County Bank v. Shalla

IN THE COURT OF APPEALS OF IOWA

No. 22-1865
Filed June 19, 2024

COUNTY BANK,
Plaintiff-Appellee,

vs.

CLINTON ALLAN SHALLA and MICHELLE LYNN SHALLA,
Defendants-Appellants.
_______________________________________

CLINTON ALLAN SHALLA and MICHELLE LYNN SHALLA,
Counterclaim Plaintiffs-Appellants,

vs.

COUNTY BANK,
Counterclaim Defendant-Appellee.
_______________________________________

CLINTON ALLAN SHALLA and MICHELLE LYNN SHALLA,
Third Party Plaintiffs-Appellants,

vs.

CHRIS GOERDT and PEOPLES TRUST AND SAVINGS BANK,
Third Party Defendants-Appellees.

Appeal from the Iowa District Court for Washington County,

Michael J. Schilling (summary judgment and discovery extension) and

Shawn Showers (directed verdict and new trial), Judges.

Appellants appeal the district court order for summary judgment, grant of a

directed verdict, denial of an extension for discovery, and denial of a new trial.

AFFIRMED AND REMANDED.
2

Peter C. Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for appellants

Clinton Allan Shalla and Michelle Lynn Shalla.

John C. Wagner of John C. Wagner Law Offices, P.C., Amana, for appellee

County Bank.

Ryan Fisher of Bradley & Riley PC, Cedar Rapids, for appellee Chris

Goerdt.

Ann C. Gronlund, Matthew L. Preston, Brad J. Brady, and Jared T. Favero

of Brady Preston Gronlund PC, Cedar Rapids, for appellee Peoples Savings Bank.

Heard by Schumacher, P.J., and Ahlers and Langholz, JJ.
3

SCHUMACHER, Presiding Judge.

Appellants Clinton and Michelle Shalla argue the district court erred in

granting summary judgment and a directed verdict in finding Iowa Code

section 535.17 (2018) as to the statute of frauds applicable to the Shallas’ non-

contract claims; in denying them additional time for discovery; in its application of

the principles of vicarious liability; and in denying a new trial because the verdict

failed to effectuate substantial justice.

I. Background Facts and Prior Proceedings

This case originated in 2018 when County Bank filed a foreclosure petition

against the Shallas as a result of the Shallas’ delinquent payments on a loan owed

to County Bank. The Shallas filed a number of counterclaims and third-party

claims against County Bank; their loan officer and County Bank employee, Chris

Goerdt; and Goerdt’s former employer, Peoples Trust and Savings Bank.

The Shallas’ relationship with Goerdt began in 2015. Clint Shalla purchased

a 442-acre farm in 1989. But Clint defaulted on the loan obligations on the

property, and that resulted in foreclosure. Clint then entered into a debt settlement

agreement that included a right to buy back the property for $497,074.79. He was

required to provide notice of his intent to exercise this option by August 15, 2015.

Around that time, Clint engaged Goerdt, then president of Peoples Trust, to provide

financing for the buyback. The Shallas trusted Goerdt and reported him to be

“accessible and responsive.” He communicated with Clint often by text, and he

would meet with the Shallas, although Clint found some of the meeting locations

to be unusual, such as a restaurant parking lot. The Shallas allege they entered

into an oral agreement with Goerdt to facilitate the buyback of the property and
4

provide financing. But the Shallas failed to exercise the buyback option by the

deadline. The Shallas blamed Goerdt for this failed buyback, but Goerdt and

Peoples Trust asserted the Shallas failed to inform them of any deadline to

exercise the option until after it had passed.

After the Shallas failed to timely exercise the buyback, Goerdt negotiated a

new deal to buy the property for the Shallas at a price of $1.25 million. Around this

same time, Goerdt left the employment of Peoples Trust and began employment

with County Bank. Goerdt took the Shallas’ loan application with him to County

Bank. The Shallas eventually executed a promissory note with County Bank for

$1.3 million. The loan included $1.25 million for the purchase of the property and

$50,000 for home improvements. The day of the closing, County Bank issued a

cashier’s check to Peoples Trust for the benefit of the Shallas. The Shallas allege

that after Goerdt provided them with this check, he directed them to arrange a

$25,000 cash withdrawal at Peoples Trust to pay closing costs. Clint obtained

$25,000 in cash from Peoples Trust, and Goerdt asked that they meet in the

parking lot of a fast-food restaurant. Clint handed off the cash to Goerdt in the

parking lot.

