author: LAVORATO, Chief Justice.

text:
    GRINNELL MUTUAL REINSURANCE COMPANY, Appellant, v. Henry C. JUNGLING, Jr., and Jungling Farms, Inc., Appellees.
    No. 00-1474.
    Supreme Court of Iowa.
    Dec. 18, 2002.

      Douglas A. Haag of Patterson, Lorent-zen, Duffield, Timmons, Irish, Becker & Ordway, L.L.P., Des Moines, for appellant.
    H. Richard Smith and David Swinton of Ahlers, Cooney, Dorweiler, Haynie, Smith & Allbee, P.C., Des Moines, for appellees.
   LAVORATO, Chief Justice.

Grinnell Mutual Reinsurance Company (Grinnell) appealed from a district court declaratory ruling that the company was obligated to indemnify its insured, Henry C. Jungling, Jr., under a personal excess liability policy for a settlement payment Jungling’s corporation made in a fraud suit against Jungling and his corporation. Grinnell contended that the district court erred in concluding that (1) the terms of the policy provided coverage, (2) public policy did not bar coverage, (3) Jungling was legally excused from complying with the notice provisions of the policy, and (4) Grinnell was obligated to fully indemnify Jungling.

We transferred the case to the court of appeals, which reversed, concluding that public policy barred coverage. On further review, we vacate the court of appeals decision, affirm in part and reverse in part the district court judgment, and remand the case with directions.

I. Background Facts.

In February 1993, William J. Steckel and Natalie M. Steckel purchased a dairy farm in Butler County, Iowa from Jun-gling Farms, Inc. In January 1995, the Steckels sued Henry C. Jungling, Jr. and Jungling Farms, Inc., seeking compensatory and punitive damages. The suit alleged fraudulent misrepresentation and fraudulent nondisclosure (hereinafter “the Steck-el suit”).

On the date the Steckel suit was filed, Henry C. Jungling, Jr. owned a personal excess liability policy (excess policy) and underlying auto liability, recreational vehicle, and homeowners’ policies, all issued by Grinnell. The excess policy was in force from January 1992 until January 1998. Jungling Farms, Inc. was an additional insured under the policy from January 1992 until January 1994 and then again after December 15,1995.

A jury in the Steckel suit found Jungling and his corporation jointly and severally liable on the Steckels’ fraudulent misrepresentation and fraudulent nondisclosure claims. The jury awarded the Steckels $323,300 in compensatory damages. The district court refused to submit the punitive damages claim to the jury. Jungling and the corporation appealed and the Steckels cross-appealed. We transferred the case to the court of appeals, which affirmed the compensatory damage award but reversed and remanded for trial on the punitive damages issue.

While the application for further review was pending in our court, the parties settled. Jungling and his corporation agreed to pay the Steckels $465,000 in settlement. Grinnell contributed $50,000 toward the settlement, without waiving its legal rights to address the issue of coverage later.

Following the settlement, Jungling made a demand pursuant to the terms of his excess policy for payment of $844,400 (settlement amount of $465,000, minus Grin-nell’s $50,000 contribution, and minus $70,600 representing return of payments made by the Steckels on the contract of sale which were not part of the “loss” within the terms of the excess policy). Demand was also made for attorneys’ fees and expenses incurred in defense and settlement of the Steckel suit.

II. The Declaratory Judgment Action.

In July 1998, Grinnell filed a petition for declaratory judgment against Jungling and the corporation, asking the district court to declare that Grinnell was not required to pay any part of the $344,400 demand. Later, Grinnell and both defendants filed separate motions for summary judgment.

In its ruling on the motions for summary judgment, the district court found there were genuine issues of material fact on whether Jungling properly notified Grinnell of the Steckel suit, as required by the terms of the excess policy, and whether his alleged failure to give such notice prejudiced Grinnell.

Additionally, the court rejected Grin-nell’s argument that the excess policy could be construed to exclude intentional acts. The court also ruled that “public policy does not mandate that insurance companies not pay for the intentional acts of their insureds.” The court concluded that the excess policy did provide coverage for the claims asserted in the underlying litigation and the losses incurred in settling the litigation, including compensatory and punitive damages.

Responding to Grinnell’s Iowa Rule of Civil Procedure 1.904(2) (formerly rule 179(b)) motion, the district court concluded that the excess policy did not provide coverage for damages arising out of the intentional acts of the defendant corporation. The court reasoned that coverage for the corporation, an additional insured, was limited due to an intentional acts exclusion found in the underlying farm policy.

Later, the notice issues were tried to the court. Following a bench trial, the district court found that Jungling did not substantially comply with the notice provision of the excess policy. However, the court further found that Jungling proved his failure to comply was legally excused. Finally, the court found that Grinnell did not show that the delayed receipt of notice of the Steckel suit prejudiced it. The court therefore concluded that Grinnell was obligated to indemnify Jungling for the $344,400 demand plus attorney fees, interest and costs.

Grinnell appealed and we transferred the case to the court of appeals. Grinnell raised the following issues: (1) by the terms of the excess policy, Jungling’s intentional and premeditated fraud was not covered; (2) it is contrary to public policy to require an insurer to pay a loss caused by the policyholder’s fraud and deceit; (3) Jungling’s noncompliance with the notice provisions of the excess policy was not legally excused and resulted in prejudice to Grinnell; and (4) Grinnell should not be required to fully indemnify Jungling because the settlement was paid by the defendant corporation, which the district court had previously determined was not covered under the terms of the excess policy.

The court of appeals reversed on public policy grounds. In view of this conclusion, the court of appeals concluded it was not necessary to address Grinnell’s other issues. and held that Grinnell was not obligated to reimburse Jungling for the $344,400 demand.

We granted Jungling’s application for further review.

III. Scope of Review.

The district court resolved the coverage and public policy issues in its ruling on the parties’ motions for summary judgment. Our review of summary judgment rulings is at law. Iowa R.App. P. 6.4; Hofco, Inc. v. National Union Fire Ins. Co. of Pittsburgh, 482 N.W.2d 397, 400 (Iowa 1992).

Summary Judgment is appropriate under Iowa Rule of Civil Procedure 1.981 only when the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. Id. A fact question arises if reasonable minds can differ on how the issue should be resolved. Id. No fact question arises if the only conflict concerns legal consequences flowing from undisputed facts. Id. Summary judgment is therefore appropriate in these circumstances. Id.

The district court addressed the notice-related issues in its ruling on the petition for declaratory judgment. Because the parties tried the case at law, our review is for correction of errors at law. Pursell Constr., Inc. v. Hawkeye-Security Ins. Co., 596 N.W.2d 67, 69 (Iowa 1999).

On our review, we determine the sufficiency of the evidence in the light most favorable to the district court’s findings whether or not the evidence was contradicted, and we will not weigh the evidence or pass on the credibility of the witnesses. Beeck v. Aquaslide ‘N’ Dive Corp., 350 N.W.2d 149, 154 (Iowa 1984); Henschel v. Hawkeye-Security Ins. Co., 178 N.W.2d 409, 415 (Iowa 1970). The court’s findings are binding on us if substantial evidence supports those findings. Beeck, 350 N.W.2d at 154. Substantial evidence supports a finding of fact if one may reasonably infer the finding from the evidence. Id.

IV. The Coverage Issue.

Grinnell first cites to the insuring clause of the excess policy to support its argument that the terms of the policy provide no liability coverage for Jungling’s intentional acts. The language of that clause provides:

We will pay on behalf of the insured person for loss in excess of the applicable underlying limits or retained limit which is from personal injury or property damage occurring during the policy period.

(Emphasis added.)

Then Grinnell points to the term “occurring,” which it argues is a derivative of the term “occurrence.” “Occurrence” is defined in the policy as follows:

“Occurrence” includes all personal injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions.

(Emphasis added.)

Grinnell’s argument proceeds as follows. Use of the term “includes,” rather than “means,” renders the definition a partial definition of the term “occurrence.” Therefore, the court should look to the dictionary definition of the term to ascertain its “ordinary meaning.” The dictionary meaning of “occurrence” is “any incident or accidental event” and “any incident or event, especially one that happens without being designed or expected.” The New Webster’s Dictionary 576 (1971). Because Jungling’s fraudulent actions were by design, and not accidental, the loss is not one that resulted from an “occurrence” within the meaning of the excess policy.

“Construction of an insurance policy — the process of determining its legal effect — is a question of law for the court. Interpretation — the process of determining the meaning of words used — is also a question of law for the court unless it depends on extrinsic evidence or a choice among reasonable inferences to be drawn.” A.Y. McDonald Indus. v. Ins. Co. of N. Am., 475 N.W.2d 607, 618 (Iowa 1991). Regarding construction or interpretation questions, the cardinal principle is that the intent of the parties controls. Id. Unless the policy is ambiguous, we determine intent by what the policy says. Id. We interpret ambiguous policy provisions in favor of the insured because insurance policies are in the nature of adhesion contracts. Id. at 619.

In addition, when an insurer has affirmatively expressed coverage through broad promises, it assumes a duty to define any limitations or exclusionary clauses in clear and explicit terms. Amco Ins. Co. v. Haht, 490 N.W.2d 843, 845 (Iowa 1992). Also, we interpret a policy from the viewpoint of an ordinary person, not a specialist or expert. Id. So when words in a policy are not defined, we will not give such words a technical meaning. A.Y. McDonald Indus., 475 N.W.2d at 619. Rather, we will give undefined words their ordinary meaning, one that a reasonable person would understand them to mean. Id.

We first note that the excess policy has no language clearly and expressly excluding coverage of losses arising from intentional acts. We agree with Jungling that Grinnell’s “occurrence” argument is a strained attempt to get around the absence of such exclusionary language. In effect, Grinnell is saying that the language “occurring during the policy period” in the insuring clause has the same effect as an express exclusionary clause based on its suggested interpretation of “occurring” and “occurrence.”

