Opinion
No. 3-125 / 02-0555.
Filed April 30, 2003.
Appeal from the Iowa District Court for Johnson County, LARRY J. CONMEY and PATRICK R. GRADY, Judges.
Plaintiff C. Allan Poots appeals the summary judgment granted by the district court in favor of defendants RAI, L.L.C., and Northern Investments, L.C., dismissing Poots's lawsuit seeking specific performance of a land-sale contract. MODIFIED, REVERSED, AND REMANDED.
Charles Traw and Steven Ballard of Leff, Haupert, Traw Willman, L.L.P., Iowa City, for appellant.
Michael Pitton of Pitton Law, P.C., Iowa City, for appellees RAI and Northern Investments.
John Beasley and Bruce Walker, Iowa City, for appellee High Country Development.
Heard by SACKETT, C.J., and HUITINK and VOGEL, JJ.
Plaintiff-appellant C. Allan Poots appeals the summary judgment granted by the district court in favor of defendants-appellees RAI, L.L.C., and Northern Investments, L.C., dismissing Poots's lawsuit seeking specific performance of a land-sale contract. In granting summary judgment the district court concluded the parties had merely agreed to contract in the future but had not formed a contract under which specific performance could be granted. On appeal Poots argues (1) the trial court erred in permitting RAI and Northern Investments to be substituted as defendants in place of High Country Development Company (High Country), with whom the contract was made, and (2) the evidence generated a fact question as to whether a contract existed. We modify the district court's ruling on the substitution motion, reverse its summary judgment, and remand for further proceedings.
In resisting the motion for summary judgment Poots claimed there were disputed facts as to (1) whether High Country and Poots entered into an agreement for the conveyance of the real estate in question; (2) whether a signed memorandum of agreement is a contract for the conveyance of the real estate in question; (3) whether an unsigned 1999 memorandum of a conference between the parties is evidence of furnishing or accepting offers to compromise; (4) whether High Country and Poots agreed to modify the Memorandum of Agreement by terms coming from the 1999 meeting; (5) whether Poots and High Country have partially performed the agreement to transfer real estate; and (6) whether High Country breached the agreement.
Although in equity, our review of an appeal from the grant of summary judgment is on legal error. Norwest Credit, Inc. v. City of Davenport, 626 N.W.2d 153, 155 (Iowa 2001); Keokuk Junction Ry. Co. v. IES Indus., Inc., 618 N.W.2d 352, 355 (Iowa 2000) (citation omitted) ("Notwithstanding the nature of this equitable action, the court `cannot find facts de novo in an appeal from summary judgment.'"). Summary judgment is proper 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). In ruling on a summary judgment motion, the court must look at the facts in a light most favorable to the party resisting the motion. Crippen v. City of Cedar Rapids, 618 N.W.2d 562, 565 (Iowa 2000). The court must also consider on behalf of the nonmoving party every legitimate inference that can be reasonably deduced from the record. Id. If reasonable minds may differ on the resolution of an issue, a genuine issue of material fact exists. Swartzendruber v. Schimmel, 613 N.W.2d 646, 649 (Iowa 2000). With this in mind we review the facts in the light most favorable to Poots.
I. BACKGROUND FACTS AND PROCEEDINGS
Poots is a real estate developer in Coralville, Iowa. In the early 1990s Poots became interested in purchasing property owned by High Country near his nine-hole golf course residential development in order to create an extended golf course and residential development. On March 12, 1992 Poots submitted a written proposal to long-time friend and the managing partner of High Country, Glenn Shoemaker, for the purchase of the property now at issue in this case. On behalf of High Country, Shoemaker wrote an April 20, 1992 response to Poots's offer of purchase, proposing several changes to the offer. Poots claims he and High Country later reached an oral agreement regarding the essential terms for the sale of the property.
