperwork and billed plaintiffs for services he did not perform.” The court also stated, “[T]he Court finds that punitive damages in this matter are merited.” We are satisfied from our review of the entire ruling that the district court undertook its own analysis and evaluation of the evidence and heard the matter de novo.

IV. Breach of Contract.

Vanden Berg claims there is not substantial evidence that he breached his contract with the Wilsons. In particular, he asserts that in the absence of expert testimony, there is no proof he “breached any legal standard of representation or that his actions were below the minimum standard of the bar.” Finally, he claims the court awarded more damages than the amount requested by the plaintiffs. We review the district court’s ruling for the correction of errors of law. See Conkey v. Hoak Mo tors, Inc., 637 NW.2d 170, 172 (Iowa 2001).

We initially address Vanden Berg’s claim that an expert witness was required because only another lawyer would be qualified to comment on the propriety of his conduct. The gist of the Wilsons’ claim was that the defendant lied tó them about having no conflict of interest with realtor Huff and then submitted a false bill to justify keeping the retainer they had paid. This claim is of a type that can readily be resolved by a fact finder without the assistance of an expert witness. See Campbell v. Delbridge, 670 N.W.2d 108, 112 (Iowa 2003) (rejecting need for expert testimony where claim against doctor and hospital was based on standards of care and professionalism understood and expected by laypersons). Therefore, the plaintiffs’ failure to call an expert does not preclude recovery on their claims.

Before reviewing the evidence pertinent to the defendant’s'alleged breach of contract, we note preliminarily that “[a] party breaches a contract when, without legal excuse, it fails to perform any promise which forms a whole or a part of the contract.” Molo Oil Co. v. River City Ford Truck Sales, Inc., 578 N.W.2d 222, 224 (Iowa 1998). In reviewing the record in this case, we think there is substantial evidence to support a finding the defendant breached his contract with the plaintiffs in two, ways: billing..for services he did not perform and rendering services when he was burdened with a conflict of interest.

In the parties’ written contract, the Wil--sons agreed to pay Vanden Berg his hourly rate “for all services performed.” (Emphasis added.) The district court found the defendant billed the Wilsons for services that he did not perform or that were not for their benefit. There is substantial evidence to support this finding. Mary Wilson testified that she provided Vanden Berg with no less than five copies of the documents he needed to pursue their case, yet the defendant billed the Wilsons for phone calls and correspondence related to obtaining multiple copies despite his own responsibility for these duplicate efforts. Another example is the charge for a call to the sheriffs office; the record contains no plausible explanation for how the sheriff was involved in this real estate problem. The bill also included entries for research and preparation of documents that were unexplained and for which there was no documentary evidence of performance.

We also conclude there is substantial evidence the defendant could not and did not represent the Wilsons unburdened by a conflict of interest, despite his promise that he could do so. Even though the plaintiffs wanted to move the matter along quickly, Vanden Berg took very little action on their case, and the few efforts he made were directed to locating insurance to cover Huffs liability to the Wilsons. An obvious explanation for Vanden Berg’s conduct was his self-interest in not jeopardizing his relationship- with Huff and other local realtors by pressing too hard on behalf of the plaintiffs.

In summary, we conclude there is substantial evidence to support the district court’s ruling the defendant breached his contract with the plaintiffs. We do not address the defendant’s contention the district court awarded excessive damages on the contract claim because we conclude the judgment can be sustained on the basis of the plaintiffs’ fraud claim, which we now consider.

V. Fraud.

The Wilsons alleged Vanden Berg misrepresented at their initial meeting that he had no conflict with the realtor whom the Wilsons believed had misled them with respect to the size of the lot. The plaintiffs asserted they would not have hired Vanden Berg had they known he would be unwilling to vigorously assert their claim and see their case through to the end, including -a lawsuit against the realtor if necessary. The Wilsons contended at trial that the delay in resolving their dispute with the realtor caused a concomitant delay in moving Mary’s parents to Iowa, resulting in a monthly expense of $700 to rent an apartment for the Hengfusses in Wisconsin. The district court found that Vanden Berg had accepted a retainer under “false pretenses” and affirmed the award of $500 in compensatory damages.

