text:
    Christian Jay BRENNEMAN, Individually and as Administrator of the Estates of Samantha Brenneman and Amanda Brenneman, Deceased, Appellant, v. Jay B. STUELKE and Lori Stuelke, Appellees.
    No. 01-1886.
    Supreme Court of Iowa.
    Dec. 18, 2002.

      Marc C. Moen, Iowa City, for appellant.
    Chad M. VonKampen and Christine L. Conover of Simmons, Perrine, Albright & Ellwood, P.L.C., Cedar Rapids, for appel-lees.
   CARTER, Justice.

Christian Brenneman, as parent and personal representative of Samantha Bren-neman and Amanda Brenneman, deceased, appeals from an adverse summary judgment in his action seeking damages for the children’s death in an automobile collision. The defendants, Jay Stuelke and Lori Stuelke, are alleged to have been social hosts of the deceased children and one Todd Graham sometime prior to the collision that killed Samantha and Amanda. That collision occurred off the premises of the defendants. Plaintiff asserted that the defendants were negligent in serving liquor to Todd Graham and then allowing him to drive away from their premises with Samantha and Amanda in his motor vehicle.

The defendants moved for summary judgment based on the social-host immunity created by Iowa Code section 123.49 (1999). Plaintiff sought to avoid that defense by urging that his claims were based on defendants’ duty to control the conduct of Graham while he was on their premises. The district court sustained the motion for summary judgment. After reviewing the record and considering the arguments presented, we affirm the judgment of the district court.

Plaintiffs petition alleges the following facts. Prior to the collision that killed Samantha and Amanda, they were present with Graham on defendants’ premises. Defendant Jay Stuelke was Graham’s employer. Defendants were giving a party to which Samantha, Amanda, and Todd Graham had been invited. Defendants provided intoxicating liquor to Todd Graham while he was on their premises. In addition it is alleged that, when Todd Graham drove away from defendants’ home where the party took place with Samantha and Amanda in his motor vehicle, defendants were aware that he was in an intoxicated condition.

In making the record on the motion for summary judgment, the foregoing facts were assumed to be true. Defendants urged that they were immune from liability based on those facts by reason of Iowa Code section 123.49(l)(a), which provides:

A person other than a person required to hold a license or permit under this chapter who dispenses or gives an alcoholic beverage, wine, or beer in violation of this subsection [prohibiting the dispensing of alcoholic beverages to an intoxicated person] is not civilly liable to an injured person or the estate of a person for injuries inflicted on that person as a result of intoxication by the consumer of the alcoholic beverage, wine, or beer.

By its terms, section 123.49 ends the “social host” liability that was previously recognized in Clark v. Mincks, 364 N.W.2d 226, 231 (Iowa 1985).

Plaintiffs specify four particulars in which they allege defendants were negligent: (1) in serving Graham alcoholic beverages to the point of intoxication; (2) in serving Graham alcoholic beverages to the point of intoxication when they knew he had a drinking problem; (3) in allowing Graham to leave the party as a driver with children in the vehicle; and (4) in failing to take any action to protect the children, knowing they were passengers in a vehicle driven by an intoxicated person.

In reviewing the allegations of the petition, it is clear that the alleged causal link between the first and second specifications and the deaths of Samantha and Amanda is Graham’s intoxication. Thus, these two allegations of breach of duty clearly fall within the immunity provided by section 123.49(1). The third specification is also linked to the children’s deaths in a causal sense as a result of Graham’s intoxication and erratic driving. Consequently, that specification is also subject to the immunity provided by section 123.49(1). In considering the fourth specification, we perceive practical problems with imposing a broad duty on social hosts to ensure that minors do not leave the premises with an intoxicated driver. Social hosts are not caretakers of all minors present on their premises. Such a duty could require the social hosts to override parental decisions or those of a parent-designated caretaker. We decline to impose that duty on social hosts.

We are aware of a trilogy of cases recognizing social-host liability for the furnishing of liquor to persons not of legal age to consume alcoholic beverages. See Garofalo v. Lambda Chi Alpha Fraternity, 616 N.W.2d 647, 653 (Iowa 2000); Sage v. Johnson, 437 N.W.2d 582, 584-85 (Iowa 1989); Blesz v. Weisbrod, 424 N.W.2d 451, 452 (Iowa 1988). However, liability in those cases was predicated on the violation of statutory law in the furnishing of liquor to underage persons. Plaintiff has alleged no statutory violations.

Plaintiff seeks to avert the defendants’ statutory immunity from social-host liability relying on the principle set forth in Restatement (Second) of Torts section 318 (1965). That section of the Restatement provides:

If the actor permits a third person to use land or chattels in his possession otherwise than as a servant, he is, if present, under a duty to exercise reasonable care so to control the conduct of the third person as to prevent him from intentionally harming others or from so conducting himself as to create an unreasonable risk of bodily harm to them, if the actor
(a) knows or has reason to know that he has the ability to control the third person, and
(b) knows or should know of the necessity and opportunity for exercising such control.

The duty described in section 318 is viewed narrowly and guided by the principle that “the scope of the duty turns on the foreseeability of harm to the injured person.” Morgan v. Perlowski, 508 N.W.2d 724, 727 (Iowa 1993).

In Morgan a claim was brought by a social guest against a host for injuries received from a third person while attending a party at the host’s residence. Id. at 725. Adopting section 318, the court concluded,

[a]s a matter of public policy, it is reasonable to impose a limited duty upon a possessor of land, who is present on the land, to control the conduct of social guests.

Id. at 728.

We have recognized some limits on the duty of a possessor of land to control the conduct of third parties. For example, in Davis v. Kwik-Shop, Inc., 504 N.W.2d 877, 878 (Iowa 1993), a claimant alleged that a convenience store owner had a duty to protect him from injuries suffered on an adjacent business property by assailants who had earlier been on the convenience store’s premises. We concluded that the store owner did not have a duty to protect the claimant, as the special relationship between the assailants and the convenience store had been severed once they left the store property. Davis, 504 N.W.2d at 879. Similarly, in Kelly v. Sin clair Oil Corp., 476 N.W.2d 341, 344 (Iowa 1991), a bartender had ordered a minor off of the tavern premises after seeing cans on the floorboard of his truck and smelling beer in the air. We concluded that the bartender did not have a duty to control the conduct of the minor.

