Court Opinion

ID: 4365262
Source: CourtListenerOpinion
Date Created: 2019-02-06 20:07:55.758756+00
Date Added: 2024-06-11T14:49:20.736352
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 17-2009
                             Filed February 6, 2019

STANDARD WATER CONTROL SYSTEMS, INC.,
    Plaintiff-Appellee,

vs.

MICHAEL D. JONES and CORI L. JONES,
     Defendants-Appellants.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Lawrence P. McLellan,

Judge.

      In an action to enforce a judgment arising from a mechanic’s lien,

defendants appeal the district court’s decision finding they waived their homestead

rights. REVERSED AND REMANDED.

      John F. Fatino, Jonathan Kramer, and Zachary J. Hermsen of Whitfield &

Eddy, P.L.C., Des Moines, for appellants.

      Jodie C. McDougal and Elizabeth R. Meyer of Davis Brown Law Firm, Des

Moines, for appellee.

      Heard by Tabor, P.J., and Mullins and Bower, JJ.
                                         2

BOWER, Judge.

      In an action by Standard Water Control Systems, Inc. (Standard Water) to

enforce a judgment arising from a mechanic’s lien, Michael and Cori Jones (the

Joneses) appeal the district court’s decision holding they waived their homestead

rights. We affirm the district court’s finding Iowa Code section 561.21(3) (2013)

does not allow a homestead to be sold to recover attorney fees entered as part of

a judgment against a home in an action to foreclose a mechanic’s lien. We reverse

the decision of the district court on the issue of whether the Joneses waived their

homestead rights and remand for further proceedings.

      I.      Background Facts & Proceedings

      This is the third appeal in the lawsuit between the parties. Because the

issues in this case involve a discussion of judicial estoppel, the law of the case

doctrine, and res judicata, we must review the procedural history.

      In 2013, the Joneses entered into a contract with Standard Water to

waterproof the basement of their home in Des Moines. While performing the work,

Standard Water struck a water line and sewer line, causing damage to the

property. The Joneses did not permit Standard Water to complete the work.

Standard Water submitted a bill for $5400, which the Joneses refused to pay.

Standard Water filed notice of a mechanic’s lien.

      On October 30, 2013, Standard Water filed an action against the Joneses,

seeking to foreclose the mechanic’s lien under Iowa Code chapter 572 and

requested the court issue a special execution for the sale of the property. Standard

Water also raised claims of breach of contract, quantum meruit, and unjust

enrichment.    The Joneses raised several affirmative defenses and filed
                                           3

counterclaims against Standard Water—none of which involved the Joneses’

homestead rights.

        The case was tried to the court, which found Standard Water’s actions were

not a breach of duty or standard of care, and it was entitled to foreclose the

mechanic’s lien. The court entered judgment against the Joneses for $5400 plus

interest. The court determined the amount of the judgment would be reduced by

$500, to $4900, if Standard Water did not complete the work. The court denied

the Joneses’ counterclaims.

        The district court determined Standard Water should be awarded attorney

fees.     Standard Water submitted an affidavit requesting attorney fees of

$56,014.25, plus costs.      The Joneses resisted the request for attorney fees,

claiming the amount was unreasonable in light of the amount of the judgment and

the value of the home—which had an assessed value in 2014 of $55,000. The

district court awarded Standard Water attorney fees of $43,835.25 and costs of

$299.04. The court entered judgment against the Joneses and issued a special

execution for the sale of the property, directing a sheriff’s sale.

        On March 13, 2015, the Joneses appealed the district court’s decision. In

the interim, the Joneses decided to not have Standard Water complete the project

and the district court reduced the judgment by $500, to $4900, plus attorney fees

and costs.

