IN THE COURT OF APPEALS OF IOWA
No. 16-2148
Filed December 20, 2017
ROBERT W. MILAS, M.D.,
Plaintiff-Appellant,
vs.
SOCIETY INSURANCE and ANGELA BONLANDER,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Scott County, Henry W. Latham II
(trial and motion to recuse) and Nancy S. Tabor (motion for summary judgment),
Judges.
Plaintiff appeals following judgment entry on his claims for fraudulent
misrepresentation and breach of contract. AFFIRMED.
Anthony J. Bribriesco, Andrew W. Bribriesco, and William J. Bribriesco of
Bribriesco Law Firm, P.L.L.C., Bettendorf, for appellant.
Guy R. Cook of Grefe & Sidney, P.L.C., Des Moines, for appellees.
Considered by Danilson, C.J., McDonald, J., and Blane, S.J.1 Tabor, J.,
takes no part.
1
Senior Judge assigned by order pursuant to Iowa Code section 602.9206 (2017).
2
MCDONALD, Judge.
A treating physician brought an action for breach of contract, negligent
misrepresentation, and fraudulent misrepresentation against a workers’
compensation insurance carrier and its claims adjuster after the claims adjuster
approved an elective surgery for the physician’s patient but the carrier declined to
pay the physician’s entire fee for the elective surgery. The district court dismissed
the misrepresentation claims on summary judgment. The claim for breach of
contract was tried to a jury. The jury found in favor of the physician and awarded
contract damages. The physician timely filed this appeal. He contends the district
court erred in dismissing his fraudulent misrepresentation claim on summary
judgment, erred in denying his request for an instruction on the claim, and erred in
declining to submit the issue of punitive damages to the jury. He also contends
the district court should have granted his motion for recusal. On November 17,
2017, we filed an opinion in this matter. We subsequently granted the physician’s
petition for rehearing and vacated our prior decision pursuant to Rule 6.1204. After
considering the petition for rehearing, we now file this opinion.
I.
In January 2012, Rickey Fitzgerald seriously injured himself while
performing work for Barker Apartments and filed a workers’ compensation claim.
Fitzgerald became dissatisfied with the medical care received, and he petitioned
for alternate care with Dr. Robert Milas. The workers’ compensation commissioner
granted the petition, and Dr. Milas became Fitzgerald’s treating physician. Dr.
Milas recommended Fitzgerald undergo a cervical fusion to treat Fitzgerald’s neck
and back injuries. Dr. Milas sent a fee estimate to the workers’ compensation
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insurance carrier, Society Insurance, in the amount of $14,325.87. A claims
adjuster, Angela Bonlander, signed the estimate. The signed estimate provided,
“SIGNATURE FROM REPRESENTATIVE AT SOCIETY INSURANCE WILL BE
THE AUTHORIZATION FOR SURGERY.”
After receiving the signed estimate, Dr. Milas performed the cervical fusion.
He submitted a bill to Society Insurance for $14,325.87. Society Insurance
provided the bill to a third-party auditing service, Health Systems International
(HSI). Upon the recommendation of HSI, Society Insurance issued a check to Dr.
Milas for $1620.52. Dr. Milas rejected the check and demanded he be paid in full.
Two years later, Society Insurance sent Dr. Milas another check for $4958.03. Dr.
Milas rejected that payment.
Dr. Milas brought this action against Society Insurance and Bonlander. Dr.
Milas asserted claims for negligent misrepresentation, fraudulent
misrepresentation, and breach of contract. Society Insurance moved for summary
judgment on all counts. The district court granted Society Insurance’s motion for
summary judgment on the fraudulent misrepresentation claim, concluding there
was no evidence showing the defendant had the intent to deceive Dr. Milas in
authorizing the elective surgery.
The matter proceeded to trial on the negligent misrepresentation claim and
the breach-of-contract claim. The first trial ended during the plaintiff’s opening
statement after the district court granted a motion for mistrial. Society Insurance
subsequently filed a second motion for summary judgment, seeking dismissal of
the negligent misrepresentation claim. The district court granted the motion,
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concluding the defendants were not in the business of providing information and
were entitled to judgment as a matter of law.
