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DRAKE LAW SCHOOL

GENERAL PRACTICE REVIEW

November 19, 2021

REAL ESTATE CASE LAW & LEGISLATIVE UPDATE

David M. Erickson

Dentons Davis Brown, P.C.

215 - 10th Street, Suite 1300

Des Moines, Iowa 50309

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Case Law

A. Broderick Family, L.P. v. City of Waukee, Iowa.

Iowa Court of Appeals No. 19-1131. Filed October 7, 2020

Broderick Family, L.P. owned certain property in the City of Waukee, Iowa.

The City of Waukee condemned approximately five acres of Broderick’s land to use for

land for the infrastructure adjacent to a new high school located in the City of Waukee.

As part of the condemnation application the City of Waukee attached plats showing the

five or so acres it sought to acquire from Broderick. In addition, it showed acquisition

plats which depicted a potential right-of-way to extend Douglas Parkway across the

entirety of Broderick’s property. Neither the right-of-way nor the additional land it could

acquire - approximately nine and one-half additional acres - were otherwise addressed in

Waukee’s condemnation application. Rather, the application only sought to acquire the

five acres (more or less) needed for the school project.

Broderick then sued Waukee under a theory of inverse condemnation. Broderick

claims that Waukee’s drawings “earmarked” the additional nine and one-half acres as

“the location where Waukee intends to construct” an extension of Douglas Parkway.

Broderick alleges that despite this, Waukee “has no intention of acquiring that right-of-

way” - the nine and one-half acres - through condemnation or otherwise. As a result,

Broderick claims, Waukee has created a servitude and uneconomical remnant.

Broderick brought this action for an inverse condemnation action. Waukee

moved for summary judgment and it pointed out that additional nine and one-half acres

is only a “possible location of a future extension of Douglas Parkway” and Waukee had

made no final decision and taken no final action either to extend or not to extend any

portion of Douglas Parkway” across the entirety of Broderick’s land. So, Waukee

argued, there has been no taking.

The district court agreed. The court stated it could not find that Waukee

“irrevocably committed to constructing an extension of Douglas Parkway through

Broderick’s land and the court found “no evidence in the record to support Broderick’s

contention that a ‘taking’ had occurred.” The court granted Waukee’s motion and

Broderick now appeals.

Broderick raises two theories - inverse condemnation and an uneconomical

remnant. A property owner can pursue a claim of inverse condemnation when a

government body such as the city takes all or part of the owner’s property without

starting formal condemnation proceedings. There is a three-part framework to evaluate

claims of inverse condemnation. (1) Is there a constitutionally protected private

property interest at stake; (2) Has the private property interest been ‘taken’ by the

government for public use; and (3) If the protected property interest has been taken, has

just compensation been paid to the owner.

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The critical question is element two - whether or not his property has been taken.

The taking can occur through regulatory actions on the part of the city. The Iowa Court

of Appeals agreed with the district court finding that there had been no permanent

government action by Waukee that definitely established the future placement of

Douglas Parkway and therefore there had been no taking by the City of Waukee. The

actions of Waukee had not affected the property in question. The court states Broderick

has not shown that Waukee’s acts give it even a limited right to use the land. Waukee

has not inhibited Broderick’s use of the land in any continual or permanent way and

therefore the Court of Appeals affirmed the district court. The argument of

uneconomical remnant is such that Broderick asserted that the city has created an

uneconomical remnant and establishes servitude upon the property thereby establishing

that there has been a taking. Broderick has not provided authority to support a separate

uneconomical remnant theory. An uneconomical remnant is a parcel of real property

once the owner is left with an interest after the partial acquisition of the owner’s

property where the acquired agency determines that the parcel has little or no value or

utility to the owner. Here the court found that there had been no such showing. The

district court’s action was affirmed.

B. Stuart v. City of Dubuque Zoning Board of Adjustment

Iowa Court of Appeals No. 19-1688. Filed November 4, 2020

The Plaintiff appeals the district court’s order dismissing a petition for writ of

certiorari arising out of a challenge that Stuart made to the Board of Adjustment for the

City of Dubuque. Stuart owned two properties on Bluff Street in Dubuque. As part of

the Jackson Park National Register Historic District, these brick duplexes are located in

a “high density, multi-family residential zoning district.” Neither property serves as a

residence. Instead, Stuart stores shingles, tar paper, old furniture, antiques, and other

miscellaneous material in the buildings. In February of 2019 he received a notice that

the use of the buildings violated a zoning ordinance and ordered that Stuart remove all

items stored within the property. Stuart appealed the notices to the City of Dubuque

Zoning Board of Adjustment. Following a May 2019 meeting, the board voted "3 to 2"

to affirm the zoning enforcement officer's determinations of illegal property use. Stuart

then petitioned for writ of certiorari in the district court, claiming the board acted

illegally and beyond its authority by failing to "follow its own procedures in how to

conduct a hearing." Stuart also complained the board made no "findings of fact or

determinations of any issues presented." According to Stuart, because of the board's

failures, the record lacked substantial evidence in support of its decision. The district

court found that the board procedures were “supported by competent and substantial

evidence” and allowed for “notice and opportunity to be heard.”

Iowa Code §414.15 governs certiorari actions seeking review of board of

adjustment decisions. Under that provision, a person aggrieved by any decision of the

board may present the court a petition alleging the grounds of illegality. These grounds

of illegality track those that are raised in certiorari actions generally. Stuart contends the

district court “erred in determining that the petition did not allege facts sufficient to

amount to any illegality.” His argument is the board violated its own procedural due

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process and did not set forth written findings of fact. The main contention of Stuart was

that the board did not follow its own procedures in requiring that oral evidence be with

oath or affirmation. He stated that he was allowed to speak and present materials but

that he did not have the opportunity to cross examine city witnesses and they were not

under oath or affirmation. The district court as well as the Court of Appeals found that

Stuart was given a meaningful opportunity to be heard and the fact that there was no

oath or affirmation does not indicate a violation. Second, Stuart also contended that the

board acted arbitrarily and illegally. In failing to make written findings and conclusions

per its own procedure. The board did submit minutes of the meetings and copies of

materials submitted into evidence which are on file with the Office of Planning Services,

City Hall, Dubuque, Iowa. The Iowa Court of Appeals affirmed the district court

finding that the minutes served as written findings and therefore the requirement of

written findings have been met. The district court’s action dismissing the writ of

certiorari was affirmed.

C. Behnke v. Fitzpatrick

Iowa Court of Appeals No. 19-1593. Filed November 4, 2020

Adjoining property owners brought this action regarding a boundary dispute.

Behnke purchased land from Hinderman after a December 2016 survey had been

completed. In 2017, Behnke filed a petition to establish the eastern boundary of their

property which lies adjacent to property owned by Mark and Sheryl Fitzpatrick. Behnke

also asked the district court to determine whether a 1955 easement applied which would

allow access across Fitzpatrick’s property. Fitzpatrick answered asserting a fence line

not the plat line established the boundary by acquiescence and disputing Behnke’s use of

the easement. Following trial, the district court ruled Fitzpatrick has failed to prove that

Behnke or the predecessors ever acquiesced in accepting the fence line as the actual

boundary between the properties. The legal description of the parcel establishes the

correct boundary line. The court found the easement inapplicable. Both parties

appealed. The court went through an analysis of a boundary dispute under Iowa Code

§650. The findings of fact by the trial court are equivalent to a jury verdict, which will

be upheld if supported by substantial evidence. In order to establish a boundary by

acquiescence, Fitzpatrick had the burden to prove by clear evidence that the two

adjoining landowners or their predecessors in title recognized and acquiesced in a

boundary line for a period of 10 years. A party seeking to establish a boundary other

than a survey line must prove it by ‘clear’ evidence. The district court found that the

Fitzpatrick’s had failed to prove their claim. They also noted that back in 2008

Hinderman had his attorney send a letter to Fitzpatrick saying that the boundary Line

was in dispute and also that Behnke’s predecessor’s had paid taxes on this particular

property over many years.

The district court found that the evidence was in favor of Behnke and that

Fitzpatrick had failed to prove by clear evidence a boundary of acquiescence. On the

issue of the easement, the court found that the easement thought to benefit Behnke rather

was to benefit a property to the north and therefore the easement was not all valid. The

district court’s decision was affirmed.

