Court Opinion

ID: 4681736
Source: CourtListenerOpinion
Date Created: 2021-04-28 15:05:35.395985+00
Date Added: 2024-06-11T08:04:02.865451
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 19-2127
                               Filed April 28, 2021

EVELINE JOHNSON, Individually, and in her capacity as Executor of the
Estate of GREGORY ALAN SOMERS, Deceased,
      Plaintiff-Appellee,

vs.

DENNIS D. SOMERS and SOMERS FARM, L.L.C., an Iowa Limited Liability
Company,
     Defendants-Appellants.
________________________________________________________________

       Appeal from the Iowa District Court for Buena Vista County, Don E.

Courtney, Judge.

       The defendants appeal from the district court’s ruling in this action for an

accounting and declaratory judgment. AFFIRMED AS MODIFIED.

       David P. Jennett of Dave Jennett, P.C., Storm Lake, for appellants.

       Richard H. Moeller of Moore, Corbett, Heffernan, Moeller & Meis, L.L.P.,

Sioux City, for appellee.

       Heard by Bower, C.J., and Doyle and Mullins, JJ.
                                           2

BOWER, Chief Judge.

       Dennis Somers (Dennis) and Somers Farm, L.L.C. (Somers Farm) appeal

the district court’s ruling in this action for an accounting and declaratory judgment

brought by Eveline Johnson (Eveline), individually and as executor of the estate of

Gregory Somers (Estate), in relation to the Estate’s interest in Somers Farm.1 The

defendants contend equitable relief for partial liquidation should not be allowed,

the court’s ruling provides for a double recovery of $75,000, and the interest rates

and dates of accrual should be modified.

       We affirm the court’s decree in all respects with one exception. We modify

the language of decretal paragraph 2(e), which shall provide: “Interest on the

Capital Interest amount shall accrue at the statutory rate for interest on judgments

from and after November 29, 2019.”

I. Background Facts and Proceedings.

       Gregory Somers (Greg) and his brother Dennis were involved in a number

of business dealings together for many years, including telecommunications

ventures in Greg’s home state of Texas and telecommunications businesses and

property investments in Dennis’s home state of Iowa. At issue here is Somers

Farm, an Iowa limited liability company.

       Greg died on September 19, 2011. On November 16, Dennis sent an email

to B. Bruce Johnson “to execute the Somers Farm LLC buy sell agreement.” Two

letters were attached to the email. In one, Attorney John Bjornstad wrote:

              The purpose of this letter is to inform you that Dennis Somers
       intends to invoke the Somers Farm, L.L.C. Buy-Sell Agreement.

1At oral argument, the Estate acknowledged there are no individual claims made
by Eveline and the only claims involve the Estate.
                                        3

               Dennis, [(Dennis’s wife)] Kathryn and Greg were the original
      members of [Somers Farm]. Dennis and Kathryn each owned a
      [forty-five] percent interest in [Somers Farm] while Greg owned a
      [ten] percent interest, Kathryn’s interest transferred to Dennis upon
      her passing away in 2009.
               The Agreement states that the initial value of Greg’s interest
      is set at $52,500.00 in 2003. The parties did not adjust this value in
      subsequent years. Dennis is proposing a variation in the calculation
      of the purchase price for Greg’s interest in the LLC.
               Attached to this letter is a letter from Dennis to [Eveline,
      Greg’s life partner,] affirming Dennis’[s] intentions to purchase
      Greg’s interest in the LLC, Dennis has set the equity of the LLC at
      $575,770.00. Greg’s 10% interest being $57,577.00. Listed among
      the liabilities is a general business debt of Dennis and Greg’s in the
      amount of $148,000.00. This debt was generated by Net/Com but
      the bank required that the debt be secured by [Somers Farm] giving
      a mortgage to the Webb 150 acres. Dennis has personally assumed
      this debt, Greg’s portion of said debt being $74,016.84. Dennis
      proposes that his overpayment of $16,439.84 ($74,016.84 less
      $57,577.00) be held over to see if the Net/Com debt can be settled
      by another of Dennis and Greg’s businesses.

      Dennis wrote to Eveline:

              In reference to the Personal Guarantee’s that Greg and I
      signed on the Net/Comm[2] line of credit, the loan has been inactive
      for [twelve] months. In the last [two] years we have managed to pay
      interest but have not been able to reduce the principal, this was set
      up to be a revolving line of credit. The amount was $150,000 and
      we made one $5000 interest and principal payment back in June just
      before we were served with a judgment and lien on the bank account
      from BLS for approximately $60,000. These circumstances have
      made it very difficult for the bank to even think Net/Com has or ever
      will have the ability to repay the debt. The total payoff is
      $148,033.68, that is principal and interest to date. Since Net/Comm

2  Bjornstad’s reference to Net/Com and Dennis’s references to Net/Comm or
Net/Com all appear to mean Net/Comm Services Corporation, a Texas
Corporation formed on July 31, 2003. Its registered agent is B. Bruce Johnson
(Johnson) with a mailing address of Dallas, Texas. The articles of incorporation
list Dennis as the sole initial director. Dennis is listed as the President of the
corporation in other official Texas filings.
        Eveline testified Net/Comm was “a telecommunications company that sold
originating and terminating traffic to other carriers, domestic and I believe there
might have been international involved.” In 2010, Net/Comm’s tax documents
reported Dennis owned 100% of the shares. Dennis testified Greg was the CEO
of Net/Comm.
                                            4

       has absolutely no way of paying this debt now or in the future the
       bank has asked that the guarantors pay it in full. In an effort to
       preserve ownership of the 150 acres of hunting land that I purchased
       in 1996 I am paying the full amount of the loan off immediately. I
       can’t risk losing the relationship with the bank.
               To simplify our individual family estates, trusts, wills etc. I have
       made the decision to execute the buy sell agreement as agreed upon
       by Kathy, Greg and I by the filing of the attached articles containing
       the buy/sell agreement signed and filed in 2004. . . . I have attached
       a copy of a letter from John Bjornstad that serves as my official
       request on this matter.

