Articles Posted in Iowa Supreme Court

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The district court granted a request for entry of a charging order against a personal guarantor and judgment debtor’s transferable interest in an LLC. The judgment debtor and intervenor filed a motion to quash alleging that multiple levies and garnishments were improper. The district court granted the motion to quash. The Supreme Court affirmed in part and reversed in part, holding (1) the entry of the charging order was proper; but (2) the district court erred in granting the motion to quash because it is proper to have multiple levies and garnishments at the same time so long as they are under a single execution. Remanded. View "DuTrac Community Credit Union v. Hefel" on Justia Law

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Liberty Bank made five loans to the owner of real property (Property). Liberty Bank and five other banks entered into participation agreements related to the loan. Iowa Great Lakes Holding later defaulted on the loan, and the mortgage was extinguished. After the surrender and foreclosure, Liberty Bank and Central Bank entered into an agreement under which Central Bank acquired assets, including loans, from Liberty Bank. Liberty Bank conveyed the Property to a Central Bank affiliated entity via quitclaim deed. Central Bank then filed a declaratory action against Liberty Bank and the five participating banks seeking a ruling that it owned the Property free and clear of any interest of the participating banks. The district court granted summary judgment for Defendants, concluding that, under the participation agreements, Central Bank did not own the property in fee simple because Liberty Bank did not sell Central Bank a one hundred percent interest in the property. The Supreme Court affirmed, holding that the ownership interest of the participating banks in the mortgage and underlying collateral was superior to Central Bank, which claimed its interest was derivative of and limited to the interest held by Liberty Bank. View "Central Bank v. Hogan" on Justia Law

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The Regional Utility Service Systems Commission (RUSS) brought a breach of contract action against the City of Mount Union. The district court entered judgment in favor of RUSS. The clerk of court subsequently issued a writ of general execution commanding the county sheriff to levy on all bank accounts held by the City at Iowa State Bank in Mount Union. The City filed a motion to quash the garnishment on the grounds that the bank account was exempt from execution under Iowa Code 627.18. The district court denied the motion to quash and claim of exemption. The Supreme Court reversed, holding that the bank account was exempt under section 627.18 because the general funds in the account were “necessary and proper for carrying out the general purpose” for which the City was organized. View "Reg’l Util. Serv. Sys. v. City of Mount Union" on Justia Law

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Bank was the holder of a promissory note executed by Mortgagors and the mortgage that secured the note. After Mortgagors defaulted on the note Bank brought a foreclosure action and obtained an in rem judgment and decree of foreclosure against Mortgagors. More than two years after the entry of the original judgment, the property had not been sold, and Bank filed a notice of rescission of the foreclosure. Bank subsequently filed this foreclosure action and moved for summary judgment. Mortgagor counterclaimed for quiet title and wrongful foreclosure, arguing that she was entitled to own the property because the house was not sold within two years of the foreclosure decree. The district court granted summary judgment in favor of Bank. The Supreme Court affirmed, holding that the two-year special statute of limitations in Iowa Code 615.1(1) does not limit the period of time for a mortgagee to rescind a prior foreclosure judgment. View "U.S. Bank Nat’l Ass’n v. Callen" on Justia Law

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At issue in this quiet title action was whether the two-year special statute of limitations in Iowa Code 615.1(1) applies only to judgment liens or whether the underlying debt is also extinguished after the end of the two-year period. The district court granted summary judgment in favor of Bank. The court of appeals affirmed. The Supreme Court affirmed, holding (1) in accordance with U.S. Bank Nat’l Ass’n v. Callen, the two-year special statute of limitations in section 615.1(1) does not apply to rescission; and (2) Mortgagor’s unclean hands defense to foreclosure has been waived. View "Kobal v. Wells Fargo Bank, N.A." on Justia Law

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Plaintiffs, former customers of West Bank, filed a multiple-count proposed consumer class action lawsuit against the Bank challenging one-time nonsufficient funds fees the Bank charged when Plaintiffs used their debit cards to create overdrafts in their checking account. Plaintiffs alleged usury claims and sequencing claims. The district court denied the Bank’s motions for summary judgment on the usury and sequencing claims but granted summary judgment on the Bank’s motion for summary judgment on Plaintiffs’ usury claim arising under the Iowa Ongoing Criminal Conduct Act. In a companion case issued today, the Supreme Court concluded that the district court erred in denying the Bank’s motions for summary judgment except as to the good-faith claim involving the sequencing of overdrafts. Likewise, the Court here found that the district court also erred in certifying the class action on all claims except for Plaintiffs' good-faith sequencing claim. View "Legg v. West Bank" on Justia Law

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Plaintiffs, former customers of West Bank, filed a multiple-count proposed consumer class action lawsuit against the Bank challenging one-time nonsufficient funds fees the Bank charged when Plaintiffs used their debit cards to create overdrafts in their checking account. Plaintiffs alleged usury claims and sequencing claims. the Bank filed three motions for summary judgment asking the district court to dismiss all of Plaintiffs’ usury and sequencing claims. The district court denied the Bank’s motions for summary judgment on the usury and sequencing claims but granted summary judgment on the Bank’s motion for summary judgment on Plaintiffs’ usury claim arising under the Iowa Ongoing Criminal Conduct Act. The Bank filed this interlocutory appeal on the district court’s denial of its motions for summary judgment. The Supreme Court affirmed in part and reversed in part, holding that the district court erred in denying the Bank’s motions for summary judgment except as to Plaintiffs’ claim based on a potential breach of the express duty of good faith in the sequencing of postings of bank card transactions. Remanded. View "Legg v. West Bank" on Justia Law

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This case presented a battle between banks over the proceeds of the sale of cattle by a financially strapped borrower who had financial dealings with both banks. When Security Savings Bank (Security) obtained the proceeds of the sale, Peoples Trust and Savings Bank (Peoples) claimed a security interest in the proceeds and sued for conversion. The district court granted summary judgment in favor of Peoples. After Security appealed, Peoples commenced garnishment proceedings against Security to enforce its judgment, and Security paid the underlying judgment. The court of appeals then determined that Security had waived its right to appeal and dismissed the case. The Supreme Court affirmed, holding (1) a defendant faced with post-judgment garnishment does not waive a pending appeal by paying the judgment in order to avoid further enforcement proceedings; and (2) the district court correctly determined that Peoples had a security interest in the proceeds superior to Security's interest and that Peoples did not waive its superior position through its course of conduct. View "Peoples Trust & Savings Bank v. Sec. Savings Bank" on Justia Law

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Husband obtained a purchase-money mortgage from Bank to invest in commercial real estate. Wife's signature was forged in executing the purchase-money mortgage. After Husband's death, Bank attempted to foreclose its mortgage, but Husband's Estate and Wife asserted Wife's fraudulent signature voided the mortgage. The district court (1) granted Bank summary judgment, concluding its purchase-money mortgage was superior to Wife's statutory dower interest and the Estate's other debts and charges; and (2) ordered any excess sale proceeds to be paid to the Estate. The court of appeals (1) affirmed the award of summary judgment; but (2) reversed the district court's determination that the foreclosure sale surplus be paid to the Estate, instead holding that Wife's statutory dower interest took priority over the Estate's other debts and charges. The Supreme Court affirmed the court of appeals, holding that a surviving spouse's dower interest, codified in Iowa Code 633.211 as to nonhomestead real property, was not subject to the debts and charges of the Estate of the spouse who died intestate.

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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.