Hawkeye Land Company v. ITC Midwest LLC et al
Filing
18
MEMORANDUM OPINION AND ORDER granting in part and denying in part 6 Motion to Dismiss. Defendants' motion to dismiss ITC Holdings from this petition is granted, as it is shielded by the limited liability laws of Iowa and the specific facts alleged to support liability on behalf of ITC Holdings were negligible. See order text for details. Signed by Judge Mark W Bennett on 8/11/2015. Order and CM-ECF sign up form emailed to attny Potter. (src)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CENTRAL DIVISION
HAWKEYE LAND COMPANY,
No. C 15-3119-MWB
Plaintiff,
vs.
ITC MIDWEST LLC and ITC
HOLDINGS, CORP.,
Defendants.
MEMORANDUM OPINION AND
ORDER DENYING IN PART AND
GRANTING IN PART
DEFENDANTS’ MOTION TO
DISMISS
___________________________
TABLE OF CONTENTS
I.
FACTUAL AND PROCEDURAL BACKGROUNDS ................................ 2
II.
ISSUES ....................................................................................... 4
III.
DISCUSSION................................................................................ 4
A.
Standard Of Review For Motion To Dismiss .................................. 4
B.
Unreasonable Interference With Private Property ........................... 6
C.
Tortious Interference With Prospective Economic Benefit ............... 10
D.
Malicious Prosecution ........................................................... 15
E.
Abuse Of Process ................................................................. 19
F.
Claim For Attorneys’ Fees ...................................................... 22
G.
Whether To Dismiss ITC Holdings From This Litigation................. 24
IV.
CONCLUSION ............................................................................ 27
In this Memorandum Opinion and Order, I address the motion to dismiss filed by
the defendants, ITC Midwest LLC (ITC Midwest) and ITC Holdings Corp. (ITC
Holdings), on June 11, 2015 (docket no. 6). Defendants move to dismiss, with prejudice,
Counts III-VI of the plaintiff’s petition, the claim for attorneys’ fees, and ITC Holdings
from this action.
I.
FACTUAL AND PROCEDURAL BACKGROUNDS
Plaintiff Hawkeye Land Company (Hawkeye), is an Iowa corporation that “owns
the right to sell easements across active railroad tracks,” in certain areas in the Midwest,
including Franklin County, Iowa. See Plaintiff’s Resistance (docket no. 9), 3; see also
Hawkeye Land Co. v. Iowa Utils. Bd., 847 N.W.2d 199, 201 (Iowa 2014).
The
defendants are ITC Midwest, a Michigan limited liability company, and ITC Holdings,
a Michigan corporation. Plaintiff’s Resistance Brief at 3. ITC Midwest is an independent
electric transmission company, and ITC Holdings is the parent company and sole member
of ITC Midwest. See id. at 2–3, 18; see also Hawkeye Land Co., 847 N.W.2d at 201.
The present dispute arose in 2009 when the Iowa Utilities Board (IUB) permitted ITC
Midwest to use a railroad-crossing statute (crossing statute), Iowa Code § 476.27,1 to
construct three 161 kilovolt transmission lines on Hawkeye’s property in Franklin
County, Iowa. Hawkeye Land Co., 847 N.W.2d at 201.
On August 7, 2009, Hawkeye contested ITC Midwest’s actions by filing a
complaint with the IUB. Id. An Administrative Law Judge (ALJ) rejected Hawkeye’s
1
The crossing statute allows public utilities to follow a “pay-and-go” procedure—that is,
a utility pays the property owner $750.00 for each crossing. See Hawkeye Land Co.,
847 N.W.2d at 203, 205. The crossing statute was used by the defendants when they
sent a crossing-statute notice to Hawkeye along with $750.00 per crossing.
2
claims in a proposed decision on October 14, 2010: it “upheld the use of the pay-and-go
procedure and denied compensation beyond the $750.00 per crossing.” Id. at 201, 205.
Hawkeye appealed the ALJ’s proposed decision to the IUB.
“IUB, asserting
interpretative authority over section 476.27, reached the same conclusions in its final
decision, and the district court affirmed on judicial review.” Id. at 201, 206. Hawkeye
appealed, and the Iowa Supreme Court retained the appeal.
The Iowa Supreme Court summarized Hawkeye’s contentions on appeal as
follows: “[Hawkeye] contends the crossing statute does not apply to it or to ITC Midwest,
because [Hawkeye] is not a ‘railroad’ and ITC Midwest is not a ‘public utility’ within the
meaning of the statute”; $750.00 per crossing of Hawkeye’s easement is “not just
compensation”; and “the pay-and-go procedure [under the crossing statute] is
unconstitutional under the takings clause of article I, section 18 of the Iowa Constitution.”
Id.
After thoroughly analyzing the parties’ arguments, the Iowa Supreme Court
determined: (1) the IUB lacks interpretive authority as to the crossing statute, Iowa Code
§ 476.27; (2) Hawkeye is a railroad corporation’s successor in interest under the crossing
statute and, thus, the statute applies to Hawkeye’s easement-crossing rights; and (3) ITC
Midwest is not a public utility company within the meaning of the crossing statute,2 and
thus, it is not permitted to use the pay-and-go procedure. Hawkeye Land Co., 847
N.W.2d at 209, 213, 219. After the case was remanded to the IUB by the district court,
the IUB ordered that its prior orders be vacated in accordance with the Iowa Supreme
2
As the defendants point out, since the decision of Hawkeye Land, the Iowa legislature,
during the next legislative session, “amended the Crossing Statute to include an
‘independent transmission company’ (such as [ITC Midwest]) as a ‘public utility’
authorized to use the Crossing Statute.” Defendants’ Reply Brief (docket no. 17), 2
(citing IOWA CODE §§ 476.27(1)(d)-(e)).
3
Court’s decision. See In Re: Hawkeye Land Co. v. ITC Midwest LLC, No. FCU-20090006, 2014 WL 4374058, *5–*6 (Iowa U.B. Aug. 29 2014) (slip op.).
Following the Iowa Supreme Court’s decision, on June 6, 2015, Hawkeye filed a
six-count petition (docket no. 4) in Franklin County, Iowa District Court, against ITC
Midwest and ITC Holdings regarding the same three railroad crossings. Hawkeye alleged
counts of (1) trespass; (2) unjust enrichment; (3) unreasonable interference with private
property; (4) tortious interference with prospective economic benefit; (5) malicious
prosecution; and (6) abuse of process. On June 5, 2015, the defendants removed this
case to the United States District Court for the Northern District of Iowa (docket no. 1).
On June 11, 2015, the defendants filed a motion to dismiss Counts III-VI of Hawkeye’s
petition, Hawkeye’s claim for attorneys’ fees, and ITC Holdings from this litigation.
