Court Opinion

ID: 9892935
Source: CourtListenerOpinion
Date Created: 2023-10-25 16:06:59.676403+00
Date Added: 2024-06-11T08:50:41.122613
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                    No. 22-1065
                              Filed October 25, 2023

THOMAS JOSEPH GENT,
    Plaintiff-Appellant,

vs.

SHIRLEY L. GENT,
     Defendant-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Keokuk County, Lucy J. Gamon,

Judge.

      The plaintiff in a breach-of-contract action appeals the district court’s

adverse grant of summary judgment. AFFIRMED.

      John C. Wagner and John G. Daufeldt of John C. Wagner Law Offices, P.C.,

Amana, for appellant.

      Joseph W. Younker, Matthew G. Barnd, Olivia A. McGovern, and Lewis I.

Field of Bradley & Riley PC, Iowa City, for appellee.

      Heard by Greer, P.J., and Schumacher and Ahlers, JJ.
                                          2

GREER, Presiding Judge.

       In this family dispute, Thomas Gent brought suit against his parents, Dennis

and Shirley Gent, claiming breach of contract and unjust enrichment. Thomas’s

claim involves an option that was in a real estate contract that he and his now ex-

wife, Mary, signed with his parents. After exercising the option, which allowed

them to buy more acres, Thomas asserted his parents breached an implied term

of that option provision because the parents had earlier entered into a twenty-year

farm-lease agreement with Thomas’s brother, John, on the same farmland that

was the subject of Thomas’s option. Dennis and Shirley moved for summary

judgment, which the district court granted.

       Thomas appeals the summary judgment ruling. He argues (1) that while

the option provision was silent on the issue of encumbrances, applying the implied

covenant of good faith and fair dealing to the option contract results in an implied

term that the parents would convey a title free of any encumbrances to the seventy

acres of farmland; (2) accepting the special warranty deed, which explicitly stated

the real estate was being sold subject to John’s farm lease, did not cause the

option to merge with the deed, so Thomas is not precluded from recovering under

the terms of the option provision; and (3) in the alternative, if the option provision

merged with the deed, then he should be allowed to recover under the theory of

unjust enrichment. Because the district court’s application of the merger doctrine

was correct, we affirm.

I. Background Facts and Proceedings.

       In 2007, Thomas and Mary entered into a real estate contract with Dennis

and Shirley, buying about ten acres of land from them. The contract also included
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an “additional provision,” which gave Thomas and Mary the option to buy another

seventy acres from Dennis and Shirley in the future. The option provision stated:

              On the condition that the buyers make the required payments
      under this contract, they are hereby given the option to purchase the
      real estate described as: The West Half of the Southeast Quarter of
      Section Four, Township Seventy-six North, Range Eleven West of
      the Fifth P,M, Keokuk County, Iowa, except the South Ten Acres in
      equal width thereof for the price of $1,800.00 an acre. The buyers
      can exercise this option at any time until the death of both contract
      sellers and for an additional period of six months after the death of
      the last of the contract sellers. The option holder may elect to pay
      the purchase price in full or on an installment contract. The terms of
      the contract shall provide for no down payment unless the buyer
      desires for a down payment. The unpaid balance of the contract
      shall bear interest computed at 6% interest per annum, payable over
      a twenty-year period or less, solely at the option of the purchaser.
      The purchaser may either elect the contract terms of twenty equal
      principal payments plus interest or twenty equal payments, which
      payment includes principal and interest. Possession shall be the
      March 1st following the date purchaser exercises the option unless
      a different date is agreed to.

Before the option was exercised, in 2014, Dennis and Shirley entered into a farm

lease agreement with Thomas’s brother, John, and his wife, Beth. Dennis and

Shirley agreed to lease the seventy acres that was the subject of Thomas’s option

to John for a period of twenty years—from March 1, 2015 to March 1, 2035—for

“$150.00 per acre for all row crop acres and $40.00 per acre for those acres in

grassed hay or pasture provided [John] pay for all the seeding expense.” They

filed the farm lease with the Keokuk County Recorder.

      Thomas and Mary divorced in 2016. As part of the decree dissolving their

marriage, the dissolution court ordered them to “exercise their option rights to

purchase the seventy acre tract” from Dennis and Shirley. The court also ordered
                                           4

them to sell the land and provided how the proceeds would be divided. 1 As

ordered, Thomas and Mary gave written notice to Dennis and Shirley that they

were exercising the option to purchase the seventy acres for $1800 per acre.

