Dickinson, Bradshaw, Fowler & Hagen, P.C. - Iowa Agribusiness Law Blog

Kenkel, O’Brien Obtain Favorable Decision for Client in Iowa Supreme Court

noreply@dickinsonlaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Thu, 27 Mar 2025 09:34:26 +0000

On March 21, 2025, Dickinson Bradshaw insurance coverage litigators Benjamin J. Kenkel and Sean O’Brien obtained a favorable decision for their client in Heartland Co-op v. Nationwide Agribusiness Insurance Company, affirming the district court’s summary judgment.

The Iowa Supreme Court agreed with Mr. Kenkel and Mr. O’Brien that their client’s coverage obligations arising from the 2020 Derecho were limited to a single business-wide interruption of operations and the insurance policy at issue unambiguously limited coverage despite the insured’s arguments that separate limits were owed for every location impacted by the Derecho.

William S. Smith Named Among America’s Top 100 Criminal Defense Attorneys®

noreply@dickinsonlaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Thu, 13 Jun 2024 13:55:27 +0000

Attorney William (Bill) Smith has been named one of America’s Top 100 Criminal Defense Attorneys. He practices as Smith & Kramer, P.C. and Of Counsel at Dickinson Bradshaw.

The honor highlights the accomplishments of the nation’s most esteemed and skilled White Collar and General Criminal Defense Attorneys. Only 100 attorneys in each state are selected for membership among America’s Top 100 Criminal Defense Attorneys.

Bill was selected through peer nomination and screened through third-party research that assesses an array of criteria including the attorney’s lifetime legal achievements, professional experience, significant case results and/or verdicts, peer reputation, client satisfaction, notable honors, media notoriety, and community impact.

Bill practices primarily in criminal and administrative defense work related to business and employer issues including environmental compliance (EPA), criminal and civil tax defense, Medicare and Medicaid issues, money laundering, structuring, fraud allegations as well as Qui Tam actions. In addition, a substantial portion of his practice involves business related issues primarily for large agricultural operations.

Prior to studying law, Bill was a C.P.A. for a major accounting firm and a smaller firm in Des Moines following his graduation from the University of Iowa. He obtained his Juris Doctorate with high distinction from the University of Iowa College of Law.

Iowa Hemp Act (2024): Using the Iowa Administrative Procedures Act to Shape Rules Regulating Liquid Consumable Hemp Products

cedwards@dickinsonlaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Mon, 10 Jun 2024 15:24:28 +0000

On June 3, 2024, the Des Moines Register published an article that explained some brewers of consumable hemp products believe draft proposed administrative rules written by the Department of Health and Human Services (“DHS”) misinterpret Iowa’s new hemp law. This blog briefly explains Iowa’s new hemp law, the rulemaking process, and options for brewers who believe DHS’s proposed administrative rules improperly interpret such law.

Iowa’s New Hemp Laws

On May 17, 2024, Governor Kim Reynolds signed House File 2605, which will change Iowa’s law regulating hemp and hemp products on July 1, 2024. Among other things, the new law regulates the amount of THC in consumable hemp products being distributed, exported, imported, or offered for sale, or sold in the State of Iowa. Specifically, under the new law, the maximum THC for consumable hemp products is the lesser of:

Three-tenths of one percent on a dry weight basis; or
Four milligrams per serving and ten milligrams per container on a dry weight basis.

If the THC amount in a product exceed both of these amounts, the product cannot be sold in Iowa as a consumable hemp product.

Notably, the statute does not define “serving.” As a result of the legislature’s failure to define “serving,” brewers intended to update their packaging for THC beverage such that a container that contained 12 ounces and 10mg of THC would have 2.5 servings. However, the draft proposed rules issued by DHS have defined “serving” for purposes of liquid consumable hemp products. Under this definition, liquid consumable hemp products must be packaged in a container that holds a minimum of 12 fluid ounces and each 12 ounces could contain up to 4mg of THC. Therefore, every beverage that has more than 4mg of THC per 12 ounces would be illegal to produce or sell. According to the Des Moines Register article, “Iowa-based brewers argue that’s not what the law intended.” So, what are the brewers’ options?

