IN THE COURT OF APPEALS OF IOWA
No. 15-0601 Filed January 13, 2016
GEHRKE, INC., Plaintiff-Appellee,
vs.
STEEPLE CHASE FARMS, LLC and THE NEW MODERN CONCEPTS, INC., Defendants-Appellants. _______________________________
STEEPLE CHASE FARMS, LLC and THE NEW MODERN CONCEPTS, INC., Counterclaim-Plaintiffs,
GEHRKE, INC., Counterclaim-Defendant. ________________________________________________________________
Appeal from the Iowa District Court for Hardin County, Kurt L. Wilke,
Judge.
A property owner and a general contractor appeal the district court’s ruling
in favor of a subcontractor. AFFIRMED.
Brian Rickert, Michael R. Blaser, and Brant D. Kahler of Brown, Winick,
Graves, Gross, Baskerville & Schoenebaum, P.L.C., Des Moines, for
appellants/counterclaim appellants.
Stephen E. Doohen of Whitfield & Eddy, P.L.C., Des Moines, for appellee.
Heard by Potterfield, P.J., and Doyle and Tabor, JJ. 2
TABOR, Judge.
A hog confinement facility under construction in Hardin County incurred
damage to its concrete manure pits following heavy rains over Memorial Day
weekend in 2013. The facility’s owner and a general contractor1 brought claims
against the excavation subcontractor for negligence, breach of contract, breach
of express and implied warranties, indemnification and contribution, and unjust
enrichment. The district court, recognizing the plaintiffs alleged five counts,
found “the sum total” of their claims came “down to a question of negligence.”
The court decided if the plaintiffs were unable to establish negligence on the part
of the subcontractor “then all of their theories fail.” The court ruled the
subcontractor was not negligent and dismissed the other four claims. On appeal,
the plaintiffs contend the record lacks substantial evidence to support the court’s
determination the subcontractor was not negligent. They also contend the court
erred in dismissing the other four claims “for failure to prove negligence” without
providing a more detailed analysis.
Because substantial evidence underpins the court’s finding the
subcontractor was not negligent and because the same allegations of negligent
workmanship form the basis for the plaintiffs’ other claims, we affirm.
I. Background Facts and Proceedings
Construction. Farmer Steve Liston contacted Iowa Select Farms, a pork
production company based in Iowa Falls, about selling a parcel of his land for a
1 Steeple Chase Farms, LLC and New Modern Concepts, Inc. were the defendants in the original mechanic’s lien foreclosure action brought by Gehrke, Inc., but it is their counterclaims at issue on appeal. We will refer to them jointly as the plaintiffs or as New Modern unless a specific designation to Steeple Chase is warranted. 3
hog confinement facility. In return for the land sale, Liston wanted a manure
easement for crop fertilizer. Liston negotiated the deal with William Foley, Iowa
Select’s chief financial officer. Foley also manages Steeple Chase Farms, a
single member L.L.C. owned by Jeffrey Hanson, Iowa Select’s chief executive
officer. Hanson’s wife, Debora, owned New Modern Concepts, Inc., which acted
as the general contractor on construction projects undertaken by Steeple Chase.
Steeple Chase bought a rectangular 4.5 acre lot from Liston located near
Owasa and bordering the south side of county road D-35. Foley submitted plans
for a two-building, 4800-head hog confinement to Hardin County and the Iowa
Department of Natural Resources (DNR). Foley testified obtaining a permit was
not an “in-depth process.” Foley planned to situate rectangular hog buildings
lengthwise, west to east, eighty feet apart. Foley placed the western sides of the
buildings one hundred feet from the west lot line and the eastern sides sixty feet
from the east lot line. Foley, who did not obtain site elevations before planning
the layout, located the driveway on the west side. Liston’s corn bins were west of
the hog facility’s lot line.
After Foley submitted his proposal, the county informed him the county
intake tile was located in the ditch on the south side of D-35 and north of the
proposed north building. The county tile line ran under the center of the
proposed confinement buildings before exiting in the southeast corner of the lot.
The county required Steeple Chase to reroute the county tile so it did not run
under the new buildings. Steeple Chase received the necessary approvals to go
forward. 4
The diagram below illustrates the facility plan Foley created.
