author: LAVORATO, Chief Justice.

text:
    Elizabeth OPPERMAN, Appellant, v. M. & I. DEHY, INC., Appellee.
    No. 00-1314.
    Supreme Court of Iowa.
    May 8, 2002.

      John F. Lorentzen and Debra L. Hulett of Nyemaster, Goode, Voigts, West, Han-sell & O’Brien, P.C., Des Moines, for appellant.
    A. Eric Neu of Neu, Minnich, Comito & Neu, P.C., Carroll, for appellee.
   LAVORATO, Chief Justice.

Elizabeth Opperman sued M. & I. Dehy, Inc. (M. & I.) in equity to rescind and cancel a mortgage on property owned by Elizabeth. Elizabeth and her husband, Ivan, executed a promissory note and the mortgage in question to M. & I., a corporation owned by their son, John. The court held that Elizabeth failed to prove the mortgage was -without consideration as she had contended and denied her relief. The court awarded M. & I. attorney fees and costs.

Elizabeth appealed and we transferred the case to the court of appeals, which agreed with Elizabeth’s contention that the note and mortgage were without consideration. The court held that the district court erred in (1) denying Elizabeth’s petition to rescind and cancel the mortgage and (2) awarding M. & I. attorney fees and costs.

M. & I. filed an application for further review, which we granted. We find the mortgage was not supported by valid consideration. However, we apply the maxim of “clean hands” to deny relief to the parties. We therefore vacate the court of appeals’ decision and affirm in part and reverse in part the district court’s judgment.

I. Scope of Review. Because this is an equitable action, our review is de novo. Norwest Bank Nebraska v. Philips Realty Co., 594 N.W.2d 3, 6 (Iowa 1999). Although we are not bound by the district court’s factual findings, we give weight to those findings, especially when witness credibility is in issue. Iowa R.App. P. 6.14(6)(g); Norwest Bank Nebraska, 594 N.W.2d at 6. Because the district court had the witnesses before it, we think it was in a far better position to judge their credibility. Hatheway v. Hanson, 230 Iowa 386, 396, 297 N.W. 824, 828 (1941).

II. Facts.

Besides John, Elizabeth and Ivan have a son, Jim, a daughter, Valarie Opperman Roberts, and three other daughters. In 1985, M. & I. became an active corporation. Jim and John Opperman owned the company in 1990. The main business of the corporation is alfalfa processing.

Also in 1985, Delray, Inc. (Delray) was formed for the sole purpose of purchasing farmland owned by Ivan. At that time, the farmland was subject to litigation and perhaps foreclosure by Farm Credit Services. The initial ownership of Delray is not clear from the record. Jim testified that he was the owner of Delray in 1990, but John testified he owned at least half and up to 100 percent of Delray.

Valarie Opperman Roberts — the two brothers’ sister — owned a house in Manning, Iowa. She lived there a short time and moved sometime during the 1980s. The house remained unoccupied until 1990, and was in need of major improvements. During this time, Ivan and Elizabeth needed a place to live. The two sons and their parents decided' — with Valarie’s approval — that the parents could live in Valarie’s house provided the necessary improvements were made.

By 1990, Ivan and Elizabeth had lost almost all of their assets and were living off social security benefits and a small weekly salary Ivan received from M. & I. John and Jim decided that Delray would purchase the house from Valarie and that M. & I. would pay for the necessary improvements because it had a monthly cash flow from its operations. Delray had only an annual income.

By the purchase and improvements, the two sons intended to place their parents in a comfortable home during their retirement years. John and Jim never intended to seek reimbursement for the improvements. Nor was it their intention to sell the' Manning property to their parents or to charge them rent.

Improvements were made to the Manning property beginning in 1990, while Valarie still owned the property. John and Jim signed checks drawn on M. & I.’s account to pay for the improvements. At this point in time, there was no agreement for the parents to pay for the house or the improvements. John testified that at the time the improvements were made during 1990 and 1991, he did not care whether Delray repaid M. & I. for amounts spent on the improvements. This was so, he testified, because both he and Jim owned the two companies, which made it “like moving money from your left ... pocket and putting it in your right pocket.”

The parents moved into the Manning property in 1991, and since then have never paid any rent. In April 1992, Delray purchased the Manning property on contract from Valarie and her husband for $18,000. A warranty deed to Delray in satisfaction of the contract was recorded on August 12, 1993. The parents made no agreement to repay amounts Delray paid to purchase the home.

In 1993, John decided to expand his farm operations to include a hog confinement operation. Jim and John agreed that a thirty-acre tract of farmland owned by Delray would be set aside for the operation, but John was to obtain the necessary financing. Delray transferred without consideration the thirty acres to M. & I. for use in the hog confinement operation.

After John failed to obtain the necessary financing for the hog confinement operation, he suggested Delray mortgage the Manning property. At the time, due to the improvements, the property was appraised at $80,000, which supported a $44,000 loan. Delray used the $44,000 to pay off a mortgage on the thirty acres to be set aside for the hog confinement operation, pay Valarie the balance of the purchase price for the Manning property, and finance the purchase of assets for the hog building. At the time of trial, Delray was current on the monthly payments toward satisfaction of the mortgage securing the $44,000 loan. John and his wife are personally liable on this debt.

In 1995, Ivan learned about a program offering home improvement subsidies. The subsidies were available to low-income homeowners. Because these subsidies were not available to a non-owner of real estate, Ivan suggested Delray deed the Manning property to him. Delray quit-claimed the Manning property to Ivan on May 17, 1995. The deed, recorded in May 1995, stated, “[t]he consideration for this deed is less than $500 and therefore is exempt from the tax imposed by Chapter 428A of the 1995 Code of Iowa, as amended.” Jim and John, as president and secretary of Delray, respectively, signed the deed.

Shortly after Delray transferred the Manning property to Ivan, one of Ivan’s unsecured creditors, a bank, threatened to collect his outstanding obligation to the bank by pursuing Ivan’s interest in the property. Ivan told Jim and John about the creditor’s threat, which prompted a discussion on how to avoid a loss of the real estate to the creditor.

As a result of that discussion, Ivan executed a promissory note, and mortgage securing the note to M. & I. Ivan executed the note and mortgage on June 1, 1995, in the amount of $35,000. The note indicated it was “finally and fully due, owing and payable on June 1, 2020.” The note bore a ten percent interest rate, but made no provisions for periodic payments of interest or principal. The mortgage provides that it was given as security for a promissory note dated June 1, 1995, for $35,000, which has a due date of June 1, 2020. The mortgage was recorded on June 8, 1995. On the same date, Ivan quitclaimed the Manning property to Elizabeth.

Jim and Ivan testified that John arrived at the $35,000 figure by subtracting the first mortgage ($44,000) from the appraised value of the property ($80,000). John testified the $35,000 amount represented the costs incurred by M. & I. in fixing up the Manning property, but admitted M. & I. incurred at least another $7,000 in expenses.

The evidence supports a finding that the parties never intended that Ivan would pay the note or that M. & I. would ever foreclose on the mortgage. This becomes evident from the note’s due date of 2020. The parties arrived at the due date of 2020 because it was far enough in the future that Elizabeth and Ivan would likely be deceased by that time and the home would revert back to Jim and John, the owners of M. & I. at the time of the mortgage.

John testified that he and Jim did not want to “give[ ] up the house,” so the mortgage and note were “interpreted that through default down the road ... Jim and I would get [the house] ... because at that time Delray and M. & I. were still fifty percent owned by both of us.” In contrast, Jim and Ivan testified that the Manning property and the improvements were a gift to Ivan.

Ownership of M. & I. and Delray became the subject of litigation in the mid 1990s. In 1996, following a settlement, John became sole owner of M. & I., and Jim became sole owner of Delray.

After Ivan and Elizabeth executed the 1995 promissory note and mortgage, John’s relationship with his parents deteriorated. John and his parents have not spoken to each other since 1995. The final blow came when Elizabeth omitted John from her will, leaving her estate to be divided among her remaining children. So if Elizabeth is successful in this suit, John would have no interest in the property upon his parents’ deaths.

II. Issues.

On appeal, Elizabeth contends the district court erred in refusing to rescind and cancel the mortgage. In support of her contention, she argues the district court erred in holding that she failed to prove the mortgage was not supported by consideration.

Not surprising, M. & I. contends there was sufficient consideration for the mortgage. In the alternative, M. & I. seeks to uphold the district court’s ruling on the ground that if fraud was involved, we should leave the parties where they stand. The alternative ground is based on the equity maxim of “clean hands,” a theory M. & I. pled and a theory to which the district court gave serious consideration in refusing Elizabeth relief.

III. Consideration.

Elizabeth contends that the mortgage is not enforceable because it was not supported by any consideration. M. & I; contends, and the district court found, that the improvements funded by M. & I. were sufficient consideration for the mortgage in question.

A. Applicable law. A mortgage is not valid and binding unless supported by sufficient consideration. 54A Am.Jur.2d Mortgages § 29, at 616 (1996). “The consideration can be either a benefit to the promisor or a detriment to the promisee.” Id. Moreover,

[t]he consideration need not always move from the mortgagee to the mortgagor at the time of the execution of the mortgage. On the contrary, a precedent obligation or debt, as between the parties, is sufficient of itself to support the mortgage. Also, the consideration for a mortgage may consist of a loan tó a third person.

Id. at 617; see also CBS Real Estate of Cedar Rapids, Inc. v. Harper, 316 N.W.2d 170, 176 (Iowa 1982) (“A precedent obligation ... constitutes consideration for a mortgage.”).

B. Analysis. The evidence is un-controverted that neither Ivan nor Elizabeth expressly agreed to pay for the improvements made to the Manning home. Nor was there any evidence that the two sons ever intended that their parents pay for the improvements. In addition, the deed to Ivan was a gift not only of the property but the improvements in question as well. The notation on the deed that the consideration for it was less than $500 supports this finding. Therefore, at the time Ivan and Elizabeth signed the note and mortgage, there was no pre-existing debt in the form of an agreement to pay for the improvements to serve as consideration for the mortgage. This alleged preexisting debt forms the sole basis for M. & I.’s claim that consideration supported the mortgage. The district court therefore erred in finding that Elizabeth failed to prove a lack of consideration for the mortgage.

