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IN THE COURT OF APPEALS OF IOWA No. 9-899 / 08-1707 Filed February 10, 2010 BROOKS WEB SERVICES, INC., Plaintiff/Counterclaim Defendant, vs. CRITERION 508 SOLUTIONS, INC., Defendant/Counterclaim-Appellee, vs. BERTROCHE LAW OFFICES, Attorneys for Plaintiff, Brooks Web Services, Inc., Appellant. ________________________________________________________________ Appeal from the Iowa District Court for Polk County, Artis I. Reis, Judge.

The plaintiffs law firm appeals from the district court ruling finding a violation of Iowa Rule of Civil Procedure 1.413(1). WRIT SUSTAINED.

David L. Brown of Hansen, McClintock & Riley, Des Moines, for appellant. Gordon R. Fischer of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, for appellee.

Heard by Sackett, C.J., Doyle and Danilson, JJ.

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SACKETT, C.J. Plaintiff, Brooks Web Services, Inc. (Brooks, Inc.), filed suit alleging the defendant, Criterion 508 Solutions, Inc. (Criterion), failed to pay money owed to Brooks, Inc. for services it performed. Criterion filed a counterclaim. Following trial, the district court granted a directed verdict dismissing Brooks, Inc.s claims against Criterion and granting judgment for Criterion on several grounds raised in its counterclaim. Criterion filed a motion for sanctions under Iowa Rule of Civil Procedure 1.413(1), contending the Bertroche Law Firm (Bertroche) failed to perform a reasonable inquiry into the facts alleged by its client, Brooks, Inc., prior to filing the petition and prior to responding to discovery requests. The district court found the rule was violated and sanctioned Bertroche. Bertroche appeals. We sustain the writ. I. agencies BACKGROUND. and contractors Criterion is in the business of advising federal on compliance with the federal Workforce

Rehabilitation Act. Criterion aids its clients in making electronic information and other technology accessible to persons with disabilities. It provides testing,

training, and certification solutions to help clients comply with the act. Criterion entered into a subcontractor services agreement with Brooks, Inc. Brooks, Inc. was to provide technical and non-technical consultation to Criterions clients on individual projects. For example, Brooks, Inc. was hired to update Criterions website, create a newsletter for Criterions clients, and test and repair clients software to comply with the Rehabilitation Act. Brooks, Inc. was also hired to provide direct mentoring and training to clients on software. Under the contract,

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Criterion would provide a work order detailing the services required. Brooks, Inc. was to provide Criterion "with a weekly summary of services performed and invoices within 10 days of project completion." Criterion was to remit payment within thirty days of receiving the invoice. On May 18, 2005, Brooks, Inc. was notified that Criterion was terminating the contract. On June 30, 2006, Brooks, Inc. filed suit alleging the defendant, Criterion, failed to pay money owed to Brooks, Inc. pursuant to the written contract and under theories of open account and quantum meruit. Criterion denied the At trial,

allegations, asserted affirmative defenses, and filed a counterclaim.

Angy Brooks, president of Brooks, Inc., testified that she performed services requested in work orders but never received payment for them. She

acknowledged that she rarely, if ever, submitted weekly summaries or invoices within ten days of project completion under the contract. She testified that there were a number of reasons for this failure. She stated that she did not complete paperwork in a timely fashion, and that Criterion was often updated on her work progress by email or by phone. She testified that she was previously paid for her work, even when the invoices were submitted late. She also testified that at times, she agreed to have her compensation delayed because the owner of Criterion needed the money for other business expenses. She also stated that at one point, she was in negotiations with Criterions owner to be compensated for previous work by giving Angy Brooks a ten percent interest in Criterion. When those negotiations failed, Angy Brooks back-invoiced for her previous work. She also stated that after the contractual relationship deteriorated, Criterions owner

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requested that Angy send her previous invoices so the parties could finalize any payment owed. Angy reconstructed invoices at this time to request payment for uncompensated services. Many of the invoices admitted at trial had incorrect dates. Angy Brooks testified that this was because her invoice template had a "dynamic date field" that inserted the current date whenever the document was opened on a computer. Therefore, the date would only show the date the document was last opened, not when the invoice was created or emailed to Criterion. On crossexamination, Angy agreed that the written contract governed the parties relationship and that Brooks, Inc. was not relying on any oral promises for collection purposes in the lawsuit. Criterion never denied that Brooks, Inc.