The Owasa lot also contained farm tile lines running north/south through
the lengths of both buildings. Foley did not know the Owasa site contained tile
lines. Foley testified an excavator generally would reroute smaller diameter farm
tile as a part of its overall bid, but he expected to pay extra if an excavator had to
reroute a county tile line due to its larger diameter. Foley also expected the 5
excavator to look at the topography in advance and determine how to dig and
where to pile the over-dig or spoils.
New Modern, the general contractor, did not perform any of the
construction itself; it hired experienced subcontractors. Adjacent landowner
Liston recommended Foley use Gehrke, Inc. for the excavation because its
owner, Steve Gehrke, had done previous drainage projects for Liston. Foley
contacted Gehrke for help in locating the county tile. Thereafter, Foley solicited a
bid from Gehrke, who had extensive experience in digging manure pits. In
Gehrke’s twenty-eight years as an excavation contractor, he had dug pits for
roughly 800 to 1000 confinement buildings, including past work for New Modern.
Gehrke kept a map of the drainage tiles on Liston’s farm because he had
completed tile work for Liston. In general, surface water flowed across the
Steeple Chase lot from the southwest corner toward the northeast corner. Based
on the map showing numerous tiles in a cross-hatch pattern on the acreage sold
to Steeple Chase, Gehrke knew the lot was wet ground.
In April 2013, shortly after New Modern told Gehrke the driveway would be
located on the west side of the lot, Gehrke submitted a written quote to the
general contractor for $34,500 in excavation services (manure pits under each
building, including rough and final backfills and rock spreading) and for $5200 to
reroute the county tile. On April 25, 2013, New Modern accepted Gehrke’s
written offer by issuing a purchase order to Gehrke detailing those items and
agreeing to pay the prices Gehrke quoted. The purchase order also asked
Gehrke to install a silt fence for $1060 and provide rock for $2878.84. Gehrke 6
agreed and did so. New Modern contends Gehrke’s April bid and its purchase
order constitutes the parties’ contract.
Gehrke ran site elevations on the lot before digging and learned the
ground one hundred feet to the east of the southwest corner was slightly more
than two feet higher than the ground at the southwest corner. He concluded the
“water naturally drains to the west on the south side of the property for the first
hundred feet. And then after that, the water goes to the east.” Gehrke also
learned the east end of the site was higher; therefore, more water would be
running on the west end of the site.
Gehrke started work in late April. A few days into his work, Gehrke asked
New Modern’s site manager Darrell Hunt if the driveway could be moved to the
east side of the buildings. Hunt knew the east side was higher, did not disagree
with Gehrke’s idea, and passed the request on to Foley. Hunt did not ask Liston
if moving the driveway to the east was possible. Based on the flow of surface
water shown by his elevations, in Gehrke’s opinion the driveway and truck
access on the east end of the lot “would have been much better for this site.”
Specifically,
[They could] flip flop the distance they bought from Steve Liston, take 100’ off the east end, and move the 60’ . . . to the west end. They wouldn’t have been buying any more acres total. It would have been a much better way to deal with the water problems.
Foley declined Gehrke’s request to move the driveway, which would have
required him to resubmit the plans and likely would have resulted in a delay.
Foley testified he understood, based on his observations of the site, “the area on
the east side would be higher in elevation than the area on the west side where 7
the driveway entrance now existed.” But Foley also knew Liston was happy with
Foley’s layout because Liston “wanted the driveway where I show it in the
diagram because it would give him an additional route into his bin site. That’s
part of what went into the thought process.”
So the driveway remained on the west side of the lot, turning east to run
between the buildings. During Gehrke’s exploration to locate existing tiles, he
dug on the north side of the north building and on the south side of the south
building. During his tile exploration, Gehrke “disturbed” the soil in those areas so
it was no longer the “virgin ground” needed to support cement trucks. In fact,
one cement truck that attempted to pour from the north got stuck up to its axle
and had to be pulled out. Gehrke reinstalled the county tile along the east end of
the lot. Before he dug the hole for the north pit, Gehrke installed a discharge tile
from the north pit to the county intake to “take care of water” that would run into
the hole for the pit and “to help drain the site.” Expert witness Jason Kreft, the
excavation subcontractor New Modern usually hired, was not critical of Gehrke
running this tile line to keep the north pit dry.2
Gehrke and Hunt both recalled meeting at the site and discussing the
location of the excavation spoils. According to Gehrke, when Hunt asked what
2 New Modern expected and hired Gehrke to come back to the site to do backfill and the final grading after other subcontractors had completed their work. Gehrke testified he planned to return after the buildings were poured and hook the discharge tile to the “Form-A-Drain pipe” or tile line that the concrete subcontractor was responsible for placing around the buildings. While Gehrke did not tell anyone from New Modern “to turn the switch off in the intake so that it wouldn’t backflow,” Gehrke was not on the site during the time of the rain, and the concrete subcontractor had finished pouring the buildings. On the existing record, we are unable to conclude Gehrke’s action regarding the discharge tile was somehow improper. 8
Gehrke was doing, Gehrke explained: “We can’t get trucks on the north and
south side because I disturbed them all” in locating tile and rerouting the farm tile
and the county tile. “The [virgin soil in the] center is the only thing left to do.”
