                IN THE SUPREME COURT OF IOWA
                                No. 19–1302

                           Filed April 17, 2020


MIDWESTONE BANK,

      Appellee,

vs.

HEARTLAND CO-OP,

      Appellant.

-------------------------

HEARTLAND CO-OP,

      Counterclaim Plaintiff,

vs.

MIDWESTONE BANK,

      Counterclaim Defendant.



      Appeal from the Iowa District Court for Story County, Angela L.

Doyle, Judge.



      A grain co-op that deducted its cost of storing and drying grain from

the sale price appeals a summary judgment awarding that amount in favor

of a bank with a priority lien on farmer’s crops and proceeds. AFFIRMED

IN    PART,     REVERSED        IN   PART,    AND    REMANDED       WITH

INSTRUCTIONS.



      Johannes H. Moorlach and Peter J. Chalik of Whitfield & Eddy,

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

      Matthew L. Preston and Cara L. Roberts of Brady Preston Gronlund

PC, Cedar Rapids, and H. Raymond Terpstra II of Terpstra & Epping,

Cedar Rapids, for appellee.



      Douglas E. Gross, John D. Hunter, Margaret A. Hibbs, and Ingrid M.

Johnson of Brown, Winick, Graves, Gross, Baskerville and Schoenebaum,

P.L.C., Des Moines, for amicus curiae Agriculture Legal Defense Fund.

      Debra Hulett and Haley Hermanson of Nyemaster Goode, P.C,

Des Moines, for amicus curiae Iowa Institute for Cooperatives.



      Robert L. Hartwig of Iowa Bankers Association, Johnston, and

Julie Johnson McLean of Davis Brown Law Firm, Des Moines, for amicus

curiae Iowa Bankers Association.
                                      3

WATERMAN, Justice.

      In this appeal, we must adjudicate competing claims by a secured

lender and a grain elevator over the costs of storing and drying grain. Each

side is supported by amici curiae briefs filed by trade organizations

warning of dire consequences of an unfavorable resolution. All agree that

the drying and storage costs were necessary to preserve the corn for sale.

The farmer is insolvent. The parties disagree over the governing statute of

limitations, the application of the discovery rule, and whether the

elevator’s common law unjust enrichment claims are superseded by the

bank’s prior perfected security interest in the grain and proceeds as

codified in Iowa’s Uniform Commercial Code (IUCC).

      The dates and dollar amounts of the transactions as well as the

terms of the relevant contracts and notifications are undisputed. There is

no evidence that the bank directed the elevator to deduct the costs to

preserve the collateral or that the bank had timely, actual knowledge and

acquiesced in those deductions. The district court ruled in favor of the

bank on cross-motions for summary judgment, allowing the bank to

recoup those costs from the elevator. The district court ruled that the two-

year limitations period in Iowa Code section 614.1(10) (2018) controlled

rather than the five-year period in section 614.1(4), but it applied the

discovery rule allowing the bank full recovery of those costs. The district

court rejected the elevator’s unjust enrichment claims.       The elevator

appealed, and we retained the case.

      On our review, we hold the controlling statute of limitations is Iowa

Code section 614.1(10), which bars the bank’s claims filed more than two

years from the date of sale of goods subject to its perfected security

interest.   The district court erred by applying the discovery rule.    The

district court correctly ruled the bank’s prior perfected security interest
                                    4

trumped the elevator’s claim for storage and drying costs. The legislature

resolved the competing policy arguments in the IUCC. Predictability and

certainty are vital in these multi-party commercial transactions.

Accordingly, we reverse the summary judgment in part and remand this

case for entry of a revised judgment dismissing the bank’s claims that are

time-barred.

      I. Background Facts and Proceedings.

      Justin Harker and his spouse Ashley Harker are farmers engaged in

the commercial production of grains (corn and soybeans). The Harkers

routinely sold and delivered their grain to Heartland Co-op (Heartland), a

licensed grain dealer that operates a grain warehouse and handling facility

in Cambridge. The Harkers had a contract with Heartland for the storage,

drying, and sale of their grain.    The Harkers were also customers of

MidWestOne Bank (MidWestOne), located in Story County. The Harkers

borrowed money from MidWestOne to pay for their farm operating

expenses, and MidWestOne in return obtained a security interest in the

Harkers’ grain and sale proceeds.

      Specifically, from 2013 through 2016, the Harkers borrowed money

from MidWestOne under three promissory notes.         MidWestOne filed a

UCC-1 Financing Statement with the Iowa Secretary of State on

February 29, 2012, and described as collateral “all farm products” and the

“proceeds of any of the property [or] goods.” On November 15, 2016, the

Financing Statement was amended and timely continued.