The Shallas later alleged Goerdt misappropriated these funds. The

withdrawal of such a large sum of cash from Peoples Trust came to the attention

of County Bank president Dan O’Rourke. Because of the Shallas’ allegations that

the money had disappeared, County Bank began an internal investigation and

eventually credited them $25,000 on their mortgage. The Goerdt-related problems

did not end there. An avalanche of allegations from bank customers led to further

investigation and the termination of Goerdt’s employment in May 2016. Goerdt
5

was federally indicted on sixteen counts of crimes related to his actions with

Peoples Trust and County Bank. He pled guilty to all but one count.

The Shallas ceased making payments on their mortgage to County Bank,

and County Bank initiated a foreclosure action. The Shallas then retained legal

counsel. During litigation, the Shallas discovered that in 2016, Goerdt used $2218

from their County Bank account to pay his in-laws’ property taxes. In response to

the foreclosure action, the Shallas asserted counterclaims and affirmative

defenses of fraud, equitable estoppel, vicarious liability, and aiding and abetting

the actions of Goerdt. They also asserted third-party claims against Peoples Trust

for vicarious liability for Goerdt’s acts, and against Goerdt for conversion,

negligence, and fraud. Peoples Trust and Goerdt asserted the Shallas’ claims

were barred by the statute of frauds in Iowa Code section 535.17.

During litigation, the parties scheduled depositions, but in light of the

criminal indictment, Goerdt was advised by counsel that he should not testify. The

court granted a motion to suspend filed by the Shallas, having found the case

should not continue until after Goerdt could be deposed. The trial date was

continued, but the discovery deadlines were not extended. The Shallas elected to

suspend some of their discovery efforts until Goerdt could be deposed. This

included choosing not to depose another officer of Peoples Trust before the pretrial

discovery deadline had passed. The Shallas later moved to extend the case

deadlines to have more time for discovery. The district court denied this extension,

finding it was not in the interest of justice.

Peoples Trust moved for summary judgment on several of the Shallas’

claims, including their negligence and fraudulent misrepresentation claims against
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Peoples Trust and Goerdt. The court granted the motion for summary judgment

as to the negligence and fraudulent misrepresentation claims, citing Iowa Code

section 535.17. The Shallas’ conversion claims against Peoples Trust were

severed before trial.

A five-day jury trial was held in September 2022. The court granted a

directed verdict as to the Shallas’ claims of fraud and conversion against County

Bank and as to their claims of negligence and fraud against Goerdt. County Bank

was granted relief on its foreclosure action. Only the claim of conversion against

Goerdt was presented to the jury. The jury found Goerdt committed conversion by

misappropriating $5800 from the Shallas and awarded that amount in actual

damages. The jury found for Goerdt on all other claims of conversion. No other

damages were awarded to the Shallas. A stipulation between the Shallas and

Peoples Trust prevented the Shallas from recovering from Peoples Trust on their

conversion claim. The Shallas filed a motion for a new trial which was denied. The

Shallas appeal.

II. Analysis

The Shallas appeal the district court’s summary judgment and directed

verdict rulings dismissing some of their claims against Peoples Trust and Goerdt

based on Iowa Code section 535.17. They also appeal the court’s decision

denying a request for an extension of discovery deadlines, granting a directed

verdict for County Bank based on vicarious liability, and denying the motion for a

new trial.
7

a. Iowa Code Section 535.17 and Non-contract Claims

The Shallas argue the district court improperly found Iowa Code

section 535.17 precluded their claims in tort against Peoples Trust and Goerdt.

We review grants of summary judgment for correction of errors at law. Banwart v.

50th St. Sports, L.L.C., 910 N.W.2d 540, 544 (Iowa 2018). Summary judgment is

warranted when the moving party can show there is no issue of material fact. Id.

at 544–45. “A genuine issue of fact exists if reasonable minds can differ on how

an issue should be resolved.” Walker v. State, 801 N.W.2d 548, 554 (Iowa 2011).

“We view the evidence in the light most favorable to the nonmoving party.”

Banwart, 910 N.W.2d at 545.

The Shallas allege Peoples Trust breached an oral promise made by Goerdt

to secure financing and exercise the buyback option on the farm property. This

promise was the basis for their actions of negligence and fraudulent

misrepresentation against Goerdt and Peoples Trust. The district court granted

summary judgment on these claims based on this court’s ruling in Geiger v.

Peoples Trust & Savings Bank, where we found section 535.17 applies to bar tort

claims, like fraudulent misrepresentation, where no written credit agreement

exists. No. 18-1428, 2019 WL 4678179, at *4–5 (Iowa Ct. App. Sept. 25, 2019).