Agency Rulemaking Process

Iowa law (Iowa Administrative Procedure Act, Ch. 17A) requires each government agency to follow specific procedures and timelines when drafting and adopting administrative rules. Relevant for this blog are the following.

First, the agency must provide a notice of intended action. The notice of intended action will set forth a time and place that interested persons can submit data, view or arguments about the proposed rules in writing. If timely requested in writing by twenty-five interested persons or by an association having not less than twenty-five members, the agency must give interested persons an opportunity to make oral presentation.

Second, the agency is required to provide a job impact statement to the administrative rules coordinator prior to the notice of intended action. Any concerned private sector employer can submit information to the agency relating to a jobs impact statement.

Third, if asked to do so by an interested person, either prior to adoption or within 30 days thereafter, the agency is required to issue a concise statement of the principal reasons for and against the rule adopted, incorporating therein the reasons for overruling considerations urged against the rule.

Fourth, the agency is required to perform and provide a regulatory analysis if the rule would have a substantial impact on small business and if, within 32 days of the notice of intended action, a written request for analysis is submitted to the agency by at least 25 persons signing the request who each qualify for as a small business or by an organization representing at least 25 such businesses. “Small business” is defined as an entity to which all of the following apply:

Is not an affiliate or subsidiary of an entity dominant in its field of operation.
It has either twenty or fewer full-time equivalent positions or less than one million dollars in annual gross revenues in the preceding fiscal year.

Brewers’ Options

DHS has not yet released the proposed rules to the general public so the brewers should continue to work with DHS to shape the rules to effectuate the legislature’s intent prior to the DHS issuing its notice of intended action and the draft rules.

Brewers should also provide a jobs impact statement to DHS before the notice of intended action.

When DHS issues the notice of intended action, brewers should submit written comments about the rules and request in writing the DHS explain the basis for declining to make any suggested changes.

Within 32 days of the DHS’ notice of intended action, at least 25 brewers who qualify as a small business should submit a written request to DHS to perform a regulatory analysis on the impact its rules will have on small business. If, as the Des Moines Register article states, the rule “would have severe financial implications” on businesses producing THC beverages, the DHS and/or the Administrative Rules Review Committee may consider changing the rules. Indeed, Iowa Code § 17A.4B(2) requires the DHS to “take steps to minimize the adverse impact on jobs and the development of new employment opportunities due to implementation of the rule.”

Finally, brewers who have concerns about the rules should talk with the legislators who are members of the administrative rules review committee.

Conclusion

The Iowa Administrative Procedures Act provides the public with many tools to shape the rulemaking process. Brewers who believe the DHS’ proposed rules regarding THC beverages are inconsistent with the legislature’s intent and will have a negative impact on jobs and business should not be afraid to use these tools.

Justin LaVan Honored by The Top Trial Lawyers in America®

noreply@dickinsonlaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Mon, 25 Mar 2024 11:14:01 +0000

Attorney Justin LaVan of Dickinson Bradshaw has been inducted into the Million Dollar Advocates Forum and the Multi-Million Dollar Advocates Forum by The Top Trial Lawyers in America®, one of the most prestigious groups of trial lawyers in the United States.

Having acted as principal counsel in million and multi-million dollar verdicts and settlements for his clients, Justin joins fewer than 1% of U.S. lawyers who are Forum members.

With 25 years of diversified experience, Justin is a skilled negotiator and litigator who practices in a variety of legal areas including business and corporate law, construction law, agricultural law, personal injury and insurance coverage issues.

For more information on Justin’s practice, visit our website.

"Blanket Ag Liens" Have Holes

jlande@dickinsonbradshaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Tue, 17 Jan 2023 09:57:32 +0000

This blog has previously covered the problems that agricultural supply dealer liens pose for financial institutions with “blanket” liens on agricultural operations. Last Friday, the Iowa Supreme Court affirmed yet another example of how numerous those holes in the blanket are in Quality Plus Feeds, Inc. v. Compeer Financial, FLCA.

The case began like so many cases of agricultural distress. The case revolved around a dairy farm that hit hard times. The primary lender, Compeer Financial, lent approximately $16 million, and was secured by blanket liens on farm products and real estate mortgages.

