In the Iowa Supreme Court
No. 22–1865
Submitted March 27, 2025—Filed May 9, 2025
County Bank,
Appellee,
vs.
Clinton Allan Shalla and Michelle Lynn Shalla,
Appellants.
Third-Party-Plaintiff Appellants,
Chris Goerdt and Peoples Trust and Savings Bank,
Third-Party-Defendant Appellees.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Washington County, Michael J.
Schilling (summary judgment and discovery) and Shawn Showers (directed
verdict and new trial), judges.
Appellants contend the district court erred in dismissing their claims for
negligence and fraudulent misrepresentation as barred by Iowa Code
section 535.17. Decision of Court of Appeals and District Court Judgment
Affirmed and Case Remanded.
McDonald, J., delivered the opinion of the court, in which all justices
joined. 2
Peter C. Riley (argued) of Tom Riley Law Firm, P.L.C., Cedar Rapids, for
John C. Wagner (argued) of John C. Wagner Law Offices, P.C., Amana, for
appellee.
Theodore T. Appel (argued), Kevin C. Rigdon, and Ryan S. Fisher (until
withdrawal) of Bradley & Riley PC, Cedar Rapids, for third-party-defendant
appellee Chris Goerdt.
Ann C. Gronlund (argued), Matthew L. Preston, Brad J. Brady, and Jared
T. Favero of Brady Preston Gronlund PC, Cedar Rapids, for third-party-
defendant appellee Peoples Trust and Savings Bank. 3
McDonald, Justice.
The Iowa credit agreement statute of frauds provides that a “credit
agreement,” including all terms of that agreement, “is not enforceable in contract
law by way of action or defense by any party unless a writing exists which
contains all of the material terms of the agreement.” Iowa Code § 535.17(1), (5)(c)
(2018). The statutory prohibition against actions to enforce unwritten credit
agreements and unwritten terms of credit agreements includes any action,
petition, counterclaim, or crossclaim “to enforce affirmatively any right or duty
or to recover damages for the nonperformance of any duty.” Id. § 535.17(5)(a).
The statute is broad in its scope and directs that it “displaces principles of
common law and equity that would . . . limit or dilute the force and effect” of the
statute. Id. § 535.17(7). The question presented on further review is whether this
statute bars a party from asserting causes of action for negligence and fraudulent
misrepresentation to enforce unwritten terms of an unwritten credit agreement
to obtain financing to exercise an option to purchase real property. The district
court and the court of appeals concluded the answer to that question was yes.
For the reasons stated below, we affirm.
I.
In February 2014, a lender foreclosed a mortgage on Clint Shalla’s farm.
To prevent a sheriff’s sale, Clint entered into a written debt settlement agreement
with Greg and Heather Koch. Clint read the debt settlement agreement prior to
signing it. Under the terms of the agreement, the Kochs agreed to purchase the
farm property for approximately $497,000 and receive a deed in lieu of
foreclosure. They agreed to give Clint an exclusive option to repurchase the
property for the same price plus fees and interest. Clint had the right to exercise
the option by providing written notice, accompanied by an irrevocable financing 4
commitment, by August 15, 2015. The failure to timely exercise the exclusive
option rendered the option null and void. Clint’s wife, Michelle Shalla, did not
hold any title in the farm, and she was not a party to the debt settlement
agreement. However, Michelle executed the deed in lieu of foreclosure and
conveyed her marital interest in the property to the Kochs.
After entering into the debt settlement agreement, the Shallas began to
search for financing to exercise the option. Clint began communicating with
Christopher Goerdt, who was then serving as the president of Peoples Trust and
Savings Bank (Peoples Bank). Clint claimed he first contacted Goerdt early in the
spring of 2015 to secure financing to exercise the option to repurchase the farm.
Goerdt disputed the timeline. He claimed Clint first contacted him around
August 2015. The only documentation of any communication between the
Shallas and Goerdt occurred after August 15. Setting aside the timing of the
communications, the record shows Goerdt orally agreed to “tak[e] care of the
buyback of the property” and secure financing for the Shallas to exercise the
option.
