author: JOHNS, Circuit Judge,

text:
    2001 SD 106
    G. Robert TROUTEN, Plaintiff and Appellee, v. HERITAGE MUTUAL INSURANCE COMPANY, Defendant and Appellant.
    No. 21590.
    Supreme Court of South Dakota.
    Considered on Briefs April 24, 2001.
    Decided Aug. 15, 2001.

      James L. Hoy and Carleton R. Hoy of Hoy & Hoy, Sioux Falls, SD, Attorneys for plaintiff and appellee.
    Gary P. Thimsen and William G. Beck of Sioux Falls, SD, Attorneys for defendant and appellant.
   [¶ 1.] Justice Robert A. Amundson delivers the majority opinion of the Court on Issue One which holds that the trial court erred in permitting the plaintiff to maintain a direct action suit against the defendant as a third party beneficiary of a contract.

[¶ 2.] Circuit Judge Timothy R. Johns delivers the majority opinion of the Court on Issue Two which holds that the trial court erred in permitting the plaintiff to proceed against the defendant for bad faith breach of an obligation to pay under a contract.

AMUNDSON, Justice, writing for the majority on Issue One.

[¶ 3.] Heritage Mutual Insurance Company (Heritage) appeals from a circuit court order denying its motion to dismiss, its motion for a protective order and its motion to sever and granting plaintiffs motion to compel discovery. We granted Heritage’s petition for allowance of appeal from the intermediate order on August 10, 2000. We reverse and remand.

FACTS

[¶ 4.] Vicki L. Kenison purchased. a business liability insurance contract from Heritage for the period of June 20, 1999 through June 20, 2000. This policy was to provide coverage for her business, Rock Bottom Liquidators, located in Sioux Falls, South Dakota. The policy provided coverage for “medical expenses ... for bodily injury caused by an accident ... [o]n ways next to premises you own or rent ... regardless of fault.” The medical expense limits were $5,000.

[¶ 5.] G. Robert Trouten (Trouten) alleges that, on June 30, 1999, he slipped and fell on a sidewalk abutting the building insured by Heritage. Trouten reported the accident to Heritage and made a claim for medical and hospital expenses exceeding $5,000. Heritage denied the claim in its entirety.

[¶ 6.] As a result of the denial of his claim, Trouten brought an action for breach of contract against Heritage in January 2000. Trouten later filed an amended complaint seeking compensatory damages for breach of contract, punitive damages for bad faith breach of the insurance policy and attorney’s fees.

[¶ 7.] Heritage denied the existence of contractual obligations to Trouten and moved for a judgment on the pleadings. The motion was subsequently denied with the court ruling that the breach of contract and bad faith claims stated viable causes of action.

[¶ 8.] On May 18, 2000, Trouten served Heritage interrogatories and a request for production of its entire claim file relating to the case. Heritage objected to Trout-en’s discovery request and moved for a protective order and an order severing the bad faith and contract claims. Heritage also served a motion to dismiss for failure to state a cause of action which the trial court treated as a second motion for judgment on the pleadings. On the same day, Trouten filed a motion for an order to compel discovery. A hearing was held and Heritage’s motions were denied while Trouten’s motion to compel discovery was granted. Heritage then filed a petition for a discretionary intermediate appeal from the trial court’s order denying its motions and granting Trouten’s discovery request.

ISSUES AND ANALYSIS

[¶ 9.] Although a number of issues have been raised, we need only address two.

ISSUE ONE

[¶ 10.] Whether Trouten can maintain a direct action suit against Heritage when he did not contract with Heritage?

[¶ 11.] This is an issue of first impression in South Dakota. “As a general rule there is no privity between an injured person and the tortfeasor’s liability insurer, and the injured person has no right of action at law against the insurer[.]” 44 AmJur2d Insurance § 1445 (1982). However, there are exceptions to this rule where a statute authorizes such suits or where the injured person is considered to be a third party beneficiary of the contract.

[¶ 12.] There is no statute in South Dakota which allows a direct action by an injured person against another’s liability insurer absent a judgment having been first obtained against the tortfeasor. See SDCL 58-23-1 (direct action allowed when an execution on a judgment against the insured is returned unsatisfied).

[¶ 13.] As to the exception for third party beneficiaries, SDCL 53-2-6 allows for a suit by a third party beneficiary of a contract. It provides that “[a] contract made expressly for the benefit of a third person may be enforced by him at any time before the parties thereto rescind it.”

[W]henever two parties enter into an agreement that appears to have been made expressly for the benefit of a third party, and such agreement has a good and sufficient consideration, the agreement itself creates all the privity there need be between the person for whose benefit the agreement was entered into and the party assuming the obligation, and an action at law should lie regardless of whether there was any obligation existing between the other party to the agreement and the third party. But, before the third party can adopt the agreement entered into and recover thereon, he must show clearly that it was entered into with the intent on the part of the parties thereto that such third party should be benefited thereby. This intent might, in a given case, sufficiently appear from the contract itself, but it must frequently be shown by other proof.

Fry v. Ausman, 29 S.D. 30, 36-37, 135 N.W. 708, 710 (1912) (emphasis original).

[¶ 14.] The issue we must decide is whether the instant contract of insurance contemplates Trouten and all others similarly situated as third party beneficiaries. The policy has two separate coverages: business liability and medical expenses. The medical expense coverage provides:

a. We will pay medical expenses as described below for bodily injury caused by an accident:
(1) On premises you own or rent;
(2) On ways next to premises you own or rent; or
(3) Because of your operations; provided that:
(1) The accident takes place in the coverage territory and during the policy period;
(2) The expenses are incurred and reported to us within one year of the date of the accident; and
(3) The injured person submits to examination, at our expense, by physicians of our choice as often as we reasonably require.
b. We will make these payments regardless of fault. These payments will not exceed the Limit [sic] of Insurance [sic]. We will pay reasonable expenses for:
(1) First aid at the time of an accident;
(2) Necessary medical, surgical, x-ray and dental services, including prosthetic devices; and
(3) Necessary ambulance, hospital, professional nursing and funeral services. (emphasis original).

[¶ 15.] Trouten contends that, because the policy states that the insurer will make medical expense payments regardless of fault, the policy is written for his benefit and he is, ipso facto, a designated beneficiary entitled to sue the insurer to collect those payments. In support of his contention, Trouten cites Harper v. Wausau Ins. Co., 56 Cal.App.4th 1079, 66 Cal.Rptr.2d 64 (1997) and Donald v. Liberty Mut. Ins. Co., 18 F.3d 474 (7th Cir.1994).

[¶ 16.] In Harper, the injured party fell on the insured’s property and then brought suit against the insurer for medical expenses under a commercial general liability policy. The medical expense portion of that policy read the same as the one in the instant case including the provision that the insurer would pay up to $5,000 for medical expenses for bodily injury regardless of fault. The issue was whether the injured party was a third party beneficiary under the terms of the insurance policy and in light of California Civil Code § 1559. That provision, like SDCL 53-2-6, stated that “ ‘[a] contract made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.’ ” Harper, 56 Cal.App.4th at 1086, 66 Cal.Rptr.2d at 68. In speaking of § 1559, the California court noted that it “excludes enforcement of a contract by persons who are only incidentally or remotely benefited by the agreement.” Id. We agree with this statement since both statutes require that the contract be made “expressly for the benefit of a third person.”

[¶ 17.] In finding that the injured party in Harper was a third party beneficiary, the Harper court reasoned:

Here, the insurance policy contained a liability provision based on fault (“Coverage A”) and a medical payment provision, based on injury on the property (“Coverage C”). The express language of “Coverage C” plainly indicates it is meant to directly confer a benefit upon third parties who are injured on the owner’s property. The payment is premised on the happening of the event and is not premised on fault. Thus, the insurer undertook a separate and direct obligation to pay to the medical expenses of any persons injured on the owner’s property regardless of its insured’s negligence. Accordingly, the payments were plainly intended to directly benefit plaintiff and were not incidental or remote.

Harper, 56 Cal.App.4th at 1090, 66 Cal.Rptr.2d at 70. (emphasis original).

[¶ 18.] As authority for its conclusion, the Harper court cited Donald, supra; Hunt v. First Ins. Co. of Hawaii, Ltd., 82 Hawai’i 363, 922 P.2d 976 (App.1996); and Desmond v. American Ins. Co. 786 S.W.2d 144 (Mo.Ct.App.1989). In each of these cases, the court held that the injured person qualified as a third party beneficiary under the medical payment benefit provision of the property owner’s insurance policy and could, therefore, maintain a direct action against the owner’s insurance company for medical benefits. Donald and Desmond are of particular note since the medical expense coverage provisions of the respective insurance policies read the same as the provisions of the instant policy including the no fault language.

[¶ 19.] The Harper court also quoted from Appleman on Insurance Law and Practice. The quotation merits repetition since it analyzes medical payment provisions in commercial and homeowner liability policies.

“Medical provisions of liability, or homeowner’s, policies are a form of minimal group accident insurance provided at minimal cost with a named insured as the entity through whom the coverage is issued.... Generally, medical payment clauses are considered to constitute separate accident insurance coverage. Such coverage is divisible from the remainder of the policy, and creates a direct liability to the contemplated beneficiaries. The purpose is to grant peace of mind and create a fund for the payment of medical services so that those injured will not necessarily be contemplating how to impose liability upon the insured. And, with this in mind, a broad and liberal interpretation will be given. Such provision is the separate obligation of the insurer, independent of its obligation to pay sums of money as damages under the liability features of the contract. It has no relevance to the financial responsibility law. Nor is liability for such payment in any way dependent upon negligence of the insured.... ”

Harper, 56 Cal.App.4th at 1089-1090, 66 Cal.Rptr.2d at 70 (quoting 8A, Appleman, Insurance Law and Practice, § 4902, pp. 228-230 (fns omitted)).

[¶ 20.] In response to the holdings in Harper, Donald, Hunt and Desmond, Heritage argues that we should follow the holding in Zegar v. Sears Roebuck and Co., 211 Ill.App.3d 1025, 570 N.E.2d 1176, 156 Ill.Dec. 454 (1991). In Zegar, a patron slipped and fell in a Sears store and brought a direct action against Sears’ insurer, Allstate, to recover medical expenses under a general liability policy containing a no fault provision under Coverage C. The Illinois court recognized

that although in some respects Zegar may be viewed as a third party beneficiary of the contract between the insured and the insurer, the coverage provisions of an insurance policy are primarily for the benefit of the contracting parties and only incidentally for injured claimants.