We likewise agree with Jungling that the word “occurrence” and “occurring” are actually derivatives of the word “occur.” It would therefore make more sense to look to the dictionary meaning of the word “occur” for guidance as to the ordinary meaning of the word “occurring” in the insuring clause. The ordinary meaning of the word “occur” is “to happen; take place, come to pass,” as for example, “When did the accident occur?” Webster’s Encyclopedic Unabridged Dictionary 1340 (1996). An ordinary person reading the insuring clause would interpret the word “occurring” to plainly refer only to the timing of the loss because it appears as part of the phrase “occurring during the policy period.”

In any event, we think the district court had it right when it reasoned as follows:

Although other words defined in the policy are followed by the words “means” (e.g., “business” means ...), “occurrence” is followed by the word “includes.” An argument could be made that this distinguishes words that are expressly defined from words that are not so defined, but are understood to have a generally accepted meaning not set forth in the policy definition. The problem with that argument is the policy holder is not advised of the distinction. That is to say, the policy holder is not aware that the definition given is not the full definition. The insurer must be “clear and explicit” in its terms. Accordingly, it appears the insurer has not been explicit in defining the terms used in the policy. [Grinnell] failed to exclude intentional acts in its personal excess policy.

Moreover, we find it significant that the only ground that Grinnell relied on in denying coverage initially was a pollution exclusion clause. Relatedly, a Grinnell staff attorney wrote in his notes the following regarding the Steckel case:

A reservation of rights has been sent on the Personal Excess [Policy] due to the pollution exclusion. However, due to the lack of an intentional acts exclusion, the Personal Excess [Policy] appears to pick up coverage for the damages arising out of the misrepresentations and for the emotional distress alleged.

Suffice it to say, if Grinnell had intended to exclude intentional acts from the policy, it should have explicitly excluded them. Grinnell could easily have included an intentional-acts-exclusion provision in the excess policy.

V. The Public Policy Issue.

As to this issue, Grinnell contended that in perpetrating the fraud on the Steckels, the two defendants committed theft by consumer fraud — a criminal act — in violation of Iowa Code section 714.16(2) (1995). Grinnell further contended that public policy bars insurance coverage for an insured’s intentional and criminal acts. As mentioned, the court of appeals reversed on public policy grounds. The court of appeals reasoned that Jungling, by perpetrating a fraud on the Steckels, committed a criminal act of consumer fraud pursuant to Iowa Code section 714.16(2), an offense punishable as a simple misdemeanor under Iowa Code section 701.8. The court concluded that “it is contrary to public policy to provide insurance coverage for losses caused by Jungling’s fraudulent misrepresentations.”

Jungling contends, among other things, that the court of appeals erred in concluding that a violation of section 714.16(2) constitutes a criminal act. Additionally, Jungling contends the court of appeals erred in concluding that public policy precludes coverage of losses arising from intentional acts of any kind (not just criminal acts).

We address the public policy argument as it relates to both the criminal acts and the intentional acts.

A. Criminal acts. To the extent that the court of appeals concluded that the fraudulent acts were criminal acts in violation of Iowa Code section 714.16(2), the court erred. In Molo Oil Co. v. River City Ford Truck Sales, Inc., 578 N.W.2d 222, 227-28 (Iowa 1998), we addressed whether a private cause of action exists under section 714.16(2)(a). After concluding section 714.16(2)(a) does not expressly create a private cause of action, we went on to determine “whether a violation of [the statute] amounted] to perpetration of a crime.” Id. at 228. We concluded it did not because the statute did not provide punishment for its violation. Id. We therefore need not give any further consideration to whether the policy covers criminal acts.

B. Intentional acts. Regardless of whether Jungling’s actions were criminal or violated a particular criminal statute, Grinnell contends public policy should bar insurance coverage for Jungling’s intentional acts. As mentioned, the excess policy contains no intentional-acts exclusion. Therefore, the question is whether public policy demands the denial of coverage for Jungling’s intentional acts in this case.

1. The general rule and the emerging exception. Historically, courts have held that it is contrary to public policy to insure against liability arising directly against the insured from intentional or willful wrongs. 7 Lee R. Russ, Couch on Insurance Sd § 101:22, at- 101-79 (1997) [hereinafter Couch ]; accord 4 Eric Mills Holmes, Holmes’ Appleman on Insurance 2d § 23.4, at 504 (1998) (“Public policy will not permit an insured to benefit from his or her own intentional wrongdoing.”) [hereinafter Holmes ]; St. Paul Fire & Marine Ins. Co. v. Jacobson, 826 F.Supp. 155, 162 (E.D.Va.1993) (“[P]ublic policy generally bars coverage for an insured’s intentional wrongdoing or criminal misconduct.”); St. Paul Ins. Co. v. Talladega Nursing Home, Inc., 606 F.2d 631, 633-34 (5th Cir.1979) (explaining that under Alabama law all contracts insuring against loss from intentional wrongs are void as against public policy).

Even when the policy “is silent as to intentional wrongs and merely states positive coverage in terms sufficiently broad to encompass intentional conduct, public policy generally requires that the policy be read as implicitly excluding coverage for intentional acts.” Couch § 101:22, at 101— 82; accord Holmes § 116.1, at 3 (2000) (“[E]ven if liability insurance policies did not contain [intentional-acts] exclusions or exceptions, the general rule is that an insured’s intentionally caused harm to another would not be covered by a liability insurance policy.”).

The court in Jacobson explained the rationale behind the public policy prohibition against coverage for intentional acts:

Underlying this public policy coverage bar is the concern that permitting coverage in certain circumstances will encourage insureds to engage in intentional misconduct. Barring coverage in these circumstances discourages insureds from intentionally harming others, as intentional wrongdoers cannot then rely on the availability of insurance to shield them from the civil consequences of their misconduct. Similarly, the public policy coverage exclusion bars insureds from recovering for self-inflicted wounds, thereby appropriately preventing insureds from enjoying the fruits of their wrongful acts.

Jacobson, 826 F.Supp. at 162-63; see also Decorative Center of Houston v. Employers Cas. Co., 833 S.W.2d 257, 260 (Tex.Ct.App.1992) (“The rationale behind the public policy is that the insured is more likely to engage in behavior which is harmful to society if he believes that he will not have to bear the financial costs of his intentional indiscretions.”).

Notwithstanding the general rule, “a growing number of modern cases find the insured’s intentional and similar conduct not to bar liability insurance coverage.” Couch § 101:24, at 101-84. According to Couch, “[t]he more lenient view apparently finds that the public interest in having victims recover for their injuries outweighs the public interest in forcing the willful wrongdoer to pay the consequences of the wrongdoing.” Id. at 101-86; see also Sch. Dist. For City of Royal Oak v. Continental Cas. Co., 912 F.2d 844, 849 (6th Cir.1990) (holding that Michigan’s public policy did not void a school district’s liability policy that provided coverage for damages arising out of insured’s religious discrimination); New Madrid County Reorganized Sch. Dist. No. 1 v. Continental Cas. Co., 904 F.2d 1236, 1242-43 (8th Cir.1990) (policy contained no intentional-acts exclusion; court rejected argument that Missouri’s public policy forbids insurance coverage for an insured’s intentional wrongful acts and held that policy covered civil rights violation which court concluded was covered under “wrongful acts” provision in the policy); Jacobson, 826 F.Supp. at 164-65 (medical malpractice policy contained no intentional-acts exclusion; court rejected argument that public policy barred recovery and recognized exception to the public policy bar, holding that insurance policy covered claims against fertility specialist alleged to have fraudulently used his own sperm in artificial insemination of his patients); Indep. Sch. Dist. No. 697 v. St. Paul Fire & Marine Ins. Co., 515 N.W.2d 576, 579-80 (Minn.1994) (policy contained no intentional-acts exclusion; court rejected argument that public policy barred recovery and held that policy covered intentional age discrimination claim under “wrongful act” provision in policy); Vigilant Ins. Co. v. Kambly, 114 Mich.App. 683, 319 N.W.2d 382, 384-85 (1982) (policy contained no intentional-acts exclusion; court rejected argument that public policy barred recovery and recognized exception to the public policy bar, holding that public policy principles did not preclude coverage under a professional liability policy for a psychiatrist’s intentional sexual abuse of a patient).

In rejecting the public policy argument, the court in Jacobson noted that there was no evidence that (1) the insured was induced to inseminate his patients with his own semen because of the availability of" insurance coverage, (2) permitting coverage would encourage other medical professionals to engage in similar conduct, or (3). the insured obtained the policy in contemplation of his misconduct. Jacobson, 826 F.Supp. at 164. Therefore, the case did not “raise the policy concerns at the heart of the public policy exclusion for intentional wrongdoing.” Id. In addition, the court reasoned that

countervailing considerations, i.e., compensating [the insureds’] innocent victims, decidedly outweigh the concern that [the insureds] will unjustly benefit from the extension of coverage. Admittedly, [the insureds] will clearly benefit from coverage under the policy because they will, to the extent of the policy limits, be insulated from personal civil liability. Equally clear, however, is that the primary beneficiaries of this coverage will be innocent third parties, namely the female patients whom Jacobson fraudulently inseminated and their families. The strong policy interest in compensating these innocent victims tips-the scales in this case m favor of coverage. And this result is not manifestly unfair to the insurer because ... [the insurer] was in a position to include in the policy a specific exclusion in the insurance contract for intentional misconduct. It failed to do so. Therefore, given the absence of specific exclusionary language, and given the absence of compelling policy reasons to bar coverage, public policy does not operate here to preclude coverage.

Id. at 164-65 (footnote omitted); accord Kambly, 319 N.W.2d at 385.

Even before Jacobson and Kambly, courts recognized exceptions to the general rule barring coverage on public policy grounds based on factors like those in Jacobson and Kambly. See, e.g., Ambassador Ins. Co. v. Montes, 76 N.J. 477, 388 A.2d 603, 605-06 (N.J.1978) (holding that coverage for insured’s arson of own property did not violate public policy where wrongdoer did not benefit and third person received protection afforded by insurance); Dent v. Virginia Mut. Benefit Life Ins. Co., 226 A.2d 166, 167-68 (D.C.1967) (holding that allowing recovery of life insurance proceeds by innocent beneficiary where insured’s criminal conduct led to his death did not violate public policy).

