Iowa Law Blog

Transferring Property From an LLC

Kyle Kruidenier — Thu, 17 May 2012 13:34:07 -0600

Although Corporations and Limited Liability Companies offer their owners similar protections from liability, differences between the two entities can be found. For instance, when transferring property from an LLC, the Iowa Revised Uniform Limited Liability Act requires that the record (i.e deed) must disclose whether the LLC is member-managed or manager-managed; whether the conveyance is in the ordinary course of the LLC's business or affairs; and that the signer has authority to act on behalf of the LLC. Whereas, the record does not need show these additional disclosures for property transferred by a corporation.

Consideration must be given to subtle differences such as these when deciding on a choice entity for a new venture.

Divorced Parents and Post Secondary Education Subsidies

Samantha Gronewald — Wed, 02 May 2012 15:27:17 -0600

The Iowa Supreme Court issued an interesting opinion on Friday, April 27, 2012 regarding divorced parents' responsibilities for post-secondary education subsidies under Iowa Code Section 598.21F (2011). The case presented required the Court to determine whether good cause exists for ordering a parent to pay a postsecondary education subsidy and, if so, in what amount? The Court ultimately affirmed the district court's determination that good cause exists for payment of a postsecondary education subsidy, but reduced the amount awarded by the district court.

In order for a court in Iowa to order a postsecondary education subsidy, first the child must qualify. Pursuant to Iowa Code Section 598.21F, to qualify the child must be between the ages of eighteen and twenty-two and must have demonstrated a capacity to succeed in postsecondary education. If a child is eligible, the district court "may" order a postsecondary education subsidy if "good cause" is shown.

Upon a showing of good cause, the Code provides a process for determining the subsidy. The process generally looks at the cost of attending an in-state public institution, determines the amount the child should reasonably be expected to contribute and looks at the child's ability to earn income while in school. The court then deducts the child's expected contribution from the cost of postsecondary education to arrive at a figure that represents the remaining cost that will be attributed to the divorced parents of the child. The Code; however, explicitly caps the amount apportioned to each parent at no more than thirty-three and one-third percent of the total cost of the child's postsecondary education at a state institution.

Iowa Fence Law Legislative Update

Benjamin Clark — Tue, 20 Mar 2012 15:26:49 -0600

As an update to previous entries regarding Iowa's fence law, the 2011 proposed legislative changes (Senate File 2102) failed to make it out of subcommittee. We will have to wait another year to see whether the legislature decides to modify the century-old statute, in particular limiting its application to agricultural uses. Until then, the statute will continue to operate in a gray area.

Iowa Fence Law Before Legislature

Benjamin Clark — Thu, 09 Feb 2012 10:27:43 -0600

I'll admit that the Iowa Fence Law (359A) has become a side project of mine. I have blogged about it on two separate occasions in the past, first noting that as written and determined by the Iowa Supreme Court, the law applied to both urban and rural property. The update noted that the mechanisms in the law to handle disputes are outdated.

The Iowa Senate is reviewing a bill to address the first issue. Senate File 2102 seeks to modify the fence law to only require an adjoining landowner with livestock (or who has owned livestock in the last five years) to help pay for the neighbors' fence.

However, the problematic dispute resolution mechanism still exists. Power to resolve problems under this code section are still within the purview of a group called "fence viewers," who are essentially township trustees. In areas where township trustees no longer exist, it is unclear how disputes are resolved.

The Legislature should completely abandon 359A as currently written and start from scratch. The piecemeal amendments to the fence law that have occurred over the last century make it completely impractical.

US Supreme Court Adopts Ministerial Exception to Discrimination Laws

Liz Overton — Fri, 20 Jan 2012 15:01:15 -0600

In the unanimous Hosana-Tabor v. EEOC decision issued January 11, 2012, the U.S. Supreme Court recognized for the first time a "ministerial exception" to virtually all forms of employment discrimination. The "ministerial exception" as announced by the Court is not a prohibition against asserting claims against religious organizations, rather an affirmative defense.

