Lead Opinion
This case presents the question whether an individual who made voluntary expenditures based on a mother’s fraudulent representation that he had fathered her child has a cause of action against the mother for recovery of those payments. Because we conclude that such a cause of action is consistent with traditional concepts of common law fraud, there is no prevailing public policy reason against recognizing such a cause of action, and Iowa’s statutes do not speak to the issue, we hold that a cause of action may be pursued. Accordingly, we reverse the judgment of the district court granting the mother’s motion to dismiss and remand for further proceedings.
I. Factual Background and Procedural History.
Because this case was decided on a motion to dismiss for failure to state a claim,
Dier filed an application in the district court to establish custody of the minor child. After Peters received the report of the child custody evaluator, she was afraid she would not get custody of the child and requested a paternity test. That test excluded Dier as the biological father. Dier then requested a second paternity test which again excluded him as the biological father.
On August 2, 2011, Dier filed a separate petition at law seeking reimbursement from Peters of monies “expended to the Defendant, monies for the minor child, and monies expended in custody litigation.” On August 25, Peters moved to dismiss the petition. She asserted that Dier’s petition “fail[ed] to state a claim upon which relief can be granted for the reason that the State of Iowa does not recognize an action for ‘paternity fraud’ nor has the Iowa Legislature created any such action by statute.” Dier resisted the motion, arguing that Peters “engaged in fraudulent activity in enticing me to believe that I was the child’s father and securing financial assistance from me from the beginning of the child’s birth until recently.” He asked that the district court “overrule the Motion to Dismiss as this matter is fraudulent and the Defendant has acted with utmost malice and hatred.”
On September 20, 2011, the district court granted Peters’ motion to dismiss. In its order dismissing Dier’s action, the trial court concluded that the “current status of the law demands that this case be dismissed.” Dier now appeals.
II. Standard of Review.
We review a district court’s ruling on a motion to dismiss for the correction of errors at law. McGill v. Fish,
III. Analysis.
The sole issue on appeal is whether Iowa law allows a putative father to bring a paternity fraud action against a biological mother to obtain reimbursement of payments that were voluntarily made. “Paternity fraud,” also known as “misrepresentation of biological fatherhood” or “misrepresentation of paternity,” “occurs when a mother makes a representation to a man that the child is genetically his own even though she is aware that he is not, or may not be, the father of the child.” Hodge v. Craig, No. M2009-00930-COA-R3-CV,
Courts in other jurisdictions are divided as to whether to recognize paternity fraud claims. Courts disallowing such claims have relied heavily on considerations of public policy and child welfare.
We granted further review. However, we deadlocked three-to-three and, thus, the district court’s grant of summary judgment was affirmed by operation of law in a nonprecedential order. Order, Brooks v. Brooks, No. 03-1217 (Iowa Sept. 1, 2004); see also Iowa Code § 602.4107 (2011).
Although we have not previously determined the viability of a tort action for paternity fraud, we have held in a series of cases that parents cannot obtain retroactive relief from court-ordered child support. See State ex rel. Baumgartner v. Wilcox,
In Wilcox, after a putative father established that he was not the biological father, he sought to be relieved of “court-ordered obligations to pay past and future child support.”
We held that “where the rights of the parties have been established, support payments which have accrued are vested and the courts, without statutory authority, cannot take them away.” Id. Thus, the putative father was responsible for making the accrued support payments on behalf of the minor child. Id. at 778.
Any periodic support payment, due prior to the date the order determining that the established father is not the biological father is filed, is unaffected by this action and remains a judgment subject to enforcement.
Section 600B.41A(4)(6) has since been amended and provides that “[i]f the court finds that the establishment of paternity is overcome ... the court shall enter an order which provides ... [t]hat any unpaid support due prior to the date the order determining that the established father is not the biological father is filed, is satisfied.” See 1997 Iowa Acts ch. 175, § 215 (now codified at Iowa Code § 600B.41A(4)(6) (2011)). Thus, the specific holding of Wilcox with respect to accrued but unpaid child support has been legislatively overruled.
