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Chipokas, L.L.C. v. Casey's Marketing Co.

Court of Appeals of Iowa

January 9, 2020

CHIPOKAS, L.L.C., Plaintiff-Appellant,
v.
CASEY'S MARKETING COMPANY, Defendant-Appellee.

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

         Chipokas, L.L.C. appeals from an adverse summary judgment ruling. AFFIRMED.

          Matthew L. Preston, Ann C. Gronlund, and David T. Meyers of Brady Preston Gronlund PC, Cedar Rapids, for appellant.

          Richard F. Mitvalsky and Thomas F. Ochs of Gray, Stefani, & Mitvalsky, P.L.C., Cedar Rapids, for appellee.

          Heard by Vaitheswaran, P.J., Mullins, J., and Gamble, S.J. [*]

          GAMBLE, SENIOR JUDGE.

         Chipokas, L.L.C. (Chipokas) appeals from the district court's summary judgment ruling in favor of Casey's Marketing Company (Casey's) interpreting the terms of a lease. We affirm.

         I. Facts and Prior Proceedings

         Chipokas is the owner of a parcel of land known as Lot 1 on the corner of Highway 13 and Mount Vernon Road in Linn County, Iowa. Chipokas divided Lot 1 into two adjoining parcels, Lot 1A for development and Lot 1B consisting of undeveloped bare ground. In 2001, Chipokas entered into a transaction with Nordstrom Oil Company (Nordstrom) comprised of two separate leases, the convenience store lease (CSL) and the bare ground lease (BGL). The CSL provided Chipokas would lease Lot 1A to Nordstrom for the construction of one of Nordstrom's HandiMart Food Stores. Under the BGL, Chipokas leased the adjoining undeveloped ground, Lot 1B, to Nordstrom. The term of each lease ran to June 30, 2012, and allowed Nordstrom to renew six times for five-year terms. Section 4.1 of the CSL also contained the following renewal condition: "The exercise of any renewal option hereunder shall require the exercise of the option to renew the [BGL] as defined in Exhibit D attached hereto."

         In 2006, Casey's and Nordstrom entered into an asset purchase agreement for thirty-three HandiMart stores, including the store located on the CSL land. The asset purchase agreement specifically stated Lot 1B, the subject of Nordstrom's BGL, was excluded from the assets Casey's acquired from Nordstrom. Nordstrom entered into an assignment and assumption of the CSL with Casey's. Casey's did not take an assignment of the BGL. Chipokas consented to the assignment of the CSL to Casey's. Chipokas had no discussions with Nordstrom about the assignment of the CSL. There were no discussions concerning the BGL. Nordstrom remained the lessee to the BGL.

         In 2012, Casey's informed Chipokas it wished to exercise its option to renew the CSL. Casey's clarified it had no desire to lease the BGL land and believed it had no right to exercise an option within the CSL to lease the BGL. Nordstrom did not renew the BGL when it expired in 2012, and it dissolved at the end of 2012. Ultimately, Chipokas permitted Casey's to renew the CSL without also entering into the BGL in 2012.

         In 2016, Casey's again informed Chipokas it wished to exercise its option to renew the CSL. It did not express any intention to lease the BGL land. In 2017, Chipokas brought the instant action for breach of contract and declaratory judgment claiming Casey's was obligated to renew the BGL upon renewal of the CSL.

         Both Casey's and Chipokas sought summary judgment in their favor. The district court initially denied both motions. However, after Casey's clarified no additional facts would be disclosed at trial, the district court granted summary judgment in favor of Casey's. The district court ruled:

The court finds on the record before it, with no resistance from [Chipokas], that there was no conversation between Chipokas and Casey's in 2006 regarding the expectation of whether Casey's or [Nordstrom] or neither would be responsible for the lease of plot 1B. Based on the court's interpretation of the contract language, as previously discussed in the order denying summary judgment, the court finds that BGL and the CSL were separated at the time that Casey's took by assignment from Nordstrom. At that point, Casey's had no obligation to renew the BGL over plot 1B as they had never exercised control over that plot, nor so intended. The court finds on the basis of the record before it, taken as complete, summary judgment in favor of the defendant, Casey's, is appropriate.

Chipokas moved the court to enlarge and amend its order granting summary judgment. In response, the district court provided additional analysis supporting its summary ...


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