IN THE COURT OF APPEALS OF IOWA
No. 23-0236 Filed May 8, 2024
FOX PRAIRIE INVESTORS, LLC, FOX PRAIRIE PLAZA SOUTH BUILDING OWNERS ASSOCIATION, FOX PRAIRIE NORTH BUILDING OWNERS ASSOCIATION, Plaintiffs-Appellants,
vs.
WALTERS COMPANIES, INC., Defendant-Appellee. ________________________________________________________________
Appeal from the Iowa District Court for Polk County, David Nelmark, Judge.
Plaintiffs appeal the district court’s grant of summary judgment dismissing
their breach-of-contract claims. AFFIRMED.
Jeffrey A. Stone and Jacob W. Nelson of Simmons Perrine Moyer Bergman
PLC, Cedar Rapids, for appellants.
Chris C. White and Rene Charles Lapierre of Klass Law Firm, L.L.P., Sioux
City, for appellee.
Heard by Bower, C.J., and Schumacher and Langholz, JJ. 2
LANGHOLZ, Judge.
This is a curious contract case. Plaintiffs—who we will refer to collectively
as the Fox Prairie Owners—are some current owners of a commercial and
residential development called Fox Prairie Plaza. They allege the development
was built defectively and want the original developer and general contractor—
Walters Companies, Inc.—to pay their damages caused by the defects. But they
did not buy their property from Walters or hire Walters as their construction
contractor. So instead, the Fox Prairie Owners claim a right to recovery because
Walters breached a contract it allegedly made with itself—in essence, a promise
not to build itself defective buildings—and they then obtained a right to enforce one
end of that contract against Walters through a series of assignments.
The district court granted Walters summary judgment, holding that the
breach-of-contract claim failed for a host of reasons. The Fox Prairie Owners
appeal, arguing that all those reasons are wrong on the merits and that some
should not have even been considered because of procedural failures by Walters
in raising them. We could fill many pages resolving all the admittedly interesting
issues presented to us by the parties. But if any one of the logical piers supporting
the bridge of liability from Walters to the Fox Prairie Owners is defective, their case
collapses. And on our inspection, we agree with the district court on one issue that
Walters without a doubt properly raised: there is no material factual dispute that
Walters ever assigned away any purported contract right against itself. So without
the support of a valid assignment, the Fox Prairie Owners cannot sue for a breach
of that alleged contract—even if they could prevail on all their other arguments.
We thus affirm the district court’s grant of summary judgment to Walters. 3
I.
Walters originally owned and developed Fox Prairie Plaza, a mixed-use
condominium property in West Des Moines with retail stores on the first floor and
residences on the upper floors. In 2005, Walters began construction of the
buildings that would become the Plaza. The Fox Prairie Owners allege that around
this time, Walters entered into a written construction contract with itself in two
separate roles—one as the owner and the other as contractor. They contend that
this contract required Walters—as contractor—to construct the Plaza for Walters—
as owner—according to proper plans and specifications and following applicable
building codes. No party submitted the alleged written contract to the district court.
But the president of Walters agreed in his deposition testimony that there was a
written construction contract and that it would have included at least those terms.
Walters and Valley Bank. Walters got a loan from Valley Bank for the
project. This transaction was supposed to include three relevant parts: (1) a
construction loan agreement; (2) a mortgage, security agreement, and fixture
financing statement; and (3) an assignment of general contractor’s agreement.
The first two parts were executed. But the last—which would have conditionally
assigned Walters’s right to enforce the construction contract against itself to Valley
Bank—was not. An unsigned copy of the assignment was submitted to the court.
And Walters’s president testified that he was unaware of any signed assignment.1
1 An employee of Great Southern Bank—which was not a party to the transaction—
said “[u]pon information and belief” that Walters and Valley Bank both “agreed to, signed, and executed” the assignment. But this affidavit gets no weight as “‘[u]pon information and belief’ is a lawyerly way of saying that the [affiant] does not know that something is a fact but just suspects it or has heard it.” Donald J. Trump for President, Inc. v. Sec’y of Pa., 830 F. App’x 377, 387 (3d Cir. 2020). 4
The loan agreement between Walters and Valley Bank—which was
properly executed—provided that Valley Bank would loan up to $14.5 million to
Walters for the construction of Fox Prairie Plaza. It provided that the loan would
be secured by the mortgage, security agreement, and fixture financing statement.