Courts in Florida, Pennsylvania, and Oregon engage in a specific analysis to determine whether coverage of a particular act is against public policy where the policy has no intentional-acts exclusion. In Florida, the court in Ranger Insurance Co. v. Bal Harbour Club, Inc. looked to two factors: “the conduct of the insured (is it a type that will be encouraged by insurance?), and the purpose served by the imposition of liability for that conduct (is it to deter wrongdoers or compensate victims?).” 549 So.2d 1005, 1007 (Fla.1989). Thus, if the type of conduct is such as to be encouraged by insurance and the primary purpose of imposing liability is to deter wrongdoers rather than to compensate victims, public policy would bar recovery. Id. at 1007-08.

The United States District Court in Pennsylvania considered the following factors in determining whether public policy precluded coverage for intentional acts where the policy contained no intentional-acts exclusion:

1. whether gain was derived from an illegal act or the insured suffered a loss by being legally required to compensate an injured third party;
2. whether permitting coverage would encourage others to engage in intentional unlawful activity for the purpose of reaping a benefit; and
3. whether permitting recovery would permit the insured to escape the consequences flowing from criminal or intentional and malicious conduct.

USX Corp. v. Adriatic Ins. Co., 99 F.Supp.2d 593, 631 (W.D.Pa.2000). The Oregon court analyzed the issue as follows:

A contract to indemnify the insured for damages he is forced to pay as a result of an intentionally inflicted injury upon another should not be regarded as contrary to public policy unless the fact of insurance coverage can be related in some substantial way to the commission of wrongful acts of that character.... [Pjunishment rather than deterrence is the real basis upon which coverage should be excluded. A person should suffer the financial consequences flowing from his intentional conduct and should not be reimbursed for his loss, even though he bargains for it in the form of a contract of insurance. A similar idea is expressed in the cases which exclude coverage on the ground that “a person should not profit from his own wrong.”

Isenhart v. General Cas. Co. of Am., 233 Or. 49, 377 P.2d 26, 28 (1962) (citation omitted).

2. The merits. As mentioned, the excess policy here affords broad coverage and has no intentional-acts-exclusion provision. The precise issue then is whether in these circumstances public policy bars coverage of a loss due to intentional fraud — an issue of first impression for us.

We begin our analysis with a caveat: “The power to invalidate a contract on public policy grounds must be used cautiously and exercised only in cases free from doubt.” DeVetter v. Principal Mut. Life Ins. Co., 516 N.W.2d 792, 794 (Iowa 1994). To strike down a contract on public policy grounds, we must conclude that “the preservation of the general public welfare ... outweigh[s] the weighty societal interest in the freedom of contract.” Id. We have recognized that “[t]here is a certain danger in too freely invalidating private contracts on the basis of public policy.... ‘[F]or a court to undertake to invalidate private contracts upon the ground of “public policy” is to mount “a very unruly horse, and when you once get astride it, you never know where it will carry you.” ’ ” Skyline Harvestore Sys., Inc. v. Centennial Ins. Co., 331 N.W.2d 106, 109 (Iowa 1983) (citation omitted).

In Skyline Harvestore, we addressed an issue similar to the one before us: whether public policy bars recovery of punitive damages under a liability insurance policy that did not expressly exclude such damages from coverage. 331 N.W.2d at 108. The insurer argued that insurance coverage of punitive damages would contravene the public policy purposes underlying punitive damages: punishment and deterrence. Id. at 108-09. While not repudiating those purposes, we concluded that public policy reasons for punitive damages cannot override other considerations favoring coverage of punitive damages under the insurance policy in question. Id. In reaching that conclusion, we said:

We realize that the result of our decision is to elevate the public policy of freedom to contract for insurance coverage above the public policy purposes of punitive damages. We do so for two reasons. First, we doubt that ordinary potential tortfeasors make calculations to determine if the expected benefits of a harmful act are outweighed by the potential costs of punitive damages, insured or uninsured. Second, we do not view our decision as totally abrogating the sting of punitive damages. The sting will continue to be felt by the uninsured, the underinsured, and the poor risks who will experience substantial difficulty and high costs in obtaining such insurance.

Id. at 109.

We think that the public policy of freedom of contract for insurance coverage should again prevail. But in this instance, it should prevail over the public policy reasons for barring coverage for the intentional act of fraud. In reaching that conclusion, we apply the framework of analysis in Jacobson and Kambly, which fits this case.

As in Jacobson and Kambly, the case here does not present the policy considerations generally cited in support of the public policy coverage bar. There is no evidence that the availability of insurance coverage induced Jungling to defraud the Steckels or that such coverage will encourage others to engage in similar conduct in the future. As a practical matter, we seriously doubt that prospective insureds contemplate purchasing broad coverage insurance with the thought of defrauding someone in the future. And for sure, there is no evidence that Jungling purchased the policy contemplating that he would defraud the Steckels.

The countervailing considerations mentioned in Jacobson and Kambly are likewise present here. Compensating Jun-gling’s innocent victims — the Steckels— outweighs the concern that Jungling will unjustly benefit from coverage. It is true that Jungling will benefit to the extent he is reimbursed for what he is out, which, as we discuss later, will be considerably less than the demand amount. But the ultimate and primary beneficiaries of the coverage will be innocent third parties — the Steckels. And as far as Grinnell is concerned, it was in a far better position than anyone to protect itself by including an intentional-aets-exclusion provision in the excess policy. We therefore conclude public policy does not operate here to preclude coverage.

VI. The Notice Issue.

The notice provision in the excess policy was included in the “Conditions” section under the subpart captioned “Your Duties After a Loss”:

If legal proceedings are brought against the insured person, the insured person must immediately notify us in writing and forward to the underlying insurer and to us every demand, summons or other process received by the insured person.

The policy further stated in the “Conditions” section under the subpart captioned “Suit Against Us”:

No legal action can be brought against us until: •
(a) The insured person has complied with all policy terms.

When, as here, a notice provision is written as a condition precedent to policy coverage, the insured must show substantial compliance with the condition. Met-Coil Sys. Corp. v. Columbia Cas. Co., 524 N.W.2d 650, 654 (Iowa 1994). The notice provision is one of the basic and essential provisions of the contract and is of the essence of the agreement. Id. at 655. The substantial compliance requirement is necessary because the notice provision is “the only avenue by which unjust claims can be successfully denied or defended. Unless given notice within a reasonable time, evidence could be lost and key witnesses never discovered.” Henderson v. Hawkeye-Security Ins. Co., 252 Iowa 97, 107, 106 N.W.2d 86, 92 (1960). Where, as here, the notice provision requires notice to be provided directly to the insurer, notice to an agent does not constitute substantial compliance. Met-Coil, 524 N.W.2d at 656.

If the insured cannot show substantial compliance, the insured, to maintain an action against the insurer, must show that the failure to comply was excused, or that the requirements of the condition were waived, or that failure to comply was not prejudicial to the insurer. Henderson, 252 Iowa at 107, 106 N.W.2d at 92. Ordinarily, the question of whether the insured has reasonably given notice of suit to the insurer is one of fact for the factfinder. Fireman’s Fund Ins. Co. v. ACC Chem. Co., 538 N.W.2d 259, 262 (Iowa 1995).

Unless the insured shows such substantial compliance, excuse, waiver, or lack of prejudice to the insurer, prejudice must be presumed. Henderson, 252 Iowa at 107, 106 N.W.2d at 92. The presumption is rebuttable, but unless the presumption is overcome by a satisfactory showing of lack of prejudice, the presumption will •defeat the insured’s recovery. Met-Coil, 524 N.W.2d at 658.

An insured’s mistaken belief or lack of knowledge regarding coverage may be a justifiable excuse for noncompliance with an insurance policy’s notice provision. Id. at 657. Such a justifiable excuse exists only if the insured exercised due diligence. Id. To satisfy the due diligence requirement, the insured must have not been negligent and must have at least made a reasonable effort to discover the existence of coverage. Id.

Here, the district court concluded that Jungling did not prove substantial compliance because the evidence was undisputed that he forwarded the suit papers to Ervin Mellema, an authorized agent of Grinnell, rather than directly to Grinnell as the excess policy required. However, the court did conclude that Jungling showed that his failure to comply with the notice provision was legally excused. In reaching that conclusion, the court made the following findings, which the court noted were undisputed. Jungling promptly informed Mellema of the lawsuit and provided him with a copy of the Steckels’ petition. Thereafter, Mellema telephoned a Grinnell claims manager. After that conversation, Mellema told Jungling that he — Mellema—had been advised by Grin-nell there was no coverage. Jungling relied upon Mellema’s statement that Grin-nell had denied coverage. Jungling was not negligent and made a reasonable effort to discover the existence of coverage. Substantial evidence supports these findings. Based on these findings the district court correctly concluded that Jungling’s failure to comply with the notice provision was legally excused. See St. Paul Fire & Marine Ins. Co. v. Elliott, 545 So.2d 760, 763 (Ala.1989) (holding that failure to comply with notice provision in policy of insurance was excused because of agent’s advice to insured, based on notice from insurer, that there was no coverage).

VII. The Indemnification Issue.

In March 1998, the Steckels executed a release covering all claims and causes of action arising out of the fraudulent sale of the farm. The document released “Henry C. Jungling, Jr., Becky Jun-gling, and Jungling Farms, Inc.” Jungling Farms, Inc. paid the Steckels the amount of the settlement, $465,000. Jungling Farms, Inc. obtained the money from Jun-gling. The settlement was concluded and the money paid before the district court entered its judgment in this case. In view of these facts, Grinnell contends the district court erred to the extent the court required it to pay more than one-half of the demand amount, or $172,200.