IV. The Clean Hands Maxim.

Although the mortgage lacked consideration, we think for reasons that follow the facts here call for the application of the equity maxim of clean hands.

A. Applicable law. The equity maxim of clean hands

expresses the principle that where a party comes into equity for relief he or she must show that his or her conduct has been fair, equitable, and honest as to the particular controversy in issue. A complainant will not be permitted to take advantage of his or her own wrong or claim the benefit of his or her own fraud or that of his or her privies.

27A Am.Jur.2d Equity § 126, at 605 (1996).

The maxim means
that whenever a party who seeks to set the judicial machinery in motion and obtain some equitable remedy has violated conscience or good faith, or another equitable principle in prior conduct with reference to the subject in issue, the doors of equity will be shut, notwithstanding the defendant’s conduct has been such that in the absence of circumstances supporting the application of the maxim, equity might have awarded relief.

Id.

What underlies the maxim is the principle that “equity will not aid an applicant in securing or protecting gains from wrongdoing or in escaping its consequences.” Id. at 605-06 (emphasis added). The maxim “is ordinarily invoked to protect the integrity of the court where granting affirmative equitable relief would run contrary to public policy or lend the court’s aid to fraudulent, illegal or unconscionable conduct.” Myers v. Smith, 208 N.W.2d 919, 921 (Iowa 1973).

The clean hands maxim need not be pleaded; the district court may apply the maxim on its own motion. Id. Here, as mentioned, M. & I. pled the maxim as an affirmative defense and the district court discussed the maxim in its ruling.

Courts have generally applied the maxim in situations where there has been a conveyance to hinder, delay, or defraud creditors. See, e.g., Shaw v. Addison, 239 Iowa 377, 395-99, 28 N.W.2d 816, 826-27 (1947) (where decedent during his lifetime transferred farm to his sister to escape a possible deficiency judgment he was fearful would be rendered against him in foreclosure action involving another farm, conveyance was in fraud of creditors, and would not be set aside upon suit by admin-istratrix of his estate); Pursifull v. Interstate Oil & Gas Corp., 293 Ky. 152, 168 S.W.2d 363, 365-66 (1942) (corporation created to take title to general manager’s property to put it beyond reach of creditors was precluded by “clean hands” maxim from maintaining an action to cancel assignment of such property by general manager to general manager’s brother); Moore v. Carter, 356 Mo. 351, 201 S.W.2d 923, 929-30 (1947) (where wife intentionally had legal title to realty placed in name of her husband to protect realty from her own creditors, and, after her husband’s death, she intentionally permitted record to continue to show ownership of realty in her husband’s name while waiting for claims of her creditors to be barred by statute of limitations, she was precluded by clean hands maxim from prevailing in a cross action in equity to quiet title in herself under a resulting trust); Wickham v. Simpler, 198 Okla. 580, 180 P.2d 171, 175 (1946) (where plaintiffs’ decedent during his lifetime entered into agreement with defendants’ decedent concealing knowledge of notes and mortgage for purpose of putting them out of reach of creditors of plaintiffs’ decedent, plaintiffs were precluded from obtaining money judgment on the notes and foreclosing the mortgage under the clean hands maxim); Nyswanger v. Roberts, 67 S.D. 362, 293 N.W. 187, 187-88 (1940) (woman who transferred homestead to defraud creditors and who thereafter falsely testified in creditor’s action that the conveyance was for consideration, could not subsequently admit falsity of the testimony given in the creditor’s action and have conveyance set aside on ground it was made without consideration because clean hands maxim was applicable).

In such situations, a court of equity will leave the parties “in the position in which they have placed themselves, refusing affirmative aid to either of the fraudulent participants.” Shaw, 239 Iowa at 398, 28 N.W.2d at 827 (citation omitted); accord England v. England, 243 Iowa 274, 277, 51 N.W.2d 437, 439 (1952). This applies “not only as to the original parties to the fraudulent transaction, but also as to their heirs and all other persons claiming under them.” Shaw, 239 Iowa at 398, 28 N.W.2d at 827.

B. Analysis. As mentioned, shortly after Delray transferred the Manning property to Ivan, one of Ivan’s unsecured creditors threatened to collect Ivan’s outstanding debt to it by pursuing Ivan’s interest in the Manning property. The evidence is clear that this threat prompted the note and mortgage. The inescapable conclusion is that the parties simply wanted to hinder the creditor from collecting on the debt Ivan owed to it by pursuing Ivan’s interest in the property.

Ivan and Elizabeth executed the note and mortgage on June 1, 1995. The note and mortgage were recorded on June 8. The same day Ivan quitclaimed the Manning property to Elizabeth.

The subject matter of the present suit is the mortgage on the Manning property. Elizabeth is seeking affirmative relief to rescind and cancel the mortgage. She is claiming the Manning property under Ivan. The clean hands maxim would bar Ivan from any affirmative relief to cancel the mortgage because it was given to hinder his creditor. The same maxim likewise bars Elizabeth who claims the Manning property under Ivan.

The mortgage in question was given to M. & L, the alter ego of John, who was a party to the scheme to hinder Ivan’s creditor from collecting the debt Ivan owed to it. M. & I. should therefore be barred from any relief. M. & I. has not asked for any affirmative relief relative to the mortgage other than attorney fees as provided for in the mortgage. We apply the clean hands maxim to bar M. & I. from collecting attorney fees. The district court therefore erred in awarding such fees.

V. Disposition.

Because we find there was no consideration for the mortgage, we reverse the district court’s contrary ruling.

The note and mortgage were given to hinder Ivan’s creditor from pursuing Ivan’s interest in the Manning property to satisfy Ivan’s debt to his creditor. For this reason we apply the clean hands maxim to deny relief to the parties, in effect leaving the parties where we find them. We therefore will not grant Elizabeth’s request to rescind and cancel the mortgage. On this point we affirm the district court ruling but for a different reason. We reverse the district court’s ruling awarding attorney fees to M. & I. because we apply the clean hands maxim to deny it any relief.

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDMENT AFFIRMED IN PART AND REVERSED IN PART.

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


source: Caselaw Access Project

author: LARSON, Justice.

license: Public Domain

text:
    Kristin GRIMM, Appellant, v. US WEST COMMUNICATIONS, INC., A Colorado Corporation, and Jamie McAllister, Appellees.
    No. 00-1275.
    Supreme Court of Iowa.
    May 8, 2002.

      Thomas Jackowski and Anthony F. Ren-zo of Babich & Renzo, P.C., Des Moines, for appellant.
    Kerrie M. Plummer and Jay Chung of Gonzalez, Saggio & Harlan, West Des Moines, Tory M. Bishop and Marcia A. Rezac of Kutak Rock L.L.P., Omaha, Nebraska, and Darren E. Nadel, Denver, Colorado, for appellees.
   LARSON, Justice.

Kristin Grimm, who had been fired from her job with U.S. West Communications, Inc., sued U.S. West and one of its supervisors, Jamie McAllister, on various claims stemming from her discharge from the company. The district court sustained the defendants’ motion to dismiss. The plaintiff appealed. Of the numerous issues raised, none are properly resolved under a motion to dismiss. We reverse and remand.

I. Facts and Prior Proceedings.

Kristin Grimm was employed by U.S. West as a directory assistance operator from June 1988 until she was discharged in March 1997. In June 1988 U.S. West had issued Grimm an employee handbook that outlined the company’s policies, which stated in part:

Unlawful discrimination against an individual based on ... sexual orientation ... is contrary to U.S. WEST policy and strictly prohibited.... Because laws protecting an individual’s right to nondiscrimination based on sexual orientation only exist on a state or local basis, the Non-Discrimination Policy of the Company with respect to sexual orientation extends to all employees, regardless of whether or not a state or local law applies.

Grimm is homosexual, and she lived with another female employee of U.S. West, a fact that was well known by her supervisor, Jamie McAllister. Grimm alleges in her petition:

12. Beginning in 1995 and continuing until Plaintiffs discharge by Defendant U.S. West on or about March 3, 1997, Plaintiff was subjected to a hostile environment in the workplace including harassment, unreasonable conditions, and discriminatory treatment based on Plaintiffs sexual orientation. This discriminatory and hostile treatment included, but was not limited to, the following:
a. Excessive and discriminatory use of availability logs;
b. Discriminatory refusal to provide adequate training;
c. Discriminatory refusal to authorize account adjustment flexibility;
d. Corporate spying by remote observation;
e. Refusal to provide adequate security for Plaintiff following a threat on her life;
f. Improper effort to deny Plaintiff earned time off to be with her sister;
g. Generally subjecting Plaintiff to unfair, petty, and unreasonable daily decisions in the workplace^]
13. Defendant McAllister, motivated by hostility to the Plaintiff due to Plaintiffs sexual orientation and gay lifestyle, orchestrated, manipulated, and encour-
aged an unfair accusation of misconduct by Defendants which resulted in Plaintiffs termination on or about March 3, 1997.
14.Following Plaintiffs termination, Defendant McAllister called Plaintiffs residence on three (3) separate occasions and made misleading statements to Plaintiff about the status of her final pay check and mocked Plaintiffs unemployment status.

Grimm initially filed her lawsuit in federal district court. She alleged a federal claim under the Labor Management Relations Act LMRA § 301(a), 29 U.S.C. §185(a), contending the company breached its collective bargaining agreement (CBA) by discriminating against her. She also filed her state tort claims under the federal court’s supplemental jurisdiction under 28 U.S.C. § 1367. The federal claim under the LMRA was dismissed because it was not filed within the required six-month period. Because the LMRA claim had been dismissed, the federal court dismissed Grimm’s independent state-law claims without prejudice because there was no longer federal court supplemental jurisdiction of the state claims. See 28 U.S.C. § 1367(c)(3).

