AgDM newsletter article, October 1998

Mediation in Iowa – under Chapters 654A, B, & C

by John R. Baker, Attorney at Law, Iowa Concern Hotline, 515.331.8908, jrbaker@iastate.edu

Iowa Code Chapter 654 was signed into law in 1985 in response to the farm debt crisis of the 1980's.  The law required the mandatory mediation of certain credit disputes between farmers and creditors.  Since the inception of Chapter 654, approximately 20,000 disputes have been mediated.

Since the inception of Chapter 654, approximately 20,000 disputes have been mediated

The provisions of Chapters 654A, B, and C are carried out by the Iowa Mediation Service, Inc., (hereinafter IMS) a nonprofit corporation organized pursuant to the laws of the state of Iowa.  IMS contracts with the Farm Assistance Program Coordinator who is appointed by the Attorney General.  The authority for this contractual arrangement may be found in Section 13.13 Code of Iowa. 

Chapter 654A

Chapter 654A provides for the mandatory mediation of farmer-creditor disputes involving a secured debt or security interest in agricultural property of twenty thousand dollars or more.  Section 654A.6 requires a creditor to file a request for mandatory mediation with the IMS prior to initiating an action to enforce a debt against agricultural property.  This section covers forfeiture actions, actions to enforce a secured interest, garnishment, levy on, seize, execute on, garnish, or attach agricultural property.  Note that the creditor must receive a mediation release prior to initiating any of the above listed actions.  The notice of right cure time limits run concurrently with time period for mediation which may be in maximum of forty-two days  and may be extended by mutual agreement of the parties.  

Section 654A.8 provides that, unless the borrower waives mediation, that the IMS shall within twenty-one days after receiving a request for mediation schedule a mediation session.  Notice must be sent to the borrower, all known creditors and to the assigned mediator.  This chapter may have increased relevance due to the September 23, 1998 decision by the Iowa Supreme Court that found that nuisance protection provided by Chapter 352 of the Code of Iowa, the ag zoning law, is unconstitutional.

The initial mediation session must be held within twenty-one days of the issuance of the notice of the mediation session.  The time periods affecting and under which the remedies affected by this Chapter or tolled until a release is issued by the IMS. The parties to mediation may continue to mediate the dispute after the end of the mediation period.  Upon a showing of good cause the time periods may be extended for up to 30 days.

Chapter 654B

Chapter 654B provides for the mediation of disputes which may arise concerning animal care and feeding contracts and nuisances.  Subsection 2 defines a dispute as a controversy between a farm resident and another person which claim may be resolved by a civil proceeding in law or equity, provided that the claim relates to either performance of either party under care and feeding contract or the allegation of a nuisance interfering with the enjoyment of the other person. 

The remaining Sections and Subsections of Chapter 654B contain provisions similar to those in 654A concerning scheduling of mediation, participation, agreements, releases and extensions of deadlines.

Chapter 654C

Chapter 654C provides for the mediation of disputes involving an animal feeding operation structure.  Section 654C.1, Subsection 2 defines a dispute as a controversy between an owner of an animal feeding structure and a neighbor which arises from the negotiations of the parties to establish an animal feeding structure within the separation distances required pursuant to Chapter 455B.162.   The remaining Sections and Subsections of Chapter 654C contain provisions similar to those in 654A concerning scheduling of mediation, participation, agreements, releases and extensions of deadlines.

Supreme Court Cases

There have been two Iowa Supreme Court cases concerning Chapter 654A and 654B and both cases involved the denial of a release because of lack of participation in mediation of one of the parties.

Graham v. Baker
Graham v. Baker, 447 N.W.2d 379 (1989) involved the contract sale of farm land by William E. and Velda Graham to Allen and Cindy Henry.  The Henry's were unable to make the required payment and the matter proceeded to mediation.  The mediation did not result in a voluntary resolution of the matter and the mediator recommended to the IMS  that no release be issued to the Grahams because of their attorney's failure to participate in the mediation meeting.  The mediator's recommendation was made in accordance with the standards the IMS had promulgated concerning participation in mediation.  The Grahams sued for a writ of mandamus to compel the IMS to issue the release.  The District Court granted the writ and the Henrys appealed.

The Court held that IMS was not an agency of the state for purposes of judicial review and that the IMS had exceeded its authority in promulgating rules for participation more stringent than contemplated by the statute. 