The facts of the case are straightforward: Cheryl Perich was employed by Hosanna-Tabor Evangelical Lutheran Church and School as a "lay" teach in 1999. In 2000, she completed requirements to become a "called" teacher. A called teach has the formal title: "Minister of Religion, Commissioned." She taught mainly secular subjects, but did teach a religion class four days a week, led the students in prayer and devotional exercises each day, and attended a weekly school-wide chapel service. In 2004 she was diagnosed with narcolepsy, which required her to begin the 2004-2005 school year on disability leave. On January 27, 2005, she notified the school that she was able to return to school. The school principal responded by saying that her position had been filled and the school was concerned that she was not ready to return. On January 30, 2005 the church congregation voted to release Perich from her call and offering what amounted to a severance payment in return for a resignation. Perich declined and was terminated.

The Court discussed the history and implications of the Religion Clause contained in the First Amendment. The Court then recognized the "ministerial exception" stating:

The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group's right to shape its own faith and mission through its appointments. According to the state the power to determine which individuals will minister to the faithful also violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions.

The Court then concluded that Perich's position was that of a minister; therefore, the employment laws, specifically the Americans with Disability Act, did not apply. The court considered her calling, title, and circumstances surrounding her commissioning among other facts. The Court did note that title alone will not necessarily mean a church employee is a "minister". The Court did not find it dispositive that Perich performed similar duties to that of lay teachers. Nor, did the Court find that the individual being considered a minister perform exclusively religious functions.

It is apparent that churches and religious organizations have wide discretion over their employment decisions, but should still be cautious when making those decisions.

A Lesson in Preventing & Correcting Discrimination

Liz Overton — Thu, 12 Jan 2012 13:52:00 -0600

A recent 8th Circuit decision demonstrates the importance of responding investigating and responding to claims of harassment and discrimination. In Crawford v. BNSF Railway Co., the plaintiffs alleged that their supervisor sexually and racially harassed them on a frequent basis. The court granted judgment in favor of the employer because the employer was able to show that it acted reasonably to prevent and correct any sexually harassing behavior and the employees failed to take advantage of the preventive and corrective opportunities provided by the employer.

The employer not only distributed its anti-harassment policies but also followed the policies. The company had counseled the alleged harasser previously about workplace behavior and required him to attend a seminar. The company had a hotline employees could use to make complaints. The company investigated each and every complaint it received through the hotline. Upon notice of the plaintiffs' complaints, the company placed the alleged harasser on administrative leave, investigated the complaints, and terminated the alleged harasser within two weeks. The court found these facts, coupled with the plaintiffs' failure to take advantage of the complaint process or hotline, granted judgment in favor of the employer.

As an employer, you cannot prevent an employee from asserting a claim, but you can decrease your potential liability by following a few steps:

1. Adopt and distribute anti-harassment/discrimination policies. If you don't have any policies that prohibit harassment and discrimination adopt them now. Make sure your employees know that you have the policies and give them a copy of the policy.

2. Educate your employees. Ensuring that your employees understand the policy means more than handing it to them on the first day of work. Hold periodic training with your employees that depicts illegal discrimination or harassment and educate them on the appropriate ways to report potential discrimination or harassment.

3. Investigate all complaints. When an employee complains of potential discrimination or harassment investigate the complaint. Do not dismiss a complaint because it doesn't seem valid on its face. Interview potential witnesses, talk to managers, make a written report. Obviously, the seriousness of the complaint may warrant a more detailed investigation, but all complaints should be afforded some level of investigation.

4. Take action. Taking action doesn't always mean discipline or termination. You may discover that certain employees need additional training or counseling. Sometimes a complaint cannot be substantiated. Even in those situations, take action by following-up with the complaining employee and making a written record of your investigation.

Having a proven track record of viewing complaints as serious demonstrates to the court that your company is committed to preventing and correcting discrimination and harassment in the workplace.

EPA Issues Mercury & Air Toxics Standards

Benjamin Clark — Wed, 21 Dec 2011 14:02:57 -0600

Today the EPA issued new standards limiting mercury, acid gases, and other toxic pollutants from power plants. A fact sheet is available here. Essentially, the standards seek to eliminate 90% of mercury and air toxics from power plant emissions by year 2016. I will provide an update setting forth how the rule will be implemented.

Less Than Clear Language in Will Spells F-E-E-S

Matt Gardner — Wed, 21 Dec 2011 08:46:01 -0600

A ruling issued today by the Iowa Court of Appeals brings to focus the necessity of clear and thorough language. If not, your attorneys will thank you for the additional fees that you bring to them. After all, attorneys need to eat, too.