       Johnson3 responded by email dated November 18:

       Hi [Dennis], I have read your email and I think there is a
       misunderstanding. I was Greg[’s] attorney and represented his
       companies over the years. I am not the attorney for the estate, I am
       not [Eveline’s] attorney and I think your action may be premature. No
       probate has been filed, the will has not been confirmed, [Eveline] has
       not been appointed the executrix. So there is nothing that can be
       done for now.

       Eveline was appointed the executor of the Estate on March 5, 2012.4 As

executor, Eveline was required to determine the assets and liabilities of the Estate.

Eveline engaged Texas attorney Robert Frisch to assist her as executor.

       On September 17, 2013, Frisch wrote to Dennis noting Eveline requested

all legal files and documents Dennis and others removed from Greg’s office “in

violation of the orders of Bruce Johnson that nothing be removed from the home,

and that you were to only make copies of documents needed for the continued

business operations of Net/Comm and 800 Special Services.” The letter also

noted Dennis had not responded to a May 2, 2013 subpoena, had produced no

3B. Bruce Johnson and Eveline Johnson are not related.
4Eveline submitted Greg’s will to the Texas probate court, which appointed her
executor under the terms of Greg’s will.
                                          5

documents, and had not appeared in court on June 29 per that subpoena. The

letter continues:

               Also, we need to resolve with you the issue of the interest
       Greg Somers had in Somers Farm, LLC. In a letter dated November
       16, 2011, your attorney John Bjornstad, on your behalf, wrote to
       Bruce Johnson advising that Greg owned only a ten percent (10%)
       interest and that you and your wife, Kathryn, owned ninety percent
       (90%). We believe that position is controverted in the documents
       that you removed from Greg’s home. . . .
               ....
               Accordingly, it is the Estate’s position that the Estate of Greg
       Somers does own fifty percent (50%) of Somers Farm, LLC.; that
       Somers Farm, LLC., had no debt against it after the mortgage to the
       bank was paid; that you made no demand upon the Estate to pay a
       portion of the debt and have filed no claim with the Estate. Ms.
       Johnson does not dispute your right to purchase Greg’s interest if, in
       fact, you can establish that the Buy/Sell Agreement was signed and
       in effect at Greg’s death. In September, 2011, you provided to Bruce
       Johnson a Buy/Sell Agreement which was not dated.
               Furthermore, your proposed buyout of the interest of the
       Estate in Somers Farm, LLC., has been rejected by the Executrix.
       Also, your claim, stated by your attorney, that Greg Somers owed
       you or the LLC $74,016.84 is rejected.

       On May 12, 2015, Eveline filed this action requesting an accounting of

Somers Farm and seeking a declaration that the Estate had a fifty-percent interest

in Somers Farm. The defendants filed an answer, asserting an accounting of

assets would be produced and contending Greg had only a ten-percent interest in

Somers Farm. The defendants also asserted a number of affirmative defenses

and a counterclaim for a declaration that Dennis be determined to be the sole

member of Somers Farm by virtue of a buy-sell agreement exercised on

November 14, 2011, and an order that the Estate indemnify Somers Farm “for any

amounts paid to or on behalf of Gregory Somers in excess of his capital account

and for attorney’s fees and court costs required to be paid in connection to

Plaintiffs’ lawsuit.”
                                            6

       In November 2017, the Estate was granted leave to file an amended

petition, and the defendants were granted summary judgment on the Estate’s claim

for derivative action but denied summary judgment on other grounds.

       Trial was held July 11, 12, and 13, 2018. Eveline testified all of Greg’s

papers concerning his businesses had been taken out of his office after the funeral

and she had been required to attempt to reconstruct them from various sources.5

The Somers Farm entity was originally set up in 2002 as a partnership—Somers,

Ltd.—with Greg owning fifty percent, Dennis owning twenty-five percent, and his

wife Nada Kathryn (Kathy) Somers owning twenty-five percent. Title to Iowa land

owned by the three individuals was placed in that partnership.

       On March 10, 2004, “Articles of Organization for Somers Farm,” the limited

liability company, were signed by Dennis as organizer and filed with the Iowa

Secretary of State. Article VII provides:

               Managers of the limited liability company shall not be liable to
       the limited liability company or its members for monetary damages
       for breach of fiduciary duty as a manager; provided, however, that
       this limitation of liability does not apply to any of the following;
               1. Breach of the manager’s duty of loyalty to the limited liability
       company or its members.
               2. Acts or omissions not in good faith or which involve
       intentional misconduct or a knowing violation of law.
               3. Transaction from which the manager derives an improper
       personal benefit or a wrongful distribution in violation of Iowa Code
       Section 490A.807 [(2003)].

5 Eveline testified that in 2015, she found Somers Farm documents in a box in her
attic. Included in that box was a November 22, 2003 letter to Dennis and Greg
from Bjornstad with enclosed proposed operating agreement and a buy-sell
agreement. The proposed buy-sell agreement listed the interest of the parties as
Dennis, twenty-five percent; Kathy, twenty-five percent; and Greg, fifty percent.
The documents were not signed.
                                         7

      Between August and September 2004, property owned by Somers, Ltd. was

deeded to Somers Farm. Additional properties owned by Dennis, Kathy, and Greg

were also deeded to Somers Farm.

      Eveline obtained a signed Somers Farm operating agreement, dated

June 30, 2004.     The agreement was signed by Dennis, Kathy, and Greg.

Section 2.04 of the operating agreement provides: “The names and addresses of

the Members are set forth on Appendix A to this Agreement.” And section 4.01

provides: “The Members listed on the Appendix to Section 2.04 have contributed

the consideration to the capital of the Limited Liability Company and have received

the Units representing either a Capital Interest or Profits Interest as set forth on

Appendix A.”     In an October 1, 2012 communication between Bjornstad and

Eveline’s counsel, Bjornstad wrote “there was no appendix to the Operating

Agreement.” Bjornstad also noted: “[t]here are no books as to each member’s

capital account” and “[t]here are no accounting records but I am enclosing

statements of income and expenses from 2005 through 2011.”