Gehrke stated he needed to shove the spoils on the east lot area so the trucks
could access the lot through the driveway on the west. Gehrke testified Hunt did
not disagree or voice any concerns about that plan. According to Hunt, although
he had concerns about Gehrke piling dirt on the east, Gehrke had explained that
“was working the best for him on the way it laid.” Hunt relied on Gehrke’s
expertise, and Hunt did not push the issue.
On cross-examination Hunt testified, if an excavation subcontractor was
doing something Hunt knew was “not going to work” or did not meet DNR
requirements, Hunt would bring the matter to the subcontractor’s attention and
either force the subcontractor to do it correctly or “kick him off the job.” Thus, it is
undisputed Gehrke chose where to put the excavation spoils based on the land’s
elevations, the driveway location, and the cement trucks’ need for “virgin” ground.
It is also undisputed Hunt did not object or require Gehrke to move the spoils to a
different location before allowing the concrete subcontractor to perform its work.
As part of his excavation contract, Gehrke rerouted the existing south tiles
into a new main tile he installed south of the south building. Gehrke created an
intake for the new south main on the southwest side of the south building.
Gehrke piled the spoils as discussed with Hunt—along the south and north
lengths of the south building area, along the east side of the lot, and on the
northeast length of the north building. Because the cement trucks needed 9
access to the west driveway, Gehrke did not place any spoils on the west side of
the lot.
Gehrke finished excavating the pits in the first week of May 2013.
Thereafter, Hunt arranged for Alewelt Inc., the concrete subcontractor, to pour
the foundations. Alewelt poured the south building first and finished the north
building on the Wednesday or Thursday before Memorial Day. No other
subcontractors had yet performed work on the buildings.
Nine inches of rain fell on Sunday and Monday of the holiday weekend.
Foley observed the site on Tuesday. The rainstorm had not damaged the south
building’s concrete, and the south building held eight to twelve inches of water in
its pit, consistent with the rainfall totals. But the north building’s pit was infiltrated
and flooded with three to four feet of water, an amount inconsistent with the
rainfall totals. Excess water caused the north building to “float” and the concrete
to crack.
After the rain storm, New Modern paid Gehrke $22,500. New Modern
hired Alewelt to tear out and replace the north building’s cement at a cost of
$78,597.86. Alewelt finished in mid-June 2013. Gehrke submitted a bill for
$8715 to New Modern in August 2013. A few days later, New Modern’s attorney
sent a demand letter to Gehrke, stating New Modern had suffered about
$100,000 in damage to the north pit, and based on its investigation, “the north
barn was not sufficiently bermed, as the south barn was, to avoid water from
infiltrating the pit.” 10
Bench Trial. Gehrke filed a mechanic’s lien, and New Modern answered
and filed counterclaims alleging negligence, breach of contract, breach of
express and implied warranty, indemnification/contribution, and unjust
enrichment. The parties settled the lien dispute, and the district court held a
bench trial on New Modern’s five counterclaims in February 2014. Because New
Modern raises a substantial-evidence challenge on appeal, we discuss the trial
testimony in some detail.
Foley testified Hunt coordinated the subcontractors to keep the project
moving, and New Modern expected Hunt to be on the project site at least once a
week. Foley explained that New Modern, as the general contractor, had “the
ultimate responsibility to the customer,” here Steeple Chase. But Foley “still
expect[ed] the subs to perform their various tasks in a workmanship like manner.”
Foley testified New Modern expected the excavator to account for the water flow
on the site and keep water out of the pits. Despite not taking elevations, Foley
believed the water flow on the lot was obvious, running from the southwest
directly to the west end of both hog barns.