Zegar, 156 Ill.Dec. 454, 570 N.E.2d at 1179.

[¶ 21.] To illustrate the contractual relationship between the insured and the insurer, the court then referred to the following policy provisions: Sears’ obligation to timely notify Allstate of an occurrence; Sears’ obligation to cooperate in the investigation, defense or settlement of a claim or suit; the fact that Sears was not allowed to voluntarily assume any obligation or expense, other than first aid, without Allstate’s consent; and the “Legal Action Against Us” provision. The insurance policy in the instant case has the same conditions as those found in Zegar including the “Legal Action Against Us” clause. As in Zegar the policy in issue provides:

4. Legal Action Against Us
No person or organization has a right under this policy:
a. To join us as a party or otherwise bring us into a suit asking for damages from an insured; or
b. To sue us on this policy unless all of its terms have been fully complied with.
A person or organization may sue us to recover on an agreed settlement or on a final judgment against an insured obtained after an actual trial, but we will not be liable for damages that are not payable under the terms of this policy or that are in excess of the applicable Limit of Insurance. An agreed settlement means a settlement and release of liability signed by us, the insured and the claimant or the claimant’s legal representative. (emphasis original).

[¶ 22.] Finding that the injured patron had no right to bring a direct action, the Zegar court stated:

In our opinion, nothing in the insurance policy states or strongly suggests that a claimant may maintain a direct action for medical expenses without regard to the resolution or [sic] of his or her potential claim against the insured for bodily injuries. We conclude that absent an express or clearly implied right to sue Allstate directly for the medical expenses under Coverage C, Zegar and the alleged class of persons injured at Sears’ stores cannot maintain an action to ' recover medical expenses directly from Allstate, at least until after a settlement, adjudication, or release of claim against Sears has been secured.

Zegar, 156 Ill.Dec. 454, 570 N.E.2d at 1180.

[¶ 28.] The proper disposition of this case is better served by following the rationale set forth in Zegar. In Zegar, the court stated that “absent an express or clearly implied right to sue [an insurer] directly for the medical expenses, [an injured person] cannot maintain an action to recover medical expenses directly from [insurer], at least until after settlement, adjudication, or release of claim[.]” Zegar, 156 Ill.Dec. 454, 570 N.E.2d at 1180. Zegar was based on the fundamental rule that the legislative public policy established in that jurisdiction provided that an insurer cannot be sued directly without first obtaining a judgment against the insured.

[¶24.] The legislative public policy of South Dakota also prohibits a similar direct action against the insurer. SDCL 58-23-1 provides:

All liability insurance policies issued in this state shall provide in substance that if an execution upon any final judgment in an action brought by the injured or by another person claiming, by, through, or under the injured, is returned unsatisfied, then an action may be maintained by the injured, or by such other person against the insurer under the terms of the policy for the amount of any judgment recovered in such action, not exceeding the amount of the policy, and every such policy shall be construed to so provide, anything in such policy to the contrary notwithstanding, (emphasis added)

Until the legislature enacts a statute, which permits direct action against an insurer, this Court declines to participate in judicially legislating such a public policy. By allowing this action to proceed would, in essence, provide for a potential for multiplicity of lawsuits, i.e., a direct claim against the insurer and a tort claim against the insured, which both arise out of the same incident.

[¶ 25.] Therefore, we reverse the trial court as to issue one.

[¶ 26.] KONENKAMPand GILBERTSON, Justices, concur.

[¶ 27.] MILLER, Chief Justice, and JOHNS, Circuit Judge, dissent on Issue One.

JOHNS, Circuit Judge, writing for the majority on Issue Two. •

ISSUE TWO

[¶ 28.] Whether Trouten can seek punitive damages by pursuing a bad faith breach of insurance contract action against Heritage?

[¶ 29.] Punitive damages are not recoverable for breach of contract unless the “complaining party can prove an independent tort that is separate and distinct from the breach of the contract.” Grynberg v. Citation Oil & Gas Corp., 1997 SD 121, ¶ 18, 573 N.W.2d 493, 500. Trouten has sought punitive damages against Heritage by alleging the tort of bad faith breach of the insurance contract. We must decide whether we will recognize this cause of action when a third party beneficiary of a general liability policy seeks medical payment benefits from the insurer.

[¶ 30.] In every contract there is “an implied covenant of good faith and fair dealing which prohibits either contracting party from preventing or injuring the other party’s right to receive the agreed benefits of the contract.” Garrett v. BankWest, Inc., 459 N.W.2d 833, 841 (S.D.1990) (citing Restatement (Second) of Contracts, § 205 (1981); 3 A. Corbin, Contracts § 541 at 97 (1960); 5 S. Williston, A Treatise on the Law of Contracts § 670, at 159 (3rd ed 1961)). This implied covenant of good faith is a principle of contract law and, with the exception of insurance contracts, we have consistently refused to recognize an independent tort action for its breach. Garrett, 459 N.W.2d at 842; McKie v. Huntley, 2000 SD 160, 620 N.W.2d 599; Genetics Research v. J K Mill-Iron Ranch, 535 N.W.2d 839, 843 (S.D.1995); Nelson v. WEB Water Development Ass’n, Inc., 507 N.W.2d 691, 697 (S.D.1993). See also Helmbolt v. LeMars Mut. Ins. Co., 404 N.W.2d 55 (S.D.1987); Crabb v. National Indemnity Company, 87 S.D. 222, 205 N.W.2d 633 (1973); Kunkel v. United Security Ins. Co. of New Jersey, 84 S.D. 116, 168 N.W.2d 723 (1969); Annotation^ Reliance on, or Rejection of, Advice of Counsel as Factor Affecting Liability in Action Against Liability Insurer for Wrongful Refusal to Settle Claim, 63 ALR3d 725 (1975).

[¶ 31.] The case of Egan v. Mutual of Omaha Ins. Co., 24 Cal.3d 809, 169 Cal.Rptr. 691, 620 P.2d 141 (1979), contains a good analysis why an insured can recover punitive damages against his or her insurer for bad faith breach of an insurance contract.

[California] Civil Code § 3294 provides: “In an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, express or implied, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”
In the present context, the principal purpose of § 3294 is to deter acts deemed socially unacceptable and, consequently, to discourage the perpetuation of objectionable corporate policies.... Traditional arguments challenging the validity of exemplary damages lose force when a punitive award is based on this justification. The special relationship between the insurer and the insured illustrates the public policy considerations that may support exemplary damages in cases such as this.
As one commentary has noted, “The insurer’s obligations are ... rooted in their status as purveyors of a vital service labeled quasi-public in nature. Suppliers of services affected with a public interest must take the public’s interest seriously, where necessary placing it before their interest in maximizing gains and limiting disbursements.... [A]s a supplier of a public service rather than a manufactured product, the obligations of insurers go beyond meeting reasonable expectations of coverage. The obligations of good faith and fair dealing encompass qualities of decency and humanity inherent in the responsibilities of a fiduciary. Insurers hold themselves out as fiduciaries, and with the public’s trust must go private responsibility consonant with that trust.” (Goodman & Seaton, Foreword: Ripe for Decision, Internal Workings and Current Concerns of the California Supreme Court (1974) 62 CalLRev 309, 346-347.) Furthermore, the relationship of insurer and insured is inherently unbalanced; the adhesive nature of insurance contracts places the insurer in a superior bargaining position. The availability of punitive damages is thus compatible with recognition of insurers’ underlying public obligations and reflects an attempt. to restore balance in the contractual relationship. (Hirsch et al., Strict Liability: A Response to the Gruenberg-Silberg Conflict Regarding Insurance Litigation Awards (1975) 7 Sw UL Rev 310, 326; Comment, Egan v. Mutual of Omaha Insurance Co.: The Expanding Use of Punitive Damages in Breach of Insurance Contract Actions (1978) 15 San Diego LRev 287, 298-301; Note, Contracting for Punitive Damages: Fletcher v. Western National Life Insurance Company (1971) 4 Loyola LAL Rev 208, 219-224.)

Egan, 169 Cal.Rptr. at 696-697, 620 P.2d at 146 (some citations omitted).

[¶ 32.] We have long recognized that “[c]onduct that is merely a breach of contract is not a tort. The contract, however, may establish a relationship demanding the exercise of proper care and acts and omissions in performance may give rise to a tort liability.” Weeg v. Iowa Mutual Insurance Company, 82 S.D. 104, 109-110, 141 N.W.2d 913, 916 (1966)(em-phasis added), (citing Smith v. Weber, 70 S.D. 232, 16 N.W.2d 537 (1944)). Although we have recognized a special relationship between insureds and insurers, Kunkel, supra, and between employees and workers’ compensation insurance carriers, Matter of Cert. of a Question of Law, 399 N.W.2d 320 (S.D.1987), we fail to see where the relationship between the parties here is any different than it is in any other third party beneficiary contract. Furthermore, the relationship of the insurer to the insured is akin to that of a fiduciary since it must give at least as much consideration to the insured’s interests as it does to its own. Long v. McAllister, 319 N.W.2d 256, 262 (Iowa 1982). Because of this fiduciary duty to the insured, the insurer stands in the shoes of the insured and has an adversarial relationship to the victim. Id. As such, the insurance company cannot be required to serve two masters who have antagonistic interests.

[¶ 33.] In summary, we hold that an injured party claiming medical expense coverage under a general liability insurance policy may not hold the insurer liable in tort for bad faith breach of an obligation to pay. We do so for two reasons. First, the injured person does not have a relationship with the insurer that justifies such a result on public policy grounds. Second, the insurer’s first duty is to its insured and not to the injured party. We decline to place the insurer in the impossible position of having to choose its loyalties since the insured can always be sued by the injured party for any and all damages flowing from his actions. Sperry v. Sperry, 990 P.2d 381 (Utah 1999). Therefore, we reverse the trial court on this issue.

[¶ 34.] Reversed and remanded.

[¶ 35.] MILLER, Chief Justice, and AMUNDSON, KONENKAMP and GILBERTSON, Justices, concur.

[¶ 36.] JOHNS, Circuit Judge, for SABERS, Justice, disqualified.

JOHNS, Circuit Judge,

(dissenting on Issue One).

[¶ 37.] After considering the authorities submitted by the parties, I would submit that Trouten’s fine of authority is more persuasive and that, under the language of the policy, Trouten is a third party beneficiary. First, the language of the “Legal Action Against Us” provision does not say that Trouten cannot bring a direct action for medical expenses. Rather, it clearly states that he can bring a direct action if the policy provisions are complied with. The only relevant policy provisions are those that place obligations on the insured which obligations the injured party would have to establish upon bringing the action.

