Iowa Law Blog

In Memory: John V. Donnelly (1940-2010)

Matt Gardner — Mon, 25 Jan 2010 16:34:48 -0600

It is with deep regret and sorrow that Sullivan & Ward, P.C. notes that one of the members of the firm, John Donnelly, recently passed away. Mr. Donnelly was a distinguished member of the Iowa Bar, graduate of Harvard University and University of Michigan Law School. We are saddened by the premature departure of our friend and colleague.

Trust Termination in Iowa Restricted

Matt Gardner — Sun, 27 Dec 2009 18:42:25 -0600

Prior posts on this site have dealt with terminating a trust or breaking a trust in Iowa. A recent case from the Iowa Court of Appeals further clarified the ability of beneficiaries to terminate a trust in Iowa under the Iowa Trust Code. In the Matter of the Trust under the Last Will and Testament of Mary E. Weitzel, Mom executed a will which provided that her assets would stay in trust for her life, then upon daughter's death, the balance of the estate would pass to daughter's children (mom's grand kids). The will contained a relatively common provision, called a "spendthrift" provision, which prevented the daughter or the creditors of the daughter from getting access to the trust principal. The daughter claimed that the creditor issues that once existed were no longer an issue, and thus the spendthrift provision was no longer needed. Apparently, daughter and sons didn't care for the bank as the trustee and having restrictions in their access to the trust assets, so they sought to have the trust terminated.

The Iowa Trust Code permits termination of a trust if all of the beneficiaries consent and there remains no further material purpose of the trust. The question in this case focused on whether the spendthrift provision constituted a material purpose, thereby not permitting the trust to be terminated even if all of the beneficiaries consent to the early termination. The ruling from the Iowa Court of Appeals was that the spendthrift provision, with the facts of this case, was a material purpose and would not permit the trust to be terminated before the trust was directed to be terminated.

This ruling further emphasizes the direction that Iowa courts are going in preserving trusts. Some other states are taking a different approach in adopting a flexible approach permitting the termination of trusts when all of the beneficiaries consent.

Rather than terminating a trust, what if the beneficiaries sought to simply amend the provisions of the trust?

Update to Posthumously Conceived Child Social Security Benefits

Matt Gardner — Thu, 03 Dec 2009 08:28:29 -0600

In a follow-up to a recent post, Jason Clayworth of the Des Moines Register recently updated the situation concerning a young girl's application for social security benefits as a result of her father's death. A federal judge has overturned the rejection of benefits and thus permits her to receive benefits. The article continues to point out that legislators are examining long overdue updates to the Iowa statute to address these types of situations. The Social Security Administration has until January 11, 2010 to appeal.

The complexities that are involved in cases like this are challenging. A recent Probate Section meeting of the Iowa State Bar began to examine some of the issues and an approach to take with this issue. The discussion revealed that there is a split in the probate section as a result of numerous questions and possible approaches. Beyond the basic philosophical question of is this "right", there other other related matters beyond social security benefits. Can the father's wishes restrict future usage of his genetic material? Does he need to sign a written consent to authorize the use after his death? Should that consent be notarized? How far in the future will this material be permitted to be utilized? How will this impact settlement of estates and determination of heirs? How does this issue impact review of real property titles in abstract examinations?

I look forward to how the Iowa legislature approaches this issue in the spring and hopefully they consider all of the interrelated issues.

New Tenant Eviction Requirements in Iowa

Matt Gardner — Fri, 20 Nov 2009 13:42:55 -0600

The eviction process (also called a "Forcible Entry and Detainer" or "FED) in Iowa is just a little more strict. A ruling from the Iowa Supreme Court today now requires that the landlord give personal service notice of the eviction hearing. Previously, under the Iowa Uniform Residential Landlord Tenant chapter of the Iowa Code (Iowa Code 562A), if a landlord was ready to evict and had followed the necessary "notice to quit" requirements, the landlord could give the tenant notice of the eviction hearing (which must be less than 7 days away from the notice) by certified mail. Whether the tenant actually received the notice or signed for the certified letter was irrelevant as notice was deemed made when mailed.

