Opinion
No. 2-083 / 01-0945.
Filed July 3, 2002.
Appeal from the Iowa District Court for Des Moines County, CYNTHIA H. DANIELSON, Judge.
Defendant appeals from a judgment in plaintiff's breach of contract suit. AFFIRMED.
William Jahn, Jr. of Aspelmeier, Fisch, Power, Engberg Helling, P.L.C., Burlington, for appellant/cross-appellee.
Peter Hansen, Burlington, and Patrick O'Bryan, Des Moines, for appellee/cross-appellant.
Heard by SACKETT, C.J., and HUITINK and HECHT, JJ.
This is an appeal from a judgment for plaintiff in a suit for breach of an oral contract to rent farmland for a term exceeding one year. Plaintiff-appellee Dean Kolkman was awarded damages against defendant Corrine Roth, the landowner, for her failure to abide by the terms of the lease. Defendant contends the district court erred in (1) denying her motion for partial summary judgment and admitting evidence in violation of the statute of frauds; (2) permitting plaintiff to offer expert testimony that went beyond the scope of discovery responses; (3) overruling her motion for directed verdict; and (4) instructing the jury on damages. On his cross-appeal defendant contends the damages were inadequate. We affirm.
Defendant inherited the land in question, some eight hundred acres in Des Moines County, upon the death of her father in December of 1995. At the time defendant's father died plaintiff was farming the land under a year-to-year lease. The eight hundred acres, composed of five separate tracts, was rundown. The buildings and fences needed repair. There were about one thousand railroad ties and ten years' accumulation of manure piled about the farm.
Plaintiff testified that in the spring of 1996 defendant approached him and asked if he would farm her land. At the time plaintiff and his wife lived in a home they owned outside of Burlington, Iowa. Plaintiff testified he was concerned about the length of any agreement or lease because there was substantial work to do to clean up and improve the land. Plaintiff further testified that he and defendant agreed at the time that he would continue to farm the land, apparently on a crop share basis, until he retired or was not able to farm. Additionally, plaintiff testified it was agreed he and his wife would move into a house on the farm and live there without paying rent for the duration of the lease. Defendant gave plaintiff a power of attorney to do what was necessary with reference to multiple peril insurance.
Plaintiff moved to the farm in 1996. He removed a large amount of manure. He calculated he worked several hundred hours at the job. He also testified he spent considerable time cleaning up junk and repairing buildings. He valued the total improvements he made at $38,000. Defendant admitted she had a conversation with defendant about farming the land in the spring of 1996. She contended the first time she learned of the claim of a long-term lease was in November of 1999.
In the spring of 1999 defendant turned the management of the farm over to her husband. In the fall of 1999 plaintiff's husband told defendant he needed to pay rent for the farmhouse and had another farmer begin tilling part of the farm. In November of that year plaintiff received a lease for the farmhouse, which was to run from January 1, 2000 to December 31, 2000, and which included a monthly rent fee of $550 a month. He also received a lease for the farmland, which was to run from February 2000 to August 31, 2000. Plaintiff did not sign either of the proposed leases. Plaintiff received a notice of termination of farm tenancy, notifying him the farm tenancy would terminate on March 1, 2001.
On December 1, 1999 plaintiff sued for breach of contract, contending defendant had breached their oral lease. Defendant filed a motion for summary judgment, which was denied. The case was tried and submitted to a jury. A verdict was returned in plaintiff's favor for $135,000 for loss of labor and management income, and $19,429 for loss of farm improvements, for a total judgment entered for plaintiff and against defendant of $154,429. The jury was also asked if plaintiff could have mitigated his damages, and if so, in what amount. The jury entered a zero in response to this question.
We first address defendant's contention that her motion for summary judgment should have been sustained. Defendant's motion for a partial summary judgment denied there was a lease and contended that evidence of a lease was not admissible because of the statute of frauds. Defendant agreed she had a conversation with plaintiff in the spring of 1996, but denied that she contracted with him in the manner claimed.
