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Goche v. WMG, L.C.

Court of Appeals of Iowa

March 6, 2019

JOSEPH GOCHE, Plaintiff-Appellee,
v.
WMG, L.C., Defendant-Appellant.

          Appeal from the Iowa District Court for Kossuth County, David A. Lester, Judge.

         A limited liability company appeals the grant of summary judgment to one of its members on a breach-of-warranty-deed claim.

          Thomas W. Lipps of Peterson & Lipps, Algona, for appellant.

          Wesley T. Graham of Graham, Ervanian & Cacciatore, LLP, Des Moines, and Philip J. Kaplan of Anthony Ostlund Baer & Louwagie P.A., Minneapolis, Minnesota, for appellee.

          Considered by Tabor, P.J., and Mullins and Bower, JJ.

          TABOR, Presiding Judge.

         This case involves four siblings and the distribution of Kossuth County farmland by WMG, L.C., their limited liability company.[1] A company resolution informed members the distributions were subject to existing liens for real estate taxes and special assessments. Member Joseph Goche sued WMG because the warranty deed on his parcel mistakenly characterized the land as unencumbered. Acknowledging the inaccuracy, WMG sought reformation of the deed. The district court refused to reform the deed and granted Joseph's motion for summary judgment, concluding the resolution language merged into the terms of the deed. On appeal, WMG contends Joseph's membership in the company and the company's clear intent to distribute the land subject to existing liens calls for reformation of the deed. Finding WMG's contention legally sound, we reverse the grant of summary judgment and remand for further proceedings.

         I. Facts and Prior Proceedings

         William and Mary Goche formed WMG in 1997. Twenty years later, WMG's members were their four children: Joseph Goche, Michael Goche, Jeanne Goche-Horihan, and Renee Afshar.[2] Until spring 2017, WMG owned five tracts of farmland near Bancroft and Titonka.

         In February 2017, WMG announced a special meeting. The meeting notice contained several proposed resolutions, including removal of Joseph as a manager of the company and a pro rata distribution of the company's real property to the four members. The latter resolution proposed, "Members and Managers acknowledge, consent, and agree that the Parcels shall be distributed to the Members via warranty deed and subject to existing liens for real estate taxes and special assessments . . . ."[3]

         At the special meeting, three of the four members voted to remove Joseph as a manager. Also during the meeting, three of four members voted to distribute the farmland by warranty deed to the members, effective March 2, 2017. Joseph cast the dissenting vote in both instances.

         Michael, as manager of WMG, executed the warranty deeds on February 25, 2017. His legal counsel recorded the deeds on March 2. The warranty deed conveying property to Joseph included the following assurance:

The grantor hereby coveimits with grantees, and suceessors in interest, that it holds the real estate by title in fee simple; that it hag good and lawful authority to sell and convey the real estate; that the real estate is ftee and clear of all hens and enjcumbraucefl, except as may be above stated; and it covenants to Warrant and Defend the real estate against the lawftil claims of all persons, except as may be above stated,

         The grantor's promise that the real estate was "free and clear of all liens and encumbrances" was inaccurate. The parties do not dispute the property was actually encumbered by unpaid property taxes in the amount of $1689 and unpaid drainage assessments of $31, 572.59. In his ...


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