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Skogman v. Emerson

Court of Appeals of Iowa

September 25, 2019

ERICK SKOGMAN and JENNIFER SKOGMAN, Plaintiffs-Appellants,
v.
RICK EMERSON and PAULA EMERSON, Defendants-Appellees.

          Appeal from the Iowa District Court for Linn County, Mitchell E. Turner, Judge.

         Erick and Jennifer Skogman appeal the district court's default judgment order entered in their favor.

          Erick J. Skogman of Elderkin & Pirnie, P.L.C., Cedar Rapids, for appellants.

          Rick Emerson and Paula Emerson, Cedar Rapids, pro se appellees.

          Considered by Potterfield, P.J., and May and Greer, JJ.

          POTTERFIELD, PRESIDING JUDGE.

         Plaintiffs Erick and Jennifer Skogman appeal the district court's default judgment order entered in their favor against defendants Rick and Paula Emerson. The Skogmans argue the district court erred by (1) dismissing Paula as a defendant for all but the Skogmans' holdover tenant claim; (2) holding the Skogmans were not entitled to damages for some of their construction costs for renovating; and (3) refusing to award punitive damages to the Skogmans.

         I. Background Facts and Proceedings

         This appeal arises out of a real estate transaction between siblings Erick and Jennifer Skogman and Rick Emerson. The Skogmans and Rick entered into a contract under which the Skogmans agreed to sell a home to Rick for $115, 000 on or around October 16, 2013. The property was sold "as is." It had been built in the 1920s, had its original electric wiring and plumbing, and would require "significant materials and labor to update." Part of that labor was to be supplied by Rick, who agreed to "replace windows and roof by June 1, 2014" in lieu of a down payment. Monthly payments for the home were set at $1000 plus 1/12 of annual real estate taxes, special assessments, and annual insurance premiums, starting on December 1, 2013. The contract increased the monthly payment to $1200 starting December 1, 2016.

         Initially, Rick fulfilled the terms of the contract. He replaced the windows, consistently made the monthly payments, and told the Skogmans he had replaced the roof, as agreed to. But Rick eventually began to fall behind on the payments, and in April 2017, the Skogmans filed a notice of foreclosure. Pursuant to the notice and Iowa Code section 656.4 (2017), Rick had thirty days to either make the owed payments or forfeit the property, the payments he had made, and any improvements he had made to the property. He did not make the payments or vacate by the deadline. He and his wife, Paula, refused to vacate the property, and, on May 15, the Skogmans filed an affidavit in support of forfeiture. The next day, the Skogmans filed a notice to quit, and under the contract Rick and Paula became holdover tenants as of May 16, 2017.

         The Skogmans regained the property on June 13, 2017, and found it would need significant repairs. The back half of the roof had never been completed, despite earlier affirmative statements from Rick that it had. The property was flea-infested, and trash had been strewn throughout the building. The second floor had been completely gutted, and some of the larger fixtures- such as the refrigerator and a vanity-were missing. The electric wiring was exposed throughout the second floor. Part of the kitchen floor had also been removed.

         The Skogmans determined they would take a significant financial hit if they sold the property as it was. They determined the entire building would need to be renovated to attract a buyer. In the end, they spent $29, 488 renovating the property. It is undisputed that the Skogmans went to significant lengths to minimize the cost of renovating the building. They called in favors with business associates to get services performed cheaply, bargain hunted supplies and materials, and performed or supervised some of the renovations themselves. After completely restoring the second floor and making significant renovations to the rest of the building, they sold the home for $130, 000 in December 2017.

         The Skogmans initiated this suit on July 13, 2017. The complaint alleged five causes of action. Count I claims Rick and Paula were holdover tenants under Iowa Code section 562.2 between May 16 and June 13, allowing the Skogmans to double the rent for that period pursuant to statute; count II claims Rick and Paula intentionally damaged the home; count III claims Rick fraudulently misrepresented that he had installed the roof; count IV claims Rick and Paula intentionally inflicted emotional distress on the Skogmans by leaving a "used marital aid" for them to find in the house and for threatening statements Rick made to the Skogmans concerning the eviction; and count V claims Rick and Paula abused process by threatening to file criminal charges against the Skogmans.[1]

         Rick and Paula were served the petition on July 13 but did not file an answer. On September 6, the Skogmans sent the Emersons a notice of intent to file for default judgment. The Emersons did not respond until their prospective counsel filed an appearance with the district court on September 15, requesting an additional twenty days to address the case and file an answer. The district ...


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