NCJC, INC., Appellee, vs. WMG, L.C., Appellant.
No. 19–0241
IN THE SUPREME COURT OF IOWA
Submitted February 17, 2021—Filed May 28, 2021
Amended August 3, 2021
On review from the Iowa Court of Appeals. Appeal from the Iowa District Court for Kossuth County, Carl J. Petersen, Judge.
Landlord and tenant seek further review of court of appeals decision on attorney fee award after offer to confess judgment.
Waterman, J.,
Thomas W. Lipps (argued) of Peterson & Lipps, Algona, for appellant. Wesley T. Graham of Duncan Green, P.C., Des Moines, and Philip J. Kaplan (argued) of Anthony Ostlund Baer & Louwagie, P.A., Minneapolis, Minnesota, for appellee.
WATERMAN, Justice.
In this appeal from rulings on cross-motions for attorney fees in a contract dispute, we must decide three legal issues: (1) who is “the prevailing party“; (2) whether
On our review, we affirm the ruling that the plaintiff alone is the prevailing party and the defendant is entitled to no fees. We determine that the district court did not abuse its discretion in finding the plaintiff complied with
I. Background Facts and Proceedings.
On February 24, 2012, WMG, L.C., as landlord, and NCJC, Inc., as tenant, executed a commercial lease of 600 acres of farmland in Kossuth County for annual cash rent of $136,449.70.1 The one-year lease term ran to February 28, 2013, but would automatically renew absent written notice of termination. The lease provided that if it was not renewed, WMG would reimburse NCJC for the remaining benefits of fertilizer NCJC had previously applied to the land. The lease gave a right of first refusal to NCJC to purchase the leased land. And Section 20 of the lease provided, “If either party files suit to enforce any of the terms of this Lease, the prevailing party shall be entitled to recover court costs and reasonable attorney‘s fees.”
On March 1, 2017, WMG terminated the lease. WMG refused NCJC‘s demands for reimbursement for fertilizer it had previously applied. WMG distributed several
On March 31, NCJC filed suit against WMG, alleging breach of contract. Count I sought recovery for WMG‘s failure to reimburse for fertilizer NCJC had applied. Count II alleged WMG‘s failure to allow NCJC to exercise its right of first refusal and sought specific performance. NCJC demanded payment of its attorney fees under Section 20 of the lease. WMG filed an answer, alleging that the right of first refusal expired when the lease was terminated and that NCJC had failed to provide support for its reimbursement claims. WMG counterclaimed for slander of title; on October 12, the district court dismissed the counterclaim.
On November 1, WMG moved for summary judgment on count II; NCJC resisted. On November 17, WMG filed its offer to confess judgment in the amount of $75,000, which NCJC rejected. On February 28, 2018, the district court granted summary judgment in favor of WMG dismissing count II, ruling that “WMG‘s distribution of the Real Estate to the Members [was not] a sale triggering NCJC‘s right of first refusal.”
The case proceeded to trial on count I. On May 9, the jury returned a verdict in favor of NCJC, finding that WMG breached the lease agreement by failing to reimburse input costs and awarding $41,453.57 in damages. The parties filed cross-motions for attorney fees and costs. Each side claimed to be a prevailing party entitled to attorney fees under Section 20 of the lease. The district court ruled that NCJC alone was the prevailing party for purposes of the contractual fee award, and declined to award WMG any attorney fees. The district court rejected WMG‘s contention that NCJC failed to comply with
WMG appealed, and we transferred the case to the court of appeals, which affirmed in part and reversed in part. The court of appeals concluded that NCJC was the prevailing party and affirmed the district court‘s ruling denying any fee award to WMG. The court of appeals affirmed the ruling that NCJC complied with
II. Scope and Standard of Review.
“We review the court‘s award of attorney fees for an abuse of discretion.” Boyle v. Alum-Line, Inc., 773 N.W.2d 829, 832 (Iowa 2009) (per curiam). “Reversal is warranted only when the court rests its discretionary ruling on grounds that are clearly unreasonable or untenable.” Id. (quoting Gabelmann v. NFO, Inc., 606 N.W.2d 339, 342 (Iowa 2000)). “[M]isapplication of the statute constitutes an abuse of discretion.” Gabelmann, 606 N.W.2d at 344.