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D. In the Matter of the Estate of Vera E. Cawiezell

Iowa Court of Appeals No. 19-1214. Filed November 4, 2020

This case deals with an interpretation of a will which where the testator imposed

a restraint on alienation on a property as well as directed that a tenant be given the right

to purchase the property for a certain period of time. The decedent Vera Cawiezell was

a hardworking former school teacher with a deep devotion to a 150-acre Muscatine

County farm. She was actively involved in the farm’s operation and assisted with her

livestock until she was 90 years old. She did not have any children. She died in April of

2018 and her will provided the following provisions:

“Item 2. I hereby will, devise and bequeath my residence house

and buildings close to home which are a part of my farm residence to my

2nd Cousin, Greg Ales. My executors are further authorized and

empowered to determine the boundary lines for the survey of the farm

residence. In addition, I give and bequeath all of the household contents

located in my home to Greg Ales.

Item 3. I hereby will, devise and bequeath all of my farm real

estate located in the Northeast Quarter of Section 21, Township 78 North,

Range 4 West of the 5th P.M. in Muscatine County, Iowa, except my

homestead referred to in Item 2 above, consisting of approximately 150

acres to my friends, Tom and Beth Coronelli or unto the survivor of

them, subject to the restriction that they should not sell or transfer the

property outside their immediate family within a period of twenty years

after my death. Terry Brooks has been leasing the farm from me under a

share crop agreement and I would request that the Coronelli family

continue leasing to Terry under favorable terms for his benefit. I further

give Terry Brooks the first option to purchase the farm during the twenty

year period following my death and I would further request that the terms

of sale be favorable for Terry Brooks.”

After a hearing, the court determined that there needed to be a temporary

executor appointed because of potential conflicts. Gary McKenrick was selected as the

temporary executor As far as the issue regarding the restriction on alienation,

McKenrick stated:

“Regarding the issue of a restriction or limitation on alienation of the

farm/agricultural tracts, my conclusion is that the provision in the will for

the 20-year sale restriction is not enforceable. However, the 20- year right

of first refusal in favor of Terry Brooks is enforceable and must be

incorporated into the deed.”

The court agreed with the interpretation of the temporary executor and ruled that

the restraint on alienation was void and provided that Brooks would have a period of 90

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days before the sale of the property to purchase the property at an agreed upon price.

The court determined that they would have appraisers appointed by each party if they

could not come up with a favorable price and that value would be the amount that would

be required to be paid to purchase the property. All parties appealed the decision of the

district court and the Court of Appeals ruled that the restriction on alienation was void

citing previous cases where it stated that “The courts will not give effect to a

testamentary provision to the effect that a devisee shall not for a period of time sell the

property devised.” relying upon the Guenther case at 29 N.W. 2nd at 223. The

executors tried to argue that Iowa Code §614.24 which is a limitation on restrictions on

property for a period beyond 21 years was applicable and should allow this restraint to

be effective for a period of 20 years. The executors asserted the restriction on alienation

in Cawiezell’s will is a “use restriction,.” under Iowa Code §614.24(5) The Iowa Court

of Appeals as well as the district court found that the purpose of Iowa Code 614.24 is to

simplify the transfer of land not to impose restrictions on the alienation of property and

found it was not applicable. The provisions in the will regarding Brooks were

interpreted by the court to grant Brooks a right of first refusal giving him the right to

purchase the property for a period of 90 days prior to the time the owners of the property

put the property on the market at a price agreed by the parties. If they could not

determine a price on their own the price would be determined by two appraisers. The

court affirmed that interpretation although they went through an analysis of the word

“request” that was in the will of the decedent and determined that the word “request”

was merely precatory not mandatory. The decision of the district court was affirmed.

E. Benskin,. Inc. v. West Bank

Supreme Court of Iowa No. 18-1966 submitted November 18, 2020 filed December

23, 2020

This case involves a situation where a borrower executed a note and mortgage to

a bank that was never funded and which security instruments were never released by the

bank on the property that secured the mortgage. There were other issues involved

regarding breach of contract, breach of implied duties of good faith and fair dealing,

fraud and slanter of title. The district court dismissed all of these claims based upon a

statute of limitation issue and the Court of Appeals reinstated the claim of slander of

title claim and this claim is on further review. The Iowa Supreme Court after reviewing

the matter determined that the district court correctly dismissed the case on the

pleadings, except for slander of title. The case involves a situation where Benskin

entered into a separate agreement for a line of credit with West Bank for up to $2

million to purchase land for development. The terms of the promissory note secured by

guarantees from Martin and Susan Benskin and mortgages on the Dickinson County

land and this time on real estate Benskin owned in Polk County. On May 30, 2008, the

2007 promissory note and mortgage matured. “On or after that date, West Bank was

obligated to release the 2007 Mortgages” as no loan was taken out or advanced secured

by these mortgages. The mortgages were not released and in May of 2018, Benskin

sued West Bank in a three count petition alleging breach of (1) the 2007 contracts, (II)

the 2006 promissory note, and (III) the implied duties of good faith and fair dealing. A

motion to dismiss was filed stating the statute of limitations barred all claims. The

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district court agreed with the West Bank and dismissed all the claims. The Court of

Appeals reversed and reinstated the slander of title claim, holding that equitable estoppel

was adequately pled to avoid a motion to dismiss on the statute of limitations and that

the slander-of-title claim was adequately pled. The Supreme Court granted further

review. The Supreme Court agreed with the Court of Appeals and district court on all of

the claims being dismissed except for the slander-of-title claim. The issue before the

Supreme Court was whether or not the claim of Benskin adequately alleges the element

of publication. Benskin’s argument is that the mere fact that the mortgage was filed of

record the element of publication was therefore satisfied. The Supreme Court did not

address this issue in previous rulings but other courts had held that recordings satisfied

the public element of the tort of slander of title referring to cases throughout the United

States. The Iowa Supreme Court found these other authorities persuasive and now

answer the question we left open in a case called Witmer and they held that the filing of

an encumbrance on a public docket in the recorder’s office satisfies the publication

element for slander of title. Therefore, the Iowa Supreme Court affirmed the district

court judgment dismissing counts I through V and reversing the judgment dismissing

Count V which is the slander of title claim.

F. No Boundary, LLC v. Cornell Hoosman

Iowa Supreme Court No. 19-0431 submitted December 16, 2020 filed January 22,

2021

A property lost his home to a tax lien in the amount of $220 but he disputed the

property taxes. The action involved in this case was an action for possession of the

property that was granted but the defendant filed a motion to set aside the default which

was denied by the district court as well as the Iowa Court of Appeals. The record

reflects the following. No Boundary obtained title to Hoosman’s home by way of a tax

sale deed issued by the Treasurer of Black Hawk County on November 30, 2018. A

Petition for recovery of property on January 14, 2019, was filed which sought immediate

and exclusive possession of Hoosman’s home. The petition was served and Hoosman

did not file an answer after the of ten-day notice of intent to file an application for

default was filed. The judge issued a default judgment and issued a writ of removal on

the property.

Two weeks after the district court issued the writ of removal Hoosman filed an

application which he sought to enjoin removal from the property alleging he was legally

disabled and because he is legally disabled he is exempt from paying property taxes.

The motion to set aside the default asserted he was incompetent and needed a guardian

ad litem and that also his statutory right of redemption afforded persons with a legal

disability under Iowa Code §447.72 gave him a meritorious defense to the action. The

district court denied the motion to dismiss. The Iowa Court of Appeals affirmed. The

Iowa Supreme Court went through an analysis regarding motion to set aside default

judgments with the statement that “We begin our answer to the question by noting there

is a longstanding policy in our state favoring the resolution of legal disputes on the

merits. Courts almost universally favor a trial on the merits and when there has been a

reasonable excuse shown for the defaults there should be no objections to the trial to

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those who are reasonably diligent.” The Court then turned to the Iowa Rule of Civil

Procedure 1.977 which provides upon a motion for good cause the court may set aside a

default of the judgment thereon for mistake, inadvertence, surprise, excusable neglect or

unavoidable casualty. The motion must be filed after discovery of the grounds but no

more than 60 days after the entry of the judgment. The burden is on the movement to

plead and prove good cause. Here the Iowa Supreme Court found from the medical

report given by one of Mr. Hoosman’s doctors made it clear he had a lapse in

concentration and suffered confusion and the apparent cognitive impairment weighs in

favor of setting aside the default judgment. In addition, the court notes that he does have

a meritorious defense to the action under Iowa Code §447.7 which deals with a

redemption of a property by a person who is legal disabled or legally disabled. The

court found in this case the motion to set aside a default is appropriate vacating the

Court of Appeals judgment and reversing the district court judgment.