      Under an Agricultural Security Agreement dated February 20, 2014,

MidWestOne obtained a security interest in the Harkers’ farm products

and the proceeds from the sale of those products.        The collateral as

described in the agreement includes all crops. The agreement required the

Harkers to update MidWestOne on the location of the collateral and
                                      5

prevented them from removing the collateral from its location without

MidWestOne’s consent unless they did so in the ordinary course of their

business:

            Transactions Involving Collateral.             Except for
      inventory sold or accounts collected in the ordinary course of
      [Harker’s] business, or as otherwise provided for in this
      Agreement, [Harker] shall not sell, offer to sell, or otherwise
      transfer or dispose of the Collateral. [Harker] shall not pledge,
      mortgage, encumber or otherwise permit the Collateral to be
      subject to any lien, security interest, encumbrance, or charge,
      other than the security interest provided for in this
      Agreement, without the prior written consent of
      [MidWestOne]. This includes security interests even if junior
      in right to the security interests granted under this
      Agreement. . . . Upon receipt, [Harker] shall immediately
      deliver any such proceeds to [MidWestOne].

The Harkers also agreed to ensure that the crops were properly maintained

at their expense without allowing the attachment of liens by elevators:

             Care and Preservation of the Crops. [Harker] shall
      (1) At seasonable and proper times and in accordance with the
      best practices of good husbandry attend to and care for the
      crops and the tillage of the land and do, or cause to be done,
      any and all acts that may at any time be appropriate or
      necessary to grow, farm, cultivate, irrigate, fertilize, fumigate,
      prune, harvest, pick, clean, preserve, and protect the crops;
      (2) Not commit or suffer to be committed any damage to,
      destruction of, or waste of the crops . . . .
            ....
             Repairs and Maintenance. [Harker] agrees to keep
      and maintain, and to cause others to keep and maintain, the
      Collateral in good order, repair and condition at all times while
      this Agreement remains in effect. [Harker] further agrees to
      pay when due all claims for work done on, or services rendered
      or material furnished in connection with the Collateral so that
      no lien or encumbrance may ever attach to or be filed against
      the Collateral.

Additionally, the agreement required the Harkers to provide MidWestOne

with a Schedule of Buyers listing the grain warehouses that they may use
                                     6

to store and sell their grain with the buyer’s checks to be payable jointly

to MidWestOne and the Harkers:

            Sale of Collateral. The following provisions relate to
      any sale, consignment, lease, license, exchange, transfer, or
      other disposition of crops, livestock or other farm products
      included as all or a part of the Collateral:
            (1) To induce [MidWestOne] to extend the credit or
            other financial accommodations secured by this
            Agreement, [Harker] represents and warrants to
            [MidWestOne] that [Harker] will sell, consign, lease,
            license, exchange, or transfer the Collateral only to
            those persons whose names and addresses have been
            set forth on sales schedules delivered to [MidWestOne].
            Each schedule shall be in such form as [MidWestOne]
            may require, including identification of each type of
            Collateral.
            (2) [Harker] agrees to provide [MidWestOne] a written
            list or schedule of the buyers, commission merchants,
            and selling agents to or through an individual including
            the entity name, contact name and address to whom or
            through whom the crops, livestock or other farm
            products may be sold, consigned or transferred. . . .
            (3) All proceeds of any sale, consignment, lease,
            license, exchange, transfer, or other disposition shall be
            made immediately available to [MidWestOne] in a form
            jointly payable to [Harker] and [MidWestOne]. . . . All
            chattel    paper,    contracts,    warehouse     receipts,
            documents, and other evidences of ownership or
            obligations relating to the Collateral, whether issued by
            a co-op, grain elevator, warehouse, marketing entity, or
            bailee, and all accounts and other proceeds of the
            Collateral shall be immediately endorsed, assigned and
            delivered by [Harker] to [MidWestOne] as security for
            the Indebtedness.

      Pursuant to the security agreement’s terms, the Harkers gave

MidWestOne a Schedule of Buyers for their corn and beans on three

occasions between 2015 and 2016. The schedules identified Heartland as

a buyer, and the Harkers verified that schedules were “a list of those

buyers, selling agents, and commission merchants to whom [the Harkers]

may sell, consign, or transfer the Farm Products as designated.”
                                    7

      MidWestOne in turn gave Heartland documents titled “Notice to

Buyer of Security Interest in Farm Products” on three occasions between

2014 and 2016. These notices informed Heartland that MidWestOne had

a security interest in the Harkers’ grain and directed them to make a joint

payment to the Harkers and MidWestOne for all proceeds from the

eventual sale of the grain.

