Inquiry Notice From Prior Pleadings Bars Later Defamation Claims Despite Possible Discovery Rule

I. Introduction

This decision arises from employment-related defamation allegations brought in two waves. Linda Betz, a former chief information security officer at the Federal Home Loan Bank of Des Moines (FHLB), lost her job in January 2020 and believed she had been discriminated against and defamed. She filed an initial lawsuit in November 2020 (later removed to federal court) against FHLB and certain executives, asserting discrimination and multiple tort claims, including defamation. After that federal case ended unsuccessfully, Betz filed a second lawsuit in March 2023—this time naming different individual employees (and again naming the CEO)—asserting only defamation based on internal whistleblower complaints, internal audit reports, and communications to personnel/regulators.

The key issue on further review was not whether the statements were defamatory, privileged, or precluded by the federal judgment, but whether the March 2023 defamation action was time-barred under Iowa Code section 614.1(2). The court of appeals had reversed dismissal by applying a discovery rule framework and treating the notice question as fact-bound. The Iowa Supreme Court vacated that reversal and affirmed dismissal, holding that—even assuming a discovery rule—the plaintiff’s own earlier allegations placed her on inquiry notice more than two years before she filed the second suit.

II. Summary of the Opinion

Iowa’s two-year statute of limitations governs defamation claims. The court declined to decide the broader doctrinal question flagged in Linn v. Montgomery—whether a discovery rule applies to defamation in Iowa—because Betz’s claims failed even under a discovery-rule approach.

Relying on inquiry-notice principles from Iowa discovery-rule precedent, the court held that Betz was on inquiry notice of employment-related defamation claims no later than November 11, 2020, when she filed her first lawsuit alleging (among other things) defamation and “additional slanderous and libelous statements” about her job performance and the circumstances of her termination. Because she waited until March 2023 to sue the later-named individuals, the action was barred.

Procedurally, the court also approved the limited use of judicial notice of filings from the federal litigation to determine what notice Betz had and when, while not accepting disputed factual assertions within those filings for their truth. The court affirmed dismissal on limitations grounds without reaching claim preclusion or privilege defenses.

III. Analysis

A. Precedents Cited (and How They Shaped the Decision)

1. Motion-to-dismiss and judicial notice boundaries

• Benskin, Inc. v. W. Bank and Venckus v. City of Iowa City: The court reiterated that a statute of limitations may be resolved on a motion to dismiss when it is “obvious from the uncontroverted facts” in the petition. This framed the court’s willingness to treat timeliness as a threshold issue suitable for dismissal, not discovery-intensive litigation.
• Meade v. Christie and Southard v. Visa U.S.A. Inc.: These cases supplied the controlling principle that, on a motion to dismiss, courts are generally limited to the petition and matters subject to judicial notice. Here, that principle enabled consideration of the existence and content of federal pleadings—only for the permissible “notice” purpose.
• State v. Gale: Cited to support that judicial notice of records in another case is proper when agreed to, reinforcing the court’s approach to using the federal filings to establish what Betz had alleged and therefore what she knew or should have investigated.
• Gray v. Kinseth Corp.: Used to underscore that limitations can be decided as a narrow legal issue when the record (or concessions) supplies the necessary facts.
• Peterzalek v. Iowa Dist. Ct.: The court refused to consider a federal affidavit produced on appeal that was not in the district-court record. This is a practical but important appellate-record holding: parties must supply the materials for judicial notice in the trial court; appellate courts will not expand the record.
• Askvig v. Snap-On Logistics Co., Jacobs v. Iowa Dep't of Transp., MIMG CLXXII Retreat on 6th, LLC v. Miller, and Riley Drive Ent. I, Inc. v. Reynolds: These cases supplied the standard of review and pleading rules: accept well-pleaded facts, reject legal conclusions, and review dismissal for errors at law.