G. Mary Sue Early and Bankers Trust Company as Trustees of the Mary Sue

Early Revocable Trust Dated September 26, 1994 v. Board of Adjustment of

Cerro Gordo County, Iowa

Iowa Supreme Court No. 19-1672

This case deals with an issue of whether or not a local board of adjustment acted

illegally in approving a variance for residential improvement completed in violation of

the setback ordinance. The district court and the Iowa Court of Appeals both affirmed

the actions of the board of adjustment in granting the variance.

The issue on appeal to the Iowa Supreme Court is whether a board of adjustment

illegally granted an area variance that allowed residential property owners to construct a

pergola twenty-ones inches from the property line in violation of an ordinance requiring

a six-foot side-yard setback. The district court answered the question in the negative

and the Court of Appeals affirmed concluding a lesser showing is required for granting

an area variance versus a use variance. The Iowa Supreme Court disagreed with that

interpretation and vacated the decision of the Court of Appeals and reversed the

judgment of the district court.

The homeowners in this case, Mr. and Mrs. Saul, constructed a pergola on their

patio which was twenty-one inches from the side yard. The zoning ordinance in

question required a six-foot side yard setback. Unaware of the requirement, the Sauls

had the pergola constructed and then were notified by the county that this construction

was in violation of the county ordinance. They applied for a permit with the

administrator but it was denied due to the setback violation. The Sauls then filed an

application for a variance from the local ordinance. The variance application form

required the following: “The Applicant shall be held responsible to provide adequate

evidence that the literal enforcement of the ordinance will result in unnecessary

hardship. “Hardship” as used in connection with the granting of a variance means the

property in question cannot be put to a reasonable use if used under the conditions

allowed by the provisions of the Ordinance, the plight of the landowner is due to

circumstances unique to his property not created by the landowner; and the variance, if

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granted, will not alter the essential character of the locality.” The form contained

questions seeking evidence of unnecessary hardship which the Sauls did not answer.

Question 2 asked what was unique about the property and the Sauls responded “none”

and the third question was whether or not the variance would fit the character of the

area and they said, “The pergola is a great use of space and shades the front from the hot

summer sun which saves energy.” The board of adjustment granted the variance saying

that the pergola was nice and allowed for the construction to remain on the property.

A neighboring property owner the Mary Sue Early Revocable Trust filed a

petition for a writ of certiorari challenging the legality of the board’s action. Both the

district court and the Court of Appeals affirmed the decision of the board of adjustment.

The Iowa Supreme Court went through a very extensive analysis of boards of

adjustments and variances. The court stated that, “variance from the terms of the

ordinance that are not contrary to the public interest, where owing to special conditions a

literal enforcement of provisions of the ordinance will result in unnecessary hardship,

and so the spirit of the ordinance shall be observed and substantial justice done.” The

court went on to state that granting of the variance is limited and it is fundamental the

board may not legislate. They relied upon the Deardorf decision at 118 N.W.2d at 83 to

support their decision. The court state that if an applicant does not meet the required

unnecessary hardship showing granting of variance is an illegal act by the board.

The court went through an analysis of the unnecessary hardship standard in

Deardorf and found that to meet the unnecessary hardship standard “the restriction must

be so unreasonable as to constitute an arbitrary and capricious interference with the basic

right of private property . . . or that there are factors sufficient to constitute such a

hardship that would in effect deprive the owner of his property without compensation.”

The three-part test to obtain a variance is as follows: “(1) the land in question

cannot yield a reasonable return if used only for a purpose allowed in that zone; (2) the

plight of the owner is due to unique circumstances and not to the general conditions in

the neighborhood . . . ; and (3) the use to be authorized by the variance will not alter the

essential character of the locality.”

The court relied upon the Deardorf standard and indicated this case was

controlling standard for almost 60 years. The statement by the Iowa Court of Appeals

that an area variance has less of a burden than a use variance is not correct and both

variances still require the unnecessary hardship requirement. The court declined to

change their previous decisions to adopt a lessor showing from granting area variances.

They defined stare decisis and decided to rely upon precedent. The court concluded

“given our string of unbroken precedents over the last 60 years, legislative reliance on

those precedents and local reliance on those precedents they decline to adopt a different

standard for area variances now. Any change in the area at this point is best undertaken

by the legislative department.”

The court having concluded that Deardorf is the controlling standard found that

the Sauls had failed to establish that there was an unnecessary hardship to their property

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because of the zoning requirement for a six-foot side yard setback. The Sauls also

argued that because the pergola had already been built and they were unaware of the

local ordinance prior to completing construction they should be allowed to have the

pergola stand. The court rejected that argument. Therefore, the board of adjustments’

actions were illegal in granting the Sauls application for a variance and the district court

action was reversed. The Court of Appeals decision was vacated.

H. Cedar Point Nursery, et al v. Hassid, et al.

United States Supreme Court of the United States 20- 107 - Decided June 23, 2021

A California regulation grants labor organizations a “right to take access” to an

agricultural employer’s property in order to solicit support for unionization. The

regulation mandates that agricultural employers allow union organizers onto their

property for up to three hours per day, 120 days per year. Organizers from the United

Farm Workers sought to take access to property owned by two California growers -

Cedar Point Nursery and Fowler Packing Company. The growers filed suit in Federal

District Court seeking to enjoin enforcement of the access regulation on the grounds that

it appropriated without compensation an easement for union organizers to enter their

property and therefore constituted an unconstitutional per se physical taking under the

Fifth and Fourteenth Amendments. The District Court denied the growers’ motion

finding that there was no per se physical taking and the U.S. Court of Appeals for the

Ninth Circuit affirmed, rehearing en banc was denied over a dissent. The United States

Supreme Court found that the California’s access regulation constitutes a per se physical

taking. The Taking Clause of the Fifth Amendment applicable to the States through the

Fourteenth Amendment, provides: “Nor shall private property be taken for public use,

without just compensation.” When the government physically acquires private property

for a public use, the Takings Clause obligates the government to provide the owner with

just compensation. A different standard applies when the government, rather than

appropriating private property for itself or a third party, instead imposes regulations

restricting an owner’s ability to use his own property. To determine whether such a use

restriction amounts to a taking, the Court has generally applied the flexible approach set

forth in Penn Central Transportation Co. v. New York City, 438 U.S. 104 in considering

factors such as the economic impact of the regulation, its interference with reasonable

investment-backed expectations, and the character of the government action.

The U.S. Supreme Court found that California’s access regulation allows for a

right to invade the growers’ property and therefore constitutes a per se physical taking.

Rather than restraining the growers’ use of their own property, the regulation

appropriates for the enjoyment of third parties the owners’ right to exclude. The Court’s

precedents have thus treated government-authorized physical invasions as takings

requiring just compensation. As in previous cases, the government here has

appropriated a right of access to private property. Because the regulation appropriates a

right to physically invade the growers’ property - to literally “take access” - it constitutes

a per se physical taking under the Court’s precedents.

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The U.S. Supreme Court declines to adopt the theory that the access regulation

merely regulates, and does not appropriate, the growers’ right to exclude. The right to

exclude is not an empty formality that can be modified at the government’s pleasure.

The U.S. Supreme Court found that the fear that treating the access regulation as

a per se physical taking will endanger a host of state and federal government activities

involving entry onto private property is unfounded. First, the Court’s holding does

nothing to efface the distinction between trespass and takings. Second, many

government-authorized physical invasions will not amount to takings because they are

consistent with longstanding restrictions on property rights, including traditional

common law privileges to access private property.

The decision of the District Court was reversed.

