author: CADY, Justice.

text:
    STATE of Iowa, DEPARTMENT OF HUMAN SERVICES, ex rel. Charles M. PALMER, Director, Plaintiff, v. UNISYS CORPORATION and Paramax Systems Corporation, A Unisys Company, Defendants. Unisys Corporation, Appellant, v. Lewin-VHI, INC., n/k/a LW-VHI, Inc., Defendant, Heritage National Health Plan and Care Choices, Inc., Appellees.
    No. 99-1535.
    Supreme Court of Iowa.
    Dec. 19, 2001.

      Mark McCormick, Mark E. Weinhardt, Margaret C. Callahan, and Danielle M. Shelton of Belin Lamson McCormick Zum-bach Flynn, P.C., Des Moines, for appellant.
    David Swinton of Ahlers, Cooney, Dor-weiler, Haynie, Smith & Allbee, P.C., Des Moines, for appellee Heritage National Health Plan.
    Richard R. Chabot and Jill Mataya Cor-ry of Sullivan & Ward, P.C., Des Moines, for appellee Care Choices.
   CADY, Justice.

Unisys Corporation appeals from an order by the district court dismissing its claims for unjust enrichment and contribution. We reverse the decision of the district court, and remand the case for further proceedings.

I. Background Facts and Proceedings.

This action originated when the State of Iowa sued Unisys Corporation and a subsidiary corporation named Paramax Systems Corporation for breach of contract and breach of implied warranty in connection with its management of the state and federal Medicaid program in Iowa. Unisys filed a cross-petition against Heritage National Health Plan and Care Choices, Inc. for contribution, indemnity, and unjust enrichment. Heritage and Care Choices moved for summary judgment and the facts and circumstances presented during the course of the summary adjudication proceedings that followed form the basis for this appeal. These facts, viewed in a light most favorable to Unisys, are accepted for the purpose of establishing the factual background of this appeal.

Iowa’s Medicaid program makes medical services available to eligible Iowans. The State administers the program through the Department of Human Services, who receives both state and federal funds to administer the program and reimburse medical providers for the medical services rendered to Medicaid recipients.

In 1987, the Department first entered into a contract with Unisys to help manage the program and serve as the fiscal agent. As fiscal agent, Unisys was responsible for reimbursing Medicaid providers.

Medicaid recipients are able to receive medical care under the Medicaid program through several methods. One method is to receive medical care from a medical provider on a fee-for-service basis. Another method permits recipients to receive services from health maintenance organizations (HMOs).

The Department contracted with several HMOs, including Heritage and Care Choices, to provide care to eligible recipients. However, instead of paying a separate fee for each medical service rendered by the HMOs, the Department agreed to pay the HMOs a predetermined monthly fee for each Medicaid recipient enrolled in the HMO in return for providing the recipient any and all medical services needed during the month. This fee was known as the “capitation rate” and was paid whether or not a recipient actually received medical services during the month. Paragraph 6.1 of the contract between the Department and the HMOs provided:

In full consideration of contract services rendered by the HMO, the DEPARTMENT agrees to pay the HMO monthly payments based on the capitation rates specified in Addendum VI. The monthly capitation rate for each enrollee category will be as specified in the addendum, and will apply through the date of contract termination.

The “capitation rate” was determined at the beginning of each fiscal year using statistics and data of the actual medical costs of Medicaid recipients who received medical care on a fee-for-service basis during the preceding fiscal year, and was essentially the quotient of the number of months an individual was eligible for Medicaid services and the amount expended during those months on the individual. Addendum VI to the contract provided, in relevant part:

The following category-specific monthly rates are based on Iowa Medicaid’s actual cost experience in each category ... for state fiscal year....

The contract then specified the rate of payment for each category of Medicaid recipient. The categories were based on the sex and age of the recipients. The contract between the Department and the HMO further provided in paragraph 6.2 that “[t]he monthly capitation rates ... shall not be subject to renegotiation during the initial contract term.... ” Additionally, paragraph 6.7 provided:

The DEPARTMENT will not normally recover HMO per capita payments when the HMO actually provided service, even if the recipient is subsequently determined to be ineligible for the month in question.
In instances where enrollment is disputed between two HMOs, the DEPARTMENT will be the final arbitrator of HMO membership and reserves the right to recover an inappropriate capitation payment. The DEPARTMENT also reserves the right to recover other types of inappropriate capitation payments, including but not limited to untimely notice from the HMO to the local office of the DEPARTMENT of an en-rollee’s request to disenroll, which had been submitted to the HMO.

Prior to 1994, the Department determined the capitation rates used to reimburse HMOs for providing medical services. However, it contracted with Unisys in the fiscal years 1994 and 1995 to assemble the necessary data to make the calculations and determine the capitation rates.

During 1994 and 1995, the Department entered into written contracts with Heritage and other HMOs to provide medical care to Medicaid recipients based on the capitation rates calculated by Unisys. The State later determined Unisys miscalculated the capitation rates used in the contracts. Consequently, the rates used in the HMO contracts were higher than they should have been if properly calculated. As a result, the State overpaid the HMOs between $15 million and $17.5 million in 1994 and 1995. Heritage and Care Choices received most of the overpay-ments. The State then sought to recover this amount from Unisys based upon its mistakes.

Although Unisys disputed the claim brought by the State, it filed its cross-petition against Heritage and Care Choices based on the theories of unjust enrichment, indemnity, and contribution. It claimed Heritage and Care Choices were not entitled to retain the alleged overpayments because the fundamental understanding of the contract between the State and the HMOs was that the HMOs would be reimbursed at a fixed rate based upon the actual cost the State had experienced in the previous year, and a mistake in calculating those costs would entitle the State to recover overpayments from the HMOs resulting from the mistake. Unisys submitted expert evidence that the capitation rates were inflated. Heritage submitted evidence that the State did not believe Heritage was liable for the overpayments, and that it had no intention of pursuing any action against Heritage.

The district court granted summary judgment for Heritage and Care Choices. It determined unjust enrichment was not available as a theory of recovery because the claim was governed by a written contract. It also rejected the indemnification and contribution theories. In particular, the district court found Unisys had no standing as a nonparty to the contract to assert that the contract between the State and the HMOs was a product of mistake. It found the parties to the contract did not intend to permit the State to recover excessive payments to HMOs based upon the miscalculation of the capitation rates.

Unisys appealed. Following the appeal, Unisys dismissed its claims against Care Choices and dismissed its indemnity claim against Heritage. It asserts that it stated viable claims against Heritage for contribution and unjust enrichment, and is entitled to receive a trial on the merits.

II. Standard of Review.

Our review is at law. Phillips v. Covenant Clinic, 625 N.W.2d 714, 717 (Iowa 2001). We will not disturb a grant of summary judgment if there is no genuine issue of material fact and the moving party is entitled to summary judgment as a matter of law. Iowa R. Civ. P. 237(c); Fitzgerald v. Salsbury Chem., Inc., 613 N.W.2d 275, 280 (Iowa 2000). When the facts are undisputed, we reverse only if the district court misapplied the law. Fitzgerald, 613 N.W.2d at 280.

In reviewing a summary judgment ruling, we consider the facts in a light most favorable to the nonmoving party. Phillips, 625 N.W.2d at 717. In addition, we construe every legitimate inference that can be reasonably deduced from the record in favor of the party resisting the motion. Id. at 718.

III. Overview.

The right of one party, who has satisfied a claim, to seek reimbursement from another party can generally be pursued by three interrelated common law principles: indemnity, contribution, and subrogation. Chenery v. Agri-Lines Corp., 115 Idaho 281, 284, 766 P.2d 751, 754 (1988). All three principles are equitable in nature and employed to correct or prevent unjust enrichment. See 1 Dan B. Dobbs, The Law of Remedies § 4.3(4), at 604-05, 607-08 (2d ed.1993) [hereinafter Dobbs]; I George E. Palmer, The Law of Restitution § 1.5(d), at 29 (1978) [hereinafter Palmer]. In essence, these doctrines evolved from the most basic legal concept of preventing injustice. I Palmer, § 1.1⅝ at 5. Thus, the idea of unjust enrichment is deeply engrained in our law and is widely applied. Id. at 2. It not only cuts across many areas of the law, such as contract and tort, “but it also occupies much territory that is its sole preserve.” Id. It is a theory to support restitution, with or without the existence of some underlying wrongful conduct. See Smith v. Harrison, 325 N.W.2d 92, 94 (Iowa 1982) (“Unjust enrichment is a doctrine of restitution.”); 1 Dobbs, § 4.1(1), at 553 (plaintiff may confer benefit without any wrongdoing by defendant). Moreover, it has not only given rise to specific derivative theories, such as contribution and indemnity, but can stand on its own as an open-ended, broad theory of restitution. See I Palmer, § 1.1, at 5 (“Unjust enrichment is an indefinable idea in the same way that justice is indefinable.”). We first recognized the principle of unjust enrichment early in the history of our court, see Dist. Township of Norway v. Dist. Township of Clear Lake, 11 Iowa 506, 507 (1861), and have applied it in a wide variety of cases since that time. In this case, Unisys relies on these concepts by making a specific claim for contribution, as well as a general claim for restitution based upon unjust enrichment.

