Court Opinion

ID: 4517487
Source: CourtListenerOpinion
Date Created: 2020-03-18 18:04:23.449976+00
Date Added: 2024-06-11T11:27:23.597022
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 18-2131
                             Filed March 18, 2020

MARY JANE BUCK; LOIS ERBSTEIN; DONALD AND LORRAINE SHIRK; and
MAUREEN D. WILSON, Individually and as Trustee of the MAUREEN D.
WILSON REVOCABLE TRUST,
     Plaintiff-Appellees/Cross-Appellants,

vs.

THE RESERVE, A NONPROFIT CORPORATION d/b/a THE RESERVE ON
WALNUT CREEK,
     Defendant-Appellant/Cross Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Jeanie K. Vaudt, Judge.

      The Reserve appeals an adverse judgement on the plaintiffs’ claims of

breach of fiduciary duty and unconscionable contract; the plaintiffs cross-appeal

the dismissal of other claims. REVERSED ON APPEAL; AFFIRMED ON CROSS-

APPEAL.

      William J. Miller of Dorsey & Whitney LLP, Des Moines, for appellant.

      Jason M. Craig and Maria E. Brownell of Ahlers & Cooney, P.C., Des

Moines, for appellee.

      Heard by Bower, C.J., and Greer and Ahlers, JJ.
                                           2

BOWER, Chief Judge.

       The Reserve on Walnut Creek (the Reserve) appeals an adverse judgment

on the plaintiffs’ claims of breach of fiduciary duty and unconscionable contract;

the plaintiffs cross-appeal the dismissal of other claims.        Our supreme court

recently decided an almost identical case involving another member of the

Reserve, the same legal representatives, and very similar claims. Albaugh v. The

Reserve, 930 N.W.2d 676 (Iowa 2019).1 Because we are bound by that ruling, we

reverse and remand for dismissal on the Reserve’s appeal. We affirm the entry of

summary judgment on the plaintiffs’ additional claims.

I. Background Facts and Proceedings.

       The Reserve is a member-owned, nonprofit “senior adult congregate living

facility”2 in Urbandale, Iowa, governed by a board of directors. It provides housing

and supportive services to its residents, who must be sixty years of age or older,

with periodic charges and an entrance fee. The supportive services provided by

the Reserve to its residents include, among other things, maintenance, communal

activities, security, transportation, and dining options. All of the supportive services

are provided to promote safely aging in place.

1 The plaintiff in Albaugh brought the suit for the return of the entrance fee or
supplemental fee on behalf of her mother, Shirley Voumard, who was a member
of the Reserve and “had to vacate the facility for health reasons.” 930 N.W.2d at
679. Albaugh asserted claims of violation of the Iowa Uniform Residential Landlord
and Tenant Act (Iowa Code chapter 562A (2016), hereinafter “IURLTA”), consumer
fraud, breach of fiduciary duty, breach of the implied covenant of good faith and
fair dealing, and unconscionability. Id. The supreme court upheld summary
judgment in favor of the Reserve.
2 This is a statutorily defined term and is one of two types of retirement facilities

governed by Iowa Code chapter 523D. Iowa Code § 523D.1(3) (“Continuing care
retirement community”), .1(10) (“Senior adult congregate living facility”); see
Albaugh, 930 N.W.2d at 690–91 (Appel, J., dissenting).
                                         3

       Plaintiffs Mary Jane Buck, Lois Erbstein, Lorraine Shirk, 3 and Maureen

Wilson (collectively “the Plaintiffs”) are current members and residents of the

Reserve.    Each plaintiff entered into a contract with the Reserve called an

“application agreement” (Agreement) to obtain a membership interest in the

Reserve and the right to occupy an apartment there. The Agreement contained

the following bold-faced language:

