Articles Posted in Iowa Supreme Court

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The Supreme Court affirmed the judgment of the district court granting summary judgment for a judgment creditor and dismissed the petition filed by the judgment debtor and his wife to vacate a charging order to execute foreign judgments in Iowa district court against the judgment debtor's membership interests in an Iowa limited liability company (LLC), holding that there was no reason to reverse the judgment of the district court. The judgment debtor and his wife sought to vacate the charging order on the grounds that the creditor could not attach the debtor's interests in the Iowa LLC since the debtor and his wife owned them as a tenancy by the entireties in their domicile of Florida. The Supreme Court affirmed the district court's judgment in favor of the creditor, holding (1) the district court properly applied Iowa law because membership interests in an LLC are located in the state where the LLC is formed; (2) the district court correctly dismissed the petition to vacate the charging order since Iowa law does not recognize the ownership of property by a married couple as tenants in the entireties; and (3) the foreign judgments were properly registered, and the charging order was properly issued. View "Wells Fargo Equipment Finance Inc. v. Retterath" on Justia Law

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A corporation does not have family members and therefore cannot qualify for the family-member exception to the employee-numerosity requirement in the Iowa Civil Rights Act (ICRA). Plaintiff worked for Defendant, a small insurance agency, and alleged that she was sexually harassed by her supervisor, the sole owner’s husband. Defendant, a subchapter S corporation, employed the owner, the owner’s husband and two other family members, Plaintiff, and another nonfamily member. Defendant moved for summary judgment on the ICRA claims on the grounds that it employed fewer than four individuals, not counting the family members. The district court denied summary judgment, concluding that a corporate employer is ineligible for the family-member exception to the ICRA contained in Iowa Code 216.6(6)(a). The court of appeals affirmed. The Supreme Court affirmed, holding that Defendant could not avail itself of the family-member exception. View "Cote v. Derby Insurance Agency, Inc." on Justia Law

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The district court erred in ruling that the coguarantors of a loan were not entitled to contribution from other guarantors of an underlying debt because the funds used to make the payments on the debt were provided to them by their respective parents. Here, the parents of the coguarantors provided funds to their children to pay part of the underlying debt. The funds were placed in accounts owned or co-owned by the coguarantors, who then paid down a debt with funds drawn from these accounts. The coguarantors sought contribution from the other guarantors of the underlying debt. The district court and court of appeals ruled against the coguarantors. The Supreme Court vacated the decision of the court of appeals and reversed the judgment of the district court, holding that the coguarantors were entitled to contribution from other guarantors on the undisputed facts of this case. View "Shcharansky v. Shapiro" on Justia Law

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West Central Cooperative was an agricultural cooperative owned by farmers. Westco Agronomy Co., L.L.C. was a wholly-owned subsidiary of West Central formed in 2005 for the purpose of streamlining delivery of agronomy products, including seed, fertilizer, and chemicals. In 2002, Westco hired Chad Hartzler to work in the agronomy division selling seed and eventually chemicals. He was later promoted to sales director but retained oversight of some of Westco’s largest accounts, including the Wollesens. A dispute arose over the relationships of these parties, resulting in a three-week jury trial and a substantial damages verdict in favor of the customer and against the cooperative. The Iowa Supreme Court limited its consideration of the case to three matters raised in the cooperative’s application for further review: (1) the district court properly denied the cooperative’s motion for new trial based on inconsistent verdicts; (2) the district court did not abuse its discretion in denying the cooperative’s pretrial motion to have equitable issues tried first; and (3), with respect to the constitutionality of Iowa Code section 706A.2(5) (2011), the statute unconstitutionally shifts the burden to the defendant. Specifically, any person who provides property or services that end up being used to facilitate “specified unlawful activity” must prove his or her own lack of negligence to avoid liability. However, the Supreme Court found the burden-shifting provision contained in section 706A.2(5)(b)(4) could be severed from the rest of the statute. Accordingly, while the Court otherwise affirmed the district court, it reversed the district court’s dismissal of this claim. View "Westco Agronomy Company, LLC v. Wollesen" on Justia Law

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An aviation company challenged the application of a statutory immunity provision to its claim of a breach of the implied warranty of merchantability found in the Uniform Commercial Code (UCC) arising from an alleged defect in product design or manufacturing. The issue this appeal presented for the Supreme Court's review was whether the immunity provision only applied in tort cases or if it also applied to contracts. The Court held the statutory immunity only applied in products liability cases involving personal injury or property damage, not in cases based solely on economic loss. View "Des Moines Flying Service, Inc. v. Aerial Services, Inc." on Justia Law

