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Miranda v. Said

Supreme Court of Iowa

July 19, 2013


On review from the Iowa Court of Appeals. Appeal from the Iowa District Court for Polk County, Robert B. Hanson, Judge.

Plaintiffs appeal a ruling of the district court granting defendants' motion for directed verdict regarding plaintiffs' claims for emotional distress damages and punitive damages.

Angela L. Campbell of Dickey & Campbell Law Firm, PLC, Des Moines, for appellants.

Eric G. Hoch and Kevin J. Driscoll of Finley, Alt, Smith, Scharnberg, Craig, Hilmes & Gaffney, P.C., Des Moines, for appellees.

CADY, Chief Justice.

In this appeal from a judgment entered for the plaintiffs in a legal malpractice action, we must determine if the district court erred in concluding the plaintiffs failed to state a claim for emotional distress and punitive damages as a matter of law. On our review, we affirm the decision of the court of appeals, reverse the decision of the district court, and remand for a new trial on damages.

I. Background Facts and Prior Proceedings.

Klever Miranda and Nancy Campoverde are Ecuadorian citizens who emigrated to the United States. Their children, including Cesar, joined them in 1995. Cesar was fourteen years old at the time. In 1998, Klever and Nancy gave birth to another son, Ronaldo, in the United States.

Klever and Nancy entered the United States without documentation. Klever initially obtained employment under a pseudonym, but eventually began to take action to obtain legal immigration status with the aid of an attorney. At some point in the late 1990s, Klever obtained legal authorization to work in the United States, but later lost that status. Klever also filed an asylum application.

In 2005, Klever received notice of a removal order. He was represented by attorney Michael Said. Klever wanted to remain in the United States and obtain citizenship. Said advised Klever that the best plan of action would be for him to return to Ecuador and have Cesar sponsor him and Nancy for citizenship once Cesar obtained citizenship. He advised Klever that Cesar could file a document called Form I-130, which permits a citizen to sponsor a relative's application for citizenship. According to Said, Klever and Nancy could then each file a document called Form I-601 waiver, which permits an applicant who is otherwise ineligible, to be admitted into the country based on "extreme hardship" to a qualifying relative. See 8 U.S.C. § 1182(i) (2006).[1]

Said allegedly told Klever and Nancy his plan contained no risks and had a ninety-nine percent chance of success. Said allegedly explained the plan would only fail if Cesar was not related to Klever and Nancy or had committed a crime in the United States or Ecuador. Said did not advise Klever and Nancy of any other options to consider because he did not believe any other options existed.

Pursuant to the plan conceived by Said, Klever left for Ecuador in 2005. Before Nancy left in 2007, Said completed the Form I-601 waiver documents so she could have them in her possession to file with the Ecuadorian consulate once Cesar became a citizen. Said also prepared a memorandum for each waiver application. The memorandums detailed the extreme hardship that would befall Klever and Nancy if their applications were denied. Said wrote in Klever's memorandum:

[B]oth the Petitioner's family as well as the Petitioner would suffer extreme hardship if his request for a waiver is not granted. The Petitioner's family consists of two United States Citizen children, one of whom is under the age of 18, and two United States Citizen grandchildren. It is the separation of the Petitioner from his young son that is most troublesome. The Petitioner's child is a United States Citizen and having been born in the United States does not know of any life outside of his current situation. He does not speak fluent Spanish nor will he be able to maintain his current health and educational [level] in Ecuador. Moreover, the separation of the child from his father would further broaden the symptoms of the disorder such as, increasing his level of low self-esteem, furthering his fearfulness of risks, and promoting poor concentration.
The son and grandchildren of the Petitioner would also suffer detriment if they followed their father and grandfather to live in Ecuador because the children were all born here in the U.S. and do not speak the language fluently. Likewise, if the children remained in the U.S. without the presence of their father and grandfather, their emotional well-being would be substantially at risk. Numerous studies have demonstrated that extreme hardship occurs to children when parents are separated. . . . The study notes that children who were unable to adjust to the separation of their parents often had problems such as expulsion from school, juvenile delinquency with the law, and emotional outbreaks.
Moreover, the Petitioner is diabetic and is unable to obtain the necessary care in Ecuador. He and his family worry that his health is rapidly declining and that he will be unable to pay for any medical necessities that he may have with regard to his current health condition. The Petitioner and his family are extremely anxious as to what could happen if his condition does worsen and he is without proper medical care and the care of his immediate family to help care for him.
The impact of separation is not exaggerated especially when factors such as the remoteness of the border from Iowa which limits frequent visitation and the exorbitant telephone rates which restricts communication between the family members further. These barriers alone can lead to depression, grief, and impoverishment to any or all family members.

