## Facts

- After foreclosing on Ivan and Jeanne Van Loon’s commercial real estate and obtaining a deficiency judgment, Wachovia proceeded against the Van Loons’ personal property, including two semi-tractors.
- Four days before a scheduled sheriff’s sale, the parties obtained a court order substituting a public auction conducted by an auction company.
- Wachovia did not obtain the original vehicle title certificates from Ivan Van Loon before the auction.
- At the auction’s outset, the auctioneer (acting for Wachovia) stated the auction company would “guarantee the titles” and that buyer funds would not be disbursed to Wachovia until the auction company had the titles and could transfer them.
- Matthew Van Sickle purchased two semi-tractors and was told he would receive titles after his check cleared; no deadline was given, and he expected a short turnaround.
- Van Sickle took possession, made repairs, and used parts from other trucks he owned, leaving those trucks unusable during the period he awaited titles.
- After the sale, the auctioneer’s attempt to obtain duplicate titles was blocked because the transaction was a public auction rather than a sheriff’s sale; Wachovia then sought titles through counsel and court processes.
- Wachovia’s efforts included contacting the Van Loons’ counsel, seeking contempt against Ivan Van Loon, and obtaining a court order directing the county treasurer to effect title transfer.
- Van Sickle received title to one truck about one month after the auction and the other about five months after the auction.
- Van Sickle alleged economic loss from the delay, and a jury awarded $27,000 compensatory damages and $250,000 punitive damages on theories of fraudulent and negligent misrepresentation; posttrial motions were denied and the intermediate appellate court reversed before further review.

## Issues

1. Whether substantial evidence supported fraudulent misrepresentation, particularly scienter (knowledge of falsity or reckless disregard) and intent to deceive.
2. Whether punitive damages could stand under Iowa’s requirement of willful and wanton conduct in disregard of a known or obvious, highly probable risk of harm.
3. Whether negligent misrepresentation could support recovery of purely economic losses in this transaction, or whether the economic-loss doctrine barred the claim.

## Decision

- The Supreme Court held the evidence was insufficient to prove fraudulent misrepresentation because scienter and intent to deceive (or reckless disregard for truth) were not supported by substantial evidence.
- The Court set aside the punitive damages award because the record did not show willful and wanton conduct; at most, Wachovia’s conduct was negligent.
- The Court held negligent misrepresentation was viable on these facts and could support recovery of economic loss caused by the delayed transfer of title, rejecting a categorical economic-loss bar in this context.
- The judgment was affirmed in part and reversed in part consistent with these holdings.

## Legal Principles

- Fraudulent misrepresentation requires proof of representation, falsity, materiality, scienter, intent to deceive, justifiable reliance, and damages; negligence or delayed performance alone does not establish scienter.
- Punitive damages require proof of willful and wanton conduct—more than negligence—showing disregard of a known or obvious risk so great that harm was highly probable.
- Negligent misrepresentation may permit recovery of economic losses in a commercial transaction when a defendant supplies inaccurate information for the guidance of others, and the economic-loss doctrine does not automatically bar such claims.
- In vehicle sales transactions, a seller’s failure to ensure timely ability to transfer good title can support negligence-based liability even when subsequent efforts show good-faith attempts to complete the transfer.

## Conclusion

The court rejected fraud and punitive damages due to the absence of proof that the title assurances were knowingly or recklessly false, but it permitted a negligence-based recovery for economic losses attributable to Wachovia’s failure to ensure timely transfer of vehicle titles after the auction.


Van Sickle Constr. Co. v. Wachovia Com. Mortg., Inc., 783 N.W.2d 684 (Iowa 2010)