Clinton Physical Therapy Services, P.c. Vs. John Deere Health Care, Inc. And John Deere Health Plan, Inc., F/k/a Heritage National Health Plan, Inc. ( 2006 )

IN THE SUPREME COURT OF IOWA
No. 28 / 04-1893
Filed May 12, 2006
CLINTON PHYSICAL THERAPY SERVICES, P.C.,
Appellant,
vs.
JOHN DEERE HEALTH CARE, INC. and
JOHN DEERE HEALTH PLAN, INC., f/k/a
HERITAGE NATIONAL HEALTH PLAN, INC.,
Appellees.
________________________________________________________________________
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Scott County, Nancy S.
Tabor, Judge.
Appeal from denial of motion for new trial on grounds of
inconsistent special verdicts. DECISION OF COURT OF APPEALS
VACATED; DISTRICT COURT JUDGMENT REVERSED AND
REMANDED.
Peter C. Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for
appellant.
Jeffrey D. Martens of Bozeman, Neighbour, Patton & Noe, LLP,
Moline, Illinois, for appellees.
2
CADY, Justice.
In this appeal from a judgment entered by the district court
following a jury verdict in a breach-of-contract action, we must primarily
consider the parameters within which the district court may resolve and
correct inconsistencies in a verdict and reform the jury’s answers to
questions in the verdict in lieu of granting a new trial. We conclude the
district court erred in failing to grant a new trial in this case. We reverse
and remand for a new trial on all issues.
I. Background Facts and Proceedings
Clinton Physical Therapy Services, P.C. (CPT) is an Iowa
corporation with its principal place of business in Clinton. It also has
offices in DeWitt and Davenport, Iowa and Morrison and Savanna,
Illinois. On April 15, 1996, CPT entered into a contract with John Deere
Health Care, Inc. (John Deere), a health maintenance organization, to be
a “network provider” of physical therapy services to John Deere plan
members. The Davenport office was not in existence at the time the
contract was executed, and the agreement was silent on which of CPT’s
offices were covered by the agreement.
The Davenport office, also called the Plaza office, opened in August
1997. CPT notified John Deere of the new Davenport office by letter on
August 11 and indicated it wanted the office to be covered by the
network-provider contract. John Deere initially paid for services
provided at the Davenport office, but claimed it did not realize the
payments were for services performed at the office at the time the
payments were made. It later took the position that the office was not a
covered facility under the contract, and denied claims for services
performed at the Davenport office.
3
John Deere sent CPT letters on April 23 and June 1, 1999 stating
the Davenport office was not covered by the contract. Nevertheless, CPT
continued to provide services to John Deere plan members at the
Davenport office. Ultimately, CPT provided services to approximately 300
John Deere plan members over 2775 visits at the Davenport office
without reimbursement from John Deere at the $50-per-visit rate under
the contract. This amounted to $138,750 in unpaid services up to
August 2001. Of this amount, $128,200 in services were rendered after
John Deere notified CPT in writing that services at the Davenport office
would not be paid. In August 2001, the parties entered into a new
contract. The new contract contained a specific clause indicating that
John Deere had discretion to pay for services provided by CPT at a new
office location.
In February 2003, CPT brought a breach-of-contract action against
John Deere. CPT claimed John Deere breached the 1996 contract by
refusing to pay for services provided to John Deere plan members at the
Davenport office. John Deere claimed the Davenport office was not
covered by the contract. It also claimed that even if it was covered, CPT
failed to mitigate its damages by continuing to treat John Deere plan
members at the Davenport office after receiving notice from John Deere
that the services would not be reimbursed, and not billing the plan
members for the services. 1
1The failure-to-mitigate-damages issue appears to be based on Restatement
(Second) of Contracts section 350. Comment b to this section provides:
As a general rule, a party cannot recover damages for loss that he
could have avoided by reasonable efforts. Once a party has reason to
know that performance by the other party will not be forthcoming, he is
ordinarily expected to stop his own performance to avoid further
expenditure. . . . The amount of loss that he could reasonably have
avoided by stopping performance . . . is simply subtracted from the
amount that would otherwise have been recoverable as damages.
4
The case was tried to a jury. At trial, CPT offered the 2001
contract into evidence as an aid to interpret the 1996 contract. John
Deere claimed the clause pertaining to new locations in the 2001
contract was in the nature of a subsequent remedial measure and was
not relevant. The district court excluded the contract from the evidence.