Iowa Code section 535.17(1) states: “A credit agreement is not enforceable

in contract law by way of action or defense by any party unless a writing exists

which contains all of the material terms of the agreement and is signed by the party

against whom enforcement is sought.” When a credit agreement is the basis for a

claim, section 535.17 applies, regardless of whether the claim is in tort or contract.

Geiger, 2019 WL 4678179, at *4–5.
8

The Shallas request we disregard Geiger, in part because they claim it did

not consider legislative history. But “[w]hen a statute’s text and meaning is clear,

‘we will not search for a meaning beyond the express terms of the statute or resort

to rules of construction.’” Est. of Butterfield by Butterfield v. Chautauqua Guest

Home, Inc., 987 N.W.2d 834, 838 (Iowa 2023) (quoting Com. Bank v. McGowen,

956 N.W.2d 128, 133 (Iowa 2021)). When the meaning of a statute is ambiguous

we may consider legislative history. Id. at 839–40. And “[s]tatutes need to be read

as a whole, both in initially determining whether ambiguity exists and, later, in

construing the statute.” Porter v. Harden, 891 N.W.2d 420, 425 (Iowa 2017).

Section 535.17 also defines many terms at issue, and “[w]hen the legislature has

defined words in a statute—that is, when the legislature has opted to ‘act as its

own lexicographer’—those definitions bind us.” In re J.C., 857 N.W.2d 495, 500

(Iowa 2014) (quoting State v. Fischer, 785 N.W.2d 697, 702 (Iowa 2010)). An

examination of section 535.17 reveals it is not ambiguous. See Geiger, 2019 WL

4678179, at *4–5; see also Iowa Code § 535.17.

Section 535.17(5)(c) defines a “credit agreement” as “any contract made or

acquired by a lender to loan money, finance any transaction, or otherwise extend

credit for any purpose, and includes all of the terms of the contract.” And as the

Geiger court highlighted, the definition of “contract” is broad under section 535.17,

concluding it encompassed the agreement the appellants in Geiger were seeking

to enforce. A “contract” is “a promise or set of promises for the breach of which

the law would give a remedy or the performance of which the law would recognize

a duty.” Id. § 535.17(5)(b). Section 535.17 also instructs that it “shall be

interpreted and applied purposively.” And our supreme court has determined:
9

Iowa Code section 535.17(6) controls over any ambiguity in the
provisions of section 535.17 and clearly requires that any alleged
credit agreements must be in writing to be enforceable “to ensure
that contract actions and defenses on credit agreements are
supported by clear and certain written proof of the terms of such
agreements to protect against fraud and to enhance the clear and
predictable understanding of rights and duties under credit
agreements.”

Clinton Nat. Bank v. Saucier, 580 N.W.2d 717, 722 (Iowa 1998) (quoting Iowa

Code § 535.17(6)).

Section 535.17(7) states, “[t]his section entirely displaces principles of

common law and equity that would make or recognize exceptions to or otherwise

limit or dilute the force and effect of its provisions concerning the enforcement in

contract law of credit agreements or modifications of credit agreements.” This

court in Geiger considered the language in section 535.17 and persuasive

authority from other jurisdictions with similar statutes,1 and determined that

1 Persuasive authority from other states with similar statutes shows the statute of

frauds cuts off a tort claim based on an unenforceable contract. See, e.g., Dixon
v. Countrywide Fin. Corp., 664 F. Supp. 2d 1304, 1309 (S.D. Fla. 2009) (“Florida
courts consistently hold that the statute of frauds also serves to bar any claims that
are premised on the same conduct and representations that were insufficient to
form a contract and are merely derivative of the unsuccessful contract claim.”
(cleaned up for readability) (citation omitted)); see also Horseshoe Entm’t, L.P. v.
Gen. Elec. Capital Corp., 990 F. Supp. 737, 743 (E.D. Mo. 1997) (surveying other
jurisdictions with credit agreement statutes and concluding, “The majority of the
cases hold that a credit agreement statute of frauds bars all actions based on an
alleged oral credit agreement, regardless of the theory of recovery asserted. The
reasoning behind these decisions is that to accept such allegations as affording
recovery, grounded in concepts other than breach of contract, simply provides an
easy avenue for resourceful attorneys to circumvent the credit agreement statute,
thus defeating the legislative intent to prohibit claims stemming from hard-to-
defend oral representations.” (cleaned up for readability) (internal footnote and
citation omitted)); Ohio Valley Plastics, Inc. v. Nat’l City Bank, 687 N.E.2d 260,
264–65 (Ind. Ct. App. 1997) (“[T]he statute of frauds at issue in the present case
applies broadly, even to an action upon an agreement with a creditor to enter into
a new credit agreement . . . Regardless of whether the present cause of action is
labeled as a breach of contract, misrepresentation, fraud, deceit, promissory
10

plaintiffs “cannot raise in tort what they cannot prove in contract: the existence of

an enforceable contract.” 2019 WL 4678179, at *6. We come to the same

conclusion. The statute requires a broad application to meet its requirements

under 535.17(6).

