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Sibley State Bank v. Braaksma

Court of Appeals of Iowa

July 18, 2018

SIBLEY STATE BANK, Plaintiff-Appellee,
v.
DALE W. BRAAKSMA, DANNA S. BRAAKSMA, JESSE DALE BRAAKSMA, and BRAAKSMA GRAIN FARMS, INC., Defendants-Appellants.

          Appeal from the Iowa District Court for Osceola County, Patrick M. Carr, Judge.

         Farm debtors appeal the district court's appointment of the bank as a receiver, the denial of a continuance, and the grant of summary judgment to the bank in a foreclosure action.

          Curt Krull of Waagmeester Law Office, P.L.C., Rock Rapids, for appellants.

          Daniel E. DeKoter of DeKoter, Thole, Dawson & Rockman, P.L.C., Sibley, for appellee.

          Considered by Vaitheswaran, P.J., and Potterfield and Tabor, JJ. Carr, S.J., takes no part.

          TABOR, JUDGE.

         For more than a decade, Sibley State Bank loaned money to Dale and Danna Braaksma, their son Jesse, and Braaksma Grain Farms, Inc. (collectively the Braaksmas) and secured mortgages on their farmland as collateral. This appeal involves the bank's foreclosure action commenced in 2016. The Braaksmas take issue with three district court rulings: (1) appointment of the bank as a receiver under Iowa Code section 680.1 (2017); (2) denial of their motion to continue under Iowa Code section 645.15; and (3) grant of the bank's motion for summary judgment on the foreclosure. Finding the district court acted properly in all three respects, we affirm.

         I. Facts and Prior Proceedings

         At the time, the Braaksmas owned about 800 acres of farmland in Osceola County. Dale and Danna filed articles of incorporation creating Braaksma Grain Farms, Inc. in 2000. Dale is corporate president and Danna is the treasurer and secretary. Their son, Jesse plays an active role in the family's farming operations.

         From 2004 to 2014, Sibley State Bank loaned the Braakmas money through six promissory notes. Dale and Danna signed two of the six promissory notes, Jesse signed three of the promissory notes, and Braaksma Grain Farms signed one. The Braaksmas' notes and obligations were secured by real estate mortgages encumbering more than half of their total acres of land.[1]

         In early 2016, the Braaksmas missed payments on their promissory notes. By July 15, 2016, all the notes were in default. The Braaksmas owed the bank in excess $1.5 million. The bank sent the Braaksmas notice of right to cure the default, but forty-five days elapsed without payment. The parties participated in mediation as required by Iowa Code section 654.2C[2] but did not come to an agreement. The bank requested a mediation release in August. In September, the bank's attorney sent a "demand for payment of the accelerated balances of the promissory notes" in accord with a clause in the promissory notes and Iowa Code section 654.4B.[3] In October, the bank proceeded with a foreclosure action.[4]

         In February 2017, the bank asked to be appointed as the receiver under the terms of the Braaksmas' mortgages. The application asserted, "The property subject to the mortgages is tillable farmland. Historically, the [Braaksmas] have very poor farm practices, which have deteriorated the condition of the farmland and resulted in yields well below local production averages." The Braaksmas contested the appointment of the bank as receiver. Bank president Karl Bormann testified the Braaksmas demonstrated an "inability for timeliness, to actually get the crop in in a timely fashion, to actually care for the crop in terms of weed control, to actually fertilize the crop, and then to ultimately harvest the crop." Bormann pointed to lower yields and deterioration of the corn allowed to stand in the field. In response to Bormann, Jesse testified his family uses no-till and other sustainable farming approaches which were not common to their area of the state. He said the bank took a "dim view" of these conservation methods and wanted them to "operate like their other customers." In March 2017, the district court appointed the bank as receiver.

         Also in February 2017, the bank filed a motion for summary judgment in the foreclosure action. In March, the Braaksmas filed a resistance to the bank's motion for summary judgment, as well as a motion to continue under Iowa Code section 654.15. In May, the district court denied the Braaksmas' motion to continue and granted the bank's motion for summary judgment. The district court filed the decree of foreclosure in June 2017. The Braaksma now appeal.

         II. Scope and Standards of Review

         The three issues on appeal call for varying standards of review. First, we review the district court's decision to appoint the bank as receiver de novo. See Wellman Sav. Bank v. Roth, 432 N.W.2d 697, 699 (Iowa Ct. App. 1988). We give weight to the district court's fact findings but are not bound by them. Id.

         Second, we review the denial of a continuance under the foreclosure moratorium statute for an abuse of discretion. See Ronan v. Larson, 278 N.W. 641, 642 (Iowa 1938).

         Third, we review the grant of summary judgment for the correction of legal error. Iowa R. App. P. 6.907; U.S. Bank Nat'l. Ass'n v. Lamb, 874 N.W.2d 112, 115 (Iowa 2016). The district court properly grants summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, reveal no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law". Iowa R. Civ. P. 1.981(3); IBP Inc. v. DCS Sanitation Mgmt. Servs., Inc., 498 N.W.2d 425, 426 (Iowa Ct. App. 1993). A genuine issue of material fact exists if reasonable minds could differ with respect to how the issue should be resolved. U.S. Bank Nat'l. Ass'n v. Lamb, 874 N.W.2d at 115. We view the record in the light most favorable to the nonmoving party. Id.

         III. Discussion

         A.Appointment of ...


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