Hanzl v. Collier et al

Filing 75

ORDER Adopting Report and Recommendation doc. no. 74 regarding 58 Motion to Abate filed by Plaintiff, Marianne Hanzl. The Court Orders that Ms. Hanzl is entitled to a preliminary deficiency award in the amount of $23,291.42 from the Colliers. However, the Court defers entering a final judgment until after the income tax liability issue is resolved by Magistrate Strand. Signed by Senior Judge Donald E OBrien on 2/25/2014. (src)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
MARIANNE HANZL,
Plaintiff,
vs.
ROBERT L. COLLIER AND
GERTRUD M. COLLIER,

No. 10-CV-4122-DEO
ORDER ON REPORT AND
RECOMMENDATION

Defendants.
____________________
Before the Court and on file at Docket No. 74 is the
Report and Recommendation (“R&R”) issued by Magistrate Judge
Leonard T. Strand concerning the Plaintiff’s Motion to Abate.
Docket No. 58.

1

The Magistrate’s R&R, dated January 31, 2014,

recommends entering:
an order granting plaintiff’s motion (Doc.
No.
58) for entry of a preliminary
deficiency judgment by (a) finding that the
defendants owe $23,291.42 to the plaintiff
pursuant to his prior order (Doc. No. 52)
enforcing
the
parties’
settlement
agreement, but (b) deferring the entry of
final judgment until a determination is
made as to whether that amount should be
adjusted
to
reflect
any
income
tax
liability that may accrue to plaintiff due
to her sale of the West Street Property.
1

Ms. Hanzl’s Docket No. 58 was originally filed as a
status report. Magistrate Strand saw fit to consider it as a
Motion to Abate, and this Court will continue to style it in
that manner.

Docket No. 74, p. 15-16. Neither party has filed an objection
to the Magistrate’s R&R.
I.

STANDARD
Pursuant to statue, this Court’s standard of review for

a magistrate judge’s Report and Recommendation is as follows:
A judge of the court shall make a de novo
determination of those portions of the
report or specified proposed findings or
recommendations to which objection is made.
A judge of the court may accept, reject,
or modify, in whole or in part, the
findings or recommendations made by the
magistrate [judge].
28 U.S.C. § 636(b)(1).
Similarly, Federal Rule of Civil Procedure 72(b) provides
for review of a magistrate judge’s Report and Recommendation
on

dispositive

motions

and

prisoner

petitions,

objections are made as follows:
The district judge to whom the case is
assigned shall make a de novo determination
upon the record, or after additional
evidence, of any portion of the magistrate
judge’s disposition to which specific
written
objection
has
been
made
in
accordance with this rule.
The district
judge may accept, reject, or modify the
recommendation decision, receive further
evidence, or recommit the matter to the
magistrate judge with instructions.
FED. R. CIV. P. 72(b).
2

where

Additionally,

failure

to

object

to

the

Report

and

Recommendation waives the right to de novo review by the
district court of any portion of the Report and Recommendation
as well as the right to appeal from the findings of fact
contained therein.

United States v. Wise, 588 F.3d 531, 537

n.5 (8th Cir. 2009).
II.

ANALYSIS
The

facts

of

the

above

captioned

case

have

been

extensively detailed in the Magistrate’s prior R&R, Docket No.
42; the Court’s prior Order Accepting the Magistrate’s R&R,
Docket No. 52; and the Magistrate’s current R&R, Docket No.
74.

In short, Ms. Hanzl, a German national, made the ill

fated decision to befriend the Colliers.

Ms. Hanzl, residing

in Germany, used the Colliers as her agents to sell a property
she owned in Arizona.
but

did

not

remit

The Colliers sold Ms. Hanzl’s property
the

money

to

Ms.

Hanzl.

Ms.

Hanzl

eventually brought the present suit against the Colliers to
recover the value of the property.

In 2012, the parties held

a settlement conference with then Magistrate Zoss.

The

parties reached a tentative agreement after the settlement
conference and the Court stayed any further proceedings.

3

However, several months later, the Colliers had not acted
on the agreement and Ms. Hanzl was forced to file a Motion to
Enforce Settlement.

Magistrate Strand initially considered

that Motion and concluded that Ms. Hanzl was entitled to
$262,500.

Because the Colliers had not paid that amount, the

Magistrate concluded Ms. Hanzl was entitled to sell a property
in Sioux City that the Colliers had used as security for the
prior agreement.

All told, the Magistrate found that Ms.

Hanzl was entitled to $262,500. However, the Magistrate found
that Ms. Hanzl was not entitled to an award of attorneys fees
under Iowa law.

