Court Opinion

ID: 9901233
Source: CourtListenerOpinion
Date Created: 2023-11-21 16:06:22.537335+00
Date Added: 2024-06-11T09:21:29.348468
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 22-1377
                           Filed November 21, 2023

WILLIAM S. WOLLESEN, IOWA PLAINS FARMS, BYRITE FARM SUPPLY,
INC., KRISTI J. WOLLESEN, and JOHN W. WOLLESEN,
       Plaintiffs-Appellants,

vs.

WIXTED, INC., d/b/a WIXTED POPE NORA THOMPSON, WIXTED POPE NORA
THOMPSON & ASSOCIATES, LLC, JEFF PIGOTT and EILEEN WIXTED,
     Defendants-Appellees.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Michael D. Huppert,

Judge.

      Plaintiffs appeal the district court’s grant of summary judgment in favor of

the defendants. AFFIRMED.

      Joel D. Vos and Zack A. Martin of Heidman Law Firm, P.L.L.C., Sioux City,

and Samuel L. Blatnick of Lucosky Brookman LLP, New York, New York, for

appellants.

      Andrew C. Johnson of Lamson Dugan & Murray LLP, West Des Moines, for

appellees.

      Heard by Greer, P.J., and Ahlers and Buller, JJ.
                                          2

AHLERS, Judge.

       The path to this appeal is complicated. We provide a simplified background.

       For several years leading up to 2011, West Central Cooperative (“WCC”)

employee Chad Hartzler defrauded WCC.1 Part of Hartzler’s scheme involved

WCC customers William Wollesen, Kristi Wollesen, John Wollesen, and their

companies, Iowa Plains Farms and Byrite Farm Supply, Inc., (collectively “the

Wollesens”). Hartzler had the Wollesens prepay for WCC products at a reduced

price and make payments to him personally. Hartzler then kept the funds for his

personal use. As the payments made by the Wollesens went to Hartzler rather

than WCC, the scheme created a growing balance in the Wollesens’ account at

WCC.2

       After Hartzler confessed the fraud in April 2011, WCC hired Wixted, Inc.

(“Wixted”) to help with communications strategy. On May 12, 2011, WCC filed suit

against Hartzler and the Wollesens. WCC alleged the Wollesens had bribed

1 In an appeal in prior litigation that relates to this case, our supreme court noted

that WCC is an agricultural cooperative owned by farmers, and Westco Agronomy
Co., L.L.C. (“Westco”) is a wholly owned subsidiary of WCC. Westco Agronomy
Co. v. Wollesen, 909 N.W.2d 212, 215 (Iowa 2017). The supreme court also noted
that Hartzler was employed by Westco rather than WCC. Id. Despite that note,
the parties in this appeal consistently refer to Hartzler as being an employee of
WCC and make no distinction between WCC and Westco. As the distinction
between Westco and WCC is immaterial to the issues in this appeal, we follow the
parties’ lead in referring only to WCC to refer collectively to WCC and/or Westco
without making any distinction between the two entities. We do so for simplicity’s
sake. We make no finding as to which entity employed Hartzler, and this opinion
should not be read as declaring any rights or responsibilities for which a distinction
between WCC and Westco would be important.
2 A more detailed explanation of Hartzler’s scheme can be found in the supreme

court case between the Wollesens and WCC. See Westco, 909 N.W.2d at 215-17.
                                          3

Hartzler to receive lower prices.3 One of the Wollesen entities filed a counterclaim.

Wixted assisted WCC in preparing several statements and documents over the

course of 2011 to communicate the fraud issue to employees and members and

to inform them of the lawsuit.        The documents very generally mentioned

wrongdoing by Hartzler and the Wollesens without naming them. For example,

Wixted helped WCC prepare a letter to its members stating that WCC brought a

lawsuit against “a former employee and a farm operation.” Another document—

used as internal preparatory material for an upcoming townhall meeting—mentions

a “deceptive duo” and “devious partnership that was only able to succeed because

an employee and customer worked together.” Media coverage of the lawsuit did

mention the Wollesens by name.

       The lawsuit went to jury trial. The jury awarded WCC damages against

Hartzler but found WCC failed to prove its claim against the Wollesens. The jury

also awarded significant compensatory damages against WCC to the Wollesen

entity that filed the counterclaim. After receiving the verdict, WCC issued a press

release on August 7, 2014. The press release expressed WCC’s disappointment

in the outcome of the trial and attempted to explain its decision to bring the lawsuit.