In October 2017 Compeer accelerated the notes, and the dairy farm began purchasing feed on credit from Quality Plus. Quality Plus took the necessary steps under Iowa Code Chapter 570A to secure an agricultural supplier lien on the cattle fed with the feed purchased from Quality Plus. After a failed attempt to file bankruptcy, the dairy farm closed. The cattle were all sold, which generated proceeds of approximately $1 million from the various entities that owned the cattle.

The dispute in the case was whether Quality Plus’s feed supplier lien had super priority over Compeer’s blanket lien. Compeer argued that Quality Plus could not establish a direct connection between the livestock sold when the dairy closed in 2019, and the feed that Quality Plus provided in the winter of 2017-2018.

The Iowa Supreme Court reviewed the rules of super priority liens. The Court acknowledged that for a feed supplier to sustain a super priority lien, the feed supplier must be able to establish a connection between the livestock sold and the feed supplied. In other words, it must demonstrate that some of the livestock consumed the feed supplied, and that some of the agricultural products (i.e., milk) were produced due to the feed.

However, the feed supplier’s lien only has priority over a blanket lien to the extent of value added from the feed. For self-raised livestock, the super priority lien can attach to the entire value of the animal, because the acquisition cost of the animal is $0. However, for livestock that are purchased, the feed supplier’s lien only has super priority over the difference between the acquisition cost of the livestock and the sale price.

Based on the evidence presented, the Court affirmed the conclusion that some of the proceeds generated from the sale of the self-raised livestock and milk were traceable to Quality Plus’s feed. However, the Court remanded the case to the district court for additional proceedings to determine the portion of Quality Plus’s claim that had super priority for livestock that the dairy farm had purchased.

This case demonstrates the challenges that can arise for lenders trying to enforce blanket agricultural liens. Iowa law gives agricultural supply dealers enhanced protections so that they continue to supply operators in distress. However, this can leave a mess for financial institutions trying to determine the portion of a bankrupt operation’s proceeds that are attributable to supply dealers. Financial institutions should do their best to understand the circumstances of their borrowers’ operations, and start to gather records regarding the use of agricultural inputs from borrowers in distress. This could include logs to identify which livestock are consuming feed supplied by a feed supplier on credit, and the acquisition cost of livestock.

A financial institution might also decide it is just simpler to advance the cost of obtaining inputs as protective advances. Protective advances would eliminate the need for dealing with suppliers, and it should protect or enhance the value of the collateral.

Financial institutions should weigh the different legal options early when a borrower begins to experience distress. Recognizing the holes in your blanket lien early on could save the trouble of needing to figure out which cow ate from a bag of feed.

Shareholder Attorney John Lande’s practice includes advising banks on regulatory issues, including matters related to cybersecurity, criminal investigations, fraud, confidentiality, insider transactions, mobile banking, collections, and wire transfers. His focus is on helping banks implement best practices to avoid litigation and disputes in the future. Find more information on his practice here.

Clarifying Misconceptions Surrounding the Employee Retention Credit

cedwards@dickinsonlaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Wed, 21 Sep 2022 13:29:40 +0000

The Employee Retention Tax Credit (“ERC”) has been a hot topic in tax circles lately. Enacted alongside the Paycheck Protection Program in 2020, the ERC was widely overlooked until recently. As the ERC has become more widely discussed, several misconceptions about the ERC have popped up, leading many to believe—incorrectly—that their business does not qualify when it might. This blog is intended to address a few of the most-frequently heard misconceptions about the ERC.

Two Tests to Qualify for the ERC. The most common misconception with the ERC is that an employer must have a decline in revenue/gross receipts during 2020 and 2021 compared to 2019 to qualify for the ERC. While this is one test, there are actually two tests under which an employer may qualify for the ERC.

Gross Receipts Test: Under the gross receipts test, an eligible employer may qualify for the ERC if they have a 50% or 20% decline in gross receipts (not profit, not revenue) on a quarterly basis for 2020 and 2021, respectively, compared to the corresponding quarter in 2019.

