In the Matter of the Guardianship and Conservatorship of Marvin M. Jorgensen

• Court: Supreme Court of Iowa
• Decided: May 21, 2021
• Docket: 18-1235
• Status: Published

Opinion

IN THE SUPREME COURT OF IOWA No. 18–1235

Submitted April 15, 2021—Filed May 21, 2021

IN THE MATTER OF THE GUARDIANSHIP AND CONSERVATORSHIP OF MARVIN M. JORGENSEN,

ROXANN WHEATLEY, RICK WHEATLEY, and DALLAS WHEATLEY,

Appellants.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Audubon County,

Kathleen A. Kilnoski, Judge.

Two of the ward’s children and the court visitor request further

review of a court of appeals decision affirming in part and reversing in part

the district court’s order modifying farm leases entered into by the ward’s

conservator. DECISION OF THE COURT OF APPEALS AFFIRMED;

DISTRICT COURT JUDGMENT AFFIRMED IN PART AND REVERSED IN PART.

McDermott, J., delivered the opinion of the court, in which all

justices joined. Waterman, J., filed a special concurrence.

Eldon L. McAfee (argued), Julia L. Vyskocil, and Daniel P. Kresowik

of Brick Gentry, P.C., West Des Moines, for appellants.

Deborah L. Petersen of Petersen Law PLLC, Council Bluffs, for

appellee Michael Jorgensen. 2

Alexander E. Wonio and David L. Brown of Hansen, McClintock &

Riley, Des Moines, for appellee Mark Jorgensen.

Leo P. Martin (argued) of Peters Law Firm, P.C., Council Bluffs, court

visitor and former guardian ad litem for Marvin M. Jorgensen. 3

McDERMOTT, Justice.

Marvin Jorgensen suffered a stroke in 2016 that left him unable to

manage his nearly 18,000 acres of Iowa farmland. Before his stroke,

Marvin had leased almost half his farmland to his children and several

grandchildren in “handshake” agreements that Marvin never put in

writing. One set of family members generally didn’t know the rental rates

that Marvin provided to another. After the stroke, Marvin’s court-

appointed conservator entered into new written leases with family

members that were intended to continue with Marvin’s practice of rent discounts from market rates. The conservator included—at the

unanimous recommendation of all three of Marvin’s children, each of

whom had handshake leases with Marvin—a $40-per-acre discount with

a lease term lasting until 2030.

But about six months after signing the written leases, in the midst

of clashes among family members that continued to surface involving

Marvin’s farmland, the conservator filed a motion seeking direction on

whether the farm leases it entered into on Marvin’s behalf were

appropriate. Marvin’s two sons came forward claiming to have

misrepresented facts surrounding Marvin’s prior rent discount practices

that the conservator relied on when it entered into the written family

leases. The district court concluded the leases were inconsistent with

Marvin’s past practices and reformed the leases to provide a $25-per-acre

discount. On appeal, the court of appeals reversed the district court’s

ruling as to the reformation of the conservator’s farm leases with Marvin’s

daughter.

On further review, Marvin’s sons and guardian ad litem ask us find the district court in this situation had the power to reform the family leases

that the conservator entered into on Marvin’s behalf or, alternatively, to 4

find the discounted rental rate in the family leases constituted an

unauthorized “gift” that separately supports the district court’s

reformation of the leases.

I.

Because this is an equitable proceeding, we recite the facts as we

find them in our de novo review. Iowa Code § 633.33 (2017); Smith v.

Harrison, 325 N.W.2d 92, 93 (Iowa 1982). Marvin had three children:

Michael Jorgensen, Mark Jorgensen, and Roxann Wheatley. After

Marvin’s stroke, disagreements flared among the children concerning the handling of his ongoing affairs. The three children, along with Marvin’s

guardian ad litem (attorney James Mailander), Marvin’s conservator

(Security National Bank), one of Marvin’s grandsons, and their respective

attorneys, all participated in mediation to resolve their disputes. The

mediation produced a settlement memorialized in the “Jorgensen Family

Settlement Agreement.” The first paragraph of the family settlement

agreement states: “The Parties desire to reconcile their differences,

preserve Marvin’s testamentary intent[,] and facilitate their future mutual

cooperation.” Security National Bank agreed to serve as Marvin’s

conservator “provided that Mark, Roxann, and Michael agree to form a

Family Council to provide it with assistance and guidance regarding the

management of Marvin’s estate.”