The Iowa Supreme Court found that service of the eviction hearing by certified mail was unconstitutional as it violates the due process clause of the Iowa Constitution. Accordingly, in order to evict a residential tenant, the landlord must give the tenant timely personal service of notice of the hearing. Personal service requires, basically, delivered in hand to the tenant.

Read the Entire Agreement - Personal Liablity May be Lurking in the Document

Matt Gardner — Wed, 28 Oct 2009 17:39:35 -0600

We've previously posted on the subject of the danger of personal guarantees when entering into contracts through a business entity. Normally, the officer/agent of the company needs to sign such an agreement in his or her capacity in the company, and not in their individual capacity in order to avoid personal liability. A recent case out of the Iowa Court of Appeals clarifies that signing in your corporate capacity isn't enough on its own to limit your personal liability.

In this case, which was handled by our own Lou Hockenberg, the defendant had signed an application for credit and signed the application as "Pres." Right above that signature line, however, was a provision that provided the applicant was also personally liable for the debt. The Iowa Court of Appeals affirmed the judgment by stating that the the provisions of the binding agreement should not be negated by simply signing such an agreement in one's corporate capacity.

Moral of the story: Read what you sign.

Steve McNair - Another Failure to Plan

Matt Gardner — Fri, 16 Oct 2009 17:10:51 -0600

Former NFL football player Steve McNair is just another too-common of an example of someone who failed to plan their estate with so much at risk. As Todd Ratner on the Estate Planning Bits blog noted in his post, there are several legal issues associated to the unfortunate demise of Steve McNair that will likely result in significant cost and struggle to his family. Fame and fortune alone won't guarantee you a structured estate plan. And you don't have to be a Steve McNair to have the same issues and risks that he did.

Larry McLellan and Mark Landa Selected for National Honors

Matt Gardner — Fri, 16 Oct 2009 15:22:35 -0600

Sullivan & Ward's own attorneys, Larry McLellan and Mark Landa, have been selected for inclusion in the 2010 edition of Best Lawyers in America in environmental law. Larry McLellan was also included in the 2009 Great Plains Super Lawyers listing under environmental law. Congratulations to Mark and Larry for these honors!

Another Iowa Case of Piercing the Corporate Veil

Matt Gardner — Fri, 09 Oct 2009 17:15:14 -0600

One of the reasons that individuals form business entities, such as corporations and limited liability companies, is to protect their own personal assets from the debts and liabilities of the business. The law does provide some protection, but in order to get that protection, the company owners need to follow certain requirements. Fail to follow those requirements opens the individual owners up to liability of the company through a process called "piercing the corporate veil".

The Iowa Court of Appeals recently affirmed a basic case permitting the piercing of the corporate veil. In this particular instance, the individual defendants claimed they were not sufficiently aware that the Plaintiff was pursuing the defendants individually (attempting to pierce the corporate veil) in the lawsuit, rather than suing just the corporation. In the court's ruling, the court found sufficient evidence to put the plaintiff's on notice before the trial that the Plaintiffs intended to pursue them individually. The defendant's claim of "trial by ambush" was rejected.

This case serves as a reminder to all business owners that the liability protection that can be provided by an entity, such as a corporation or a limited liability company, is only valid if you follow the proper formalities. Failing to keep corporate minutes and records, separate corporate finances, routine government filings and separate books of the business entity can expose the individual owners of the company to the company's liability. Setting up the corporation is only the first step and that step alone does not necessarily provide the corporate liability protection.