There is no dispute the agreement at issue was not in writing. The Shallas

allege Goerdt orally promised to secure financing for the buyback option. A credit

agreement is a contract to lend money, and Goerdt’s promise to secure financing

fits within that definition. The Shallas allege Goerdt and Peoples Trust “broke a

promise to lend them money. They request damages resulting from this broken

promise. Thus, they are seeking to enforce ‘a promise . . . for the breach of which

the law would give a remedy.’” See id. at *4 (quoting Iowa Code § 535.17). The

Shallas seek a remedy for the breach of their oral contract, and they assert claims

of negligence and fraudulent misrepresentation. These claims depend on the

existence of the oral contract.

The Shallas claim Goerdt and Peoples Trust fraudulently induced them to

enter the oral agreement, and they also claim Goerdt and Peoples Trust were

negligent in effectuating that agreement. Both claims rely on the existence of the

promise. Peoples Bank and Goerdt argue this case “is Geiger 2.0” and because

estoppel, its substance is that of an action upon an agreement by a bank to loan
money. Therefore, the statute of frauds applies.” (cleaned up for readability)
(citation omitted)).
Geiger v. Peoples Tr. & Sav. Bank, 940 N.W.2d 46 (Iowa Ct. App. 2019).
And see also Twiford Enterprises, Inc. v. Rolling Hills Bank & Tr., No. 20-
CV-28-F, 2020 WL 5248561, at *1 (D. Wyo. Aug. 5, 2020), aff’d, No. 20-8048, 2021
WL 2879126 (10th Cir. July 9, 2021), following the reasoning of Geiger.
11

the issue is the same as in Geiger,2 the resolution must also be the same. See id.

at *6. Taken in totality, section 535.17 demands a broad application that allows

the enforcement of only written credit agreements, both in tort and in contract, and

the Shallas, without a writing, cannot show that there was ever a credit agreement

for Goerdt and Peoples Trust to breach. See id. at *5–6; Iowa Code § 535.17(6),

(7); Saucier, 580 N.W.2d at 722. The district court did not err by granting summary

judgment and a directed verdict on this issue.

b. Discovery Deadline

The Shallas also argue that the district court erred in denying additional time

for discovery. We review decisions on the extension of discovery deadlines for

abuse of discretion. Hill v. McCartney, 590 N.W.2d 52, 54 (Iowa Ct. App. 1998).

“[T]he exercise of that discretion will not be disturbed unless it was exercised on

clearly untenable grounds or to an extent clearly unreasonable.” Id. at 54–55. “In

reviewing decisions regarding discovery, we give the district court wide latitude.”

Jones v. Univ. of Iowa, 836 N.W.2d 127, 139 (Iowa 2013).

The Shallas assert that after Goerdt was advised he should not testify until

after sentencing in his criminal case, the parties agreed to suspend discovery until

Goerdt could be deposed. Peoples Trust, County Bank, and Goerdt dispute this

and maintain the Shallas only ever requested Goerdt’s deposition alone be

delayed. The Shallas cite no portion of the record to support their claim. In any

case, once they determined Goerdt was unavailable for testimony, the Shallas

2 “The alleged fraudulent conduct is an inducement to a loan agreement the
defendants later broke. In other words, the defendants broke a promise to lend
them money.” Geiger, 2019 WL 4678179, at *4.
12

chose only to request that the court suspend the trial and hearing on the motion

for summary judgment until after Goerdt could be deposed. The Shallas did not

request that the discovery deadlines be altered, and they waited until two years

after those deadlines had passed to bring the issue before the court. They then

sought an alteration to the deadline to depose another officer of Peoples Trust.

This officer was not the subject of a criminal investigation that would prevent him

or her from testifying. These circumstances were laid out in Peoples Trust’s

resistance and considered by the district court.

Considering it had been two years since the deadline passed, there was

ample opportunity for the Shallas to conduct discovery. As such we cannot say

the court’s decision to deny an extension of the discovery deadlines was “clearly

unreasonable” or based on “clearly untenable grounds.” See McCartney, 590

N.W.2d at 54.

c. Application of Vicarious Liability

The Shallas argue that the district court improperly applied the principles of

vicarious liability in granting a directed verdict for County Bank3 on the Shallas’

claims of conversion. The court found Goerdt was acting outside the scope of his

authority. We review a directed verdict for correction of errors at law. Royal Indem.

