Iowa Law Blog

The Breastfeeding Employee

Liz Overton — Thu, 11 Mar 2010 09:20:41 -0600

Do breastfeeding employees have any protection under the laws? That was the question I wanted an answer to after learning from other women that some employers were not supportive of their decision to continue breastfeeding upon return to work. The employers of the women I talked to did not refuse to allow the women to pump at work, but did not make it easy for them either. Many of the women did not have regular breaks or a private and convenient place to express their breast milk.

Unfortunately, as of 2009 approximately 15 states have enacted laws that protect a lactating employee. Iowa is not one of those states. Of the states with laws, none provide a lactating employee any time, other than their normal breaks, in which to pump and only a few require the employer to provide a lactation area. I would argue that such laws do not effectively provide any protection to a lactating employee. Without adequate time and a private area, many women would abandon the idea of continuing to breastfeed their children.

With all the benefits that breastfeeding provides for both mother and child, it would be beneficial for employers to support mothers who wish to continue breastfeeding upon their return to work. I am lucky to work for an employer that has supported my decision to continue breastfeeding upon my return to work. For those of you with employers that may not prohibit you from pumping at work, but do not necessarily encourage you, talk to your employer before the issue arises. Perhaps your employer has never been faced with the issue or the issue has never been discussed. Employers, think about this issue prior to a request from an employer. Think about whether you can create a private place for a lactating worker or provide such employer with additional time in which to pump. Thinking about it now may reduce future problems.

LegalZoom and DIY Legal Documentation Need Their Own Lawyers

Matt Gardner — Sat, 27 Feb 2010 08:38:03 -0600

The popular legal document production website, LegalZoom, is "zooming" to the court based upon a class action lawsuit in Missouri. The Plaintiff's in the suit are claiming that LegalZoom is engaging in the unauthorized practice of law.

While some people may see attempts by attorneys to knock LegalZoom out of business in order to protect the attorney's "ground", the reality is that if there are any issues that come out of the documents created by LegalZoom, the attorneys are likely to make much more money in fees in cleaning up the mess than they would have in drafting the documents in the first place. Most clients are surprised at the relatively reasonable cost we charge for the same "document preparation" that these DIY companies provide. Is it as cheap as LegalZoom? No. Do you get what you pay for?

There are plenty examples of people performing their own surgeries, but there is a reason that physicians go through years of school and training and are subject to regulations. Similarly, whether you like attorneys or not, there is a reason they too go through years of school, training and subject to regulations.

Don't you have a little more comfort in knowing that the critical legal documents are done accurately? Plus, if there is a question later on, having that initial relationship with an attorney will help with dealing with any problems.

Iowa Supreme Court Rules on Recovery of Damages from Real Estate Sale

Matt Gardner — Fri, 26 Feb 2010 11:13:21 -0600

In an opinion released by the Iowa Supreme Court today, the Court found that a suit for breach on a covenant of title requires that the coventor be giving notice of the underlying claim before they are obligated to pay. In this case, Gaede's purchased land from Stansberry. After the sale was completed and the Gaede's took possession, the city approached the new owners, Gaede, and claimed that part of the property they purchased was actually a city street and they needed to "get off" the city property. A "quiet title" action ensued (quiet title is where a party attempts to establish the true owner of the land) and the Gaedes lost the battle. Unfortuantely, the Gaedes spent nearly $24,000 for a property valued at about one-half that figure.

After their loss, the Gaedes went to the seller, Stansberry, and asserted that as Stansberry had given them a warranty deed, they should stand behind their warranty and make the Gaedes whole and compensate them for their damages. Stansberry was not given notice of the proceedings by the city. As a result of that failure to be given notice of those prior proceedings and to defend title in that trial, the Iowa Supreme Court ruled that before a party is liable for the cost, they must be given notice of the challenge and have the opportunity to defend the title.

Buy-Sell Agreements for Small Businesses - The "Business Pre-Nup"

Matt Gardner — Fri, 26 Feb 2010 08:04:23 -0600

It seems like business formation activity is starting to pick up as people are starting to not only thaw out from the winter but also thaw out from the "economic ice storm". Part of the process of any business formation involves consideration not only of creating the company but also terminating the relationship. Much like a premarital agreement predetermines how assets are split at divorce or at death, a "buy sell" agreement will determine how the business will continue or dissolve in the event of a death of an owner, disability of an owner, bankruptcy of an owner, the divorce of an owner or a dispute by the owners. None of these issues are typically on the near horizon when the process is starting, so it is easy to forget about them. However, most small businesses will end at some point. Better to start the planning now before too much is invested and when relationships are strong.

