Court Opinion

ID: 2778559
Source: CourtListenerOpinion
Date Created: 2015-02-11 16:05:14.501247+00
Date Added: 2024-06-11T11:28:09.687481
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 14-0503
                            Filed February 11, 2015

SUSAN KIZER and SERENITY SALON
AND SPA, INC.,
     Plaintiffs-Appellants,

vs.

KIM SIEVERS,
      Defendant-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Buena Vista County, Carl J.

Petersen, Judge.

      Susan Kizer and Serenity Salon and Spa, Inc. appeal from the district

court’s ruling dissolving the corporation and denying Kizer’s claim of breach of a

purchase agreement.      AFFIRMED IN PART, REVERSED IN PART, AND

REMANDED WITH DIRECTIONS.

      Gregory N. Lohr of Baron, Sar, Goodwin, Gill & Lohr, Sioux City, for

appellants.

      Gina C. Badding of Neu, Minnich, Comito & Neu, P.C., Carroll, and Dan

Connell of Dan Connell, P.C., Storm Lake, for appellee.

      Heard by Danilson, C.J., and Potterfield and Bower, JJ.
                                             2

DANILSON, C.J.

       Susan Kizer and Serenity Salon and Spa, Inc. appeal from the district

court’s ruling dissolving the corporation and denying their claim of breach of a

purchase agreement by Kim Sievers. Kizer1 contends the court inappropriately

dissolved the corporation and considered a director’s breach of fiduciary duties.

Kizer also contends Sievers breached the stock purchase agreement and

guaranty, and further, that the district court erred in finding an oral contract

existed. We conclude the personal guaranty is unenforceable due to a failure of

consideration. The trial court erred in dissolving the corporation, a remedy not

requested and unnecessary, and we remand to revise the judgment entry, but we

otherwise affirm the settlement of the rights and obligations of the parties.

       I. Scope and Standard of Review.

       The parties express some ambivalence as to the scope of review.

However, despite ancillary requests for equitable relief,2 this is essentially a

breach-of-contract action, which was tried at law. 3              See Collins Trust v.

Allamakee Cnty. Bd. of Supervisors, 599 N.W.2d 460, 463 (Iowa 1999)

(“Generally, our review of a decision by the district court following a bench trial

depends upon the manner in which the case was tried to the court.”). We review

law actions for errors of law. Iowa R. App. P. 6.907.

1
  While we recognize the appellants are nominated Kizer and Serenity, for simplicity’s
sake we refer to them collectively as Kizer.
2
Harrington v. Univ. of N. Iowa, 726 N.W.2d 363, 365 (Iowa 2007) (“The fact that
injunctive relief was sought is not dispositive of whether an action is at law or in equity,
as an injunction may issue in any action.” (citation, quotation marks, and alterations
omitted)).
3
   The trial court wrote, “The parties stipulated to waive the jury and present this
proceeding at law to the court.”
                                        3

      II. Background Facts and Proceedings.

      Kizer is a licensed cosmetologist having graduated from Faust Institute in

1999. Kizer opened Serenity Salon & Spa, Inc. in 2003. Kizer’s daughter, Karla,

worked at Serenity after graduating from cosmetology school.         Kizer initially

operated the salon at Lake Avenue in Storm Lake and moved to its current

location at 323 East Milwaukee. Kizer, as president of Serenity, signed a five-

year lease for that location on July 1, 2007. Rent was $12,018 per year, payable

in monthly installments of $1001.50.

      Kizer incorporated this entity under the name Face @ Total Concept, but

amended the name of the corporation to Serenity Salon & Spa, Inc. (Serenity) in

2004. Serenity’s report to the secretary of state filed in 2004 listed Kizer as the

president and her husband, Mrylon, as a director. In 2005, Serenity’s report

listed Karla as secretary, Mrylon as director, and Kizer as president. In 2008,

Serenity’s report indicated there were “no directors” and listed Kim Sievers as

secretary and Kizer as the president of the corporation.

      In early 2008, Kizer had approached Sievers, a client, with a proposal that

Sievers purchase Karla’s portion of Serenity.     Kizer and Sievers met on two

occasions to discuss the purchase; at one meeting their husbands were also

present.