The memorandums were substantially similar. Klever and Nancy paid Said $11, 000 for his legal services.

Before Nancy left for Ecuador, she asked Said if the applications would be successful, stating she would prefer to remain in the United States if the applications would not be successful. Said reiterated his belief that the plan had a ninety-nine percent likelihood of success. Nancy left the United States, knowing Cesar was very close to obtaining his citizenship. Believing she would be returning to the United States within a short period of time, she only packed one suitcase.

Cesar became a citizen a short time later. He promptly filed the Form I-130 documents Said had prepared in advance. Klever and Nancy then each filed the Form I-601 with the Ecuadorian consulate. However, their applications were denied. The Ecuadorian consulate also informed Klever and Nancy that they were subject to a ten-year bar to readmission because they had left the United States voluntarily. See id. § 1182(a)(9)(B)(i).[2] Klever, Nancy, and Cesar were distraught.

Klever and Nancy later learned that Form I-601 waivers are only available when the qualifying relative is the spouse or parent of the applicant. Id. § 1182(i)(l). The Form I-601 applications prepared by Said listed Cesar and Ronaldo—their children—as qualifying relatives. In truth, Klever and Nancy had no qualifying relatives.

Klever, Nancy, and Cesar brought a legal malpractice action against Said. The action included a claim for emotional distress damages, as well as punitive damages. The case ultimately proceeded to trial. As a part of their case, Klever and Nancy called an expert witness who opined that the strategy pursued by Said likely had no chance of success.

Said admitted at trial he knew Cesar and Ronaldo were not qualifying relatives. He also stipulated that no reasonable attorney would have attempted to use a Form I-601 to obtain lawful residency for Klever and Nancy. Nevertheless, Said maintained that he had been successful ten to fifteen times in the past using children as qualifying relatives. Said testified that, in his experience, consular officials used discretion to grant Form I-601 waivers when a child of the applicant was the sponsor.

Klever and Nancy's expert testified that the immigration statute only grants consular officials discretion to reject the application of an applicant who meets the statutory minimum requirements but is undesirable for other reasons. Klever and Nancy's expert further testified that officials had no discretion to grant applications of individuals who do not meet the minimum requirements. Moreover, Klever and Nancy's expert testified that even if a consular agent had granted the waivers in contravention of the statute, the error would have been noticed when they applied for citizenship. In turn, the error would have foreclosed the opportunity for Klever and Nancy to become citizens. Instead of obtaining citizenship, Klever and Nancy would have been deported.

Although Said claimed previous success in using children as qualifying relatives, he failed to produce any documentation of this success, despite his claim that such records existed and despite a court order to produce the records.[3]

Prior to submitting the case to the jury, the district court granted Said's motion for directed verdict on the claims for emotional distress and punitive damages. It held that past and future emotional distress damages were not available. The court acknowledged emotional distress is more likely in the immigration context, but concluded the evidence failed to satisfy the legal standard for emotional distress damages in negligence actions. The court also held that punitive damages were not available in this case, reasoning Klever and Nancy had proffered no evidence suggesting willful, wanton, or reckless conduct. Thus, the district court only allowed the claim for economic damages to be considered by the jury. This claim was based on the attorney fees paid to Said. Ultimately, the jury found Said negligent and awarded Klever and Nancy $12, 500.