performed any of the services alleged, but focused its defense on Angy Brookss failure to submit timely invoices as required by the contract. At the close of Brooks, Inc.s evidence, the district court granted a directed verdict in favor of Criterion, finding that Brooks, Inc. failed to establish elements on each of its claims. The court stated, Count one alleges breach of a written contract. Taking the evidence most favorable to the plaintiff, the Court does find that there was a written agreement entered into by the parties. There were actually two written agreements entered into by the parties. That contract did provide that defendant was provided certain services, and Criterion 508 was to pay for the same; however, there were certain conditions under the contract which were conditions precedent to payment. The plaintiff has not proven that the defendant is under default--is in default under terms of the written agreement or that the defendant has breached the written agreement. The plaintiff has not proven damages under count one; therefore, the motion for Directed Verdict under count one is granted.

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Under count two plaintiff pleads an open account. For the same reasons, the allegations under this count two have not been proven, even taking the evidence in the light most favorable to the plaintiff. Count two is dismissed. Count three alleges: Quantum mer[u]it. Plaintiff has not proven that she has performed each and every obligation imposed on it under the terms of the written contract and the oral agreements between the parties. She has not proven the amount of damages, even taking the evidence most favorable to plaintiff; therefore, Directed Verdict is granted on count three. Plaintiffs petition is dismissed. The court also dismissed portions of Criterions counterclaim and trial proceeded on Criterions remaining grounds. Following trial, on July 25, 2007, the district court entered its order, finding Brooks, Inc. breached the confidentiality provisions and restrictive covenant in the contract between the parties and was liable for negligence and conversion. It determined however, that Criterion failed to prove damages on most of its claims, but awarded Criterion damages in the amount of $11,200, ordered Brooks, Inc. to return any of Criterions property, and permanently enjoined Brooks, Inc. from further breaching the contract. On August 22, 2007, Criterion filed a motion for sanctions pursuant to Iowa Rule of Civil Procedure 1.413(1), contending Brookss counsel, Bertroche Law Firm, had inadequately investigated the facts prior to filing the original suit, and in responding to discovery requests. Bertroche resisted the motion and the court heard oral arguments on the issue on October 5, 2007. The court

concluded that rule 1.413(1) and Iowa Code section 619.19 (2005) were violated and Criterion was entitled to reasonable fees and costs. It ordered Criterions counsel to submit a statement of its claimed fees and a statement showing

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attorney fees and costs in the amount of $26,964.20 was filed.

Bertroche

objected, noting among other things, that fees should not be awarded for the third day of trial since only Criterions counterclaim was addressed on that day. The district court agreed, deducted from the requested amount fees and costs for the third day of trial, and awarded Criterions counsel, against Bertroche, $25,326.64. Bertroche appeals the award of fees and costs.1 It claims the court erred in (1) finding Criterions request for fees was timely, (2) finding rule 1.413(1) was violated, (3) applying the rule to discovery violations, and (4) awarding fees for the preparation and litigation of Criterions counterclaims. II. STANDARD AND SCOPE OF REVIEW. We review a ruling on a motion for sanctions for an abuse of discretion. Slade v. M.L.E. Inv. Co., 566 N.W.2d 503, 505 (Iowa 1997); Breitbach v. Christenson, 541 N.W.2d 840, 845 (Iowa 1995). Nonetheless, if an erroneous application of the law occurs during the exercise of that discretion, we will correct it. Weigel v. Weigel, 467 N.W.2d 277, 280 (Iowa 1991). The district courts findings of fact are binding on us if supported by substantial evidence. Barnhill v. Iowa Dist. Ct., 765 N.W.2d 267, 272 (Iowa 2009). The question presented to the district court under rule [1.413(1)] and section 619.19 is not whether a court shall impose sanctions

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The proper means to appeal a court order issuing sanctions is by filing a petition for writ of certiorari. Barnhill v. Iowa Dist. Ct., 765 N.W.2d 267, 272 (Iowa 2009). The remedy is certiorari, not appeal because the attorney is not a party to the underlying case, but is a party in the certiorari action. Sterner v. Fischer, 505 N.W.2d 490, 491 (Iowa 1993); Weigel v. Weigel, 467 N.W.2d 277, 278 (Iowa 1991). Bertroche acknowledges it did not file a petition for writ of certiorari but instead filed a notice of appeal. We therefore consider the notice of appeal as a petition for a writ of certiorari. See Iowa R. App. P. 6.108; Everly v. Knoxville Cmty. Sch. Dist., 774 N.W.2d 488, 492 (Iowa 2009); Sterner, 505 N.W.2d at 491.