Hawkeye filed its resistance brief on June 24, 2015 (docket no. 9), following which the
defendants filed their reply brief on July 6, 2015 (docket no. 17).
II.
ISSUES
In this Memorandum Opinion and Order, I address whether Hawkeye has stated
claims upon which relief may be granted as to its claims for: (1) unreasonable interference
with private property (Count III); (2) tortious interference with prospective economic
benefit (Count IV); (3) malicious prosecution (Count V); (4) abuse of process (Count
VI); (5) attorneys’ fees; and (6) relief against ITC Holdings. I also address whether oral
argument is necessary in this case.
III.
A.
DISCUSSION
Standard Of Review For Motion To
Dismiss
The defendants move to dismiss Hawkeye’s action pursuant to Federal Rule of
Civil Procedure 12(b)(6). Rule 12(b)(6) authorizes a pre-answer motion to dismiss for
4
“failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6).
As the Eighth Circuit Court of Appeals has explained,
We review de novo the district court’s grant of a motion to
dismiss, accepting as true all factual allegations in the
complaint and drawing all reasonable inferences in favor of
the nonmoving party. See Palmer v. Ill. Farmers Ins. Co.,
666 F.3d 1081, 1083 (8th Cir. 2012); see also FED. R. CIV.
P. 12(B)(6). “To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to
state a claim to relief that is plausible on its face.” Ashcroft
v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d
868 (2009) (internal quotation omitted). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id.
Richter v. Advance Auto Parts, Inc., 686 F.3d 847, 850 (8th Cir. 2012); accord Freitas
v. Wells Fargo Home Mortg., Inc., 703 F.3d 436, 438 (8th Cir. 2013) (quoting Richter,
686 F.3d at 850); Whitney v. Guys, Inc., 700 F.3d 1118, 1128 (8th Cir. 2012) (stating
the same standards).
Courts consider “plausibility” under this Twom-bal standard3 by “‘draw[ing] on
[their own] judicial experience and common sense.’” Whitney, 700 F.3d at 1128 (quoting
Iqbal, 556 U.S. at 679). Also, courts must “‘review the plausibility of the plaintiff’s
claim as a whole, not the plausibility of each individual allegation.’” Id. (quoting Zoltek
Corp. v. Structural Polymer Grp., 592 F.3d 893, 896 n.4 (8th Cir. 2010)). The Eighth
3
The “Twom-bal” standard is my nickname for the “plausibility” pleading standard
established in the United States Supreme Court’s twin decisions on pleading
requirements, and standards for dismissal for failure to state a claim upon which relief
can be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, for
claims in federal court. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct.
1955, 167 L.Ed.2d 929 (2007); see also Iqbal, 556 U.S. at 129 S.Ct. 1937.
5
Circuit Court of Appeals has refused, at the pleading stage, “to incorporate some general
and formal level of evidentiary proof into the ‘plausibility’ requirement of Iqbal and
Twombly.” Id. Nevertheless, the question “is not whether [the pleader] might at some
later stage be able to prove [facts alleged]; the question is whether [it] has adequately
asserted facts (as contrasted with naked legal conclusions) to support [its] claims.” Id.
at 1129. Thus,
[w]hile this court must “accept as true all facts pleaded by the
non-moving party and grant all reasonable inferences from the
pleadings in favor of the non-moving party,” United States v.
Any & All Radio Station Transmission Equip., 207 F.3d 458,
462 (8th Cir. 2000), “[a] pleading that offers ‘labels and
conclusions’ or ‘a formulaic recitation of the elements of a
cause of action will not do.’” Iqbal, 556 U.S. at 678, 129
S.Ct. 1937 (quoting [Bell Atl. Corp. v.] Twombly, 550 U.S.
[544,] 555, 127 S.Ct. 1955 [(2007)]).
Gallagher v. City of Clayton, 699 F.3d 1013, 1016 (8th Cir. 2012); Whitney, 700 F.3d
at 1128 (stating the same standards).
With the above standards in mind, I turn to consider the defendants’ motion to
dismiss. In each section below, I initially discuss the requirements for the claim at issue,
following which I analyze whether Hawkeye’s factual allegations sufficiently state a
plausible claim.
B.
Unreasonable Interference With
Private Property
The first issue I consider is whether Hawkeye has stated a claim upon which relief
may be granted as to its claim for unreasonable interference with private property.
According to the defendants, “[a]n action for unreasonable interference with private
6
property is a private nuisance action, as distinguished from a trespass claim.”4
Defendants’ Brief In Support Of Defendants’ Motion To Dismiss (docket no. 6-1), 7
(citing Bates v. Quality Ready-Mix Co., 154 N.W.2d 852, 857 (Iowa 1967)). The
defendants argue that the plaintiffs’ allegations in Count III of their complaint do not
support a nuisance claim because Hawkeye has failed to allege “any intangible invasion
of its property,” such as offensive smells or noises, pollution, etc. Id. at 8. The
defendants contend Hawkeye has merely reasserted its trespass claim. Id. Hawkeye
responds by arguing that it “alleged an actionable unreasonable interference with private
property claim (‘abusive condemnation’) upon which relief can be granted in Count III,
and therefore, the Court should not dismiss it.”5 Plaintiff’s Resistance Brief at 8. In
4
“The term ‘private nuisance’ refers to the (private) interests invaded.” Ryan v. City of
Emmetsburg, 4 N.W.2d 435, 438 (Iowa 1942).
5
Hawkeye relabeled its “unreasonable interference with private property” claim as
“abusive condemnation”:
Hawkeye has alleged an actionable unreasonable interference
with private property claim (“abusive condemnation”) upon
which relief can be granted in Count III, and therefore, the
Court should not dismiss it. Count III is a valid claim for
abusive condemnations, which is a distinct cause of action in
Iowa. See generally Nadler v. Mason, 387 N.W.2d 587 (Iowa
1986); Osborn v. City of Cedar Rapids, 324 N.W.2d 471
(Iowa 1982); Skaff v. Sioux City, 168 N.W 2d 789 (Iowa
1969).
Plaintiff’s Resistance Brief at 8. None of the authorities cited by Hawkeye use the
“abusive condemnation” language. Nor did I find any Iowa case law employing those
terms. The defendants are correct that the cases relied on by Hawkeye—Nadler, Osborn,
and Skaff—involve distinguishable facts where city defendants “repeatedly started, then
stopped the condemnation process, until either the city completed condemnation or the
plaintiff landowner brought a mandamus action to compel condemnation proceedings.”
7
addition, Hawkeye argues that the defendants mislabel Count III as a private nuisance
claim. Id. at 7. Even if I decide that Hawkeye’s claim is a private nuisance claim,
however, Hawkeye argues that it also correctly pled a private nuisance claim.