        On August 3, 2015, while the appeal was pending, Standard Water initiated

proceedings for a special execution and sheriff’s sale of the property. The notice

advised      the   Joneses    “if   the   described    real   estate   includes   the

homestead . . . defendant must file a homestead plat with the Sheriff within ten
                                          4

(10) days after service of this notice, or the Sheriff will have it platted and charge

the costs to this case.” See Iowa Code § 561.4, .5. The property was sold on

October 21, 2015, for $45,000 to Standard Water. There was no discussion of the

Joneses’ homestead rights at the time of the sale.

       In Standard Water Control Systems, Inc. v. Jones, 888 N.W.2d 673, 677‒

79 (Iowa Ct. App. 2016), we determined: (1) the notice of commencement of work

filed by Standard Water was not untimely under section 572.13A; (2) the contract

did not contain an improper indemnity clause and was not void on this ground; and

(3) the award of trial attorney fees was excessive. We vacated the award of

attorney fees and remanded to the district court for additional fact-finding on this

issue. Standard Water, 888 N.W.2d at 679.

       Based on our decision, the Joneses filed a motion to set aside the sheriff’s

sale, noting the attorney fee award, which was a large portion of the judgment, had

been vacated. Standard Water resisted the motion to set aside the sale. In their

response to the resistance, filed on September 20, 2016, the Joneses stated the

property was their homestead. The district court determined the sheriff’s sale

should be set aside. The court stated, “Finally, this is the Jones[es]’ home and to

allow the sheriff’s sale to stand knowing they cannot afford to exercise their right

to redeem effectively makes them homeless.”

       On remand, Standard Water asked the district court to affirm its previous

award of trial attorney fees and sought $29,144 in appellate attorney fees and

costs. Additionally, it asked the court to reverse the order granting the motion to

set aside the sheriff’s sale. The Joneses resisted Standard Water’s requests. The

district court reduced the amount of trial attorney fees to $41,670.25. The court
                                          5

determined the Joneses should pay $17,283.44 for Standard Water’s appellate

attorney fees. The court also found, “[A]ny action with regard to the property shall

proceed as if there has not been a sheriff’s sale. Thus, if Standard wishes to initiate

a sheriff’s sale it will need to do so.” The Joneses appealed the district court’s

decision.

       While the second appeal was pending, on May 30, 2017, Standard Water

initiated new proceedings for a special execution and sheriff’s sale of the property.

The notice to the Joneses contained the same homestead statement as the notice

given at the time of the first sheriff’s sale. The sheriff’s sale was scheduled for

August 22. On August 10, the Joneses filed a motion to vacate the writ of special

execution, stating the property was their homestead and they were protected by

the provisions of Iowa Code chapter 561. Standard Water resisted the motion,

raising issues of estoppel and the law of the case doctrine. The Joneses replied,

denying they waived their homestead rights. On August 21, the district court

determined the Joneses had not adequately shown the property was their

homestead and ordered the sale could go forward. The court noted “the issues as

to whether the property is subject to section 561.21(3), the amount of the lien, and

whether the Jones[es] may raise the issues presently raised in their motion to

vacate the special execution” could all be addressed during redemption

proceedings under section 628.21.

       Cori Jones submitted an affidavit stating the property was the parties’

homestead. The Joneses selected the property as their homestead, submitted a

plat, and recorded it with the Polk County Recorder. They filed a motion asking

the court to reconsider its ruling on the motion to vacate and in the alternative
                                          6

sought relief under section 628.21. In the meantime, the property was sold on

August 22 to Standard Water for $45,000. Standard Water resisted the Joneses’

motions. Standard Water also filed a request for execution or garnishment of the

Joneses’ personal assets for $21,456.24, the amount due after the sale of the

home.

