Iowa Department of Human Services v. Morse Healthcare Services, Inc. D/B/A Faith Ridge Life Center, Morse Enterprises, Inc. D/B/A Kevington Lane, Manor of Malvern, Inc., Kevington Lane, Inc., and Mary Morse-Bolton

• Court: Supreme Court of Iowa
• Decided: April 10, 2015
• Docket: 14–1542
• Status: Published

Opinion

IN THE SUPREME COURT OF IOWA No. 14–1542

Filed April 10, 2015

IOWA DEPARTMENT OF HUMAN SERVICES,

Plaintiff-Appellee,

vs.

MORSE HEALTHCARE SERVICES, INC. d/b/a FAITH RIDGE LIFE CENTER, MORSE ENTERPRISES, INC. d/b/a KEVINGTON LANE, MANOR OF MALVERN, INC., KEVINGTON LANE, INC., and MARY MORSE-BOLTON,

Defendants,

KLAASMEYER & ASSOCIATES, INC.,

Receiver-Appellee,

and

BANK IOWA,

Intervenor-Appellant.

Appeal from the Iowa District Court for Polk County, Mary Pat

Gunderson, Judge.

A bank appeals a district court decision permitting the payment of

receivership expenses out of property in which it has a prior perfected

security interest. REVERSED AND REMANDED WITH DIRECTIONS.

Steven H. Krohn, Smith, Peterson Law Firm, Council Bluffs, and

William B. Serangeli and Joseph M. Borg, Dickinson, Mackaman, Tyler &

Hagen, P.C., Des Moines, for appellant. 2

Thomas J. Miller, Attorney General, and Amy C. Licht, Assistant

Attorney General, for appellee Iowa Department of Human Services.

Jeffrey W. Courter, Nyemaster Goode, P.C., Des Moines, for

appellee Klaasmeyer & Associates, Inc.

Robert L. Hartwig, Johnston, for amicus curiae Iowa Bankers

Association. 3

PER CURIAM.

This is the companion interlocutory appeal with facts that mirror

Iowa Department of Human Services v. DeWitt Bank and Trust Co., ___

N.W.2d ___ (Iowa 2015), decided today.

As in DeWitt Bank, the Iowa Department of Human Services (DHS)

filed an application for relief against the defendant health care providers,

Morse Healthcare Services, Inc., Morse Enterprises Inc., Manor of

Malvern, Inc., Kevington Lane, Inc., and Mary Morse-Bolton, under Iowa

Code section 249A.44 (2015). See DeWitt Bank, ___ N.W.2d at ___. The

district court appointed a receiver without formal notice to Bank Iowa, a

lender that held perfected security interests in the defendant health care

providers’ property. Bank Iowa intervened and resisted the receiver’s

applications for fees and expenses. The district court ruled the

receivership expenses should be paid out of property in which Bank Iowa

had prior lien interests. Bank Iowa sought interlocutory review. We

granted its application and expedited the appeal.

In DeWitt Bank, we concluded that Iowa follows the common law

rule that receivership expenses can be charged to secured property only

if the secured creditor has consented to the receivership or benefited

therefrom. ___ N.W.2d at ___. Based on the reasoning set forth in DeWitt

Bank, we reverse the decision of the district court and remand the case

for further proceedings consistent with this opinion. Costs on appeal are

taxed against DHS.

REVERSED AND REMANDED WITH DIRECTIONS.

All justices concur except Waterman, J., who takes no part.

This opinion shall not be published.