The duty mandated by section 318 is “to control conduct of a licensee to prevent harm to others.” Morgan, 508 N.W.2d at 728 (emphasis added). A licensee is “one who may enter or remain on land only with the possessor’s consent.” Id. at 727. Once a person leaves the land or remains without consent, the individual loses the status of “licensee,” and the affirmative duty of the land possessor to control the individual’s conduct would cease. Cases from other jurisdictions support this conclusion.

Kansas has adopted a requirement that the injury occur on the land in order for section 318 to be applicable. In Beckner v. Jensen, 29 Kan.App.2d 129, 24 P.3d 169 (2001), a property owner’s son hosted a postprom “sleepover.” One of the boys who attended the party remained awake all night, except for an hour in the morning between 6 and 7 a.m. On his way home, his vehicle left the road and struck a bicyclist, who later died from her injuries. The court of appeals concluded section 318 was inapplicable, as the duty under section 318 did not cover a licensee after leaving the landowner’s property. Beckner, 24 P.3d at 172.

Ohio similarly adopted the requirement that the injury occur on the premises in Gelbman v. Second National Bank of Warren, 9 Ohio St.3d 77, 458 N.E.2d 1262 (1984). The court stated there was no authority

for extending a duty to control third parties to a property owner for the acts of unrelated individuals ... who have left the owner’s premises, have negligently entered a public thoroughfare outside the purview of the owner’s control, and thereby negligently injure a third party.

Gelbman, 458 N.E.2d at 1264. The court reasoned that imposing a duty in such circumstances would be unreasonable, as there is little hope that the one made responsible could prevent the negligent conduct. Id. We agree that generally a property owner is not liable under section 318 of the Restatement for injuries off the premises that are directly caused by actions occurring off the premises.

Plaintiff urges that there were acts on defendants’ premises that triggered liability under section 318 by reason of the language “duty to exercise reasonable care so to control the conduct of a third person as to prevent him from ... conducting himself as to create an unreasonable risk of bodily harm.” He urges that such a risk was created from actions that took place on the premises. In resolving this issue we focus on (1) the language of the Restatement rule, and (2) the acts that occurred on defendant’s premises. The language of the rule is aimed at acts that “intentionally” harm others. No acts of this nature on Graham’s part have been alleged. In addition, to the extent that the Restatement rule establishes liability for acts that “create an unreasonable risk of bodily harm,” the only acts by Graham that are alleged to create such risk are acts for which defendants are immune from liability under section 123.49. When the legislature has immunized specific acts from civil liability, an injured party may not avoid that immunity by alleging that the act violated a broad general duty. We reject the effort to do that in the present case. Summary judgment was properly granted.

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

AFFIRMED.

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


source: Caselaw Access Project

author: CARTER, Justice.

license: Public Domain

text:
    Robert S. KENNEDY, Individually, Appellant, v. CIVIL SERVICE COMMISSION OF the CITY OF COUNCIL BLUFFS, Iowa, Appellee. Joseph A. Venditte, Individually, Appellant, v. Civil Service Commission of the City of Council Bluffs, Iowa, Appellee.
    No. 01-1267.
    Supreme Court of Iowa.
    Dec. 18, 2002.
    Matthew D. Wilber of Richter & Wilber, Council Bluffs, for appellants.

      Karen A. Dales, Assistant City Attorney, Council Bluffs, for appellee.
   CARTER, Justice.

Police officers who were disciplined by the appointing authority appeal from orders in their certiorari actions that rejected their challenge to the use of a hearing officer to take evidence and make a disciplinary recommendation to the Civil Service Commission of the City of Council Bluffs. The district court concluded that the commission had the power under the municipal home-rule amendment, Iowa Const, art. Ill, § 38A, to delegate its authority to a hearing officer. On this appeal the officers urge that (1) the commission lacked rule-making authority; (2) if rule-making authority existed, the rule being challenged was not adopted by proper procedures; and (3) the use of a hearing officer to conduct hearings on civil service appeals is contrary to law. After reviewing the record and considering the arguments presented, we agree with the officers’ third contention, and it is therefore not necessary to consider their first two arguments. The judgments of the district court are reversed and the cases remanded for orders sustaining the writs.

Joseph Venditte and Robert Kennedy were employed as Council Bluffs police officers. Venditte was placed on suspension on January 3, 2000, and Kennedy’s employment was terminated on February 18, 2000. Both officers appealed their disciplinary sanctions to the Civil Service Commission of the City of Council Bluffs. That commission had adopted rules to govern contested matters, and among other things, those rules provided for the use of a hearing officer to handle disciplinary appeals.

The hearing officer presided over the hearings, received evidence, and submitted recommendations to the commission that favored upholding the disciplinary action that had been taken. The commission concurred with the recommendations of the hearing officer and upheld Venditte’s suspension and Kennedy’s termination.

Venditte and Kennedy argue that the district court improperly relied on the home-rule amendment because the enlarged authority granted to cities thereunder may only be exercised by the city council. The commission acted on its own in adopting the challenged ordinance providing for a hearing officer. While that argument provides an alternative basis for challenging the commission’s rule, see 1986 Iowa Op. Att’y Gen. 125 (city agencies do not have home-rule authority to act beyond their statutory field of operation), we also discern a substantive impediment to the rule that would exist even if it had been ratified by the city council.

The municipal home-rule amendment only grants authority to take action that is not inconsistent with state law. Iowa Const, art. Ill, § 38A (municipal corporations are granted home-rule power and authority, not inconsistent with the laws of the General Assembly). We have recognized that,

[i]n determining what the legislature has permitted and prohibited, we look to the legislative intent in enacting the state statutes and we require that any local ordinance remain faithful to this legislative intent.

Goodell v. Humboldt County, 575 N.W.2d 486, 500 (Iowa 1998). In ascertaining legislative intent, we may consider the object sought to be obtained by the legislature in enacting the statute. Id.

We have previously interpreted the civil service laws in Iowa Code chapter 400 to give the commission sole authority with respect to conducting entrance and promotional exams. Sioux City Police Officers’ Ass’n v. City of Sioux City, 495 N.W.2d 687, 694 (Iowa 1993). Our examination of that chapter also convinces us that the commission has sole authority to hear disciplinary appeals. The issue we must decide is whether the local commission’s attempts to delegate part of that authority to a hearing officer is contrary to the legislative enactments that create the commission and establish its authority.