There are many areas of confusion with the gross receipts test, including:

Many eligible employers believe that since a decline in revenue may qualify them, an increase in revenues will disqualify them. That is not the case. The statute makes no mention of increases in gross revenue at all. So, while a decrease may qualify an eligible employer, an increase only disqualifies them for that test (remember, there are two) for that quarter.
The gross receipts test is analyzed on a quarterly basis, so failure to meet the gross receipts test in one quarter does not preclude qualification in another quarter. For example, an eligible employer may not qualify under the gross receipts test for Q4 2020, but may qualify for Q1 2021.
There is more than one method to apply the gross receipts test, such as the primary method and the alternative quarter election.
PPP loan proceeds are not included in gross receipts for purposes of the ERC. Initially, guidance required eligible employers to include PPP loan proceeds in gross receipts; however, subsequent guidance changed this so that such proceeds are excluded. Given the large dollar amounts of PPP loans, exclusion could make the difference in qualifying for the gross receipts test.

Full or Partial Suspension Test: The second test, which is often overlooked, is the full or partials suspension of operations due to a governmental order test. as with the gross receipts test, there are many misconceptions with this test, including:

Many eligible employers believe they don’t qualify under this test because their revenues or gross receipts increased during 2020 and 2021. As should be apparent by now, the gross receipts test is only one of two tests under which an eligible employer may qualify for the ERC. To be clear, a company may have had record gross receipts in Q1 2021 and still qualify for the ERC if the eligible employer was subject to government orders related to COVID that placed restrictions on their business.
Due to the use of the term “suspension,” many believe they do not qualify because their business did not “shut down.” This is not the test. The statute requires a suspension of operations, not closure of a business. Suspensions may result in numerous ways, and the order need not necessarily directly impact the business looking to qualify. Orders which caused supply chain issues, for example, may qualify if other criteria are met. Additionally, government orders that required social distancing in your business may also qualify as a partial suspension.

Credit Amount. For employers who qualify, and are able to receive the maximum credit, they can receive $5,000 per employee for 2020 and $7,000 per employee, per quarter for the first 3 quarters of 2021. A company may qualify in Q4 of 2021 as well, but that is only for small companies that started operations during COVID (called Recovery Startup Businesses). Thus, the total benefit to non-Recovery Startup Businesses could be as much as $26,000 per employee, plus interest. This is a refundable credit, so will result in a refund to the eligible employer that qualifies.

PPP Loans Do Not Disqualify. Another misconception is that a business that received a PPP loan is disqualified from claiming the ERC. This was true when the credit was first established, but subsequent legislation retroactively eliminated that restriction. After the retroactive change, an employer that received a PPP loan may also qualify for the ERC (however, there is no double dipping wages).

Does Your Business Qualify? Small eligible employers that have not taken advantage of the ERC should consider whether they qualify for the consequential and substantial ERC. Based on our experience, non-profit entities, restaurants, breweries, doctor and dental offices, and car dealership, to name a few, have mistakenly believed they did not qualify for the ERC, when they, in fact, did.

Word of Caution. We must conclude with a word of caution. Due to the potentially substantial dollar amount of the ERC, many fly-by-night operations have popped up to help clients obtain the ERC. While some of these operations are qualified to analyze and apply the law, many are not. If you choose to file for the ERC and engage a third-party to help, please ensure you are choosing an accountant or attorney who is qualified and will be there to represent you if the IRS questions your claim for the ERC.

To explore if your organization qualifies for the Employee Retention Tax Credit, please contact Attorney Cody Edwards or Attorney Charles Telk.

23 in 2023: Dickinson Law Attorneys Honored by Best Lawyers®

noreply@dickinsonlaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Thu, 18 Aug 2022 08:33:36 +0000

Dickinson, Mackaman, Tyler & Hagen, P.C. is pleased to announce that once again attorneys of the firm have been named by Best Lawyers to all three of its recognition lists for 2023.

Based on peer reviews, those recognized by Best Lawyers were honored for their work in 25 different areas of law and represent three-fourths of the firm’s attorneys.

