Jones v. Glenwood Golf Corp.

956 N.W.2d 138

Terry K. JONES and Christine Jones, Appellees,

v.The GLENWOOD GOLF CORPORATION, Appellant.

No. 20-0303

Supreme Court of Iowa.

Submitted December 16, 2020

Filed March 12, 2021

William H. Larson, Zachary D. Clausen (argued), Rene Charles Lapierre (argued) of Klass Law Firm, L.L.P., Sioux City, for appellant.

Stephen A. Rubes (argued) and Joseph J. Hrvol of Joseph J. Hrvol, P.C., Council Bluffs, for appellees.

Waterman, J., delivered the opinion of the court, in which all justices joined.

WATERMAN, Justice.

In this appeal, we must decide a question of first impression: whether an injured passenger's settlement and release of negligence claims against the driver by operation of law extinguished his vicarious liability claim against the vehicle owner under Iowa Code section 321.493 (2017) (Owner's Responsibility Law) for damages caused by the driver. A father–son golf outing ended badly when the son, driving a golf cart owned by the golf course, struck a bridge and the impact ejected the passenger (his father) who suffered severe injuries. The passenger settled his claims against the driver and signed a release that expressly reserved his claims against the owner. He then sued the golf course for owner liability under section 321.493 and common law premises liability (based on the condition of the bridge). The owner moved for summary judgment contending the release of the driver extinguished the statutory liability claim. The district court denied the motion and the case proceeded to trial. The jury found the owner not negligent for premises liability and found that the driver was one hundred percent at fault for damages totaling $500,000, including $20,000 for past medical expenses. The evidence showed the past medical bills were at least $295,463, and on that basis, the court granted the plaintiffs’ motion for a new trial on damages against the owner. The owner appealed, and we retained the case.

On our review, for the reasons explained below, we hold that the passenger's release of the driver extinguished the owner's vicarious liability under section 321.493 for the damages negligently caused by the driver. This result is mandated by our precedent on vicarious liability and Iowa Code chapter 668 (Comparative Fault Act) and reflects the majority rule in other jurisdictions. The district court erred by ordering a new trial, and we reverse that ruling and remand the case for dismissal.

I. Background Facts and Proceedings.

On September 14, 2017, plaintiff Terry Jones went golfing with his son, Jeff Jones, at Glenwood Golf Course in Mills County. Glenwood Golf Corporation owns the golf course and the golf carts used by its patrons with its permission. Jeff was driving the cart with Terry in the passenger seat. As they crossed a bridge in the cart, the cart started veering to the left and when Jeff over-corrected, the cart's left front tire became wedged into the steel structure of the bridge. The impact ejected Terry through an opening in the bridge's safety-rail. Terry fell about twenty-five feet onto a creek bed below filled with concrete and steel reinforcement bar. Terry suffered life-threatening injuries and was airlifted by helicopter to the University of Nebraska Medical Center. He underwent multiple surgeries and spent months hospitalized and in a rehabilitation facility.

Terry and his wife, Christine Jones, entered into a settlement agreement with Jeff and his homeowner's liability insurer, Liberty Mutual Insurance Company. Under the terms of the six-page contract entitled "RELEASE AND INDEMNITY AGREEMENT ," Liberty Mutual paid $817,500 to Terry and Christine (identified in the contract as "the Plaintiffs") and their lawyer, and $60,000 to Pacific Life & Annuity Services, Inc. to purchase a structured settlement annuity for additional monthly payments. The settlement released all claims against Jeff Jones and Liberty Mutual (identified in the contract as the "Released Parties") arising from the golf cart accident. The agreement included these terms:

[T]he Plaintiffs further agree to hold the Released Parties harmless, and to defend and indemnify the Released Parties from any suits, claims, cross-claims, judgments, costs or expenses of any kind, including attorney's fees, arising from assertion of any such liens, reimbursement right, subrogation interest or claim.

D. PRESERVATION OF CLAIM . By signing this agreement and entering into this Release Plaintiffs specifically preserve any and all claims they may have against the Glenwood Golf Course, Glenwood Golf Corporation and any other responsible party.

E. As further consideration of this payment, the Plaintiffs hereby agree that:

1. This Release and Indemnity Agreement covers the released parties’ proportionate responsibility for all injuries and damages, whether known or not, and which may hereafter appear or develop arising from the matters referred to above[.]

