John L. Hintermeister v. Belin McCormick, PC, Nathan J. Barber, Riverview Hotel Development, LLC d/b/a Merrill Hotel & Conference Center, and MLC Land Company, LLC ( 2019 )

IN THE COURT OF APPEALS OF IOWA
No. 18-1294
Filed July 24, 2019
JOHN L. HINTERMEISTER,
Plaintiff-Appellant,
vs.
BELIN McCORMICK, PC, NATHAN J. BARBER, RIVERVIEW HOTEL
DEVELOPMENT, LLC, d/b/a MERRILL HOTEL & CONFERENCE CENTER,
and MLC LAND COMPANY, LLC,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Muscatine County, Patrick
McElyea, Judge.
Plaintiff appeals the district court decision granting summary judgment to
defendants. AFFIRMED.
Patrick L. Woodward and Ryan F. Gerdes (until withdrawal) of McDonald,
Woodward & Carlson, P.C., Davenport, for appellant.
Matthew C. McDermott of Belin McCormick, P.C., Des Moines, for
appellee Belin McCormick, P.C.
Steven J. Havercamp of Stanley, Lande & Hunter, P.C., Davenport, for
appellees.
Considered by Potterfield, P.J., and Tabor and Bower, JJ.
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POTTERFIELD, Presiding Judge.
Plaintiff John Hintermeister appeals the district court decision granting
summary judgment to defendants Nathan Barber, Belin McCormick, P.C.,
Riverview Hotel Development, LLC, and MLC Land Company, LLC for his claims
of tortious interference with business relations and intentional infliction of
emotional distress. We determine the district court properly granted the
defendants’ motion for summary judgment.
I. Background Facts & Proceedings
This case arises out of a real estate development project pursued by
defendants MLC and Riverview. At all times relevant to this dispute, MLC and
Riverview were represented by Barber, an attorney at Belin McCormick. In 2016,
MLC and Riverview began purchasing parcels of land to develop the Merrill Hotel
& Conference Center in downtown Muscatine. One of these parcels, an area of
greenspace, was owned by the various condominium owners of the Pearlview
Condominium Association (PCA) as tenants in common. Among these tenants
were Ronald and Sally Bryant, who owned a three-twentieths fractional interest in
the greenspace, and Thomas Meeker, a local businessperson who owned rental
property in Muscatine and was president of PCA.
At all times relevant to this dispute, PCA and Meeker individually were
represented by plaintiff Hintermeister, an attorney with a part-time law practice at
Hintermeister & Kundel. Hintermeister had sold his law practice to Steven
Kundel in 2003, and the two attorneys agreed Hintermeister could continue to
practice law with Kundel’s practice, but only so long as Kundel consented.
3
In connection with the sale of the greenspace, Barber reviewed the
abstract of title and issued a preliminary title opinion on June 2, 2016. The title
opinion identified two federal tax liens against the Bryants, which attached to
their interest in the greenspace. Barber concluded the tax liens needed to be
released in order for his clients to obtain marketable title to the property.
At the same time MLC pursued the greenspace purchase, MLC also
sought a construction loan of $20 million from the United States Department of
Agriculture (USDA) under Cedar Rapids Bank & Trust (CRBT). The USDA
required release of the Bryants’ tax liens to satisfy the lender’s title opinion.
Hintermeister directly contacted James Howe, a manager of MLC, about
closing the greenspace purchase. In a July 27, 2016 email, Hintermeister
informed Howe he could not obtain a release for the Bryants’ tax liens but
informed him
[i]f closing [the greenspace purchase] soon is critical, I will see if we
can arrange to close on the Bryant to Meeker sale, paying the
credit union off, paying the closing expenses, and hold the rest of
the funds in escrow in my trust account until we can get the tax
liens paid and released. We can then immediately close on the
Green Space.[1]
On September 15, 2016, MLC closed on the purchase of the greenspace
from PCA. Hintermeister had not obtained a release of the Bryants’ tax liens at
the time of sale. MCL nonetheless agreed to close the deal based on
1
“Bryant to Meeker sale” refers to the purchase of two of the Bryants’ other rental
parcels by Meeker. The Bryants’ tax liens were set to attach to these parcels as well.
Meeker had agreed to purchase the parcels from the Bryants, but only if Hintermeister &
Kundel held a portion of the purchase price in trust until the Bryants paid the tax liens.
Hintermeister entered into an informal agreement with the Bryants’ attorney Duane
Goedken to determine the amount of the federal tax liens and either have the Bryants
pay the liens themselves or use the funds held in trust at Hintermeister & Kundel to pay
the liens.
