author: ' WIGGINS, Justice. CARTER, Justice CADY, Justice

text:
    Beverly J. BRANDON, Appellee, v. WEST BEND MUTUAL INSURANCE COMPANY, Appellant.
    No. 02-1880.
    Supreme Court of Iowa.
    June 16, 2004.

      Peter J. Thill and Lisa Taylor of Betty, Neuman & McMahon, L.L.P., Davenport, for appellant.
    Michael J. Walton and Robert L. Cusack of Ottesen & Walton, Davenport, for appel-lee.
   ' WIGGINS, Justice.

In this interlocutory appeal, the primary issue presented is whether an insured who has brought an action against an insurer for uninsured and underinsured motorist benefits may discover privileged communications between outside counsel employed by the insurer to pursue its subrogation interests against the underinsured driver and the insurer’s claims adjuster and in-house counsel, made in the course of the prior litigation against the underinsured driver, on the basis of the joint-client exception to the attorney-client privilege and the work product doctrine. On our review, we affirm the decision of the district court to permit discovery by deposition but limit the scope of discovery to (1) communications between outside counsel and the insurer’s claims adjuster during the period of joint representation; and (2) communications between outside counsel and the insurer’s in-house counsel during the period of joint representation.

I. Background Facts and Proceedings.

The background facts of this case date back to May 23, 1999, when Beverly Brandon (Brandon) was injured as a result of a collision between an automobile driven by Juan Castillo (Castillo) and an automobile driven by Mark Schultz (Schultz). Brandon was a passenger in the Castillo vehicle. The accident occurred at an intersection of two roads in Edgington Township, Illinois.

Castillo’s vehicle was uninsured. Drivers Direct Auto Insurance (Drivers Direct) insured Schultz with an automobile insurance policy with limits of $20,000. West Bend Mutual Insurance Company (West Bend) provided Brandon with uninsured motorist coverage (UM) and underinsured motorist coverage (UIM) with limits of $300,000. The policy also provided Brandon with $5000 medical payment coverage.

Brandon made a claim against West Bend under the UM/UIM provisions of the policy for her injuries. West Bend paid Brandon $5000 under the medical payment provision of the policy and eventually offered to settle her UM/UIM claim for $120,000. On September 8, 2000, West Bend notified Drivers' Direct, of its subro-gation interest.

Brandon subsequently obtained the services of an attorney, who rejected West Bend’s offer. Instead, he demanded the policy limits. In a letter dated March 7, 2001, Brandon’s counsel informed West Bend that Brandon did not intend to pursue a claim against Schultz, and indicated West Bend should bring the action against him “through its subrogation rights.” He also indicated Brandon would cooperate with West Bend if it brought a subrogation claim against Schultz.

West Bend subsequently employed attorney Peter J. Thill (Thill) to file a subro-gation action against Schultz. On May 19, 2001, Thill filed a petition against Schultz in Illinois, 'for the injuries sustained by Brandon. Brandon was .the named plaintiff. The petition recited in two separate places that Thill was Brandon’s attorney. The prayer of the petition did not limit Brandon’s damage claim to the $5000 medical payment made by West Bend to Brandon but prayed for damages in excess of $50,000. Thill sent a copy of the petition to Brandon’s counsel, together with a cover letter indicating he filed the petition to protect West Bend’s subrogation interests.

Brandon and West Bend were unable to settle the UM/UIM claim, and Brandon filed a petition against West Bend on May 22, 2001. Thill filed an answer -on behalf of West Bend. In May 2002 the Illinois action filed against Schultz settled without the necessity of Thill having to have any contact with Brandon. Schultz’s insurer, Drivers Direct, agreed to pay the policy limits of $20,000 upon the filing of a release signed by Brandon.

West Bend refused to give the $20,000 it collected in the Illinois suit to Brandon. Brandon filed a motion to adjudicate law points in this action alleging as a matter of law West Bend was not entitled to the $20,000. The district court concluded West Bend was not entitled to the $20,000 it collected in the Illinois suit until Brandon was fully compensated for her injuries. The district court indicated Brandon’s damages appeared to be in excess of $50,000 and ordered West Bend to remit the settlement funds immediately to Brandon. The district court reserved the issue of whether West Bend was entitled to a credit for the $5000 medical payment it made and for the $20,000 Brandon received from Schultz until after the trial, when the total amount of Brandon’s damages would finally be determined. After receiving this ruling, Brandon amended her petition to assert a claim against West Bend for bad faith for West Bend’s refusal to pay her the $20,000 it received from Schultz. The. district court severed this claim from the UM/UIM claim.

During the course of the litigation between Brandon and West Bend, Brandon propounded interrogatories, requests for admissions, and sought the production of documents. West Bend objected to some of the admissions and the production requests. It provided answers to some of the interrogatories, and indicated Julie Schocker (Schocker), a claims adjuster for West Bend, compiled the answers. Therese Sizer (Sizer), in-house counsel for West Bend, signed the verification to the interrogatories.

The parties resolved most of their discovery disputes generated by the requests for admissions, interrogatories, and production requests. Brandon then sought to depose Schocker and Sizer and made other requests for discovery. West Bend objected to the depositions, claiming any relevant information it possessed was not subject to discovery under the attorney-client privilege and the work product doctrine. In particular, West Bend asserted that Schocker’s investigation of the claim by Brandon was protected as work product, and Brandon had made no assertion of substantial need or undue hardship for the information. It claimed all information acquired by Sizer about the case was not only protected as work product, but fell within the attorney-client privilege.

Brandon argued that any information shared between Thill and the two West Bend employees was not privileged as to her because Thill also represented her in the Illinois lawsuit. Consequently, she asserted that she was entitled to the information provided by Schocker and Sizer to Thill prior to and during the course of the Illinois litigation. She argued they gathered such information on her behalf, as well as on behalf of West Bend. Brandon also argued that West Bend waived any privilege by having Schocker and Sizer verify and answer the interrogatories.

The district court denied protective relief sought by West Bend, granted the discovery request, and ordered the depositions to be taken prior to trial. West Bend sought permission to appeal prior to a final judgment. We granted the request.

II. Scope of Review.

We review a discovery ruling for an abuse of discretion. Ashmead v. Harris, 336 N.W.2d 197, 199 (Iowa 1983). The district court ruling will be upheld unless it is clearly unreasonable or untenable. Id. A discovery order “is untenable when it is not supported by substantial evidence. ...” Graber v. City of Ankeny, 616 N.W.2d 633, 638 (Iowa 2000). A ruling based on an erroneous interpretation of a rule of discovery may constitute an abuse of discretion. See Schaffer v. Rogers, 362 N.W.2d 552, 555 (Iowa 1985).

III. Issues Presented.

West Bend limits its challenge to the discovery order by the district court by only asking that the order compelling the depositions of Schocker and Sizer be reversed. Brandon acknowledges the existence of the attorney-client privilege and the work product doctrine, but claims these doctrines do not apply in a controversy between two parties who were jointly represented by the same attorney in a prior action with respect to communications with that attorney. She also claims the adjuster and in-house counsel waived any attorney-client privilege by verifying and answering the interrogatories. Thus, the issues we address on this interlocutory appeal are limited to the grounds urged by the parties.

IV. Attorney-Client Privilege.

The attorney-client privilege protects against the disclosure of “ ‘[a]ny confidential communication between an attorney and the attorney’s client ... against the will of the client.’ ” Squealer Feeds v. Pickering, 530 N.W.2d 678, 684 (Iowa 1995) (citation omitted). Under common law we recognized the privilege, and it is codified in Iowa Code section 622.10 (2001). See Squealer Feeds, 530 N.W.2d at 684. It is recognized that in-house counsel who consult with outside counsel fall within the privilege. 1 Paul R. Rice, Attorney-Client Privilege in United States § 4.4, at 24-25 (2d ed.1999).

V. Joint-Client Exception.

Only a 'few exceptions have been carved from the attorney-client privilege. See Hickman v. Taylor, 329 U.S. 495, 511, 67 S.Ct. 385, 393-94, 91 L.Ed. 451, 462 (1947) (recognizing that exceptions tend to have a detrimental effect on attorney advocacy). One such exception exists where two or more persons jointly consult with the same attorney to act for them in a matter of common interest. See City of Coralville v. Iowa Dist. Ct., 634 N.W.2d 675, 677-78 (Iowa 2001). This exception is known as the “joint-client” exception. Actual consultation by both clients with the attorney is not a prerequisite to the. application of the joint-client exception. Id. at 677-78. The attorney' is duty-bound to divulge such communications by one joint client to the other joint client. Id. Thus; when the same attorney acts for two parties, the communications are privileged from third persons in the controversy, but not in a subsequent controversy between the two parties. 1 John W. Strong, McConnick on Evidence § 91, at 365-66 (5th ed.1999).

