Court Opinion

ID: 9965740
Source: CourtListenerOpinion
Date Created: 2024-05-03 14:06:20.677667+00
Date Added: 2024-06-11T08:25:37.143536
License: Public Domain

IN THE SUPREME COURT OF IOWA

                                 No. 22–1995

              Submitted February 21, 2024—Filed May 3, 2024

TERRACE HILL SOCIETY FOUNDATION,

      Appellee,

vs.

TERRACE HILL COMMISSION and KRISTIN HURD, in her official capacity as
chairperson of the Terrace Hill Commission,

      Appellants.

      Interlocutory appeal from the Iowa District Court for Polk County, David

Nelmark, Judge.

      Interlocutory appeal from denial of motion to dismiss on sovereign

immunity grounds. AFFIRMED AND REMANDED.

      McDonald, J., delivered the opinion of the court in which all justices

joined.

      Brenna Bird, Attorney General; Eric Wessan (argued), Solicitor General;

Andrew Ewing, Assistant Attorney General; and Samuel P. Langholz (until

withdrawal), Chief Deputy Attorney General, for appellants.

      Jason M. Casini (argued) of Whitfield & Eddy, P.L.C., Des Moines, for

appellee.
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MCDONALD, Justice.
      This interlocutory appeal concerns a dispute between the Terrace Hill

Society Foundation (THSF) and the Terrace Hill Commission (the Commission)

regarding property and historical artifacts (the collection) used and displayed in

the Governor’s official residence, Terrace Hill. THSF filed a petition and then an

amended petition for declaratory relief against the Commission and its

chairperson, Kristin Hurd. In its amended petition, THSF sought a declaration

that it was the sole owner of the collection and sought injunctive relief that gives

it the right to access the collection to itemize, insure, maintain, and preserve it.

The defendants moved to dismiss the suit on the ground the suit was barred by

the doctrine of sovereign immunity and on the ground Hurd could not provide

the requested relief. The district court denied the motion with respect to the

Commission, but it granted the motion with respect to Hurd and dismissed the

claims against her without prejudice. The questions presented in this appeal are

whether the district court erred in denying the State’s motion to dismiss this suit

against the Commission and whether the district court should have dismissed

the suit against Hurd with prejudice.

                                         I.
      In reviewing a ruling on a motion to dismiss, we accept as true the factual

allegations contained in the pleading. See Shumate v. Drake Univ., 846 N.W.2d

503, 507 (Iowa 2014). Terrace Hill is the official residence of the Governor of the

State of Iowa. THSF is a nonpartisan, nonprofit corporation organized pursuant

to Iowa Code chapter 504. It is the result of a 2012 merger between two

predecessor organizations, the Terrace Hill Foundation (the Foundation) and the

Terrace Hill Society (the Society). For ease of reading, unless context and

specificity require otherwise, we refer to all three organizations collectively as
“THSF.” The Commission is a state agency organized under Iowa Code
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section 8A.326.   The   Commission    is    charged   with   “provid[ing]   for   the

preservation, maintenance, renovation, landscaping, and administration of the

Terrace Hill facility.” Iowa Code § 8A.326(3) (2022). Hurd serves as the

chairperson of the Commission. THSF’s claims against Hurd were asserted

against her “solely in her official capacity as” chairperson of the Commission.

      According to the amended petition, in 1996, the Commission, the Society,

and the Foundation entered into an operating agreement regarding Terrace Hill.

The 1996 agreement provided, as relevant here, that the Commission, the

Society, and the Foundation were “mutually resolved in the future to work

harmoniously and cooperatively in the overall goal of restoring, preserving and

improving Terrace Hill; and will present honestly and forthrightly, as with a

single voice, the workings and needs of Terrace Hill to the community at large.”

THSF concedes the 1996 agreement is no longer in force.

      The amended petition averred that “[f]or nearly fifty years, including, but

not limited to, the time period in which the 1996 Agreement was in effect, THSF

. . . received hundreds of items of donated property, including, but not limited

to, historical artifacts . . . along with monetary donations for Terrace Hill

furnishings and for the restoration, preservation, and improvement of Terrace
Hill.” THSF placed many items from the collection into the “custody and control

of the Commission, in reliance on the commitments by the Commission as set

forth in the 1996 Agreement and in many other communications with present

and former members of the Commission to work together ‘harmoniously’ and

‘cooperatively’ with the ‘mutual goal of restoring, preserving and improving

Terrace Hill.’ ” The amended petition stated that THSF placed items in the care

and custody of the Commission “subject to the express understanding that it

was owned by, and would continue to be owned by, those predecessor
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organizations and (now) THSF, without any express or implied relinquishment of

any ownership rights by THSF or its predecessor organizations.”

