Opinion
No. 5-978 / 04-1068
Filed April 12, 2006
Appeal from the Iowa District Court for Polk County, Karen A. Romano and Joel D. Novak, Judges.
Plaintiffs appeal district court rulings granting defendants' motions for summary judgment. AFFIRMED.
Michael M. Sellers of Sellers Law Office, West Des Moines, for appellants/cross-appellees.
Apryl M. DeLange, William L. Dawe, and Sara M. Kouri of Hopkins Huebner, P.C., Des Moines for appellee City of West Des Moines.
Douglas A. Fulton and Brian R. Kohlwes of Bradshaw, Fowler, Proctor Fairgrave, P.C., Des Moines for appellees Signature Partners-Des Moines, Ltd.; Devpar, Ltd.; Secured Investment Advisors Development, Inc.; Conco, Ltd.; Secured Advisors, Inc.; Secured Investments Advisors, Inc.; Secured Investment Advisors Partners, Ltd.; S.I.A. Partners, Ltd.; S.I.A. Contractors, Ltd.; S.I.A., Inc.; S.I.A.D., Inc.; Allen C. Gunter; Clark Hamilton; Donald Bennett; David Grotenhuis; and Wayne Siemens.
Michele M. Ramsey and Kirk W. Bainbridge of Duncan, Green, Brown Langeness, P.C., Des Moines for appellee Fusch-Serold Partners, Inc.
Jacqueline K. Samuelson, David L. Phipps, and Drew J. Gentsch of Whitfield Eddy, P.L.C., Des Moines, for appellee/cross-appellant Custom Engineering, Inc.
Heard by Sackett, C.J., and Vogel and Mahan, JJ.
Plaintiffs appeal district court rulings granting four separate motions for summary judgment. We affirm in part and reverse in part.
I. Background Facts and Proceedings
First Sierra Equities, L.L.C., PCP-Des Moines, L.L.C., and Signature Place-Des Moines, L.L.C. (plaintiffs) filed a petition on July 11, 2000, naming numerous defendants and thirty-seven counts. Plaintiffs sought damages for alleged construction defects to Signature Place Apartments, an apartment complex located in West Des Moines, Iowa, and purchased by plaintiffs in December 1998 from defendant Signature Partners-Des Moines, Ltd. Defendants included parties involved with the construction, design, and ownership of Signature Place Apartments. The City of West Des Moines was also named as a defendant. Over the course of the litigation, several defendants were dismissed.
On July 17, 2001, the Polk County Clerk of Court sent a notice pursuant to Iowa Rule of Civil Procedure 1.944 (formerly rule 215.1) (dismissal for want of prosecution), indicating a dismiss date of January 1, 2002. On December 19, 2001, a motion and order for continuance pursuant to rule 1.944 was filed, stating that "[a]ll counsel concur that the case should be continued beyond December 31, 2001, pending further orders of the court." A uniform scheduling order, filed May 24, 2002, set a trial date of August 25, 2003.
The City of West Des Moines filed a motion for summary judgment on March 26, 2002. The district court filed its ruling granting the motion on June 17, 2002. Plaintiffs filed a motion pursuant to Iowa Rule of Civil Procedure 1.904(2). In a ruling filed September 12, 2002, the district court enlarged its previous ruling, but still granted summary judgment in favor of the City.
On March 14, 2003, the remaining parties to the litigation entered a joint stipulation to extend the deadline for designation of expert witnesses by one month. The reason for the extension was due in part to the implication of two additional parties during depositions of other expert witnesses. The stipulation stated, "All counsel agree that it would be in the interest of sound judicial administration and justice to have the requested additional time to evaluate whether or not this new testimony would require them to be implead." On May 29, 2003, the district court granted defendant Williams Insulation Company's motion for leave to file a cross petition.
On July 25, 2003, the parties filed a joint stipulation to amend the scheduling order. The parties agreed to changes in the scheduling order without waiving any jurisdictional or other defenses, and recognizing that the trial date needs to be continued in this case because two new parties have been added to the case and because the Plaintiffs' attorney has not yet been able to tender all of his expert witnesses for deposition.