The Iowa legislature enacted a statutory nuisance provision under Iowa Code
§ 657.1, which is supplemented by the common law of nuisance. Miller v. Rohling, 720
N.W.2d 562, 567 (Iowa 2006). The Iowa legislature defined a “nuisance” under Iowa
Code chapter 657.1 as follows:
Whatever is injurious to health, indecent, or unreasonably
offensive to the senses, or an obstruction to the free use of
property, so as essentially to interfere unreasonably with the
comfortable enjoyment of life or property, is a nuisance[.]
IOWA CODE § 657.1 (emphasis added). Common law principles governing “private
nuisances” supplement the above skeletal statutory provisions:
A private nuisance is “an actionable interference with a
person's interest in the private use and enjoyment of the
person's land.” Parties must use their own property in such
a manner that they will not unreasonably interfere with or
disturb their neighbor’s reasonable use and enjoyment of the
neighbor’s property.
Whether a lawful business is a nuisance depends on the
reasonableness of conducting the business in the manner, at
the place, and under the circumstances in question. Thus the
existence of a nuisance does not depend on the intention of
Defendants’ Brief at 2. The defendants are not municipalities or governmental bodies
and Hawkeye did not assert a mandamus action to compel condemnation proceedings by
the defendants. See Phelps v. Board of Sup’res of Muscatine County, 211 N.W.2d 274,
276 (Iowa 1973) (“We have held on a number of occasions that mandamus is a proper
remedy to compel condemnation when there has been a taking of private property for
public use without just compensation.”) (citations omitted). In agreement with the
defendants, Hawkeye’s unreasonable interference with private property claim is a private
nuisance cause of action.
8
the party who created it. Rather, it depends on the following
three factors: priority of location, the nature of the
neighborhood, and the wrong complained of.
Perkins v. Madison County Livestock & Fair Ass’n, 613 N.W.2d 264, 271 (Iowa 2000)
(quoting Weinhold v. Wolff, 555 N.W.2d 454, 459, in turn quoting Bates, 154 N.W.2d
at 857). “From this discussion, it is clear that whether a party has created and maintained
a nuisance is ordinarily a factual question.” Weinhold, 555 N.W.2d at 459 (citing Bates,
154 N.W.2d at 857).
Nuisance and trespass are related doctrines, but there are differences between
them. On the one hand, a claim of trespass involves “an actionable invasion of interests
in the exclusive possession of land,” and “an actual invasion by tangible matter.” Ryan,
4 N.W.2d at 438. On the other hand, a claim of nuisance is “an actionable invasion of
interests in the use and enjoyment of land,” the invasion “is usually by intangible
substances, such as noises or odors,” and “[i]t usually involves the idea of continuance
or recurrence over a considerable period of time.”
Id.
Despite these understood
differences, the Iowa Supreme Court has explained, “[t]he line of demarcation between
private nuisance and trespass is not always clear.” Id. at 438–39. A trespass and a
nuisance can arise from the same occurrence (e.g., cases involving the flooding of land),
and “[i]n some instances trespasses of continuing character have been dealt with as
nuisances.” Id. at 439.
In this case, ITC Midwest’s three power lines, which constitute tangible matter,
physically cross Hawkeye’s property. Hawkeye purchased the real estate before the
defendants constructed the power lines. Although recognizing a nuisance generally
involves intangible substances, Hawkeye cites the less common nuisance cases involving
tangible substances, such as dust. Plaintiff’s Resistance Brief at 9–10 (citing Miller, 720
N.W. at 565; Bates, 154 N.W.2d at 858). I also note that this case is not unlike the
9
example in which person A’s tree branches and roots constitute a private nuisance by
encroaching onto person B’s property. See, e.g., Lane v. W.J. Curry & Sons, 92 S.W.3d
355, 366 (Tenn. 2002) (finding defendant’s tree constituted a private nuisance where it
“adversely affected the plaintiff’s reasonable and ordinary use and occupation of her
home, not to mention pos[ed] hazards to the plaintiff’s health and safety.”).6 Hawkeye
alleges in its petition that its real estate was being used to develop utility projects. Id. at
10. By erecting the three power lines, the defendants have, according to Hawkeye,
substantially interfered with Hawkeye’s use and enjoyment of its private property. Id.
This is because Hawkeye is unable to “develop[ ] its property as it pleases.” Id. Hawkeye
also pled that the power lines have remained on its property, without its permission, for
a continuing period of six years. Id. at 8, 10.
Hawkeye has sufficiently pled facts to state a claim for unreasonable interference
with private property. Thus, defendants’ motion to dismiss Count III is denied.
C.
Tortious Interference With Prospective
Economic Benefit
The second issue I consider is whether Hawkeye has stated a claim upon which
relief may be granted as to its claim for tortious interference with prospective economic
benefit. The defendants argue Hawkeye’s factual allegations are “deficient” as to each
6
The Supreme Court of Tennessee noted that “Tennessee’s definition of private nuisance
is typical of how most states have defined the tort, both now and in the past.” Lane, 92
S.W.3d at 365; see also RESTATEMENT (SECOND) OF TORTS § 821D (1979). In Lane, it
was held that the defendant’s trees satisfied Tennessee’s definition of a private nuisance,
i.e., “‘anything which annoys or disturbs the free use of one’s property, or which renders
its ordinary use or physical occupation uncomfortable . . . [and] extends to everything
that endangers life or health, gives offense to the senses, violates the laws of decency, or
obstructs the reasonable and comfortable use of property.’” Lane, 92 S.W.3d at 364
(citation omitted).
10
element of its tortious interference claim. Defendants’ Brief at 9. In reply, Hawkeye
makes the case that it sufficiently pled facts, which allow me to draw the reasonable
inference that the defendants intentionally interfered with Hawkeye’s prospective
business relations. See Plaintiff’s Resistance Brief at 12. Thus, Hawkeye contends,
Count IV of their petition should not be dismissed. See id.
The parties agree that, under Iowa law, there are five elements of a claim for
tortious interference with prospective economic benefit:
1. A prospective contractual or business relationship;
2. the defendant knew of the prospective relationship;
3. the defendant intentionally and improperly interfered with
the relationship;
4. the defendant’s interference caused the relationship to fail
to materialize; and
5. the amount of resulting damages.7
Iowa Coal Min. Co., Inc. v. Monroe County, 555 N.W.2d 418, 438 (Iowa 1996). The
Iowa Supreme Court has “recognized the tort of interference with prospective business
advantage, explaining that Iowa law thereby protects expectancies of future contractual
7
Tortious interference with prospective economic benefit is a recognized tort in Iowa.