On the Tuesday morning after the rainstorm, Foley noticed Gehrke had
not placed “any berm or build-up of dirt around the north pit” to prevent water
from getting into the north pit. Foley believed blocking the east side of the lot
with spoils “clearly impeded” the “water’s ability to flow on out.” Foley opined, if
Gehrke had “not pushed all the dirt to the east end and blocked the natural flow
of water, it appears that [damage to the north pit] could have been easily
avoided.” 11
On cross-examination, Foley acknowledged he declined Gehrke’s request
to move the driveway to the east side of the lot due to the probable delay (thirty
to ninety days) in completing the project. Foley admitted putting the driveway on
the east “possibly” would have changed where Gehrke placed the dirt. Foley
also admitted: “Q. If under our hypothetical, the driveway goes on the east side
and spoiled dirt is piled on the west side, that . . . would have protected both of
these buildings; right? A. If that’s how he would have chose to do it.”
Foley suggested he had seen other sites where the spoils were piled in
the center but admitted he did not know the total width required by the cement
trucks to maneuver between the buildings. Foley then suggested if Gehrke had
extended the berm on the south side of the south building “just to the west of the
south building on the southwest corner of the site, from where the water was
flowing” onto the site, those spoils would not have prevented the cement trucks
from driving between the bins, but would have protected the north pit. Foley was
“fairly certain” his extended-berm solution would not have backed up surface
water onto Liston’s property. In any event, Foley did not believe a southwest
berm that routed the water towards Liston’s property was a problem because the
water entering Steeple Chase’s lot at the southwest corner came from Liston’s
land and Steeple Chase had no obligation to keep that water on its lot.
On cross-examination, Foley acknowledged that water standing in the
north ditch was atypical and resulted from the heavy rains. Foley also admitted
the flooded county intake in the north ditch might be higher than Gehrke’s
discharge tile line in the bottom of the north pit. Based on the amount of rain, it 12
was possible Gehrke’s discharge tile line intended to move water out of the north
pit to keep it dry “actually had just the opposite effect.” Foley concluded there
was no way to determine how much of the water inside the north pit came from
the flooded county intake and how much came from the flow of surface water.
Dwaine Bundy, an expert witness for New Modern, opined if Gehrke had
properly “bermed up” the outside of the north pit before the concrete
construction, “the concrete would not have had to be replaced.” Bundy also
criticized Gehrke for piling dirt on the east side of the lot. When asked if
extending the berm on the south side of the south building further west as
proposed by Foley would have helped protect the north pit, Bundy testified “it
would,” except for the water flowing directly east from Liston’s grain bin area, “we
got to have that coming to the north.”
Bundy did not know Gehrke had asked to have the driveway placed on the
east side, which would have allowed space for the spoils along the west side of
both buildings. When asked whether Gehrke’s proposal “wouldn’t have been a
better outcome in this case given what we know about the slope of the water,”
Bundy answered it “might have been.” When asked whether Gehrke putting a
similar size berm around the north pit as around the south pit would have
worked, Bundy replied:
I believe it would, except the fact the water had to run someplace. And [the picture] shows the arrow where the water from part of that went to the east. And that part of the water would have not been part of the water up against a berm on the west side or the north side, so that would be the case in this situation. Q. So now we’ll never know if a berm would have held the water on the north pit because Mr. Gehrke didn’t put one in; correct? A. That would be correct. 13
(Emphasis added.)
New Modern also called Jason Kreft as an expert witness. Kreft was an
experienced excavator whose business made a profit doing projects for New
Modern, though he testified he was neither being paid nor promised any
particular work for providing his opinion. Kreft had concerns about Gehrke piling
dirt on the east end because it would “probably catch water . . . if the water got in
there, it can’t get out.” If Kreft had been hired to excavate the Owasa site, he
would have piled dirt completely around all four sides of each building and would
have had the cement trucks pour from the outside of the buildings, not from a
center aisle. But Kreft did not know any details about Gehrke being required to
reroute the county tile. On cross-examination, Kreft agreed the Owasa lot was
naturally a wet site and acknowledged nine inches of rain falling in a twenty-four-
hour period “would be a lot.” Kreft agreed it is more difficult for an excavator to
handle spoils on a “wet site” because the dirt “sloughs off and doesn’t stay in a
pile.” According to Kreft, if trucks were to drive in the center aisle of a wet site,
then the excavator would need to keep the dirt in the center aisle “virgin.” Kreft
testified, if hypothetically the driveway was placed on the east side so that
Gehrke, knowing he did not have to worry about access of trucks on the west
side, “piled a windrow of dirt along the west side,” the fact of Gehrke “putting dirt
on that end” would have “gone a long ways toward protecting the north building.”