       Thomas and Mary paid $126,000 for the seventy acres of farmland and, in

September 2017, Shirley and Dennis conveyed an undivided one-half interest in

the seventy acres to each Thomas and Mary by special warranty deed. The deed

gave explicit notice of John’s lease on the seventy acres being conveyed; it said,

“The above described ground is subject to a 20 year Farm Lease, dated December

10, 2014, filed December 10, 2014, Book 2014-1684, in the Office of the Keokuk

County Recorder.”

       Thomas brought suit against his parents in 2018, alleging they breached

the option provision of the real estate contract by failing to convey title to the

seventy acres, free and clear of encumbrances, and because of the impact of the

farm lease, the parents were unjustly enriched. More to the point, Thomas claimed

he was damaged “by virtue of diminished value to the subject land and an inability

to sell the same for market value.”

1 We take this information from the “notice of exercising option.” While the
dissolution decree was included in the second volume of the appendix filed on
appeal, the decree was not part of the record in the district court—Thomas asked
the court to take judicial notice of the document at the hearing on the motion for
summary judgment, but the court never indicated it would do so. Therefore, we do
not consider the dissolution decree in resolving this appeal. See Iowa R. App.
P. 6.801 (defining the record on appeal as “[o]nly the original documents and
exhibits filed in the district court case from which the appeal is taken, the transcript
of proceedings, if any, and a certified copy of the related docket and court calendar
entries prepared by the clerk of the district court”); In re Est. of Kelly, 558 N.W.2d
719, 722 n.3 (Iowa Ct. App. 1996) (“We must accept the record made by the parties
and cannot consider matters outside the record.”).
                                         5

       Sometime between Thomas bringing suit and April 2022, Dennis died.2

       In April 2022, Shirley moved for summary judgment, asserting Thomas got

exactly what he bargained for in the option provision—he was able to purchase the

seventy acres of farmland at the agreed-upon price.         She argued Thomas’s

breach-of-contract claim failed as a matter of law because there was no term in

the option provision that required Shirley and Dennis to convey the seventy acres

free of encumbrances. Additionally, she claimed the option to purchase the real

estate merged with the deed once Thomas accepted it, so the court needed to

review only the deed itself for the conditions of the transfer when deciding the

breach-of-contract claim. Because the special warranty deed expressly stated title

to the land was being conveyed subject to John’s farm lease, Thomas accepted

and filed the deed with the encumbrance clearly laid out. Finally, Shirley claimed

Thomas’s claim of unjust enrichment failed as a matter of law because there was

an express contract under which Thomas was suing, which precluded a claim for

unjust enrichment.

       Thomas resisted, although he did not dispute any of the material facts

asserted by Shirley.    He asserted that, while no express term of the option

provision required Dennis and Shirley to convey title to the seventy acres of farm

land free and clear of encumbrances, applying the implied duty of good faith and

fair dealing to the option provision created an implicit term that his parents would

2 We asked counsel for information related to Dennis, including whether there is

an estate opened for him and if this claim should be dismissed as to him. During
oral arguments both parties confirmed that there was no reason for Dennis to
remain named as a party. We addressed this “housekeeping” issue by separate
order.
                                          6

convey the land without encumbrances if he exercised his option to purchase it.

He also argued the option provision did not merge with the special warranty deed

because the implied term his parents would not transfer title to the seventy acres

with encumbrances was a collateral matter that was not extinguished by accepting

the deed. Lastly, he argued in the alternative that if the court concluded the option

provision merged, then his claim for unjust enrichment should be able to proceed

as there was no longer a contract under which he was suing.

       Following a reported hearing, the district court granted Shirley’s motion for

summary judgment3 and dismissed Thomas’s lawsuit. The court ruled:

              This Option contains no promise to convey the subject real
              estate free of all liens and encumbrances, such as the Farm
              Lease. The Court declines to rewrite the parties’ contract to
              include such a promise. The Court concludes, as a matter of
              law, that [Shirley and Dennis] did not breach their contract with
              [Thomas]. As the parties had a legal written contract between
              them, there is no possibility that [Thomas] may successfully
              bring an action for unjust enrichment. Thus, both of
              [Thomas’s] causes of action fail as a matter of law.

Thomas filed a motion asking the court to reconsider, enlarge, or amend its ruling,

which the court denied. Thomas appeals.

II. Standard of Review.

       “We review summary judgment rulings for correction of errors at law.”