We recognize' this exception extends to situations where the same attorney represents two parties, separately interested in a matter of common interest. City of Coralville, 634 N.W.2d at 677-78; Henke v. Iowa Home Mut. Cas. Co., 249 Iowa 614, 619, 87 N.W.2d 920, 924 (1958) (holding attorney-client privilege does not exist because the attorney has a duty under the circumstances to divulge communications from one client to the other). The rationale for the joinfielient exception “is simply that if it appears the secret or imparted communication is such that the attorney is under a duty to divulge it for the protection of the others he has undertaken to represent in the involved transaction, then the communication is not privileged.” Henke, 249 Iowa at 619, 87 N.W.2d at 924.

■ On two prior occasions, we have permitted discovery of communications between an attorney and a client under the joint-client exception. In Henke, we held that communications between an automobile liability insurer and an attorney employed by the insurer to defend the insured in litigation resulting from an automobile accident were not privileged in a subsequent action by the insured against the insurer for bad faith and negligence in failing to settle the underlying litigation within the policy limits. 249 Iowa at 619, 87 N.W.2d at 924. More recently, in City of Coral-ville, we held that communications between city officials and an attorney retained by the city to defend the city and a police officer in an action for damages arising out of an arrest were not privileged in a later action by the police officer against the city arising out of the settlement of the first action after that point in time where the facts revealed an attorney-client relationship formed between the attorney and the police officer. 634 N.W.2d at 679. Brandon relies on these cases to support her claim for discovery in this case. She claims she formed an attorney-client relationship with Thill once he filed the Illinois lawsuit in her name.

When an attorney enters an appearance in court on behalf of another, we presume an attorney-client relationship exists between the attorney and the person on whose behalf the attorney enters the appearance. See Henke, 249 Iowa at 617, 87 N.W.2d at 923. We recognize this presumption because an attorney has no right to bring an action on behalf of an individual without authorization. By bringing an action, the attorney subjects the client to sanctions, counterclaims, discovery requests, and a judgment for costs if the suit is unsuccessful. Additionally, under Illinois law, where Thill filed Brandon’s tort suit, it is unethical and illegal for an attorney to bring an action on behalf of an individual if there is no attorney-client relationship. Foley v. Metro. Sanitary Dist., 213 Ill.App.3d 344, 157 Ill.Dec. 514, 572 N.E.2d 978, 984 (1991). We assume an attorney is acting ethically and legally when an attorney brings an action on behalf of an individual and therefore a presumption that an attorney-client relationship. exists is warranted.

A party may rebut the presumption of an attorney-client relationship by evidence that the client did not assent to the filing of the action. See Henke, 249 Iowa at 617-18, 87 N.W.2d at 923. Although it is critical that there be an undertaking by the lawyer to represent the purported client, it is equally important that there be an acceptance of the lawyer’s services by the alleged client. See Henke, 249 Iowa at 617, 87 N.W.2d at 923; City of Coralville, 634 N.W.2d at 679. Further, although “[t]he fact that another selects and pays [the] attorney” is a factor in determining the existence of an attorney-client relationship, this circumstance does not prevent the formation of such a relationship. Henke, 249 Iowa at 617, 87 N.W.2d at 923; accord City of Coralville, 634 N.W.2d at 679. Applying this law to the facts and circumstances of the present case, we conclude there was substantial evidence to support the trial court’s conclusion there was an attorney-client relationship between Thill and Brandon.

In a letter dated March 7, 2001, Brandon’s counsel informed West Bend that neither Brandon nor her counsel intended to pursue a claim against the tortfeasor and authorized West Bend to bring the action against the tortfeasor to protect its subrogation rights. West Bend and Thill knew under Illinois law that such an action had to be . brought in Brandon’s name. Instead of hiring other counsel, which would have preserved West Bend’s attorney-client privilege, West Bend hired Thill to file the subrogation action in Brandon’s name. On May 9, 2001, Thill informed Brandon’s attorney that West Bend- filed an action in Illinois naming Brandon as the plaintiff.

Not only did Brandon assent to the representation by Thill in her attorney’s letter of March 7, 2001, Brandon’s insurance policy contractually required Brandon to assent to the representation. Part F of the insurance policy issued by West Bend, to Brandon provided:.

Our right to recover payment
A. If we make a payment under this coverage form and the person to or for whom payment was made has a right to recover damages from another we shall be subrogated to that right. That person shall do:
1. whatever is necessary to enable us to exercise our right.

The facts of the present case are not much different from the facts in City of Coralville, 634 N.W.2d 675. In City of Coralville, the city and one of its police officers were sued under 42 U.S.C. § 1983 and common law for damages allegedly arising out of an arrest made by a police officer. 634 N.W.2d at 676. The city authorized an attorney to file an appearance on behalf of the officer in order to avoid a default judgment. Id. at 676-77. The assistant city attorney informed the officer that the city had a legal obligation to provide a defense to the officer. Id. at 676. The officer never consulted with the attorney who appeared on the officer’s behalf. Id. at 679. The officer was unaware that the attorney filed the appearance. Id. Under these circumstances, we found an attorney-client relationship existed between the attorney and the officer because the city informed the officer that the city had an obligation to defend the officer, and the attorney did in fact represent the officer by filing two appearances and motions. Id.

In the present case, Brandon’s attorney acknowledged West Bend’s subrogation rights and authorized West Bend to pursue those rights. The insurance policy contractually obligated Brandon to assent to the representation. Thill undertook that representation by filing an action naming Brandon as plaintiff. These facts will not allow West Bend to rebut the attorney-client relationship presumed by Thill’s act of filing the subrogation claim in Brandon’s name.

It is equally clear from the record that Brandon and West Bend did maintain a “common interest” in the Illinois action. In Henke, we- noted a common interest exists where two or more parties consulted an attorney for the mutual benefit of the parties. 249 Iowa at 618, 87 N.W.2d at 923. In City of Coralville, we characterized a common interest as two or more parties having an interest in some problem or situation. 634 N.W.2d at 677. At the time Thill filed the Illinois action in Brandon’s name, West Bend claims Thill filed the action solely to protect West Bend’s subrogation interest and not Brandon’s interest. It points to the fact that Thill settled the Illinois case without Brandon’s active participation. The flaw in this argument is that West Bend did not have an interest in the proceeds from the Illinois action until Brandon received full compensation for her damages under the full recovery rule governing UIM coverage.

Iowa Code section 516A.4 gives West Bend the right of reimbursement from or subrogation to Brandon’s recovery from the underinsured tortfeasor. Iowa Code § 516A.4 (2001). The right of reimbursement is limited by the goal of under-insurance, which is to fully compensate the insured for his or her damages. McClure v. Northland Ins. Cos., 424 N.W.2d 448, 450 (Iowa 1988). The full recovery rule requires that the insurance company’s claim for reimbursement does not mature until the insured has been fully compensated for his or her damages. Cont’l W. Ins. Co. v. Krebill, 492 N.W.2d 405, 406-07 (Iowa 1992).

At the time Thill filed the Illinois action, Brandon was entitled to receive Schultz’s $20,000 in addition to the $5000 medical payment she previously received from West Bend because she had not yet been fully compensated for her damages. If at a later time it is determined that Brandon’s damages exceed $325,000, Brandon would be entitled to the underinsured motorist limits ($300,000), the $5000 medical payment, and the $20,000 proceeds from the Illinois lawsuit under the full recovery rule. On the other hand, if at a later time it is determined that Brandon’s damages are less than $325,000, West Bend would be entitled to reimbursement from Brandon for the $5000 medical payment it made and/or from the Illinois settlement proceeds she received in an amount equal to the excess she recovered for her damages.

At the time Thill filed suit in Illinois, West Bend took the position Brandon’s damages were less than West Bend’s underinsured limits; therefore, it claimed it was entitled to any settlement proceeds recovered in the Illinois action. At that point in the controversy, Brandon claimed her damages exceeded West Bend’s UIM limits. West Bend’s argument overlooks that if it is ultimately determined Brandon’s damages exceeded $325,000, West Bend would not be entitled to any of the Illinois settlement proceeds. Until Brandon’s damages are finally determined in the UIM action, West Bend’s right of reimbursement remains unknown. Because West Bend’s right of reimbursement was unknown at the time Thill filed the Illinois action, Thill’s representation of Brandon in the Illinois action was for the mutual benefit of Brandon and West Bend, who had a common interest in a recovery against Schultz. Therefore, communications with Thill during the period of joint representation are subject to the joint-client exception to the attorney-client privilege and the work product doctrine.

VI. Waiver.

Brandon claims West Bend waived the attorney-client privilege because Sizer verified the answers to the interrogatories and because Sizer and Schocker provided the information for the answers to the interrogatories. “[T]he attorney-client privilege may be waived.” Squealer Feeds, 530 N.W.2d at 684. The waiver may be express or implied. Id. It may be based not only on words expressing intent to waive, but conduct making it unfair for a client to invoke the privilege. 1 McCormick § 93, at 371. Thus, we recognize waiver occurs when a person holding a privilege discloses or, for purposes of discovery, plans to disclose privileged matters. See Squealer Feeds, 530 N.W.2d at 684-85.