The matter proceeded to trial on the claim for breach of contract. Prior to
the second trial, Dr. Milas moved to recuse the presiding judge. The district court
denied the motion. Dr. Milas sought interlocutory review of the order denying the
motion. That, too, was denied. The district court denied Dr. Milas’s request for an
instruction on the fraudulent misrepresentation claim and declined to submit the
issue of punitive damages to the jury. The jury returned a verdict finding Dr. Milas
and Society Insurance entered into a contract and finding Dr. Milas and Bonlander
had not entered into a contract. The jury found Society Insurance breached the
contract and awarded Dr. Milas $14,325.87. Dr. Milas now appeals.
II.
In his first claim of error, Dr. Milas argues the district court erred in
dismissing his claim for fraudulent misrepresentation and in failing to submit a jury
instruction on this claim. Dr. Milas contends Society Insurance, in signing the
estimate, made a false representation that it would pay the proposed surgical fees
knowing it intended to negotiate the fees at a later date. He contends this is a
triable issue of fact.
With respect to the summary judgment claim, this court reviews a district
court’s grant of summary judgment for correction of errors at law. See Boelman v.
Grinnell Mut. Reins. Co., 826 N.W.2d 494, 500 (Iowa 2013). A district court
properly grants summary judgment when there is no genuine issue of material fact
and the moving party is entitled to judgment as a matter of law. See id. at 501. An
issue of fact is material if “the dispute is over facts that might affect the outcome of
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the suit, given the applicable law.” Weddum v. Davenport Cmty. Sch. Dist., 750
N.W.2d 114, 117 (Iowa 2008). “An issue of fact is ‘genuine’ if the evidence is such
that a reasonable finder of fact could return a verdict or decision for the nonmoving
party.” Huck v. Wyeth, Inc., 850 N.W.2d 353, 362 (Iowa 2014). “We can resolve
a matter on summary judgment if the record reveals a conflict concerning only the
legal consequences of undisputed facts.” Boelman, 826 N.W.2d at 501. The
burden is on the moving party to show it is entitled to judgment as a matter of law.
Sallee v. Stewart, 827 N.W.2d 128, 133 (Iowa 2013).
With respect to the jury instruction issue, “[l]itigants are entitled to have their
legal theories submitted to the jury if they are supported by the pleadings and
substantial evidence in the record.” Kessler v. Wal-Mart Stores, Inc., 587 N.W.2d
804, 806 (Iowa Ct. App. 1998). Evidence is substantial when reasonable minds
would accept it as adequate to reach the proposed conclusion. See Smith v. Air
Feeds, Inc., 556 N.W.2d 160, 165 (Iowa Ct. App. 1996).
There are seven elements of fraudulent misrepresentation: (1)
representation, (2) falsity, (3) materiality, (4) scienter, (5) intent to deceive, (6)
justifiable reliance, and (7) resulting injury or damage. Air Host Cedar Rapids, Inc.
v. Cedar Rapids Airport Comm’n, 464 N.W.2d 450, 453 (Iowa 1990). Scienter and
intent to deceive are closely related elements of fraudulent misrepresentation, and
the same general analysis applies for each. See Van Sickle Constr. Co. v.
Wachovia Comm. Mortg., Inc., 783 N.W.2d 684, 688 (Iowa 2010). “Scienter and
intent to deceive may be shown when the speaker has actual knowledge of the
falsity of his representations or speaks in reckless disregard of whether those
representations are true or false.” Id. (citation omitted).
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On the summary judgment record, Dr. Milas failed to create a triable issue
of fact on these two elements. There was no evidence in the summary judgment
record showing the defendants made a false representation, had actual knowledge
of a false representation, or spoke in reckless disregard of whether any
representation was true or false. The fact that Society Insurance’s employee,
Angela Bonlander, knew the claim would be submitted to a bill review company
does not by itself show a misrepresentation because, notwithstanding a contract
obligation to pay a sum certain, there is no harm in later asking if a contract obligee
is willing to take a lower payment.
“Speculation is not sufficient to generate a genuine issue of fact.” Hlubek
v. Pelecky, 701 N.W.2d 93, 96 (Iowa 2005). In the absence of any evidence from
which a jury could infer scienter and intent to deceive, the district court correctly
granted summary judgment. See, e.g., Cannon v. Bodensteiner Implement Co.,
No. 15-0741, 2017 WL 1086787, at *4 (Iowa Ct. App. Mar. 22, 2017) (affirming
dismissal of fraudulent misrepresentation claim where there were “no facts
supporting the scienter and intent elements of [the] claim or creating a genuine
issue material fact as to those elements”); Polar Insulation v. Garling Constr., Inc.,
No. 15-1051, 2016 WL 6396208, at *3 (Iowa Ct. App. Oct. 26, 2016) (affirming
dismissal of fraudulent misrepresentation claim on summary judgment where claim
was “largely an extension of [the plaintiff’s] breach-of-contract claim in that
[plaintiff] claims [defendants] intended to deceive by not paying” and noting the
“[f]ailure to fulfill obligations under a contract does not necessarily support a claim
for fraudulent misrepresentation”); Scholapkohl v. Am. Family Mut. Ins. Co., No.