The case was submitted to the jury on a verdict form that required the
jury to answer a series of questions and determine the amount of
damages in the event a breach of contract was established. The form
provided:
We find the following verdict on the questions
submitted to us:
Question No. 1: Did the terms of the contract allow
for the Plaintiff to add its new Plaza or North Scott location
by providing written notification to Defendants of the
opening of that office?
Answer “yes” or “no.”
ANSWER: _____
(If your answer is “no,” do not answer any further
questions)
Question No. 2: Did the Plaintiff comply with all the
terms of the contract that were required unless excused?
Answer “yes” or “no.”
ANSWER: _____
(If your answer is “no,” do not answer any further
questions)
Question No. 3: Did the Defendant breach its
contract with Plaintiff?
________________________
Restatement (Second) of Contracts § 350 cmt. b, at 127 (1981). Clinton does not
challenge the application of this defense, and we do not express an opinion as to
its applicability.
5
ANSWER: _____
(If your answer is “no,” do not answer any further
questions)
Question No. 4: Did the Plaintiff fail to mitigate its
damages?
Answer “yes” or “no.”
ANSWER: _____
Question No. 5: State the amount of damages
sustained by the Plaintiff as to each of the following items of
damages:
A. The reasonable value, at the contracted rate, of
outstanding charges for treatment provided by Plaintiff in its
Plaza facility to Defendants’ eligible members from 1997
through July 31, 2001.
$ ___________
B. The reasonable value of Plaintiff’s lost profits
from the loss of referrals of Defendants’ members to its Plaza
facility from 1997 through July 31, 2001.
$ ___________
Question No. 6: State the amount of damages which
Plaintiff failed to mitigate.
$ __________
Question No. 7: State the total amount of
recoverable damages to the Plaintiff. (The total of the answer
to Question 6 minus the total of the answer to Question 7). 2
$ __________
The parties consented to a sealed verdict, which permitted the jury to be
discharged after reaching the verdict without reporting its findings in
open court in the presence of the parties. See Iowa R. Civ. P. 1.931(3)
(“When, by consent of the parties and the court, the jury has been
2The parenthetical instruction in question 7 contained a mistake and was
intended to tell the jury the answer to question 7 was the difference of question 5
(subparts A and B) minus question 6 (not question 6 minus question 7).
6
permitted to seal its findings and separates before it is rendered, such
sealing is equivalent to a rendition and a recording thereof in open court,
and such jury shall not be polled or permitted to disagree with respect
thereto.”).
After a period of deliberations, the jury notified the judge that it
had reached a verdict. The judge discharged the jury without notifying
the attorneys for the parties. In response to the first three questions in
the verdict, the jury found that the network-provider contract did allow
CPT to add the Davenport office, that CPT complied with all the terms of
the contract, and that John Deere breached the contract. In response to
question 4, the jury found that CPT did not fail to mitigate its damages.
It then found CPT suffered $138,750 in damages in response to question
5, subpart A. These damages were defined as the reasonable value of the
service provided to John Deere members at the Davenport office from
August 1997 through July 2001. However, question 6 required the jury
to state the amount of damages CPT failed to mitigate. The jury
answered $128,200. Finally, the jury found the total amount of damages
CPT could recover was $10,550. The district court entered a judgment
for $10,550 in favor of CPT.
CPT subsequently filed a motion for a new trial. It claimed the
verdict was inconsistent because the answers showed the jury found it
did not fail to mitigate damages yet found its damages should be reduced
by $128,200. It claimed this inconsistency warranted a new trial under
Iowa Rule of Civil Procedure 1.1004(5). CPT also asserted that a new
trial was warranted because the district court erred in failing to admit
the 2001 contract into evidence.
John Deere resisted the motion for new trial. It argued CPT waived
its right to a new trial by agreeing to a sealed verdict and failing to move
7
for resubmission of the case before the jury was discharged.
Alternatively, John Deere argued the verdict was not so logically
inconsistent that it could not be harmonized.