August 15 came and went, and Clint failed to exercise the option to
repurchase the farm. In his deposition, Clint testified that he was unaware of the
August 15 deadline, that he had no conversations with Goerdt regarding the
option deadline prior to its passing on August 15, and that he first learned about
the deadline when Goerdt informed him in early October. Clint’s recollection of
the timeline of these events was consistent with Goerdt’s. Goerdt testified that
his first dealing with the Kochs occurred in October. He claims Greg Koch
provided him with a copy of the debt settlement agreement. When Goerdt
reviewed the debt settlement agreement, he learned of the August 15 option 5
deadline for the first time. Goerdt immediately told Clint about the option
deadline and told him that the option had expired.
After the option expired, the Shallas contacted the Kochs to see if they
could still repurchase the farm. The Kochs agreed to sell the farm but believed
the price was now negotiable. In early December, the Shallas agreed to
repurchase the property from the Kochs for approximately $1.25 million.
In late December, Goerdt’s employment with Peoples Bank ended, and he
began employment with County Bank on January 18, 2016. On January 25,
Goerdt secured financing through County Bank for the Shallas to complete the
renegotiated transaction with the Kochs. The Shallas did not want to attend the
closing with the Kochs, so Goerdt agreed to handle it for them. Goerdt came to
the Shallas’ home and presented them with the paperwork. The Shallas signed
a note to borrow $1.3 million from County Bank secured by mortgages on the
farm. Goerdt brought with him a cashier’s check issued by County Bank for
$30,405.80, payable to Peoples Bank. Goerdt instructed Clint to take the check
to a specific teller at Peoples Bank and obtain $25,000 in cash for miscellaneous
closing costs. Clint claims that Goerdt instructed him to deliver the $25,000 to
Goerdt in the parking lot of a Subway restaurant, which Clint claims he did.
Goerdt’s unusual directions with respect to the cashier’s check and the
delivery of cash foreshadowed things to come. Shortly thereafter, County Bank
suspended Goerdt and then terminated his employment after County Bank
learned from another customer that Goerdt was engaged in fraudulent activities.
In May 2019, Goerdt was indicted on eleven counts of bank fraud, two counts of
aggravated identity theft, two counts of wire fraud, and one count of
misapplication by a bank officer. He later pleaded guilty to fifteen of these
charges and was sentenced to federal prison. One of the charges Goerdt pleaded 6
guilty to was an unauthorized withdrawal of $2,218 from the Shallas’ bank
account.
In the interim, the Shallas made only one payment on the mortgage, and
County Bank filed this foreclosure petition. The Shallas asserted counterclaims
against County Bank for (1) fraudulent misrepresentation and nondisclosure
and (2) conversion. In addition to the counterclaims against County Bank, the
Shallas asserted third-party claims against Peoples Bank and Goerdt for
(1) “cross petition liability,” (2) negligence, (3) fraudulent misrepresentation,
(4) conversion, and (5) aiding and abetting. The negligence and fraudulent
misrepresentation claims arose out of Goerdt’s alleged oral agreement to obtain
financing for and assist the Shallas in exercising the option under the debt
settlement agreement.1 According to the Shallas, Peoples Bank and Goerdt failed
to adequately represent the Shallas’ interests with respect to the option.
Peoples Bank filed a motion for partial summary judgment. As relevant
here, Peoples Bank argued the negligence and fraudulent misrepresentation
claims arising out of the agreement to obtain financing were barred by Iowa Code
section 535.17, the credit agreement statute of frauds. Peoples Bank also
believed it was entitled to judgment as a matter of law for the fraudulent
misrepresentation claim because Goerdt, as Peoples Bank’s former president,
never discussed the Koch option with the Shallas prior to the option deadline.
Further, Peoples Bank claimed Michelle’s negligence and fraudulent
misrepresentation claims should be dismissed because she was not a party to
1The Shallas also alleged that Goerdt misrepresented that the Shallas should withdraw
$12,000.00 from their account and provide it to Goerdt so that Goerdt could pay the Shallas’ accountant and implement dealership. This claim is not relevant to the resolution of the issue presented in this appeal. 7
the debt settlement agreement. Goerdt joined Peoples Bank’s motion for
summary judgment with respect to these claims.