We reject the notion that a person waives a privilege by verifying the accuracy of answers to interrogatories or by participating in framing the answers. See Travelers Ins. Cos. v. Superior Ct., 143 Cal.App.3d 436, 191 Cal.Rptr. 871, 876 (1983) (holding attorney-client privilege not waived by signing answers to interrogatories). A verification of the accuracy of interrogatory answers is unrelated to the concept of waiver. Instead, the determinative factor rests with the actual content of the answers provided to the interrogatories. If the answers reveal privileged communications, then waiver can occur. See Alpha Beta Co. v. Superior Ct., 157 Cal.App.3d 818, 203 Cal.Rptr. 752, 759 (1984). If not, a person does not waive an attorney-client privilege by answering interrogatories in the course of the discovery phase of a trial that do not reveal any attorney-client communications. See id.

Brandon has not identified any answers to the interrogatories that would constitute attorney-client communications so as to justify further discovery. We find nothing in the answers to interrogatories to support waiver of the attorney-client privilege. Therefore, Brandon’s inquiry at the depositions should be limited to events that occurred in the period of joint representation.

VII. Scope of Allowable Discovery.

The waiver of the attorney-client privilege under the joint-client exception applies only to the' period when the attorney is representing both parties. Coralville, 634 N.W.2d at 680. The waiver applies to communications between joint clients and their attorney. Henke, 249 Iowa at 617, 87 N.W.2d at 923. Therefore, the scope of discovery by Brandon shall be limited to the period of joint representation. The joint representation commenced when Thill began his preparations for filing the Illinois action and ended when Brandon returned the signed release to Thill. Discovery shall also be limited to communications made by Schocker to Thill or by Sizer to Thill. West Bend has not waived the attorney-client privilege concerning any communications between Sizer and Schocker. All communications between Sizer and Schocker, which were not communicated to Thill during the joint representation, are still subject to the attorney-client privilege.

VIII. Conclusion.

The district court did not abuse its discretion in ordering the depositions to take place. However, the district court did abuse its discretion by not limiting the inquiry by Brandon to (1) communications between Thill and Schocker during the period of joint representation; and (2) communications between Thill and Sizer during the period of joint representation. We remand the case for further proceedings consistent with this opinion.

AFFIRMED AS MODIFIED AND CASE REMANDED.

All justices concur except CARTER, J., who concurs specially, and CADY, J., who dissents.

CARTER, Justice

(concurring specially).

This is a discovery dispute involving Iowa Rule of Civil Procedure 1.503(3). I concur with the majority’s conclusion that Beverly Brandon’s request for discovery should have been allowed but not for the reasons set forth in the opinion of the court. I agree with Justice Cady that Betty, Neuman & McMann, L.L.P. had no reason to believe that that firm or any member thereof had an attorney-client relationship with Beverly Brandon with regard to their pursuit of the subrogation action. Her lack of interest in that action had been expressly confirmed by another attorney who was representing her interests.

I am satisfied, however, that the protection against discovery of work product contained in rule 1.503(3) should not be applied in the present case where the actions of the parties in creating the work product are among the issues in the litigation.

CADY, Justice

(dissenting).

I respectfully dissent. The legal 'theories that should control the resolution of the critical and delicate issue presented in this case are absent from the analysis adopted by the majority. Consequently, many dangerous traps are set by the majority opinion that will snare unsuspecting attorneys and clients — as done in this case — and unnecessarily erode one of the most noble and venerable principles of our legal system.

The attorney-client privilege is -recognized as one of the pillars of our system of justice. Over the centuries, only a few carefully crafted exceptions have surfaced. See Hickman, 329 U.S. at 510-12, 67 S.Ct. at 393-94, 91 L.Ed. at 462-63. These exceptions have been limited due to the detrimental effect they have on attorney advocacy. See id.

One exception, now widely recognized, exists when two or more persons jointly consult with the same attorney to act for them in a matter of common interest. See City of Coralville, 634 N.W.2d at 677-78. See generally 1 Rice § 4:30-:33, at 152-90 (providing a general overview of the joint client exception); Edward J. Imwinkelried, The New Wigmore: Evidentiary Privileges § 6.13.2(b), at 956-58 (Richard D. Friedman ed., 2002) (same); 3 Jack B. Weinstein & Margaret A. Berger, Weinstein’s Federal Evidence § 503.21[1], at 503-67 to -68 (Joseph M. McLaughlin ed., 2d ed.2004) (same). This exception is based largely on the concept that joint clients have no intention or expectation to keep their communications confidential as between themselves. See City of Coral-ville, 634 N.W.2d at 677.

It is clear the joint client exception is sensitive to the rights and interests of all of the parties in the mix, including the other client who has his or her privilege invaded by the exception. For this reason, the exception only applies when a clear justification exists, and when all clients should understand that disclosure would occur because of the multi-party relationship. Disclosure is based primarily on the rights of clients who have entered into an attorney-client relationship.

On the two prior occasions we have permitted discovery of communications between an attorney and a client under the joint client exception, we have followed an analysis that considers all the surrounding circumstances to determine the existence of the essential relationship between an attorney and a client. In Henke, the attorney hired by the insurer actually defended the insured in litigation that included a trial. 249 Iowa at 617, 87 N.W.2d at 923. The relationship created between the attorney and insured was purposeful, known, and very real. It involved a relationship permeated by actions that gave rise “to the usual confidences of client and attorney.” Id. at 618, 87 N.W.2d at 923. In City of Coralville, we again employed the surrounding circumstances analysis to determine when and if an attorney-client relationship comes into existence. 634 N.W.2d at 679. In doing this, we rejected the notion that an attorney-client relationship is created solely because an attorney agrees to represent another. See id. Instead, the attorney-client relationship is not created until all of the circumstances and factors reveal a commitment to a relationship marked by “the usual confidences of client and attorney.” Henke, 249 Iowa at 618, 87 N.W.2d at 923. Thus, we did not immediately recognize an attorney-client relationship between the police officer and the attorney retained by the city. City of Coralville, 634 N.W.2d at 679. No attorney-client relationship initially existed even though the police officer apparently wanted the city to obtain an attorney for him, was told the city would provide an attorney, and the attorney was employed by the city to represent the police officer. Id. at 676, 679. We did not recognize the exception to apply until it became clear that the attorney had taken sufficient action to show an intent to represent the police officer. Id. at 679.

The important point in Henke and City of Coralville is that an attorney-client relationship is not built on appearances, but substance. It is built on what an attorney-client relationship is and has always been, a close relationship of trust and confidence as shown by the circumstances. See Henke, 249 Iowa at 617-18, 87 N.W.2d at 923.

The majority acknowledges that an attorney-client relationship requires the attorney to undertake to represent the purported client, and requires the purported client to accept the attorney’s services. Prom that statement of law, it concludes Thill undertook to represent Brandon by naming Brandon as the plaintiff in West Bend’s subrogation action against the tort-feasor. It further concludes Brandon accepted Thill’s service when Brandon’s attorney informed West Bend in the March 7, 2001, letter that Brandon did not intend to pursue a lawsuit against the tortfeasor, and if West Bend wanted to pursue the tortfeasor “such action should be brought by West Bend through its subrogation rights' as set forth in ... the policy.” Brandon’s attorney then concluded the letter by indicating that Brandon would cooperate “with any subrogation case” as required by the policy. I do not believe either of these events supports an attorney-client relationship.

First, Brandon clearly acknowledged that West Bend sought to pursue a subro-gation claim. A subrogation claim, in the context of insurance law, is a claim by the insurer against the tortfeasor responsible for the loss to the insured. Allied Mut. Ins. Co. v. Heiken, 675 N.W.2d 820, 824 (Iowa 2004). A subrogation claim is not a claim by the insured. Thus, placed in the proper context of the law, the March 7 letter expresses the opposite meaning given to it by the majority. Brandon’s attorney was simply informing West Bend that Brandon had no intention to pursue her personal injury claim against the tortfea-sor and if West Bend wanted to protect its subrogation interests against the tortfea-sor, it would need to pursue its own claim. This position is consistent with our law. Our law permits a partially subrogated insurer to assert a subrogation claim' directly against a tortfeasor when the insured is unwilling (or unable) to pursue a claim against the tortfeasor for the entire loss. Farm Bureau Mut. Ins. Co. v. Allied Mut. Ins. Co., 580 N.W.2d 788, 789 (Iowa 1998). Thus, the claim in this case was entirely West Bend’s claim, not Brandon’s, and Brandon’s decision not to pursue her own, independent claim cannot be construed as assent for Thill to represent her, or to represent her in whatever interest she could ultimately acquire as a result of the subrogation action.

The same is true with the majority’s claim that the cooperation clause of the insurance policy required Brandon to assent to the representation. I think insurance defense attorneys in this state will be shocked to learn that the contractual duty of an insured to cooperate with the insurer when the insurer pursues its subrogation rights means the insured agrees to enter into an attorney-client relationship with the insurer’s attorney. None of these events establishes assent to an attorney-client relationship.