John Deere claimed that a reasonable explanation existed for the
inconsistent answers based on the changes in the damage figures made
by the jury on the verdict form. The verdict form revealed the jury
originally inserted $10,550 for the total amount of damages sustained by
CPT (value of services provided from 1997 to 2001) in response to
question 5, subpart A. It also originally inserted zero in response to the
request in question 6 to state the amount of damages CPT failed to
mitigate. Thus, up to this point, the verdict answers were not
inconsistent, and John Deere theorized that the jury had decided that
CPT’s damages were limited to reimbursement for services it provided
prior to the time John Deere notified CPT in 1999 that it would not
provide reimbursement. Question 7 then informed the jury to determine
the “total amount of recoverable damages” by subtracting the amount of
damages CPT failed to mitigate from CPT’s total damages (reasonable
value of services provided from 1997 to 2001). At this point, John Deere
surmises that the jury understood it needed to show its math by
subtracting the amount of damages CPT failed to mitigate from the total
value of the unreimbursed services rendered over the course of the
contract. John Deere believed the jury went back to questions 5 and 6 to
show its math, but neglected to return to question 4 to change its answer
to “yes,” consistent with the procedure required under the instructions to
reach the recoverable amount of damages.
The district court determined that CPT did not waive the
inconsistency issue by failing to object before the jury was discharged.
However, the court denied the motion for new trial on its merits. The
8
court accepted John Deere’s explanation that the jury intended for its
answers to be consistent. The court then reformed the jury’s answer to
question 4 (“Did the Plaintiff fail to mitigate its damages?”) to “yes” to
conform to the remainder of the verdict, and concluded that “[t]he jury’s
determinations were not inconsistent and the verdict effectuate[d]
substantial justice between the parties.”
CPT appealed. It claimed the district court erred by failing to grant
a new trial based on the inconsistent answers in the verdict. We
transferred the case to the court of appeals. The court of appeals
affirmed, reasoning that while the jury’s answers to questions four and
six were “facially . . . inconsistent,” the jury must have intended to find
that CPT failed to mitigate its damages because it reduced the total
damages by $128,200—the amount of damages CPT sustained after
John Deere’s April 1999 notice that the Davenport office was not covered
under the contract. It also found the district court did not abuse its
discretion in failing to admit the 2001 contract into evidence. CPT
applied for further review, which we granted.
II. Standard of Review
“ ‘The scope of our review of a district court’s ruling on a motion for
new trial depends on the grounds raised in the motion.’ ” Richards v.
Anderson Erickson Dairy Co., 699 N.W.2d 676, 678 (Iowa 2005) (quoting
Channon v. United Parcel Serv., Inc., 629 N.W.2d 835, 859 (Iowa 2001)).
If the motion for a new trial was “ ‘based on a discretionary ground, we
review it for an abuse of discretion.’ ” Id. (quoting Roling v. Daily, 596
N.W.2d 72, 76 (Iowa 1999)). In contrast, if the motion was “ ‘based on a
legal question, our review is on error.’ ” Id. (quoting Roling, 596 N.W.2d
at 76).
9
In this case, the underlying ground for the motion for new trial was
based on a claim of inconsistent answers in the verdict. Generally, the
trial court has some discretion when faced with inconsistent answers in
a verdict. See Dutcher v. Lewis, 221 N.W.2d 755, 762 (Iowa 1974) (“The
trial court has three alternatives where the answers are consistent with
each other but inconsistent with the general verdict: (1) order judgment
appropriate to the answers notwithstanding the verdict; (2) order a new
trial; or (3) send the jury back for further deliberations. Ordinarily, it is
discretionary with the court as to which of these alternatives to choose.”).
However, the question whether a verdict is inconsistent so as to give rise
to the exercise of that discretion is a question of law. See Redmond v.
Socha, 837 N.E.2d 883, 895 (Ill. 2005) (“[W]hether two verdicts are legally
inconsistent is a question of law.”); State v. Leake, 699 N.W.2d 312,
325 (Minn.) (“The question of whether verdicts are legally inconsistent is
a question of law . . . .” (Citation omitted.)), cert. denied, ___ U.S. ___, 126
S. Ct. 745, 163 L. Ed. 2d 583 (2005); accord State v. Harris, 983 P.2d
881, 884 (Mont. 1999); State v. Thompson, 971 P.2d 879, 891 (Or. 1999).
Therefore, we review the district court’s conclusion as to whether
answers are inconsistent for correction of errors at law. See Richards,
699 N.W.2d at 678 (stating when a motion for a new trial “ ‘is based on a
legal question, our review is on error’ ” (quoting Roling, 596 N.W.2d at
76)). We generally review the admission of evidence at trial for an abuse
of discretion. State v. Price, 692 N.W.2d 1, 3 (Iowa 2005) (citing State v.