While the motions for summary judgment were pending, the district court,
at the parties’ request, suspended proceedings for almost two years due to
Goerdt’s criminal prosecution. The parties wanted to depose Goerdt before
proceeding, but Goerdt refused to be deposed until after his criminal case was
resolved. After Goerdt was sentenced in the criminal case, this case resumed,
and the Shallas filed their resistance to the motions for summary judgment. The
Shallas argued the credit agreement statute of frauds did not bar their claims
because the statute applied only to contract claims and not tort claims. They
also argued that Michelle had standing to bring these claims because the
property at issue was a marital asset and that the factual arguments relied upon
by the third-party defendants were improper. Additionally, the Shallas claimed
Peoples Bank was vicariously liable for Goerdt’s conduct.
The district court granted in part and denied in part the motions for partial
summary judgment. The court granted the motion with respect to Michelle’s
claim for fraudulent misrepresentation because she was not a party to the debt
settlement agreement that contained the exclusive option. On the other claims,
the district court held that section 535.17 did not apply and that there were
disputed issues of material fact to be resolved at trial.
Peoples Bank filed a motion to reconsider, arguing the court erred in its
interpretation and application of Iowa Code section 535.17. Specifically, Peoples
Bank believed that because Goerdt’s alleged oral promises were made in
connection with a promise to loan money, they were barred by the credit
agreement statute of frauds. The district court granted the motion to reconsider.
It determined that, after additional research, the Shallas allegations were 8
premised upon oral promises by Goerdt made in connection with a credit
agreement. This made the promises unenforceable under the credit agreement
statute of frauds. The court then held that tort claims based upon oral
agreements made in connection with a credit agreement are barred by
section 535.17.
The remainder of the case came on for trial. The final pretrial conference
was held in September 2022. At this time, the Shallas and Peoples Bank agreed
to sever their claims and enter a joint stipulation regarding issue and claim
preclusion in future proceedings between the parties. The court agreed to the
severance. County Bank’s foreclosure action against the Shallas was tried to the
court. The court entered judgment in favor of County Bank and against the
Shallas for $2,398,069.20 for the unpaid loans, interest, and attorney fees and
foreclosed the property.
The Shallas’ counterclaims against County Bank and the Shallas’ third-
party claims against Goerdt were tried to a jury. At the close of the Shallas’ case,
Goerdt moved for a directed verdict on the negligence and fraudulent
misrepresentation claims related to the agreement to obtain financing for the
exercise of the option. Like Peoples Bank, he argued the claims were barred by
Iowa Code section 535.17. The district court granted the motion and submitted
the parties’ remaining claims to the jury. The jury found Goerdt committed
conversion by misappropriating $5,800 from the Shallas.
The Shallas timely filed their appeal from the district court’s judgment,
and we transferred this case to the court of appeals. The Shallas raised several
arguments on appeal. The court of appeals rejected each and affirmed the
judgment of the district court. The court of appeals decision was unanimous on
all issues except the application of the statute of frauds to the Shallas’ claims for 9
negligence and fraudulent misrepresentation. The majority held section 535.17
prevented the Shallas from raising in tort what they could not raise in contract:
the breach of an unwritten credit agreement. A dissenting judge believed the
district court erred in dismissing the Shallas’ negligence and fraudulent
misrepresentation claims because section 535.17 applies only to claims in
contract and not in tort.
We granted the Shallas’ application for further review. “When we grant
further review, we have discretion to let the court of appeals decision stand on
specific issues.” State v. Wade, 7 N.W.3d 511, 514 (Iowa 2024). We exercise that
discretion here, and we address only the issue of whether the district court erred
in holding that Iowa Code section 535.17, the credit agreement statute of frauds,
barred the Shallas’ claims of negligence and fraudulent misrepresentation
against Peoples Bank and Goerdt. The court of appeals decision is final as to all
other issues.
II.
“This case presents a question of statutory interpretation and
construction, and ‘our review is for the correction of errors at law.’ ” Cianzio v.