      Six sales transactions in which the Harkers sold grain to Heartland

are at issue:

      1. On January 7, 2014, the Harkers sold 33,402.65 bushels
         of corn at a price of $4.23 per bushel. The total sale price
         was $141,293.21. Heartland withheld $9,420.39 from the
         check for the cost of drying and storing. Heartland also
         withheld $2,234.01 for warehouse storage and $156.38 in
         tax.
      2. On March 17, 2014, the Harkers sold 6,250 bushels of
         corn at a price of $4.52 per bushel. The total sale price
         was $28,250. Heartland withheld $26,861.80 for the cost
         of drying and storing.
      3. On August 25, 2014, the Harkers sold 2,902.32 bushels
         of corn at a price of $3.43 per bushel. The total sale price
         was $9,954.96. Heartland withheld $756.52 for the cost
         of drying and storing.
      4. On October 5, 2015, the Harkers sold 9,659.50 bushels of
         corn at a price of $3.82 per bushel. The total sale price
         was $36,899.29. Heartland withheld $5,072.40 for the
         cost of drying and storing.
      5. On December 23, 2016, the Harkers sold 8,600.34
         bushels of soybeans at a price of $10.00 per bushel. The
         total sale price was $86,003.40. Heartland withheld
         $35,070.30 for the cost of drying and storing.
      6. On February 24, 2017, the Harkers sold 55,361.29
         bushels of corn at a price of $3.20 per bushel. The total
         sale price was $177,156.13. Heartland withheld $323.88
         for the cost of drying and storing.

In each transaction, Heartland deducted from the sale proceeds its costs

of drying and storing the grain before sending the balance in a joint check

to the Harkers and MidWestOne. The drying and storage charges were

paid when the grain was sold through this withholding. In total, Heartland
                                       8

withheld $79,895.68 from the sale proceeds. The withheld amounts were

not used to service or pay any other debt that the Harkers owed to

Heartland, and Heartland provided the Harkers with statements reflecting

these withholdings. Neither the Harkers nor Heartland provided those

statements to MidWestOne. MidWestOne claims it is owed those amounts

based on its prior perfected security interest in the Harkers’ grain and sale

proceeds.

      On March 16, 2018, MidWestOne filed this civil action alleging

$79,895.68 in damages for the drying and storage charges withheld

between 2014 and 2017 along with attorney fees and court costs.

MidWestOne     asserted     that   Heartland     had   a     junior   interest   to

MidWestOne’s     prior    perfected   security   interest,    that    the   offsets

represented preexisting debt to Heartland, and that Heartland is not a

buyer of grain in the ordinary course of business.            Heartland filed an

answer and asserted affirmative defenses of failure to state a claim, unjust

enrichment, waiver, bailment lien, quantum meruit, course of dealing,

usage of trade, and statute of limitations. Heartland filed an amended

answer and counterclaim seven months later that alleged an additional

affirmative defense, equitable set off. The counterclaim also asserted that

Heartland was entitled to recover from MidWestOne for the value of the

services provided to improve and protect the grain under the doctrine of

equitable estoppel. MidWestOne filed a reply to the counterclaim. The

parties filed cross-motions for summary judgment and resistances.

      Heartland asserted that the two-year limitations period in Iowa Code

section 614.1(10) for a “secured interest in farm products” applied because

MidWestOne’s conversion claims were based in its contention that it had

a prior perfected security interest in the grain. Heartland also argued in

favor of its many affirmative defenses. MidWestOne countered that section
                                          9

614.1(4) for conversion claims provides the applicable five-year limitations

period and, alternatively, argued that the discovery rule applied.

MidWestOne argued Heartland’s affirmative defenses failed as a matter of

law.

       On May 31, the district court granted MidWestOne’s motion for

summary judgment and denied Heartland’s motion. The district court

applied the limitations period for a “secured interest in farm products” in

Iowa Code section 614.1(10) to MidWestOne’s conversion claims after

concluding that the more specific limitations period in section 614.1(10)

overrides the general limitations period in section 614.1(4). The district

court determined that the claims for the offsets on January 7, 2014;

March 17, 2014; August 25, 2014; and October 5, 2015, fell outside the

two-year limitation period.       The district court determined those claims

amounted to about $42,111. But the court applied the discovery rule

based on MidWestOne’s showing that it was unaware of Heartland’s offsets

before 2017. The court entered a judgment in favor of MidWestOne for

$79,895.68 plus interest, costs, and attorney fees. 1

       Heartland moved to enlarge or amend the ruling, which the district

court denied. Heartland appealed and we retained the case. The Iowa
Bankers Association filed an amicus curiae brief supporting MidWestOne.