15-1612, 2016 WL 5407957, at *8 (Iowa Ct. App. Sept. 28, 2016) (affirming
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summary judgment where there was no evidence of intent to deceive regarding
the terms of an insurance contract); D & W Dev., Inc. v. City of Milford, No. 12-
0579, 2013 WL 2145735, at *6 (Iowa Ct. App. May 15, 2013) (affirming dismissal
of fraudulent misrepresentation claim where there was no evidence of scienter or
intent to deceive).
Nor did substantial evidence support submission of this theory to the jury.
No evidence was presented at trial to establish scienter and intent to deceive. Dr.
Milas makes much of Bonlander’s testimony. She was asked, “You never told Dr.
Milas that you intended on negotiating his fees, true?” She replied in the
affirmative. But her testimony is not substantial evidence of fraudulent
misrepresentation. It is consistent with her testimony that she only authorized the
surgery but did not agree to the fee. She understood Dr. Milas to have the same
understanding. The district court did not err in declining to instruct the jury on the
fraudulent misrepresentation claim.
III.
Dr. Milas requested the jury be instructed on punitive damages. The court
declined to give the instruction. Dr. Milas appeals that decision. We review the
failure to give a jury instruction for correction of error at law. See Beyer v. Todd,
601 N.W.2d 35, 38 (Iowa 1999). Failure to give jury instructions on issues
supported by substantial evidence is error. See Meck v. Iowa Power & Light Co.,
469 N.W.2d 274, 276 (Iowa Ct. App. 1991). Instructional error warrants reversal if
it resulted in prejudice. See Rudolph v. Iowa Methodist Med. Ctr., 293 N.W.2d
550, 555 (Iowa 1980).
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Punitive damages may not be awarded unless the jury finds “by a
preponderance of clear, convincing, and satisfactory evidence, the conduct of the
defendant from which the claim arose constituted willful and wanton disregard for
the rights or safety of another.” Iowa Code § 668A.1 (2013). When the claim for
punitive damages arises out of a contract action, an award of punitive damages is
allowed only “when the breach (1) constitutes an intentional tort, and (2) is
committed maliciously, in a manner that meets the standards of Iowa Code section
668A.1 (1993).” Magnusson Agency v. Pub. Entity Nat’l Co-Midwest, 560 N.W.2d
20, 29 (Iowa 1997). Legal malice is conduct exhibiting “willful and wanton
disregard for the rights or safety of another.” Schultz v. Sec. Nat’l Bank, 583
N.W.2d 886, 888 (Iowa 1998).
We cannot conclude the district court erred in declining to instruct the jury
on punitive damages. There is not substantial evidence in support of such an
instruction. Society Insurance’s use of a third-party audit service to advise on fees
and negotiate fee payment does not constitute an independent tort. Similarly, the
decision to negotiate fees is not evidence of legal malice. The mere fact the jury
found a breach of contract here is insufficient to require an instruction on punitive
damages. See Hansen Co. v. Rednet Env. Servs., L.L.C., No. 16-0735, 2017 WL
4570406, at *4–7 (Iowa Ct. App. Oct. 11, 2017); Polar Insulation, 2016 WL
6396208, at *4 (affirming decision to not instruct the jury on punitive damages for
a claim of breach of contract).
IV.
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In his last claim of error, Dr. Milas contends the trial judge should have
recused himself from this proceeding. Prior to the second trial, Dr. Milas filed a
motion for recusal. Dr. Milas argued the court should have recused itself because
the court had an ex parte communication with Society Insurance’s counsel,
because the court “showed an unfavorable disposition towards” Dr. Milas and Dr.
Milas’s counsel, and because the court “made a clear evidentiary error” against
Dr. Milas. The district court denied the motion for recusal.
The burden of showing grounds for recusal is on the party seeking recusal.
See Campbell v. Quad City Times, 547 N.W.2d 608, 611 (Iowa Ct. App. 1996).