Dullard, 668 N.W.2d 585, 589 (Iowa 2003)).
III. Verdict
We first address the argument by John Deere that CPT waived its
right to seek a new trial based on inconsistent answers in the verdict by
consenting to a sealed verdict. When parties agree to a sealed verdict,
10
they lose their right to have a verdict returned in open court where
inquiry can be made into its findings. See Iowa R. Civ. P. 1.931.
Consequently, it is not possible to use additional deliberations as a
remedy for an inconsistency in a verdict when a sealed verdict is used in
a case. However, further deliberation to remedy an inconsistency in the
verdict is only one available remedy. The other remedies are to grant a
new trial or attempt to reconcile the inconsistencies. Id. r. 1.934. Thus,
a sealed verdict may constitute a waiver of the additional-deliberations
option, but it would not constitute a waiver of other remedies. CPT did
not waive its right to request a new trial by agreeing to a sealed verdict.
Thus, we proceed to consider the merits of the claim.
Jury verdicts in Iowa can be in the form of a general verdict,
special verdict, or general verdict with special interrogatories. See Iowa
Rs. Civ. P. 1.932-.934. A general verdict is a verdict in which the jury
only makes a finding in favor of one party over the other party. See
Black’s Law Dictionary 1555 (7th ed. 1999) (defining “general verdict” as
“[a] verdict by which the jury finds in favor of one party or the other, as
opposed to resolving specific fact questions”). A special verdict consists
entirely of questions that elicit special written answers to resolve the
material issues of fact in the case, and the court then enters judgment
based on the findings made by the jury. Pexa v. Auto Owners Ins. Co.,
686 N.W.2d 150, 160 (Iowa 2004); see Black’s Law Dictionary 1555
(defining “special verdict” as “[a] verdict that gives a written finding on
each issue, leaving the application of law to the judge”); see also
McConnell v. ALCOA, 367 N.W.2d 245, 246 n.1 (Iowa 1985)
(distinguishing between special verdicts and special interrogatories
accompanying general verdicts). The answers by the jury become special
written findings of fact. McConnell, 367 N.W.2d at 246 n.1. No general
11
verdict is entered by the jury, and the jury does not consider the effect of
its special findings. See Pexa, 686 N.W.2d at 161 (stating that when
special verdicts are submitted, “ ‘it is wholly unnecessary and is
generally improper for the jury to be concerned with the effect of its
special findings’ ” (quoting Poyzer v. McGraw, 360 N.W.2d 748, 753 (Iowa
1985))). Instead, the court enters judgment by applying the law to the
findings. Id. at 160; Black’s Law Dictionary 1555. A special verdict is
normally used in cases involving complicated legal principles to help
simplify the resolution of the case and to force the jury to focus on the
important issues in the case. Poyzer, 360 N.W.2d at 753.
A general verdict may be supplemented with written interrogatories
that cover certain issues of fact upon which the verdict is based. Iowa R.
Civ. P. 1.934. These are called “special interrogatories.” Black’s Law
Dictionary 825; see also McConnell, 367 N.W.2d at 246 (“In order to avoid
confusion, a special verdict should not be called an interrogatory.”). Like
a special verdict, special interrogatories help to focus the jury on the
important issues in the case that bear upon the general verdict the jury
must reach. See Willametz v. Guida-Seibert Dairy Co., 254 A.2d 473,
476 (Conn. 1968) (“The primary purpose of an interrogatory is to elicit a
determination of material facts and to furnish the means of testing the
correctness of the verdict rendered.” (Citation omitted.)); Burmac Metal
Finishing Co. v. W. Bend Mut. Ins. Co., 825 N.E.2d 1246, 1259 (Ill. App.
Ct. 2005) (“ ‘The purpose of a special interrogatory is not to instruct the
jury, but to act as a check on its verdict.’ Specifically, special
interrogatories are used to test the general verdict against the jury’s
conclusions as to the ultimate controlling facts.” (Citation omitted.));
Freeman v. Norfolk & W. Ry., 635 N.E.2d 310, 313 (Ohio 1994) (“The
purpose of an interrogatory is to ‘test the jury’s thinking in resolving an
12
ultimate issue so as not to conflict with its verdict.’ ” (Citation omitted.)).