The same day, the district court filed an order continuing trial to May 10, 2004, pursuant to the parties' stipulation.
On March 4, 2004, plaintiffs dismissed all claims against Williams Insulation with prejudice. It is not a party to this appeal.
Defendants Signature Partners-Des Moines, Ltd. et al. filed a motion for summary judgment on March 10, 2004. Defendant Fusch-Serold Partners, Inc. filed a motion for summary judgment on March 18, 2004. Defendant Custom Engineering filed a motion for summary judgment on March 19, 2004.
The group hereinafter referred to as the "Signature Partners Defendants" includes the following parties: Signature Partners-Des Moines, Ltd.; Devpar, Ltd.; Secured Investment Advisors Development, Inc.; Conco, Ltd.; Secured Advisors, Inc.; Secured Investments Advisors, Inc.; Secured Investment Advisors Partners, Ltd.; S.I.A. Partners, Ltd.; S.I.A. Contractors, Ltd.; S.I.A., Inc.; S.I.A.D., Inc.; Allen C. Gunter; Clark Hamilton; Donald Bennett; David Grotenhuis; and Wayne Siemens.
In its motion for summary judgment, Fusch-Serold argued the district court lacked subject matter jurisdiction because the case was dismissed under rule 1.944, effective January 1, 2002 or, in the alternative, August 25, 2003, and never reinstated. The Signature Partners Defendants and Custom Engineering subsequently joined in this argument. Plaintiffs resisted the motions. The district court heard arguments on the motions on April 30, 2004.
The district court filed its written summary judgment ruling on May 13, 2004. The court concluded the case was not dismissed by operation of law as of January 1, 2002 because the May 24, 2002 scheduling order retroactively provided the "date certain" required by rule 1.944(5) and lacking in the December 2001 order. However, the court went on to conclude the case was dismissed by operation of law on August 25, 2003 because the stipulation entered into and signed resetting the trial date to May 10, 2004 "did not insulate plaintiffs' case from the consequences of rule 215.1/1.944 dismissal." The court granted summary judgment to defendants on the grounds the court lacked subject matter jurisdiction because the case was dismissed under rule 1.944 on August 25, 2003 and never properly reinstated. However, the district court went on to address the other substantive issues raised in defendants' motions for summary judgment, "in the event the court is in error in its jurisdictional ruling and this case is remanded for trial." In essence, the court granted defendants' motions for summary judgment and dismissed the case.
Plaintiffs appeal, raising the following issues related to the district court's rulings on summary judgment:
1. The district court erred in ruling the case had been dismissed as a matter of law pursuant to Iowa Rule of Civil Procedure 1.944.
2. The district court erred in ruling (1) the City had not waived municipal tort immunity pursuant to Iowa Code section 670.7 (1999) and (2) that the City was immune from liability pursuant to Iowa Code section 670.4(10).
3. The district court erred in concluding the earnest money contract for the purchase of the property was subject to an "as is" provision that barred recovery by plaintiffs.
4. The district court erred in dismissing the individual limited partners as defendants.
5. The district court erred in dismissing Fusch-Serold and Custom Engineering.
Because we conclude that we can affirm the district court's rulings on the substantive legal issues raised in defendants' motions for summary judgment, we need not address the rule 1.944 dismissal issue. We will present additional facts as they relate to the issues presented on appeal. To the extent plaintiffs have not raised issues addressed by the district court in the summary judgment motions, we consider those issues waived.
II. Standard of Review.
We review a ruling on a motion for summary judgment for correction of errors at law. Iowa R. App. P. 6.4; Clinkscales v. Nelson Sec., Inc., 697 N.W.2d 836, 840-41 (Iowa 2005). Summary judgment is proper only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Iowa R. Civ. P. 1.981(3).