               (i) Upon disbursement of such Entrance Fee and such
       Supplemental Amount to the uses and purposes of the Corporation
       the Corporation will have no further obligation to refund or return
       such Entrance Fee or such Supplemental Amount to Applicant.
               (ii) Applicant’s ability to recover such Entrance Fee and such
       Supplemental Amount will depend entirely on the Applicant’s ability
       to assign or transfer his Membership in the Corporation to another
       person or persons.
               (iii) The Monthly Charge is subject to fluctuation.
               (iv) Upon the transfer of Applicant’s Membership in the
       Corporation to another person or persons there is no guarantee the
       Applicant will recover the entire Entrance Fee, the entire
       Supplemental Amount, or such other funds as may have accrued
       during Applicant’s residency within the Development pursuant to
       Article 7 of the Covenants of Occupancy.
               (v) Should Applicant default under the terms of the Covenants
       of Occupancy, which default is not cured in a manner deemed
       satisfactory by the Corporation, Applicant’s Residential Membership
       shall be terminated and all of Applicant’s right, title and interest in
       and to such Entrance Fee, such Supplemental Amount, and such
       other funds as may have accrued during Applicant’s residency within
       the Development pursuant to Article 7 of the Covenants of
       Occupancy shall be forfeited by Applicant and become the sole and
       separate property of the Corporation, and the Corporation shall have
       the right and authority to transfer Applicant’s Apartment to an
       assignee or transferee. Upon such transfer, the Corporation, in its
       sole discretion, shall have the right to deduct all Monthly Charges by
       Applicant and other expenses due and payable upon transfer.

(Emphasis omitted.)

3 Donald Shirk died prior to trial. By consent of the parties, the case proceeded to
trial with Lorraine Shirk alone representing the Shirks’s interests.
                                       4

      Just above the signature line, the Agreement stated, “This Agreement will

supersede any prior understandings and agreements and constitutes the entire

agreement between us, and no oral representations or statements shall be

considered a part hereof.”4

      Wilson executed the Agreement for Apartment 130 on December 20, 2004.

She agreed to pay an entrance fee of $87,983,5 a supplemental amount of

$91,983,6 and a monthly occupancy fee of $1489.

      The Shirks executed the Agreement for Apartment 219 on July 1, 2005.

They agreed to pay an entrance fee of $84,998, a supplemental amount of

$81,070, and a monthly occupancy fee of $1384.

      Buck, who was advised against signing the Agreement, executed the

Agreement for Apartment 328 on April 3, 2007. She agreed to pay an entrance

fee of $87,929, a supplemental amount of $87,929, and a monthly occupancy fee

of $1450.

4 Article 18 of the “Covenants of Occupancy” also provides: “No representations
other than those contained in the Agreement, these Covenants of Occupancy, the
Articles of Incorporation and the Bylaws of the Corporation shall be binding upon
the Corporation or the Resident.”
5 Iowa Code section 523D.1(4) defines an “[e]ntrance fee” as

        an initial or deferred transfer to a provider of a sum of money or other
        property made or promised to be made as full or partial consideration
        for acceptance of a specified individual in a facility if the amount
        exceeds either of the following:
                (a) Five thousand dollars.
                (b) The sum of the regular periodic charges for six months of
        residency.
6 The supplemental amount allowed the member to pay less in monthly fees

(approximately $600 less) than members who did not agree to pay the
supplemental amount. Because all the plaintiffs paid a supplemental amount, their
monthly occupancy fees reflect the discount.
                                          5

          Erbstein executed the Agreement for Apartment 238 on November 1, 2009.

She agreed to pay an entrance fee of $86,585, a supplemental amount of $86,585,

and a monthly occupancy fee of $1555.

          The monthly fee paid by all members of the Reserve pays for the month-to-

month expenses for operation of the Reserve, such as payroll for the Reserve’s

employees and expenses associated with the Reserve’s social programming and

the other services and activities provided to its members. If a member of the

Reserve fails to pay their monthly fee, that failure directly affects the other

members by requiring the other members to pay increased costs to “cover” for the

amounts that have not been paid by another member.

          In March 2015, the Reserve’s elected board of directors announced a

change to the Reserve’s financial structure due to the increase in availability of

“type A” units the Reserve owned through default or donation and the resulting

shortfall in the available monies to pay for its mortgage, its debt service, and the

monthly obligation for all of the expenses.7 The Reserve offered several available

type A units to be transferred for an entrance fee of $5000. The Reserve did not

change the monthly charges for these units, and the board of directors declared,

“Please be assured that there will be no ‘steering’ of prospects away from member-

owned units up for transfer, and we’ll continue working hard on moving all available

units.”