It is provided by statute that a person holding civil service rights has a right to appeal any disciplinary action. The statute granting that right provides:

No person holding civil service rights as provided in this chapter shall be removed, demoted, or suspended arbitrarily, except as otherwise provided in this chapter, but may be removed, demoted, or suspended after a hearing by a majority vote of the civil service commission, for neglect of duty, disobedience, misconduct, or failure to properly perform the person’s duties.

Iowa Code § 400.18 (1999). The commission’s jurisdiction is as follows:

The civil service commission has jurisdiction to hear and determine matters involving the rights of civil service employees under this chapter, and may affirm, modify, or reverse any case on its merits.
The city attorney or solicitor shall be the attorney for the commission or when requested by the commission shall present matters concerning civil service employees to the commission, except the commission may hire a counselor or an attorney on a per diem basis to represent it when in the opinion of the commission there is a conflict of interest between the commission and the city council. The counselor or attorney hired by the commission shall not be the city attorney or solicitor. The city shall pay the costs incurred by the commission in employing an attorney under this section.

Iowa Code § 400.27 (emphasis added). Section 400.30 provides “[t]he provisions of this chapter shall be strictly carried out by each person or body having powers or duties thereunder.”

The power to “hear and determine” is an essential component of the commission’s mandate. Sandahl v. City of Des Moines, 227 Iowa 1310, 1312, 290 N.W. 697, 698 (1940). We have recognized that this power refers to a judicial investigation in settlement of an issue of fact. Id. We have recognized that a municipal corporation cannot surrender or contract away its governmental functions and powers. Marco Dev. Corp. v. City of Cedar Falls, 473 N.W.2d 41, 42 (Iowa 1991). We have applied a similar principle to the actions of statutorily created municipal agencies. Gabrilson v. Flynn, 564 N.W.2d 267, 276 (Iowa 1996); Bunger v. Iowa High School Athletic Ass’n, 197 N.W.2d 555, 560 (Iowa 1972).

We are satisfied that in assigning duties to the commission the legislature intended that all critical duties be performed by those persons empowered by law to do so, i.e., the duly appointed commissioners. An essential element in hearing and deciding civil service appeals is a credibility assessment of the witnesses who appear and testify. For this reason, we conclude that it is the commissioners’ duty to personally hear the testimony presented.

The commission and the city urge that the taking of evidence before a hearing officer is consistent with this court’s decisions in Connor v. Civil Service Commission, 265 N.W.2d 735, 736-37 (Iowa 1978), and O’Connor v. Youngblade, 250 Iowa 808, 816, 96 N.W.2d 457, 462 (1959), where we recognized that members of the commission not attending a civil service appeal hearing may vote with those commissioners who did attend the hearing after reviewing a written record of the hearing. We do not believe that these cases support the commission’s claim of authority to have the hearing process conducted entirely by a hearing examiner. In the cited cases, the hearing was held before a quorum of the commission.

We have considered the issue presented and conclude that the judgment of the district court should be reversed. The case is remanded to that court with directions to sustain the writ of certiorari and order a new hearing of these civil service appeals before the civil service commissioners.

REVERSED AND REMANDED.


author: TERNUS, Justice.

text:
    Douglas E. DAWSON, Appellant, v. IOWA BOARD OF MEDICAL EXAMINERS, Appellee.
    No. 01-1201.
    Supreme Court of Iowa.
    Dec. 18, 2002.

      Davis L. Foster, Iowa City, for appellant.
    Thomas J. Miller, Attorney General, and Heather L. Adams and Theresa O’Connell Weeg, Assistant Attorneys General, for ap-pellee.
   TERNUS, Justice.

The appellant, Douglas E. Dawson, appeals a district court decision on judicial review affirming the order of the appellee, Iowa Board of Medical Examiners, reinstating Dawson’s medical license subject to certain competency-based conditions. Dawson claims he did not agree to the imposition of competency-based conditions when he entered into a settlement agreement with the Board to resolve the underlying disciplinary proceeding brought by the Board against him. He also challenges the power of the Board to impose competency-based conditions when it made no finding of incompetency in the original disciplinary proceeding. The absence of such a finding and the lack of any other factual support for such conditions, argues Dawson, render the Board’s order arbitrary, capricious and an abuse of discretion. Finding no merit in these contentions, we affirm.

I. Background Facts and Proceedings.

The Iowa Board of Medical Examiners is the state agency responsible for the examination, licensing, and discipline of physicians practicing medicine in the State of Iowa. See generally Iowa Code chs. 147, 148, 150A, 272C (1999 & Supp.1999). Dawson is a board-certified otolaryngologist who has been licensed to practice medicine in Iowa since 1984.

On December 16, 1999, the Board filed formal disciplinary charges against Dawson that included two primary allegations: (1) professional incompetency; and (2) unethical conduct based on Dawson’s sexual relationship with a patient. The Board’s allegations of professional incompetency involved Dawson’s treatment of some eighty-two patients. A peer review committee formed by the Board to review a sampling of these cases concluded Dawson failed to meet the prevailing standard of care in several particulars. Among other items, the committee found Dawson failed to document the medical necessity for the surgeries he performed, and he employed the same excessive bilateral sinus surgery regardless of the level of disease present. In addition, the committee concluded Dawson excessively or unnecessarily removed the middle and inferior turbinates in all thirteen sinus cases reviewed, resulting in chronic debilitating symptoms that were not present prior to surgery. Because the Board believed Dawson’s continued practice posed an immediate danger to the public’s health, safety, and welfare, it issued an emergency order indefinitely suspending Dawson’s medical license pending a hearing. See generally id. § 17A.18A (allowing agency to “use emergency adjudicative proceedings in a situation involving an immediate danger to the public health, safety, or welfare”).

On February 10, 2000, prior to the scheduled hearing on the Board’s charges, Dawson and the Board entered into a “settlement agreement and final order to resolve the [pending disciplinary proceeding].” See generally id. § 272C.3(4) (providing for informal stipulation and settlement agreements by a board and a licensee of any matter involving licensee discipline). The agreement stated in pertinent part that Dawson admitted the allegations of sexual misconduct, but contested the allegations of professional incompetency. It further stated the Board made “no finding with respect to the allegations” of professional incompetency. The parties agreed that Dawson’s license would be indefinitely suspended, but that he could apply for reinstatement after satisfying specific requirements set out in the agreement. These requirements included Dawson’s submission to a comprehensive evaluation at the Colorado Physician’s Education Program (CPEP) in Denver, Colorado, and a comprehensive sexual misconduct evaluation at the Behavioral Medicine Institute (BMI) in Atlanta, Georgia. In addition, Dawson agreed to provide the Board with reports from CPEP and BMI following their evaluations. Finally, Dawson specifically agreed “to comply with any recommendations made by CPEP ... [and] BMI.”