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Hintermeister’s assurances in the July 27, 2016 email. Barber issued an updated
title opinion on December 19, 2016, which noted “John Hintermeister’s office is
holding funds in escrow for payment of these liens.”
The liens had still not been released by March 2017. CRBT contacted
Hintermeister on March 9; it had not yet received notification of the release of the
Bryants’ tax liens and was frustrated Hintermeister had not cooperated in
obtaining the release. Hintermeister informed CRBT “I do have the funds in my
trust account for the tax liens, and as soon as I have some official notification
from the IRS (through Duane Goedken) as to how much will be required to
satisfy those liens, I will make payment to the IRS through Duane’s office.”
Hintermeister forwarded this email conversation to Barber.
Hintermeister next updated Barber in an email sent August 9.
Hintermeister informed Barber “I think we are finally going to be able to deal with
the Ron Bryant tax liens. I have a statement from the IRS, but I want to be sure it
covers everything before I release the money.” Hintermeister asked Barber to
send him a copy of the title opinion showing the tax liens, which Barber provided
the same day.
By August 31, CRBT was growing impatient with MLC. USDA was
threatening to terminate the $20 million construction loan if the Bryants’ tax liens
were not released. To avoid termination, CRBT contacted MLC and demanded
MLC get the lien release. Barber emailed Hintermeister on August 31 and asked
him whether the release had been obtained. Hintermeister replied the same day,
saying “I gave the money to Duane Goedken about two weeks ago so he could
pay them, but I have not heard anything since.”
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The communications at the heart of this dispute were sent from Barber
and Rebecca Howe (James Howe’s wife and an agent for Riverview and MLC) to
Hintermeister on September 5. The first communication is a letter from Barber.
Citing Hintermeister’s statements in his July 27, 2016 email, the March 9, 2017
email chain, and the August 9 email, Barber stated that Hintermeister had agreed
to hold the funds in his trust account until the Bryants’ tax liens were released
and that disbursing the funds without first securing the release violated that
agreement:
The funds were escrowed in your trust account for the
purpose of obtaining the lien releases. You informed both [James]
Howe and me that you would assume responsibility for obtaining
the releases in exchange for the funds.
This letter is notice that if the tax liens are not released
within 20 days of this letter, we will be forced to bring suit for breach
of the escrow agreement.
Also on September 5, Rebecca Howe emailed Hintermeister and stated, “Since
you are refusing to discuss [releasing the tax liens], I am left with no alternative
but to pursue a legal resolution.”
Hintermeister responded by sending Belin McCormick and Rebecca Howe
his own letter threatening litigation on September 12, and he followed it up with
another letter on September 18, reiterating his threat. Hintermeister claimed he
would be unable to purchase errors and omissions coverage because of the
threats of litigation, which would force him out of his firm. On September 19,
2017, Barber searched the Muscatine County record and discovered that the
Bryants’ tax liens had been released on September 18. Barber emailed
Hintermeister and CRBT and informed them the tax lien matter had been
resolved.
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Hintermeister brought suit against the defendants on February 22, 2018.
In his complaint, Hintermeister alleged that the defendants had interfered with his
employment prospects by threatening to sue him in the September 5, 2017 letter.
Under Hintermeister & Kundel’s firm policy, Hintermeister had been required to
report the threat of litigation made in the letter to the firm’s errors and omissions
liability insurance provider. Kundel terminated Hintermeister’s partnership with
Hintermeister & Kundel effective December 31, 2018. Hintermeister also sued
the defendants for intentional infliction of emotional distress.
Barber and Belin McCormick moved for summary judgment on April 26,
2018. MLC and Riverview joined the motion. The district court granted summary
judgment on behalf of all the defendants on July 24, 2018. The court ruled that
the defendants’ statements fell under the litigation privilege and were therefore
immune from civil liability. Hintermeister appealed.
II. Scope of Review
We review the district court’s decision on a motion for summary judgment
for correction of errors at law. Slaughter v. Des Moines Univ. Coll. of
Osteopathic Med., 925 N.W.2d 793, 800 (Iowa 2019); see also Iowa R. App. P.
6.907. “Summary judgment is proper when the movant establishes there is no
genuine issue of material fact and it is entitled to judgment as a matter of law.”
Id. (quoting Deeds v. City of Marion, 914 N.W.2d 330, 339 (Iowa 2018)). “[W]e
review the facts in the light most favorable to the nonmoving party.” Morris v.
Steffes Group, Inc., 924 N.W.2d 491, 493 (Iowa 2019). “The burden is on the
moving party to demonstrate that it is entitled to judgment as a matter of law.”
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Goodpaster v. Schwan’s Home Serv., Inc., 849 N.W.2d 1, 6 (Iowa 2014) (quoting
Sallee v. Stewart, 613 N.W.2d 128, 133 (Iowa 2013)).