And while it listed several other loan documents that Walters was required to
execute, the assignment of general contractor’s agreement is not included or
otherwise mentioned in the agreement.
Consistent with the promise in the loan agreement, the mortgage, security
agreement, and fixture financing statement gave Valley Bank a mortgage on the
real estate that would become the Fox Prairie Plaza. It also granted “a first and
prior security interest and all of [Walters’s] right, title and interest in, to and under
the Personalty, Fixtures, Leases and Rents, in trust, to secure the full and timely
payment of the Indebtedness and the full and timely performance and discharge
of the Obligations.” The mortgage defined the covered “Personalty” as all of
Walters’s interest
in and to all furniture, furnishings, equipment, appliances, machinery, goods, general intangibles, money, accounts, contract rights, inventory and all other personal property (other than the Fixtures) of any character as defined in and subject to the provisions of the Uniform Commercial Code of Iowa, as amended, now or hereafter located upon, within or about the Premises and the Improvements, or used in connection with the operation, use or occupancy of the Project.
In late 2007—less than two years after signing the loan agreement—
Walters defaulted on its payment obligations under the agreement. Rather than
starting foreclosure proceedings, Valley Bank and Walters executed an alternative
nonjudicial voluntary foreclosure agreement. See Iowa Code § 654.18 (2007). In 5
the agreement, Walters agreed to convey all its mortgaged interest in the Fox
Prairie Plaza real estate by a quitclaim deed at the same time it executed the
agreement. Walters also agreed, “To the extent Walters owns any equipment,
furniture, furnishings or other personal property in or on the Properties, Walters will
execute and deliver to Valley Bank a Bill of Sale conveying all such personal
property to Valley Bank.” And in return, Valley Bank accepted the real estate
conveyed and “waive[d] its right to a deficiency judgment or other claim against
[Walters], or any personal guarantor or other party, arising from the Note[] and
Mortgage[].”
As required by the agreement, Walters executed the quitclaim deed
conveying the Fox Prairie Plaza real estate to Valley Bank on the same date as
the agreement. But there is no evidence in the record of any bill of sale conveying
personal property from Walters to Valley Bank.
The Chain of Transactions after Valley Bank. About five months later,
Valley Bank agreed to sell its “right, title and interest” in the Fox Prairie Plaza real
estate to Hubbell Realty Company. The agreement also included Valley Bank’s
“right, title and interest in all personal property owned by [Valley Bank] and used
in the operation of” the Fox Prairie Plaza. Over the next three months, Hubbell
and Valley Bank made six amendments to the agreement, the details of which are
not relevant here. And then, Hubbell assigned its “right, title and interest under
that certain Purchase Agreement” to Fox Prairie Investors, LLC—which is one of
the entities making up the Fox Prairie Owners.2
2 Hubbell is also the managing member of Fox Prairie Investors, LLC. 6
Several years after Valley Bank’s sale of its interest in the Fox Prairie Plaza,
Great Southern Bank bought the assets of Valley Bank. And still years later—after
this lawsuit was filed by Fox Prairie Investors and the other Fox Prairie Owners—
Great Southern Bank made a second assignment to Fox Prairie Investors “[t]o
avoid any doubt about the assignment of the Construction Contract” Walters
allegedly made with itself. In this assignment, Great Southern Bank assigned “the
entirety of [its] right, title, interest and obligation in and to the Construction
Contract, including without limitation cause in action or chose in action arising out
of the Construction Contract.”
Fox Prairie Investors soon assigned its interest in Walters’s alleged
construction contract with itself to the two condominium associations that own the
common elements of each of the buildings comprising the Fox Prairie Plaza.
Those assignments largely mirrored the language of Great Southern Bank’s
assignment, assigning the part of Fox Prairie Investor’s “right, title, interest and
obligation in and to the Construction Contract with respect to” each association’s
common elements, “including without limitation cause in action or choice [sic] in
action arising out of the Construction Contract.”