As husband and wife, Paul and Minda had a will which provided for each other for their lives, then Minda's will provided that if she and Paul died at the same time or after her, her estate would pass to Paul's daughter Gail (Minda's step-daughter). Everything looks fine at first glance. But what if Paul predeceases Minda? What would happen then? Minda's heirs (her brothers here) claim that the gift to Paul/Gail lapses (fails) and thus passed intestate (without a will) to them.

The appellate court agreed with the trial court that the will demonstrated a clear intent to provide for Gail after Paul's passing. In addition, a court will typically rule in a way to avoid having property pass intestate, if possible. The perceived demonstration of intent plus avoidance of intestate permitted Gail to receive her step-mother's estate.

It certainly would have been easier if the author of the will had put in a couple of additional words (for example, "if he predeceases me") to avoid having to go through a trial and an appeal. So when you read our wills and think "man, these lawyers are wordy", there is a reason we are wordy.

Iowa Fence Law (Needs) Update

Benjamin Clark — Mon, 05 Dec 2011 09:47:08 -0600

Iowa Law Blog recently featured a post regarding the Iowa fence law found at Iowa Code Chapter 359A. That post discussed that although the fence law was historically enacted for agricultural purposes, the Iowa Supreme Court has ruled that its applicability extends to "serve the broader public good by mediating boundary, fence and trespass disputes." Gravert v. Nebergall, 539 N.W.2d 184, 188 (Iowa 1995). The fence law could be used for urban purposes as well.

The fence law directs that the township trustees of the subject area will serve as "fence viewers," a group that decides the outcome of a fence dispute between two neighbors. However, as unincorporated land is annexed by municipalities, that land is no longer part of the township, but instead part of the municipality. Thus, the township trustees no longer have jurisdiction over fence disputes.

Logically, under this scenario it would seem that the city council would become the "fence viewers" who would resolve the dispute between the neighbors. However, city councils traditionally serve a legislative function, and not a judicial one. Accordingly, it would seem that the Iowa District or small claims court would be the appropriate venue for these disputes.

Such result does not mesh with Iowa Code 359A or the Gravert decision of the Iowa Supreme Court. The Iowa legislature should review 359A to ensure that it still serves it purpose, and that there is a clear mechism for citizens to utilize it.

Super-sized Child Support in Iowa

Samantha Gronewald — Sat, 26 Nov 2011 15:03:38 -0600

This past summer, supermodel Linda Evangelista requested $46,000/month in child support from Francois Henri Pinault, CEO of the Paris-based conglomerate that owns Gucci, Yves St. Laurent and Bottega Veneta. He is the father of her four year old son and has allegedly not paid any money in child support since the child's birth. Ms. Evangelista's request raises an interesting question - In Iowa, how is child support calculated when the parents' combined net monthly income is unscheduled or in other words in excess of $20,000?

In Iowa, the child support guidelines are based on the parents' combined income and the number of children involved. The child support guidelines are scheduled for a combined net monthly income up to $20,000. For a net monthly income in excess of $20,000 the guidelines provide that the appropriate figure is deemed to be within the sound discretion of the court or the agency fixing child support by administrative order. The amount of support payable by a non-custodial parent with a monthly net income of $20,001 or more shall be no less than the dollar amount as provided for in the guidelines for a non-custodial parent with a monthly net income of $20,000.

The guidelines do; however, expressly empower the courts to depart from the recommended child support amounts because of special circumstances. Ms. Evangelista's "special circumstances" include a request for a full-time nanny, vacation expenses and armed chauffeurs. It will be interesting to see how her case plays out in the Manhattan Family Court system.

Iowa Supreme Court sides with Purchase Money Mortgage

Benjamin Clark — Fri, 18 Nov 2011 16:14:53 -0600

Today the Iowa Supreme Court released its opinion in Freedom Financial Bank v. Estate of Edward Boesen and Maureen Boesen. Sullivan & Ward, P.C. represented Freedom Financial Bank in a mortgage foreclosure action against the Estate of Edward Boesen. The Court affirmed the decision of the Polk County District Court and the Iowa Court of Appeals, ruling that Freedom Financial's purchase money mortgage was superior to a wife's dower interest in intestate property.