III. Analysis.
“Iowa follows the American rule: ‘the losing litigant does not normally pay the victor‘s attorney‘s fees.’ ” Guardianship & Conservatorship of Radda v. Wash. State Bank, 955 N.W.2d 203, 214 (Iowa 2021) (quoting Thornton v. Am. Interstate Ins., 897 N.W.2d 445, 474 (Iowa 2017)). “Generally, attorney fees are recoverable only by statute or under a contract.” Id. (quoting Thornton, 897 N.W.2d at 474). This appeal involves no underlying fee-shifting statute and both sides seek their attorney fees pursuant to Section 20 of their lease agreement, which provides, “If either party files suit to enforce any of the terms of this Lease, the prevailing party shall be entitled to recover court costs and reasonable attorney‘s fees.”
We have three issues to decide: First, who is the prevailing party? Second, did the district court abuse its discretion in finding that NCJC complied with
A. WMG Is Not the Prevailing Party. In the posttrial motions for attorney fees, each party argued that it was the “prevailing party.” Their lease entitles “the prevailing party“—singular—to reasonable attorney fees. There is only one prevailing party here. WMG argues that it prevailed because NCJC recovered far less at trial than its first demand of $190,564 and the district court granted WMG‘s motion for partial summary judgment dismissing count II. WMG further argues it is the prevailing party in the phase of litigation after NCJC rejected its $75,000 offer to confess judgment, because the jury awarded a lower amount. The district court and court of appeals determined that NCJC alone was the prevailing party because it recovered $41,453 from WMG in the judgment on the jury verdict for fertilizer.
We agree with the district court and court of appeals that NCJC alone is the prevailing party based on its recovery of a money judgment against WMG. See Lee v. State, 874 N.W.2d 631, 645 (Iowa 2016) (“[B]ecause ‘the prevailing party inquiry does not turn on the magnitude of the relief obtained,’ even an award of nominal damages confers eligibility to receive an attorney fee award under that standard.” (quoting Farrar v. Hobby, 506 U.S. 103, 113–14, 113 S. Ct. 566, 574 (1992))). “Generally speaking, ‘status as a prevailing party is determined on the outcome of the case as a whole, rather than by piecemeal assessment of how a party fares on each motion along the way.’ ” Emery v. Hunt, 272 F.3d 1042, 1047 (8th Cir. 2001) (quoting Jenkins v. Missouri, 127 F.3d 709, 714 (8th Cir. 1997) (en banc)). In Dutcher v. Randall Foods, we approvingly cited federal caselaw allowing “prevailing party” attorney fees even though the ultimate recovery fell below settlement demands or offers. 546 N.W.2d 889, 895 (Iowa 1996) (citing Haworth v. Nevada, 56 F.3d 1048, 1052 (9th Cir. 1995); Fegley v. Higgins, 19 F.3d 1126, 1135 (6th Cir. 1994)). Indeed, Black‘s Law Dictionary defines “prevailing party” as one “in whose favor a judgment is rendered, regardless of the amount of damages awarded.” Prevailing Party, Black‘s Law Dictionary (11th ed. 2019) (emphasis added).
B. NCJC Complied with
We begin with the text of the statute, which provides:
No such attorney fee shall be taxed if the defendant is a resident of the county and the action is not aided by an attachment, unless it shall be made to appear that such defendant had information of and a reasonable opportunity to pay the debt before action was brought. This provision, however, shall not apply to contracts made payable by their terms at a particular place, the maker of which has not tendered the sum due at the place named in the contract.
The statute is an imperfect fit with
We agree with the court of appeals that the pleadings themselves showed compliance with the statute. In its petition, NCJC alleged:
Despite a demand by NCJC for reimbursement for the unused portion of the allocated benefit of the phosphate, potash, lime and trace minerals that were applied to the Subject Real Estate prior to termination of the Lease, WMG
has failed and refused to make any of the payment required by Section 4 of the Lease.
In its answer, WMG “[a]dmitted that WMG has not paid NCJC for the amounts demanded.” WMG also acknowledged that NCJC had sent it an invoice in the amount of $190,564.62 on January 9—eighty-one days before NCJC filed the petition.