      In 2005, Somers Farm issued a tax document (Schedule K-1) to Greg noting

his share of Somers Farm was fifty percent. Eveline submitted additional tax

documentation that Greg was noted as a fifty-percent member of Somers Farm

from 2005 through 2010. As managing member, Dennis was responsible for those

filings. Eveline also submitted USDA farm operating plan documents—signed by

Dennis—listing Greg as a fifty-percent member in 2009 and 2010.            In 2012,

Somers Farm’s USDA farm operating plan listed “Gregory A Somers Estate” as
                                                    8

having a fifty-percent share; Dennis as a twenty-five-percent share, and Linda

Somers, “spouse of Dennis Somers,”6 as having a twenty-five-percent share.

           Eveline testified the assets of Somers Farm at the time of Greg’s death

included machinery and equipment and three recreational and hunting properties

in Iowa known as (1) the Cabin and 20 acres, (2) the Doc Larson 80, and (3) the

Webb 150. Eveline testified Somers Farm was owed the remaining proceeds from

an installment sales contract (the Hoover contract), the final annual installment

being due April 1, 2014.

           In response to Eveline’s request for an accounting, Dennis provided the

following one-page document, which he acknowledged contained estimated

property values at what he “felt” was a “fair price.”

2011 Somers Farm LLC Assets
    Cash in bank                                $   14,000.00
    Crop in elevator                            $     2070.00
    Equipment                                   $
                                 IH Tractor     $        8500.00
                            Polaris Ranger      $        7500.00
                              Utility Trailer   $        1700.00
                        Bob Cat Skidloader      $        7000.00
    Land                                        $
                       Cabin on 20 acres        $   185,000.00
                          Doc Larson 80         $   290,000.00
                 Webb 150 acres wetlands        $   225,000.00

                               Total Assets     $   747,770.00
Liabilities
                   Note to FarmCredit Doc       $       14,000.00   Due on Jan 1, 2012
                                                                    Greg and [Dennis] used land as
                                                                    collateral and signed personally on
                       LOC to CS Webb 150       $   148,238.39      this loan 50/50
                                                                    These were paid in September and
                         Credit Card Taxes      $        3000.00    card is due Oct 15

                            Total Liabilities   $   165,238.39
Total Equity
                                                $   575,531.61

6   Kathy died in 2009, and Dennis later married Linda.
                                            9

Buy/Sell Settlement Amounts
    Community State Loan                $    148,033.68
    Greg’s Estate Portion               $     74,016.84
    Buy/Sell Amt                        $     57,577.00
    Amt owed to Denny                         16,439.84

          Dennis used Community State Bank (CSB)7 for the banking needs of both

Somers Farm and Net/Comm Services. In 2007, Net/Comm Services obtained a

line of credit from CSB. CSB required Greg and Dennis to co-sign a note to secure

the $150,000 line of credit. On August 21, 2009, Somers Farm entered into a

hypothecation agreement with CSB signed by Dennis, which provides in pertinent

part, “In consideration of your making, renewing, or extending a loan or loans to

[Net/Comm Services,] Dennis D. Somers and Greg A. Somers, hereinafter referred

to as the borrower, for which the [Webb 150] belonging to me has been tendered

to you as collateral security.” Greg and Dennis renewed the promissory note for

the Net/Comm Services line of credit on November 10, 2010. The CSB records

for Net/Comm Services indicate the amount owed on the line of credit on

November 19, 2010, was $148,238.89.

          Eveline testified she learned that on November 9, 2011, Dennis obtained

$225,000.00 from 1713 McNaughton Way, LLC (McNaughton Way). On March 7,

2012, McNaughton Way recorded a real estate mortgage between McNaughton

Way and Somers Farm on the Webb 150 in the amount of $225,000.00. In 2015,

Eveline was notified the March 7, 2012 mortgage was in default and was subject

to voluntary foreclosure. The notice indicated a thirty-day redemption period and

a debt owing of $236,613.70 plus interest.

7   Referred to by Dennis as CS in the list of assets and liabilities.
                                           10

         Eveline testified she learned of the Somers Farm buy-sell agreement after

Johnson sent her a copy of the September 2011 email from Bjornstad and Dennis.

She testified Dennis did not follow any of the procedures set out in the buy-sell

agreement.8

         Eveline learned about the Hoover contract while carrying out her job as

executor.

8   The buy-sell agreement Dennis presented stated, in part:
                                      Section Three
                                     Death of Member
                On the death of any member, the other members shall
         purchase the member’s entire interest in the membership for a price
         and on terms as determined in Section Four.
                                       Section Four
                                   Determination of Price
                It is agreed that the current fair market value of the
         membership’s capital assets, including good will, is Five Hundred
         Twenty-five Thousand dollars ($525,000.00); and therefore, the
         value of each member’s interest is as follows:
                     Dennis D. Somers                    $236,250.00
                     Nada Kathryn Somers                 $236,250.00
                     Gregory A. Somers                    $52,500.00
                The members agree to redetermine these values within thirty
         (30) days following the last day of December and on the last day of
         December of each year with the first revaluation to take place no later
         than January 1, 2004. The redetermined value shall be signed by
         the members and attached and made part of this agreement.
                If the members do not make such a redetermination for any
         twelve (12) month period, the last previously stipulated value shall
         control, except that if the members fail to make a redetermination for
         any twelve (12) month period and death occurs, then the purchase
         price shall be the deceased or disabled member’s capital account as
         shown on the books of the membership at the beginning of the fiscal
         year in which the member’s death occurred, adjusted as follows:
                The capital account shall be increased or decreased by the
         deceased members’ share of membership profits or losses from the
         beginning of the membership year to the date of death and
         decreased by the deceased partner’s withdrawals during that period.
                                         11

       Bjornstad testified he prepared the legal documents and tax documents for

Somers Farm over the years, relying on information provided to him by Dennis.

