Opinion
No. 1-789 / 00-2039.
Filed March 27, 2002.
Appeal from the District Court for Polk County, ARTHUR E. GAMBLE, Judge.
Crown Colony, Inc. appeals following a judgment entered in favor of the defendant. AFFIRMED.
John R. Perkins of Pingel Templer, P.C., West Des Moines, until withdrawal, and then Thomas Cunningham of the Pingel Firm, for appellant.
Lawrence P. McLellan and Jill Mataya Corry of Sullivan Ward, P.C., Des Moines, for appellee.
Considered by HUITINK, P.J., and ZIMMER and VAITHESWARAN, JJ.
A seller of real estate sued the buyer for breach of contract, alleging the buyer failed to properly terminate the contract. The district court concluded the seller waived its right to enforce the relevant contract terms. We agree and, accordingly, affirm.
I. Background Facts and Proceedings
Crown Colony, Inc. (CCI), a real estate development corporation, agreed to sell real estate to Iowa Rural Water Association, Inc. (IRWA). The contract called for IRWA to make a $10,000 earnest money payment, which it did. IRWA was given the right to terminate the contract without liability if any one of seven listed conditions was not satisfied, provided IRWA gave CCI written notice of its intent to terminate on or before the dates specified after each condition. The pertinent contract language is as follows:
5. CONDITIONS. Buyers duty to perform under this Agreement is contingent upon and subject to the following: See Addendum A. Failure of any one or more of the conditions set forth in Addendum A, shall give Buyers the right to terminate this Agreement in Buyer's sole and absolute discretion, without any liability whatsoever to Sellers, provided that written notice thereof is given to Sellers on or before the dates as noted in Addendum A, and upon written notice thereof, the earnest money shall be returned to the Buyers, and upon such return, neither party shall have any further rights or obligations with respect to this Agreement.
Addendum A states:
a) Preparation and review by Buyers, at its expense, of an architectural design for use of the property by Buyers, and a determination that said design is satisfactory to Buyers in its sole and absolute discretion by January 31, 1999.
b) Preparation and review by Buyers, at its expense, of a general building contractor's estimate of construction costs for improvements to the property contemplated by the architectural design, and a determination by Buyers in its sole and absolute discretion that said estimate is satisfactory to Buyers by January 31, 1999.
c) The review and approval of all governmental bodies necessary for the use and construction of improvements to its property as contemplated by Buyers, to be obtained at Buyers' expense, including but not limited to zoning compliance, site plan approval, and building permit issuance by March 15, 1999.
d) Buyer to obtain a written commitment for conventional financing for the balance of the Purchase Price upon terms and conditions to its sole satisfaction by February 29, 1999.
e) Seller shall provide adequate water lines to and across the frontage of subject property at buyers cost as required by and in accordance with all relevant regulations pertaining thereto.
f) Survey shall demonstrate the boundaries of the subject property which boundaries must be satisfactory to the Buyer in its sole and absolute discretion.
g) Buyer and Seller will cooperate in re-zoning the subject property and adjoining tri-angle to the west.
IRWA had difficulty obtaining a satisfactory construction bid and financing as set forth in paragraphs (b) and (d) of the addendum. IRWA's executive director, Mark Dickey, communicated these difficulties to Morey Knutsen, a senior vice president with the real estate brokerage company representing CCI. Dickey simultaneously sought and obtained several extensions of the deadlines specified in the addendum. Ultimately, CCI extended the deadline contained in paragraph (b) from January 31, 1999 to March 31, 1999 and the deadline set forth in condition (d) from February 29, 1999 to May 14, 1999.
Dickey continued to experience hurdles in obtaining a satisfactory construction bid and financing and continued to notify Knutsen of his difficulties. On June 23, 1999, after the extended deadlines had expired, Dickey advised Knutsen in writing that conditions (b) and (d) could "not be fulfilled in a timeframe conducive to moving the project along." Dickey requested a return of IRWA's earnest money within thirty days.
CCI declined the request and sued IRWA for breach of contract. IRWA counterclaimed for return of its earnest money. The district court dismissed CCI's petition after concluding that CCI waived its right to enforce the notice deadlines set forth in the contract. The court entered judgment in IRWA's favor.
The judgment was for $10,000, less a set-off of $5,162.60, the pro rata share of engineering fees that IRWA conceded it was obligated to pay.
CCI appealed. Our review is on error. Iowa R. App. P. 6.4.