Michael Tacchia Jr., who poured the concrete, agreed the Owasa lot was
a wet site. He testified to needing thirty to forty feet of “virgin” ground to optimally
operate his pump truck between the two buildings. 14
Gabriel Snakenberg, a self-employed excavator who had previously
worked for Gehrke, Inc., testified as an expert witness for Gehrke. Snakenberg
said an excavator’s job is to keep the pit floor dry so the concrete contractor can
pour the foundation and to move the spoils so the other contractors can complete
the site work. According to Snakenberg, an excavator cannot place the spoils so
water is directed onto neighboring property. Snakenberg reviewed Gehrke’s
elevations and agreed the ground between the two buildings “is lower in the
center of the buildings than it is either on the west or east end” by roughly two
feet. Snakenberg testified, because the dirt was disturbed to reroute the county
tile on the north side of the north building, it was not an option to have concrete
pump trucks on the north side of the north building. Snakenberg also testified if
Gehrke had added a berm on the north building’s south side, the space
remaining would not have accommodated the cement trucks. Snakenberg had
no problem with Gehrke placing spoils in a windrow on the east side of the
property—he “had no more places to go with his spoiled dirt since his property
was so tight.”
When Gehrke took the witness stand, he acknowledged his company had
an obligation to excavate the site in a reasonable manner to prevent the
accumulation of water. Gehrke agreed the north building’s concrete cracked and
had to be replaced. Gehrke explained he did not put spoils along the north
building’s south length because “water would have ponded” between the
buildings as it was “two feet lower in the center.” Gehrke testified putting a berm
on the north building’s south length and cutting a channel to the east would not 15
have eliminated the pond—the middle’s center is ninety-nine feet and the east
end is slightly over one-hundred feet—a “foot and a half higher on the east end
already, so water could have never flowed to the east.” Gehrke testified his
elevations showed that even if he had not put spoils on the east, the water would
not have flowed through there.
Engineer James Tometich testified on Gehrke’s behalf. According to his
report, “[W]hen the flood occurred and the county tile could not handle the
amount of water, it back flowed into the excavated pits and created” the
infiltration of the north pit. Tometich opined the berms that Foley and New
Modern’s experts suggested Gehrke should have installed on the north pit “would
not have been an effective method of controlling the flood waters. The soil was
super saturated (full of water) and would not have held up like an earthen dam.
The water would have ultimately back-flowed into the excavations through the
previously installed tile lines.”
Tometich also discussed the roles of general contractor New Modern and
its subcontractors.
A General Contractor (GC) is in charge of the entire job. The GC hires subcontractors to perform many aspects of the work. The GC schedules the work and when one [sub]contractor is complete, the next one comes in and does the next portion. If a subcontractor’s work is not done correctly, the GC is responsible for requiring corrections of the work prior to the next contractor coming in. The fact that the concrete foundations were poured on Gehrke’s work indicates that the work was complete and acceptable; otherwise the GC would not have let the concrete subcontractor continue their work . . . . It is clear that [Gehrke’s] work was accepted by the GC [New Modern]. 16
At the close of the evidence, Gehrke’s attorney argued that in New
Modern’s counterclaims for breach of either contract or warranty, “the breach
would be negligence.” Similarly, New Modern’s trial brief to the court stated its
“counterclaims plead multiple theories of recovery for the same wrong; namely,
Gehrke’s defective work and failures on the site resulted in [New Modern]
incurring $78,597.86 in damages to tear out, replace, and re-pour the north
building concrete pit.” (Emphasis added.)
March 2015 District Court Ruling. The district court understood that
New Modern advanced five counterclaims, but decided they all boiled down to
whether Gehrke fulfilled its obligation to excavate the site in a “reasonable
manner.” The court held that if New Modern was “unable to establish negligence
on the part of Gehrke, then all of [its] theories fail.”