7 Members who selected a type A apartment paid an entrance fee and no
supplemental fee. Type A units thus came with a higher monthly charge than “type
B” units.
                                              6

         The Reserve subsequently implemented a leasing program in July to allow

members to lease their units to qualified individuals and to allow the Reserve to

lease the Reserve-owned units “at market-competitive lease rates.”

         On July 20, 2016, the Plaintiffs filed suit against the Reserve, raising the

following claims: count I—violations of the IURLTA (asserting the entrance fee and

supplemental amount constituted a rental deposit prohibited by Iowa Code section

562A.6(12)); count II—consumer fraud under Iowa Code chapter 714H (asserting

unfair and deceptive practices); count III—violation of Iowa Code chapter 523D

(claiming failure to provide a compliant disclosure statement); count IV—

declaratory judgment (asserting statutory and common-law unconscionability); and

count V—breach of fiduciary duties.8

8   The petition alleged:
         The Reserve through its Board of Directors and the company it hired
         to manage the Reserve, Newbury, breached their fiduciary duties by
         taking actions detrimental to the Plaintiffs and each Plaintiff’s
         respective investment, Entrance Fee and Supplemental Amount, in
         the Reserve, by among other things,
                (a) Failing to deal with Plaintiffs in an open and honest
         manner;
                (b) Failing to disclose to Plaintiffs how their investment in the
         Reserve was adversely affected by certain actions of the Board and
         Newbury, including, but not limited to:
                (i) Selling and/or transferring memberships/apartments of
         former residents at prices below the investments of Plaintiffs;
                (ii) By renting forfeited units at rental fees different from the
         monthly occupancy fees paid by Plaintiffs;
                (iii) By selling and/or transferring forfeited units at prices below
         the investments of the Plaintiffs for similar apartments;
                (iv) By advising other similarly situated residents to sell and/or
         transfer their memberships/investments at prices lower than the
         investments of the Plaintiffs for similar apartments;
                (v) By advising some former residents to forfeit their
         investments/apartments rather than continuing to pay monthly
         occupancy fees while no longer occupying their apartments;
                                         7

       On December 19, 2017, the district court granted summary judgment to the

Reserve on counts I–III and the statutory-unconscionability-claim portion of

count IV.   The court concluded it “cannot say as a matter of law that the

agreements at issue were not unconscionable at the time they were made.” As for

count V, the breach-of-fiduciary-duty claim, the court concluded there was an issue

of fact as to whether a fiduciary relationship existed between the Plaintiffs and the

Reserve such that the Reserve had a duty to protect the value of the Plaintiffs’

“investment” (i.e., the entrance fee and supplemental amount).

       Trial was held from June 4 to 8, 2018, with the court as fact-finder for the

unconscionability claim and the jury as fact-finder for the breach-of-fiduciary-duty

claim. The jury found a fiduciary relationship existed, which the Reserve breached

with each plaintiff, and awarded damages in the amount of each plaintiff’s entrance

fee and supplemental amount: Buck—$175,858; Erbstein—$173,170; Shirk—

$166,068; and Wilson—$179,966.

       On August 6, the court entered an order finding there was a ten-year statute

of limitations for the unconscionability claim and Shirk and Wilson’s claims were

“outside the window of eligibility for relief.” The court found Buck’s and Erbstein’s

claims were within the limitations period and found their contracts unconscionable.

               (vi) By decreasing the amenities offered by the Reserve or
       failing to add amenities in order to attract buyers willing to invest
       similar amounts as Plaintiffs; and
               (vii) Failing to maintain the Reserve at a level that would
       attract buyers willing to invest similar amounts as Plaintiffs.
                                         8

         The Reserve filed a motion for judgment notwithstanding the verdict, a

motion for new trial, and a motion to amend and enlarge. The district court ruled

on the posttrial motions and entered judgment in favor of the Plaintiffs.

         The Reserve appeals, and the Plaintiffs cross-appeal.

II. Scope and Standard of Review.

         We review rulings on motions for judgment notwithstanding the verdict for

correction of errors at law. Ferguson v. Exide Techs., Inc., 936 N.W.2d 429, 431

(Iowa 2019). We also review a district court ruling on a motion for summary

judgment for correction of errors at law. Albaugh, 930 N.W.2d at 682. When the

moving party has shown “there is no genuine issue as to any material fact and the

moving party is entitled to judgment as a matter of law,” summary judgment is

appropriate. Id. (citation omitted).