Concluding that Grinnell was obligated to indemnify Jungling for the full amount of the demand, the district court reasoned as follows:

The Court further concludes that Jun-gling is entitled to a declaratory judgment that [Grinnell] is obligated to indemnify him for the losses sustained in connection with the Steckel litigation. [Grinnell’s] argument that it should be excused from reimbursing Jungling for his loss based on the technicality as to the manner in which the settlement was paid is without merit. Jungling and Jungling Farms, Inc. were jointly and severally liable on the judgment and the Steckels could have sought satisfaction from either party.... While Jungling Farms, Inc. issued the settlement check, Jungling personally incurred the loss as he was the sole source of the settlement funds. He was obligated to pay the settlement because he was the only party financially capable of doing so. [Grin-nell] consented to the settlement. Jun-gling’s payment of the settlement funds constitutes a loss compensable under the personal excess policy even though the funds were routed through Jungling Farms, Inc. The personal excess policy covers “loss” occurring during the policy period. “Loss” is defined as “the amount the insured ... is legally obligated to pay due to judicial decision or compromise without written consent.” Jungling personally was legally obligated to pay the entire judgment under the doctrine of joint and several liability. Accordingly, his payment of the settlement constitutes a loss compensable under the personal excess policy even though the funds were routed through Jungling Farms, Inc.

For reasons that follow, we disagree with this reasoning and legal conclusion. Jungling paid the funds into Jungling Farms, Inc. on the advice of his accountant to obtain a tax benefit. As Grinnell points out, on the one hand Jungling represented to tax authorities that the settlement was paid by Jungling Farms, Inc. On the other hand, Jungling asserted in this proceeding that he personally paid the settlement. We agree with Grinnell that he cannot have it both ways. When Jungling paid the funds into Jungling Farms, Inc., the funds became the property of the corporation. Therefore, Jungling Farms, Inc. suffered the loss when it paid the settlement, not Jungling. There was no coverage as far as Jungling Farms, Inc. was concerned. Grinnell was therefore not obligated to indemnify Jungling Farms, Inc. for any loss it incurred.

The district court erred in relying on the joint and several liability rule when it concluded that Grinnell was obligated to indemnify Jungling for the full amount of the demand. It is true that according to the joint and several liability rule, each defendant was liable for the total amount of the judgment. Slager v. HWA Corp., 435 N.W.2d 349, 351 (Iowa 1989) (common-law rule of joint and several liability permits recovery of the total judgment against any one defendant). The joint and several liability rule is a tort principle inuring to the benefit of the plaintiff. The rule has nothing to do with Grinnell’s obligation under the policy to pay only for a loss sustained by an insured. Nevertheless, because Grinnell is only asking to have its liability limited to fifty percent of the demand, we have no alternative but to abide by that request. Cf. State ex rel. Miller v. Midwest Pork, L.C., 625 N.W.2d 694, 701 (Iowa 2001) (“Although the statute as we have interpreted it would permit broader injunctive relief, the district court, in fashioning its order, should restrict the injunction to that requested by the State.”); Douglass v. Iowa City, 218 N.W.2d 908, 914 (Iowa 1974).

VIII. Disposition.

In sum, the district court correctly concluded that (1) the policy language provided coverage, (2) public policy did not bar coverage, and (3) Jungling’s noncompliance with the notice provision of the policy was legally excused. The court, however, erred in concluding that Grinnell was obligated under the policy to reimburse Jun-gling for the demand it made to Grinnell, that is $344,400. However, because Grin-nell only asks that its liability be limited to fifty percent of the demand, we reverse and remand for an entry of judgment that Grinnell is obligated to reimburse Jungling for $172,200. We affirm the district court’s judgment in all other respects.

COURT OP APPEALS DECISION VACATED; DISTRICT COURT JUDGMENT AFFIRMED IN PART AND REVERSED IN PART; CASE REMANDED WITH DIRECTIONS.


source: Caselaw Access Project

author: LARSON, Justice.

license: Public Domain

text:
    Dennis FISCHER, Julie Fischer, James Horn, Judy Horn, Todd Niggeling, Liz Niggeling, Kraig Sankey, Christine Sankey, Shaun Smith, Kari Smith, Mark Stevenson, Lorin Walker and Linda Walker, Appellees, and Key Bank USA, N.A., Intervenor-Appellee, v. CITY OF SIOUX CITY, Iowa, Appellant.
    No. 01-0328.
    Supreme Court of Iowa.
    Dec. 18, 2002.

      James L. Abshier, City Attorney, Sioux City, for appellant.
    Steven R. Jensen of Crary, Huff, Ink-ster, Sheehan, Ringgenberg, Hartnett, Storm & Jensen, Sioux City, for appellees.
    Ross W. Johnson of Faegre & Benson, L.L.P., Des Moines, for intervenor-appel-lee Key Bank USA, N.A.
   LARSON, Justice.

Several Sioux City homeowners sued the city when a storm sewer overflowed and damaged their properties. The district' court, through the application of “offensive issue preclusion,” granted the plaintiffs’ motion for partial summary judgment based on a prior case in which the city was found to be negligent in the design of the same drainage system. We reverse and remand.

I. Background Facts and Proceedings.

These plaintiffs lived at or near the intersection of Sergeant Road and Walden Avenue in Sioux City when, on ■ July 2, 1999, a rainstorm of unprecedented proportions dumped three inches of rain on the watershed within twenty-five minutes,' Water ponded at the intersection to a depth of about six feet and extended in three directions for about a block. The basements or ground floors of all of the plaintiffs’ houses filled with water, damaging the plaintiffs’ homes and personal property.

The plaintiffs filed seven separate lawsuits against the city on August 11, 1999, and the cases were consolidated on August 7, 2000. Trial was set for January 9, 2001. On November 9, 2000 (two months before trial), the plaintiffs filed a motion for partial summary judgment, which raised, for the first time, the plaintiffs’ claim of issue preclusion that is at issue in this appeal. On January 2, 2001, a week before trial, the court granted the plaintiffs’ motion for partial summary judgment. This order precluded the city from relitigating the question of its negligence in designing the storm system. (Issues of proximate cause and damages remained for trial.) The city immediately sought interlocutory appeal in this court (ultimately denied) and, on the same day, moved for a continuance. On the day the trial began, the court denied the motion for a continuance. In the meantime, on January 5 (three days after the order in question and four days before trial), the city moved for reconsideration of the court’s order granting partial summary judgment. The trial began on January 9, and the motion for reconsideration of the issue-preclusion matter was denied two days later. The city complains that, in view of this timeline, it did not have adequate notice of, or time to respond to, the issue-preclusion claim.

The plaintiffs’ claim of issue preclusion was based on a judgment that had been obtained earlier against the city for damages sustained in a 1996 flood at the same intersection. See Kelly v. City of Sioux City, LACV 115635 (Woodbury County). The judgment in the Kelly case was based on a finding by the court that the storm sewer was negligently designed by using too small a pipe. The court set the Kellys’ damages at $67,851, and the city did not appeal. Affidavits by city officials stated that the city did not appeal because it was not economically advisable to do so.

The present appeal concerns only the court’s decision to foreclose the city from relitigating the issue of negligent design. Issues of proximate cause and damages were tried to the court.

It is undisputed that the plaintiffs did not plead the theory of issue preclusion; this theory was first raised in their motion for partial summary judgment filed just before trial was to begin. The district court ruled that, despite the fact the plaintiffs had not expressly pled issue preclusion, they nevertheless could assert it because (1) under notice pleading the petition sufficiently raised the issue, and (2) the city had “tried” the issue of preclusion by consent. Following trial the court entered judgments for the plaintiffs totaling $695,237.39. On appeal the city raises four issues, but we believe one is dispositive: Did the court err in imposing offensive issue preclusion?

In Hunter v. City of Des Moines, 300 N.W.2d 121 (Iowa 1981), we explained issue preclusion in general and offensive issue preclusion in particular:

In general, the doctrine of issue preclusion prevents parties to a prior action in which judgment has been entered from relitigating in a subsequent action issues raised and resolved in the previous action. “When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.”

Hunter, 300 N.W.2d at 123 (quoting Restatement (Second) of Judgments § 68 (Tentative. Draft No. 4 1977)) (footnote omitted). We continued:

As we have noted in prior cases, the doctrine may be utilized in either a defensive or an offensive manner.
The phrase “defensive use” of the doctrine of collateral estoppel is used here to mean that a stranger to the judgment, ordinarily the defendant in the second action, relies upon a former judgment as conclusively establishing in his favor an issue which he must prove as an element of his defense.
On the other hand, the phrase “offensive use” or “affirmative use” of the doctrine is used to mean that a stranger to the judgment, ordinarily the plaintiff in the second action, relies upon a former judgment as conclusively establishing in his favor an issue which he must prove as an essential element of his cause of action or claim.
In other words, defensively a judgment is used as a “shield” and offensively as a “sword.”

Hunter, 300 N.W.2d at 123 (quoting Goolsby v. Derby, 189 N.W.2d 909, 913 (Iowa 1971)) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 4, 99 S.Ct. 645, 649 n. 4, 58 L.Ed.2d 552, 559 n. 4 (1979)).

We concluded in Hunter that issue preclusion may be invoked, even without mutuality of the parties, if four prerequisites are met: (1) the issue in the present case must be identical, (2) the issue must have been raised and litigated in the prior action, (3) the issue must have been material and relevant to the disposition of the prior case, and (4) the determination of the issue in the prior action must have been essential to the resulting judgment. Hunter, 300 N.W.2d at 123; see also United Fire & Cas. Co. v. Shelly Funeral Home, 642 N.W.2d 648, 655 (Iowa 2002).

If, however, issue preclusion is to be used offensively, as it is in this case, two additional questions must be answered: (1) whether the opposing party in the earlier action was afforded a full and fair opportunity to litigate the issues of its negligence and proximate cause, and (2) whether any other circumstances are present that would justify granting the party resisting issue preclusion occasion to relitigate the issues. Hunter, 300 N.W.2d at 126 (citing Restatement (Second) of Judgments § 88 (Tentative Draft No. 2, 1975)). For a general discussion of offensive issue preclusion in Iowa, see Bruce C. Kempkes, Issue Preclusion: Parklane Hosiery v. Shore Revisited, 31 Drake L.Rev. 111 (1981-82).