The moving party has the burden to prove the facts are undisputed. Peppmeier v. Murphy, 708 N.W.2d 57, 58 (Iowa 2005). "A court entertaining a motion for summary judgment must view the evidence in the light most favorable to the nonmoving party." Clinkscales, 697 N.W.2d at 841. The party resisting the motion "should be afforded every legitimate inference that can reasonably be deduced from the evidence." Id. However, the nonmoving party "may not rest upon the mere allegations of his pleading but must set forth specific facts showing the existence of a genuine issue for trial." Hlubek v. Pelecky, 701 N.W.2d 93, 95 (Iowa 2005); see also Iowa R. Civ. P. 1.981(5). Speculation is insufficient to generate a genuine issue of fact. Hlubek, 701 N.W.2d at 96. Where the facts are undisputed and the only dispute concerns the legal consequences flowing from those facts, we must determine whether the district court correctly applied the law. City of West Branch v. Miller, 546 N.W.2d 598, 600 (Iowa 1996).
III. City of West Des Moines's Motion for Summary Judgment
Plaintiffs' petition alleged the City and its employees were negligent in the planning process, issuance of building permits, and in conduct of or failure to conduct adequate or appropriate inspection of the construction of the buildings, and in issuance of occupancy permits for the buildings. The City's motion for summary judgment contended the City was immune from liability pursuant to Iowa Code sections 670.4(5), (6), (10), and 670.7 (1999). Plaintiffs resisted.
The district court granted the City's motion, holding: (1) the City's participation in the Iowa Communities Assurance Pool did not constitute waiver of immunity as to exceptions in section 670.4 (see Iowa Code § 670.7), and (2) the City is immune from liability pursuant to section 670.4. The court enlarged its ruling in a subsequent ruling on plaintiffs' motion pursuant to Iowa Rule of Civil Procedure 1.904(2), but still granted summary judgment in favor of the City. On appeal, plaintiffs contend the district court erred in ruling (1) the insurance afforded to the City was not an effective waiver of municipal tort liability immunity pursuant to the terms of section 670.7 and (2) the City was immune from liability pursuant to section 670.4(10).
A. Governmental Immunity: Applicable Law
Generally, municipalities are subject to liability for their torts and those of their officers and employees. Iowa Code § 670.2. Iowa Code section 670.4 immunizes municipalities from tort liability in several specific instances, including:
Any claim based upon an act or omission of an officer or employee of the municipality, whether by issuance of permit, inspection, investigation, or otherwise, and whether the statute, ordinance, or regulation is valid, if the damage was caused by a third party, event, or property not under the supervision or control of the municipality, unless the act or omission of the officer or employee constitutes actual malice or a criminal offense.
Iowa Code section 670.7 permits a municipality to purchase liability insurance covering torts specified in section 670.4, to adopt a self-insurance program, or to join and pay funds into a local government risk pool to protect itself against any or all liability. Generally, the procurement of liability insurance "constitutes a waiver of the defense of governmental immunity as to those exceptions listed in section 670.4 to the extent stated in the policy." Iowa Code § 670.7. However, if a municipality "joins and pays funds into a local government risk pool the action does not constitute a waiver of the defense of governmental immunity as to the exceptions listed in section 670.4." Id.
B. Waiver of Governmental Immunity: Iowa Code section 670.7
1. Undisputed Facts
The City has been a member of a risk pool known as the Iowa Communities Assurance Pool (ICAP) since July 1, 1988. The ICAP is composed of several Iowa municipalities and provides risk sharing to each member through contributions to a cumulative reserve fund. The City pays a "basis rate," which is the amount paid annually to the ICAP that the administrator deems necessary to provide the scope of coverage afforded to that member. Any claim made by the City is paid fully by ICAP. ICAP, in turn, may be reimbursed from the national risk pool (APEEP) or the General Reinsurance Corporation.
The City entered into an intergovernmental contract with ICAP. The contract states, "The powers and duties created hereunder and the activities of this Pool shall not constitute doing an insurance business." The contract further states, "This Agreement shall not inure to the benefit of third parties nor does any party hereto waive such sovereign or governmental immunity as may be available to it individually." A member certificate issued to the City incorporates by reference the terms and conditions of the contract.