Iowa State Univ., 14 N.W.3d 716, 719 (Iowa 2024) (quoting Doe v. State, 943
N.W.2d 608, 609 (Iowa 2020)). Our task is “to determine the ordinary and fair
meaning” of the statute at issue. Doe, 943 N.W.2d at 610. In making that
determination, we consider the relevant statutes as a whole and in context and
“not just isolated words and phrases.” Id. (quoting Iowa Dep’t of Hum. Servs. v.
Lohman (In re Est. of Melby), 841 N.W.2d 867, 879 (Iowa 2014)). “Generally, when
we conclude the express language of the statute is plain and the meaning is
clear, we need not proceed any further with our analysis.” Cianzio, 14 N.W.3d at
721. 10
We begin our analysis with the text of the statute. See Doe, 943 N.W.2d at
610 (“Any interpretive inquiry thus begins with the language of the statute at
issue.”). Iowa Code section 535.17(1) provides, “A credit agreement is not
enforceable in contract law by way of action or defense by any party unless a
writing exists which contains all of the material terms of the agreement and is
signed by the party against whom enforcement is sought.” A “credit agreement”
is “any contract made or acquired by a lender to loan money, finance any
transaction, or otherwise extend credit for any purpose, and includes all of the
terms of the contract.” Id. § 535.17(5)(c) (emphasis added). A “contract” is defined
in section 535.17(5)(b) as a “promise or set of promises for the breach of which
the law would give a remedy or the performance of which the law would recognize
a duty, and includes promissory obligations based on instruments and similar
documents or on the contract doctrine of promissory estoppel.” Id. § 535.17(5)(b).
When the general assembly acts as its own lexicographer, we are normally bound
by its definitions, even if those definitions do not coincide with dictionary or
common law definitions. See State v. Pettijohn, 899 N.W.2d 1, 15–16 (Iowa 2017),
overruled on other grounds by State v. Kilby, 961 N.W.2d 374 (Iowa 2021).
The statutory text presents a threshold question when applied to the facts
of this case: whether the Shallas’ claims for negligence and fraudulent
misrepresentation involve a “credit agreement” as defined in the statute. In an
affidavit, Clint acknowledged that he approached Goerdt to secure financing.
Specifically, Clint stated, “I knew I would need financing to exercise the option.
I knew that Chris Goerdt at Peoples Trust and Savings Bank was making farm
loans and so I contacted him. He agreed to be our representative to work with
the Kochs in paying them off and to come up with the money.” The record also
reflects that Clint understood Goerdt’s alleged statement that he was “taking 11
care of the buyback of the property” meant that Goerdt “would try to secure
financing for” the Shallas.
Given the broad definition of the terms credit agreement and contract, we
have little trouble concluding that Goerdt’s promise or promises to the Shallas
to assist them in obtaining financing to exercise the option was a credit
agreement within the meaning of the statute. The Code defines “credit
agreement” broadly. See Iowa Code § 535.17(5)(c). It includes “any contract
made . . . to loan money” or “finance any transaction.” Id. Goerdt’s statements
were oral promises to secure financing for a transaction, specifically, financing
to exercise the buyback of the farm.
The Shallas do not dispute this on appeal. However, the Shallas argue that
Goerdt made a second promise to represent and assist the Shallas in connection
with the buyback of the farm. This promise, they contend, gives rise to claims
outside the credit agreement statute of frauds. We disagree. The Code defines
the term “contract” broadly to include any “promise or set of promises,” plural,
that would impose a duty of performance or that would give a remedy for a
breach. Id. § 535.17(5)(b) (emphasis added). Any additional promise Goerdt made
to represent or assist the Shallas in connection with exercising the option was
part of a single transaction—to obtain financing to exercise the option. Under
the plain language of section 535.17(5)(c), a credit agreement is not limited to
just the terms of the loan or financing but includes “all of the terms of the
contract.” Id. § 535.17(5)(c). As such, the Shallas cannot slice up the terms of a
single credit agreement into multiple promises to evade the statute of frauds. See
Ramsey v. Bank of Okla., No. 08–CV–0239–CVE–SAJ, 2008 WL 4936316, at *5
(N.D. Okla. Nov. 17, 2008) (“[P]laintiffs may not attempt to isolate the oral 12
agreement from the Credit Agreement to avoid application of the statute of
frauds.”).