Klever and Nancy appealed. Among other issues, they argued the district court erred in failing to submit their claim for emotional distress and punitive damages.

We transferred the case to the court of appeals. It reversed the district court decision and found that the claims for emotional distress and punitive damages should have been submitted to the jury. It also found the district court erred in dismissing Cesar from the case but affirmed the district court on all remaining issues.

Said sought, and we granted, further review. He raises two issues for our review: First, whether a contract for legal services in the immigration context is the kind of special relationship in which emotional distress is foreseeable and, second, whether punitive damages were appropriate in the case. We only address those issues on further review.

II. Scope and Standard of Review.

We review a district court's ruling on a motion for directed verdict for correction of errors of law. Spaur v. Owens-Corning Fiberglass Corp., 510 N.W.2d 854, 858 (Iowa 1994); see also Iowa R. App. P. 6.907. We consider the evidence presented at trial in the light most favorable to the nonmoving party. Beeman v. Manville Corp. Asbestos Disease Comp. Fund, 496 N.W.2d 247, 254 (Iowa 1993). "Every legitimate inference that reasonably may be deduced from the evidence must be afforded the nonmoving party; and if reasonable minds can differ as to how the issue should be resolved, a jury question is engendered." Henkel v. R & S Bottling Co., 323 N.W.2d 185, 187–88 (Iowa 1982).

III. Emotional Distress Damages.

A. Introduction.

The general rule in Iowa is emotional distress damages are not recoverable in torts " 'absent intentional conduct by a defendant or some physical injury to the plaintiff.' " Clark v. Estate of Rice ex rel. Rice, 653 N.W.2d 166, 169 (Iowa 2002) (quoting Mills v. Guthrie Cnty. Rural Elec. Coop. Ass'n, 454 N.W.2d 846, 852 (Iowa 1990)). This rule generally recognizes there is no duty in tort law to avoid causing emotional harm. Like most other rules, however, exceptions exist.

We recognize "a duty to exercise ordinary care to avoid causing emotional harm" when supported by the nature of the relationship between the parties and the nature of the acts engaged in by the defendant within the context of the relationship.[4] See Oswald v. LeGrand, 453 N.W.2d 634, 639 (Iowa 1990); cf. Blong v. Snyder, 361 N.W.2d 312, 316 (Iowa Ct. App. 1984) ("[P]laintiff's status as an employee entitled him to more protection from insultive or abusive treatment than would be expected between two strangers."). Stated differently,

[w]e have recognized recovery for emotional distress damages in actions which did not involve an intentional tort when a party negligently performed an act which was "so coupled with matters of mental concern or solicitude, or with the sensibilities of the party to whom the duty is owed, that a breach of that duty will necessarily or reasonably result in mental anguish or suffering, and it should be known to the parties from the nature of the [obligation] that such suffering will result from its breach."

Lawrence v. Grinde, 534 N.W.2d 414, 420–21 (Iowa 1995) (quoting Meyer v. Nottger, 241 N.W.2d 911, 921 (Iowa 1976) (alteration in original)). The question we face in this case is whether this exception is applicable to the attorney–client relationship and the actions of the attorney that are claimed to be negligent. We have not yet applied the exception to a tort claim of attorney malpractice.