Bjornstad testified the property sold to the Hoovers by way of the Hoover contract

had been paid off early in 2012, the balance at that time being about $14,195. With

regard to the buy-sell agreement, Bjornstad testified he discussed that with Dennis.

He acknowledged the procedures of the agreement had not been followed when

Kathy died or when Linda became a member. He acknowledged Dennis was

proposing a method other than what was provided in the buy-sell agreement in his

offer to Eveline. When asked why Dennis did not “just make the calculation as set

forth in the buy-sell agreement,” Bjornstad stated: “I don’t think we discussed that.

I think we just kind of went with what [Dennis] thought was going to be a good

value for the property.”

       The Estate called Dennis to testify. He acknowledged he was responsible

for the various tax and USDA filings for Somers Farm that showed Greg or his

estate was a fifty-percent member of the limited liability company.

       With respect to the loan from McNaughton Way, Dennis testified, “[T]he

check from McNaughton Way was made out to Somers Farm, LLC, went into

Somers Farm, LLC. I could have put it from Somers Farm, LLC into Net/Comm, I

guess, via a loan.” Dennis thus acknowledged the $148,238.89 payment he made

to CSB on November 10, 2011, represented an unwritten loan by Somers Farm to

Net/Comm Services and should be considered an asset of Somers Farm.

       When asked what the purpose was for the March 7, 2012 mortgage Somers

Farm granted to McNaughton Way, Dennis stated it was “[t]o collateralize the
                                         12

[November 2011] loan for [$]225,000 from McNaughton Way.” His testimony

continued:

              Q. So in addition to the mortgage given to McNaughton Way
      by Somers Farm, LLC, did—excuse me, did Somers Farm, LLC also
      sign a note obligating the company to pay $225,000 to McNaughton
      Way? A. Yes.
              Q. And that was different from what the situation was when
      the loan was solely the obligation of you and Greg and Net/Comm
      Services Corporation; correct? A. Correct.
              Q. And how much was the loan that had to be paid to [CSB]
      by you, Greg and Net/Comm Services Corporation? A. I believe it
      was a little over $148,000 was the payoff.
              Q. The—the money you borrowed from McNaughton Way
      was in the amount of $225,000; correct? A. That’s correct.
              Q. So there was an excess—there was an additional $75,000
      over and above the amount that had to be paid to [CSB]? A. Yes,
      sir.
              ....
              Q. What happened to that money? A. Transferred that into an
      interest-bearing account to be able to use for ongoing expenses in
      the forward years.
              ....
              Q. Okay. So Somers Farm, LLC had a savings account as
      well? A. I don’t believe so. I believe that was an account only in my
      name.
              Q. So you transferred to this to your savings account? A. Yes,
      I believe so.

      On November 29, 2019, the district court entered its findings of facts,

conclusions of law, and decree. We set out pertinent fact findings here:

             34. . . . . The court therefore finds that the $75,000 that Dennis
      caused [Somers Farm] to transfer to him was wrongful to other
      members, or it constituted a cash distribution or withdrawal of capital,
      which was made without a corresponding cash distribution or
      withdrawal to the other members of the limited liability company.
             35. When Nelson [owner of McNaughton Way] gave Dennis
      the $225,000 on November 11, 2011, there was no written
      agreement, oral agreement, note, mortgage, or other documentation
      evidencing the terms of the transaction. Therefore, there is nothing
      to show that [Somers Farm] was a borrower at that time. Not until
      March 7, 2012, four months after, did Dennis cause him and [Somers
      Farm] to sign a note in favor of McNaughton Way, and cause
      [Somers Farm] to secure that note with a mortgage on the Webb 150.
                                   13

Dennis claims he had the authority to take this action on behalf of
[Somers Farm] as its manager, pursuant to various provisions of the
Operating Agreement.
       36. When defining and considering Dennis’[s] authority and
duties as manager of [Somers Farm], he might be able to persuade
the court that Greg consented to or acquiesced in those actions
before he died. The same cannot be said about those same rights
and obligations as they apply to Eveline and Estate. Instead, the
evidence shows, and the court finds that within days or weeks after
September 19, 2011, Dennis knew that Eveline disputed his position
regarding the Buy-Sell Agreement; that soon after March 5, 2012,
Dennis knew Eveline had been appointed as executor of Estate; that
Dennis knew by at least by August 23, 2012, that Estate was
demanding to be treated as a transferee of . . . Greg’s membership
interest; and that by May 12, 2015, Dennis had been sued by Estate
for an accounting, breach of fiduciary duty, and other claims. Any
one of these circumstances put Dennis on notice that Eveline and
Estate expected him to act as a fiduciary and perform his duties
according to the terms of the Operating Agreement and the law
applicable to limited liability companies.
       37. Given this change in circumstances, Dennis’[s] actions on
March 7, 2012, must be measured according to the terms of the
Operating Agreement and applicable law. Dennis points to the
enumeration of powers under Section 6.02 of the Operating
Agreement. However, each of those specific authorities are
prefaced with the requirement that they are granted as “necessary,
proper, convenient or advisable to effectuate and carry out the
purposes, business and objectives of the Limited Liability Company.”
Given the findings in paragraph 34 above, the most egregious being
the $75,000 of the $225,000 that Dennis transferred to himself, the
note and mortgage made by [Somers Farm] to McNaughton Way
does not fit within this grant of authority.
       38. Likewise, the change in circumstances flowing from
Greg’s death show Dennis’[s] actions regarding [Somers Farm’s]
financial matters fall far short of his duties as manager. . . . Dennis
did nothing to change the way he treated [Somers Farm] as his own
personal asset, paying his personal obligations or purposes (i.e., a
house mortgage payment, a donation to Iowa Lakes Corridor),
loaning money to others (i.e., loan [or transfer to other entities Dennis
owned or controlled]), and generally commingling funds between
[Somers Farm’s] checking account with accounts belonging to him
and other entities he owned or controlled. All the while, right up to
the present time, Dennis failed to maintain any form of bookkeeping
or accounting, and as a result he does not (at least at this time) have
the ability to trace funds going in and out of the account, so as to
enable the Estate to exercise its rights as a transferee.
                                          14

