Mary Batinich as Personal Representative of the Estate of Alex Batinich v. Arthur Renander v. Jacqueline Zara Renander and Rai, LLC

IN THE COURT OF APPEALS OF IOWA

No. 15-2053
Filed March 22, 2017

MARY BATINICH as PERSONAL REPRESENTATIVE of the ESTATE of ALEX
BATINICH,
Plaintiff-Appellee,

vs.

ARTHUR RENANDER,
Defendant-Appellant,

vs.

JACQUELINE ZARA RENANDER and RAI, LLC,
Defendants.
________________________________________________________________

Appeal from the Iowa District Court for Johnson County, Mary E.

Chicchelly, Judge.

Arthur Renander appeals the remedies and damages awarded to Alex

Batinich by the district court, including trial attorney fees, punitive damages, and

dissociation from the parties’ limited liability company, following the court’s entry

of a default judgment. AFFIRMED-IN-PART, VACATED-IN-PART, AND

REMANDED WITH DIRECTIONS.

Christopher J. Foster of Foster Law Office, Iowa City, for appellant.

David M. Caves and Paul D. Burns of Bradley & Riley PC, Iowa City, for

appellee.

Heard by Potterfield, P.J., and Doyle and Tabor, JJ.
2

DOYLE, Judge.

Following entry of a default judgment against Arthur and Zara Renander

and a subsequent hearing on remedies and damages, the district court awarded

Alex Batinich1 monetary damages, punitive damages, and trial attorney fees

individually against the Renanders. The court also dissociated the Renanders

from the parties’ limited liability company. Arthur appeals the court’s ruling on

remedies and damages in various respects. Upon our review, we affirm in part,

vacate in part, and remand with directions.

I. Background Facts.

RAI, LLC (RAI) is an Iowa limited liability company (LLC) that was

organized in 2001 by Arthur and Zara Renander. At some point, Alex Batinich

purchased a thirty-four-percent share of the company, and the Renanders

retained the majority share as managing members. RAI’s sole asset was a fifty-

percent ownership interest in about one-hundred acres of land in Coralville, Iowa.

Northern Investments, L.C., owned by Gary Aamodt, held the other half of the

real-estate interest in the land.2

The relevant parties have been involved in protracted litigation concerning

the real estate for many years, and the saga continues. See, e.g., Renander v.

High Country Dev. Co., No. 16-0424, 2016 WL 7393906, at *1 (Iowa Ct. App.

Dec. 21, 2016); Renander v. Aamodt, No. 08-1321, 2009 WL 3775112 (Iowa Ct.

App. Nov. 12, 2009); Batinich v. Renander, No. 05-1969, 2007 WL 913872 (Iowa

1
Alex Batinich died on June 15, 2016, after this appeal was filed. Batinich’s wife, Mary,
as personal representative of the Estate of Alex Batinich, was substituted as plaintiff-
appellee in this matter. See Iowa R. Civ. P. 1.221; Iowa R. App. P. 6.109(3).
2
Because Northern Investments, L.C. is owned by Aamodt, we will refer to both as
“Aamodt.”
3

Ct. App. Mar. 28, 2007). In the instant case, Batinich filed suit—individually and

derivatively on behalf of RAI—against the Renanders and RAI in June 2014. The

petition—and Batinich’s affidavit attached thereto—stated the derivative claims

were brought pursuant to Iowa Code section 489.902(2) (2013) because the

ordinary notice and demand required under section 489.902(1) would have been

futile. The petition then set forth four counts.

Count I of the petition asserted the Renanders breached their fiduciary

duties to Batinich and RAI and proximately caused damages to both Batinich and

RAI. Batinich, individually and derivatively on behalf of RAI, requested that

“judgment be entered against the Renanders to fully and fairly compensate

[Batinich and RAI] for the damages caused by the Renanders, for costs, for

attorney’s fees, and for other such relief as the [court deemed] equitable.” Count

II requested the Renanders be ordered to make a complete accounting to

Batinich of RAI’s assets, liabilities, and other obligations, and also requested the

same relief as Count I. Count III alleged the Renanders, as the majority owners

and managers of RAI, were in violation of Iowa Code section 489.410 for failing

to make company information requested by Batinich available for his inspection.

Batinich, individually and on behalf of RAI, requested the Renanders

be ordered to comply with [section] 489.410, make available to
Batinich the information and records required under section
489.410, make available information regarding RAI’s activities,
financial information, and other circumstances which [the
Renanders] know and is material to Batinich, and request
judgment against the Renanders to fully and fairly compensate
them for the damages caused by the Renanders, for costs, for
attorney’s fees, and for other such relief as the [court deemed]
equitable.