Second, Thill never undertook to represent Brandon by pursuing West Bend’s subrogation claim against the tortfeasor in the name of the insured. Under Illinois law, a subrogation claim based on an insurance policy may be brought in the name of the insured if the insured has at least a de minimis interest in the lawsuit. Orejel v. York Int’l Corp., 287 Ill.App.3d 592, 222 Ill.Dec. 811, 678 N.E.2d 683, 692 (1997). However, the interest of the insurer-subro-gee cannot be concealed, and the insurer must either be named as á plaintiff or disclosed in the pleadings or by affidavit as the real party in interest. Id. Nevertheless, Illinois law clearly authorizes an insurer to use the insured’s name when pursuing a subrogation claim. This statutory authorization certainly does not create an attorney-client relationship with the insured, but primarily serves to minimize the existence and impact of insurance. See Nitrin, Inc. v. Bethlehem Steel Corp., 35 Ill.App.3d 577, 342 N.E.2d 65, 75-76 (1976) (motion to prohibit mention of insurance coverage properly denied when insurer was real party in interest). Moreover, an attorney-client relationship is not established merely because a person may have an interest in a lawsuit. Finally, even if Thill may have improperly used Brandon’s name in the lawsuit, such a mistake would not create an attorney-client relationship. The mere fact that Brandon may have had an interest in the litigation does not mean Thill represented that interest.

It is abundantly clear that the facts of the case show Thill never undertook to represent Brandon. Brandon never agreed to have Thill • represent her and there were no other indicia of an attorney-client relationship. Brandon and Thill never communicated with each other personally and Brandon was at all relevant times represented by another attorney, who eschewed any thought of having Brandon pursue a claim against the tortfeasor. Moreover, neither Brandon nor Thill maintained a subjective belief that an attorney-client relationship had been established. See 1 Rice § 4:31, at 159-60 (listing relevant factors to determine the existence of an attorney-client relationship in the joint client context). Only when Brandon later sought discovery from West Bend did she claim the existence. of an attorney-client relationship with West Bend’s attorney. Until that time, the existence of an attorney-client relationship between Thill and Brandon was never contemplated or imagined.

The majority looks beyond the reality of the circumstances of this case and transforms the joint client exception from a fact-based analysis of a relationship into a blunt inquiry into the existence of a legal interest a person may have in a lawsuit brought by an attorney on behalf of another. It declares the existence of an attorney-client relationship based on the manner in which the lawsuit was brought and the nature of the lawsuit itself. It relies on what could have been, not on what actually occurred. This is a grand departure from our prior cases, as well as the approach followed in other jurisdictions. See Henke, 249 Iowa at 617, 87 N.W.2d at 923 (“It is no answer that under the contract the insured agrees to cooperate and aid the insurer’s attorney.”); see also 1 Rice § 4:31, at 159-60. It places appearances above substance, and serves only to punish a lawyer and to unjustifiably invade the sanctity of the lawyer’s relationship with the other innocent party. “The nature of the relationship, not the nature of the cause of action,” is the controlling factor. Palmer by Diacon v. Farmers Ins. Exch., 261 Mont. 91, 861 P.2d 895, 906 (1993).

The majority has also twisted the presumption we established in Henke relating to the filing of an appearance by an attorney, and utilizes this new presumption to bypass any serious consideration of the facts of the case that clearly dispel any notion of an attorney-client relationship between Thill and Brandon. In Henke, we said an attorney-client relationship is presumed to exist when a person knowingly assents to the appearance in court of an attorney on his or her behalf- Henke, 249 Iowa at 617, 87 N.W.2d at 923. The majority simply drops the knowingly assents to the appearance prerequisite, and declares that a presumption is created when an attorney enters an appearance in court on behalf of another, which only then may be rebutted by evidence that the client did not assent to the appearance. This change in the law is made without any acknowl-edgement or explanation. We should not change legal principles in such a manner.

This case is not about filing an appearance on behalf of Brandon. It is about an attorney filing a subrogation claim against the responsible tortfeasor on behalf of an insurance company, using the insured’s name as the plaintiff as authorized by law. It is not about the creation of an attorney-client relationship. An attorney-client relationship is not artificial and detached, but is derived from conduct and intention signifying a relationship of trust, confidence, and devoted service. It requires an attorney to understand the representation has been undertaken, and for the client to accept receipt of services. See id. at 617-18, 87 N.W.2d at 923. These matters are absent in this case.

      . The positions taken by the parties narrow our consideration of the discovery dispute. We do not consider whether any nonprivi-leged information known by the in-house counsel or the claims adjuster would be discoverable upon a showing of substantial need and inability to obtain the information by other means under Iowa Rule of Civil Procedure 1.503(3), or by any other theory. Additionally, we do not address the procedure employed by West Bend to raise the issue presented in this interlocutory appeal since it was not challenged in the district court. Finally, we do not address firandon's claim on appeal that a letter written by the in-house counsel to Drivers Direct constituted admissions and a waiver of any privilege. This issue was not adequately raised on appeal and was not supported by any authorities. See Iowa R.App. P. 6.14(1)(c).

      . Under the terms of West Bend's policy, if it is determined that West Bend does in fact have a right of reimbursement, West Bend would reduce the amount it was required to pay Brandon under the UIM coverage in an amount equal to the reimbursement Brandon owed to West Bend.

      . I acknowledge that an attorney-client relationship between the insurer’s attorney and the insured could develop in a subrogation action. However, it would develop based upon the facts of the relationship and the extent of the actual claim asserted, not the mere existence of a subrogation claim naming the insured as the plaintiff.


source: Caselaw Access Project

author: CARTER, Justice.

license: Public Domain

text:
    ROGER'S BACKHOE SERVICE, INC., Appellee, v. Jeffrey S. NICHOLS, Appellant, and Scott Price d/b/a Price Construction, Defendant.
    No. 02-2014.
    Supreme Court of Iowa.
    June 16, 2004.

      Kevin P. Shea in association with Naz-ette, Marner, Wendt, Knoll & Usher, L.L.P., Cedar Rapids, for appellant.
    William F. Creasey of Goedken & Creasey, Muscatine, for appellee.
   CARTER, Justice.

Defendant, Jeffrey S. Nichols, is a funeral director in Muscatine. This action arises from a construction project that he undertook in 1998 involving the building of a crematorium and an enlargement and resurfacing of the parking lot at his funeral home. A dispute arose between Nichols and Roger’s Backhoe Service, Inc. (Roger’s) concerning invoices presented by Roger’s for excavation work performed during the construction. The district court awarded Roger’s the full amount claimed in the action.

The court of appeals reversed the district court’s award and concluded that no enforceable contract had been established between the parties. After reviewing the record and considering the arguments presented, we conclude that the district court’s judgment was supported by the evidence and was not the product of legal error. Consequently, we vacate the decision of the court of appeals and affirm the judgment of the district court.

In early 1998 Nichols decided to build a crematorium on the tract of land on which his funeral home was located. In working with the Small Business Administration, he was required to provide drawings and specifications and obtain estimates for the project. Nichols hired an architect who prepared plans and submitted them to the City of Muscatine for approval. These plans provided that the surface water from the parking lot would drain onto the adjacent street and alley and ultimately enter city storm sewers. These plans were approved by the city.

Nichols contracted with Roger’s for the demolition of the foundation of a building that had been razed to provide room for the crematorium and removal of the concrete driveway and sidewalk adjacent to that foundation. Roger’s completed that work and was paid in full. Scott Price d/b/a Price-Built Constructions (Price) was hired by Nichols as the contractor for building the crematorium and an enlarged concrete parking lot. Price contracted with Roger’s to assist in a curb cut that was required by his contract. Roger’s has been paid for that work, and it is not in issue in the present case.

After construction began, city officials came to the jobsite and informed Price and Roger’s that the proposed drainage of surface water onto the street and alley was unsatisfactory. The city required that an effort be made to drain the surface water into a subterranean creek, which served as part of the city’s storm sewer system. City officials indicated that this subterranean sewer system was about fourteen feet below the surface of the ground. Price and Roger’s conveyed the city’s mandate to Nichols when he visited the jobsite- that same day.

It was Nichols’ testimony at trial that, upon receiving this information, he advised Price and Roger’s that he was refusing permission to engage in the exploratory excavation that the city required. Nevertheless, it appears without dispute that for the next three days Roger’s did engage in digging down to the subterranean sewer system, which was located approximately twenty feet below the surface. When the underground creek was located, city officials examined the brick walls in which it was encased and determined that it- was not feasible to penetrate those walls in order to connect the surface water drainage with the underground creek. As a result of that conclusion, the city reversed its position and once again gave permission to drain the surface water onto the adjacent street and alley.

Two of the four invoices at issue in this litigation relate to charges that Roger’s submitted to Nichols for the three days of excavation necessary to locate the underground sewer system and the cost for labor and materials necessary to refill the excavation with compactable materials and attain compaction by means of a tamping process. The other two invoices for which Roger’s made claim against Nichols involved grading necessary to enable Price to perform the work called for in its contract with Nichols. The district court found that the amount of. the charges submitted on the four invoices were fair and reasonable and that they -had been performed for Nichols’ benefit and with his tacit approval.

I.Scope of Review.

