IN THE COURT OF APPEALS OF IOWA
No. 17

- 1021 Filed July 18, 2018

SIBLEY STATE BANK , Plaintiff

- Appell ee ,
vs. DALE W. BRAAKSMA, DANNA S. BRAAKSMA, JESSE DALE BRAAKSMA, and BRAAKSMA GRAIN FARMS, INC. , Defendant s - Appell ants

.

________________________________________________________________ Appeal from the Iowa District Court for Osceola County, Patrick M. Carr , Judge.

Farm debtors appeal the district court’s appointment of the bank as a receiver, the denial of a continuance, and the grant of summary judgment to the bank in a foreclosure action. AFFIRMED.

Curt Krull of Waagmeester Law Office, P.L.C. , Rock Rapids , for appellant s

. Daniel E. DeKoter of DeKoter, Thole, Dawson & Rockman, P.L.C. , Sibley , for appellee.

Considered by Vaitheswaran, P.J., and Potterfield and Tabor, JJ. Carr, S.J., takes no part.2

TABOR, Judge. For more than a decade, Sibley State Bank loaned money to Dale and
Danna Braa ksma, their son Jesse, and Bra aksma Grain Farms, In c. (collectively the Braaksmas) and secured mortgages on their farmland as collateral. This appeal involves the bank’s foreclosure action commenced in 2016. The
Braaksmas take issue with three district court rulings : (1) appointment of the bank as a receiver under Iowa Code section 680.1 (2017); (2) denial of their motion to continue under Iowa Code section 645.15; and (3) grant of the bank’s motion for summary judgment on the foreclosure. Finding the district court acted properly in all three respect s , we affirm.
I. Facts and Prior Proceedings At the time, t he Braaksma s own ed about 800 acres of farm land in Osceola County

. Dale and Danna filed articles of incorporation creating Braaksma Grain Farms, Inc. in 2000. Dale is corporat e p resident and Danna is the treasurer and secretary. Their son, Jesse plays an active role in the family’s farm ing operations. From 2004 to 2014 , Sibley State Bank loaned the Braakmas money through six promissory notes. Dale and Danna signed t wo of the six promissory notes, Jesse signed three of the promissory notes , and Braaksma Grain Farms signed

one. The Braaksma s ’ notes and obligations were secured by real estate mortgages encu mbering more than half of their total acres of land

. 1

1 The record shows a series of three unconditional guaranties of the bank obligations: the first executed by Dale and D anna in January 2004, holding them liable for all of Jesse’s obligations; the second executed by Braaksma Grain Farms ’ in October 2013, h olding the corporation liable for all of Dale and Danna’s obligations; and the third executed by Dale and Danna in May 2014 for Braaksma Farm’s obligations to the bank.3

I n e arly 2016, the Braaksmas missed payments on their promissory notes. By July 15, 2016, all the notes were in default. The Braaksmas owed the bank in

excess $ 1 .5 million. The bank sent the Braaksmas notice of right to cure the default , but forty

- fiv e days elapsed without payment. The parties participated in

me diation as required by Iowa Code section 654.2C 2 but did not come to an agreement. The bank requested a mediation release in August. In September, the bank’s attorney sent a “demand for payme nt of the accelerated balances of the promissory notes” in accord with a clause in the promissory notes and Iowa Code
section 654.4B

. 3 In October, t he bank proceeded with a foreclosure action

. 4
I n February 2017 , the bank asked to be appointed as the receiver under the terms of the Braaksmas’ mortgages. The application asserted, “The property

2 This section provides:

A person shall not initiate a proceeding under this chapter t o foreclose a deed of trust or mortgage on agricultural property, as defined in section 654A.1, which is subject to chapter 654A and which is subject to a debt of twenty thousand dollars or more under the deed of trust or mortgage unless the person receive s a mediation release under section 654A.11, or unless the court determines after notice and hearing that the time delay required for the mediation would cause the person to suffer irreparable harm. Title to land that is agricultural property is not affect ed by the failure of any creditor to receive a mediation release, regardless of its validity. Iowa Code § 654.2C

. 3 This section provides:

Prior to commencing a foreclosure on the accelerated balance of a mortgage loan and after termination of any appli cable cure period, including but not limited to those provided in section 654.2A or 654.2D, a creditor shall give the borrower a fourteen

- day demand for payment of the accelerated balance to qualify for an award of attorney fees under section 625.25 on the accelerated balance. Iowa Code § 654.4B (1). 4 The b ank also brought a replevin action against the Braaksma s. Because Iowa Code s ection 643.2 prohibits joinder of any act ion with a replevin proceeding, the district court addressed the replevin filing in a separate case

