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IN THE COURT OF APPEALS OF IOWA No. 6-523 / 05-0607 Filed December 13, 2006

ALLISON M. JENSEN, Plaintiff-Appellant/Cross-Appellee, vs. PRIME TIME, LTD., d/b/a PRIME N' WINE, THOMAS G. BARLAS, JR., Individually and in his Official Capacity, and UNKNOWN SUCCESSOR CORPORATION, Defendants-Appellees/Cross-Appellants. ------------------------------------------------------THOMAS G. BARLAS, JR. Counterclaimant-Appellee, vs. ALLISON M. JENSEN, Defendant to Counterclaim-Appellant. ________________________________________________________________

Appeal from the Iowa District Court for Cerro Gordo County, Bryan H. McKinley, Judge.

Plaintiff appeals, and defendants cross-appeal, from district court rulings in a civil matter. AFFIRMED IN PART, REVERSED IN PART, AND

REMANDED WITH DIRECTIONS.

2 Mark D. Sherinian and Jill M. Zwagerman, West Des Moines, for appellant.

Darrell J. Isaacson, Mason City, for appellee.

Heard by Huitink, P.J., Vogel, J., and Beeghly, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2005).

3 HUITINK, P.J. Allison Jensen filed a petition at law and jury demand, seeking damages for claims of sexual abuse perpetrated by Thomas G. "Tommy" Barlas, Jr. and pregnancy discrimination by her former employer, Prime Time, Ltd. d/b/a Prime N' Wine, a restaurant owned by Tommy Barlas. The defendants answered and filed counterclaims against Jensen. A jury returned a verdict in favor of Jensen and awarded damages on both claims. The jury found Tommy Barlas did not prove his claims of slander or fraudulent misrepresentation and the defendants did not prove their defenses to the pregnancy discrimination claim of waiver and failure to mitigate damages. However, the district court, ruling on defendants' posttrial motions, concluded defendants had established a defense of equitable estoppel, and therefore Jensen was barred from recovering damages for her pregnancy discrimination claim. Jensen appeals, arguing the district court erred in concluding the defendants properly asserted an equitable estoppel defense. The defendants cross-appeal, arguing (1) the district court erred in interpreting Iowa Code section 668.15 (2001) to exclude evidence of Jensen's past sexual behavior with Tommy Barlas and (2) if this court determines equitable estoppel does not bar Jensen's pregnancy discrimination claims, then the trial court erred in (a) not directing a verdict in favor of defendants on those claims and (b) not finding that Jensen's claims were waived as a matter of law. Upon review for correction of errors at

4 law, Iowa R. App. P. 6.4, we affirm in part, reverse in part, and remand with directions. I. Background Facts In 1997 Allison Jensen began working as a hostess at Prime N' Wine, a restaurant in Mason City owned by Barlas and his brother, George Barlas. After approximately six months, Jensen went to work at the Hanford Inn, a hotel owned by Barlas's mother. Jensen returned to the Prime N' Wine in the fall of 1999 as a hostess, bartender, and waitress. A few days prior to July 17, 2000, Tommy Barlas asked Jensen if she wanted to go with him to Minneapolis, Minnesota. As Jensen understood it, the trip was for business purposes. She agreed, and the two left after Jensen's shift on the 17th. Barlas brought alcohol along, and the two drank on the way to Minneapolis. During the trip, Barlas offered Jensen a promotion to assistant manager at the Prime N' Wine and promised her a raise of $1.50 per hour. After a night of drinking and visiting strip clubs in Minneapolis, the two returned to Barlas's home, 1 where they engaged in sexual intercourse. According to

Jensen, she was intoxicated at the time, and the sex was nonconsensual. Afterwards, Barlas drove Jensen home. The following day, Jensen worked at the restaurant. Barlas told her she could no longer be the assistant manager after what had happened, but she would still get her raise. On August 14, 2000, a pregnancy test confirmed Jensen was pregnant. Jensen told the nurse practitioner she had been sexually active without using
1

Barlas's wife, Michelle, was out of town at the time.

5 birth control, and that there were two possible instances where she could have gotten pregnant, one time four weeks prior and another time seven or eight days before that. Jensen and her boyfriend, Gregg Wettleson, had had intercourse on July 9. Jensen requested an ultrasound to determine the date of conception. Following the August 15 ultrasound, Jensen was informed her conception date was "around the middle of July 2000." When she asked for further clarification, Jensen was told "it was virtually impossible" for conception to have occurred on the 9th. On August 24, 2000, Jensen told Barlas she was pregnant and the date of conception was July 17. It was common knowledge among the restaurant staff, including Barlas, that Jensen was dating Wettleson, but Jensen did not tell Barlas she had had sex with Wettleson on July 9. When she suggested DNA testing, Barlas refused, indicating he "couldn't be linked to this baby in any way." Barlas and Jensen agreed that Barlas would give her $10,000 to help with expenses. 2 The two discussed Jensen moving to Hawaii, where her sister lived, and giving the baby up for adoption. Barlas told Jensen that in order to avoid suspicion, she would have to put in her two weeks' notice at the restaurant. Her last day was scheduled for September 9, 2000. When Jensen later asked to move her last day back because of a horse show that brought in extra business to the restaurant, Barlas refused. Jensen then approached George Barlas about working at North Beach, another restaurant owned by the family. George Barlas was unaware of Jensen's pregnancy at the time. Jensen worked at North Beach without incident until the restaurant closed in October 2000.
2

Tommy Barlas gave Jensen $9062 in early September.

6 By November 2000 Jensen had changed her mind about moving to Hawaii. When she approached George Barlas, who was then managing the Prime N' Wine, about returning to work, he told her she could not return to the restaurant under the circumstances. Michelle and Tommy Barlas and Jensen spoke on numerous occasions over the next several months, in an attempt to resolve the situation. In one meeting on November 17, the three discussed an agreement whereby Barlas would pay $15,000 into an escrow account for Jensen pending a positive DNA test. The three discussed keeping the matter quiet and Jensen moving out of town. The baby was born in March 2001. On April 1, 2001, Tommy Barlas and Jensen met. By that time, Jensen had filed a civil rights complaint against Barlas and the restaurant. Jensen secretly tape recorded the conversation, which she had done on at least one prior occasion during meetings with Michelle and Tommy Barlas. Barlas mentioned dropping the civil rights complaint against him, and the two discussed the baby and DNA testing. No specific agreement was reached. Barlas eventually submitted a blood sample for DNA testing, which showed Barlas was not the father. Later DNA testing showed Gregg Wettleson was the father of Jensen's baby. The aforementioned litigation ensued, and we must now address the issues raised on appeal. II. Equitable Estoppel As mentioned, following the jury verdict in Jensen's favor, the district court ruled that the defense of equitable estoppel barred Jensen's recovery on her

7 pregnancy discrimination claim. On appeal, Jensen contends the district court erred in applying the defense of equitable estoppel to her discrimination claims. We agree. 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. Opperman v. M. & I. Dehy, Inc., 644 N.W.2d 1, 6 (Iowa 2002) (quoting 27A Am. Jur. 2d Equity

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