2. Merits
Plaintiffs contend the City's participation in the ICAP is "exactly analogous" to City of West Branch v. Miller, 546 N.W.2d 598 (Iowa 1996), and constitutes a waiver of immunity pursuant to section 670.7. We disagree.
In City of West Branch, 546 N.W.2d at 604, the court held the county's procurement of a separate errors and omission policy through the local government risk pool constituted a waiver of governmental immunity as to claims against the county auditor and assessor for failure to assess and collect taxes, to the extent the policy covered such claims. The key factors in the court's determination were:
(1) the risk pool purchased the policy on behalf of the county from a private insurance company,
(2) the county paid a separate premium for it,
(3) the private insurance company issued the separate policy to the county, and (4) the risk pool members did not share and pay the costs of claims; rather, the private insurer issuing the policy paid the claims.
Id. at 600, 603.
The situation before us is contrary to that in City of West Branch. The City receives its coverage solely from ICAP. It does not receive a separate policy issued by a private insurer. The City pays a single contribution to the ICAP at a basis rate. It does not pay a separate annual premium to either a private insurer or to ICAP for any separate insurance policy. Any claim made by the City is paid in full by ICAP. Therefore, plaintiffs' reliance on City of West Branch is misplaced.
Moreover, the City's contract with ICAP specifically reserves the governmental immunities of chapter 670. For these reasons, the City's participation in ICAP does not constitute a waiver of governmental immunity pursuant to section 670.7. We affirm the district court's decision on this issue.
C. Iowa Code section 670.4(10) Immunity
1. Undisputed Facts
The City administers and enforces its own building code, the 1994 Uniform Building Code, which it adopted by ordinance number 1138 in 1995. The City's chief building official issues building permits to those applicants whose plans meet the required specifications to build within the City. If the application for a permit conforms to the building code requirements, the building official must issue the permit. The City's building official is not involved in the design of buildings and has no affirmative duty to correct impractical designs if the designs meet code requirements.
2. Merits
Plaintiffs' divide the claims against the City into two general categories: (1) the City's alleged negligence related to the review and approval of plans for the Signature Place Apartment project, and (2) the City's alleged negligence in the issuance of building permits and inspection of the property. We conclude plaintiffs make a distinction without a difference. All these activities concern the "issuance of permit, inspection, investigation, or otherwise," and therefore fall within the purview of section 670.4(10).
Plaintiffs contend the City was required to conduct certain inspections pursuant to Iowa Code chapter 103A. The City argues chapter 103A does not apply to the City because it has adopted its own building code. See Iowa Code §§ 103A.10(2)(b); 103A.22(1). The question of which building code applies and what types of inspections were required is irrelevant. The City's alleged failure to conduct the appropriate inspections and/or its improper issuance of a building permit are precisely the types of "act[s] or omission[s]" covered by the immunity provision of section 670.4(10). In addition, because the undisputed facts reveal that the City's involvement was strictly limited to conducting an inspection and issuing a building permit, its involvement in the project did not rise to the level necessary to constitute "supervision and control" of the property or third parties as contemplated by section 670.4(10). See Madden v. City of Eldridge, 661 N.W.2d 134, 141 (Iowa 2003) ("Because the city inspected the building and did not supervise or control the contractor, Iowa Code section 670.4(10) immunizes the city from liability."). Therefore, the City is immune from liability pursuant to section 670.4(10). We affirm the district court on this issue.
IV. Signature Partners Defendants' Motion for Summary Judgment
A. Undisputed Facts
Signature Partners sought a buyer for Signature Place Apartments in 1998. Insignia Financial Group (Insignia), one of the largest apartment owners and managers in the country, expressed interest in the property. For business reasons, First Sierra took over as purchaser, although Insignia remained a partner in the deal. The owners of First Sierra were sophisticated commercial real estate purchasers who owned and operated several other commercial real estate properties.