      On April 8, 2008, two documents drafted by Kizer’s attorney, Ted Brown, a

stock purchase agreement and a personal guaranty, were executed. The stock

purchase agreement provides:

            This agreement is entered into by and between Serenity
      Salon & Spa, Inc. hereinafter referred to as “Corporation,” Susan
                                        4

      Kizer hereinafter referred to as “Kizer,” and Kim Sievers hereinafter
      referred to as “Sievers” upon the following terms and conditions:
              1. Presently Kizer is the sole shareholder in the Corporation,
      holding 50 shares of stock in the same.
              2. Sievers desires to purchase 50 shares of stock from the
      Corporation so that she will be an equal shareholder with Kizer.
              3. The Corporation presently has corporate debt incurred at
      Central Bank of Storm Lake, Iowa, which has been presently
      guaranteed by Kizer. Kizer and the Corporation agree that 50
      shares of stock shall be issued to Sievers upon the condition that
      she personally guarantee to the Corporation and to Kizer the
      payment of $ 60,000.00 of corporate debt to Central Bank of Storm
      Lake, Iowa.
              4. The Corporation, Kizer and Sievers hereby agree that 50
      shares of stock of the Corporation shall issue to Sievers and that
      Sievers shall execute a personal guarantee in favor of the
      Corporation and Kizer personally guaranteeing the payment of
      $60,000.00 of corporate debt to Central Bank in Storm Lake, Iowa.
              5. Sievers acknowledges and agrees that monthly payments
      of principal and interest on the loan described above are made by
      automatic withdrawal from the Corporation’s checking account and
      that this practice shall continue. These debt payments shall have
      priority over any distributions to Sievers.
              6. Sievers acknowledges and agrees that the shares of stock
      issued to her by the corporation shall be held by said Corporation
      as security for her personal guarantee to pay $60,000.00 of the
      corporate debt and that if she fails to honor or abide by said
      personal guarantee said shares shall remain in the possession of
      the Corporation and shall be subject to forfeiture, in which case
      Sievers shall have no proprietary interest in the Corporation.

The agreement was signed on April 8, 2008, by Kizer “individually as president of

Serenity Salon & Spa, Inc.” and Sievers.

      Sievers that same date signed the following document, entitled “personal

guaranty”:

            I, Kim Sievers, . . . for and in consideration of the agreement
      by Serenity Salon & Spa, Inc. and Susan Kizer to issue 50 shares
      of stock in said Corporation to me do hereby unconditionally
      guarantee payment of $60,000.00 to Central Bank of Storm Lake,
      Iowa, whether evidenced by an open account, note or other
      evidence of debt; however, this guaranty is related to a promissory
      note executed by the Corporation above named in favor of Central
      Bank as Loan Number 4802901 dated April 1, 2008 with a maturity
                                        5

      date of April 1, 2018, in the total amount of $130,000.00. This
      guaranty shall continue in force until such time as the above
      described note is paid in full. The undersigned acknowledges,
      understands and agrees that in the event the Corporation above
      named is unable to pay the promissory note identified above, she
      shall be personally liable to repay said debt to Central Bank up to
      the amount of $60,000.00, plus interest, accrued late charges and
      any other fees and costs that are assessed by the bank. The
      undersigned further acknowledges, understands and agrees that
      the terms of certain documents entitled Guaranty executed by
      Susan Kizer and Mrylon Kizer in regard to Loan No. 4802901 shall
      be incorporated herein by reference and that the undersigned
      obligation to repay the debt at Central Bank shall be governed by
      said terms as well as the terms of this Guaranty.
             I agree that this is absolute and unconditional Guaranty.
      This Guaranty cannot be revoked and will remain in effect until the
      debt at Central Bank, identified above, is paid in full. If I fail to
      abide by the terms of this Guaranty, Serenity Salon & Spa, Inc. and
      Susan Kizer shall have a cause of action against me for actual
      damages suffered as a result of my failure.

      Sievers enrolled in cosmetology school in July 2008. She graduated on

July 9, 2009, and began working at Serenity on July 10, 2009. Karla left Serenity

in August 2009, taking her clients to her new place of part-time employment.