I. Kristina Lewis v. Howard L. Allen Investments, Inc., et al.

Iowa Supreme Court No. 19-1640. Filed March 19, 2021

Howard L. Investments, Inc. sold certain property to Metro Investments on

contract. Several years into the contract a fire broke out on the property and a tenant of

Metro Investments, Kristina Lewis, suffered serious injuries. Lewis brought this action

for negligence suing both the buyers who leased her the house and Howard L. Allen

Investments, the seller of the property on contract to Metro. The District Court granted

summary judgment in Howard Allen Investments’ favor holding that the entity as

contract seller owed no duty to Lewis. On appeal the Plaintiff argued that Iowa’s

Uniform Residential Landlord and Tenant Act, 562A allows for the seller of a property

under a contract of sale to owe a duty to a contract buyer’s tenant. The issue before the

court is whether or not Allen owed a duty to the tenant to protect her from the harm she

suffered. In Junkin v. McClain, decided in 1936, we described a “contract of sale” as a

“contract for sale of real estate with a legal title of record retained by the seller, pending

payment of the purchase price, and upon completion of payment of such purchase price

the instrument transferring the legal title to be delivered to purchaser.” We held in that

case that the seller simply held legal title as security for the contract buyer’s payment of

the remaining debt. Another case, Hollingsworth v. Schminkey, we held that a seller on

a contract of sale was not liable for damages to a car caused by a rutted driveway. The

Plaintiff in this case, however, argues that Hollingsworth does not control because this

involves a tenant-landlord relationship. The tenant references Iowa Code §562A.6(5)

which defines his “landlord” as “the owner, lessor or sublessor of the dwelling unit or

the building of which it is a part.” The tenant argues Allen Investments’ name on the

deed makes it an “owner” under this definition. The Iowa Supreme Court determined

that Lewis’ interpretation - that where there is a distinct owner and distinct lessor in a

particular case then both are “landlords” and are thus jointly and severally responsible to

maintain the property - lacks textual (and contextual) support in this case. The context

in which the definitions in 562 are applied also undercuts a multiple-landlord reading as

well.

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The connection between “tenant” as a person with a rental agreement, and

“landlord,” who receives rent under that rental agreement, provides context for how the

court will define “landlord.” The Iowa Supreme Court found that Allen Investments

was not a landlord as defined by Iowa Code §562A and therefore owed no duty to the

tenant. The decision of the District Court was affirmed.

J. Danielle Putman v. Shawn J. Walther and Amy M. Walther

Iowa Court of Appeals No. 20-0195. Filed December 16, 2020

Danielle Putman purchased a property from Shawn and Amy Walther. After

purchasing the property she had a substantial water leak into her basement. The

disclosure statement signed by the Walthers revealed that the basement only had a “2010

sewer back up and SW wall seepage a few times.” She had Magee Construction

Company inspect her basement where they found there was significant water damage

and it would cost approximately $11,571.48 to repair the water damage to the basement.

In October of 2018, Putman sued the Walthers for both fraudulent misrepresentation and

negligent misrepresentation. She did not specifically mention Iowa Code §558A

although the court determined that Code section was the basis of her allegations. The

Walthers moved for summary judgment in November of 2019 noting that Putman failed

to designate an expert witness and can offer no testimony concerning causation and the

water intrusion into her home. Putman resisted the motion saying that city employees

saw the water and infiltration, Magee Construction conducted the inspection, neighbors

could testify as to water in the basement. In January of 2020, the District Court granted

the Walthers’ motion for summary judgment. The court held that expert testimony is

required on the issues of causation and damages because the cause of water damages to

the house and the costs to repair are not common knowledge to a lay person. Putman

did not meet this requirements in the court’s estimation holding “After review of the

record, the witnesses mentioned in Plaintiff’s Resistance were not formally designated

as experts nor were these individuals disclosed as experts in the Plaintiff’s discovery

responses. In reviewing the interrogatory responses submitted in support of the

various motions for summary judgment, the Court notes that no expert witness was

mentioned in the discovery responses. Further, Plaintiff makes summary allegations that

representatives were disclosed in the Resistances to the motions for summary judgment

but provides no actual interrogatory responses to support these allegations.”

Iowa Rule of Civil Procedure 1.500(2)(a) provides that “a party must disclose to

the other parties the identity of any witnesses the party may use at trial to present

evidence under Iowa Rules of Evidence 5.702, 5.703 and 5.705.” Under this disclosure

rule, a party must disclose the identity of expert witnesses. Plaintiff tried to assert that

her attachment of the construction company’s analysis of the situation to her petition

qualified that as a designation of her expert.

The Iowa Court of Appeals determined that summary judgment is appropriate

when a Plaintiff’s claims must be supported by expert testimony and the plaintiff fails to

designate an expert witness.

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The District Court’s granting of the motion of summary judgment was affirmed.

K. In the Matter of the Estate of Vera E. Cawiezell v. Tom Coronelli

Iowa Supreme Court No. 19-1214. Filed April, 30, 2021

See D Above. In this case the executors of an estate appealed the decision of the

District Court which held that a 20-year transfer restriction on devised farmland was an

impermissible restraint on alienation. The Court of Appeals affirmed the District

Court’s ruling. Vera Cawiezell died testate in April 2018. Her will provided, in part, as

follows:

I hereby will, devise and bequeath all of my farm real estate located . . .

in Muscatine County, Iowa, except my homestead referred to in Item 2

above, consisting of approximately 150 acres to my friends, Tom and

Beth Coronelli or unto the survivor of them, subject to the restriction

that they should not sell or transfer the property outside their immediate

family within a period of twenty years after my death.

The Iowa Court of Appeals as well as the District Court determined that this

provision was an unreasonable restraint on alienation. At the District Court the

executors tried to place in the deed transferring the property to the Coronellis a

restriction that if it did sell to anyone outside their immediate family the property would

revert back to Phyllis Knoche who is a residual beneficiary of the Vera E. Cawiezell

Estate.

The Iowa Supreme Court held that the ruling against restraints on alienation

bars direct restraints on the alienability of present or future vested interests. The

executors tried to argue that Iowa Code Section 614.24 allows for reasonable restraints

on alienation and property. The Iowa Supreme Court in affirming the Court of Appeals

as well as the District Court concluded that that statute is inapplicable. This Code

provision, also known as the Stale Use and Reversions Act, is intended to “simplify

land transfer in Iowa by shortening the title-search period for reversion, reverted

interests and use restrictions. There is nothing in this particular statute which governs

restraints on alienation.”

The executors also tried to rely upon the recent decision in In re Coe College,

935 N.W.2d 581 (Iowa 2019). In that particular case donor of property for a charitable

use may impose such conditions as many choose including a restraint on alienation. In

this case it is not a donor of property and it is not used for charitable purposes.

Exception to restraints on alienation as set forth in Coe College was not applicable to

this case.

The executor also tried to argue that the court should adopt §3.4 and 3.5 of the

Restatement (third) of Property: Servitudes which essentially provides that in each case

you need to determine the “rationality” or “reasonability” of a restraint on alienation

and it was a fact-intensive inquiry. The Iowa Supreme Court refused to adopt that

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position and has held that restraints on alienation are void in Iowa and in this case the

testamentary provision restricting the beneficiaries from selling or transferring the

devised property outside the immediate family for a period of 20 years following the

testator’s death is a prohibitive restraint on the alienation and is void. The Supreme

Court affirmed the Court of Appeals decision.

L. In the Matter of the Estate of Francis O. Glaser, Deceased v. Iowa Department

of Revenue

Iowa Supreme Court No. 19-0008. Filed April, 30, 2021

This case deals with a situation where a deceased individual transferred property

allegedly to defraud creditors prior to his death. He had numerous tax problems over

the years and in September of 2011 he transferred an undivided one-half interest in a

farm to Judy Shreve who then transferred it to the Defendant in this case, a Ms.