       In February 2016, the Wollesens commenced a federal lawsuit against

WCC and Wixted.4 The lawsuit asserted several causes of action, including claims

3 The lawsuit included claims against Hartzler and the Wollesens for commercial

bribery, theft, conversion, breach of fiduciary duty, breach of duty of loyalty,
ongoing criminal conduct, unjust enrichment, and foreclosure of an agricultural
supply dealer lien. The suit sought compensatory and punitive damages.
4 The Wollesens sued Wixted, Inc. as well as two of its principals, Eileen Wixted

and Jeff Pigott. For ease of reference, we will continue to refer to the corporation,
as well as the individual defendants, as Wixted.
                                           4

for defamation and aiding and abetting breach of fiduciary duty. The Wollesens

settled their claims against all defendants except Wixted. As a result of the

settlement, the federal court lost diversity jurisdiction, and the Wollesens refiled in

Iowa district court.5

       Wixted moved for summary judgment.             Wixted argued the Wollesens’

claims are subject to the two-year limitation period set by Iowa Code

section 614.1(2) (2016), and since more than two years had passed since the last

statement capable of a defamatory meaning was published in June 2011, the

claims were time-barred. The Wollesens resisted. They claimed the aiding-and-

abetting-breach-of-fiduciary-duty claim is governed by the five-year limitation

period of section 614.1(4). They also argued that, even if a two-year limitation

period applied, the last defamatory statement was the August 7, 2014 press

release, which would not be time-barred.

       The district court granted Wixted’s motion. It found as a matter of law that

the press release was not defamatory, and therefore, even though the statements

5 While the record is not entirely clear on the procedural history, the parties appear

to agree on the history. Specifically, they appear to agree that the Wollesens
originally sued in Iowa district court in 2015 and then voluntarily dismissed that
suit. The Wollesens then sued in federal court in February 2016. When WCC
settled in 2019, the federal court lost diversity jurisdiction, so the federal action was
dismissed. Just under six months later, the Wollesens refiled in Iowa district court.
We use the February 2016 date to determine whether the limitation period has
expired. See Iowa Code § 614.10 (2020) (“If, after the commencement of an
action, the plaintiff, for any cause except negligence in its prosecution, fails therein,
and a new one is brought within six months thereafter, the second shall be held a
continuation of the first.”); Wetter v. Dubuque Aerie No. 568 of the Fraternal Order
of Eagles, 588 N.W.2d 130, 132 (Iowa Ct. App. 1998) (finding Iowa Code
section 614.10 applied to save a state action because, even though the federal
action was dismissed for lack of subject matter jurisdiction due to the plaintiff’s
miscalculation of a necessary jurisdictional fact, the dismissal was not due to
negligence in prosecution).
                                         5

in the press release were made within the limitation period, they were not

actionable. The court found that any other claims for defamation dated back to

statements made in 2011, so they were time barred. As to the claims for aiding

and abetting breach of fiduciary duty, the district court found the claims were based

on defamation and subject to the same two-year limitation period under Iowa Code

section 614.1(2) rather than the five-year limitation period under section 614.1(4).

As more than two years had passed since the last potential defamatory statement

was made when the suit was filed, the court dismissed the claims on statute-of-

limitations grounds. The Wollesens appeal on their claims for defamation and

aiding and abetting breach of fiduciary duty.

I.     Standard of Review

       We review summary judgment rulings for correction of errors at law.

Andrew v. Hamilton Cnty. Pub. Hosp., 960 N.W.2d 481, 488 (Iowa 2021). We

review the record in the light most favorable to the Wollesens—the party opposing

summary judgment—and consider all reasonable inferences that can be made on

their behalf. See Serv. Emps. Int’l Union, Loc. 199 vs. Iowa Bd. of Regents, 928

N.W.2d 69, 74 (Iowa 2019). Summary judgment should be granted when there is

no genuine issue of material fact, and the moving party is entitled to judgment as

a matter of law. Andrew, 960 N.W.2d at 488.

II.    Applicable Limitation Period

       We first address the parties’ dispute over the applicable limitation period.

When the parties dispute which limitation period should apply to a claim, we must

decide which of the actions described in Iowa Code section 614.1 “most nearly

characterizes the action before the court.” Scott v. City of Sioux City, 432 N.W.2d
                                         6

144, 147 (Iowa 1988). To do that, we assess only the foundation of the action.