Like the court of appeals, we find no abuse of discretion in the district court‘s determination that NCJC satisfied
C. The Effect of the Rejected Offer to Confess Judgment. We turn now to the offer to confess judgment—a better vehicle for the defendant in a breach of contract action to avoid or reduce liability for the plaintiff‘s attorney fees. The court of appeals held
Whether the term “costs” in
Five years later, in Brockhouse v. State, we adjudicated the effect of an offer to confess in a case where the prevailing party was entitled by statute to recover attorney fees. 449 N.W.2d 380, 381 (Iowa 1989). We held that
NCJC as the prevailing party is contractually entitled to recover its reasonable attorney fees from WMG under Section 20 of their farm lease agreement. As
Our interpretation furthers the “well-recognized purpose of
Our analysis is supported by persuasive caselaw construing
In Marek, the plaintiffs sued police officers under
Rather than “cutting against the grain” of § 1988, as the Court of Appeals held, we are convinced that applying Rule 68 in the context of a § 1983 action is consistent with the policies and objectives of § 1988. Section 1988 encourages plaintiffs to bring meritorious civil rights suits; Rule 68 simply encourages settlements. There is nothing incompatible in these two objectives.
The concurrence in part and dissent in part fails to cite any post-Marek decision of another state‘s appellate court holding “costs” do not include attorney fees in an equivalent offer-to-confess-judgment rule when the underlying contract or statute allows recovery of fees taxed as costs.
Id. at 11, 105 S. Ct. at 3017–18; see also Catalina Yachts v. Pierce, 105 P.3d 125, 130–31 (Alaska 2005) (reaching same conclusion under Alaska Rule of Civil Procedure 68 and fee-shifting provision in the Magnuson-Moss Act). We agree with this reasoning.
Our holding today leaves the ultimate responsibility to choose whether to allow or deny attorney fees under
[B]y relying on the underlying statute the court places the ultimate responsibility to make the decision where it should be—on the Legislature. There is inevitably a tension between the policy of CR 68 as interpreted in Marek to promote settlements by limiting plaintiff‘s attorneys’ fees on the one hand, and the policy of many civil rights and consumer protection statutes to facilitate, indeed, to encourage enforcement litigation. As has frequently been expressed, a successful civil rights case not only vindicates the rights of the individual but also serves a broader purpose to eliminate discrimination in society. It is for the Legislature to strike the proper balance between these competing values.
Hodge v. Dev. Servs. of Am., 828 P.2d 1175, 1178 (Wash. Ct. App. 1992) (footnote omitted).7 Meanwhile, legislators could reasonably conclude that
The WMG–NCJC lease allows the prevailing party an award of its “reasonable attorney‘s fees.”
amount to be taxed as costs to “reasonable” attorney fees.
Our holding under
IV. Disposition.
For the foregoing reasons, we affirm the decision of the court of appeals, and reverse the district court ruling to the extent it awarded NCJC fees incurred after WMG offered to confess judgment. We remand the case
for the district court to recalculate the fee award consistent with this opinion.
DECISION OF COURT OF APPEALS AFFIRMED; DISTRICT COURT JUDGMENT AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH INSTRUCTIONS.
Christensen, C.J., and Mansfield, McDonald, Oxley, and McDermott, JJ., join this opinion. Appel, J., files an opinion concurring in part and dissenting in part.
#19–0241, NCJC, Inc. v. WMG, L.C.
APPEL, Justice (concurring in part and dissenting in part).
I concur with most of the majority opinion, but I dissent on the question of whether a party is entitled to attorney fees under the cost-shifting statute of
I. Overview.
The question of who pays attorney fees is a big deal. This is so for a number of reasons. First, potential litigants with few resources are at a distinct disadvantage in legal disputes where attracting skilled lawyers, if not a prerequisite for success, greatly increases the odds of a positive outcome. Second, our legal system has become more complicated and thus more expensive. Under the circumstances, an underdog risks being crushed by the resource imbalance notwithstanding the underlying merits of the case.
At common law, the prevailing party was entitled to recover attorney fees. The common law approach to fee-shifting made litigation a risky business even under the best of circumstances. Those feisty rebels, now called Americans, adopted a distinctly different approach. Under the American rule, each party bears its own expenses in litigation, including attorney fees. The purpose of the American rule was to ameliorate the harshness of the common law approach.
