Mary Batinich as Personal Representative of the Estate of Alex Batinich v. Arthur Renander v. Jacqueline Zara Renander and Rai, LLC
15-2053
| Iowa Ct. App. | Mar 22, 2017Background
- RAI, LLC was formed by Arthur and Zara Renander; Alex Batinich owned 34% and the Renanders controlled the remainder. RAI’s sole asset was a 50% interest in ~100 acres in Coralville; Northern Investments (Aamodt) owned the other half.
- Batinich sued individually and derivatively in 2014 alleging the Renanders breached fiduciary duties, failed to provide corporate records (Iowa Code §489.410), and sought various equitable relief including accounting, escrow of sale proceeds, and other remedies. He alleged demand on managers would be futile.
- The district court found the Renanders willfully ignored discovery and entered default judgment, reserving a hearing on damages and remedies. Evidence at the hearing included testimony that Batinich personally advanced substantial sums to RAI and that the Renanders obstructed a likely 2010 sale by demanding land for themselves.
- The district court found the Renanders breached duties of loyalty and care, dissociated them from RAI, awarded Batinich $373,880 in individual monetary damages, $79,956.01 in attorney fees, and $100,000 punitive damages, and changed the Renanders’ status to transferees.
- On appeal, the court affirmed dissociation and the $373,880 damage award, vacated punitive damages, and held the attorney-fee award must be imposed against RAI (the LLC) rather than the Renanders personally; remanded for entry of judgment consistent with these rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court could judicially dissociate the Renanders from RAI | Batinich sought dissociation at remedies hearing and argued demand on managers was futile so derivative relief including dissociation was proper | Renander argued dissociation required prior demand or explicit pleading and was outside the court’s authority without proper procedure | Court: Dissociation permissible; petition + affidavit showed futility of demand and issue was raised/argued at hearing — affirmed |
| Whether Batinich could recover individual monetary damages | Batinich alleged he personally paid hundreds of thousands to RAI and suffered individual injury beyond corporate harm | Renander argued harm was to RAI only and individual recovery was not pled or proven | Court: Individual injury shown (advances without accounting); individual award of $373,880 affirmed |
| Whether judgment could be entered personally against the Renanders | Batinich sought money judgment against the Renanders jointly and severally for his individual losses | Renander contested notice/causation and argued damages speculative | Court: Evidence supported causation and reasonable basis for damage computation; judgment against Renanders affirmed |
| Whether trial attorney fees were recoverable and who is liable | Batinich sought fees under §489.906(2) and for intentional tort | Renander argued fees not recoverable or were excessive; also disputed imposing fees on members personally | Court: Fees are recoverable but, under derivative-action/common-fund principles, must be awarded from RAI (the LLC), not personally against members — fee award affirmed but against RAI not Renanders |
| Whether punitive damages were proper | Batinich requested punitive damages for willful breach of fiduciary duty | Renander opposed punitive damages as unsupported | Court: Conduct warranted dissociation but did not meet clear, convincing standard for punitive damages; punitive award vacated |
Key Cases Cited
- Cookies Food Prods., Inc., by Rowedder v. Lakes Warehouse Distrib., Inc., 430 N.W.2d 447 (Iowa 1988) (standard of review for derivative suits)
- Berger v. Gen. United Grp., Inc., 268 N.W.2d 630 (Iowa 1978) (general allegation of futility is sufficient when petition facts demonstrate futility)
- Pavone v. Kirke, 801 N.W.2d 477 (Iowa 2011) (distinguishing proof of existence of damages from proof of amount; reasonable basis required)
- St. Malachy Roman Catholic Congregation of Geneseo v. Ingram, 841 N.W.2d 338 (Iowa 2013) (speculative damages denied)
- Hammes v. JCLB Props., LLC, 764 N.W.2d 552 (Iowa Ct. App. 2008) (difficulty proving amount does not bar recovery if best evidence furnishes a reasonable basis)
- Smith v. Smithway Motor Xpress, Inc., 464 N.W.2d 682 (Iowa 1990) (plaintiff must produce best available evidence to estimate loss)
- Hawkeye Motors, Inc. v. McDowell, 541 N.W.2d 914 (Iowa Ct. App. 1995) (trial court discretion on damages will not be disturbed if within evidentiary range)
- Boyle v. Alum-Line, Inc., 773 N.W.2d 829 (Iowa 2009) (framework for reasonable attorney-fee awards)
- Smith v. Iowa State Univ. of Sci. & Tech., 885 N.W.2d 620 (Iowa 2016) (review standard for attorney-fee awards)