Employers and the H1N1 Virus

Liz Overton — Thu, 01 Oct 2009 16:57:00 -0600

Employers need to be aware of the effect the H1N1 flu virus may have on its workforce this winter and be prepared to deal with issues that arise. According to the CDC the H1N1 flu virus attacks young children and young adults. This means many employees will either contract the H1N1 virus themselves or have a child that contracts the virus. The CDC is recommending that those that contract the virus stay home and away from the public for at least 24 hours after their fever is gone.

For employees with sick leave or paid-time-off (PTO), staying home to take care of a sick child or themselves does not present a problem. But there are employees who either have no available time off or have exhausted all their available time off. What can or should an employer do in that case?

Employers are under no obligation to provide those infected with the H1N1 virus any additional time off. Providing sick leave or PTO is not required, at this time, under any Iowa or federal law. There have been no requirements from Iowa or the federal government mandating that employers allow persons infected with the H1N1 virus time off from work (either paid or unpaid). However, persons infected with the virus may potentially spread it to others, thus resulting in a “pandemic” in your workplace. It may be possible for you to adopt policies which allow sick workers to stay at home. Examples of such policies include granting more PTO; allowing sick workers to “borrow” time from a future allotment; allow employees to work from home.

Even if none of the above options are appropriate for your work site, it is still important to stress preventative health options to your workers—washing hands, using antibacterial hand gels etc.

Divorce: An Overview of Issues

Samantha Kain — Wed, 09 Sep 2009 16:26:04 -0600

"No-Fault" Divorce: Iowa has what is known as a "no-fault" divorce law. This means that neither party is required to prove that the other party was "at fault" or caused the marriage breakup. Instead of proving fault, a person must simply show there has been a breakdown in the marriage relationship, the legitimate objects of matrimony have been destroyed, and there remains no reasonable likelihood that the marriage can be preserved.

Custody: Child custody can be divided into two categories - legal custody and physical custody. Rights and responsibilities of legal custody include, but are not limited to, decision making affecting the child's legal status, medical care, education, extracurricular activities and religious instruction. Joint legal custody is common and means that neither parent has legal custodial rights superior to the other parent. While joint legal custody is common, it does not require joint physical custody. Physical custody or physical care means the right and responsibility to maintain a home for the minor child and provide for the child's routine care. Physical custody may be given to either parent, subject to the visitation rights of the other. In the alternative, joint physical care can be awarded and in which case neither parent has physical rights superior to that of the other parent. In determining custody, the Court looks at what is in the "best interests of the child." In doing so, the Court also tries to assure maximum continuing physical and emotional contact with both parents.

Visitation: Visitation rights will, in most instances, be granted to the non-custodial parent. Visitation between a non-custodial parent and a child typically involves visitation during the week, on weekends, holidays, birthdays, and school/summer vacations.

Child Support: New child support guidelines were adopted by the Iowa Supreme Court effective July 1, 2009. The new guidelines are based upon a pure income shares model of child support. Either parent can be ordered to pay child support and typically a parent's child support obligation continues until the child for whom support is being provided, (1) reaches 19 years of age or graduates from high school, whichever occurs first; (2) marries; (3) dies; or (4) otherwise becomes emancipated and self-supporting.

Minority, Disabled and Women Owned Business Owners in Iowa

Matt Gardner — Tue, 01 Sep 2009 08:18:03 -0600

If your business is majority-owned by a female, a person with a disability, or a minority, your business may qualify as a "Targeted Small Business" (TSB). If the business meets the requirements of a TSB, you have the opportunity for certain preferential treatment in state-funded projects. For example, certain projects may require a certain amount of work be completed by a TSB. By qualifying as a TSB, you are placed on a central list where contractors and state agencies are able to locate you and seek your services as part of the project. In addition, TSB's are given the opportunity to bid on certain projects 48 hours in advance. TSB's also have the opportunity to seek financial assistance in the form of grants or low-interest rate loans.

The Iowa Department of Inspection and Appeals administers the TSB certification program and have the application materials posted on their website. Also, the Iowa Department of Economic Development has additional general information on their site.