Finally, Count IV requested the Renanders be ordered to escrow
4

any and all proceeds from the sale of the Real Estate [the
Coralville property], or any other assets received for RAI, until
such time as this litigation is concluded and the members
resolve disputes over the amounts and calculations of the
debts of the company and entitlement and amounts of
distributions, and for costs, for attorney’s fees, and for other
such relief as the [court deemed] equitable.

In April 2015, the district court found the Renanders in contempt for

“knowingly, willfully, and without justification, disregard[ing] their discovery

obligations and disobey[ing the] court’s discovery orders.” Citing Iowa Rule of

Civil Procedure 1.517(2)(b)(3), the court concluded a default judgment should be

entered against the Renanders on all counts of Batinich’s petition following “a

hearing . . . to consider and determine the appropriate damages and remedies”

to be awarded to Batinich. The court ordered the Renanders to produce any

documents previously ordered but not yet given to Batinich. The court also

ordered the Renanders to pay Batinich $7355 in attorney fees, which the court

found was reasonable and incurred as a result of the Renanders’ discovery

abuses.

The hearing on damages and remedies commenced in July 2015. At that

time, Batinich’s health was declining, and the parties’ agreed his testimony would

be given via deposition, to be held after the hearing. The parties agreed the

record would be held open after the hearing for submission of the deposition.

The court heard testimony at the hearing from Batinich’s wife, Mary, and

also from Gary Aamodt, and Arthur Renander. Prior thereto, Batinich’s attorney

gave an opening statement, explaining the course of the litigation and the

numerous ways Batinich believed the Renanders breached their fiduciary duties

as the member-managers of RAI. Batinich’s counsel stated:
5

Batinich has over the years advanced his personal funds to
pay bills on behalf of RAI, everything from landscaping bills
and snow shoveling to paying property taxes to paying
attorney’s fees that RAI incurred. We’ve asked for an
accounting. We’ve asked repeatedly to see the books of RAI
reflecting those contributions, those loans to the company.
There’s nothing resembling a proper accounting, nothing
resembling a financial statement, a proper accounting of the
loans that have been advanced over the years. We’ve asked
for corporate records under the Iowa corporate records
statute. That’s one of the claims in this case. Basically, we’re
told they don’t exist. Most of them just don’t exist, all of which
is another breach of his duty of standard of care of managing
the company . . . .

Counsel advised that in detailing the parties’ history and their dealings to the

court, “it wasn’t in order to establish liability. And when you see the documents

and the exhibits, it’s not to establish liability. It’s to show the persistent nature of

these abuses, to give you a sense of a problem when you’re fashioning a

remedy.” Batinich’s counsel suggested the following damages to the court: (1)

dissociation of the Renanders from RAI to allow Batinich to get an honest

accounting of RAI’s financials and to allow RAI’s percentage of the real estate to

be sold; (2) monetary damages, which counsel suggested could be calculated by

subtracting the lesser profit Batinich could expect to receive as a member of RAI

from the pending $4.5 million sale from the larger profit Batinich would have

received had the property been sold in 2010 for $4.7 million but for the

Renanders interference; counsel advised the difference between the two profit

figures did not even account for the loans Batinich made to RAI; and (3) punitive

damages for breach of fiduciary duty.

Batinich’s wife testified Batinich initially invested $125,000 in RAI, and

then invested another $250,000. She testified that, since that time, Batinich had
6

invested at least another $380,000 and, if legal fees were factored in, Batinich

had spent about $1.2 million concerning RAI. Mrs. Batinich testified Batinich

initially believed the Renanders were keeping accounting records for RAI but,

after Batinich requested the records and received none, Batinich started keeping

his own records. The Renanders objected to the relevance of this testimony and

an exhibit listing monies Batinich had paid for RAI, noting that some of the listed

expenditures went all the way back to 2003, “a time period not contemplated at

all by the petition or really any of the things that are at issue.” Batinich’s counsel

explained both were relevant, though Batinich was not

representing that all of these monies [listed on the exhibit
were] owed from RAI to [Batinich]. It’s just an illustration of
money that has been advanced, some of which is relevant in
here. We need an accounting so we can sort out which of
these are proper debts owed from RAI to Mr. Batinich and
which ones aren’t. That’s the job of the manager of the LLC to
do that, to have it done. We’ve asked for an accounting.

The court allowed the testimony and exhibit.