[¶ 38.] Second, the insuring agreement provision states that, the insurer “mil make the [medical expense] payments regardless of fault.” (emphasis added). It does not say that it is within the insurer’s unbridled discretion to make the payments. It does not follow, however, that the injured party is relieved from proving that he or she was actually hurt on the insured premises. The no fault clause simply provides that the injured person does not have to prove negligence upon the part of the insured in order to receive medical expense payments.

[¶ 39.] Third, I agree with the analysis that medical expense payment provisions in liability policies provide separate insurance coverage divisible from the remainder of the policy. As such, these provisions create a fund for payment of medical services for those injured persons who may not want to impose liability upon the insured for any amounts in excess of the medical expense limits.'

[¶ 40.] Fourth, the coverage is designed to benefit a clearly ascertainable group of persons. As sttch, they are not remote or incidental beneficiaries and, in many instances, they may well benefit as much or more than the insured. “Incidental is defined as: ‘[depending upon or appertaining to something else as primary; something necessary, appertaining to, or depending upon another which is termed the principal; something incidental to the main purpose.’ ” Robinson & Muenster As-socs. v. Dept. of Rev., 1999 SD 132, ¶ 31, 601 N.W.2d 610, 617 (Sabers, J., dissenting) (quoting Black’s Law Dictionary 762 (6th ed 1990)). Injured persons certainly are more than just incidental beneficiaries of the medical expense benefit coverage although they are incidental beneficiaries of the liability coverage.

[¶ 41.] Based upon the foregoing, I would hold that Trouten is a third party beneficiary under the terms of the medical benefit portion of the policy. As such, he is entitled to recover medical benefits up to the $5,000 maximum irrespective of whether he ever brings suit against the property owner and irrespective of whether he is successful in any such suit.

[¶ 42.] The insurance company has contractually bound itself to pay medical benefits to a person injured on the insured premises “regardless of fault.” Since Trouten was allegedly injured on the insured premises, he should be able to prosecute this action without having to sue and recover against the insured on a liability theory. I would affirm the trial court on this issue.

[¶ 43.] MILLER, Chief Justice, joins this dissent as to Issue One.

      . Whether the fall actually occurred and, if it did, where it occurred and whether it resulted in the injuries claimed by Trouten are all facts in dispute.

      . At § 4902.05, Appleman goes on to state:
      "Medical payments provisions are found in almost every type of liability insurance. Thus, they appear in contracts of public liability coverage, ... (owner's, landlord's and tenants), contractor's, garage, and homeowner's, as well as comprehensive personal liability and sports coverage. The purpose is not only the salutary one of alleviating the mind of the one injured from concern over resources with which to pay such obligations, but to dissuade the one injured from thinking up theories upon which to sue the insured. And since the reduction of litigation is a desirable objective, certainly that is not improper. In contrast to automobile coverage, this provision is not designed to protect the insured from his legal liability but to insure the payment of medical expenses. It does not affect the liability limits, although ... the two may impinge upon each other. The policy may limit the class of persons to whom such coverage is applicable."

        Harper, 56 Cal.App.4th at 1091, 66 Cal.Rptr.2d at 71 (quoting 8A, Appleman, Insurance Law and Practice, § 4902.05, pp. 232-233).

      . § 3294 was originally enacted in 1872. South Dakota’s comparable statute, SDCL 21-3-2, was first enacted in 1877. § 21-3-2 provides:
      In any action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, actual or presumed, or in any case of wrongful injury to animals, being subjects of property, committed intentionally or by willful and wanton misconduct, in disregard of humanity, the jury, in addition to the actual damage, may give damages for the sake of example, and by way of punishing the defendant.

      . In Smith, 70 S.D. at 236, 16 N.W.2d at 539, we said: "It may be conceded that tort usually signifies a breach of legal duty independent of contract. But such breach of duty may arise out of a relation or state of facts created by contract.”

      . This is not to imply that there may not be other matters which the injured party must establish. For example, under the policy, the injured person must submit to examinations by the insurer’s physicians.


source: Caselaw Access Project

author: CADY, Justice.

license: Public Domain

text:
    STATE of Iowa, Appellant, v. Timothy Karl HOEGH, Appellee.
    No. 00-1633.
    Supreme Court of Iowa.
    Sept. 6, 2001.

      Thomas J. Miller, Attorney General, Mary Tabor, Assistant Attorney General, James P. Barry, County Attorney, and Francine O’Brien Andersen, Audubon County Attorney Special Prosecutor, for appellant.
    Terrance G. Rutherford and John M. Trewet of Rutherford, Trewet & Knuth, Atlantic, for appellee.

       Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2001).

   CADY, Justice.

In this appeal brought by the State, we must decide if the district court was authorized to appoint a special prosecutor after the county attorney declined to prosecute a case due to a conflict of interest. The district court dismissed the trial information filed by the special prosecutor after concluding the information had been filed by an unauthorized person because the court had no authority to issue a previous order appointing a special prosecutor. On our review, we conclude the district court possessed inherent authority to appoint a special prosecutor, but was not justified in exercising its authority in this case. We affirm the district court order dismissing the trial information.

I. Background Facts and Proceedings.

Timothy Hoegh was arrested in Atlantic, Iowa on July 9, 2000, for operating while intoxicated. A breath intoxilyzer test administered by the arresting officer following the arrest revealed Hoegh had a blood alcohol concentration of .199.

On July 31, 2000, the Cass County Attorney, James Barry, filed an application with the district court for the appointment of a special prosecutor to represent the State in the prosecution of the case. Barry asserted in the application that he had a conflict of interest in prosecuting the case because he was representing Hoegh’s former wife in a pending civil action against Hoegh. On the same date, without a hearing, the district court entered an order appointing the Audubon County Attorney, Francine O’Brien Andersen, as a special prosecutor in the case.

On August 3, 2000, the special prosecutor filed a trial information formally charging Hoegh with operating while intoxicated. Hoegh filed a motion to dismiss in response to the trial information. He alleged the district court was not authorized to appoint a special prosecutor and the trial information should be dismissed.

Following a hearing, the district court dismissed the trial information. It found the county board of supervisors, not the district court, had the statutory authority to appoint an attorney to act as county attorney, which rendered the trial information defective. The State appealed.

II. Standard of Review.

Our review of the grant of a motion to dismiss is for correction of errors at law. Meyn v. State, 594 N.W.2d 31, 33 (Iowa 1999).

III. Defect in Trial Information.

The only person authorized to file a trial information in Iowa is the county attorney, unless authority has been granted to other prosecuting attorneys by statute or rule. Iowa R.Crim. P. 5(1). The failure to file a trial information in a manner required by law is a recognized ground for dismissal. Id. 10(6)(c)(2). Thus, an information filed by an unauthorized person is subject to dismissal.

IV.Judicial Authority to Appoint Special Prosecutors.

For more than a century, our legislature recognized the authority of the district court to appoint a special prosecutor when the regular prosecutor was disqualified. In 1888, our legislature enacted a statute that provided, in pertinent part:

In case of absence, sickness, or disability of the county attorney and his deputies, the court ... may appoint an attorney to act as county attorney....

McClain’s Code Ann. § 271 (1888). This statute remained relatively unchanged for 111 years, and was eventually transferred to Iowa Code section 331.754(1) in 1981. See 1981 Iowa Acts ch. 117, § 754 (codified at Iowa Code § 331.754(1) (1981)).

Independent of this statutory authority, we recognized very early in the history of our court the inherent power of the district court to appoint a special prosecutor in a criminal case. White v. Polk County, 17 Iowa 413, 414 (1864). In tracing the source of this power to the necessity for the courts to perform their basic function of administering justice, we said:

The public business is not to be left thus to suffer. A court possessing such jurisdiction is not limited to the very letter of the character of its power. The charter gives it life. Of course, it has the right and power to preserve this life. The vital machinery cannot be kept in motion without officers, and for the very preservation of the life of the court, the protection of the charter of its existence, these necessary officers may be appointed, temporarily, the regular ones being absent. A prosecutor is one of those officers, and therefore he may be appointed. And the same reasoning might be used in relation to the welfare of the State and the necessity of maintaining and vindicating the supremacy of the law.

Id. at 415. On the other hand, where effective administration of justice is not jeopardized, we have refused to extend the inherent power of a court to appoint a prosecutor. See Seaton v. Polk County, 59 Iowa 626, 628, 13 N.W. 725, 726 (1882) (no inherent power to appoint prosecutors when county attorney not absent). Nevertheless, we have repeatedly recognized that our courts possess inherent power to appoint special prosecutors. See State v. Brandt, 253 N.W.2d 253, 262 (Iowa 1977).

Notwithstanding this well-established court authority to appoint special prosecutors, our legislature amended Iowa Code section 331.754(1) in 2000 to grant the power of appointment of a special prosecutor in the absence, sickness, or disability of the regular prosecutor to the county board of supervisors. See 2000 Iowa Acts ch. 1057, § 2 (codified at Iowa Code § 331.754(1) (2001)). The statute, which became effective on July 1, 2000, now provides, in relevant part:

In case of absence, sickness, or disability of the county attorney and the assistant county attorneys, the board of supervisors may appoint an attorney to act as county attorney.

Iowa Code § 331.754(1) (2001).

Hoegh asserts this amendment not only transferred the authority to appoint a special prosecutor from the district court to the county board of supervisors, it also abrogated the inherent authority of the court because the authority given to the board makes it unnecessary for the court to take action out of the need to administer justice. The State argues the amendment did not divest courts of their inherent powers in this area of law, and points out that there may be a variety of circumstances not within the statutory authority of the board of supervisors which would require the court to exercise its inherent powers.