The defendant contends on appeal to this court that the district court did not address the fraud claim in its ruling. Van-den Berg dismisses the court’s finding that the defendant had taken the retainer under false pretenses, arguing this reference to a criminal act “has no appropriate place” in the district court’s review. While it is true that the term “false pretenses” is generally considered to refer to a crime, we think the district court used this term to refer to the misrepresentation claim alleged by the plaintiffs.

The common meaning of “false pretenses” is “[t]he crime of knowingly obtaining title to another’s personal property by misrepresenting a fact with the intent to defraud.” Black’s Law Dictionary 636 (8th ed.2004). Thus, the concept of false pretenses mirrors the elements of a claim for fraudulent misrepresentation, which requires proof of a material misrepresentation made with knowledge of its falsity and an intent to deceive, together with the plaintiffs justifiable reliance and resulting damages. See Gibson v. ITT Hartford Ins. Co., 621 N.W.2d 388, 400 (Iowa 2001). While we do not endorse the use of the term “false pretenses” in referring to a fraudulent misrepresentation claim, our objective here is to ascertain the intent of the court, not the precision of its terminology. We are confident the court ruled against the defendant on the Wilsons’ misrepresentation claim when it held the defendant had obtained the retainer under false pretenses.

Vanden Berg alternatively . contends there was insufficient evidence on three elements of the fraudulent misrepresentation claim: (1) the falsity of the misrepresentation; (2) the defendant’s knowledge of the falsity; and (3) the defendant’s intent to deceive. Our discussion of this challenge focuses on the defendant’s assurance he had no conflict of interest with Huff that would interfere with his representation of the Wilsons.

With respect to the falsity of this statement, Vanden Berg argues he had no conflict when he first met with the plaintiffs. He claims “the evidence shows the potential conflict did not develop until January 2002.” Consequently, he argues, his assurance was true when made. Regardless of whether there was evidence in the record to support Vanden Berg’s view of the situation, our task is to determine whether there is substantial evidence in support of the district court’s contrary determination of what occurred. We think there is such evidence.

Mary Wilson testified Vanden Berg told them at their initial conference that “he knew of [Huff], did no business with him and there was definitely no conflict.” She also testified that although the defendant denied a relationship with Huff, Vanden Berg made a phone call to Huff at the parties’ November 2001 meeting where, without identifying himself, he greeted Huff with “Hey buddy, what’s up?” Later, in early January 2002, Vanden Berg terminated his representation of the Wil-sons “because of potential conflicts with realtors in the area that I work with.” Yanden Berg failed to give them any explanation for the sudden development of a “potential conflict” with local realtors. We think a fair inference from these facts is that Vanden Berg suffered from a conflict of interest from the beginning of the parties’ relationship. We have not overlooked the defendant’s testimony at trial that the conflict developed after his initial consultation with the Wilsons due to an increase in his real estate practice. This claim, supported only by Vanden Berg’s testimony, was apparently rejected by the district associate judge, who relied on the magistrate’s determination that the defendant was not credible.

The evidence we have already reviewed also supports a finding that Vanden Berg knew his assurances were false. No one better than the defendant .himself would know whether he had a relationship with Huff that would • create a conflict of interest sufficient to interfere with his advocacy of the Wilsons’ claim. Moreover, his lackluster handling of the Wilsons’ complaint against Huff further supports the conclusion he had a conflict from the beginning and he knew it.