One fundamental aspect of the claim for unjust enrichment involving third parties, such as contribution and other related theories, requires that the two parties to the claim be obligated to the third party. See Oregon Laborers-Employers Health & Welfare Trust Fund v. Phillip Morris Inc., 185 F.3d 957, 968 (9th Cir.1999) (plaintiff to an unjust enrichment claim does not provide a benefit to the defendant by paying bills of third parties which the defendant had no legal obligation to pay); Chenery, 766 P.2d at 755 (claim for subrogation requires that a party making a payment to a third party must have an obligation to make that payment or a recognizable interest to protect); Shonka v. Campbell, 260 Iowa 1178, 1182, 152 N.W.2d 242, 245 (1967) (a claim for contribution requires that the injured party has a legally recognizable remedy against “both the party seeking contribution and the party from whom contribution is sought”). Therefore, in this case, the claims brought by Unisys require a showing that Heritage has a legal obligation to the State. Unisys concedes, for the purpose of its cross-petition, that it is obligated to the State.

Heritage claims it has no legal obligation to the State. Unisys asserts the State has a legal right to recover the overpayments from Heritage based on mutual mistake. Thus, we must first examine whether Uni-sys has established liability by Heritage based on mistake.

IV. Mutual Mistake.

Mistake in the law of contracts has different consequences depending on its relationship to the transaction and the corresponding remedy at issue. See generally II Palmer, § 11.2, at 481-95. Thus, a variety of rules and principles exist to deal with the law of mistake. These rules, however, are tailored to the circumstances that support them, and must not be broadly applied. See generally id.

Generally, mutual mistake will render a contract voidable by the party who is adversely affected by the mistake when the parties are mistaken on a basic assumption on which the contract was made, unless the adversely affected party bears the risk of mistake. Davenport Bank & Trust Co. v. State Cent. Bank, 485 N.W.2d 476, 480 (Iowa 1992); Restatement (Second) of Contracts § 152 (1981). On the other hand, a unilateral mistake by one party will not release that party from its obligation under the contract absent fraud, misrepresentation, or other misconduct. See Bachman v. Easy Parking of Am., Inc., 252 Neb. 325, 330, 562 N.W.2d 369, 373 (1997). Thus, Heritage argues that the mistake in the capitation rates was unilateral, not mutual, and there was no evidence of any misconduct to support a claim against it by the State based on unilateral mistake.

We agree Unisys presented no evidence that Heritage knew the capitation rates were incorrect. However, the rules governing mutual and unilateral mistakes vary with the type of mistake involved and principally impact the rescission of a contract, not reformation. See generally II Palmer, § 11.2, at 481 95. Reformation seeks to uphold the intent of the parties to the contract and takes a different approach to mistake than when rescission is sought, especially when the mistake exists in expression. Id. § 11.2(c), at 488-89; III Id. § 13.1, at 3. On the other hand, rescission seeks to defeat the parties’ intent by ending the contract altogether. Ill Id. § 13.1, at 3. Thus, application of the law of mistake requires courts to resolve disputes by first considering the relationship of the mistake to the transaction and its legal effect on the transaction. II Id. § 11.2, at 482.

Mistakes involving contracts “can be made in the formation, integration, or performance of a contract.” Pathology Consultants v. Gratton, 343 N.W.2d 428, 437 (Iowa 1984). Mistake in expression, or integration, occurs when the parties reach an agreement but fail to accurately express it in writing. Id.; II Palmer, § 11.2, at 482. Mistakes in the formation of contracts include mistakes in an underlying assumption concerning matters relevant to the decision to enter into a contract. II Palmer, § 11.2, at 482. In this category of mistake, the agreement was reached and expressed correctly, yet based on a false assumption. Id. These two types of mistakes can be compatible, and a mistake in expression can also describe a mistake in an underlying assumption. Id. § 11.2(c), at 489.

The nature of the mistake in expression, or those instances where mistake in assumption relates to expression, is also compatible with the concept of reformation. Ill Id. § 13.1, at 2-4. When the understanding of the parties was not correctly expressed in the written contract, equity exists to reform the contract to properly express the intent of the parties. Akkerman v. Gersema, 260 Iowa 432, 438, 149 N.W.2d 856, 859 (1967). Furthermore, it normally makes no difference if the mistake is mutual or unilateral. See III Palmer, § 14.4, at 157-58, 161 (1978 & Supp. 1984). This is because the operative mistake is the belief of the parties that the contract correctly expresses the agreement. See II id. § 11.2(c), at 489-90 (1978). Thus, reformation is needed to give effect to the intention of the parties and to prevent unjust enrichment. Id. at 488. Without reformation, the party benefited by this mistake would receive a benefit not provided for under the agreement which the written contract was meant to express. Id.; see id. § 12.3, at 562-63; III id. § 13.7, at 44-48 (confusing mistake in expression with its cause).

In this case, Heritage contracted with the State to provide medical services for the State’s Medicaid patients. In exchange, the State contracted to pay Heritage the capitation rates listed in Addendum VI. This provision provided: “The following category-specific monthly rates are based on Iowa Medicaid’s actual cost experience.... ” We think this language shows the parties intended the contract to be based on a fee derived from the actual cost of services in the prior years, and there was no extrinsic evidence offered to show otherwise. See Iowa-Illinois Gas & Elec. Co. v. Black & Veatch, 497 N.W.2d 821, 825 (Iowa 1993) (the court is to interpret the meaning of the contract terms unless the meaning is dependent upon extrinsic evidence). Thus, if the terras of the final written agreement failed to accurately express an actual cost experience capitation rate intended by the parties, the contract failed to express the intent of the parties. The contract also reveals an actual cost rate was a basic assumption on which the contract was made and the basis for the consideration paid to Heritage by the State for the services performed. It also suggests both parties believed, at the time the contract was executed, that the rates properly reflected the actual cost experience, and that neither party knew the rates were incorrectly calculated. Therefore, it makes no difference if the parties were unaware of the mistake, or if it was unilateral or mutual. Reformation is available to reform the contract to reflect the true intent of the parties. See III Palmer, § 13.1, at 3.

Notwithstanding, Heritage claims there can be no claim of mistake because the contract allocated the risk of mistake to the State. See Davenport Bank & Trust Co., 485 N.W.2d at 480 (assumption of risk of mistake will defeat a claim of mistake); Restatement (Second) of Contracts § 154 (assumption of risk). Contrary to Heritage’s assertion, we can find no language in the contract revealing the parties allocated the assumption of the risk of miscalculation in the capitation rates to the State. Although the contract indicated the capitation rates could not be renegotiated and the Department would not normally recover payments, the Department reserved the right to recover inappropriate capitation payments. Clearly, recovery of mistaken payments does not constitute renegotiation of the payment rates. The contract did not allocate the risk of mistake in the capitation rates to the State. Based on the contract language, the parties intended the capitation rates to accurately reflect the actual cost experience, and neither party had reason to believe otherwise. There was no evidence offered to support a contrary conclusion.

Finally, Heritage claims Unisys is unable to use the State’s claim of unjust enrichment to support its claim for contribution because the State does not intend to assert any rights against Heritage. Heritage claims the contract with the State is valid as written against the world until such time as the State elects to rescind or reform the contract. See First State Bank v. Shirley Ag Serv., Inc., 417 N.W.2d 448, 452 (Iowa 1987) (security agreement remained valid where neither party chose to avoid it due to mutual mistake).

We think this argument misses the point. The State has elected to hold Unisys accountable for the overpayments. Thus, we must focus on the rights of Uni-sys for contribution or other forms of unjust enrichment. A third-party claim based on unjust enrichment only requires that a legally recognizable claim exists, not the actual assertion of that claim. The inaction of the injured party does not defeat a claim for contribution. Schreier v. Sonderleiter, 420 N.W.2d 821, 825 (Iowa 1988). Unisys alleges sufficient facts to support a claim by the State against Heritage for unjust enrichment based on mistake.

V. Contribution.

The doctrine of contribution rests on the equitable principle that the parties subject to common liability should contribute equally to the discharge of that liability. Herter v. Ringland-Johnson-Crowley Co., 492 N.W.2d 672, 674 (Iowa 1992). It is founded on the principle that “when the parties stand in aequali jure, the law requires equality ... and one of them shall not be obliged to bear a common burden in ease of the rest.” 18 C. J.S. Contribution § 3, at 5 (1990). A party may seek contribution from another if they share a common liability, even if their liability rests on different theories. Schreier, 420 N.W.2d at 824. Thus, parties who are liable to one another because of their common liability have a right to compel contribution from each other. Stowe v. Wood, 199 N.W.2d 323, 325 (Iowa 1972).