In addition to these requirements, Dawson’s future reinstatement was also made subject to Iowa Administrative Code rule 653 — 12.40, which provides that “[a]ny person whose license to practice medicine and surgery ... has been revoked, or suspended by the board, may apply to the board for reinstatement in accordance with the terms and conditions of the order of revocation or suspension.” (Emphasis added.) More specifically, the settlement agreement provided that “the Board [had] the discretion to impose a period of probation with appropriate terms, and to impose those restrictions on [Dawson’s] practice which it deems appropriate.” (Emphasis added.) And finally, Dawson agreed to “voluntarily waive[] any rights to a contested case hearing on the allegations ... and waive[ ] any objections to the terms of [the] Settlement Agreement.”

In April 2000, Dawson applied for reinstatement of his license. At the reinstatement hearing, he presented evidence that he had completed both required evaluations and he submitted reports of both assessments.

The CPEP report stated that it assessed “educational status and clinical competencies.” It indicated three board-certified otolaryngologists had interviewed Dawson with respect to actual patient cases he had handled. In addition, the evaluation included a multiple-choice assessment to reveal areas of concern and simulate patient encounters, a psychological indicator test, and a screening for cognitive impairment. The report summarized the consultants’ assessment of Dawson’s clinical judgment as follows:

In the area of clinical judgment, Dr. Dawson demonstrated the ability to make good decisions. For example, he managed jaw surgery, parotid tumor, peritonsillar cellulitis, sleep apnea and tonsillectomy well. In one case he helped the patient achieve weight loss rather than perform surgery; in another he corrected a nasal problem and did not do sinus surgery. However, each consultant noted his aggressive approach to sinus disease. The consultants commented on the different philosophies of sinus surgery and recognized that authorities in this area do differ regarding the extent of surgery that should be performed. The more aggressive approach may lead to difficult complications and the consultants recommended that Dr. Dawson be more conservative in his choices.

(Final two emphases added.) At the end of the report was a section entitled “Implications for Education and Other Intervention.” Consistent with the consultants’ concern regarding Dawson’s use of extensive surgery in the management of chronic sinusitis, the suggestions for modification also focused on this area:

During this Assessment, Dr. Dawson demonstrated a sufficient level of clinical competence to continue to practice unsupervised. From an educational perspective it would be reasonable for Dr. Dawson to review the self-instructional material available at the American Academy of Otolaryngology/Head and Neck Surgery. Additionally, universities and other institutions offer sinus surgery courses. These courses and educational material may provide alternatives to Dr. Daiuson’s current approach to sinus disease. Participation in regular discussions with colleagues about surgery decisions (an academic-style morbidity and mortality conference) is especially important for physicians in solo practice. Service on a hospital quality improvement committee is another way to keep abreast of changes in surgical management. Tracking aggregate data (number of patients seen, disease, procedures, complications and outcomes) helps a physician continue to offer quality patient care and can identify when consideration of a change in management style needs to occur. Based on this evaluation, the Medical Education Director did not suggest a formal, structured, supervised Education Plan.

(Emphasis added.)

In response to the reports from CPEP and BMI, the State proposed a reinstatement order that placed Dawson on probation for five years. In addition to certain conditions designed to address Dawson’s sexual improprieties, the proposal required that before he resumed endoscopic surgery, he had to submit for board approval a document explaining the benefits, risks, potential complications, and expected postoperative course of endoscopic sinus surgery. In addition, the State wanted the Board to require Dawson to submit a written surgical consent form for Board approval. The proposed order also mandated performance monitoring by a board-certified otolaryngologist of any endoscopic sinus surgery undertaken by Dawson, including an evaluation of the preoperative indications for surgery by the monitoring physician. The State requested that Dawson be required to comply with any recommendations of the monitoring physician, including a recommendation that surgery not be performed.

Subsequently, the Board issued a decision that included findings of fact consistent with the above recitation of the factual background of this case. The Board concluded that Dawson had complied with the terms of the settlement agreement and final order and that his license should be reinstated “subject to certain terms and conditions.” The Board rejected the State’s request for professional monitoring, but did require Dawson to submit for the Board’s approval “a written quality improvement plan to address concerns raised in the CPEP report about his aggressiveness in diagnosing and treating sinus disorders.” This plan had to include (1) “a written explanation of risks/benefits of endoscopic surgery to be provided to patients,” (2) a “written procedure for obtaining informed consent,” (3) a “method for collecting and tracking aggregate data on the number of patients seen, disease, procedures, complications, and outcome,” and (4) a “continuing medical education program.” Once the plan was approved, Dawson’s license would be reinstated. The order provided, however, that Dawson would be on probation for five years, and the continuation of his license would be subject to certain requirements that included full compliance with the quality improvement plan approved by the Board.

After the Board issued its ruling, Dawson submitted a written quality improvement plan that was accepted by the Board after a few modifications made at the Board’s request. Upon approval of the plan, the Board issued a final order on September 8, 2000, reinstating Dawson’s license subject to the terms of its prior decision and order.

Dawson sought judicial review, challenging the Board’s requirement that he comply with the quality improvement plan as a condition of his probation. The district court affirmed. The matter is now before this court on appeal from the district court.

II. Scope of Review.

Relief from agency action may be accorded by the court when a party’s “substantial rights have been prejudiced because the agency’s action meets any one of several statutory criteria.” Midwest Auto. III, LLC v. Iowa Dep’t of Transp., 646 N.W.2d 417, 421 (Iowa 2002) (citing Iowa Code § 17A.19(10) (Supp.1999)). The criteria implicated here include agency action “[biased upon a determination of fact ... that is not supported by substantial evidence in the record before the court when that record is viewed as a whole” and agency action that is “[Otherwise unreasonable, arbitrary, ... or an abuse of discretion.” Iowa Code § 17A.19(10)(f), (n).