The Alleged Construction Defects. Beginning in 2018, the Fox Prairie
Owners discovered problems with their balconies and roofs that they believe are
caused by defects in Walters’s original construction of the buildings. According to
later investigation, the attic was built without adequate ventilation, causing
condensation that damaged the roof, attic, and residences below. And the balcony
or patio screens caused water to collect and damage the screen structures. These
issues required replacing the roof and the screens. 7
This Proceeding. In November 2020, the Fox Prairie Owners3 sued Walters
for breach of contract. They claimed that Walters breached the contract for
construction of the Fox Prairie Plaza “by not complying with the plans and
specifications and applicable building codes” and that the breach caused them
damage. They also claimed that Walters “assigned the construction contract to
Valley Bank, which in turn assigned the construction contract to Hubbell Realty,
which in turn [as]signed the construction contract” to the Fox Prairie Owners. The
petition did not allege that Walters made the construction contract with itself or
provide any other detail about who Walters contracted with.
Walters answered the suit by denying any breach of contract or damage
from the breach. And among other affirmative defenses, it asserted that “[t]hese
plaintiffs were never in privity of contract with the defendant and therefore their
claim is barred.” Walters did not assert an affirmative defense that the construction
contract was void because it was not a contract between two parties.
The Fox Prairie Owners moved to transfer the case to the Iowa Business
Specialty Court.4 And over Walters’s objection, the motion was granted, and the
case was specially assigned to a business court judge.
About two years into the litigation, Walters moved for summary judgment,
arguing that the Fox Prairie Owners’ breach-of-contract claim failed because they
never contracted with Walters and there was no evidence of a valid assignment of
3 Plaintiffs include Fox Prairie Investors, LLC, Fox Prairie South Building Owners
Association, and Fox Prairie North Building Owners Association. 4 See Iowa Judicial Branch, Iowa Business Specialty Court, https://www.iowacourts.gov/iowa-courts/district-court/iowa-business-specialty- court (last visited May 3, 2024). 8
any contract right against Walters to the Fox Prairie Owners.5 In resistance to
Walters’s motion, the Fox Prairie Owners fleshed out their breach-of-contract
theory. They argued that “Walters Companies as Borrower/Owner/Developer
entered into a written construction contract . . . with Walters Companies as
contractor” to build the Fox Prairie Plaza. And they contended that “Walters, as
Borrower” assigned its “chose in action against Walters as Contractor,” under the
construction contract “to Valley Bank in at least four ways.” They pointed to (1) the
assignment of general contractor’s agreement; (2) the construction loan
agreement between Walters and Valley Bank; (3) the real estate mortgage,
security agreement, and fixture financing statement; and (4) the alternative
nonjudicial voluntary foreclosure agreement.
The Fox Prairie Owners also argued that the chain of assignments to them
was completed in two ways. First, by the purchase agreement between Valley
Bank and Hubbell Realty, and then the assignment from Hubbell Realty to the Fox
Prairie Owners. And second, by an assignment directly from Valley Bank’s
successor—Great Southern Bank—to the Fox Prairie Owners. Finally, they
argued that Valley Bank did not waive its assigned contract rights in the alternative
With its target better illuminated, Walters argued in reply that it never
“assigned the right of an ‘action or chose in action’ against Walters to Valley Bank,”
so “Valley Bank could not assign an ‘action or chose in action’ to any of its
5 Walters also argued that any claim would be barred by the five- or ten-year statute
of limitations for claims on oral and written contracts respectively. See Iowa Code § 614.1(4)–(5) (2020). But Walters abandoned this argument on appeal. 9
successors in interest.” Walters highlighted that there was no evidence that the
assignment of general contractor’s agreement was ever signed. And it targeted
other links in the alleged chains of assignments. Walters also questioned the Fox
Prairie Owners’ theory that it contracted with itself giving “Walters rights to bring
suit against Walters,” asking “Why would Walters ever bring suit against Walters?”
