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Farm Credit Services of America v. Braaksma

Court of Appeals of Iowa

October 23, 2019


          Appeal from the Iowa District Court for Osceola County, Carl J. Petersen, Judge.

         Borrowers appeal the district court's denial of their motion to continue the lender's action to foreclose their real estate mortgage without an evidentiary hearing.

          Richard H. Moeller of Moore, Heffernan, Moeller, Johnson & Meis, L.L.P., Sioux City, for appellants.

          Thomas H. Burke and Molly M. Brown of Whitfield & Eddy, P.L.C., Des Moines, for appellee.

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

          TABOR, JUDGE.

         It's a bit like rearranging the deck chairs on the Titanic. That's how counsel for Farm Credit Services of America described a motion to continue its mortgage foreclosure action under Iowa Code section 654.15 (2017), filed by borrowers Dale and Danna Braaksma and Braaksma Grain Farms, Inc. (collectively, the Braaksmas). Farm Credit sought foreclosure against the Braaksmas for amounts due on two promissory notes and sought to conclude litigation with a summary judgment motion.[1] The Braaksmas filed their motion to continue the day before the summary judgment hearing. Farm Credit argued the Braaksmas did not seek the continuance in good faith-given its timing and the extent of their other indebtedness. The district court agreed, calling the motion a "last ditch effort" to delay the foreclosure proceedings.

         The Braaksmas contend the district court abused its discretion in denying their motion to continue the foreclosure action without setting an evidentiary hearing. Farm Credit defends the district court's decision but also urges the appeal is moot as to one of the two promissory notes. To prove mootness, Farm Credit points to a February 2019 redemption assignment in which the Braaksmas assign their right of redemption "as well as all of their right, title, interest, and equity" in the Note 201 property to a third party.[2]

         Jo's Family Farms, LLC, purchased the Note 201 property at a February 2018 sheriff's sale.[3] One year later-before the Braaksmas' redemption window closed-they assigned their right of redemption to Robert Zylstra. Zylstra then exercised his newly acquired right of redemption, tendering $255, 363.45 for the Note 201 property. The district court ordered the funds disbursed to Jo's Family Farms and a sheriff's deed issued to Zylstra.

         Because the Braaksmas do not retain an interest in the collateral for Note 201, we agree the appeal is moot as to that real estate. See Lincoln Joint Stock Land Bank of Lincoln, Neb. v. Hansen, 263 N.W. 821, 822 (Iowa 1935) (dismissing as moot an appeal from refusal to grant continuance of mortgage foreclosure action and hypothetically asking: "Should the court find that the order refusing to grant a continuance should be reversed, of what benefit would it be to the appellant?"); see also Newman v. Callahan, 237 N.W. 514, 514 (Iowa 1931) (deeming question of fraudulent transfer of real estate was moot where "one of the mortgages against said land had been foreclosed, and the sheriff's certificate issued thereon to an outside party, who is not a party to this litigation, and the time for redemption expired without any redemption having been made by any of the parties"). We will address the Braaksmas' claim as to the Note 325 property.

         I. Prior Proceedings

         In August 2017, Farm Credit petitioned for foreclosure on both Note 201 and Note 325. The lender alleged the notes were in default due to the Braaksmas' failure to make payments when due. Farm Credit recounted sending the Braaksmas notices of the right to cure in February and June 2017, and a notice of default and acceleration of the demand for payment in July 2017. The petition also listed other potential encumbrances on the Note 201 property including a judgment of $1, 140, 851 owed to the estate of Tena Steensma and a judgment of $1, 175, 000 owed to Sibley State Bank.

         In the Braaksmas' September 2017 answer, they denied Farm Credit's allegations of default on the two promissory notes.

         Later that month, Farm Credit moved for summary judgment. The Braaksmas resisted the motion.[4] The court set a summary judgment hearing for October 27, 2017. On the eve of the hearing, the Braaksmas asked the court for a continuance under Iowa Code section 654.15:

COMES NOW the Defendants and in support of their Motion for Continuance state as follows:
1. That the Defendants request a stay of proceeding pursuant to Section 654.15 of the [c]ode and allege that the reason the Owners failed to pay was caused by excessive rain in the spring and as a result of those ...

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