The question of whether attorney fees could be awarded to a party is a distinctly different question than whether the costs of litigation might be imposed on a party. The costs of litigation have traditionally been distinguished from “expenses” including attorney fees.
In this case, we are called upon to consider the provisions of
The question here is whether costs in this statute may be construed to include attorney fees. Remarkably, the majority tells us sometimes—depending upon the wording of the underlying fee-shifting statute found elsewhere in the Code. In other words, the term “costs” in
First, in my view, the word “costs” should be given its traditional meaning. The traditional view found in many cases from multiple jurisdictions is that “costs” means the ministerial costs tacked on at the conclusion of litigation by the court. In a court that occasionally prides itself on “plain meaning,” it is surprising that the legislative choice of wording does not carry the day. While the majority retreats to policy implications, touting the approach as encouraging settlement, I think the
policy implications cut in exactly the opposite direction and will encourage settlement of cases for less than their real worth.
Second, in my view the majority errs when it chooses to adopt the oddball and historically unjustified approach of the United States Supreme Court in Marek v. Chesny, 473 U.S. 1, 105 S. Ct. 3012 (1985). The Marek case was not cited by either party, and for good reason. In Marek, the Supreme Court upended a cart of legal potatoes when it departed from its precedent and discovered that the term “costs” in
Finally, even if we were to incorporate a Marek-type floating meaning approach into our law, it is misapplied by the majority. According to Marek, the question of whether attorney fees were recoverable as costs under
The majority‘s disposition in this case does not shift the defendant‘s attorney fees to the plaintiff because the defendant was not a prevailing party under their lease. The majority decision, however, prevents the plaintiff from recovering postoffer attorney fees from the defendant because the plaintiff‘s ultimate damages award was less than the offer. Under my approach to
For the above reasons, I would hold that in this case, the plaintiff is not liable for the attorney fees incurred by the defendant after the offer to confess judgment and that the plaintiff is entitled to postoffer attorney fees under the lease agreement and
II. Traditional Approach to “Costs” and “Attorney Fees.”
A. Introduction.
While I am ordinarily not much of a fan of “plain meaning,” statutory language remains the starting point of analysis. In
The majority eschews that approach, which I think is okay given the wide choices ordinarily available from various dictionaries. But from the standpoint of both legal theory and caselaw, it is clear that, traditionally at least, costs and attorney fees are not twins, not even siblings, really, but belong to different families. In my view, we should simply follow the traditional view that costs and attorney fees are different and call it a day.
B. Iowa Caselaw.
Iowa has had a cost-shifting statute since the early days of statehood. The language of
What has the term “costs” meant historically in Iowa? A line of Iowa cases follow the traditional approach that costs are not attorney fees. For example, in Boardman v. Marshalltown Grocery Co., we noted that attorney fees and other expenses are not part of the costs. 105 Iowa 445, 451, 75 N.W. 343, 345 (1898). The Boardman court was not wishy washy on the issue, stating, “If anything is well settled, it is that such items [including attorney fees] can neither be recovered nor taxed.” Id.
In Weaver Construction Co. v. Heitland, we considered whether attorney fees were within the scope of the term “costs” in Iowa Code section 677.10 (1983). 348 N.W.2d 230, 232–33 (Iowa 1984). We stated that “we do not agree . . . that the word ‘costs’ should be so liberally stretched as to include attorney fees.” Id. at 233. We did not regard it as a close issue. We stated that “the legislative intent of
Several years later, we considered the enforceability of an offer to confess judgment in Brockhouse v. State, 449 N.W.2d 380 (Iowa 1989). In Brockhouse, the fighting issue was the meaning of an offer of settlement of “$10,000 ‘with costs.’ ” Id. at 382. Did “with costs” mean that costs were included within the $10,000, or did “with costs” mean that an additional sum beyond $10,000 would be paid for costs? Id. at 383. We noted that the term of the offer in the case tracked the language of the statute. Id. The parties in Brockhouse agreed that
