Opinion
No. 5-970 / 05-1066
Filed February 15, 2006
Appeal from the Iowa District Court for Cherokee County, Nancy L. Whittenburg, Judge.
LaVon Roberts appeals a district court ruling for specific performance of a contract. AFFIRMED.
William D. Cook of Herrick, Ary, Cook, Cook Cook, Cherokee, for appellant.
John A. Wibe of Martin, Wibe, Cozine Phillips, L.L.P., Marcus, for appellee.
Considered by Huitink, P.J., and Mahan and Hecht, JJ.
I. Background Facts and Proceedings
In the mid-1980s LaVon Roberts, John J. Murphy, Jr., LeRoy Kellen, and Julie Ashbaugh incorporated their business, the MARK Crop Insurance agency. The agency's principal offices are located in LeMars and Cherokee, Iowa; the business sells crop insurance to area farmers.
On November 4, 1993, the four shareholders entered into a buy/sell agreement whereby any stockholder wishing to sell his or her stock must first offer the stock to the corporation. The agreement detailed how the sale would proceed and how the price of the stock would be fixed. The agreement also included a non-compete provision.
When LeRoy Kellen retired in 1995, the three remaining shareholders agreed that his son, Charles (hereinafter "Kellen"), could acquire LeRoy's shares and become a stockholder. Patrick Murphy (hereinafter "Murphy"), son of John Murphy, became a shareholder when John retired in 1999.
On September 3, 2002, Roberts provided written notice to the other shareholders that she intended to retire at the end of 2002. She offered her shares for sale as follows: twenty-five percent to her daughter, Lori Ebel, and the remaining 4.17 percent to Murphy. Ebel had worked at MARK Crop Insurance since 1985, initially performing secretarial duties and eventually becoming licensed to sell insurance and performing data entry for both the Cherokee and LeMars offices.
On September 9, 2002, the shareholders met to discuss LaVon's retirement and the proposed distribution of her shares. Kellen, Murphy, and Ashbaugh explained to Roberts her shares must be offered to the corporation first pursuant to the terms of the buy/sell agreement. The remaining shareholders would later determine whether an offer to purchase shares would be extended to Ebel. The three expressed a willingness to continue Ebel's employment with MARK Crop Insurance after Roberts's retirement. According to the minutes of the meeting, Roberts was upset and left the meeting, remarking that Ebel had "made MARK Crop Insurance what it is today" and was entitled to the shares. Following the meeting, Kellen, Murphy, and Ashbaugh sent a letter to Roberts stating, "we the remaining stockholders feel it is in our best interest and in the best interest of the corporation" to purchase Roberts's stock as stated in the buy/sell agreement.
After further discussion and negotiation between the parties, the four shareholders signed an "Agreement of Selling Stockholder" on November 1, 2002. The agreement provided that Roberts would sell her shares to the remaining three shareholders in weighted shares and would terminate her duties effective December 31, 2002. According to Roberts, she executed the agreement on the belief that the other shareholders would offer Ebel the opportunity to purchase shares in the corporation.
On December 4, 2002, Kellen, Murphy, and Ashbaugh met to discuss Ebel's future with the company. Minutes of the meeting were recorded. Due to Ebel's "attitude and animosity" toward Kellen and Murphy, the three decided to offer a salaried position. If, after one year, Ebel's animosity and attitude had changed, "consideration would be given to allow Lori [Ebel] to purchase some percentage of shares." The three shareholders met with Ebel on December 9 and offered the salaried position. Roberts was not present at the meeting.
On December 10 Roberts sent a written statement to the other shareholders, indicating she had "decided not to retire, and will remain a shareholder of this corporation." On January 6, 2003, Kellen, Murphy, and Ashbaugh sent Ebel a letter, withdrawing the offer of employment.