III. Discussion.

         We recognize the district court did not have the benefit of the supreme

court’s Albaugh decision in which it granted summary judgment to the Reserve on

substantially identical claims. Under that ruling, we must reverse the judgment

entered against the Reserve unless the Plaintiffs are able to distinguish their

cases.

         A. The Reserve’s Appeal.

               1. Unconscionability. “Whether an agreement is unconscionable

must be determined at the time it was made.” Id. at 687 (citation omitted). “[W]e

examine factors of assent, unfair surprise, notice, disparity of bargaining power,

and substantive unfairness to determine whether a contract is unconscionable.
                                          9

Nevertheless, the doctrine of unconscionability does not exist to rescue parties

from bad bargains.” Id. (quotation marks omitted) (citations omitted).

       The district court found the Agreement entered into by Buck and Erbstein

“contain[s] harsh, oppressive and one-sided terms.” The district court wrote:

       The take-away from a careful reading of these documents together[9]
       is three-fold: (1) Enrollees who have to leave the Reserve because
       they are no longer capable of living independently must still pay the
       Reserve their monthly exclusive occupancy fees and expenses until
       they get their interest in the Reserve sold or assigned; (2) if an
       enrollee dies after leaving the Reserve, their estate must continue to
       pay the decedent’s monthly exclusive occupancy fees and expenses
       until the estate gets the decedent’s interest in the Reserve sold or
       assigned; and (3) an enrollee, under the right conditions, could lose
       their entire investment in the Reserve. For Ms. Buck and Ms.
       Erbstein, this investment was a six-figure endeavor.
               The illustrations stated above confirm that the contested
       documents contain a number of oppressive and one-sided terms that
       could challenge the most sophisticated and experienced business
       person. Ms. Buck and Ms. Erbstein were not business people who
       had enjoyed decades-long careers routinely forging deals. They
       were not well-versed in the pluses and minuses of written residency
       agreements. They wanted a secure place to live, and they trusted
       that the Reserve would be fair to them in this endeavor. A
       reasonable person would not agree to abide by the terms and
       conditions the Reserve imposed upon Ms. Buck and Ms. Erbstein,
       several of which were substantively unfair. The court finds and
       concludes that under the record presented, the documents at issue
       individually and together are substantively unconscionable.

The facts and documents upon which the district court relied in its analysis are not

materially different from those in Albaugh. See id. at 679–80.

       Buck and Erbstein contend unconscionability claims are fact-specific and

the facts in their cases are distinguishable from those in Albaugh. The district court

9 The district court considered three sets of documents it described as “(1) a
seventeen-page disclosure statement; (2) a seven-page application agreement
with attached schedules I and II which they were required to ratify; and (3) an
eighteen-page document entitled ‘covenants of occupancy.’”
                                           10

noted the “oppressive and one-sided” contract terms; Buck’s and Erbstein’s six-

figure investments; and that Buck and Erbstein “were not business people,”

“wanted a secure place to live,” and “trusted that the Reserve would be fair to them

in this endeavor.”

       Buck’s and Erbstein’s circumstances are not materially different from those

of the member in Albaugh, Shirley Voumard—her entrance fee and supplemental

fee constituted a six-figure endeavor, id. at 679; she signed the same Agreement,

id. at 680; and despite the clear language of the Agreement, Albaugh claimed

“Voumard entered into the agreement with the understanding that the Reserve

would refund her entrance fee and supplemental amount and no one informed

Voumard that the Reserve would begin leasing or selling units in this manner,” id.

at 685. While the district court mentioned that Buck and Erbstein were “not well-

versed in the pluses and minuses of written residency agreements,” the evidence

presented was that each applicant had the opportunity to seek the advice of others.

The only discernable difference in circumstances is that Voumard was no longer a

resident due to her inability to care for herself.