II. Application of Preclusion Principles.

A. Must issue preclusion be pled? Offensive issue preclusion lacks some of the policy support underlying the defensive use of the doctrine.

• First, offensive use of collateral estop-pel [issue preclusion] does not promote judicial economy in the same manner as defensive use does. Defensive use of collateral estoppel precludes a plaintiff from relitigating identical issues by merely “switching adversaries.” Thus defensive collateral estoppel gives a plaintiff a strong incentive to join all potential defendants in the first action if possible. Offensive use of collateral es-toppel, on the other hand, creates precisely the opposite incentive. Since a plaintiff will be able to rely on a previous judgment against a defendant but will not be bound by that judgment if the defendant wins, the plaintiff has every incentive to adopt a “wait and see” attitude, in the hope that the first action by another plaintiff will result in a favorable judgment. Thus offensive use of collateral estoppel will likely increase rather than decrease the total amount of litigation, since potential plaintiffs will have everything to gain and nothing to lose by not intervening in the first action.

Parklane Hosiery Co., 439 U.S. at 329-30, 99 S.Ct. at 650-51, 58 L.Ed.2d at 561 (citation omitted) (footnote omitted).

A second argument against offensive use of collateral estoppel is that it maybe unfair to a defendant. If a defendant in the first action is sued for small or nominal damages, he may have little incentive to defend vigorously, particularly if future suits are not foreseeable.

Id. at 330, 99 S.Ct. at 651, 58 L.Ed.2d at 561; see also Blonder-Tongue Labs. v. Univ. of Ill. Found., 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971).

The fairness issue is stressed by the city here: the rain amount in 1999, said to be a “500 year” rain, greatly exceeded that in 1996, characterized as a “once in a lifetime” rain, and the amount of damages was considerably higher ($695,237.39 to $67,851). The city contends it was unfair to apply issue preclusion because it was not reasonably foreseeable to the city that a rain of this magnitude in 1999 would come within only three years of the 1996 event, which was itself almost unprecedented. The city relies on one of the examples in Hunter illustrating when offensive issue preclusion should not be applied. That is when “ ‘it was not sufficiently foreseeable at the time of the initial action that the issue would arise in the context of a subsequent action. . . .'" Hunter, 300 N.W.2d at 125 n. 4 (quoting Restatement (Second) of Judgments § 68.1 (Tentative Draft No. 4, 1977)). In other words, it was not reasonably foreseeable that the size of the drainage pipe found to be insufficient for a “once in a lifetime” rain would be an issue only three years later, when a “500 year” rain and its resulting greater damage occurred.

If a party fails to assert offensive issue preclusion at the earliest practicable time, the unfairness already inherent in offensive issue preclusion will only be exacerbated. That is why, we believe, the general rule is that issue preclusion'— whether offensive or defensive — must be pled and proved by the party asserting it.

A party asserting res judicata (or mutual collateral estoppel) must plead and prove the identity of parties, that is that the parties in the prior action were the same as the parties to the pending action, or that the parties to the pending action are in privity with the parties to the prior action. Absent such allegation or proof, res judicata is unavailable. In jurisdictions where the requirement of mutuality has been abandoned for the doctrine of collateral estoppel, the party asserting collateral estoppel is required to plead and prove that the party against whom the doctrine is asserted was a party or in privity with a party to the prior action.

47 Am.Jur.2d Judgments § 724, at 194-95 (1995) (footnotes omitted); see also 18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4405, at 82 (2d ed.2002) [hereinafter Wright & Miller] (“Ordinarily both issue preclusion and claim preclusion are enforced by awaiting a second action in which they are pleaded and proved by the party asserting them.”). This authority has further stated:

In contrast to the well-settled rules that apply to defendants, the procedural requirements imposed on plaintiffs who wish to assert preclusion have received surprisingly little attention. It seems useful to draw a distinction between a plaintiffs reliance on res judicata to defeat some position taken by the defendant and a plaintiffs reliance on res judicata to establish a claim....
... [I]t is difficult to understand why plaintiffs should not be required to plead preclusion as clearly as defendants — the need for notice and an opportunity to respond seems the same. The most frequent need for a specific pleading is likely to arise from the growing use of nonmutual offensive issue preclusion; although some circumstances may lead a defendant to expect the preclusion argument, the weaker the argument the greater the need for notice. Some courts have suggested that specific notice is required, and the same approach has been taken when a demand for declaratory relief rests on preclusion. This approach should be followed by asking that notice be provided without insisting on a particular method of notice by pleading.
Whatever the method by which the question is raised, the burden of establishing preclusion is placed on the party claiming it.

18 Wright & Miller § 4405, at 108-10.

In Iowa we apparently have no cases directly on point. In Hunter the manner of raising the offensive issue preclusion was not discussed because it was not an issue. In that case, the plaintiff specifically pled offensive issue preclusion. See Hunter, 300 N.W.2d at 124. Cases from other jurisdictions, however, hold that issue preclusion must be pled. See, e.g., Harvey v. United Transp. Union, 878 F.2d 1235 (10th Cir.1989).

Although the use of issue preclusion by plaintiffs is not subject to [Federal Rule of Civil Procedure 8(c) ], the rationale for requiring a party to plead defensive issue preclusion pretrial applies to offensive use as well- — to provide “the opposing party notice of the plea of estoppel and a chance to argue, if he can, why the imposition of an estoppel would be inappropriate.” Although this notice requirement was established in a case approving defensive use of issue preclusion, it has even more force for offensive use, when, as here, plaintiffs seek to benefit from litigation to tvhich they were not parties.

Id. at 1243 (quoting Blonder-Tongue Labs., Inc., 402 U.S. at 350, 91 S.Ct. at 1453, 28 L.Ed.2d at 812) (emphasis added); see also Herzbrun v. Milwaukee County, 504 F.2d 1189, 1196 (7th Cir.1974) (plaintiffs failed to raise claim of offensive issue preclusion in a pleading or motion; offensive issue preclusion rejected); Cashelmara Villas, Ltd. P’ship v. DiBenedetto, 87 Ohio App.3d 809, 623 N.E.2d 213, 215 (1993) (must plead and prove issue preclusion); Monahan v. Eagle Picher Indus., Inc., 21 Ohio App.3d 179, 486 N.E.2d 1165, 1168 (1984) (“In order to assert collateral estoppel successfully, a party must plead and prove [it].”).

The plaintiffs do not challenge the general rule that a party claiming issue preclusion must claim and prove it. Rather they argue, and the district court ruled, that (1) our notice-pleading rules do not require the pleading of a theory of recovery, and (2) the city tried the issue by consent.

B. Issue preclusion principles applied. The plaintiffs correctly note that, under notice pleading, a petition need not identify a specific legal theory; it is sufficient if the prima facie elements of a claim are stated, and this is fair notice to the defendant. Soike v. Evan Matthews & Co., 302 N.W.2d 841, 842 (Iowa 1981) (citing Lamantia v. Sojka, 298 N.W.2d 245, 247 (Iowa 1980)). However, the petition must “apprise a defendant ‘of the incident out of which the claim arose and of the general nature of the action.’ ” Lamantia, 298 N.W.2d at 247 (quoting Roberts v. Acres, 495 F.2d 57, 58 (7th Cir.1974)); accord Smith v. Smith, 513 N.W.2d 728, 730 (Iowa 1994).

The petitions in this case cannot be construed broadly enough to encompass offensive issue preclusion because they did not identify either the incident giving rise to the claim of issue preclusion or the general nature of the claim. The incident identified in these petitions was the flood of 1999, and the general nature of the claim was that the city was negligent in designing the drainage system. However, the plaintiffs’ claim of issue preclusion is based on an entirely different incident: the district court’s entry of the allegedly pre-clusive judgment in 1996. The “general nature” of the plaintiffs’ present claims, ie., issue preclusion, moreover, could not be gleaned from the petition, which alleged elements of negligent design — not issue preclusion. Cf. Davis v. Ottumwa YMCA, 438 N.W.2d 10, 13 (Iowa 1989) (“It is difficult to believe that a state common-law claim based on negligence and breach of contract could be construed to be fair notice of an intent to rely on a federal statutory [ERISA] claim.”).

C. The “tried by consent” argument. The plaintiffs contend the city implicitly agreed to resolve the issue-preclusion claim on its merits by failing to actively oppose it. The facts, however, do not support that argument. As soon as the plaintiffs asserted the issue-preclusion claim in their motion for partial summary judgment, the city resisted. The court did not rule on the summary-judgment motion until a week before the trial began. The day after the court ruled on the summary-judgment motion, the city applied for discretionary review in our court and also filed a motion for a continuance. The court did not rule on the motion for a continuance until the day of trial and then denied it. From the day the plaintiffs filed their motion for partial summary judgment until, literally, the trial was underway, the city did not know whether it was defending a fact issue on their alleged negligence or a legal issue on the application of issue preclusion. In view of this procedural history, we reject the plaintiffs’ argument that the city litigated the issue-preclusion matter by not sufficiently resisting it.

III. Conclusion.

Rulings on the application of issue preclusion are reviewed for abuse of discretion. Casey v. Koos, 323 N.W.2d 193, 197 (Iowa 1982). We believe that discretion was abused here because the city was denied adequate time to deal with issue preclusion after the district court ordered it to be applied and the date the trial began (one week). This was compounded by the refusal of the court to grant the city's application for a continuance. The potential unfairness in applying issue preclusion, discussed above, combined with the lack of adequate time to meet this theory demands the case be reversed and remanded for a new determination of the negligence issue without application of issue preclusion. See Harvey, 878 F.2d at 1243 (failure to assert offensive issue preclusion in timely manner waives the claim). Accordingly, we reverse and remand for further proceedings consistent with this opinion.

REVERSED AND REMANDED.