Following dismissal in federal court, Grimm filed her suit in Polk County based solely on the remaining independent state-law claims. The defendants removed the case to federal court, claiming all of the state claims were preempted by the LMRA. Grimm moved to remand to the state court, and the motion was granted. The federal court concluded that Grimm’s state-law claims were not preempted by the LMRA, that the federal court did not have jurisdiction, and the case would be remanded to state court. That ruling was not subject to appellate review. See 28 U.S.C. § 1447(d).

The defendants moved in state court to dismiss Grimm’s petition on a number of grounds, and the court granted the motion on all grounds urged.

II. Principles of Review.

All of the issues presented here were raised in the district court by a motion to dismiss under Iowa Rule of Civil Procedure 88(a)(6) (“failure to state a claim upon which any relief may be granted”) (now rule 1.421(l)(f)). A court’s authority to dismiss under this rule is closely circumscribed. “We uphold such a dismissal only if we can conclude that no state of facts is conceivable under which a plaintiff might show a right of recovery.” Smith v. Smith, 613 N.W.2d 728, 730 (Iowa 1994). We address issues presented in a motion to dismiss based on facts apparent on the face of the petition or conceded by the plaintiff. See Gray v. Kinseth Corp., 636 N.W.2d 100, 102 (Iowa 2001) (holding that plaintiffs concession of facts outside the petition were properly considered “to resolve the narrow legal issue [under the motion to dismiss] whether his suit is time-barred”).

III. Interference With Contractual Relationship.

Grimm alleged McAllister interfered with Grimm’s contractual relationship with U.S. West. The elements of this claim are (1) the plaintiff had a valid contractual relationship with U.S. West, (2) the defendant knew of that relationship, (3)the defendant intentionally interfered with that relationship, (4) the defendant’s action caused U.S. West to breach its contractual relationship with the plaintiff, and (5) the amount of damages. See Water Dev. Co. v. Bd. of Water Works, 488 N.W.2d 158, 161 (Iowa 1992).

The problem for the plaintiff in this case is that McAllister is á supervisory employee of U.S. West, one of the parties to the employment contract. We have held such employees cannot be held liable for tortious interference with the employment contract. See Harbit v. Voss Petroleum, Inc., 553 N.W.2d 329, 331 (Iowa 1996) (action for tortious interference, based on alleged retaliation for reporting sexual harassment, could not be maintained if all defendants were either plaintiffs employers or the employer’s agents); Klooster v. N. Iowa State Bank, 404 N.W.2d 564 (Iowa 1987) (action related to existing contracts between the parties and no third parties were involved, therefore no claim of tortious interference). This is so because ordinarily when both parties are parties to a contract the proper remedy is a suit for breach of contract. Tyler v. Percell, 506 N.W.2d 805, 808 (Iowa Ct.App.1993) (citing K & K Management, Inc. v. Lee, 316 Md. 137, 557 A.2d 965, 974 (1989)).

Grimm cites Hunter v. Board of Trustees, 481 N.W.2d 510 (Iowa 1992), to support her argument that, in situations such as this, supervisors may be held liable for interference with a contract. Although Grimm’s argument is not clearly illuminated, Hunter recognized a cause of action for tortious interference with an employment contract when a supervisor discharges another employee in violation of the employment contract, and the discharge is found to exceed the qualified privilege to which the supervisor is entitled as an officer or director. Id. at 518. 'This court has also found that, in the absence of evidence of bad faith, fraud, or improper means, there is no cause of action against an agent for breach of contract by a corporation. Bossuyt v. Osage Farmers Nat’l Bank, 360 N.W.2d 769, 778 (Iowa 1985); see also 45 Am.Jur.2d. Interference § 6, at 277 (1999) (“[A] corporation’s officer or director generally cannot be held liable under a theory of tortious interference for causing the corporation to breach a contract, nor can an agent be held liable for inducing his principal to breach a contract so long as he is acting within the scope of his authority.”). Because Grimm alleges McAllister’s actions were malicious, wanton, and pursued for an improper purpose, her claim may fall within the beyond-the-scope-of-the-agency exception to the rule that parties to a contract cannot tortiously interfere with that contract. These allegations are sufficient to survive a motion to dismiss because they allege McAllister was acting outside the scope of her agency, and thus in effect removed herself from the contract.

IV. The Federal Preemption Issue.

Section 301 preempts state claims “founded directly on rights created by collective-bargaining agreements, and also claims ‘substantially dependent on analysis of a collective-bargaining agreement.’ ” Caterpillar, Inc. v. Williams, 482 U.S. 386, 394, 107 S.Ct. 2425, 2431, 96 L.Ed.2d 318, 328 (1987) (quoting Int’l Bhd. of Elec. Workers v. Hechler, 481 U.S. 851, 859 n. 3, 107 S.Ct. 2161, 2167 n. 3, 95 L.Ed.2d 791, 801 n. 3 (1987)).

A. The contract claim. US West contends that the plaintiffs suit is preempted, even though it is not based directly on the CBA, because the scope of the CBA’s “zipper” clause must be consulted to determine if a separate action may be maintained.

A zipper clause “seeks to close out bargaining during the contract term and to make the written contract the exclusive statement of the parties^] rights and obligations.” The parties to a written contract typically want the writing to be the exclusive statement of what they have agreed to. A zipper clause conveys the message that this agreement contains the complete understanding of the parties. It zips up and closes their negotiations and announces there is no more to bargain about until next time.

Mt. Vernon Educ. Ass’n v. Illinois Educ. Labor Relations Bd., 278 Ill.App.3d 814, 215 Ill.Dec. 553, 663 N.E.2d 1067, 1070 (1996) (quoting NLRB v. Tomco Communications, Inc., 567 F.2d 871, 879 (9th Cir. 1978) (alteration by court)).

The zipper clause contained in U.S. West’s CBA stated:

The Agreements of August 13, 1989, between the Union and the Company, superseded any and all past practices, policies, or procedures, either oral or written, which existed between the parties prior to the date of those Agreements. This Agreement between the Union and the Company continues the effect of that understanding and will govern the relationship between the parties during its term. No modification to this Agreement shall be effective unless signed by the parties.

Here, U.S. West argues that the “contract” that Grimm claims was created by the employee handbook was entered into before the CBA became effective and, therefore, may not be enforced because the claim is preempted by the LMRA. U.S. West argues,

[a]t the very least, the Court would have to interpret the zipper clause in the CBA to determine if the CBA superseded any past policies or procedures established by the [employee handbook]. This alone renders the “resolution of [Grimm’s] state law claims ... inextricably intertwined with and substantially dependent upon analysis of the terms of the [CBA] ” such that Grimm’s “claims are ... subject to the complete preemption doctrine.”

(Citations omitted.)

We agree with the federal court, which ruled that the language of section 301 does not sweep so broadly as to preempt all claims based on the employee manual. That court relied on Caterpillar, which noted that

individual employment contracts are not inevitably superseded by any subsequent collective agreement covering an individual employee, and claims based upon them may arise under state law. Caterpillar’s basic error is its failure to recognize that a plaintiff covered by a collective-bargaining agreement is permitted to assert legal rights independent of that agreement, including state-law contract rights, so long as the contract relied upon is not a collective-bargaining agreement.

482 U.S. at 396, 107 S.Ct. at 2431, 96 L.Ed.2d at 329-30.

In the present case, as in Caterpillar, the collateral contract is alleged to be implied from conduct, and therefore, “it is unclear whether an examination of the collective-bargaining agreement is truly required by [state] law,” because “ ‘[i]n pleading a cause of action on an agreement implied from conduct, only the facts from which the promise is implied must be alleged.’ ” Caterpillar, 482 U.S. at 395 n. 9, 107 S.Ct. at 2431 n. 9, 96 L.Ed.2d at 329 n. 9 (quoting Youngman v. Nevada Irrigation Dist., 70 Cal.2d 240, 74 Cal.Rptr. 398, 449 P.2d 462, 466 (1969)).

In deciding whether the handbook “contract” here was “inexorably intertwined” with the CBA, we must remember first that the plaintiff is the “master of [her own] complaint.” Caterpillar, 482 U.S. at 398-99, 107 S.Ct. at 2433, 96 L.Ed.2d at 331, and she may intentionally craft her petition to avoid the need to interpret the CBA. Also, U.S. West seeks to derail her suit at the petition stage through its motion to dismiss. In this respect, this case is analogous to federal courts’ initial rulings on removal petitions, which turn on whether section 301 preempts state court jurisdiction as a matter of law. In Caterpillar the Supreme Court ruled that a holding of preemption at the removal stage was premature:

The fact that a defendant might ultimately prove that a plaintiffs claims are preempted under the NLRA does not establish that they are removable to federal court [on preemption grounds].

Id. at 398, 107 S.Ct. at 2432, 96 L.Ed.2d at 330-31. As the Court has noted, a plaintiff should be master of her pleadings, and a plaintiff

may, by eschewing claims based on federal law, choose to have the cause heard in state court. When a plaintiff invokes a right created by a collective-bargaining agreement, the plaintiff has chosen to plead what we have held must be regarded as a federal claim, and removal is at the defendant’s option. But a defendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated. If a defendant could do so, the plaintiff would be master of nothing. Congress has long since decided that federal defenses do not provide a basis for removal.

Id. at 399, 107 S.Ct. at 2433, 96 L.Ed.2d at 331 (footnote omitted).

We conclude the district court erred in ruling as a matter of law that Grimm’s handbook claim is preempted by the LMRA.

B. The tort claims. The defendants contend, and the district court ruled, that the plaintiffs tort claims, as well as her contract claim based on the employee handbook, are preempted by the LMRA. The test for LMRA preemption in a tort case is

whether evaluation of the tort claim is inextricably intertwined with consideration of the terms of the labor contract. If the state tort law purports to define the meaning of the contract relationship, that law is pre-empted.

Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 213, 105 S.Ct. 1904, 1912, 85 L.Ed.2d 206, 216-17 (1985).

Allis-Chalmers illustrates the type of tort case that is preempted by section 301. The CBA in that case provided for an internal “Joint Plant Insurance Committee” with authority to “resolve all disputes involving ‘any insurance-related issues that may arise from provisions of the [Collective-Bargaining] Agreement.’ ” Id. at 204, 105 S.Ct. at 1907, 85 L.Ed.2d at 211 (alteration by court). In Allis-Chalmers the plaintiff claimed Allis Chalmers had ordered the company’s workers’ compensation carrier to periodically cut off his workers’ compensation benefits. Lueck did not attempt to grieve the matter under the CBA. Instead, he filed a state tort claim for breach of the company’s duty “to act in good faith and deal fairly” with his claim. The Wisconsin Supreme Court held his claim was not preempted by section 301 because that statute dealt with labor contracts, while Lueck’s claim “was a tort claim of bad faith” and thus independent of the contract. The Wisconsin Supreme Court ruled the contract was “ ‘irrelevant to the issue of whether the defendants exercised bad faith in the manner in which they handled Lueck’s claim.’ ” Id. at 207, 105 S.Ct. at 1909, 85 L.Ed.2d at 212 (quoting Lueck v. Aetna Life Ins. Co., 116 Wis.2d 559, 342 N.W.2d 699, 703 (1984)).

The Supreme Court held that, “[u]nder Wisconsin law, the tort intrinsically relates to the nature and existence of the contract, [and][t]hus the tort exists for breach of a ‘duty devolved] upon the insurer by reasonable implication from the express terms of the contract,’ the scope of which, crucially, is ‘ascertained from a consideration of the contract itself.’ ” Allis-Chalmers, 471 U.S. at 216, 105 S.Ct. at 1914, 85 L.Ed.2d at 218 (quoting Hilker v. W. Auto. Ins. Co., 204 Wis. 1, 235 N.W. 413, 415 (1931) (alteration by court)). The Court held that,

when resolution of a state-law claim is substantially dependent upon analysis of thé terms of an agreement made between the parties in a labor contract, that claim must either be treated as a § 301 claim, .or dismissed as preempted by federal labor-contract law. This complaint should have been dismissed ....

Allis-Chalmers, 471 U.S. at 220, 105 S.Ct. at 1916, 85 L.Ed.2d at 221 (citation omitted). In Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988), the Supreme Court further refined the principles of section 301 preemption:

[I]f the resolution of a state-law claim depends upon the meaning of a collective-bargaining agreement, the application of state law (which might lead to inconsistent results since there could be as many state-law principles as there are States) is preempted and federal labor-law principles — necessarily uniform throughout the nation — must be employed to resolve the dispute.

Lingle, 486 U.S. at 405-06, 108 S.Ct. at 1881, 100 L.Ed.2d at 418-19. The Court noted, however, that “‘not every dispute ... tangentially involving a provision of a collective-bargaining agreement, is preempted by section 301[.]’ ” Id. at 413, n. 12, 108 S.Ct. at 1885, n. 12, 100 L.Ed.2d at 424, n. 12 (quoting Allis-Chalmers, 471 U.S. at 211, 105 S.Ct. at 1911, 85 L.Ed.2d at 206).

[II] We have already held plaintiffs contract claim is not preempted at this stage in the proceedings because she is the master of her own complaint. We believe the reasoning there applies with equal force as to the plaintiffs tortious interference claim. As to plaintiffs intentional-infliction-of-emotional-distress claim, we note the case of Keehr v. Consolidated Freightways of Delaware, Inc., 825 F.2d 138 (7th Cir.1987), presented facts similar to the present case. The issue was whether the plaintiffs state claim for intentional infliction of emotional distress was preempted by the LMRA. The court concluded this claim “revolve[s] around conduct by his employer that is not even arguably sanctioned by the labor contract.” Keehr, 825 F.2d at 138 n. 6.

In rejecting the employer’s preemption argument, the court said in Keehr,

[the employer] argues that Bruce’s claims are preempted because he could have filed a grievance against [his supervisor] for using abusive language. The mere fact that Bruce might be able to grieve [his supervisor’s] conduct under procedures provided in the collective bargaining agreement is not sufficient in itself to conclude that Bruce’s tort claims are preempted. The crucial issue under Allis-Chalmers is not whether a claim can be taken through the grievance process but whether the state law tort claim being asserted purports to give meaning to the terms of the labor contract. [The employer] has not suggested that Bruce’s claims are in any way derived from rights or duties provided for under the contract. Because the resolution of Bruce’s tort claims in no way depends on an interpretation of the labor contract, we conclude that Bruce’s claims are not preempted by section 301.

Keehr, 825 F.2d at 137.

Similarly, the court in Lightning v. Roadway Express, Inc., 60 F.3d 1551, 1557 (11th Cir.1995), held an employee’s state claim for intentional infliction of emotional distress was not preempted because the claim “does not implicate the provisions of the collective-bargaining agreement.” See also Knafel v. Pepsi-Cola Bottlers of Akron, Inc., 899 F.2d 1473, 1483 (6th Cir. 1990) (“This tort claim [for emotional distress] ... does not require an interpretation of the labor contract.”).

We conclude the resolution of Grimm’s suit for intentional infliction of emotional distress is not, as a matter of law, preempted by the LMRA and therefore reverse the district court on that issue.

V. Preemption by Iowa Civil Rights Statute.

The defendants argue that Grimm’s intentional-infliction-of-emotional-distress claim against McAllister is also preempted by the Iowa Civil Rights Act, Iowa Code ch. 216, even though the statute does not apply to sexual orientation. See Sommers v. Iowa Civil Rights Comm’n, 337 N.W.2d 470, 474 (Iowa 1983) (holding the Iowa Civil Rights Act does not make transsexuals a protected class). The defendants contend that, because the legislature has given a statutory remedy to some claimants, it has impliedly preempted the whole field and has thereby denied a remedy to all others. Thus, “with great timidity [the court] must defer to the legislature to establish the parameters of our common law as well [as statutory law].” Eddy v. Casey’s Gen. Store, Inc., 485 N.W.2d 633, 639 (Iowa 1992) (Larson, J., dissenting).

Grimm has not attempted to couch her claim as one for sexual orientation discrimination but rather one for intentional infliction of emotional distress. She alleges:

34. Defendant McAllister’s discriminatory and malicious actions as set forth above were outrageous and so extreme in degree as to go beyond all possible bounds of decency and to be regarded as atrocious and utterly intolerable in a civilized society.
35. Defendant McAllister intentionally or with reckless disregard of the consequences inflicted upon Plaintiff severe emotional harm and distress.

The defendants assert these claims are merely disguised claims of sexual-orientation discrimination, and the “discriminatory and malicious actions” of McAllister must be interpreted as sexual-orientation discrimination. However, it takes a significant amount of interpolation to make Grimm’s emotional-distress claim a sexual-orientation claim, especially when we consider that the issues arose at the petition stage on a motion to dismiss. We have said a petition need only give fair notice of the incident giving rise to the claim and the general nature of the claim presented. Soike v. Evan Matthews & Co., 302 N.W.2d 841, 842 (Iowa 1981). Grimm could simply have alleged in general terms the elements of an intentional-infliction-of-emotional distress claim and survived a motion to dismiss. We cannot agree with the defendants that, at least at this preliminary stage, she has alleged a discrimination claim that is preempted by the civil rights statute. We therefore conclude the district court erred in dismissing Grimm’s intentional-infliction-of-emotional-distress claim on the basis it was preempted by the Iowa Civil Rights Act.

VI.The Statute-Of-Limitations Argument.

The defendants contend that all of Grimm’s claims are untimely under our two-year statute of limitations. Grimm relies on our saving statute, Iowa Code § 614.10, providing:

If, after the commencement of an action, the plaintiff, for any cause except negligence in its prosecution, fails therein, and a new one is brought within six months thereafter, the second shall, for the purposes herein contemplated, be held a continuation of the first.

(Emphasis added.)

Grimm contends she was not negligent because she had a reasonable belief her suit in federal court (which was ultimately held to be untimely itself) was brought at a time when she reasonably believed the six-month statute of limitation on her LMRA claim did not begin to run until she learned from a lawyer that she had a cause of action. We cannot say as a matter of law on a motion to dismiss that Grimm was negligent in this respect.

VII. The Contract Claim.

Grimm claims U.S. West breached a contract based on the employee handbook. The defendants argue, and the district court held, that the employee handbook did not, as a matter of law, constitute a contract because of its specific disclaimers of any such role. Grimm argues that, for several reasons, including the placement of the disclaimers within the handbook, the contract was ambiguous. Again, we cannot say as a matter of law that the handbook did or did not constitute a contract. That issue will have to be resolved at a later stage of the case. We hold it was error to dismiss this claim under the defendant’s preliminary motion.

VIII. Preemption by Iowa’s Workers’ Compensation Statute.

McAllister contends Grimm’s claim for intentional infliction of emotional distress is preempted by our workers’ compensation statute, Iowa Code eh. 85, which they argue now covers a purely “mental/mental” injury. However, it is not clear that the case falls under that theory. Our cases have held coverage of a mental/mental injury requires a showing of both legal and medical causation. See Brown v. Quik Trip Corp., 641 N.W.2d 725, 727 (Iowa 2002); Dunlavey v. Econ. Fire & Cas. Co., 526 N.W.2d 845, 853-58 (Iowa 1995). It also must appear that the injury arose out of and in the scope of Grimm’s employment. All these issues are clearly beyond the scope of a motion to dismiss.

IX. Conclusion.

We hold the court erred in dismissing Grimm’s claim for interference with a contractual relationship, her claim of a breach of the handbook “contract,” and her claim of intentional infliction of emotional distress. We therefore reverse and remand.

REVERSED AND REMANDED.


author: CADY, Justice.

text:
    Ibrahim AL-KHATTAT, Appellant, v. ENGINEERING AND LAND SURVEYING EXAMINING BOARD OF THE STATE OF IOWA, Appellee.
    No. 00-1254.
    Supreme Court of Iowa.
    May 8, 2002.