Both special verdicts and special interrogatories submitted with a
general verdict are findings by the jury that the court uses to enter
judgment—like pieces of a puzzle. In the case of special verdicts, the jury
merely gives the court the pieces, and the court assembles the puzzle
and enters judgment. In the case of a general verdict with special
interrogatories, the jury assembles the puzzle to complete the picture. If
all the pieces fit together correctly, the court enters judgment. However,
if the pieces do not fit together correctly, the court can see what went
wrong and attempt to fix the puzzle instead of starting over again with a
new jury. Each puzzle piece, or finding, must be supported by the
evidence presented. Cowan v. Flannery, 461 N.W.2d 155, 158 (Iowa
1990). Furthermore, the findings made cannot be internally
inconsistent. See Dutcher, 221 N.W.2d at 761 (“[W]hen there is an
irreconcilable conflict between the general verdict and special findings
the latter must prevail and the general verdict cannot stand.”); 89 C.J.S.
Trial § 992, at 603 (2001) (stating that when findings in special verdicts
“are utterly and irreconcilably inconsistent with, or repugnant to, each
other, they neutralize, nullify, or destroy each other”).
Our rules of civil procedure contemplate instances of inconsistent
findings by the jury, and specifically address conflicts in answers to
special interrogatories submitted with a general verdict. Iowa R. Civ. P.
1.934. If the interrogatory answers are consistent with each other but
any answer is inconsistent with the general verdict, then the court has
three options to consider. Id. It may send the jury back for additional
deliberations, enter judgment according to the special interrogatory
answers, or grant a new trial. Id.; accord Berghammer v. Smith, 185
N.W.2d 226, 234 (Iowa 1971) (noting special interrogatories trump the
13
general verdict in case of a conflict). However, if the interrogatory
answers are inconsistent with each other and any is inconsistent with
the general verdict, the options of the court are narrowed to two. Iowa R.
Civ. P. 1.934. The court may either send the jury back for additional
deliberations or grant a new trial. Id. In this instance, the court no
longer has the option to enter judgment. This option is not available
because inconsistent answers constitute inconsistent findings that
cannot support a judgment. See Bangs v. Pioneer Janitorial of Ames, Inc.,
570 N.W.2d 630, 632 (Iowa 1997) (“If a verdict is internally inconsistent
. . . , and there is no way to determine the jury’s intent, the proper
remedy is a new trial.” (citing Cowan, 461 N.W.2d at 160; Hoffman v.
Nat’l Med. Enters., Inc., 442 N.W.2d 123, 127 (Iowa 1989))); cf. 89 C.J.S.
Trial § 992, at 603 (stating that when findings in special verdicts “are
utterly and irreconcilably inconsistent with, or repugnant to, each other,
they neutralize, nullify, or destroy each other”).
Although rule 1.933, governing special verdicts, does not
specifically address the possibility of an internal inconsistency in the
answers in the special verdict, we recognize that rule 1.934, governing
special interrogatories supplementing general verdicts, is construed
together with rule 1.933. See Crookham v. Riley, 584 N.W.2d 258, 269
(Iowa 1998) (stating the rules are construed in pari materia, meaning
“taken together as if they were one law, . . . construed together as though
they constituted one act” (citing Fitzgerald v. State, 220 Iowa 547, 553,
260 N.W. 681, 683 (1935))). Thus, the rules governing inconsistent
special interrogatory answers would apply to inconsistent answers in a
special verdict. Both answers constitute special findings in the case and
must be internally consistent. If not, the court must either resume
deliberations or grant a new trial. Iowa R. Civ. P. 1.934. Inconsistent
14
answers that constitute special findings cannot support a judgment.
Our prior cases illustrate this rule. Compare Crookham, 584 N.W.2d at
269 (when answers to special verdict in malpractice action finding lawyer
negligent were consistent with each other but inconsistent with a general
verdict for the lawyer on a counterclaim for unpaid fees, trial court had
discretion to consider all options including entering judgment for client
on the counterclaim consistent with the answers to the special verdict),
and Dutcher, 221 N.W.2d at 762 (answers to special interrogatories were
consistent with each other but one was inconsistent with the general
verdict; court was within its discretion in ordering new trial in lieu of
other two options of resubmission or entering judgment), with Bangs,
570 N.W.2d at 632 (answers to special verdict were inconsistent with
each other (damage itemization 3 awarded $100,000 for past and future
pain and suffering but $0 for medical expenses); new trial was required
because there was no way to determine whether jurors denied medical
expenses because they thought they were paid by a third party or
whether they compromised on liability by reducing total damages
awarded), and Guzman v. Des Moines Hotel Partners, Ltd., 489 N.W.2d 7,
12 (Iowa 1982) (stating the court properly resubmitted the case to the
jury when answers in special verdict were internally inconsistent in that
the jury found negligence, but no proximate cause and then proceeded
further to award damages), and Cowan, 461 N.W.2d at 160 (trial court
abused its discretion in failing to grant new trial where answers in
special verdict were inconsistent with each other (awarded $21,220 for
medical expenses but $0 for pain and suffering)), and Shewry v. Heuer,
255 Iowa 147, 155, 121 N.W.2d 529, 534 (1963) (trial court abused its
3Itemizations of damages are treated as special verdicts. Cowan, 461 N.W.2d at
158.