The testimony and circumstances we have discussed and the inferences that can be drawn from this evidence also provide substantial support for a finding that Vanden Berg intended to deceive the Wil-sons with respect to his relationship with Huff. In response to direct inquiries from the plaintiffs, Vanden Berg gave unequivocal assurances'. that he had no conflict. Later, his efforts were almost exclusively directed toward extracting a payment from Huffs insurance carrier. When those efforts were not fruitful and litigation appeared to be the only alternative, Vanden Berg terminated his representation of the plaintiffs,' refunding only $80 of the- $500 retainer. From these facts, one could infer that Vanden Berg intended to mislead the plaintiffs in the hope of representing them up to the point that litigation was required and earning $500 in the process.

In summary, we conclude there is substantial evidence to uphold the district court’s ruling that Vanden Berg obtained the $500 retainer through misrepresentation. As the defendant does not challenge the propriety of the court’s damage determination on this claim, we affirm the judgment of $500 in compensatory damages to the plaintiffs.

VI. Punitive Damages.

The district. court held “that punitive damages [were] merited” and affirmed the magistrate’s award of $3500. On appeal to this court, the defendant argues the district court “rubber stamped the findings and conclusions of the magistrate” and failed to conduct a de novo review. He also contends the district court did not hold the plaintiffs to the correct standard of proof by a preponderance of clear, convincing, and satisfactory evidence, and failed to make any findings of the specific acts by the defendant that constituted willful and wanton disregard for the plaintiffs’ rights. See Iowa Code § 668A.1 (requiring proof by. a preponderance of clear, convincing, and satisfactory evidence that the defendant’s conduct amounted to a willful and wanton disregard for the rights of another). As a final allegation of error, Vanden Berg argues there is insufficient evidence to support a finding of willful and wanton conduct.

We have already discussed the defendant’s contention that the district court did not perform a de novo review, so we turn to Vanden Berg’s assertion the court did not apply the proper standard of proof. The defendant has not directed our attention to anything said by the district court in its ruling that indicates it applied a less rigorous burden of proof than that required under Iowa law. The court’s failure to specifically state the applicable burden of proof is not a basis to conclude it applied the wrong standard. There is no requirement that the district court state every principle of law that governs its review in a small claims action. Therefore, in the absence of any suggestion in the record that the court used an erroneous burden of proof, we assume it properly applied the law. Therefore, there is no basis for reversal on this ground.

The defendant also complains of the district court’s alleged omission of a factual finding of a specific act that was committed with a willful or reckless disregard for the rights of the plaintiffs. As we have previously discussed, however, there is no requirement that a court issue findings of fact in a small claims action so long as we can ascertain the basis for the court’s ruling for purposes of our review. Here, the district court indicated its general agreement with the magistrate’s findings and conclusions with respect to the issue of punitive damages. The magistrate stated in her ruling that Vanden Berg intentionally deceived the Wilsons and his conduct rose to a level meriting an award of punitive damages. We are comfortable that the district court, by its concurrence in the magistrate’s findings, provided a discernible rationale for its award of punitive damages.

The remaining challenge to the punitive damage award is the defendant’s belief there was insufficient evidence to support a finding that his conduct “constituted willful and wanton disregard for the rights” of the plaintiffs. Iowa Code § 668A.1. Conduct is “willful and wanton” when

“[t]he actor has intentionally done an act of unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow, and which thus is usually accompanied by a conscious indifference to the consequences.”

McClure v. Walgreen Co., 613 N.W.2d 225, 230 (Iowa 2000) (citation omitted).

The facts and circumstances we have previously reviewed in support of the court’s ruling that Vanden Berg breached his contract with the Wilsons and made a material misrepresentation to them also supports the district court’s finding of conduct sufficient to support the judgment for punitive damages. Although a breach of contract will ordinarily not support a punitive damage award, where the breach also constitutes an intentional tort committed maliciously, punitive damages may be given. See Hockenberg Equip. Co. v. Hockenberg’s Equip. & Supply Co., 510 N.W.2d 153, 156 (Iowa 1993) (stating “we will uphold an award of punitive damages when conduct breaching a contract also constitutes an intentional tort, committed maliciously, that meets the standards of section 668A.1”).