      James C. Larew of Larew Law Office, Iowa City, for appellant.
    Thomas J. Miller, Attorney General, and Pamela D. Griebel, Assistant Attorney General, for appellee.
   CADY, Justice.

This appeal centers on an application to the State of Iowa Engineering and Land Surveying Examining Board for licensure without examination as a professional mechanical engineer under the foreign licen-sure comity provisions of Iowa Code section 542B.20 (1997). The Board denied the application after determining the professional examination process completed by the applicant to obtain licensure in the foreign country was not equivalent to the professional examination requirements for applicants seeking initial licensure in Iowa under section 542B.14. The district court affirmed the decision of the Board. On our review, we conclude the professional examination components of the two jurisdictions’ licensure processes are designed to accomplish different purposes, and therefore are not equivalent. We affirm.

I. Background Facts and Proceedings.

Dr. Ibrahim Al-Khattat is a sixty-three-year-old mechanical engineer. He has enjoyed a long and distinguished career in the engineering field. He was born in Iraq, and completed his secondary and college education in European institutions. In 1962, he received a Bachelor of Science degree in civil engineering from the University of Wales. In addition, he has obtained several graduate degrees from reputable United States colleges. He received a Master’s of Science in applied mechanics from Kansas State University in 1976, a Master’s of Science in mechanical engineering from Stanford University in 1979, and a Doctorate of Philosophy (Ph.D.) in mechanical engineering from Stanford in 1981.

In addition to a diverse academic background, Dr. Al-Khattat has a broad range of experiences, from research assistant, to professor of mechanical engineering, to founder of engineering corporations. At the time of this action, Dr. Al-Khattat was the founder and president of Sustainable Science International (SSI). SSI is based at the University of Iowa in Coralville, and focuses on conservation and environmental sustainability.

In 1987, Dr. Al-Khattat became registered as a charter engineer in the mechanical engineering branch of the United Kingdom. To become' a member of the Institution of Mechanical Engineers in the United Kingdom, an applicant must satisfactorily complete a “professional review.” In essence, the review consists of a written report, resembling an essay, and an oral interview by the applicant’s peers. The report must briefly summarize the applicant’s career, as well as contain a detailed description of at least one significant project demonstrating the engineering experiences of the applicant. The peer interviewers derive their questions for the oral interview from the prepared report.

The purpose of the interview is to examine the applicant’s professional judgment, problem-solving and decision-making capabilities, and the breadth of the responsibilities afforded to the applicant in his or her experiences. Although the oral interview is designed to evaluate the applicant’s professional development following the attainment of an accredited college degree, the interview is tailored to the specific applicant. The questions only concern the projects and experiences listed in the applicant’s written report.

In Dr. Al-Khattat’s professional review, the written report and oral interview primarily focused on the dissertation he prepared for his Ph.D. In general, Dr. Al-Khattat explained the justifications supporting the conclusions he reached in his dissertation. This included the physical, theoretical, experimental, and computational reasoning underlying his conclusions. Additionally, Dr. Al-Khattat discussed the credibility and practicality of mathematical modeling and numeric analy-ses of engineering systems and processes.'

Dr. Al-Khattat applied for a comity license in mechanical engineering with Iowa’s Engineering and Land Surveying Examining Board on April 30, 1997. Because he had been licensed as a professional mechanical engineer in the United Kingdom, Dr. Al-Khattat believed he could be licensed .without further examination in Iowa pursuant to Iowa Code section 542B.20.

The Board-denied the application. The Board concluded the licensing process in the United Kingdom was not based on requirements and qualifications equal to those imposed on applicants seeking licen-sure by examination in Iowa. Thus, the Board found Dr. Al-Khattat’s failure to pass the Principles and Practice of Engineering examination, or an equivalent examination offered by another jurisdiction, precluded his licensure in Iowa based on the failure to satisfy the requirements of section 542B.14(l)(d). The Board again denied Dr. Al-Khattat’s application after entertaining his request for reconsideration.

A contested case hearing was then held in accordance with Iowa Administrative Code rule 1930 — 1.11(1) (1998). Three witnesses testified at the hearing. One witness was the Board’s executive officer, who acknowledged that the Board has never granted a comity license to an applicant from a foreign country or another state who has not passed the Principles and Practice of Engineering examination. Another witness was the director of examination development for the National Council of Examiners for Engineers and Surveyors (NCEES). The NCEES produces and scores the Fundamentals and Principles and Practice of Engineering examinations administered by states, such as Iowa, for engineering and land surveying licensure. In designing the exams, the NCEES surveys engineers to determine what knowledge and tasks demonstrate minimal competence in the profession. The director also explained the various purposes underlying the two exams. The Fundamentals exam, given in Iowa to satisfy the requirements of section 542B.14(l)(b), is designed to test the examinee’s understanding of general engineering principles. On the other hand, the Principles and Practice of Engineering exam, given in Iowa to satisfy the requirements of section 542B.14(l)(d), evaluates the thinking process utilized by the examinee in solving the engineering problems.

Dr. Al-Khattat also testified. He explained the United Kingdom’s licensure process, and submitted a ninety-three-page report he prepared comparing the licen-sure processes of the United Kingdom and Iowa. Dr. Al-Khattat acknowledged the oral interview was essentially a “mini-defense” of his Ph.D. dissertation, and that it did not require him to solve any mechanical engineering problems. Instead, the United Kingdom licensure process was an individualized process, involving a summary of an individual’s experience and an analysis of whether the particular individual should become a licensed engineer.

Following the hearing, the Board entered a written ruling denying Dr. Al-Khattat’s application for a comity license. As in its earlier decisions, the Board relied on its conclusion that the evidence failed to demonstrate that Dr. Al-Khattat passed a professional examination in the United Kingdom equivalent to the NCEES Principles and Practice of Engineering examination required for initial licensure under section 542B.14.

Dr. Al-Khattat then petitioned for judicial review pursuant to section 17A.19. The district court denied the petition. It found the Board’s decision was supported by substantial evidence.

Dr. Al-Khattat appeals. He contends the district court erred in upholding the Board’s conclusion that he did not successfully pass an examination designed to determine an applicant’s proficiency to practice engineering. Additionally, he contends the Board engaged in illegal informal rulemaking by requiring comity license applicants to pass the Principles and Practice of Engineering examination.

II. Standard and Scope of Review.

We review the denial of a petition for judicial review for errors at law. Greenwood Manor v. Iowa Dep’t of Pub. Health, 641 N.W.2d 823, 830 (Iowa 2002). When evaluating the validity of agency action, we consider the standards delineated in section 17A.19(8) to determine if our conclusions align with those of the district court. Id.; Wieslander v. Iowa Dep’t of Transp., 596 N.W.2d 516, 520 (Iowa 1999). Thus, we confine our review to “whether the district court correctly applied the law.” Id.

We will reverse the agency’s action only if it is not supported by substantial evidence in the record, S.E. Iowa Coop. Elec. Ass’n v. Iowa Utils. Bd., 633 N.W.2d 814, 818 (Iowa 2001), or if the agency acted unreasonably, arbitrarily, or capriciously in rendering its decision. 53 C.J.S. Licenses § 43(c), at 389 (1987). An agency decision is supported by substantial evidence when a reasonable person could' reach the same conclusions after considering the record in its entirety. S.E. Iowa Coop. Elec. Ass’n, 633 N.W.2d at 818; Madrid Home for the Aging v. Iowa Dep’t of Human Servs., 557 N.W.2d 507, 510 (Iowa 1996). Consequently, even if we find the evidence capable of supporting a conclusion different from that reached by the agency, we must affirm if we can find substantial evidence in the record to support the agency’s determination. Id. Moreover, we must seek to uphold the agency’s decision by liberally construing its factual findings. Wieslander, 596 N.W.2d at 520.

Lastly, we defer to an agency’s construction of statutes and rules within the agency’s expertise, unless the interpretation is erroneous or unreasonable. Madrid Home for the Aging, 557 N.W.2d at 511; 53 C.J.S. Licenses § 43(c), at 389. This is particularly true in the case of statutes and regulations entrusted to agencies responsible for licensing professionals. See 53 C.J.S. Licenses § 43(c), at 389; see also S.E. Iowa Coop. Elec. Ass’n, 633 N.W.2d at 818 (afford considerable deference to agency charged with making decisions concerning “the highly technical area of public utility regulation”). Therefore, we generally affirm the informed decision of the agency, and refrain from substituting our less-informed judgment. Id.

III. Denial of Comity Licensure.

There are two ways to become licensed as a professional engineer in Iowa: (1) licensure by examination; and (2) licensure by comity. The first method applies to applicants seeking original licensure as a professional engineer in Iowa. To obtain initial licensure, an applicant must satisfy each of the following requirements:

a. (1) Graduation from a course in engineering of four years or more in a school or college which, in the opinion of the board, will properly prepare the applicant for the examination in fundamental engineering subjects.
b. Successfully passing a written, oral, or written and oral examination in fundamental engineering subjects which is designed to show the knowledge of general engineering principles.... [i.e., the Fundamentals of Engineering examination]
c. ... [A] specific record of four years or more of practical experience in engineering work which .is of a character satisfactory to the board.
d. Successfully passing a written, oral, or written and oral examination designed to determine the proficiency and qualifications to engage in the practice of engineering.... [i.e., the Principles and Practice of Engineering examination]

Iowa Code § 542B.14(1). The NCEES prepares the two examinations administered to initial licensure applicants. Iowa Admin. Code r. 193C — 1.4(4) (1997). Both are written, uniform examinations. Id. The Fundamentals exam “covers general engineering principles,” id. r. 193C— 1.4(4)(a), and is intended to satisfy the requirements of section 542B.14(l)(b), while the Principles and Practice exam addresses “proficiency and qualification to engage in the practice of professional engineering,” id. r. 193C — 1.4(4)(b), and is intended to satisfy the requirements of section 542B.14(l)(d).