This contract action was tried by ordinary proceedings and consequently is reviewed for errors at law. Iowa Const. art. V, § 4; Iowa Code § 611.6 (2001). Trial court findings of fact are binding on us if supported by substantial evidence, but we are not precluded from inquiry into whether erroneous rules of law materially affected the. decision. In re Estate of Northup, 230 N.W.2d 918, 921 (Iowa 1975); Farmers Ins. Group v. Merryweather, 214 N.W.2d 184, 186-87 (Iowa 1974).

II. The Court of Appeals Opinion.

The court of appeals premised its reversal of the district court’s decision on three separate and distinct conclusions. First, it concluded that an action based on an open account is a discrete cause of action with fixed legal elements that were not established in the matter before the court. Second, the court of appeals concluded that Roger’s should not be able to establish an implied contract because it did not allege any oral or written contract in its petition as required by Iowa Rule of Civil Procedure 1.418. Finally, the court of appeals concluded that a necessary element in establishing an implied-in-fact contract is that the services performed be beneficial to the alleged obligor. It concluded .that Roger’s had failed to show that its services benefited Nichols.

III. Whether Suit on an Open Account is a Discrete Cause of Action With Fixed Elements.

In concluding that suit on an open account is a discrete cause of action with fixed elements, the court of appeals relied on two lines of authority neither of which provide a satisfactory resolution of the issue. First, the court of appeals relied on the statements in Griffith v. Portlock, 233 Iowa 492, 7 N.W.2d 199 (1942), and Tucker v. Quimby, 37 Iowa 17 (1873), indicating that

[a] “continuous, open, current account” is one “which is not interrupted or broken, not closed by settlement or otherwise, and is a running, connected series of transactions.”

Griffith, 233 Iowa at 498, 7 N.W.2d at 202 (quoting Tucker, 37 Iowa at 19). The Griffith and Tucker cases were not concerned with establishing the elements for recovery in an action on an open account. Rather, these cases dealt with the requirements to show that an open account existed for purposes of establishing the statute of limitations set forth in Iowa Code section 614.5 and its statutory predecessors. Consequently, we find these cases to be inappo-site.

The court of appeals further described an open account as involving

an agreement between parties who have monetary transactions that all the items of the account representing such transactions, and the balance struck, are correct, together with a promise, express or implied, to pay such balance.

(Citing Weaver Constr. Co. v. Farmers Nat'l Bank, 253 Iowa 1280, 1287, 115 N.W.2d 804, 808 (1962)). The cited language from the Weaver Construction case did not purport to describe the elements of an action on an open account in all situations. It was directed at the common-law cause of action for an account stated. Although a suit on an open account may be based on a legal theory of account stated, it may also be premised on other theories, which do not require the showing of a balance struck.

Although an account in its narrow sense envisions something evidenced by book records, in a general sense, it encompasses any claim or demand based on a transaction creating a debtor-creditor relationship. In re Stratman’s Estate, 231 Iowa 480, 489, 1 N.W.2d 636, 643 (1942). We have held that, when the evidence fails to establish the elements of an account stated, the creditor may nevertheless recover by proving a contractual obligation for the individual items in the account and the fair and reasonable value of the amounts claimed. St. Luke’s Med. Ctr. v. Rosengartner, 231 N.W.2d 601, 602 (Iowa 1975); Jewett Lumber Co. v. Anderson Coal Co., 181 Iowa 950, 952, 165 N.W. 211, 212 (1917). In the Rosengartner case, we stated:

Maurice [the defendant] also contends that St. Luke’s pleaded an account stated but did not prove one. The petition is broad enough, however, to encompass an action on account. In view of the parties’ stipulation that St. Luke’s furnished the services shown on the account and that the charges for her care are reasonable, the trial court found as a fact that Theresa [defendant’s wife] “was a patient in plaintiffs hospital and she incurred charges for hospital services in the amount of $3161.25, which charges were fair and reasonable.” St. Luke’s is thus entitled to recover on the account, whether or not it established an account stated.

Rosengartner, 231 N.W.2d at 602 (quoting Jewett Lumber Co., 181 Iowa at 952, 165 N.W. at 212). The establishment of an account in this manner was similarly approved in McIntire v. Muller, 522 N.W.2d 329, 331 (Iowa Ct.App.1994).

IV. Failure to Allege Whether Claim Was Based on Written or Oral Contract.

As the court of appeals properly noted, Roger’s did not allege a specific written or oral contract in its petition. The court found this to be a violation of Iowa Rule of Civil Procedure 1.418. Although that rule does require the pleading of special matters with respect to a contract claim, a failure to do so is not fatal. See Berg v. Ridgway, 258 Iowa 640, 643, 140 N.W.2d 95, 98 (1966) (failure to allege nature of contract not fatal); Simmermaker v. Int’l Harvester Co., 230 Iowa 845, 849, 298 N.W. 911, 913 (1941) (failure to allege nature of contract waived when motion for more specific statement not filed). As stated in Berg,

[i]t is proper to move to make the petition more specific by stating whether a contract is written or oral. And it is also proper to seek such information by interrogatories.... The petition was not fatally defective [for failure to allege the nature of the contract], nor did the failure to comply with rule 91 [now rule 1.418] render evidence of the contract inadmissible.

258 Iowa at 644, 140 N.W.2d at 98 (citation omitted).

The facts underlying the alleged contractual relationship were adequately described in the petition, and Nichol’S' failure to seek further information by motion or interrogatory, as suggested in Berg, precludes any complaint based on the state of the pleading. The evidence offered at trial clearly revealed the theory of implied-in-fact contract upon which the district court based Roger’s’ recovery.

V. Sufficiency of the Evidence to Establish Implied-in-Fact Contract.

The district court’s findings amounted to a determination that an implied-in-fact contract had been established under the principles set forth in Restatement (Second) of Contracts section 69 (1981). That commentary provides:

Ordinarily an offeror does not have power to cause the silence of the offeree,to operate as acceptance.... The exceptional cases where silence is acceptance fall into two main classes: those where the offeree silently takes offered benefits, and those where one party relies on the other party’s manifestation of intention that silence may operate as acceptance.

Restatement (Second) of Contracts § 69 cmt. a (1981) (citation omitted) [hereinafter Restatement]. The bold-letter text of this section provides:

(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:
(a) Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.

Restatement § 69. This Restatement provision in its tentative draft form was given approval by this court in Prestype, Inc. v. Carr, 248 N.W.2d 111, 120-21 (Iowa 1976).

We agree with the district court that, even if Nichols, at the time he first learned of the city’s requirement of extra excavation, expressed the opinion that it should not be done, if the work was subsequently undertaken and performed for three days with his knowledge and in his presence, he was bound to call off the digging if he did not intend to pay for it. The evidence is also sufficient to support the district court’s finding that (1) the excavation, filling, and tamping required by the city’s demands were not a part of Price’s contract and should be paid for by Nichols; and (2) Roger’s’ charges were fair and reasonable.

The district court’s resolution of the controversy is further aided by the following commentary in the Restatement:

Problems of offer and acceptance are important primarily in cases where advance commitment serves to shift a risk from one party to the other, as in sales .of goods which are subject to rapid price fluctuations, in sales of land, and in insurance contracts. Controversies as to whether and when the commitment is made are less likely to be important even in such cases once performance is well under way. Offer and acceptance becomes still less important after there have been repeated occasions for performance by one party where the other knows the nature of the performance and has an opportunity for objection to it. In such cases it is unnecessary to determine the moment of making of the contract, or which party made the offer and which the acceptance.

Restatement § 22 cmt. b (citations omitted). In the present case, the district court could justifiably have found that Roger’s’ undertaking to do the work constituted a fresh offer to undertake the project, which was accepted by Nichol’s silence.

VI. The Need to Show Benefit.

In describing the elements of an action on an implied contract, the court of appeals stated in Iowa Waste Systems, Inc. v. Buchanan County, that

the party seeking recovery must show:
(1) the services were carried out under such circumstances as to give the recipient reason to understand:
' (a) they were performed for him and not some other person, and
(b) they were not rendered gratuitously, but with the ■ expectation of compensation from the recipient; and
(2) the services were beneficial to the recipient.

617 N.W.2d 23, 30 (Iowa Ct.App.2000) (quoting Bloomgarden v. Coyer, 479 F.2d 201, 208-09 (D.C.Cir.1973) (footnote omitted)) (emphasis added). In applying the italicized language in Iowa Waste Systems to the present controversy, it was the conclusion of the court of appeals that Roger’s’ services conferred no benefit on Nichols. We disagree. There was substantial evidence in the record to support a finding that, unless and until an effort was made to locate the subterranean sewer system, the city refused to allow the project to proceed. Consequently, it was necessary to the successful completion of the project that the effort be made. The fact that examination of the brick wall surrounding the underground creek indicated that it was unfeasible to use that source of drainage does not alter the fact that the project was stalemated until drainage into the underground creek was fully explored and rejected. The district court properly concluded that Roger’s’ services conferred a benefit on Nichols.