The newly-created family council that the three siblings formed

would provide “guidance and assistance” to the conservator in discharging

the conservator’s duties. The conservator agreed to give “due deference,

which will not be unreasonably withheld, as to matters and issues on

which the family council unanimously consents, in writing and signed by all parties,” so long as the action didn’t contravene Marvin’s intent or the

conservator’s fiduciary duties. The family settlement agreement stated 5

that determinations of Marvin’s intent would take into consideration his

“past course of dealing with his children and their family members.”

The family settlement agreement included an attached “Family

Recommendation to Conservator” signed by all three family council

members. In the recommendation, the siblings unanimously

recommended to the conservator that (1) “[a]ll current farm leases will

remain in effect”; (2) “[a]ll farm leases shall be extended to the year 2030”;

and (3) “[r]ents will be calculated at the Iowa State University cash rent for

medium quality ground, effective March 1, 2018 less $40 per acre as per past course of dealing.”

Marvin’s guardian ad litem filed an application seeking the district

court’s approval of the family settlement agreement with the attached

family council recommendation. No one filed an objection or requested a

hearing on the application. The district court entered an order approving

the family settlement agreement on January 31, 2017.

In May, the conservator filed an application seeking the court’s

authorization and direction to enter into leases and other agreements to

manage Marvin’s farmland. Marvin’s guardian ad litem (a new one,

attorney Clint Hight, who replaced Mailander in April) filed an answer to

the conservator’s motion stating that it would be in Marvin’s best interests

“to authorize the Conservator to perform the acts requested in the said

applications as long as the Conservator gives appropriate consideration to

the family settlement agreement filed herein on January 31, 2017 and

exercises such authority in accordance with their fiduciary duty to the

ward.” The district court granted the application and ordered the

conservator to enter into the leases. The conservator did as ordered. By September, the conservator had

signed farm leases on Marvin’s behalf with all family-member tenants. The 6

leases included, as set out in the recommendation attached to the family

settlement agreement and urged by Marvin’s guardian ad litem, a $40-per-

acre discount from the Iowa State University cash rental rate and a lease

term that ran to 2030.

By late fall, new disputes started flaring among the siblings. The

issues included, for instance, whether the new leases permitted Michael

free access to Roxann’s farmland for winter cornstalk grazing for his cattle

herd, a practice Michael claimed their father had always allowed, and

whether land previously set aside in a crop reserve program should have been included in a lease with Michael or with Roxann’s son Dallas

Wheatley. So in February 2018, about six months after the family leases

had been signed, the conservator filed an application asking the district

court to review issues surrounding the farm leases. The conservator made

reference to having not been informed of Marvin’s past practices in

permitting the winter foraging on other tenants’ properties, and to

criticism that the conservator hadn’t properly looked out for Marvin’s best

interest when it entered into leases with the $40-per-acre discounts and

lengthy lease terms. The conservator asked the district court to determine

whether it had complied with its fiduciary duties to Marvin when it gave

deference to the family council’s recommendation on the leases and

requested that the court either adjust the family members’ leases or

confirm the propriety of the existing leases.

In the course of the siblings’ new dispute, Michael and Mark

indicated that the $40-per-acre rent discounts were in fact inconsistent

with Marvin’s prior practice—contradicting the family council

recommendation they’d each signed more than a year earlier. When questioned at a hearing about what had caused him to change his position

on this issue, Michael testified that he’d recently learned that before his 7

stroke, Marvin had spoken with a farm management company about

managing his farm properties and, based on that discussion, the farm

management company presented Marvin with a proposal that would have

provided a $25-per-acre discount to family members. Michael thus seems

to have disputed not the fact that Marvin provided his family members

rent discounts but merely the amount of the discounts. Mark claimed his

father provided his children no discounts on rent. Roxann, for her part,

maintained that the discounts in the new leases were consistent with

Marvin’s past practice (if anything, not as extensive) and that no legal basis existed to modify the leases.