       The Agreement terms here are the same that Albaugh alleged were

unconscionable, and the supreme court found:

       The agreement did not contain any elements of unfair surprise, as it
       clearly informed Voumard of her payment obligations regardless of
       whether she was still occupying her unit. It provided her with explicit
       notice that her ability to recover the entrance fee and supplemental
       amount depended entirely on her ability to assign or transfer her
       membership interest to someone else, and Voumard assented to the
       terms of the agreement. Nothing in the record suggests Voumard
       was unable to understand what she was assenting to.
                                          11

Albaugh 930 N.W.2d at 687. The supreme court concluded the Agreement was

not unconscionable. Id. at 688.

       Buck and Erbstein presented no evidence they were unable to understand

the terms of the Agreement. The Agreement all plaintiffs entered into did not

contain any elements of unfair surprise, as it clearly informed each plaintiff of their

payment obligations regardless of whether they were still occupying their unit. See

id. at 687. The Agreement provided each plaintiff with explicit notice that their

ability to recover the entrance fee and supplemental amount depended entirely on

their ability to assign or transfer their membership interest to someone else, and

each plaintiff assented to the terms of the agreement. See id. Nothing in the

record suggests any plaintiff was unable to understand what they were assenting

to.

       Each plaintiff and the Reserve entered into the Agreement on equal footing,

so there was not a disparity of bargaining power. See id. at 687–88. We find

unconvincing the Plaintiffs’ claim that the Agreement is so “harsh, oppressive, and

one-sided” that “no man in his senses and not under delusion would make” it. In

particular, we consider that Buck entered into the Agreement contrary to her

daughter’s advice, and others were part of a group of friends who all chose the

Reserve as their retirement community. Cf. id. at 688.

       Finally, we note the supreme court held “Iowa Code chapter 523D expressly

allows the entrance fee and supplemental amount outlined in the Reserve’s

agreement.” Id.; see Iowa Code §§ 523D.2, .3, .6. Considering these factors, we

reverse the district court’s judgment in favor of Buck and Erbstein on their claim of

unconscionability.
                                         12

              2. Breach of Fiduciary Duty. The Reserve contends the district

court erred in denying its motions for summary judgment, directed verdict, and

judgment notwithstanding the verdict on grounds the Plaintiffs could not identify a

fiduciary duty owed to each of them. We agree.

       Buck, Erbstein, Shirk, and Wilson each entered into the Agreement with the

Reserve as unrelated and unaffiliated parties. Each negotiated and entered the

Agreement on equal footing without the Reserve having any form of influence over

them. And the Agreement each signed clearly stated there was “no guarantee [the

member] will recover the entire Entrance Fee, the entire Supplemental Amount, or

such other funds as may have accrued during [her] residency within the

Development.” See Albaugh, 930 N.W.2d at 685–86.

       As we already noted, the district court did not have the benefit of the

Albaugh opinion when it ruled on the Reserve’s motion for summary judgment and

posttrial motions and found substantial evidence supports the existence of a

fiduciary duty between Plaintiffs and the Reserve. But, the Albaugh court affirmed

the grant of summary judgment in favor of the Reserve on substantially the same

asserted claim. Id. at 686. In fact, the Albaugh court found “nothing in the record

supports Albaugh’s claim that a fiduciary relationship existed between the parties.”

Id.   The court further explained, “The Reserve was managed by a board of

directors, a majority of whom were elected by all members, including Voumard.

The directors owed a fiduciary duty to act for the benefit of the Reserve, not an

individual member.” 10 Id. at 686 n.3.

10We observe that while there was a dissent in Albaugh, that dissent was aimed
only at the applicability of the IURLTA. 930 N.W.2d at 699 (Appel, J., dissenting)
                                         13

       Like the Plaintiffs in this case, Albaugh argued the Reserve owed a fiduciary

duty to Voumard because the she “relied on the Reserve to protect the value of

her membership.” Id. at 685. The Albaugh court rejected this argument:

