MARY BATINICH as PERSONAL REPRESENTATIVE of the ESTATE of ALEX BATINICH, Plaintiff-Appellee,
ARTHUR RENANDER, Defendant-Appellant,
JACQUELINE ZARA RENANDER and RAI, LLC, Defendants.
from the Iowa District Court for Johnson County, Mary E.
Renander appeals the remedies and damages awarded to Alex
Batinich by the district court, including trial attorney
fees, punitive damages, and dissociation from the
parties' limited liability company, following the
court's entry of a default judgment. AFFIRMED-IN-PART,
VACATED-IN-PART, AND REMANDED WITH DIRECTIONS.
Christopher J. Foster of Foster Law Office, Iowa City, for
M. Caves and Paul D. Burns of Bradley & Riley PC, Iowa
City, for appellee.
by Potterfield, P.J., and Doyle and Tabor, JJ.
entry of a default judgment against Arthur and Zara Renander
and a subsequent hearing on remedies and damages, the
district court awarded Alex Batinich monetary damages, punitive
damages, and trial attorney fees individually against the
Renanders. The court also dissociated the Renanders from the
parties' limited liability company. Arthur appeals the
court's ruling on remedies and damages in various
respects. Upon our review, we affirm in part, vacate in part,
and remand with directions.
LLC (RAI) is an Iowa limited liability company (LLC) that was
organized in 2001 by Arthur and Zara Renander. At some point,
Alex Batinich purchased a thirty-four-percent share of the
company, and the Renanders retained the majority share as
managing members. RAI's sole asset was a fifty-percent
ownership interest in about one-hundred acres of land in
Coralville, Iowa. Northern Investments, L.C., owned by Gary
Aamodt, held the other half of the real-estate interest in
relevant parties have been involved in protracted litigation
concerning the real estate for many years, and the saga
continues. See, e.g., Renander v. High Country
Dev. Co., No. 16-0424, 2016 WL 7393906, at *1 (Iowa Ct.
App. Dec. 21, 2016); Renander v. Aamodt, No.
08-1321, 2009 WL 3775112 (Iowa Ct. App. Nov. 12, 2009);
Batinich v. Renander, No. 05-1969, 2007 WL 913872
(Iowa Ct. App. Mar. 28, 2007). In the instant case, Batinich
filed suit-individually and derivatively on behalf of
RAI-against the Renanders and RAI in June 2014. The
petition-and Batinich's affidavit attached thereto-stated
the derivative claims were brought pursuant to Iowa Code
section 489.902(2) (2013) because the ordinary notice and
demand required under section 489.902(1) would have been
futile. The petition then set forth four counts.
of the petition asserted the Renanders breached their
fiduciary duties to Batinich and RAI and proximately caused
damages to both Batinich and RAI. Batinich, individually and
derivatively on behalf of RAI, requested that "judgment
be entered against the Renanders to fully and fairly
compensate [Batinich and RAI] for the damages caused by the
Renanders, for costs, for attorney's fees, and for other
such relief as the [court deemed] equitable." Count II
requested the Renanders be ordered to make a complete
accounting to Batinich of RAI's assets, liabilities, and
other obligations, and also requested the same relief as
Count I. Count III alleged the Renanders, as the majority
owners and managers of RAI, were in violation of Iowa Code
section 489.410 for failing to make company information
requested by Batinich available for his inspection. Batinich,
individually and on behalf of RAI, requested the Renanders
be ordered to comply with [section] 489.410, make available
to Batinich the information and records required under
section 489.410, make available information regarding
RAI's activities, financial information, and other
circumstances which [the Renanders] know and is material to
Batinich, and request judgment against the Renanders to fully
and fairly compensate them for the damages caused by the
Renanders, for costs, for attorney's fees, and for other
such relief as the [court deemed] equitable.
Count IV requested the Renanders be ordered to escrow
any and all proceeds from the sale of the Real Estate [the
Coralville property], or any other assets received for RAI,
until such time as this litigation is concluded and the
members resolve disputes over the amounts and calculations of
the debts of the company and entitlement and amounts of
distributions, and for costs, for attorney's fees, and
for other such relief as the [court deemed] equitable.
April 2015, the district court found the Renanders in
contempt for "knowingly, willfully, and without
justification, disregard[ing] their discovery obligations and
disobey[ing the] court's discovery orders." Citing
Iowa Rule of Civil Procedure 1.517(2)(b)(3), the court
concluded a default judgment should be entered against the
Renanders on all counts of Batinich's petition following
"a hearing . . . to consider and determine the
appropriate damages and remedies" to be awarded to
Batinich. The court ordered the Renanders to produce any
documents previously ordered but not yet given to Batinich.