“Common liability exists when the injured party has a legally cognizable remedy against both the party seeking contribution and the party from whom contribution is sought.” McDonald v. Delhi Sav. Bank, 440 N.W.2d 839, 841 (Iowa 1989). Two or more persons must be liable to the injured party for the same damage, although liability may rest on different grounds or theories. Federated Mut. Implement & Hardware Ins. Co. v. Dunkelberger, 172 N.W.2d 137, 142 (Iowa 1969).

Unisys claims it is entitled to contribution from Heritage because Heritage and Unisys are both liable for the overpay-ments made by the State. For purposes of the contribution claim, Unisys claims it is liable to the State for breach of contract, and further claims that Heritage is liable to the State for restitution based on mistake. We have previously determined that Unisys has set forth facts that could support a claim for restitution between the State and Heritage based on mistake. Therefore, we turn to consider whether this form of liability is sufficient to satisfy the common liability element of a claim for contribution.

Although the State may have a remedy against either Unisys or Heritage for the overpayments it made to Heritage, this does not mean common liability exists to justify a claim for contribution. Common liability exists for the purpose of contribution when two or more actors are liable to the injured party for the same damage. Federated Mut. Implement & Hardware Ins. Co., 172 N.W.2d at 142. This common liability rule exists because the principles of equity on which the right of contribution rests are applicable only when the situation of the parties are equal. 18 C.J.S. Contribution § 6, at 8. On the other hand, “equality among [parties] whose situations are not equal is not equitable.” Id.

The theories of recovery at issue in this case reveal the situations of Unisys and Heritage are not the same, and explain why contribution is not available in this case. The State’s claim against Unisys is breach of contract. The State’s claim against Heritage is restitution based on unjust enrichment resulting from mistake. The State has no underlying substantive claim against Heritage for wrongdoing. Instead, the claim is strictly equitable and based on unjust enrichment. Thus, the remedies available to the State under each of the theories are different. Restitution measures the remedy by the gain obtained by the defendant, and seeks disgorgement of that gain. 1 Dobbs, § 4.1(1), at 555. Damages, on the other hand, are measured by the plaintiffs loss, and seek to provide compensation for that loss. Id. This distinction means the burdens placed on the parties are different. While the State may have separate remedies against Unisys and Heritage, there is no joint liability essential to support a claim for contribution. This is borne out by assuming Heritage provided restitution to the State by returning the overpay-ments. In this situation, Heritage would have no contribution claim against Unisys for its share of the overpayments because Heritage did not pay for any loss but merely returned property belonging to the State. Its obligation to return the property was not based on liability shared with Unisys, but unjust enrichment. Common liability means contribution must flow in either direction depending on which co-obligor or joint tortfeasor paid more than its fair share of an obligation. See Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1306 (9th Cir.1997). Parties do not share common liability if they are only severally liable on an obligation. See 18 C.J.S. Contribution § 6, at 8.

Normally, the absence of joint liability is a defense to a claim for contribution. In re Reading Co., 115 F.3d 1111, 1124 (3d Cir.1997). However, if there are no facts alleged to support joint liability, the claim must fail as a matter of law. Id. We conclude Unisys has no claim for contribution against Heritage as a matter of law.

Even when contribution fails to provide a remedy because the circumstances do not quite fit within the elements or definition of contribution, it is important to remember that the underlying reason for allowing contribution is unjust enrichment. I Palmer, § 1.5(d), at 33. Thus, if the enrichment of the defendant under the circumstances is the same whether or not the elements of contribution have been satisfied, the principles of unjust enrichment may continue to justify restitution. Id. Unjust enrichment can be the sole basis for a claim of restitution. See id. Thus, we turn to consider whether Unisys has presented a viable claim based on unjust enrichment.

VI. Unjust Enrichment.

The doctrine of unjust enrichment is based on the principle that a party should not be permitted to be unjustly enriched at the expense of another or receive property or benefits without paying just compensation. Credit Bureau Enters., Inc. v. Pelo, 608 N.W.2d 20, 25 (Iowa 2000). Although it is referred to as a quasi-contract theory, it is equitable in nature, not contractual. See Iowa Waste Sys., Inc. v. Buchanan County, 617 N.W.2d 23, 29 (Iowa Ct.App.2000). It is contractual only in the sense that it is based on an obligation that the law creates to prevent unjust enrichment. See id. at 29-30.

The doctrine of unjust enrichment serves as a basis for restitution. Smith, 325 N.W.2d at 94. It may arise from contracts, torts, or other predicate wrongs, or it may also serve as independent grounds for restitution in the absence of mistake, wrongdoing, or breach of contract. See 1 Dobbs, § 4.1(1), at 553.

Recovery based on unjust enrichment can be distilled into three basic elements of recovery. They are: (1) de-fendant was enriched by the receipt of a benefit; (2) the enrichment was at the expense of the plaintiff; and (3) it is unjust to allow the defendant to retain the benefit under the circumstances. See Credit Bureau Enters., Inc., 608 N.W.2d at 25; West Branch State Bank v. Gates, 477 N.W.2d 848, 851-52 (Iowa 1991). Heritage essentially argues that Unisys is unable to satisfy any of the elements of its claim for unjust enrichment for the following reasons: (1) Heritage did not receive anything that it was not entitled to receive under the contract with the State; (2) Heritage did not receive anything belonging to Unisys; and (3) Unisys should justly bear responsibility for the overpayments because they resulted from its conduct and Unisys is independently liable to the State for this conduct.

For purposes of summary judgment, Unisys has shown the mistake inured to the benefit of Heritage, who received more compensation than the parties contemplated under the contract. The contract between the State and Heritage did not insulate Heritage from responsibility for any overpayments. Nevertheless, Heritage claims the overpayments cannot be considered to be a benefit for the purposes of a claim for unjust enrichment by Unisys because the funds were not conferred by or do not belong to Unisys.

We recognize unjust enrichment is a broad principle with few limitations. We have never limited this principle to require the benefits to be conferred directly by the plaintiff. See Iconco v. Jensen Constr. Co., 622 F.2d 1291, 1301-02 (8th Cir.1980) (plaintiff not required to show he directly conferred benefit on defendant under Iowa law). Instead, benefits can be direct or indirect, and can involve benefits conferred by third parties. See I Palmer, § 1.7, at 40-41, 44. The critical inquiry is that the benefit received be at the expense of the plaintiff. See Guldberg v. Greenfield, 259 Iowa 873, 878, 146 N.W.2d 298, 301 (1966).

Heritage argues the overpay-ments it received were not at the expense of Unisys because Unisys is independently liable to the State under the breach of its own contract. Heritage asserts this independent liability precludes any claim for unjust enrichment. We agree Unisys may be liable to the State for the overpayments independent of any responsibility of Heritage. We also agree a plaintiff who has an independent obligation to a third person cannot maintain an action for unjust enrichment against a defendant who is incidentally benefited by the performance of that obligation to the third person. See Oregon Laborers-Employers Health & Welfare Trust Fund, 185 F.3d at 968-69; Restatement (First) of Restitution § 1 (1936). By analogy, we also recognize that subrogation is not available to a person who is personally liable for the debt that the person discharges. Brown v. Sheldon State Bank, 139 Iowa 83, 95, 117 N.W. 289, 293 (1908). However, Unisys is not seeking restitution from Heritage for an incidental benefit. Even though Unisys may be primarily liable to the State for its breach of contract, Heritage is potentially primarily liable to the State for restitution based on mistake. Thus, once Unisys satisfies its obligation to the State for its breach of contract, it could, at the same time, satisfy a separate restitution claim for which Heritage would be primarily responsible. Unisys will not only satisfy its own obligation if it pays the State for the overpayments, but will also satisfy a separate obligation Heritage owes to the State for which Unisys is not primarily responsible. The separate obligations of both Uni-sys and Heritage are critical in determining whether Heritage received a benefit at the expense of Unisys. They are also critical to understanding that the true nature of the claim by Unisys is against Heritage.