B. Development of the Law on Emotional Distress.

To better appreciate and understand the current state of our law on emotional distress damages in claims of negligence, we turn back to review the somewhat confusing development of compensation for mental distress in our law. See Richard B. Margulies, Note, An Insurer Is Under an Implied-in-Law Duty of Good Faith and Fair Dealing in the Settlement of Claims by the Insured, the Breach of Which May Constitute the Element of Outrageous Conduct in a Prima Facie Case for the Tort of Intentional Infliction of Severe Emotional Distress. Amsden v. Grinnell Mutual Reinsurance Co. (Iowa 1972), 23 Drake L. Rev. 210, 210 (1973) [hereinafter Margulies]. On one hand, we displayed an early approval of emotional distress damages. For instance, we approved of damages awards including mental-anguish damages in a variety of intentional-tort cases, such as seduction, Stephenson v. Belknap, 6 Clarke 97, 104–05 (Iowa 1858); assault and battery, [5] McKinley v. C. & Nw. R., 44 Iowa 314, 319–22 (1876), and Lucas v. Finn, 35 Iowa 9, 12–13 (1872); malicious prosecution, Parkhurst v. Mastellar, 57 Iowa 474, 480, 10 N.W. 864, 867 (1881); and wrongful ejection from a train, Curtis v. Sioux City & Highland Park Ry., 87 Iowa 622, 626–28, 54 N.W. 339, 340–41 (1893), and Shepard v. Chi., Rock Island & Pac. Ry., 77 Iowa 54, 58–59, 41 N.W. 564, 565 (1889). We also permitted recovery of mental-anguish damages in a case involving the breach of a marriage contract. See Royal v. Smith, 40 Iowa 615, 618 (1875). In an early case, we also approved emotional distress damages in a negligence action in which the mental anguish attended a physical injury. See Muldowney v. Ill. Cent. Ry., 36 Iowa 462, 468 (1873).

On the other hand, in an early case sounding in negligence, we suggested a damage award for emotional distress would be inappropriate unless accompanied by physical injury. See Collins v. City of Council Bluffs, 35 Iowa 432, 436 (1872). In Collins, we stated:

The party injured by such a casualty should have compensation for the injury. Not such a speculative amount as would be equivalent for the bodily pain and mental anguish which the injured party has necessarily endured, but such a sum as would be an actual practical compensation for the injury. Physical pain and mental anguish can have no adequate compensation in dollars and cents. They are a part of the life, and "what shall a man give in exchange for his life" is an interrogative statement of its immeasurable and incomprehensible value. And, while physical and mental suffering caused by an injury are proper to be considered in determining the amount of damages, yet they are not to be compensated for in the ordinary meaning of that word, but they stand as lights around the injury, in the focal rays of which we see more intensely and clearly the full measure and extent of the injury itself.

Id. In tort actions grounded in negligence unaccompanied by some special relationship, this rule has persevered through time. See Clark, 653 N.W.2d at 170–71; Niblo v. Parr Mfg., Inc., 445 N.W.2d 351, 354–55 (Iowa 1989); Lee v. City of Burlington, 113 Iowa 356, 357–58, 85 N.W. 618, 619 (1901); Mahoney v. Dankwart, 108 Iowa 321, 324, 79 N.W 134, 135–36 (1899).

Iowa was not alone in the early recognition of emotional distress damages. See, e.g., Fairchild v. Cal. Stage Co., 13 Cal. 599, 601 (1859); Linsley v. Bushnell, 15 Conn. 225, 235–36 (1842); Lewis v. Hoover, 3 Blackf. 407, 408 (Ind. 1834); Malone v. Murphy, 2 Kan. 250, 261–62 (1864); Wadsworth v. Treat, 43 Me. 163, 167 (1857); Canning v. Inhabitants of Williamstown, 55 Mass. 451, 452 (1848). Yet, many courts during this time also viewed emotional distress damages as limited to certain classes of cases. As the Supreme Court of Mississippi stated,

[d]amages for mental suffering have been very generally allowed in three classes of cases: (1) Where, by the merely negligent act of the defendant, physical injury has been sustained; and in this class of cases they are compensatory, and the reason given for their allowance by all the courts is that the one cannot be separated from the other. (2) In actions for breach of contract of marriage. (3) In cases of willful wrong, especially those affecting the liberty, character, reputation, personal security, or domestic relations of the injured party.