The Agriculture Legal Defense Fund and the Iowa Institute for

Cooperatives each filed a brief amicus curiae supporting Heartland.

       II. Standard of Review.

       We “review a district court ruling on a motion for summary judgment

for correction of errors at law.” Wells Fargo Equip. Fin., Inc. v. Retterath,

928 N.W.2d 1, 5 (Iowa 2019) (quoting Jahnke v. Deere & Co., 912 N.W.2d

       1MidWestOne   dropped its claim for attorney fees, and those are not at issue in
this appeal.
                                     10

136, 141 (Iowa 2018)). “Summary judgment is proper when the moving

party has shown ‘there is no genuine issue as to any material fact and the

moving party is entitled to judgment as a matter of law.’ ” Jahnke, 912

N.W.2d at 141 (quoting Homan v. Branstad, 887 N.W.2d 153, 163 (Iowa

2016)). Summary judgment is appropriate “if the record reveals only a

conflict concerning the legal consequences of undisputed facts.” Nelson v.

Lindaman, 867 N.W.2d 1, 6 (Iowa 2015) (quoting Wallace v. Des Moines

Indep. Cmty. Sch. Dist. Bd. of Dirs., 754 N.W.2d 854, 857 (Iowa 2008)). We

review evidence in the light most favorable to the nonmoving party. Id.

      III. Analysis.

      We first decide which statute of limitations governs and whether the

discovery rule applies.     We then address whether MidWestOne’s prior

perfected security interest supersedes Heartland’s offset for the costs of

storing and drying the corn.

      A. The Statute of Limitations. MidWestOne argues its claims are

subject to the general five-year statute of limitations in Iowa Code section

614.1(4) for injuries to property.   Heartland argues the district court

correctly ruled that MidWestOne’s claims are subject to the more specific

two-year statute of limitations in section 614.1(10) for claims based on a

secured interest in farm products. We agree with Heartland.

      We begin with the statutory language.      Iowa Code section 614.1

states, in relevant part,

            Actions may be brought within the times limited as
      follows, respectively, after their causes accrue, and not
      afterwards, except when otherwise specially declared:
             ....
            4. Unwritten contracts — injuries to property — fraud —
      other actions. Those founded on unwritten contracts, those
      brought for injuries to property, or for relief on the ground of
      fraud in cases heretofore solely cognizable in a court of
      chancery, and all other actions not otherwise provided for in
                                    11
      this respect, within five years, except as provided by
      subsections 8 and 10.
              ....
            10. Secured interest in farm products. Those founded
      on a secured interest in farm products, within two years from
      the date of sale of the farm products against the secured
      interest of the creditor.

(Emphasis added.)     “The evident purpose behind § 614.1(10), which

shortens the limitations period from five years under § 614.1(4) to two

years for claims founded on secured interests in farm products, is to

hasten resolution of such claims.” Farmers Coop. Co. v. Swift Pork Co.,

602 F. Supp. 2d 1095, 1110 (N.D. Iowa 2009).

      MidWestOne contends section 614.1(4) governs conversion claims

for injuries to property, as we held in Husker News Co. v. Mahaska State

Bank, 460 N.W.2d 476, 477 n.2 (Iowa 1990). But that case did not involve

claims arising from a secured interest in farm products, the very claims at

issue in this case. Iowa Code section 614.1(4) carves out such claims with

its final phrase, “except as provided by subsections 8 and 10.” From this

language, the United States District Court for the Northern District of Iowa

determined that

      it is readily apparent that paragraph (10) is an exception to
      subsection (4)—that is, that subsection (4) applies unless
      subsection (10) applies—because subsection (4) expressly
      states a five-year statute of limitations for the pertinent
      actions, “except as provided by subsections 8 and 10.”

Farmers Coop. Co., 602 F. Supp. 2d at 1108–09 (quoting Iowa Code

§ 614.1(4)). We agree. Under the plain meaning of the text of the statute,

subsection (4) applies to property damage claims unless subsection (8) or

(10) apply.

      Section 614.1(10) by its terms governs actions “founded on a

secured interest in farm products.” MidWestOne’s contractual security

interest through the Security Agreement and its UCC-1 Financing
                                      12

Statement is a “secured interest.”         MidWestOne’s Security Agreement

specifically defines the collateral as “all farm products” that are “grown,

growing, or to be grown” as well as the “proceeds” of any sale thereof.

MidWestOne’s conversion claims are founded on Heartland’s alleged

disregard of MidWestOne’s “secured interest” in the Harker’s grain, clearly

a “farm product,” and in the proceeds of the sale of that grain. Indeed,

without the secured interest, MidWestOne would have no conversion claim

against Heartland.