See Clarke v. Figge, 181 N.W.2d 211, 213 (Iowa 1970) (noting that “the doctrine [for
interference with prospective business relationships] is an extension of the rule imposing
liability for inducing breaches of existing contracts[.])” This tort goes by other labels,
including the tort of “interference with prospect advantage” and “interference with
reasonable economic expectancies[.]” Id. (citations omitted). The main difference
between the theories of intentional interference with existing contracts and intentional
interference with prospective business relationships is “the nature and degree of proof
required on the element of motive.” Burke v. Hawkeye Nat. Life Ins. Co., 474 N.W.2d
110, 114 (Iowa 1991). “In a claim of intentional interference with a prospective business
advantage, plaintiff must prove that the defendant intended to financially injure or destroy
the plaintiff.” Id. (citations omitted). By contrast, “[i]n cases of interference with
existing contracts, proof of such purpose is not essential.” Id. (citations omitted).
11
relations such as the ‘opportunity of obtaining customers.’” North v. State, 400 N.W.
2d 566, 569 (Iowa 1987) (citations omitted); see also Page County Appliance Ctr. v.
Honeywell, 347 N.W.2d 171, 177 (Iowa 1984).
The parties’ briefs focus primarily on the first element of Hawkeye’s tortious
interference with prospective economic benefit claim. Relying on Nesler v. Fisher and
Co., 452 N.W.2d 191, 198–99 (Iowa 1990), the defendants argue that the “plaintiff must
identify the third party with whom there was a prospective business or contractual
relationship for the first element to be satisfied.” Defendants’ Brief at 9. In response,
Hawkeye admits that, in Nesler, 452 N.W.2d at 198–99, the case relied upon by the
defendants, the jury instructions required “a third-party’s name,” but that “case does not
require such specificity in the mere pleadings.” Plaintiff’s Resistance Brief at 11. In
addition, in Nesler, Hawkeye asserts that the Iowa Supreme Court “found it proper to
submit the issue [of whether the defendants tortiously interfered with prospective business
contracts] to the jury without identifying the potential future investors who could not have
been known at the time of the tortious conduct.” Id. (citing Nesler, 452 N.W.2d at 195–
96).
In Hagen v. Siouxland Obstetrics & Gynecology, P.C., 934 F.Supp.2d 1026, 1049
(N.D. Iowa 2013), a case that recently came before me, the parties similarly disputed
whether the plaintiff “provided sufficient evidence of identifiable third parties” in relation
to the plaintiff’s tortious interference with prospective business advantage claim. Id.
There, I explained that “the Iowa Supreme Court has not specifically addressed this
element of the cause of action.” Id. However, other courts in different jurisdictions
persuasively addressed the issue, and I noted that “[i]n making a claim for tortious
interference with prospective business relationships, it has been held that the prospective
relationship may be with an identifiable class of third persons, not just an identified third
person.” Id. (citing Hayes, M.D. v. Northern Hills General Hospital, 590 N.W.2d 243,
12
250 (S.D. 1999); Lamdin v. Aerotek Commercial Staffing, 2010 WL 3896154, *6 (E.D.
Tenn. 2010)). As I further explained in Hagan, in Hayes, the Supreme Court of South
Dakota found that requiring third parties to be identified by name “‘would render the tort
for the most part, a nullity and, in all actuality, never allow a plaintiff to proceed with its
claim beyond summary judgment especially if the business enterprise is dependent upon
a large pool of clientele.’” Id. (quoting Hayes, M.D., 590 N.W.2d at 250). Hawkeye
has pled sufficient facts as to its prospective business relationships with third parties to
develop utility projects on its property in Franklin County, Iowa, which constitutes “an
identifiable class of third persons.” See id. Thus, I find that the first element was
sufficiently pled at the motion to dismiss stage.
As to the second element, the defendants contend that Hawkeye failed to allege
that ITC had knowledge of “any prospective contract.” Defendants’ Brief at 9. In reply,
Hawkeye directs my attention to an Iowa Supreme Court decision, Revere Transducers,
Inc. v. Deere & Co., 595 N.W.2d 751, 764 (Iowa 1999), and interprets it to mean that
“knowledge of a specific contract is not necessary to support a cause of action even in
the context of interference with an existing contract.” Plaintiff’s Resistance Brief at 11.
In Nesler, the Iowa Supreme Court found that this second element was met by a showing
that the defendants “had reason to know” of potential contracts and a “binding contract”
was unnecessary for a claim of interference with prospective business advantage. Nesler,
452 N.W.2d at 196; see also Tompkins Lawncare, Inc. v. Bucholz, No. 03-1284, 2005
WL 597016, *2 (Iowa Ct. App. 2005) (unpublished op.). Here, the defendants were
allegedly aware of Hawkeye’s use of its property to develop competing power lines and
get paid by third parties. See Plaintiff’s Resistance Brief at 12. Therefore, ITC Midwest,
an experienced independent transmission company, either knew or “had reason to know”
of potential business relations and contracts Hawkeye may have formed. Nesler, 452
N.W.2d at 196. Thus, I find that the second element was sufficiently pled.
13
As to the third element, the defendants argue that Hawkeye failed to provide
sufficient facts to support the assertion that the defendants “‘intentionally and improperly
interfered’” with one of Hawkeye’s economic relationships. Defendants’ Brief at 9.
Hawkeye failed to allege, the defendants contend, “how [the defendants] interfered, what
[the defendants] interfered with or how it was improper.” Id. According to Hawkeye,
its projects depend on its real estate, and the defendants’ power lines interfere with every
potential user. Plaintiff’s Resistance Brief at 12. In further support of its allegations,
Hawkeye persuasively argues that it pled to “own[ing] real estate,” the defendants
“intentionally ignored relevant law to install power lines on that real estate to injure
Hawkeye,” and the defendants know of “Hawkeye’s use to develop competing power
lines and be paid by third parties[.]” Id. The above facts support Hawkeye’s assertion
that the defendants acted with a purpose to financially “injure or destroy Hawkeye.”
Plaintiff’s Petition at 5. This is because, first, the defendants allegedly knew their
intrusions onto Hawkeye’s property would interfere with other prospective projects by
paying third parties on that property, and, second, Hawkeye would only receive a nominal
fee of $750.00 for each of the defendants’ three crossings based on the defendants’ use
of the crossing statute, Iowa Code § 476.27. See Iowa Coal Min. Co., Inc., 555 N.W.2d
at 438 (noting that the third element requires “proof that the defendant intended to
financially injure or destroy the plaintiff.” (citing Burke, 474 N.W.2d at 115)).
Hawkeye’s pled facts are sufficient to infer that the defendants “intentionally and
improperly interfered” with Hawkeye’s prospective economic relationships. Thus, I find
that the third element was sufficiently pled.