Poots claims on the basis of this oral agreement he went to obtain a financing commitment from the Hawkeye State Bank. The bank apparently was unwilling to grant financing based only on an oral agreement. Therefore on May 1, 1995, at the request of Hawkeye State Bank, Shoemaker, on behalf of High Country, and Poots executed and signed a document prepared by High Country or its representative entitled "Memorandum of Purchase Agreement." Attached to that Memorandum of Purchase as Exhibit A was a description of the land in the agreement, specifically 99.43 acres. The Memorandum of Purchase Agreement provided as follows:
Pursuant to an offer to Purchase certain lands as described in Exhibit A, including Lakewood Hills 9th Subdivision — Brown Deer Phase II shown as filed May 1, 1995 at Coralville City Hall by Allan Poots from High Country Development Company, and certain modifications and changes thereto by both parties, those parties have proceeded to effect a final transaction. To date, no monies have changed hands, however, both parties have expended significant funds for design and other fees toward the fruition of a transaction.
The offer from Allan Poots represents approximately 100 acres at approximately $15,000 per acre for a total of approximately $1,500,000 of which $100,000 cash down payment would be made. High Country Development was to provide approximately $150,000 worth of engineering design.
There are certain lands not included in the transaction, but which are adjacent and attendant to the transaction acres that will be "developed", i.e. sewer, water, grading, paving, etc., by Poots but not obligated or included and are as described herein.
It is, at this time, the intent that certain developed lots will be "released" i.e. unencumbered, to High Country Development Company as unrealized payment and non-transacted land and will be "exchanged" for the balance of the land within this transaction. Basically High Country would be trading a large tract of undeveloped land for smaller tracts/lots of developed land, as follows:
High County will acknowledge Poots' construction and escrow fund mortgage and will provide clear merchantable title for same. Upon Final Plat approval and recording, Poots will deliver to High Country Development Company mortgage releases for Lots as shown in Exhibit B along with Subdivider's Escrow Agreement per City requirements. At this point, High Country Development Company will Warranty Deed lots shown in Exhibit A including Lakewood Hills 9th Subdivision, except lots as described in Exhibit B to Poots in exchange for $100,000 cash.
Under the parties' written agreement, as it was reflected in the Memorandum of Purchase Agreement, once the City of Coralville approved the Planned Unit Development, Poots was to pay High Country $100,000 and High Country was to transfer title to the real estate in the form of warranty deed from High Country to Poots. On June 13, 1995 the city of Coralville approved the Planned Unit Development. By this time Poots had the appropriate financing in place, had taken bids for the land development, and was prepared to award contracts. It appears the financing included Poots's encumbering his existing golf course and home.
High Country, however, was unable to transfer merchantable title to Poots because of a lawsuit against High Country and Shoemaker filed by Arthur and Zara Renander (Renander). The suit asserted Renander had an ownership interest in the High Country property. A notice of lis pendens was consequently filed against the High Country property.
The basis of the Renander suit was a claim that one of the planned fairways for the golf course in the planned unit development encroached upon an adjacent nine acres owned by Renander, and Renander had agreed to give High Country 1.66 acres of their nine-acre parcel in exchange for 1.33 acres of High Country's 100-acre parcel to facilitate the design of the golf course in anticipation of the golf course expansion. Learning that another condominium development would be placed between the planned golf course and their development, the Renanders brought fraudulent misrepresentation and breach of contract claims, arguing the land exchange was induced by Shoemaker's representation that, pursuant to the exchange, they would have golf course frontage. See Renander v. Shoemaker, No. 97-0583 (Iowa Ct.App. Feb. 23, 1999). In the course of this litigation, in which Poots intervened, Renander testified in a deposition that High Country and Poots had a deal for the 100 acres High Country owned that would be sold to Poots at roughly, they said, $15,000 an acre, and that High Country was going to get some developed lots, with the rest of the land and lots going to Allan Poots. High Country filed a counterclaim in this lawsuit, contending that Renander intentionally interfered with a contract for transfer of High Country's real estate to Poots.
Renander v. Shoemaker continued until May 17, 1999. Poots claims he stood ready during the course of the litigation to follow through with his end of the agreement, but because of the litigation no further steps could be taken because High Country could not transfer merchantable title. On April 5, 1998 Shoemaker died.
On November 19, 1998 counsel for High Country notified Poots's attorney that High Country had received another offer for the property and inquired as to Poots's position with respect to the property. In a letter dated November 20, 1998, High Country's counsel stated, "As you know, we cannot negotiate other offers until Mr. Poots informs us in writing of his intentions to pursue the purchase of the High County (sic), plus or minus 100 acres, or not."