Kindsfather. In November of 2012, he transferred a city property to Kindsfather. Upon

his death the Iowa Department of Revenue sought to set aside the transfer of the

property in town and filed a motion to set it aside within the five-year period of time

applicable under Iowa Code §614.1(4) and 684.9(1). After the five-year period of time

had expired the Iowa Department of Revenue attempted to amend their motion to

include the farm property that had transferred a one-half interest back in 2011. This

motion to amend was beyond the five-year statute of limitations. The District Court as

well as the Iowa Court of Appeals allowed the amendment saying that relation back

was allowed under Iowa Rules of Civil Procedure 1.402(5). Under 1.402(5) of the

Iowa Rules of Civil Procedure it states that whenever the claim asserted in the amended

pleading arose out of the conduct, transaction or occurrence set forth or attempted to be

set forth in the original pleading, the amendment relates back to the date of the original

pleading. The District Court and the Iowa Court of Appeals felt that this addition of the

farm property arose out of the same fraud on the creditors. The Iowa Supreme Court

disagreed with that interpretation finding that there was simply nothing at all in the very

specific original motion relating to the earlier transfer of the farm property from Glaser

to Shreve. The court found that this was not a case of a mistake in the original pleading

where the party had been misnamed or left out or where the property had been

misdescribed. This is not a case of a previously unpled theory arising out of the same

fact alleged in the original pleadings. Instead, the Department has a proposed

amendment attacking the transfer of a property that is nowhere mentioned in the

original pleading. The Supreme Court therefore found that the proposed amendment

does not relate back to the original motion and therefore was barred by the statute of

limitations under 614.1(4) and 684.9(1). The court also addressed as to whether or not

the district court had given excessive relief in allowing for the setting aside of the

transfers and allowing all of the proceeds from the sale of the property to remain with

the estate. The court found that this an excessive relief and that any proceeds from the

sale of the property should only be used to pay the back debt and the balance paid to the

alleged owners of the property .

M. Mlady v. Dougan

Iowa Court of Appeals No. 19-1689. Filed December 16, 2020

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This particular case had been before the Iowa Court of Appeals previously

regarding whether or not a right of redemption could be assigned by the debtor to a third

party. The Court of Appeals determined that yes the right of redemption could be

assigned. The question in this appeal is whether or not an individual who redeems a

property from a sheriff’s sale and does not tender the correct amount to redeem but

tenders the additional amount after the redemption period has expired may redeem.

Also the issue before the court was what the interest rate was going to be on this loan for

the period of redemption. The Iowa Court of Appeals determined that the interest rate

on this particular redemption was a default rate of 21% rather than the rate set forth in

the note. Also the court determined that because the holder of the redemption certificate

did not pay the full amount due to redeem within the one-year period, the redemption

was not effective. The statutory right to redeem set forth in Iowa Code §628.3 dates to

1851. Since that time, our supreme court has observed that the redemption statute ”must

be strictly complied with.” Failure to act within the one-year redemption period puts the

holder of the right of redemption “beyond the reach of equitable relief.” Under such

circumstances, the court has no discretion nor power of mercy to allow redemption. The

court here found that the amount that the holder of the redemption certificate was to

redeem was short on the amount that was needed to redeem they tried to pay the balance

after the one-year redemption period. The Court of Appeals found that Dougan failed to

strictly comply with the statutory requirements to pay the full amount due within the

redemption period. As a result, the redemption attempt was untimely.

N Koll v. Wells Fargo Bank, N.A.

Iowa Court of Appeals No. 20-1227. Filed April 4, 2021

Heidi Koll appeals an order dismissing her petition for declaratory judgment and

granting summary judgment to Wells Fargo Bank on the enforceability of its mortgage

lien following a bankruptcy discharge.

Christopher and Heidi Koll filed for Chapter 7 bankruptcy in federal court,

claiming their current residence as an exempt homestead. See Iowa Code §561.16.

Wells Fargo Bank did not object to the exemption despite holding a mortgage lien on the

property for a home equity loan. The bankruptcy court granted the Kolls’ discharge.

Relying on that discharge order, Heidi sought a declaratory judgment in state court that

the bank’s mortgage lien was void and unenforceable. The district court decided the

mortgage lien “passed through” the bankruptcy proceeding and remained enforceable

against the Kolls’ property. In this case it is clear that the Wells Fargo Bank had a

mortgage lien on the homestead of the Kolls for a home equity line of credit. The

original note and mortgage were taken out by Kolls husband and not Heidi as they were

married after the mortgage had been placed on the property. The Kolls filed for

bankruptcy and sought protection under the homestead exemption. The bankruptcy

ordered the Kolls discharge in early August. After the bankruptcy proceeding Wells

Fargo mailed Christopher a notice of right to cure for default for missing a payment on a

home equity line. The letter was sent to Kolls. In reaction to the letter, Heidi brought a

declaratory judgment action against the bank to contest the validity and enforceability of

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the second mortgage lien. She alleged the line of credit between her husband and the

bank should be voided because she did not consent to it, the bankruptcy court discharged

the obligation and the mortgage lien impaired her homestead right. Wells Fargo moved

to dismiss the petition for failure to state a claim upon which relief can be granted. The

district court granted summary judgment to the bank. The court found that the federal

cases holding that a mortgage lien survived a bankruptcy discharge were on point. The

petition for declaratory judgment was dismissed. The narrow question before the court

in this case is whether the enforceability of a mortgage lien following discharge of the

underlying debt must be decided by state law rather than federal bankruptcy law. The

federal bankruptcy court when they discharge a debtor discharges the personal

obligation but does not remove the lien on the property that was consented to by the

borrower. Put simply a discharge “extinguishes only one mode of enforcing a claim -

namely, an action against the debtor in personam - while leaving intact another - namely,

an action against the debtor in rem. The plaintiff in this case tries to cite two older Iowa

cases for the general rule that a mortgage is “a mere incident” to the debt, and not an

interest in real property. From there the plaintiff reasons a lien cannot survive if the debt

has been discharged. The Iowa Court of Appeals and the District Court found that

Heidi’s argument fails. Under both federal and state law the bank could bypass the

bankruptcy proceeding, yet preserve its in rem claim. Because the bank obtained its

mortgage lien 15 years before Heidi’s bankruptcy petition, Wells Fargo was entitled to

judgment as a matter law that the lien survived the discharge of her personable

obligations.

O. David S. Griffith, et al .v. The City of LeClaire, Iowa

Iowa Court of Appeals No. 20-0533. Filed January 21, 2021

The Plaintiffs-Appellants appealed the annulment of a writ of certiorari related to

the city’s rezoning notice requirements. Kwik Trip wanted to rezone certain property in

LeClaire, Iowa, from an “R-1 Single Family Residential District” to a “C-3 Highway

Oriented District.” The requirements to have this completed amounted to filing a

rezoning application and having a P&Z public meeting. The city has to mail public

hearing notices and there has to be a city council public hearing. The issue in this case

is whether or not a proper notice was given to the homeowners within 200 feet of the

location of the rezoning site as required by the City of LeClaire city ordinance. LeClaire

City Code III.53.5 provides as follows:

Notice of the time and place of any such public hearing conducted under

this section will be published at least once, not less than seven (7) days,

nor more than twenty (20) days before the hearing, in a newspaper of

general circulation in the City of LeClaire. In the case of a proposed

amendment to the district map, said notice will also be delivered by

certified mail not less than seven (7) days, nor more 5 than twenty (20)

days, before the hearing to all property owners whose property boundaries

lie within two hundred feet (200'), inclusive of any and all public and

quasi-public right-of-way distances, of the boundaries of the property

upon which the proposed amendment is to be considered.

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The property owners in question complained that the ordinance requires that all

property owners receive a certified notice, separately addressed to each individual

property owner. Here, the four property owners who did not receive a certified mailing

addressed in their individual names challenged the rezoning of the property. They do

state that their spouse was given notice of the rezoning request by certified mail and that

they were aware of the meeting. The parties in this case were not assuming they were

not informed or deprived of the opportunity to object; instead, they complain about not

receiving their own individual notice. The court found that the notice being sent to the

address of each affected property to be sufficient as it was received by a spouse or co-

owner of the property that could be reasonably expected to inform the joint owner. The

district court rejected their argument and on appeal the issue before the court was based

upon the language of the city ordinance. Is the zoning change void because a certified

mailing of the notice went to only one property owner of each household rather than to

each individual owner directly? The Court of Appeals affirmed the District Court

finding that there was substantial compliance with the city ordinance. The property

owners tried to argue that there had to be strict compliance with the city ordinance, that

the court here finds that in cases where there were issues regarding notice there was

actually no notice given and no hearing was held before the rezoning was approved. In

this case, notice was given and there was a substantial compliance with the statute to

carry out the intent for which it was adopted. Therefore the court found that the giving

of the notice to at least one of the property owners at the property location was sufficient

to comply with due process and with the intent of the statute.