The district court ordered the guardian ad litem to negotiate a

contract with one of the farm management companies that Marvin had

spoken with (but didn’t retain) to manage all Marvin’s farmland in place of

the conservator. The court then directed the to-be-retained farm

management company to rewrite all the family leases to include only a

$25-per-acre discount as opposed to the $40-per-acre discount in the

existing family leases. The district court also directed the farm

management company to reform the existing leases to prohibit subleasing

at a profit and to correct certain errors the court found in describing who

had leased two particular farms (the Chappel farm and the Snake farm) as

between Michael and Dallas. The district court’s order also dissolved the

family council that had been created in the family settlement agreement.

The district court’s ruling made no comment on the credibility of any

witnesses and made no finding of misrepresentation or fraud associated

with the conservator’s existing leases. Rather, it found the existing leases

“the product of too many errors” and deemed the $40-per-acre discount “not prudent,” particularly considering the length of the leases. 8

Both Roxann (with her husband Rick Wheatley and son Dallas) and

the conservator filed motions to amend or enlarge the district court’s order

under Iowa Rule of Civil Procedure 1.904(2). In response, the district court

clarified that it was terminating the family settlement agreement (in

conjunction with dissolving the family council), and made other relatively

minor changes to particular findings or conclusions, but left unchanged

the substance of the original ruling.

The Wheatleys appealed. The court of appeals affirmed in part and

reversed in part the district court’s ruling, holding principally that the district court lacked authority to reform the Wheatleys’ leases with the

conservator. Michael, Mark, and Marvin’s guardian ad litem (a new one,

attorney Leo Martin, who replaced Hight shortly after the Wheatleys

appealed) sought further review, which we granted. While this case

remained pending on appeal, Marvin passed away at the age of 92.

Attorney Martin thus continues in this appeal as “court visitor” under Iowa

Code section 633.562 (2020) instead of guardian ad litem.

II.

The court visitor argues, as an initial matter, that the conservator

lacked “sufficient prior court approval” to enter into the family leases in

the first place, and thus the district court acted within its power to require

changes to leases that had never been authorized. Under Iowa law, a

conservator generally must give notice and receive specific prior

authorization from the court before the conservator may take certain

actions on the ward’s behalf. Id. § 633.647 (2017). The law specifically

requires prior authorization before a conservator may lease a ward’s real

property. Id. § 633.647(2). But under these facts, we find the conservator had specific prior

authorization to enter into the family leases. Marvin’s guardian ad litem 9

filed the family settlement agreement with its attached family council

recommendation. No one opposed or requested a hearing on the

application. The conservator thereafter sought an order “authorizing and

directing the Conservator to execute and enter into any and all

agreements, leases and instruments, and to perform all other acts

necessary or appropriate to manage the Ward’s farm land.” Again, no one

filed any objection or requested a hearing. To the contrary, the guardian

ad litem filed an answer to the conservator’s motion stating that it would

be in Marvin’s best interest to authorize the conservator to enter into the leases “as long as the Conservator gives appropriate consideration to the

family settlement agreement filed herein on January 31, 2017 and

exercises such authority in accordance with their fiduciary duty to the

ward.” The district court granted the application and ordered the

conservator to enter into the farm leases. The conservator dutifully

complied. The process undertaken fulfilled the process required by law.

See Iowa Code §§ 633.388 (requiring a request to lease property to “set

forth the reasons for the application and describe the property involved”),

.389 (requiring notice to interested persons), .647 (requiring notice and

prior approval by the court). The conservator didn’t need to go back to the

district court for yet another authorization to enter into the family leases.

Michael, Mark, and the court visitor argue more forcefully that

Marvin’s handshake leases never actually included the $40-per-acre

discounts included in the conservator’s leases, and that the conservator

thus breached its fiduciary duty to Marvin because the conservator’s

request for authorization was founded on a misrepresentation. The

curious quirk here, of course, is that the misrepresentation the conservator relied on was perpetrated by the same two siblings—Michael

and Mark—advancing this argument. Roxann contends that, certainly as 10

to the conservator’s leases with the Wheatley family, the leases are

consistent with Marvin’s past practice and there has been no

misrepresentation that would warrant reforming them.