Aamodt testified he had “[n]o doubt whatsoever” that the real estate could

have sold in 2010 for $4.7 million. He testified the parties received an actual

offer for that amount, but he believed they could get more than $5 million for the

property and wanted to submit a counter offer. He admitted that if a counter offer

had been submitted the buyers could have walked away altogether, but he

explained that he knew the persons offering to purchase the land were very

interested in the property and, based upon conversations he had had with one of

the potential buyers, he believed they could get about $5.2 million. He testified

he had urged Arthur to agree to his proposed counter offer, but Arthur refused

unless the offer included a transfer of part of the land to the Renanders.
7

Arthur testified he thought the potential buyers in 2010 “were highly

motivated” and “would have gotten the money together.” But Arthur admitted he

did want land, and he testified his request of land as part of the deal bothered

Batinich and Aamodt “enormously . . . because they could see that the way to

make money was to sell this land in parcels retail rather than dump it wholesale

with the whole parcel, and [he] was going to pursue a much more attractive

option.” He explained:

[Y]ou see, what happens is this. If we get cash and buy
separately, not in the same transaction, maybe that afternoon,
so many acres back, that’s our business. So it isn’t—they’re
two transactions. The reason that Mr. Aamodt is so upset is,
he knows that I know what to do with this land and how
attractive it is. Now, think about this. It doesn’t affect one
dime of cash that goes to Aamodt or Batinich if I use it to buy
back land. That’s a total figment of everybody’s imagination,
meaning [Batinich, Batinich’s wife, and Aamodt], that
somehow I’m hurting them when not in any way is the amount
of cash that goes to them is affected, because I just use my
cash to buy back land. Nothing wrong with that, okay.

As to RAI’s accounting, Arthur testified RAI had no bank account because

the LLC did not need or want one. He believed a bank account would be a

detriment, testifying

we have very, very few expenses. Snow removal, $1300 in
taxes a year, and some grass mowing, and that’s it. And if you
want to take individual deductions, the easiest thing to do is
for each of us that are paying these taxes in this room could
write a check and take it off their tax, so you don’t need it. You
don’t need an account.

Arthur went on to testify he and his wife paid sixty-six percent of RAI’s expenses

from their own personal accounts and Batinich only paid thirty-four percent of the

expenses. No exhibits or other evidence was provided by Arthur to substantiate

his claim.
8

At the conclusion of the hearing, the court advised it would allow the

record to remain open for submission of Batinich’s deposition testimony. Later, a

telephonic hearing was set for the continuation of the damages hearing and the

court noted it was anticipated Batinich’s testimony would be submitted by that

time. Following the telephonic hearing, which was not reported, the court

directed Batinich to file his transcript and the matter would be deemed submitted.

The court directed the parties to submit briefs. The transcript was submitted, and

both parties’ briefs were timely filed.

Batinich’s brief essentially restated his request that the court grant him the

relief set out in his counsel’s argument at the remedies and damages hearing.

Batinich also requested attorney fees based upon section 489.906(2) “and

because the Renanders committed an intentional tort.”

The Renanders’ brief argued Batinich failed to establish he was entitled to

damages individually or that the Renanders caused him certain damages. They

asserted that “the discussion of the desire for land was essentially an attempt to

negotiate a side deal wherein RAI would receive cash and [Arthur] would

essentially be able to use that cash to immediately buy back land,” which they

maintained was permitted under RAI’s operating agreement that permitted them

“to engage in business that directly competed with the business of RAI.” They

also contended dissociating the Renanders from RAI was an absurd and

unnecessary remedy, stating, among other things, that “[i]t should be abundantly

clear that [the] Renanders wish for a sale of the land that ultimately benefits RAI

as a whole. . . . It is just as much in the Renanders’ interest as it is in Batinich’s
9

interest to have the property sold at a profit.” The Renanders’ brief did not

address Batinich’s request for punitive damages.

Thereafter, the district court entered its ruling in favor of Batinich. The

court did not find Arthur to be credible, stating it “found his testimony to largely be

a self-serving attempt to either excuse his own conduct or to attempt to cloud the

issues before the court, or both,” and it did “not consider his testimony probative

on any issue before it at this time.” Conversely, the court explicitly found Mary

Batinich’s testimony credible and determined Batinich paid the Renanders

hundreds of thousands of dollars . . . for RAI expenses and
taxes, but RAI has provided no records to show what has been
done with the money. Batinich requested RAI hold annual
meetings and provide an accounting. The court cannot find
that an accounting has been provided at any point in time by
the Renanders for RAI; no books of the corporation have been
produced, no bank records have been shown to exist, and no
corporate formalities appear to have been in place at any point
in time for RAI. In this regard, the Renanders as managers of
RAI have utterly failed, and have breached their duties to the
minority shareholder [Batinich] herein as such.