        The district court found the property was the Joneses’ homestead. The

court concluded, “[S]ection 561.21(3) does not allow a homestead to be sold to

recover attorney fees, costs of the action or interest that may have been entered

as a judgment against the home in a foreclosure action under chapter 572.” The

court determined, however, the Joneses’ homestead could be sold to recover

attorney fees based on its finding the Joneses waived their homestead rights. The

court stated:

               The homestead exemption is a personal defense which is
        waived if not raised initially in the foreclosure action. The Jones[es]
        never raised their homestead exemption rights in their answer,
        affirmative defenses and counterclaim filed on November 30, 2013.
        They never raised the defense when they requested that the court
        set aside the first sheriff’s sale. The court concludes that the
        Jones[es] failed to timely raise their homestead rights as a defense.
        Accordingly, the Jones[es] waived this defense. Judicial estoppel
        and the law of the case doctrine preclude the raising of this defense
        at this time. In addition, the court adopts the court’s position in
        Francksen [v. Miller, 297 N.W.2d 375, 377 (Iowa 1980)] where the
        court denied the defense based upon the principles of res judicata.

(Footnotes omitted.)
                                            7

       The Joneses filed a motion pursuant to Iowa Rule of Civil Procedure

1.904(2), which was denied by the district court. The Joneses appealed the district

court’s decision.1

       II.    Standard of Review

       On the issue of our standard of review, we previously stated:

       Actions to enforce mechanic’s liens are equitable proceedings.
       Normally, appeals from actions brought in equity are reviewed de
       novo. However, this dispute raises issues of statutory interpretation
       and construction. Our review of issues of statutory interpretation and
       construction is for the correction of legal error.

Standard Water, 888 N.W.2d at 675 (citations omitted). To the extent issues of

statutory construction are raised in this appeal, we will review them for the

correction of errors at law. See id. On all other issues, our review is de novo. See

id.

       III.   Homestead Rights

       The parties agree the Joneses’ home, which is subject to Standard Water’s

mechanic’s lien, is their homestead. See Iowa Code § 561.1. The district court

found, “[S]ection 561.21(3) does not allow a homestead to be sold to recover

attorney fees, costs of the action or interest that may have been entered as a

judgment against the home in a foreclosure action under chapter 572.” Standard

Water claims the district court erred in its interpretation of chapter 561. It states

1
   After the notice of appeal in the current matter was filed, we decided Standard Water
Control Systems, Inc. v. Jones, No. 17-0854, 2018 WL 739330, at *2‒3 (Iowa Ct. App.
Feb. 7, 2018), which affirmed the award of trial attorney fees of $41,670.25 and appellate
attorney fees of $17,283.44. No additional appellate attorney fees were awarded.
Standard Water II, 2018 WL 739330, at *3.
                                         8

an award of attorney fees in an action to foreclose a mechanic’s lien should be part

of the judgment against a homestead.

      Homestead rights are purely statutory in nature.         First Am. Bank v.

Urbandale Laser Wash, L.L.C., 894 N.W.2d 24, 27 (Iowa Ct. App. 2017). “The

purpose of homestead laws is ‘to provide a margin of safety to the family, not only

for the benefit of the family, but for the public welfare and social benefit which

accrues to the state by having families secure in their homes.’” In re Marriage of

Tierney, 263 N.W.2d 533, 534 (Iowa 1978) (citation omitted). “Homestead rights

are jealously guarded by the law.” Iowa State Bank & Tr. Co. v. Michel, 683
N.W.2d 95, 101 (Iowa 2004). “Recognizing the important public purpose of the

protections established for the homestead interest, we construe our homestead

statute broadly and liberally to favor homestead owners.”          In re Estate of

Waterman, 847 N.W.2d 560, 567 (Iowa 2014).

      “The homestead of every person is exempt from judicial sale where there is

no special declaration of statute to the contrary.” Iowa Code § 561.16. This section

“provides that every person’s homestead is exempt from judicial sale,” except as

provided by statute. In re Estate of Tolson, 690 N.W.2d 680, 682 (Iowa 2005). “In

furtherance of its purpose of protecting the homestead interest, the general

assembly has expressly limited the circumstances in which a homestead may be

vulnerable to judicial sales for the satisfaction of debts.” Waterman, 847 N.W.2d

at 567. The Joneses claim their homestead is exempt from judicial sale for

attorney fees.