On April 15, 1998, Signature Partners entered into an "Earnest Money Contract" with First Sierra. The contract provided as follows:
Section 9. Representations, Warranties, and Covenants of Seller. Except for the provisions of this Section 9, and the other express representations and warranties made in this Contract and in the documents conveying the Property to Purchaser, the transfer of the Property is on an "AS IS" basis and without representation or warranty. Whenever this Contract refers to the "actual knowledge" of Seller, it shall be deemed to mean the actual knowledge of Allen Gunter without any duty of investigation. Each Seller represents, warrants and covenants to Purchaser for itself and that portion of the property owned by it that, as of the Effective Date and Closing:
. . . .
f. To Seller's actual knowledge, Seller has not received any notice of, and Seller is not aware of, any material defects in the construction of the Improvements located on the Land.
. . . .
Section 10. Representations, Warranties and Covenants of Purchaser. Purchaser represents, warrants and covenants to Seller that as of the Effective Date and at Closing
. . . .
b. PURCHASER ACKNOWLEDGES AND AGREES THAT DURING THE INSPECTION PERIOD, PURCHASER WILL CONDUCT ITS OWN INDEPENDENT INVESTIGATION AND INSPECTIONS OF ALL ASPECTS OF THE PROPERTY. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT IT IS RELYING ON SUCH INDEPENDENT INVESTIGATION AND INSPECTION AND EXCEPT AS EXPLICITLY PROVIDED IN THIS CONTRACT, IS NOT RELYING ON ANY INFORMATION PROVIDED BY SELLER, SELLER'S REPRESENTATIVES OR CONSULTANTS OR THE BROKER IN DETERMINING WHETHER TO PURCHASE THE PROPERTY. PURCHASER FURTHER ACKNOWLEDGES THAT AT CLOSING IT WILL BE FULLY AND COMPLETELY SATISFIED THAT THE PROPERTY IS SATISFACTORY IN ALL RESPECTS FOR ITS INTENDED USE AND PURCHASER SHALL HAVE NO RECOURSE WHATSOEVER AGAINST SELLER IN CONNECTION WITH THE PROPERTY except as explicitly provided for in this contract or in the deed and other documents executed at closing. Except as specifically provided in this contract or in the deed and other documents executed at closing, seller has not made, does not make, and specifically disclaims any and all representations, warranties, promises, covenants, agreements or guarantees of any kind or character whatsoever whether express or implied, oral or written, past, present or future, as to, concerning or with respect to the property, including but not limited to (A) the nature, quality or condition of the property; (B) the income to be derived from the property; (C) the suitability of the property for any and all activities and uses which purchaser may conduct thereon; (D) the compliance of or by the property or its operation with any laws, rules, ordinances or regulations of any applicable governmental authority or body including but not limited to any state or federal environmental law, rule or regulation; (E) habitability, merchantability or fitness of the property for a particular purpose; or (F) any other matter with respect to the property.
Provisions substantially similar hereto shall be contained in the Special Warranty Deed to be delivered at Closing.
The contract further provided it "shall be governed and construed by the laws of the State of Texas." In an affidavit submitted with the Signature Partners Defendants' motion for summary judgment, Allen Gunter stated,
At the time of entering into the Earnest Money Contract and as of the closing of the transaction, I had not received notice of and I was not aware of, any material defects in the construction of the improvements as defined in the Earnest Money Contract.
Insignia utilized Apartment Investment and Management Company (AIMCO), another nationally-recognized apartment management company, to conduct due diligence. During this time, AIMCO announced it was acquiring the multi-family operations of Insignia. AIMCO would manage the Signature Place Apartments after the transaction closed.
During the inspection period, all materials related to the project were made available to First Sierra and AIMCO for inspection and auditing, including: construction plans and specifications, rent rolls, leases, tenant complaint files, work orders, and invoices for repairs. AIMCO hired LAW Company to perform an engineering inspection of the premises. A LAW employee was on-site to conduct interviews and inspect the property. The LAW representative inspected site developments (fences, drainage, lighting, etc.), pavements, foundations and structures, exterior walls and windows, roofing, interiors, mechanical and electrical systems, plumbing, and fire protection and life safety systems. A detailed written report was issued, noting some problems with the apartment complex such as drainage of rain water, insulation of sprinkler systems, and missing shingles on the roof.