P. Angstrom v. Calhoun County, et al.

Iowa Court of Appeals No. 20-0421. Filed June 30, 2021

Kelly and Cheryl Angstrom purchased property in Calhoun County from Ted

and Jan George. The Georges had a dispute with Calhoun County about the extent of

their property on Twin Lakes. They entered into a lease with the county concerning

their dock. It allowed them to lease the property for a period of 50 years at a $1 per

year. The Angstroms bought the George’s property and had some issues with the county

regarding access to the beaches. The county terminated the lease and in a separate letter

the county contented the lease was “void ab initio” because before approving it the

Calhoun County Board of Supervisors had not followed the notice requirements in

section 331.305. This litigation then followed and the District Court included the lease

was void. Iowa Code §331.361 provides:

In disposing of an interest in real property by sale or exchange, by lease

for a term of more than three years, or by gift, the following procedures

shall be followed. The board shall set forth its proposal in a resolution and

shall publish notice of the time and place of a public hearing on the

proposal, in accordance with 331.305

The Angstrom’s view was that this arrangement with the Georges was not a

lease, however, a disposition of an interest in property. The district court as well as the

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Iowa Court of Appeals disagreed because of the langue in the document where it said

this property is being leased solely for the purposes of placing a dock on the lake.

Therefore the county was required to comply with the notice provision. The Angstrom’s

tried to argue that Iowa Code §589.31 was applicable; Iowa Code §589.31 is essentially

a statute of limitation indicating that:

All deeds and conveyances of the land executed by or purporting to be

executed by the governing body of a city or a county which deeds or

conveyance purport to sustain the record title, are legalized and valid after

10 years.

The issue before the court was whether or not this conveyance was a conveyance

of land which purports to sustain the record title. The court determined that this

transaction was not to sustain the record title and therefore found that Iowa Code §589.1

was not applicable. The lease was void.

Q. Schueller v. Gillies and Stone Hill Community Association

Iowa Court of Appeals No. 19-2114. Filed January 21, 2021

Steven Schueller and his wife Allison Gilles owned a townhome in Dubuque,

Iowa. It was part of the Stone Hill Community. The townhome was purchased in 1978.

Schueller and Gilles moved away from Dubuque and rented out the property for a

number of years. Gilles and Schueller divorced in 1999 and the divorce decree declared

Gilles and Schueller tenants in common to the townhouse. The property was rented out

by Schueller for a number of years and Schueller had the primary responsibility to

maintain and keep the townhome occupied. After 2011, Schueller did not pay any

assessments to the Stone Hill Community Association. He took the position he was not

required to pay the assessment because Stone Hill’s covenants had expired. They were

placed on the property in 1976 two years before Schueller and Gills bought their

townhouse. The Association brought an action against Schueller in 2012 in small claims

seeking to collect the unpaid assessment. The magistrate agreed with Schueller and

dismissed the case stating that the use restrictions had expired and they had no basis for

the claim. In 2018 Gilles received a notice regarding the assessments from the Stone Hill

Association and she brought this action to petition for partition of the townhouse.

Schueller answered and pled an affirmative defense of adverse possession. Stone Hill

then intervened to collect unpaid assessments. The district court (1) concluded Gillies

and Schueller own the townhouse as tenants in common, (2) granted Gillies’s partition

claim, (3) ordered Schueller and Gillies to take reasonable steps to sell the townhouse

and then share the net sale proceeds, (4) rejected Schueller’s claim of adverse possession

and (5) granted judgment in favor of Stone Hill and against Schueller and Gillies equal

to the amount of the unpaid assessments of $24,652.44. Schueller appealed the decision

claiming the district court erred in finding he failed to meet the elements of adverse

possession and awarding Stone Hill unpaid assessments that accrued from 2013 to 2019.

Schueller tried to claim that he had title to the entire property based upon adverse

possession where a party must prove adverse possession by establishing hostile, actual,

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open, exclusive and continuous possession, under claim of right or color of title for at

least 10 years. In the case of a tenants in common situation the burden of proof is much

higher. Between cotenants the court stated that the statute does not commence to run

until there has been an ouster, actual or constructive, by the occupying claimant. A

family relationship among contending cotenants places a stronger burden of proof on

those asserting adverse possession to show the necessary elements. Here the court found

that there was no act by Schueller which amounted to a constructive ouster of Gilles to

start the statutory period and even if there was some type of act as a constructive ouster

Gilles was never notified of that act. Therefore, the claim for adverse possession was

denied by the District Court and affirmed by the Court of Appeals. The Supreme Court

has held the burden of proof in an adverse possession claim by a cotenant is high stating:

As between tenants in common, acts and words which will amount to an

ouster must not be of a doubtful character, but clear and unambiguous.

The reason is that the possession itself is rightful, and does not imply

adverse possession as would that of a stranger, so that the presumption of

possession in recognition of the rights of cotenants must be overcome by

acts and declarations clearly inconsistent therewith brought home to the

cotenants. Any other rule would lead to gross injustice and enable a

designing tenant in common to turn the kindness and forbearance of [their]

cotenants into a means of depriving them of their equal interest in the

common property without consideration.

On the issue of unpaid assessments, Schueller’s claim was that the covenants had

expired which contain the assessments and the new covenants which were enacted a

couple of years after the expiration of the old assessments were not signed by Schueller

and therefore were not binding upon him. Schueller also made the argument that

because of the action in small claims court that res judicata applied. The Iowa Court of

Appeals went through an analysis of decisions by small claims courts finding that a

small claims adjudication cannot provide a basis for issue preclusion but can claim

preclusion. Here the claim preclusion was not applicable because of the fact that the

claim for dues occurred after the small claims decision. The court reviewed what is

required for claim preclusion that a party must show: (1) the parties in the first and

second action are the same parties or parties in privity, (2) there was a final judgment on

the merits in the first action, and (3) the claim in the second suit could have been fully

and fairly adjudicated in the prior case. Here the claim preclusion argument fails

because these assessments occurred after the small claims decision. The next issue

raised by Schueller was that these covenants expired by virtue in Iowa Code §614.24

which provides that “no action based upon any claim arising or existing by reason of the

provisions of any deed or conveyance, reverted interest or use restrictions in and to the

land therein described shall be maintained either at law or in equity in any court to

recover real estate in this state or to recover or establish any interest therein or claim

thereto, against the holder of the record title to such real estate in possession after 21

years from the recording of such deed of conveyance …”

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Schueller argued that the covenants expired and therefore they cannot bring this

action for the assessments. Stone Hill disagrees. In their view the assessment

provisions of the covenants were never use restrictions for purposes of Iowa Code

§614.24(1) so therefore they did not expire. The Iowa Court of Appeals went through

an analysis of what a use restriction was and found that the assessment provisions were

not use restrictions they were merely an obligation to pay money and therefore the

covenants were still in existence. The Iowa Court of Appeals held that Stone Hill’s

assessment provisions do not need to be revived unless they actually expired. They

could not have expired unless they were use restrictions under the pre-amendment

language of Iowa Code §614.24. We conclude they were not so we need not decide

whether the amendment could have reinvigorated them. The court affirmed the District

Court and found that the defendants owed the assessment amount.

R. Midstates Bank, N.A. v. LBR Enterprises, LLC, et al.

Iowa Court of Appeals No. 20-0336. Filed May 12, 2021

Edward and Barbara Tomas appeal a decision of the district court to reform a

warranty deed based upon an alleged scrivener’s error. The Tomases owned a 234 acre

farm which consisted of two parcels, a 202-acre farm and a 32-acre homestead. Their

oldest son, Eddie, farmed the land for the first year and entered into some arrangements

with a company called LBR Enterprises. LBR Enterprises agreed to purchase the

property from the Tomases understanding that the Tomases wanted to retain a life estate

in the homestead. The sum of the dispute is whether the homestead included a house

only or the house plus the 32 acres. A purchase agreement was entered into in 2013 that

provided in part as follows:

“LBR Enterprises agree to grant a life estate to Edward and Barbara

Tomas in the house which they currently reside on the property until such

time as they decide to move, at which time the house will then revert to

the ownership of LBR Enterprises. Edward and Barbara Tomas will pay

for the electric and water utilities to said residence until they move.”