3 It is unclear from the Shallas’ brief if they also raise this argument against Peoples

Trust: “The Trial Court directed a verdict as to County Bank on the basis that
Goerdt was acting outside the scope of his authority,” but they also wrote “[t]he
aforementioned facts make clear each . . . act committed by Goerdt . . . while under
the scope of his role as an officer of Peoples and County.” Despite referring to
Goerdt’s time with Peoples Trust in their brief, they reference no evidence
regarding this period. That said, the Shallas clarified at oral argument this claim
was limited to County Bank. Consequently, we limit our discussion to vicarious
liability as it applies to County Bank as it concerns the approximate seventy-nine
days Goerdt was employed by County Bank.
13

Co. v. Factory Mut. Ins. Co., 786 N.W.2d 839, 849 (Iowa 2010). In a directed

verdict “[t]he question is whether, viewing the evidence in the light most favorable

to the nonmoving party, substantial evidence supports each element of the cause

of action.” Charles v. Houseal, No. 20-0741, 2021 WL 811179, at *1 (Iowa Ct.

App. Mar. 3, 2021).

“The well established rule is that under the doctrine of respondeat superior,

an employer is liable for the negligence of an employee committed while the

employee is acting within the scope of his or her employment.” Godar v. Edwards,

588 N.W.2d 701, 705 (Iowa 1999). There are two elements to a claim of vicarious

liability: “proof of an employer/employee relationship, and proof that the injury

occurred within the scope of that employment.” Biddle v. Sartori Mem’l Hosp., 518

N.W.2d 795, 797 (Iowa 1994). Our supreme court has laid out a number of factors

to consider in determining whether conduct occurred within the scope of

employment:

(a) whether or not the act is one commonly done by such servants;
(b) the time, place and purpose of the act;
(c) the previous relations between the master and the servant;
(d) the extent to which the business of the master is apportioned
between different servants;
(e) whether or not the act is outside the enterprise of the master or,
if within the enterprise, has not been entrusted to any servant;
(f) whether or not the master has reason to expect that such an act
will be done;
(g) the similarity in quality of the act done to the act authorized;
(h) whether or not the instrumentality by which the harm is done has
been furnished by the master to the servant;
(i) the extent of departure from the normal method of accomplishing
an authorized result; and
(j) whether or not the act is seriously criminal.

Godar, 588 N.W.2d at 706 (citation omitted). Additionally, “whether or not it is just

that the loss resulting from the servant’s acts should be considered as one of the
14

normal risks to be borne by the business in which the servant is employed.” Id.

(citation omitted).

The acts committed by Goerdt, while a consequence of his position at the

bank, were outside the scope of his employment. The Shallas’ claims are largely

regarding the exchange of $25,000 in cash in the fast-food parking lot and Goerdt’s

use of the Shallas’ account to pay his in-laws property taxes.

[F]or an act to be within the scope of employment the conduct
complained of “must be of the same general nature as that
authorized or incidental to the conduct authorized.” Thus, an act is
deemed to be within the scope of one’s employment “where such act
is necessary to accomplish the purpose of the employment and is
intended for such purpose.”

Id. at 705 (quoting Sandman v. Hagan, 154 N.W.2d 113, 117 (Iowa 1967)). Clint

testified to meeting Goerdt in parking lots. This method of conducting business is

a substantial deviation from a banker’s normal conduct, and the record shows that

it was conducted in this way to benefit Goerdt personally. This behavior was not

in the scope of his employment. Goerdt’s use of the Shallas’ money to pay his in-

laws’ property taxes was also not in the scope of his employment. Goerdt was

criminally charged for this act; his acts were for his own personal benefit. See id.

at 706.

County Bank cannot be vicariously liable for Goerdt’s actions when those

actions are clearly outside the scope of his employment. See Biddle, 518 N.W.2d

at 797. It is not within the scope of employment of a banker to steal funds from

customer’s bank accounts or meet customers in parking lots to exchange bags of

cash. While bankers deal in money, that does not mean Goerdt’s efforts to steal

money from the bank’s customers are of that same general nature or within the
15

scope of his employment. See Sandman, 154 N.W.2d at 117; Biddle, 518 N.W.2d

at 797. We affirm on this issue.

d. The Verdict and Substantial Justice

The Shallas’ final argument is that the verdict failed to effectuate substantial

justice. They argue their inability to conduct further discovery and the court’s ruling

applying the statute of frauds prejudiced their ability to present their case.