As to the fourth element, the defendants contend that Hawkeye failed to allege that
the defendants caused a third party not to form a contractual or business relationship with
Hawkeye. Defendants’ Brief at 9. Hawkeye counters that the defendants’ trespasses
onto Hawkeye’s property “substantially interfered” with the development of competing
14
power line projects, which caused Hawkeye to lose business opportunities. Plaintiff’s
Resistance Brief at 12. To put it another way, as a consequence of the defendants building
power lines on Hawkeye’s property, the defendants caused other projects that may have
developed on Hawkeye’s property to “fail to materialize.” See Id.; see also Iowa Coal
Min. Co., Inc., 555 N.W.2d at 438. These factual allegations convince me that the fourth
element was sufficiently pled.
Finally, as to the fifth element, Hawkeye alleged that it incurred damages from
the above described lost business opportunities.
The defendants do not contest
Hawkeye’s factual allegations concerning the fifth element. Based on the facts alleged,
I find that the fifth element was sufficiently pled.
For the above reasons, I conclude Hawkeye has sufficiently pled facts to state a
claim for tortious interference with prospective business relations.
Therefore,
defendants’ motion to dismiss Count IV is denied.
D.
Malicious Prosecution
The third issue I consider is whether Hawkeye has stated a claim upon which relief
may be granted as to its claim for malicious prosecution. Pursuant to Rule 12(b)(6),
defendants contend that Hawkeye’s malicious prosecution claim fails “as a matter of
law.” Defendants’ Brief at 11. Hawkeye responds by asserting that it has brought an
“actionable malicious prosecution claim upon which relief can be granted,” and for that
reason, I should not dismiss Hawkeye’s claim. Plaintiff’s Resistance Brief at 12.
The Iowa Supreme Court has articulated six elements for a malicious prosecution
claim. In the words of Iowa’s highest court,
To prevail on a claim for malicious prosecution, the plaintiff
must establish each of the following six elements: (1) a
previous prosecution, (2) instigation of that prosecution by the
15
defendant,8 (3) termination of that prosecution by acquittal or
discharge of the plaintiff, (4) want of probable cause, (5)
malice on the part of defendant for bringing the prosecution,
and (6) damage to plaintiff. Sarvold v. Dodson, 237 N.W.2d
447, 448 (Iowa 1976).
Royce, 423 N.W.2d at 200.
As to the first element, “a previous prosecution,” the Iowa Supreme Court made
clear in Sergeant v. Watson Bros. Transp. Co. that “[t]he prosecution contemplated” in
a malicious prosecution case “is a proceeding of a judicial character.” 52 N.W.2d 86,
91 (Iowa 1952) (emphasis added) (citing C.J.S., Malicious Prosecution, § 5). The Iowa
Supreme Court has defined a “judicial proceeding” as “‘one carried on in a court of
justice [established]9 or recognized by law, wherein the rights of parties which are
8
The second element is quoted in terms of “instigation” of the prior prosecution by the
defendant. This quotation is from Royce v. Hoening, 423 N.W.2d 198, 200 (Iowa 1988),
and is consistent with Wilson v. Hayes, 464 N.W.2d 250, 266 (Iowa 1990). By contrast,
in Whalen and Employers Mut. Cas. Co., the Iowa Supreme Court referred to the second
element of a malicious prosecution claim as follows: “[I]nvestigation of [a previous]
prosecution by the defendant.” Whalen v. Connelly, 621 N.W.2d 681, 687–88 (Iowa
2000) (quoting Employers Mut. Cas. Co. v. Cedar Rapids Television Co., 552 N.W.2d
639, 643 (Iowa 1996)). As I have explained before, the tort requires “instigation,” not
“investigation,” of the prior prosecution by the defendant. See Jensen v. Barlas, 438
F.Supp.2d 988, 997 n.5 (N.D. Iowa 2006) (discusses the second element and the
“erroneous metamorphosis of the second element” from “instigation” to “investigation”).
9
I edited the quotation from Kennedy because the Iowa Supreme Court misquoted the
definition of “a judicial proceeding,” as it is set forth in Mills, by excluding the word
“established” from the definition, which qualifies “a court of justice.” Compare Kennedy
v. Zimmerman, 601 N.W.2d 61, 65 (Iowa 1999) with Mills v. Denny, 63 N.W.2d 222,
226 (Iowa 1954). While it may have been no more than a scrivener’s error, excluding
the word “established” from the definition of “a judicial proceeding” in Mills would seem
to greatly expand the scope of “a judicial proceeding.”
16
recognized and protected by law are involved and may be determined.”10 Kennedy, 601
N.W.2d at 65 (emphasis added) (quoting Mills, 63 N.W.2d at 226). The Iowa Supreme
Court has further elaborated upon the issue by holding that “a judicial proceeding”
encompasses “quasi judicial proceedings such as those before the industrial
commissioner.” Id. (citing Tallman v. Hanssen, 427 N.W.2d 868, 870 (Iowa 1988)). In
reaching the decision to include the “quasi judicial proceeding” in Tallman under the
definition of “a judicial proceeding,” the Iowa Supreme Court reasoned that a proceeding
before the industrial commissioner is “confrontational and judicial in nature.” Tallman,
427 N.W.2d at 870.
I recognize that, although the IUB is an administrative agency, it “does provide
for true court-like adversarial proceedings,” and “many aspects of IUB proceedings
mirror court proceedings.” Iowa Network Services, Inc. v. Qwest Corp., No. 4:02–CV–
40156, 2002 WL 31296324, 5 n.10 (S.D. Iowa October 9, 2002). However, ITC
Midwest’s invocation of the crossing statute does not share sufficient attributes of a
“judicial proceeding” for purposes of Hawkeye’s malicious prosecution claim. ITC
Midwest was merely seeking to determine if it constituted a public utility and obtain
permission from the IUB to cross railroad tracks. ITC Midwest did not utilize the
10
The Iowa Supreme Court has only defined “a judicial proceeding” in the context of an
attorney’s “judicial proceeding privilege.” The “judicial proceeding privilege” is defined
by the Restatement (Second) of Torts section 586:
An attorney at law is absolutely privileged to publish
defamatory matter concerning another in communications
preliminary to a proposed judicial proceeding, or in the
institution of, or during the course and as part of, a judicial
proceeding in which he participates as counsel, if it has some
relation to the proceeding.
Kennedy, 601 N.W.2d at 64 (quoting RESTATEMENT (SECOND) OF TORTS § 586 (1977)).
17
procedures that “mirror court proceedings” available before the IUB. Importantly, it
was Hawkeye, not the defendants, who filed the complaint with the IUB. As the Iowa
Supreme Court explained,
ITC Midwest complied with the procedures set forth in Iowa
Code section 476.27 and Iowa Administrative Code chapter
199–42. ITC Midwest first obtained permission for the
crossings from IUB. The company then sent engineering
drawings to Union Pacific, which approved the crossing
plans. After receiving this approval, ITC Midwest sent
Hawkeye Land three $750 statutory payments and notification
of the planned crossing construction. Hawkeye Land refused
the tendered payments. ITC Midwest, nevertheless,
proceeded to construct the three crossings as permitted by the
pay-and-go procedure of section 476.27.