The district court denied defendant's motion for summary judgment finding there were sufficient facts to support a claim of promissory estoppel creating an exception to the statute of frauds and rendering evidence of the oral lease admissible.
Summary judgment is appropriate under Iowa Rule of Civil Procedure 1.981 only when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3); City of West Branch v. Miller, 546 N.W.2d 598, 600 (Iowa 1996). In ruling upon the motion, the court considers the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any. City of West Branch, 546 N.W.2d at 600. We examine the record before the district court to decide whether a genuine issue of material fact exists and whether the court correctly applied the law. Gerst v. Marshall, 549 N.W.2d 810, 811-12 (Iowa 1996). In doing so, we view the facts in the light most favorable to the party opposing the motion for summary judgment. Id.
Defendant contends it is undisputed that there was no written lease, and that consequently the statute of frauds prevents plaintiff from proving the lease by oral testimony. Plaintiff contends the statute of frauds is not applicable because defendant admitted she had a conversation with plaintiff, although she denies that she agreed he could farm the land until his retirement. Plaintiff responds that since defendant admitted there was an oral agreement, even though she disagreed with the length of the lease, there is not a statute of frauds question.
Plaintiff further advances that even if the statute of frauds applies, two exceptions make it inapplicable. He contends there was partial performance. Defendant contends that the partial performance exception to the statute of frauds does not apply to an oral lease of real estate for a term of more than one year. Plaintiff also contends there was promissory estoppel.
The statute of frauds is codified at Iowa Code section 622.32, and pertinently provides that,
[e]xcept when otherwise specially provided, no evidence of the following enumerated contracts is competent, unless it be in writing and signed by the party charged or by the party's authorized agent:
. . .
3. Those for the creation or transfer of any interest in lands, except leases for a term not exceeding one year.
The statute of frauds does not render oral promises to convey invalid. Sun Valley Iowa Lake Ass'n v. Anderson, 551 N.W.2d 621, 630 (Iowa 1996). Rather, the statute relates merely to the manner of proof. Id. The statute renders incompetent oral proof of such promises. Id.; Recker v. Gustafson, 279 N.W.2d 744, 748 (Iowa 1979). The statute, therefore, is a rule of evidence and not of substantive law. Sun Valley Lake Ass'n, 551 N.W.2d at 630. The statute is a defense and must be raised by answer or by objection to evidence at trial . Id.; Johnson v. Ward, 265 N.W.2d 746, 747-48 (Iowa 1978). Defendant raised the issue.
First, we disagree with plaintiff that because defendant admitted there was some form of lease, though she disagreed on its term, that this admission was sufficient to render testimony of the lease admissible as an exception to the statute of frauds. In Peterson v. Petersen, 355 N.W.2d 26, 31 (Iowa 1984) the court, while recognizing the evidence demonstrated the possibility of contract action, dismissed plaintiff's claim of an oral contract, finding it was not properly supported. The fact plaintiff has shown some lease is not sufficient in itself to prove an exception to the statute of frauds.
We also reject plaintiff's contention that the contract is taken out of the statute of frauds because he took possession under an oral lease for a term of more than one year. See Snater v. Walters, 250 Iowa 1189, 1199, 98 N.W.2d 302, 308, (Iowa 1959); Powell v. Crampton, 102 Iowa 364, 365, 71 N.W. 579 (Iowa 1897).
We agree with plaintiff that there is a fact question as to whether promissory estoppel renders the evidence of the alleged oral contract admissible. Section 622.33 not only names specific acts of part performance as creating an exception, but also specifies as an exception, "any other circumstance which, by the law heretofore in force, would have taken the case out of the statute of frauds." That language is sufficient to include what is now called "promissory estoppel." Miller v. Lawlor, 245 Iowa 1144, 1152-53, 66 N.W.2d 267, 272-73 (1954). "Promissory estoppel" is a recognized species of consideration. See id. The doctrine of equitable estoppel is applicable whenever the representation or promise relied on has been made to induce action or is reasonably calculated to induce action. See id. An oral contract otherwise unenforceable can be enforceable to the extent necessary to protect expenditures made in reasonable reliance thereon. See id. The binding force of the promise does not depend on any personal gain or advantage to the promisor. See id. The rule does not rest upon the assumption that the party estopped has obtained any personal gain or advantage, but on the fact that he or she has induced others to act in such a manner that they will be seriously prejudiced if he or she is allowed to fail in carrying out what he or she has encouraged them to expect. See id.