The court found the Renanders

have engaged in and were engaging in conduct that adversely
and materially affected RAI’s activities, insofar as they
materially breached the operating agreement and their duties
and obligations under Iowa Code section 489.409 by breaching
their duty of loyalty and care, loyalty to account to the
company and hold as a trustee any property of the company,
including a company opportunity and a duty to refrain from
competing with the company in the conduct of the company’s
affairs and to act in the best interests of the company.

The court also found the Renanders

engaged in conduct violative of these duties primarily insofar
as they demanded personally for themselves land in any
transaction to sell the property at issue in this matter, thereby
holding up sale of the property on October 31, 2010, . . . a sale
which, but for the Renanders’ self-dealing, would have taken
10

place at a time which would have allowed RAI to pay off its
debts at a far lower dollar figure.

As remedies, the court dissociated the Renanders from RAI pursuant to

Iowa Code section 489.602 and changed their status from member-managers to

transferees. Additionally, the court determined Batinich was individually entitled

to recover damages from the Renanders, jointly and severally, including a money

judgment of $373,880, attorney fees in the amount of $79,956.01, and punitive

damages of $100,000 “in light of the [Renanders’] breach of fiduciary duties.”

Arthur Renander appeals the district court’s ruling on remedies on

damages, asserting the district court erred in five respects: (1) dissociating the

Renanders from RAI without authority under the facts of the case, (2) awarding

Batinich a monetary judgment individually, (3) entering judgment against the

Renanders, individually, (4) awarding Batinich trial attorney fees, and (5)

awarding Batinich punitive damages. We address his arguments in turn,

reviewing the majority of his claims de novo. See Iowa R. App. P. 6.907;

Cookies Food Prods., Inc., by Rowedder v. Lakes Warehouse Distrib., Inc., 430

N.W.2d 447, 448 (Iowa 1988) (“We review decisions in shareholders’ derivative

suits de novo, deferring especially to district court findings where the credibility of

witnesses is a factor in the outcome.”). However, challenges to a district court’s

grant of attorney fees are reviewed for an abuse of discretion. See Smith v. Iowa

State Univ. of Sci. & Tech., 885 N.W.2d 620, 624 (Iowa 2016).
11

II. Discussion.

A. Dissociation.

Renander first contends that the district court “was entirely outside of its

authority to expel the two members that make up a majority of the ownership

without [Batinich] having follow[ed] required and proper procedure and suing

derivatively to enforce that right.” At first blush, his argument seems to have

some merit. Iowa Code section 489.602 allows dissociation of a member by

judicial order upon application for such by the LLC. See Iowa Code

§ 489.602(5). A member may maintain a derivative action to enforce a right of

the LLC pursuant to Iowa Code section 489.902(1) if the member

makes a demand on the other members . . . requesting that
they cause the company to bring an action to enforce the right,
and the managers or other members do not bring the action
within ninety days from the date the demand was made unless
the member has earlier been notified that the demand has
been rejected by the company or unless irreparable injury to
the company would result by waiting for the expiration of the
ninety-day period.

Renander puts the two provisions together to maintain that, “[i]n order to sue

derivatively on that issue, and request the expulsion, the demand, or the

statement of futility, must include a demand that the company make application

to judicially expel a member.” However, Renander ignores subsection (2) of

section 489.902, which excuses the member from making such demands of the

LLC if they “would be futile.” Id. § 489.902(2); see also 6 Matthew G. Dore, Iowa

Practice Series: Business Organizations § 39:4 (2012 ed.).

While section 489.904(2) requires the complaint in a derivative action

under section 489.902 state with particularity “the reasons a demand under
12

section [489.902(1)] would be futile,” it does not expressly require stating all of

the demands that have been made. To do so would eliminate any need for

section 489.902(2). Clearly, the member must only explain why making the

demand would be futile. See Berger v. Gen. United Grp., Inc., 268 N.W.2d 630,

636 (Iowa 1978) (“[W]e are persuaded by those decisions which hold a general

allegation of futility of demand is sufficient if other assertions of fact in the petition

are detailed enough to demonstrate a demand would have been unavailing.”).