On August 7, 2009, Hawkeye Land filed a formal complaint
with IUB regarding these three crossings . . .
Hawkeye Land Co., 847 N.W.2d at 205 (emphasis added). All of these facts persuade
me that ITC Midwest’s use of the crossing statute was not a “proceeding of a judicial
character” and, therefore, the defendants did not bring a previous prosecution against
Hawkeye. Sergeant, 52 N.W.2d at 91.
Because there was not a previous prosecution to form the basis of Hawkeye’s
malicious prosecution action, Hawkeye’s claim must fail.11 It is unnecessary for me to
11
In the alternative, even if ITC Midwest’s invocation of the crossing statute was deemed
a “previous prosecution” and “instigated” by ITC Midwest, ITC Midwest had “probable
cause” to use the crossing statute. This is because both the ALJ, the IUB, and the district
court ruled in ITC Midwest’s favor and approved of ITC Midwest using the pay-and-go
procedure under the crossing statute. See RESTATEMENT (SECOND) OF TORTS § 675(b)
(1977) (“As in the case of the initiation of criminal proceedings, a decision by a competent
tribunal in favor of the person initiating civil proceedings is conclusive evidence of
18
analyze the parties’ arguments as to the remaining elements. Accordingly, I dismiss
Hawkeye’s claim for malicious prosecution.
E.
Abuse Of Process
The fourth issue I consider is whether Hawkeye has stated a claim upon which
relief may be granted as to its claim for abuse of process. Defendants contend that
Hawkeye’s claim for abuse of process is “equally unsustainable,” and it also “fails as a
matter of law.” Defendants’ Brief at 13, 15. Hawkeye counters by arguing that it has
pled sufficient facts to allow me to draw the reasonable inference that the defendants are
liable for abuse of process and, thus, Hawkeye’s claim should not be dismissed.
Plaintiff’s Resistance Brief at 17.
Under Iowa law, to prove a claim of abuse of process, a plaintiff must show: “(1)
use of the legal process, (2) in an improper or unauthorized manner, and (3) that damages
were sustained as a result of the abuse.” Stew-Mc Development, Inc. v. Fischer, 770
N.W.2d 839, 849 (Iowa 2009).
The first two elements of an abuse of process claim
“focus largely on the actual misuse of otherwise properly issued legal process, and are
easily contrasted with the elements of malicious prosecution, which focus primarily on
the malicious institution of criminal proceedings without probable cause.” Tomash v.
John Deere Indus. Equipment Co., 399 N.W.2d 387, 390 (Iowa 1987). However,
probable cause. This is true although it is reversed upon appeal and finally terminated
in favor of the person against whom the proceedings were brought.”); see also Schneider
v. Rodgers, 752 N.W.2d 33, 2008 WL 508481, *3 (Iowa Ct. App. Feb. 27, 2008)
(unpublished op.) (finding that “it was not unreasonable for [the defendant] to make [the
argument claimed to be maliciously prosecuted] in district court,” and reasoned that
“[t]he mere fact that a third judge ultimately rejected this argument,” after two separate
judges agreed with it, did not mean the defendant “did not have probable cause to resort
to a court to settle this dispute.”) Thus, based on the procedural history of this case,
Hawkeye fails to show a lack of probable cause.
19
“[a]buse of process is similar to malicious prosecution in that the basis for both is the
improvident use of the courts.” Wilson, 464 N.W.2d at 266 (citing Note, A Lawyer’s
Duty to Reject Groundless Litigation, 26 WAYNE L.REV. 1561, 1565 (1980)). Moreover,
abuse of process is “‘the use of legal process, whether criminal or civil, against another
primarily to accomplish a purpose for which it was not designed.’” Fuller v. Local Union
No. 106 of United Bhd. Of Carpenters & Joiners of Am., 567 N.W.2d 419, 421 (Iowa
1997) (citing Palmer v. Tandem Mgmt. Servs., Inc., 505 N.W.2d 813, 817 (Iowa 1993)).
The fighting issue, here, is whether the defendants’ use of the crossing statute,
Iowa Code § 476.27, constitutes “use of the legal process” under the first element of
Hawkeye’s abuse of process claim, even though the defendants did not file a formal
complaint with the IUB or a civil lawsuit against Hawkeye in a court of law. To assist
me in my analysis below, I turn to Van Stelton v. Van Stelton, in which I recently
analyzed, in detail, the first element of an abuse of process claim:
The Iowa Supreme Court has also explained that “‘[t]he first
element [of an abuse-of-process claim, use of legal process,]
can generally be shown by the use of a legal process against
the plaintiff.’” [Gibson v. ITT Harford Ins. Co., 621 N.W.2d
388, 398 (Iowa 2001)] (quoting [Wilson, 464 N.W.2d at 266].
The “legal process” in question can be civil or criminal.
Fuller, 567 N.W.2d at 421 (citing Palmer, 505 N.W.2d at
817). Although the Iowa Supreme Court has “not precisely
identified what action constitutes ‘legal process’ sufficient to
satisfy the first element,” see id. at 422, it appears reasonably
clear that actually filing a civil lawsuit against the claimant
would constitute the required “use of legal process” against
the claimant. Cf. id. (concluding that filing a police report
was insufficient, but suggesting that actually filing a criminal
complaint would be sufficient).
994 F.Supp.2d 986, 992 (N.D. Iowa 2014).
20
Defendants rely on Dobratz v. Krier, No. 11–0120, 2011 WL 5867067, *1 (Iowa
Ct. App. Nov. 23, 2011) (unpublished op.), a decision of the Iowa Court of Appeals,
where the appellate court held that a claim for an abuse of process “requires misuse of a
judicial process.” See Defendants’ Brief at 14. At the end of the appellate court’s opinion
in Dobratz, the court concluded by explaining its unwillingness to extend the abuse of
process tort to include the abuse of administrative proceedings:
During oral arguments, plaintiffs acknowledged Rhode Island
is the only state supreme court to expand the abuse of process
tort to administrative proceedings. We concur with the
opinions expressed by the clear majority of the courts and
decline plaintiffs’ request to follow Rhode Island and expand
the tort of abuse of process to include administrative
proceedings. An actionable tort for abuse of process does not
exist in Iowa unless there is some improper use of the process
of the court. Accordingly, plaintiffs’ claim fails.
Dobratz, 2011 WL 5867067 at *4 (emphasis added). Hawkeye replies by citing to
Gibson, 621 N.W.2d at 398–99, and argues that “[t]he Iowa Supreme Court has allowed
abuse of process claims arising out of administrative actions.” Plaintiff’s Resistance Brief
at 16. Hawkeye’s reliance on Gibson is misplaced.