 

Arends v. Iowa Select Farms
The second case involving participation is Arends V. Iowa Select Farms, L.P. 556 N.W.2d 812 (1996).  This case involved a mediation meeting conducted under Chapter 654B Code of Iowa.  Thirty-five plaintiffs were involved in a dispute concerning the siting of a hog confinement facility proposed by Iowa Select Farms.  Fourteen of the plaintiffs attended a mediation meeting and twenty-one did not attend.   IMS granted a release to the fourteen plaintiffs who did attend and refused to grant a release to those who did not attend.  All plaintiffs appealed the decision of the IMS not to issue a release.  The defendant filed a motion for summary judgment which granted by the District Court and plaintiffs appealed.

The Court cited the language of 654B.4(3) in reaching its conclusion that the plaintiffs had participated in mediation.   Section 654B.4(3) states, "At the meeting, a party to the dispute may be represented by counsel or appear with a consultant to assist the party in mediation."  The defendant argued that this provision requires a party to either attend personally or to attend personally with counsel or consultant.  The Court rejected the defendant's interpretation of this section.

Amendments to Chapters 654A, B, & C

The Legislature passed and the Governor signed into law a bill amending Chapters 654A, B and C.  These amendments clarified the participation requirement under all three chapters.

Chapter 654A.11, Subsection 3, paragraph b was amended as follows: (all changes are underlined) 

The mediator shall issue a mediation release unless the creditor fails to personally attend and participate in all mediation meetings.  The mediator shall issue a mediation release if the borrower waives of fails to personally attend and participate in all mediation meetings, regardless of participation by the creditor.  However, if a creditor or borrower is not a natural person, the creditor or borrower must be represented by a natural person who is an officer, director, employee, or partner of the creditor or borrower.  If a person acts in a fiduciary capacity of the creditor or borrower, the fiduciary may represent the creditor or borrower.  If the creditor or borrower or eligible representative is not able to attend and participate as required in this paragraph, due to physical infirmity, mental infirmity or other exigent circumstances determined to be reasonable by the farm mediation service, the creditor or borrower must be represented by another natural person.  Any representative of the creditor or borrower must be authorized to sign instruments provided by this chapter, including a mediation agreement or a statement prepared by the mediator that mediation was waived.  This section does not require the creditor or borrower to reach an agreement, including restructuring a debt, in order to receive a mediation release.

Chapter 654B.4 Subsection 3 was amended to read:

The mediator shall issue a mediation release unless the other party desiring to initiate a civil proceeding to resolve the dispute fails to personally attend and participate in all mediation meetings.  The mediator shall issue a mediation release if the farm resident waives of fails to personally attend and participate in all mediation meetings, regardless of participation by the other party.  However, if the other party or the farm resident is not a natural person, the other party or farm resident must be represented by a natural person who is an officer, director, employee, or partner of the other party or farm resident.  If a person acts in a fiduciary capacity of the other party or farm resident, the fiduciary may represent the other party or farm resident.  If the other party or farm resident or eligible representative is not able to attend and participate as required in this paragraph, due to physical infirmity, mental infirmity or other exigent circumstances determined to be reasonable by the farm mediation service, the other party or farm resident must be represented by another natural person.  Any representative of the other party or farm resident must be authorized to sign instruments provided by this chapter, including a mediation agreement or a statement prepared by the mediator that mediation was waived.  This section does not require a party to reach an agreement.   This section does not require a person to change a position, alter an activity which is a subject of the dispute, or restructure a contract in order to receive a mediation release.

Chapter 654C.5 Subsection 2 was amended to read:

The parties agreeing to mediation shall personally attend and participate in all mediation meetings.  However, if a party is not a natural person party must be represented by a natural person who is an officer, director, employee, or partner of the party.  If a person acts in a fiduciary capacity for a party, the fiduciary may represent the party.  If the party or eligible representative is not able to attend and participate as required in this paragraph, due to physical infirmity, mental infirmity or other exigent circumstances determined to be reasonable by the farm mediation service, the party must be represented by another natural person.  Any representative of a party must be authorized to sign instruments provided by this chapter, including a mediation agreement or a statement prepared by the mediator that mediation was waived.  This section does not require a party to reach an agreement.   This section does not require a person to change a position, alter an activity which is a subject of the dispute, alter an application for a permit for construction of an animal feeding operation, or restructure a contract.

Note that the amendments to these sections require any party to a dispute to either attend all mediation meetings personally or, under certain circumstances, to be represented by another person.  Any party to a dispute may be accompanied by counsel or a consultant.  These changes do not require any party to reach an agreement or to change a position. 

 

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