Legg v. W. Bank, 873 N.W.2d 763, 774 (Iowa 2016). We do not decide based on

the label placed on the claim by the plaintiff, Bob McKiness Excavating & Grading,

Inc. v. Morton Bldgs., Inc., 507 N.W.2d 405, 411 (Iowa 1993), or the alleged injury.

Brown v. Liberty Mut. Ins. Co., 513 N.W.2d 762, 765 n.1 (Iowa 1994) (“[W]e . . .

reject the dichotomy . . . that we would apply different limitation periods depending

on the nature of the alleged injury.”). However, we remain cognizant that the type

of injury cannot be completely disregarded, as some limitation periods “are tied to

the legal source of the right or obligation sought to be enforced while others are

tied to the type of loss or injury for which recovery is sought.” Scott, 432 N.W.2d

at 147.

       There are two causes of action at issue here—a defamation action and an

action for aiding and abetting breach of fiduciary duty. As to the defamation action,

“[t]he gravamen or gist . . . is damage to the plaintiff’s reputation.” Schlegel v.

Ottumwa Courier, 585 N.W.2d 217, 221 (Iowa 1998) (quoting 50 Am. Jur. 2d Libel

and Slander § 2, at 338‒39 (1995)). The nature of breach of fiduciary duty in this

context is whether WCC fiduciaries failed to act with care, good faith, and in the

best interests of the cooperative. See Iowa Code § 499.36A(1). Aiding and

abetting adds only the requirements that the Wollesens prove Wixted knew the

conduct of WCC’s principals constituted a breach of fiduciary duty and that Wixted

provided substantial assistance or encouragement in the commission of the

breach. See Tubbs v. United Cent. Bank, N.A., 451 N.W.2d 177, 182 (Iowa 1990).

       The district court granted summary judgment on both claims, finding both

to be governed by the two-year limitation period in section 614.1(2). It reasoned
                                          7

that the aiding-and-abetting claim was essentially just the defamation claim by

another name, and therefore should fall under the two-year limitation period for

defamation. The Wollesens claim the district court erred because they suffered

financial injury, and not just reputational harm, so the claim for aiding and abetting

breach of fiduciary should be governed by the five-year limitation period of

section 614.1(4).

       In support of their argument, the Wollesens point to several incidents to try

to separate the two claims.      First, they argue, “Plaintiffs were expelled from

membership of WCC and the narrative that Plaintiffs gave hundreds of thousands

of dollars in bribes to Hartzler was widely publicized.” But the Wollesens’ expulsion

from WCC is not explicitly attributed to Wixted—in fact, the Wollesens point to no

facts suggesting Wixted had any part in that decision. Nor can we look at this as

separate from their defamation claim, as the Wollesens present it hand in hand

with their claim that Wixted helped publish libelous material.

       The second incident the Wollesens rely upon is Wixted’s advice to WCC

cautioning against firing Hartzler’s supervisor to avoid the inference that other

co-op leaders should have been aware of Hartzler’s fraud. The thrust of this

argument is that Wixted assisted WCC in “scapegoating” the Wollesens for the

purpose of “divert[ing] attention away from [WCC leadership’s] malfeasance.” But

this is just a piece of the larger puzzle making up the defamation claim, as it

focuses on the alleged goal of placing blame and attention on the Wollesens to

keep the same blame and attention away from WCC leaders. See Hallett Constr.

Co. v. Meister, 713 N.W.2d 225, 230 (Iowa 2006) (“[A] claim is not founded on a

written contract merely because . . . the instrument would be a link in the chain of
                                           8

evidence establishing the cause of action.” (citation and internal quotation marks

omitted)).

       Finally, the Wollesens argue their claim is separate because they suffered

financial, not just reputational injury, from Wixted’s actions. The claimed injuries

are the loss of the financial benefit from WCC membership and the legal fees from

the “improper” lawsuit brought against them. But it is the nature of the claim, not

the nature of the injury, that guides our decision. Brown, 513 N.W.2d at 764, 765

n.1. And as the district court aptly observed, “the plaintiffs . . . cannot establish

liability for any of their claims against [Wixted] without first establishing that

[Wixted] published allegedly defamatory statements against the [Wollesens].”

Because the Wollesens’ aiding-and-abetting-breach-of-fiduciary-duty argument

rests on the alleged attack on their reputation, we agree with the district court that

it is subject to the two-year limitation period in section 614.1(2).

