Opinion
No. 3-138 / 02-0844
Filed August 27, 2003
Appeal from the Iowa District Court for Bremer County, Paul W. Riffel, Judge.
Landowners appeal from the district court's grant of a summary judgment motion, which resulted in the dismissal of their petition for specific performance of a right of first refusal. AFFIRMED.
Hugh Field of Beecher, Field, Walker, Morris, Hoffman Johnson, P.C., Waterloo, for appellants.
Max Kirk of Ball, Kirk Holm, P.C., Waterloo, for appellees Siech.
Chris Foy, Waverly, for third-party defendant-appellee Bremer County Abstract.
Steven Egli of Hagemann, Goeke, Egli Thalacker, Waverly, for third-party defendants-appellees David Foelske, Nancy Foelske, Steven Foelske, and Vicki Foelske.
Considered by Vogel, P.J., and Miller and Eisenhauer, JJ.
Ronald and Melodie Foelske filed a petition seeking specific performance of a right of refusal that was appended to their contract for the purchase of certain real estate. The district court dismissed their petition after granting summary judgment motions filed by the sellers and purchasers of a portion of the land to which the plaintiffs claimed a right of first refusal, and the company which prepared the abstract of title on that land. We affirm.
Background Facts and Proceedings . In 1984, Ronald and Melodie Foelske (the Foelskes) purchased certain real estate from Catherine Foelske (Catherine). An additional provision in the real estate contract (1984 contract) was apparently intended to grant a right of first refusal to the Foelskes to purchase a 300-foot-wide tract of Catherine's land that lay directly south of the Foelskes' newly-purchased property, and which ran south from their property along the eastern boundary of Catherine's land, ending at a county road.
At Catherine's death her land passed to her heirs, David Foelske and his wife Nancy, and Steven Foelske and his wife Vicki (collectively the heirs). Eleven acres of the land were retained by David and Nancy. The remaining land, approximately 160 acres, was sold, in 1996, to Richard and Eleanor Siech (the Siechs). The abstract of title prepared by Bremer Country Abstract Company, Inc. (Bremer) in relation to the 160 acres made no reference to any right of first refusal as to any portion of the land purchased by the Siechs. Based on the plats attached to the various filings, it appears that the land sold to the Siechs would contain the southern-most portion of a 300-foot-wide tract that ran from the Foelskes' land to the county road, while the eleven acres retained by David and Nancy would contain the northern part of such a tract.
The Foelskes filed an action for specific performance against the Siechs. The Siechs filed a third-party petition for indemnity against the heirs and Bremer. The heirs then filed a cross-petition for indemnity against Bremer.
The Siechs, the heirs and Bremer filed a joint motion for summary judgment, contending that the Foelskes had been offered an opportunity to purchase the land now owned by the Siechs, but had declined to do so. The Foelskes filed a counter-motion for summary judgment, which sought specific performance as to the entire 300-foot-wide tract of land. The Foelskes' statement of undisputed facts stopped short of denying that they had been given an opportunity to purchase the full 160 acres now held by the Siechs. Instead, the Foelskes asserted that they were never informed that the 160-acre parcel contained land over which they possessed a right of first refusal, and that they were never presented with a bona fide offer from a prospective purchaser for the entire, specific 300-foot-wide tract of land running from their property southward to the county road.
In ruling on the summary judgment motions the district court focused primarily on an affirmative defense raised by the Siechs, the heirs and Bremer in their answers, that the land purchased by the Seichs did not include the land described in the right of first refusal contained in the 1984 contract. The district court agreed, and found that the Siechs had taken title to their land as good faith purchasers, for value, and without notice of the Foelskes' right of first refusal. Finding that the Siechs had a superior right to the land as against the Foelskes, the court sustained the summary judgment motions of the Siechs, the heirs and Bremer, denied the Foelskes' summary judgment motion, and dismissed the petition. The Foelskes appeal.
Scope and Standard of Review . Our review is for the correction of errors at law. Iowa R.App.P. 6.4. Where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. Iowa R.Civ.P. 1.981(3); City of West Branch v. Miller, 546 N.W.2d 598, 600 (Iowa 1996).
Material Issue of Fact The Foelskes first argue that summary judgment was inappropriate because the record contained genuine issues of material fact. Based upon the record, the only facts subject to dispute concern what information and offers the Foelskes received regarding any land held by the heirs after Catherine's death. To be material, these facts must be ones that "might affect the outcome of the suit, given the applicable law." Lewis v. State ex rel. Miller, 646 N.W.2d 121, 124 (Iowa Ct.App. 2002) (citing Fouts ex rel. Jensen v. Mason, 592 N.W.2d 33, 35 (Iowa 1999)). As we will discuss below, however, the Siechs' lack of actual or constructive notice precludes the exercise by the Foelskes of any right that may have been granted in the 1984 contract. As such, facts relating to the Foelskes' knowledge of a possible sale or of their potential exercise of a right of first refusal would have no impact on the outcome of the suit.
Notice . Under Iowa's recording statutes, the right of first refusal in the 1984 contract is of no validity against a bona fide purchaser for value, so long as that purchaser is not on actual notice of the right. See Iowa Code § 558.41 (2001); Sun Valley Iowa Lake Ass'n v. Anderson, 551 N.W.2d 621, 638 (Iowa 1996). Although the Foelskes argue the Siechs were on actual or constructive notice of the right of first refusal, the summary judgment record is to the contrary. Neither the Siechs nor the heirs were party to the 1984 contract, and the affidavits supplied by David and Steven establish as uncontested fact that they had no knowledge or actual notice of the right of first refusal.
Also flawed is the Foelskes' claim that the Siechs were on constructive notice of the right of first refusal. It is true that a properly filed and indexed instrument places all persons on constructive notice of any right conferred in that instrument. Iowa Code § 558.55. It is also undisputed that the 1984 contract was recorded. However, it described the right of first refusal as applying to
a 300 foot wide strip of property directly south of the above described property [the property purchased by the Foelskes] along the east boundary of Seller's property in s ec. 28, Township 91 N, Range 13 West of the 5th P.M. to the C-50 Blacktop.
(Emphasis added).
The portion of the Siechs' land that is the subject of this litigation is located entirely in section 33 of Township 91 North. In contrast, the contract's right of first refusal states it applies to property in section 28. Because the contract did not indicate the existence of any such right impinging on the heirs' property in section 33, it was apparently not indexed against section 33 or the heirs' property in that section and did not appear in the abstract of title to the section 33 land the Siechs purchased from the heirs. The district court properly concluded that the Siechs were not on constructive notice of a right of first refusal to a portion of their land located in section 33.
Because the Siechs had no actual or constructive notice of any right of first refusal, they took the land free of any such right.