The conclusion that the alleged promises or representations were part of a
single credit agreement does not completely resolve the question presented in
this appeal, however. The statute of frauds provides only that a credit agreement
is “not enforceable in contract law by way of action or defense . . . unless a
writing exists which contains all of the material terms of the agreement and is
signed by the party against whom enforcement is sought.” Iowa Code § 535.17(1)
(emphasis added). The Shallas maintain that the credit agreement statute of
frauds thus bars only contract claims and not tort claims, such as their claims
for negligence and fraudulent misrepresentation.
The Shallas’ argument has some superficial appeal. The statute does
discuss the enforcement of claims in “contract law.” Id. However, courts do not
interpret words in a statute in isolation. “Perhaps no interpretive fault is more
common than the failure to follow the whole-text canon, which calls on the
judicial interpreter to consider the entire text, in view of its structure and of the
physical and logical relation of its many parts.” Antonin Scalia & Bryan A.
Garner, Reading Law: The Interpretation of Legal Texts 167 (2012).
Reading the statute as a whole, it becomes clear that the Shallas’
interpretation of the statute is forbidden by the text of the statute. The legislature
provided explicit guidance to courts in the application of this statute: “This
section shall be interpreted and applied purposively to ensure that contract
actions and defenses on credit agreements are supported by clear and certain
written proof of the terms of such agreements to protect against fraud and to
enhance the clear and predictable understanding of rights and duties under
credit agreements.” Iowa Code § 535.17(6); see also Clinton Nat’l Bank v. Saucier, 13
580 N.W.2d 717, 722 (Iowa 1998) (“Iowa Code section 535.17(6) controls over
any ambiguity in the provisions of section 535.17 . . . .”). In accord with this
broad purpose, the legislature placed an anti-circumvention provision into the
statute so that parties cannot avoid the statute through artful pleading.
Specifically, section 535.17(7) provides that the credit agreement statute of
frauds “entirely displaces principles of common law and equity that would make
or recognize exceptions to or otherwise limit or dilute the force and effect of its
provisions concerning the enforcement in contract law of credit agreements or
modifications of credit agreements.” Iowa Code § 535.17(7). Allowing parties to
avoid the credit agreement statute of frauds by repackaging contract claims as
tort claims would undermine “the clear and predictable understanding of rights
and duties under credit agreements,” id. § 535.17(6), and it would permit
plaintiffs to seriously “dilute the force and effect of [section 535.17’s] provisions,”
id. § 535.17(7).
The Shallas’ claims for negligence and fraudulent misrepresentation are
merely repackaged contract claims barred by the statute. In Sanborn Savings
Bank v. Freed, 38 F.4th 672, 675–77 (8th Cir. 2022), a mortgagee sought to
enforce the terms of a mortgage agreement against a mortgagor in a dispute
arising under Iowa law. The mortgagor responded by raising various equitable
arguments. Id. at 679–80. The Eighth Circuit concluded that “a mortgage must
necessarily be a ‘credit agreement’ under Iowa Code § 535.17(5)(c).” Sanborn Sav.
Bank, 38 F.4th at 679. Then, the court held that any equitable arguments raised
by the mortgagor were “untenable” because section 535.17(7) “entirely displaces
principles of common law and equity that would . . . otherwise limit or dilute the
force and effect” of section 535.17. Id. at 680 (quoting Iowa Code § 535.17(7)). As 14
such, the mortgagor’s equitable arguments were “foreclosed” by the credit
agreement statute of frauds. Id. at 679.
In Geiger v. Peoples Trust & Savings Bank, No. 18–1428, 2019 WL
4678179, at *4–6 (Iowa Ct. App. Sept. 25, 2019), the Iowa Court of Appeals aptly
recognized that limiting section 535.17 only to contract claims would allow
litigants to bypass the statute. Geiger features many of the same players and
arguments that are before the court today. There, different plaintiffs brought a
claim against Peoples Bank for fraudulent misrepresentation and interference
with a contract after the plaintiffs entered into a loan agreement with Goerdt
while he was serving as president of Peoples Bank. Id. at *1. The question
presented in that case was the same question before the court today: whether
the trial court correctly held that the plaintiffs’ claims were barred by
section 535.17 because they had entered an oral credit agreement with Goerdt.