VII. The Extra Work.

Our discussion up to this point has involved the recovery awarded to Roger’s for the excavation, filling, and tamping necessitated by the city’s demands. The other items for which he recovered involved site preparation around the crematorium and new parking area. Roger’s testified that this work was done at the express request of Nichols and was not part of Price’s contract. Price testified that this site preparation was not part of his contract. The issue of Nichol’s liability for this site preparation was an issue of fact. The district court’s findings resolving the matter in favor of Roger’s and against Nichols are supported by substantial evidence and binding on us. We have considered all issues presented and conclude that the decision of the court of appeals should be vacated. The judgment of the district court is affirmed.

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED.


author: ANDERSON, PAUL H., Justice.

text:
    James W. CLIFFORD, individually and as Trustee of the Heirs and Next of Kin of Doris T. Clifford, deceased, petitioner, Appellant, v. GERITOM MED, INC., defendant and third-party plaintiff, Respondent, Michael Gmitro, M.D., et al., third party defendants, Respondents, Bruce J. Mack, M.D., third party defendant, Respondent, Monica Myklebust, M.D., et al., third party defendants, Respondents.
    No. CX-02-2041.
    Supreme Court of Minnesota.
    June 24, 2004.
   OPINION

ANDERSON, PAUL H., Justice.

In June 1999, Doris Clifford was an 84-year-old woman in reasonably good health for a person her age. She was recovering from a cold and was experiencing some discomfort as the result of phlegm. To relieve this discomfort, her physician prescribed a decongestant, Liquibid, but her pharmacy dispensed Lithobid, a drug containing lithium and used to treat bipolar disorder. Eight days after receiving the Lithobid, Clifford was admitted to a hospital where 11 days later she died of complications from lithium toxicity.

Clifford’s estate sued Geritom Med, Inc., the pharmacy that dispensed the Lithobid. Geritom filed a third-party complaint against the prescribing physician, his nurse, and the physicians who later treated Clifford. The district court dismissed the third-party defendants. After Geritom asserted a different theory of liability, the court did allow the prescribing physician and his nurse to be included on the special verdict form for the purpose of apportioning fault. A jury found Geritom not negligent in Clifford’s death. The jury also found the physician “and/or” nurse negligent, but found that this negligence was not a direct cause of Clifford’s death. Clifford moved for judgment notwithstanding the verdict (JNOV) or a new trial. The court denied the JNOV motion, but granted a new trial. A second jury found Geri-tom liable and Geritom appealed. The court of appeals reversed the district court’s grant of a new trial. We reverse.

At 12:46 p.m. on June 17, 1999, Doris Clifford called the Phone Care number at Park Nicollet Clinics’ central office. Clifford, age 84, was recovering from a cold and reported that her condition had “greatly improved” except for a phlegm problem that was making her feel uncomfortable. The nurse receiving the call faxed a handwritten note describing the nature of Clifford’s call to Clifford’s physician, Dr. Michael Gmitro. Dr. Gmitro’s office is at Park Nicollet’s Carlson Branch in Minnetonka. Dr. Gmitro returned Clifford’s call, spoke with her about her request for something to treat the phlegm problem, and prescribed the drug Liqui-bid, a decongestant. Dr. Gmitro wrote this prescription on the same piece of paper with the Phone Care message. He then gave this piece of paper to his nurse assistant, Susan Duffy, R.N., so she could call Clifford’s pharmacy to place the prescription order.

Duffy, who had worked at Park Nicollet for 13 years and had been a nurse for 30 years, does not remember the specific telephone call she placed to Clifford’s pharmacy. However, information about the call is contained in an entry to Clifford’s computer chart. This information was entered at 4:35 p.m. on June 17. After entering the information, Duffy discarded the paper with Dr. Gmitro’s handwritten prescription. The computer chart entry states that

dr. gmitro called and talked to doris, a prescription for liquibid # 60 ii bid was called into geritom pharmacy and it will be delivered to [Clifford’s apartment building].

In essence, the entry reflects a prescription for 60 tablets of Liquibid, to be taken two at a time, twice a day, with no indication of any authorization for refills.

Respondent, Geritom Med, Inc., is the pharmacy to which Duffy telephoned Clifford’s prescription. Geritom is a “closed-door” or “dispensing” pharmacy, meaning it primarily takes orders for prescriptions over the telephone and then delivers the prescriptions directly to patients. It serves developmentally disabled, mentally ill, and mentally retarded patients living in group homes and elderly patients living in senior apartments. Geritom pharmacist Daniel Sander Lee, Jr. answered Duffy’s call and recorded the prescription on a telephone prescription form normally used by Geritom. Lee does not have any independent memory of Duffy’s call. The prescription form contains the following information (italics indicate Lee’s writing):

NAME: Doris Cifford [sic]
ADDRESS: 5/8/15 [Clifford’s date of birth]
MEDICATION/STRENGTH: Lithobid
SIG: # W 2 tabs PO BID
REFILL #: 1
DR. NAME: Mike Gmitro
PHONE #: [omitted]

In essence, the information on this form reflects a prescription for 40 tablets of Lithobid, to be taken orally two at a time, twice a day, with one authorized refill. The drug Lithobid contains lithium and is used to treat bipolar or manic depressive disorders.

Geritom filled the prescription, as recorded by Lee, and delivered it later that day to Clifford’s apartment building. The label on the bottle shows the contents to be Lithobid and contains the same instructions for taking the medication as were written on the form completed by Lee. After receiving the prescription, Clifford apparently placed a small label of her own, in her own writing, on the Lithobid bottle with the words “Lithobid — Decongestant.”

Eight days later, on June 25, Clifford arrived by ambulance at North Memorial Medical Center in Robbinsdale ,and was admitted to the Emergency Department. According to her chart, Clifford reported that she had gone to bed the night before in a normal state of health. Sometime in the middle of the night, however, she found herself on the floor tangled in her pajamas, experiencing lower extremity pain, and she had urinary and fecal incontinence. North Memorial records described Clifford as a “pleasant elderly woman.”

Although Clifford appeared to be in good health at the time of her admission, hospital physicians decided to have her stay for additional testing. - North Memorial’s apparent practice is to continue administering a patient’s preadmission prescriptions. To obtain Clifford’s prescription information, her daughter-in-law, Jeanette Clifford, went to Clifford’s apartment to obtain detailed information on Clifford’s current medications. Jeanette Clifford then called a nurse at the hospital to relay this information from a list prepared by Clifford and from the labels on the medications. The information relayed to North Memorial by Jeanette Clifford included that obtained from the bottle containing Lithobid. North Memorial then dispensed drugs from its own pharmacy to continue Clifford’s prescriptions in accordance with its standard practice.

At 4:00 a.m. on June 29, a resident physician was summoned to see Clifford. Clifford had suffered an acute decrease in mental status. She had decreased interaction with staff and was unable to “ambulate or verbalize freely.” A lithium blood level was drawn and the Lithobid medication was stopped. North Memorial physicians also began an effort to clear the lithium from Clifford’s system and her lithium level progressively dropped over the following days. Upon learning the Litho-bid prescription ipay have been a mistake, Jeanette Clifford returned to Clifford’s apartment to determine whether she had conveyed the wrong information to the hospital. After confirming that she had correctly read the label on the medication, she brought the bottle to the hospital where pharmacy staff verified that the tablets in the bottle were indeed Lithobid.

Despite the discontinuation of the Litho-bid and the drop in her lithium level, Clifford never regained her preadmission mental status and her condition continued to, deteriorate. Clifford died a week later at 11:37 p.m. on July 6. The Hennepin County Medical Examiner concluded that Clifford died of complications from lithium toxicity.

Two months after Clifford’s death, on September 14, 1999, one of Clifford’s sons, James Clifford, was named trustee of her estate. After his appointment, James Clifford individually and on behalf of his mother’s estate commenced a wrongful death action against Geritom in Hennepin County District Court. The complaint alleged that Geritom negligently dispensed Litho-bid instead of Liquibid and that this .negligent act ultimately caused Clifford’s death. In September 2000, Geritom filed a third-party complaint against Dr. Gmitro and Nurse Duffy (d/b/a Park Nicollet) and two North Memorial physicians. Geritom alleged that Dr. Gmitro and Duffy failed- to “accurately and properly transmit” the Li-quibid prescription and that, the North Memorial physicians negligently failed to diagnose and treat Clifford’s initial symptoms of lithium toxicity.

In June 2001, the: district court dismissed without prejudice Geritom’s third-party complaint for failure to state a claim upon which relief could be granted. The court found that there was no common liability among the parties. In making this finding, the court determined that, even if it were true that Dr. Gmitro communicated the Lithobid prescription, at most Dr. Gmitro and Duffy were distinct and independent tortfeasors. Therefore, the court concluded there was no common liability between them and Geritom because the act of prescribing the wrong medication could not have been jointly performed. The court also found that even if it were true that the North Memorial physicians negligently treated Clifford, Clifford’s cause of action against Geritom arose before her admission to North Memorial and the North Memorial physicians and Geritom could not be joint tortfeasors.