C. Other State Court Authorities.
There is ample authority in state courts for the proposition found in the Iowa precedents, namely, when the legislature uses the term “costs,” it means fees and charges such as filing fees, fees for service of process, and the like, but not attorney fees. See All. Indem. Co. v. Kerns, 398 P.3d 198, 204 (Kan. Ct. App. 2017); see also Freiburger v. J-U-B Eng‘rs, Inc., 111 P.3d 100, 109 (Idaho 2005); Nat‘l Union Fire Ins. of Pittsburgh, P.A. v. Dixon, 112 P.3d 825, 830 (Idaho 2005) (“When the legislature has intended that the term costs cover attorney fees, it has so provided.“); Trs. of Ind. Univ. v. Buxbaum, 69 P.3d 663, 670 (Mont. 2003); Kintner v. Harr, 408 P.2d 487, 498 (Mont. 1965); Pub. Entity Pool for Liab. v. Score, 658 N.W.2d 64, 67–70 (S.D. 2003); Soundgarden v. Eikenberry, 871 P.2d 1050, 1064 (Wash. 1994) (en banc).
Many states have adopted a rule of civil procedure that authorizes the shifting of certain costs after the refusal of an offer to confess. The rules are highly variable, but, in general, as observed by one academic, the trend shows increasing rejection of
But the limited definition of costs has been applied by a number of courts in considering the effect of statutes or rules that are similar to
While state caselaw often construes the term costs in the traditional way, some states as a matter of substantive law have altered the cost-shifting approach. For example, in 1971 New Jersey enacted a rule that provided for the shifting of attorney fees up to $750. See
In contrast, New Mexico has enacted a rule which expressly excludes attorney fees from recovery in its confession of judgment rule. See
D. Traditional Federal Caselaw Prior to Marek.
Historically, the federal caselaw generally stood for the proposition that costs and attorney fees were different items. As noted by one commentator, “In the federal courts, the practice is based upon the fundamental, essential, and common law doctrines and distinctions as to costs and fees.” Philip M. Payne, Costs in Common Law Actions in the Federal Courts, 21 Va. L. Rev. 397, 397–98 (1934–1935) (emphasis omitted).
The Supreme Court recognized the distinction between costs and attorney fees long ago. In Day v. Woodworth, the Court emphasized that “the legal taxed costs are far below the real expenses incurred by the litigant.” 54 U.S. (13 How.) 363, 372 (1851). The Supreme Court later recognized in Sioux County v. National Surety Co., that an attorney fee award under a state statute was not the same as “costs in the ordinary sense of the traditional, arbitrary and small fees . . . allowed to counsel.” 276 U.S. 238, 243–44, 48 S. Ct. 239, 241 (1928). In Fleischmann Distilling Corp. v. Maier Brewing Co., the Supreme Court had no trouble coming to the conclusion that costs in the Lanham Act did not mean attorney fees. 386 U.S. 714, 719–21, 87 S. Ct. 1404, 1408–09 (1967).
The issue came to sharp focus in Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S. Ct. 2455 (1980). There, the Supreme Court held that a statute authorizing an award of excess costs where attorneys have engaged in vexatious litigation did not authorize the award of attorney fees to the prevailing defendant. Id. at 767, 100 S. Ct. at 2465. The Supreme Court noted that under
A few years later in Delta Airlines, Inc. v. August, the Supreme Court considered the meaning of the term “costs” in Federal Rule of Civil Procedure 54(d). 450 U.S. 346, 351, 101 S. Ct. 1146, 1149 (1981). Under the rule, the prevailing party after judgment “recovers costs unless the trial court otherwise directs.” Id. The Delta Court further considered the
E. Summary.
Based on the above authorities, I would stay within the mainstream and conclude that the term “costs” does not include attorney fees for purposes of
