Court Opinion

ID: 9663122
Source: CourtListenerOpinion
Date Created: 2023-08-23 23:28:23.782702+00
Date Added: 2024-06-11T18:14:45.862400
License: Public Domain

WOLLE, Justice
(concurring in part and dissenting in part).
I concur in Divisions I and II of the majority opinion because the evidence was clearly sufficient to generate jury questions on Kristerin’s contract claims against Granson and its individual partners. I dissent from Divisions III and IV because in my view the evidence was also sufficient to generate jury questions on Kristerin’s fraud claims against all defendants.
I. Fraud Claim Against Granson and Its Partners.
Kristerin alleged and offered substantial evidence to prove that Grandquist falsely made two representations to KJ’s representative Netteland shortly after KJ and two partners of Granson had signed the written contract. One representation was “The deal is good.” The other was “It only takes a couple partners to bind it anyway, so don’t worry about it.” Grandquist and the other Granson partners testified they never intended the contract signed by two of them to be a binding obligation.
After the date when Grandquist made the alleged representations, Granson offered one excuse after another why the transaction could not be closed. During that time Grandquist was secretly attempting to negotiate sale of the subject property to another investor on terms more favorable to Granson than the KJ contract. After stringing along Granson for several months, allegedly in an effort to keep open Granson’s options on sale of the property, KJ aborted the KJ transaction. It then asserted the several contract defenses which may yet, after remand in accordance with the majority opinion, result in a jury verdict for the defendants.
The majority opinion holds that Kristerin as a matter of law cannot recover on its fraud theory, pointing out that if a jury on remand finds Grandquist represented that two partners could bind the partnership, that finding would undermine the Granson mutual-assent defense to the contract action. The majority apparently reasons that Kristerin’s proof of that Grandquist representation must inexorably lead to a jury verdict for Kristerin on its contract theory, making unnecessary jury consideration of Kristerin’s fraud claim. I question both the application of that rationale to the facts in this case and the underlying notion that a right to recover for breach of contract constitutes a defense to a fraud action.
In this case Granson and its partners have responded to the contract claim by asserting several alternative defenses which will be jury issues on remand: (1) the partners had not given mutual assent to the deal, signing only on condition that Grandquist would sign; (2) sale of the partnership’s sole asset was not a sale in the usual course of business; and (3) the written offer was too uncertain or incomplete to constitute a contract. Perhaps, as the majority opinion holds, the first of those alternative defenses will be unavailing to. Granson if the jury finds Grandquist represented that two partners could bind the partnership. I question, however, whether Granson’s other alternative defenses would be defeated by such a finding. Moreover, the jury might well find from the evidence that Grandquist made the first representation (“The deal is good.”) but not the representation concerning binding authority of two partners. The jury might then find against Kristerin on its contract claim by finding merit in Granson’s mutual-assent defense. I believe Kristerin was entitled to submission of the fraud count even though its proof of one of the alleged Grandquist misrepresentations would gut one of Gran-son’s affirmative defenses to the contract action.
More importantly, I believe that a party may join in the same petition and present for jury determination alternative contract and civil fraud claims arising from a commercial transaction without having to elect one remedy or the other. See Feldhahn v. *335R.K.B. Quality Corp., 356 N.W.2d 226, 230 (Iowa 1984) (“It is fundamental that all well pled issues which are supported by substantial evidence should be submitted to the jury.”); Iowa R.Civ.P. 22, 28 (permitting joinder of causes of action).