          The amended petition stated that a disagreement has developed between

THSF and the Commission “regarding ownership and control over the Collection,

resulting in the Commission, in effect, asserting control over the Collection and

denying THSF control over it or access to it.” In the amended petition, THSF

sought a declaration that it was the sole owner of the collection, an injunction to

obtain access to the collection for a variety of purposes, and any “other . . .

additional relief that the Court deems just and equitable under the

circumstances.” THSF also sought a declaration that any claim of ownership

contrary to THSF’s interests was “invalid and unenforceable, and in violation of

federal law . . . and state law.”

          The defendants moved to dismiss THSF’s amended petition. The

Commission argued the suit was barred by the doctrine of sovereign immunity.

The Commission argued that the State had explicitly waived its sovereign

immunity and consented to suit for certain claims involving real property, citing

Iowa Code section 613.8. By negative inference, the Commission argued, the

State had not waived its sovereign immunity and consented to suit for claims
involving personal property. Hurd argued the claims against her failed because

she did not have the legal authority as chairperson to provide the requested

relief. In her view, only the Commission as a whole could provide the requested

relief.

          THSF resisted the motion to dismiss. THSF argued the Commission

constructively or impliedly waived sovereign immunity through its prior conduct.

Relying on Lee v. State, 815 N.W.2d 731 (Iowa 2012), State v. Dvorak,

261 N.W.2d 486 (Iowa 1978), and Kersten Co. v. Department of Social Services,
207 N.W.2d 117 (Iowa 1973) (en banc), THSF maintained that this was a case
                                          5

where “the rule of immunity was waived because the State had voluntarily

created [a] legal relationship[] with private citizens that subjected it to liability.”

Lee, 815 N.W.2d at 738. At the hearing on the motion to dismiss, THSF’s counsel

specified that the voluntary legal relationship between THSF and the

Commission was “clearly” or “essentially” a “common law bailment.”

      The district court denied in part and granted in part the defendants’

motion to dismiss. The district court concluded that the factual allegations in

the petition, when taken in the light most favorable to THSF, alleged facts

sufficient to overcome the State’s immunity from suit. The district court

explained:

             Here, the Court finds that, when looking at the factual
      allegations in the light most favorable to THSF, the Commission’s
      prior conduct subjects it to suit in this matter. The Commission
      willingly accepted possession of THSF’s property. It retained such
      possession after the 1996 Agreement expired. THSF has property
      rights under state law and the Iowa Constitution, and it is entitled
      to have this Court rule on the merits of its ownership claims.

The district court granted the motion with respect to Hurd and dismissed the

claims against her without prejudice rather than with prejudice.

                                          II.

      We first address the Commission’s sovereign immunity argument. As early
as 1855, this court applied the common law doctrine of sovereign immunity. See

Chance v. Temple, 1 Iowa (Clarke) 179, 201 (1855). Under this doctrine, the State

cannot be sued absent its waiver or consent to suit. See Lee, 815 N.W.2d at 738;

Dvorak, 261 N.W.2d at 489. Under Iowa law, the doctrine of sovereign immunity

is more than immunity from liability, it is immunity from suit. See Anderson v.

State, 2 N.W.3d 807, 812 (Iowa 2024); Wagner v. State, 952 N.W.2d 843, 856

(Iowa 2020) (“The immunity of the State is from suit rather than from liability
and remains the rule rather than the exception.” (quoting Lloyd v. State,
                                         6

251 N.W.2d 551, 555 (Iowa 1977))); Lee v. State, 874 N.W.2d 631, 637–38 (Iowa

2016) (stating the “principle of state sovereign immunity . . . recognizes that

inherent in the nature of sovereignty is some degree of immunity from suit”);