A plaintiff who seeks to prove an oral contract on land must establish the contract by a preponderance of the clear, satisfactory and convincing evidence. Peterson v. Petersen, 355 N.W.2d 26, 29 (Iowa 1984); Knight v. Anderson, 292 N.W.2d 411, 417 (Iowa 1980); Severson v. Elberon Elevator, Inc., 250 N.W.2d 417, 420 (Iowa 1977); Vanston v. Rupe, 244 Iowa 609, 620, 57 N.W.2d 546, 551 (1953).
The question then becomes, has plaintiff proved the essential elements of estoppel, which are: (1) a clear and definite oral agreement; (2) that plaintiff acted to his detriment solely in reliance on said agreement; (3) that plaintiff was without knowledge of the real facts; (4) false representation or concealment of material facts; (5) that a weighing of all the equities entitles plaintiff to the equitable relief of estoppel. Merrifield v. Troutner, 269 N.W.2d 136, 137 (Iowa 1978).
Plaintiff and defendant entered into an oral lease, and plaintiff took possession of the property. There is evidence that after the agreement was made plaintiff undertook to improve the run down farmland and farmstead in a manner beyond what one would anticipate from a crop-sharing tenant on a year-to-year lease. There is evidence plaintiff and his wife also sold their home in Burlington in order to move to the farm. There is evidence plaintiff bought machinery because of the lease. There is evidence that these things were done on the basis of an oral promise that the crop share lease would continue for a long term. From this evidence one could find the term promised was an inducement for the plaintiff to undertake the improvement to the farm, the sale of and move from his home, and the purchase of machinery. One could conclude the promised term was a deciding factor without which plaintiff would not have taken those actions. While it may not necessarily be the sole reliance, it is sufficient that without defendant's representations or promises of a lengthy term plaintiff would not have acted. See Miller, 245 Iowa at 1155, 66 N.W.2d at 274. We affirm on this issue.
Defendant next contends the district court erred in permitting plaintiff's expert to testify beyond the scope of his discovery response. We review for an abuse of discretion. Hantsbarger v. Coffin, 501 N.W.2d 501, 505 (Iowa 1993). We will reverse if the ruling rests on grounds or for reasons clearly untenable or unreasonable. Id. A ruling based on an erroneous interpretation of a rule can constitute an abuse of discretion. Shook v. City of Davenport, 497 N.W.2d 883, 885 (Iowa 1993).
A party is permitted to discover the facts and opinions held by an expert the opposing party expects to call as a witness at trial when those facts and opinions are within the scope of discovery and were acquired or developed in anticipation of litigation or for trial. Iowa R. Civ. P. 1.508(1)(a). To the extent that these facts and opinions have been developed in discovery proceedings, the expert's testimony at trial may not be inconsistent or go beyond the fair scope of the expert's testimony in discovery proceedings. Iowa R. Civ. P. 1.508(4).
Defendant's challenge is to certain testimony of one Kliebenstein as to losses experienced by plaintiff as a result of defendant's breach of contract. It is agreed that defendant made discovery requests that required plaintiff to disclose Kliebenstein. Kliebenstein is an agricultural economist who has a Ph.D. from Iowa State University. Defendant, while admitting she was advised of Kliebenstein, contends that discovery documents provided by plaintiff did not show specific cost of production, yields, profit, loss, inventory accumulation or reduction, interest payments, net worth, or other performance indicia, which formed the basis of Kliebenstein's opinion of plaintiff's loss of future income.
