Justia Iowa Supreme Court Opinion SummariesArticles Posted in Business Law
Goche v. WMG, L.C.
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
Guge v. Kassel Enterprises, Inc.
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
EMC Insurance Group, Inc. v. Shepard
The Supreme Court affirmed the judgment of the district court granting summary judgment against an investor on grounds that he failed to exercise his appraisal rights in a merger, holding that the investor failed validly to exercise his appraisal rights that had been extinguished.The investor, the beneficial owner of 1.1 million shares, received $39.6 million when the merger transaction closed. The investor objected to the merger and sought to exercise his appraisal rights, but he never obtained the written consent of the record shareholder. The corporation brought this declaratory judgment action. The district court granted summary judgment for the corporation. The Supreme Court affirmed, holding (1) lacking the record shareholder's consent, the investor lost his right to an appraisal; and (2) the investor's waiver and estoppel arguments failed. View "EMC Insurance Group, Inc. v. Shepard" on Justia Law
Barkalow v. Clark
The Supreme Court affirmed in part and reversed in part the judgment of the district court decreeing dissolution of a limited liability company (LLC), holding that, for the most part, the district court properly adjudicated the parties' rights but erred in ordering dissolution of the LLC.Plaintiffs filed suit seeking an order expelling three individuals as members of the LLC, an order dissolving the LLC, an order appointing a receiver for the LLC, and damages for breach of contract, breach of fiduciary duty, economic duress, and civil conspiracy. After a nonjury trial, the district court adjudicated the parties' rights and granted the request to dissolve the LLC based on the impracticability of continuing business. The Supreme Court reversed in part, holding that judicial dissolution should not have been ordered under Iowa Code 489.701(d)(2). View "Barkalow v. Clark" on Justia Law
Anderson v. Anderson Tooling, Inc.
The Supreme Court affirmed in part and vacated in part the decision of the court of appeals affirming the judgment of the district court modifying a judgment for civil conspiracy following a jury trial, holding that the district court did not abuse its discretion in granting the motion to amend the judgment.Jeffrey Anderson commenced an action against Dean and Carol Anderson and Anderson Tooling, Inc. (ATI) alleging, among other claims, tortious discharge. Dean, Carol, and ATI filed several counterclaims. ATI sued Lori and brought a claim against Lori and Fabrication & Construction Services Inc. (FabCon) for, among other claims, conspiracy. Damages against Jeff totaled $772,297.72. The district court subsequently granted ATI's motion to modify the judgment to make Lori and FabCon jointly and severally liable for the $772,297.72 judgment. As relevant to this appeal, the court of appeals reversed the district court's order imposing joint and several liability on Lori and FabCon, determining that a conspiracy did not exist for Lori and FabCon to join. The Supreme Court vacated the court of appeals's judgment in part, holding that the district court did not abuse its discretion in granting the motion to amend the judgment. View "Anderson v. Anderson Tooling, Inc." on Justia Law
Wells Fargo Equipment Finance Inc. v. Retterath
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
Cote v. Derby Insurance Agency, Inc.
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
Shcharansky v. Shapiro
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
Westco Agronomy Company, LLC v. Wollesen
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
Des Moines Flying Service, Inc. v. Aerial Services, Inc.
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