from the Iowa District Court for Polk County, Karen A.
defendant in an action for breach of contract appeals from
the jury's verdict, which found the defendant breached
the contract and awarded damages to the plaintiff. AFFIRMED
A. Cacciatore of Graham, Ervanian & Cacciatore, L.L.P.,
Des Moines, for appellant.
W. Nelmark of Gislason & Hunter L.L.P., Des Moines, for
by Danilson, C.J., and Potterfield and Bower, JJ.
defendant, Gary Matthews, appeals from a jury verdict, which
found he had breached the contract he entered into with the
plaintiff, Bastion Capital Group, and awarded Bastion damages
in the amount of $113, 540.49. The jury verdict awarded
damages on three of five instances of forbearance by the
lender, followed by consequential transactions to the benefit
of Matthews. Matthews maintains the district court abused its
discretion in admitting testimony of Matthews's net worth
and evidence of the disposition of two properties that
occurred after the forbearance agreement was signed. He
claims the court also abused its discretion in sustaining an
objection to a question directed to Matthews's
foreclosure attorney about the meaning of a term used in the
contract between Matthews and Bastion. Additionally, Matthews
maintains the jury's verdict was illogical and
inconsistent, thus warranting a new trial. In response,
Bastion asks us to affirm the jury's verdict and remand
for the determination and award of "reasonable"
appellate attorney fees.
Background Facts and Proceedings.
is a commercial real estate developer in Peoria, Illinois. As
of June 2014, he was involved with a number of commercial
properties, and he was in default on some loans related to
those properties. Matthews had cross-collateralized his
loans, and the bank began foreclosure actions on a number of
commercial properties that had been designated as collateral.
Additionally, Matthews had personally guaranteed a number of
reached out to Leo Skeffington, the sole shareholder and
employee of Bastion, for help. Then, on June 20, 2014, Matthews entered
into a written agreement with Bastion, titled "Syndicate
Finance Agreement" (SFA). The agreement provided that
Matthews would pay Bastion a "commitment fee" of
$15, 000 when the agreement was entered into; this fee paid
for ninety days of Bastion's services. Matthews would
then pay $2500 for each additional month. The agreement was
"to remain in effect for a term of three hundred
sixty[-five] (365) days commencing" on the date it was
signed. The agreement could be "terminated early by
either party with a written notice no later than thirty (30)
days prior to the end of the then current month, " and
early termination did "not preclude [Bastion] from
receiving 'Success Fees' owed during the original
term" of the agreement. Additionally, a signed amendment
to the contract provided:
1. Bastion . . . is to be paid a successful resolution fee
approximately 1.5% upon successful agreed upon resolution
between Morton Community Bank . . . and Gary Matthews
regarding addendum A any and all debts Bastion . . . is
restructuring with Gary Matthews, Bastion Capital will be
paid a bonus fee. For example $1, 000, 000 loan is restricted
to agreeable terms between all parties: $1, 000, 000 x 1.5% =
$15, 000.00 bonus fee.
2. In the event that Bastion . . . is successful in
refinancing existing loans with Morton Community Bank . . .,
Bastion Capital will be paid a 1.5% fee. For example new loan
of $1, 000, 000 x 1.5% = $15, 000 bonus fee.
A Bonus success fee is only paid to Bastion . . . upon all
parties signing relevant closing documents signifying
agreement with all terms, covenants, obligations of such
contractual agreement. If relevant and/or responsible
managing parties do not sign closing contractual agreement
which would trigger a transaction funding there is no fee to
also agreed to pay "[a]ny traveling expenses which
[Bastion] incurs in carrying out its obligations" and
"all fees, and costs, including reasonable
attorneys' fees incurred as a result of any legal action
Bastion was required to take "to collect the fees or
expenses" outlined in the contract, including fees
resulting from an appeal.
time Matthews and Bastion entered into the agreement, there
was already a July 3 hearing scheduled for the appointment of
a receiver for the properties.
1, Bastion sent the bank a proposal from another lending
institution that was considering refinancing the debt for
Matthews. The next day, personnel from the bank sent Bastion
an email stating the bank had received the refinance proposal
and had "asked our counsel to delay the [receivership]
hearing for one week so that we could continue to have
negotiations with you and [Matthews] relative to a proposed
and his foreclosure attorney, Christopher Ryan, met with
personnel from the bank and the bank's attorneys on July
7. Skeffington was unable to attend the meeting in person,
and he joined by way of a conference call. At some point
during or soon after the meeting, it became clear the bank
was not interested in giving Matthews the time to pursue
refinancing the loans through another lending institution.
