The Construction Counselor

On May 29, 2026, construction attorneys Jodie McDougal and Brandon Underwood of Fredrikson presented at the Iowa State Bar Association’s (ISBA) Annual Construction Law Seminar. McDougal and Underwood presented an annual update, given each May, on major Iowa court decisions in the area of construction law from the prior year, as well as an update from the 2026 legislative session regarding new construction laws.

Three Iowa construction law cases stand out as the most significant from the past year. We have previously covered the first two: Kono v. D.R. Horton, which involved a worksite injury of a sub-subcontractor and is summarized in “Iowa Supreme Court Reaffirms No-Duty Rule for General Contractors in Subcontractor Worksite Injuries Cases,” and C&S Lease Services v. Northern Natural Gas Co., which involved sub-subcontractor notices under Iowa’s mechanic’s lien statute and is summarized in “Iowa Appellate Court Issues Guidance on Sub-Subcontractor Pre-Lien Notices on Commercial Projects.”

Below is a detailed summary of the third case: Perfection Property Restoration, Inc. v. Marshall County, which involved the court’s thorough review of established Iowa case law and reiterates the need for contractors to follow proper procedures when contracting with governmental entities. The full slide deck, 2026 ISBA Construction Law Seminar: Construction Case Law and Legislative Update, contains all court decisions, including ones not summarized herein.

Perfection Property Case: Background Summary

This lawsuit arose after a tornado struck the city of Marshalltown in 2018 and significantly damaged the Marshall County (the County) Courthouse. A full-service disaster remediation contractor, Perfection Property Restoration, Inc. (Perfection), had representatives onsite within 24 hours of the storm. Before starting repairs, Perfection required the Marshall County auditor to sign an “Insurance Work Authorization,” which authorized the County’s insurer to make payments directly to Perfection. This was signed, and work began shortly after.

Over the next three years, Perfection performed services for the County that fell into three categories: storm-related repairs, updates to bring facilities into compliance with building codes and discretionary improvements. The County never submitted any of these projects for public bidding, and the Board of Supervisors (the Board) was never asked to ratify the Insurance Work Authorization.

In 2021, the County requested that Perfection sign a new contract for its ongoing activities, which now consisted mostly of discretionary improvements. Perfection refused and stopped working, insisting that its original Insurance Work Authorization remained in effect. The County finished the ongoing projects with another contractor, and Perfection filed suit for breach of contract and equitable remedies in the Southern District of Iowa. The County moved for summary judgment on the contract claims.

The Court’s Decision

The district court granted summary judgment on the contract claims in favor of the County. While this case was decided under existing case law, the well-reasoned decision emphasized that equities have no place in determining whether contractors have an enforceable agreement with a public entity. The court held that a party contracting with a local government in Iowa — including cities, counties, school districts and other localities — must adhere to all statutory requirements for the agreement to be enforceable. Here, this meant that formal approval was necessary to enforce the Insurance Work Authorization. However, the Board never passed a motion, resolution, amendment or ordinance, as required by Iowa law. See Iowa Code § 331.302(1). It made no difference that the Board had a copy of the agreement, approved payments or even monitored progress. Perfection had the opportunity for nearly three years to ask the Board to approve the agreement, and the court emphasized that parties negotiating or entering into contracts with government entities are on notice as to the limits on their authority.

Further, the County auditor did not have independent authority to enter into a contract binding the County. See Iowa Code § 331.502 (listing the 38 duties of a county auditor). Any alternative ruling would allow a county auditor to circumvent competitive bidding requirements under Iowa Code § 331.341, which requires “public improvements” exceeding a certain cost to be put out to bid. The court held that a single elected official was not entitled to bypass these statutory requirements.

Finally, neither the “emergency work” exception nor the fact that insurance funds paid for the improvements rescued Perfection. Although actions qualifying as “emergency work” are exempt from bidding requirements, the emergency here ended well before the following three years of construction. And even though insurance proceeds covered the cost of these projects, they were considered public funds once received by the County. The court held that the Insurance Work Authorization was unenforceable and granted the County’s summary judgment motion.

Key Takeaways

• Contracts with government entities require formal approval by the governing body to be enforceable.
• Parties contracting with government entities are responsible for understanding the entity’s statutory requirements and authority limits.
• Equitable considerations and emergency circumstances do not excuse noncompliance with statutory requirements.

As noted, a breakdown of the remainder of cases from this year’s presentation may be viewed in the slide deck.

For more information or questions, contact Jodie McDougal or Brandon Underwood.