A conservator owes a fiduciary duty to the ward. Iowa Code

§ 633.3(17); In re. Conservatorship of Rininger, 500 N.W.2d 47, 50 (Iowa

1993). We find no breach of fiduciary duty in the conservator’s conduct.

Again, all three of Marvin’s children entered into the family settlement

agreement with its attached recommendation stating that the proposed

$40-per-acre discount was consistent with Marvin’s past course of dealing. The district court entered an order approving the family settlement

agreement as requested. Our jurisprudence establishes that family

settlement agreements are favored in law. Gustafson v. Fogleman, 551

N.W.2d 312, 314 (Iowa 1996). Courts have long promoted the voluntary

settlement of legal disputes, and courts likewise refrain from inordinately

scrutinizing the parties’ terms of settlement. Wright v. Scott, 410 N.W.2d

247, 249 (Iowa 1987). We’ve noted exceptions in prior cases, but those

exceptions aren’t implicated in this case. See In re Est. of Swanson, 239

Iowa 294, 302, 31 N.W.2d 385, 390 (1948).

Only after the district court authorization and the conservator’s

consummation of the family leases did Mark and Michael claim that the

discount was inconsistent with Marvin’s past practice. Roxann,

meanwhile, steadfastly maintained the veracity of the discount and its

alignment with Marvin’s past practice. The conservator in this situation

didn’t breach its fiduciary duty when it relied on information from all three

of the ward’s children, each of whom was uniquely—if not ideally—

positioned to provide information on the ward’s past leasing practices with them. We’re presented with no grounds for the conservator to have

disbelieved the family members prior to entering into the leases. Marvin’s 11

own guardian ad litem—tasked in this role with “advocat[ing] for the best

interests of the ward,” Est. of Leonard ex rel. Palmer v. Swift, 656 N.W.2d

132, 142 (Iowa 2003)—endorsed providing the $40-per-acre discounts and

2030 lease terms in response to the conservator’s motion seeking

authorization. Under the facts of this case, we cannot find the conservator

acted imprudently or disloyally to the ward by including the $40-per-acre

discounts, and we thus find no breach of the conservator’s fiduciary duty

on this ground.

Concerning the unusual length of the family lease terms (to 2030) as indicating a breach of the conservator’s fiduciary duty, Marvin’s will

specified that his property wouldn’t be liquidated until 2030, at which time

it would be donated to a charity he’d selected. Marvin might reasonably

have selected the year 2030 so his children could continue farming his

land until they neared a typical retirement age. The conservator’s

inclusion of the 2030 lease term suggests consistency with, not

contradiction of, Marvin’s wishes, and we again find no breach of fiduciary

duty on this ground. See Iowa Code § 633.644 (authorizing orders in a

conservatorship that preserve a living ward’s testamentary intent

expressed in a prior will); see also id. §§ 633.641(2) (2020) (conservators

when investing or selecting property for distribution “shall consider any

estate plan or other donative, nominative, or appointive instrument of the

protected person”) .670 (conservators in managing estate assets must take

into account “the protected person’s preference, values, and prior

directions to the extent known to, reasonably ascertainable”).

Marvin’s interactions with the two farm management companies

that led to a proposal that included a $25-per-acre discount for family members doesn’t dictate a different result. The lack of written leases,

coupled with the fact one set of family members didn’t know the rental 12

rates that Marvin provided to others, leaves us without certainty of the

amount of discount Marvin actually provided to each of his family

members. The farm management company interactions suggest Marvin

did, in fact, provide discounts to family tenants, contrary to the thrust of

Mark’s testimony otherwise. And Marvin, we mustn’t forget, elected not to

accept the farm management company’s proposal with its $25-per-acre

discount. The farm management company interactions prove neither that

Marvin’s past practice involved discounts of $25 per acre nor that his

future wish involved discounts in that amount. Michael, Mark, and the court visitor further argue we should find a

breach of fiduciary duty nonetheless because the conservator made

statements during the course of the proceedings below suggesting it

admitted it had breached its fiduciary duties by entering into the family

leases. But reading the record in full, we find the conservator more

accurately poses questions as opposed to concessions. The conservator’s

motion asked the court to determine whether the conservator breached its

duties by relying on what Michael and Mark later claimed were

misrepresentations, which was the initial step (and initial question) the

district court needed to address. We find no breach of fiduciary duty based

on this argument.

