Court Opinion

ID: 4529825
Source: CourtListenerOpinion
Date Created: 2020-04-29 17:05:18.206037+00
Date Added: 2024-06-11T09:26:54.549135
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 18-1841
                              Filed April 29, 2020

ZEN RESTAURANTS LLC,
     Plaintiff-Appellee,

vs.

KIRKWOOD COMMONS, LLC,
     Defendant-Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Sarah E. Crane, Judge.

      Kirkwood Commons, LLC appeals the district court’s entry of declaratory

judgment in its favor. AFFIRMED.

      David Barajas of Macro & Kozlowski, L.L.P., West Des Moines, for

appellant.

      David J. Hellstern of Sullivan & Ward, P.C., West Des Moines, for appellee.

      Considered by Vaitheswaran, P.J., and Mullins and Ahlers, JJ.
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VAITHESWARAN, Presiding Judge.

      Zen Restaurants, LLC (Zen) owned several restaurants in Des Moines,

Iowa. Zen leased space for two of the restaurants from Kirkwood Commons, LLC

(Kirkwood). Between 2006 and 2015, Zen paid Kirkwood $250 to $350 per month

in “common area maintenance” (CAM) fees.         In 2015, Kirkwood proposed to

increase the fee to $2500 per month, but it later reduced the sum to $1515.89 per

month. Zen refused to pay the increased amount.

      Zen sued Kirkwood, seeking a declaration that the increase of “577%” was

“invalid and unenforceable.”1   Following trial, the district court found that an

addendum to the lease referred to as “Addendum 1” “further detailed the CAM

charges at issue” and “[t]he parties acted as if Addendum 1 had been signed until

this dispute arose in 2015.” The court determined “that Addendum 1 [was] an

agreement between the Parties and part of the Lease.” Applying the lease terms,

including the terms of Addendum 1, the court increased Zen’s CAM fee from $250

to $476.11 per month, an amount that was significantly lower than the sum

Kirkwood requested. Kirkwood appealed.

      Kirkwood contends Addendum 1 was not “mutually accepted by the parties

and enforceable.” In Kirkwood’s view,

      [t]here was no evidence presented at trial showing that Addendum 1
      was ever signed by either [party,] which was a prerequisite to any
      modifications of the lease agreement, and as such it was improper
      for the district court to consider Addendum 1 in making its Findings
      of Fact and Conclusions of Law.

1 Zen raised other claims that the court resolved against Zen. The court ruled,
“The narrowing of claims to the declaratory judgment matter is consistent with the
parties’ post-trial briefs.” Neither party disputes the court’s statement.
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In support of its argument, Kirkwood cites the following lease provision:

             Entire Agreement; Amendments. This Lease contains all
       agreements between Landlord and Tenant with respect to any matter
       mentioned herein, and no other prior or contemporaneous agreement
       or understanding shall be effective. . . . No subsequent alterations,
       amendments, changes or additions to this Lease shall be binding
       unless reduced to writing and signed by each party.

(Emphasis added.)

       Although Kirkwood did not rely on this integration clause in the district court,

and the district court did not cite it, Zen agrees error was preserved, and so do we.

See Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002) (“It is a fundamental

doctrine of appellate review that issues must ordinarily be both raised and decided

by the district court before we will decide them on appeal.”). With or without the

integration clause, the substance of Kirkwood’s argument was and is that

Addendum 1 was not signed and, accordingly, was unenforceable. See McKenzie

v. E. Iowa Tire, Inc., 448 N.W.2d 464, 466 (Iowa 1989) (“We believe the issues

now before us were tried to the court by consent. . . . McKenzie sufficiently

preserved his claim of error for appeal.”).

       In determining that the parties agreed to Addendum 1, the district court

made the following findings:

       On January 18, 2007, Eric Wolfe, a representative of Kirkwood, sent
       a proposed lease addendum to clarify the formula for the CAM
       charges. This email invited review and reply. (Exhibit 4). On
       February 8, 2007, Eric Wolfe sent another email with an updated
       “final lease addendum.” Wolfe specifically noted that it had been
       “modified per your request.” Wolfe asked [Zen owner] Hutchison to
       sign and noted that he would ensure John Chudy [an owner of
       commercial space at the building] signs. He further stated: “Thanks
       for your help in getting this agreement clarified and reduce[d] to
       writing in a mutually agreeable form. Hopefully this will help to avoid
       any future surprises or disagreements about utility or maintenance
       issues.” (Exhibit 5). The attachment to Exhibit 5 included changes
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       proposed by Zen’s attorney modifying the obligations for
       proportionate share of expenses. It is unclear whether that
       addendum was signed in February 2007 or not. On April 9, 2008,
       Steve Grow, a property manager for Kirkwood sent an email
       calculating the expenses in two different ways, one which relied on
       the specific percentages calculated in the Addendum. Grow stated
       that Kirkwood would honor the lower amounts as calculated by
       Addendum 1 if Zen would sign and return Addendum 1. (Exhibit 7).
       Hutchison testified that he then signed Addendum 1 and returned it.
       There is no dispute that the Parties applied Addendum 1 for the next
       seven (7) years.
               The Court finds that, at a minimum, an agreement on
       Addendum 1 (as set forth in Exhibit 5) was reached in April 2008.
       The email from Kirkwood property manager Grow offered to honor
       Addendum 1 if Hutchison signed it. Hutchison testified that he signed
       it, which would constitute acceptance of that offer. The Court finds
       Hutchison’s testimony credible. It is undisputed the Parties acted in
       conformity with Addendum 1 for the next seven (7) years, until this
       dispute developed. Even Kirkwood relies on terms defined in
       Addendum 1 in its efforts to calculate what it calls CAM charges.
       (See Worksheet 1 in Exhibit H). John [Chudy] testified that he
       refused to sign Addendum 1. This testimony does not change the
       Court’s determination for two reasons. The Kirkwood property
       manager made an offer to Hutchison to honor Addendum 1. . . .
       Exhibit 7 is an objective offer—Exhibit 5 referred to Addendum 1 as
       the final lease addendum and Exhibit 7 offers to honor it. The Court
       finds the offer was accepted. [Chudy’s] claim that he refused to sign
       because of confusion about the CAM charges is in direct
       contradiction to the actions of the parties for the next seven (7) years.
       The Court finds Addendum 1 is part of the Lease.

Substantial evidence supports the court’s findings and determination. See Metro.

Prop. & Cas. Ins. Co. v. Auto-Owners Mut. Ins. Co., 924 N.W.2d 833, 839 (Iowa

2019) (“The district court’s factual findings have the effect of a special verdict and

are binding on us if supported by substantial evidence.”).

       The integration clause does not alter our conclusion. The district court

found Hutchison signed Addendum 1, a finding that is supported by substantial

evidence. The court further found Chudy’s testimony that he did not sign the

document lacked credibility, a determination that is uniquely within that court’s
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purview. See City of Cedar Rapids v. Leaf, 923 N.W.2d 184, 196 (Iowa 2018)

(“[W]e give weight to the trial court’s findings of fact, particularly when it comes to

the credibility of witnesses.”). Accordingly, the integration clause’s requirement

that “[n]o subsequent alterations, amendments, changes or additions to this Lease

shall be binding unless reduced to writing and signed by each party” was satisfied.

       We affirm the district court’s findings and conclusions.

       AFFIRMED.