                39. The court therefore finds that the loan should have been
       only an obligation of Dennis and/or [Net/Comm Services], that
       Dennis’[s] actions in causing [Somers Farm] to incur a secured
       obligation have to be measured by his duties as the manager of the
       limited liability company, and that Dennis exceeded his authority to
       make [Somers Farm] a maker of the note to McNaughton Way and
       to execute and deliver the mortgage to secure that debt.
                40. Subsequently, Dennis caused [Somers Farm] to convey
       all of the Webb 150, owned by [Somers Farm], to McNaughton Way
       by voluntary foreclosure, to release himself from any liability on the
       debt. The result is that [Somers Farm] surrendered an asset that
       Dennis claimed was worth at least $225,000 in exchange for
       discharging a debt [owed by Dennis or Net/Comm] of $148,238.
       Dennis tried to explain this loss of over $76,000 by claiming that
       [Somers Farm] received those funds and used them for other
       company expenses, including the Farm Credit loan and interest on
       the McNaughton Way note. The court does not accept this
       explanation as true.

       The court also found “Greg’s death, without more, did not require dissolution

of [Somers Farm] because [Dennis] (and presumably Linda) consented to its

continuation pursuant to the Operating Agreement.”

       With respect to both the Hoover contract and Somers Farm, the court ruled

Greg had a fifty-percent interest at the time of his death.

       The court concluded the Estate was a transferee member of Somers Farm

entitled to an accounting for the Hoover contract and for Greg’s membership

interest. The trial court explained:

       An action for an accounting is generally in two parts: determining
       whether the plaintiff is entitled to an accounting, and, if so, the actual
       accounting. 1 Am. Jur. 2d, Accounts and Accounting § 65; Ontjes v.
       McNider, 224 Iowa 115, 275 N.W. 328, 332 (1937). In the latter part,
       the burden to prove that the money over which he had control was
       properly handled may be shifted to defendant. 1 Am. Jur. 2d, § 65;
       see Hum v. Ulrich, 458 N.W.2d 615, 617 (Iowa Ct. App. 1990). And
       if the property has not been properly handled, the plaintiff is entitled
       to a judgment for the amount found due. 1 Am. Jur. 2d, § 67; 1A
       C.J.S. Accounting § 5.
               The court has found that the sellers’ interests in the Hoover
       Contract was never assigned to [Somers Farm], and thus Greg’s
                                         15

       50% interest remained with him on the day he died. Therefore, when
       it was paid off on March 13, 2012, half of the sale proceeds should
       have been paid to Estate. By that time, Dennis knew Eveline had
       rejected his proposal for [Somers Farm], and by August 3, 2012, he
       was being asked, “What amount [of the sale proceeds] is owed to
       Greg’s Estate.” Accordingly, the Estate is entitled to judgment
       against Dennis for $7097.
               Determining the Estate’s entitlement to an accounting Iowa
       Code section 489.102(13) defines a member as “a person that has
       become a member of a limited liability company under section
       489.401 and has not dissociated under section 489.602.” A person
       is dissociated as a member of a limited liability company if the person
       dies. Iowa Code § 489.602(6)(a). “[W]hen a person is dissociated
       as a member of a limited liability company . . . any transferable
       interest owned by the person immediately before dissociation in the
       person’s capacity as a member is owned by the person solely as a
       transferee,” subject to Iowa Code Section 489.504. Iowa Code
       § 489.603(1)(c). Section 489.504 states that a “deceased member’s
       personal . . . other legal representative may exercise the rights of a
       transferee provided in section 489.502, subsection 3, and for the
       purposes of settling the estate the rights of a current member under
       section 489.410.” Further, Iowa Code section 489.502(3) states that,
       “In a dissolution and winding up of a limited liability company, a
       transferee is entitled to an account of the company’s transactions
       only from the date of dissolution.”
               In its ruling on defendants’ motion for summary judgment, this
       court directed that “Estate’s right to ‘full information’ about [Somers
       Farm]’s ‘financial condition’ entitles the Estate to the accounting it
       requests so long as all of the requirements of section 489.410(2)(b)
       are satisfied and that the accounting request is for the purposes of
       settling the estate as required by section 489.504.”

(Alterations to internal quotations in original.) The court concluded Eveline met the

requirements under Iowa Code section 489.410(2)(b).

       The court concluded Dennis failed in his burden to show the money over

which he had control was properly handled after Greg’s death. The court wrote,

“As long as he maintains he is entitled to continue operations of [Somers Farm],

he has to account to the Estate, as a transferee, from September 2011 to the

present.”
                                           16

         The court observed the Estate’s claims involved “awarding it money

judgments for the Hoover contract, its capital interest, and any distributions Dennis

received for which an equal distribution was not made to the Estate,” entitling the

Estate to interest at the rate of five percent per annum from and after the date they

were received by Dennis or Somers Farm and retained beyond a reasonable time

without the Estate’s consent.

         The court decreed:

                 1. Dennis and [Somers Farm] shall provide Estate with a full,
         complete, and itemized accounting of all income and expenses of
         [Somers Farm] from and after September 1, 2011, to the present,
         audited and presented according to generally accepted accounting
         principles, and thereupon pay Estate any amount found to be due as
         a result of distributions made to Dennis but not to Estate, but no less
         than $75,000. Interest on the resulting amount shall accrue at the
         rate of 5% per annum from and after the date of any distribution, and
         in the case of the minimum amount, from and after November 14,
         2011.
                 2. Dennis and/or [Somers Farm], jointly and severally, shall
         determine and pay Estate the amount of Greg’s Capital Interest, as
         defined in the Operating Agreement, as of September 2011, under
         the following conditions:
                         (a) The amount must be based upon the actual
                 amounts of its liabilities at that time, not estimates;
                         (b) It shall not include the debt then owing to[9]
                 [Net/Comm Services];
                         (c) Dennis and/or [Somers Farm] shall provide to
                 Estate objective, reliable, and verifiable documentation of the
                 actual amounts of the liabilities and the fair market values of
                 the assets, as of September 2011, and a calculation of the
                 amount of the Capital Interest;
                         (d) The resulting Capital Interest shall be no less than
                 $322,649.19;
                         (e) Interest on the Capital Interest amount shall accrue
                 at the rate of 5% per annum from and after August 3, 2012.
                 3. If the Capital Interest is not paid within one hundred and
         twenty (120) days, Dennis will be required to liquidate as many of the
         assets of [Somers Farm] as necessary to pay such amount, and
         apply all of the net proceeds to the amount owing Estate.