Even without a breach of the conservator’s fiduciary duty, Michael,

Mark, and the court visitor argue that the brothers’ misrepresentations in

the family council’s recommendation (attached to the court-approved

family settlement agreement) misled the district court and caused the

court to authorize the family leases under false pretenses. The district

court, they argue, thus properly exercised its equitable powers to protect the ward through reforming the leases under an inherent authority to

protect the ward. 13

But the court generally protects a ward in a conservatorship not

through exercising some unrestrained equitable power of its own but

through exercising control over the conservator. See, e.g., Iowa Code

§§ 633.641 (2017) (prescribing the duties of a conservator), .668

(prescribing when a conservator may make gifts), .670 (prescribing the

reporting duties of a conservator). The Iowa Code makes most significant

actions by conservators subject to prior authorization from the court. Id.

§ 633.647(1)–(8). The specific prior authorization requirement reveals

where the legislature sought to place the court’s oversight function: before the conservator acts.

The logic of a pre-authorization focus needs little exposition, as we’ve

long held that once an action is completed, a conservator’s action binds a

ward in the same way any legally competent person may bind himself. See

Kowalke v. Evernham, 210 Iowa 1270, 1278, 232 N.W. 670, 674 (1930)

(“When duly authorized, a guardian, without becoming personally liable

himself, may bind the ward’s estate for an obligation.”); cf. In re Est. of

Harker, 113 Iowa 584, 588, 85 N.W. 786, 787 (1901). Requiring specific

prior authorization for conservator action appears throughout the Iowa

Code’s conservatorship provisions; after-the-fact judicial reformation of

preapproved conservator action appears nowhere in these provisions.

The court visitor also cites to section 633.10 as granting the district

court power to modify contracts a conservator enters into on a ward’s

behalf. But that statute grants the court no such power. Section 633.10

is a jurisdictional statute. See Iowa Code § 633.10 (titled “Jurisdiction”).

It states that “the district court sitting in probate shall have jurisdiction of

. . . [c]onservatorships and guardianships,” including “the administration, settlement and closing of conservatorships.” Id. § 633.10(3). Yet the

district court’s jurisdiction over the administration of an estate does not, 14

without more, permit the court to rewrite contracts that it previously

authorized the conservator to enter into and where the conservator

breached no fiduciary duty to the ward.

Parties seeking to set aside a written instrument affecting real estate

bear the burden to establish their right to relief by clear, satisfactory, and

convincing proof. Smith, 325 N.W.2d at 93. Reformation of written

instruments generally requires proof “of fraud, deceit, duress, or mutual

mistake.” Iowa R. App. P. 6.904(3)(k); see also Kufer v. Carson, 230 N.W.2d

500, 504 (Iowa 1975). In our de novo review, as to the Wheatleys’ actions surrounding the leases, we find none of these defects. Marvin’s sons and

court visitor thus fail to meet their heightened burden of proof to reform

the Wheatleys’ leases under this argument.

Michael, Mark, and the court visitor raise a further argument: Even

if the leases were properly authorized, the conservator failed to seek and

receive authorization for what must be considered gifts to Marvin’s family

members by virtue of the discounts contained in the leases. As a result,

they argue, the conservator would have breached its fiduciary duty to

Marvin and the district court would have been empowered to rescind the

gifts.

Iowa Code § 633.668 provides that “[f]or good cause shown and

under order of court, a conservator may make gifts on behalf of the ward

out of the assets under a conservatorship to persons . . . to whom or to

which such gifts were regularly made prior to the commencement of the

conservatorship.” We’ve never previously addressed whether, when a

conservator enters into a lease, a discounted rental rate constitutes a “gift”

that brings it within the restrictions on the conservator’s powers to make gifts. And “gift” isn’t defined in chapter 633. 15

Yet even if we were to determine the discounts in the leases

constituted “gifts” to the tenants, the family settlement agreement (which

included the family council’s recommendation of the discount), coupled

with the district court’s June 2018 order authorizing the conservator to

enter into farm leases, satisfies the legal requirements of Iowa Code section

633.668 as “regularly made prior to the commencement of the

conservatorship.” The district court disagreed not with the fact Marvin

had previously provided discounts to his family members but merely the

amount of the per-acre discount ($40 versus $25). We find the evidence supports the $40-per-acre discount in the Wheatleys’ leases (as previously

advanced by the entire family council, the guardian ad litem, and the

conservator, and authorized by the court) and thus find the discounts were

regularly made prior to the conservator’s appointment as required by the

statute.