      Standard Water claims the exception found in section 561.21(3), which

provides a homestead may be sold to satisfy a debt “incurred for work done or
                                         9

materials furnished exclusively for the improvement of the homestead,” applies in

this case. It states the extent of a mechanic’s lien includes the contract price,

interest, costs, and attorney fees, and all of these should be included in a debt

which may be recovered from a homestead under section 561.21(3). A party

seeking to prove an exception under section 561.21 has the burden of proving the

exception. See Hawkeye Bank & Tr. Co. v. Michel, 373 N.W.2d 127, 130 (Iowa

1985).

         After an exhaustive search, we are unable to find any cases specifically

addressing the issue of whether section 561.21(3) should be interpreted to include

attorney fees in the amount which may be recovered against a homestead as part

of the “work done or materials furnished exclusively for the improvement of the

homestead.” Iowa Code § 561.21. “In interpreting a statute, we first consider the

plain meaning of the relevant language, read in the context of the entire statute, to

determine whether there is ambiguity. If there is no ambiguity, we apply that plain

meaning.” State v. Doe, 903 N.W.2d 347, 351 (Iowa 2017) (citations omitted).

         Under section 561.16, a homestead is subject to a judicial sale only when

there is a special statutory declaration permitting such a sale. See First Am. Bank,
894 N.W.2d at 26. We find no ambiguity in the language of section 561.21(3) and

apply the plain meaning of the statute. See Doe, 903 N.W.2d at 351. The section

lists two types of debts for which a homestead may be sold—those for work done

and those for materials furnished. See Waterman, 847 N.W.2d at 571 n.13. The

only debts for which a homestead may be sold are enumerated in section 561.21.

Id. at 567. Because section 561.21(3) does not list attorney fees, we conclude the

district court did not err in its conclusion “section 561.21(3) does not allow a
                                          10

homestead to be sold to recover attorney fees, costs of the action or interest that

may have been entered as a judgment against the home in a foreclosure action

under chapter 572.” We affirm the district court on this question.

       IV.    Waiver of Homestead Rights

       After finding the Joneses’ homestead could not be sold to recover attorney

fees under section 561.21(3), the court found the Joneses had waived their

homestead rights in the property under theories of judicial estoppel, the law of the

case doctrine, and res judicata. “[W]aiver is an intentional relinquishment of a

known right.” Huisman v. Miedema, 644 N.W.2d 321, 324 (Iowa 2002) (quoting

State v. Hallum, 606 N.W.2d 351, 354 (Iowa 2000)). “[T]he burden of showing

waiver rests on the party seeking to claim some advantage on account thereof.”

Butler v. Cleland, 202 N.W. 557, 558 (Iowa 1925).

       A.     Judicial Estoppel

       The doctrine of judicial estoppel provides, “[A] party who has, with

knowledge of the facts, assumed a particular position in judicial proceedings is

estopped to assume a position inconsistent therewith to the prejudice of the

adverse party.” Kinseth v. Weil-McLain, 913 N.W.2d 55, 74 (Iowa 2018) (quoting

Snouffer & Ford v. City of Tipton, 129 N.W. 345, 350 (Iowa 1911)). “[A] central

tenet of the doctrine is ‘the successful assertion of the inconsistent position in a

prior action.’” Id. (quoting Vennerberg Farms, Inc. v. IGF Ins., 405 N.W.2d 810,

814 (Iowa 1987)).      There has been judicial acceptance “when ‘the position

asserted by a party was material to the holding in the prior litigation.’” Id. (quoting

Tyson Foods, Inc. v. Hedlund, 740 N.W.2d 192, 198 (Iowa 2007)). “Without judicial

acceptance of the inconsistent position, judicial estoppel is inapplicable, as there
                                          11

is ‘no risk of inconsistent, misleading results.’”    Id. (quoting Vennerberg, 405

N.W.2d at 814). A party claiming judicial estoppel must show prejudice. Wilson v.