Highlights include:

Two distinguished attorneys were honored as “Lawyer of the Year” in their respective areas of law in Des Moines:
19 attorneys with extensive experience, including two newly-honored lawyers, were included in The Best Lawyers in America, and:
Four rising lawyers were recognized in the third edition of Best Lawyers: Ones to Watch.

Lawyers of the Year

Two attorneys from Dickinson Law were named “Lawyer of the Year” for 2023 in three areas of law, including:

Amy Plummer - Banking and Finance Law and Closely Held Companies and Family Businesses Law

Ronald L. Mountsier - Tax Law

Only a single lawyer in each practice area and designated metropolitan area is honored as the "Lawyer of the Year," making this accolade particularly significant. These lawyers are selected based on particularly impressive voting averages received during the peer review assessments. Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the metropolitan area and the same practice areas for their abilities, their professionalism, and their integrity.

Best Lawyers in America 2023

Dickinson attorneys recognized for The Best Lawyers in America include:

Jeffrey G. Baxter - Business Organizations including LLCs and Partnerships, and Real Estate Law

Benjamin Bruner - Banking and Finance Law, Commercial Transactions / USS Law, Land Use and Zoning Law, Mortgage Banking Foreclosure Law, and Real Estate Law

Ted Craig – Commercial Litigation (first year recognized)

Howard O. Hagen - Banking and Finance Law and Financial Services Regulation Law

Thomas D. Hanson - Bet-the-Company Litigation and Commercial Litigation

Jill R. Jensen-Welch - Employment Law - Management and Litigation - Labor and Employment

John E. Lande – Banking and Finance Law, Commercial Litigation and Privacy and Data Security Law

Ronald L. Mountsier - Tax Law

Bryan P. O'Neill - Employment Law - Management and Litigation - Labor and Employment

Mollie M. Pawlosky - Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law, and Commercial Litigation

Amy Plummer - Banking and Finance Law, Business Organizations (including LLCs and Partnerships), Closely Held Companies and Family Businesses Law, and Corporate Law

David M. Repp - Nonprofit / Charities Law, Tax Law, and Trusts and Estates law

Russell L. Samson - Employment Law - Management and Labor Law – Management

Melissa A. Schilling – Education Law, Employment Law - Management and Litigation - Labor and Employment

William B. Serangeli - Commercial Litigation, Litigation - Land Use and Zoning, Litigation - Real Estate, and Real Estate Law

William R. Stiles - Commercial Transactions / UCC Law, Corporate Law, Land Use and Zoning Law, and Real Estate Law

Paul R. Tyler - Land Use and Zoning Law and Real Estate Law

David Wetsch – Real Estate Law (first year recognized)

Mary A. Zambreno - Family Law

Since it was first published in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence. The organization has published their list for over three decades, earning the respect of the profession, the media, and the public as the most reliable, unbiased source of legal referrals.

Lawyers on The Best Lawyers in America list are divided by geographic region and practice areas, and are reviewed by their peers for their professional expertise.

Ones To Watch

The following Dickinson lawyers were recognized in the 2023 Edition of Best Lawyers: Ones to Watch:

Regan Conder - Family Law

Cody J. Edwards - Litigation and Controversy - Tax and Tax Law

Sierra McConnell – Corporate Governance and Compliance Law and Privacy and Data Security (first year recognized)

Will Reasoner – Land Use and Zoning Law, Litigation – Real Estate, and Litigation – Trusts and Estates (first year recognized)

The Ones to Watch list recognizes associates and other lawyers who are earlier in their careers for their outstanding professional excellence in private practice. Lawyers recognized are divided by geographic region and practice areas, and are reviewed by their peers on the basis of professional expertise, and undergo an authentication process to make sure they are in current practice and in good standing.

About Dickinson, Mackaman, Tyler & Hagen, P.C.

Experience You Need. Results You Want.

Dickinson, Mackaman, Tyler & Hagen, P.C. is a general practice law firm in Des Moines, Iowa. Our attorneys provide a full range of legal and business counseling services to a client base that includes large corporations, small businesses, governmental entities and not-for-profit organizations with interests in Iowa. From a $60-per-month rental office with one attorney 85 years ago, Dickinson Law has grown into a leading general practice firm that proudly serves clients in all of Iowa's 99 counties. We consider ourselves teammates in the interest of our clients' success. Ultimately, our goal is to provide legal services and counseling which enhance the reputation of both the client and the attorney involved.