There was some dispute as to what that clause meant but at the time of the

closing the party who prepared the deed which was a third party title company prepared

the deed with the following language:

“For the consideration of One and 00/100 Dollar(s) and other valuable

consideration, Edward A. Tomas and Barbara E. Tomas, husband and wife

as joint tenants . . . do hereby Convey to LBR Enterprises, LLC, with a life

estate interest in Edward A. Tomas and Barbara E. Tomas . . . whether one

or more the following described real estate in Ringgold County, Iowa.”

The missing language in the deed was that it would be in the house which they

currently reside on the property only.

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Midstates made a loan on the property realizing there was a life estate in the

house to the Tomases but not realizing that the life estate was actually in the entire

property. For a number of years there were no issues but then LBR Enterprises

defaulted on the loan and there was some negotiation between the parties regarding

resolving the debt. When the new purchaser did a title search they found that the life

estate was on the entire property and that was the objection on the part of the new buyer.

In May of 2017, Midstates petitioned for reformation against LBR and the Tomases

claiming that the deed did not reflect the true intent of the parties because a mutual

mistake in a scrivener’s error. The Tomases raised the affirmative defense that

Midstates lacked standing to seek reformation and after a trial the court reaffirmed the

deed to provide that the life estate was in the house only. The Tomases appealed.

In order to be successful on a reformation claim there is a two-prong test on

standing requiring the plaintiff to show a specific personal or legal interest in the

litigation and injury in fact. The court found that the Tomases had a more precisive

argument regarding the first element of reformation but the Iowa Court of Appeals

found that even without privity it is not in their analysis. The Iowa Court of Appeals

found that the first prong could be met by Midstates alleging some type of injury

different from the population in general. Here it was clear that Midstates would suffer a

loss if they could not sell the property because of the life estate on the entire property

and therefore they satisfied the first element. The second element of injury in fact which

has much in common with the first element of injury must show harm that is “concrete”

and “actual or imminent” rather than “conjectural” or “hypothetical.” The court found

that Midstates clearly had an injury in fact because the security interest of Midstates in

the property would be diminished substantially with the life estate in the entire farm.

On the merits of the case the Tomases alleged that the bank did not meet its

burden of proof (1) the scrivener’s error created a mistake in the deed, (2) the deed did

not reflect the true intent of the parties and (3) the purchase agreement did not merge

into the subsequent deed. The court found that there was a scrivener error as creating a

mistake in the deed and it was not the true intent of the parties. The fact that the

purchase agreement normally merges into a deed was not applicable here as there are

exceptions to the merger doctrine and one of those exceptions is a mistake. Here it was

clear there was a mistake and therefore the merger doctrine did not apply. The court

found that the reformation was appropriate and reformed the deed to reflect that the life

estate was only in the home not on the entire farm.

S. McNaughton v. Chartier, et al.

Iowa Court of Appeals No. 19-1681. Filed June 16, 2021

Willard McNaughton owned certain property off Highway 20 in Lawton, Iowa.

The defendants in this case Jeanine and Stanley Chartier who owned Char-Mac, Inc. are

McNaughton’s sister and brother-in-law. They approached McNaughton back in the late

1990s to see if he would grant an easement for ingress and egress to the property to the

east which they were proposing to buy and place on the property an assisted-living

facility. He agreed to that easement and in September of 1999 the parties entered into an

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easement agreement in which McNaughton conveyed the Chartiers an easement for

ingress and egress over and across McNaughton’s property said easement being “for the

exclusive use and benefit of Chartier and the residents, guests and other invitees of the

assisted living facility located on Chartiers’ property.” The agreement provided “the

easement rights granted herein may not be assigned by Chartier to any other party or

parties without the express written consent of McNaughton or his successors or assigns,”

and the agreement “creates a ‘private’ easement granted for the use and benefit of the

parties and is not to be construed as an easement for the use and benefit of the general

public. The agreement cannot be modified except by written instrument executed by all

parties or their legal successors and/or assigns.” Over the course of the time that the

property adjacent to McNaughton was owned by the Chartiers the city approached him

on three different occasions to see if he would dedicate the easement area for public use.

He declined on all three occasions. There is a street out in front of the property that was

dedicated for the public use and adjoined and is adjacent to Highway 20. In late 2017 or

2018, Jeanine Chartier began experience health issues and decided it was time to retire.

She hired broker to assist in finding a buyer for their property and entered discussions

with AbiliT Holdings, LLC about the latter purchasing the east property and assisted-

living facility. They advised the AbiliT about the easement situation. Cartier requested

McNaughton enter a clarification of easement to allow for the purchaser to have the

rights to the easement. McNaughton declined and insisted upon large sums of money to

be paid before he would agree to any modification of the easement. The property was

sold to AbiliT. Prior to the closing of the sale, McNaughton initiated this litigation

precipitating the appeal. In his petition for declaratory judgment, injunctive relief and

damages, McNaughton stated he has not provided express written consent to the

assignment of the rights under the easement to Char-Mac, Inc. or anyone else and Char-

Mac’s use of the easement as well as McNaughton’s property south of the easement has

caused and continues to cause damages to McNaughton. The district court found that

the easement had been publicly dedicated to the City of Lawton, the easement was

appurtenant to adjoining property and the lower court awarded common law attorney

fees to the defendants. McNaughton appealed on all three of these grounds. The Court

of Appeals in reviewing the issues before it concluded that the property had not been

dedicated to the public because in order to have a dedication of property to the public it

has to be a question of fact and must be proven by the party relying upon it. To have an

express declaration there must be an appropriation of the land by the owner for a public

use and actual parting of with the use of the property to the public and the actual

acceptance of the property by the public. The first element “turns on the intent of the

offeror or dedicator.” Here it is clear that McNaughton had no intention of dedicating

his easement to the public and, in fact, declined to do so on three different occasions.

The District Court seemed to indicate that the property was dedicated because

McNaughton consented to the city installing a public street and improvements adjacent

to the easement area but there was no indication that he had dedicated the property to the

city.

The next issue was whether or not the easement created was an appurtenant of

the easement which belongs and attaches to the property. Here it was clear that there is

not an appurtenant easement because it was specifically stated to be a private easement

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and therefore not appurtenant to the property. The district court identified the easement

agreement as allowing for “ingress and egress” language was “more specific and

therefore trumps the generalized ‘private’ easement statement.” The Court of Appeals

found just the opposite where private listed in the easement trumps the ingress and

egress. As far as the attorney’s fees the court found no basis for awarding the attorney’s

fees to the defendant as now the defendants were the losing party. The Court in

conclusion determined that the evidence is insufficient to support a finding of public

dedication. The easement is not appurtenant in nature and the defendants are not

entitled to award of common law attorney’s fees.

T. Northwest Iowa Mental Health Center d/b/a Seasons Center for Behavioral

Health v. G. William Phelps and Applewhite Dental, LLC

Iowa Court of Appeals No. 20-0767. Filed April 14, 2021

This case deals with a situation as to whether or not certain items located in a

building were actually fixtures or trade fixtures that went with the practice rather than

with the building. Phelps is a dentist. He purchased the building in Spencer and a

dental practice from another dentist in 1994. In 2011 he sold his practice and all of its

assets to AppleWhite Dental, LLC. AppleWhite then leased the building from Phelps,

and he became an employee of AppleWhite. The contract for sale of Phelps’s practice

assets specifically included all tangible personal property “including, without limitation,

inventory, supplies, equipment, machinery, computers, furniture, fixtures, devices, and

instruments.” Seasons is a non-profit organization. They entered into an option

agreement with Phelps. In 2015 they went ahead and executed the purchase of the

building and the lease with AppleWhite terminated. Following the purchase Seasons

took possession of the property and found the fixtures were removed. The assets

removed including, among other things, dental chairs, x-ray machines, lighting,

speakers, and cabinets. Seasons filed for a breach of contract based on alleged damage

done to the building when the trade fixtures were removed. The issue before the court

was the ownership status of the trade fixtures removed from the building. The district

court found that the trade fixtures removed from the building were trade fixtures that

belonged to AppleWhite and did not go with the building. Under common law personal

property become a fixture when (1) it is actually annexed to the realty, or to something

appurtenant thereto; (2) it is put to the same use as the realty with which it is connected;

and (3) the party making the annexation intends to make a permanent accession to the

freehold. The court found that the paramount concern is the intention of the party

annexing the improvement. The court here agreed with the district court that Phelps’

intention for installation of the trade fixtures concerning both use and character was to

support his dental practice and not become permanent additions to the building. The

decision of the District Court was affirmed.