We review a district court's denial of a new trial for failure to administer

substantial justice for an abuse of discretion. Crow v. Simpson, 871 N.W.2d 98,

105 (Iowa 2015). “A district court has broad discretion in deciding whether to grant

or deny a new trial on the ground that the verdict failed to administer substantial

justice between the parties.” Id. at 108. Abuse of discretion occurs when the court

acted on grounds clearly untenable or to an extent clearly unreasonable. Id.

The Shallas’ argument relies heavily on their contentions that additional

discovery should not have been denied and the section 535.17 statute of frauds

does not apply to tort claims. They allege these actions by the district court

“inhibited [their] ability to present their case.” Having found these claims without

merit, we cannot find the verdict failed to effectuate substantial justice. The district

court did not abuse its discretion in denying a new trial. See id.

e. County Bank’s Attorney Fees

Under Iowa Code section 625.22(1) attorney fees may be awarded in a

judgment on a written contract that provides for them. This court may also award

appellate attorney fees under this provision. GreenState Credit Union v. Prop.

Holders, Ltd., No. 21-0498, 2022 WL 2154816, at *5 (Iowa Ct. App. Jun. 15, 2022).

The mortgage agreement between the Shallas and County Bank provides that the
16

Shallas pay attorney fees, and we determine that County Bank should be awarded

appellate attorney fees. But as we do not have the requested amount of attorney

fees before us, we remand the case to the district court for a determination of

appellate attorney fees for County Bank.

III. Conclusion

For the above stated reasons, we affirm the district court and remand for a

determination of County Bank’s appellate attorney fees.

AFFIRMED AND REMANDED.

Ahlers, J., concurs; Langholz, J., partially dissents.
17

LANGHOLZ, Judge (concurring in part and dissenting in part).

I join much of the majority’s well-reasoned opinion. I agree that the district

court correctly granted a directed verdict to County Bank and did not abuse its

discretion in denying Clinton and Michelle Shalla an extension of the discovery

deadline or their motion for a new trial on their conversion claim. I also agree that

County Bank should be awarded appellate attorney fees.

Yet I cannot agree that the district court properly dismissed the tort claims

against Chris Goerdt and Peoples Trust and Savings Bank based only on a statute

that makes certain agreements “not enforceable in contract law.” Iowa Code

§ 535.17(1) (2018) (emphasis added). True, a panel of our court affirmed a similar

dismissal in an unpublished decision. See Geiger v. Peoples Tr. & Sav. Bank,

No. 18-1428, 2019 WL 4678179, at *4–5 (Iowa Ct. App. Sept. 25, 2019).4 But an

unpublished case is not binding on us. See In re S.O., 967 N.W.2d 198, 206 (Iowa

Ct. App. 2021); Iowa R. App. P. 6.904(2)(a)(2). A statute is. And this statute is

unambiguously limited to claims “in contract law.” Iowa Code § 535.17(1). So I

respectfully dissent from the majority’s decision to affirm dismissal of the tort claims

against Goerdt and Peoples Trust.

Still, I would start at the same place as the majority—the statute’s text. See

Calcaterra v. Iowa Bd. of Med., 965 N.W.2d 899, 904 (Iowa 2021). The statute

relied on to dismiss the Shallas’ tort claims says: “A credit agreement is not

enforceable in contract law by way of action or defense by any party unless a

writing exists which contains all of the material terms of the agreement and is

4 In fact, Geiger was brought against two of the same defendants here—Geordt

and Peoples Trust—by plaintiffs represented by the same counsel as the Shallas.
18

signed by the party against whom enforcement is sought.” Iowa Code

§ 535.17(1). And like the majority, I see no need to look to legislative history to

interpret this unambiguous text. See Calcaterra, 965 N.W.2d at 904 (“If statutory

language in its proper context is unambiguous, we do not look past the plain

meaning of the words.”). By its plain terms, this statute of frauds requires “[a] credit

agreement” to be, among other things, in writing or else it “is not enforceable in

contract law by way of action or defense by any party.” Iowa Code § 535.17(1).

The statute’s phrase “in contract law” should cause a full stop. Id.