      Our conclusion that section 614.1(10) controls over section 614.1(4)

is buttressed by a familiar canon of construction: “To the extent ‘there is

a conflict or ambiguity between specific and general statutes, the

provisions of the specific statutes control.’ ” Oyens Feed & Supply, Inc. v

Primebank, 808 N.W.2d 186, 194 (Iowa 2011) (quoting Freedom Fin. Bank

v. Estate of Boesen, 805 N.W.2d 802, 815 (Iowa 2011)).            “[Iowa Code

section] 614.1(10) is a more specific statute of limitations that is an

exception to the more general statute of limitations in [section] 614.1(4).”

Farmers Coop. Co., 602 F. Supp. 2d at 1109; see also Iowa Code § 4.7 (“If

a general provision conflicts with a special or local provision, they shall be

construed, if possible, so that effect is given to both. If the conflict between

the provisions is irreconcilable, the special or local provision prevails as

an exception to the general provision.”).        We easily harmonize these

provisions because subsection (4) expressly excludes claims governed by

subsection (10). The district court correctly concluded that MidWestOne’s

claims are subject to the two-year limitations period in section 614.1(10).

      B. The Discovery Rule. MidWestOne argues that the district court

correctly applied the discovery rule to allow MidWestOne to recover on

transactions that occurred more than two years before it filed its civil

action.   MidWestOne relies on the fact that it did not discover that
                                     13

Heartland had deducted the cost of storing and drying the grain before

2017. Heartland argues the district court erred by applying the discovery

rule to section 614.1(10). We agree with Heartland.

      Under the discovery rule, the statute of limitations is tolled “until

the plaintiff knows or in the exercise of reasonable care should have known

both the fact of the injury and its cause.” K & W Elec., Inc. v. State, 712

N.W.2d 107, 116 (Iowa 2006) (quoting Rieff v. Evans, 630 N.W.2d 278, 291

(Iowa 2001) (en banc)). When a plaintiff learns information that would

inform a reasonable person of the need to investigate, the plaintiff is on

inquiry notice of all of the facts that would have been discovered through

a reasonably diligent investigation.      Hallett Constr. Co. v. Meister, 713

N.W.2d 225, 231 (Iowa 2006). We have applied the discovery rule “when

it would be unfair to charge ‘a plaintiff with knowledge of facts which are

“unknown and inherently unknowable.” ’ ” Mormann v. Iowa Workforce

Dev., 913 N.W.2d 554, 567 (Iowa 2018) (quoting LeBeau v. Dimig, 446

N.W.2d 800, 802 (Iowa 1989)). Heartland’s setoffs for its costs of drying

and storing the grain were not inherently unknowable from MidWestOne’s

standpoint. MidWestOne could have asked Heartland or the Harkers for

documentation that would have revealed those setoffs.

      In Husker News Co., we declined to apply the discovery rule to Iowa

Code section 554.3419(1)(c) (1987) because doing so would be inconsistent

with fundamental policies underlying the UCC. 460 N.W.2d at 477. There,

we noted that “when interpreting any provision of the Uniform Commercial

Code, we bear in mind its overriding purposes and objectives,” which

include uniformity among the states and “the presumption in favor of

predictability and the finality of commercial transactions.” Id. We noted

that a majority of jurisdictions have declined to apply the discovery rule in

UCC conversion cases, typically because of “(1) the need for finality in
                                     14

transactions involving negotiable instruments, and (2) the presumption

that property owners know where their property is located.”           Id. at

477–78.

      We determined that the fundamental policies underlying the UCC

favored a strict application of the limitation period for negotiable

instruments. Id. at 479; see also Mormann, 913 N.W.2d at 569 (“Courts

have held that equitable tolling principles do not apply to claims brought

under the UCC, where a fundamental purpose of the statute is to establish

clear rules for rapid commercial transactions.”). We have refrained from

applying the discovery rule when it would undermine the purpose of the

statute. See Husker News Co., 460 N.W.2d at 477.

      We reach the same conclusion here for the same reasons. Finality

and predictability in commercial transactions are equally salient in

commercial farming enterprises.           See id. at 478 (“We think the

considerations of finality and predictability represented by the majority

rule are substantial and outweigh the countervailing equities which led us

to apply the discovery rule in other cases.”). The agricultural industry

involves multiple producers, lenders, suppliers, and vendors. As such, we

must honor the UCC’s preference for clear rules.