Here, Batinich’s petition and his affidavit filed therewith satisfy the criteria

of section 489.904(2). The petition states Batinich is bringing the action both

“individually and derivatively on behalf of RAI, L.L.C.” It alleges the Renanders

“acted in concert to exercise total control of the affairs of RAI, and to make all

decisions on behalf of RAI.” The petition alleges the Renanders failed to abide

by the LLC’s operating agreement and that their “actions towards RAI and

towards Batinich have been oppressive and in a manner that was, is, and will be,

harmful to RAI and to Batinich.” The petition then sets out Batinich’s demand for

an annual meeting of RAI, among other things, and Renanders rejection of the

demand. The affidavit not only explains the various demands Batinich made to

the Renanders regarding their management of RAI to no avail, it and the petition

expressly state that any further demands “would be futile because the

wrongdoers—the Renanders—exercise complete control of RAI. A demand that

the Renanders, in effect, sue themselves, would surely be rejected.” The actions

of the Renanders alleged in his petition and affidavit support Batinich’s assertion

of futility; a specific demand was, therefore, not required.
13

At the beginning of the remedy and damages hearing, Batinich specifically

requested the Renanders be dissociated from RAI. Renander made no response

at that time. The court ordered the parties to file post-hearing briefs. In his brief,

Batinich again requested the Renanders be dissociated from RAI. Renanders

responded in their brief that awarding damages to Batinich, as well as forcing the

Renanders out of the corporation, effectively allowing Batinich to take it over for

his own benefit, would essentially be a double recovery by Batinich and would be

an absurd outcome. After the court entered its order, which included dissociating

Renanders from RAI, the Renanders filed a motion to reconsider, and for the first

time claimed dissociation was inappropriate because, among other things,

Batinich had not made such a demand before filing his petition nor had he made

such a demand in his petition. Batinich resisted. The district court denied the

motion to reconsider concluding Renanders’s motion was “merely a summary

reiteration of [their] arguments the Court considered at trial, and should be

denied for the reasons set forth in the Court’s original ruling and in the

resistance . . . filed by [Batinich].”

While Batinich did not make an explicit claim for dissociation as relief in

his petition, he did make the claim at the outset of the remedy and damages

hearing, to which Renanders resisted on the merits. After the issue was

presented and argued by the parties, the district court concluded “the Renanders

have engaged in and were engaging in conduct that adversely and materially

affected RAI’s activities, insofar as they materially breached the operating

agreement and their duties and obligations under Iowa Code section 489.409 by
14

breaching their duty of loyalty and care . . . .” We agree and affirm on the

dissociation issue.

B. Judgment in Favor of Batinich Individually.

Iowa Code section 489.901 allows for a direct action by a member of an

LLC against another member, a manager, or the LLC itself “to enforce the

member’s rights and otherwise protect the member’s interests” if the member

“plead[s] and prove[s] an actual or threatened injury that is not solely the result of

an injury suffered or threatened to be suffered by the [LLC].” Renander argues

Batinich did not plead or prove a personal injury apart from the injury to the LLC.

For the reasons that follow, we disagree.

1. Pleading.

In Iowa, our notice-pleading rules allow for a liberal interpretation of a

party’s prayer when general equitable relief is requested. See Lee v. State, 844

N.W.2d 668, 679 (Iowa 2014). If the relief requested in addition to that contained

in the specific prayer fairly conforms to the case made by the petition and the

evidence, such relief will generally be granted. See id. Moreover, the exact

nature of a plaintiff’s actions are generally pinned-down and the issues narrowed

“at the pretrial conference or during the trial before instruction.” Id. (citation

omitted). In any event, issues beyond the scope of the pleadings may still be

“tried by express or implied consent of the parties” and must “be treated in all

respects as if they had been raised in the pleadings.” Iowa R. Civ. P. 1.457.

Here, Batinich brought claims individually against the Renanders and RAI,

asserting Batinich sustained individual damages as a result of the Renanders’

actions. The evidence and testimony at the hearing on remedies and damages
15

clearly established Batinich was attempting to prove personal, individual injuries

based on the Renanders’ actions. In fact, the default judgment was entered as a

sanction because the Renanders failed to comply with the court’s ruling to

compel evidence, which was arguably sought in support of Batinich’s case.

Viewing the petition’s prayers for relief liberally along with the evidence at trial,

we find Batinich sufficiently pled he was personally injured apart from RAI as a

result of the Renanders’ actions.