. See Sibley State Bank v. Braaksma , No. 17

- 1002, also filed today.4

subject to the mortgages is tillable farmland. Historically, the [Braaksmas] have very poor farm practices, which have deteriorated the condition of the far mland and resulted in yields well below local production averages.” The Braaksma s contested the appointment of the bank as receiver. Bank p resident Karl Borman n testified the Braaksmas demonstrated an “inability for timeliness, to actually get the crop i n in a timely fashion, to actually care for the crop in terms of weed control, to actually fertilize the crop, and then to ultimately harvest the crop.” Bormann pointed to lower yields and deterioration of the corn allowed to stand in the field. In respo nse to Bormann, Jes se testified his family uses no

- till and other sustainable farming approaches which were not common to their area of the state. He said the bank took a “dim view” of these conservation methods and wanted them to “operate like their othe r customers.” In March 2017, the district court appoint ed the bank as receiver

. Also in February 2017, the bank filed a motion for summary judgment in the foreclosure action. In March, the Braaksmas filed a resistance to the bank’s motion for summary judgment, as well as a motion to continue under Iowa Code section 654.15. In May, the district court denied the Braaksmas’ motion to continue and granted the bank’s motion for summary judgment. The district court filed the decree of foreclo sure in June 2017. The Braaksma now appeal

. II. Scope and Standard s of Review
The three issues on appeal call for varying standards of review. First, we
review the district court’s decision to appoint the bank as receiver de novo. See Wellman Sav. Bank v. Roth , 432 N.W.2d 697, 699 (Iowa Ct. App. 1988). We give weight to the district court’s fact findings but are not bound by them. Id.5
Second, we review the denial of a continuance under the foreclosure
moratorium statute for an abuse of disc r etion. See Ro nan v. Larson , 278 N.W. 641, 642 (Iowa 1938)

. Third, we review the grant of summary judgment for the correction of legal

error

. Iowa R. App. P. 6.907; U.S. Bank Nat ’l . Ass’n v. Lamb , 874 N.W.2d 112, 115 (Iowa 2016). The district court properly grant s s ummary judgment “ if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if a ny, reveal no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law ”

. Iowa R . Civ. P. 1.981(3 ); IBP Inc. v. DCS Sanitation Mg m t

. Servs., Inc. , 498 N.W.2d 425, 426 (Iowa Ct. App. 1993). A genuine issue of material fact exists if reasonable minds could differ with respect to how the issue should be resolved. U.S. Bank Na t’l . Ass’n v. Lamb , 874
N.W.2d at 115

. W e view the record in the light most favorable to the nonmoving party. Id.
III. Discussion
A. Appointment of Receive r A receiver is “a person appointed by the court to take into his custody the control and management of the property or funds of another, pending judicial action concerning them. ” Dobler v. Bawden , 25 N.W.2d. 866, 869

– 70 (Iowa 194 7) (describing receiver as “an arm of the court”). On appeal, the Braaks mas contend the district court should not have appointed the bank as receiver. They first assert
t he mortgage d id not contractually require the appointment of a re ceiver. The mortgage states:6
Upon a default by the Mortgagor, the lender may take possessi on of the property itself or through a court appointed receiver, without regard to the solvency or insolvency of the Mortgagor, the value of the property, the adequacy of the Lender’s security, or the existence of any deficiency judgment, and may operate t he Property and collect the rents and apply them to the costs of operating the Property and/or to the unpaid debt.
The bank interprets this clause as entitling it to appointment of a receiver.
The district court disagreed, concluding it could not “infer from the language of
th os e mortgages ” that the Braaksmas were barred from resisting the appointment of a receiver. We agree with the district court; the use of the term “may” signals
the Braaksmas did not consent to the appointment of a receiver. See No rwest Bank Des Moines, Nat ’l . Ass’n v. Bruett , 432 N.W.2d 711, 712 (Iowa Ct. App. 1988) ( finding mortgagor consented to appointment of a receiver based on the use of

“ shall ” in the mortgage). Given the mortgage language , the appointment of a
receiver was a decision for the district court. See Holden v. Constr. Mach. Co ., 202 N.W.2d 348, 360 (Iowa 1972) ( describing a ppointment of a receiver to be

“ a ddressed to the court’s sound legal discretion”). We turn from the contract terms to the statutory language. The Braaksmas acknowledge Iowa Code section 680.1 authorizes the district court to appoint a
receiver where the party shows that [it] has a probable right to, or interest in, any property which is the subject of the controversy, and that such property, or its rents or profits, are in danger of being lost or materially injured or impaired, and on such notice to the adverse party as the court shall prescribe , the court, if satisfied that the interest s of one or both parties will be thereby promoted, and the substantial rights of neither unduly infringed. . . . Iowa Code § 680.1.7