Nixon v. State, 704 N.W.2d 643, 645 (Iowa 2005) (stating the State “was immune

from suit under the common-law doctrine of sovereign immunity”); Callahan ex

rel. M.H. v. State, 385 N.W.2d 533, 538 (Iowa 1986) (discussing the “removal of

immunity from suit”). The doctrine relieves the State from suffering “the

indignity” of being subjected “to the coercive process of judicial tribunals at the

instance of private parties.” Lee, 815 N.W.2d at 738 (quoting Alden v. Maine,

527 U.S. 706, 749 (1999)).

      This court has “consistently held [sovereign immunity] is a jurisdictional

bar” to initiating and prosecuting a suit against the State absent its waiver or

consent. Segura v. State, 889 N.W.2d 215, 220 (Iowa 2017); see also Wagner,

952 N.W.2d at 856–57 (stating “our courts lacked jurisdiction over suits brought

against the state or its agencies sounding in tort” (quoting Lloyd, 251 N.W.2d at

555)); Godfrey v. State, 847 N.W.2d 578, 582–83 (Iowa 2014) (stating the doctrine

of sovereign immunity is jurisdictional); Schaefer v. Putnam, 841 N.W.2d 68, 80

(Iowa 2013) (stating sovereign immunity is “a jurisdictional matter” (quoting
Swanger v. Iowa, 445 N.W.2d 344, 346–47 (Iowa 1989))); Hyde v. Buckalew,

393 N.W.2d 800, 802 (Iowa 1986) (stating that the waiver of “sovereign immunity

with respect to a particular type of claim is a matter of jurisdiction, the power of

the court to hear and adjudicate a particular class of cases,” and that sovereign

“immunity was jurisdictional”). As a jurisdictional bar, the doctrine of sovereign

immunity “prevent[s] our courts from hearing cases brought against the State or

its agencies.” Callahan, 385 N.W.2d at 538.

      Because the doctrine of sovereign immunity is an immunity from suit and
jurisdictional in nature, any waiver of sovereign immunity must be “strictly
                                           7

construed.” Feltes v. State, 385 N.W.2d 544, 548 (Iowa 1986) (en banc); see also

Segura, 889 N.W.2d at 224 (recognizing “that jurisdictional matters must be

carefully construed”). “[W]hen sovereign immunity is asserted, it is not the

State’s burden to show that the plaintiff could never state a viable claim. Instead,

it is the plaintiff’s burden to plead facts that affirmatively state a viable claim.”

Matzen v. McLane, 659 S.W.3d 381, 393–94 (Tex. 2021); see also Young v.

Johnson, 860 S.E.2d 82, 83–84 (Ga. Ct. App. 2021) (holding plaintiff failed to

satisfy burden of pleading waiver of sovereign immunity).

      The Commission argues the district court erred in denying its motion to

dismiss the amended petition on sovereign immunity grounds. The Commission

emphasizes that the legislature has expressly waived sovereign immunity for

suits “involving the title to real estate, the partition of real estate, the foreclosure

of liens or mortgages against real estate, or the determination of the priorities of

liens or claims against real estate, for the purpose of obtaining an adjudication

touching or pertaining to any mortgage or other lien or claim which the state

may have or claim to the real estate involved.” Iowa Code § 613.8. Because the

express statutory waiver involves only actions or claims relating to real property

and not personal property, the Commission argues that the legislature has not
waived the State’s sovereign immunity for actions or claims relating to personal

property.

      The Commission is correct that the State can expressly waive its sovereign

immunity when it enacts a statute consenting to suit. See, e.g., Iowa Code

§ 17A.19(1) (waiving sovereign immunity for judicial review of agency actions);

id. § 613.8 (waiving sovereign immunity in certain suits involving real estate); id.

§ 669.4(2) (waiving sovereign immunity for suits sounding in tort). But express

statutory waiver is not the only way the State can waive its immunity as
sovereign. The State can impliedly or constructively waive its immunity from suit
                                          8

when it voluntarily creates certain legal relationships that subject it to liability.

See Lee, 815 N.W.2d at 737–38. For example, we have held the State impliedly

waived its sovereign immunity when it entered a contractual relationship. See

Kersten Co., 207 N.W.2d at 122. We have also held that the State impliedly

waived its sovereign immunity when it assumed the legal obligations of a

landowner. See Dvorak, 261 N.W.2d at 489. The implied waiver found in

Kersten Co. and Dvorak “reflected our belief that the State is answerable for the

legal relationships it voluntarily creates.” Lee, 815 N.W.2d at 740.

