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Valley v. Kiel

Court of Appeals of Iowa

October 10, 2018

ROBERT VALLEY and MARLENE VALLEY, Plaintiffs-Appellants,
v.
DOUGLAS KIEL and JAN KIEL, Defendants-Appellees.

          Appeal from the Iowa District Court for Fayette County, John J. Bauercamper, Judge.

         Robert and Marlene Valley appeal the district court order denying their petition and entering judgment in favor of Douglas and Jan Kiel.

          Jeffrey E. Clements, West Union, for appellant.

          Patrick B. Dillon of Dillon Law, P.C., Sumner, for appellee.

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

          DOYLE, JUDGE.

         Robert and Marlene Valley appeal the district court order denying their petition and entering judgment in favor of Douglas and Jan Kiel. They claim the district court erred in applying the law to their cause of action.

         I. Background Facts and Proceedings.

         For thirty-two years, Robert Valley owned and operated Midwest Cleaning Systems, a business that sold and serviced pressure washers and cleaning equipment. For the last thirty years, the business sold and serviced Alkota brand equipment after having sold and serviced two other brands during its first two years in operation. When Robert decided to sell the business, Douglas Kiel was one of four people interested in buying it.

         On September 23, 2014, the Valleys and the Kiels signed an asset purchase agreement. The Kiels agreed to purchase the assets of Midwest Cleaning Systems "in their current condition, 'as is' with all faults" for $120, 000. Exhibit A, a handwritten attachment to the agreement, listed all of the assets sold under the agreement and their values. The purchase agreement called for the Kiels to pay $40, 000 at closing with the remaining $80, 000 plus interest due on or before December 1, 2015. It also required the Kiels to execute a security agreement that granted the Valleys a security interest in all of the assets sold under the purchase agreement, which the Kiels signed the same day they signed the purchase agreement. The Valleys filed a UCC financing statement with the Iowa Secretary of State.

         When the Kiels failed to make the $80, 000 plus interest payment by December 1, 2015, Robert contacted Douglas. Douglas thought the payment was due on December 31, not December 1. The Kiels then sent the Valleys a check dated December 2, 2015 in the amount of $40, 800. Since the check was not for the full amount due, Robert again contacted Douglas. Robert gave the Kiels until March 1, 2016 to pay the balance due under the contract. The Kiels only paid an additional $144.66 before the March 1, 2016 deadline. No further payments were made.

         On November 23, 2016, the Valleys filed a petition to foreclose on the collateral provided in the security agreement. They sought judgment against the Valleys for $40, 000 plus interest, attorney fees, and costs. They also requested an order granting them the right to possession of the collateral for a sale to be held with the net proceeds from the sale to be applied toward the judgment against the Kiels.

         The Kiels filed their answer on December 9, 2016, denying the Valleys' claims. They alleged Robert Valley had assured them that the business had "a defined, protected territory in which [Midwest Cleaning Systems] was the exclusive Alkota Dealer," which it did not. They also claimed that the purchase price originally included a building that the Valleys later withdrew from the assets and the purchase price "should have been reduced to reflect the withdrawal of the building." The Kiels further alleged the value of the assets outlined in Exhibit A was "drastically overstated" and that they "had no way to ascertain these deficiencies until they took possession." Finally, they claimed that they had paid the Valleys "the true value of all assets transferred, and no further payment should be due." They asked the court to dismiss the Valleys' petition, assess the costs to the Valleys, award them attorney fees, and grant "such other and further relief as the Court deems just and equitable."

         Following a bench trial, the district court found the Valleys failed to prove "all elements of their claim for breach of contract" and that the Kiels had proved that the Valleys breached the contract. The court denied the petition ...


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