       A fiduciary relationship “exists when there is a reposing of faith,
       confidence and trust, and the placing of reliance by one upon the
       judgment and advice of the other.” Indicative factors of a fiduciary
       relationship
               include the acting of one person for another; the having
               and the exercising of influence over one person by
               another; the reposing of confidence by one person in
               another; the dominance of one person by another; the
               inequality of the parties; and the dependence of one
               person upon another.
       In contrast, a fiduciary relationship does not exist when the
       relationship exists through an “arms-length transaction,” which is “[a]
       transaction between two unrelated and unaffiliated parties” or “[a]
       transaction between two parties, however closely related they may
       be, conducted as if the parties were strangers, so that no conflict of
       interest arises.”
               The district court correctly granted the Reserve’s motion for
       summary judgment on this issue because Voumard and the Reserve
       engaged in an arms-length transaction that did not establish a
       fiduciary relationship. The record demonstrates that Voumard and
       the Reserve entered into the agreement as unrelated and unaffiliated
       parties. The indicative factors of a fiduciary relationship are not
       present here, as Voumard and the Reserve negotiated and entered
       the agreement on equal footing without the Reserve having any form
       of influence over Voumard. Moreover, despite Albaugh’s claim that
       Voumard put her confidence in the Reserve to protect her entrance
       fee and supplemental amount, we have already noted the application
       agreement between Voumard and the Reserve stated there was “no
       guarantee [Voumard] will recover the entire Entrance Fee, the entire
       Supplemental Amount, or such other funds as may have accrued
       during [her] residency within the Development.” Overall, nothing in
       the record supports Albaugh’s claim that a fiduciary relationship
       existed between the parties.

Id. at 685–86 (internal citations omitted).

(“I would reverse the district court judgment on the IURLTA claim, grant summary
judgment to Albaugh on the IURLTA claim, and remand to the district court for
further proceedings.”).
                                             14

         The Plaintiffs have provided no persuasive factors to distinguish their

positions from Voumard’s. As a matter of law, the Reserve had no fiduciary

relationship with the Plaintiffs. See id. We reverse the judgment entered on this

ground.

         B. Plaintiffs’ Cross-appeal. The Plaintiffs assert the district court erred in

granting partial summary judgment in favor of the Reserve based on its

conclusions that the IURLTA does not apply to the Reserve and the Plaintiffs’

consumer fraud claims were untimely and barred.

                 1. IURLTA.

         The Plaintiffs claim the Reserve’s Agreement and corresponding entrance

fee, which is expressly permitted by specific provisions of chapter 523D, should

nonetheless be prohibited by the IURLTA and the Reserve’s use of same has

violated chapter 562A. This contention has already been rejected by our supreme

court. Id. at 682–84.11 The Albaugh court expressly concluded “the legislature did

11   The Albaugh court reasoned,
                 Iowa Code chapter 523D is entitled “Retirement Facilities” and
         is applicable to a provider who executes a contract for housing and
         one or more “supportive services” in a facility that “is or will be located
         in this state” and where the contract “requires or permits the payment
         of an entrance fee.” Iowa Code §§ 523D.1, .2. Some examples of
         supportive services include activity services, housekeeping, dining
         options, emergency nursing care, and transportation. Id.
         § 523D.1(12). As a provider that contracts with residents to supply
         this sort of housing and living services in an Iowa facility, the Reserve
         is considered a retirement facility and thus governed by chapter
         523D.
                 On the other hand, “[t]he IURLTA generally defines the legal
         rights and obligations of a landlord and tenant” in a rental agreement.
         Lewis v. Jaeger, 818 N.W.2d 165, 178 (Iowa 2012). A “‘rental
         agreement’ means an agreement . . . embodying the terms and
         conditions concerning the use and occupancy of a dwelling unit and
         premises.” Iowa Code § 562A.6(11).
                                          15

not intend the fees permitted by chapter 523D be subject to the rental deposit

provision of the IURLTA.” Id. at 684. We are not at liberty to overturn this

precedent. See State v. Eichler, 83 N.W.2d 576, 578 (Iowa 1957) (“If our previous

holdings are to be overruled, we should ordinarily prefer to do it ourselves.”); State

v. Hastings, 466 N.W.2d 697, 700 (Iowa Ct. App. 1990).