On January 22, 2003, MARK Crop Insurance (plaintiff) filed a petition for specific performance, requesting the court order Roberts to comply with the buy/sell agreement and the November 1, 2002 agreement. The petition also requested a temporary injunction to remove Roberts from her position at MARK Crop Insurance. Roberts filed an answer and counterclaim.
On April 3, 2003, plaintiff withdrew its application for temporary injunction. On April 18, 2003, plaintiff dismissed its case against Roberts with the understanding that Roberts would dismiss her counterclaim. On February 23, 2004, after Roberts's counterclaim was set for trial, plaintiff filed a motion to reinstate the petition, which the district court granted on March 8, 2004.
On the morning of trial, Roberts dismissed her counterclaim. The court proceeded to hear testimony and receive evidence on plaintiff's petition. On May 26, 2005, the district court entered its ruling finding specific enforcement of the contract was necessary. The court ordered the terms of the November 1, 2002, agreement be enforced; specifically ordering Roberts to sell her shares to Kellen, Murphy, and Ashbaugh in weighted shares and terminate her duties for and on behalf of the corporation.
Roberts appeals, arguing the district court erred in finding (1) the November 1, 2002 agreement between the parties had not been abandoned and (2) the corporation's acceptance of Roberts's rescission of the November 1, 2002 agreement was predicated on an agreement by Roberts to dismiss her counterclaim.
II. Standard of Review
Our scope of review of an action for specific performance is de novo. HW Motor Express v. Christ, 516 N.W.2d 912, 913 (Iowa Ct. App. 1994). We give weight to the fact findings of the district court, especially when considering the credibility of witnesses, but are not bound by them. Iowa R. App. P. 6.14(6)( g).
Specific performance "is not a matter of absolute right but is always addressed to the sound judicial discretion of the court." McCarty v. Jeffers, 261 Iowa 470, 473, 154 N.W.2d 718, 721 (1967). "The court will not decree specific performance when the circumstances of the case show it would be inequitable to do so." Id. at 473-74, 154 N.W.2d at 721.
III. Merits
Abandonment of a contract is the relinquishment, renunciation or surrender of a right. Iowa Glass Depot, Inc. v. Jindrich, 338 N.W.2d 376, 380 (Iowa 1983). Whether or not a party has abandoned a contract "depends upon the party's intent to abandon and acts evidencing such an intent." In re Marriage of Christensen, 543 N.W.2d 915, 918 (Iowa Ct.App. 1995). "The act of abandonment must be unequivocal and decisive." Id.
The burden of establishing abandonment is on the party raising the claim. Severson v. Elberon Elevator, Inc., 250 N.W.2d 417, 421 (Iowa 1977). It may be evidenced by both words and conduct, and "[w]hen the evidence is susceptible to differing inferences, the issue whether the claim has been proven is for the trier of fact." Id. at 421-22.
The issues raised by Roberts on appeal are based on her disagreement with the fact findings of the district court. She contends the conduct of the parties following the rescission of her offer to sell her shares back to the corporation was "business as usual." Further, she points to the plaintiff's withdrawal of its request for a temporary injunction and dismissal of the petition in April 2003 as evidence that the parties no longer intended to be bound by the terms of the November 1, 2002 agreement.
The district court, as finder of fact, reviewed the evidence and determined Roberts had not proven her claim of abandonment. Specifically, the court determined that plaintiff did not abandon its remedies by acting in conformity with a mutual agreement between the parties to dismiss their respective litigation. The court concluded
Under these circumstances, where defendant induced the plaintiff to dismiss its suit by representing she would dismiss her counterclaim, it cannot be found that plaintiff abandoned its remedies under the common understanding of the word abandon, to give up definitely, forever. But for the parties' mutual agreement to dismiss their respective litigation, plaintiff would not have done so.
Based on our de novo review, we conclude the record supports the district court's findings. Roberts failed to carry her burden of proving abandonment of the November 1, 2002 agreement. We affirm the district court's ruling in favor of plaintiff.