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Thunder & Lightning, Inc. v. 435 Grand Avenue, LLC

Court of Appeals of Iowa

November 7, 2018

THUNDER & LIGHTNING, INC., Plaintiff-Appellant,
v.
435 GRAND AVENUE, LLC, d/b/a 435 E. GRAND AVE., LLC, SANTOKH NAGRA, PETER SAND, and LOYD OGLE, Defendants-Appellees.

          Appeal from the Iowa District Court for Polk County, Lawrence P. McLellan, Judge.

         In this consolidated appeal, we consider Thunder & Lightning, Inc.'s direct appeals of the order dismissing its trespass claims and a certiorari action concerning sanctions awarded against Thunder & Lightning and its attorney.

          Cornelius S. Qualley of Qualley Law, P.L.C., Des Moines, for appellant.

          Paul J. Statler of Statler Law, PLLC, Des Moines, for appellee.

          Heard by Danilson, C.J., and Potterfield and Doyle, JJ.

          DOYLE, JUDGE.

         This appeal consolidates Thunder & Lightning, Inc.'s direct appeal of the order dismissing its trespass claims against the defendants and a certiorari action concerning an order awarding sanctions against Thunder & Lightning and its attorney for violating Iowa Rule of Civil Procedure 1.413. Because the defendants entered the leased premises without consent, Thunder & Lightning proved the defendants committed trespass. Accordingly, we reverse the dismissal of its claims for trespass and conspiracy to commit trespass and remand to the district court to determine the amount of Thunder & Lightning's damages. Because the district court did not abuse its discretion in sanctioning Thunder & Lightning and its attorney for violating rule 1.413 by failing to conduct a reasonable inquiry before initiating a contempt action, we annul the writ of certiorari.

         I. Background Facts and Proceedings.

         Thunder & Lightning leased commercial space from 435 Grand Avenue LLC, d/b/a 435 E. Grand Ave., LLC (435 Grand) for a five-year term beginning August 1, 2011, and ending July 31, 2016.[1] Thunder & Lightning operated the premises as the Lime Lounge. The parties' relationship soured and can be described as contentious, though another apt descriptor would be litigious. Three years into the lease, 435 Grand filed a petition alleging Thunder & Lightning breached the lease by failing to pay property taxes, and Thunder & Lightning counterclaimed for lack of notice of default, libel, and reimbursement for remodeling costs. Although the parties later dismissed the claims, the litigation did not end there.

         Thunder & Lightning initiated the present action against 435 Grand in September 2015. It alleged multiple claims of breach of contract against 435 Grand, in addition to a claim of libel. Thunder & Lightning also sought specific performance of a lease provision that provided it with an exclusive option to purchase the real estate during the first forty-eight months of the lease. Following events that occurred in January 2016, Thunder & Lightning later amended the petition to add 435 Grand's principal, Santokh Nagra, and two of its attorneys, Peter Sand and Loyd Ogle, as parties. It also added claims of breach of covenant of quiet enjoyment, trespass (against Nagra, Sand, and Ogle), civil conspiracy to commit trespass (against Nagra, Sand, and Ogle), fraudulent misrepresentation, and fraudulent nondisclosure. The district court severed the claims of trespass and civil conspiracy to commit trespass for a separate trial.

         The two trespass claims were tried to the court in February 2017. On the last day of trial, Thunder & Lightning filed a motion for rule to show cause, alleging 435 Grand was in contempt of a court order relating to the first trial on the bulk of its claims. In an April 2017 order, the district court dismissed both trespass claims and denied Thunder & Lightning's motion for rule to show cause. On its own initiative, the court found Thunder & Lightning and its attorney violated Iowa Rule of Civil Procedure 1.413 in filing the motion for rule to show cause and allowed the defendants ten days to suggest an appropriate sanction. In a May 2017 order, the court assessed a total of $1120 in sanctions jointly and severally against Thunder & Lightning and its attorney, Cornelius Qualley (Qualley), to compensate the defendants for the attorney fees expended in defending the motion for rule to show cause.

         Thunder & Lightning appealed the dismissal of its trespass claims and the order awarding sanctions. The Iowa Supreme Court consolidated the appeals and transferred the matter to this court. Additional facts will be discussed below.

         II. Trespass Claims.

         Thunder & Lightning first appeals the dismissal of its claims for trespass and civil conspiracy to commit trespass.[2] It argues the district court erred in failing to find the defendants committed trespass by entering and remaining upon the leased property without its consent.

         A. Scope and Standard of Review.

         Our review is for correction of errors at law. See Iowa R. App. P. 6.907. The trial court's fact findings are binding upon us if supported by substantial evidence. See Iowa R. App. 6.904(3)(a). "Substantial evidence supports a factual finding when the finding 'may be reasonably inferred from the evidence presented.'" Hutchison v. Shull, 878 N.W.2d 221, 229-30 (Iowa 2016) (quoting Vaughan v. Must, Inc., 542 N.W.2d 533, 538 (Iowa 1996)).

When reviewing a claim that substantial evidence does not support a district court finding, we are required to view the evidence in the light most favorable to the judgment and liberally construe the court's findings to uphold, rather than defeat, the result reached. Evidence supporting a district court finding is not insubstantial merely because we may draw a different conclusion from it. The crucial question in determining whether substantial evidence supports a district court finding is not whether the evidence would support a different finding, but whether the evidence supports the finding actually made.

Id. at 230 (citations omitted).

         B. Trespass.

         "One is subject to liability to another for trespass, irrespective of whether he thereby causes harm to any legally protected interest of the other, if he intentionally . . . enters land in the possession of the other . . . ." Robert's River Rides, Inc. v. Steamboat Dev. Corp., 520 N.W.2d 294, 301 (Iowa 1994) (quoting Restatement (Second) of Torts § 158 (1964)), abrogated on other grounds by Barreca v. Nickolas, 683 N.W.2d 111 (Iowa 2004). Where there is consent to enter, either express or implied, there can be no trespass. See Alexander v. Med. Assocs. Clinic, 646 N.W.2d 74, 76 (Iowa 2002) ("A 'trespasser' is one who has no legal right to be upon another's land and enters the land without the express or implied consent of the owner."); Restatement (Second) of Torts § 167. Consent occurs "where the plaintiff's conduct reasonably led the defendant to believe the defendant had authority for the actions taken with regard to the property." Larson v. Great W. Cas. Co., 482 ...


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