              2. Consumer Fraud. The Plaintiffs argue the Reserve engaged in

unfair practices in 2015 when it began to lease units without requiring an entrance

fee. They assert the statute of limitations does not bar the claim because Iowa

              The crux of Albaugh’s claim against the Reserve concerning
      the IURLTA is that Voumard’s $64,975 entrance fee and $63,557
      supplemental amount should be refunded to Voumard because they
      are improper rental deposits under the IURLTA. This brings us to
      the fundamental issue: whether the fees permitted by chapter 523D
      are rental deposits subject to the IURLTA.
              ....
              Affording each statute its proper context, the words used by
      the legislature reflect the intent to regulate two entirely distinct living
      arrangements. Chapter 523D regulates facilities that provide
      housing together with supportive services. In contrast, chapter 562A
      pertains to the rights and obligations of a landlord and tenant. This
      distinction is made plain by what the legislature said in each
      definition. An entrance fee only qualifies as an entrance fee if the
      amount exceeds “five thousand dollars” or “[t]he sum of the regular
      periodic charges for six months of residency” and is used as
      consideration for acceptance in a facility. Id. § 523D.1(4)(a)–(b). A
      rental deposit, however, is limited to “two months’ rent” and may only
      be used to remedy the tenant’s default, to restore the dwelling unit to
      its prior condition, and to recover expenses associated with the
      recovery of the premises. Id. § 562A.12(1), (3)(a). This reasonably
      demonstrates the legislature did not contemplate the use of an
      entrance fee as a rental deposit because the statutory definition of
      entrance fee is neither constrained to two months’ rent nor restricted
      as a landlord’s remedial function.
              We conclude the plain statutory language makes clear the
      legislature did not intend the fees permitted by chapter 523D be
      subject to the rental deposit provision of the IURLTA.
Albaugh, 930 N.W.2d at 682–84.
                                           16

Code section 714H.3(1) is not limited to practices occurring at the time the

Plaintiffs’ entered into the Agreement “but applies more broadly to post-sale

conduct which is ‘related to, linked to, or associated with’ the sale.” See State ex

rel. Miller v. Cutty’s Des Moines Camping Club, Inc., 694 N.W.2d 518, 525–28

(Iowa 2005) (examining unfair practices under Iowa’s consumer fraud act).

        The district court rejected the Plaintiffs’ contention that their claims were not

barred because they were brought within two years of the discovery of the violation

of the chapter. Even aside from the statute of limitations problem, we find the

Plaintiffs have failed to allege a cause of action.

        Section 714H.3(1) describes prohibited conduct under the act, providing in

part:

        A person shall not engage in a practice or act the person knows or
        reasonably should know is an unfair practice, deception, fraud, false
        pretense, or false promise, or the misrepresentation, concealment,
        suppression, or omission of a material fact, with the intent that others
        rely upon the unfair practice, deception, fraud, false pretense, false
        promise, misrepresentation, concealment, suppression, or omission
        in connection with the advertisement, sale, or lease of consumer
        merchandise, or the solicitation of contributions for charitable
        purposes. For the purposes of this chapter, a claimant alleging an
        unfair practice, deception, fraud, false pretense, false promise, or
        misrepresentation must prove that the prohibited practice related to
        a material fact or facts.

        The district court observed the Plaintiffs did not assert “the representations

allegedly made by the Reserve were known or should have been known to be

unfair or untrue at the time they were made, or when the units were advertised, or

when the transfer of the memberships at the Reserve were made to plaintiffs.” We

agree. The Plaintiffs’ allegations do not fall within section 714H.3(1), and thus their

claim fails.   See Albaugh, 930 N.W.2d at 685 (“Albaugh’s argument that a
                                        17

reasonable jury could find the Reserve’s actions unfair and ‘rely on its own

common sense’ to support this conclusion does not demonstrate that the Reserve

knew or should have known it was engaging in an unfair practice. There is no

evidence that the Reserve knew in 2007—when Voumard entered her agreement

with the Reserve—that it would have to lower the price on entrance fees in 2015.”).

The court did not err in granting summary judgment to the Reserve on this count.

      IV. Summary.

      On the Reserve’s appeal, we reverse the adverse judgments entered on the

Plaintiffs’ claims of breach of fiduciary duty and unconscionable contract and

remand for dismissal.    On the Plaintiffs’ cross-appeal, we affirm the entry of

summary judgment on the IURLTA claim and the claim of consumer fraud.

      REVERSED ON APPEAL; AFFIRMED ON CROSS-APPEAL.