After releasing their negligence claims against Jeff as driver of the golf cart, Terry and Christine filed this civil action against Glenwood alleging two theories of liability. First, their petition alleged that Glenwood "breached its duty as the owner of the Glenwood Golf Course, pursuant to the Restatement (2nd) of Torts, Section 344, to protect Plaintiff Terry K. Jones from the accidental, negligent, or intentional harmful acts of third persons, including Jeff Jones." This premises liability claim was factually based on the alleged unsafe condition of the bridge. Second, their petition alleged that Glenwood, as the owner of the golf cart, "is liable for damages caused by reason of the negligence of the driver of such vehicle in accordance with Chapter 321.493 of the Iowa Code." The parties agreed that the golf cart is a vehicle within the meaning of section 321.493 and that Jeff was driving the cart with Glenwood's permission.

Glenwood filed a motion for summary judgment contending that by releasing the driver, the plaintiffs extinguished their section 321.493 claims against the owner. Plaintiffs filed their own motion for summary judgment, arguing that Glenwood was liable as owner of the unsafe bridge. The district court denied both summary judgment motions. The court, noting conflicting expert testimony, determined that "whether the bridge was safe and maintained properly" was a disputed issue of material fact precluding summary judgment for the plaintiffs. The court denied Glenwood's motion, reasoning that "[s]ection 321.493 does not specifically exclude liability if the driver is released by settlement. Further, no case law in Iowa provides an escape from liability under § 321.493 in case of a released party." The court ruled that Glenwood, if liable, would get an offset for the plaintiffs’ settlement with Jeff.

The case proceeded to a jury trial. Glenwood failed to move for a directed verdict on grounds that the plaintiffs’ settlement with Jeff precluded liability under section 321.493. The court submitted both liability theories to the jury, with Jeff Jones on the verdict form as a released party. The jury found Glenwood as owner of the golf course was not negligent under the premises liability claim. The jury found that "Jeffrey Jones as driver of the cart" was negligent and that his fault caused the plaintiffs’ damages. The jury assessed one hundred percent of the fault to "Jeffrey Jones (Released Party)." The jury awarded damages totaling $500,000, including $20,000 for past medical expenses. The district court entered judgment that, after applying a dollar for dollar (pro tanto) setoff, awarded the plaintiffs zero damages:

Jeffery Jones is a released party having entered into a settlement with Plaintiffs. The amount paid to Plaintiffs by Jeffery Jones in that settlement is in excess of the total damages awarded by the jury in this case under the owner liability claim. Because the jury did not find or assign Glenwood Golf Corporation any percentage of fault under the tort claim theory the court must reduce Plaintiffs’ recovery considering the Jeffery Jones settlement. Accordingly, the court reduces the award of $500,000 against Defendant Glenwood Golf Corporation, as owner of the golf cart operated by Jeffery Jones, to zero dollars.... THEREFORE the Court enters judgment in favor of Plaintiffs Terry and Christine Jones but reduces the amount of damages to zero dollars.

The plaintiffs filed a motion for new trial and additur on grounds that the verdict was inadequate because the evidence showed the past medical expenses were many times the amount awarded. Glenwood acknowledged the evidence showed past medical expenses of at least $295,463 while the plaintiffs argued the evidence showed far greater amounts. The district court again ruled that Glenwood "is liable on the owner liability claim" and granted a new trial on damages only. Glenwood appealed, and the plaintiffs filed no cross-appeal. We retained the case.

II. Standard of Review.

The dispositive issue on appeal is whether the plaintiffs’ release of the golf cart driver, Jeff, extinguished their vicarious liability claims against Glenwood as the golf cart owner under Iowa Code section 321.493 for the damages caused by Jeff's negligent driving. This is a question of law. "We review the application and interpretation of statutes for errors at law." Beganovic v. Muxfeldt , 775 N.W.2d 313, 317 (Iowa 2009). "The standard of appellate review regarding the permissible scope of a district court judgment is for errors of law." Rethamel v. Havey , 715 N.W.2d 263, 266 (Iowa 2006). When the ruling on a motion for new trial is "based on a legal question, our review is on error." Clinton Physical Therapy Servs., P.C. v. John Deere Health Care, Inc. , 714 N.W.2d 603, 609 (Iowa 2006) (quoting Richards v. Anderson Erickson Dairy Co. , 699 N.W.2d 676, 678 (Iowa 2005) ).

III. Analysis.

The fighting issue on appeal is whether the district court correctly ruled that the plaintiffs can recover from Glenwood as the golf cart owner under Iowa Code section...