2. Proof.

The court’s order following the hearing on remedies and damages

expressly found that Batinich “paid hundreds of thousands of dollars to the

Renanders for RAI expenses and taxes, but RAI has provided no records to

show what has been done with the money.” This finding is supported by

testimony and other evidence presented at trial. Arthur could have produced his

own evidence beyond his own testimony showing where the money paid by

Batinich to the Renanders went. He did not. He merely asked the court to take

his word for it—that any loss was to RAI—but the court did not find him to be

credible. Consequently, without any accounting by the member-managers, there

is no evidence that the money provided by Batinich was for RAI’s expenses, was

used for RAI’s expenses, and even if they were, that the expenses were paid in

the percentage for which Batinich was responsible. Clearly the monies paid out

of pocket without an accounting are an individual injury to Batinich. That the

court determined the amount of money damages should equal the amount it

believed Batinich lost as a member because of the Renanders’ interference with

the sale in 2010 does not change the finding that Batinich suffered an individual
16

injury. We agree with the district court that Batinich established he suffered an

injury beyond those incurred by RAI, such that an individual award of damages

was appropriate. We affirm on this issue.

C. Judgment Against the Renanders.

Renander advances several arguments as to why the judgment against

him and Zara was in error. He claims a damage calculation based upon the lost

2010 sale was “overly speculative” as well as futile because the sale did not

occur. He also claims the allegations in Batinich’s petition were too broad and

non-specific to place him and Zara “on notice of the nature and extent of the

liability which [Batinich] sought to impose upon them” or establish causation

between their breach and Batinich’s damages. We disagree.

Starting with the latter assertion first, the record is replete with evidence

that Arthur was warned the Renanders would be in breach of their fiduciary

duties if they did not accept the 2010 deal—or those negotiated thereafter—so all

parties could avoid defaulting on the mortgage, incurring additional fees, and

potentially losing the property itself. In a September 2010 letter from Batinich’s

attorney to the Renanders, several specific examples of the Renanders’ breach

of their fiduciary duties were given, including Arthur’s insistence on retaining land

as part of the deal. As one party’s representative put it, it was “impossible to deal

with [Arthur] when [he would] not even cooperate under circumstances that

[were] advantageous to [his] position.”

Additionally, though RAI’s operating agreement allowed member-

managers, “from time to time,” to “engage in business enterprises similar

to . . . and competitive with the business” of the LLC, that is not what happened
17

here. The land at interest here was owned by RAI, not the Renanders. Arthur’s

characterization of his position as he and his wife obtaining land as a “side deal”

that would benefit everyone in RAI is simply not credible. The Renanders could

have negotiated to buy the land back after RAI and Aamodt sold the real estate,

which is what all of the other parties wanted them to do. Instead, Arthur held

RAI’s sole asset hostage to place the Renanders in a more favorable position

without any regard for RAI’s overall loss. He simply refused to sell RAI’s land

unless he and Zara—not RAI—were guaranteed to individually retain some

portion or parcel of the land.

The record also shows Arthur used threats of litigation as a means to get

other parties—including Batinich—to agree to his terms and force them to settle

for less. Arthur even suggested to RAI’s attorney that an “aggressive litigation

approach vs. Aamodt . . . and maybe [Batinich] was the only hope for putting

these players at risk, which [was] the road to a settlement and compromise.”

Arthur believed foreclosure on the property would force Batinich to sell out his

interest in RAI, and he proposed letting the property go to sheriff’s sale “so a new

group/investors allied with the Renander[s]” could buy the property without

having to pay Batinich anything. In his communications with RAI’s attorney,

Arthur acknowledged Batinich was individually at risk. In response to a letter

from Batinich about whether there was a conflict of interest between the

Renanders and RAI’s attorney, Arthur “observed” that if a conflict was found, RAI

would require Batinich alone to pay for a new attorney from Batinich’s “share of

any future proceeds . . . and to fund [RAI’s] future representation”. There is
18

simply no question on this record that the Renanders were “on notice of the

nature and extent of the liability which [Batinich] sought to impose upon them.”

As to the speculative nature of the sale, it is true that damage claims have

been rejected when they are “too speculative.” See St. Malachy Roman Catholic

Congregation of Geneseo v. Ingram, 841 N.W.2d 338, 353 (Iowa 2013). But

“[t]here is a distinction between proof of the fact that damages have been

sustained and proof of the amount of those damages.” Pavone v. Kirke, 801

N.W.2d 477, 495 (Iowa 2011) (citation omitted). Specifically:

If the evidence is speculative and uncertain whether damages
have been sustained, damages are denied. However, if the
uncertainty merely lies in the amount of damages sustained,
recovery may be had if there is proof of a reasonable basis
from which the amount can be inferred or approximated.
Thus, some speculation on the amount of damages sustained
is acceptable; however, overly speculative damages cannot be
recovered.