This burden is substantial, and we will not overturn the trial judge’s decision absent
an abuse of discretion. See State v. Millsap, 704 N.W.2d 426, 432 (Iowa 2005).
To show an abuse of discretion, a party must show the court exercised its
discretion “on grounds or for reasons clearly untenable or to an extent clearly
unreasonable.” In re Estate of Olson, 479 N.W.2d 610, 613 (Iowa Ct. App. 1991).
The Iowa Code of Judicial Conduct provides, “A judge shall uphold and
apply the law, and shall perform all duties of judicial office fairly and impartially.”
Iowa Code of Judicial Conduct R. 51:2.2. “A judge shall disqualify himself or
herself in any proceeding in which the judge’s impartiality might reasonably be
questioned . . . .” Iowa Code of Judicial Conduct R. 51:2.11(A). The Iowa Code
of Judicial Conduct enumerates certain circumstances in which the judge must
recuse himself. See Iowa Code of Judicial Conduct R. 51:2.11(A)(1)-(6). One
such circumstance is when the “judge has a personal bias or prejudice concerning
a party or a party’s lawyer, or personal knowledge of facts that are in dispute in the
proceeding.” Iowa Code of Judicial Conduct R. 51:2.11(A)(1). The enumerated
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circumstances are nonexclusive, however, and the judge is disqualified “whenever
the judge’s impartiality might reasonably be questioned.” Iowa Code of Judicial
Conduct R. 51:2.11 cmt. 1. “Before recusal is necessary, actual prejudice must be
shown.” State v. Biddle, 652 N.W.2d 191, 198 (Iowa 2002).
The record shows Society Insurance’s counsel did have a brief ex parte
communication with the court during the course of trial for the purpose of informing
the court counsel wanted to make a record on an issue. The communication was
permissible, routine, and not cause for concern. See Iowa Code of Judicial
Conduct R. 51:2.9 (allowing “ex parte communication for scheduling . . . provided
. . . the judge makes provision promptly to notify all other parties of the substance
of the ex parte communication and gives the parties an opportunity to respond”).
The court immediately notified Dr. Milas’s counsel of the substance of the
communication and gave his counsel an opportunity to respond. This incident
does not serve as grounds for recusal.
Dr. Milas also contends the district court showed an unfavorable disposition
toward Dr. Milas and his counsel. At one point during trial, outside of the presence
of the jury, the court said, “[Counsel], it appears to me that Dr. Milas is kind of
staring me down. I—it’s very uncomfortable.” The remainder of the evidence on
this point consists of counsel’s affidavit stating the district court’s tone and
temperament were inappropriate, without providing detail.
Dr. Milas also contends the court made an evidentiary error by admitting a
record that contained hearsay. Dr. Milas does not challenge the admission of the
exhibit by itself; he merely challenges the court’s impartiality, citing the admission
of this exhibit as proof of bias. Assuming without deciding the court did make an
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evidentiary error, that alone is not proof of any bias, and it would not cause a
reasonable person to question the court’s impartiality.
With respect to these last two points, we cannot conclude the district court
abused its discretion in denying the motion. The judge has the duty to decide. The
judge is duty-bound to “hear and decide matters assigned to the judge, except
when disqualification is required by rule 2.11 or other law.” Iowa Code of Judicial
Conduct R. 51:2.7.
Judges must be available to decide the matters that come
before the court. Although there are times when disqualification is
necessary to protect the rights of litigants and preserve public
confidence in the independence, integrity, and impartiality of the
judiciary, judges must be available to decide matters that come
before the courts. Unwarranted disqualification may bring public
disfavor to the court and to the judge personally.
Iowa Code of Judicial Conduct R. 51:2.7 cmt. 1. It has thus been observed that
mere speculation of partiality is not sufficient; “[t]here is as much obligation for a
judge not to recuse when there is no occasion for him to do so as there is for him
to do so when there is.” Hinman v. Rogers, 831 F.2d 937, 939 (10th Cir. 1987).
Here, Dr. Milas’s claims are mere speculation unsupported by the record. See,
e.g., In re Marriage of McGruder, No. 06-1089, 2007 WL 3376899, at *4 (Iowa Ct.
App. Nov. 15, 2007) (affirming denial of request for recusal where counsel
complained of the judge’s tone and tenor). There was no basis for the district court
judge to ignore the duty to decide. We affirm the district court’s denial of Dr. Milas’s
motion for recusal.
V.
For the foregoing reasons, we affirm the judgment of the district court.
AFFIRMED.
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