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IN THE COURT OF APPEALS OF IOWA No. 6-295 / 04-2070 Filed July 12, 2006

DONALD ROSDAIL, DOUGLAS FULLER, STAN McCLURG, JOEL KESSLER and JOHN HUSTON, Plaintiffs-Appellants/Cross-Appellees, vs. WILLIAM BYRNE, RICHARD STEPHENS and BRUCE KERN, Defendants-Appellees/Cross-Appellants. ________________________________________________________________

Appeal from the Iowa District Court for Linn County, Marsha M. Beckelman, Judge.

Plaintiffs appeal the district court's denial of their motion for a new trial in their claim of fraudulent misrepresentation and intentional interference with business relations. Defendants cross-appeal the district court's denial of their motion for directed verdict. REVERSED ON CROSS-APPEAL.

Sara Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for appellant.

William J. Wright and Eugene Kopecky, Cedar Rapids, for appellee.

Heard by Sackett, C.J., and Huitink and Miller, JJ.

2 HUITINK, J. I. Background Facts and Proceedings.

Donald Rosdail, Douglas Fuller, Stan McClurg, Joel Kessler, and John Huston ("Detectives") are detectives with the Cedar Rapids Police Department. They filed claims of fraudulent misrepresentation and intentional interference with business relations on July 17, 2000. The suit was filed against William Byrne, who served as chief of police from 1990 through 1999, and Richard Stephens and Bruce Kern, who both served as assistant chiefs through the date of trial. The Detectives' claims of fraudulent misrepresentation and intentional interference with business relations stem from the existing pay disparity between sergeants and detectives of equal seniority at the Cedar Rapids Police Department. Byrne, Stephens, and Kern allegedly promised the Detectives that if they left the collective bargaining unit which encompassed both sergeants and detectives, the Detectives' pay would be brought within five and ten cents of the hourly wage earned by the sergeants of equal seniority. In reliance on this

promise, the Detectives petitioned and ultimately withdrew from the collective bargaining unit on July 18, 1995. On August 7, 2000, Byrne, Stephens, and Kern filed an answer to the petition. Byrne and the assistant chiefs filed a motion for summary judgment, which was denied. Trial began on August 16, 2004. On the second day of trial, the Detectives withdrew their intentional interference with business relations claim. Each Detective testified on his own behalf, and retired Detective Stark testified as to the events leading up to the Detectives' withdrawal from the collective bargaining unit. Timothy Terry also testified for the Detectives as an

3 expert on damages. The Detectives also called Chief Byrne, Assistant Chief Stephens, and Gloria McMahan, who worked for the city and adjusted the Detectives' salaries after they left the collective bargaining unit. At the close of the Detectives' evidence, Byrne and the assistant chiefs made a motion for directed verdict, which was overruled. The assistant chiefs called Kern, McMahan, and Judy Perkins, the city's collective bargaining representative, to testify on the assistant chiefs' behalf. Byrne also called J. D. Smith, Safety Commissioner. At the close of evidence, Byrne and the assistant chiefs again moved for a directed verdict. The district court granted the motion for directed verdict as to Byrne. The district court also granted Assistant Chief Kern's motion for directed verdict as to McClurg, Huston, and Fuller. Stephens's motion for directed verdict was denied as to all

Detectives, and Kern's motion was denied as to Rosdail and Kessler. Two jury verdict forms were submitted to the jury. The verdict forms were identical except Form of Verdict 1 applied to Stephens and Form of Verdict 2 applied to Kern. Each form consisted of nine questions. On August 27, 2004, the jury returned the verdict. On Form of Verdict 1, the jury answered "yes" to questions one through eight. Question nine asked the amount of damages sustained by the plaintiffs. The jury responded "0". On Form of Verdict 2, the jury answered question one "no". They did not find by a

preponderance of clear, satisfactory, and convincing evidence that Kern made representations to Rosdail or Kessler individually that if Rosdail and Kessler got out of the collective bargaining unit they would be paid close to or equal to

4 sergeants' pay. Pursuant to the instructions, the jury did not answer any of the other questions on Form of Verdict 2. The Detectives filed a motion for a new trial on damages against Stephens or, in the alternative, a new trial against Byrne, Stephens, and Kern on all the issues. The district court denied the motion. On appeal, the Detectives raise the following issues: I. II. Did the trial court err in denying plaintiffs' motion for new trial against defendant Stephens on the issue of damages? The trial court erred in refusing to grant the detectives a new trial on all issues against defendants Stephens and Kern?

On cross-appeal, Byrne, Stephens, and Kern argue the following: I. It was error for the district court to deny the defendants' motion for directed verdict because the plaintiffs' reliance upon the representation was not justified as a matter of law. It was error for the district court to deny the defendants' motion for a directed verdict because the plaintiffs did not prove the amount of their damages.

II.

II. Motion for Directed Verdict. We first consider the cross-appellant's argument that the trial court should have granted the motion for directed verdict. We review a trial court's denial of a directed verdict for correction of errors of law, and we limit our review to the grounds raised in the motion. Pierce v. Staley, 587 N.W.2d 484, 485 (Iowa 1998). We "review the evidence in the light most favorable to the nonmoving party" and we determine "whether a fact question was generated." Id. "`A

directed verdict is appropriate in cases where any element of the claim is not supported by substantial evidence."" Id. (quoting Hill v. Winnebago Indus., Inc., 522 N.W.2d 326, 328 (Iowa Ct. App. 1994)). Substantial evidence means

evidence that a "`reasonable mind would accept as adequate to reach a

5 conclusion.'" Bellville v. Farm Bureau Mut. Ins. Co., 702 N.W.2d 468, 473 (Iowa 2005) (quoting Thomas v. U.S. Fid. & Guar. Co., 559 N.W.2d 288, 290-91 (Iowa 1997)). Stephens and Kern moved for a directed verdict as a matter of law claiming that the Detectives failed to prove they justifiably relied upon the alleged representations. Reliance is an element of fraudulent misrepresentation. 1 However, "some

Cornell v. Wunschel, 408 N.W.2d 369, 374 (Iowa 1987).

misrepresentations may not justifiably be relied on." Lockard v. Carson, 287 N.W.2d 871, 878 (Iowa 1990). Statements of intent to perform a future act may not justifiably be relied upon unless the statement is "spoken with the existing intention not to perform." City of McGregor v. Janett, 546 N.W.2d 616, 619 (Iowa 1996). "`[W]here a plaintiff has equal information of certain knowledge as the defendant, he has no right to rely upon defendant's statements.'" Lockard, 287 N.W.2d at 878 (quoting Andrew v. Baird, 221 Iowa 83, 93, 265 N.W. 170, 175 (1936)). As the recipient of a fraudulent representation, the plaintiff is "`required to use his senses, and cannot recover if he blindly relies on a misrepresentation the falsity of which would be patent to him if he had utilized his opportunity to make a cursory examination or investigation.'" Id. (quoting Restatement

(Second) of Torts

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