       Due to our conclusion that the Wollesens’ claims are governed by a two-

year limitation period, we look only at the alleged tortious conduct of Wixted

occurring in the two-year window before suit was filed. Within that period, the only

alleged tortious conduct by Wixted is the alleged defamation by the August 7, 2014

press release. So we turn our attention to that document as the sole remaining

basis for the Wollesens’ claims.

III.   The Press Release

       In its entirety, the press release at issue reads:

              We are surprised by, and disagree with, the verdict based on
       all of the evidence. We continue to believe, along with our
       farmer-members and employees, that this is not how business
       should be done.
                                            9

                 West Central denies that it committed any fraudulent acts
          against Iowa Plains Farms/Wollesen’s [sic].
                 We had confidence in the facts of our case. We intend to
          pursue all appropriate legal means available, up to and including
          appeal.
                 When we filed the lawsuit, we felt it was our responsibility
          to protect the integrity of the agricultural marketplace, the
          cooperative system, and our business. We still believe this to be
          true today.

(Emphasis added.)

          The Wollesens focus their argument on the highlighted statements.6 They

claim these statements imply their actions are outside the bounds of how

businesses in the agricultural community should operate, that they lack integrity,

and that they are “bad actors who threatened the integrity of the entire agricultural

marketplace and the cooperative system.”

          Before going into the legal analysis, we first note the role of the courts in

addressing defamation claims. If there are multiple reasonable interpretations of

a statement, one of which is not defamatory and one of which is defamatory, the

question of whether the statement is defamatory is to be answered by the jury.

Kerndt v. Rolling Hills Nat’l Bank, 558 N.W.2d 410, 418 (Iowa 1997). However,

“[w]hether a statement is capable of a defamatory meaning is a question for the

court.”     Bauer v. Brinkman, 958 N.W.2d 194, 198 (Iowa 2021).              With that

delineation of duties in mind, we turn to the challenged statements.

6 The record shows that, in addition to the press release quoted here, WCC also

sent a letter to WCC employees. While the wording of the letter differs somewhat
from the press release, including the wording of the alleged defamatory
statements, in substance the letter is the same as the press release. At oral
argument, the Wollesens’ counsel clarified that they were relying on the statements
in the press release as the basis for their claim, so we limit our analysis to the
statements in the press release.
                                        10

       To prevail on their claim that the highlighted statements were defamatory,

the Wollesens must prove Wixted published the statements, the statements were

defamatory, and the statements were about the Wollesens. See Andrew, 960

N.W.2d at 489. Although it is uncertain whether Wixted had anything to do with

publishing the press release, we will assume for the sake of discussion that it did.

The question then becomes whether the challenged statements were defamatory.

       To be defamatory, a statement cannot be an opinion, because opinions are

“absolutely protected under the First Amendment.” Id. (quoting Kiesau v. Bantz,

686 N.W.2d 164, 177 (Iowa 2004), overruled in part on other grounds by Alcala v.

Marriott Int’l, Inc., 880 N.W.2d 669, 708 n.3 (Iowa 2016)). To be defamatory, the

challenged statements in the press release must be capable of being reasonably

interpreted as stating facts about the Wollesens. See Bauer, 958 N.W.2d at 198

(“Statements that cannot be reasonably interpreted as stating actual facts about a

person are not actionable as defamation.”).        We apply a four-factor test to

determine whether a statement is opinion. Id. First, we look at “whether the

alleged defamatory statement ‘has a precise core of meaning for which a

consensus of understanding exists or, conversely, whether the statement is

indefinite and ambiguous.’” Id. (quoting Bandstra v. Covenant Reformed Church,

913 N.W.2d 19, 47 (Iowa 2018)). “Second, we consider to what degree the

statement is ‘objectively capable of proof or disproof.’” Id. (quoting Bandstra, 913

N.W.2d at 47). “Third, we examine ‘the context in which the alleged defamatory

statement occurs.’”   Id. (quoting Bandstra, 913 N.W.2d at 47).        “Fourth, we

contemplate ‘the broader social context’ the alleged defamatory statement fits

into.” Id. (quoting Bandstra, 913 N.W.2d at 47).
                                        11