The second method, comity licensure, is available to those who have been previously licensed in another jurisdiction and have satisfied specific circumstances. See Arizona State Bd. of Accountancy v. Cole, 119 Ariz. 489, 581 P.2d 1139, 1142 (1978) (purpose of comity licensure is to grant licensed status when specific factors are fulfilled, not to automatically recognize licenses held in foreign jurisdictions). Comity applicants may receive professional licensure in Iowa without further examination if the original license is active, Iowa Admin. Code r. 193C — 1.4(5), and was based on requirements and qualifications equivalent to the requirements of chapter 542B. Iowa Code § 542B.20.

Section 542B.20 establishes the requirements for this second method of licensure, and provides that a person holding a certificate of licensure as a professional engineer issued by the proper authority of a foreign country “based on requirements and qualifications” which, “in the opinion of the board,” are “equal to or higher than the requirements” of chapter 542B may be licensed without examination. Id. Because the licensure requirements of chapter 542B are found in section 542B.14, the four requirements for licensure by examination under section 542B.14 must therefore be considered in determining whether the requirements of licensure by comity have been satisfied.

Dr. Al-Khattat sought professional licensure through the comity provisions of section 542B.20. The Board did not dispute Dr. Al-Khattat’s satisfaction of the educational and practical experience requirements of section 542B.14(l)(a) and (c). Furthermore, because Dr. Al-Khattat passed the Fundamentals examination in 1995, the Board found he also satisfied section 542B.14(l)(b). Instead, the Board concluded the United Kingdom’s professional examination was not equivalent to the Principles and Practice of Engineering examination given to applicants for licen-sure by examination to satisfy section 542B.14(l)(d).

Dr. Al-Khattat claims the Board essentially precludes all comity licensure for any engineer from a foreign country by requiring proof that the examination taken to obtain the foreign license was equivalent to or superior to the NCEES examination taken by applicants for licensure by examination in Iowa. He claims the comity licen-sure statute does not require a comparison between the foreign examination and the NCEES examination to determine if they are equivalent, but only requires a determination by the Board that the foreign examination passed by the applicant to obtain the foreign license was, like the NCEES examination, “designed to show the knowledge of general engineering principles” and “designed to determine the proficiency and qualifications to engage in the practice of engineering.” See id. § 542B.14(l)(b), (d). Thus, any comparison by the Board must relate to the design of the tests, not the mechanics, scoring, or other aspects of the tests.

We agree with Dr. Al-Khattat that the comity licensure statute only requires the foreign license to be based on the “requirements and qualifications ... equal to or higher than the requirements” for licensure by examination in Iowa. See id. § 542B.20. This means a comity applicant must show, together with the education and experience prerequisites, that the foreign license was predicated on passing an examination in fundamental engineering subjects “designed to show the knowledge of general engineering principles” and an examination “designed to determine the proficiency and qualifications to engage in the practice of engineering.” See id. § 542B.14(l)(a)-(d). This standard does not require the mechanics of the foreign examinations to mirror those of the NCEES examinations administered to applicants in Iowa. There may be many differences in the types and methods of examinations that nevertheless have the same design or purpose. The Board must determine if the examination component for foreign licensure met the design of the examination components for licensure by examination under section 542B.14.

Clearly, the Board placed considerable emphasis on the numerous mechanical differences in the United Kingdom examination and the NCEES examination. Yet, differences in the mechanics and approach taken between two examinations, although not alone determinative, can be helpful to ascertain the design and purpose of each examination.

As mentioned, the NCEES principle and practice examination is clearly designed to test an applicant’s overall proficiency in the general practice of mechanical engineering. It conforms to the design contemplated by section 542B.14(l)(d). It is a uniform, standardized, objective examination, and is not tailored to a specific applicant’s area of expertise within a particular engineering branch. The exam concentrates on general problem-solving ability. It consists of two parts. The first part requires the examinees to show their calculations. The examinee receives points for each level reached in solving the problem. The second part is a multiple-choice format. In both exams, the problem content covers a variety of problems encountered in the mechanical engineering profession.

In contrast, the United Kingdom professional' examination is tailored to an applicant’s particular accomplishments and experiences. Although the United Kingdom professional examination may in fact be designed to determine a particular individual’s competence, it focuses on proficiency in a specific discipline. In essence, as characterized by Dr. Al-Khattat, the United Kingdom licensure process is “an oral evaluation of the candidate based on the facts that he [or she] provides.” The peer interview does not address problems affecting the general practice of mechanical engineering, other than what issues were presented by the applicant’s written report. In Dr. Al-Khattat’s case, the peer interview primarily concerned his Ph.D. dissertation regarding metal forming plasticity applications. Thus, he was only required to demonstrate his proficiency in this specialized area of mechanical engineering. The exam seems to assume general competency in the field of engineering.

We think the differences in the United Kingdom examination and the NCEES examination reveal that the design of the United Kingdom examination taken by Dr. Al-Khattat to obtain his license was not to “determine the proficiency and qualifications to engage in the practice of engineering.” The “practice of engineering” covers a broad range of areas, and the evidence submitted to the Board shows that the United Kingdom examination, as a separate requirement for licensure in the United Kingdom, is geared towards proficiency in a particular area practiced by the applicant, not the general practice of engineering. This evidence supports the finding made by the Board that the certificate of licensure held by Dr. Al-Khattat was not based on the requirements and qualifications equal to those found in chapter 542B.

We acknowledge the distinguished career attained by Dr. Al-Khattat as an engineer. He has reached a level of education and experience beyond that required under section 542B.14. Yet, our licensing requirements do not substitute experience for the lack of compliance with a professional examination requirement. The Board carefully considered the content and purposes of the two examinations before making its decision. This is not a case where the Board failed to even make a comparison. See Fiber v. New Mexico Bd. of Med. Exam’rs, 93 N.M. 67, 596 P.2d 510, 512 (1979). Furthermore, the Board has consistently interpreted section 542B.20 to reject comity licensure where the applicant has not satisfied standards comparable to those required of initial licensure applicants in Iowa. See Homer v. State Bd. of Eng’g Exam’rs, 253 Iowa 1, 8-9, 110 N.W.2d 371, 375 (1961). No evidence was produced indicating the Board has issued comity licensure to an applicant who has not taken an examination comparable in design to the Principles and Practice of Engineering examination. The consistent application of comity licensure requirements suggests the Board did not act arbitrarily or capriciously in rendering its decision in this particular case. See Binkley v. Zollar, 289 Ill.App.3d 189, 224 Ill.Dec. 171, 681 N.E.2d 153, 155 (1997); State Bd. of Registration for Prof l Eng’rs v. Eberenz, 723 N.E.2d 422, 431 (Ind. 2000).

Furthermore, the legislature entrusted the Board to exercise its expertise in determining the requisite qualifications of licensure applicants. Horner, 253 Iowa at 6, 110 N.W.2d at 373. In a case such as this, where the decision is close, we will not second-guess the importance the Board places on the professional examination requirement. We find substantial evidence supports the Board’s determination that Dr. Al-Khattat failed to successfully complete an examination designed to demonstrate his proficiency to engage in the practice of engineering.

IV. Conclusion.

We conclude there is substantial evidence in the record to support the Board’s finding Dr. Al-Khattat’s foreign license was not based on requirements and qualifications equal to the requirements of section 542B.14(1). Thus, the district court correctly denied the petition for judicial review.

AFFIRMED.

      . In 1995, Dr. Al-Khattat took the Principles and Practice of Engineering examination while working in the state of Oregon. Although Dr. Al-Khattat was informed that the practice examination was an open-book test in which examinees were expected to bring a calculator and reference books, he brought neither testing aid. At the contested case hearing before the Board, Dr. Al-Khattat explained he was only taking the test for “educational curiosity,” and to compare the exam with the professional exam he was subjected to in the United Kingdom. Consequently, he failed the practice exam. However, he did pass the Fundamentals exam, which is an eight-hour, closed-book examination.

      .' We find Dr. Al-Khattat failed to preserve his argument that the Board engaged in illegal informal rulemaking when it provided him with a list of foreign credentials required for comity applicants seeking licensure in Iowa. Because this issue was not clearly raised before the agency, we deem it unpreserved for our review. Wieslander v. Iowa Dep’t of Transp., 596 N.W.2d 516, 525 (Iowa 1999). Moreover, this issue was not addressed in the district court’s ruling on the petition for judicial review. If Dr. Al-Khattat had in fact raised the issue of informal rulemaking before the district court, he should have filed a motion pursuant to Iowa Rule of Civil Procedure 1.904(2) requesting the court to enlarge its findings of fact and conclusions of law. See Meier v. Senecaut, III, 641 N.W.2d 532, 538 (Iowa 2002) (referring to former procedural rule 179(b); which is now renumbered as rule 1.904(2)).

      . Although inapplicable to this case, we believe it is important to note recent amendments to the administrative rules governing the Board when ruling on applications for comity licensure. First, an applicant will be considered for comity licensure only if his or her original license is in active status and was “based on approved examination." Iowa Admin. Code r. 193C — 1.4(5) (2001) (emphasis added). Furthermore, the new rules contain a more explicit explanation of what factors the Board must consider in comparing a foreign license with the standards of section 542B.14. For example, the Board.must individually consider each of the four licensing prerequisites of section 542B.14, and the superior satisfaction of one prerequisite will not mitigate the failure to comply with another. Iowa Admin. Code r. 193C — 4.2. In addition, the rules guide the Board in its comparison of NCEES and non-NCEES examinations. The rule states, in pertinent part:
      A non-NCEES professional examination, for instance, must be designed to determine whether a candidate is minimally competent to practice, professional engineering in a specific branch of engineering .... The examination must be written, objectively graded, verifiable, and developed and validated in accordance with the testing standards of the American Psychological Association or equivalent testing standards. Free-form essays and oral interviews ... are not equal or superior to NCEES examinations

        Id. r. 193C — -4.2(3)(d) (emphasis added).