      Applying the discovery rule would conflict with the plain language of

section 614.1(10), which expressly provides that the date of sale starts the

time clock. Iowa Code § 614.1(10) (2018) (“Those founded on a secured

interest in farm products, within two years from the date of sale of the farm

products against the secured interest of the creditor.” (Emphasis added.)).

We have refused to apply a discovery rule to other statutes of limitation

that set forth the triggering event. See, e.g., Schultze v. Landmark Hotel

Corp., 463 N.W.2d 47, 50 (Iowa 1990) (recognizing that the discovery rule

does not apply to a wrongful-death statute of limitations that runs from
                                            15

the “date of death”); see also Bergen v. Iowa Veterans Home, 577 N.W.2d

629, 630 (Iowa 1998) (per curiam) (holding that there is “no basis for

applying the discovery rule” when the limitation period is “within three

years from the date of the last payment of weekly compensation benefits”

(quoting Iowa Code § 85.26(1) (1989))); Whitmer v. Int’l Paper Co., Folding

Carton & Label Div., 314 N.W.2d 411, 412 (Iowa 1982) (en banc) (same).

When the statute sets forth the triggering event,

       [t]here is no suggestion or hint in [the statute’s] language that
       the legislature intended that we impose a different
       commencement date for the limitation period . . . . To further
       extend the limitation period would be contrary to the plain
       language of the subsection and the legislature’s intent to
       restrict the length of time for commencing [the] action[].

Schultze, 463 N.W.2d at 50. “There is consequently no basis for applying

the discovery rule” when the period runs from a specified event. Bergen,

577 N.W.2d at 630.

       We hold that the discovery rule does not apply to Iowa Code section

614.1(10). Accordingly, MidWestOne’s judgment must be reduced by the

amount 2 withheld by Heartland in transactions occurring more than two

years before this lawsuit was filed.

       C. Unjust Enrichment. We now turn to Heartland’s argument that
the district court erred by rejecting its unjust enrichment claim.                       On

appeal, Heartland does not claim it has a statutory lien or security interest

under the IUCC. 3 All parties agree that the drying and storage costs were


       2The   district court calculated that amount to be $42,111. We note a mathematical
discrepancy. On January 7, 2014, Heartland withheld an additional $2234.01 for
warehouse storage and $156.38 in tax. The district court did not include these sums in
its calculation of the amount that fell outside the two-year limitation period, yet the court
did include these sums total amount claimed by, and awarded to, MidWestOne after it
applied the discovery rule. This discrepancy can be resolved by the parties and district
court on remand.
        3Article 7 of the IUCC, Iowa Code chapter 554, includes a warehouse lien

provision, Iowa Code section 554.7209 (2018). The district court rejected Heartland’s
                                            16

necessary to preserve the grain for sale. Heartland and its amici argue

grain elevators routinely deduct drying and storage costs from the sale

proceeds and that MidWestOne should have been aware of this common

industry practice. The district court determined that MidWestOne was

unaware that Heartland was deducting those costs, and there is no

evidence the Harkers or Heartland notified MidWestOne of those

deductions.      The parties’ contracts obligated the Harkers to pay those

costs. MidWestOne argues that its prior perfected security interest in the

grain and proceeds defeats Heartland’s claims. We must decide whether

the UCC priority system trumps Heartland’s unjust enrichment claims on

this record.

       An unjust enrichment claim “arises from the equitable principle that

one shall not be permitted to unjustly enrich oneself by receiving . . .

benefits without making compensation therefor.” Legg v. W. Bank, 873

N.W.2d 763, 771 (Iowa 2016) (quoting Ahrendsen ex rel. Ahrendsen v. Iowa

Dep’t of Human Servs., 613 N.W.2d 674, 679 (Iowa 2000) (en banc)).

Unjust enrichment exists when (1) one party is enriched (2) at the expense

of the other, and (3) it would be unjust under the circumstances for the

enriched party to retain the benefit. Behm v. City of Cedar Rapids, 922

N.W.2d 524, 577 (Iowa 2019).

       We have never held that a grain elevator as an unsecured creditor

can recover under a common law or equitable unjust enrichment theory

against a bank with a valid perfected security interest in the grain and


warehouse lien claim, and Heartland has abandoned that claim in this appeal.
MidWestOne argues the warehouse lien statute displaces Heartland’s common law or
equitable unjust enrichment claims. See id. § 554.1103(2) (“Unless displaced by the
particular provisions of this chapter, the principles of law and equity . . . supplement its
provisions.”). We do not decide that question today. Cf. Warder & Lee Elevator, Inc. v.
Britten, 274 N.W.2d 339, 341–42 (Iowa 1979) (en banc) (holding that Iowa Code section
554.2201 on statute of frauds does not displace doctrine of estoppel for oral sale of goods).
                                     17

proceeds. To the contrary, we have held the bank is entitled to summary

judgment enforcing its security interest in the grain proceeds. First State

Bank v. Clark, 635 N.W.2d 29, 34 (Iowa 2001); see also Peoples Tr. & Sav.