It is fundamental to our system of government that the authority for courts to act is conferred by the constitution or by statute. Yet, it is equally fundamental that in addition to these delegated powers, courts also possess broad powers to do whatever is reasonably necessary to discharge their traditional responsibilities. Webster County Bd. of Supervisors v. Flattery, 268 N.W.2d 869, 874 (Iowa 1978). This type of judicial authority is known as inherent power, and it is derived from the separation of powers between the three branches of government, as well as limited by it. See People v. Zapotocky, 869 P.2d 1234, 1243-44 (Colo.1994); Webster County Bd. of Supervisors, 268 N.W.2d at 874; Konrad v. Jefferson Parish Council, 520 So.2d 393, 397 (La.1988); In re Alamance County Ct. Facilities, 329 N.C. 84, 93-94, 405 S.E.2d 125, 129 (1991). Inherent powers are necessary for courts to properly function as a separate branch of government, but cannot be used to offend the doctrine of separation of powers by usurping authority delegated to another branch of government. See Superior Ct. v. County of Mendocino, 13 Cal.4th 45, 57-59, 51 Cal.Rptr.2d 837, 845, 913 P.2d 1046, 1054-55 (1996); Lavelle v. Koch, 532 Pa. 631, 635, 617 A.2d 319, 321 (1992); see also Carlisle v. United States, 517 U.S. 416, 426, 116 S.Ct. 1460, 1466, 134 L.Ed.2d 613, 624 (1996) (courts cannot invoke inherent powers to circumvent or disregard constitutional or statutory procedures). Thus, principles of deference accompany the use of inherent powers and impose restraints on courts to limit the exercise of the powers as a necessary “response to the problems and needs that provoke it.” Degen v. United States, 517 U.S. 820, 823-24, 116 S.Ct. 1777, 1781, 135 L.Ed.2d 102, 108 (1996).

We have recognized that some inherent powers may be controlled or restricted by statute. See Harding v. McCullough, 236 Iowa 556, 558, 19 N.W.2d 613, 616 (1945). Some inherent powers may even be overridden by statute. See Carlisle, 517 U.S. at 426, 116 S.Ct. at 1466, 134 L.Ed.2d at 624. Other inherent powers may be so fundamental to the operation of a court that any attempt by the legislature to restrict or divest the court of the power could violate the separation of powers doctrine. Gray v. Comm’r of Revenue, 422 Mass. 666, 672, 665 N.E.2d 17, 22 (1996).

In determining the balance of power between our branches of government, it is important to understand that the separation of powers doctrine does not have rigid boundaries. People v. P.H., 145 Ih.2d 209, 222-23, 164 Ill.Dec. 137, 143, 582 N.E.2d 700, 706 (1991). Instead, some acts can be properly entrusted to more than one branch of government, and some functions inevitably intersect. See id.; Brach v. Chief Justice of Dist. Ct. Dep’t, 386 Mass. 528, 537-38, 437 N.E.2d 164, 170 (1982) (court facilities may be maintained by either executive branch or judicial branch). When this occurs, “harmonious cooperation among the three branches of government [becomes] fundamental to our system of government.” Webster County Bd. of Supervisors, 268 N.W.2d at 874.

The inherent power of the courts to appoint a special prosecutor is not derived so much from the exclusivity of the duty, but the general need for the criminal justice system to function. See id. However, the prosecutorial function of a criminal case is historically within the province of the executive branch. See United States v. Jacobo-Zavala, 241 F.3d 1009, 1012 (8th Cir.2001); see also State v. Hager, 630 N.W.2d 828, 834 (Iowa 2001). Moreover, the legislative branch maintains a strong interest in the appointment of prosecutors for a variety of reasons, including the need to appropriate funds to compensate prosecutors. See Webster County Bd. of Supervisors, 268 N.W.2d at 874-75. Thus, the interest in the appointment of a special prosecutor in a criminal case is shared by all branches of government, and the legislative intervention into the area by delegating authority to the county board of supervisors does not necessarily offend the separation of powers. The question is whether the inherent power of the court survives the statutory amendment.

A statute will not abrogate an inherent power of the court absent clear legislative intent. See Link v. Wabash R.R., 370 U.S. 626, 631-32, 82 S.Ct. 1386, 1389, 8 L.Ed.2d 734, 739 (1962). A careful review of the amended statute in this case fails to reveal any legislative intent to abrogate the court’s inherent power to appoint special prosecutors. When the legislature originally codified the power of the court to appoint a special prosecutor, it specifically limited the power to cases involving the “absence, sickness, or disability” of the county attorney. Thus, the authority granted under the statute only applied to certain circumstances. Inherent powers of a court, on the other hand, extend to a full range of circumstances. See Chambers v. NASCO, Inc., 501 U.S. 32, 46, 111 S.Ct. 2123, 2134, 115 L.Ed.2d 27, 46 (1991). Even with a grant of statutory power, “inherent power[s] ... continue to exist to fill in the interstices.” Id. Although the legislature may recognize inherent powers in a statute, those powers exist independent of the statute. Gray, 422 Mass. at 672, 665 N.E.2d at 22; see Brandt, 253 N.W.2d at 262 (inherent power of court to appoint special prosecutor independent of statute). Thus, our courts maintained their inherent power to appoint special prosecutors after our legislature originally enacted its statute recognizing the power.

The recent amendment to section 331.754 merely transferred the statutory power of appointment of a prosecutor to the board of supervisors. A power our legislature recognized for over 100 years as belonging to the courts was given to the legislative branch of government. See Webster County Bd. of Supervisors, 268 N.W.2d at 876 (“county board of supervisors is the legislative body in the county and exercises legislative powers delegated to it by the state legislature”). Yet, the legislature did not grant authority to the board of supervisors to appoint a special prosecutor under the broad standard of necessity which guides courts in the exercise of their inherent power. Thus, the same inherent power which continued to exist after the enactment of the 1888 statute also continues to exist after the 2000 amendment to that statute. The designation of the board of supervisors to appoint special prosecutors under special circumstances did not, by negative implication, mean the inherent power of courts to appoint special prosecutors was abrogated. See Link, 370 U.S. at 630, 82 S.Ct. at 1388-89, 8 L.Ed.2d at 738.

Even though courts continue to possess the inherent authority to appoint special prosecutors, the legislative grant of appointment authority to the board of supervisors clearly acts to restrict or limit the exercise of the courts’ inherent power. See Harding, 236 Iowa at 558, 19 N.W.2d at 616. Now that some appointment authority lies in the hands of the board of supervisors, it would generally be unnecessary for the court to exercise its inherent power under the circumstances enumerated in the statute. See Polk County Conference Bd. v. Sarcone, 516 N.W.2d 817, 821 (Iowa 1994) (“disability” under section 331.754(1) includes a conflict of interest by the county attorney). Courts can only exercise inherent authority out of genuine necessity, not merely theoretical circumstances. Lavelle, 532 Pa. at 636, 617 A.2d at 321.

We confirm the inherent power of district courts to appoint special prosecutors when necessary for the administration of justice. At the same time, however, we recognize that our legislature has limited this inherent power by amending section 331.754(1). In this case, the record fails to reveal any necessity for the court to exercise its power. See Webster County Bd. of Supervisors, 268 N.W.2d at 876-77 (courts should develop a record to support exercise of inherent powers). There was no showing in this case that the authority granted to the board of supervisors under section 331.754(1) was insufficient, making it necessary for the court to act in order to carry out its essential duties.

V. Conclusion.

We conclude the district court has the inherent authority to appoint a special prosecutor when necessary for the administration of justice. However, the State failed to demonstrate the necessity of the court’s intervention in this case. We affirm the ruling of the district court.

AFFIRMED.

SNELL, S.J. participates in lieu of STREIT, J., who takes no part.

      . The dismissal of the trial information under these circumstances does not necessarily terminate further criminal prosecution. See Iowa R.Crim. P. 10(7). It does not preclude the State from filing a new trial information. See id.; State v. Rout, 478 N.W.2d 633, 634 (Iowa 1991) (dismissal of trial information because it was signed by a district associate judge, rather than a district judge, was a correctable defect).

      . The most substantial change to the statute during this period of time came in 1988 when it was amended to add a provision to allow the board of supervisors to “appoint an acting county attorney to provide legal assistance relating] to [its] official business ... during the absence, sickness, or disability of the county attorney and the assistants].... ” 1988 Iowa Acts ch. 1066, § 1 (codified at Iowa Code § 331.754(1) (1989)).


author: SNELL, Senior Judge.

text:
    Francis J. TAYLOR, Jr., Appellee, v. STATE of Iowa, Appellant.
    No. 99-1285.
    Supreme Court of Iowa.
    Sept. 6, 2001.

      Thomas J. Miller, Attorney General, and Cristen C. Odell and Richard A. Williams, Assistant Attorneys General, for appellant.
    Marlyn S. Jensen, Osceola, for appellee.
   SNELL, Senior Judge.

This case involves a question concerning the district court’s authority and discretion on limited remand from an appeal in post-conviction proceedings. Previously, we granted limited remand and instructed the district court to rule on a pre-existing motion. Thereafter, an amended motion was filed which prompted the court to recuse itself and grant a new trial. Because we feel it was error for the district court to grant a new trial, we remand the case for a ruling on the original motion.

I. Factual Background and Procedure

The appellee, Francis J. Taylor, was convicted in 1991 for willfully failing to pay income taxes in 1985 and 1986. Iowa Code §§ 422.25(5), 714.8(10), 714.9 (1989). He was sentenced to two concurrent ten-year terms of imprisonment and ordered to pay a $4000 fine. Taylor appealed this sentence to our court, and we remanded for reconsideration. Upon resentencing, Taylor received a suspended sentence in 1992.

Taylor then sought postconviction relief. After a long history of procedural roadblocks not relevant here, Taylor’s postcon-viction claims were heard by the district court in 1999. This resulted in a denial of Taylor’s application for postconviction relief and a case dismissal. Taylor then made a timely Iowa Rule of Civil Procedure 179(b) motion to amend or enlarge the findings. He concurrently filed a notice of appeal to our court, inadvertently taking jurisdiction away from the district court to rule on his Rule 179(b) motion.

To allow the district court to address his Rule 179(b) motion, Taylor moved for a limited remand with our court. We granted this motion “for the limited purpose of addressing [Taylor’s] motion for expanded ruling.” The order also stated that remand proceedings were not to exceed twenty days. On day twenty, Taylor filed a “First Supplement to Rule 179 Motion, for Reconsideration and New Trial.” In it, he not only made his first request for new trial from the district court’s dismissal, but he also alleged that the presiding judge should recuse himself because he had developed an interest in the proceedings.

Before the State could reply, the court recused itself and granted Taylor a new trial. Although the ruling does not specifically say as much, we assume the district court granted Taylor a new postconviction hearing rather than a new trial. In its ruling, the court took offense to the allegations of bias, but nonetheless recused itself. It stated:

The Court reluctantly does this, but in order to avoid the appearance of any impropriety the Court feels that it can no longer issue any orders or rulings in regard to any motions pending before the Court.
The Court will further state, however, for whatever it is worth, that at no time has this Court taken any position or manifested an interest in the outcome of this matter in regard to either of the parties at any time. Such an accusation offends the integrity of this court and its sense of fairness which it has always applied vigorously in every case before it.