The court also addressed Geritom’s liability in the context of any subsequent negligent treatment by the North Memorial physicians by quoting Viou v. Brooks-Scanlon Lumber Co.: “The mere fact that injuries caused by the negligence of the person sought to be charged have been increased by the negligence of an attending physician does not relieve that person of consequent liability.” 99 Minn. 97, 103, 108 N.W. 891, 893 (1906). In addition, the court referred to the Restatement (Second) of Torts § 457 (1965) as setting the general rule for the scope of Geritom’s liability in this matter. Section 457 reads as follows:

If the negligent actor is liable for another’s bodily injury, he is also subject to liability for any additional bodily harm resulting from normal efforts of third persons in rendering aid which the other’s injury reasonably requires, irrespective of whether such acts are done in a proper or negligent manner.

The court concluded that if Geritom were found liable for the Lithobid error, it would also be liable for any subsequent harm to Clifford “from the treating physicians and hospital.”

Before the start of the trial, Geritom moved to add Dr. Gmitro, Duffy, and the North Memorial physicians to the verdict form for the purpose of allocating fault under MinmStat. ch. 604 (2002). Specifically, Geritom claimed that it would present evidence on the “communication process” between Park Nicollet and Geritom and that a jury could find both parties at fault for any miscommunication. Clifford responded by arguing that the motion was an attempt by Geritom “to get in through the back door what [it] couldn’t do through the front door and that is to be able to argue, despite the [district] [c]ourt’s ruling, that these other individuals were negligent.” The court granted the motion as to Dr. Gmitro and Duffy, but denied it as to the North Memorial physicians.

The district court denied Geritom’s motion for a jury instruction on superseding cause, but also denied Clifford’s in limine motion to prohibit Geritom and its witnesses from “arguing, submitting evidence, or otherwise mentioning that the previously dismissed third-party defendants contributed to or caused the death” of Doris Clifford. Clifford contended that this was necessary to prevent Geritom from arguing superseding cause. Geritom responded that Clifford had the burden of proving-direct cause and Geritom was entitled to introduce rebuttal evidence that Clifford’s ingestion of Geritom’s Lithobid was not a direct cause of her death. Geritom asserted that one of its expert witnesses who was a doctor would testify that the Geri-tom-dispensed Lithobid ingested by Clifford was not a direct cause of her death. The court, in denying Clifford’s motion, explained that Geritom had a right to defend itself by attacking direct cause and that, because there would be no superseding cause instruction, any testimony related to North Memorial could be “handled by cross examination.” Ultimately, the physician whose testimony was proffered by Geritom did not testify.

The trial on Clifford’s action was held July 23-27, 2001. Dr. Gmitro and Duffy testified, but were not represented. No persons connected with North Memorial appeared as witnesses. Geritom’s attorney made a number of references apparently related to North Memorial’s treatment of Clifford. During his opening statement, the attorney stated that Clifford had “only taken five pills” from the Geritom bottle, that North Memorial’s pharmacy “refilled” the Lithobid prescription, and that the five Geritom tablets did not directly cause Clifford’s death. Also on the trial’s first day, Geritom’s attorney questioned James and Jeanette Clifford on the subject of Clifford’s apparent good health upon her admission to North Memorial and her declining condition while in the care of North Memorial.

Clifford’s attorney did not object to the opening statement or cross-examinations, but apparently believed Geritom’s conduct was improper and expressed this concern to the district court. The court’s order and memorandum granting a new trial notes that Geritom’s attorney was “admonished” the morning of the trial’s second day “not to go any further into these matters.” Nevertheless, later that same day, when cross-examining Clifford’s expert pharmacist, Geritom’s attorney asked several questions related to Clifford’s consumption of Lithobid before and after admission to North Memorial. In prefacing one question, the attorney stated that Clifford had taken 14 tablets of Lithobid following the last time she took a “pill out of that [Geritom] bottle.” In response to this line of questioning, Clifford appears to have requested a curative jury instruction during a chambers conference the morning of the third and final day of the trial. The proposed instruction incorporated verbatim the text of Restatement (Second) Torts § 457 (1965). The court denied this request.

Aside from these apparent references regarding the issue of superseding cause, Clifford and Geritom introduced evidence specific to Clifford’s negligence claim against Geritom. During the trial, Duffy testified that she had never heard of Li-thobid or called in a prescription for it. After discussing the three discrepancies between the record of Dr. Gmitro’s Liqui-bid prescription and Geritom’s telephone prescription form, Duffy testified that if a pharmacist had repeated the prescription as Geritom recorded it, just one of the discrepancies would have caused her to correct the information.

Lee, the Geritom pharmacist who took Duffy’s call, testified regarding his practice of repeating prescription information to callers in order to correct any discrepancies. Lee also testified that in the year leading up to Clifford’s prescription Geri-tom had filled 30 Lithobid and 14 Liquibid prescriptions. Lee also acknowledged that Geritom does not include patient information inserts with the delivered prescriptions unless a patient specifically requests the information. Clifford’s pharmacy expert testified that not including the patient information inserts did not violate any law or regulation, but that in his opinion Geri-tom’s failure to follow this practice departed from the standard of care for pharmacies. This testimony was juxtaposed with Jeanette Clifford’s earlier testimony about Clifford’s careful behavior regarding her medications, including her practice of writing notes on the patient information inserts she received with medications dispensed from other pharmacies.

Geritom’s pharmacy expert testified that Lee exceeded industry standards by repeating the prescription information and that “closed-door” pharmacies such as Ger-itom do not use patient information inserts on a routine basis. Geritom’s owner, Thomas D. Smith, testified that Geritom offers in-person pharmacy counseling once a week at Clifford’s apartment building and a Geritom pharmacist is available to customers by either telephone or pager 24 hours a day. Geritom also elicited testimony and introduced a Phone Care record regarding a call on June 23 by Clifford to Park Nicollet. The Phone Care record indicated that Clifford was concerned about a possible reaction to a medication she was taking for a bladder infection. There is no record of this call being returned by Dr. Gmitro or any other Park Nicollet doctor.

At the beginning of his closing argument on the third and final day of the trial, Geritom’s attorney told an anecdote about circus clowns. This anecdote involved clowns who deceived an audience by making the audience think that a clown was shot out of a cannon into a net when actually it was a different clown who appeared in the net. Geritom’s attorney ended the anecdote by stating “Things aren’t always what they appear to be. Things are not always what they appear to be.”

The jury started deliberations around mid-day on July 25 and returned the special verdict form on July 27. The jury answered “No” to the question “Was Defendant Geritom Med, Inc. negligent?” The jury answered ‘Tes” to the question “Were Dr. Michael Gmitro and/or Nurse Susan Duffy negligent?,” but answered “No” to the question “Was such negligence a direct cause of the death of Doris T. Clifford?” Based on these answers to the special verdict interrogatories, the district court entered judgment in favor of Geri-tom. The court denied Clifford’s subsequent motion for JNOV. However, the court granted Clifford’s alternative motion for a new trial on liability on the ground the verdict was against the preponderance of the evidence.

A second trial took place March 19-21, 2002. At the conclusion of this trial, a jury found Geritom negligent and a direct cause of Clifford’s harm. The jury found that Park Nicollet was not negligent. Following this second trial, Geritom moved for JNOV, a new trial, or reinstatement of the verdict from the first trial. The district court denied these motions. Geritom appealed, challenging the granting of Clifford’s motion for a new trial following the first trial and requesting as alternative relief a new trial because of various alleged errors in the second trial. The court of appeals reversed and reinstated the first jury’s verdict, concluding that the district court had abused its discretion in granting a new trial. Clifford v. Geritom, No. CX-02-2041, 2003 WL 21652269 (Minn.App. July 15, 2003). The court of appeals did not address Geritom’s other issues. Clifford appealed and asks that we reverse the court of appeals by holding that the district court did not abuse its discretion in granting Clifford’s motion for a new trial.

We begin our analysis by recognizing that a motion for a new trial gives a district court the opportunity to correct errors without subjecting the parties to the expense and inconvenience associated with an appeal. Sauter v. Wasemiller, 389 N.W.2d 200, 201 (Minn.1986). We have held that Minnesota Rule of Civil Procedure 59.01 establishes the causes for which a court may grant a new trial and limits the grounds for a new trial to those causes. Ginsberg v. Williams, 270 Minn. 474, 485, 135 N.W.2d 213, 221 (1965). Here, the relevant recognized cause for a new trial is when “The verdict * * * is not justified by the evidence * * ⅜.” Minn. R. Civ. P. 59.01(g). This cause “vest[s] the broadest possible discretionary power in the trial court.” Ginsberg, 270 Minn, at 484, 135 N.W.2d at 220. Whether the verdict is justified by the evidence presents a factual question and the district court may properly weigh the evidence. Lamb v. Jordan, 333 N.W.2d 852, 855 (Minn.1983).

A district court is in a better position than an appellate court to assess whether the evidence justifies the verdict and we usually defer to that court’s exercise of the authority to grant a new trial. Haugen v. Int’l Transp., Inc., 379 N.W.2d 529, 531 (Minn.1986); LaValle v. Aqualand Pool Co., Inc., 257 N.W.2d 324, 328 (Minn.1977); Lamb, 333 N.W.2d at 856. We will not reverse a district court’s grant of a motion for a new trial absent a clear abuse of discretion. LaValle, 257 N.W.2d at 328; Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn.1990). When a jury’s verdict indicates the jury was confused, we will “defer to the trial court’s discretionary grant of the alternative new trial motion * * *.” Waite v. Amer. Fam. Mut. Ins. Co., 352 N.W.2d 19, 22 (Minn.1984).