III. Discussion
The parties argue over application of the “litigation privilege” to the
statements made by Barber in his September 5 letter and by Rebecca Howe in
her September 5 email to Hintermeister. Hintermeister argues the privilege does
not apply because the statements “were not made preliminary to or during any
legal proceeding.” The defendants argue the privilege is broad enough to cover
the statements and bar Hintermeister’s suit. We conclude it is.
In the context of a defamation suit, the Iowa Supreme Court has adopted
a two-part analysis for determining whether an attorney’s communication is
protected by the privilege:
First, the communication must be examined in the context of the
occasion to determine if it was made “preliminary to a proposed
judicial proceeding, or in the institution of, or during the course and
as a part of a judicial proceeding.” Second, the content of the
communication must be evaluated to determine if it “has some
relation to the proceeding.”
Kennedy v. Zimmerman, 601 N.W.2d 61, 64 (Iowa 1999) (citations omitted)
(quoting Restatement (Second) of Torts § 586 (Am. Law Inst. 1977)). The
privilege extends to parties to judicial proceedings as well. Spencer v. Spencer,
479 N.W.2d 293, 295 (Iowa 1991) (applying Restatement (Second) of Torts §§
586–88); Robinson v. Home Fire & Marine Ins. Co., 49 N.W.2d 521, 527 (Iowa
1953) (“The protection which is afforded an attorney under a plea of privilege
equally applies to the client he represents.”); Restatement (Second) of Torts §
587 (“A party to a private litigation . . . is absolutely privileged to publish
8
defamatory matter concerning another in communications preliminary to a
proposed judicial proceeding . . . if the matter has some relation to the
proceeding.”). The litigation privilege “encourage[s] the open resolution of
disputes by removing the cloud of later civil suits from statements made in
judicial proceedings.” Spencer, 479 N.W.2d at 295. It is “based upon a public
policy of securing to attorneys as officers of the court the utmost freedom in their
efforts to secure justice for their clients.” Restatement (Second) of Torts § 586,
cmt. a.
We must first determine whether the litigation privilege applies to
Hintermeister’s claims, even though his claims are for something other than
defamation. The district court determined the privilege applied to non-defamation
causes of action because “extending the litigation privilege in this case would
further its purpose.” While the Iowa Supreme Court has not addressed whether
the absolute privilege applies outside defamation actions, other courts have
concluded it does. See Simms v. Seaman, 69 A.3d 880, 905 (Conn. 2013)
(discussing the litigation privilege and collecting cases from other jurisdictions
expanding the privilege beyond defamation); Echevarria, McCalla, Raymer,
Barrett & Frappier v. Cole, 950 So. 2d 380, 384 (Fla. 2007) (extending the
litigation privilege to cover all causes of action arising under Florida law); see
also Thornton v. Rhoden, 53 Cal. Rptr. 706, 719 (Cal. Ct. App. 1966) (“The
salutary purpose of the privilege should not be frustrated by putting a new label
on the complaint.”); Douglas R. Richmond, The Lawyer’s Litigation Privilege, 31
Am. J. Trial Advoc. 281, 295 (2007) (“It is the perceived necessity for candid and
unrestrained communications in those proceedings, free of the threat of legal
9
actions predicated upon those communications, that is at the heart of the rule.
The nature of the underlying dispute simply does not matter.” (citing Echevarria,
950 So. 2d at 385)). We find these authorities persuasive. The policy
considerations motivating the application of the privilege to defamation actions
support applying the privilege to other causes of actions based on attorney
conduct and statements made in the course of client representation. See
Restatement of Torts § 586 cmt. a. We conclude the litigation privilege can apply
to bar Hintermeister’s interference with employment prospects and intentional
infliction of emotional distress causes of action if the threats of litigation meet
both prongs of the test described in Kennedy, 601 N.W.2d at 64.
The first prong of the test requires there to be a connection between the
statements in question and some judicial proceeding. See Kennedy, 601 N.W.2d
at 64. Hintermeister argues the letter and email are not sufficiently connected to
litigation because the greenspace sale had been finalized for more than a year
and Hintermeister was neither a party to nor counsel for any party involved in that
transaction. This argument does not accurately characterize the scope of the
privilege. The privilege extends beyond statements made in the course of
litigation to include pleadings, affidavits, briefs, conferences, and other
communications made prior to a proposed judicial proceeding. See id. at 65. So
long as “the communication has some relation to a proceeding that is
contemplated in good faith and under serious consideration,” the first prong of
the test is met. Restatement (Second) of Torts § 586 cmt. e.