W. Union Tel. Co. v. Rogers, 9 So. 823, 825 (Miss. 1891). Stated in the inverse, some courts viewed awards of emotional distress damages as the exception and not the rule. See Gatzow v. Buening, 81 N.W. 1003, 1009 (Wis. 1900). Lord Wensleydale famously captured the prevailing rule when he wrote, "Mental pain or anxiety the law cannot value, and does not pretend to redress, when the unlawful act complained of causes that alone[.]" Lynch v. Knight, (1861) 11 Eng. Rep. 854 (H.L.) 863; 9 H.L. Cas. 577, 598.

A significant early limitation on the award of emotional distress damages in Iowa can be observed in our refusal to award emotional distress damages in a breach-of-contract action. See Stone v. Chi. & Nw. R., 47 Iowa 82, 88 (1877). This limitation in contracts actions has influenced the development of emotional distress damages in negligence actions because the two actions were often joined together. In Stone, we said:

The damages that may be recovered in actions on contracts are tested and governed by entirely different rules from actions on torts. In the former, the damages must be such as fairly and naturally result from the breach of the contract. Insult and abuse accompanying a breach cannot affect the amount of the recovery in such actions. If the action is based on a wrong the jury are permitted to consider injury to feelings and many other matters which have no place in actions to recover damages for a breach of contract.

Id. Yet, this limitation was not absolute, as revealed in our cases dealing with marriage contracts. See Royal, 40 Iowa at 618. Moreover, less than twenty years after Stone, we opined damages might be available for emotional distress under some more conventional contracts. See Mentzer v. W. Union Tel. Co., 93 Iowa 752, 753, 760–61, 62 N.W. 1, 1, 4 (1895).

Over time, we have backed away from our statement in Stone, as the gradual evolution of our general rules of contract have seemed to support expanding the types of damages available in certain breaches of contracts. This evolution actually began with the seminal case of Hadley v. Baxendale, (1854) 156 Eng. Rep. 145, 151 9 Exch. 341, 354. In Hadley, the court famously said:

Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fully and reasonably be considered either as arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated.

Id. at 344.

In this manner, some commentators now recognize Hadley to be the first step to making the law of contracts more like the law of torts. See Alexander J. Bolla, Jr., Contort: New Protector of Emotional Well-Being in Contract?, 19 Wake Forest L. Rev. 561, 561 (1983) [hereinafter Bolla]. After all, as we have previously recognized, Hadley essentially looks to what the parties to the contract actually knew and contemplated or reasonably should have known and contemplated. See DeWaay v. Muhr, 160 N.W.2d 454, 459 (Iowa 1968). While Hadley may be viewed as articulating two rules, the difference between its two statements is illusory; parties reasonably should contemplate the natural and probable consequences of a breach of contract. See id.

The progression of contract law to resemble portions of tort law has been understandable. After all, modern contract law owes a debt of existence to tort law. As pointed out by Professor Ames, the writ of assumpsit[6]—a forerunner of modern contract actions—derives from the common law tort of trespass on the case.[7]See James Barr Ames, The History of Assumpsit, 2 Harv. L. Rev. 1, 2 (1888). Indeed, the earliest assumpsit cases resemble modern negligence cases, particularly cases of the malpractice variety. Id. But, liability in these cases—a barber who negligently shaved a man's face, a veterinarian who negligently shoed a horse, a ferryman who negligently overloaded a boat, a carpenter who negligently constructed a building—was grounded not on the tortious nature of the conduct, but rather the defendant's promise to undertake the labor skillfully. See id. at 2, 4. Over time, the cause of action focused more and more on the promise and less on the tortious nature of the actions. See id. at 9–15. Eventually, assumpsit became what is now essentially the action for a breach of contract. See id. at 15–16. Modern contract law's origin in assumpsit and trespass on the case makes the award of tort-like damages in breach-of-contract cases more reasonable. See Meyer, 241 N.W.2d at 920–21 ("Where one holds himself out as specially qualified to perform ...

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