In any event, Wilcox does not control the case before us. Our conclusion in Wilcox rested on a long line of cases holding that “courts do not have the authority under the common law to reduce court-determined support payments retroactively.” Wilcox,
A. Traditional Law of Fraud. As noted, Dier is not seeking relief under Iowa Code section 600B.41A(4)(6), which permits a putative father who has overcome the establishment of paternity to avoid all unpaid and future support obligations. Rather, Dier has brought a common law action for fraud seeking as damages monies voluntarily paid based on an allegedly fraudulent representation. From our vantage point, Dier’s cause of action appears to fit comfortably within the traditional boundaries of fraud law.
In order to prevail on a common law fraud claim the plaintiff must prove the following:
(1) [the] defendant made a representation to the plaintiff, (2) the representation was false, (8) the representation was material, (4) the defendant knew the representation was false, (5) the defendant intended to deceive the plaintiff, (6) the plaintiff acted in [justifiable] reliance on the truth of the representation ..., (7) the representation was a proximate cause of [the] plaintiffs damages, and (8) the amount of damages.
Spreitzer v. Hawkeye State Bank,
3. Materiality. In order to recover in an action for fraud the alleged false misrepresentation must be material. Rosenberg v. Miss. Valley Constr. Co.,
(a) a reasonable man would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question; or
(b) the maker of the representation knows or has reason to know that its recipient regards or is likely to regard the matter as important in determining his choice of action, although a reasonable man would not so regard it.
Restatement (Second) of Torts § 538, at 80 (1977); see also Sedeo Int’l, S.A. v. Cory,
Dier has alleged a material misrepresentation. Being the father of a child is an important matter, bringing with it legal, financial, and moral responsibilities. Dier alleges that his decision to voluntarily incur the expenses associated with supporting the child and her mother were “based upon the representations made by the Defendant” and that Peters “used this assertion to secure monies from [him].” These allegations support his claim that the false representation induced him to act and that the defendant knew that he was likely to regard the assertion “as important in determining his choice of action.” See Restatement (Second) of Torts § 538, at 80. We cannot say that a reasonable person would not have attached significant importance to the specific fraudulent misrepresentation in this ease.
4. Knowledge of falsity. The knowledge of falsity element of a fraud claim is also commonly known as the scien-ter element. See Rosen v. Bd. of Med. Exam’rs,
We have held that a plaintiff can prevail on the scienter element by demonstrating:
the defendant had actual knowledge of the falsity, possessed reckless disregard for the truth, falsely stated or implied that the representations were based on personal knowledge or investigation, or had a special relationship with the plaintiff and therefore had a duty to disclose.
McGough v. Gabus,
Here Dier specifically alleges that “the Defendant knew that the Plaintiff was not the biological father of the child.” Thus, he has alleged scienter.
Dier alleges that Peters not only knew he was not the biological father, but “used this assertion to secure monies from [him].” These allegations are sufficient to survive a motion to dismiss on the intent to deceive element. Dier has also bolstered his petition with the further allegation that Peters only announced later that Dier was not the child’s biological father out of fear Dier would get custody of the child following a child custody evaluator’s report.
6. Justifiable reliance. To bring a fraud claim, the plaintiff must have justifiably relied on the false representation. Spreitzer,
Dier alleges that Peters told him he was the child’s biological father, and that “based upon th[is] representation,” he “provided for the child, provided for the Defendant and engaged in litigation ... as to the custody of the child.” At the pleading stage, these allegations are sufficient. It is true that a paternity test could have established at the outset whether Dier was the child’s father, notwithstanding any representation by Peters. But we are unwilling to hold as a matter of law that a putative father can never rely on a mother’s representation that he is the father and must immediately insist upon paternity testing. Dier’s allegations are adequate on the justifiable reliance element.