III.

We thus affirm the court of appeals’ ruling reversing the district

court’s order insofar as it modifies the rent rates, duration, and for-profit

subleasing rights in the Wheatleys’ leases. “[W]hen we grant further

review, we have discretion to let the court of appeals decision stand on

specific issues,” State v. Swift, 955 N.W.2d 876, 885 (Iowa 2021), and we

do so on the court of appeals’ determinations concerning the Chappel

Farm issue. We otherwise affirm the district court’s ruling in its other

determinations.

DECISION OF THE COURT OF APPEALS AFFIRMED; DISTRICT

COURT JUDGMENT AFFIRMED IN PART AND REVERSED IN PART.

All justices join this opinion. Waterman, J., files a special concurrence. 16

#18–1235, Guardianship & Conservatorship of Jorgensen

WATERMAN, Justice (concurring specially).

I join the court’s opinion but write separately to emphasize that

today’s fact-bound decision should not be interpreted as weakening the

statutory requirement for district court approval of gifts that a conservator

makes on behalf of a ward from the assets of the conservatorship.

The governing provision of the probate code provides,

For good cause shown and under order of court, a conservator may make gifts on behalf of the ward out of the assets under a conservatorship to persons or religious, educational, scientific, charitable, or other nonprofit organizations to whom or to which such gifts were regularly made prior to the commencement of the conservatorship, or on a showing to the court that such gifts would benefit the ward or the ward’s estate from the standpoint of income, gift, estate or inheritance taxes. The making of gifts out of the assets must not foreseeably impair the ability to provide adequately for the best interests of the ward.

Iowa Code § 633.668 (2017). The ward in this case, Marvin Jorgensen,

owned 18,000 acres of Iowa farmland. Before his stroke and resulting

conservatorship, he had a longstanding practice of renting land to his

children at discounted rates. That practice continued during the

conservatorship. In my view, these below-market leases constitute gifts.

See, e.g., Wineman v. CIR, 79 T.C.M. (CCH) 2189, 2000 WL 839962, at *10 (2000) (holding that “there is no dispute that the below-market rent is a

taxable gift”). Yet the discounted leases continued a practice “regularly

made prior to the commencement of the conservatorship” as required

under Iowa Code section 633.668. Given the size of Jorgensen’s estate,

the leases at issue would not “impair the ability to provide adequately for

the best interests of the ward”—another requirement for court approval of a gift. Iowa Code § 633.668; see also In re Brice’s Guardianship, 233 Iowa

183, 184, 189–90, 8 N.W.2d 576, 577, 580 (1943) (cautioning that 17

“payments to one holding no legal obligation against the [ward] should not

be authorized unless adequate provision has first been made for the ward”

while affirming monthly payments to ward’s nephew when “it is certain

that neither the ward nor his large estate will ever suffer because of these

comparatively small payments”).

The district court previously approved the Jorgensen Family

Settlement Agreement providing for such discounted leases. The district

court’s ruling under review in this appeal modified the leases on other

grounds, not because of any alleged failure to comply with the court approval requirements of section 633.668. Given the present posture of

the case and our de novo review, I agree with our court’s determination

that in light of the family settlement agreement, the parties to this appeal

have failed to show the leases should be set aside or modified. However,

the ultimate recipient of the extensive land holdings and beneficiary under

Jorgensen’s estate, the Mayo Clinic, was not a party to the family

settlement agreement and was denied leave to intervene in this appeal

after the court of appeals decision restored the leases. The Mayo Clinic

has not yet had its day in court on its own challenge to the lease terms as

gifts lacking the requisite court approval. Whether the Mayo Clinic’s

challenge has merit is a question for another day in district court.