The Braaksmas do not dispute the bank ’s interest in the property nor do they deny receiving “notice

. ” But they contend the bank failed to meet the remaining elements of the statute

. In particular, the Braaksmas maintain insufficient evidence support s the bank’s position t hat the property’s “ r ents or profits ” were “ in danger of being lost or materially injured or impaired”

. At the hearing on the bank’s motion to appoint a receiver, b ank p resident Bormann expressed concern the Braaksmas would not timely harvest their corn crop, noting Jesse ’s dilatory farm practices and “the inconsistency of allowing grain
to stand in the field and be harvested in the spring further added to the deterioration of that collateral.” The Braaksmas assert Bormann is “not a farming expert” and his testimony did not show the bank’s interest in the crop yield was “in danger of being lost or mater ially injured” without the appointment of a receiver. The y fault the district court for accepting Bormann’s opinion “ at face value” and allege the
district court erred in appointing a receiver because the court relied on the “groundless opinions of a bank president.” The bank counters that the previous fall it was forced to hire a custom combine to harvest the Braaksmas’ corn even though the family possessed machinery and could have timely harvested the crop. The bank argues the Braaksmas’ “refusal to harvest the 2016 corn crop is sufficient in itself to support a finding of probable injury or impairment to the rents and profits of the land under section 680.1.” We agree the district court properly a ppoint ed the bank as receiver
so the bank could over see the harvest and protect its profits in foreclosur e to reduce the outstanding obligations of the Braaksmas.8
In further defense of the district court’s decision, t he bank argues the Braaksmas cannot show their substantial rights were “unduly infringed” by the appointment of the bank as a receiver because they were granted the right of first refusal to rent the farm land in compliance with Iowa Code section 654.14. 5 See Fed. Land Bank of Omaha v. Heeren , 398 N.W.2d 839, 842 (Iowa 1987) (defining prefere nce under the facts of case as g iving the debtor a right of first refusal in leasing). The Braaksmas contend that as a practical matter the statutory preference was o f little value to them after the bank took their assets in the replevin action. They also cite to Iowa Code section 628.3, which provides for a debtor to “redeem real property at any time within one year fr om the day of sale” and entitles a debtor “in the meantime” to “possession thereof.” The Braaksmas argue that
when read together sections 654.14 and 628.3 signal a legislative intent to give landowners “every opportunity” to continue farming until a foreclosure is final.
While those statutory provision s may signal such an intent, nothing about the appointment of a receiver in this case undermines that legislative purpose. The appointment of the receiver offered a benefit to both the bank and the
Braak smas. The receiver maximize s the value of the land the bank can sell which
in turns decreases the Braak s mas ’ debt. We conclude the appointment of the bank

as receiver d id not unduly infringe on the Braak s mas ’ rights and affirm the ruling.

5 “ In an action to foreclose a real estate mortgage, if a receiver is appointed to take charge of the real estate, preference shall be given to the owner or person in act ual possession, subject to approval of the court, in leasing the mortgaged premises

. ” Iowa Code § 654.14 (1)

.9

B. Denial of Continuance
The Braaksma s next allege the district court abused its discretion in denying
their March 2017 motion to continue under Iowa Code section 654.15. That statute provides:
In all actions for the foreclosure of real estate mortgages

. . . when the owner enters an appearance and files an answer admitting some indebt edness and breach of the terms of the designated instrument . . . th e owner may apply for a continuance of the foreclosure action if the default i s mainly due or brought about by reason of drought, flood, heat, hail , storm, or other climatic conditions

. . . . The appl ication must be in writing and filed at or before final decree . . . . If the court finds that the application is made in good faith and is supported by competent evidence showing that default in pay me nt or inability to pay is due to drought, fraud, heat, hail, storm, or other climatic conditions or due to infestation of pests, the court may continue the foreclosure proceedings

. . . . Iowa Code § 654.15(1)(a).
The Braa k s mas partially satisfied s ecti on 654.15 by admit ting in their

answer to defaulting on some of the notes and to breaching the terms of the designated instrument

. But t hey fell short on proving by competent evidence that
their default was mainly due to clima tic conditions. At a May 201 7 hearing Jesse testified the “ very wet , nasty spring” of 2016, which prevented timely planting, was the root of their financial turmoil . He explained , “ The rain just continued. So what
we did is we filed a prevented plant claim with our Federal Crop Insurance on approximately 75 percent of our farm. ” Jesse claimed the family’s inability to plant three