If you have questions about forming your business or the TSB process in general, feel free to contact us.

NCAA Football: Let the Votes be Counted...Publicly

Benjamin Clark — Thu, 27 Aug 2009 16:19:47 -0600

As reported on August 25, 2009 by Andy Staples on SportsIllustrated.com, SI.com is issuing open records requests to the 51 public school bowl championship subdivision football coaches who cast votes for the weekly coaches poll in NCAA football. The coaches poll carries 33% weight in the determination of which schools are eligible to compete in the BCS national championship game, and other high-paying bowl games. Staples argues that since football coaches at public universities are public employees, all records-including their votes-are subject to the open records laws of their specific states.

Neither Kirk Ferentz or Paul Rhoads are voting in the coaches this year (2009), but if they were, an interested person could make an open records request under Iowa Code Chapter 22. Whether such requests by SI.com are successful remains to be seen, but Iowa's law in particular seems to favor the interested person under these circumstances.

What is clear, however, is that this author is excited for the approaching college football season. Stay tuned for any other excuses to write about the divergence of college football and the law.

Rolland Grefe Pro Bono Publico Award

Samantha Kain — Mon, 10 Aug 2009 13:48:37 -0600

Robert M. "Bob" Holliday was recently awarded the Rolland Grefe Pro Bono Publico Award for his efforts to have the life sentence of Reed Prior commuted. Mr. Prior's sentence was commuted by President George W. Bush on December 23, 2008 approximately seven years after Bob began working on his case. Bob received the Award on June 24, 2009 at the President's Awards Banquet during The Iowa State Bar Association's Annual Meeting. Congratulations, Bob!

Disclosures of Problems with Property in Residential Sales

Matt Gardner — Sun, 02 Aug 2009 23:03:20 -0600

The Iowa Court of Appeals recently issued a ruling that should be a reminder to those trying to sell a house in Iowa. The evidence presented at trial indicated that the seller of a home had previous history of water standing on the lawn after rains. The seller had provided a seller's disclosure statement, pursuant to Iowa law, which requires a potential seller to list and disclose any potential problems, including "physical problems such as: settling, flooding, drainage, or grading problems" but failed to indicate the standing water problem. The Court indicated that the standard is not whether the seller believes that a characteristic is a problem, but whether the grading/drainage is a condition and important characteristic of the property. Accordingly, the Court found that the seller improperly failed to disclose the condition of the property to the buyer. For anyone looking to sell their property on their own, this is a reinforced reminder to disclose anything and everything to a potential buyer. Whether the seller believes that it is a problem does not matter. My advice to any of my clients selling property is to do disclose everything. Being subject to a lawsuit from a disgruntled purchaser is not a pleasant experience to go through. The safer course of action is to disclose any potential important conditions of the property so that a buyer is put on notice.

Iowan Fights for Inheritance Rights of Daughter Conceived after Death of Father

Matt Gardner — Mon, 22 Jun 2009 11:47:18 -0600

A recent story in the Des Moines Register Dead Iowan fathers child; is daughter entitled to survivor benefits? illustrates the need for the laws, in Iowa and elsewhere, to catch up to today's technologies or at begin discussion of bioethics for certain medical situations that have significant legal impacts.

Patti Beeler is fighting for social security benefits for her daughter, who was conceived after the death of the girl's father from frozen sperm after the father died from cancer. This story is another example of why laws need to be updated to address these types of situations. This case is just one of several that will likely continue to emerge in the near future as courts from around the country have taken opposite positions as to whether a posthumously conceived child is entitled to inherit. Iowa laws currently do not permit such a child to inherit as an heir as the child was conceived after the biological parent's death. See Iowa Code 633.220. The social security administration looks to local law to determine who would qualify as a dependent for purposes of social security benefits. Thus, Iowa law is not favorable for this little girl, who will never know her father.