      In July 2010, Kizer left Serenity and opened a salon a few blocks away,

taking her clients with her. Sievers continued to operate Serenity.

      On July 22, 2011, Serenity was sent a notice by Central Bank that Note

4802901 was two payments past due and, because the loan was delinquent, the

bank was demanding payment in full of the principal and accrued interest in the

amount of $57,741.87.

      On July 26, 2011, Sievers was sent a letter asserting she was in default

under the terms of the stock purchase agreement and demanding she vacate the

Serenity premises. She declined.
                                         6

       On December 15, 2011, Serenity and Kizer filed a petition asserting four

causes of action: (1) breach of the stock purchase agreement in that Sievers

“has failed to make payment of the corporate debt to Central bank of Storm Lake,

Iowa,” (2) trespass and unreasonable invasion of use and enjoyment of property

in failing to vacate the Serenity premises “despite having no valid proprietary

interest,” (3) a request for a declaration of rights and status under the stock

purchase agreement in which the plaintiffs asked the court to “determine all

questions of construction relating to the issues described herein and declare the

rights of the parties affected by reason thereof,” and (4) Sievers was a director

and officer of Serenity and had “negligently, carelessly, and intentionally failed to

perform her duties to that [sic] funds and assets of Serenity were mismanaged,

wasted, and diverted.” Further, the plaintiffs alleged Sievers “through intimidation

and acts of insubordination” caused “Kizer to remove herself from the location of

the business” of Serenity, and further that she was “using invalid powers . . . and

using such power illegally and oppressively.”

       Sievers filed an answer, denying the allegations of the petition and

asserting several affirmative defenses, as well as a counterclaim for breach of an

oral agreement. Sievers alleged Kizer misrepresented the financial status of the

corporation, breached an oral agreement to teach Sievers the business and

remain for three to five years, and misused company assets “to her advantage

and detriment of the business.”

       The matter was tried to the court on October 15, 2013. On February 25,

2014, the court entered its ruling on the petition and counterclaim. The court

made these findings of fact:
                                  7

        With this purchase agreement, [Kizer] consolidated the
Serenity debt with Central Bank in the amount of $130,000. [Kizer]
and [Sievers] entered into a stock purchase agreement on April 8,
2008, and [Sievers] signed a personal guaranty to guarantee
$60,000 to Central Bank as identified in Exhibit 2. [Sievers] did not
have the stock purchase agreement or personal guaranty reviewed
by her own legal counsel. Ted Brown prepared the documentation
and had previously represented [Kizer] in other legal matters.
[Sievers] did not make any initial direct payment for the stock
purchase agreement, but assumed $60,000.00 of the debt to
Central Bank.
        [Kizer] did not disclose to [Sievers] that Serenity operated at
a loss each year. In 2007, Serenity lost approximately $30,000. A
review of the tax returns throughout the operation of this business
demonstrated a loss each year. However, [Kizer] would assert this
loss is somewhat a loss “on the books” as [Kizer] and [Sievers]
would receive income for services directly provided to clients. The
court was not presented with [Kizer]’s personal income while
working at Serenity, and [Sievers] earned meager income as set
forth in Exhibit H.
        Any existing good faith to join forces to operate Serenity
quickly disappeared. [Kizer]’s daughter left Serenity in 2009 taking
with her 42% of the clients. [Kizer] thereafter left Serenity in June
of 2010. [Kizer] blames [Sievers]’s relationship with the other
cosmetologists, and she believes this created a hostile work
environment requiring her to open her own salon. [Kizer]’s
departure resulted in a 72% loss of the remaining clients of
Serenity.
        [Sievers] continues to operate the business at its current
location and currently has 7 employees. [Sievers] recently renewed
the lease with the landlord at that location. The parties did not
agree on how to financially deal with the separation and basically
operated independently of each other until [Sievers] stopped
making payments on the note with Central Bank in March of 2011.
At that time both parties positioned themselves with communication
through counsel of record, and this petition was filed by [Kizer] in
December of 2011.
        [Kizer] continued to work with Central Bank and has paid off
the note leaving a personal loan in the amount of $40,848.82 as
identified in Exhibit 3. Testimony appears that perhaps [Kizer] and
or her husband have now paid that remaining loan in its entirety.
[Sievers] continued to pay the day to day bills operating Serenity.
[Sievers] injected a significant amount of money into Serenity to
keep the doors open.
        ....
        . . . Exhibit G demonstrates that when [Sievers] and [Kizer]
began jointly operating, [Sievers] paid $13,375.39 towards the loan
                                        8