Pursuant to the terms of the "Earnest Money Contract," Signature Partners signed a "Special Warranty Deed," granting the property to plaintiffs. The deed was recorded in June 1998. The disclaimers in section 10 of the "Earnest Money Contract" were repeated in the "Special Warranty Deed."
B. "As Is" Contract Language
The district court, relying on the contract language and Texas law, concluded the Signature Partners Defendants were entitled to summary judgment as a matter of law based on the "as is" provision of the contract. Plaintiffs contend the court's decision was in error. Specifically, plaintiffs argue the court's reliance on Prudential Insurance Company of America v. Jefferson Associates, Ltd., 896 S.W.2d 156 (Tex. 1995), was misplaced, and that issues of fact exist as to whether defendants' express warranties and representations were truthful and whether the plaintiffs' inspection was hampered by defendants.
In Prudential, the Texas Supreme Court held that a buyer who agreed, freely and without fraudulent inducement, to purchase commercial real estate "as is" could not recover damages from the seller when the property was later found to contain asbestos fireproofing which had not been discovered during a pre-sale inspection of the property. Prudential, 896 N.W.2d at 161. The court determined the buyer's agreement to buy the building "as is" precluded him from proving the seller's conduct caused him any harm. Id. "By agreeing to purchase something `as is,' a buyer agrees to make his own appraisal of the bargain and to accept the risk that he may be wrong." Id. The court continued,
A valid "as is" agreement . . . prevents a buyer from holding a seller liable if the thing sold turns out to be worth less than the price paid because it is impossible for the buyer's injury on account of this disparity to have been caused by the seller.
Id.
The Texas court went on to explain that an "as is" agreement may not have such a "determinative effect" in every circumstance. For example, "A buyer is not bound by an agreement to purchase something `as is' that he is induced to make because of a fraudulent representation or concealment of information by the seller." Id. at 162. Further, a buyer is not bound by an "as is" agreement "if he is entitled to inspect the condition of what is being sold but is impaired by a seller's conduct." Id. "The nature of the transaction and the totality of the circumstances surrounding the agreement must be considered." Id.
We conclude the circumstances before us in this case are analogous to those in the Prudential case. Here, as in Prudential, the parties involved were sophisticated and experienced real estate professionals. The contract clearly stated the property was being sold "as is." First Sierra, through AIMCO and LAW Engineering, inspected the property prior to the sale. Allen Gunter's affidavit indicates he, as the "seller" designated in the contract, was not aware of any material defects existing in the property at the time the earnest money contract was signed by the parties.
Plaintiffs contend a jury must decide whether the Signature Partners Defendants "were truthful in those express warranties and representations or not." Essentially, plaintiffs contend fraudulent concealment by the Signature Partners Defendants precludes summary judgment in this case. Plaintiffs, however, have failed to present any facts to support their arguments related to fraud or misrepresentation. Plaintiffs may not rest upon these allegations, "but must set forth specific facts showing the existence of a genuine issue for trial." Hlubek, 701 N.W.2d at 95. "Speculation is not sufficient to generate a genuine issue of fact." Id.
Plaintiffs also argue summary judgment is precluded because they were impaired from conducting the appropriate inspections due to a provision of the contract that prohibited physical damage to the property during inspections. Plaintiffs contend, "A jury should have the opportunity . . . to determine that the language was specifically included in order to prohibit, inhibit, and avoid discovery by plaintiffs of the disastrous conditions that could not have been discovered upon any inspection that was actually permitted by [the earnest money] contract." Again, plaintiffs fail to cite to specific facts in the record that would generate a genuine issue for trial. In fact, the undisputed facts show that many of the defects plaintiffs complain of would have been open and obvious at the time of inspection. Moreover, the contract did not prohibit plaintiffs from damaging the property during inspection. Rather, it required the buyer to "repair all damages caused to the property . . . as a result of any action taken on the property pursuant to" inspections.
