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SCS Property Management, LLC v. Vokes

Court of Appeal of Iowa

June 12, 2013

SCS PROPERTY MANAGEMENT, LLC, Plaintiff-Appellant/Cross-Appellee,
v.
CINDY VOKES and WESTSIDE KIDS, INC., Defendants-Appellees/Cross-Appellants.

Appeal from the Iowa District Court for Dallas County, Gregory A. Hulse, Judge.

SCS Property Management, LLC appeals, and Cindy Vokes and West Side Kids cross-appeal, from the district court's judgment ruling on the parties' breach of contract claims.

Bridget R. Penick and Allison M. Lindner of Dickinson, Mackaman, Tyler & Hagen, P.C., Des Moines, for appellant.

Matthew J. Hemphill of Bergkamp, Hemphill, Ogle & McClure, P.C., Adel, for appellees.

Considered by Vaitheswaran, P.J., and Tabor and Mullins, JJ.

VAITHESWARAN, P.J.

SCS Property Management, LLC, run by Cindy Jones, leased space to a day care center known as West Side Kids, run by one of its owners, Cindy Vokes. When the five-year lease spanning 2005 to 2010 expired, West Side Kids vacated the premises, taking certain items with it. SCS sued West Side Kids and Vokes for breach of the lease agreement. West Side Kids counterclaimed for breach of the same agreement. Following a bench trial, the district court concluded both sides breached the lease. After offsetting their damage awards, the court entered judgment of $12, 971.74 in favor of West Side Kids.

On appeal and cross-appeal, the parties challenge several aspects of the district court's findings and conclusions. Our review of the court's fact findings is for substantial evidence and our review of the law is on error. Iowa R. App. P. 6.907; NevadaCare, Inc. v. Dep't of Human Servs., 783 N.W.2d 459, 465 (Iowa 2010).

I. SCS's Appeal

SCS contends the district court erred in rejecting its breach-of-contract claims based on West Side Kids' (A) removal of fixtures from the premises, (B) damage to the concrete outside the building, (C) "waste" of the premises and (D) failure to pay adequate "common area maintenance" (CAM) fees. SCS also appeals the district court's denial of its claim for attorney fees.

A. Removal of Fixtures

When West Side Kids vacated the leased premises, it took playground equipment, playground turf, concrete barriers surrounding the playground, fencing above the concrete barriers, children's toilets and sinks, and attached soap and paper towel dispensers. At trial, SCS did not dispute West Side Kids' entitlement to the playground equipment and turf but argued the balance of the items were "fixtures" that should have remained with the property.

The district court agreed with SCS that the soap and paper towel dispensers were "fixtures" and awarded SCS $290.06 in damages for the removal of those items. The court concluded the toilets, sinks, concrete barriers and fencing were needed in the daycare business, were, accordingly, "trade fixtures" rather than "fixtures, " and were appropriately removed by West Side Kids.

On appeal, SCS contends the district court got it wrong. It reiterates that the contested items were "fixtures" that should have remained with the real estate because they were "affixed to its real estate." Compare 35A Am.Jur.2d Fixtures § 3, at 840 (2001) (stating a fixture is "real property because it is incorporated in or attached to realty"), with Winnike v. Heyman, 169 N.W. 631, 633 (Iowa 1918) ("Trade fixtures' is a term usually employed to describe property which a tenant has placed on rented real estate to advance the business for which it is leased and which may, as against the lessor, be removed at the end of the tenant's term.").

Courts have applied a factual test to determine whether contested items are "fixtures" or "trade fixtures." Young v. Iowa Dep't of Transp., 490 N.W.2d 554, 556 (Iowa 1992) (stating personal property becomes a fixture when (1) it is actually annexed to the realty, or to something appurtenant thereto; (2) it is put to the same use as the realty with which it is connected; and (3) the party making the annexation intends to make permanent accession to the freehold); Marty v. Champlin Refining Co., 36 N.W.2d 360, 365 (Iowa 1949) (same, with respect to trade fixtures). We find it unnecessary to apply this test because it is clear from the terms of the lease and our precedent that a predicate to consideration of this issue was not satisfied: the tenant's placement of the disputed items on the property. See Interior Energy Corp. v. Alaska Statebank, 771 P.2d 1352, 1353- 54 (1989) ("The threshold issue in trade fixture cases is who purchased and installed the disputed fixtures. If it was not the tenant who installed them . . . he or she has no right to remove them.").

We begin with the lease. The document does not define the terms "trade fixtures" or "fixtures" but its "surrender of premises" provision consistently characterizes "trade fixtures" as items brought to the ...


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