      A voluntary bailment is a legal relationship sounding in contract. See

Farmers Butter & Dairy Co-op. v. Farm Bureau Mut. Ins., 196 N.W.2d 533, 538

(Iowa 1972). “A bailment occurs when personal property has been delivered by

one person, the bailor, to another, the bailee, for a specific purpose beneficial to

the bailee or the bailor, or both, with the understanding the property will be

returned to the bailor after the purpose has been accomplished.” Khan v.

Heritage Prop. Mgmt., 584 N.W.2d 725, 729 (Iowa Ct. App. 1998). “Once a

bailment is established, the law imposes specific duties upon bailees to care for

the bailor’s property while it is in their possession.” Id. at 730.

      THSF’s amended petition alleges sufficient facts to plead a voluntary
bailment and thus a voluntary legal relationship that impliedly waived the State’s

sovereign immunity. The amended petition provides, among other things, as

follows:

             18. At all material times, the Collection was placed in the care
      and custody of the Commission by THSF and its predecessor
      organizations, for use and display at Terrace Hill, subject to the
      express understanding that it was owned by, and would continue to
      be owned by, those predecessor organizations and (now) THSF,
      without any express or implied relinquishment of any ownership
      rights by THSF or its predecessor organizations.

            19. As a result of the ongoing disagreement between the
      Commission and THSF regarding ownership and control over the
      Collection, the Commission has, in effect, and without legal
                                         9

       authority to do so, asserted control over the Collection and denied
       THSF control over it or access to it.

“[T]he State, by entering into a contract, agrees to be answerable for its breach

and waives its immunity from suit to that extent.” Kersten Co., 207 N.W.2d at

120; see also Sweeten v. Lawson, 404 P.3d 885, 886–87, 890–93 (Okla. Civ. App.

2017) (holding that action against museum for recovery of personal property

could proceed notwithstanding sovereign immunity).

       It is immaterial to our analysis that the amended petition did not use the

word “bailment.” “Iowa is a notice pleading state.” Nahas v. Polk County,

991 N.W.2d 770, 776 (Iowa 2023). Under our notice pleading standard, the

“petition need not allege ultimate facts that support each element of the cause

of action.” Id. (quoting Rees v. City of Shenandoah, 682 N.W.2d 77, 79 (Iowa

2004)). And the petition need not “identify a specific legal theory.” Adam v. Mt.

Pleasant Bank & Tr. Co., 355 N.W.2d 868, 870 (Iowa 1984). Instead, the petition

need only contain “factual allegations that give the defendant ‘fair notice’ of the

claim asserted so the defendant can adequately respond to the petition.” Nahas,

991 N.W.2d at 776 (quoting Rees, 682 N.W.2d at 79). “A petition complies with

the ‘fair notice’ requirement if it informs the defendant of the incident giving rise

to the claim and of the claim’s general nature.” Id. (quoting Rees, 682 N.W.2d at
79).

       “A court should grant a motion to dismiss ‘only if the petition on its face

shows no right of recovery under any state of facts.’ ” Id. (quoting Young v.

HealthPort Techs., Inc., 877 N.W.2d 124, 127 (Iowa 2016)). Under our liberal

notice pleading standards, we conclude the district court did not err in finding

THSF’s amended petition alleged sufficient facts to plead a voluntary legal

relationship waiving the State’s immunity from suit.
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                                         III.

      We now address Hurd’s appeal. Hurd contends the district court should

have dismissed the claims against her with prejudice rather than without

prejudice. The district court granted dismissal on the ground that Hurd is not a

proper party in this suit because she could not provide the pleaded-for relief. On

appeal, Hurd contends that this defect “cannot be cured by repleading.” She

points out that, under the Code, “[o]nly the Commission, acting in its discretion

under state law, could contract with THSF to give it access to the historical

collection.” We find this argument unconvincing. Even if this were true, THSF

could replead and add the remaining commissioners to the suit. In that event,

Hurd would still be a party to the action. We affirm this part of the district court’s

ruling. See 5B Charles Alan Wright, Arthur R. Miller & A. Benjamin Spencer,

Federal Practice and Procedure § 1357, at 491 (4th ed. 2024) (stating that it is

“clear” that dismissal pursuant to a motion to dismiss “generally is not with

prejudice . . . because the district court normally will give the plaintiff leave to

file an amended complaint to see if the shortcomings of the original document

can be corrected”).

                                         IV.
      For the reasons stated above, we affirm the district court’s order on the

motion to dismiss. We remand to the district for further proceedings.

      AFFIRMED AND REMANDED.