The court also ordered the Renanders to pay Batinich $7355 in
attorney fees, which the court found was reasonable and
incurred as a result of the Renanders' discovery abuses.
hearing on damages and remedies commenced in July 2015. At
that time, Batinich's health was declining, and the
parties' agreed his testimony would be given via
deposition, to be held after the hearing. The parties agreed
the record would be held open after the hearing for
submission of the deposition.
court heard testimony at the hearing from Batinich's
wife, Mary, and also from Gary Aamodt, and Arthur Renander.
Prior thereto, Batinich's attorney gave an opening
statement, explaining the course of the litigation and the
numerous ways Batinich believed the Renanders breached their
fiduciary duties as the member-managers of RAI.
Batinich's counsel stated:
Batinich has over the years advanced his personal funds to
pay bills on behalf of RAI, everything from landscaping bills
and snow shoveling to paying property taxes to paying
attorney's fees that RAI incurred. We've asked for an
accounting. We've asked repeatedly to see the books of
RAI reflecting those contributions, those loans to the
There's nothing resembling a proper accounting, nothing
resembling a financial statement, a proper accounting of the
loans that have been advanced over the years. We've asked
for corporate records under the Iowa corporate records
statute. That's one of the claims in this case.
Basically, we're told they don't exist. Most of them
just don't exist, all of which is another breach of his
duty of standard of care of managing the company . . . .
advised that in detailing the parties' history and their
dealings to the court, "it wasn't in order to
establish liability. And when you see the documents and the
exhibits, it's not to establish liability. It's to
show the persistent nature of these abuses, to give you a
sense of a problem when you're fashioning a remedy."
Batinich's counsel suggested the following damages to the
court: (1) dissociation of the Renanders from RAI to allow
Batinich to get an honest accounting of RAI's financials
and to allow RAI's percentage of the real estate to be
sold; (2) monetary damages, which counsel suggested could be
calculated by subtracting the lesser profit Batinich could
expect to receive as a member of RAI from the pending $4.5
million sale from the larger profit Batinich would have
received had the property been sold in 2010 for $4.7 million
but for the Renanders interference; counsel advised the
difference between the two profit figures did not even
account for the loans Batinich made to RAI; and (3) punitive
damages for breach of fiduciary duty.
wife testified Batinich initially invested $125, 000 in RAI,
and then invested another $250, 000. She testified that,
since that time, Batinich had invested at least another $380,
000 and, if legal fees were factored in, Batinich had spent
about $1.2 million concerning RAI. Mrs. Batinich testified
Batinich initially believed the Renanders were keeping
accounting records for RAI but, after Batinich requested the
records and received none, Batinich started keeping his own
records. The Renanders objected to the relevance of this
testimony and an exhibit listing monies Batinich had paid for
RAI, noting that some of the listed expenditures went all the
way back to 2003, "a time period not contemplated at all
by the petition or really any of the things that are at
issue." Batinich's counsel explained both were
relevant, though Batinich was not
representing that all of these monies [listed on the exhibit
were] owed from RAI to [Batinich]. It's just an
illustration of money that has been advanced, some of which
is relevant in here. We need an accounting so we can sort out
which of these are proper debts owed from RAI to Mr. Batinich
and which ones aren't. That's the job of the manager
of the LLC to do that, to have it done. We've asked for
court allowed the testimony and exhibit.
testified he had "[n]o doubt whatsoever" that the
real estate could have sold in 2010 for $4.7 million. He
testified the parties received an actual offer for that
amount, but he believed they could get more than $5 million
for the property and wanted to submit a counter offer. He
admitted that if a counter offer had been submitted the
buyers could have walked away altogether, but he explained
that he knew the persons offering to purchase the land were
very interested in the property and, based upon conversations
he had had with one of the potential buyers, he believed they
could get about $5.2 million. He testified he had urged
Arthur to agree to his proposed counter offer, but Arthur
refused unless the offer included a transfer of part of the
land to the Renanders.
testified he thought the potential buyers in 2010 "were
highly motivated" and "would have gotten the money
together." But Arthur admitted he did want land, and he
testified his request of land as part of the deal bothered
Batinich and Aamodt "enormously . . . because they could
see that the way to make money was to sell this land in
parcels retail rather than dump it wholesale with the whole