Bank v. Sec. Sav. Bank, 815 N.W.2d 744, 763–64 (Iowa 2012) (affirming

summary judgment enforcing bank’s security interest in cattle sale

proceeds and rejecting waiver claim based on course of conduct); accord

Agrifund, LLC v. Heartland Co-op, ___ F. Supp. 3d ___, ___, 2020

WL 486503, *3, *6 (S.D. Iowa Jan. 28, 2020) (granting summary judgment

for secured lender against grain elevator enforcing security interest in crop

proceeds). Our court of appeals has previously rejected a feed dealer’s

unjust enrichment claim against a bank for the enhanced value from the

sale of pigs, holding that it was not unjust for the bank to receive the

proceeds from the sale pursuant to the bank’s valid security interest.

Larsen v. Warrington, 348 N.W.2d 637, 643 (Iowa Ct. App. 1984), overruled

in part on other grounds by C & H Farm Serv. Co. of Iowa v. Farmers Sav.

Bank, 449 N.W.2d 866, 873–74 & n.3 (Iowa 1989).

      Heartland relies primarily on the decision by the Colorado Supreme

Court in Ninth District Production Credit Ass’n v. Ed Duggan, Inc., 821 P.2d

788 (Colo. 1991) (en banc). The Duggan court held that under limited

circumstances, a creditor with a perfected security interest in collateral

could be liable “to an unsecured creditor based on a theory of unjust

enrichment for benefits that enhance the value of the collateral.” Id. at

793. Edmond Duggan supplied corn to a cattle feedlot. Id. at 792. Ninth

District Production Credit Association (PCA) had a security interest in the

feedlot’s receivables. Id. at 790. A loan officer for PCA was present at the

feedlot at times, knew that the cattle were eating the corn Duggan

supplied, approved some orders for the corn, and never objected to the

transactions. Id. at 792–93, 803. When the insolvent feedlot operator
                                           18

failed to pay for the corn, Duggan sought reimbursement from PCA from

the proceeds of the sale of the cattle. Id. at 793. PCA, asserting its secured

status, refused to pay Duggan, an unsecured creditor, out of those funds.

Id. Duggan sued PCA for unjust enrichment and won a jury verdict on

that theory. Id. The Colorado Court of Appeals affirmed, and the Colorado

Supreme Court granted certiorari, noting the “tension between the [UCC]

priority system . . . and equitable principles of unjust enrichment.” Id.

      The Duggan court observed that the UCC “reflects the legislative

judgment that the value of a predictable system of priorities ordinarily

outweighs the disadvantage of the system’s occasional inequities.” Id. at

797. Yet the court also stated that the UCC “recognizes that equitable

principles may require alteration of the priority system in particular

circumstances.”        Id.     After surveying cases nationwide, the court

concluded that a determining factor is whether the secured creditor

“initiates or encourages” the transactions that enhance the value of the

collateral.    Id. at 795–98.        The Duggan court described the limited

circumstances as follows:

      Where a secured creditor is benefitted by a transaction
      between its debtor and an unsecured creditor that enhances
      the value of the secured collateral, and the secured creditor
      initiates or encourages the transaction, the secured creditor
      can be held liable to the unsecured creditor on the theory of
      unjust enrichment.

Id. at 801. The court determined the jury had not been properly instructed

and remanded the case for a new trial. Id. 4
      Duggan appears to represent the high water mark for allowing an

unsecured creditor to recover against a secured creditor under an unjust

enrichment theory. “Recovery is clearly the exception, not the norm, and


      4Three   dissenting justices would have affirmed the jury verdict. Id. at 804.
                                           19

is subject to stern limitations.” Knox v. Phx. Leasing Inc., 35 Cal. Rptr. 2d

141, 145 (Ct. App. 1994). Other courts have strictly enforced the UCC

priority system to reject unjust enrichment claims against secured

creditors. See, e.g., Nat’l Bank & Tr. Co. of S. Bend v. Moody Ford, Inc.,

273 N.E.2d 757, 760 (Ind. Ct. App. 1971) (“Were this court to disregard

the fact that [the appellee] has totally failed to comply with the provisions

of the Uniform Commercial Code[,] the result would be little more than a

judicial erasure of those sections of the Code upon which this case relies.”);

Evans Prods. Co. v. Jorgensen, 421 P.2d 978, 983 (Or. 1966) (en banc)

(“The purpose and effectiveness of the UCC would be substantially

impaired if interests created in compliance with UCC procedures could be

defeated by application of the equitable doctrine of unjust enrichment.”);

Peerless Packing Co. v. Malone & Hyde, Inc., 376 S.E.2d 161, 164 n.4 (W.

