Douglas v. Stenoien, Lavola Stenoien, Sheryl Stenoien, and Gwendolyn Brown v. Gary Stenoien, Lorri Ann Stenoien A/K/A Lorri Ann Reinke, and Tammy Swanson

Citation: Not availableDocket: 13-1044

Court: Court of Appeals of Iowa; July 30, 2014; Iowa; State Appellate Court

Original Court Document: View Document

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Plaintiffs Douglas and Lavola Stenoien, along with their daughters Sheryl Stenoien and Gwendolyn Brown, appeal a district court's summary judgment favoring defendants Gary Stenoien (their son), Lorri Ann Stenoien (Gary's wife), and Tammy Swanson (Gary and Lorri's daughter). The court found the plaintiffs' petition for equitable enforcement of an oral agreement was barred by the statute of frauds and the statute of limitations relating to oral contracts. The appellate court determined that neither statute barred the action and reversed the lower court's decision, remanding the case for further proceedings.

The background involves a family dispute over farmland. Douglas sold 226 acres to the Johnsons in 1998, retaining the right to repurchase at 1998 prices plus ten percent until July 2003. Family discussions led to an agreement for Sheryl and Gary to exercise the repurchase option on behalf of the family, intending for all children to equally share ownership. The repurchase option was extended, and a mortgage was signed by Sheryl in 2004 to secure a loan, with Douglas and other family members present at the loan meeting. The property was transferred to Gary in January 2004 and later leased in 2010. Family discussions continued regarding mortgage payments and the potential sale of Douglas's horse ranch. Tensions escalated, leading to a breakdown in communication between Douglas and Gary following a Thanksgiving 2011 conversation about the loan balance, which Gary refused to disclose.

Douglas discovered that only Gary's name was on the warranty deed following a December 1 meeting, with no evidence of the loan being paid or Douglas selling his horse ranch to settle the balance. A letter from Farm Credit Services (FCS) dated March 20, 2012, detailed fees for releasing Sheryl's real estate from the mortgage, and on May 8, 2012, FCS released the lien without notifying Sheryl of the request or the partial release. On September 23, 2012, the plaintiffs filed a petition claiming Gary breached an oral family agreement regarding the repurchase of land, seeking enforcement of the agreement, payment of rents towards the mortgage, and a constructive trust to divide property equally among Douglas and Lavola Stenoien's children. The plaintiffs later added Lorri and Tammy as defendants and responded to Gary's counterclaims. The defendants moved for summary judgment, arguing that the claims were barred by the statute of frauds and the statute of limitations for oral contracts. The plaintiffs contended these statutes did not impede their claims. The district court granted summary judgment for the defendants, leading to the plaintiffs' appeal. The review standard for summary judgment is to identify whether genuine issues of material fact exist, favoring the nonmoving party. The defendants asserted no factual disputes existed, framing the issue as a matter of law. They claimed the facts in the joint affidavit were admitted for the motion, and attempts to limit this admission were ineffective, as clients are bound by their attorney's actions within the scope of representation. This principle of agency law holds that clients bear the consequences of their attorney's decisions across all facets of the attorney-client relationship.

Notice given by an attorney is typically considered the client’s act. Clients are generally bound by the strategic decisions made by their counsel, even if these decisions raise constitutional issues. An attorney's admissions, relevant and within the scope of their employment, are admissible against the client. The plaintiffs argued that a family agreement was exempt from the statute of frauds due to partial writing and performance, and claimed that the statute of limitations had not expired because the breach of an oral contract could only have been discovered on December 1, 2011. The district court, referencing Iowa Code section 614.1(4), found the claim barred by the five-year statute of limitations for oral contracts, asserting that the breach occurred when a warranty deed was recorded in January 2004. The court determined that whether there was a valid oral contract and its breach are typically questions for a trier of fact, and noted that the motion for summary judgment was premature as discovery was incomplete. The Iowa Rule of Civil Procedure 1.403 does not require detailed pleadings, just a clear statement of the claim. The plaintiffs argued that their petition did not limit recovery theories to breach of an oral contract, citing Gary's December 2011 statement claiming title to the property as the incident that initiated their claim. Under Iowa law, a cause of action does not accrue until the wrongful act results in loss or damage to the claimant, and a breach occurs when a party fails to perform any part of the contract without legal excuse.

The family agreement stipulates that title to the property would be transferred to the children of Douglas and Lavola after the associated repurchase loan is repaid. Currently, only a partial mortgage release has occurred, suggesting the loan remains unpaid, and the family agreement is still actionable. Plaintiffs allege that Gary expressed an intention to breach this agreement on December 1, 2011, leading to a claim of anticipatory breach of an oral contract. Citing Glass v. Minnesota Protective Life Ins. Co., the court notes that an anticipatory breach allows the non-breaching party to either uphold the contract or treat it as breached. Since the plaintiffs waited until Gary's actual breach occurred before initiating their claim, it falls within the one-year timeframe and is not barred by the five-year statute of limitations for unwritten contracts.