There’s a reason that for more than a century, most first-year law students

have had to shuffle from their Contracts class to Torts class to learn each of these

areas of the law: contract law and tort law are distinct. See Robert W. Gordon,

The Geological Strata of the Law School Curriculum, 60 Vand. L. Rev. 339, 340–

42 (2019). Contract law is generally concerned with enforcing the performance of

promises. See 1 Corbin on Contracts § 1.1, at 2 (1993) (“That portion of the field

of law that is classified and described as the law of contracts attempts the

realization of reasonable expectations that have been induced by the making of a

promise.”). While tort law “is concerned with the allocation of losses arising out of

human activities” and “compensat[ing] for injuries sustained by one person by the

conduct of another.”5 W. Page Keeton et al., Prosser and Keeton on Torts § 1, at

5–6 (5th ed. 1984).

5 Tort law—unlike contract law—is also generally focused on remedying wrongful

conduct where the actor is at fault, either intentionally or negligently. See Dan B.
Dobbs, The Law of Torts 2–3 (2000). This focus is apparent in its name, which “is
derived from the Latin ‘tortus’ or ‘twisted.’” Prosser and Keeton on Torts § 1, at 2.
Thus, “a tort is conduct which is twisted or crooked, not straight.” Id.
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The Shallas do not bring contract actions against Goerdt and Peoples Trust.

The actions they assert—negligence and fraudulent misrepresentation—are torts.

But this statute does not bar any actions in tort—it bars only actions “in contract

law.” Iowa Code § 535.17(1). So the statute does not apply here.

The majority glosses over this part of the statute and instead dives into the

statute’s definition of “credit agreement.” I don’t see that term as particularly

relevant because however broadly it is written, the statute only makes an unwritten

credit agreement unenforceable “in contract law.” Iowa Code § 535.17(1). And

again, the Shallas’ claims are not actions in contract law. So even if the statements

Goerdt made to the Shallas were a credit agreement under the statute, it matters

not—the Shallas were not seeking to enforce them by an action in contract law.

Part of the confusion seems to stem from the majority—and Geiger, on

which it relies—equating claims of negligence and fraudulent misrepresentation

with contract claims. But these are distinct claims that require proof of distinct

facts—even if the same general course of conduct might sometimes support both

contract and tort claims. A claim for fraudulent misrepresentation does not seek

to enforce a promise—it seeks to remedy lying about ever intending to follow

through on the promise. See Robinson v. Perpetual Servs. Corp., 412 N.W.2d

562, 565 (Iowa 1987) (explaining that “[t]he mere breach of a promise is never

enough in itself to establish the fraudulent intent” required to bring a fraudulent

misrepresentation claim because the speaker must have had “an existing intention

not to perform” the broken promise when it was made (cleaned up)). And while a

negligence claim does seek to enforce a breach—it’s not a breach of a promise,

but a breach of “a duty to conform to a standard of conduct to protect others.”
20

Thompson v. Kaczinski, 774 N.W.2d 829, 834 (Iowa 2009) (quoting Stotts v.

Eleveth, 688 N.W.2d 803, 807 (Iowa 2004)). So by asserting fraudulent

misrepresentation and negligence claims, the Shallas are neither “seeking to

enforce a promise” nor “seek[ing] a remedy for the breach of their oral contract” as

the majority concludes. (Cleaned up.)

The majority also looks to the surrounding statute for support. And again, I

agree we should read the statute as a whole to understand its context. See

Calcaterra, 965 N.W.2d at 904. But what I see at every point is contract law. So

yes, we learn that the statute “shall be interpreted and applied purposively,” as the

majority notes. Iowa Code § 535.17(6). But reading on, it’s “purposively to ensure

that contract actions and defenses on credit agreements are supported by clear

and certain written proof of the terms of such agreements to protect against fraud

and to enhance the clear and predictable understanding of rights and duties under

credit agreements.” Id. (emphasis added). This text does not support any purpose

to affect tort actions—especially not a fraud claim, as it states an intent “to protect

against fraud.” Id.; see Nanos v. Harrison, 117 A. 803, 805 (Conn. 1922) (reversing

dismissal of fraud claim based on statute of frauds when claim did not seek

enforcement of the oral contract, noting that otherwise “the statute of frauds, which

was intended to prevent fraud, will serve as an aid in helping to perpetrate a fraud”).

And true, the statute expressly and “entirely displaces” some “principles of

common law and equity.” Iowa Code § 535.17(7). But again, this displacement is

limited to those principles “that would make or recognize exceptions to or otherwise

limit or dilute the force and effect of its provisions concerning the enforcement in

contract law of credit agreements or modifications of credit agreements.” Id.
21

(emphasis added). Such text cannot support displacing an action in tort law. The

limited nature of the displacement to only the express terms of section 537.17(1)

is reinforced by the next sentence. That provision clarifies that “this section does

not displace any additional or other requirements of contract law,”—note once

more the reference to contract law—“which shall continue to apply, with respect to

the making of enforceable contracts, including the requirement of consideration or

other basis of validation.” Id. So looking at the whole statute only bolsters the

plain meaning of section 537.17(1)—it applies only to bar actions “in contract law.”