The problem that stemmed from the recusal was the court’s interpretation of Rule 179(b). The court believed the rule required the same judge who made the original ruling be the same judge to amend or enlarge it. Because of this, it determined there was no other choice but to grant Taylor a new hearing. The court’s ruling was as follows:

This [recusal] becomes difficult however, in that the Supreme Court of Iowa has remanded this matter for this Court to rule on the motion pursuant to Rule 179(b). It is this Court’s opinion that such a ruling on a 179(b) motion can only be made by the fact finder and/or the judge presiding in that matter. Therefore, due to the fact that the Court now recuses itself from this matter and cannot rule on the 179(b) motion, the Court grants motion for new trial....

As Taylor’s appeal before our court was still pending, the State then filed a notice of cross-appeal from the court’s decision to grant a new hearing to Taylor and recuse itself. Taylor then voluntarily dismissed his appeal, and our court allowed the State to proceed as the appellant. On appeal, the State argues: (1) The district court abused its discretion by recusing itself, and (2) Even if recusal was proper, the district court had no authority to grant a new trial.

II. Scope and Standard of Review

We review a court’s decision to recuse or not to recuse itself for an abuse of discretion. State v. Mann, 512 N.W.2d 528, 532 (Iowa 1994); State v. Farni, 325 N.W.2d 107, 110 (Iowa 1982) (“[T]he decision of the trial judge will not be overturned unless there has been an abuse of discretion.”)- “An abuse of discretion is found when the trial court has clearly exercised its discretion on untenable grounds or acted unreasonably.” In re Marriage of Wagner, 604 N.W.2d 605, 608 (Iowa 2000).

Ordinarily, we review the decision to grant a new trial for an abuse of discretion. Johnson v. Knoxville Cmty. Sch. Dist., 570 N.W.2d 633, 635 (Iowa 1997); see also Condon Auto Sales & Serv., Inc. v. Crick, 604 N.W.2d 587, 594 (Iowa 1999) (“[I]f the motion is based on a discretionary ground, we review for abuse of discretion.”). However, where that decision is based upon an interpretation of statutory requirements, as is the case here, we review for correction of errors at law. Wagner, 604 N.W.2d at 608 (“[I]f the motion is based on a legal question, our review is on error.”).

III. Propriety of Recusal

Although our limited remand did not contemplate a supplemental motion, the trial court has authority to hear a recusal challenge on limited remand. We will only reverse the court’s decision to recuse itself if there is evidence of an abuse of discretion. Ordinarily, the issue of recusal comes before us because a judge did not recuse himself when asked, rather than from a judge’s decision to recuse. When a judge agrees recusal is necessary, it is a matter based largely on judicial discretion. Here, we have very little to aid our review because no concrete reasons were given for the recusal.

In a somewhat similar context, when a judge decides to disqualify an attorney, we have said:

Because the district court did not mouth the magic words — actual conflict or serious potential for conflict — does not mean the court automatically abused its discretion. In our review we can determine whether the facts available to the court support the court’s discretionary decision to disqualify ... counsel. We emphasize, however, thai trial judges should explain their discretionary decisions on the record. It would aid our review if they would make detailed findings of fact and state why the facts show an actual conflict of interest or a serious potential for conflict of interest.

State v. Vanover, 559 N.W.2d 618, 627 (Iowa 1997) (emphasis added).

Normally, when a judge does not recuse himself, the burden is on the party seeking recusal to prove that he should have. The State’s argument here is that the court should not have recused itself in this situation where Taylor was not forced to bear this burden of proof, show actual prejudice, prove actual partiality, allege sufficient facts of extrajudicial bias, etc. See, e.g., State v. Bear, 452 N.W.2d 430, 434-35 (Iowa 1990). The State correctly states some of the questions we ask on review of a decision not to recuse. However, we do not use this same analysis on appeal when the judge does recuse himself. State v. Lawrence, 344 N.W.2d 227, 230-31 (Iowa 1984).

In Lawrence, the judge agreed with the State’s motion that his recusal was necessary. The defendant appealed, arguing he was biased by the original judge not hearing his case. We noted and held:

In support of this argument defendant cites a number of authorities which set forth grounds upon which judges shall either consider recusing themselves or actually recuse themselves from cases. These authorities, however, only set the limits of a judge’s decision to refuse recusal. They do not delineate grounds for challenging a judge’s decision to step aside
... [W]e [have previously] said:
“The right to change a judge is not one of absolute right. The judge is entitled to consult his own mind and he, perhaps better than anyone else, knows whether or not he can give a defendant on trial before him a fair and impartial trial in every way. The high appreciation of judicial duties should prompt any judge to refrain from presiding at the trial of one charged with crime when he feels a consciousness that he cannot act in the matter with impartiality and without a feeling of prejudice.”
The right, if it exists at all, to retain a certain judge to preside over a specific case is even more tenuous. The judge here did not recuse himself because he believed his ability to be impartial was [not] in any way affected by the motion. He simply felt his trial rulings might be questioned in the mistaken belief he was reacting in some way to the fact he had been asked to step aside. We cannot say this was unreasonable. There was no error [in the recusal].

Id. (citing Iowa Code § 605.17 (1981) (repealed 1983); Iowa Code of Judicial Conduct Canon 3(C)(1); State v. Smith, 282 N.W.2d 138, 142 (Iowa 1979); State v. Smith, 242 N.W.2d 320, 323-24 (Iowa 1976)) (quoting State v. Gibson, 204 Iowa 1306, 1310, 214 N.W. 743, 745 (1927)). Because this is largely an issue of discretion, we will uphold the recusal if it was reasonable. See Gibson, 204 Iowa at 1310, 214 N.W. at 745; see also State v. Veal, 564 N.W.2d 797, 812-13 (Iowa 1997) (approving judge’s recusal from sentencing after meeting with prosecutor at a bar following conviction).

Here, the district court judge gave the same reason for his recusal the judge gave in Lawrence. Neither admitted they were biased, but rather, sacrificed their control of the case to temper the appearance of impropriety once their predilections had been challenged. Although we agree with our emphasis in Vanover, i.e., that courts should provide a factual basis on the record for decisions left to their discretion, we have never found that the decision to recuse to avoid the appearance of impropriety is an abuse of discretion. We decline to do so today. As such, we find it was not an abuse of discretion for the judge to recuse himself.

IV. The Grant of New Trial

Our limited remand asked the district court to rule on the pending Rule-179(b) motion. Rule 179(b) provides that a judge’s findings may be enlarged or amended by making such a motion. The rule states:

On motion joined with or filed within the time allowed for a motion for new trial, the findings and conclusions may be enlarged or amended and the judgment or decree modified accordingly or a different judgment or decree substituted. But a party, on appeal, may challenge the sufficiency of the evidence to sustain any finding without having objected to it by such motion or otherwise. Resistances to such motions and replies may be filed and supporting briefs may be served as provided in R.C.P. 100(d) and (e).

Iowa R. Civ. P. 179(b). Nowhere does it state that only the judge who made the ruling can amend or enlarge the findings. As such, recusal of the presiding judge should not automatically lead to a new trial. In fact, another rule lends assistance here:

In the event of the death or disability of a judge in the course of a proceeding at which the judge is presiding, or while a motion for new trial or for judgment notwithstanding the verdict, or for other relief, is pending, any other judge of the district may hear or act upon the same, and, if in the judge’s opinion the judge can proceed with the matter or determine the motion the judge shall do so; otherwise, the judge may order a continuance, declare a mistrial, order a new trial of all or any of the issues, or make such disposition of that matter as the situation warrants.

Iowa R. Civ. P. 367(a) (emphasis added). Although this rule allows a new trial to be granted where a new judge must hear the case, Rule 367(a) requires the new judge to make this decision after he has first determined he cannot proceed. The district court erred by making this determination upon its recusal.

The above conclusion assumes that “disability” can embrace a situation where a judge recuses himself. Disability is defined as: “The inability to perform some function.” Black’s Law Dictionary 474 (7th ed.1999). Disable further means: “To legally disqualify (someone).” Id. (emphasis added). When a judge recuses himself, he no longer has the ability to perform and, thus, is disqualified. Disability then can encompass a recusal. In fact, the synonym of recusal in Black’s Law Dictionary is “disqualification.” Id. at 1281. Moreover, Iowa Code section 602.1606, which deals with the issue of recusal, refers to recusal as disqualification. Iowa Code § 602.1606 (1999). Further, the recusal section 602.1606 lists Iowa Rule of Civil Procedure 367 regarding disability as a cross-reference. Therefore, we can easily equate disability with recusal under Rule 367. See In re Marriage of Seyler, 559 N.W.2d 7, 11 n. 4 (Iowa 1997) (recognizing that disability likely means legal disability rather than physical disability). As such, it was error for the recusing judge to grant the motion for new trial, rather than leaving that decision to the new judge under Iowa Rule of Civil Procedure 367(a).

As a matter of public policy, we note that we would not be well served if defendants could make accusations of impropriety, which when accepted, would result in an automatic new trial. In future cases, when a Rule 179(b) motion is pending, but the presiding judge sees fit to recuse himself, it is the new judge who has the authority to decide if a new trial is required. Otherwise, this new judge should rule on the pending motion. Nothing in Rule 179 requires a different result.

Therefore, we affirm the court’s decision to recuse itself but reverse the grant of a new postconviction hearing. We reinstate the limited remand and return this case to the status it held at the time of our first remand, albeit before a different judge. As such, we will proceed as though Taylor’s appeal is still pending before our court and retain jurisdiction. We recognize this is a unique disposition, but determine that our appellate authority justifies such an action. On limited remand, the district court is instructed to rule on the question posed by the original Rule 179(b) motion as directed and restricted by our initial order for limited remand. The district court, other than in regard to collateral issues, has no authority to review questions outside those that existed at the time of the limited remand. In re Marriage of Davis, 608 N.W.2d 766, 769 (Iowa 2000) (“When ... an appellate court remands for a special purpose, the district court upon such remand is limited to do the special thing authorized by the appellate court ... and nothing else.”).

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH DIRECTIONS.