Defendant further contends that had she known Kliebenstein had analyzed plaintiff's actual financial condition and compared it to farmers in southeast Iowa and the entire state, she would have done additional discovery.
Defendant asked plaintiff to identify expert witnesses he intended to call and, as to those witnesses, to identify (1) the subject matter of their testimony, (2) the substance of the facts and opinions on which the witness was to testify, and (3) a summary of the bases or basis and grounds for each opinion. Plaintiff attached a copy of a twenty-three-page report prepared by Kliebenstein and referred to it as the answer to all the questions above. At trial defendant made some general objections to Kliebenstein's testimony. Without addressing whether they were specific enough to preserve error on issues now raised, we find the district court did not abuse its discretion in admitting the evidence. We affirm on this issue.
Defendant contends the district court erred in instructing the jury. The error now urged was not preserved for appeal.
Defendant next contends that the district court should not have overruled her motion for directed verdict, as there was not substantial evidence to support a finding that plaintiff suffered the loss of future profits, nor was there evidence to support a finding the damages were within the contemplation of the parties at the time they entered into the lease.
Evidence is substantial to support a jury verdict if reasonable minds would find it adequate to reach the same conclusion. Shams v. Carney, 518 N.W.2d 366, 369 (Iowa 1994). In considering the sufficiency of evidence, we view the evidence in the light most favorable to the party in whose favor the verdict was rendered. Id.
Defendant contends there is not substantial evidence to support plaintiff's claim for lost profits. The three prerequisites for a lessee's recovery of lost profits occasioned by the lessor's breach are:
(1) Such damages must have been within the contemplation of the parties at the time the lease was made;
(2) Such damages must be the natural and direct result of the breach; and
(3) Such damages must be established with reasonable certainty and may not be based upon speculation and conjecture.Jamison v. Knosby, 423 N.W.2d 2, 6 (Iowa 1988) (citing Dopheide v. Schoeppner, 163 N.W.2d 360, 367 (Iowa 1968)).
Defendant contends there was no evidence the damages were contemplated by the parties, as plaintiff shows a net loss for two of the years he farmed defendant's real estate and profits of less than one thousand dollars in the other two years. He contends that this indicates plaintiff could not have contemplated annual profits of nearly twenty thousand dollars, which were the projections used by Kleibenstein as anticipated profits. Defendant therefore contends there is not substantial evidence to support the judgment of $135,000 for future loss of labor and management income, and that the judgment in that amount should be vacated.
Defendant further contends plaintiff failed to introduce substantial evidence to establish with reasonable certainty that the damages were reasonable and not based on speculation and conjecture. Defendant contends plaintiff and his expert relied on the average return of Iowa grain farmers and their fifteen-year history in determining what plaintiff should earn. Defendant argues this evidence is not sufficient, absent facts showing plaintiff was either above or below the average Iowa grain farmer. Defendant suggests the historical financial data of plaintiff is analogous to the "new business rule" which deems "potential profits from a new commercial enterprise" too speculative to be recoverable. See Connolly v. Bain, 484 N.W.2d 207, 211 (Iowa Ct.App. 1992).
Plaintiff has not responded to this argument except to point to the defendant's testimony that since plaintiff began farming the land, she has made a profit.
First, we decline the defendant's invitation to apply the "new business rule" to a new grain farm operation. The gross income of most new businesses is dependent upon the specific product sold or the service delivered and the market available to the location of the business. Any crop-share farmer's gross income is based on grain prices and yields. There is evidence that plaintiff's yields were above Des Moines County and state of Iowa averages. While the exact price received for grain may vary within the state because of distance from transportation or markets, the general trends in grain sales affect prices in all parts of the state. History of grain prices in the state is relevant in projecting future sale prices. The expert testimony of expected future profits is not so unreliable that it does not support the verdict. There is substantial evidence to support the damage award. We affirm on defendant's appeal.
Plaintiff on cross-appeal contends the jury verdict was not adequate. We disagree and affirm.
AFFIRMED.