from the Iowa District Court for Lee County (South), Mary Ann
Kunz appeals from a jury verdict in favor of Connie Kunz in
her breach-of-contract action. REVERSED AND REMANDED.
F. Dennis, Keokuk, for appellant.
R. Dial of the Law Office of Curtis Dial, Keokuk, for
by Danilson, C.J., and Doyle and McDonald, JJ.
Kunz appeals from a jury verdict in favor of Connie Kunz in
this breach-of-contract action. He contends the settlement
memorandum signed by Connie and him were only preliminary
negotiations and not a binding agreement. Even if it was a
binding agreement, his obtaining financing was a condition
precedent that did not occur. He challenges the court's
refusal to give his proposed jury instructions regarding the
condition precedent. He also challenges the district
court's decision to allow evidence regarding his personal
Kunz and Robert Kunz, brothers, started a business in 1973
called Happy Homes, Inc., which sold factory-built homes.
This was a "family business, " and Richard's
wife, Connie, and Robert's wife, Dorothy, were actively
involved. Richard and Robert jointly owned the business and
9.7 acres of real estate upon which Happy Homes was located.
In 2007, Richard died, and his interest in Happy Homes went
to Connie. In 2008, Connie and Robert began discussing the
sale of the business. Initially, Connie was interested in
purchasing Robert's share of the business and continuing
to operate Happy Homes with her son, Denton. Connie and
Robert eventually entered mediation, and, on April 23, 2010,
Connie, Robert, Dorothy, and their respective attorneys all
signed a document entitled "Settlement Memorandum."
Settlement Memorandum stated,
1. Robert will purchase Connie's shares of stock in Happy
Homes, Inc. for the sum of $250, 000.00 including the real
estate owned jointly by Connie and Robert and Dorothy. Curtis
Dial and Hubert Staff [attorneys] will prepare all detailed
agreements necessary for the purchase of the corporate stock
and the real estate. The escrow fund is to be intact as to be
verified by the accountant. This agreement is subject to
Robert Kunz being able to arrange financing for this
2. All of Connie's shareholder debt will be canceled.
3. Robert will seek to obtain a release by the bank on
individual guarantees of corporate indebtedness by
4. Robert agrees to indemnify Connie against corporate debt
per the agreement prepared by the attorneys.
5. The real estate will be conveyed using normal real estate
purchase and sale closing procedures. It is anticipated or
expected that this matter will be closed within forty-five
(45) days of this date.
6. Included in this agreement is the agreement of Robert to
take over ownership of the individual homes owned by Connie
and assume the debt on those homes.
7. Connie will receive the 1997 Chevrolet C-10 truck formerly
used by Richard.
8. The parties agree to take all action and execute all
documents necessary to effectuate this agreement.
2, 2010, Robert's attorney notified Connie's attorney
Robert and Dorothy "have been unsuccessful in obtaining
a loan" and would not proceed with the purchase.
28, 2010, Connie filed a breach-of-contract suit against
Robert and Dorothy, which she subsequently dismissed without
prejudice. On February 17, 2011, Robert and Dorothy filed
suit against Connie for partition and liquidation of Happy
Homes. The modular homes, real estate, and other assets of
Happy Homes were sold at auction on May 5, 2012. Robert
purchased the 1997 Chevrolet C-10 truck for $4000. The
original purchaser of the real estate bid $160, 000 but
backed out, forfeiting a $16, 000 down payment. Robert then
purchased the real estate from Happy Homes. The proceeds from
the sales of Happy Homes assets ($251, 066.47) were placed in
a trust account, outstanding loans to State Central Bank were
paid off, as were attorney fees and other items, and, on
October 25, 2012, $88, 225.88 was distributed each to Connie
thereafter reinitiated her suit against Robert and Dorothy
for breach of the settlement memorandum, seeking the
difference between what she received from liquidation of the
company and the purchase price set forth in the settlement
memorandum. Dorothy was later dismissed as a party.
7, 2015, Robert filed a motion in limine asking that the
court exclude his personal financial statement as irrelevant.
The court denied the motion noting,
One of the issues in this case will be whether [Robert]
complied with the terms of a contract that he "arrange
financing" to make a payment to [Connie]. Counsel agreed
that one of [Robert's] defenses to not completing the
terms of the contract was that he was not able to arrange
financing. As a result the Court can envision how his
financial condition would be relevant to a trier of fact to
evaluate on whether he had been able to "arrange
financing" to complete payment of the contract
trial, Connie testified Robert agreed at mediation to buy her
interest in the real estate and business for $250, 000 and
that he would obtain a release of her individual guarantees
of corporate indebtedness. She considered the Settlement
Memorandum a contract. She acknowledged she had received
three checks from the liquidation of Happy Homes'
assets and that she had been released from liability on Happy
Homes' indebtedness. Connie asked that she be awarded the
difference between the $250, 000 promised and what she had
January 2010, Robert's financial statement with his bank,
State Central Bank, indicated his net worth was over $2, 720,
000. Robert agreed he had signed the settlement memorandum
and "agreed to purchase Connie's interest in the
business and the real estate for $250, 000, and she would
also get the truck she wanted." Robert testified he went
to his bank and sought financing to pay Connie, offering the
assets of Happy Homes as collateral. He did not offer his
personal family assets as collateral because "personal
family assets and this does not get mixed in with a
business." He also stated he went to a distant relative,
who was a banker in Illinois, and asked for a loan and was
denied. He did not fill out a loan application at either
Robert also testified as follows:
Q. Did you ever attempt to use your personal finances to
obtain a loan?
A. No, I did not.
Q. And would you agree that had you used your personal
finances, you could have obtained financing?
A. I wouldn't say that.
Q. Well, you could have paid for it yourself, ...