III. Should We Adopt the Marek Approach Under Iowa Code Section 677.10?
A. Introduction.
In an important civil rights case, the Supreme Court in Marek considered whether costs under
The majority opinion adopts the approach of the United States Supreme Court in its interpretation of In Marek, three police officers answering a domestic disturbance call shot and killed the Chesny‘s son. 473 U.S. 1, 3, 105 S. Ct. 3012, 3013. Chesny on his own behalf and as administrator of his son‘s estate filed an action against the officers under The plaintiffs filed a request for $171,692.47 in costs and attorney fees, including amounts incurred after the settlement offer. Id. The defendants, however, claimed that under The district court agreed with the defendants and declined to award attorney fees incurred after the offer of judgment. Id. The parties agreed that the allowable costs prior to the offer of judgment, including attorney fees, was $32,000. Id. The plaintiffs appealed the denial of postoffer costs. Id. The United States Court of Appeals for the Seventh Circuit reversed the district court. Id. In an opinion by Judge Posner, the Seventh Circuit concluded that the approach of the district court would undermine the effectiveness of The majority opinion in Marek was written by Chief Justice Burger. The majority first considered whether the offer was valid. 473 U.S. at 5, 105 S. Ct. at 3014. The central question was whether a “lump-sum” offer was valid under the rule. Id. at 6–7, 105 S. Ct. at 3015. The majority concluded that under the language of the rule, there was no requirement that a party break down the components of an offer. Id. “As long as the offer does not implicitly or explicitly provide that the judgment not include costs, a timely offer will be valid.” Id. at 6, 105 S. Ct. at 3015. The majority then turned to the question of whether costs in In terms of methodology, the majority stressed that in order to shift costs under In considering the impact of the approach on civil rights cases, the majority rejected the view of the Seventh Circuit that the approach would frustrate congressional objectives. Id. at 10, 105 S. Ct. at 3017. The majority emphasized the role of Justice Brennan, joined by Justices Marshall and Blackmun, dissented. Id. at 13, 105 S. Ct. at 3018 (Brennan, J., dissenting). Justice Brennan observed that in Roadway Express, a similar argument was rejected as inconsistent with the well-settled meaning of the term and the desire of Congress for uniformity. Id. at 17, 105 S. Ct. at 3020 (citing Roadway Express, 447 U.S. at 758, 100 S. Ct. at 2460). Aside from precedent, Justice Brennan offered six reasons in support of a uniform approach to the term “costs” in In addition, Justice Brennan found the approach of the majority inconsistent with the goals of civil rights legislation and beyond the rulemaking power of the Court. Id. at 28–38, 105 S. Ct. at 3026–32. The Marek decision was immediately controversial in Congress and ultimately was overruled with respect to civil rights legislation in the Civil Rights Act of 1991, Pub. L. No. 102–166, 105 Stat. 1071 (1991) (codified at In 1992, Judge William Schwarzer proposed revisions to In 1996, the American Bar Association weighed in on the issue. See ABA Urges Offer of Judgment Changes to Counter Movement to “Loser Pays” Rule, 64 U.S.L.W. 2495 (1996). The ABA concluded that the rule was deeply flawed as it was available only to plaintiffs, shifted only costs, and gave no discretion to judges if unfairness resulted. See Walter H. Beckham & Lawrence J. Fox, Report on Offer of Judgment Legislation, 1996 A.B.A. Sec. Tort & Ins. Prac. 114; see also Lesley S. Bonney, Robert J. Tribeck & James S. Wrona, Rule 68: Awakening a Sleeping Giant, 65 Geo. Wash. L. Rev. 379, 415–18 (1997) (reviewing ABA proposal); Russell C. Fagg, Montana Offer of Judgment Rule: Let‘s Provide Bona Fide Settlement Incentives, 60 Mont. L. Rev. 39, 40 n.2 (1999). Closer to home, Drake Law Professor Danielle Shelton wrote an important article in the Minnesota Law Review relating to the difficulties arising from the Supreme Court‘s interpretation of The vibrant discussion about First, the approach relies on fine distinctions in the language used in the underlying fee-shifting statutes that were not drafted with the expectation that the statutes might give rise to shifting of fees after rejected offers of judgment under Second, it is beyond debate that the confession of judgment antecedents to Third, the parsing of the language of a fee-shifting statute is problematic. Indeed, in this case we must consider the meaning of the ambiguous phrase “taxed as costs.” Instead of introducing clarity into the law, it introduces uncertainty. A much better approach is the uniform one, namely, that “costs” means traditional costs under Fourth, the inclusion of attorney fees as costs threatens to undermine the fundamental policy of the underlying fee-shifting statute itself. Indeed, that is exactly what happened in Marek. Fee-shifting statutes demonstrate a legislative directive to increase access to the courts for parties vindicating important public law principles. An interpretation of the term “costs” in a confession