Liberty Mut. Grp., 666 N.W.2d 163, 166 (Iowa 2003). On issues of judicial estoppel

we review for an abuse of discretion. Tyson Foods, 740 N.W.2d at 195.

       The district court found the Joneses took a position contrary to their present

position at the time they requested the first sheriff’s sale be set aside. After we

reversed the initial award of attorney fees and remanded, Standard Water, 888
N.W.2d at 679, the Joneses filed a motion to set aside the sheriff’s sale which had

occurred while the appeal was pending, stating, “Part of the basis of the execution

on the Joneses’ property was the attorney fee award,” and, “In light of the appellate

court vacating the attorney fee award, the execution and Sheriff’s sale should

likewise be set aside.” The district court found the Joneses’ prior position was

material to its decision to vacate the first sheriff’s sale, where the court found:

              The court of appeals’[s] decision reversed a substantial
       amount of the judgment which precipitated the sheriff’s sale. Since
       the underlying judgment which made the sheriff’s sale possible has
       been eliminated equity demands that the sheriff’s sale which was
       authorized by the judgment should likewise be set aside until the
       court has the opportunity to address the court of appeals’[s] decision.
       Standard [Water] will not be prejudiced by this action.

Although at the time the first sheriff’s sale was vacated the court found Standard

Water was not prejudiced by the court’s decision, in ruling on the Joneses’ claims

concerning the second sheriff’s sale, the court determined the vacation of the first

sheriff’s sale worked to the detriment of Standard Water.

       The Joneses claim the doctrine of judicial estoppel should not be applied

under the circumstances here because they never took an inconsistent position

concerning their homestead rights. The Joneses’ argument the first sheriff’s sale
                                          12

should be set aside because we reversed part of the judgment on appeal was not

an express waiver of their homestead rights. See Mills Owners’ Mut. Fire Ins. v.

Petley, 229 N.W. 736, 740 (Iowa 1930) (“Express waiver or relinquishment of the

homestead was not made by said appellee. Implication alone is left to supply a

waiver or relinquishment.”). “The homestead right is a favorite of the law, and its

surrender or waiver will not be presumed, nor will such intent be inferred from the

use of words of a general and indefinite signification.” Id. “Unless the language is

plain and unmistakable, we should not conclude that the parties, through mere

inference or uncertain implications, meant that a homestead right should be waived

or relinquished.” Id. at 741.

       The district court’s ruling on the issue of judicial estoppel was based on

inferences and implications arising from the Joneses’ arguments at the time they

requested the first sheriff’s sale be set aside. The statements made in the Joneses’

motion to set aside the first sheriff’s sale were not a plain, unmistakable, or express

waiver of their homestead rights, and as such, were not sufficient to waive their

homestead rights.     See id. at 740‒41.       Because we find the Joneses never

expressly waived their homestead rights in the prior proceedings in this case, we

conclude their present position seeking to enforce their homestead rights is not

precluded under the doctrine of judicial estoppel.

       B.     Law of the Case Doctrine

       “The law-of-the-case doctrine ‘represents the practice of courts to refuse to

reconsider what has once been decided.’”          Brewer-Strong v. HNI Corp., 913
N.W.2d 235, 245–46 (Iowa 2018) (quoting State v. Grosvenor, 402 N.W.2d 402,

405 (Iowa 1987)). “[A] reviewing court’s legal principles and views expressed
                                           13

become binding throughout the case as it progresses, regardless of their

accuracy.” Id. at 246. Generally, the law of the case doctrine “applies only to

issues raised and passed on in a prior appeal.” Lee v. State, 874 N.W.2d 631, 646

(Iowa 2016). It may also apply, however, “to ‘matters necessarily involved in the

determination of a question’ settled in a prior appeal for purposes of subsequent

appeals.” Id. (quoting In re Lone Tree Cmty. Sch. Dist., 159 N.W.2d 522, 526

(Iowa 1968)).