Evidence is substantial when “a neutral, detached, and reasonable person” would find it sufficient “to establish the fact at issue when the consequences resulting from the establishment of that fact are understood to be serious and of great importance.” Id. § 17A.19(10)(/)(1). In deciding whether a finding is supported by substantial evidence in the record, we consider the evidence that detracts from the challenged finding as well as the evidence that supports it. Id. § 17A.19(10)(/)(3).

An agency action is arbitrary “when it is taken without regard to the law or facts of the case.” Soo Line R.R. v. Iowa Dep’t of Transp., 521 N.W.2d 685, 688-89 (Iowa 1994). Similarly, a decision is unreasonable when it is “clearly against reason and evidence.” Stephenson v. Fur-nas Elec. Co., 522 N.W.2d 828, 831 (Iowa 1994). An “abuse of discretion is synonymous with unreasonableness.” Id.

III. Issues on Appeal.

Initially, Dawson challenges the Board’s ability to impose competency-based conditions on his reinstatement in the absence of any competency-based findings in the underlying disciplinary proceeding. Specifically, he claims that in the absence of such findings the Board’s conditions are unjustified and without factual support in the record. Under these circumstances, argues Dawson, the Board’s action and decision are arbitrary, unreasonable, and an abuse of discretion. Finally, Dawson asserts the CPEP assessment provides no basis for the imposition of the competency-based restrictions contained in the Board’s reinstatement order.

The Board disputes that its competency-based conditions lack substantial support in the record and claims that it was entitled to impose such conditions pursuant to the parties’ settlement agreement. It asserts Dawson consented to the imposition of competency-based restrictions by entering into that agreement.

When the arguments of the parties are considered in relation to the standards of review under chapter 17A, it appears the issues boil down to two. First, may the Board impose competency-based restrictions when it has not made a prior finding of incompetency but the physician has consented to a final order including the terms found in the agreement at issue in this case? Second, is there a factual basis in the record for the imposition of competency-based restrictions?

IV. Poiver of Board to Impose Competency-Based Restrictions When It Has Not Made a Prior Finding of Incompetency Because the Disciplinary Proceeding Was Resolved by Settlement.

A professional licensing board is not required “to make specific findings to support ... conditions of probation.” Burns v. Bd. of Nursing, 528 N.W.2d 602, 605 (Iowa 1995). Nonetheless, we think a condition imposed upon reinstatement of a medical license that is not related in some logical and rational way to the matters that led to the initial suspension would be arbitrary.

Here, there is no dispute the Board did not make a factual finding in the contested case proceeding that Dawson rendered incompetent treatment to his patients. On the other hand, there is no dispute that the restrictions challenged by Dawson address competency concerns. Dawson would have our examination of the record end here, but we think the settlement agreement is an important component of our consideration of this issue.

Although no finding or admission of incompetency was included in the parties’ settlement agreement, Dawson agreed to subject himself to an evaluation at CPEP. There can be no doubt this evaluation was focused on competency matters. In addition, Dawson agreed that any subsequent reinstatement of his license would be subject to his full compliance with the requirements set forth in the settlement agreement as well as any conditions the Board deemed appropriate. One of the express requirements contained in the settlement agreement was that he comply with any recommendations of CPEP, which obviously would be related to competency issues.

For Dawson to now claim that he did not anticipate any competency-based restrictions or conditions upon his reinstatement is simply not supported by the record. To the contrary, we conclude he consented to conditions of the very type imposed by the Board in its reinstatement order. Furthermore, any objections to the terms of the settlement agreement at this time will not be considered, as Dawson expressly waived the right to object to the settlement terms as part of the agreement he reached with the Board.

In summary, we do not think a Board finding of incompetency or a physician admission of incompetency is required before the Board may condition reinstatement on competency-related restrictions when the physician, as here, has agreed as part of the settlement of the Board’s disciplinary charges to terms and conditions that address the Board’s competency concerns. To require such findings or admissions would discourage informal settlements of disciplinary proceedings contrary to legislative intent that such settlements be encouraged. See Iowa Code § 17A.10(1)- (“Unless precluded by statute, informal settlements of controversies that may culminate in contested case proceedings according to the provisions of this chapter are encouraged.”). For example, one advantage to a physician of a settlement is the avoidance of an evidentiary hearing and possible adverse findings. The Board, however, would have no incentive to enter into informal settlements if doing so would preclude it from addressing the concerns that led to the filing of the disciplinary proceeding. We conclude, therefore, that the Board could impose competency-based conditions on Dawson’s reinstatement.

V. Factual Basis For The Imposition of Competency-Based Restrictions In This Case.

Dawson claims that even if a finding or admission of incompetency is not a prerequisite to the imposition of competency-based conditions on reinstatement, the Board’s decision to include such conditions in Dawson’s five-year probation is unreasonable and arbitrary. He asserts this is so because the CPEP did not recommend such restrictions and there is no other factual basis in the record to justify them.

We first point out that the Board, as a professional licensing authority, has discretion “to determine what conditions should be attached to probation,” and this court will not second-guess the Board’s judgment in this regard absent an abuse of that discretion. Burns, 528 N.W.2d at 604-05. Upon our review of the record, we conclude the Board’s decision to order Dawson to submit and comply with a written quality improvement plan is not “against reason and [the] evidence.” Stephenson, 522 N.W.2d at 831.

Contrary to Dawson’s contention, the restrictions imposed by the Board find substantial support in the report from CPEP. Granted, CPEP pointed out positive aspects of Dawson’s professional skills, but it also noted Dawson’s aggressive approach to sinus surgery. Significantly, “the [CPEP] consultants recommended that Dr. Dawson be more conservative in his choices.” We reject Dawson’s assertion that the concern over his surgical decisions was merely a reflection of different approaches to treatment of sinus disease. The consultants acknowledged the existence of this professional debate but even within this context viewed Dawson’s handling of sinus patients as too aggressive.

In addition, while CPEP diplomatically discussed “[i]mplications” for “intervention,” these “implications” were, we think, intended as suggestions for ways in which Dawson’s enthusiastic use of surgery might be tempered. See generally Webster’s Third New International Dictionary 1135 (unabr. ed.1993) (defining “implication” in part as “suggestion”); id. at 1183 (defining “intervene” as “to come in or between by way of hindrance or modification”). We disagree with Dawson’s characterization of these recommendations as merely “general observations ... applicable to all physicians,” and his claim they were not “directed at ... [him] specifically.” In discussing these “implications for intervention,” CPEP references ways in which Dawson might become aware of “alternatives to [his] current approach to sinus disease,” of “changes in surgical management,” and of “when consideration of a change in management style needs to occur.” It is not a coincidence that these suggestions would assist Dawson in making more conservative choices in his treatment of sinus disease, as recommended by the CPEP consultants.