Deeds v. City of Marion, 914 N.W.2d 330, 339 (Iowa 2018). Summary judgment

is proper when the moving party establishes there is no genuine issue of material

fact and they are entitled to judgment as a matter of law. Id. “We [re]view the

record in the light most favorable to the nonmoving party.” Id.

3 No party moved to have Dennis substituted, and the district court ruled as if

Dennis was still an active defendant in the case.
                                           7

III. Discussion.

       Thomas did not allege to the district court that there were material facts in

dispute, and he does not challenge any of the facts relied upon by the district court

in reaching its ruling. So, we need not consider whether summary judgment was

inappropriate because of a genuine issue of material fact. See Cubit v. Mahaska

Cnty., 677 N.W.2d 777, 781 (Iowa 2004) (“Where the only dispute concerns legal

consequences flowing from undisputed facts, our review is limited to whether the

district court correctly applied the law.” (citation omitted)). So, we look to the law.

       A. Merger.

       We start with Thomas’s second issue because if the option provision did in

fact merge with the special warranty deed, whether the option once contained an

implied term of clear title is without legal significance. See Gray v. Van Gordon,

174 N.W. 588, 589–90 (Iowa 1919) (“Articles of agreement for the conveyance of

land are, in their nature, executory, and the acceptance of a deed, in pursuance

thereof, is to be deemed, prima facie, an execution of the contract and the

agreement thereby becomes void and of no further effect.” (citation omitted)).

       “In this jurisdiction a contract for conveyance of real estate, absent any

showing to the contrary, is deemed to have merged in a subsequent deed.” Lovlie

v. Plumb, 250 N.W.2d 56, 62 (Iowa 1977). However, there are some exceptions

to this general proposition.

       For instance if the deed be uncertain and ambiguous in its own
       terms, resort may be had to the antecedent contract as an aid to
       construing the terms of the deed. If a mistake in the deed be alleged
       and reformation be sought, the contract becomes competent as
       evidence on that question. Likewise if the contract contain collateral
       agreements or conditions which are not incorporated in the deed,
       and which are not inconsistent with the terms of the deed as
                                          8

       executed, the contract will be deemed to live for the purpose of the
       enforcement of such collateral agreements or conditions.

Huxford v. Trs. of Funds and Donations for Diocese of Iowa, 185 N.W. 72, 74 (Iowa

1921). And here, Thomas maintains the deed and option provision did not merge

because the implied agreement to deliver a title free and clear and encumbrances

was a “collateral agreement.”

       But even if we agreed with Thomas that the issue of clear title was

“collateral,” that alone is not enough to defeat merger. Rather, to survive the

execution of the deed, the secondary agreement has to be about a “condition” that

was “not incorporated in the deed, and which [was] not inconsistent with the terms

of the deed as executed.” Id. And here, the issue of whether the land would be

conveyed with or without encumbrances was directly dealt with in the deed—the

deed stated the land was being conveyed to Thomas and Mary subject to John’s

farm lease. Thomas has the burden to show merger was not intended, and he is

hard-pressed to meet that burden where the special warranty deed clearly set out

the lease obligation. See Lovlie, 250 N.W.2d at 62.

       Thomas tries to make this case like those where the contract agreement

included mention of a condition on which the deed was then silent. Like in Phelan

v. Peeters, 152 N.W.2d 601, 602 (Iowa 1967), where the real estate contract stated

“[a]ll utilities [would be] available and accessible so construction [could] begin” and

the deed was silent as to utilities. There, the defendant who failed to bring the

utilities to the property argued the deed merged with the contract and, because the

deed was silent as to any requirements about the utilities, the plaintiff could not

recover. Phelan, 152 N.W.2d at 603. The supreme court denied the defendant’s
                                         9

argument, concluding the utilities requirement survived the merger of the contract

and deed. Id. at 603–04. In that case, the explicit term of the contract survived

because the deed that followed was silent on that issue: “[T]he intent of the parties

[was] not manifest from the deed.” Id. at 603. But those are not the facts here—

the deed was not silent on the issue of encumbrances; Thomas was expressly

informed the title was encumbered by John’s farm lease.