- quarters of its crop land led directly to the loan default. But on cross examination, Jesse a cknowledged payments were due on
bank notes i n the amount of $28,800 in January 2016 and in the amounts of $65,730 and $76,591 in March 2016, before the wet spring would have had an10

impact on their ability to satisfy the obligations. The bank agreed to extend the payment dates until the summer of 2016.
In den ying the Braaksmas’ motion to continue, th e district court aptly
reasoned [T]heir failures to pay in January and March, 2016, or the extended note dates of June and July, 2016, can scarcely be laid at the feet of wet planting conditions for the 2016 crop. Had the wet planting conditions not prevailed, and had their 2016 crop been timely planted, it would not have been available for harvest, sale and application to their notes until the fall harvest season of 2016. Even after allowing for their 45

- day cure dates, all their cure dates expired before September, 2016, the earliest date upon which the crop could have been realized.
The court concluded the Braaks m as’ default did not result from adverse weather
conditions. The statute allows the district court t o exercise discretion in determining whether the owners’ predicament can be traced to climactic con ditions beyond their control. See Bank of Craig, Craig, Mo v. Hughes , 398 N.W.2d 216, 2017 ( Iowa Ct. App. 1986). The Braak s mas did not produce sufficient e vidence to support a finding that the ir application was made in good faith or they were unable to pay due to conditions outline d in s ection 654.15

. We determine the district court acted within its discretion in declining to impose a foreclosure moratorium under section 654.15. C. Summary Judgment Most critically, t he Braaksmas assert the district court erred in granting the bank’s motion for summary judgment in the mortgage foreclosure proceeding

. They raise a single contention over the interpretation of a creditor’s right to cure a default in a foreclosure action on agricultural land under Iowa Code
section 654.2A(1) and (4)

.11
At issue is the following language: 1. A creditor shall not initiate an action pursuant to this chap ter to foreclose on a deed of trust or mortgage on agricultural land, as defined in section 9H.1, until the creditor has complied with this section.

. . . . 4. If the borrower has a right to cure a default:
a. A creditor shall not accelerate the maturity of the unpaid balance of the obligation, demand or otherwise take possession of the land, other than by accepting a voluntary surrender of it, or otherwise attempt to enforce the obligation until forty

- five days after a proper no tice of right to c ure is given. The time period for a request for mediation pursuant to chapter 654A shall run concurrently with the period for the notice to cure under this section. b. Until the expiration of forty

- five days after notice is given, the borrower may cure t he default by tendering either the amount of all unpaid installments due at the time of tender, without acceleration, plus a delinquency charge of the scheduled annual interest rate plus five percent per annum for the period between the giving of the notic e of right to cure and the tender, or the amount stated in the notice of right to cure, whichever is less, or by tendering any performance necessary to cure a default other than nonpayment of amounts due, which is described in the notice of right to cure. Iowa Code § 654.2A

. The Braaksmas highlight the last clause of section 654.2A(4)(b), contending they may cure the default by tend er ing either the amount of all unpaid installments

or any performance necessary to cure a default other than nonpayment of am ounts due

. 6 They focus on the word “performance” and suggest it be given a liberal construction under the remedial provisions of chapter 654. See Koch v. Kostichek , 409 N. W.2d 680, 682 (Iowa 1987). The Braaksmas contend “any performance” is

6 The Braaksma do not dispute that they were in default or that they received the proper forty

- five day notice to cure.12

broad enough to encompass their pledge to assign their expected crop insurance payment and the liquidation of “old crop” grain on hand to the bank

. They claim by informing the bank of a future payment at a future date they satisfy the performance requirement of section 654.2A(4)(b). The bank insists the Braaksmas are “misreading” the last phrase and offers
an alternative statutory interpretation: The Code contemplates two situations, which may or may not both be in play in a given case. One situation is a debt or defaulting by failing to make a payment due, which is the Braaksma situation. Another situation is the debtor defaulting by violating some other agreement with the creditor, e.g. by failing to pay real estate taxes, or failing to insure collateral as re quired in loan agreements.
The bank contends it is un reasonable to interpret the right

- to

- cure statute as allowing a debtor to cure a default by the promise of a future payment. We agree with the bank’s interpretation. The phrase “any performance necess ary” in the last
sentence refers to default s stemming from the borrower’s failure to satisfy an obligation to the lender other than nonpayment. See Koch , 409 N.W.2d at 683 ( “ We will not search for the meaning of a statute or apply a strained construction when its language is clear and unambiguous .”). T he Braak s mas have not shown any legal error in the district court’s grant of the bank’s motion for summary judgment.
AFFIRMED.