9   This is a typographical error as the court found the debt was owed by Net/Comm.
                                        17

             4. In the event of any disagreement between plaintiffs and
      defendants relating to the determination and payment of the amount
      of Greg’s 50% Capital Interest, plaintiffs may hereafter seek
      additional relief from the court.
             5. Judgment shall be entered in favor of Estate and against
      Dennis for $7097.59 (one-half of the proceeds of the Hoover
      contract). Interest on such amount shall accrue at the rate of 5% per
      annum from and after August 3, 2012.

      The defendants appeal, asserting (1) partial liquidation is unnecessary

because the Estate has an adequate remedy at law, (2) the decree should be

modified to prevent double recovery, and (3) the dates of accrual of interest should

be modified.

II. Scope and Standard of Review.

      This action was tried in equity, and therefore, our review is de novo. See

Iowa R. App. P. 6.907. “In equity cases, we are not bound by the district court’s

factual findings; however, we generally give them weight, especially with regard to

the credibility of witnesses.” Soults Farms, Inc. v. Schafer, 797 N.W.2d 92, 97

(Iowa 2011).

III. The Operating Agreement.

      Pursuant to Iowa Code section 489.110(1) (2011), a limited liability

company’s operating agreement governs:

              a. Relations among the members as members and between
      the members and the limited liability company.
              b. The rights and duties under this chapter [Iowa Code chapter
      489—the Revised Uniform Limited Liability Company Act (RULLCA)]
      of a person in the capacity of manager.
              c. The activities of the company and the conduct of those
      activities.
              d. The means and conditions for amending the operating
      agreement.
                                           18

If the operating agreement does not address any of the matters listed, the

provisions of the RULLCA govern.10 Iowa Code § 489.110(2).

       The Somers Farm operating agreement contains these pertinent definitions:

               1.06 “Capital Interest” shall mean an Interest that would give
       the Member a share of the proceeds if the Limited Liability
       Company’s assets were sold at fair market value and then the
       proceeds were distributed in a complete liquidation of the Limited
       Liability Company.
               ....
               1.09 “Distribution” shall mean any distribution pursuant to
       Section 5.04 by the Limited Liability Company of cash to Members
       or any Distribution in Kind.

       Article V of the operating agreement contains provisions relevant to

allocations and distributions:

              5.04 Distribution of Cash, Securities, Warrants or Options.
              (a) The Manager may distribute to the Members any cash of
       the Limited Liability Company in excess of working capital
       requirements or other amounts that they determine shall be
       necessary or appropriate for the operation of the business of the
       Limited Liability Company or its winding up and dissolution. All such
       cash distributions shall be made to the Members in accordance with
       paragraph (c) of this Section 5.04.
              ....
              (c) Any distribution of cash pursuant to paragraph (a) of this
       Section 5.04 . . . shall be made to the Members in proportion to their
       interests.
              (d) The value of any Distribution in Kind as of any date of
       determination (or in the event such date is a holiday or other day that
       is not a business day, as of the next preceding business day) shall
       be the estimated fair value of any property distributed as determined
       by the Members.

       Article VI governs the management of Somers Farm. Section 6.03 places

these limits on the manager’s authority:

10Although the 2004 operating agreement predates the RULLCA, Iowa Code
section 489.1304(2) provides: “[O]n and after January 1, 2011, this chapter
governs all limited liability companies.”
                                         19

              The Manager shall have no authority to do any act prohibited
      by law or in contravention of this Agreement, nor shall the Manager
      have any authority to do any of the following without the prior written
      consent of the Members holding at least a majority of the Units;
              (a) permit or cause the Limited Liability Company to make any
      loan to any Manager or any of their Affiliates;
              (b) permit or cause the funds of the Limited Liability Company
      to be commingled with the funds of any other person;
              (c) permit any creditor who makes a nonrecourse loan to the
      Limited Liability Company to acquire, at any time as a result of
      making such loan, any direct or indirect interest in the profits, capital
      or property of the Limited Liability Company other than as a secured
      creditor;
              (d) perform any act which would impair or make impossible
      the ordinary conduct of the Limited Liability Company’s business;
              (e) sell all or substantially all of the assets of the Limited
      Liability Company other than in the ordinary course of business or
      merge the Limited Liability Company with any other entity.

      As the manager of Somers Farm, Dennis had the following obligations

pursuant to section 6.04 of the operating agreement: “(b) maintain accounting

records from which a Limited Liability Company Capital Account Balance can be

determined for each member” and “(f) have fiduciary responsibility for the

safekeeping and use of all funds and assets of the Limited Liability Company, and

not employ or permit others to employ such funds or assets (including any interest

earned thereon) in any manner except for the benefit of the Limited Liability

Company.”

      Article XII governs the termination and dissolution of the entity.

              12.01 Events Requiring Termination and Dissolution. The
      Limited Liability Company shall be dissolved upon the happening of
      any of the following events:
              ....
              (d) the death, insanity, withdrawal, retirement, resignation,
      expulsion, bankruptcy, or dissolution of any Member or any other
      event which under the Act shall result in the dissolution or termination
      of the Limited Liability Company unless the business of the Limited
      Liability Company is continued by the consent of all of the remaining
      Members.
                                          20

IV. Discussion.

       A. Remedy. The defendants do not claim on appeal that the trial court erred

in finding Dennis, as manager, engaged in oppressive conduct vis-a-vis the other

members or that the court erred in rejecting the Estate’s request for dissolution of

the limited liability company. Rather, they assert, “The remedy requiring partial

liquidation of the remaining LLC assets fashioned by the court is not equitable and

not financially advisable in the current market conditions.”