The majority and Geiger also rely on out-of-state cases. But I do not find

them persuasive. For starters, none interprets a statute with a similar express

limitation to actions “in contract law.”6 Iowa Code § 537.17(1). And one of the

cases—interpreting the Missouri credit-agreement statute of frauds—was later

rejected by the Missouri Court of Appeals based on a century of Missouri

precedent that statutes of frauds do not limit tort actions even without our express

language. See Mika v. Cent. Bank of Kansas City, 112 S.W.3d 82, 90–93 (Mo. Ct.

App. 2003). The Missouri Court of Appeals also persuasively undermines that

6 In Dixon v. Countrywide Financial Corp., the statute applied to “an action on a

credit agreement.” 664 F. Supp. 2d 1304, 1309 (S.D. Fla. 2009) (quoting Fla. Stat.
§ 687.0304(2)). Likewise, in Horseshoe Entertainment, L.P. v. General Electric
Capital Corp, the statute barred “an action upon . . . a credit agreement.” 990 F.
Supp. 737, 743 (E.D. Mo. 1997); Mo. Rev. Stat. § 432.045(2) (1994). And in Ohio
Valley Plastics, Inc. v. National City Bank, the statute applied to an “action upon
an agreement.” 687 N.E.2d 260, 263–65 (Ind. Ct. App. 1997) (quoting Ind. Code
§ 32-2-1.5-5, recodified at § 26-2-9-4 (2002)). The majority also cites to Twiford
Enterprises, Inc. v. Rolling Hills Bank & Trust, No. No. 20-CV-28-F, 2020 WL
5248561 (D. Wyo. Aug. 5, 2020), aff’d, No. 20-8048, 2021 WL 2879126 (10th Cir.
July 9, 2021). But the court there followed our unpublished decision in Geiger—
without any independent analysis—because it was required to apply Iowa law
under the parties’ choice-of-law clause. See id. at *7.
22

case’s survey of other jurisdictions, noting that some of those—such as Illinois and

Colorado—had more expansive statutory text prohibiting actions “on or in any way

related to a credit agreement” or “an action or claim related to an oral credit

agreement. Id. at 92; see 815 Ill. Comp. Stat. 160/2; Colo. Rev. Stat. § 38-10-

124(2). What’s more, the Missouri Court of Appeals is not alone in holding that a

statute of frauds does not apply to tort claims. See, e.g., Brown v. Founders Bank

& Tr. Co., 890 P.2d 855, 861–64 (Okla. 1994) (holding credit-agreement statute of

frauds does not bar fraud claim); Munson v. Raudonis, 387 A.2d 1174, 1176–77

(N.H. 1978) (holding that plaintiffs could bring an action for deceit based on an oral

promise unenforceable under the statute of frauds); Haynes v. Cumberland

Builders, Inc., 546 S.W.2d 228, 231 (Tenn. Ct. App. 1976) (holding that statute of

frauds did not apply to fraudulent misrepresentation claim); Nanos, 117 A. at 805.

I do not dispute that there may well be policy reasons that tort claims related

to unwritten credit agreements should be barred the same as actions “in contract

law.” Iowa Code § 535.17(1). But we are not at liberty “to rewrite” a “statute in the

guise of interpretation.” Goche v. WMG, L.C., 970 N.W.2d 860, 866 (Iowa 2022).

If the legislature agrees with these policy concerns, it could enact an amendment

removing the statute’s clear limitation to contract actions or adding broader

language sweeping in tort actions.7

7 Indeed, after the Missouri Court of Appeals interpreted its credit-agreement
statute of frauds to not apply to tort actions, see Mika, 112 S.W.3d at 90–93, the
Missouri legislature did just that—enacting a new statute that applied to “an action
upon or a defense, regardless of legal theory in which it is based, in any way
related to a credit agreement.” BancorpSouth Bank v. RWM Props. II, LLC,
No. 4:11CV00373, 2011 WL 4435271, at *3 (E.D. Mo. Sept. 23, 2011) (quoting
Mo. Rev. Stat. § 432.047(2) (2004)).
23

Until then, the statute currently on the books does not apply to the Shallas’

tort claims. I would thus reverse the district court’s grant of summary judgment to

Peoples Trust and its directed verdict for Goerdt and remand for further

proceedings on these claims.