RSB ENTERTAINMENT, LLC d/b/a PLAZA BOWL and RICHARD J. MOORES, Plaintiffs-Appellants,
HERITAGE BANK, N.A., Defendant-Appellee.
from the Iowa District Court for Woodbury County, Julie A.
Entertainment, LLC and Richard Moores appeal from the
district court's summary judgment ruling and dismissal of
their claim for damages.
S. Moeller of John S. Moeller, P.C., Sioux City, for
J. Morehead of Woods, Fuller, Shultz & Smith, P.C., Sioux
Falls, South Dakota, for appellee.
Considered by Vaitheswaran, P.J., Mullins, J., and Gamble,
Schumacher, J., takes no part.
GAMBLE, Senior Judge.
Entertainment, LLC (RSB), and its sole shareholder, Richard
Moores, appeal from the district court order dismissing an
action to recover funds from Heritage Bank, N.A. The dispute
stems from a loan from Heritage Bank to RSB personally
secured by Moores for the purpose of financing a bowling
center. RSBcontends the district court erred in
granting Heritage Bank's motion for partial summary
judgment concluding certain bowling equipment amounted to
fixtures to real estate purchased by the bank at
sheriff's sale following an earlier mortgage foreclosure
decree. RSB also appeals a finding by the district court upon
trial of its damage claim that Heritage Bank disposed of
other collateral securing the loan in a commercially
reasonable manner. We affirm the district court in part and
reverse and remand in part.
Facts and Prior Proceedings
2010, RSB obtained a loan from Heritage Bank to purchase
Plaza Bowl bowling alley and One Eyed Jack's, an attached
restaurant in Sioux City. Pursuant to the loan agreement, RSB
executed a promissory note for $1, 525, 000. Moores
personally guaranteed the loan. Heritage Bank obtained a
mortgage on the real property including fixtures and secured
interests in RSB's personal property.
defaulted on the note. On October 31, 2016, Heritage Bank
obtained a decree of foreclosure on the real property. On
January 4, 2017, Heritage Bank purchased the real property at
a sheriff's sale for $1, 350, 000 leaving a deficiency of
$136, 447.53 subject to 6.25% annual interest and costs.
January 3, 2017, Heritage Bank filed a replevin action to
repossess the personal property subject to the security
interest. Heritage Bank attached to its petition a list of
personal property obtained from the original appraisal for
the loan and obtained a writ of replevin based on the listed
property. Following the sheriff's sale and the filing of
the replevin action, RSB vacated the premises. On January 5,
2017, Heritage Bank took possession of the property and
performed an updated inventory of the personal property
surrendered by RSB to the bank. Heritage Bank revised its
list of personal property subject to the replevin action
consistent with the updated inventory. RSB did not contest
the inventory or revised list of personal property in the
replevin action. On November 17, 2017, the Court entered a
judgment of replevin in favor of Heritage Bank for the
personal property listed in the revised list.
January 2017 to May 2017, Heritage Bank leased the real and
personal property to J&B Investments (J&B) for one
dollar per month so long as J&B covered any operating and
maintenance associated with the bowling-alley operation.
Heritage Bank leased the property to J&B on a short term
basis so that the bowling league using Plaza Bowl could
finish out the season and the property could be marketed as
an ongoing business. Heritage Bank entered into another lease
with J&B from August 2017 to May 2018, providing $3200
per month in rent for the real property and use of the
personal property inside. It also entered into a lease
agreement with Mangos, L.C. to operate One Eyed Jack's
restaurant for $3200 per month.
13, 2017, shortly after Heritage took possession of the
property, Vander Werff & Associates appraised the
unattached personal property as having a $34, 000 liquidation
value. In May 2018, Heritage Bank performed a
final walk-through of the property and created a list of
personal property for final disposition of the collateral.
commenced the present proceedings in April 2017 in effort to
enjoin Heritage Bank from disposing of the unattached
personal property and obtain fair compensation for use of the
unattached personal property, including the Plaza Bowl and
One Eyed Jack's tradenames. Heritage Bank answered,
counterclaimed and sought declaratory judgment that certain
items of bowling equipment and machinery are improvements,
structures, fixtures, or replacements. Heritage Bank sought
partial summary judgment on its counterclaim. The district
court granted the bank's motion for partial summary
judgment and declared the identified items are
"fixtures, improvements, or replacements to the real
Heritage Bank used a commercial real estate company to market
the real and personal property as a going concern for
purchase. On April 9, 2018, Heritage Bank and J&B entered
into a purchase agreement and specified closing would occur
on May 17. Heritage Bank sent notice of disposition to RSB on
May 4. The bank attached a list of unattached personal
property compiled at the walk-through to the notice of
disposition. J&B assigned its purchase rights to Klinger
Properties. Klinger Properties then purchased the real
property and personal property from Heritage Bank for $850,
000 with $136, 000 allocated to the personal property.
requested an accounting for Heritage Bank. After applying the
proceeds of the sale and proceeds from renting the personal
property, a deficiency of $11, 000 remained. In order to
clear a lien, Moore paid the remaining balance due to
Heritage Bank. At trial, RSB challenged the timing of the
notice of disposition, the commercial reasonableness of the
sale of the personal property, the amount of rental income
produced by the real property, and value and items disposed
of in the disposition. RSB sought monetary damages.
district court determined notice of disposition was timely
and the disposition was commercially reasonable in all
respects. The district court dismissed RSB's claim for
damages. RSB now appeals the dismissal of their action for