Justia Business Law Opinion Summaries

An elderly woman, Janice Geerdes, and her long-time friend, Albert Gomez Cruz, had a partnership raising hogs on a piece of land. Initially, Janice deeded half of her interest in the land to Albert. Over a decade later, she deeded the rest of her interest in the land to Albert, receiving nothing in return. About six months later, Janice’s adult daughters were appointed her conservator and guardian. The conservator challenged the validity of the quitclaim deed based on undue influence and lack of capacity.The district court set aside the deed, finding that there was undue influence through a confidential relationship and that Janice lacked the necessary capacity to deed her interest in the land. The court of appeals affirmed the decision on the basis of lack of capacity.The Supreme Court of Iowa, however, disagreed with the lower courts. The Supreme Court found that the conservator did not establish by clear, convincing, and satisfactory evidence that there was undue influence or that Janice lacked capacity at the time of the gift. The court found that the lower courts gave too much weight to the perceived improvidence of the transaction and too little weight to the testimony of the third-party accountant who witnessed the transaction. Therefore, the Supreme Court vacated the decision of the court of appeals, reversed the district court judgment, and remanded for further proceedings. View "Conservatorship of Janice Geerdes v. Cruz" on Justia Law

The case involves William and Mary Goche, LLC; Global Assets, LLC; and Joseph Goche (collectively “Goche”), who own land in three different drainage districts in Kossuth County. The Kossuth County Board of Supervisors administers these districts. Goche alleged that the board of supervisors administered the districts in a way that specifically caused him harm. He brought a suit against the board of supervisors, current and former supervisors, and engineering firm Bolton & Menk, Inc., asserting claims for breach of fiduciary duty and seeking punitive damages for the defendants’ alleged breaches.The defendants moved to dismiss the claims, arguing that they owed no fiduciary duty to Goche as an individual landowner within the drainage districts. The district court granted the motions, leading to Goche's appeal. However, in the appeal, Goche abandoned his breach of fiduciary duty claims and instead contended that he is entitled to proceed against the defendants on a standalone cause of action for punitive damages.The Supreme Court of Iowa disagreed with Goche's argument. The court clarified that punitive damages are a form of damages available to a plaintiff incidental to a recognized cause of action and not a freestanding cause of action. The court also noted that Goche conceded that the defendants owed him no fiduciary duty in the administration of the drainage districts or in providing engineering services to the districts. Therefore, the court affirmed the judgment of the district court, dismissing Goche's claims. View "William and Mary Goche, LLC v. Kossuth County Board of Supervisors in their capacity as Trustees of Drainage Districts 4, 18, and 80" on Justia Law

This case involves a dispute within the Hora family over the operation of their family farm, Hora Farms, Inc. (HFI). Two brothers, Brian and Gregg Hora, brought a derivative action as minority shareholders against their father, Keith Hora, and brother, Kurt Hora, alleging breach of fiduciary duties based on their management of the farming operation. The brothers claimed that Keith and Kurt mismanaged the farm's operations, resulting in financial losses and unaccounted-for corn inventory. They also alleged that Keith used HFI's credit card for personal expenses.The case was initially heard in the Iowa District Court, where it was determined that neither Keith nor Kurt breached fiduciary duties owed to the corporation. The court found that the brothers' concerns were primarily related to poor recordkeeping and longstanding business practices, rather than intentional wrongdoing. The court also concluded that Keith's use of the corporate credit card for personal expenses was part of his compensation and was fair to HFI.The brothers appealed the decision to the Iowa Court of Appeals, which reversed the district court's decision on two specific issues. The appellate court concluded that Keith engaged in self-dealing by using HFI's credit card for personal expenses and that he enabled Kurt to misappropriate corn from the farm. The court also found that Kurt breached his duty to HFI by misappropriating corn for his personal use.The case was then reviewed by the Supreme Court of Iowa. The court vacated the decision of the Court of Appeals and affirmed the judgment of the District Court. The Supreme Court found that Kurt, as an employee and not an officer or director of HFI, did not owe fiduciary duties to the corporation. The court also concluded that Keith did not violate any fiduciary duties owed to HFI in his oversight of Kurt. The court determined that the brothers failed to prove that Keith or Kurt violated fiduciary duties owed to HFI. View "Hora v. Hora" on Justia Law

The Supreme Court of Iowa affirmed the decision of the Court of Appeals and the District Court in favor of the City of Des Moines, in a case brought by Lime Lounge, LLC. Lime Lounge, a bar, challenged a city ordinance requiring it to obtain a conditional use permit (CUP) to operate. After receiving noise complaints, the City revoked Lime Lounge's CUP, which was upheld in a prior appeal. Lime Lounge then challenged the ordinance arguing it was preempted by Iowa Code, violated equal protection and spot zoning prohibitions. The trial court dismissed Lime Lounge's claims and this decision was affirmed by the Court of Appeals.The Supreme Court of Iowa found that the city's ordinance was not preempted by state law. Rather, it was a proper exercise of the city's zoning authority and did not create a separate local alcohol license. The Court also rejected Lime Lounge's equal protection claim, holding that the city had a legitimate purpose in imposing a CUP on specific businesses selling alcohol. Finally, the Court dismissed the claim of illegal spot zoning, as Lime Lounge failed to prove that the city had engaged in such activity. The Court thus affirmed the dismissal of Lime Lounge's challenge to the ordinance. View "Lime Lounge, Inc. v. City of Des Moines, Iowa" on Justia Law