      . It is not always possible to assert issue preclusion in a pleading because the need for it may not then be apparent. For example, see Dettmann v. Kruckenberg, 613 N.W.2d 238, 243 (Iowa 2000) (issue preclusion not pled; defendant filed supplemental answer to interrogatory suggesting person other than defendant was driving car; issue preclusion applied based on earlier criminal conviction of defendant as driver).


author: TERNUS, Justice.

text:
    In re the MARRIAGE OF Richard L. NELSON and Jane M. Nelson. Upon the Petition of Richard Lawrence Nelson, Jr., Appellant, And Concerning Jane Marie Nelson, Appellee.
    No. 01-0780.
    Supreme Court of Iowa.
    Dec. 18, 2002.
    Dennis A. Bjorklund, Coralville, for appellant.

      Robert N. Johnson, III, of Saunders, Humphrey & Johnson, LLP, Ft. Madison, for appellee.
   TERNUS, Justice.

The district court and the court of appeals concluded the appellant, Richard Nelson, should pay increased child support to his former -wife, appellee Jane Nelson, for the Nelsons’ disabled adult child, Marie. We reject Richard’s contention'that Marie is capable of being self-supporting. Because we also conclude that the amount of support ordered by the district court is fair and reasonable, we affirm the decision of the court of appeals and the judgment of the district court.

I. Background Proceedings.

Richard and Jane were divorced in 1998, and, under the terms of the decree, shared joint legal custody of their Wo children, Marie and Michael. Richard was granted sole physical care of Michael, born in 1986, and Jane was granted sole physical care of Marie, born in 1980. Each party was granted “liberal arid reasoriable rights of visitation.”

The district court in the original dissolution action also ordered both parties to pay child support. Although Marie had turned eighteen three days before the decree was entered, the court ruled that child support would include “a child of any age who is dependent on the parties because of physical or mental disabilities.” Marie is a high-functioning autistic adult. Therefore, the court ordered Richard to pay $11.59 per week to Jane for Marie’s support. Jane was ordered to pay $28.67 per week to Richard for Michael’s support.

In October 2000, Jane filed an application for modification, seeking a specific schedule for her visitation with Michael. In response, Richard.sought an increase in Jane’s child support payments. Additionally, the parties disputed whether Marie was a mentally disabled dependent adult for whom Richard should continue to pay child support.

After trial, the court ordered a specific visitation schedule for Jane with Michael and, because Jane’s support payments deviated by more than ten percent from the amount due under the current child support guidelines, the court also increased Jane’s child support obligation to $62 per week. See Iowa Code § ’598.21(9) (1999) (providing that a substantial change of circumstances so as to support modification of the decree exists when child support payments deviate by ten percent or more from the current guidelines' amount). These rulings are not challenged in this appeal.

The final issue addressed by the district court was Richard’s obligation to pay support for Marie. The court concluded the evidence would not support a finding that Marie was now employable such that she could work a steady job for a steady wage. The evidence did show, however, that Marie’ receives social security disability payments as well as Title XIX medical coverage, and that these benefits are not sufficient to cover her financial needs. The court concluded, apparently based on Richard’s increased earnings since the divorce, that he had the financial means to contribute more than $11.59 per week towards Marie’s support, and so increased Richard’s child support obligation to $62 per week.

Richard appealed that part of the court’s ruling ordering him to pay child support for Marie. .The appeal was transferred to the court of appeals, where the district court judgment was affirmed. This court granted further review.

II. Scope of Review.

Our review is de novo. In re Marriage of Hilmo, 623 N.W.2d 809, 811 (Iowa 2001). We give weight to the trial court’s findings of fact, especially when considering the credibility of witnesses, but such findings do not bind us. In re Marriage of Beecher, 582 N.W.2d 510, 513 (Iowa 1998).

III. General Principles Governing Child Support.

A parent’s legal obligation to support his or her children does not necessarily end when the child reaches the age of majority. Iowa law includes within a parent’s support obligation “support for a child of any age who is dependent on the parties to the dissolution proceedings because of physical or mental disability.” Iowa Code § 598.1(9) (defining “support payments”); see also id. § 598.21(4)(a) (authorizing district court in dissolution proceeding to require parent “to pay an amount reasonable and necessary for supporting a child”). To determine whether a child is “dependent,” we consider the child’s ability to be gainfully employed and whether the child receives income or benefits from other sources. See In re Marriage of Hansen, 514 N.W.2d 109, 112 (Iowa Ct.App.1994).

Our child support guidelines do not apply to support involving dependent adult children. See In re Marriage of Davis, 462 N.W.2d 703, 705 (Iowa Ct.App.1990). Therefore, in determining what amount of support is “reasonable and necessary,” we look to the ability of both parents to contribute to the support of the dependent child. See id.

IV. Marie’s Dependency.

Upon our de novo review of the record, we find the following facts, granting due deference to the trial court’s credibility determinations. At the time of trial, Marie was twenty years old. She was in good physical health; however, the state of her mental health was disputed. Marie is autistic and the Social Security Administration has held that she is disabled under federal disability rules for adults. Thus, Marie qualifies for supplemental security income (SSI) payments and receives $530 per month in SSI benefits. Although Marie has been prescribed medication for her condition, she chose to quit taking it, deciding on her own that she did not need it.

Marie lives with her mother, Jane. Jane serves as the payee for Marie’s SSI payments and, with the approval of the federal authorities, receives $200 per month from these payments to cover rent and other living expenses for Marie. The balance of Marie’s benefits is placed in one of her two bank accounts.

Marie graduated from high school in a mainstream program. Although she was accepted at a community college, she did not attend. Marie has a driver’s license and can drive a car, a motorcycle, and a tractor. She is capable of physical labor, having assisted her father in several small construction projects and having worked on her grandmother’s farm. Marie has also done lawn work and picked apples on an occasional basis. In addition, she works as needed for an appliance repair business, repairing appliances in return for a share of the profit if the appliance is later sold. In the past, she has repaired bicycles and then sold them. For a short period of time she provided care for her grandmother, who had suffered a stroke. This care involved helping her grandmother to the bathroom, assisting in meals, and helping with medications. Marie worked for approximately three weeks and then suddenly quit because she could not bear the emotional strain of seeing her grandmother in that condition.

Richard asserts that although Marie was not paid well for these jobs, they demonstrate her capabilities and her potential to be gainfully employed. He also criticizes Jane for not exploring programs that would assist Marie in independent living.

Jane helps Marie in managing her money and paying her bills. Marie’s own testimony showed that she did not have a full appreciation for the importance of money in meeting her needs. The evidence also showed that Marie’s emotional health had deteriorated after her parent’s divorce. She was forced to move with her mother out of the family home, a disturbing event that left her emotionally fragile.

The trial judge, who was able to see Marie and judge for himself which parent accurately characterized Marie’s capabilities, concluded that while Marie “was polite and lucid, ... it [is] clear ... that [she] suffers limitations.” As one of Richard’s own witnesses observed, “She doesn’t communicate real well with people on a general basis.” The trial court concluded, based on his observations during trial and based on the credible evidence, that Marie did not have the mental or emotional ability to be employed at a steady job.

We agree with the district court and the court of appeals that Marie is not capable of gainful employment because of her disability. Although she is able to do physical labor, she has never been employed for more than two consecutive days. Other than payments by her father for her assistance on various building projects, Marie has only earned nominal sums. For example, she was paid in eggs, butter, and car repairs when she worked on her grandmother’s farm, and she earned two dollars a day for yard work. These activities are a far cry from holding a regular job at a wage level that would contribute meaningfully to her financial needs. In addition to this evidence, we place substantial reliance on the trial court’s ability to observe Marie, as well as the district court’s implicit judgment with respect to the credibility of the witnesses who had differing views of Marie’s capabilities.

We have not overlooked Richard’s argument that Jane has not done enough to encourage greater independence by Marie. To the extent Richard claims Marie should be encouraged to live on her own, we fail to see how the circumstances of Marie’s living arrangements relate to her employa-bility, which is the relevant consideration for purposes of determining child support. Although there may be some truth in the assertion that Jane has not pushed Marie to find a steady job, we reject Richard’s contention that Jane is fostering Marie’s dependence for Jane’s financial gain. This argument was not even made until Richard filed his petition for further review and it does not enjoy support in the record. Moreover, given the emotional toll taken on Marie by her parents’ divorce and her move from the family home, we do not criticize Jane for focusing first on rebuilding Marie’s feelings of security and general emotional well-being. Our present view of the situation should not, however, be interpreted to mean that the absence of efforts by either parent to assist Marie in obtaining the life skills to become more financially independent and self-sufficient should not be considered by the court in any future modification proceeding.

Having concluded that Marie cannot be gainfully employed at this time, we examine whether she has any outside sources of income to meet her needs. Marie receives just over $5700 in SSI benefits each year, but her estimated annual living expenses are nearly $9000. She is, therefore, in need of financial assistance from her parents. Consequently, Marie is a dependent adult child within the meaning of section 598.1(9). We now consider the level of support that her father should be required to contribute.

V. Reasonable and Necessary Support.

As we previously noted, the child support guidelines do not govern our determination of the appropriate support payments that are required of the parent of an adult dependent child. Nonetheless, they are instructive and so we note preliminarily that under the guidelines, Richard would be obligated to pay approximately $76.50 per week in support based on the parties’ respective incomes. (The record shows that Richard’s annual income is $22,630 and Jane’s annual income is $16,640.)

The trial court determined that Richard should pay support of only $62 per week. Although the court did not precisely explain the methodology used to arrive at this figure, the amount chosen by the court fits neatly into the overall financial situation of the involved persons. First of all, support of $62 per week results in yearly payments slightly less than the difference between Marie’s annual expenses and annual SSI benefits, thus ensuring that Marie’s minimum financial needs will be met. In addition, the amount of support Richard was ordered to pay equals the amount of child support payable by Jane to Richard. Therefore, the parties’ child support obligations are offsetting, meaning neither party’s income will be supplemented by the other party. The net effect is that the parties are put in roughly equivalent financial positions. Because Jane’s and Marie’s combined incomes are approximately the same as Richard’s income, each household has approximately the same amount of income to support one parent and one child. We think this disposition is fair and equitable under the circumstances of this case.