7. Proximate cause. Proximate cause “addressfes] the question whether the losses that in fact resulted from the reliance were connected to the misrepresentation in a way to which the law attaches legal significance.” Spreitzer,
Dier alleges that he provided financial support and incurred the expense of custody litigation “based upon the representations made by the Defendant.” These allegations are sufficient to plead proximate cause. Not only does Dier allege he spent money based on the misrepresentation, but common sense tells us that the misrepresentation increased the likelihood he would spend this money.
8. Damages. “A showing of resulting injury or damages is an element in a fraudulent misrepresentation case.” Sanford v. Meadow Gold Dairies, Inc.,
As damages, Dier seeks reimbursement of financial support provided to Peters and the minor child and expenses incurred during the custody litigation. These items are out-of-pocket expenses that are generally
However, we have consistently held that “[a] successful party ordinarily cannot recover attorney fees unless they are authorized by statute or agreement.” Audus v. Sabre Commc’ns Corp.,
One who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover reasonable compensation for loss of time, attorney fees and other expenditures thereby suffered or incurred in the earlier action.
Restatement (Second) of Torts § 914(2), at 491 (1979).
Dier has alleged that he was forced to engage in custody litigation as a result of Peters’ fraudulent misrepresentation. But the exception to the general rule noted above does not apply because the custody action was against Peters, not a third party. See Moser v. Thorp Sales Corp.,
With the foregoing exception, Dier has not alleged, or asked this court to adopt, a new cause of action or theory of recovery. Rather, he has stated a claim for traditional common law fraud. We have said that the common law is presumed to be in force in this state unless it has been revised or repealed by statute or constitution. See Iowa Civil Liberties Union v. Critelli,
In fact, we have previously allowed causes of action for common law fraud to proceed in other cases with atypical fact patterns. For example, in Wright v. Brooke Group Ltd., we had to decide the following certified question: “Under Iowa law, can a manufacturer’s alleged failure to warn or to disclose material information give rise to a fraud claim when the relationship between a Plaintiff and a Defendant is solely that of a customer/buyer and manufacturer?”
In answering this question we acknowledged that the case was atypical: “Iowa cases applying a fraud theory have typically involved a business transaction between the parties, a fact not present in the certified question.” Id. at 175. Nonetheless, we reasoned that
what is really important is that the statements were made for the purpose of influencing the action of another. The fact that this element is usually found in transactions where the parties deal directly with one another does not mean that the same goal of influencing another’s action cannot be present in business transactions that do not involve direct contact between the plaintiff and the defendant.
Id. at 176 (citing cases). Thus, we concluded that a manufacturer’s failure to warn or to disclose material information may give rise to a fraud claim when the manufacturer “(1) has made misleading statements of fact intended to influence consumers, or (2) has made true statements of fact designed to influence consumers and subsequently acquires information rendering the prior statements untrue or misleading.” Id. at 177 (citing Restatement (Second) of Torts § 551(2)(b), (c), at 119 (1977)).
In Beeck v. Kapalis, we held the plaintiffs could pursue a fraud action against Aquaslide and its president for making a reckless, but innocent, misrepresentation that the water slide injuring one of the plaintiffs had been manufactured by Aqua-slide — thereby causing the plaintiffs to fail to name the actual manufacturer as a defendant before the statute of limitations ran.
B. Public Policy. Despite the apparent fit between this case and common law fraud, defendant contends that judicial recognition of a cause of action for paternity fraud would be contrary to Iowa public policy. She relies on the Nebraska Supreme Court’s decision in Day, a case where a father sought recovery of court-ordered child support he had been required to pay from 1991 to 1999 for a child who had been born in 1987 while he was married to the child’s mother.
