ROBERT W. DAVIS and KIRK K. PETERSON, Plaintiffs-Appellants,
AMERICAN INTERNATIONAL BRIDGE, INC., ANFU WANG and CHUN LING LU, Defendants-Appellees.
from the Iowa District Court for Story County, Michael J.
appeal from adverse judgment on claim to enforce personal
guaranty of commercial property lease. AFFIRMED.
W. Goodwin of Goodwin Law Office, P.C., Ames, for appellants.
R. Cahill of Cahill Law Offices, Nevada, for appellees.
by Vaitheswaran, P.J., and Potterfield and McDonald, JJ.
Peterson and Robert Davis filed this suit against American
International Bridge, Inc. ("American"), for breach
of a commercial property lease agreement to which they were
not parties. American filed a counterclaim against Peterson
and Davis to enforce their personal guaranty of the lease
after the lessee and sublessee defaulted on the lease
agreement. The district court granted American's motion
for summary judgment on Peterson and Davis's
breach-of-contract claim, concluding they were not parties to
the lease agreement, were not third-party beneficiaries of
the lease agreement, and lacked standing to assert claims
under the lease agreement. After a bench trial, the district
court entered judgment in favor of American and against
Peterson and Davis on their personal guaranties. Peterson and
Davis timely filed this appeal. On appeal, they contend the
district court erred in granting American's motion for
summary judgment, erred in finding of favor of American on
its claim, erred in calculating damages, and erred in setting
the interest rate on the judgment.
record reveals the following. In 2012, Anfu Wang, doing
business as American International Bridge, Inc., purchased a
commercial building in Boone. In 2013, Monte Streit expressed
interest in leasing the building and operating a restaurant
in the building. Wang's attorney expressed reservations
to Wang that relying solely on Streit to meet the lease
payments would be unduly risky. Wang insisted Streit obtain
guarantors. Streit contacted Peterson, Streit's
physician, and Davis, Streit's dentist, for assistance.
In an agreement with Streit, Peterson and Davis each agreed
to sign a personal guaranty of the lease agreement and each
loaned Streit $37, 500. In exchange, Streit agreed to repay
the loans at five percent interest and pay to each thirty
percent of the profits of the restaurant. In March 2013,
Streit signed the commercial lease agreement. Peterson and
Davis were not parties to the agreement. On the same day,
Peterson and Davis each signed a personal guaranty of the
restaurant, known as Sports Story Bar & Grill, began
business in April 2013. Business was poor. By August, Streit
was two months behind in rent. Peterson and Davis each paid
one month's rent to Wang to come current. However, Sports
Story ceased operations in December 2013.
reached out to Chad Borsheim, who knew several of the parties
involved. Borsheim and a partner formed a partnership to run
the business and sublease the building from Streit. The
business they formed was called the Boone Depot. Like its
predecessor, the Boone Depot ran into difficulty. It failed
to make all required lease payments to American. American
served Borsheim a notice of default and sent copies to Davis
and Peterson. In the notice, American demanded payment of all
unpaid sums. The default was not cured, and the entire unpaid
balance of the lease was declared due and payable.
March 2014, Peterson and Davis filed this action against
American, Wang, and Wang's wife, Chun Ling Lu
(collectively, "American"). The petition asserted
claims of negligent misrepresentation, fraudulent
misrepresentation, and breach of lease, and requested a
declaratory judgment that there "was failure or lack of
consideration to Davis and Peterson" for the guaranty,
rendering the guaranty unenforceable against them. The theory
of Peterson and Davis's case was American failed to
repair a leaky roof in the restaurant and failed to repair
the adjacent parking garage, the failure to repair these
items damaged the restaurant's business, the damage to
the restaurant's business caused the business to default
under the lease agreement, and the default under the lease
agreement caused Peterson and Davis to be liable on their
personal guaranties. Peterson and Davis claimed to be
third-party beneficiaries of the lease agreement because of
their pecuniary interest in the restaurant. The district
court dismissed the breach-of-contract claim on summary
judgment, and Peterson and Davis voluntarily dismissed their
answered and brought counterclaims against Peterson and
Davis. The only counterclaim that went to trial was
American's claim against Peterson and Davis to enforce
their personal guaranties of the lease agreement. American
sought past-due rent and property taxes in the amount of
$159, 000, plus interest and penalties as provided in the
lease. Plaintiffs asserted an affirmative defense to this
counterclaim of failure of consideration, which was
substantially their same claim regarding the failure to
repair the purportedly leaky roof and parking ...