2. Discovery rule and inquiry notice doctrine

• Linn v. Montgomery: Provided the acknowledged open question—whether the discovery rule applies to defamation. The court used Linn to justify a narrow disposition: it could assume arguendo a discovery rule and still affirm dismissal.
• Mormann v. Iowa Workforce Dev.: Central to the result. It articulated the modern inquiry-notice test: limitations begin when the plaintiff “knows or should have known facts that put the plaintiff on inquiry notice that a claim may be present.” The court analogized Betz to the plaintiff in Mormann, who had enough information to suspect a claim even if the employer allegedly concealed “real reasons.”
• Kendall/Hunt Publ'g Co. v. Rowe and Ranney v. Parawax Co.: Reinforced that “knowledge sufficient to put [a person] on inquiry notice” triggers the clock, and that inquiry notice arises when information would alert a reasonable person to investigate.
• Franzen v. Deere & Co.: Supplied two key propositions used explicitly here: (1) the duty to investigate does not depend on exact knowledge of the problem; and (2) once on inquiry notice, the claimant is charged with what a reasonable investigation would have disclosed, and the limitations period is the “outer time limit” for investigating and suing.
• Hallett Constr. Co. v. Meister and Vachon v. State: Hallett was cited for the point that inquiry notice does not require knowing evidentiary details. Vachon was particularly influential because it involved successive lawsuits: once plaintiffs had the facts needed to investigate, the limitations clock ran even though later information sharpened the negligence theory.
• Sparks v. Metalcraft, Inc.: The opinion’s most on-point “litigation strategy” precedent. Sparks rejected a “later-discovered theory” approach where plaintiffs filed a second action after uncovering more facts in the first. The court imported Sparks’ principle that claimants cannot disregard limitations once they have an actionable basis and later sue when additional facts support additional theories.
• Vachon v. State and Sparks v. Metalcraft, Inc. together: These cases supplied the doctrinal bridge from “inquiry notice” to “no wait-and-see litigation sequencing.” The court treated Betz’s post-federal-case defamation suit as the type of delayed “second-wave” theory barred by the limitations clock once inquiry notice existed.
• Flynn v. Lucas County Memorial Hosp., K & W Elec., Inc. v. State, and Est. of Montag v. T H Agric. & Nutrition Co.: Cited as additional support for the discovery rule’s purpose and the chargeability of what reasonable diligence would uncover.
• Chicoine v. Wellmark, Inc.: Used to rebut Betz’s argument that she chose to litigate discrimination first. The court emphasized that alternative pleading is permissible; litigants can plead potentially inconsistent theories and later narrow them.

3. The federal decisions in the background

• Betz v. Fed. Home Loan Bank of Des Moines, 549 F. Supp. 3d 951 (S.D. Iowa 2021): The federal court dismissed Betz’s defamation claim tied to the Form 8-K and dismissed “unidentified” additional defamatory statements for failure to plead specifics. The Iowa Supreme Court did not adopt those merits holdings, but the existence of the first defamation allegations mattered for inquiry notice.
• Betz v. Fed. Home Loan Bank of Des Moines, 644 F. Supp. 3d 500 (S.D. Iowa 2022): Summary judgment on retaliation relied on reasons connected to the audit and internal complaint—facts that also underscore why Betz had reason to suspect negative internal statements about her performance.

B. Legal Reasoning

1. The court sidestepped the unsettled “discovery rule for defamation” question

The opinion carefully avoided creating broad defamation-limitations doctrine. It acknowledged the dispute about whether defamation accrues at publication (traditional rule) or may be subject to a discovery rule in some circumstances, citing Linn v. Montgomery for the proposition that Iowa has not decided that question for “nonnegligence claims such as defamation.” But the court found the case could be resolved by assuming the discovery rule applied and applying inquiry notice.

2. Judicial notice was used to establish notice, not the truth of allegations

The court emphasized a subtle but important procedural point: it could consider the federal pleadings because the district court was asked to take judicial notice and the materials were used “solely for notice purposes and not to establish the truth of facts asserted.” This enabled the court to treat Betz’s own prior allegations—particularly her allegation of “additional slanderous and libelous statements” about her job performance—as evidence of what she believed and therefore what she should have investigated by November 2020.

3. Inquiry notice—not actual notice—starts the clock under a discovery rule

The plaintiff alleged she did not learn of the specific internal complaint/audit statements until “late March 2021,” which—if “actual notice” controlled—might have made the March 2023 filing barely timely. The court rejected that framing by applying the inquiry-notice standard: limitations begin when a plaintiff has enough information to prompt a reasonable investigation, not when the plaintiff uncovers full specifics.