Four days later, Walters filed a supplemental reply that directly argued that
any alleged contract with itself “would be void and unenforceable” because “there
must be at least two parties to a contract.” The Fox Prairie Owners sought to strike
the supplemental reply because they contended it raised a new issue for the first
time in reply. The district court denied the request but permitted the Fox Prairie
Owners to file a sur-reply, in which they argued that “Walters can enter into a
contract with itself in two separate capacities.” They also alternatively argued that
even if the contract is void, Walters would still be liable to Valley Bank based on
promissory estoppel and they obtained a right to enforce that promise through the
chain of assignments from Valley Bank.
The district court granted Walters’s motion for summary judgment, holding
that the Fox Prairie Owners’ breach-of-contract claim failed for many reasons.
First, the court held that the construction contract was void because it “had only
one party: Walters” and one party cannot contract with itself. And the court
explained that any of the alleged assignees—including the Fox Prairie Owners—
thus “acquired nothing.” The court also rejected the Fox Prairie Owners’ belated
theory of promissory estoppel, reasoning that they had not pleaded it in their
petition nor presented any evidence of any “promise beyond the purported
Construction Contract.” 10
Alternatively, the court held that even if there had been a valid contract or
other enforceable promise, the Fox Prairie Owners had failed to present evidence
showing a complete chain of assignments from Walters to them of a right to enforce
the contract or promise. The court reasoned that there was no evidence that the
assignment of the general contractor’s agreement was ever signed by Walters or
Valley Bank. And it looked to the text of other alleged assignments—the
alternative nonjudicial voluntary foreclosure agreement and the purchase
agreement between Valley Bank and Hubbell—and concluded that they did not
cover the right to enforce any construction contract or promise.
After the Fox Prairie Owners moved for reconsideration and enlargement
under Iowa Rule of Civil Procedure 1.904, the court also rejected the Fox Prairie
Owners’ argument that the mortgage, security agreement, and fixture financing
statement could be a valid assignment of Walters’s contract right to Valley Bank.
Again, the court looked to the text of the assignment provision in the mortgage and
concluded that it did not cover any rights in the construction contract.
While the court agreed with the Fox Prairie Owners that Walters should
have pleaded its theory that the construction contract with itself was void as an
affirmative defense, the court declined to revisit its holding agreeing with Walters
on that basis. The court reasoned that the Fox Prairie Owners were also late in
making this argument in a reconsideration motion rather than in their briefing in
response to Walters. And since the court would have let Walters amend its answer
if the issue had been raised while the motion was still pending, the court deemed
the answer to have been amended. The court also declined to permit the Fox
Prairie Owners to amend their petition to assert an alternative promissory estoppel 11
claim. It reasoned that doing so would be futile given the lack of any valid chain of
assignments to the Fox Prairie Owners and because Valley Bank would have
waived any promissory estoppel claim in the alternative nonjudicial voluntary
foreclosure agreement. The Fox Prairie Owners appeal.
II.
We review the grant of summary judgment for correction of errors at law.
Red Giant Oil Co. v. Lawlor, 528 N.W.2d 524, 528 (Iowa 1995). Under Iowa Rule
of Civil Procedure 1.981, the district court must grant a motion for summary
judgment when the evidence in the record “show[s] that there is no genuine issue
as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Iowa R. Civ. P. 1.981(3). In resisting summary judgment, the
nonmoving “party may not rest upon the mere allegations or denials in the
pleadings, but the response, by affidavits or as otherwise provided in this rule, must
set forth specific facts showing that there is a genuine issue for trial.” Iowa R. Civ.
P. 1.981(5).
“Summary judgment is not a dress rehearsal or practice run for trial but
rather the put up or shut up moment in a lawsuit, when a nonmoving party must
show what evidence it has that would convince a trier of fact to accept its version
of the events.” Buboltz v. Birusingh, 962 N.W.2d 747, 754–55 (Iowa 2021)
(cleaned up). “And if, after considering all that evidence in the light most favorable
to the nonmoving party, no reasonable mind could differ on how the factual issues
should be resolved—and the law applied to those facts compels judgment for the
moving party—summary judgment must be granted.” In re Est. of River, ___
N.W.3d ___, 2024 WL 108884, at *3 (Iowa Ct. App. 2024). 12
The district court held that the Fox Prairie Owners’ breach-of-contract claim
fails because (1) any contract made by Walters with itself is void; (2) there is no
evidence of a proper assignment of the contract by Walters to Valley Bank; (3) any
such assigned claim was waived by Valley Bank; and (4) the purchase agreement
between Valley Bank and Hubbell did not cover any assigned claim. The Fox
Prairie Owners first challenge the district court’s holding that the alleged contract
between Walters as owner and Walters as contractor is void both on procedural
grounds and on the merits. They again argue that the court should not have
considered Walters’s voidness argument because Walters did not plead the
affirmative defense and made the argument too late in its supplemental reply brief.