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

       Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2001).


author: CARTER, Justice.

text:
    Royce L. ANTHONY, Kenneth J. Arduser, Richard D. Aringdale, Fred O. Burger, Steven R. Conlon, Joseph L. Diaz, Loren E. Dykeman, James K. Ehresman, Robert W. Elliott, Blaine Goff, Terrance Hoil, McKinnely Jontz, Jr., Ronald G. Makin, Larry G. Mathers, George H. Mayer, Timothy P. McDonald, Lee J. Meinert, Larry L. Noble, Bradford J. Thompson, Earl E. Usher, Jon R. Wilson, and Charles R. Wood, Appellants, v. STATE of Iowa and Iowa Department Of Public Safety, Appellees.
    No. 99-0515.
    Supreme Court of Iowa.
    Sept. 6, 2001.

      Pamela J. Walker of Sherinian & Walker Law Firm, West Des Moines, and R. Todd Gaffney of Finley, Alt, Smith, Scharnberg, Craig, Hilmes & Gaffney, P.C., Des Moines, for appellants.
    Thomas J. Miller, Attorney General, and Jeffrey D. Farrell, Assistant Attorney General, for appellees.

       Senior Judge assigned by order pursuant to Iowa Code section 602.9206 (2001).

   CARTER, Justice.

Plaintiffs appeal from the grant of summary judgment for the State in their class action for overtime wages under the Fair Labor Standards Act (FLSA) and Iowa Code chapter 91A. The State cross-appeals, urging that it is immune from plaintiffs’ claims by reason of the decision in Alden v. Maine, 527 U.S. 706, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999). The district court rejected the State’s claim of sovereign immunity but granted the State summary judgment based on a federal regulation purporting to allow correction of wage-basis methodology that would otherwise render an employee subject to the act. On February 14, 2001, this court filed an opinion affirming the district court’s decision on the merits and declining to rule on the sovereign-immunity issue. A petition for rehearing filed by plaintiffs was subsequently granted and that opinion, which was never published, was withdrawn. After again reviewing the record and considering the arguments presented in the original briefs and on the petition for rehearing, we reverse the judgment of the district court on plaintiffs’ appeal but affirm that court’s rejection of the State’s sovereign-immunity defense.

Plaintiffs are current and former employees of the Iowa Department of Public Safety in executive and administrative positions. Because of the nature of their duties, the State asserts that they are not subject to the overtime pay requirements of the FLSA. Plaintiffs maintain that they are subject to such requirements because the manner in which they are paid includes deductions for disciplinary suspensions.

Plaintiffs originally filed an action in the United States District Court for the Southern District of Iowa seeking to establish their position. That court initially granted plaintiffs’ motion for summary judgment on the merits of their claim and set a hearing on damages for a later date. Before that hearing could be held, the Supreme Court filed the decision of Seminole Tribe v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996), establishing the immunity of states under the Eleventh Amendment with respect to similar claims. Based on that decision, the district court dismissed plaintiff’s action on jurisdictional grounds. Raper v. Iowa, 940 F.Supp. 1421 (S.D.Iowa 1996). That decision was affirmed on appeal. Raper v. Iowa, 115 F.3d 623 (8th Cir.1997).

At the conclusion of the federal litigation, plaintiffs filed the present action in state court. They reasserted the claim made in the federal litigation that they were not exempt from the application of the FLSA overtime requirements because of the State’s disciplinary policy calling for suspensions without pay.

Plaintiffs and the State each filed motions for summary judgment. The State’s motion relied on 29 C.F.R. § 541.118(a)(6), the “window of correction” regulation, which allows an employer to preserve an employee’s exempt status under the FLSA if it corrects past violations of the salary test, which the employer is required to meet. It also claimed sovereign immunity based on the Alden decision. The district court rejected the sovereign-immunity claim. Relying on the window-of-correction regulation, the court granted the State’s motion for summary judgment based on the assurance that the State had reimbursed those executive and administrative employees who had suffered deductions from their regular salaries for disciplinary reasons and had amended its personnel policies to preclude similar deductions from the salaries of the plaintiff class members in the future.

I. The Sovereign-Immunity Issue.

Because both parties have requested that we initially resolve the sovereign-immunity issue raised in the State’s appeal, we consider that matter first. The critical question on that issue is whether the State has waived the sovereign immunity to which it is otherwise entitled under the Alden decision.

A. The Alden decision. In Alden, probation officers employed by the State of Maine brought a private suit for damages against the state in federal court alleging violation of the overtime provisions of the FLSA. Alden, 527 U.S. at 711-12, 119 S.Ct. at 2246, 144 L.Ed.2d at 652. As in the present case, the federal district court dismissed the plaintiffs’ claim after the Supreme Court decided the Seminole Tribe case. The court of appeals affirmed. Mills v. Maine, 118 F.3d 37, 55 (1st Cir.1997). The Alden plaintiffs then brought the same suit in state court. Maine’s appellate court ultimately found that the state was protected from suit under the doctrine of sovereign immunity. Alden v. State, 715 A.2d 172, 176 (Me.1998). The Supreme Court granted certiorari and held “that the powers delegated to Congress under Article I of the United States Constitution do not include the power to subject nonconsenting States to private suits for damages in state courts.” Alden, 527 U.S. at 712, 119 S.Ct. at 2246, 144 L.Ed.2d at 652.

In its Alden opinion, the Supreme Court discussed at length the preconstitutional history of the doctrine of sovereign immunity as well as application of the doctrine after the Constitution was adopted and later amended. The court emphasized that the states’ immunity from private suits for damages was a fundamental component of the states’ sovereignty before the Constitution was adopted and was an integral consideration throughout the ratification process. Id. at 713, 119 S.Ct. at 2246-47, 144 L.Ed.2d at 653-54. The Court concluded that the Tenth Amendment removes “[a]ny doubt regarding the constitutional role of the States as sovereign entities ...,” as it reserves all powers to the states that are not delegated to the federal government by the Constitution. Alden, 527 U.S. at 713-14, 119 S.Ct. at 2247, 144 L.Ed.2d at 653.

Following Alden, at least three state appellate courts have held that states are protected by the sovereign-immunity doctrine from private suits for damages based on the FLSA unless the state waives its immunity. King v. State, 260 Neb. 14, 614 N.W.2d 341, 347 (2000); Allen v. Fauver, 327 N.J.Super. 14, 742 A.2d 594, 598 (App.Div.1999); Commonwealth v. Luzik, 259 Va. 198, 524 S.E.2d 871, 877 (2000).

B. Whether a waiver of sovereign immunity has been established. One of the legal theories on which plaintiffs’ claims are based in the present litigation involves the Iowa Wage Payment Collection Law, Iowa Code chapter 91A (1995). They urge that in combination the applicable statutes and administrative regulations classify the overtime compensation required by the Fair Labor Standards Act as “wages” subject to collection by legal action under Iowa Code sections 91A.8 and 91A.10(3). They urge that this statutory scheme is a waiver of the State’s sovereign immunity under Alden.

1. The issue-preclusion problem. In considering the consequences of chapter 91A on the State’s sovereign immunity, we first encounter a potential issue-preclusion problem. The federal district court in which the plaintiffs first presented their claims rejected their attempt to establish a waiver of the State’s sovereign immunity based on chapter 91A. The federal court’s ruling on the sovereign-immunity issue was a final judgment on the merits of that jurisdictional issue. The federal court clearly had jurisdiction to determine its own jurisdiction.

Although the issue concerning waiver of sovereign immunity under the Eleventh Amendment in the federal litigation was similar to the issue of waiver of sovereign immunity under the Tenth Amendment in the present litigation, a close reading of the federal court ruling discloses reasons why it should not be given preclusive effect on the interpretation of chapter 91A. In rejecting plaintiffs’ arguments on waiver of sovereign immunity based on chapter 91A, the federal court stated:

As noted by defendants, however, plaintiffs’ suit in the present case is brought under the FLSA — not Chapter 91A. Furthermore, there is no indication anywhere in Chapter 91A that a “court of competent jurisdiction” includes & federal court. “[I]n order for a state statute or a constitutional provision to constitute a waiver of Eleventh Amendment immunity, it must specify the State’s intention to subject itself to suit in federal court.”

Raper, 940 F.Supp. at 1426 (citation omitted). This ruling did not consider whether chapter 91A allows plaintiffs to pursue their FLSA overtime claims in an action brought under that chapter in the Iowa courts.

2. The statutory pay plan. For purposes of wage collections under sections 91A.8 and 91A.10(3):

“Wages ” means compensation owed by an employer for:
a. Labor or services rendered by an employee, whether determined on a time, task, piece, commission, or other basis of calculation.
b. Vacation, holiday, sick leave, and severance payments which are due an employee under an agreement with the employer or under a policy of the employer.
c. Any payments to the employee or to a fund for the benefit of the employee, including but not limited to payments for medical, health, hospital, welfare, pension, or profit-sharing, which are due an employee under an agreement with the employer or under a policy of the employer. The assets of an employee in a fund for the benefit of the employee, whether such assets were originally paid into the fund by an employer or employee, are not wages.
d.Expenses incurred and recoverable under a health benefit plan.

Iowa Code § 91A.2(7).

Section 91A.2(4) defines employer so as to include those identified as persons in Iowa Code chapter 4. Iowa Code section 4.1(20) includes state governmental agencies within the definition of “person.” The State and its agencies are thus classified as employers subject to the Iowa Wage Payment Collection Law.

The State urges that, notwithstanding its liability for wage payments under chapter 91A, such liability only includes payments mandated by state law. Because plaintiffs’ claims are based on federal law, the State urges that they do not fall within the chapter 91A collection procedure. We disagree.

The critical language in the section 91A.2(7) definition of wages is “compensation owed by an employer.” Although the impetus for state wage policy involving FLSA overtime pay is the mandate of the federal legislation, the State has acceded to that mandate in a manner that establishes the resulting overtime remuneration as compensation owed by an employer. Iowa Code section 19A.9(2) provides that the director of the department of personnel shall adopt rules providing

[f]or pay plans within the purview of an appropriation made by the general assembly and not otherwise provided by law for all employees in the executive branch of state government, excluding employees of the state board of regents, after consultation with the governor and appointing authorities with due regard to the terms of collective bargaining agreements negotiated under chapter 20 and after a public hearing held by the commission.... Each employee in the executive branch, excluding employees of the state board of regents, shall be paid at one of the rates set forth in the pay plan for the class of position in which employed and, unless otherwise designated by the commission, shall begin employment at the first step of the established range for the employee’s class.

The rules adopted pursuant to this statute speak to the issue of FLSA overtime compensation in two places. First, Iowa Administrative Code rule 581-1.1 provides by way of definition:

“Overtime ” means those hours that exceed 40 in a workweek for which an employee is entitled to be compensated.
“Overtime covered class, employee, or position” means a class, employee, or position determined to be eligible for premium overtime compensation in accordance with the federal Fair Labor Standards Act.