15
discretion by failing to order a new trial when special verdicts were
internally inconsistent (awarded medical expenses but no pain and
suffering)). But see Berhow v. Kroack, 195 N.W.2d 379, 384 (Iowa 1972)
(trial court properly granted judgment notwithstanding the verdict when
answers to special interrogatories were internally inconsistent and
inconsistent with general verdict).
The parties maintain that the verdict in this case constituted a
special verdict, and they dispute how the rules apply to resolve the case.
While the verdict did not actually require the jury to enter a general
verdict, it did require the jury to determine the total recoverable damages
by subtracting the amount of damages CPT failed to mitigate from the
total damages sustained from the breach of the contract. This is not a
process normally associated with a special verdict. See Pexa, 686
N.W.2d at 160 (stating that in a special verdict, “the jury resolves
pertinent factual issues pursuant to the court’s instructions, and the
trial court enters the general verdict ‘by applying the applicable law to
the jury’s factual determinations’ ” (citation omitted; emphasis added)).
Nevertheless, the rules governing inconsistent answers in a verdict are
the same. Whether the answers are in response to special interrogatories
or are answers to a special verdict, if they are inconsistent, then the
court must either resume deliberations or grant a new trial. Iowa R. Civ.
P. 1.934; see Crookham, 584 N.W.2d at 269 (stating rules 1.933 and
1.934 are construed in pari materia).
It is fundamental that these principles only apply to inconsistent
verdicts or inconsistent answers within the verdict. If the answers are
not inconsistent, the court, of course, is permitted to enter judgment
consistent with the answers. Iowa R. Civ. P. 1.934. Thus, the first step
in the application of the rule is to determine if an inconsistency exists.
16
We have said that a verdict is not inconsistent if it can be
harmonized in a reasonable manner consistent with the jury instructions
and the evidence in the case, including fair inferences drawn from the
evidence. Hoffman, 442 N.W.2d at 126-27. The test recognizes that the
determination of whether two answers are inconsistent requires the court
to consider how the jury could have viewed the evidence and how that
view of the evidence fits into the requirements of the instructions or the
law applicable to the case. See 66 C.J.S. New Trial § 82, at 172 (1998)
(“In determining whether findings or answers are inconsistent or
irreconcilable so as to warrant a new trial, the findings or answers are to
be construed in light of the surrounding circumstances and in
connection with the pleadings, instructions and issues submitted.”).
Ultimately, two answers are not inconsistent if they can be harmonized
under the evidence and the instructions. See, e.g., Foggia v. Des Moines
Bowl-O-Mat, Inc., 543 N.W.2d 889, 892 (Iowa 1996) (jury’s award of
damages for pain and suffering but no award of damages for medical
expenses was not inconsistent because the jury could have “found none
of his medical expenses were caused by the fall at issue”); Brant v.
Bockholt, 532 N.W.2d 801, 805 (Iowa 1995) (jury’s award of “$31,000
damage for future medical expenses for treatment of facial scarring” and
no damages for loss of function of the body was not inconsistent because
“plaintiff presented no evidence of functional impairment due to facial
scarring,” and the jury could have included the damages on this item
with the umbrella of future pain and suffering). Thus, the process of
determining whether answers are inconsistent focuses on the evidence
and the law, and the court must decide if the two answers at issue can
be harmonized in light of the evidence and the law. When, under this
analysis, two answers or findings by the jury would compel the rendition
17
of different judgments, the answers are inconsistent. 89 C.J.S. Trials
§ 993, at 605-06; see id. § 992, at 604 (“The test to determine if conflict
between jury questions is irreconcilable is whether one answer would
establish a cause of action while the other answer would destroy it, or
whether taking one finding alone a judgment should be entered in favor
of the plaintiff and taking the other finding alone a judgment should be
rendered for the defendant.”).