The district court determined the September 5 letter from Barber and
email from Rebecca Howe were statements made preliminary to a judicial
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proceeding and so satisfied the first prong of the test. We agree. Barber drafted
the September 5 letter in connection to his representation of MLC. He had been
led to believe Hintermeister could get the liens released based on the July 27,
2016, March 9, 2017, and August 9, 2017 emails. The letter is itself the
communication threatening litigation. Similar letters have been considered
“preliminary to a proposed judicial proceeding” by other courts. See, e.g.,
Messina v. Krakower, 439 F.3d 755, 761 (D.C. Cir. 2006) (discussing
Restatement (Second) of Torts § 586 and concluding a letter threatening
litigation was “preliminary to a proposed judicial proceeding” because it “was sent
for the very purpose of attempting settlement prior to litigation” (quoting Messina
v. Fontana, 260 F. Supp. 2d 173, 178 (D.D.C. 2003))); Atkinson v. Affronti, 861
N.E.2d 251, 255 (Ill. App. Ct. 2006) (“We are convinced that the same public
policy considerations that protect an attorney’s statements made to his or her
client during the course of a legal proceeding necessarily protect prelitigation
communications such as the letter defendant sent to plaintiff’s employer.”).
Similarly, the record shows Rebecca Howe sent the September 5 email from a
Riverview email account in her capacity as an agent of Riverview and for the
purpose of getting the Bryants’ tax liens released. She had also been led to
believe Hintermeister could get the tax liens released based on Hintermeister’s
communications to Barber, MLC and Riverview’s attorney. We conclude the
September 5 letter from Barber and email from Rebecca Howe were
“contemplated in good faith and under serious consideration” of litigation and
were made “preliminary to a proposed judicial proceeding” within the meaning
the first prong of the test. Restatement (Second) of Torts § 586 cmt. e.
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The second prong of the test requires the party asserting the litigation
privilege to show a connection between the litigation in question and the
communication. Kennedy, 601 N.W.2d at 64. The communication “need not be
strictly relevant to any issue involved in” the litigation. Restatement (Second) of
Torts § 586 cmt. c. We conclude this prong of the test is met for both Barber’s
letter and Rebecca Howe’s email to Hintermeister. The letter is a communication
from the counsel (Barber) of a potential plaintiff (MLC and Riverview) to the
potential defendant (Hintermeister) regarding the possibility of the plaintiff
bringing a lawsuit against the defendant. Rebecca Howe’s email from that same
day is a communication directly from one party to another for that same purpose.
Neither communication discusses any topic besides the tax liens. Both
communications have “some relation” to the potential lawsuit under consideration
by MLC and Riverview against Hintermeister within the meaning of the litigation
privilege test.
Hintermeister argues the litigation privilege is sufficiently narrow to
exclude the communications at issue in this case. To support this proposition, he
relies on Spencer, 479 N.W.2d 293 and White & Johnson, P.C. v. Bayne, No. 02-
0757, 2003 WL 21696938 (Iowa Ct. App. July 23, 2003), an unpublished decision
of a panel of this court. While these opinions caution us to balance the
competing interests of zealous advocacy and protecting an individual’s
reputation, we conclude the communications at issue here nevertheless fall
within the scope of the privilege. Both Spencer and Bayne lean heavily on the
fact that the statements at issue were disseminated to third parties with no
interest in the litigation. In Spencer, the Iowa Supreme Court concluded libelous
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letters sent by the defendant were not privileged in part because they “were sent
to persons no longer having, or never having, any interest” in the litigation the
statements addressed. 479 N.W.2d at 295. Similarly in Bayne, a panel of this
court upheld the district court’s refusal to attach the privilege to a brief that “had
some of the markings of a privileged document” but had been disseminated by
the defendant to third parties whom the defendant “failed to show . . . had any
connection to the litigation.” 2003 WL 21696938, at *4. In both cases, the court
recognized extending the privilege to communications made to third parties
would improperly shield defendants from liability. Spencer, 479 N.W.2d at 296
(quoting Asey v. Hallmark Cards, Inc., 594 F.2d 692, 698 (8th Cir. 1979)); see
also Bayne, 2003 WL 21696938, at *4 (quoting the Spencer). Here, neither
statement was disseminated to third parties by the defendants. Both
communications were sent between Hintermeister, Barber, and the Howes, all of
whom had an interest in the litigation.
IV. Conclusion
We conclude the litigation privilege applies to the September 5 letter sent
by Barber and the September 5 email sent by Rebecca Howe. The statements
were made in good faith, and the litigation threatened was seriously considered.
Defendants’ statements are entitled to absolute immunity. The district court did
not err in granting Defendants’ motion for summary judgment.
AFFIRMED.