The unjust enrichment claim asserted by Unisys is actually one for equitable subrogation. Subrogation, like contribution and indemnity, is a separate form of restitution. See 1 Dobbs, § 4.3(4), at 604, 608. Like unjust enrichment, the object of subrogation is to prevent injustice and rests on the principles of natural equity. Black v. Chicago Great W. R.R., 187 Iowa 904, 914, 174 N.W. 774, 778 (1919). It essentially provides that “one who has been compelled to pay a debt that ought to have been paid by another is entitled to exercise all remedies which the creditor possessed against the other.” Am. Sur. Co. of New York v. Bethlehem Nat’l Bank of Bethlehem, Pennsylvania, 314 U.S. 314, 317, 62 S.Ct. 226, 228, 86 L.Ed. 241, 244 (1941) (citations omitted). This doctrine permits a person who is satisfying an obligation owed by another to a third person to be placed in the obligee’s position against the primary obligor. Heritage Bank v. Lovett, 613 N.W.2d 652, 654 (Iowa 2000). Subrogation is granted to the person who is secondarily liable and “is designed to allow that party to enforce the creditor’s right of exoneration against one [who] has been unjustly enriched.” Id. The doctrine is needed because a person who is secondarily liable would otherwise have no cause of action against the unjustly enriched party. Id. Thus, the rationale for subrogation is “bottomed on a sensitivity to the comparative equities involved.” Fed. Land Bank of Baltimore v. Joynes, 179 Va. 394, 402, 18 S.E.2d 917, 920 (1942). Where one person is more fundamentally liable for a debt which another person is obligated to pay, such a person shall not be enriched by escaping the obligation. Id.

The only twist to the doctrine of subrogation in this case is that Unisys will discharge the obligation by Heritage to make restitution when it also discharges its own obligation to the State. However, this dual discharge is not contrary to the notion that subrogation is only available to those who are secondarily liable. See Heritage Bank, 613 N.W.2d at 654. Instead, we think this equitable requirement is designed to prevent a person who is ultimately responsible for an obligation to a creditor from being subrogated to the creditor’s rights against one who is only secondarily liable after the person satisfies his or her own obligation. Subrogation only requires that the payment by the party seeking subrogation satisfy an obligation for which that party is not primarily liable. See id. If Unisys pays the State for the overpayments made to Heritage, it will satisfy the obligation of Heritage to make restitution for which it is not primarily liable. Moreover, as between Unisys and Heritage, Heritage is more fundamentally liable for the overpayments because the contract which contained the error is subject to reformation, which serves to correct the error.

We conclude a claim for restitution based on unjust enrichment exists against Heritage if Unisys establishes that the State has a claim for unjust enrichment against Heritage and Unisys pays the State for the overpayments based on the State’s claim against Unisys for breach of contract. Yet, we recognize that the obligation or debt must be paid by the party seeking subrogation before subrogation can be enforced. Leach v. Commercial Sav. Bank of Des Moines, 205 Iowa 1154, 1161, 213 N.W. 517, 520 (1927). Thus, Unisys has no enforceable claim for restitution against Heritage until it has paid the State the full amount of its claim. Notwithstanding, as with claims for contribution, this rule should not prohibit a party from filing a cross-petition for unjust enrichment in the original action by the injured party. See Tel. Herald, Inc. v. McDowell, 397 N.W.2d 518, 519 (Iowa 1986); 18 C.J.S. Contribution § 7, at 9. The trial court can impose restrictions on the enforcement of any rights against Heritage until the State is paid.

VII. Conclusion.

We conclude Unisys has established a claim for restitution based on unjust enrichment sufficient to withstand summary adjudication. The district court erred by granting summary judgment.

REVERSED AND REMANDED.

      . Unjust enrichment developed from a common-law count called "money had and received,” which was derived from an earlier form of action known as general assumpsit. Iconco v. Jensen Constr. Co., 622 F.2d 1291, 1295 (8th Cir.1980). This action developed gradually in the English common law, and by 1750 became a common remedy where a defendant had received money he was obligated by "natural justice and equity to refund.” Id. (quoting Moses v. MacFerlan, 2 Burr. 1005, 1012, 97 Eng. Rep. 676, 681 (K.B.1760); Ames, The History of Assumpsit, 2 Harv. L.Rev. 53 (1888)). The action was quickly recognized in this country and, by the 1930's, the principle of unjust enrichment became well engrained into the law. See Iconco, 622 F.2d at 1295; Restatement (First) of Restitution § 1 (1936) ("A person who has been unjustly enriched at the expense of another is required to make restitution to the other.”).

      . The court of appeals recently identified four elements of recovery on the basis of unjust enrichment, including the element that there be no at-law remedy available to the plaintiff. See Iowa Waste Sys., Inc., 617 N.W.2d at 30. The adequacy of a legal remedy is a general limitation on the exercise of equity jurisdiction and is properly considered when restitution is sought in equity, but no independent principle exists that restricts restitution to cases where alternative remedies are inadequate. See I Palmer, § 1.6, at 33-34.

      . In In re Stratman’s Estate, 231 Iowa 480, 488, 1 N.W.2d 636, 642 (1942), we said: "[I]t is essential merely to prove that a defendant has received money which in equity and good conscience belongs to plaintiff." We think the three elements we have identified today capture this statement, as well as the general statements and definitions of unjust enrichment we have utilized since Stratman.

      . Unisys also argues Heritage not only received a benefit through the receipt of over-payments from the State, but would also receive a benefit directly from Unisys if Unisys reimbursed the State for the overpayments. However, any satisfaction by Unisys of its obligation to the State cannot actually be considered to be of benefit to Heritage when the State elected not to seek restitution from Heritage. Instead, reimbursement by Unisys helps explain why the retention of the over-payments by Heritage would be unjust.

      . Although subrogation was first applied to sureties, it is broad enough to cover all cases in which one person pays or satisfies an obligation which in justice and good conscience should have been paid by another. It is administered to secure real and essential justice without regard to form, and is independent of any contractual relations. See Am. Sur. Co. of New York v. State Trust & Sav. Bank of Mt. Pleasant, 218 Iowa 1, 5, 254 N.W. 338, 340 (1934).

      . Heritage would also have defenses to the claim for unjust enrichment by Unisys. See 1 Dobbs, § 4.6, at 656-59 (change of position); Baker v. Am. Sur. Co. of New York, 181 Iowa 634, 639, 159 N.W. 1044, 1046 (1916) (equitable subrogation doctrine is not enforced when it would be inequitable).


source: Caselaw Access Project

author: CARTER, Justice.

license: Public Domain

text:
    Michael KERN, Appellant, v. SAYDEL COMMUNITY SCHOOL DISTRICT, Appellee.
    No. 99-0923.
    Supreme Court of Iowa.
    Dec. 19, 2001.

      Joe Walsh of Hedberg, Owens, Hedberg & Spaulding, P.C., Des Moines, for appellant.
    Brian L. Gruhn of the Gruhn Law Firm, P.C., Cedar Rapids, for appellee.
   CARTER, Justice.

Plaintiff, Michael Kern, appeals from an adverse judgment in his wrongful termination claim against the defendant, Saydel Community School District. The basis for his claim is the alleged failure of the school district to provide a hearing on his proposed termination as required by the Iowa Veterans Preference Law, Iowa Code § 35C.6 (1997). After reviewing the record and considering the arguments presented, we affirm the decision of the district court.

The evidence presented to the district court was substantially as follows. Plaintiff served in the United States Navy from 1972 until his honorable discharge in 1975. In January 1996 he was hired by the school district as a custodian and became a member of the local union.

On September 19, 1996, plaintiffs supervisor, Merle Schieffer, met with him and presented him with a written memorandum which stated that several classrooms were not properly cleaned and that the office area and library had not been vacuumed. All of these deficiencies were in the portion of the building that plaintiff was assigned to clean. Thereafter, several teachers complained about the condition of the rooms plaintiff was assigned to clean. In a memorandum dated October 14 plaintiff was advised by Schieffer that he had left the lights on in at least one-half of the classrooms, trash remained in the garbage cans in several classrooms, several classrooms were not properly cleaned, office areas had not been vacuumed, gum remained in the restroom urinals, and hand towels in the bathrooms had not been replaced. He was told to improve his work performance.

A written work performance appraisal of plaintiffs efforts was prepared on October 14, 1996, and mailed to him. He concedes that he received it. This performance appraisal cited deficiencies in work performance, quality of work, quantity of work, the ability to work with others, job attitude, and dependability. Schieffer and the building principal met with plaintiff on October 21 concerning this performance appraisal.

On May 28, 1997, plaintiff received a written communication that an inspection by his supervisor revealed several classrooms had not been vacuumed, bathrooms had not been cleaned, and doors were left unlocked. This notification advised plaintiff that a meeting was being scheduled for June 2, 1997, to discuss his continued employment. The notice advised plaintiff that this meeting would be step three of the district’s procedures for disciplinary action due to poor job performance. Those procedures provide as follows:

PROCEDURES FOR DISCIPLINARY ACTION DUE TO JOB PERFORMANCE

Walk-through evaluations will be done at anytime during or at the end of a regular work shift(s). Walk-throughs will precede any formal evaluation. Walk-through data will be documented.