In this case, three chiropractors and their respective business entities sued Wellmark, Iowa’s largest health insurer and claims administrator, alleging that the company violated Iowa antitrust laws through its Administrative Service Agreements with over 400 Iowa employers who self-fund healthcare benefits for their employees. The chiropractors argued that without these agreements, the self-funded employers would compete independently for chiropractic services, resulting in higher profits for chiropractors. The chiropractors filed a motion to certify a class of approximately 1,300 Iowa chiropractors. However, the Supreme Court of Iowa affirmed the district court's decision to deny class certification, concluding that the chiropractors failed to meet the predominance requirement for class certification as they could not prove the threshold issue of antitrust injury on a classwide basis. The court found that proving whether individual chiropractors would be better or worse off without Wellmark’s agreements would require numerous mini-trials, and thus, individual questions predominated over common questions. Additionally, the court applied the doctrine of judicial estoppel to prevent the chiropractors from belatedly reviving a different liability theory that they had previously abandoned to avoid a motion to dismiss. View "Chicoine v. Wellmark, Inc." on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment entered by the district court in this action involving former co-counsel on a contingent-fee case, holding that the district court erred in finding insufficient evidence that the Hope Law Firm's new entity, Hope Law Firm & Associates, P.C., was a successor entity to Hope Law Firm, P.L.C.Lawyer James Larew had an of-counsel arrangement with the Hope Law Firm and agreed to work on a particular client's case in exchange for a portion of the firm's fee. Larew and the firm later ended the of-counsel arrangement, and Larew ultimately won a large judgment at trial. This litigation concerned the disposition of the fee. On appeal, Larew appealed the district court's determination on the terms of an implied-in-fact contract, quantum meruit calculation, successor liability, and other causes of action. The Supreme Court reversed the district court's ruling as to successor liability and otherwise affirmed, holding that Larew showed that Hope Law Firm & Associates, P.C. was a successor entity to Hope Law Firm, P.L.C. View "Larew v. Hope Law Firm, P.L.C." on Justia Law

The Supreme Court vacated the decision of the court of appeals reversing the judgment of the district court affirming the decisions of the administrative law judge (ALJ) and the Iowa Department of Transportation (DOT) that good cause existed to permit a franchiser to create dueling franchises in a geographic area under Iowa Code 322A.4, holding that the district court did not err in its judgment.At issue was whether, in considering if the establishment of an additional franchisee in a geographic area is in the public interest, the DOT must consider the investment and impacts across the entire geographic area of the existing franchisee. The ALJ and DOT concluded that the twenty-three county area where the additional franchisee would compete with the existing franchisee was the relevant geographic area to consider when determining the presence of good cause under section 322A.4. The court of appeals reversed, arguing that the relevant geographic area to consider was the entire seventy-one county area in which the existing franchise conducted business. The Supreme Court vacated the decision below and affirmed the trial court, holding that the proper focus was the area in which the existing franchisee and the proposed new franchise would be in direct competition. View "Sioux City Truck Sales, Inc. v. Iowa Department of Transportation" on Justia Law

The Supreme Court reversed the ruling of the Iowa Business Specialty Court denying Appellants' motion to dismiss this action involving a shareholder's challenge to a corporate merger involving the purchase of a publicly traded company's shares in a "going private transaction," holding that Appellee's claims must be dismissed.Appellee, a shareholder, brought this action alleging that Appellants, the corporation's directors, breached their fiduciary duties by agreeing to a flawed merger process that resulted in an unsatisfactory price for the minority shareholders' stock. Appellants filed a motion to dismiss, arguing that Appellee failed to plead around the statutory defenses available to the directors. The business court denied the motions to dismiss filed by Appellants. The Supreme Court reversed, holding that Appellant's allegations were insufficient to establish "intentional infliction of harm on the corporation or the shareholders" by the directors. View "Meade v. Christie" on Justia Law

The Supreme Court reversed the decision of the district court ordering an Iowa limited liability company (LLC) to pay its former manager the attorney fees he incurred litigating against the LLC pursuant to Iowa Code 489.408(1), holding that, under the plain language of the statute, a manager or former manager cannot recover from the LLC fees incurred litigating against the company.The district court ruled that the LLC was liable to the manager for indemnification of attorney fees and expenses he incurred defending himself against claims brought against him by the LLC for alleged breach of his duties as manager. The district court awarded the manager attorney fees and expenses but declined to award him "fees on fees," or the additional fees incurred enforcing the statutory fee claim. The Supreme Court reversed the award of attorney fees, holding that the the fees and expenses at issue were not incurred on behalf of the LLC, and therefore, the manager could not recover them from the LLC under section 489.408(1). View "Goche v. WMG, L.C." on Justia Law

The Supreme Court affirmed in part and reversed in part the ruling of the district court making a "fair value" determination of Plaintiffs' shares in an election to purchase in lieu of dissolution proceeding, holding that the district court erred in determining the fair value of the shares without any discount for transaction costs or built-in gain taxes.This case concerned the three children of Lawrence and Georgia Kassel - Susan Guge, Peggy McDonald, and Craig Kassel. After their parents died, Susan and Peggy (together, Plaintiffs) filed a lawsuit against Craig, Craig's wife, two of Craig's corporations, and Kassel Enterprises, the family farming operation that the parents incorporated. Plaintiffs sought judicial dissolution of Kassel Enterprises under Iowa Code 490.1430(1)(b)(2) and 490.1430(1)(b)(4). Kassel Enterprises elected to purchase Plaintiffs' shares for fair value in lieu of a judicial dissolution of the corporation. Both sides appealed the district court's determination of fair value. The Supreme Court reversed in part, holding (1) remand was required for the court to determine and apply the appropriate deduction of transaction costs to the value of the corporation's assets in setting the fair value of Plaintiffs' shares; and (2) the district court's judgment was otherwise affirmed. View "Guge v. Kassel Enterprises, Inc." on Justia Law