This process of determining whether answers are inconsistent by
attempting to harmonize the answers with the evidence and the law is
separate from the process of reconciling two answers determined to be
inconsistent. In this case, for example, there was evidence to either
support or reject the claim of failure to mitigate damages as instructed
by the trial court. However, under the instructions, the jury could not
find that CPT did not fail to mitigate damages and then reduce damages
based on the failure to mitigate. The two findings by the jury would
compel different judgments. Thus, the two answers by the jury were
clearly inconsistent with the instructions. Nevertheless, the district
court did not proceed to apply the rules governing inconsistencies in a
verdict, but proceeded to harmonize the inconsistent answers by
concluding that the jury did not intend to answer “no” to question 4, but
intended to answer “yes.” In this way, the district court found the
answers were consistent and entered judgment. However, the district
court went too far under the guise of harmonizing purportedly
inconsistent answers and engaged in a process of reconciliation not
available when two special findings are inconsistent with each other, and
both are supported by evidence. See Iowa R. Civ. P. 1.934 (“If the
answers are inconsistent with each other, . . . the court shall not order
judgment, but either send the jury back or order a new trial.”).
18
A court may reform a verdict by correcting a mistake. Ostrem v.
State Farm Mut. Auto. Ins. Co., 666 N.W.2d 544, 546 (Iowa 2003). We
recognize that “verdicts are to be liberally construed to give effect to the
intention of the jury and to harmonize verdicts if it is possible to do so.”
Hoffman, 442 N.W.2d at 126 (citations omitted). However, this power is
very limited and only permits the court to correct mistakes or errors in
the verdict that are technical or ministerial in nature. Ostrem, 666
N.W.2d at 546. A judge cannot exercise the power to substitute its
judgment for the judgment of the jury. Id.
In this case, the district court may have uncovered a very logical
explanation for the inconsistent answers. Yet, this explanation
necessarily involved some degree of speculation. It involved speculation
because there was evidence that would have permitted the jury to either
accept or reject the mitigation-of-damages claim. Verdicts can only be
reformed when the change “clearly and definitely expresses the jury’s
intentions.” Id. When two answers in a verdict are both supported by
substantial evidence but are inconsistent under the instructions, a court
may not attempt to reconcile the inconsistency and enter a judgment by
correcting the inconsistency to conform to the intent of the jury because
the two conflicting views of the evidence would necessarily produce some
speculation about the intent of the jury. See Ex parte Alfa Mut. Ins. Co.,
799 So. 2d 957, 962 (Ala. 2001) (“ ‘Where a jury verdict is the result of
confusion or is inconsistent in law, the trial court should grant a new
trial; a new trial is necessary because, once the jury is dismissed, any
attempt to reconcile the inconsistencies in a verdict must be based on
mere speculation about the jury’s intent.’ ” (quoting City of Bessemer v.
Foreman, 678 So. 2d 759, 760 (Ala. 1996))).
19
The answers in the verdict in this case were internally inconsistent
as a matter of law. The district court had no power to correct the
inconsistency in the verdict because there was substantial evidence to
support both answers. Thus, the court had no power to enter judgment
following discharge of the jury, but was required (because the jury had
been discharged) to grant a new trial as a matter of law. It was the only
remedy available to the court to exercise under the circumstances.
IV. Evidentiary Ruling
Because this case must be remanded for a new trial, we proceed to
address the disputed evidentiary ruling by the district court because it is
likely to arise on retrial. See McElroy v. State, 703 N.W.2d 385, 392
(Iowa 2005) (stating we may consider issues likely to arise on retrial
(citing McElroy v. State, 637 N.W.2d 488, 501-02 (Iowa 2001); Gacke v.
Pork Xtra, L.L.C., 684 N.W.2d 168, 184-85 (Iowa 2004); Greenwood v.
Mitchell, 621 N.W.2d 200, 207-08 (Iowa 2001))). As previously noted, the
district court excluded evidence of the terms of the 2001 contract
between John Deere and CPT, ruling it was not relevant to the
interpretation of the 1996 contract. We must decide whether this was an
abuse of discretion. See State v. Sinclair, 582 N.W.2d 762, 764 (Iowa
1998) (“This court reviews the trial court's decision on the relevancy of
evidence for an abuse of discretion.”).