In Gibson, the Iowa Supreme Court held that the issue of whether the claimant
was entitled to punitive damages on his abuse of process claim was for the jury. Gibson,
621 N.W.2d at 399. Gibson does not stand for the proposition that an administrative
procedure will give rise to an abuse of process claim in conflict with the later holding in
Dobratz, 2011 WL 5867067 at *4. Rather, in Gibson, because the defendant did “not
appeal[ ] from the judgment in favor of [the plaintiff] on [the abuse of process claim],”
the Supreme Court did not allow the defendant to “challenge the judgment.” Id. In this
case, ITC Midwest’s use of the crossing statute, as permitted by the IUB, was not a “use
of the process of the court.” See Dobratz, 2011 WL 5867067, *4. Rather, the evidence
21
shows that this case involves ITC Midwest’s use of IUB’s administrative regulations
governing crossings in Iowa. Subsequent litigation was initiated in the court system only
after Hawkeye decided to lodge its formal complaint with the IUB against ITC Midwest.
See Hawkeye Land Co., 847 N.W.2d at 205. The defendants never initiated a civil
lawsuit or filed a complaint with the IUB against Hawkeye. Thus, the first element is
not factually plausible.
For these reasons, Hawkeye has not sufficiently pled facts as to the first element
of its abuse of process claim. I need not consider the remaining elements of this claim.
Hence, Hawkeye’s abuse of process claim is dismissed.
F.
Claim For Attorneys’ Fees
The fifth issue I consider is whether Hawkeye has stated a claim upon which relief
may be granted as to its claim for attorneys’ fees as to all six counts. The crux of the
defendants’ argument is two-fold: (1) no statute or contract provides attorneys’ fees in
this matter and common law attorneys’ fees are not warranted; and (2) “every Court and
administrative agency presented with [Hawkeye’s] fee claim denied it.” Defendants’
Brief at 15–17. In reply, Hawkeye urges that the issue of attorneys’ fees is “not ripe, as
it is unknown at this time whether or not Hawkeye may receive attorneys’ fees.”
Plaintiff’s Resistance Brief at 17. Even if the matter is ripe, Hawkeye argues that the
Iowa Supreme Court in Hawkeye Land Co., 847 N.W.2d at 219, indicated that the issue
of attorneys’ fees will be resolved by later litigation, and Hawkeye is entitled to attorneys’
fees based on “numerous legal theories” at common law. Id. at 18–19.
“Generally, a party has no claim for attorney fees as damages in the absence of a
statutory or written contractual provision allowing such an award.” William v. Sickel,
659 N.W.2d 572, 579 (Iowa 2003) (citing Hockenberg Equipment Co. v. Hockenberg’s
Equipment & Supply Co., 510 N.W.2d 153, 158 (Iowa 1993)). Under common law,
22
“[c]ourts have recognized a rare exception to this general rule, however, ‘when the losing
party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’”
Hockenberg Equipment Co., 510 N.W.2d at 158 (quoting Alyeska Pipeline Serv. v.
Wilderness Soc’y, 421 U.S. 240, 258–59 (1975)). In seeking attorneys’ fees under
common law, a plaintiff “must prove that the culpability of the defendant’s conduct
exceeds the ‘willful and wanton disregard for the rights of another’; such conduct must
rise to the level of oppression or connivance to harass or injure another.” Id. at 159–
160. The decision of whether to award attorneys’ fees “lies within the equitable power
of the court[.]” Id. at 159 (citing Alyeska Pipeline, 421 U.S. at 257–58 n.30).
Here, Hawkeye does not cite to any statutory provisions or a written contract
between the parties authorizing an award of attorneys’ fees. See Plaintiff’s Resistance
Brief at 17–19. Therefore, Hawkeye must prove that its claim for attorneys’ fees is one
of the “rare” instances where common law attorneys’ fees may be awarded.
See
Hockenberg Equipment Co., 510 N.W.2d at 158. In advancing the contention that an
award of common law attorneys’ fees is justified, here, Hawkeye cites to Williams, 659
N.W.2d at 581. In Williams, the Iowa Supreme Court held that the county treasurer’s
conduct of fabricating documents after the start of trial and offering them as evidence at
trial, with the intent to establish her case and defeat counterclaims against her, rose to
the level of justifying attorneys’ fees at common law. Plaintiff’s Resistance Brief at 19.
Drawing parallels to Williams, Hawkeye argues,
It’s completely plausible that the Williams fact pattern would
be analogous to the fact pattern here where Defendants, forprofit entities, falsely asserted that they were a public utility
in order to claim the State’s sovereign power of eminent
domain to take Hawkeye’s Property to financially benefit
themselves from knowingly illegal conduct and at Hawkeye’s
expense.
23
Id. “[A]ccepting as true all factual allegations in the complaint,” as I am required to
when considering a motion to dismiss for failure to state a claim, I find that Hawkeye has
alleged a plausible factual basis as to the defendants’ conduct to support an inference that
this case is a “rare exception” in which recovery of attorneys’ fees may be permissible
under the common law. See Palmer, 666 F.3d at 1083; see also FED. R. CIV. P.
12(B)(6).
In addition, contrary to the defendants’ arguments, the Iowa Supreme Court in
Hawkeye Land Co. did not reject attorneys’ fees for Hawkeye. Rather, as Hawkeye
correctly asserted, the Iowa Supreme Court noted the issue would be resolved later:
“Iowa Code chapter 6B governs the compensation owed Hawkeye for the crossing
easements taken by ITC Midwest, as well as the related claims for attorney fees, costs
and expenses.” Hawkeye Land Co., 847 N.W. at 219; see also Plaintiff’s Resistance
Brief at 18. The Iowa Supreme Court then continued by explaining that “[c]ompensation
and entitlement to fees cannot be determined until the procedures of chapter 6B are
invoked.” Id.; see also IOWA CODE §§ 6B.33–34 (these statutory provisions under Iowa
Code chapter 6B govern the award of costs and attorneys’ fees in condemnation
proceedings). The Iowa Supreme Court’s decision does not forbid Hawkeye’s present
claim for attorneys’ fees based on its six causes of action.
Hawkeye has sufficiently pled facts that may allow me to draw the reasonable
inference that Hawkeye may be entitled to attorneys’ fees from the defendants at common
law. Thus, the defendants’ motion to dismiss is denied.
G.
Whether To Dismiss ITC Holdings
From This Litigation
The sixth issue I consider is whether ITC Holdings should be dismissed from this
action. The defendants argue that ITC Holdings should be dismissed from this action
24
because the power lines that Hawkeye complains about are owned and constructed by
ITC Midwest, and only ITC Midwest attempted to use the crossing statute. Defendants’
Brief at 18. “[ITC Midwest] is a Michigan limited liability corporation and ITC Holdings
is its sole member.”12 Id. The defendants cite statutory provisions and case law from
Michigan and Iowa in support of their argument that, as a member of the L.L.C., ITC
Holdings is not liable for the actions of ITC Midwest. Id.