Our decision does not ignore Jane’s obligation to contribute to Marie’s financial support. Although Marie’s annual needs were computed to be just under $9000, we note this figure did not include any sums for clothing other than shoes and boots, no amount for incidental expenses, and a very conservative sum for food. We have no doubt that Jane has in the past subsidized and will continue in the future to subsidize Marie’s income as necessary.

In conclusion, we agree with the district court that Marie is a dependent adult child entitled to support from her parents. We also agree with the district court’s determination that Richard should contribute $62.00 per week to Marie’s support. Therefore, we affirm the court’s order that the parties’ child support obligations offset each other.

Costs are taxed to Richard. Each party will bear the expense of his or her own attorney.

DECISION OF COURT OF APPEALS AND JUDGMENT OF DISTRICT COURT AFFIRMED.


text:
    Leighton MANNING, Appellant, v. STATE of Iowa, Appellee.
    No. 01-1245.
    Supreme Court of Iowa.
    Dec. 18, 2002.

      Linda Del Gallo, State Appellate Defender and David Arthur Adams, Assistant Appellant Defender, Leighton Manning, pro se, for appellant.
    Thomas J. Miller, Attorney General, Thomas S. Tauber, Assistant Attorney General, Thomas J. Ferguson, Black Hawk County Attorney and Kimberly A. Griffith, Assistant County Attorney, for appellee.
   LAVORATO, Chief Justice.

In this postconviction proceeding, Leigh-ton Manning appeals from a district court judgment dismissing his application for postconviction relief. His sole challenge is that the district court should not have summarily dismissed his application without affording him an evidentiary hearing. Under the circumstances here, we agree. We therefore vacate the decision of the court of appeals, reverse the judgment of the district court, and remand the case.

I. Criminal Proceedings.

In May 1997, the State charged Manning with possession of a controlled substance (cocaine) with intent to deliver and failure to affix a drug tax stamp. Later, the State added an allegation that Manning was subject to sentencing provisions as a second offender. Seven months later, the State charged Manning with identical criminal charges and later added the second offender allegation.

In January 1998, Manning’s counsel filed a motion to suppress and motions to dismiss. The record reveals no disposition of these motions.

In February 1998, Manning withdrew his not guilty pleas and entered guilty pleas. The district court sentenced Manning to serve a seventy-five-year term on each possession count concurrently with a five-year term on each failure to affix a drug tax stamp count. The sentences in each criminal case were to run concurrently-

Manning appealed. Following the appeal, his appellate appointed counsel moved to withdraw pursuant to Iowa Rule of Appellate Procedure 104 (now rule 6.104). Appellate counsel informed Manning by letter of the motion. In that letter, counsel also informed Manning that if he disagreed with counsel’s conclusions about the merits of Manning’s appeal, Manning must write the Iowa Supreme Court clerk to request another attorney and to raise “any points which you believe support your appeal.” Manning did write the clerk, requested new appellate counsel, and raised several claims that his trial counsel was ineffective. Later, this court dismissed the appeal as frivolous.

II. Postconviction Proceedings.

Following the dismissal, Manning filed a pro se application for postconviction relief, raising eight grounds. Five of those grounds pertained to ineffective assistance of trial counsel and three related to claims of alleged vindictiveness by the State. The State moved to dismiss and Manning’s court-appointed counsel filed a one-page resistance to the motion. The district court set the State’s motion for hearing.

Several months following the State’s motion and appointed counsel’s resistance, Manning filed a pro se “amended and substituted application for postconviction relief.” In the motion, Manning claimed his appellate counsel was ineffective for failing to raise on direct appeal claims of ineffective assistance of trial counsel.

In a memorandum of law filed a little more than one month after the amended-substituted application, Manning resisted the State’s “motion for summary judgment.” Additionally, Manning asserted that his claim of ineffective assistance of counsel required that he be allowed latitude and further discovery to determine the reason behind counsel’s “no-negotiated guilty plea.” Manning also asserted that summary disposition of a postconviction relief claim is not proper if a material issue of fact exists, citing Iowa Code section 822.6. He also asserted that claims of ineffective assistance of counsel involved issues of fact and law and for that reason he should be allowed “an opportunity to discover whether such factual allegations are true.” Manning then raised ineffective assistance of appellate counsel as his reason for not raising his postconviction claims on appeal. Finally, he reiterated his postconviction claims of ineffective assistance of trial counsel as we earlier mentioned.

Eleven days after Manning filed his pro se memorandum of law, the district court entered an order dismissing Manning’s application for postconviction relief. The order recites that an assistant county attorney appeared for the State and Manning’s postconviction counsel appeared for Manning. The order further recites that “[t]he matter proceeded to hearing by the Court’s review of the court file only.” Apparently, the hearing was unreported because we have no record of the proceeding.

After setting out the standards for ineffective assistance of counsel, the district court concluded in its dismissal order:

In effect, [Manning] is claiming that the trial counsel was ineffective for not seeking any plea agreement and in fading to properly advise him of the potential for the-maximum sentence allowed. Additionally, [Manning] is claiming that appellate counsel was ineffective for failing to raise these issues on appeal. As previously noted in the court file [Manning] filed a direct appeal with the Iowa Supreme Court, which appeal was dismissed on April 4, 1999, pursuant to Rule 104 as being frivolous. Likewise, by pleading guilty, the petitioner waived all claims of ineffective assistance of counsel.
From a review of the information and documentation provided, the Court cannot conclude that the petitioner has met his burden of proof in establishing ineffective assistance of trial or appellate counsel. Additionally, this Court cannot conclude that the petitioner has met his burden of proof in establishing that the requisite prejudice has resulted, whether counsel’s representation was deficient or not. Accordingly, the petition should be dismissed.

Manning appealed, contending that the district court erred in dismissing his application for postconviction relief without affording him an evidentiary hearing. We transferred the case to the court of appeals, which affirmed. We granted Manning’s application for further review.

III. Issue.

The issue we must decide is whether the district court erred in dismissing Manning’s application for postconviction relief without affording him an evidentiary hearing.

IV. Scope of Review.

Our review in postconviction relief proceedings is for correction of errors at law. DeVoss v. State, 648 N.W.2d 56, 60 (Iowa 2002).

V. Applicable Law.

Iowa Code section 822.7 provides for a trial on the merits of a postconviction relief application. Iowa Code § 822.7 (1999). This section provides that (1) a record of the proceedings shall be made and preserved, (2) all rules and statutes applicable in civil proceedings including pretrial and discovery procedures are available to the parties, (3) the court may receive proof of affidavits, depositions, oral testimony, or other evidence, and (4) the court may order the applicant brought before it for the hearing. Id. Additionally, the statute requires that after the hearing, the court shall make specific findings of fact and conclusions of law relating to each issue presented and then enter an appropriate order. Id.

However, Iowa Code section 822.6 provides for disposition of a postconviction relief application without a trial on the merits as provided for in section 822.7. Section 822.6 provides in relevant part:

Within thirty days after the docketing of the application [for postconviction relief] ... the state shall respond by answer or by motion which may be supported by affidavits....
[Paragraph 2] When a court is satisfied, on the basis of the application, the answer or motion, and the record, that the applicant is not entitled to postcon-viction relief and no purpose would be served by any further proceedings, it may indicate to the parties its intention to dismiss the application and its reasons for dismissal. The applicant shall be given an opportunity to reply to the proposed dismissal. In light of the reply, or on default thereof, the court may order the application dismissed or grant leave to file an amended application or direct that the proceedings otherwise continue. Disposition on the pleadings and record is not proper if a material issue of fact exists.
[Paragraph 3] The court may grant a motion by either party for summary disposition of the application, when it appears from the pleadings, depositions, answers to interrogatories, and admissions and agreements of fact, together with any affidavits submitted, that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.

Iowa Code § 822.6.

As is apparent from this language, two methods are available for disposition of postconviction relief applications without a trial on the merits. The first method, found in paragraph two, allows for such disposition on the court’s initiative, and entitles the applicant to notice of the court’s intention to dismiss the application and its reasons for dismissal. Hines v. State, 288 N.W.2d 344, 346 (Iowa 1980).

The second method, found in paragraph three of section 822.6, allows for such disposition on the motion of either party. Id. The goal here “is to provide a method of disposition once the case has been fully developed by both sides, but before an actual trial.” Id. (emphasis added).

Disposition under paragraph three is “analogous to the summary judgment procedure” in Iowa Rules of Civil Procedure 237-240 (now rules 1.981-1.983). Summage v. State, 579 N.W.2d 821, 822 (Iowa 1998). The language in paragraph three of section 822.6 is comparable to Iowa Rule of Civil Procedure 1.981 (formerly rule 237) relating to summary judgments. Compare Iowa Code § 822.6 (providing that court may grant motion for summary disposition “when it appears from the pleadings, depositions, answers to interrogatories, and admissions and agreements of. fact, together with' any affidavits submitted, that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law”), with Iowa R. Civ. P. 1.981(3) (“The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a njatter of law.”); see also Iowa Code § 822.7 (“All rules and statutes applicable in civil proceedings including pretrial and discovery procedures are available to the parties.”). Therefore, the principles underlying summary judgment procedure apply to motions of either party for disposition of an application for post-conviction relief without a trial on the merits. Poulin v. State, 525 N.W.2d 815, 816 (Iowa 1994).

VI. Analysis.

We begin our analysis with Manning’s claims for postconviction relief. They include the following:

1. Trial counsel failed to file a motion in arrest of judgment;
2. Trial counsel led Manning to believe he (Manning) would receive twenty-five years if he pled guilty;
3. Trial counsel pressured and encouraged Manning to plead guilty without ascertaining whether a plea bargain could be reached;
4. Trial counsel failed to advise the court of a promise of leniency made by the Waterloo Police Department;
5. Trial counsel failed to pursue motions to dismiss and to suppress;
6. State “vindictively” prosecuted Manning after he refused to become an informant;
7. ■ State “vindictively” recommended seventy-five years for each count solely because Manning refused to become an informant;
8. State “vindictively” filed an amended information without providing Manning notice and an opportunity to resist.

On appeal, the State and Manning treat the State’s motion to dismiss as a motion for summary disposition under paragraph three of section 822.6. Accordingly, we do the same.