On November 24, 1998 Poots's attorney responded, saying Poots was ready to perform his purchase agreement as soon as marketable title could be conveyed to him. In spite of this response, a "for sale" sign apparently was placed on the property. On April 16, 1999 counsel for Poots again wrote High Country's attorney, stating Poots was the buyer and stood ready to complete the purchase agreement as soon as merchantable title was available.
During this time various negotiations were occurring. Poots allegedly demanded a lowered purchase price by $300,000, following an alleged oral agreement between Poots and Shoemaker to reduce the sale price, due to the significant delays in the transfer of merchantable title to Poots caused by the Renander lawsuit. High Country testified it would have been willing to proceed with the transfer under the original terms of the agreement if that would have resolved the dispute.
The dispute was not resolved, and Poots initiated this action seeking specific performance of the land sale contract on May 3, 1999. On May 17, 1999 the Renander litigation ended.
Negotiations continued between the parties. An August 3, 1999 Memorandum of Conference recording discussions between the parties indicated ongoing negotiations regarding the purchase price and the land boundaries. Poots explains this memorandum as representing the continuing negotiations under the agreement caused by the unforeseen litigation. High Country argues the memorandum demonstrates that there never was a contract with clear essential terms. This Memorandum of Conference was never signed by any party.
Negotiations and correspondence continued between the parties. Poots's attorney sent High Country's attorney a letter on November 15, 1999, concerning recalculations of the acreage involved in the transaction. On November 23, 1999 counsel for High Country clarified its position, stating,
1. High Country is willing to perform the May 1995 memorandum — 40 developed lots for the real estate described in the memorandum; or
2. 35 developed lots for the real estate within the P.U.D. Boundary and the 1.9 acre commercial real estate.
High Country is not willing to convey the real estate within the legal description in the May 1995 memorandum plus the 1.9 acre commercial lot for 35 lots.
In August of 1999 Poots entered into an agreement with Renander, a principal in RAI, L.L.C., agreeing to sell Renander his claim on the land for $1,000,000 and close the sale on May 1, 2000. In apparent reliance on this agreement, Renander intervened in the Poots-High Country lawsuit on February 23, 2000. Poots and Renander had their own disagreements, however, and the matter went to arbitration. The arbitrator determined Renander had breached the agreement and found the agreement null and void. The arbitration was concluded in March 2001, but Renander remained interested in the land. Ultimately his company, RAI, together with defendant Northern Investments, sought and received an assignment by High Country of its interest in the land subject to the Poots-High Country dispute.
Having received an assignment of High Country's interest in the real estate contract, defendants RAI and Northern Investments filed a motion requesting they be substituted for High Country as parties-defendants in Poots's action. The court sustained the motion.
II. SUBSTITUTION OF PARTIES
Poots's first argument on appeal is that the trial court erred in permitting RAI and Northern Investments to be substituted as defendants and dismissing High Country from the litigation.
Although this case was brought in equity, we review the trial court's decision permitting RAI, L.L.C., and Northern Investments, L.C., to be substituted as parties-defendants for errors at law. Benton v. Slater, 605 N.W.2d 3, 4 (Iowa 2000) (concluding that where no facts are disputed and the issue is one of proper application of the law, review on appeal is for errors at law, even in equity proceedings).
In permitting the substitution of parties the trial court reasoned that High Country had the legal right to assign its rights and duties, that the plaintiff was seeking specific performance, and that it made no difference whether plaintiff sought specific performance from High Country or from another title-holder. While this may be true, the assignment does not release High Country from any contract liability it has to Poots unless Poots agrees to the assignment and the release of High Country from any obligations under the contract on which this suit is brought. An assignment of a contract by the first contracting party does not release that contracting party from liability to a second contracting party unless there is shown, among other things, that the second contracting party (here Poots) released the first contracting party (here High Country) from the initial contract. See BH Apartments P'ship v. Tharp, 466 N.W.2d 694, 696 (Iowa 1990). There is no evidence, either express or implied, to show such a release by Poots. Consequently we agree with him that substitution of RAI, L.L.C. and Northern Investments for High Country was in error.