Without citing to any authority, Hawkeye counters that I should not dismiss ITC
Holdings as ITC Holdings is included in each count of Hawkeye’s petition, and ITC
Holdings was engaged in the parties’ previous litigation, which gave rise to several of
Hawkeye’s claims here. “Even if ITC Holdings proves it is not actually engaged in the
illegal activity,” Hawkeye writes, “[ITC Holdings] still knowingly benefits from ITC
Midwest’s illegal activities that harm Hawkeye.” Plaintiff’s Resistance Brief at 20.
Furthering this point, Hawkeye alleges that “ITC Midwest has presumably passed
profits” to ITC Holdings for the six years that ITC Midwest has illegally and freely used
Hawkeye’s property. Id. Those profits, Hawkeye argues, have “unjustly enriched” ITC
Holdings. Id.
“One of the hallmark features of a limited liability company is the limited liability
of its members and managers.” CCS, Inc. v. K & M Enterprises, L.L.C., No. 12–1213,
2013 WL 751284, *2 (Iowa Ct. App. Feb. 27, 2013) (citing IOWA CODE § 489.304
(2009)). “A member or manager is not liable for the ‘debts, obligations, or other
liabilities of a limited liability company, whether arising in contract, tort, or otherwise’
solely by reason of acting as a member or manager.” Id. (citing IOWA CODE § 489.304
12
Elsewhere in the defendants’ brief, they argue that Hawkeye’s petition as to ITC
Holdings should be dismissed “because its only involvement is as the owner (member)
of [ITC Midwest],” and thus it is protected by the limited liability laws in Michigan and
Iowa. Defendants’ Brief at 2.
25
(2009)). Moreover, “[a] limited liability company is an entity distinct from its members.”
IOWA CODE § 489.104 (2009).
There are “exceptional circumstances” when a court will decide to “pierce the veil
of a limited liability company and hold members or managers individually liable.” CCS,
Inc., 2013 WL 751284 at *2. For example, six factors support a court’s decision to
pierce the corporate veil, including: “(1) it is undercapitalized, (2) it is without separate
books, (3) its finances are not separated from individual finances, (4) it pays an
individual’s obligations, (5) it is used to promote fraud or illegality, or (6) it is merely a
sham.” Northeast Iowa Co-Op. v. Lindaman, No. 13–0297, 2014 WL 69605, *9 (Iowa
Ct. App. 2014) (citing Briggs Transp. Co., Inc. v. Starr Sales Co., Inc., 262 N.W.2d
805, 810 (Iowa 1978)); see also Cemen Tech., Inc. v. Three D. Indus., L.L.C., 753
N.W.2d 1, 6 (Iowa 2008) (putting forth the six-step analysis for piercing an L.L.C.’s
veil).
In this case, ITC Holdings is ITC Midwest’s corporate parent, sole member, and
owner, and it is shielded from liability under Iowa Code § 489.104. Hawkeye Land Co.,
847 N.W.2d at 204; see also Defendants’ Reply Brief at 5. Hawkeye made no factual
allegations as to any of the six factors listed above to support a piercing claim. See CCS,
Inc., 2013 WL 751284, at *3 (affirming district court’s decision to grant summary
judgment in favor of individual members of L.L.C. as to their personal liability where
no facts were presented to show a genuine issue as to any of the six factors for piercing
the veil of a limited liability company).
In addition, although ITC Holdings is included in each count of Hawkeye’s
petition, and ITC Midwest’s acts were alleged to “have been through concerted action
with ITC Holdings,” the facts alleged to support liability on behalf of ITC Holdings are
scant. It is merely alleged that ITC Holdings “knowingly benefits from ITC Midwest’s
illegal activities,” and ITC Midwest “presumably passed profits” to ITC Holdings.
26
Plaintiff’s Resistance Brief at 20. Even if it is erroneous to apply the six factors of the
piercing the corporate veil standard, facts as to ITC Holdings’s specific involvement in
ITC Midwest’s construction and operation of the power lines are missing. I am left
questioning whether ITC Holdings supervises any activities of ITC Midwest. Hawkeye
also only equivocally asserts that ITC Holdings “presumably” received profits from ITC
Midwest. Cf. Broadcast Music, Inc. v. Mooney Hollow Saloon LLC, No. C13–1038,
2014 WL 4384323, *2 (N.D. Iowa Sept. 3 2014) (slip op.) (denying motion to dismiss
defendant, a member of an L.L.C., and finding plaintiff’s allegations met Iqbal’s pleading
requirements and stated a plausible claim for individual liability where plaintiff asserted
that defendant had primary responsibility for operation management of L.L.C., had a
right and ability to supervise activities of L.L.C., and had a direct financial interest in
L.L.C.). Agreeing with the defendants, Hawkeye has failed to plead sufficient factual
content as to ITC Holdings’s involvement in this action.
In sum, Hawkeye did not present sufficient factual allegations that allow me to
draw the reasonable inference that ITC Holdings has liability for the counts asserted in
Hawkeye’s petition. Thus, defendants’ motion to dismiss ITC Holdings is granted.
IV.
CONCLUSION
Accordingly, the defendants’ motion to dismiss is granted in part and denied in
part. I grant the defendants’ motion to dismiss Hawkeye’s Counts V and VI, but deny
their motion to dismiss Hawkeye’s Counts III and IV.
Additionally, I deny the
defendants’ motion to dismiss the claim for attorneys’ fees as Hawkeye sufficiently pled
facts for the reasonable inference that attorneys’ fees are recoverable under common law,
and I granted the defendants’ motion to dismiss ITC Holdings from this petition, as it is
shielded by the limited liability laws of Iowa and the specific facts alleged to support
liability on behalf of ITC Holdings were negligible. Pursuant to Local Rule 7(c), I deny
27
the parties’ requests for oral argument because good cause has not been shown for such
a hearing. See Local Rule 7(c). As I have stated before, “the issue on a Rule 12(b)(6)
motion to dismiss for failure to state a claim upon which relief can be granted is not
whether a claimant will ultimately prevail, but whether the claimant is entitled to offer
evidence in support of his, her, or its claims.” Van Stelton, 994 F.Supp.2d at 994 (citing
Scheuer v. Rhodes, 416 U.S. 232, 236 (1973)). I anticipate that, in round two, the
inevitable motions for summary judgment, I will have the opportunity to revisit the
arguments of the parties.
IT IS SO ORDERED.
DATED this 11th day of August, 2015.
_________________________________
MARK W. BENNETT
U.S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA
28
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