      . Although not determinative of our analysis in this case, we must comment on the Board’s incorrect application of the Fundamentals examination requirement of section 542B.14(b). The Board erred in considering Dr. Al-Khattat’s passing score on the Fundamentals examination. When an applicant seeks licen-sure by comity, the licensing authority is to only look at the requirements and. qualifications that served as the basis of the issuance of the foreign license. Iowa Code § 542B.20; accord Tinner v. Dist. of Columbia Dep’t of Consumer & Regulatory Affairs, 703 A.2d 833, 836 (D.C.Ct.App.1997). The Board is not to consider intervening factors, such as the successful completion of an exam subsequent to .obtaining initial licensure. See Tinner, 703 A.2d at 836.
      Nevertheless, we find Dr. Al-Khattat did in fact satisfy the requirements of section 542B. 14(b). The Fundamentals examination is waived for applicants who have received a Ph.D. from a United States institution and an accredited Bachelor of Science engineering degree. Iowa Admin. Code r. 193C — 1.4(3) (1997). Because Dr. Al-Khattat has reached the requisite educational levels, he was hot required to pass a Fundamentals examination or its equivalent.

      . We reached this conclusion by examining the two methods of licensure in the United Kingdom. The first method is the professional review process completed by Dr. Al-Khat-tat. The second method applies to applicants who have not received an engineering degree from an accredited institution. These applicants must successfully pass a series of standardized, written examinations. The first series appears to cover general engineering subjects, such as mathematics and engineering perspectives and skills. The objective of this examination is to test the applicants’ understanding of fundamental techniques and concepts required to solve engineering problems. The second series involves the testing of more complicated engineering subjects. Because Dr. Al-Khattat had attained the requisite education level, he was exempted from the written examination requirements. Thus, if an applicant has obtained an engineering degree, competency in fundamental engineering concepts is presumed.


author: NEUMAN, Justice.

text:
    Robert Allen SHELTON, Appellant, v. STATE of Iowa, Appellee.
    No. 00-0958.
    Supreme Court of Iowa.
    May 8, 2002.

      Michael L. Mollman of Mollman Law Office, Cedar Rapids, for appellant.
    Thomas J. Miller, Attorney General, and Charles S. Lavorato, Assistant Attorney General, for appellee.
   NEUMAN, Justice.

Plaintiff Robert Shelton brought this suit to recover for severe injuries he suffered in a fall in a state park. The suit was dismissed on the State’s motion for summary judgment, the trial court holding the State’s alleged tortious conduct fell within the discretionary function exception to the State Tort Claims Act. We affirm.

Wild Cat Den State Park in Muscatine County, comprising more than four hundred acres, is owned and operated by the state through the Department of Natural Resources. One of its major attractions is a trail system which winds through a variety of terrain leading from near the base to the top of sandstone bluffs. The trails were first constructed in the 1930s by the United States Conservation Corps and were renovated by park authorities between 1986 and 1996. They are located in a pristine outdoor environment. A main trail begins about one hundred feet from the base of a stone cliff and ends where it passes at a distance varying from ten feet to one-quarter mile from the top edge of the cliff. The area between the trail and cliff edge is either level or sloping forest.

The park’s precipitous rock formations, obviously formidable, prompted park authorities to post signs prohibiting repelling or rock climbing. We of course accept Shelton’s denial he in any way violated this warning. See Theisen v. Covenant Med. Ctr., Inc., 636 N.W.2d 74, 79 (Iowa 2001) (court reviews summary judgment record “in the light most favorable to the nonmov-ing party”). For purposes here we likewise ignore the State’s suggestion that he may have ventured into a “voluntary” trail, one developed by hikers creating a route other than an official one constructed and maintained by park authorities. Id.

While on a family outing Shelton encountered some loose gravel at a point where the trail passes along the edge of the cliff. He fell over forty feet into some trees below and finally came to rest on a lower bluff. His injuries were severe and debilitating. He is paralyzed from the waist down and incurred medical expenses in excess of $100,000. He claims the state is liable for his injuries because park authorities were negligent in failing to maintain trails or erect guardrails in the park, failing to protect members of the public using the park, and failing to insure that the park was safe for members of the visiting public.

Shelton brought this suit after exhausting his administrative remedy with the State Appeal Board. His appeal from a summary judgment ruling dismissing the suit involves only the State’s discretionary function defense. Shelton thinks summary judgment was inappropriate because the parties have underlying factual disputes. See id. at 78 (summary judgment proper only where record reveals no genuine issue of material fact). , But the disputed factual issues here are not material.because they relate only to Shelton’s assertions of negligence, which, as hereafter explained, will not be reached because the discretionary function exception applies.

I. Until relatively recent times, the public was immune from liability for torts committed by the government, its officers or employees. Clamor against this unpopular rule was noted in Boyer v. Iowa High Sch. Athletic Ass’n, 256 Iowa 337, 127 N.W.2d 606 (1964) in which we were unanimous in condemning the rule. A majority, however, held that its abrogation should await action by the legislature. Id. at 348, 127-N.W.2d at 612. Four justices dissented, contending this court should strike it down. Id. at 358,127 N.W.2d at 618. The General Assembly responded favorably the following year by enacting the State Tort Claims Act. 1965 Iowa Acts ch. 79. Waiver of immunity is now spelled out in Iowa Code section 669.4 (1999) but is subject to several exceptions, including the one at issue here: claims based on “the exercise or performance or the failure to exercise or perform a discretionary function .... ” Iowa Code § 669.14(1). Thus, the controlling question is whether the park authorities’ actions — or lack of them — criticized by Shelton as tortious, involved a discretionary function. If so, governmental immunity bars the claim.

We employ a two-step test for determining whether challenged actions fall within the discretionary function exception. The first step is to consider whether the action involved a matter of choice on the part of those acting for the government. Goodman v. City of Le Claire, 587 N.W.2d 232, 237-38 (Iowa 1998). If so, a second step must be satisfied. It must also appear that the challenged judgment call is of the kind the discretionary function was designed to shield. Id.

II. Although he argues otherwise, Shelton’s petition presupposes the first step. His specifications of negligence— wrongly locating trails, failing to maintain them, failing to protect the public by placing guardrails or warning signs — are charges of wrong choices, not non-choices. Shelton points to the broad language of Iowa Code section 308.7(3) which provides “[t]he department of natural resources ... shall: [mjaintain, improve, and beautify according to plans made ... all conservation areas .... ” But this statute vests discretion with the department in the matters at issue. It does so by directing state authorities to make plans which, by their very nature, are combinations of choices. The first step is readily established.

So is the second, determining whether the choices at issue were of the sort intended for protection under the discretionary exception. We think the choices challenged here are the archetype of the sort intended for protection. The basis for the exception is well known. It is to “prevent judicial ‘second guessing’ of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort.” Goodman, 587 N.W.2d at 237 (quoting Berkovitz, 486 U.S. at 536-37, 108 S.Ct. at 1959, 100 L.Ed.2d at 541). The substances used in forming the trails, the placement of the trails, the omission of guards or handrails, placement or omission of warning signs, and trail maintenance, were all matters for park professionals. These administrative choices, driven as they were by economics and aesthetics, are clearly matters into which courts in general and judges in particular are ill equipped to intrude.

III. The Tort Claims Act is especially appropriate for applying the sometimes criticized but familiar rule that we are guided by federal decisions interpreting federal statutes on which our own statutes are modeled. Id. at 236. Where, as here, negligence suits have challenged discretionary decisions implicating governmental policy choices in park management and maintenance, federal decisions supporting dismissal are close to unanimous. See, e.g., Shansky v. United States, 164 F.3d 688, 691, 695 (1st Cir.1999) (decision to omit safety of handrails in favor of authenticity at refurbished historic site held discretionary and susceptible to policy analysis, thus justifying application of discretionary function exception); Rosebush v. United States, 119 F.3d 438, 442, 444 (6th Cir.1997) (in absence of rule mandating “precise manner” of maintaining campground firepits, decisions balancing safety concerns with financial considerations and environmental impact are protected by discretionary function exception); Blackburn v. United States, 100 F.3d 1426, 1434 (9th Cir.1996) (discretionary function exception applied where competing policy decisions drove park service decision to choose warning signs instead of barriers to prevent diving off bridge in Yosemite); Valdez v. United States, 56 F.3d 1177, 1180 (9th Cir.1995) (broad safety goals attainable only by exercise of discretion and challenged conduct involving maintenance of trails, guard rails and warning signs implicated policy decision between “maximizing access to and preservation of natural resources versus the need to minimize potential safety hazards”); Autery v. United States, 992 F.2d 1523, 1530-31 (11th Cir.1993) (in absence of statute or policy mandating specific manner of inspecting for hazardous trees, park officials’ decision and execution of plan involved balance between visitor safety, budgetary limitations and environmental concerns protected by discretionary function exception); Zumwatt v. United States, 928 F.2d 951, 955 (10th Cir.1991) (decision to place trail warnings in pamphlet, not on trail’s path, reflected discretionary policy decision to maintain trail in a “wilderness state”); Bowman v. United States, 820 F.2d 1893, 1395 (4th Cir.1987) (decision to open up vista and not install guardrail on Blue Ridge Parkway resulted from policy judgment balancing safety, aesthetics, environmental impact and financial resources; discretionary function exception prevents courts from second-guessing such policies).

Only where government rules dictate nondiscretionary action based on known safety hazards have courts refused to summarily accord immunity. See, e.g., Fang v. United States, 140 F.3d 1238, 1242-43 (9th Cir.1998) (policy shield of discretionary function exception does not protect rescue personnel who failed to stabilize fallen hiker’s spine prior to transport, but exception applies to decisions regarding availability of emergency equipment at accident site); Duke v. Dep’t of Agrie., 131 F.3d 1407, 1412 (10th Cir.1997) (although no rule required specific safety measures, neither would social or economic policy considerations justify failure to warn of man-made hazard causing boulders to tumble into campsite); Faber v. United States, 56 F.3d 1122, 1126 (9th Cir.1995) (no discretion involved where park service failed to follow specifically prescribed policies requiring implementation of three safety measures to prevent public from diving at waterfall).