The district court did not dismiss High Country as a defendant, and High Country should remain a defendant. To the extent that any liability and responsibility established by Poots against High Country is not satisfied by RAI and Northern Investments, High Country shall remain liable, and we modify accordingly. We affirm that part of the district court's ruling making RAI and Northern Investments defendants.
II. SUMMARY JUDGMENT
We next address the main issue in this case, which is whether there was evidence that a contract existed between Poots and High Country. The trial court issued summary judgment, concluding there was evidence of an agreement to agree, but no evidence of an actual contract with definite essential terms.
Poots seeks specific performance of a contract for the sale of real estate. Specific performance is available when the contract involves property which is unique or possesses special value. Recker v. Gustafson, 279 N.W.2d 744, 759 (Iowa 1979). Real estate is assumed to possess this necessary quality. Id.; Moser v. Thorp Sales Corp., 256 N.W.2d 900, 907 (Iowa 1977) (citation omitted). Specific performance is not an absolute right. Orr v. Graybill, 237 Iowa 628, 644, 23 N.W.2d 414, 422-23 (1946). It rests in the sound legal discretion of the trial court. Id. In a proper case it is not to be denied unless some good reason is shown for so doing. Id. A vendee may often compel specific performance where the vendor could not. Urbain v. Speak, 258 Iowa 584, 589, 139 N.W.2d 311, 314 (1966); Townsend v. Blanchard, 117 Iowa 36, 40, 90 N.W. 519, 520 (1902). Specific performance of an oral contract to convey realty will not be decreed unless proof of the contract is clear, satisfactory and convincing. Vrba v. Mason City Production Credit Ass'n, 248 Iowa 264, 268, 80 N.W.2d 495, 498 (1957); Vanston v. Rupe, 244 Iowa 609, 618, 57 N.W.2d 546, 551 (1953). Poots's claim for enforcement of a contract to buy real estate is that sort of a claim where specific performance is frequently found to be a proper remedy.
The focus of the district court's ruling on summary judgment was that Poots could not show he had a contract. The most he could demonstrate was an agreement to agree. However, Shoemaker, general partner of High Country, stated in his depositions that he believed Poots and he had formed a deal which was represented, although not fully, in the May 1, 1995 memorandum. The deal was essentially 100 acres in exchange for $1,500,000. There were a substantial number of oral agreements and negotiations. There is evidence that both Poots and High Country spent considerable money in reliance on an agreement. In addition, Poots has shown that the agreement was reduced to writing in the May 1, 1995 Memorandum of Purchase Agreement which showed consideration (money and fees expended by both parties for design and other costs) and the approximate acreage to be sold, both by number and description. The agreement further contemplated factors necessary to accomplish the development and the sale of the land. The agreement was for the purpose of showing Poots's lender that he had an actual contract. The lawsuit against High Country put the transaction on hold, but following the completion of the litigation, Poots indicated his position was to continue with the contract and that he expected concessions for what could be considered High Country's partial breach in being unable to deliver merchantable title at the time Poots demanded it.
Appellees argue Shoemaker's statements are subject to higher scrutiny because he is no longer living. This argument is based on the dead man's statute, previous Iowa Code § 622.4 (1981), which has been repealed. Furthermore, the weight to be given to Shoemaker's statements is an issue for the factfinder.
Though the lender is not a party to this lawsuit, Shoemaker was well aware that the lender was relying on the fact that there was a contract in making loans to Poots.
Proof of a contract need not be undisputed or to an absolute certainty — reasonable certainty is sufficient. Williams v. Chapman, 242 Iowa 294, 307-309, 46 N.W.2d 56, 63-64 (1951). The question of whether a contract exists typically is for the trier of fact. Audus v. Sabre Communications Corp., 554 N.W.2d 868, 871 (Iowa 1996). The intent of the parties, which is a question of fact, is the determinative factor in determining whether a contract for the sale of real estate has been reached. Rodgers v. Baughman, 382 N.W.2d 714, 718 (Iowa Ct.App. 1985). There is no dispute that the two parties in this case had a meeting of the minds as to the general parcel of land they were contracting for and its approximate acreage within a range of about five acres, as well as the purchase price for the land.