      with Central Bank. [Sievers] would assert that after [Kizer] left the
      corporation, [Sievers] continued to make payments to Central Bank
      in the amount of $11,373.30. [Kizer] also continued to make
      monthly payments totaling $75,982.59 since 2008. Exhibit 7
      identifies the bank registry identifying payments. Of note is that
      M[ry]lin Kizer paid $55,269 against the principle of this note on
      December 21, 2010.
              The Court makes a creditability finding based upon the
      record. [Kizer] did not disclose the true financial condition of
      Serenity to [Sievers], although [Sievers] did not do proper due
      diligence to “purchase” one-half of Serenity. [Kizer] repeated in her
      testimony her attitude toward Serenity of “throwing money down a
      rat hole!” The record is clear that [Kizer] arranged this agreement
      with [Sievers] to get out of a losing business. [Kizer]’s testimony
      lacks creditability that she had to leave Serenity.           Almost
      immediately after the sale to [Sievers], [Kizer] attempted to sell her
      remaining one-half of Serenity. She did not disclose this to
      [Sievers] and falsified discussions with other salon owners in Storm
      Lake. She attempted to sell to other Serenity employees. [Kizer]
      began a new salon while still working for Serenity and had product
      for her new salon delivered to the Serenity location.
              [Kizer] and her daughter left Serenity within 2 years of the
      agreement with [Sievers] taking with them the great majority of the
      Serenity clients. [Kizer] did not take steps to dissolve Serenity, but
      instead directly competed against Serenity. [Kizer] was and still
      remains an officer, director and half-owner of Serenity. [Sievers]
      continued to operate the business and pay the lease. The
      remaining assets of Serenity include inventory of $15,752 and
      depreciated assets of $10,167 as evidenced by the 2012 Serenity
      tax return.
              [Sievers] appears creditable and somewhat naive in this
      entire business process.

The court summarized the claims before it:

             The court is asked to make a determination of the competing
      claims by each party in this breakup of Serenity. [Kizer] asserts a
      contractual obligation based upon the stock transfer and personal
      guaranty of $60,000. [Kizer] has the burden of proof to prove this
      claim that [Sievers] has failed to perform by failing to make
      payments on the Serenity debt to Central Bank. [Kizer]’s second
      claim is a request to obtain the assets of the corporation, and the
      third cause of action being a declaration of the rights of the assets
      of Serenity. [Sievers] counters a breach of contract by [Kizer,]
      alleging she failed to perform under the terms of the purchase
      agreement.      [Sievers] has the burden of proof as to the
      counterclaim.
                                        9