Dickinson Attorneys Named to All Three Best Lawyers® Recognition Lists for 2021

noreply@dickinsonlaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Thu, 20 Aug 2020 09:13:52 +0000

Dickinson, Mackaman, Tyler & Hagen, P.C. is pleased to announce that 24 attorneys of the firm have been named by Best Lawyers^® to its 2021 recognition lists for professional legal excellence, including:

21 attorneys with extensive experience were included in The Best Lawyers in America;

Three distinguished attorneys were honored as “Lawyer of the Year” in their respective areas of law in Des Moines, and:

Three rising lawyers were recognized in the inaugural edition of Best Lawyers: Ones to Watch.

2021 Best Lawyers in America

Lawyers on The Best Lawyers in America list are divided by geographic region and practice areas, and are reviewed by their peers for their professional expertise.

Attorneys Jeff Baxter and Melissa Schilling were honored for the first time on this year’s list. Attorneys Howard Hagen and Tom Hanson are also both celebrating a milestone anniversary, with 25 consecutive years of inclusion on the list.

**Dickinson attorneys recognized for The Best Lawyers in America 2021 include:**

Jeffrey G. Baxter - Business Organizations including LLCs and Partnerships

Benjamin Bruner - Land Use and Zoning Law and Real Estate Law (3 years)

Joan M. Fletcher - Litigation - Labor and Employment (5 years)

Howard O. Hagen - Banking and Finance Law and Financial Services Regulation Law (25 years)

Thomas D. Hanson - Bet-the-Company Litigation and Commercial Litigation (25 years)

Jill R. Jensen-Welch - Employment Law - Management and Litigation - Labor and Employment (5 years)

Jeffrey A. Krausman - Education Law, Employment Law - Management, Labor Law - Management, and Litigation - Labor and Employment (10 years)

John E. Lande - Commercial Litigation and Privacy and Data Security Law (2 years)

F. Richard Lyford - Appellate Practice, Bet-the-Company Litigation, Commercial Litigation, Litigation - Land Use and Zoning, Litigation - Real Estate, and Personal Injury Litigation – Defendants (10 years)

Richard A. Malm - Commercial Litigation, Construction Law, Corporate Governance Law, Corporate Law, Derivatives and Futures Law, Eminent Domain and Condemnation Law, and Litigation – Construction (10 years)

Ronald L. Mountsier - Tax Law (5 years)

Bryan P. O'Neill - Employment Law - Management and Litigation - Labor and Employment (2 years)

Mollie M. Pawlosky - Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law and Commercial Litigation (5 years)

Amy Plummer - Banking and Finance Law, Business Organizations (including LLCs and Partnerships), Closely Held Companies and Family Businesses Law, and Corporate Law (3 years)

David M. Repp - Nonprofit / Charities Law, Tax Law, and Trusts and Estates (15 years)

Russell L. Samson - Employment Law - Management and Labor Law – Management (15 years)

Melissa A. Schilling - Employment Law - Management and Litigation - Labor and Employment

William B. Serangeli - Commercial Litigation, Litigation - Land Use and Zoning, Litigation - Real Estate, and Real Estate Law (5 years)

William R. Stiles - Commercial Transactions / UCC Law, Corporate Law, Land Use and Zoning Law, and Real Estate Law (5 years)

Paul R. Tyler - Land Use and Zoning Law and Real Estate Law (15 years)

Mary A. Zambreno - Family Law (5 years)

Lawyers of the Year

Only a single lawyer in each practice area and designated metropolitan area is honored as the "Lawyer of the Year," making this accolade particularly significant. These lawyers are selected based on particularly impressive voting averages received during the peer review assessments. Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, their professionalism, and their integrity.