       As to the first challenged statement, even within the context of the events

surrounding the statement and the context of the entire statement itself, it falls

within the category of opinion. WCC is expressing a belief about how businesses

should conduct themselves that is not capable of being proven true or false, so the

statement is nonactionable opinion. See, e.g., Bandstra, 913 N.W.2d at 48–49

(finding statements about whether alleged victims of sexual abuse and exploitation

should be sent to jail were opinions not capable of being proven or disproven and

therefore protected by the First Amendment). Nor does “[h]ow business should be

done” have a “precise and verifiable meaning” that can “give rise to clear factual

implications.” See, e.g., Yates v. Iowa W. Racing Ass’n, 721 N.W.2d 762, 773

(Iowa 2006) (finding the statement that a business did not receive a contract

because they were “substandard and poor performers” did not have a precise and

verifiable meaning that could make the statement provable and was therefore a

nonactionable opinion).    The Wollesens argue the context of the statement

implicates them, but even assuming so, that context does not transform the

statement into a provable allegation of fact with a precise meaning. See Bandstra,

913 N.W.2d at 47 (assessing the four factors distinguishing an opinion from a fact

statement). Because the statement “[w]e continue to believe . . . that this is not

how business should be done” is an opinion, it is not defamatory.

       As to the second statement, the Wollesens claim it defames them by

implying they have engaged in activities “threaten[ing] the integrity of the entire

agricultural marketplace and the cooperative system.” The Wollesens even go so

far as to suggest that this may be defamatory per se. If a statement is defamatory

per se, such as one that attacks a person’s integrity or moral character, then there
                                        12

is a presumption of injury and the burden shifts to the defendant to prove the

statement could have a non-defamatory meaning. Kiesau, 686 N.W.2d at 175.

      Here the statement does not even mention the Wollesens or the situation

with Hartzler. But even if the parties to the suit were so well known that the

audience would know to whom the press release referred, there is no reasonable

interpretation of the statement that is defamatory. Rather, the clear meaning of

the statement is that WCC initiated the lawsuit to maintain the strength or

soundness of its business and its business community.7 The press release was

intended to explain the result of the lawsuit while attempting to justify starting a

lawsuit with a costly outcome. The reading that the lawsuit was justified because

WCC leaders felt it was necessary to keep the business financially sound makes

more sense in that context. That is also the clear meaning in the context of the

surrounding events. WCC had sued the Wollesens under numerous theories

based on their connection to Hartzler’s fraud. Both the context of the lawsuit and

the statement read as a whole make the Wollesens’ interpretation that the

statement attacked their character for honesty unreasonable.        This is not an

instance of two reasonable interpretations. See id.; Kerndt, 558 N.W.2d at 418.

Rather, there is only one interpretation a reasonable reader could make, which is

7 The Wollesens place great emphasis on the use of the word “integrity,”
suggesting WCC called them dishonest. But “integrity” has more than one
meaning.          See     Integrity,     Merriam-Webster,      https://www.merriam-
webster.com/dictionary/integrity (last visited Nov. 15, 2023) (providing definitions
of “firm adherence to a code of especially moral or artistic values:
INCORRUPTIBILITY,” “an unimpaired condition: SOUNDNESS,” and “the quality
or state of being complete or undivided: COMPLETENESS”). It is clear from the
challenged statement that “integrity” in this context is referring to the second
definition of soundness. There is no reasonable way to interpret the press
release’s reference to integrity to be referring to the Wollesens’ honesty.
                                           13

that WCC justified the suit on the grounds that it thought it was doing what would

be best for the market, the cooperative community, and its business at a financial

level. There is simply no indication from the statement that WCC is making a claim

about the integrity of the Wollesens. Cf. Stevens v. Iowa Newspapers, Inc., 728

N.W.2d 823, 826, 831 (Iowa 2007) (finding the true statement in an article that a

writer “rarely attended events upon which he wrote columns,” which named the

writer and stated the fact in a negative way, could reasonably be interpreted to

imply the writer’s work was untruthful).

       The court’s role is to determine whether the statement is capable of a

defamatory meaning. Bauer, 958 N.W.2d at 198 (“Whether a statement is capable

of a defamatory meaning is a question for the court.”). The district court found that

a reasonable person could not read the statement at issue and interpret it as an

attack on the integrity of the Wollesens. We agree. The district court was correct

in granting summary judgment to Wixted on the claims based on the 2014 press

release—the only remaining basis for potential recovery that is not time-barred.

IV.    Conclusion

       We find no error in the district court’s determination that the Wollesens’

aiding-and-abetting-breach-of-fiduciary-duty claim rests entirely on claims based

on defamation. As a result, both that claim and the defamation claim are subject

to the two-year limitation period of section 614.1(2). We also find no error in the

district court’s conclusion that both challenged statements in the 2014 press

release were not defamatory as a matter of law. As all other bases for recovery

are time-barred, we affirm the district court’s grant of summary judgment to Wixted.

AFFIRMED.