A review of the Board’s reinstatement order shows that the Board merely worked off the suggestions made in the CPEP report to devise a probation plan that would encourage Dawson to assess the wisdom of his aggressive approach by tracking patient disease, procedures, complications, and outcome. The fact that the Board’s order included conditions in addition to those contained in the CPEP report is not unreasonable, as the Board was entitled to use its professional judgment in devising an appropriate probation plan that addressed the competency concerns for which Dawson was evaluated. These additional conditions — preparation of an informed consent form and a plan for obtaining informed consent — reflect an effort by the Board to force Dawson as well as his patients to focus on the risks and benefits of sinus surgery before embarking on that treatment approach. Moreover, they are consistent with the CPEP recommendation that Dawson consider alternatives to his aggressive use of surgery.

We find no merit in Dawson’s complaint that the Board’s reinstatement requirements were at odds with CPEP’s conclusion that “a formal, structured, supervised [education [p]lan” was not necessary. By its own terms, the CPEP report assessed “educational status and clinical competencies.” (Emphasis added.) The quality improvement plan required by the Board was, according to the Board’s order, intended “to address concerns raised in the CPEP report about [Dawson’s] aggressiveness in diagnosing and treating sinus disorders.” In other words, the quality improvement plan was directed at Dawson’s clinical competency, not his educational status. Although the plan was to include a continuing education program, the order did not require that any such program be formal or supervised.

In summary, we think the conditions imposed on Dawson’s probationary reinstatement by the Board are very reasonable and well supported by the record. Accordingly, we find no basis to overturn the Board’s decision.

AFFIRMED.


author: PER CURIAM.

text:
    H & R PARTNERSHIP, Timothy S. Kniffen, Pride, L.L.P., Scott Schager, and Southland Pork, L.C., Appellants, v. DAVIS COUNTY BOARD OF REVIEW, David William Hardy, Chairman, Appellee.
    No. 00-0275.
    Supreme Court of Iowa.
    Dec. 18, 2002.

      Robert P. Malloy of Malloy Law Firm, Goldfield, and Deborah M. Tharnish of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, for appellants.
    Frank W. Peehacek, Jr. and Michael J. Davenport of Willson & Peehacek, P.L.C., Council Bluffs, and Rick L. Lynch, County Attorney, Bloomfield, for appellee.
    Thomas J. Miller, Attorney General, and Harry M. Griger, Special Assistant Attorney General, and James D. Miller, Assistant Attorney General, for amicus curiae, Iowa Department of Revenue.
   PER CURIAM.

H & R Partnership, Timothy S. Kniffen, Pride, L.L.P., Scott Schager, and South-land Pork, L.C., who are Davis County property owners on whose land swine confinement facilities have been constructed, appeal from the district court’s judgment upholding the property tax assessment on their respective parcels. On May 8, 2002, we filed an opinion in this case disposing of the issues raised on appeal. The appellants then filed a petition for rehearing, which was granted. The prior opinion, which was not published, has been withdrawn. After again reviewing the record and considering the arguments presented, including the arguments on rehearing, we modify the district court’s decree and remand for further proceedings.

The assessments in question were made in January of 1998 and January of 1999. Swine confinement facilities had recently been constructed on the parcels in question. The individual assessments that are involved are as follows:

H & R Partnership (1998)
Land Buildings Total
Parcel 1 $5923 $ 453,086 $ 459,009
Parcel 2 $3851 $ 461,025 $ 464,876
Parcel 3 $2625 $ 245,456 $ 248,081
H & B. Partnership (1999)
Parcel 1 $5645 $ 304,779 $ 310,424
Parcel 2 $7186 $ 312,731 $ 319,917
Parcel 3 $5205 $ 392,969 $ 398,174
Timothy S. Kniffen (1998)
Parcel 1 $3142 $ 453,086 456,228
Timothy S. Kniffen (1999)
Parcel 1 $3812 $ 312,409 316,221
Pride L.L.P. (1998)
Parcel 1 $4946 $ 453,086 $ 458,032
Parcel 2 $6309 $ 453,086 $ 459,395
Pride L.L.P. (1999)
Parcel 1 $7654 $ 307,182 $ 314,836
Parcel 2 $ 310,271 $ 314,910
Scott Schager (1998)
Parcel 1 $2649 $ 453,086 $ 455,735
Scott Schager (1999)
Parcel 1 $3213 $ 310,271 313,484
Southland Pork, L.C. (1998)
Parcel 1 $5439 $ 527,092 $ 632,531
Parcel 2 $3563 $ 229,343 $ 232,906
Southland Pork, L.C. (1999)
Parcel 1 $4323 $ 160,275 $ 164,598
Parcel 2 $1,276,127 $1,283,119

In their respective protests to the board of review, the property owners only objected to that portion of the assessments allocated to the buildings. The basis for each of the protests was that the amount , of the assessment allocated to the buildings exceeded that authorized by law. An alternative amount deemed by the property owners to be a fair assessment was proposed in the protest. The board of review denied the protests and confirmed the assessor’s valuations.

In their appeal to the district court pursuant to Iowa Code section 441.38 (1997), the property owners continued to challenge only the valuation placed on the buildings. After a trial in equity, the district court upheld the determinations of the assessor and board of review.

I. Scope of Review.

The trial of assessment appeals in the district court is by equitable proceedings. Iowa Code § 441.39. Consequently, our review is de novo. Iowa R.App. P. 6.4. No presumption exists that the assessor’s valuation is correct. Eagle Food Ctrs., Inc. v. Bd. of Review of City of Davenport, 497 N.W.2d 860, 863 (Iowa 1993); Iowa Code § 441.39.

II. The Property Owners’Arguments.

On appeal the property owners contend that the assessed value allocated to the buildings is, in each instance, not correct. The arguments made for relief from this court are that (1) the assessor failed to take into account the. productivity and net-earning capacity criteria for valuing agricultural real estate pursuant to Iowa Code section 441.21(l)(e); (2) the assessments improperly included the value of removable personal property; (3) the formula applied in valuing the buildings relied on inaccurate data concerning comparable sales; (4) the amount of the assessments are excessive when compared to the valuations of similar facilities by assessors in other counties; (5) the Iowa Department of Revenue and Finance failed to adopt a rule embracing the formula used to allocate value to the buildings; and (6) in using cost of construction as a measure of value, the board of review and district court relied on average costs and ignored evidence of actual costs. We separately consider these contentions.