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A federal district court certified two questions of law to the Iowa Supreme Court in a priority dispute between competing creditors of a bankrupt hog operation. Crooked Creek Corporation operated a farrow-to-finish hog facility where it bred gilts and sows and raised their litters for slaughter. After the company filed for bankruptcy, the hogs were sold, but the sale did not generate enough money to pay off competing liens asserted by two of Crooked Creek’s creditors: Oyens Feed & Supply, Inc. and Primebank. Oyens Feed held an agricultural supply dealer lien because it sold Crooked Creek feed “on credit . . . to fatten the hogs to market weight.” Primebank had a perfected article 9 security interest in the hogs to secure two promissory notes predating Oyens Feed’s section 570A.5(3) agricultural supply dealer lien in the hogs. At trial, Oyens Feed claimed it was entitled to all of the escrowed funds because its agricultural supply dealer lien had superpriority over Primebank’s earlier perfected security interest. The bankruptcy court concluded the plain meaning of section 570A.4 created a “discrete window of time,” beginning with the farmer’s purchase of feed and ending thirty-one days later, within which an agricultural supply dealer must file a financing statement to perfect its lien. The bankruptcy court concluded Oyens Feed had only perfected its lien as to amounts for feed delivered in the thirty-one days preceding the filing of each of its financing statements. In reaching its decision on the extent of Oyens Feed’s lien in the escrowed funds, the bankruptcy court reasoned the acquisition price of the hogs was zero because Crooked Creek raised hogs from birth rather than purchasing them. The court concluded “the ‘purchase price’ comprises the vast majority, if not all of, the ‘acquisition price’ for . . . purposes of Iowa Code § 570A.5(3).” The United States District Court for the Northern District of Iowa asked the Iowa Supreme Court: (1) whether, pursuant to Iowa Code section 570A.4(2), was an agricultural supply dealer required to file a new financing statement every thirty-one (31) days in order to maintain perfection of its agricultural supply dealer’s lien as to feed supplied within the preceding thirty-one (31) day period?; and (2) whether pursuant to Iowa Code section 570A.5(3), was the “acquisition price” zero when the livestock are born in the farmer’s facility? The Supreme Court answered both certified questions in the affirmative. View "Oyens Feed & Supply, Inc. v. Primebank" on Justia Law

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The Attorney General brought an action against Corporation, which sold memberships in buying programs giving members the option to purchase various goods and services at discounted rates, alleging violations of the Buying Club Membership Law (BCL) and the Iowa Consumer Fraud Act (CFA) and seeking civil penalties for consumer frauds committed against the elderly. The district court concluded (1) many of Corporation's marketing and sales practices violated the BCL and CFA; (2) Corporation did not commit consumer frauds against the elderly; and (3) application of the BCL to Corporation's solicitation practices did not violate the dormant Commerce Clause. The court awarded more than $25 million in consumer reimbursement, civil penalties, and attorney fees. The Supreme Court affirmed in part, reversed in part, and modified, holding (1) Corporation's telemarketing and Internet practices violated the CFA; (2) Corporation's solicitations and its memberships offering one or more discount features were subject to the terms of the BCL; (3) application of the BCL to Corporation's solicitations did not violate the dormant Commerce Clause; (4) affirmed the reimbursement award for BCL violations as modified; and (5) reversed the ruling that the State was not entitled to civil penalties for consumer frauds committed by the elderly. View "State ex rel. Miller v. Vertrue, Inc." on Justia Law

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The majority shareholder of a family farm corporation served as a director and officer of the corporation. A minority shareholder of the corporation (Plaintiff) sued the corporation and the majority shareholder (collectively, Defendants), alleging that illegal, oppressive, and fraudulent acts by the majority shareholder resulted in waste of the corporation's assets and constituted a breach of fiduciary duty. At the close of Plaintiff's evidence at trial, Defendants moved for a directed verdict. The district court granted the motion and dismissed the action, concluding that Plaintiff had presented no evidence that Defendants had acted fraudulently, illegally, or oppressively. The Supreme Court reversed, holding that the district court erred in dismissing Plaintiff's oppression claim because the court did not apply the correct legal standard in the adjudication of the oppression claim. Remanded. View "Baur v. Baur Farms, Inc." on Justia Law

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The board of directors of a nonprofit condominium association approved necessary but nonemergency repairs to the association's parking garage without a full vote by its members. The repairs were completed at an amount eight times greater than the theshold in the bylaw, which required preapproval of a supermajority of owners to authorize certain expenditures exceeding $25,000. Several condominium owners sued for a judicial declaration that the board's violation of the bylaw's preapproval requirement excused their obligation to pay. The association counterclaimed against the owners to collect their share of the completed repairs and for attorney fees. The district court ruled in favor of the owners. The Supreme Court reversed, (1) holding that the business judgment rule applies to the governance decisions of this board when it acts within its authority; and (2) because the bylaw at issue was ambiguous, the Court deferred to the board's authority under the governing declaration to decide questions of interpretation or application of the bylaws. Remanded.

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A bank attempted to prove an accounting negligence claim by using an expert witness to testify regarding the accountant's audit of a lumber company. The district court refused to allow the expert to testify as to generally accepted CPA auditing standards, whether the accountant breached those standards, and causation. The district court left open the question of whether the expert could testify as to the accountant's work papers. At trial, the bank made an offer of proof as to the work papers but did not move to introduce them, and so the court never ruled on their admissibility. The jury returned a verdict finding the accountant did not negligently perform the audit. The court of appeals reversed the district court and remanded for a new trial. The Supreme Court vacated the decision of the court of appeals and affirmed the judgment of the district court, holding (1) the bank failed to preserve error on the work-paper issue, and (2) the expert was not qualified to testify on the ultimate issue of whether the accountant violated generally accepted accounting standards because the expert lacked the knowledge, skill, experience, training, or education to provide an adequate basis for this testimony.