The court specifically found, at the time of the rain storm, there “was no
dirt piled on the west or south side of the north building since that was the access
area for trucks to get to and between the building sites. Piling dirt in those
locations would have prevented such access.” The court concluded New Modern
“failed to establish negligence on the part of Gehrke or that the alleged
negligence of failure to extend a berm to the west was a proximate cause of
damage” to New Modern. Specifically, the court found:
[U]nder the requirements of the job that was presented to Gehrke, it acted reasonably in accomplishing its work. Due to the shortness of space from the buildings to the western boundary, an extended berm would likely have accomplished nothing except anger the neighbor [Liston]. Further, water backflowing from the ditch into the north building excavation was just as likely to have been the cause of damage as surface water flowing across the property. 17
New Modern’s post-trial motion asked the court to enter specific findings
on its four other counterclaims. The court declined, and New Modern timely
appealed.
II. Standard of Review
New Modern’s counterclaims were tried at law. Thus, we review for
correction of errors at law, and the district court’s findings of fact “shall have the
effect of a special verdict.” Iowa R. App. P. 6.907. The trial court’s findings of
fact are binding upon us if supported by substantial evidence. Iowa R. App. P.
6.904(3)(a). We view the evidence in the light most consistent with the court’s
judgment. R.E.T. Corp. v. Frank Paxton Co., 329 N.W.2d 416, 419 (Iowa 1983).
“Our deference to the trial court's finding of facts does not extend to its
determinations of law.” Id.
III. Substantial Evidence
New Modern contends substantial evidence does not support the court’s
determination Gehrke was not negligent. To succeed on its negligence claim,
New Modern had to prove “the existence of a duty to conform to a standard of
conduct to protect others, a failure to conform to that standard, proximate cause,
and damages.” St. Malachy Roman Catholic Congregation v. Ingram, 841
N.W.2d 338, 346 (Iowa 2013). On appeal, this court does not reweigh the
evidence to see if it would have reached a different conclusion. See R.E.T.
Corp., 329 N.W.2d at 419 (“Evidence can be contradictory and remain
substantial.”). Here, the fighting issues were whether Gehrke failed to conform to 18
a standard of care and whether Gehrke’s action or inaction in placing the spoils
caused the undisputed damages.
The record contains conflicting evidence with both parties presenting
expert testimony to support their contentions. The district court believed and
credited Gehrke’s evidence and rejected some of New Modern’s evidence. In
our review, we “are keenly aware of the trial court’s superior vantage point to
make credibility determinations due to its ability to consider firsthand the
demeanor and appearance of the parties.” Neimann v. Butterfield, 551 N.W.2d
652, 654 (Iowa Ct. App. 1996).
Foley and New Modern’s experts were critical of Gehrke’s excavation
process, citing his failure to (1) place berms around the north pit, (2) extend the
berm along the south building to the west lot line, and (3) recognize placing dirt
along the east would impede water flow. The plaintiffs alleged Gehrke’s
defective workmanship resulted in the flooding of the north pit. But both the
cross-examination of New Modern’s witnesses about those alleged failures—as
well as the testimony of Gehrke and his witnesses—provided substantial support
for the district court’s ruling. For instance, New Modern’s own expert explained
lengthening the south windrow to the west lot line would have done nothing to
handle the water entering directly from the west corn bin area. Testimony also
made clear such an extension (1) would not have prevented water from flowing
around the windrow and onto Liston’s land and (2) an excavator is not allowed to
place the spoils in a manner that temporarily diverts surface water onto another’s
property. 19
The evidence showed Gehrke was working on a tight site; he could not
have added a windrow to the north pit’s south side and still have left room for
cement trucks. Moreover, given Gehrke’s undisputed measurements of the site
elevations, adding dirt to the south side of the north pit also was not feasible due
to the higher elevation on the east side and the lower elevation in the center
aisle. Based on these elevations, adding a windrow along the north pit’s south
side would have caused a two-foot pond to form in the only area for cement
trucks access. Finally, the evidence supports the district court’s conclusion
Gehrke could not place dirt on the west side of the north building due to the
driveway access for cement trucks. Accordingly, given this tight lot’s elevations
and driveway placement, substantial evidence supports the district court’s finding
Gehrke did not breach a standard of care in regard to the failures claimed by
New Modern.
The district court also concluded New Modern failed to prove the
causation element of negligence because “water backflowing from the ditch into
the north building excavation was just as likely to have been the cause of
damage as surface water flowing across the property.” Foley’s testimony alone,
as detailed above, provides substantial evidence to support this conclusion.
Further, Foley’s testimony is consistent with the views of Gehrke’s expert.