The contract language was clear and unambiguous. The parties agreed to a sale of the property "as is." Plaintiffs have failed to generate a genuine issue of material fact to preclude summary judgment. Therefore, we affirm the district court's decision granting summary judgment in favor of the Signature Partners Defendants.
V. Fusch-Serold's and Custom Engineering's Motions for Summary Judgment
A. Undisputed Facts
Fusch-Serold is a Texas architectural firm that provided architectural services to SIADI. The parties' agreement limited Fusch-Serold's obligations to providing design and construction plans. It had no contractual obligations with any other party with respect to construction of Signature Place Apartments. At the time Fusch-Serold entered the agreement with SIADI, it had no knowledge of any agreement for the sale of the apartment complex to a third party. Upon completion of its architectural services under the agreement with SIADI, Fusch-Serold had no further involvement with the project.
SIADI contracted with Custom Engineering, located in Independence, Missouri, to perform certain mechanical engineering services related to the project. Custom Engineering agreed to perform the following services: consultation with owner/architect, preparation of one set of drawings, and checking of shop drawings. The agreement specifically provided Custom Engineering's services "do not extend to or include the review or site observation of the contractor's work or performance."
Custom Engineering prepared plans for the plumbing, electrical and HVAC work at Signature Place Apartments and provided copies of the plans, certified by engineers licensed in Iowa, to SIADI. It also prepared certain specifications for the plumbing, electrical and HVAC work, included as part of the plan documents ("sheet specs"). Custom Engineering did not prepare or review any specifications for the project other than the "sheet specs," perform any on-site inspections, or perform any review of the plans or specifications for the project to determine whether they complied with the terms of the Model Energy Code applicable in West Des Moines.
B. Merits
In its summary judgment motion, Fusch-Serold argued it owed no duty to plaintiffs. Custom Engineering raised the same argument and also argued plaintiffs had no cause of action for an alleged violation of Iowa Code chapter 542B, which sets forth licensing standards and enforcement procedures for individuals engaged in the practice of engineering in Iowa. The district court concluded Chapter 542B did not provide a private cause of action for plaintiffs for a violation of the chapter and dismissed plaintiffs' claims under that chapter as a matter of law. It further concluded neither Fusch-Serold nor Custom Engineering owed a duty to plaintiffs and granted summary judgment in favor of both defendants.
Plaintiffs argue the court erred in dismissing these parties because (1) Iowa Code section 614.1(11) (fifteen-year statute of limitations for improvements to real property) "provides for a cause of action against contractors, architects, and engineers with respect to latent construction defects," and (2) chapter 542B creates a private cause of action against licensed professionals. Plaintiffs' arguments are without merit.
1. Iowa Code section 614.1(11)
Plaintiffs did not raise, nor did the district court address, the issue of whether Iowa Code section 614.1(11) provides for a cause of action against these defendants. An issue neither presented to nor ruled upon by the district court will not be addressed for the first time on appeal. Benavides v. J.C. Penney Life Ins. Co., 539 N.W.2d 352, 356 (Iowa 1995). Plaintiffs failed to preserve error on this issue, and we will not address it.
2. Iowa Code chapter 542B
In order for a negligence claim to lie for violation of a statutory duty, the statute must explicitly or implicitly provide for it. Marcus v. Young, 538 N.W.2d 285, 288 (Iowa 1995). "In the absence of such a provision, the violation of a statutory duty does not give rise to a private cause of action." Id.
Iowa Code chapter 542B does not expressly authorize a private cause of action against licensed professional engineers. Therefore, we must determine whether a cause of action may be implied from the statute. Id. In answering this question, we apply the following four-factor test:
1. Is the plaintiff a member of the class for whose benefit the statute was enacted?
2. Is there any indication of legislative intent, explicit or implicit, to either create or deny such a remedy?
3. Would allowing such a cause of action be consistent with the underlying purpose of the legislation?
4. Would the private cause of action intrude into an area over which the federal government or a state administrative agency holds exclusive jurisdiction?