Second, Iowa Administrative Code rule 581-4.11(2) provides:

Eligible job classes. An employee in a job class designated as overtime eligible shall be paid at a premium rate (one and one-half hours) for every hour in pay status over 40 hours in a workweek.

We are convinced that the statutory scheme for deriving pay plans has been implemented in a manner that includes FLSA overtime remuneration as compensation owed by an employer. Sections 91A.8 and 91A.10(3) provide an express consent to sue in the Iowa courts for purposes of recovering any compensation thus owed. We affirm the judgment of the district court rejecting the State’s sovereign-immunity claim.

II. The Window of Correction Regulation.

Under the FLSA, employers generally must pay their employees at least one and one-half times their regular rate of pay for hours worked in excess of forty hours per week. 29 U.S.C. § 207(a)(1). Employees who are employed in executive, administrative, or professional capacities are exempt from that overtime requirement. 29 U.S.C. § 213(a)(1). The Secretary of Labor is authorized to define by rule the scope of those exemptions. Id. Under these rules, three tests must be satisfied for an executive, administrative, or professional employee to be considered exempt. These are a “duties” test (29 C.F.R. § 541.1); a “salary level” test (29 C.F.R. § 541.1(f)); and a “salary basis” test (29 C.F.R. § 541.118). Only the salary-basis test is at issue in this case.

An employee is considered to be paid on a salary basis if “he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” 29 C.F.R. § 541.118(a). In order to qualify for exempt status, “the employee must receive his full salary for any week in which he performs any work without regard to the number, of days or hours worked.” Id. The rule makes an exception for “[penalties imposed in good faith for infractions of safety rules of major significance.” 29 C.F.R. § 541.118(a)(5). But, other reductions in pay such as disciplinary suspensions without pay are impermissible reductions that destroy an employee’s exempt status. Auer v. Robbins, 519 U.S. 452, 456, 117 S.Ct. 905, 909, 137 L.Ed.2d 79, 87 (1997). The State’s disciplinary suspension policies applicable to the plaintiff-employees did provide for disciplinary suspensions without pay, and that policy had been invoked in at least eight instances.

The Secretary’s regulations also contain a “window of correction” clause. The rule implementing that clause provides:

The effect of making a deduction which is not permitted under these interpretations will depend upon the facts in the particular case. Where deductions are generally made when there is no work available, it indicates that there was no intention to pay the employee on a salary basis. In such a case the exemption would not be applicable, to him during the entire period when such deductions were being made. On the other hand, where a deduction not 'permitted by these interpretations is inadvertent, or is made for reasons other than lack of work, the exemption will not be considered to have been lost if the employer reimburses the employee for such deductions and promises to comply in the future.

29 C.F.R. § 541.118(a)(6) (emphasis added).

In the Auer case, the Supreme Court adopted the Secretary of Labor’s interpretation of when a category of employees is considered to have satisfied the salary-basis test. It held that an employer has not demonstrated an objective intent to treat a category of employees as exempt from the FLSA if that employer has an employment policy that creates a significant likelihood of disciplinary pay deductions or has an actual practice of making disciplinary deductions from such employees’ pay. Auer, 519 U.S. at 461-63, 117 S.Ct. at 911-12, 137 L.Ed.2d at 90-91. As to the category of employees involved in Auer, the court held that no clear inference could be drawn as to the likelihood of a sanction being applied to the employees because the employer’s policy manual did not specifically identify the employees as being subject to disciplinary pay deductions. The Court explained that in the absence of actual deductions the Secretary’s interpretation required “a clear and particularized policy — one which ‘effectively communicates’ that deductions will be made in specified circumstances.” Id. at 461, 117 S.Ct. at 911, 137 L.Ed.2d at 90.

One employee in the group of employees before the Court in the Auer case had received a disciplinary pay deduction. As to that employee, the Court determined that the employer was entitled to a window-of-correction defense under 29 C.F.R. § 541.118(a)(6). In so holding, the Court stated:

One small issue remains unresolved: the effect upon the exempt status of Sergeant Guzy ... of the one-time reduction in his pay. The Secretary’s regulations provide that if deductions which are inconsistent with the salary-basis test — such as the deduction from Guzy’s pay — are made in circumstances indicating that “there was no intention to pay the employee on a salary basis,” the exemption from the FLSA is “[not] applicable to him during the entire period when such deductions were being made.” Conversely, “where a deduction not permitted by [the salary-basis test] is inadvertent, or is made for reasons other than lack of work, the exemption will not be considered to have been lost if the employer reimburses the employee for such deductions and promises to comply in the future.”

Id. at 463, 117 S.Ct. at 912, 137 L.Ed.2d at 91 (citation of regulation omitted).

The Auer decision was initially interpreted so as to allow the window of correction to be invoked in any instance in which the deductions were for reasons other than lack of work. Paresi v. City of Portland, 182 F.3d 665, 668 (9th Cir.1999); DiGiore v. Ryan, 172 F.3d 454, 465 (7th Cir.1999); Davis v. City of Hollywood, 120 F.3d 1178, 1180 (11th Cir.1997); Childers v. City of Eugene, 120 F.3d 944, 947 (9th Cir.1997); Balgowan v. New Jersey, 115 F.3d 214, 219 (3d Cir.1997). Following this first wave of appellate decisions, the second circuit in Yourman v. Giuliani, 229 F.3d 124, 128 (2d Cir.2000), and the sixth circuit in Takacs v. Hahn Automotive Corp., 246 F.3d 776, 783 (6th Cir.2001), took the position that the window-of-correetion defense is not available to an employer who has a policy of making pay deductions from salaries due to disciplinary infractions. The seventh circuit and ninth circuit have also embraced this view, thus abandoning their earlier pronouncements. See Whetsel v. Network Property Servs., 246 F.3d 897, 902 (7th Cir.2001); Klem v. County of Santa Clara, 208 F.3d 1085, 1094 (9th Cir.2000).

We find the views expressed in the more recent federal cases to be persuasive. The Auer case interpreted the FLSA and the Secretary of Labor’s regulations to provide that, if an, employer is shown to have a general policy of making deductions from salaries for disciplinary violations, its pay plan for that class of employees is deemed not to be on a salary basis. Nothing contained in 29 C.F.R. § 541.118(a)(6) purports to nullify that interpretation. The factual setting in which the Court in Auer applied the window of correction was one in which no policy of docking pay was found to exist. Consequently, we favor an interpretation of the regulation in which the window of correction is only available to those employers who do not have an established policy of deducting their employees’ pay for disciplinary reasons yet, in a few selected instances, have imposed such discipline. See Whetsel, 246 F.3d at 901; Takacs, 246 F.3d at 783.

We conclude that the record on the summary judgment motion revealed without dispute that the State did have a policy of imposing deductions from pay for disciplinary reasons with respect to the members of the plaintiff class. Based on our interpretation of the applicable federal law, that circumstance is outcome determinative on the issue of liability. The district court was wrong in granting summary judgment for the State. It should have granted summary judgment for plaintiffs on the issue of liability.

We have considered all issues presented and conclude that the State’s claim of sovereign immunity should be rejected. The district court’s grant of summary judgment to the State, based on the window-of-correction regulation, is reversed. The case is remanded to the district court with directions to grant summary judgment for the plaintiffs on the issue of liability and to proceed as necessary in the determination of damages. All costs on appeal are assessed to the State.

REVERSED AND REMANDED ON APPEAL; AFFIRMED ON CROSS APPEAL.

SNELL, S.J., participates in lieu of STREIT, J., who takes no part.

      . The named defendants in this action who are the appellees and cross-appellants are the State of Iowa and the Iowa Department of Public Safety. They will be referred to collectively as the State throughout this opinion.

      . These statutes provide:
      When it has been shown that an employer has intentionally failed to pay an employee wages or reimburse expenses pursuant to section 91A.3, whether as the result of a wage dispute or otherwise, the employer shall be liable to the employee for any wages or expenses that are so intentionally failed to be paid or reimbursed, plus liquidated damages, court costs and any attorney's fees incurred in recovering the unpaid wages and determined to have been usual and necessary.
      Iowa Code § 91A.8.
      The provisions of subsections 1 and 2 [providing for suit by the commissioner of labor as the employee's assignee] shall not be construed to prevent an employee from settling or bringing an action for damages under section 91A.8 if the employee has not assigned the claim under subsection 1.
      Iowa Code § 91A.10(3).


text:
    STATE of Iowa, Appellee, v. Ronald Lee ROYER, Appellant.
    No. 00-0903.
    Supreme Court of Iowa.
    Sept. 6, 2001.

      Linda Del Gallo, State Appellate Defender, and Dennis D. Hendrickson, Assistant State Appellate Defender, for appellant.
    Thomas J. Miller, Attorney General, Darrel L. Mullins, Assistant Attorney General, Barbara A. Edmondson, County Attorney, and Eric Goers, Assistant County Attorney, for appellee.

       Senior Judge assigned by order pursuant to Iowa Code section 602 .9206 (2001).

   CARTER, Justice.

The defendant, Ronald Royer, pled guilty to the offense of manufacturing methamphetamine in violation of Iowa Code section 124.401(l)(b)(7) (1999), a class “B” felony. The charges against him were filed after numerous ingredients necessary for the manufacture of methamphetamine were discovered in his car and home. A Department of Public Safety criminologist estimated the potential yield of methamphetamine from the ingredients would have been well over 100 grams. That estimate was used as a factual basis for accepting defendant’s guilty plea to the class “B” felony.

On appeal, defendant urges that the applicable statutes require the manufacture of five actual, not potential, grams of methamphetamine to support a conviction. He contends that his counsel at the guilty plea proceeding was ineffective for permitting him to plead guilty to a crime for which the admitted facts would not support a conviction. We conclude that under a proper interpretation of section 124.401(l)(b)(7) the record does not disclose a factual basis for a plea of guilty based on a violation of that statute. Because of the considerable doubt that exists concerning whether such a factual basis can be shown, we conclude that effective counsel would not have allowed defendant to plead guilty under these circumstances. We vacate defendant’s sentence and remand the case for a redetermination of factual basis in accordance with this opinion.

