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IN THE SUPREME COURT OF IOWA
No. 23 / 04-1139 Filed April 14, 2006 MARK STURM and LORI J. STURM, Appellants, vs. PEOPLES TRUST & SAVINGS BANK, Appellee.

Appeal from the Iowa District Court for Carroll County, Joel E. Swanson, Judge.

Bank customers appeal from summary judgment against them in their suit against bank based on alleged violations of federal statute and common law. AFFIRMED.

Benjamin T. Doran of Doran Anderson & Baltimore, P.L.C., Boone, for appellants.

Bernard L. Spaeth, Jr. of Whitfield & Eddy, P.L.C., Des Moines, for appellee.

2 LARSON, Justice. The plaintiffs, Mark and Lori J. Sturm, defaulted on loans they had obtained from Peoples Trust & Savings Bank (Peoples), and Peoples foreclosed. After the foreclosure, Sturms filed this suit, claiming the loan papers had failed to comply with a federal statute, that Peoples negligently misrepresented the rights and duties under the loan agreements, and that they had suffered damages as a result. The district court sustained Peoples' motion for summary judgment, and Sturms appealed. We affirm. I. Facts and Prior Proceedings. Sturms and Peoples had a long banking relationship, but only two transactions are involved on this appeal. The first was a loan in July 1999 for $100,000 to build a cabin on Sturms' acreage. Peoples, in order to loan the money, required a first lien on the Sturms' real estate, which was at that time mortgaged to Farmers Savings Bank of Halbur (Farmers). Peoples paid the balance due to Farmers of $54,237.28 to obtain a first-lien position. In addition, $12,118.35 was deducted from the loan proceeds to pay off a previous loan Sturms had with Peoples. As a result of the

payments to Farmers and to Peoples on its existing loan, Sturms did not get the full $100,000 for the construction of their cabin, as they had planned. The second transaction relates to what was actually a new loan taken out by the Sturms in 2001 in the amount of $143,292.71. The loan

required an initial payment of $4500 and monthly payments of $1359.39. The Sturms claim that they were not aware that a new loan was being created and that they believed three of the previous loans with Peoples were merely being renewed. The gist of the Sturms' suit against Peoples is that the loan papers were deficient under federal statutes and common law. They argue that the first of the bank's "HUD-1" forms (which we explain later) was deficient

3 because it failed to state on its face that the net amount of the loan would be reduced by the payment to Farmers and to Peoples on its earlier loan. They believe the second HUD-1 form was deficient because it indicated that the three previous loans were merely being renewed. The factual support for Sturms' claims are not at issue on appeal. The sole issues are legal ones: (1) Do borrowers have a private cause of action against a lending institution for violation of the federal lending statute involved here, and (2) if statutory liability does not exist, may Peoples be held liable under a theory of negligent misrepresentation? II. The Statutory Claim. The Sturms claim that Peoples failed to comply with 12 U.S.C.

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