Administrative Procedures
Step 1 Following the identification of job performance concerns, an informal meeting will be held with the employee and the Facilities Director to highlight the areas of concern(s). These areas of concern(s) will be documented in writing, dated, and placed in the employee[’]s file. The object of Step one (1) is to alert the employee of performance concerns and to gain employee feedback.
Step 2 This step is subsequent to identification of job performance concerns which the employee has either continued to display or has not appropriately addressed.
Step Two (2) includes a formal meeting with the Facilities Director, the employee, and the Building Principal. This step may include the Superintendent, should conditions require such action or is requested. The purpose for Step two (2) will be to present formal complaints of each of the job performance(s) to the employee, and to gain their feedback. Results from the Step two (2) meeting may be referred to Step three (3) for administrative action, or placed back on the employee for correction.
Step 3 Step three (3) will be held to discuss the continued employment of an employee whose performance continues to be less than expected. This meeting will be held with the employee, the Facilities Director, Principal, and Superintendent. Disciplinary action may be taken as a result of this conference.
Please note that the Custodial Evaluation Form will be used throughout this process. The purpose of this information is both to fulfill contractual agreements, and to help our employees improve as professionals.

Plaintiff, Schieffer, the building principal, and plaintiffs union representative attended the June 2 meeting. Plaintiff attended the meeting and conveyed his feeling that his work deficiencies were partly the result of being required to perform too many tasks within a limited period of time and partly the result of excessive uncleanliness on the part of pupils and teachers. At the conclusion of the meeting, Schieffer determined that plaintiff could not be counted on to improve his work performance, and that such performance was not up to district standards. He advised plaintiff that he intended to recommend his termination to the school superintendent and that, in the interim, plaintiff would be suspended without pay. He further advised plaintiff that, because the superintendent was unable to attend the June 2 meeting, plaintiff would be afforded an opportunity for a separate meeting with the superintendent to complete step three of the disciplinary procedure.

On June 16, 1997, plaintiff and his union representative met with Dr. David Arnold, the superintendent. Plaintiff was given the opportunity to review his personnel file, dispute or ask questions about anything in the file, and address any concerns he had. After the meeting, Dr. Arnold reviewed plaintiffs personnel file and considered the information he received from Schieffer, plaintiff, and the union representative. Dr. Arnold then made a recommendation to the school board to terminate plaintiffs employment. The board followed the superintendent’s recommendation and terminated plaintiffs employment with the school district. Plaintiff was not present at the meeting of the board at which his termination took place.

Pursuant to the district’s labor contract, plaintiff filed a grievance, contending his discharge was improper under the contract. An arbitration proceeding was held on August 13, 1997. Plaintiff was present and was assisted by Sharon McIntosh, Stanley Nevins, and Linda Davis from the union. Both the school district and plaintiff called witnesses to testify before the arbitrator. The arbitrator’s decision found that the school district did not violate the plaintiffs contractual rights, but, in so ruling, did not consider the requirements of the Veterans Preference Law.

Iowa Code section 35C.6 (1997) states:

No person holding a public position by appointment or employment, and belonging to any of the classes of persons to whom a preference is herein granted, shall be removed from such position or employment except for incompetency or misconduct shown after a hearing, upon due notice, upon stated charges, and with the right of such employee or appointee to a review by a writ of certiora-ri or at such person’s election, to judicial review in accordance with the terms of the Iowa administrative procedure Act if that is otherwise applicable to their case.

There is no dispute that this provision is applicable to plaintiff. Plaintiff was employed by a public employer. See Iowa Code § 20.3(11). He was also honorably discharged from the United States Navy in February 1975, making him a person to whom a preference was granted. See Iowa Code § 35C.1(1).

The term “hearing” is not defined by statute, nor is it defined in Iowa case law. Guidance in removing a veteran for incompetency or misconduct was sought from the attorney general. The attorney general stated:

Written charges should be made stating the grounds for the removal, and a copy of such charges, together with notice of the time and place of hearing, should be served upon the accused, and at such time and place the person sought to be removed should have an opportunity to be heard and refute such charges and show why he ought not to be discharged.
Upon hearing if the charges are not sustained by a preponderance of the evidence the person should be exonerated, but if a preponderance of the evidence shows incompetency or misconduct the person should be removed from his position or discharged from employment.

1909 Op. Iowa Att’y Gen. 146.

If the issue before us was whether the opportunity granted this plaintiff to respond to the complaints that led to his discharge satisfied due process, the answer would be easy. When a formal postdis-charge procedure exists in which a discharged employee is afforded a full and complete evidentiary hearing (such as the hearing before the arbitrator provided for in the school district’s labor agreement), a predischarge procedure that only calls for a notice of deficient performance and an opportunity to respond will satisfy due process. Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 546, 105 S.Ct. 1487, 1495, 84 L.Ed.2d 494, 506 (1985); Winegar v. Des Moines Indep. Cmty. Sch. Dist., 20 F.3d 895, 899 (8th Cir.1994). That type of notice and opportunity was afforded plaintiff prior to his discharge. However, plaintiff urges that the type of hearing to which he was entitled is not determined by the Due Process Clause but rather by Iowa Code section 35C.6.

We agree that section 35C.6 is the source of the right that plaintiff has asserted in this litigation and we must decide the case based on what that statute requires. As we have stated, the type of hearing called for by that legislation is not described in the statute. For that reason, we are satisfied that some flexibility is called for in determining the type of pre-discharge hearing that must be afforded under section 35C.6. As is the case with the requirements of the Due Process Clause, the type of hearing required must necessarily vary with the circumstances.

We have recognized that the purpose of section 35C.6 is to insure veterans permanency of employment and protect them from removal except for their own incompetency or misconduct. Edwards v. Civil Serv. Comm’n, 227 Iowa 74, 79, 287 N.W. 285, 287 (1939). Because the school district was aware of plaintiffs postdischarge rights under the collective bargaining agreement, which included a complete evi-dentiary hearing before an independent arbitrator, we are satisfied the purpose of section 35C.6 was fully satisfied by the type of notice and opportunity to respond that was afforded to plaintiff.

We have considered all issues presented and conclude that the decision of the district court should be affirmed.

AFFIRMED.


author: STREIT, Justice.

text:
    STATE of Iowa, Appellee, v. John Richard BONSTETTER, Appellant.
    No. 00-2044.
    Supreme Court of Iowa.
    Dec. 19, 2001.

      John R. Sandre of Coppola, Sandre, McConville & Carroll, P.C., West Des Moines, for appellant.
    Thomas J. Miller, Attorney General, Martha E. Boesen, Assistant Attorney General, Ron Robertson, County Attorney, and Stephen Lickiss, Assistant County Attorney, for appellee.
   STREIT, Justice.

A cooperative executive seeks bonus and 401K benefits accrued during the time he was stealing from his employer. John Richard Bonstetter appeals the district court’s denial of this claim and order of restitution resulting from his conviction of first-degree fraudulent practice and forgery. Specifically, Bonstetter challenges the trial court’s denial of his request to offset damages allegedly owed him by his victim. He further challenges the district court’s inclusion of the cost of an audit in the restitution order. We find the district court was correct in not allowing Bonstet-ter’s claim against his victim. Further, while the costs of an audit are certainly recoverable, the State failed to offer sufficient proof of this audit as an item of damage. We affirm in part, reverse in part, and remand.

I. Background Facts

Bonstetter converted over $422,000 from his employer, NEW Cooperative, for private use. In 1992 Bonstetter became director of finance at NEW Cooperative. In 1997 he was promoted to the position of grain market manager and assistant general manager. In these capacities, Bon-stetter had authority to issue checks without prior authorization from anyone in the company. During these years, through a series of eleven fraudulent-check transactions, Bonstetter converted the money from his employer.

In 2000, Bonstetter pled guilty to first-degree fraudulent practice and forgery. The district court sentenced Bonstetter to five and ten-year consecutive indeterminate terms of incarceration. The sentences were suspended. Bonstetter repaid $463,597. The State sought to recover restitution for lost profits, audit fees, and attorney fees. During the hearing on damages, the State presented a bill from the auditor for $19,763. Bonstetter testified as part of his compensation package he was entitled to a bonus if he reached certain goals. He claimed he reached the goal prior to resignation and therefore was entitled to the bonus. Bonstetter also sought accrued vacation and 401K benefits. The total amount of these accrued benefits was $54,812. The court ordered Bonstet-ter to pay $89,318 for lost profits and $19,763 in audit costs. Bonstetter received credit for $21,386 against these amounts for the restitution he previously overpaid.

On appeal, Bonstetter contends he should have been given an offset for the money NEW Cooperative owes him. He also contends the audit fees should not have been included in the restitution order as there was no evidence in the record as to what services were rendered or whether the fees were necessary, fair, and reasonable.