Id. (citing Seeman v. Liberty Mut. Ins. Co., 322 N.W.2d 35, 38 (Iowa 1982)).
Chapter 542B is designed to protect the public by making certain that those acting as professional engineers in Iowa meet certain minimum standards of competence. Iowa State Bd. of Eng'g Exam'rs v. Electronic Eng'g Co., 261 Iowa 456, 457, 154 N.W.2d 737, 738 (1967). The legislature created an engineering and land surveying examining board (Board) to carry out the statute's purpose. See Iowa Code § 542B.3; Iowa Admin. Code r. 193C-1.1 ("The engineering and land surveying examining board's principal mandate is the protection of the public interest."). Four of the Board's seven members must be licensed professional engineers. Iowa Code § 542B.3. The Board receives written complaints or may initiate an investigation on its own. Iowa Code § 542B.22; Iowa Admin. Code r. 193C-9.1. Upon finding a violation of licensing standards, the Board may take certain actions, including suspension, revocation, or reprimand of licensees; issuance of a permanent injunction; and imposition of a civil penalty. Iowa Code §§ 542B.21, .24, .27; Iowa Admin. Code r. 193C-9.3-9.5.
The legislature's creation of the Board and its delegation of enforcement of chapter 542B to the Board imply a legislative intent to deny a private remedy to those seeking redress for an alleged violation of the statute's provisions. A private cause of action would intrude upon the agency's statutorily conferred enforcement authority. Allowing a private cause of action would permit an individual to sidestep the legislature's carefully designed enforcement scheme of chapter 542B. In addition, it would be inconsistent with the statute's apparent purpose of delegating the evaluation of the competency of licensed professional engineers to those with specific expertise in the engineering field. We conclude there is no private cause of action for alleged violations of chapter 542B. We affirm the district court on this issue.
3. Negligence — Duty
Although it is not entirely clear from their brief, it appears plaintiffs also disagree with the district court's conclusion related to a common law duty. The district court addressed plaintiffs' common law negligence claims and the issue of whether Fusch-Serold owed a duty to plaintiffs and concluded as follows:
The key inquiry for this Court in determining whether Fusch-Serold owed a duty to the plaintiffs is whether it knew or should have foreseen the plaintiffs would rely on its services.
Teunissen v. Orkin Exterminating Co., Inc., 484 N.W.2d 589, 591 (Iowa 1992).
The reasoning in Teunissen is instructive to this court in determining whether Fusch-Serold owed a duty to plaintiffs. At the time Fusch-Serold performed its services, it did not know, nor should it have known, that the property would be sold to the plaintiffs in 1998. Nor could this defendant know that plaintiff would rely on the design and construction plans provided to the original developer, SIADI. As the defendant points out, the plaintiffs were far removed from the picture at the time the defendant performed its services and were not even aware of those services before plaintiff discovered the construction defects at the apartment complex. The court concludes that the plaintiff[s] have failed to establish that Fusch-Serold, as a supplier of the design and construction plans for the project in 1995 and 1996, owed plaintiffs a duty. Plaintiffs were not a known third-party to this defendant who would reasonably rely on the services so provided. Therefore, the court concludes that plaintiffs' claims against Fusch-Serold [should] be dismissed as a matter of law as a result of plaintiffs failing to establish such a duty.
The district court's reasoning is sound, and we adopt it as our own. Moreover, we conclude its reasoning and conclusion applies equally to Custom Engineering. We affirm the district court on this issue.
The district court went on to determine that assuming there was a duty, a genuine issue of material fact existed as to whether there had been a breach of duty. Custom Engineering filed a cross-appeal, arguing this conclusion by the district court was in error. Because we conclude there was no duty owed by these defendants, it is not necessary to address the breach of duty issue. Similarly, we need not address the merits of Custom Engineering's cross-appeal.
VI. Conclusion
We have considered all of the parties' arguments on appeal, whether or not we have discussed them. We affirm the district court's decisions granting summary judgment in favor of the City, the Signature Partners Defendants, Fusch-Serold, and Custom Engineering.
AFFIRMED.