of judgment statute or rule eviscerates that policy. Fifth, under Sixth, the rule does not focus on nonmeritorious claims, but faulty guesswork. Under the majority approach, an offer to confess may be made early in the litigation, even before discovery has occurred. If attorney fees are included within the term “costs” in Seventh, the approach requires plaintiffs’ lawyers to predict how the district court will respond to fee requests. Of course, a plaintiffs’ lawyer will have a good idea of the amount of fees that may be claimed at the time of an offer to confess judgment. But district court awards of fees are highly variable. The assessment of risk is now doubly complicated. Eighth, an offer of a lump sum places attorneys in conflict with clients, particularly in class actions. A lump sum settlement that includes attorney fees places lawyers and clients at odds as they try to determine how to respond to a lump sum offer. In the context of a class action, a rational method of determining the allocation of an offer to confess in a short period of time may be virtually impossible. Ninth, there is reason to believe that the inclusion of attorney fees in costs will not affect the number of settlements at all, but will only affect the potential gains in favor of the defendants. In other words, the only effect of the inclusion of attorney fees in costs will be to shift the price range where settlement negotiations occur. See Judith Resnick, Failing Faith: Adjudicatory Procedure in Decline, 53 U. Chi. L. Rev. 494, 531 (1986) (noting that the Marek court “ignored the complexity of the disparate impact that the increase in economic incentives to settle has upon litigants with vastly divergent resources“); Albert Yoon & Tom Baker, Offer-of-Judgment Rules and Civil Litigation: An Empirical Study of Automobile Insurance Litigation in the East, 59 Vand. L. Rev. 155, 162 (2006) (discussing how the offer of judgment rule imposes risk on plaintiffs without any corresponding risk borne by defendants). Cumulatively, in my view, these concerns are more than enough to discourage a cut and paste job implanting the approach in Marek into our Iowa statute. We should just declare that costs are costs and be done with it. Even assuming we adopt the Marek approach, we must look to the fine language in the underlying fee-shifting statute to determine whether attorney fees are within the scope of the term “costs” in provides: “When judgment is recovered What are we to make of the phrase “allow and tax as a part of the costs” and the follow up phrase “to be determined by the court“? In my view, the language is obviously designed to show how contracts with attorney fees provisions are to be enforced. The statute does not declare that attorney fees are, in fact costs. Rather, they are a distinct element that the district court is to tax as a part of the costs and awarded by the court posttrial. The purpose of declaring that the district court may “allow and tax as a part of the costs” attorney fees is to ensure that the district court, and not the fact finder, makes the determination after trial. In a contract case, a party may wonder whether an attorney fee claim is a part of the damages that needs to be proved at trial and potentially subject to determinations by a jury. The statute answers that question. Where there is a contract that provides for attorney fees in the event of a breach, the attorney fees are not a part of the damages but instead the district court is directed to tax the attorney fees “as a part of the costs.” Indeed, as noted in a 1935 commentary, where attorney fees are available to a prevailing party, “it is usually further provided that such fees are to be determined by the court and taxed as part of the costs of the action.” W.M.B, Note, Costs—Problems in the Allowance of Attorneys’ Fees in America, 21 Va. L. Rev. 920, 921 (1935) (emphasis added) (footnote omitted). As the commentator suggests, “[w]here a jury is required, quite obviously evidence must be introduced to guide it in fixing the amount [of attorney fees].” Id. at 925. One might conclude that my approach parses the statute rather finely, or to use Justice Brennan‘s term, “picayune.” Marek, 473 U.S. at 15, 105 S. Ct. at 3019 (Brennan, J., dissenting). Quite so, but that picayune distinction is precisely what Marek requires. If one has distaste for fine analysis of language of fee-shifting statutes, and thinks the debate about the meaning of “tax as a part of the costs” is a debate about trifles, that is a good and entirely sufficient reason to reject the Marek regime in its entirety. But if we are to have it, I would conclude that For the above reasons, I respectfully dissent from the majority opinion to the extent it rejects the district court‘s award of postoffer attorney fees to the plaintiff and therefore shifts the attorney fees pursuant to its interpretation of the interplay of B. Overview of Marek.
1. Factual and procedural background.
2. Majority opinion.
3. Dissenting opinion.
C. Problematic Nature of Marek.
1. Developments post-Marek.
2. Problems with the Marek approach.
IV. Application of Marek Leads to a Result Contrary to the Majority.
V. Conclusion.