A. Productivity criteria of section II1.21(l)(e). In assessing agricultural property,

[t]he actual value of agricultural property shall be determined on the basis of productivity and net earning capacity of the property determined on the basis of its use for agricultural purposes capitalized at a rate of seven percent and applied uniformly among the counties and among classes of property. Any formula or method employed to determine productivity and net earning capacity of property shall be adopted in full by rule.

Iowa Code § 441.21(l)(e).

The assessment of the property owners’ lands and buildings in the present case involved the application of a process established in Iowa Administrative Code rule 701-71.12(1) (1997), promulgated by the Iowa Department of Revenue and Finance. The first step in that process is to calculate the total crop-producing value for the county. The assessor begins this process by examining the county’s per-acre crop-producing value as computed by the Iowa Department of Revenue and Finance. That agency reviews each county’s crop yields and gross crop-production income over a five-year period. The county’s total gross income is then reduced by the aggregate production costs. The agency then adjusts this net figure to account for real estate taxes and, then, to comport with Iowa Code section 441.21 (1)(e), capitalizes the resulting value at the rate of seven percent.

The assessor arrives at the county’s total crop-producing value by multiplying the per-acre crop-producing value derived by the Iowa Department of Revenue and Finance by the total number of crop-producing acres in the county. This figure represents the total productivity value of both land and improvements within the county.

In order to obtain a valuation for the improvements (buildings) on the land, the assessor values the improvements on each separate parcel other than dwelling houses in the county at market value (derived on the basis of replacement cost). This valuation is then adjusted to conform to the ratio between the fair market value of all agricultural real estate in the county and the productivity valuation of such real estate that has been computed pursuant to rule 701-71.12(1). Dwelling houses are valued as ordinary real property. This adjusted value constitutes the assessed valuation of the agricultural buildings on each individual tract. The total valuation of all buildings within the county, so derived, is then subtracted from the total crop-production value of all land and buildings as computed under rule 701-71.12(1) to establish the aggregate value of the bare land.

This aggregate value is spread to each parcel to be assessed in proportion to the ratio of the corn-suitability rating of the particular tract to the sum of all corn-suitability ratings within the county. That computation establishes the valuation of the land on each parcel and is stated separately from the valuation of the buildings on that parcel. The separate assessment of land and buildings is dictated by Iowa Code section 441.21(7) (renumbered as section 441.21(6) in Iowa Code 2001).

The property owners urged that this method of appraisal does not comport with the criteria established in section 441.21(l)(e). They contend that the assessment should be based on the productivity value of their property as a swine-producing operation. We disagree. As the board of review urges, consideration of the productivity value of livestock operations on these parcels is an unsatisfactory criteria for assessing agricultural land because it involves the profits derived from a business being carried on upon the land rather than the productivity value of the land itself.

Section 441.21(l)(e) expressly authorizes the Iowa Department of Revenue and Finance to fashion a formula in accordance with that statute for the valuation of agricultural property. We are satisfied that the formula set forth in rule 701-71.12(1) provides a reasonable application of the productivity, net-earning capacity, and seven percent capitalization criteria established by section 441.21(l)(e). We also conclude that the procedure applied for allocating the aggregate productivity valuation of land and buildings within the county between land and buildings resulted in a reasonable assessment of the buildings if the market value of the buildings (based on replacement cost) was accurately determined by the assessor. That issue will be discussed later in this opinion.

B. Inclusion of personal property. The property owners urge that the challenged assessments improperly included the value of removable personal property. Based on the evidence, the district court concluded that the “attached property is integral to the use of these specialized buildings and is properly assessed for real estate taxation purposes.” Evidence was offered suggesting that the items that the taxpayers claim to be removable personal property had a relatively short useful life and that the cost of moving them would discourage that effort. We agree with the district court’s conclusion that, to the extent this property was considered in determining the market value of these buildings prior to the agricultural adjustment, this was proper under the circumstances.

C. Use of comparable sales in adjusting the market value of the buildings to accord ivith productivity value. In comparing the board of review’s comparable sales data with that of the property owners for purposes of adjusting the market value of the buildings to accord with productivity value, it is apparent that both sets of valuation data suffer from certain defects. The defect in the board of review’s comparable sales data was that it was not current. The defect in the property owners’ comparable sales data was that it did not screen out sales that were not arm’s-length transactions, as did the board of review’s comparable sales data. The burden of proof on this issue rested with the property owners, and they have failed to show that their evidence of comparable sales was superior to the evidence relied on by the assessor and board of review. We uphold the district court’s finding that the valuations used to compute the agricultural adjustment to the market value of the taxpayers’ buildings have not been shown to be inaccurate. These valuations produce an agricultural adjustment of fifty-five percent of market value.

D. Lower building valuations on comparable facilities in other counties. The mere fact that similar facilities were shown to have been allocated a lesser assessed value in other counties does not offer a basis for granting relief to these property owners. This comparison is of no use in the absence of some demonstration that the productivity and net-income factors used in rule 701-71.12(1), the comparable sales data used in the agricultural adjustment, and the production costs utilized in the determination of building values were similar. This data has not been supplied, and the failure to produce it works to defeat the property owners’ claim on this issue.

E. Failure to adopt a rule governing allocation of aggregate assessment between land and buildings. The property owners contend that section 441.21(l)(e) requires the Iowa Department of Revenue and Finance to pass a rule for purposes of establishing a formula for allocating value to the buildings. That contention is not correct. The rule that is required by section 441.21(l)(e) is in regard to establishing the formula for assessment of land and buildings in combination based on productivity and net-earning capacity. Rule 701-71.12(1) does that. Although there are other steps in the assessment process, the determination of productivity and net-earning capacity that is central to all assessment decisions is derived in accordance with a formula adopted by rule. This is all that section 441.21(l)(e) requires.

F. Failure to use actual construction costs. The property owners’ final argument concerns the assessor’s utilization of typical construction costs to establish replacement costs rather than the actual construction costs of the buildings being assessed. As we have noted, an essential step in the process of assessing agricultural buildings is to arrive at the market value of the buildings. Although that value is later adjusted, the adjusted value will only be correct if the determination of the buildings’ market value is accurate. In the present case both sides have sought to establish the market value of the buildings by establishing their replacement cost.