And they contend that the court erred in not allowing them to amend their petition
to assert a promissory estoppel claim instead if the court accepted the late
voidness argument. On the merits, they argue that a party can contract with itself
if it does so in two different capacities, which it contends Walters did—as owner
and as contractor. Alternatively, they contend that “any defect in the contract was
eliminated when Walters assigned it to Valley Bank.” And finally, they argue that
even if the contract “is invalid, Walters is estopped from denying its enforceability.”
But we need not wade into this cascading series of issues flowing from the
district court’s ruling that any contract by Walters with itself is void. Even assuming
that Walters made an enforceable contract with itself, the district court also held
that Walters did not assign away its right to enforce the contract. And this ground
independently defeats the Fox Prairie Owners’ breach-of-contract claim. Because
without a valid assignment of the contract from Walters to Valley Bank, neither
Valley Bank, nor Hubbell, nor Great Southern Bank could assign a right to enforce 13
the contract to the Fox Prairie Owners. See Roberts v. Austin Corbin & Co., 26
Iowa 315, 327 (1869) (“[T]he assignee stands in the shoes, and only succeeds to
the rights, of the assignor.”). And without an assigned right to enforce the contract,
the Fox Prairie Owners are strangers to Walters’s contract with itself and cannot
seek to enforce it. See Davis v. Clinton Water-Works Co., 6 N.W. 126, 127
(Iowa 1880) (“It is a rule of law, familiar to the profession, that a privity of contract
must exist between the parties to an action upon a contract.”).
We thus focus on whether the Fox Prairie Owners have presented any
evidence from which a jury could conclude that Walters assigned a right to enforce
the alleged construction contract against Walters to Valley Bank. A party to a
contract may assign its right to enforce the contract. See Red Giant Oil Co., 528
N.W.2d at 533 (“Choses in action whether for breach of contract or for tort are
assignable in this state.”). And since an assignment is itself “a contract between
the assignor and assignee,” we determine its existence and scope like any written
contract, based on “the intent of the parties.” Broyles v. Iowa Dep’t of Soc. Servs.,
305 N.W.2d 718, 721 (Iowa 1981). In doing so, we must “give effect to the
language of the entire contract of assignment in accordance with commonly
accepted and ordinary meaning.” Id. at 721–22.
While the Fox Prairie Owners pointed to a few potential assignments in the
district court, on appeal they argue only that Walters made the assignment to
Valley Bank in the mortgage, security agreement, and fixture financing statement.
They rely on a provision saying that the mortgage “does Grant, Bargain, Convey,
Assign, Transfer and Set Over, unto [Valley Bank] a first and prior security interest
and all of [Walters’s] right, title and interest in, to and under the Personalty . . . in 14
trust, to secure the full and timely payment of the Indebtedness” and performance
of Walters’s other obligations under the mortgage and loan agreement. And they
note that the mortgage defines “Personalty” to included Walters’s “right, title and
interest . . . in and to all . . . general intangibles, . . . contract rights, . . . and all
other personal property . . . now or hereafter located upon, within or about the
Premises and the Improvements, or used in connection with the operation, use or
occupancy of the Project.”
The district court held that the mortgage did not assign Valley Bank a right
to enforce Walters’s contract with itself. And we agree. True, the mortgage
provision could create a security interest in the right to enforce some contracts
given the express inclusion of “contract rights” and “general intangibles” within its
definition of personalty. See Iowa Code § 554.9102(1)(as) (defining “[g]eneral
intangible” to “includ[e] things in action”). But even assuming the provision covers
the right to enforce Walters’s contract with itself, the provision could only give
Valley Bank “a first and prior security interest” in that contract right. The
assignment “of right, title and interest” in any such contract right was merely “in
trust, to secure the full and timely payment of the Indebtedness and the full and
timely performance and discharge of the Obligations.” (Emphasis added.) So the
mortgage did not itself give Valley Bank the right to enforce the construction
contract against Walters.