       In trying to keep the option provision “alive and enforceable,” Huxford, 250

N.W.2d at 74, Thomas focuses on what he claims are inconsistencies between the

deed and option provision.       But Thomas did not claim fraud, mistake, or

malfeasance. So “if a conflict exists between the [deed and the contract], ‘the deed

speaks and the contract is silent.’” Midstates Bank, N.A. v. LBR Enters., LLC,

No. 20-0336, 2021 WL 1897968, at *8 (Iowa Ct. App. May 12, 2021) (quoting

Huxford, 185 N.W. at 74). Rather than showing some issue with the deed—as

Thomas implies—his acceptance and filing of a deed with less-favorable terms

than the option provision would not keep the contract alive; instead, it shows

Thomas waived any right to clear title. See Lovlie, 250 N.W.2d at 62 (recognizing

contracts to convey land merge with the subsequent deed “even though the terms

and conditions of the deed be not identical with those of the contract” because

parties to a contract can mutually agree “to change its terms and conditions”).

       To the district court, Thomas suggested he had no choice but exercise the

option and accept the deed because he was ordered to do so and to buy the

seventy acres by the dissolution court. First, we reiterate that the decree is not

part of our record on appeal, so we cannot say exactly what Thomas was ordered

to do by the dissolution court. To that end, Thomas raises a problem existing
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between him, his ex-spouse, and the dissolution court—an issue we are not tasked

to solve on this record. But, second, we point out that there is a distinction between

exercising an option to purchase land and executing a deed. If, after Thomas

exercised his option to purchase the land, he was presented with a deed he did

not believe conformed with the terms of the option provision, Thomas could have

sought specific performance of the option provision rather than accepting the deed

with less-favorable terms. In other words, being ordered to exercise the option

provision to purchase land is not the same as being ordered to accept new or

different terms as part of that purchase.

       Because the option provision merged with the deed, Thomas cannot

recover for breach of contract based on an implied term in the option provision.

Therefore, his breach-of-contract claim fails as a matter of law and summary

judgment was proper.

       B. Unjust Enrichment.

       Alternatively, Thomas argues that if the option provision merged with the

deed, then he should be allowed to recover under the theory of unjust enrichment.

       The doctrine of unjust enrichment is based on the concept of an implied

contract. Kunde v. Est. of Bowman, 920 N.W.2d 803, 807 (Iowa 2018). The term

“contract” is somewhat of a misnomer, as the obligation of quasi contracts or

implied-in-law contracts “is created by law for reasons of justice, without any

expression of assent and sometimes even against a clear expression of dissent.”

Iowa Waste Sys. v. Buchanan Cnty., 617 N.W.2d 23, 29 (Iowa Ct. App. 2000)

(quoting 1 Arthur Linton Corbin, Corbin on Contracts § 1.18, at 51 (rev. ed. 1993));

see also id. (“[I]t would be better not to use the word ‘contract’ at all.” (citation
                                            11

omitted)). “Unjust enrichment . . . is not grounded in contract law but rather is a

remedy of restitution.” Id. “A claim for unjust enrichment ‘arises from the equitable

principle that one shall not be permitted to unjustly enrich oneself by receiving

property or benefits without making compensation therefor.’” Legg v. West Bank,

873 N.W.2d 763, 771 (Iowa 2016) (citation omitted).         And, “[g]enerally[,] the

existence of a contract precludes the application of the doctrine of unjust

enrichment.” Johnson v. Dodgen, 451 N.W.2d 168, 175 (Iowa 1990); see also

Kunde, 920 N.W.2d at 807 (“The existence of an express contract on these matters

prevents [the plaintiff] from circumventing their agreement by seeking to use [the

theory] of unjust enrichment . . . to recover . . . .”).

       Here, there is not an implied or quasi contract—there is a deed that “was

made in consummation and fulfillment of the contract.” Carey v. Walker, 154 N.W.

425, 427 (Iowa 1915).        And the deed is expressly on point on the issue of

encumbrances, which Thomas seeks to litigate. So, Thomas cannot rely on the

theory of unjust enrichment to recover.            See Kunde, 920 N.W.2d at 807

(recognizing “that an express contract and an implied contract cannot coexist with

respect to the same subject matter”). That Thomas is prevented from relying on

an earlier, now-merged agreement to recover is not inequitable. As we have

already pointed out, Thomas is not claiming fraud, mistake, malfeasance, or even

surprise, so there is no reason he should not be held to the terms of the deed he

agreed to accept.

       Thomas’s claim of unjust enrichment fails as a matter of law; summary

judgment was appropriate.
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IV. Conclusion.

      Because the option provision merged with the deed, Thomas cannot

recover for breach of contract based on an implied term in the option provision.

And because there is an express agreement on the subject matter Thomas

challenges, his claim for unjust enrichment also fails as a matter of law. For these

reasons, we affirm the district court’s grant of summary judgment for Shirley and

the dismissal of Thomas’s lawsuit.

      AFFIRMED.