      The court concluded Kizer had proved “the basic elements of

reimbursement” and “pursuant strictly to the contractual documentation” Sievers

“would be responsible for $60,000 reimbursement to [Kizer].” However, the court

continued,

      [Sievers] has the burden of proof to establish by a preponderance
      of the evidence that [Kizer] breached the purchase agreement
      justifying her failure to pay the bank loan and relieve her of the
      personal guaranty. [Sievers] asserts the defense of failure of
      consideration. Failure of consideration means a contract is valid
      when formed, but becomes unenforceable because performance
      bargained for has not been rendered. . . . To constitute a complete
      defense to breach of contract claim, alleged failure of consideration
      must be total; total failure of consideration occurs when a party has
      failed or refused to perform substantial part of what the party
      agreed to. In those circumstances, the failure or refusal to perform
      defeats the very purpose of the contract. . . .
              The court further reviews these parties’ actions in this case
      based upon the corporate issue of each party’s duty of loyalty and
      good faith to the corporation. The court initially recognizes that
      directors and officers of the corporation have a fiduciary duty to act
      in all things wholly for the benefit of the corporation. This duty
      limits a director’s or officer’s conduct both as to actions taken on
      behalf of the corporation and actions taken in the fiduciary’s own
      behalf that may have an effect on the corporation. . . .
              The court concludes that [Kizer] has breached the purchase
      agreement with [Sievers]. [Kizer]’s actions after the stock purchase
      demonstrated that she had no intention to follow through with her
      purchase agreement with [Sievers].           She promised that her
      daughter and she would continue to work at Serenity. As soon as
      [Sievers] became a licensed cosmetologist, her daughter left and
      [Kizer] was making preparations to leave, including attempting to
      sell to other third parties. She did not disclose these attempts to
      sell to [Sievers]. Thereafter, she began preparation of opening her
      own salon and left and actually had product for her new salon
      delivered to the Serenity location. [Kizer] has continued to operate
      as an officer and director of the corporation. The court did not
      receive any proof of a resignation by [Kizer] from the Serenity
      Corporation. [Kizer] continued to make monthly payments towards
      the outstanding obligation; however, [Kizer] did not work at the
      Serenity location. To the contrary, she directly competed against
      Serenity and [Sievers]. She removed a vast majority of the
      clientele who she serviced at her new salon.
                                         10

              Therefore, the court concludes that under both causes,
       [Sievers] has established by a preponderance of evidence that
       [Kizer] breached the purchase agreement with [Sievers] and
       breached her duty of loyalty to Serenity. She did not continue to
       work at Serenity and assist [Sievers] with learning the salon
       business. She did not resign as a director or officer and directly
       competed against Serenity.

The district court dissolved the corporation and ordered judgment against Sievers

for the value of Serenity’s inventory and equipment less the amount Kizer had

charged on the corporate credit card, which had been paid by Serenity.

       Kizer appeals, contending, first, the issue of dissolution of the corporation

was not raised by the pleadings or tried by consent, and that Sievers had not

proved Serenity should be dissolved. Kizer also contends Sievers failed to plead

a breach of fiduciary duty by Kizer. She argues Sievers breached the stock

purchase agreement, there was lack of sufficient evidence of the existence of an

oral contract, and the trial court’s findings of fact are not supported by substantial

evidence. With the exception of dissolving the corporation, we agree with the

district court’s general disposition of the case, though for different reasons.

       III. Discussion.

       A. Asserted failure to plead.

       Kizer complains the trial court erred in dissolving Serenity because

Sievers failed to plead grounds for or request that Serenity be dissolved, or that

Kizer breached a fiduciary duty. Iowa courts are committed to notice pleading.

See Wells Dairy, Inc. v. Am. Indus. Refrigeration, Inc., 762 N.W.2d 463, 474
                                            11