Using a Power of Attorney in Your Iowa Estate Plan

Matt Gardner — Mon, 22 Jun 2009 08:30:14 -0600

At Iowa Estate Plan, I have a post about the benefit of using a Power of Appointment in your estate plan.

Matt Gardner - Attorney and Now Author

Matt Gardner — Fri, 19 Jun 2009 15:09:21 -0600

Matt Gardner recently had a chapter published in the book titled "Estate Planning Client Strategies: Leading Lawyers on Understanding the Client's Goals Using Trusts Effectively, and Planning in a Changing Economic Climate (Inside the Minds)." If you are interested in purchasing, go here (none of the proceeds go to us).

Win or Lose: You've Got the Job

Benjamin Clark — Fri, 19 Jun 2009 10:17:38 -0600

This post should be prefaced with the fact that I am an alumnus of the Univeristy of Iowa, but I will attempt to remain as objective as possible in my reporting.

Iowa State University recently finialized its contract with new Head Football coach Paul Rhoads. The contract, linked here by the Des Moines Register, has an interesting term that is not often found in coaching contracts. Under Article V of the contract, instances are provided that equate to "just cause" for termination, in other words, reasons the University can give to fire him. Paragraph 2(a) of this Article specifically lists some situations that cannot be considered just cause, including:

ii) Win-loss record or public unhappiness with win-loss record; or

iii) Other general displeasure at the direction or success of the football program.

Generally, win-loss records and displeasure with the direction of an athletic program are the main reasons coaches are fired by their university employers. It would be interesting to know at whose behest these clauses were added, and the policy behind them. It should be noted that the contract also lists a number of "just cause" reasons to fire Rhoads, and the University would likely be able to find separate reasoning to release him besides the win-loss record of the team.

At any rate, his job is safe for a while, even after September 12, 2009. Go Hawks.

Elizabeth Overton Quoted in Business Record

Matt Gardner — Thu, 04 Jun 2009 07:02:40 -0600

Sullivan & Ward's Liz Overton was quoted in the Des Moines Business Record concerning legal issues related to company furloughs. Company furloughs create a legal minefield Very good information and article related to company furloughs.

Des Moines Schools: Facebook Sleuths?

Benjamin Clark — Thu, 21 May 2009 09:41:05 -0600

The Des Moines School Board voted 6-0 on Tuesday, May 19, 2009 to approve a tougher student conduct policy related to illegal activities and behavior. The policy will go into effect in the Fall of 2009, and will apply to students year-round. Opponents of the new changes have focused their attention on a particular part of the policy: The new code allows district officials to use information from social networking sites such as MySpace or Facebook as evidence to discipline students, even in the event the student is not charged by legal authorities.

The Des Moines Board policy certainly raises a number of questions about the authenticity of social networking information as evidence (Is a picture of a student-athlete holding a red Solo cup of Pepsi at a party going to get him or her suspended?) (What if a beer is Photoshopped into the picture?) (What if the picture was taken before the policy was in effect?); the availability of resources to enforce the new policy (Will the district employ an individual to scour the Internet in search of allegedly damning photos?); and whether investigations will be commenced by school administrators, by an opposing team a few days before the big game, or by a parent of a student-athlete from the same team (Is this a tool for the district or does it promote everybody to become a whistle-blower?). Additionally, the moral/social debate about parental decision-making overruled by the school district is alive and well following the board's actions. From a legal perspective, however, high school extra-curricular activities are a privilege, not a right. Accordingly, the school district is likely entitled to use social networking sites as a means to enforce its policies.

Also, look for students to simply change their habits. Many will avoid situations where alcohol or drugs are involved, while others may not abate their behavior, but will just take the photos off the Internet.

The introduction of Internet information as evidence, especially found on Facebook and MySpace, is a fascinating legal phenomenon. The information is plentiful and can provide tremendous assistance to a fact-finder, but its authenticity is highly questionable.