In looking at the issues, here is a brief outline of some items to consider as the business owner formulates a plan.

Triggering Events
- Death
- Disability (consider length of necessary disability)
- Divorce by one owner (ex-wife digging through company financials?)
- Bankruptcy by an owner (bankruptcy trustee involved in company?)
- Desire of one party to get out of the company

Valuation Issues
- Annually have the owners determine the value of shares by unanimous agreement or by appraisal or by some formula using company financials.
- Professional appraisal at time of triggering event
- “Texas Shootout” – one party submits price that they would either be willing to buy OR sell. Other party has option to either buy OR sell for that price.
- Can use combination of valuation issues with different triggering events.

Funding Issues - Upon a triggering event, how will the departing member be paid for his or her shares.
- Insurance (life insurance, disability insurance, business continuation insurance)
- Installment payments
- Cash reserves of Company

Company redemption vs. Cross purchase
- Determining whether the company will redeem the company shares or whether the other owners will be making the purchase (who buys the owner out - company or other owners?).
- This decision affects the valuation of the company and a shareholder’s basis in the company.

This outline is simply a starting list to get the thought process moving. The final provisions can either be placed in the formation documents, or a separate "buy sell" agreement. The drafting of such a document can be very complex and you should consult an experience attorney to assist with the drafting of such a document. Implementing the "business pre-nup" now will hopefully help smooth out the process later.

Disinherit a Spouse? Iowa Court Explains How to Do So

Matt Gardner — Tue, 09 Feb 2010 21:59:10 -0600

Once in awhile you'll come across someone that wants to disinherit their spouse. Sometimes it isn't done with ill-will. For example, maybe it is a second marriage situation and both spouses decide they don't need to leave anything for the survivor. Sometimes it is ill will.

The general rule is that you can only disinherit your spouse if he or she agrees to it. In other words, a surviving spouse can choose (elect) after your death to basically ignore your will or trust that doesn't provide for that surviving spouse, and have basically a third of your estate go to them. For example, if you left your entire estate to your children and not your spouse, your spouse can say "wait a second. I don't like that idea. I'll take one-third of the estate thank you very much." And believe it or not, money can make people change their minds.

For a while, individuals were using trusts to get around this "election against the will", but eventually the Iowa laws corrected that "end around" planning. But now, a recent ruling out of an Iowa district court in Pottawattamie County created another option. In a December 2009 ruling, the district court permitted some bank accounts with a payable on death (POD)/ Transferrable on Death (TOD) designation to escape the spouse's ability to get the one-third elective share. The result, under this ruling, is that you can now disinherit your spouse by using the POD/TOD designation on these accounts. While this ruling is not the law of the state, the court creates a roadmap for a valid argument to properly disinherit your spouse.

TOD and POD accounts are very easy and flexible planning tools. In fact, they can be almost too easy. If this ruling continues to stand, it may result in some unintended consequences contrary to the intent of the spousal election laws. The court places the burden on the Iowa legislature to correct the statute if they don't want this type of "loophole". Time will tell.

Custody Restoration Rights After Guardianship Established

Matt Gardner — Tue, 09 Feb 2010 21:26:48 -0600

A recent ruling from the Iowa Court of Appeals dictates that once a natural parent loses custody of their child in a guardianship proceeding, if the parent seeks to terminate the guardianship and regain custody, it is necessary that the parent seeking to terminate the guardianship must show a "substantial change in circumstances" in order to terminate the guardianship.

To understand the significance of this ruling, it is important to understand the normal rule involved with guardianships where a natural parent is involved. The normal rule in establishing a guardianship for a minor is that a natural parent, if qualified and suitable, shall be preferred over all others in an appointment as a guardian. This strong legal presumption is a result of the strong societal desire to preserve the natural parent-child relationship.

The Iowa Court of Appeals stated that once the issue of the natural parent's ability is litigated in the establishment of a guardianship, the normal rule in favor of a natural parent doesn't apply in later proceedings to terminate the guardianship as it is not in the child's best interest.

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.