The evidence here supports a finding the defendant undertook to represent the plaintiffs after having assured them he could do so unencumbered by any conflicts of interest. The record also supports a finding Vanden Berg suffered from a conflict of interest from the beginning in that he wanted to maintain a good relationship with local realtors, an interest that would conflict with the plaintiffs’ desire that their claim be asserted vigorously to the end that Huff, a local realtor, would compensate them for their damages. For example, the Wilsons wanted to be paid for the smaller-than-advertised size of the property they purchased, and it was clearly of no concern to them whether that compensation came from Huff or from his insurer. In contrast, the defendant focused his efforts on locating and notifying an insurance carrier that would cover Huffs liability to the Wilsons rather than simultaneously pursuing a claim directly against Huff. It is a fair inference that these differing views were attributable to the conflicting interests of Yanden Berg and the Wilsons.

We also think the record permits an inference that Vanden Berg knew he had a conflict of interest for the reasons discussed above. At the very least, the risk that harm would probably follow from his conflicted representation should have been obvious. Nonetheless, the defendant took the Wilsons’ money and then offered halfhearted representation by failing to diligently assert the plaintiffs’ claim because he put his own self-interest ahead of the Wilsons’ interests. A fact finder could infer the defendant was consciously indifferent to the impact of his actions on the Wilsons.

We conclude the district court fairly concluded the defendant’s conduct constituted a willful and wanton disregard for the plaintiffs’ rights under the contract and a willful and wanton disregard of the plaintiffs’ known and paramount interest that the matter be resolved quickly so Mary could care for her elderly parents. Because the defendant’s breach of contract also amounts to fraud, an intentional tort, there was a sufficient factual and legal basis for the court’s award of punitive damages.

VII. Summary and Disposition.

Upon our review of the record, we conclude there is substantial evidence to support the district court’s ruling that the defendant breached his contract with the plaintiffs and misrepresented that he had no conflict of interest that would interfere with his handling of their case. There is also sufficient evidence that the defendant acted in willful and wanton disregard for the plaintiffs’ rights. Therefore, we affirm the judgment awarding compensatory and punitive damages to the Wilsons.

AFFIRMED.

      . The defendants do not offer any basis for reversal of the judgment entered against Tor-gerson & Vanden Berg Law Offices other than the alleged errors that purportedly require reversal of the judgment as to Steven Vanden Berg. Therefore, for the sake of simplicity, we refer in our opinion only to the defendant, Steven Vanden Berg. Nonetheless, our decision and disposition of this case is equally applicable to Torgerson & Vanden Berg Law Offices.

      . Although the defendant asserts the magistrate narrowed the issues when ruling on his motion to dismiss,, we think- the most that can be said of that decision is that the magistrate stated she would not consider any claim in the nature of legal malpractice that would require expert testimony. In fact, the defendant himself limited his motion to dismiss to legal malpractice claims other than those that "would be ... obvious to a nonlegally trained person.” As we discuss later in this opinion, the Wilsons’ claims alleging misrepresentation and false billing do not require an expert witness. Expectations that one will not be induced into entering a contract by intentional and knowing misrepresentations and then falsely billed for performance of the contract are expectations in any contractual association and are not peculiar to an attorney-client relationship.

      . Vanden Berg also argues there is no evidence he "did anything less than the best he could do.” This contention is apparently directed to the magistrate's discussion of Van-den Berg’s lack of compliance with the parties' contract, which provided: “I will do the best I can for you within the budget constraints you describe.” The magistrate concluded it was "unthinkable that this could be Mr. Vanden Berg's best effort in representing a client.” The focus of our review, however, is on the district court’s decision, not the magistrate's ruling. The district court did not discuss the best-efforts issue, but rather focused on the defendant’s representation that he could handle the Wilsons’ case unencumbered by a conflict of interest and the defendant’s bill, matters we will discuss.

      . This matter was drawn out so long Mary’s mother passed away in March 2002 in Wisconsin before arrangements could be made for her to move to Iowa.