Specific performance was ordered in Severson v. Elberon Elevator, Inc., 250 N.W.2d 417, 423 (Iowa 1977), a case where there were differing opinions as to the terms. The court in Severson noted the parties to a valid contract may rescind or abandon the contract, substitute another in its place, or by conduct inconsistent with the continued existence of the original contract, estop themselves from asserting any right thereunder. Severson, 250 N.W.2d at 421; See Morse v. Slocum, 192 Iowa 1080, 1094, 186 N.W. 22, 28 (1922). The burden of establishing that one of these events occurred is on the party raising such claim. Severson, 250 N.W.2d at 421. It may be evidenced by both words and conduct. Id. at 421-22. When the evidence is susceptible to differing inferences, the issue whether the claim has been proven is for the trier of fact. Id. at 422.
Specifics regarding the price, including whether High Country was to be given back thirty-five or forty acres, were subject to negotiations, but major re-negotiations occurred only years after the Renander litigation had significantly delayed the performance of the agreement.
Appellees raise for the first time on appeal a claim that the issue of whether Poots and High Country had a contract for the sale of the land was decided in the suit by Renander against High Country. As such, they contend issue preclusion prevails and the issue of whether there was a contract cannot be relitigated. High County is asking us to affirm the district court on this ground. We disagree with appellees that the district court can be affirmed on an issue not raised, litigated and decided. See State v. DeVoss, 648 N.W.2d 56, 62-63 (Iowa 2002).
However, because the matter may come up on retrial, we address it. The elements of issue preclusion are (1) the issue determined in the prior action is identical to the present issue; (2) the issue was raised and litigated in the prior action; (3) the issues was material and relevant to the disposition in the prior action; and (4) the determination made of the issue in the prior action was necessary and essential to that resulting judgment. United Fire Cas. Co. v. Shelly Funeral Home, Inc., 642 N.W.2d 648, 655 (Iowa 2002) (citations omitted).
At issue in the prior litigation was whether there was fraudulent misrepresentation by High Country to Renander regarding whether Renander's property would always border a golf course and, additionally on appeal whether the court erred in granting a directed verdict on Renander's breach of contract claim. The district court found the evidence insufficient to prove Shoemaker made any representations promising a golf course adjacent to Renander's property. As part of its finding used to reach this conclusion the district court stated, among other things, "Renander knew any golf course development would be by Poots not Shoemaker, and no formal contract between Poots and Shoemaker had been agreed to." With respect to the breach of contract claim, we determined the following:
In order to prevail upon their breach of contract claim against Shoemaker, the Renanders needed to prove (1) they had a contract with Shoemaker; (2) a term of that contract required Shoemaker to provide them with golf course frontage; (3) they fulfilled their obligation under the contract by the exchange of deeds; (4) Shoemaker breached the contract; and (5) they suffered damages.
Renander v Shoemaker, No. 97-0583 (Iowa Ct.App. Feb. 23, 1999). The issue of whether High Country had a contract with Poots was not material and relevant to the disposition in the Renander suit, nor was it determinate of an issue necessary and essential to the judgment in the Renander suit. As the existence or nonexistence of a Poots-High Country contract was not material to the disposition in the prior litigation, issue preclusion does not compel us to similarly and affirmatively conclude Poots and High Country did not have a contract in this case. See United Fire Cas. Co., 642 N.W.2d at 655. There is no basis to dismiss Poots's suit on this ground.
As we have stated, the question of whether a contract exists typically is for the trier of fact. Audus, 554 N.W.2d at 871. The determination of the parties' intention to make a contract, as gathered from what the parties did and said, is typically a question to be decided by the trier of fact, particularly if the contract terms are unclear. Parson v. Procter Gamble Mfg. Co., 514 N.W.2d 891, 894 (Iowa 1994). There is substantial evidence which, if believed, could support a finding for Poots on his claim for specific performance that he had a land-sale contract with High Country and stood ready and willing to perform. While facts concerning the terms of and modifications to the contract, both written and oral, may be subject to different interpretations, the terms of the contract and any modifications, if any, are for determination by a factfinder following a trial. We conclude the matter was not properly disposed of on summary judgment. We reverse the grant of the motion for summary judgment and remand to the district court to hold a trial on the merits.