Three attorneys from Dickinson Law were named “Lawyer of the Year” for 2021 in their respective areas, including:

Jeffrey A. Krausman - Education Law
David M. Repp - Nonprofit / Charities Law
Paul R. Tyler - Land Use and Zoning Law

Ones To Watch

The following Dickinson lawyers were recognized in the 2021 Edition of Best Lawyers: Ones to Watch:

Cody J. Edwards - Litigation and Controversy - Tax and Tax Law
Andrea E. Rastelli - Banking and Finance Law and Financial Services Regulation Law
Regan Wilson - Family Law

About Dickinson, Mackaman, Tyler & Hagen, P.C.

Experience You Need. Results You Want.

Dickinson, Mackaman, Tyler & Hagen, P.C. is a general practice law firm in Des Moines, Iowa. Our attorneys provide a full range of legal and business counseling services to a client base that includes large corporations, small businesses, governmental entities and not-for-profit organizations with interests in Iowa. From a $60-per-month rental office with one attorney over 80 years ago, Dickinson Law has grown into a leading general practice firm that proudly serves clients in all of Iowa's 99 counties. We consider ourselves teammates in the interest of our clients' success. Ultimately, our goal is to provide legal services and counseling which enhance the reputation of both the client and the attorney involved.

On-Demand Webinar for Lenders: COVID-19 – Dealing with Agricultural and Commercial Loans

noreply@dickinsonlaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Thu, 23 Apr 2020 13:12:18 +0000

The COVID-19 pandemic has caused severe financial losses for agricultural producers and commercial businesses, and lenders are left with uncertainty on how to respond.

Our COVID-19 – Dealing with Agricultural and Commercial Loans Webinar that first aired on April 23, 2020 is now available as an on demand resource. It addresses the impact that the novel coronavirus has created for lenders, including recent state and federal regulatory changes and guidance to commercial and ag foreclosures, as well as analysis of recent government stimulus programs and opportunities for lenders.

To access the recorded webinar*, click here. Audio starts at 2:42 of the recording.

To access the presentation slides only*, click here.

*The information in the webinar is current as of April 23, 2020. The material presented is property of Dickinson Law and is designed and intended for general informational purposes only. It is not intended and it should not be construed or relied upon as legal advice.

Iowa Supreme Court Rules Secured Creditor Entitled to Refund for Co-op Storage and Drying Costs

estaudacher@dickinsonlaw.com (Dickinson, Bradshaw, Fowler & Hagen, P.C.) — Fri, 17 Apr 2020 13:46:29 +0000

On April 17, 2020, the Iowa Supreme Court issued a ruling in MidWestOne Bank v. Heartland Co-op regarding competing claims by a secured lender and a grain elevator for the costs of storing and drying grain. The Court affirmed the district court’s opinion in part and reversed in part.

Background

The Harkers are row crop farmers who routinely sold and delivered grain to Heartland Co-op in Cambridge, Iowa. The Harkers had a contract with Heartland for the storage, drying, and sale of their grain. The Harkers were also customers of MidWestOne Bank and had a secured loan with the bank which identified their grain as collateral. MidWestOne properly obtained and perfected a security interest in the Harker’s grain and proceeds. The security agreement signed by the Harkers required them to update MidWestOne on the location of the collateral and prevented them from removing the collateral from its location without MidWestOne’s consent unless they did so in the ordinary course of business.

The agreement also required the Harkers to ensure that the crops were properly maintained at their expense without the attachment of liens by elevators. Additionally, the Harkers were required to provide MidWestOne with a Schedule of Buyers which listed the grain warehouse that they may use to store and sell their grain with the buyer’s checks to be payable jointly to MidWestOne and the Harkers. Pursuant to the Schedule of Buyers provided by the Harkers, MidWestOne sent notices to Heartland informing them that MidWestOne had a security interest in the Harkers’ grain and directed them to make a joint payment to the Harkers and MidWestOne for all proceeds from the sale of grain.

Despite proper notice given by MidWestOne, Heartland deducted the costs of drying and storing grain from the sale proceeds before sending the balance in a joint check to the Harkers and MidWestOne. Heartland provided statements reflecting the withholdings to the Harkers, but neither the Harkers nor Heartland provided the statements to MidWestOne.

