Iowa Supreme Court upholds District Court’s Grant of Motion to Dismiss in Breach of Contract

Posted on: January 4th, 2021

Plaintiff, Benskin, Inc. entered into a written loan agreement with West Bank to borrow money.  On May 18, 2018, Benskin sued West Bank in a three-count petition alleging breach of (I) the 2007 contracts, (II) the 2006 promissory note, and (III) the implied duties of good faith and fair dealing. West Bank filed a motion to dismiss on grounds that the seven-year statute of limitations in Iowa Code section 524.221(2) (2018) barred all claims.

The district court granted the motion to dismiss all claims. Although Plaintiff resisted arguing that equitable estoppel applied, the District Court ruled that, while equitable estoppel could apply to contract actions, Plaintiff failed to allege a “specific statement or action as the basis of its equitable estoppel claim.”  On appeal, the Iowa Court of Appeals reversed, holding that equitable estoppel was adequately pled to avoid a motion to dismiss.

In reversing the Iowa Court of Appeals, the Iowa Supreme Court held that the courts apply the statute of limitations in existence at the time the action accrues, not the current statute. As such, the Supreme Court held that the action was time barred. In addressing the equitable estoppel argument, the Supreme Court held that while equitable estoppel was available, it required Plaintiff to file the claim within a reasonable period of time of learning of the same. Plaintiff failed to do so when Plaintiff knew of the claim within the statutory period, but did not file the claim until after the statute of limitations ran on the cause of action. The Court further held that the discovery rule did not apply in situations where a specific event triggers the cause of action, i.e., the breach of a contact on a specific date or failure to abide by the contract on a specific date.

Benskin, Inc. v. W. Bank, No. 18-1966, 2020 WL 7635833, (Iowa Dec. 23, 2020).

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