Iowa Court Considers Attorney Fee Division in Partition in Kind Action
The case is Mueggenberg v. Mueggenberg, No. 21-0887 (Iowa Ct. App. June 29, 2022).
On June 29, 2022, the Iowa Court of Appeals issued an opinion involving a partition action and the subsequent assessment of attorney fees and costs. After three siblings filed a petition seeking a partition in kind against their other two siblings, the five siblings agreed to a partition in kind for the “heirs property” they owned as tenants in common. See Iowa Code § 651.1(5). Because the division was equitable and practicable, the Court of Appeals affirmed the referee’s recommendation. However, the court held that the district court erred in taxing all costs against the defendants.
Five siblings owned approximately 180 acres as tenants in common. An energy company operated a wind turbine on the northern portion of the property and provided yearly payments for the wind easement. Three of the siblings, the plaintiffs, petitioned for a partition in kind. Both the plaintiffs and the remaining two siblings, the defendants, agreed to use a referee. After obtaining three appraisals, the referee averaged the valuations and determined that the fair market value was $8,076 per gross acre. The defendants contested the various aspects of the valuation. However, after a hearing, the district court adopted this number as the fair market value of the property. See Iowa Code § 651.28(1)-(4).
The referee, believing that partitioning the land into five parcels would be “unworkable,” recommended dividing the land into two unequally sized parcels by drawing a straight line east to west. Under the proposal, the three plaintiffs would receive the southern parcel—approximately 60% of the gross acres—while the two defendants would receive the northern parcel—approximately 40% of the gross acres. This resulted in an award of 112.59 and 59 tillable acres respectively.
The case proceeded to trial. Both parties agreed to adopt this plan in some form. However, the defendants claimed there were entitled to 40% of the total tillable acres—68.64 acres. The defendants also argued that the plaintiffs were not entitled to attorney fees. The district court found the referee’s proposal persuasive as the north parcel had a higher CSR2 rating, was more tillable, and received payments for the wind easement. The district court also found that the defendants were the “losing contestants” and taxed all plaintiffs’ attorney fees as costs of the action against the defendants. The court denied the defendants’ motion to reconsider and assessed $31,039, including attorney fees and referee fees, against the defendants. The defendants appealed.
On appeal, the defendants argued that the plaintiffs received too many tillable acres which was “more than their proportional share of real estate.” To resolve this issue, the defendants asked the court to order the defendants to “pay, as owelty, a proportional share of the wind turbine value to plaintiffs” and to reduce the amount of tillable acres the plaintiffs received.
In support of their argument, the defendants provided their own mathematical formulas. However, the Court of Appeals determined that the formulas contained several errors. For example, the defendants incorrectly relied on the $8,076 per acre gross valuation when their formulas only accounted for tillable acres. Additionally, an owelty award is discretionary, not mandatory. Iowa Code § 651.16(4).
Based on the appraisals, the referee believed that the wind turbine added $48,490 in value. The referee also relied on each parcels’ CSR2 rating to conclude that the defendants’ parcel had an added value of $57,933. Thus, the value awarded to the defendants was $607,158 or 38.99%.
While appraisals are not an exact science, the evidence in this case supported a finding that the division was equitable. Additionally, moving the boundary to give the defendants more value would be inconvenient and create a non-uniform boundary line. Accordingly, the Court of Appeals found the division of the property equitable and practicable.
Attorney Fees and Costs
The court next considered whether the district court erred in taxing all of the plaintiffs’ attorney fees as costs against the defendants. In a partition action, the court “shall” award attorney fees to the plaintiff, unless he is the “losing contestant” in a “contest.” Iowa Code § 651.23. The defendants asserted that attorney fees can be taxed as costs “only if the legal services are for each party’s common benefit.”
Because the plaintiffs’ counsel provided no common benefit, the defendants argued that there was no basis for awarding attorneys’ fees. The Court of Appeals disagreed, concluding that the mandatory language of the statute only gives the court discretion in determining how much to assess against the losing contestant, not when to assess a fee.
The court next considered whether the defendants were the “losing contestants.” The plaintiff must advance the costs related to a partition action. Those costs will then be divided proportionally amongst each party. Iowa Code § 651.22. However, any cost that arises from a contest in the partition action will be assessed against the “losing contestant.” Id.
Although the defendants ultimately “lost every contest in the partition action,” the court found that that the district court erred in assessing all the costs of the partition action against the defendants. Not all costs were attributable to those contested issues. Many costs were incurred before the defendants’ initial objections for work performed by the plaintiffs’ counsel, the referee, and the appraisers. These costs, the court determined, must be taxed proportionally among the parties. The losing contestant should only be taxed for the costs attributable to contests, not for all costs. As a result, the Court of Appeals vacated the cost assessment and remanded the case to the district court to divide any costs not associated with contests amongst the parties.
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