To sum up, the trial court’s refusal to consider Shelton’s negligence claims on their merits was correct. The General Assembly took care, under the discretionary function exception, to leave immunity in place where governmental officials are called upon to make judgment calls. This was such a case.

AFFIRMED.

All justices concur except LAVORATO, C.J., who takes no part.

      . In a recent unpublished opinion, Roher v. Veterans Mem'l Hosp., No. 98-1585, 2000 WL 145045, at *2-3 (Iowa Ct.App. Feb.9, 2000), our court of appeals analyzed a discretionary function exception issue using the planning-operational dichotomy applied in Dalehite v. United States, 346 U.S. 15, 73 S.Ct. 956, 97 L.Ed. 1427 (1953). In Goodman, however, we recognized that our court, and many others, had misinterpreted Dalehite’s scheme, thereby failing to recognize discretionary decisions at the "operational” level. Goodman, 587 N.W.2d at 238. To correct this misapplication of the law, we adopted the two-prong analysis approved in Berkovitz v. United States, 486 U.S. 531, 108 S.Ct. 1954, 100 L.Ed.2d 531 (1988). Id. To the extent Roher
        rested on an out-dated analysis, it should not be relied upon as authoritative.


author: CARTER, Justice.

text:
    Marcia WIEDMEYER, Appellant, v. The EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, A New York Corporation, Appellee.
    No. 00-0957.
    Supreme Court of Iowa.
    May 8, 2002.

      Patrick L. Woodward of McDonald, Sto-nebraker & Cepican, P.C., Davenport, and George B. Norman, Davenport, for appellant.
    Peter J. Thill of Betty, Neuman & McMahon, L.L.P., Davenport, for appellee.
   CARTER, Justice.

Plaintiff, Marcia Wiedmeyer, appeals from an adverse summary judgment in a slip-and-fall damage action against the Equitable Life Assurance Society of the United States (Equitable), the owner of Duck Creek Plaza, a shopping mall in Betten-dorf. Plaintiff alleged Equitable failed to maintain the parking lot of its shopping center in a safe manner and that, as a result, she fell and sustained serious injuries. Equitable asserted, among other defenses, that it was not the possessor of the real estate as the result of a management agreement that it had entered into with General Growth Management Company (General Growth).

The district court sustained Equitable’s motion for summary judgment on the basis that General Growth rather than Equitable was the possessor of the property where plaintiff sustained her injury. After reviewing the record and considering the arguments presented, we reverse that decision and remand the case to the district court for further proceedings.

Plaintiff has alleged that she visited Duck Creek Plaza December 7, 1996, for the purpose of shopping in certain of the stores located there. She parked her vehicle in a parking area provided for Duck Creek Plaza customers. While traversing the parking lot, she alleges that she slipped and fell on a patch of ice, fracturing her ankle. She contends that her fall was the result of an unsafe condition of the property, which she asserts was possessed by Equitable.

Equitable owned Duck Creek Plaza on the date of plaintiffs injury. It had, however, entered into a real estate management agreement with General Growth, which appointed the latter as the exclusive managing and renting agent for the mall. Among the matters that General Growth agreed to perform on behalf of Equitable was to “arrange for cleaning and snow removal for the parking areas and roadways of the premises.” Specific provisions of the management agreement that relate to this controversy will be discussed in connection with our consideration of the legal issues presented.

I. Standard of Review.

The ruling of the district court was based on its conclusion that Equitable owed no legal duty to the plaintiff because it was not the possessor of the real estate. The standard of review when the issue is whether a legal duty exists is correction of errors at law. Iowa R.App. P. 6.4; Allison by Fox v. Page, 545 N.W.2d 281, 282 (Iowa 1996). It is well established that in assessing whether summary judgment is appropriate the court views the entire record in the light most favorable to the nonmoving party. Crippen v. City of Cedar Rapids, 618 N.W.2d 562, 565 (Iowa 2000).

II. Whether Equitable Was the Possessor of Duck Creek Plaza so as to Make it Responsible for the Duties Recognized in Section 343 of the Restatement (Second) of Torts (1965).

The determinative issue on appeal is whether Equitable was the possessor of Duck Creek Plaza so as to be subject to the duties recognized in section 343 of Restatement (Second) of Torts (1965). That section of the Restatement provides:

A possessor of land is subject to liability for physical harm caused to his invitees by a condition on the land if, but only if, he
(a) knows or by the exercise of reasonable care would discover the condition, and should realize that it involves an unreasonable risk of harm to such invitees, and
(b) should expect that they will not discover or realize the danger, or will fail to protect themselves against it, and
(c) fails to exercise reasonable care to protect them against the danger.

The status of a “possessor of land” turns on occupation and control of the land, not mere ownership. Van Essen v. McCormick Enters. Co., 599 N.W.2d 716, 718 (Iowa 1999). We have adopted the definition of “possessor” contained in section 328E of Restatement (Second) of Torts. Id. at 719. This section of the Restatement provides:

A possessor of land is
(a) a person who is in occupation of the land with intent to control it, or
(b) a person who has been in occupation of land with intent to control it, if no other person has subsequently occupied it with intent to control it, or
(c) a person who is entitled to immediate occupation of the land, if no other person is in possession under clauses (a) and (b).

Restatement (Second) of Torts § 328E.

We have recognized that the owner of land may in some situations loan its possession to another, thus rendering that party the possessor and negating the owner’s status as such. Galloway v. Bankers Trust Co., 420 N.W.2d 437, 441 (Iowa 1988). Equitable urges that it loaned possession of the Duck Creek Plaza to General Growth and thus was not itself a possessor at the time of plaintiffs injury. Plaintiff asserts that one who exercises control over land through an agency agreement with a contract manager is a possessor for purposes of the liability recognized in section 343 of the Restatement.

Equitable argues that in the present case the specific law of absentee owner immunity takes precedence over general principles of agency law. It urges that, although generally a principal may be liable for the acts or omissions of its agent, in no circumstance does premises liability exist unless the defendant occupies the status of a possessor of the land. Section 422 of the Restatement provides that

[a] possessor of land who entrusts to an independent contractor construction, repair, or other work on the land, or on a building or other structure upon it, is subject to the same liability as though he had retained the work in his own hands to others on or outside of the land for physical harm caused to them by the unsafe condition of the structure
(a) while the possessor has retained possession of the land during the progress of the work, or
(b) after he has resumed possession of the land upon its completion.

(Emphasis added.) We relied upon this section of the Restatement in Kragel v. Wal-Mart Stores, Inc., 537 N.W.2d 699, 708-04 (Iowa 1995), to visit premises liability on a retail store that entrusted snow removal to an independent contractor.

Equitable urges that the store owner in the Kragel case retained possession of the land while its snow removal obligations were being carried on by another entity. It argues that subsections (a) and (b) of section 422 expressly require possession as a condition for premises liability. It contends that the manner in which General Growth took charge of the mall operation for Equitable rendered General Growth the possessor of the property and negated Equitable’s status as such. We disagree.

Equitable’s argument overlooks the fundamental principle of agency law under which acts of an agent in carrying out the principal’s affairs are in legal effect the acts of the principal. Section 12 of the Restatement (Second) of Agency provides:

An agent or apparent agent holds a power to alter the legal relations between the principal and third persons and between the principal and himself.

Comment (a) to that section provides that “[w]hen a duly constituted agent acts in accordance with his instructions in matters as to which it is possible for a principal to act through an agent ... he has power to affect the legal relations of the principal to the same extent as if the principal had so acted.” Based on this principle, we are convinced that the acts of General Growth in asserting possession and control over the premises are in legal effect the acts of Equitable. As a consequence of those acts, Equitable continued to be the possessor of the Duck Creek Plaza.

In Hoffnagle v. McDonald’s Corp., 522 N.W.2d 808 (Iowa 1994), we held that a franchiser-owner of a restaurant property was not a possessor when the property was occupied and controlled by a franchisee. We expressly noted that the relationship between the owner arid its franchisee was not that of principal and agent. There was also no principal/agent relationship in the Van Essen and Galloway cases in which we applied the loaned-possession doctrine. As a result, Van Essen, Hoffnagle, and Galloway are not in conflict with our holding in thé present case.

The language of the agency agreement does not alter our conclusion and indeed supports it. Section 2.1 of article II of the agency agreement provides:

Agent, on behalf of Owner, shall implement, or cause to be implemented, the decisions of Owner and shall conduct the ordinary and usual business affairs of Owner as provided in this Agreement. Agent shall at all times conform to the policies and programs established by Owner and the scope of Agent’s authority shall be limited to said policies. All undertakings incurred by Agent on behalf of Owner under this Agreement shall be at the cost and expense of Owner unless otherwise provided for herein. Agent agrees to use its best efforts in the management and operation of the Premises, and to comply with Owner’s instructions.

Subparagraph (c) of this same article requires the agent to

[k]eep the Premises in a safe, clean and sightly condition and make and contract for all repairs, alterations, replacements, and installations, do all decorating and landscaping, and purchase all supplies necessary for the proper operation of the premises....

Subparagraph (z) of this article requires the agent to

arrange for cleaning and snow removal for the parking areas and roadways of the premises.

We are convinced that, under both general agency doctrine and the specific provisions of the agency agreement at issue here, the legal consequence of General Growth’s acts in possessing and controlling the Duck Creek Plaza were “to the same extent as if the principal had so acted.” Restatement (Second) of Agency § 12, cmt. a. Consequently, Equitable was a possessor of the property and subject to the duties recognized in section 343 of the Restatement (Second) of Torts.

We have considered all issues presented and conclude that the judgment of the district court must be reversed. The case is remanded to the district court with directions to deny Equitable’s motion for summary judgment.

REVERSED AND REMANDED.

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