The Court also conducted an extensive analysis of the Iowa Probate Code to determine whether the Estate or Maureen Boesen should receive the remainder of the proceeds from the sale of the subject real estate.

Stay tuned to the Iowa Law Blog for an analysis of the Court's probate ruling and its effect.

FCC Open Internet Disclosure Rule for ISPs Effective November 20, 2011

Benjamin Clark — Wed, 16 Nov 2011 14:39:54 -0600

The FCC issued its Final Rule on Friday, September 23, 2011 entitled "Preserving the Open Internet". In the Rule, the FCC seeks to "preserve the Internet as an open platform for innovation, investment, job creation, economic growth, competition, and free expression." To further that goal, the FCC adopted three basic rules for fixed and mobile broadband providers:

Transparency: broadband providers must disclose network management practices, performance characteristics, and commercial terms of their broadband services.
No Blocking: fixed broadband providers may not block lawful content, applications, services, or non-harmful devices.
No Unreasonable Discrimination: fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic.

Although all rules become effective November 20, 2011, the transparency requirement creates an affirmative duty for fixed and mobile broadband providers to disclose certain information on their websites or in their stores by November 20, 2011. This information includes the disclosure of network practices, performance characteristics, and commercial terms.

Michael Green Joins Sullivan & Ward Law Firm

Matt Gardner — Fri, 04 Nov 2011 07:55:16 -0600

Michael J. Green, formerly associated with the Brown Winick law firm, has joined Sullivan & Ward law firm. Mr. Green is an AV-rated attorney practicing in the area of real estate and business.

Good Fences Make Good Lawsuits

Benjamin Clark — Wed, 19 Oct 2011 11:32:44 -0600

During Jan Mickelson's (@amtalker) radio show this morning on 1040 WHO, I heard part of a story about two neighbors who had a dispute about a fence. The discussion involved Iowa Code Section 359A, which is a very old statute. Essentially, the statute sets forth the procedure under which a person can force his adjoining land neighbor to help pay for the costs of a fence between the two properties.

There are several policies furthered by this statute. The centuries-old proverb that "good fences make good neighbors" is an obvious reason, but for agricultural states it also helps clarify farmland boundaries and contain livestock.

This is where clarification is important: although the radio guest noted that this statute is intended for agricultural purposes, the statute technically does not have that limitation. The Iowa Supreme Court has held that:

"Chapter 359A applies equally to all adjoining landowners without regard to the use of the land. Our decision rested on the fundamental belief that, in the long run, shared responsibility for partition fences minimizes conflict among neighbors. The fencing statute does not merely benefit livestock owners. It serves the broader public good by mediating boundary, fence and trespass disputes." Gravert v. Nebergall, 539 N.W.2d 184, 188 (Iowa 1995).

So for the city-folk reading this note, you have the access to this statute as well.

Institute for Financial Literacy Releases its Consumer Bankruptcy Demographics Report

Kyle Kruidenier — Wed, 12 Oct 2011 14:08:58 -0600

The Institute for Financial Literacy, a non-profit corporation, recently published its Annual Consumer Bankruptcy Demographics Report. The findings indicate that the profile of the typical American bankruptcy filier may be changing. Among other things the report seems to indicate that the gender gap in bankruptcy filing is closing; Americans with advanced degrees are filing at higer rates; Americans 45 years and older are filing at increased rates while Americans 34 years and younger are filing with less frequency than before.

Click here to view the full report

Kyle Kruidenier Elected to Urbandale School Board

Samantha Gronewald — Wed, 14 Sep 2011 11:55:41 -0600

Kyle Kruidenier was elected to the Urbandale School Board following Tuesday night's election. Kyle has been with Sullivan & Ward, P.C. since 2004. While Kyle's practice is a general civil practice, he focuses primarily on real estate, landlord/tenant, environmental, business, non-profit, employment, collection and public utility law. Congratulations, Kyle!

Supreme Court Reaffirms At-Will Employment

Liz Overton — Fri, 09 Sep 2011 10:50:06 -0600

A little over a year ago I wrote about the Court of Appeals' decision in Berry v. Liberty Holdings, Inc. In that decision the Court of Appeals determined that Iowa's comparative fault statute was a basis for a public policy exception to the at-will employment doctrine. I mentioned that, despite the Court of Appeals' decision, the case was far from over.