4. Why November 11, 2020 was the decisive date

The court identified the information Betz possessed (or alleged) by the filing of her first lawsuit:

• She believed she was wrongfully discharged.
• She believed the Form 8-K implied termination “for cause.”
• She alleged there were additional defamatory statements about her job performance and termination circumstances.
• She knew SOX-control issues had been raised by her subordinate months earlier, and termination was framed by Wilson as a move toward “more risk-based” security.

Taken together, these facts meant Betz had enough reason to suspect that negative job-performance statements by employees were circulating and affecting her termination and reputation. Under Ranney, Franzen, and Mormann, that is the moment the duty to investigate arises—and the limitations period becomes the outer bound to investigate, identify speakers, and sue.

5. “Wait-and-see” litigation sequencing is inconsistent with inquiry notice

The opinion’s most consequential practical guidance comes from its treatment of Betz’s strategic choice. Counsel explained that they chose to “ride the federal claim through” and then decide whether to file defamation in federal or state court. The court held that, under inquiry-notice doctrine, that approach is not available once the plaintiff has information suggesting an actionable claim. This is the explicit import of Sparks v. Metalcraft, Inc. and the successive-suit reasoning of Vachon v. State.

The court also rejected any suggestion that perceived inconsistency between discrimination and defamation theories justified delay, reminding that alternative pleading is permissible (Chicoine v. Wellmark, Inc.).

C. Impact

1. Practical rule for employment-related defamation claims in Iowa

Even without deciding whether defamation enjoys a discovery rule, the decision establishes a strong, litigation-driving principle: when an employee has enough information to allege that negative job-performance statements exist and have harmed them, the employee is on inquiry notice and must investigate and sue within two years (or add the claim by amendment), rather than waiting to see how other theories (e.g., discrimination/retaliation) turn out.

2. Increased significance of a plaintiff’s own early pleadings

Plaintiffs’ initial pleadings can become the anchor date for inquiry notice. By alleging that additional defamatory statements existed (even without specifics), Betz effectively demonstrated she had reason to investigate by that time. Future litigants should expect defendants to use earlier petitions, administrative complaints, and related filings to argue that the clock started earlier than claimed.

3. Guidance on judicial notice at the motion-to-dismiss stage

The opinion reinforces a disciplined approach: courts may judicially notice the existence and content of filings from other cases to determine notice, procedural posture, and what was alleged, while avoiding acceptance of contested factual assertions for their truth. It also cautions that parties must make those materials part of the trial-court record; appellate courts will not do the parties’ work.

4. What the decision does not resolve

The court expressly did not decide (a) whether the discovery rule applies to defamation claims in Iowa, (b) claim preclusion arising from the federal judgment, or (c) absolute/qualified privilege for internal complaints, audits, or regulator communications. Those issues remain open for future cases.

IV. Complex Concepts Simplified

• Statute of limitations: A deadline to file suit. For defamation in Iowa, it is two years under Iowa Code section 614.1(2).
• Discovery rule: A doctrine that can delay when the limitations clock starts—until the plaintiff knew or should have known they had a claim. The court assumed it might apply here but did not decide the broader question.
• Inquiry notice (the key concept): The clock starts when the plaintiff has enough information that a reasonable person would investigate—not when the plaintiff learns every detail (like exactly who said what).
• Judicial notice: A court’s ability to recognize certain facts without evidence—such as the existence and contents of court filings. Here, judicial notice was used to show what Betz alleged earlier (thus what she was on notice of), not to prove whether those allegations were true.
• Alternative pleading: A plaintiff may plead different, even inconsistent, theories (e.g., discrimination and defamation) and later narrow them as evidence develops.
• Claim preclusion and privilege: Defenses that might independently bar defamation claims (because of prior judgments or protected communications). The court did not reach them.

V. Conclusion

The Iowa Supreme Court’s decision is a targeted but consequential statute-of-limitations ruling. Without deciding whether defamation claims receive the benefit of a discovery rule, the court held that inquiry notice—demonstrated by the plaintiff’s own earlier allegations—started the clock no later than the filing of the first lawsuit. The plaintiff’s decision to postpone a defamation theory while litigating other theories was incompatible with Iowa’s inquiry-notice doctrine. The result is a clear warning for future litigants: once you have enough information to suspect actionable defamation tied to an employment dispute, the two-year limitations period becomes the outer boundary to investigate, identify actors, and timely file or amend—rather than waiting for related litigation to conclude.