On March 16, 2018, MidWestOne Bank filed a lawsuit alleging that Heartland Co-op had converted $79,895.68 for the drying and storage charges that had been withheld between 2014 and 2017. MidWestOne asserted that Heartland had a junior interest to MidWestOne’s prior perfected security interest. Heartland, however, argued it was following standard industry practices and was entitled to the offset. Heartland also asserted that there was a two-year limitations period on MidWestOne’s claims, which limitations began at the time of the sale of the farm products.

The district court determined that MidWestOne did have a superior claim to the grain sale proceeds. The district court also ruled that the two-year statute of limitations did apply, but applied the discovery rule based on MidWestOne’s showing that it was unaware of Heartland’s offsets until 2017. In other words, because MidWestOne was not aware that Heartland was offsetting the costs of drying and storage, the statute of limitations did not begin to run until the bank became aware.

Statute of Limitations and the Discovery Rule

MidWestOne argued its claims were subject to the general five-year statute of limitations for injuries to property as a conversion, but Heartland argued the provision for secured interest in farm products should apply, which is a two-year statute of limitations. The Supreme Court agreed with Heartland and ruled that the two-year statute of limitations should apply.

MidWestOne argued that even if the two-year statute of limitations applies, the bank should still be able to recover on transactions that occurred more than two years before it filed suit, because it did not discover that Heartland had deducted the cost of storing and drying grain until 2017. The Iowa Supreme Court reversed the district court on this issue and ruled that the discovery rule was not applicable in this case. Applying the discovery rule would conflict with the plain language of the statute, which expressly provides that the date of sale starts the time clock. Moreover, the fundamental policies underlying the UCC favored a strict application of the limitation period in order to provide predictability in commercial transactions. Accordingly, the Iowa Supreme Court reduced the judgment amount to those transactions occurring within two years of the date the lawsuit was filed by MidWestOne.

Unjust Enrichment

Heartland argued that grain elevators routinely deduct drying and storage costs from the sale of proceeds and that MidWestOne was unjustly enriched by the drying storage services provided by Heartland. The Iowa Supreme Court ruled that MidWestOne’s prior perfected security interest in the grain and proceeds defeats Heartland’s claims. The Court stated that it favors adhering to the UCC’s priority system to provide clarity, uniformity, and consistency in commercial transactions, and those objectives could be undermined by allowing unjust enrichment claims against secured creditors. However, the Court did leave the door open for potential future claims in which equitable principles may trump the UCC priority system.

Citing a Colorado case, the court states the “high water mark” for allowing an unsecured creditor to recover against a secured creditor under an unjust enrichment theory may occur if: 1) the secured creditor is benefitted by a transaction between its debtor and an unsecured creditor; 2) the value of the secured collateral is enhanced by the transaction; and 3) the secured creditor initiates or encourages the transaction. The Court did not rule whether a claim would be allowed in these limited circumstances, but did acknowledge that allowing these claims could be a possibility in the future.

Waiver

Heartland also argued that MidWestOne impliedly waived its lien rights through course of conduct and performance by cashing the checks from Heartland without objection, because MidWestOne should have been aware of the industry practice to deduct storage and drying costs form the proceeds of the sale of grain. The Court ruled there was no evidence MidWestOne was aware of the fact that Heartland was offsetting the costs and, therefore, MidWestOne did not waive its lien right. Waiver requires actual knowledge, and the record provided no evidence in support of the fact that MidWestOne had actual knowledge.

Conclusion

The Iowa Supreme Court’s ruling makes it clear that a grain elevator or co-op may not offset its costs of drying and storing grain against the sale of grain which is subject to a security interest. If elevators want to continue the practice of offsetting costs, they will need take action such as obtaining a written waiver or following the standards prescribed by Iowa law for warehouse liens. Another option may be to enact legislation, similar to that which has already been introduced in the Iowa legislature, granting a “superpriority” to grain warehouses and co-ops.

The Court’s application of the statute of limitations also reinforces the need to closely monitor collateral. It is clear from this decision that the two-year statute of limitations will apply in all cases which are founded on a secured interest in farm products, even if the elevator had knowledge of a bank’s security interest.

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