In arguing that he was not guilty of manufacturing more than five grams of methamphetamine, defendant relies on the distinction that we drew in State v. Casady, 597 N.W.2d 801, 807 (Iowa 1999). In that case, this court concluded that under the conspiracy alternative of section 124.401(1) a potential rather than an actual yield of five grams of methamphetamine was sufficient to establish guilt. We stated in this regard:

The first alternative means of violating the statute is the actual manufacture of drugs, but the second alternative includes a conspiracy to manufacture it. See Iowa Code § 124.401(1). Contrary to Casad/s argument, it is not necessary for the State to prove the second alternative by also proving the first. While the State must show an overt act toward the accomplishment of the conspiracy, Iowa Code § 706.1(3), it did not have to prove the completed act.

Casady, 597 N.W.2d at 807. Defendant urges that, when the State bases its charge on the manufacturing of a controlled substance rather than a conspiracy to manufacture a controlled substance, it must show that a manufacturing process was completed that actually yielded five or more grams of the prohibited substance. The State responds that the statutory definition of the term “manufacture” as contained in Iowa Code section 124.101(16) includes the preparation of the controlled substance and the amount of finished product is not controlling.

The statutory definition of “manufacture” is as follows:

“Manufacture” means the production, preparation, propagation,- compounding, conversion or processing of a controlled substance, either directly or by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, and includes any packaging or repackaging of the substance or labeling or relabeling of its container, except that this term does not include the preparation or compounding of a controlled substance by an individual for the individual’s own use, or the preparation, compounding, packaging, or labeling of a controlled substance:
a. By a practitioner as an incident to administering or dispensing of a controlled substance in the course of the practitioner’s professional practice, or
b. By a practitioner, or by an authorized agent under the practitioner’s supervision, for the purpose of, or as an incident to, research, teaching, or chemical analysis and not for sale.

Iowa Code § 124.101(16). As the State urges, this definition envisions the process of preparing or producing a controlled substance by various means. We are unable to conclude, however, that the language of this statutory definition assists us in determining precisely what the manufacturing process must yield in order to constitute a violation of section 124.401(l)(b)(7). We must rely on the relevant language of the latter statute in order to determine the answer to that question. That statute provides:

1. Except as authorized by this chapter, it is unlawful for any person to manufacture, deliver, or possess with the intent to manufacture or deliver, a controlled substance, a counterfeit substance, or a simulated controlled substance, or to act with, enter into a common scheme or design with, or conspire with one or more other persons to manufacture, deliver, or possess with the intent to manufacture or deliver a controlled substance, a counterfeit substance, or a simulated controlled substance.
b. Violation of this subsection with respect to the following controlled substances, counterfeit substances, or simulated controlled substances is a class “B” felony, and in addition to the provisions of section 902.9, subsection 1 [providing a twenty-five year prison sentence], shall be punished by a fine of not less than five thousand dollars nor more than one hundred thousand dollars:...
(7) More than five grams but not more than five kilograms of methamphetamine, its salts, isomers, or salts of isomers, or analogs of methamphetamine, or any compound, mixture, or preparation which contains any quantity or detectable amount of methamphetamine, its salts, isomers, or salts of isomers, or analogs of methamphetamine.

Iowa Code § 124.401(l)(b)(7).

Statutory words are presumed to be used in their ordinary and usual sense and with the meaning commonly attributable to them. State v. Rohm, 609 N.W.2d 504, 510 (Iowa 2000); State v. Walker, 574 N.W.2d 280, 289 (Iowa 1998). The plain language of the statute under consideration indicates that, in order to be in violation of the subsection (7) alternative for violating section 124.401(l)(b), one has to produce, by the manufacturing processes recognized in section 124.101(16), more than five grams of either:

(1) Methamphetamine, its salts, isomers, or salts of isomers, or analogs of methamphetamine, or
(2) Any compound, mixture, or preparation which contains any quantity or detectable amount of methamphetamine, its salts, isomers, or salts of isomers, or analogs of methamphetamine.

In commenting on the second alternative listed above, the court of appeals has observed:

The statute specifically states the amount must be five grams or more of “methamphetamine ... or any compound, mixture, or preparation which contains any quantity or detectable amount of methamphetamine.... ” It does not specify any particular stage of the manufacturing or post-manufacturing process, nor does it indicate an expected yield must be estimated or a pure form must be extracted in order to weigh the narcotic....
We find the statute is plain on its face and does include any compound or mixture which contains any quantity or detectable amount of methamphetamine.

State v. Rivera, 614 N.W.2d 581, 584 (Iowa Ct.App.2000) (citation of regulation omitted). We agree with that conclusion. Moreover, we interpret the statute as authorizing the State to aggregate any manu-factored substance falling under either or both of these alternatives in seeking to establish a prohibited manufacture of methamphetamine.

In seeking to show a factual basis for defendant’s plea, the State relies on laboratory reports from the Iowa Department of Public Safety Criminology Laboratory. These reports show the substances in defendant’s possession included:

• an alkaline solution containing ephedrine or pseudoephedrine (no weight shown),
• 2.53 grams of a powdered compound containing methamphetamine,
• unspecified methamphetamine residue (lab exhibits B and D),
• two liquid compounds containing some methamphetamine (no weight shown),
• 600 60 mg tablets of pseudoephedrine hydrochloride, a known precursor of methamphetamine,
• a propane tank,
• forty lithium batteries, and
• three cans of engine starting fluid.

The State sought to show a factual basis for defendant’s guilty plea by relying on the potential yield of methamphetamine that might be obtained from the foregoing materials, assuming that anhydrous ammonia was obtained for use in the manufacturing process. According to the State, if that were done the potential yield would have been 276 grams of methamphetamine.

The State’s attempt to establish a factual basis for defendant’s plea based on potential yield does not comport with the requirements of the statute under which he was charged. It is necessary to show that the manufacturing process in fact yielded five grams or more of methamphetamine, its salts, isomers or salts of isomers, or analogs of methamphetamine, or as the court of appeals declared in Rivera, more than five grams of “any compound or mixture which contains any quantity or detectable amount of methamphetamine.” Rivera, 614 N.W.2d at 584.

On the record presented, there is clearly no factual basis for the plea under the first alternative. With respect to the second alternative, the record does not disclose an adequate factual basis for the plea, but we cannot state with certainty that such basis does not exist. The laboratory report does not reveal the weight of the liquid compounds containing methamphetamine. Nor was the residue identified in lab exhibits “B” and “D” quantified. As a result, we have no way of knowing whether, if the weight of those compounds were added to the powder compound weighing 2.53 grams, the total weight of manufactured substance containing methamphetamine would exceed five grams.

When a defendant’s counsel does not challenge the entry of a guilty plea to an offense for which no factual basis is shown and a strong possibility exists that there was no factual basis, we have consistently held that this court may review the resulting challenge to the plea notwithstanding a failure to file a motion in arrest of judgment. State v. Schminkey, 597 N.W.2d 785, 788 (Iowa 1999); State v. Miller, 590 N.W.2d 724, 726 (Iowa 1999); State v. Allison, 576 N.W.2d 371, 374 (Iowa 1998); State v. Hack, 545 N.W.2d 262, 263 (Iowa 1996); State v. Galbreath, 525 N.W.2d 424, 427 (Iowa 1994).

When a guilty plea has no factual basis in the record, two possible remedies exist. When the record establishes that the defendant was charged with the wrong crime, we have vacated a judgment of conviction and sentence and remanded for dismissal of the charge. See Hack, 545 N.W.2d at 263; State v. Schoelerman, 315 N.W.2d 67, 75 (Iowa 1982). If, however, it is possible that a factual basis could be shown, it is more appropriate to vacate the sentence and remand for further proceedings in which the State might have an opportunity to establish a factual basis. Schminkey, 597 N.W.2d at 792. We think this case falls within the latter category.

In his brief filed in this court, defendant suggests that, if no factual basis is shown, we reclassify his conviction as a class “C” felony and provide for a ten-year sentence. That is the classification and penalty provided in section 124.401(l)(c)(6) for manufacture of five grams or less of methamphetamine. Because there is a factual basis for a violation of that statute, we agree that this would be an expeditious disposition of the matter if on remand the State is unable to show a factual basis for the charge to which defendant entered a plea.

We vacate defendant’s sentence and remand the case to the district court in order to allow the State to establish a factual basis for the original charge under the interpretation that we have given the statute. If the State is successful, defendant’s conviction and sentence shall be reinstated. If the State fails to establish a factual basis, the defendant shall be resentenced as if convicted under section 124.401(l)(c)(6).

SENTENCE VACATED AND CASE REMANDED.

SNELL, J., participates in lieu of STREIT, J., who takes no part.

      . We considered a very similar statutory interpretation issue under section 124.401(b)(2)(d) in State v. Maghee, 573 N.W.2d 1, 11-12 (Iowa 1997), but found it unnecessary to decide the question.


author: PAUL H. ANDERSON, Associate Justice

text:
    In re Petition for DISCIPLINARY ACTION AGAINST Martha L. BURNS, an Attorney at Law of the State of Minnesota.
    No. C0-01-899.
    Supreme Court of Minnesota.
    Aug. 30, 2001.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Martha L. Burns has committed professional misconduct warranting public discipline, namely, neglect of client matters, failure to communicate with clients and failure to return a client file as well as failure to cooperate with the supervisor of her stipulated private probation and with the Director’s Office in violation of Minn. R. Prof. Conduct 1.3, 1.4, 1.16 and 8.1(a)(3), Rule 25, Rules on Lawyers Professional Responsibility (RLPR), and the terms of respondent’s private probation.

By order dated June 26, 2001, this Court deemed admitted the allegations of the Director’s petition. Respondent has entered into a stipulation with the Director in which she has waived her rights to further proceedings pursuant to Rules 14 and 15, RLPR, and the parties jointly recommend that the appropriate discipline is indefinite suspension from the practice of law for a minimum period of nine months pursuant to Rule 15, RLPR, and payment of $900 in costs and disbursements pursuant to Rule 24, RLPR. The reinstatement hearing provided for in Rule 18, RLPR, is not waived. Reinstatement is conditioned upon: (1) payment of costs in the amount of $900 plus interest pursuant to Rule 24(d), RLPR; (2) compliance with Rule 26, RLPR; (3) successful completion of the professional responsibility portion of the bar examination pursuant to Rule 18(e); and (4) satisfaction of the continuing legal education requirements pursuant to Rule 18(e), RLPR.

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

IT IS HEREBY ORDERED that respondent Martha L. Burns is indefinitely suspended from the practice of law for a minimum period of nine months, with reinstatement conditioned upon the agreed-upon terms set forth above. Respondent shall pay $900 in costs and disbursements.

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

BY THE COURT:

PAUL H. ANDERSON, Associate Justice