Finally, the Magistrate found that:

If the net sale proceeds [of the Colliers’
property] are less than $262,500, judgment
will be entered against both defendants,
jointly and severally, for the amount of
the deficiency, unless the court adjusts
the amount of the deficiency based on any
objections the Colliers file with regard to
the sale of the property.
Docket No. 52, p. 12-13.

This Court subsequently adopted the

Magistrate’s findings.
Ms. Hanzl subsequently sold the Colliers’ property for a
gross sum of $275,000.
had

to

pay

sale

However, Ms. Hanzl reported that she

related

expenses

totaling

$51,431.62.

Accordingly, after expenses, she recovered a net total of
4

$223,568.38

from

the

sale

of

the

Colliers’

property.

Accordingly, Ms. Hanzl concluded that she was entitled to a
deficiency judgment of $38,931.62 against the Colliers.

2

In the present R&R, Magistrate Strand considered Ms.
Hanzl’s claimed deficiency of $38,931.62.

Magistrate Strand

affirmed that Ms. Hanzl is entitled to a deficiency judgment
generally.

Magistrate Strand also stated that sale price of

the property was appropriate.

Magistrate Strand then stated

that Ms. Hanzl is entitled to deduct reasonable sales related
expenses from the gross proceeds of the Colliers’ property
when computing the deficiency.

3

Magistrate Strand approved most of Ms. Hanzl’s expenses
in figuring the deficiency.

However, he did take issue with

2

These totals do not reflect income tax considerations.
Magistrate Strand withheld ruling on the income tax
considerations until after a status hearing that is scheduled
for March 4, 2014.
3

Magistrate Strand reasons, and this Court agrees, that
the Colliers knew Ms. Hanzl was an elderly woman living in
Germany and that she would incur expenses when she was forced
to try and sell a home in Sioux City, Iowa. If the Colliers
had wanted to avoid those expenses, they could have sold the
property themselves, as the agreement originally intended.
Finally, Magistrate Strand notes that the Colliers took
actions that increased sales related costs, such as removing
cabinets and otherwise leaving the property in poor condition.
5

the some of the expenses paid to Mr. Jackson, Ms. Hanzl’s
attorney.

The Magistrate restated the fact that the Court

concluded in its previous Order that Ms. Hanzl is not entitled
to an award of attorney’s fees.

He then concluded that Ms.

Hanzl was allowed to claim some expenses that Mr. Jackson
incurred while he acted as her sales agent.

The Magistrate

stated:
In short, nothing about Iowa law, this
court’s prior orders or the parties’
negotiations creates a bright-line rule
prohibiting the deduction of Mr. Jackson’s
fees as transaction-related expenses. The
remaining issue is what amount, if any, of
those fees can reasonably be deducted from
the gross sales price on that basis.
Docket No. 74, p. 11.
Magistrate Strand considered the scope of Mr. Jackson’s
services,
expenses.’

limiting

any

recovery

to

‘transaction

related

The Magistrate excluded expenses that could be

considered ‘traditional’ legal services.

He also limited

deductible expenses to those incurred on or after July 30,
2013.

Finally, he found that Mr. Jackson’s claimed hourly

rate exceeded what is reasonable for the services performed.
Instead, Magistrate Strand determined that $200 is an

6

appropriate rate for Ms. Hanzl to deduct related to Mr.
Jackson’s services.

He concluded that:

That results in an allowable deduction of
$9,000.00 for Mr. Jackson’s services. When
combined with the other transaction-related
expenses discussed earlier, the total,
allowable transaction-related expenses are
$35,791.42.
When those expenses are
charged against the gross sales price of
$275,000, the Colliers are entitled to a
credit in the amount of $239,208.58
against the $262,500 that they owe to Hanzl
pursuant to the settlement agreement.
Thus, at this stage of the case I find that
the deficiency still owing from the
Colliers to Hanzl is $23,291.42.
If
judgment were to be entered today, I would
recommend that it be entered in that
amount.
Docket No. 74, p. 15.
The Court has reviewed the Report and Recommendation,
along with the entire file, and finds Judge Strand’s analysis
and

recommendations

are

appropriate

and

correct.

4

Accordingly, the Court will adopt Magistrate Strand’s Report
and Recommendation.

4

Although this Court will not set out the Magistrate’s
entire Report and Recommendation, it is incorporated in its
entirety by reference.
7

III.

CONCLUSION
For the reason’s set out above, the Court adopts the R&R

(Docket No. 74), and the Court Orders that Ms. Hanzl is
entitled to a preliminary deficiency award in the amount of
$23,291.42 from the Colliers.

However, the Court defers

entering a final judgment until after the income tax liability
issue is resolved by Magistrate Strand.
IT IS SO ORDERED this 25th day of February, 2014.

__________________________________
Donald E. O’Brien, Senior Judge
United States District Court
Northern District of Iowa

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