II. Scope of Review

Bonstetter claims he should be allowed an offset as part of the statutory scheme for restitution. We resolve this issue by our rules of statutory construction. We normally construe statutes on the basis of their ordinary and commonly understood meanings. State v. Petrie, 478 N.W.2d 620, 622 (Iowa 1991). We will not search for a different meaning when the statutory language is clear. Id.

Our review is at law as to Bonstet-ter’s claim the court erred in including the audit fees in the restitution order. State v. Watts, 587 N.W.2d 750, 751 (Iowa 1998) (“[restitution orders are reviewed for errors at law”). The court’s findings of fact have the effect of a special verdict. See Iowa R.App. P. 4. When reviewing the restitution order, we determine whether the court’s findings lack substantial evi-dentiary support, or whether the court has not properly applied the law. Christensen v. Iowa Dist. Ct., 578 N.W.2d 675, 678 (Iowa 1998). “Evidence is substantial when a reasonable mind would accept it as adequate to reach a conclusion.” Hasselman v. Hasselman, 596 N.W.2d 541, 545 (Iowa 1999) (quoting Johnson v. Dodgen, 451 N.W.2d 168, 171 (Iowa 1990)).

III. The Merits

A. Offset in the Restitution Order

Bonstetter claims NEW Cooperative owes him monies for a bonus, accrued vacation time and salary, and benefits from his 401K plan. It is not clear if he sought extra bonus money for the increased profits from his repayment of the money he stole. At sentencing, the trial court denied Bonstetter’s request for such monies.

Before we turn to the merits of this issue, we first briefly explore the concept of criminal restitution. The word “restitution” connotes restoring or compensating the victim for loss. 24 C.J.S. Criminal Law § 1771, at 428 (1999). Unlike other forms of penal sanctions, restitution forces the offender to answer directly for the consequences of his or her actions. See State v. Kluesner, 389 N.W.2d 370, 372-73 (Iowa 1986). The rationale of restitution under criminal law is similar to the rationale of tort under civil law. See State v. Mayberry, 415 N.W.2d 644, 645-46 (Iowa 1987). “A wrong has been done. A person has been injured or property damaged. The victim deserves to be fully compensated for the injury by the actor who caused it.” State v. Ihde, 532 N.W.2d 827, 829 (Iowa Ct.App.1995) (citing Mayberry, 415 N.W.2d at 645-46). Since restitution is a penal sanction separate from civil remedies, it makes it possible to avoid the necessity of a separate civil action and ensures the efficient use of time and resources in the sentencing process. Matthew Spohn, Note, A Statutory Chameleon: The Mandatory Victim Restitution Act’s Challenge to the Civil/Criminal Divide, 86 Iowa L.Rev. 1013, 1034 (2001).

As a general rule, restitution depends on the existence of a crime for which the offender was convicted. 24 C.J.S. Criminal Law § 1774, at 431. In Iowa, restitution shall be ordered in all criminal cases in which the defendant pleads guilty or is found guilty. See Iowa Code § 910.2 (1999); Teggatz v. Ringleb, 610 N.W.2d 527, 529 (Iowa 2000); Watts, 587 N.W.2d at 751 (restitution is mandatory in all criminal cases in which the defendant pleads guilty). After conviction, the court must' identify the “victim” entitled to restitution. Wayne R. LaFave, Criminal Procedure § 26.6(c), at 801 (2d ed.1999). A victim is “a person who has suffered pecuniary damages as a result of the offender’s criminal activities.” Iowa Code § 910.1(5).

Once the victim is identified, the court must determine what losses may be considered in calculating the amount of restitution. Any damages that are causally related to the criminal activities may be included in the restitution order. 24 C.J.S. Criminal Law § 1776, at 432. Damages not causally related to the crime are improper. Id. A restitution order is not excessive if it bears a reasonable relationship to the damage caused by the offender’s criminal act. Ihde, 532 N.W.2d at 829. The relationship must be shown by a preponderance of the evidence. Iowa Code § 910.2.

A court is authorized to order criminal restitution pursuant to the statutes. 24 C.J.S. Criminal Law § 1771, at 428. In the absence of such statutes, the court has no power to issue a restitution order. Id. The sentencing judge performs two functions in entering a restitution order. Ihde, 532 N.W.2d at 829. First, the judge determines the damage caused by the defendant’s actions. Id. Second, the judge fashions a reasonable method of payment. Id.

Restitution serves multiple purposes. It compensates the victim. Teg-gatz, 610 N.W.2d at 529 (“the purpose of restitution is to protect the public by compensating victims of criminal activity”). It is rehabilitative in nature. “Restitution goes beyond revenue recovery and is designed to instill responsibility in criminal offenders.” State v. Izzolena, 609 N.W.2d 541, 548 (Iowa 2000). When the court orders restitution, it must consider the appropriate goal of restitution desired in the particular circumstances of the case before it.

In reviewing a restitution award, we must determine if the trial court applied the correct law in fixing damage. State v. Petrie, 478 N.W.2d 620, 622 (Iowa 1991). We must also consider whether there is substantial evidence supporting the damages awarded. See State v. Kaelin, 362 N.W.2d 526, 528 (Iowa 1985). The district court is confined to the statute in determining what damages to include in the restitution order.

In this case the trial court determined the amount of restitution under Iowa Code chapter 910. This chapter provides, in part:

[T]he sentencing court shall order that restitution be made by each offender to the victims of the offender’s criminal activities, to the clerk of court for fines, penalties, ... and, to the extent that the offender is reasonably able to pay, ... court costs ..., court-appointed attorney’s fees, or the expense of a public defender when applicable.... ”

Iowa Code § 910.2.

The trial court denied Bonstet-ter’s request for an offset because the statute does not authorize a reduction of the damages by a claimed offset by the criminal defendant. The trial court correctly applied the rule of strict statutory construction. The restitution statute in Iowa Code chapter 910 is a penal statute and must be interpreted strictly. See White v. Iowa Dep’t of Transp., 407 N.W.2d 606, 608 (Iowa 1987) (in statutes relating to a penal sentence, we apply rules of strict construction). The court must determine the legislative intent, considering the language in the statute, the object sought to be accomplished, and the evil sought to be remedied. State v. Akers, 435 N.W.2d 332, 334 (Iowa 1989) (citing Brown v. John Deere Waterloo Tractor Works, 423 N.W.2d 193, 195 (Iowa 1988)). Strict statutory construction is not to be used to inject doubt when legislative intent is evident through a reasonable construction of the statute. Iowa Code § 4.1(38) (when statute contains no technical terms or terms with particular legal meaning, its language must be construed “according to the context and the approved usage of the language”); White, 407 N.W.2d at 608.

The obvious purpose of Iowa Code chapter 910 is to compensate the victim and serve the functions of deterrence and rehabilitation of the offender. To advance this purpose, the legislature has enacted criminal sanctions that must be ordered by the sentencing judge in accordance with the statute. The statute provides, “[restitution means payment of pecuniary damages to a victim in an amount and in the manner provided by the offender’s plan of restitution.” Iowa Code § 910.4. Pecuniary damages are “all damages to the extent not paid by an insurer, which a victim could recover against the offender in a civil action arising out of the same facts or event, except punitive damages.... ” Id. § 910.1(3).

Inclusio unius est exdusio alterius, the maxim of statutory construction that the inclusion of one is the exclusion of the other, has force in this case. Under this principle, any other types of damages not outlined in the statute are not recoverable. The statute does not confer authority in the district court to include an offset in a restitution order. The only exception is an allowance for an offset for amounts paid the victim by insurance. Id. § 910.1(2). Other than this exception, the restitution statute clearly excludes from the consideration of the district court the discretion to include an offset in a restitution order. There is no suggestion by the legislature that this statute extends to protect the criminal offender by allowing an offset other than in the insurance context. Such a construction would not comport with the purpose of the statute, and is an unreasonable interpretation.

To hold otherwise would reward a lawbreaker by providing a forum to litigate freely all the various claims against the victim. The purpose of the restitution order is to compensate the victim for losses caused by the defendant’s criminal activity — not to address civil claims such as the one before us. Because we find the district court correctly applied the law in excluding the requested offset from the restitution order, we affirm.

B. Cost of the Audit

The State requested the district court include the cost of an audit in the restitution order. The State offered an exhibit specifying NEW Cooperative’s calculation of damages. The exhibit included the cost of the audit in the total damages calculation. Over a hearsay objection, the court admitted the exhibit and later ordered Bonstetter to pay an additional $19,763 to cover the cost of the audit. Bonstetter argues the district court erred in including the audit in the restitution order. He claims there was no evidence to establish the fee was necessary, fair, or reasonable. The State argues Bonstetter failed to preserve error because he did not lodge the proper objection before the trial court, ie. Bonstetter did not argue there was no evidence the costs of the audit were reasonable and necessary.