The difficulty in obtaining actual costs may justify the use.of typical costs in making hundreds of assessments. But when the assessor’s determination of the market value of the buildings is challenged, the board of review may not answer that challenge merely by showing that the assessor followed the prescribed procedure adopted by the Iowá Department of Revenue and Finance. The issue to be decided is whether the valuation established by the assessor does in fact reflect the correct market value of the buildings. The most credible measure of value that is shown by the evidence should prevail. See Valley Forge Apartments v. Bd. of Review, 239 N.W.2d 148, 151 (Iowa 1976) (court may not refuse property owners’ cost figures simply because they conflict with those of the assessor).

The property owners submitted evidence of what the actual costs of construction for these buildings had been. For purposes of the 1998 assessments, the buildings were newly constructed and neither side contends that depreciation was a factor in making a replacement-cost valuation. The board of review argues that the cost of construction submitted by the taxpayers is incomplete and does not include site-preparation costs. The board also urges that the fact that these taxpayers may have been able to build their facility at less cost than the typical costs utilized by the assessor does not mean that the assessor’s costs are not an accurate measure of the market value of the buildings. As to the first argument, the board’s own expert witness, who helped prepare the assessors’ manual for the Iowa Department of Revenue and Finance, expressed doubt as to whether site-preparation costs are properly considered in assessing agricultural buildings. We need not decide that question because we are satisfied that the board is correct in urging that, if the typical construction costs applied in the assessment process are found to be accurate, they serve as a better measure of the cost of reproduction than the actual construction cost to a particular property owner.

Robert Ehler, the board’s expert witness, testified that he had assisted the Iowa Department of Revenue and Finance in preparing its 1998 real property appraisal manual. In so doing, he gained familiarity with building costs of structures similar to those involved in the present controversy. He and the others working with him on the project obtained costs from the suppliers of construction material and labor costs. They established the typical completion time of various building projects. They reviewed actual costs of thousands of buildings throughout the state. Based upon that investigation, they developed typical costs per square foot for various types of construction. These were then adjusted up or down, based on perceived deviations in the ninety-nine counties throughout the state.

The 1998 assessors’ manual came out one month after the assessment of the taxpayers’ agricultural property. The assessor had utilized construction costs contained in the 1984 real property appraisal manual and adjusted them upward by twenty percent to account for inflation. Ehler tested the assessor’s figures against the costs of construction for buildings similar to the taxpayers’ as shown in the 1998 manual (adjusted for Davis County), which were current with the appraisals that we are considering. He found very slight deviations. These deviations are revealed in Ehler’s determination of the cost of reproduction for the taxpayers’ property using the data in the 1998 manual adjusted for Davis County. His conclusions are listed in the same order as the list of assessed values set forth earlier in this opinion:

H & R Partnership (1998)
Buildings
Parcel 1 $740,233
after agricultural adjustment $407,128
Parcel 2 $759,419
after agricultural adjustment $417,680
Timothy S. Kniffen (1998)
Parcel 1 $759,419
after agricultural adjustment $417,680
Pride L.L.P. (1998)
Parcel 1 $759,419
after agricultural adjustment $417,680
Parcel 2 $759,419
after agricultural adjustment $417,680
Scott Schager (1998)
Parcel 1 $759,419
after agricultural adjustment $417,680
Southland Pork, L.C. (1998)
Parcel 2 $386,363
after agricultural adjustment $212,500

In each of the instances shown above, Ehler’s determination of the replacement cost of the taxpayers’ buildings, when reduced by the fifty-five percent agricultural adjustment factor utilized by the Davis County assessor, results in a lower valuation of the taxpayers’ buildings in 1998 than was established by the assessor.

Ehler testified that he believed the productivity value of the land and buildings was at least as high as found by the assessor. This contention involved the consideration of factors not utilized in the assessment formula derived by the Iowa Department of Revenue and Finance and used by the Davis County Assessor in the present ease. Moreover, it was partially based on livestock production, which we have rejected as an element of productivity to be considered in assessing property under section 441.21(l)(e). However, focusing only on Ehler’s determination of the cost of reproduction of these buildings, that determination was based on the proper elements and the most current data available. We conclude that Ehler’s assessment of the cost of reproduction of the buildings is the most credible evidence in the record with respect to that issue.

If we consider Ehler’s replacement-cost computations for the buildings and use the same agricultural adjustment employed by the assessor, this results in the valuations that we have shown above.

The property owners are entitled to challenge the assessments on the same basis that the assessor made them and that the board of review- seeks to uphold them in this litigation. We have upheld the assessor’s use of a fifty-five percent agricultural adjustment to the replacement cost of the buildings to obtain their productivity value. Because we find that Ehl-ers’ determination of replacement cost for these buildings is the most credible evidence on that issue, the taxpayers are entitled to a reduction in the valuation of their buildings consistent with the figures set forth above following the phrase “after agricultural adjustment.” The case will be remanded to the district court for an order so providing.

The changes that have been ordered in the valuation of the buildings will result in some change in the valuation of the taxpayers’ bare land. This will require a complex computation. This determination shall be made in the district court and settled by decree pursuant to Iowa Code section 441.39. See Sevde v. Bd. of Review, 434 N.W.2d 878, 881 (Iowa 1989) (court must order county auditor to correct assessment using specific valuations). Following remand, the district court, with the assistance of counsel for the parties, shall also calculate the change necessary in the 1999 assessment as a result of the new valuations for the 1998 assessment.

Costs are assessed thirty percent to appellants and seventy percent to appellees.

AFFIRMED AS MODIFIED AND REMANDED.

      . Apportioning the county-wide productivity valuation of the bare land to each parcel within the county in accordance with the corn-suitability rating of each parcel is consistent with Iowa Code section 441.21(1)(£), which provides:
      In counties or townships in which field work on a modern soil survey has been completed since January 1, 1949, the assessor shall place emphasis upon the results of the survey in spreading the valuation among individual parcels of such agricultural property.

      . Ehler’s computations with respect to parcel one of the Southland Pork, L.C. assessment are not compatible with the assessor's data. To the extent we can apply these valuations, they suggest a higher replacement cost for the buildings than was found by the assessor. We do not disturb the assessor’s valuation of the buildings on this parcel.