       The district court found the Joneses’ claims were barred under the law of

the case doctrine, finding:

       At no time prior to trial, after the court entered its findings of fact and
       conclusions of law or before the court entered judgment did the
       Jones[es] ever assert their homestead rights. In their appeal they
       did not challenge the court’s judgment entry allowing the sheriff’s
       sale to satisfy the entire money judgment which included not only the
       costs of the improvements but also attorney fees, interest and the
       costs of the action. Nor did they raise it at the time they requested
       that the court set aside the first sheriff’s sale even though in their
       arguments to the court they were asserting that the house in question
       was their home.

       Absent from the court’s consideration is any reference to where the issue

of the Joneses’ homestead rights was previously raised and decided.                  “The

doctrine applies ‘only to those questions that were properly before us for

consideration and passed on’ and ‘[a] question not passed on is not included’

under the doctrine.” Bahl v. City of Asbury, 725 N.W.2d 317, 321 (Iowa 2006)

(quoting Lone Tree, 159 N.W.2d at 526). Where, as here, the first appeal (and the

second) did not address the applicability of a statute, the parties are free to litigate

the issue in subsequent proceedings. See Cawthorn v. Catholic Health Initiatives
                                         14

Iowa Corp., 806 N.W.2d 282, 286 (Iowa 2011). We conclude the Joneses’ claims

concerning their homestead rights are not barred by the law of the case doctrine.

       C.     Res Judicata

       The district court did not conduct an analysis of the case under the

principles of res judicata, but stated, “In addition, the court adopts the court’s

position in Francksen where the court denied the defense based upon the

principles of res judicata.” In Francksen, 297 N.W.2d at 376, a party did not assert

his homestead rights when defending a foreclosure action. In an appeal of a later

forcible entry and detainer action, the Iowa Supreme Court stated:

              The record of the foreclosure suit shows defendant did not
       assert his homestead claim until after the sheriff’s sale. The trial
       court held the claim was untimely and refused to set the sale aside.
       No appeal was taken from that adjudication. Therefore, under Dodd
       [v. Scott, 46 N.W. 1057, 1058 (Iowa 1890),] defendant is precluded
       from raising a homestead defense in the present action, . . . . This is
       based on the principle of res judicata.

Francksen, 297 N.W.2d at 377.

       We first note, “[a] judgment, once reversed or vacated, no longer has

preclusive effect.” Clarke Cty. Reservoir Comm’n v. Robins Revocable Tr., 862
N.W.2d 166, 177 (Iowa 2015). Therefore, whether or not the Joneses raised their

homestead claims prior to the first sheriff’s sale, which was vacated, does not have

a preclusive effect on whether they are barred by res judicata from raising the issue

at the time of the second sheriff’s sale. Additionally, the Joneses raised their

claims regarding their homestead rights prior to the second sheriff’s sale, thereby

making the claims timely under Francksen, 297 N.W.2d at 377. We determine the

Joneses are not precluded by the doctrine of res judicata from raising their

homestead claims in the present action.
                                        15

      Once the court set aside the sale in 2016 and authorized a new sale after

re-setting the allowable attorney fees, the Joneses were once again alerted in the

notice of special execution of the right to assert the homestead exemption claim.

The motion to vacate filed with the court prior to the 2017 sale can only be

interpreted as an assertion of the homestead exemption; certainly there was no

waiver at that time. We find the claim of homestead exemption is a claim that can

be asserted in response to an execution and is not required in the underlying

lawsuit. We conclude the Joneses’ homestead rights were not waived because

they were not asserted earlier in the proceedings.

      On our de novo review, we conclude the district court abused its discretion

by finding the Joneses waived their homestead rights. We affirm the district court’s

finding section 561.21(3) does not allow a homestead to be sold to recover

attorney fees entered as part of a judgment against a home in an action to

foreclose a mechanic’s lien. We reverse the court’s conclusion the Joneses

waived their homestead rights and remand for further proceedings. Costs of this

appeal are assessed to Standard Water.

      REVERSED AND REMANDED.