Robert’s fraud and assumpsit claims are for Robin’s misrepresentation that led Robert to make investments of time, emotion, and money in Adam that he would not have made had he known that Adam was not his biological son. In effect, Robert is saying, “He is not my son; I want my money back.” Robert’s fraud and assumpsit causes of action focus on the burdens of the parent-child relationship, while ignoring the benefits*12 of the relationship. We. do not believe that having a close and loving relationship “imposed” on one because of a misrepresentation of biological fatherhood is the type of “harm” that the law should attempt to remedy.
Moreover, a tort or assumpsit claim that seeks to recover for the creation of a parent-child relationship has the effect of saying “I wish you had never been born” to a child who, before the revelation of biological fatherhood, was under the impression that he or she had a father who loved him or her. We decline to allow a party to use a tort or assumpsit claim as a means for sending or reinforcing this message.
Id. at 479 (internal citations omitted).
While these concerns are legitimate, we are not ultimately persuaded by them. For one thing, O.D. is not fifteen years old, like the child in Day, but three. We are not persuaded that allowing the present cause of action to go forward would impose additional stress on the child, who is not a party to the case, and likely need not participate in it or even be aware of it. It is true that Dier’s success in the litigation could diminish the resources that Peters has available in the future to support O.D., but this would be true of any lawsuit against Peters. We have never afforded parents a general defense from tort liability on the ground they need all their money to raise their children.
Also, we need to consider the public policy implications of an opposite ruling. We recognize fraud as a cause of action partly to deter lying. One good reason to allow fraud claims to go forward in the area of paternity fraud is to avoid the situation that has allegedly arisen here.
We have emphasized that “public policy” is not predicated on this court’s “generalized concepts of fairness and justice.” Claude v. Guaranty Nat’l Ins. Co.,
“[D]espite the difficulty of characterizing the exact elements of the public interest, we have considered and weighed public policy concerns when deciding important legal issues.” Galloway v. State,
In Shook v. Crabb, we abolished inter-spousal immunity and recognized the “fundamental policy consideration of providing judicial redress for an otherwise cognizable wrong.”
Our evaluation of public concern here is consistent with Shook and Turner. In fact, there is less reason to be concerned
This state has a recognized public policy interest in providing a remedy for fraud.
C. Section 600B.41A. Finally, we consider whether allowing Dier’s paternity fraud claim would be contrary to a law or policy expressed by the general assembly. As we have discussed above, Iowa Code section 600B.41A addresses the consequences of overcoming the presumption of paternity and provides:
4. If the court finds that the establishment of paternity is overcome, in accordance with all of the conditions prescribed, the court shall enter an order which provides all of the following:
a. That the established father is relieved of any and all future support obligations owed on behalf of the child from the date that the order determining that the established father is not the biological father is filed.
b. That any unpaid support due prior to the date the order determining that the established father is not the biological father is filed, is satisfied.
Id. § 600B.41A(4).
Thus, section 600B.41(4) relieves the putative father from future support obligations and from accrued but unpaid support obligations. By implication, particularly in light of Wilcox, support that has
We do not agree. As noted above, Wilcox and the preceding cases involving court-ordered support were predicated on “the policy of protecting the stability and integrity of court judgments.” Wilcox,
Allowing a cause of action here does not contravene these principles. We are not concerned here with the finality of a prior decree or judgment. According to the petition here, Dier voluntarily made payments to Peters for the benefit of O.D. once Peters told him he was the father. We believe this sort of conduct should be encouraged, not discouraged. Of course, to protect the child’s interests, and to insure that the payments meet what our guidelines require, proceedings may be instituted under chapter 600B.
IV. Conclusion.
For the foregoing reasons, we hold that Dier’s claim for paternity fraud should not have been dismissed. It is supported by common law standards for fraud and is not contrary to public policy or the statutory policy of this state. Of course, we emphasize the limits of our holding. As noted above, while Dier may pursue recovery of monies provided to Peters or spent for the benefit of the minor child (assuming he was not under a court order to make these payments), he may not recover attorneys’ fees and costs incurred in the prior custody litigation with Peters.