Id. (citations and internal quotation marks omitted). Thus, “while a loss may be

hard to ascertain ‘with preciseness and certainty, the wronged party should not

be penalized because of that difficulty.’” Hammes v. JCLB Props., LLC, 764

N.W.2d 552, 558 (Iowa Ct. App. 2008) (citation omitted). “[A]ll that is required to

justify an award of damages ‘is that the plaintiff produce the best evidence

available and that this evidence afford a reasonable basis for estimating the

loss.’” Smith v. Smithway Motor Xpress, Inc., 464 N.W.2d 682, 688 (Iowa 1990)

(citation omitted). Although the “court may not disregard evidence and arbitrarily

fix an amount of damage for which no basis in the evidence exists,” it does have

discretion in determining the damages award, which will not be disturbed on
19

appeal so long as it is within the range of evidence. Hawkeye Motors, Inc. v.

McDowell, 541 N.W.2d 914, 917-18 (Iowa Ct. App. 1995).

Here, there is a reasonable basis in the record from which the amount of

damages awarded by the court can be inferred or approximated. First, we note

that from 2003 to 2010, per Batinich’s statement, he paid over $400,000 in RAI

bills, including its significant legal costs. A 2011 letter from Batinich to the real

estate mortgagee stated that, at that time, he had invested over $750,000 in the

real estate, to the Renanders’ $50,000. Those figures are on track with Arthur’s

testimony at the hearing that, at the beginning of the endeavor to buy the real

estate, Batinich contributed $250,000, Aamodt $340,000, and the Renanders

$60,000, with Arthur going back to Batinich thereafter for additional contributions.

There is no evidence in this record showing Arthur contributed anything beyond

his $60,000.

Additionally, evidence in the record also supports the court’s finding that

the property could have sold in 2010 for $4.7 million, if not more, but at the time

of the damages hearing, the property was to be sold for $4.5 million.

Furthermore, the increase of the amount of debt against the property from 2010

to the time of the hearing was astounding. The district court found Batinich’s

share of profit from the 2010 sale would have been $499,342, but decreased to

$125,462 because of the lower sale price and increased debt. The court

determined the difference between the two numbers was the amount of damages

Batinich sustained, equaling $373,880.

Though that figure is derived from Batinich’s share of the overall loss to

RAI, and perhaps quantifiable as a loss to the business rather than an individual
20

loss, we have no trouble finding the amount of the award was within the range of

evidence presented at trial for the losses sustained by Batinich individually, given

the amounts found to be contributed by Batinich without any accounting by RAI

or the Renanders, along with the Renanders’ failure to comply with the court’s

orders concerning discovery in the underlying case. We therefore affirm the

district court’s monetary award of $373,880 in favor of Batinich and against the

Renanders.3

D. Trial Attorney Fees.

Arthur also challenges the district court’s award of attorney fees to

Batinich, arguing attorney fees were not recoverable in this action, and if they

were, they were excessive. As noted above, our review of the grant is “for an

abuse of discretion,” and we will only reverse if the district court rested its

discretion upon “grounds that are clearly unreasonable or untenable.” Smith, 885

N.W.2d at 624; see also Boyle v. Alum-Line, Inc., 773 N.W.2d 829, 832 (Iowa

2009). Upon our review, though we do not find the district court’s award was

based upon unreasonable or untenable grounds, we do find the award must be

against RAI rather than the Renanders.

Here, Batinich brought his suit individually and derivatively on behalf of

RAI, and his petition prayed for an award of attorney fees. Iowa Code section

489.906(2) permits the court to “award the plaintiff reasonable expenses,

including reasonable attorney fees and costs, from the recovery of the limited

liability company,” if the derivative action is successful in whole or in part. The

3
At oral argument in the case, we questioned whether the amount of the award was too
low because of a possible mathematical error in one of Batinich’s calculations, but
Batinich’s counsel was satisfied with the amount of the award.
21

court’s dissociation of the Renanders from RAI to allow the property to be sold is

a recovery for RAI. Despite the Renanders’ statements in the brief to the district

court that they wanted a sale of the land “that ultimately benefits RAI as a whole,”

the district court found, and the evidence supports its finding, that while a sale of

the land itself would benefit RAI as a whole, Arthur would not agree to the sale

unless he and Zara—not RAI—received a side deal for land. Batinich had to

expend personal resources in an attempt to get the Renanders to perform their

fiduciary duties as the member-mangers of RAI, resorting to litigation in the end

when Arthur could not be reasoned with. Without dissociation, Arthur would

likely continue resisting and litigating until he got what he wanted or no one

received anything. Batinich’s suit was successful, and dissociation of the

Renanders from RAI was a recovery necessary to permit RAI to sell its asset.