One issue the jury had to decide in resolving the contract claim in
this case was whether paragraph 3(c) 4 of the 1996 contract applied to
4Paragraph 3(c) provided:
If [CPT] discontinues or adds any service covered by this
Agreement, [CPT] shall notify [John Deere] prior to discontinuance or
addition, and the rate set forth in [the ancillary rate structure] shall be
adjusted by agreement of both parties. [John Deere] shall review, at the
time of the addition or deletion, the need in the network for the service to
appropriately handle access. If the need for the addition of the service
20
services provided at a new location. CPT sought to introduce the 2001
contract because it contended paragraph 12 of that contract, which
specifically addressed the situation of opening a new office, 5 showed that
John Deere did not intend paragraph 3(c) of the old contract to cover the
situation of addition of a new office. Rather, CPT claimed paragraph 3(c)
only applied to the situation of addition of particular services at existing
locations.
Generally, contracts are interpreted based on the language within
the four corners of the document. See Smidt v. Porter, 695 N.W.2d 9,
21 (Iowa 2005) (“It is a fundamental and well-settled rule that when a
contract is not ambiguous, we must simply interpret it as written.” (citing
State Pub. Defender v. Iowa Dist. Ct., 594 N.W.2d 34, 37 (Iowa 1999);
Rogers v. Md. Cas. Co., 252 Iowa 1096, 1098-99, 109 N.W.2d 435, 437
(1961))). However, when the language is ambiguous, we must engage in
a process of interpretation to search for “the meanings attached by each
party at the time the contract was made.” E. Allan Farnsworth,
Contracts § 7.9, at 458 (3d ed. 1999). To reveal this intent, extrinsic
evidence is admissible “ ‘when it sheds light on the situation of the
parties, antecedent negotiations, the attendant circumstances, and the
objects they were striving to attain.’ ” Dickson v. Hubbell Realty Co., 567
N.W.2d 427, 430 (Iowa 1997) (quoting Kroblin v. RDR Motels, Inc., 347
________________________
exists, [CPT] shall comply with [John Deere’s] credentialing requirements
for that new service.
5 Paragraph 12 provided:
[CPT] understands and agrees that if [CPT] opens or enters into
business in another location, that does not cause automatic inclusion
into the products listed on [the product participation matrix/fee
schedule] for services provided at that location. [CPT] must notify [John
Deere] of the new location and [John Deere] at its sole discretion will
determine the need of entering into a contractual relationship for the new
location.
21
N.W.2d 430, 433 (Iowa 1984)). However, the 2001 contract in this case
does little to shed light on the situation of the parties or any attendant
circumstances in 1996—the time relevant to the interpretation of the
governing contract. Id.; see also 17A Am. Jur. 2d Contracts § 346, at
333-34 (2004) (“The intention, with which the law is concerned in
construing and giving effect to a contract, is that of the parties at the
time of entering into the contract, regardless of any events occurring
afterward, at least if such subsequent events were not reasonably within
the contemplation of the parties when the contract was made.”). A
specific clause placed in the 2001 contract by the parties concerning new
offices does not show the intent of the parties in 1996 regarding the
application of paragraph 3(c) to new offices. Thus, the 2001 contract was
not relevant to the interpretation of the 1996 contract. It did not make
either of the competing meanings asserted by the parties more likely or
less likely than it would be without the evidence. See Iowa R. Evid.
5.401 (“ ‘Relevant evidence’ means evidence having any tendency to
make the existence of any fact that is of consequence to the
determination of the action more probable or less probable than it would
be without the evidence.”). We find no abuse of discretion in its
exclusion.
V. Conclusion
We vacate the decision of the court of appeals, reverse the
judgment of the district court, and remand for a new trial. To avoid
repetition of this resource-wasting result, we repeat out prior admonition
that “[t]he trial court should not discharge the jury until it determines
the special verdict is consistent and supported by evidence.” Cowan,
461 N.W.2d at 160; see also 75B Am. Jur. 2d Trial § 1854, at 595 (1992)
22
(“Ordinarily, when a jury returns inconsistent or incomplete answers to a
special verdict, it is preferable to send the jury back for further
deliberation.”).
DECISION OF COURT OF APPEALS VACATED; DISTRICT
COURT JUDGMENT REVERSED AND REMANDED.