Today, the Iowa Supreme Court issued its ruling in Berry v. Liberty Holdings, Inc., vacating the Court of Appeals decision and reinstating the district court's dismissal of the case. The Supreme Court disagreed that the comparative fault statute was a source of public policy. Rather, it found that the purpose of the law is to provide a framework or set of rules one must follow when assigning fault in negligence cases.

The Court explained that the statute being used to support a wrongful termination claim must "relate to the public health, safety or welfare and embody a clearly defined and well-recognized public policy that protects the employee's activities." The statute cannot deal merely with individual interests. The Court went on to explain the history and purpose of the comparative fault statute:

Chapter 668 did not create any new causes of action. Rather, it created a set of rules under which the parties will try all tort actions when the action involved 'fault' as defined by the statute. Therefore, chapter 668 more closely resembles a statute that attempts to regulate private conduct and imposes requirements that do not implicate public policy concerns.

For this reason, the Supreme Court vacated the Court of Appeals' decision and reinstatned the district court's dismissal. The decision reaffirms the Court's adherence to the at-will employment doctrine except in limited circumstances.

David J. Hellstern Joins Sullivan & Ward, P.C.

Samantha Gronewald — Tue, 06 Sep 2011 18:00:49 -0600

Sullivan & Ward, P.C. is pleased to announce the addition of David J. Hellstern to the Firm. David received his Bachelor of Business Administration from the University of Iowa in 2000 and his Juris Doctorate from Drake University Law School in 2004. Prior to joining Sullivan & Ward, P.C., David practiced with a small firm in West Des Moines, Iowa. David's practice areas include Business/Corporate Law, Construction Law, Real Estate, Probate and Family Law. Welcome David!

Employers Now Required to Post Notice of NLRA Rights

Liz Overton — Fri, 02 Sep 2011 09:07:18 -0600

Earlier this week the NLRB issued a final rule requiring employers to notify employees of their rights under the National Labor Relations Act (NLRA) by November 14, 2011. All private-sector businesses, except those "small employers" which the Board has chosen not to assert its jurisdiction over, are required to comply with the rule.

According to the NLRB press release, the notice will inform employees that they have a right to act together to improve wages and working conditions, to form, join and assist a union, to bargain collectively with their employer, and to refrain from any of these activities. It provides examples of unlawful employer and union conduct and instructs employees how to contact the NLRB with questions or complaints.

The required notice will be available on the NLRB website and from regional offices by November 1.

Misconduct and Unemployment Benefits

Liz Overton — Wed, 24 Aug 2011 08:22:24 -0600

In a rare appellate decision regarding unemployment benefits, the Iowa Court of Appeals upheld denial of a former Casey's employee's unemployment benefits. The facts in this case are uninteresting: the employee removed discarded soup from the garbage and took it home to feed her dog. This violated a written policy that had been provided and explained to the employee. The employee was terminated.

Generally, misconduct serious enough to justify denial of unemployment benefits is a series of infractions after repeated warnings or one major infraction of an employer's policies. Here, the infraction appears to be minor--one-time removal of $10.00 worth of discarded soup. However, the court focused not on the amount of soup or its status as garbage but on the employee's intentional disregard of rules that she either was aware of or should have been aware of. It was the obvious intentional disregard that amounted to misconduct in the court's opinion.

I rarely advise employers to contest unemployment benefits, but this case does have some take away for employers who choose to contest employee's benefits.

1. Have written policies and provide the policies to your employees. Casey's had a written handbook that was provided to all employees. Employees were required to sign receipt of the handbook and expected them to read the handbook. The policy about wasted foods was clearly stated in the handbook.

2. Explain important policies to your employees. Casey's held a training meeting that specifically explained its policy regarding wasted foods.

3. Be consistent in your enforcement. While the facts do not indicate whether Casey's terminated all employees for similar infractions, it's a good idea to be consistent in enforcement. Consistency creates expectations for employees. I would guess if the testimony had shown that Casey's had a written policy, explained the written policy, but never, rarely or even inconsistently enforced the written policy the employee would have received benefits.