The evidence was sufficient to satisfy the elements of Kristerin’s civil fraud cause of action on which the jury returned a substantial verdict against Granson. We have often listed those elements, most recently in Beeck v. Aquaslide 'N' Dive Corp., 350 N.W.2d 149, 155 (Iowa 1984). On this record, viewed in the light most favorable to the plaintiff (Iowa R.App.P. 14(f)(2)), the jury could reasonably find by a preponderance of clear and convincing evidence that Grandquist misrepresented a material fact in telling KJ that the deal was good when his partners and he never intended the contract to be a binding obligation. The jury could determine that Grandquist knowingly made the misrepresentation with the intent that KJ be induced to keep the transaction alive while allowing Gran-son to seek a better deal with another investor. Moreover, the jury could find Kristerin justifiably relied on the misrepresentation to its detriment, suffering business losses and incurring considerable expense while attempting to close the transaction. Consequently, I believe the trial court erred in granting Granson’s motion for judgment N.O.V. and in setting aside Kristerin’s substantial fraud judgment against Granson.
II. Fraud Claim Against Meggison.
The defendant realtor Meggison and his defendant company (collectively “Meggi-son”) were granted a directed verdict by the trial court and the majority affirms that ruling. I believe the trial court should have submitted that claim to the jury. If Kristerin’s claims against Granson will be retried, its claims against Meggison should also be presented to the jury.
The majority opinion concludes that as a matter of. law Meggison acted only as Granson’s “mouthpiece” and made no representations différent than Grandquist had made to KJ. The majority also holds that as a matter of law KJ did not justifiably rely on the agent Meggison’s representations because it confirmed those representations with the principal, Grandquist. I disagree, believing it was for the jury on this record to decide what Grandquist said to Meggison, what Meggison said to KJ, and whether KJ justifiably relied on what Meggison told it. While it is true the jury might have believed Meggison’s version that he merely repeated to KJ and its attorney what Grandquist thereafter told both of them, the evidence was irreconcilably in conflict on those questions of fact. Grand-quist denied he told Meggison or KJ that the deal was good or that signatures of two partners were sufficient to bind Granson. The jury was free to believe Grandquist when he said he had not made such representations to Meggison, and to believe KJ’s representative and attorney who said Meg-gison made the representations to them. No one questions that Meggison had authority to serve as Granson’s agent in handling this transaction. If Meggison falsely represented that Grandquist had told him two partners could bind Granson, he would not have acted simply as a mouthpiece and could be held liable to Kristerin for making actionable false representations regardless of the outcome of Kristerin’s contract and fraud claims against Granson and its partners. See McCann v. Clark, 166 Iowa 705, 713-14, 148 N.W. 1025, 1028-29 (1914); Restatement (Second) of Agency § 348 (1958).
The record also supports Kristerin’s contention that KJ justifiably relied upon Meg-gison’s alleged statements. See Lockard v. Carson, 287 N.W.2d 871, 878 (Iowa 1980) (reliance tested subjectively by “what the complaining party reasonably could be expected to do,” emphasis in original); accord Sedco International, S.A. v. Cory, 683 F.2d 1201, 1207 (8th Cir.), cert. denied, 459 U.S. 1017, 103 S.Ct. 379, 74 L.Ed.2d 512 (1982). KJ’s representative Netteland and also KJ’s attorney testified that they relied on Meggison’s representations that there was a contract, two of three partners could bind Granson, and the deal would close pursuant to the written contract. Upon *336remand for trial of Kristerin’s contract action against Granson and its partners, Kristerin’s claims against Meggison and his company should also be retried in order that a jury may decide what testimony was credible on the issues whether Meggison’s representations went beyond what Grand-quist had told him, whether KJ justifiably relied on the alleged misrepresentations of Meggison, and what damages KJ sustained as a result. Of course the jury’s verdict for Kristerin based on its finding that Granson and its partners committed fraud, if not overturned by the majority opinion, would provide Meggison a complete defense since Meggison would have made no representations beyond those made by Grandquist himself.
On the record before us I would vacate the decision of the court of appeals, reverse the trial court’s grant of judgment N.O.V. for Granson on the fraud claim, and remand this case for further proceedings on those contract and fraud claims that have not yet been submitted to a jury and that are not inconsistent with Kristerin’s judgment on its fraud claims against Granson.