       The defendants maintain the Estate has the rights of a judgment creditor

under Iowa Code sections 489.50211 and 489.404(4).12 They contend that as

judgment creditor, the Estate has “the capability of requesting a charging order”

under section 489.503.13 Building on these statements, Dennis and Somers Farm

argue that because the Estate has an adequate remedy at law, partial liquidation

of the Estate’s share of capital interest is not necessary and the court’s decree

“should be modified on appeal to grant the [Estate] a charging order to collect the

amounts found owed by the trial court.”

11  “A transferee has the right to receive, in accordance with the transfer,
distributions to which the transferor would otherwise be entitled.” Iowa Code
§ 489.502(2).
12 “If a member or transferee becomes entitled to receive a distribution, the

member or transferee has the status of, and is entitled to all remedies available to,
a creditor of the limited liability company with respect to the distribution.” Id.
§ 489.404(4).
13 Section 489.503(1) provides, in part, “On application by a judgment creditor of a

member or transferee, a court may enter a charging order against the transferable
interest of the judgment debtor for the unsatisfied amount of the judgment.”
                                             21

         The Estate contends the defendants never presented this argument to the

district court and have therefore failed to preserve error. We agree. Our supreme

court has observed:

                 Generally, we will not decide an issue presented to us on
         appeal that was not presented to and decided by the district court.
         For error to be preserved on an issue, it must be both raised and
         decided by the district court. If a party raises an issue and the district
         court does not rule on it, the party must file a motion to request a
         ruling on the issue.

DuTrac Cmty. Credit Union v. Hefel, 893 N.W.2d 282, 293–94 (Iowa 2017)

(citations omitted) (noting defendant claimed the trial court was prevented from

entering a charging order because the motion to compromise ordered in the

bankruptcy court remained in effect). Though the defendant in DuTrac raised the

issue in the district court, “the district court order never addressed the argument

that the motion to compromise remains in effect. [The defendant] never filed a

motion requesting a ruling on the issue and therefore did not properly preserve

error.” Id. at 294.

         In any event, the Estate here requested dissolution of Somers Farm under

section 489.701(1)(e).14 However, the trial court acted under section 489.701(2),

14   Iowa Code section 489.701(1) provides:
                 A limited liability company is dissolved, and its activities must
         be wound up, upon the occurrence of any of the following:
                 ....
                 (e) On application by a member or transferee, the entry by a
         district court of an order dissolving the company on the grounds that
         the managers or those members in control of the company have
         done any of the following:
                 (1) Have acted, are acting, or will act in a manner that is illegal
         or fraudulent.
                 (2) Have acted or are acting in a manner that is oppressive
         and was, is, or will be directly harmful to the applicant.
                                            22

which allows the court to “order a remedy other than dissolution.” The defendants

themselves cited the alternative to dissolution in their proposed findings of fact,

conclusions of law, and decree.15

         Here, the trial court concluded:

         For this reason, Iowa Code section 489.701(2) allows the court to
         fashion a remedy so that Estate is paid what it should have been paid
         when Dennis tried to invoke a right to buy Greg’s interest. Thus,
         Dennis and [Somers Farm] should determine and pay Estate the
         amount of Greg’s Capital Interest (at 50% of the Capital Interests),
         as defined in the Operating Agreement (which includes valuing the
         assets “at fair market value”), as of September 2011. . . . [A]nd
         Dennis’[s] conduct should not allow this amount to be less than
         $322,649.19 . . . .

         “[T]he court, sitting in equity, has considerable flexibility in resolving the

dispute.” Baur v. Baur Farms, Inc., 832 N.W.2d 663, 677–78 (Iowa 2013). “In

fashioning appropriate remedies, we have explained that trial courts should regard

requests for general equitable relief with considerable liberality.” Id. at 678. We

find no reason to modify the remedy fashioned by the district court in lieu of

dissolution under section 489.701(2).

         B. Double recovery? The defendants next assert that compliance with the

decree will result in double recovery of $75,000—the money Dennis placed in his

own account rather than Somers Farm’s account when depositing the $225,000

obtained from McNaughton Way. They argue:

15   The defendants wrote,
         The [RULLCA] empowers the court to order “a remedy other than
         dissolution,” [Iowa Code] § 489.701(2), one that will provide relief to
         the plaintiff but allow the LLC to continue. In fact, it is common for a
         court finding there to be oppression not to order judicial dissolution
         of the entity but to order a buy-out of the oppressed interest holder
         instead, together with any other appropriate relief.
                                         23

       The equitable remedy fashioned by the court decree does not do
       equity by ordering that a minimum amount of $322,649.19 be
       credited to Greg’s capital interest which includes one half of the
       $225,000 distribution to Dennis and also orders that a minimum
       amount of $75,000 must be paid in addition to the $322,649.19. The
       $75,000 is part of the $225,000.00 that the Court found was to be
       included in the $322,649.19 calculation.

We are not convinced.

       As we read it, the court’s ruling that the minimum amount to be credited to

Greg’s capital interest was $322,649.19 includes the value of the Webb 150,

which, according to the mortgage held by McNaughton Way, was $225,000.

       Separate and apart from the minimum capital interest calculation, the court

decreed the Estate was entitled to a distribution equal to the $75,000 Dennis

received in November 2011 because, under section 5.01(c) of the operating

agreement, a distribution to a member entitled other members to a similar

distribution “in proportion to their interests.”16 We decline to modify the decree on

this basis.