Additionally, we do not find the award excessive. “A reasonable attorney

fee is initially calculated by multiplying the number of hours reasonably expended

on the winning claims times a reasonable hourly rate,” though the

“reasonableness of the hours expended and the hourly rate depends, of course,

upon the facts of each case.” Boyle, 773 N.W.2d at 832 (citation omitted). Thus,

the district court must make comprehensive fact-findings setting forth that factors

it considered in fashioning its award. See id. at 833. Still, there is no precise

formula; the court should use its “independent judgment with the benefit of

hindsight,” looking at “the whole picture,” and decide on the appropriate amount.

Id. at 832 (citation omitted).

Here, the district court found that the 2010 sale would have taken place

but for the Renanders self-dealing. Though it is true Batinich did not file his suit
22

until 2014, the record shows he, his attorney, and others have communicated

with the Renanders and RAI’s attorney with concerns about the Renanders’

actions and failure to agree to a sale unless they individually benefitted since

2010. Since that time, Batinich’s attorney has billed almost 400 hours fighting for

his client, who passed away during the pendency of this appeal. The hours

expended over seven years seems reasonable—particularly given the evidence

in this case of self-dealing—and the Renanders do not challenge Batinich’s

attorney’s rate of $200 an hour. Multiplying the two gives an amount of $80,000.

This amount is less than the amount RAI still owes its attorney, who filed a lien

against the property. Though a more detailed record of the hours spent working

on the case would have been helpful, in the context of this unique case, we find

the evidence presented by Batinich supports the court’s award of the attorney

fees against the Renanders, and to remand for a more detailed explanation

would not change the outcome; rather, it would continue the proceedings at a

greater cost to the parties. Upon our review, we do not find the attorney fee

award to Batinich to be unreasonable or untenable, and the district court,

therefore, did not abuse its discretion in its determination of the fee amount.

Nevertheless, it is clear that an award of attorney fees under section

489.906(2) must come from the LLC and not the member. See 19 Am. Jur. 2d

Corporations § 2135 (2016) (“[U]nder the common-fund doctrine, the obligation to

reimburse the successful plaintiffs in a derivative action falls on the corporation,

and not on the losing party, such as the directors charged with

mismanagement.”); 6 Matthew G. Dore, Iowa Practice Series: Business

Organizations § 39:18 (2012 ed.). This makes sense, given that a purpose of
23

creating an LLC is to limit one’s individual liability. See 5 Matthew G. Dore, Iowa

Practice Series: Business Organizations § 13:1 (2012 ed.) (“[P]articipants in [an

LLC] (members and managers) have no responsibility for company obligations

based on their status as members or managers.”). Consequently, any award

must be against RAI. That part of the district court’s judgment that awards

attorney fees in favor of Batinich and against the Renanders should be vacated

and the attorney fees should be awarded in favor of Batinich and against RAI.

We affirm the award in all other respects.

E. Punitive Damages.

Finally, Arthur argues the court erred in awarding punitive damages

against the Renanders. He also faults Batinich’s failure to request punitive

damages in the petition, but we need not address that contention because we

conclude punitive damages should not have been awarded.

To support a claim for punitive damages, a plaintiff must show “by a

preponderance of clear, convincing, and satisfactory evidence, [that] the conduct

of the defendant from which the claim arose constituted willful and wanton

disregard for the rights or safety of another.” Iowa Code § 668A.1(1)(a). It is

telling that the district court made no such finding. Although Renander’s

obstreperous conduct warranted dissociation from the LLC, we do not find that it

rose to the level required to warrant an award of punitive damages. Accordingly,

we must vacate the award of punitive damages.

III. Conclusion.

For the foregoing reasons, we affirm the district court’s dissociation of the

Renanders from RAI and affirm its monetary judgment of $373,880 in favor of
24

Batinich individually against the Renanders. We vacate the portion of the

judgment awarding Batinich attorney fees against the Renanders but find the

attorney fees should be awarded in favor of Batinich and against RAI. Finally, we

vacate the portion of the judgment awarding Batinich punitive damages. We

remand the case to the district court to enter judgment consistent with our

decision. We affirm the district court’s order in all other respects.

AFFIRMED-IN-PART, VACATED-IN-PART, AND REMANDED WITH

DIRECTIONS.