(Iowa 2009).4 However, the remedy entered here was not sought by any party,

and we agree that under the facts found by the trial court, dissolving the

corporation was unnecessary, which we will address later.5

       B. Failure of consideration.

       The trial court concluded that Sievers breached the stock purchase

agreement, which entitled Kizer to contribution. Sievers, however, had asserted

4
  “We continue to rely upon notice pleading in Iowa. As such, it is not necessary to raise
a specific theory of liability, but only to state the basis in broad, general terms. Iowa R.
Civ. P. 1.402(2)(a).” Wells Dairy, 762 N.W.2d at 474.
5
   The Iowa Business Corporation Act, Iowa code chapter 490 (2013), authorizes the
district court to dissolve a corporation in a “proceeding by a shareholder” if “any of the
following conditions exist”:
                  (1) The directors are deadlocked in the management of the
         corporate affairs, the shareholders are unable to break the deadlock, and
         either irreparable injury to the corporation is threatened or being suffered,
         or the business and affairs of the corporation can no longer be conducted
         to the advantage of the shareholders generally, because of the deadlock.
                  (2) The directors or those in control of the corporation have acted,
         are acting, or will act in a manner that is illegal, oppressive, or fraudulent.
                  (3) The shareholders are deadlocked in voting power and have
         failed, for a period that includes at least two consecutive annual meeting
         dates, to elect successors to directors whose terms have expired.
                  (4) The corporate assets are being misapplied or wasted.
Iowa Code § 490.1430(b).
         Kizer’s petition alleged Sievers was a director and officer of Serenity who
“negligently, carelessly, and intentionally failed to perform her duties to that funds and
assets of Serenity were mismanaged, wasted, and diverted.” The petition asked that the
court “determine all questions of construction relating to the issues described herein and
declare the rights of the parties affected by reason thereof.” On appeal, Kizer states,
“The day to day operation of the business had been made impossible.”
         Sievers, in turn, alleged Kizer “changed the sharing of the business income at
her sole election,” “had use of a corporate credit card which she used for payment of her
own personal bills and expenses,” “was in the process of purchasing materials in
anticipation of opening a new salon on her own, and intended to go into competition with
Kim Sievers and Serenity Salon & Spa, Inc.,” did “start[] a new salon,” and on June 10,
2010, “start[ed] a new salon,” “used Serenity’s computer to access clients’ addresses
and sent out notice of her intended move,” “took 72% of the client[ele] of Serenity,” and
acted in direct competition with Serenity, as a result of which the corporate entity
suffered.
         The court heard the testimony of purportedly equal shareholders who were at
odds and conducting business in direct competition with one another. These allegations
would allow the court to dissolve the corporation. However, at trial, Sievers testified, “I
would like to continue being the sole manager and owner and continue what I’ve
accomplished over the last three years.”
                                          12

she was relieved of her obligations under the stock purchase agreement and

personal guaranty due to a failure of consideration. The district court ruled this

contention “lacks any weight to a determination in this controversy.” In so ruling,

the court erred as a matter of law.

       A failure of consideration means a contact is valid when formed but

becomes unenforceable because the performance bargained for has not been

rendered. Johnson v. Dodgen, 451 N.W.2d 168, 172 (Iowa 1990).

               To constitute a complete defense to a breach of contract
       claim, the alleged failure of consideration must be total. A total
       failure of consideration occurs when a party has failed or refused to
       perform a substantial part of what the party agreed to do. In these
       circumstances the failure or refusal to perform defeats the very
       purpose of the contract.

Id.

       Here, the consideration for Sievers’s promise under the personal guaranty

was “the agreement by Serenity Salon & Spa, Inc. and Susan Kizer to issue 50

shares of stock in said Corporation.” No stock was ever issued.6 Cf. id. at 174-

75 (acknowledging that “[e]ven though a seller retains physical possession of the

stock as collateral under a stock purchase agreement, there may be constructive

delivery of the stock from the seller to the buyer” and finding constructive delivery

where stock was reissued in the buyer’s name but held as security).              Kizer

herself testified no shares of stock were ever issued to anyone.7             Sievers

6
  Apparently, stock certificates were prepared by an attorney, but they were not dated,
signed, or delivered, constructively or otherwise. Further there was no allegation that
shares without certificates were authorized by the corporation.             See Iowa
Code §§ 490.625–.626. There were also no incidents of ownership such as where
properly issued stock was simply held as collateral. See Johnson, 451 N.W.2d at 174;
see also Iowa Code § 490.625 (providing each stock certificate must be signed by two
officers or the board of directors).
7
  Kizer testified:
                                         13

nonetheless continued to operate the business of Serenity and contributed more

than $60,000 of her own funds to the business while Kizer and the corporation

seemingly abandoned the business.8 Because there was a complete failure of

consideration constituting a breach of the agreement, Sievers was discharged

from performance under the personal guaranty. Johnson, 451 N.W.2d at 172

(stating a failure of consideration discharges performance). Thus, like the district

court, though for a different reason, we conclude Sievers is relieved of

performance under the personal guaranty.