Va. 1988) (“The UCC provides justice in the long run in large part through

the certainty and predictability of its provisions, which should not be set

aside absent truly egregious circumstances verging on actual fraud.”).

       We favor adhering to the UCC’s priority system to provide clarity,

uniformity, and consistency in commercial transactions.                    See Husker

News Co., 460 N.W.2d at 478. Those objectives would be undermined by

allowing unjust enrichment claims against secured creditors. 5 But we


       5We note that during the 2019 legislative session, an amendment was proposed
to the warehouse lien statute in Iowa Code section 554.7209 that would have added a
new subsection giving grain elevators a new priority over secured lenders:
               NEW SUBSECTION. 3A. Notwithstanding any provision in this
       section to the contrary, a warehouse’s lien created in subsection 1, that is
       in favor of a warehouse operator licensed under either chapter 203C or the
       United States Warehouse Act, 7 U.S.C. ch. 10, is effective against all
       persons and is superior against all other competing security interests and
       agricultural liens.
S.S.B. 1251, 88th G.A., 1st Sess. § 29 (Iowa 2019). This amendment was passed by the
Senate Appropriations Committee, S. Journal, 88th G.A., 1st Sess., at 814–15 (Iowa
2019), but it was never enacted, cf. 2019 Iowa Acts ch. 131 (2019). We defer to the
                                            20

need not decide whether to allow such claims under the limited

circumstances recognized in Duggan because Heartland lacks evidence

that MidWestOne initiated or encouraged the elevator’s practice of

deducting drying and storage costs from the sale proceeds.                         Neither

Heartland nor the Harkers sent MidWestOne documentation showing

those deductions.           The summary judgment record, including the

uncontroverted affidavit testimony of a bank officer, established that

MidWestOne lacked actual knowledge of those deductions before 2017.

The Harkers were contractually obligated to pay the drying and storage

costs.     Heartland’s unjust enrichment claims would fail even under

Duggan.

         Heartland and its amici argue that it is a common practice for grain

elevators to deduct their storage and drying costs from the proceeds of the

sale of the grain and that MidWestOne, as a farm lender, should have been

aware of that practice and at least impliedly waived its lien rights through

course of conduct and performance when it cashed checks without

objection. On our review of the record, we reach the same conclusion as

the district court—MidWestOne did not discover Heartland’s deductions

before 2017. In Peoples Trust & Savings Bank, we made clear that “a

waiver can be established only upon showing that the creditor knowingly

and intentionally waived [its] rights in the proceeds.” 815 N.W.2d at 763.

“Further, in order to establish implied waiver by conduct, there must exist

clear, unequivocal, and decisive conduct demonstrating intent to waive.”

Id. The summary judgment record here is devoid of such evidence.

         While the actions of [the bank] may not have been a model of
         diligence, and even rather gullible, there is no triable issue on
         the question of an intentional and knowing waiver of [the

legislature whether to give grain elevators lien rights for storage and drying costs superior
to a lender’s prior perfected security interest in crops and their proceeds.
                                    21
      bank’s] interest in the proceeds through clear, unequivocal,
      and decisive conduct.

Id. at 764.
      Other courts, as we do today, have rejected unjust enrichment

claims against secured creditors as factually unsupported even while

acknowledging the authority allowing such claims under limited

circumstances. See, e.g., Newsom v. Rabo Agrifin., Inc., 427 S.W.3d 688,

695 (Ark. Ct. App. 2013) (“[a]ssuming arguendo that under certain

circumstances an equitable lien could prime a perfected security interest,”

the creditor “did as it was entitled to do under the law”); Daniels-Sheridan

Fed. Credit Union v. Bellanger, 36 P.3d 397, 404 (Mont. 2001) (holding that

“an equitable carve-out from the UCC’s hierarchy of priorities is not

justified” under the facts even if Duggan were followed). On this record,

the district court correctly granted MidWestOne’s motion for summary

judgment dismissing Heartland’s unjust enrichment claims.

      IV. Disposition.

      For those reasons, we affirm the summary judgment rejecting

Heartland’s unjust enrichment claims. We reverse the summary judgment

in part on the statute of limitations and remand this case for entry of a

revised judgment consistent with this opinion dismissing the bank’s

claims that are time-barred.

      AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

WITH INSTRUCTIONS.