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when it finds a violation--it must; instead, the question is how to determine whether there was a violation. Mathias v. Glandon, 448 N.W.2d 443, 445 (Iowa 1989). Our review on this question is deferential, and whether a violation has occurred is a determination for the court, involving matters of judgment and degree. Id. at 445-46. Counsels conduct is judged by an objective, as opposed to a subjective, standard. Weigel, 467 N.W.2d at 281. III. TIMELINESS OF MOTION. Bertroche first argues that Criterions

motion for sanctions was not timely filed. It acknowledges that there is no set deadline for filing a motion for sanctions, and that the motion was filed within thirty days after the courts trial ruling. However, it maintains that Criterions

counsel informed the court, on June 6, 2007, of its intent to file a motion for sanctions along with its proposed findings of fact and conclusions of law due on June 27, 2007. It contends since Criterions counsel did not actually file a motion for sanctions until August 22, 2007, the motion should be considered untimely. It asks us to adopt a rule that a motion for sanctions must be filed within thirty days of when a violation becomes apparent or within thirty days after the movant advises of its intent to seek sanctions. A motion for sanctions "must be filed while the underlying action is pending and before the courts authority to act on issues within that lawsuit expires." Franzen v. Deere & Co., 409 N.W.2d 672, 674 (Iowa 1987). Yet

counsel should request sanctions as early as possible after alleged violations occur to aid in judicial economy and effective determination of whether a rule was violated. Darrah v. Des Moines Gen. Hosp., 436 N.W.2d 53, 55 (Iowa 1989);

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Franzen, 409 N.W.2d at 675. Although there is no specific timeline under our rules for filing motions for sanctions, we require such motions to "be filed expeditiously without undue delay." Hearity v. Bd. of Supervisors, 437 N.W.2d 907, 909 (Iowa 1989). The many considerations which confront an advocate seeking to protect the best interests of a client militate against requiring that a motion for . . . sanctions be filed within a time frame shorter than the expiration of the time for appeal from the final judgment. Id. The motion for sanctions was filed within this time period and accordingly, we find it was timely filed. IV. VIOLATION OF RULE OF CIVIL PROCEDURE 1.413(1). Rule

1.413(1) provides in relevant part, Counsels signature to every motion, pleading, or other paper shall be deemed a certificate that: counsel has read the motion, pleading, or other paper; that to the best of counsel's knowledge, information, and belief, formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and that it is not interposed for any improper purpose, such as to harass or cause an unnecessary delay or needless increase in the cost of litigation . . . . If a motion, pleading, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay the other party . . . the amount of the reasonable expenses incurred because of the filing of the motion, pleading, or other paper, including a reasonable attorney fee. Iowa R. Civ. P. 1.413(1) (emphasis supplied). Iowa Code section 619.192 is identical in substance, and both are designed to maintain professionalism in the

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This section provides, Pleadings need not be verified unless otherwise required by statute. Where a pleading is verified, it is not necessary that subsequent pleadings be verified unless otherwise required by statute.

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practice of law and to discourage the filing of frivolous suits and the misuse of pleadings. Barnhill, 765 N.W.2d at 272-73. The rule requires the signer to certify that the attorney, (1) has read the petition, (2) concluded there is adequate support for the filing after performing a reasonable inquiry into the facts and the law, and (3) that the signer is not acting with any improper motive. Weigel, 467 N.W.2d at 280. In considering whether a violation has occurred, the court must ask whether counsel acted with reasonableness under the circumstances, as compared to a ",,reasonably competent attorney admitted to practice before the district court." Barnhill, 765 N.W.2d at 272 (quoting Weigel, 467 N.W.2d at 281). We view counsels conduct as of the time the allegedly unsupported petition or pleading was filed. Id.

The signature of a party, the partys legal counsel, or any other person representing the party, to a motion, pleading, or other paper is a certificate that: 1. The person has read the motion, pleading, or other paper. 2. To the best of the persons knowledge, information, and belief, formed after reasonable inquiry, it is grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law. 3. It is not interposed for any improper purpose, such as to harass or cause an unnecessary delay or needless increase in the cost of litigation. If a motion, pleading, or other paper is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader or movant. If a motion, pleading, or other paper is signed in violation of this section, the court, upon motion or upon its own initiative, shall impose upon the person signing, the represented party, or both, an appropriate sanction, which may include an order to pay the other party or parties the amount of the reasonable expenses incurred because of the filing of the motion, pleading, or other paper, including a reasonable attorney fee. Iowa Code

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