       C. Request that the court declare the rights of the parties.

       The district court addressed the request that it “declare the rights of the

parties affected” as follows:

               The court must then declare the rights of [Kizer] and
       [Sievers] in Serenity based upon the above conclusions. The court
       concludes that Serenity should be dissolved and the assets of
       Serenity be transferred to [Sievers]. [Sievers] is relieved of the
       guaranty of $60,000 based upon [Kizer]’s breach of the agreement.
       The Court does not make this conclusion based upon any covenant
       not to compete. [Kizer] was free to resign from Serenity and/or
       dissolve the corporation when she decided to open a new salon.
       [Kizer], however, did not do so. This caused the continuing
       financial drain upon both parties. [Kizer] did continue to pay the
       outstanding loan to Central Bank. However, [Kizer] fails to
       recognize that [Sievers] continued to operate the business; paying

                Q. Okay. So let me ask you this: How could you give my client 50
       shares of stock if, in fact, you didn’t have 50 shares of stock? Just can
       you answer that for me? A. No.
                Q. Okay. Did anyone else you say hold any shares of stock in this
       corporation? Obviously, there were none issued, so nobody could hold
       any shares; right? A. No.
                ....
                Q. Do you agree with me that it was—what you stated in
       Plaintiffs’ Exhibit 1 [the stock purchase agreement] was not accurate
       because there were no shares of stock issued; right? A. I guess.
8
  We reach this conclusion because neither Kizer nor the corporation contributed any
funds to keep the business afloat after Kizer left the business and siphoned customers
from the business.
                                         14

       the lease and injecting over $60,495.27 since [Kizer] leaving
       Serenity.
               [Sievers], however, would be unjustly enriched if the court
       stopped at that juncture in this dispute between the parties.
       [Sievers] would receive equipment and inventory of Serenity
       without payment since she is being relieved of the personal
       guarantee. The court concludes that based upon the 2012 tax
       return, inventory and equipment is valued at $25,919.00. Further,
       this would be subtracted by the personal purchases that Serenity
       paid for [Kizer] in the amount of $7027.65. Judgment, therefore,
       will be entered against [Sievers] in the amount of $18,881.35.

       While we agree with much of the trial court’s settlement of the issues, we

disagree that Serenity should be dissolved.        Sievers requested that she be

allowed to continue to operate the business as she had done for the past several

years. It continues to employ other workers. Sievers renewed the lease under

her name for a five-year term on April 2, 2013.          Under the circumstances

presented here, because no corporate stock ever issued, we treat the

relationship between Serenity, Kizer, and Sievers as one of joint venture.9 See

Farm-Fuel Prods. Corp. v. Grain Processing Corp., 429 N.W.2d 153, 158 (Iowa

2012) (“[A] joint venture may arise by implication.”). As a party in a joint venture,

Kizer had a duty of good faith. See Larken, Inc. v. Larken Iowa City Ltd. P’ship,

9
  In Peoples Trust & Savings Bank v. Security Savings Bank, 815 N.W.2d 744, 756
(Iowa 2012), the court stated:
       We have held that “no particular form of expression or formality of
       execution” is necessary to establish a joint venture, which may be implied
       “in whole or in part from the conduct of the parties.” Pay-N-Taket [, Inc. v.
       Crooks, 145 N.W.2d 621, 625 (Iowa 1966)].
               We have characterized a joint venture in a number of ways. In
       Brewer [v. Central Construction, Co. 43 N.W.2d 131, 136 (Iowa 1950)],
       we said:
               A joint adventure is defined as an association of two or
               more persons to carry out a single business enterprise for
               profit; also as a common undertaking in which two or more
               combine their property, money, efforts, skill or knowledge.
       . . . [A] gateway requirement of a joint venture is a showing that the
       participants have agreed to share in the profits and losses.
                                             15

589 N.W.2d 700, 704 (Iowa 1999) (“‘[T]he duty of good faith is not limited to the

familiar categories such as partnership, joint venture, and agency; it permeates

the law wherever a relationship of trust and confidence exists.’” (citation

omitted)).

       The trial court found Kizer breached her fiduciary duty to Serenity. While

the trial court based its decision on its “recogni[tion] that directors and officers of

the corporation have a fiduciary duty to act in all things wholly for the benefit of

the corporation,” see Midwest Janitorial Supply Corp. v. Greenwood, 629 N.W.2d
373, 375 (Iowa 2001),10 the following findings are equally applicable to Kizer’s

duty as a joint venturer. Kizer had a fiduciary duty to Serenity and Sievers. See

Kurtz v. Trepp, 375 N.W.2d 280, 283 (Iowa Ct. App. 1985) (“A fiduciary

relationship exists between directors of a corporation. A fiduciary relationship

also exists between joint venturers, such as partners.” (citation omitted)); see

also Greenberg v. Alter Co., 255 Iowa 899, 902, 124 N.W.2d 438, 440 (1963)