Under the mortgage, until Walters defaulted, Valley Bank had no right to
possess any of the collateral securing its loan to Walters—including the right to
enforce Walters’s construction contract with itself. See Iowa Code § 554.9609
(providing under the uniform commercial code that “[a]fter default, a secured party 15
. . . may take possession of the collateral . . . pursuant to judicial process; or . . .
without judicial process, if it proceeds without breach of the peace” (emphasis
added)). In other words, the mere execution of the mortgage did not give Valley
Bank the right to sue Walters for some breach of the construction contract any
more than it gave Valley Bank the right to possess the land and exclude Walters
from any construction work on Fox Prairie Plaza. The grant of a security interest—
the only interest in any contract right granted by the mortgage—is not the same as
the absolute assignment of the contract right itself. Cf. Arbie Min. Feed Co. v.
Farm Bureau Mut. Ins. Co., 462 N.W.2d 677, 680 (Iowa 1990) (explaining the
related process of levying on a breach-of-contract chose in action and noting that
even after obtaining a perfected lien on the action, the final step before prosecuting
the claim would be to have “had it assigned” to the levying party).
The Fox Prairie Owners insist that Valley Bank immediately got a right to
enforce Walters’s contract with itself directly from the execution of the mortgage
and we do not need to look elsewhere for a later assignment. But since we
disagree, in fairness to the Fox Prairie Owners, we do consider whether the record
shows any evidence that Valley Bank exercised its right to claim an assignment of
any secured contract right upon Walters’s default.
Recall, Valley Bank chose to enforce its rights under the mortgage with an
alternative nonjudicial voluntary foreclosure agreement rather than a judicial
foreclosure proceeding. See Iowa Code § 654.18 (2007). In that agreement,
Valley Bank “waive[d] its right to a deficiency judgment or other claim against
[Walters], or any personal guarantor or other party, arising from the Note[] and
Mortgage[]” in return for Walters’s agreement to simultaneously convey all its 16
mortgaged interest in the Fox Prairie Plaza real estate by a quitclaim deed. And
the summary judgment record shows that Walters did indeed execute a quitclaim
deed conveying the Fox Prairie Plaza real estate to Valley Bank on the same date
as the agreement. But the quitclaim deed only conveyed the “described real
estate”—the land and buildings on it—not any intangible contracts rights secured
by the mortgage.
The alternative nonjudicial voluntary foreclosure agreement did include
another provision dealing with some of the personal property securing the
mortgage. Walters agreed, “To the extent Walters owns any equipment, furniture,
furnishings or other personal property in or on the Properties, Walters will execute
and deliver to Valley Bank a Bill of Sale conveying all such personal property to
Valley Bank.” But this provision also cannot be an assignment of the contract right
for two reasons. First, it only covers “personal property in or on” the Fox Prairie
Plaza. It thus does not cover intangible personal property, like the right to enforce
Walters’s contract with itself. Second, like the mortgage, this provision does not
itself make any assignment. It merely requires Walters to make the transfer by
“execut[ing] and deliver[ing] to Valley Bank a Bill of Sale conveying all such
personal property to Valley Bank.” By the agreement’s terms, the bill of sale—not
the agreement—would convey any contract right from Walters to Valley Bank. And
the Fox Prairie Owners submitted no such document to the district court. Nor have
they presented any other evidence that Walters conveyed a right to enforce
Walters’s contract with itself because of Walters’s default or the alternative
nonjudicial voluntary foreclosure agreement. 17
Bottom line, because the Fox Prairie Owners fail to show a material factual
dispute that Walters ever assigned away any rights under its alleged contract with
itself, their claim for breach of that contract collapses. The district court correctly
granted Walters summary judgment on this ground. And so, we need not consider
the Fox Prairie Owners’ challenges to the court’s alternative grounds.
AFFIRMED.