As mentioned, the rules for summary judgment apply to a motion for summary disposition under paragraph three of section 822.6. Those rules provide that summary judgment is only proper when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Behr v. Meredith Corp., 414 N.W.2d 339, 341 (Iowa 1987). The moving party has the burden of showing the nonexistence of a material fact and the court is to consider all materials available to it in the light most favorable to the party opposing summary judgment. Knudson v. City of Decorah, 622 N.W.2d 42, 48 (Iowa 2000); Behr, 414 N.W.2d at 341. A genuine issue of material fact exists if reasonable minds could draw different inferences and reach different conclusions from the undisputed facts. Behr, 414 N.W.2d at 341.

The State’s motion to dismiss alleged only that Manning had failed to raise his postconviction relief issues earlier and by pleading guilty he waived all claims of ineffective assistance of counsel. The district court not only agreed with both grounds, but, went on to address on the merits two claims of ineffective assistance of counsel.

As to the first allegation, the State contends Manning waived his claims for post-conviction relief because he (1) did not include them in his resistance to his appellate counsel’s motion to dismiss his appeal as frivolous and (2) did not show “sufficient reasons” for not including them in his resistance.

Iowa Code section 822.8 requires post-conviction relief applicants to raise all grounds for relief available to them in their original, supplemental, or amended applications. Iowa Code § 822.8. An exception exists where “the court finds a ground for relief asserted which for sufficient reason was not asserted or was inadequately raised in the original, supplemental, or amended application.” Id. We have interpreted section 822.8 “to impose a burden upon a postconviction applicant to show sufficient reasons why any ground for relief asserted in a postconviction relief petition was not previously asserted on direct appeal.” Bugley v. State, 596 N.W.2d 893, 896 (Iowa 1999).

When a direct appeal ends in an unresisted dismissal under Iowa Rule of Appellate Procedure 6.104, a postconviction relief applicant must comply with section 822.8 and show “sufficient reason” why the applicant’s postconviction relief claims were not raised on direct appeal. Id. at 896-97. However, a rule 6.104 dismissal “which is contested or objected to by the [defendant-appellant] does not prevent issues which could have been presented upon direct appeal from being embraced in a petition for postconviction relief’ under section 822.8. Stanford v. Iowa State Reformatory, 279 N.W.2d 28, 34 (Iowa 1979).

Here, Manning objected to the rule 6.104 dismissal of his direct appeal. In his letter to our clerk of court, he alleged he received ineffective assistance of counsel and that “there is more evidence that will help my appeal.” This was sufficient to allow Manning to raise the claims he now raises in his postconviction relief application. He was not required to show “sufficient reasons” for not raising such claims on direct appeal.

However, Manning faces another hurdle. We have held that a defendant who pleads guilty waives all claims of ineffective assistance of counsel except those that bear on the knowing and voluntary nature of the plea. See State v. LaRue, 619 N.W.2d 395, 398 (Iowa 2000); Speed v. State, 616 N.W.2d 158, 159 (Iowa 2000). Manning has alleged only two claims that clearly fall into that exception. One includes Manning’s claim that trial counsel led him to believe that he — Manning—would receive twenty-five years if he pled guilty. The other includes Manning’s claim that trial counsel pressured and encouraged Manning to plead guilty without ascertaining whether a plea bargain could be reached. Without a fully developed record, there is no clear cut way to determine whether Manning can establish those claims.

That leads us to the real problem in this case: the district court’s action in ruling on the merits of Manning’s postcon-viction relief application. Manning was not made aware that the hearing the court set was to be on the merits. The order setting the hearing clearly states that hearing is “on the State’s Resisted Motion to Dismiss Application for Postconviction Relief.” (Emphasis added.) So it is clear that Manning was not properly notified that he would need to present proof on any issue other than what was alleged in the State’s motion to dismiss.

Moreover, claims bearing on whether Manning’s pleas were knowing and voluntary raise genuine issues of material fact precluding entry of summary disposition on those claims. The State had the burden to show there were no such genuine issues of material fact. The State presented nothing more than pure allegations in its motion that bore not on the knowing and voluntary nature of Manning’s pleas but on whether he failed to preserve his claims and whether he waived his claims by pleading guilty.

Finally, we have recognized that when claims of ineffective assistance of counsel are properly raised in a postconviction relief application, “an evidentiary hearing on the merits is ordinarily required.” Foster v. State, 395 N.W.2d 637, 638 (Iowa 1986); see also Watson v. State, 294 N.W.2d 555, 556 (Iowa 1980); State v. Smith, 282 N.W.2d 138, 143 (Iowa 1979). “Such a hearing affords the parties an opportunity to adversarily develop all of the relevant circumstances attending counsel’s performance, including those circumstances and considerations which may be pertinent but are not a part of the criminal record.” Watson, 294 N.W.2d at 556. Manning’s claims, even if the district court deems them improbable, require that he be allowed to present whatever proof he may have to support those claims. See id. at 557.

For all these reasons, we conclude the district court should not have summarily dismissed Manning’s application. We therefore vacate the court of appeals decision, reverse the district court judgment, and remand for an evidentiary hearing on two claims. Those two claims are that trial counsel (1) led Manning to believe he would receive twenty-five years if he pled guilty, and (2) pressured and encouraged Manning to plead guilty without ascertaining whether a plea bargain could be reached.

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED.


author: /s/ Paul H. Anderson Associate Justice.

text:
    In re Petition for DISCIPLINARY ACTION AGAINST Mary E. McCORMICK, an Attorney at Law of the State of Minnesota.
    No. C1-02-2025.
    Supreme Court of Minnesota.
    Dec. 26, 2002.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Mary E. McCormick, due to mental and physical conditions, has committed professional misconduct warranting public discipline, namely, that she has failed to comply with the terms of her private probation, engaged in the unauthorized practice of law, engaged in a pattern of neglect of client matters, failed to adequately communicate with clients, failed to return a client file, and failed to cooperate with the Director’s disciplinary investigations, in violation of Minn. R. Prof. Conduct Rules 1.3, 1.4, 1.16(d), 5.5(a) and 8.1(a)(3) and Rule 25, Rules on Lawyers Professional Responsibility (RLPR).

Respondent admits her conduct has violated the Rules of Professional Conduct, waives her rights under Rule 14, RLPR, and has entered into a stipulation with the Director in which they jointly agree that respondent currently suffers from mental and physical conditions, namely depression and chronic pain syndrome, which prevent her from competently practicing law and jointly recommend that the appropriate discipline is a public reprimand and transfer to disability inactive status. The parties further recommend that the court require that if respondent seeks reinstatement, she petition for reinstatement under Rule 18 and 28(d), RLPR, and that if the court reinstates respondent, she be placed on public probation subject to the terms and conditions deemed appropriate by the court at that time.

This court has independently reviewed the file and approves the jointly recommended disposition.

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that respondent Mary E. McCormick is publicly reprimanded and transferred to disability inactive status. Any request for reinstatement shall be filed under Rule 18(a) — (d), RLPR.

BY THE COURT:

/s/ Paul H. Anderson Associate Justice.


author: /s/ Paul H. Anderson Associate Justice

text:
    In re Petition for DISCIPLINARY ACTION AGAINST David T. ERICKSON, an Attorney at Law of the State of Minnesota.
    No. C1-87-1357.
    Supreme Court of Minnesota.
    Dec. 26, 2002.
   ORDER

On November 14, 2002, we imposed a stayed 30-day suspension on respondent David T. Erickson for failing to cooperate with the Director’s investigation of a Complaint filed against respondent. In re Erickson, 653 N.W.2d 184, 192 (Minn.2002). As a condition of the stay, we placed respondent on probation for four years and required him to “file and serve on the Director a valid address within the state for personal service within ten days.” Id. at 192. We further provided:

If Respondent violates any of the conditions of this order before the expiration of the four-year probation period, he will be subject to immediate and automatic revocation of the stay of the suspension, and the 30-day period of suspension shall be imposed.

Id.

On December 5, 2002, the Director filed an affidavit stating that respondent has not filed or served the Director with a valid address for personal service as required. The Director requests that we revoke the stay of suspension immediately and impose a 30-day suspension.

Based on all the files, records and proceedings herein,

IT IS HEREBY ORDERED that respondent David T. Erickson is suspended from the practice of law for 30 days, effective immediately. Respondent shall comply with Rule 26, Rules on Lawyers Professional Responsibility.

BY THE COURT:

/s/ Paul H. Anderson Associate Justice


author: Paul H. Anderson Associate Justice

text:
    In re Petition for DISCIPLINARY ACTION AGAINST Ronald P. SMITH, an Attorney at Law of the State of Minnesota.
    No. C5-02-987.
    Supreme Court of Minnesota.
    Dec. 26, 2002.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Ronald P. Smith has committed professional misconduct warranting public discipline, namely, preparing instruments that named as beneficiaries respondent’s son, daughter, and a charity in which respondent was personally interested, altering a Transfer of Partnership Interest document by adding a handwritten provision altering the nature of the document after it was executed, and providing conflicting statements to others about when the handwritten notations were placed on the Transfer of Partnership Interest in violation of Minn. R. Prof. Conduct 1.7(b) and 1.8(c), 8.4(c) and (d).

Respondent admits his conduct violated the Rules of Professional Conduct, waives his rights under Rule 14, Rules on Lawyers Professional Responsibility (RLPR), and has entered into a stipulation with the Director in which they jointly recommend that the appropriate discipline is a 90-day suspension with reinstatement to permanent retired status only, such suspension to be effective 14 days following entry of an order adopting the terms of the stipulation, and payment of $900 in costs under Rule 24(a), RLPR.

This court has independently reviewed the file and approves the jointly recommended disposition.

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that respondent Ronald P. Smith is suspended from the practice of law for a period of 90 days, such suspension to be effective 14 days following entry of this order and subject to the agreed upon terms and conditions set forth above. Respondent shall comply with Rule 26, RLPR, and shall pay $900 in costs under Rule 24(a), RLPR.

BY THE COURT:

Paul H. Anderson Associate Justice