U. King v. Ward Smith and Carolyn Stanley

Iowa Court of Appeals No. 20-0137. Filed June 16, 2021

This case deals with an attempted transfer upon death deed in the State of Iowa.

Charley and Lillie Smith own certain property as joint tenants. In February of 1974 they

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executed a warranty deed. The warranty deed conveyed the family farm to their children

Mona Vee King, Carolyn Stanley and Ward Smith as tenants in common. Mona Vee

King was the mother of the Plaintiffs in this case, Ronald Laine King, Lillie Lorraine

Jackson and Mona Ray Bennett. The deed also included the following language:

Grantors herein reserve unto themselves, and each of them, or the survivor

of them, for their natural lives or the natural life of the survivor of them,

all the rights of possession, rents and profits of the above described real

estate, and further reserve unto themselves, each of them, or the survivor

of them, the right to mortgage, sell, or transfer said property for and during

their natural life and the natural life of the survivor of them, in accordance

with Supreme Court decisions of the State of Iowa, without the consent of

the grantees herein. It is understood by grantors herein that they are

creating or retaining an estate in joint tenancy with right of survivorship in

the above described property for themselves as husband and wife.

The deed was recorded in 1982. Charlie Smith died in approximately 1993. Thereafter

in 2006, Lillie Smith executed another “warranty deed” where she attempted to convey

the property to just two of her children - Carolyn Stanley and Ward Smith. She left out

the mother of the plaintiffs, Mona Vee King because she had certain Medicaid

obligations that she was afraid would cause problems for the other two children and the

farm. The Plaintiffs’ mother died in 2010. Carolyn Stanley realized the 2006 deed was

not yet recorded so Lillie Smith executed another warranty deed in 2010. The plaintiffs

in this case do not believe they had any ownership interest in the property after their

mother died but because of some payment from MidAmerica Energy they determined

they did have an interest according to MidAmerican Energy. An affidavit pursuant to

9.8 was executed by all of Mona Vee King’s children stating their mother died in July

2010 and the five people signing were her survivors and were in complete, actual and

sole possession of the one-third interest in the farmland. The plaintiffs tried to argue

that they owned a one-third interest in the farmland. In 2018, the plaintiffs petitioned

the court to partition the family farm. The district court in reviewing the deed

determined that it was a transfer upon death deed and that the deed executed by Lillie

Smith was not valid excluding Mona King’s interest in the property because all she had

was a life estate at that time. The petition to partition was allowed and the defendants in

this case appealed the decision. The Iowa Court of Appeals in reviewing this deed

found that it was transfer on death deed or what they call a beneficiary deed where the

deed automatically conveys the property to a designated person upon the property

owner’s death. It avoids probate by allowing a property owner while living to make a

grant of real property to the owner’s heirs but does not effect a change of ownership

until after the grantor’s death. Transfer on death deeds have been recognized and

allowed via statute in 13 states who have enacted the provision that would allow for a

transfer upon death deed to avoid probate. Iowa has not done so. The Iowa Court of

Appeals determined that because transfer on death deeds have not been recognized in

Iowa that the deed executed by Lillie and Charley Smith in 1974 was not authorized in

Iowa at the time and the court does not sanction at this time. Therefore, the court

determined that no delivery had occurred and therefore the deed was invalid. The Court

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of Appeals disagreed with the district court which found that this deed was valid and the

Court of Appeals held that therefore the deed was invalid and the Smiths retained the

property as joint tenants. The interest of Lillie Smith must pass through her estate as

these deeds were void and unenforceable.

V. Ravindra Mallavarapu v. City of Cedar Falls and Thunder Ridge West

Owners Association

Iowa Court of Appeals No. 19-1792. Filed December 16, 2020

This case deals with whether the Plaintiffs were the intended beneficiaries or

incidental beneficiaries of a storm water maintenance agreement entered into between

the City of Cedar Falls and Thunder Ridge West Owners Association. There was an

area of a wet detention basin abutting their backyards of the Plaintiffs. The Plaintiffs in

this case petitioned for specific performance of the maintenance provisions in a 1999

amendment to a 1997 storm water drainage and detention easement between the city and

Thunder Ridge West Owners Association. The district court rejected the argument

finding that the city engineer had the sole discretion to determine whether the retention

basin needed maintenance work. The Iowa Court of Appeals in reviewing the case

found that specific performance was not an appropriate remedy in this case but they held

for different reasons. They found that the homeowners did not have standing to bring

the action. The court determined that the only parties are the intended beneficiaries of

the easement agreement or someone who is a party to the actual easement agreement.

The court found that these homeowners were not the intended beneficiaries of the

easement agreement and were only incidental beneficiaries. The incidental beneficiaries

do not have standing to bring an action only intended beneficiaries. The court held that

in order to have standing to assert a breach of contract, a party not privy to such contract

must be regarded as a direct beneficiary of the contract, and not as an incidental

beneficiary. The Iowa Court of Appeals found that neither the storm water detention

easement nor the recreation easement involving this matter confers them standing.

There was no intent to confer an expressed benefit to these homeowners. The district

court’s decision was affirmed but based upon standing rather than the discretion of the

city engineer.

W. Julie A. Kraft v. Larry Kraft, Kenneth Kraft, et al.

Iowa Court of Appeals No. 19-1586. Filed April 28, 2021

In 1941, Ruth Foster obtained certain real property by way of warranty deed. In

her last will and testament, dated 1962, Ruth devised said property as follows:

to my daughter Frances I. Bainbridge for as long as she lives, and upon her

death to Barbara H. Hirschman and Margaret A. Kraft or the survivor for

as long as they shall live, and upon the death of the survivor to the

children of Barbara H. Hirschman and Margaret A. Kraft share and share

alike.

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Ruth died in 1963. Her estate was opened shortly thereafter. Julie was born to Margaret,

Ruth’s daughter, in September 1964. The appellees include Julie’s brothers - Larry,

Kenneth, and Douglas Kraft - as well as her cousins and children to Barbara - Donald,

David, Myron, and Frank Hirschman. The probate inventory filed in January 1965 listed

the appellees as beneficiaries and heirs at law, but not Julie. In December of 1968 a

final report and application for discharge was filed. An order approving the final report

and a change of title was entered establishing title in “Larry Kraft, Kenny Kraft and

Douglas Kraft; Donald Hirschman, Frank Hirschman, David Hirschman and Myron

Hirschman, subject to the life estate of Francis I. Bainbridge and upon her death life

estate to Barbara H. Hirschman and Margaret A. Kraft or the survivor for as long as they

shall live.” Julie reached the age of majority in 1981. Frances died in 1985. Barbara

died in 2004 and Margaret died in 2018. Shortly thereafter, Frank recorded affidavits of

death terminating the life estates of Barbara and Margaret and noting the “real estate has

passed to” the appellees. Roughly a month later, Julie filed an affidavit of death

terminating life estates alleging she was a member of the class of beneficiaries to the real

property and she “made this affidavit for the purpose of correcting affidavits prepared

and filed by Frank Hirschman,” which “incorrectly omitted her as a member of the class.

In July, Julie filed a petition for partition and quieting of title arguing she had a one-

eighth interest in the property. The court determined that under Iowa Code §§614.17,

614.17A, 633.487 and 633.488 Julie did not have an interest in the property. On appeal

the Iowa Court of Appeals agreed with the district court finding that because she was not

listed in the probate inventory or on the certificate of title that she did not have an

interest in the property by virtue of the statute of limitations of Iowa Code §614.17 and

614.17A. The district’s court action was affirmed.

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Legislation

1. House File 561 - Relates to the perfection of a mechanics’ lien and

attorney’s fees on a bond given in lieu thereof

2. House File 554 - Relating to the acquisition of title to abandoned property

in an unincorporated area of a county.