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Kunde v. Estate of Bowman

Supreme Court of Iowa

November 2, 2018


          On review from the Iowa Court of Appeals.

          Appeal from the Iowa District Court for Jackson County, Nancy S. Tabor, Judge.

         The parties seek further review of a decision by the Iowa Court of Appeals affirming the district court's dismissal of the plaintiff's unjust enrichment and quantum meruit claims and reversing the district court's dismissal of the plaintiff's promissory estoppel claim. DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

          D. Flint Drake and Samuel M. DeGree of Drake Law Firm, P.C., Dubuque, for appellant.

          Bradley T. Boffeli of Boffeli & Spannagel, P.C., Maquoketa, for appellees.

          APPEL, Justice.

         In this case, a farmer sued his neighbor's heirs, claiming, among other things, that he and the decedent entered into an option contract to purchase farmland that was subject to a written lease and upon which the farmer made substantial improvements at his expense. In the alternative, the farmer sought to recover under various equitable theories of promissory estoppel, quantum meruit, and unjust enrichment.

         A jury found in favor of the plaintiff on his contract claim and awarded damages. After the verdict, however, the district court granted the defendants' motion for a directed verdict on the contract claim. The district court refused to order a new trial on the plaintiff's alternative equitable theories.

         On appeal, the court of appeals affirmed the directed verdict on the contract claim but remanded the case to the district court for a trial on the equitable claims. On remand, the district court granted the defendants' motion for summary judgment on the equitable claims.

         On a second appeal, the court of appeals again reversed the judgment of the district court. The court of appeals found that the claims of unjust enrichment and quantum meruit failed as a matter of law because the parties had express agreements governing improvements to the leasehold and allocating the expenses of the improvements. On the claim of promissory estoppel, however, the court of appeals concluded that the presence of agreements related to the leasehold and improvements was not determinative. Instead, the court of appeals reasoned that what was required to give rise to a claim of promissory estoppel was not an "agreement" but a "promise." As a result, the court of appeals reversed the district court and remanded the matter for a new trial.

         We granted further review. For the reasons expressed below, we vacate the decision of the court of appeals, affirm the district court's dismissal of the unjust enrichment and quantum meruit claims, and reverse the district court's dismissal of the promissory estoppel claim.

         I. Procedural and Factual Background.

         Viewed in the light most favorable to the plaintiff, the summary judgment record shows the following facts. Ronald Kunde purchased farmland along with a residence in Jackson County in 2000. He bought additional ground in 2007. Kunde's farm was adjacent to a 102-acre farm owned by Arthur Bowman.

         Kunde and Bowman were neighbors who engaged in an occasional "hello" and brief discussion concerning farming practices. At trial, Kunde testified that in the fall of 2007, Bowman approached Kunde and asked if he would be willing to rent his farm. Kunde responded by asking whether Bowman's wife would rent or sell farmland she owned. Bowman told Kunde that his wife's property had been sold but that Bowman would consider selling his own property for $1900 per acre. Kunde testified he told Bowman that the figure was too low and the parties agreed on a price of $3000 per acre. Kunde told Bowman he wanted to talk with his brother about the transaction. Bowman told Kunde that he could rent the farm in the meantime and that he could purchase the property at his option.

         The parties discussed the possibility of improvements to Bowman's property. Kunde agreed to make certain improvements to the property as part of the oral agreement that Kunde could exercise an option to purchase the Bowman land.

         Kunde and Bowman entered into a written lease to rent the farm for the 2008 farm year. Kunde made a list of improvements he had discussed with Bowman, and at his request an addendum was added to the 2008 farm lease. The addendum stated that the improvements would be permissive and at renter's expense. The parties executed other leases in 2009, 2012, and 2013 under terms generally similar to those in the 2008 lease.

         The leases were prepared by an attorney for Bowman. The leases contained provisions related to improvements by the lessee. Paragraph 4 provided that all commercial fertilizer and other inputs and expenses were to be paid 100% by the tenant. Paragraph 14 related to new improvements and provided that all buildings, fences, and improvements that may be erected by the tenant constitute additional rent and shall inure to the real estate and become property of the landlord and that expenses incurred without landlord consent were the responsibility of the tenant. Paragraph 21 provided that changes in lease terms could only be made in writing.

         During the period of time when Kunde leased the Bowman property, he made substantial improvements to the land. He banked expensive fertilizer in the soil, excavated and leveled the property, installed drain tile, engaged in general cleanup, repaired and installed fences, and created and redirected waterways. Kunde's work also converted twenty-three acres of nontillable acres to tillable acres.

         Kunde asserted that he incurred $52, 000 in cost for his labor, equipment use, and materials in making the improvements. He claimed that when he discussed the improvements with Bowman, Bowman told him that Kunde could do whatever he wanted since the farm would be his. Kunde claimed he made the improvements in reliance on Bowman's promise that he would be able to buy the farm. Several witnesses at trial testified that improvements adding tillable acres to farm property would typically be the responsibility of the landlord.

         In 2010, Kunde attempted to exercise his option to purchase the Bowman farm. Kunde was told by Bowman's daughter, Diane Engelkins, that she had discovered a third-party right of first refusal on the farm. After Kunde was told of the right of first refusal, Bowman told Kunde, "I feel like I lied to you."

         In August 2013, Bowman was placed in a nursing home, suffering from dementia. Kunde was served with a notice of termination of the farm tenancy. In November, Engelkins informed Kunde that the farm was being placed for sale at a public auction due to the fact that it was Bowman's only asset and he needed it to be sold in order to meet Title XIX requirements. The farm was ultimately sold.

         Kunde brought an action in district court against the defendants. He claimed that the defendants breached an option contract to sell him the agricultural land. Alternatively, Kunde alleged equitable causes of action, including promissory estoppel, unjust enrichment, and quantum meruit. The case proceeded to jury trial, with the jury rendering a verdict in favor of Kunde on his contract claim and awarding damages of $52, 000.

         After the verdict was rendered, the district court granted a motion for directed verdict on the grounds that there was insufficient evidence to prove the existence of a contract. The district court denied plaintiff's motion to reconsider, motion to amend and enlarge findings, and ...

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