II. Waiver
The sole issue on appeal is whether CCI waived its right to receive timely notice of IRWA's intent to terminate, as prescribed in paragraphs (b) and (d) of the addendum. Waiver is the voluntary or intentional relinquishment of a known right. Scheetz v. IMT Ins. Co., 324 N.W.2d 302, 304 (Iowa 1982). A waiver can be either express or implied. Iowa Comprehensive Petroleum Underground Storage Tank Fund Bd. v. Federated Mut. Ins. Co., 596 N.W.2d 546, 552 (Iowa 1999). One way to prove waiver of contract provisions is "by evidence of a general course of dealing between the parties." See Dunn v. General Equities of Iowa, Ltd., 319 N.W.2d 515, 516 (Iowa 1982) (quoting Livingston v. Stevens, 122 Iowa 62, 69, 94 N.W. 925, 927 (1903)).
The parties agree that paragraph 5 of the contract gave CCI the right to a termination notice within the dates specified in the addendum. The parties also agree that IRWA did not furnish CCI a notice of termination within those time frames or within the extended time frames agreed to by the parties. They part ways on the question of whether CCI voluntarily or intentionally relinquished its right to timely notice.
CCI first maintains that the contract deadlines were conditions precedent to IRWA's right to terminate the contract without liability. It asserts that, while it extended the time for sending the termination notice, it never waived its right to sue if IRWA failed to adhere to the extended deadlines. Second, CCI contends Knutsen lacked the authority to waive the deadlines. Third, CCI argues a waiver after the time for performance has elapsed is not effective. We are not persuaded by these contentions.
With respect to CCI's first argument, there is substantial evidence to support the district court's findings that CCI not only waived its right to timely notice but also waived its right to sue for noncompliance with the notice provisions. For a period of five months, IRWA regularly informed CCI of its efforts to meet the conditions in the addendum. When it was up against one or more of the contractual deadlines, it sought extensions. At no time did CCI refuse to grant these requests or otherwise indicate an intent to enforce the contractual deadlines. Instead, the record reflects CCI made every effort to avoid triggering a termination of the contract. For instance, just a month before IRWA terminated the contract, Knutsen advised Dickey that he wanted a summary of what needed to be done prior to closing. Knutsen did not foreclose the granting of an additional extension to reach this result. Additionally, Knutsen continued to communicate with Dickey about the conditions almost until the date of termination. In sum, CCI's words throughout the period leading up to termination reflected an intent to waive its right to a termination notice within the contractual deadlines as well as its right to sue for noncompliance.
Cf. Beckman v. Kitchen, 599 N.W.2d 699, 701 (Iowa 1999) (noting where there has been extension or waiver of time for performance of land contract, seller must notify buyer of its intent to enforce a performance date); Bettis v. Bettis, 228 N.W.2d 193, 194 (Iowa 1975) (stating one who has waived the time for performance may withdraw waiver by affording other party reasonable opportunity to perform conditions of the contract which were waived).
Knutsen's exact words were, "[w]hile we all would like to avoid another `extension', please FAX to me at your earliest convenience a new summary of what yet needs to occur leading to closing and upon what date."
See 17B C.J.S. Contracts § 557 at 225-28 (2000) (noting party to a contract who is entitled to demand performance of a condition precedent may waive it); cf. H.L. Munn Lumber Co. v. City of Ames, 176 N.W.2d 813, 816 (Iowa 1970) (party may waive condition precedent to performance). Contrast Mosebach v. Blythe, 282 N.W.2d 755, 760 (Iowa Ct.App. 1979) (concluding single acquiescence in extension of selling deadline did not amount to waiver of conditions in agreement but a separate agreement).
As for CCI's second argument that Knutsen lacked authority to grant the extensions, there is again substantial evidence to the contrary. Knutsen was the sole person with whom IRWA communicated. He was the person who granted IRWA extensions of the deadlines. After each deadline had passed, he was the person who wrote to IRWA to determine whether it had "satisfied the conditions." Although CCI now claims that only the head of its company had authority to grant the extensions, the record reveals that Knutsen's communications concerning the extensions were explicitly authorized by the head of CCI. We conclude there is substantial evidence to support the district court's findings that Knutsen acted for CCI in granting the extensions. See Magnusson Agency v. Public Entity Nat. Company-Midwest, 560 N.W.2d 20, 25-26 (Iowa 1997).
Finally, we are not persuaded by CCI's contention that the waiver was ineffective because it occurred after the operative deadlines for performance. This argument is essentially a repackaged version of CCI's first argument. As noted, the record reflects that even before certain deadlines had expired, CCI was more interested in seeing the conditions satisfied than in seeing the contract terminated. To that end, it ignored timely requests for extensions of the deadlines and granted untimely requests, never once intimating that, should IRWA terminate the contract, it would have to send notice within the contract deadlines to avoid liability. By these actions, CCI waived its right to sue for IRWA's failure to timely terminate the contract.
III. Disposition
We affirm the district court judgment.
AFFIRMED.