In general, matters not raised in the trial court will not be considered for the first time on appeal. State v. Morehouse, 316 N.W.2d 884, 886 (Iowa 1982). However, in a bench trial, a defendant is not required to challenge the sufficiency of the evidence in the district court to preserve error for appeal. See State v. Anspach, 627 N.W.2d 227, 231 (Iowa 2001) (citing State v. Abbas, 561 N.W.2d 72, 74 (Iowa 1997)). Therefore, it was not necessary for Bonstetter to object to the inclusion of the audit in the restitution order or raise the point by way of a post-trial motion.

Bonstetter filed a “motion for new trial, motion for reconsideration, and motion to correct sentence.” In the motion, Bonstet-ter specifically identified the nature of his challenge to the restitution order. At the time the State filed its resistance to Bon-stetter’s motion, it had the opportunity to specifically state the evidence supporting the inclusion of the audit. However, the State resisted the motion simply by denying “all allegations of errors or improprieties in the sentencing of Defendant and of the amount of restitution ordered.” Even though Bonstetter was not required to challenge the sufficiency of the evidence to support the inclusion of the audit, he alerted the court to the issue, and the court had occasion to correct any errors in the sentence. In its order, the court found “the restitution amount Ordered fairly reflect [sic] the amounts owing pursuant to Chapter 910.”

In calculating a restitution order, the district court must find a causal connection between the established criminal act and the injuries to the victim. State v. Holmberg, 449 N.W.2d 376, 377 (Iowa 1989). The damage must have been caused by the offender’s criminal act to justify the restitution order. Ihde, 532 N.W.2d at 829. Once the causal connection is established by a preponderance of the evidence, “the statute allows recovery of ‘all damages’... which the state can show by a preponderance of the evidence.” Id. (quoting Holmberg, 449 N.W.2d at 377). A restitution order is not excessive “if it bears a reasonable relationship to the damage caused.” Mayberry, 415 N.W.2d at 647. In the criminal context, failure of the State to satisfy its burden of proof as to damages does not preclude pursuit of civil recovery for the costs of an audit.

Under our statute, a restitution order may properly include all damages to the extent not paid by an insurer, which the victim could recover against the offender in a civil action arising out of the same facts or event. Iowa Code § 910.1(2). The present case is similar to State v. Taylor, 506 N.W.2d 767 (Iowa 1993) and State v. Hollinrake, 608 N.W.2d 806 (Iowa Ct.App.2000). In Taylor, the defendant pled guilty to first-degree theft and falsifying public documents. Taylor, 506 N.W.2d at 768. In Hollinrake, the defendant pled guilty to falsifying public documents. Hollinrake, 608 N.W.2d at 808. In both cases, the courts held the offense was the civil equivalent of conversion. Hollinrake, 608 N.W.2d at 808; Taylor, 506 N.W.2d at 768. “Conversion is the intentional exercise of. control over property ‘which so seriously interferes with the right of another to control it that the actor may justly be required to pay ... the full value of the chattel.’ ” Hollinrake, 608 N.W.2d at 808 (quoting Restatement (Second) of Torts § 222A(1) (1964)). In the case before us, the State convicted Bonstetter of first-degree fraudulent practice and forgery. The events surrounding Bonstetter’s criminal conduct support a civil claim for conversion. Bonstetter took money from his employer. The issue then is whether the costs of the audit, determining the extent of the taking, are a proper element of damage in a conversion suit.

Generally, expenses of litigation are not recoverable in a civil suit, unless there is specific statutory authority to the contrary. Taylor, 506 N.W.2d at 768 (citing 89 C.J.S. Trover & Conversion § 175, at 650 (1955)). However, conversion cases present an exception to the general rule. Here, the reasonable and necessary expenses incurred in recovering the misappropriated funds are a proper element of damage. Iowa Code §§ 910.1, 910.2; Taylor, 506 N.W.2d at 768; Hollinrake, 608 N.W.2d at 809; 89 C.J.S. Trover & Conversion § 174, at 650; 18 Am.Jur.2d Conversion § 117, at 231 (1985). Consequently, expenses incurred solely because of the offender’s acts are recoverable. Hollinrake, 608 N.W.2d at 809 (costs of audit are recoverable if offender’s action directly caused the need for the audit); 89 C.J.S. Trover & Conversion § 174, at 650.

Bonstetter, over a long period of time, intentionally converted over $422,000 from NEW Cooperative. NEW Cooperative, in turn, was forced to conduct an independent audit to determine the extent of the damage caused by Bonstetter. See, e.g., Hollinrake, 608 N.W.2d at 809 (citing Taylor, 506 N.W.2d at 769) (“[t]he only means to adequately uncover the extent of the damage was through an audit”); accord State v. Bausch, 29 P.3d 989, 991 (Kan.Ct.App.2001) (audit costs are recoverable as part of restitution order because the audit was a reasonable consequence of the defendant’s crime); State v. Whitaker, 110 N.M. 486, 495, 797 P.2d 275, 284 (1990) (“[a] reasonably foreseeable consequence of defendant’s taking money from the county was that the county would need to conduct a thorough audit to be sure it had uncovered all the defendant’s defalcations”); State v. Holmgren, 229 Wis.2d 358, 372, 599 N.W.2d 876, 883 (Ct.App.1999) (where audit was done to determine extent of defendant’s wrongdoing and to attach specific amounts to the criminal acts, the costs of the audit were necessitated by defendant’s crime).

Given these facts, common sense seems to dictate an audit was certainly necessary. However, we may not simply infer the necessity and reasonableness of this particular audit. The State must offer some proof to support the inclusion of the audit in the restitution order. In this case, the State failed to provide any such evidence. Bonstetter argues the court erred in including the cost of the audit in the restitution order because there was insufficient evidence to prove the audit fees were necessary, fair, or reasonable. The State offered exhibit three which included the $19,763 audit fee in the calculation of total damages. Over Bonstetter’s hearsay objection, the court admitted exhibit three into evidence. Mr. Stanley, a certified public accountant with Sehnurr & Company, testified the charge was for “professional fees for work in this case.” He further said he did not know whether the audit fees were necessary, fair, and reasonable.

On appeal, Bonstetter seems to argue the audit may not be included in the restitution order because no witness ever uttered the words, “the audit fees are necessary, fair, and reasonable.” Though the State must provide evidence to support the conclusion the audit is necessary, fair, and reasonable,- it is not necessary for the State to elicit from a witness the precise words, “the audit fees are necessary, fair, and reasonable.” Though such an exact statement is not necessary, if present in the record, the statement is some proof to support inclusion of an audit in a restitution order. Here, the record does not reflect such a statement, and we can find no other evidence to support the court’s inclusion of the audit as a damage item in the restitution order. There is no evidence NEW Cooperative paid any money in satisfaction for the cost of the audit. All the State offered was proof that a bill was presented from a third party for payment of the costs of the audit. However, presentation to the court of the bill alone is not enough to prove the costs of the audit are necessary, fair, and reasonable. Some other proof is necessary before we can conclude the audit was a reasonable, fair, and necessary element of damage. See Data Documents, Inc., v. Pottawattamie County, 604 N.W.2d 611, 616 (Iowa 2000) (party seeking damages bears burden of proving them; if the record is uncertain or speculative as to whether a party has sustained damages, the factfinder must deny recovery); B-W Acceptance Corp. v. Saluri, 258 Iowa 489, 497, 139 N.W.2d 399, 404 (1966) (must prove damages with some reasonable certainty).

In conclusion, we find the State failed to satisfy its burden of proving a reasonable relationship between Bonstet-ter’s criminal actions and the necessity and reasonableness of this particular audit. See Mayberry, 415 N.W.2d at 647. It is the county attorney’s responsibility to account for victim rights under our statutes. Iowa Code § 910.3. As such, the State must satisfy its burden of proof when it seeks to recover damages due the victim. Since the record is devoid of any evidence to prove' this audit was reasonable and necessary, the inclusion of the costs of the audit as an item of damage was not supported by substantial evidence. See Mayberry, 415 N.W.2d at 647. Because we find there was not substantial evidence for the court to determine the costs of the audit were part of the damage caused by Bonstetter’s crimes, we reverse and remand for the district court to enter an order consistent with this opinion.

Costs on appeal are taxed to the appellant.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

      . Punitive damages and damages for pain, suffering, mental anguish, and loss of consortium are not recoverable. See Iowa Code § 910.1(2).