Additionally, the district court ruled that the statute of frauds rendered oral contracts related to land transfers inadmissible. However, this ruling was deemed incorrect, as the statute of frauds does not nullify oral contracts but makes them difficult to prove unless in writing. Exceptions exist for contracts that have been partially performed or where promissory estoppel is applicable. Thus, the plaintiffs’ action is valid in light of these exceptions, and the district court's summary judgment was erroneous on both the statute of limitations and the statute of frauds grounds.

The plaintiffs, Douglas, Lavola, Sheryl, and Gwendolyn, claim a contract analogous to an oral agreement in the case of Gardner, where Harry Gardner, facing financial difficulties, solicited his siblings to convey their remainder interest in real estate in exchange for a promise to reconvey it if he failed to refinance. The court in Gardner ruled that partial performance could bypass the statute of frauds, allowing oral contract evidence. The current case raises a material fact issue regarding part performance, with the plaintiffs citing three actions: one child’s option to repurchase, Sheryl’s provision of her land as security for financing, and the application of rent toward the loan by Gary. The district court dismissed the claim, suggesting alternative explanations for these actions, but the plaintiffs are entitled to favorable inferences from the evidence, indicating material issues of fact that prevent summary judgment. 

Additionally, the plaintiffs argue that the defendants should be equitably estopped from invoking the statute of frauds or the statute of limitations, referencing Iowa's recognition of promissory estoppel as a means to circumvent the statute of frauds. The defendants contest this claim, insisting that strict proof of promissory estoppel elements is necessary. However, factual disputes remain regarding the validity of estoppel claims, and the plaintiffs need only address the elements challenged in the summary judgment motion.

A nonmovant's opportunity to address grounds for summary judgment is crucial, and a party cannot introduce new grounds on appeal that were not previously presented. The defendants failed to establish their entitlement to summary judgment, leading to a reversal and remand for further proceedings. Judge McDonald dissents, arguing that the plaintiffs lack competent evidence of a contract, as any contract related to land must be in writing and signed. The general rule applies, and no recognized exceptions exist in this case. Even assuming the evidence was competent, the plaintiffs' claim would still fail because a contract must be definite and certain in its terms. The requirement for clear and convincing evidence for oral agreements regarding land is designed to prevent fraud and perjury, ensuring that enforcement only occurs with adequate documentation. The plaintiffs' oral agreement lacks clarity on essential terms, such as whether the property would be gifted or sold among siblings, the price, and the timeline for any transfer, demonstrating insufficient evidence to establish a legitimate claim. To resist summary judgment, a party must present specific, material facts that create a genuine issue for trial, and the plaintiffs have not met this burden.

An issue of fact is considered 'genuine' if a reasonable jury could favor the nonmoving party. Under the statute of frauds, the plaintiffs' evidence to oppose summary judgment is deemed 'incompetent' unless an exception applies. Iowa Code section 622.33 specifies two exceptions concerning land contracts, neither of which is relevant in this case. The first exception applies when a vendor has received part of the purchase money or when the vendee has taken possession with the vendor's consent. This exception is limited and requires that any actions demonstrating part performance must unequivocally relate to the contract. The plaintiffs failed to demonstrate such part performance or provide evidence supporting it.

The alleged agreement between Gary and the plaintiffs does not meet the statutory criteria, as the plaintiffs did not show any recognized part performance related to their agreement with Gary. Actions like Gary exercising a purchase option or renting the property do not qualify under the statute. The facts indicate that Gary purchased the property, took title, and rented it, suggesting his intent to benefit from the property rather than transfer it to his siblings, contradicting the plaintiffs' claims.

Additionally, the second exception to the statute involves circumstances that could historically exempt a case from the statute, including the doctrine of promissory estoppel. However, the excerpt introduces the elements of promissory estoppel without further elaboration. Overall, there is no genuine issue of material fact regarding part performance, and the plaintiffs' claims lack the necessary legal foundation to contest the summary judgment.

A promise can only be enforced under certain conditions: (1) the promissor must understand that the promisee relies on the promise; (2) the promisee must act to their substantial detriment based on that reliance; and (3) enforcement is necessary to avoid injustice. Strict proof of each element is required to prevent undermining the statute of frauds. The plaintiffs failed to provide adequate evidence for any of these elements, including a clear promise, reliance, substantial detriment, or injustice. Previous cases affirm that mere costs or marketing expenses do not suffice to challenge summary judgment on a promissory estoppel theory. Additionally, the plaintiffs did not adequately argue for the applicability of promissory estoppel and instead referenced equitable estoppel regarding the statute of limitations, which does not apply in this context. The dissent emphasizes that allowing exceptions to the statute of frauds undermines its purpose and the stability of property title, arguing that the courts should not bypass the statute regardless of the case's hardships. The argument presented by the plaintiffs is deemed insufficient to warrant trial proceedings, and the dissent would uphold the district court's judgment.