Also, alleging paternity fraud is not the same as proving it. We have said that “[pjroving fraud is a difficult task.” In re Marriage of Cutler,
Notes
. Nagy v. Nagy,
. Koelle v. Zwiren,
See also State ex rel. P.M. v. Mitchell,
. At times we have spoken in terms of seven required elements. Van Sickle Const. Co. v. Wachovia Commercial Mortg., Inc.,
. We are not holding that Dier would have been precluded from recovering his costs and attorney fees by making a claim in the custody litigation itself. Courts have allowed recovery of common law attorneys’ fees in rare cases where " ‘the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’ ” See Fennelly v. A-l Mach. & Tool Co.,
. See, e.g., Midwest Home Distrib., Inc.,
. We distinguish this case from the so-called “wrongful birth” cases where a biological parent tries to recover the costs of rearing a healthy child on the theory that the defendant's negligence allowed the child to be bom. See Nanke v. Napier,
the public policy of Iowa which dictates that a parent cannot be said to have been damaged or injured by the birth and rearing of a normal, healthy child because the invaluable benefits of parenthood outweigh the mere monetary burdens as a matter of law.
Id. at 522-23.
In this case Dier is not alleging that he had a biological parent-child relationship negligently imposed on him. Rather, he is alleging that he was fraudulently induced into believing he had a biological child, but in reality did not. Consequently, Dier could not prevail in the custody litigation, and he will actually be denied the "invaluable benefits of parenthood” we discussed in Nanke. See id. at 523. The public policy considerations that foreclosed damages for wrongful life in Nanke are inapplicable in a case where the plaintiff is being denied a parent-child relationship.
Concurrence Opinion
(concurring specially).
I concur in the opinion of the majority. I write separately to clarify my reason for joining the holding by the majority to allow the claim to go forward and to emphasize the inherent difficulties and challenges presented by opening the courthouse doors to paternity fraud.
While claims for fraud have been applied to many types of relationships of trust and confidence, such as attorney and client, employer and employee, and accountant and investor, the relationship involved in a claim of paternity fraud is distinguishable by the inherent presence of uncertainty caused by conversations or assurances of paternity. See Wilson v. Vanden Berg,
While the misleading conduct of a mother, or any person, should be discouraged, the conduct of a man voluntarily forming a bond with and supporting a nonbiological child in a nontraditional family setting is, on the other hand, arguably a noble cause to encourage in our society. See Melony B. Jacobs, When Daddy Doesn’t Want to be Daddy Anymore: An Argument Against Paternity Fraud Claims, 16 Yale J.L. & Feminism 193, 195-98 (2004) (noting the disconnected logic that seems contrary to efforts to make decisions in accordance with the best interests of the child when our courts recognize two fundamentally different family law models, one that “embrace[s] functionality in the context of establishing paternal relationships” and the other that “placets] emphasis on biology in disestablishing parental relationships”). As the Nebraska Supreme Court recognized, a claim seeking to recover for support given to a child may send the message, “I wish you had never been born” to a child who was otherwise under the impression she had a father who loved her. Day v. Heller,
Thus, due to the multidimensional nature of relationships that produce children, and the many varying factors that motivate or incentivize parties involved in the child’s life, the legislature is the proper authority to balance the competing policy interests at stake and ultimately articulate the parameters of any exception to common law fraud based on public policy. Our refusal to create an exception to this case is not an expression of an opinion that the competing policy reasons are not valid. Instead, as a court, we simply continue to adhere to our broader policy, woven into the law long ago, of recognizing a remedy for fraud.
Finally, as pointed out by the majority, “[p]roving fraud is a difficult task.” In re Marriage of Cutler,
Although these consequences might seem inequitable at times, relevant evidence can often be embarrassing to parties and witnesses in other types of cases. We do not foreclose a cause of action because some information relevant to the truth-seeking process may be uncomfortable to disclose. State v. Baker,