      . To use the general tort concept of conversion to draw a corollary to audit expenses as similar to costs of preparation for a civil suit skews the analysis. In a civil suit, the cost of an audit to determine damages would be as recoverable as the repair estimate charge given as part of the repair process. See 25 C.J.S. Damages § 48, at 770 (1966) (where property is susceptible of being repaired, the cost of such repairs and replacements as are necessary to restore property to condition in which it was prior to the damage is recoverable). Similarly, the cost of a doctor’s initial exam after an injury to determine the injury and the steps needed to remedy same is recoverable in a civil case. See Id. § 47(1), at 760 (recovery for reasonable amount of expenses necessarily incurred by victim as result of a wrong occasioning a personal injury). This is not similar to attorney fees in a civil case. See Id. § 50, at 777 (no recovery as damages of the expenses of litigation and attorney fees unless authorized by statute or contract).


author: NEUMAN, Justice.

text:
    Frank CONKEY d/b/a Conkey Electric Co., Appellant, v. HOAK MOTORS, INC. and GMAC, Appellees.
    No. 99-1283.
    Supreme Court of Iowa.
    Dec. 19, 2001.

      Frank Conkey, Sioux City, appellant pro se.
    Alison L. McGinn, Donald P. Dworak, and Frederick D. Stehlik of Gross & Welch, Omaha, NE, for appellees.
   NEUMAN, Justice.

This is an appeal from dismissal of plaintiffs small claims action for conversion. Two matters are at issue: (1) the authority of defense counsel to appear pro hac vice and, (2) the sufficiency of the evidence to sustain the district court judgment. Finding no error warranting reversal, we affirm.

The facts are essentially undisputed. Plaintiff, Frank Conkey, leased a van from defendant, Hoak Motors, Inc., who assigned the lease to defendant, GMAC. Conkey fell behind on his lease payments. Efforts by GMAC to persuade Conkey to cure the arrearage were unsuccessful. So when Conkey took the van to Hoak Motors for warranty work, a GMAC representative repossessed the vehicle and put it in storage.

GMAC advised Conkey of the van’s location and gave him the opportunity to retrieve tools and equipment he had stored in it. Conkey, evidently angered by the repossession, proceeded to where the van was stored, argued with police and a GMAC representative, but failed to collect his equipment. The van was moved to a more secure storage facility and a detailed inventory of Conkey’s tools was prepared. Following correspondence between GMAC’s counsel and Conkey, some of the tools were eventually retrieved by Conkey. The remainder were shipped to him via UPS.

Conkey then commenced separate small claims actions against Hoak Motors and GMAC for “conversion and theft of business tools and business materials” as well as damages for the loss of their use. The actions were consolidated for trial. Based on GMAC’s entitlement to the van, and Conkey’s failure to prove any loss of its contents, the small claims court dismissed the action. Conkey appealed.

On appeal to the district court, Conkey claimed entitlement to a new trial because he had not learned until after the trial that GMAC’s counsel, Frederick D. Stehlik, is licensed to practice law in Nebraska but not Iowa. The court rejected Conkey’s challenge to Stehlik’s pro hac vice status and also found, as the small claims court had before it, that the repossession was proper and Conkey sustained no recoverable damages.

Conkey’s appeal, treated as an application for discretionary review, was granted for the purpose of considering the import of his challenge to defense counsel’s status.

I. Scope of Review.

This small claims action, tried at law, is reviewable on appeal for the correction of assigned errors only, not de novo. Hyde v. Anania, 578 N.W.2d 647, 648 (Iowa 1998).

II. Issues on Appeal.

A. Pro hac vice. Conkey’s principal claim seems to be that his pursuit of a judgment against the defendants was prejudiced by the fact that defendants’ counsel, Stehlik, is not licensed to practice law in Iowa. Conkey did not learn of Steh-lik’s unlicensed status until Conkey appealed the dismissal of his small claims action, whereupon Stehlik filed a written motion for admission pro hac vice in the district court. The record reveals, and the district court found as a matter of fact, that Steh-lik had sought and received oral permission from the small claims court to appear on defendants’ behalf at trial. Word of that permission was never relayed to Con-key, however, a matter Conkey now urges as a ground for reversal. He not only challenges the informality of the court’s action; he claims that if he had known Stehlik was unauthorized to appear as an attorney, he would have called him as a witness regarding GMAC’s disposition of his property.

Several code sections and court rules bear on our consideration of Conkey’s argument. Small claims proceedings are, by statute, intended to be “simple and informal,” tried to the court “without regard to technicalities of procedure.” Iowa Code § 631.11(1) (1999). A party in small claims may appear “personally or by attorney.” Id. § 631.11(2). Ordinarily, however, corporations may appear only by counsel. Hawkeye Bank & Trust, N.A. v. Baugh, 463 N.W.2d 22, 25 (Iowa 1990). But see Iowa Code § 631.14 (authorizing corporate party in small claims to be represented by “an officer or employee”); Iowa Supreme Ct. Comm. on Unauth. Practice of Law v. A-1 Assoc., Ltd., 623 N.W.2d 803, 808 (Iowa 2001).

A member of a bar of another state may be permitted to appear and pursue or defend a cause of action in Iowa, provided

that at the time the attorney enters an appearance the attorney files with the clerk of such court the written appointment of some attorney resident and admitted to practice in the state of Iowa, upon whom service may be had in all matters connected with said action, with the same effect as if personally made on such foreign attorney within this state. In case of failure to make such appointment, such attorney shall not be permitted to practice as aforesaid, and all papers filed by the attorney shall be stricken from the files.

Iowa Code § 602.10111. But see Iowa Sup. Ct. R. 113 (permitting but not requiring court to dismiss action or strike pleadings of noncomplying party).

We agree with Conkey that, in the absence of the written filing required by section 602.10111, strict adherence to the statute would call Stehlik’s appearance into doubt and compel the striking of any papers filed by him in the case. But at least two important factors militate against such a result here. First, the only written pleadings in the case were filed, not by Stehlik, but by his colleague, Alison L. McGinn, a licensed Iowa lawyer. Second, that same written appearance by Iowa counsel arguably satisfied the requirement, under section 602.10111, that a lawyer admitted in this state be appointed so that service might be made in connection with all matters pertaining to the cause of action. Given the statutorily informal nature of small claims proceedings, we think substantial compliance with section 602.10111 has been established under this record. The district court was correct in so ruling.

Conkey’s claim that he was prejudiced by less-than-strict adherence to section 602.10111 is not persuasive. Had he argued at trial, as he now contends, that Stehlik had personal knowledge of the controversy helpful to his case, he could have sought the court’s permission to call Steh-lik as a witness. He did not do so and cannot, in fairness, now expect to benefit from his failure. As a pro se plaintiff, Conkey undertook responsibility for litigating his own cause. No part of that obligation devolved upon the court. See Lombardi v. Citizens Nat’l Trust & Sav. Bank, 137 Cal.App.2d 206, 209, 289 P.2d 823, 825 (1955) (court not required to advocate for pro se litigant in presentation of evidence); cf. State v. Glanton, 231 N.W.2d 31, 35 (Iowa 1975) (rule permitting student practice not intended to transfer advocacy role to judge).

The assignment of error is without merit.

B. Sufficiency of the evidence. Conkey’s argument for reversal on the merits is equally unavailing. His lease agreement with GMAC specifically authorized the lessor, upon the lessee’s default, to repossess the vehicle, as was done here. Substantial evidence supports the court’s finding that Conkey was in default on his lease payments when GMAC repossessed the vehicle from Conkey’s bailee, Hoak Motors. The court then held, as a matter of law, that Hoak Motors properly surrendered the vehicle to GMAC, whose right to possession was paramount to Conkey’s, the bailor. This legal conclusion was correct. See 8A Am. Jur. Bailments § 148, at 600 (1997). It has long been the “modern rule” that “it is a sufficient excuse for the nondelivery of personal property for the bailee to show that he has surrendered it to the rightful owner.” Shellenberg v. Fremont, E. & M. V.R. Co., 45 Neb. 487, 63 N.W. 859, 859 (1895); accord The “Idaho,” 3 Otto 575, 581, 93 U.S. 575, 581, 93 S.Ct. 978, 980, 23 L.Ed. 978, 980 (1876); Jensen v. Eagle Ore Co., 47 Colo. 306, 107 P. 259, 260 (1910).

With respect to Conkey’s personal property in the repossessed vehicle, GMAC was authorized under the lease agreement to “take the property and store it” for the lessee. Although Conkey’s claim for conversion asserts that his tools and other personalty were not returned promptly, the evidence supports a contrary finding. Admitted into evidence was a police report corroborating GMAC’s assertion that Conkey was encouraged, but refused, to retrieve his tools from the van on the very day it was repossessed. The record further supports the court’s finding that Conkey’s personalty was then inventoried by GMAC personnel and returned to him. Conkey tendered no credible evidence to the contrary.

Accordingly, we affirm the district court judgment dismissing Conkey’s small-claims action against Hoak Motors and GMAC.

AFFIRMED.