The applicable test for granting a new trial on the basis that the evidence does not justify the verdict is whether “the verdict is so contrary to the preponderance of the evidence as to imply that the jury failed to consider all the evidence, or acted under some mistake * * ⅜.” LaValle, 257 N.W.2d at 328. This is a demanding standard, but it is less rigorous than the standard for granting JNOV, which is “when the evidence is so overwhelming on one side that reasonable minds cannot differ as to the proper outcome.” Id. Here, the district court’s articulated basis for granting a new trial was that “the verdict [was] so contrary to a preponderance of the evidence presented at trial that the jury must have been acting under some mistaken belief.” The court concluded that the jury’s finding that none of the parties listed on the special verdict form was the direct cause of Clifford’s death demonstrated that the jury’s verdict “must have been corrupted by some mistaken belief or theory.”

We note that Geritom does not dispute that Clifford died of complications from lithium toxicity. Further, according to the evidence, the only sources of lithium were the Lithobid dispensed by Geritom and that dispensed by North Memorial after it obtained information from the bottle of Lithobid dispensed by Geritom. The evidence also demonstrates that, when North Memorial obtained the information from the bottle of Lithobid dispensed by Geri-tom, it was following its policy of continuing preadmission medications. We concur with the district court’s apparent conclusion that North Memorial would not have dispensed and administered Lithobid if not for the prescription information found on the bottle of Lithobid.

The significance of this conclusion is that it shifts the question of direct cause from which source of lithium was responsible for Clifford’s death to who was responsible for the erroneous prescription information on the bottle of Lithobid dispensed by Geri-tom. Thus, according to the evidence, negligence by either Dr. Gmitro “and/or” Duffy in communicating the information, or by Geritom in taking the information, would be the legal direct cause of the harm to Clifford. Of course, the jury could have found neither Dr. Gmitro and Duffy nor Geritom negligent, but it did not. It is the inconsistency between the jury’s finding of negligence and its finding of no causation that indicated to the district court that the jury must have been acting under a mistaken belief. It appears that the court, upon reflection, must have realized the role of its decisions before and during the trial in either contributing to the jury’s mistaken belief or in failing to prevent such a mistaken belief.

Geritom contends that in other instances we have upheld jury findings of negligence without causation and that we should do so here. However, the cases Geritom relies upon fail to support our upholding the first jury’s verdict. In those cases, we upheld the jury verdict after determining that the jury could have considered theories wherein independent superseding forces intervened to cause the plaintiffs injury; i.e., the plaintiff would have been harmed under those circumstances even if the defendant had exercised reasonable care. See, e.g., Hauenstein v. Loctite Corp., 347 N.W.2d 272, 276 (Minn.1984). In Norberg v. Northwestern Hosp. Ass’n, Inc., we noted that the jury could have found that the plaintiff “would have been injured even if due care had been exercised.” 270 N.W.2d 271, 275 (Minn.1978). In Kilbane v. County of Ramsey, we stated that the jury could have concluded that the plaintiffs injury would have occurred regardless of any exercise of due care because of an inevitable accident or self-infliction of the injury. 292 Minn. 86, 89, 193 N.W.2d 301, 304 (1971). In Fallin v. Maplewood-North St. Paul Dist. No. 622, we upheld a finding of negligence without causation after first noting expert testimony that a teacher cannot supervise every student at all times. 362 N.W.2d 318, 323 (Minn.1985). We then concluded that the jury could have decided there was no causation between a teacher briefly leaving a wood-shop and a student’s injury “because the accident happened quickly and because of the number of students in the room.” Id. Here, we conclude the foregoing cases cited by Geritom are unpersuasive because in each of those cases superseding cause was legally cognizable and here the district court specifically denied Geritom’s request for a superseding cause instruction.

Geritom also asserts that the jury’s finding of no negligence on Geritom’s part absolves it of any liability regardless of any confusion by the jury regarding causation. We disagree. We ordered a new trial in a similar case when a jury found a defendant not negligent, a third-party defendant negligent, but the third-party defendant’s negligence not a direct cause of an accident. Bergemann v. Mut. Serv. Ins. Co., 270 N.W.2d 107, 109-10 (Minn.1978). In Bergemann, we observed that the verdict appeared to mean that the negligence of the third-party defendant “served to insulate [the defendant’s] actions from a finding of negligence” because it “rendered otherwise unreasonable actions reasonable.” Id. at 110. Here, because of the “and/or” framing of the interrogatory related to Dr. Gmitro and Duffy, it is unclear whether the jury believed Dr. Gmitro, Duffy, or both to be negligent. Like Bergemann, it is possible the jury believed Dr. Gmitro’s apparent failure to return Clifford’s June 23 call insulated Geritom from any prior negligence on its part.

The jury’s finding of no negligence by Geritom also does not automatically absolve Geritom of any liability because negligence and causation in this case are so closely related that we cannot say the jury’s confusion as to causation did not taint its understanding of negligence. Cf. Koenigs v. Werner, 263 Minn. 80, 85, 116 N.W.2d 73, 76 (1962) (stating “the practice of permitting a partial new trial should not be followed unless it clearly appears that the issue to be retried is distinct and separable and that the trial of that issue alone may be had without injustice.”). Indeed, the jury’s finding of negligence on the part of Dr. Gmitro “and/or” Duffy is questionable as there was no evidence introduced that would provide an applicable standard of care. See Norberg, 270 N.W.2d at 275 (refusing to consider alternative theories of negligence not supported by a standard of care when attempting to reconcile a jury’s finding of negligence without causation).

We conclude that the jury’s finding of no negligence by Geritom when the jury made inconsistent findings on negligence and causation with respect to Dr. Gmitro and Duffy does evidence mistake or confusion by the jury. Therefore, after reviewing the evidence in this case, we have no reason to doubt the district court’s determination that the evidence did not justify the first jury’s verdict. As we noted earlier, the function of a new trial motion is to permit a district court a means of correcting errors short of an appeal. Accordingly, we hold that the district court did not abuse its discretion when it granted Clifford’s motion for a new trial.

Our holding that the district court properly granted Clifford’s motion for a new trial reverses the court of appeals on the only issue that court addressed on appeal. The alternative issues raised by Geritom before the court of appeals and not addressed by that court remain unresolved. Therefore, we remand this case to the court of appeals for consideration of Geri-tom’s remaining issues in a manner consistent with this opinion.

Reversed, vacated, and remanded.

BLATZ, C.J., took no part in the consideration or decision of this case.

      . We note that Clifford presented at least one other theory of liability, namely, that Geritom was negligent in failing to include an information insert with the Lithobid that would have alerted Clifford, who was very conscious about her medications, that there was an error. However, our discussion focuses on causation as it relates to how the prescription information came to be on the bottle of Litho-bid dispensed by Geritom. This focus is the result of our attempt to reconcile the jury's finding that Dr. Gmitro “and/or” Duffy were negligent without also being the direct cause of Clifford’s death.

      . In the memorandum attached to its order granting a new trial, the district court noted that the likely reason for the jury’s mistake was the improper statements of defense counsel alluding to potential superseding causes. However, the district court’s articulated ground for granting a new trial was that the evidence did not justify the verdict and we affirm on that ground. Because we conclude it was unnecessary for the court of appeals to address the issue of superseding cause, we vacate the court of appeals opinion to the extent that court directly or indirectly addressed this issue in its opinion.


author: /s/Kathleen A. Blatz Chief Justice

text:
    Donald PUBLICOVER, Relator, v. VOLTELCON, and Hartford Specialty Risk Services, Respondents.
    No. A04-603.
    Supreme Court of Minnesota.
    June 29, 2004.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed March 12, 2004, be, and the same is, affirmed without opinion. See Minn. R. Civ.App. P. 136.01.

BY THE COURT:

/s/Kathleen A. Blatz Chief Justice


author: /s/Sam L. Hanson Associate Justice

text:
    Michelle HUGILL, Respondent, v. BENTON COUNTY, and Self-Insured/MN Counties Insurance Trust/RSKCo., Relators, and Allina/Sister Kenny Institute, Mickelson Rehab. Consultants, Third Party Solutions, Inc., Noran Neurological Clinic, and Foley Physical Rehab., Inc., Intervenors.
    No. A04-598.
    Supreme Court of Minnesota.
    June 29, 2004.
    Christopher Edward Celichowski, Minneapolis, MN, for Relator.
    Norbert Cuellar, Minneapolis, MN, for Respondent.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed March 10, 2004, be, and the same is, affirmed without opinion. See Minn. R. Civ.App. P. 136.01.

IT IS FURTHER ORDERED that the motion of Benton County, et ah, for oral argument be, and the same is, denied.

IT IS FURTHER ORDERED that the motion of Benton County, et al. to strike part of respondent’s brief be, and the same is, granted.

Employee is awarded $1,200 in attorney fees.

BY THE COURT:

/s/Sam L. Hanson Associate Justice