       C. Interest accrual dates. Finally, the defendants argue the decree should

be modified for purposes of interest calculations.17 They note the court awarded

statutory interest under Iowa Code section 535.2(1)(d) at five percent per annum

from and after the date they were “received to the use of [Dennis or Somers Farm]

and retained beyond a reasonable time, without [the Estate’s] consent, express or

implied.”     The defendants maintain the appropriate interest rate should be

16 The defendants’ brief states the $75,000 distribution to Dennis was presumed
to be the combined member interests of Dennis and Linda, i.e., a fifty-percent
interest.
17 The defendants challenge only the distribution and capital interest dates. They

make no argument as to the accrual date of the Hoover loan so we need not
address that aspect of the decree.
                                        24

determined by section 535.3, as interest “allowed on all money due on judgments

and decrees of courts at a rate calculated according to section 668.13.” See Sauer

v. Moffitt, 363 N.W.2d 269, 276 (Iowa Ct. App. 1984) (awarding money judgment

interest in action seeking dissolution of corporation where the court allowed a

buyout alternative remedy).

       The Estate counters by arguing prejudgment interest may be awarded from

the time the damage is complete. See Gosch v. Juelfs, 701 N.W.2d 90, 92 (Iowa

2005) (“Although in many instances interest is not recoverable on unliquidated

damages prior to judgment, our cases have carved out a definite exception to this

rule when it has been shown that the damage was complete at a particular time.”).

             Generally, “interest runs from the time money becomes due
       and payable, and in the case of unliquidated claims this is the date
       they become liquidated, ordinarily the date of judgment. . . . One
       exception to this rule is recognized ‘in cases in which the entire
       damage for which recovery is demanded was complete at a definite
       time before the action was begun.’”

Midwest Mgmt. Corp. v. Stephens, 353 N.W.2d 76, 83 (Iowa 1984) (alteration in

original) (citations omitted).

       Here, the court allowed prejudgment interest on (1) the $75,000 distribution

to Dennis, (2) the Estate’s interest in Somers Farm as Greg’s transferee, and

(3) Greg’s interest in the Hoover contract. We conclude the decree must be

modified—in part.

       1. Distribution and Hoover contract. First, as they did in the previous

division, the defendants argue the $75,000 Dennis deposited into his own account

should be included in the $225,000 loaned by McNaughton Way to Somers Farm

and is not a separate item of damages. We have already rejected that argument.
                                         25

       Dennis transferred $75,000 from the Somers Farm bank account to his own

on November 14, 2011. Under the operating agreement, the Estate was entitled

to a similar payment on that date. Thus, that amount became due and payable on

November 14, 2011. Interest at a rate of five percent per annum shall run from

that date.

       With respect to the Hoover contract, the trial court made these factual

findings:

              57. On March 1, 2012, Bjornstad emailed Dennis with
       information regarding the Hoover contract, indicating that the buyers
       were going to pay off the balance before the due date and take deed
       to the property.
              58. On March 12, 2012, the warranty deed “in fulfillment” of
       the Hoover contract was recorded.
              59. According to Bjornstad’s email, the balance of the Hoover
       contract at that time would have been slightly less than $14,195.19.
              60. . . . [T]he proceeds of the payoff of the Hoover contract,
       were assigned to [Somers Farm]. Therefore, the court finds that
       Greg’s 50% interest in those sale proceeds, or approximately $7097,
       were payable to the estate on March 13, 2012.

       This sum of $7097, too, represents an amount of damage “complete at a

particular time” and thus interest should be allowed as to that item from March 13,

2012. See Gosch, 701 N.W.2d at 92–93 (“When, as here, a definite amount of

recovery has been fixed by the trier of fact for a damage item shown to be complete

at a particular time, interest should be allowed as to that item from the time that

the damage was shown to be complete.”). Interest at a rate of five percent per

annum shall run from that date.

       2. Capital interest. With respect to the accrual date of the capital interest,

however, we agree with the defendants that interest should be awarded from the

date judgment was entered, November 29, 2019. See Sauer, 363 N.W.2d at 276.
                                         26

       We note the trial court ruled on November 15, 2017, that there is “a genuine

dispute of material fact that Greg held more than a 10% interest” in Somers Farm.

And,

       [t]here is a genuine dispute of material fact whether Estate’s request
       for an accounting of [Somers Farm’s] transactions, profits, state and
       condition of the assets, monies on hand, and monies drawn out by
       Dennis satisfies the three requirements of section 489.410(2)(b) and
       are for purposes of settling Estate as required by section 489.504.

       The court resolved those factual disputes on November 29, 2019, and

ordered:

                 2. Dennis and/or [Somers Farm], jointly and severally, shall
       determine and pay Estate the amount of Greg’s Capital Interest, as
       defined in the Operating Agreement, as of September 2011, under
       the following conditions:
                 (a) The amount must be based upon the actual amounts of its
       liabilities at that time, not estimates;
                 (b) It shall not include the debt then [owed by Net/Comm
       Services];
                 (c) Dennis and/or [Somers Farm] shall provide to Estate
       objective, reliable, and verifiable documentation of the actual
       amounts of the liabilities and the fair market values of the assets, as
       of September 2011, and a calculation of the amount of the Capital
       Interest[.]

The trial court sitting in equity determined a minimum capital interest based on its

observation that “delay in time and Dennis’[s] conduct should not allow this amount

to be less than $322,649.19.” Under these circumstances, interest shall run on the

capital interest portion of the decree from the date of judgment.

V. Conclusion.

       The district court was within its authority to provide equitable relief, and the

ruling did not provide for a double recovery of $75,000. We affirm the court’s

decree in all respects with one exception. We modify the language of decretal

paragraph 2(e), which shall provide: “Interest on the Capital Interest amount shall
                                        27

accrue at the statutory rate for interest on judgments18 from and after

November 29, 2019.”

      AFFIRMED AS MODIFIED.

18 Pursuant to Iowa Code 668.13(3): “Interest shall be calculated as of the date of
judgment at a rate equal to the one-year treasury constant maturity published by
the federal reserve in the H15 report settled immediately prior to the date of the
judgment plus two percent. The state court administrator shall distribute notice
monthly of that rate and any changes to that rate to all district courts.”
        The State court administrator’s notice of November 13, 2019, indicates the
one-year     treasury    constant      maturity    rate    of      1.58%.      See
https://www.iowacourts.gov/iowa-courts/district-court/post-judgment-interest-
table. Thus, the judgment interest rate is 3.58%.