Skeffington testified the bank was looking for a "quick
resolution" and did not want to wait the amount of time
it would take to obtain appraisals of the
properties-approximately forty-five to sixty days. According
to Ryan, the two sides were not having meaningful
negotiations toward a resolution until Ryan threatened that
Matthew might choose to pursue bankruptcy if they were unable
to reach some sort of agreement to prevent the foreclosure.
the meeting, on July 7, Skeffington sent Matthews an email,
stating, in part:
We have the same goal in sight as you. We want you to
maintain all your equity in the properties as well as you
maintaining ownership. This is what the engagement reads as
well as our proposal sent last week. Please read the Global
resolution which . . . states the valuation wi[ll] be at [the
refinancing institution's] sole discretion. We could get
to par and/or close to par. However, as always this process
is a negotiation with the bank. We represent you as an
investment bank, and some of those negotiations could include
an internal restructuring which our engagement states.
the July 7 meeting, the focus was on an attempt to reach a
forbearance agreement between Matthews and the bank. On July
9, the bank's attorneys sent Ryan a first draft of a
forbearance agreement. Skeffington, Ryan, and Matthews
discussed various terms and Ryan continued to negotiate with
the bank's attorneys for the next few weeks; a number of
revised drafts were completed.
August 5, Matthews entered into a forbearance agreement with
There were five loans at issue:
first loan was for EM Riverside L.L.C., which housed a
PetSmart and had outstanding debt of approximately $3, 487,
000. The forbearance agreement gave Matthews until December
31, 2014, to sell the property. If Matthews was able to sell
the property before December 31, the bank would take what it
was owed, Matthews would receive 10% of whatever was left to
pay down another loan he had with the bank, and the rest
would go to Matthews's investors. If Matthews was not
able to find a buyer, the bank would take the property by
deed in lieu of foreclosure. If it did so, the bank agreed to
discharge the entire loan, thus also removing Matthews's
personal guaranty. The property was ultimately sold on
November 18, 2014, for $4, 658, 703.
next property, Riverside Retail, is a strip mall, which
included a Radio Shack. It had outstanding debt of
approximately $2, 150, 000. The second property was given
similar terms to the first in the forbearance agreement;
Matthews had until December 31, 2014, to attempt to sell the
property. If he was successful, the bank would receive what
it was due, and then he would receive the first 15% of what
was left to pay down another loan he had with the bank. His
investors would then receive the rest. Matthews was unable to
sell Riverside Retail, and the bank took the property by deed
in lieu of foreclosure. The entire debt on the property was
discharged when the bank did so.
third property is EM Barclay, L.L.C., and it was also a strip
mall, housing a Sherwin Williams. The property was subject to
debt of $2, 615, 000. On August 5, 2014-the date the
forbearance agreement was signed-Matthews executed a deed in
lieu of foreclosure, returning the property to the bank. The
bank released the full debt and paid $100, 000 toward other
Matthews executed a deed returning EM Drake, L.L.C. (a Qdoba)
to the bank on August 5. In return, the bank discharged the
entire $1, 420, 000 and put $50, 000 toward Matthews's
fifth property at issue was listed in a chart on the front
page of the forbearance agreement, but it was otherwise not
dealt with in the agreement itself. The bank held the second
mortgage-worth $900, 000-on the GEM Terrace. The Terrace
housed Matthews's office, and another bank had the first,
senior mortgage on the property for $2, 500, 000. The
property was eventually sold for $3, 500, 000 and both the
mortgages were then discharged.
had not told Skeffington about the meeting with the bank to
sign the forbearance agreement, and Skeffington did not
attend. Skeffington learned of the meeting on August 5 and
sent Matthews a text message, stating, "Was unaware of
meeting this morning. Please call me afterwards. Glad we are
able to get this internal restructuring done. As part of
engagement we should be present at meeting for your benefit.
Regardless we can talk after meeting." Matthews did not
call Skeffington after the meeting.
days later, Skeffington emailed Ryan and asked for a copy of
the "finalized closed restructuring/forbearance
agreement." Ryan did not send a copy. Later the same
day, Matthews emailed Ryan asking him to "give us a call
to discuss the attached [Bastion] contract."
August 7, Skeffington emailed Matthews asking him to
"[p]lease call . . . to talk regarding
restructuring." Matthews responded that he would call
the next morning.
next day, Skeffington and Matthews spoke on the phone.
Following the conversation, Skeffington sent Matthews an
email, stating, in part:
As of today you called to inform after successful resolution
that we were not due a success fee which is contradictory to
fully executed engagement. We would like to understand you[r]
position in detail.
Regardless if it is your intention not to pay Bastion Capital
Group, Inc. a success fee based on a successful resolution
with [the bank], I ask you to advise with my counsel . . . .
We strongly suggest you review the engagement with counsel
and further will have no other option than to pursue our
rights via the fully executed engagement.
August 11, Matthews sent Bastion a letter giving notice that
he was cancelling their agreement effective September 11,
2014-a date still within the original ninety days covered by
the commitment fee. Additionally, it stated:
Please note that of services listed in paragraph one, you
were only involved with some negotiations with the Lenders.
No refinancing has occurred and no buyers have been obtained
by you for any properties in question. After consulting with
my attorney, I've been advised that you are not owed any
fees per Amendment A as no loans have been refinanced or
restructured. We do not believe that being required to turn
over properties, sell the remaining properties within 4
months and providing [the bank] with additional collateral is
a 'successful' resolution of the . . . debt.
As you recall, you told me that you had Lenders that would
take out [the bank], which again never materialized. . . .
Any further contact should be done through my attorney.
filed the present suit on November 3, claiming breach of
contract.Matthews filed a counterclaim asserting