(“There is no question but joint venturers like partners owe the duty of finest

loyalty and such loyalty continues throughout the life of the venture and its

dissolution.”). The trial court as fact finder determined Kizer “began a new salon

while still working for [the business] and had product for her new salon delivered

to the [the business] location.” It also found Kizer left [the business] earlier than

promised, taking with her the “the great majority of the [the business] clients;

Kizer remained an officer, director, and half-owner of Serenity while directly

competing against [the business]; and Kizer used a corporate credit card for her

10
  “[D]irectors and officers of a corporation have a fiduciary duty to act in all things whole
for the benefit of the corporation.” Midwest Janitorial, 629 N.W.2d at 375.
                                         16

own benefit. The trial court concluded Kizer breached the purchase agreement

and her duty of loyalty to Serenity. For the same reasons, we conclude there is

substantial evidence that Kizer breached her fiduciary duty of loyalty to both

Serenity and to Sievers.

       D. Settlement of rights.

       The parties asked the district court to determine their rights and status.

They had no agreement to resolve those rights in the event their plans were

unsuccessful. Kizer and Sievers believe they are each owed a significant sum

from the other. The judgment may be entered as an accounting upon the

termination of a joint venture. See Jensen v. Schreck, 275 N.W.2d 374, 388

(Iowa 1979).

       Kizer requested the trial court to award her the assets of the corporation.

Because we find it unnecessary to dissolve the corporation, the corporate entity

shall be awarded to Kizer.        However, like the district court, we conclude

permitting Sievers to maintain the ongoing business and equipment is

reasonable and equitable under these facts. Sievers received no stock, kept the

salon business going, invested substantial funds into the business, and paid

down the corporate debt. During this time, Kizer took actions reflecting an intent

to abandon both the agreement between the parties as well as the business, but

for the desire that Sievers continue making payments on the corporate debt and

other business monthly obligations.11      The corporation stood idly by without

11
  It appears that without Sievers’s active participation, the very existence of the
business would be questionable. We note that Kizer’s trial brief acknowledges Sievers
had complete control of the business from June 2010 through December 2012. The
                                         17

providing any influx of moneys to aid the business, notwithstanding Sievers’s

major contributions and payments toward corporate debt and obligations.

       Although the district court awarded the business assets to Sievers, it

concluded Sievers would be unjustly enriched without some offsetting payment

for the inventory and equipment valued by the district court in the sum of

$25,919. After reducing the value of those assets by the credit card debt for

personal purchases made by Kizer in sum of $7027.65, the court imposed

judgment against Sievers and in favor of Kizer in the generous amount of

$18,881.35. On appeal, Sievers has asked that we affirm the judgment entry.

       Unfortunately, the judgment should have been entered in favor of the

corporation, as the corporation, not Kizer, owned the assets and inventory of the

business. Because the judgment should have been in favor of the corporation,

Sievers is not entitled to an offset for the credit card debt incurred by Kizer but

paid by the business. However, we believe Sievers is entitled to an offset or

credit at least equal to the same amount because of her contributions to the

business and for one-half of all payments made toward the corporate debt from

the beginning of the joint venture as she received no stock. Accordingly, we

remand with directions to the district court to correct the judgment entry showing

the judgment is in favor of the corporation, not Kizer.

       Upon our de novo review and in light of Kizer’s and the corporation’s

actions and inactions, Sievers’s cash inputs to Serenity, and Sievers’s payments

toward the corporate indebtedness, we find no reason to disturb the trial court’s

evidence also suggests that other employees of the business sided with Sievers in the
parties’ dispute.
                                         18

resolution of the rights as between Kizer, Sievers, and the corporation, except

the corporation shall not be dissolved and the judgment entry corrected. Kizer

shall retain whatever rights she has to the corporate entity. We further declare

that Sievers shall have no rights to the corporate entity or corporate name but

shall retain the business and its assets and inventory. All other terms of the

district court order not inconsistent with these terms are affirmed.

       AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH

DIRECTIONS.