Id. at *3. The court of appeals answered that question in the affirmative, noting
that allowing plaintiffs to argue that their claims sound in tort law, not contract
law, would allow them to “end run section 535.17.” Id. at *4. The plaintiffs “[could
not] raise in tort what they cannot prove in contract: the existence of an
enforceable contract.” Id. at *6.
Similarly, in Twiford Enterprises, Inc. v. Rolling Hills Bank & Trust, No. 20–
CV–28–F, 2020 WL 5248561, at *7–8 (D. Wyo. Aug. 5, 2020), the United States
District Court for the District of Wyoming quoted Geiger and applied Iowa Code
section 535.17 to bar the plaintiffs’ claims of negligence and fraudulent and
negligent misrepresentation. These tort claims were premised on the defendant’s
“oral representations in relation to ‘an agreement by a bank to loan money.’ ”
Twiford Enters., 2020 WL 5248561, at *8 (quoting Geiger, 2019 WL 4678179, at
*5). The court granted summary judgment for the defendant as it determined 15
that the alleged oral agreements were not enforceable under our state’s credit
agreement statute of frauds; therefore, the tort claims failed as a matter of law.
Id.
Like we do today, courts around the country have concluded that their
respective credit agreement statute of frauds bars all actions relating to the
enforcement of promises in an unwritten credit agreement, no matter how the
claim is packaged. See, e.g., Dixon v. Countrywide Fin. Corp., 664 F. Supp. 2d
1304, 1310 (S.D. Fla. 2009) (holding that tort claims premised upon the same
conduct and representations as a barred breach of contract claim were “likewise
barred by the banking statute of frauds and must be dismissed”); Horseshoe
Ent., L.P. v. Gen. Elec. Cap. Corp., 990 F. Supp. 737, 743 (E.D. Mo. 1997) (“The
majority of the cases [from other jurisdictions] hold that a credit agreement
statute of frauds bars all actions based on an alleged oral credit agreement,
regardless of the theory of recovery asserted. . . . ‘[T]o accept such allegations as
affording recovery, grounded in concepts other than breach of contract, simply
provides an easy avenue for resourceful attorneys to circumvent the [credit
agreement] statute, thus defeating the legislative intent to prohibit claims
stemming from hard-to-defend oral representations.’ ” (third alteration in
original) (footnote omitted) (quoting Fleming Irrigation, Inc. v. Pioneer Bank & Tr.
Co., 661 So. 2d 1035, 1039 (La. Ct. App. 1995))); Ohio Valley Plastics, Inc. v. Nat’l
City Bank, 687 N.E.2d 260, 263–64 (Ind. Ct. App. 1997) (“Regardless of whether
the present cause of action is labeled as a breach of contract, misrepresentation,
fraud, deceit, promissory estoppel, its substance is that of an action upon an
agreement by a bank to loan money. Therefore, the Statute of Frauds applies.”);
Jesco Const. Corp. v. Nationsbank Corp., 830 So. 2d 989, 992 (La. 2002) (“The 16
Louisiana Credit Agreement Statute precludes all actions for damages arising
from oral credit agreements, regardless of the legal theory of recovery asserted.”).
III.
For these reasons, we affirm the judgment of the district court and the
decision of the court of appeals. Pursuant to Iowa Code section 625.22, we hold
that County Bank is entitled to appellate attorney fees. See Bankers Tr. Co. v.
Woltz, 326 N.W.2d 274, 278 (Iowa 1982) (“The same rationale under
section 625.22, which justifies awarding attorney fees in the trial court, also
justifies awarding attorney fees in this appeal . . . .”); GreenState Credit Union v.
Prop. Holders, Ltd., No. 21–0498, 2022 WL 2154816, at *5 (Iowa Ct. App.
June 15, 2022) (“Where attorney fees are awarded under section 625.22, a party
may also be awarded appellate attorney fees.”). We remand this matter to the
district court for a determination of County Bank’s attorney fees, including
appellate attorney fees.
Decision of Court of Appeals and District Court Judgment Affirmed
and Case Remanded.