Accordingly, the district court’s ruling on causation is likewise well-rooted in the
record. 20
IV. Other Counterclaims
New Modern contends the district court erred in dismissing its other claims
(breach of contract, breach of express and implied warranties, indemnification
and contribution, and unjust enrichment) solely on the premise it did not prove
Gehrke’s negligence. In a related issue, New Modern argues the court erred in
declining to make findings of fact and conclusions of law on its counterclaims
other than negligence. We will address these issues in a combined analysis.
A. Error Preservation. Gehrke asserts New Modern did not preserve
error. We find no merit to this challenge. New Modern pleaded the four non-
negligence counts in its counterclaim. Its trial brief listed the elements to be
proven in a contract action and provided a general definition of “implied warranty”
in construction contracts. New Modern’s motion under Iowa Rule of Civil
Procedure 1.904 alleged the court did not rule “on their other four counterclaims”
and asked the court to “amend and enlarge its findings and conclusions” in order
“to address and rule on each of [its] separate counterclaims.” The district court
declined, ruling:
As stated in this court’s ruling, all of the counterclaimants’ counterclaims were founded on alleged negligence of [Gehrke]. This court specifically found that counterclaimants failed to prove negligence on the part of [Gehrke]. Having failed to do so, there was no breach of contract, no breach of express or implied warranties, no basis for indemnification or contribution, and no unjust enrichment on the part of [Gehrke].
Thus, the district court did rule on the other claims, and error was
preserved for appellate review. See Meier v. Senecaut, 641 N.W.2d 532, 537
(Iowa 2002). 21
B. Discussion
New Modern contends the court erred because its other counts require
proof of elements distinct from the components of its negligence claim.3
Contract. The district court determined its finding that Gehrke’s actions
or inactions did not constitute a failure to meet the standard of care (i.e. Gehrke’s
workmanship was not defective and it was not at “fault” in tort) also resolved New
Modern’s claim Gehrke breached their contract. We agree under the specific
circumstances of this case. First, New Modern’s trial brief stated it was pleading
“multiple theories of recovery for the same wrong; namely, Gehrke’s defective
work and failures on the site.” Second, New Modern’s evidence cited the same
three alleged failures by Gehrke, discussed above in the negligence analysis, as
constituting defective workmanship for all of its claims.
The court’s standard-of-care conclusion in tort was based on its findings
(1) “Gehrke acted appropriately in all respects” and (2) “under the requirements
of the job that was presented to Gehrke, it acted reasonably in accomplishing its
work.” The same findings that support the court’s conclusion New Modern could
not recover for defective workmanship in tort also support the court’s conclusion
New Modern could not recover for defective workmanship in contract—i.e.,
3 New Modern does not advance a separate argument concerning its counterclaims for indemnification and contribution or unjust enrichment in its appellant’s brief. Similar to its trial brief, New Modern discusses those concepts only in parentheticals included in a string of case citations. Because those claims are not separately argued, we decline to consider them on appeal. See State v. Mann, 602 N.W.2d 785, 788 n.1 (Iowa 1999) (noting random mention of an issue, without analysis or argument, is insufficient to prompt appellate consideration). New Modern’s argument concerning those claims in its reply brief comes too late. See Sun Valley Iowa Lake Ass’n v. Anderson, 551 N.W.2d 621, 642 (Iowa 1996) (declining to consider argument raised for first time in reply brief). 22
Gehrke’s work was not defective as alleged by the three specifications of
negligence and thus Gehrke did not breach the construction contract. See
Pursell Constr., Inc. v. Hawkeye-Sec. Ins. Co., 596 N.W.2d 67, 68 (Iowa 1999)
(combining the analysis of tort and contract claims alleging defective
workmanship where both claims were based on the contractor’s alleged failure to
put the basement at the correct level); McPherrin v. Jennings, 24 N.W. 242, 243
(Iowa 1885) (recognizing a party’s negligent acts in caring for a horse
“constitutes a breach of contract, and the [tort] action is based upon this breach”);
see also Hilsman v. Phillips, No. 08-0289, 2009 WL 249885, at *4 (Iowa Ct. App.
Feb. 4, 2009) (recognizing the “same specifications of negligence” claimed by the
plaintiff were also the plaintiff’s basis for the alleged breach in the contract claim).
As in McPherrin, the defective workmanship New Modern alleged
constituted “fault” in negligence, i.e. failing to properly berm the site, was the
identical workmanship alleged to have breached the contract. See McPherrin, 24
N.W. at 244. Although more detail in the court’s ruling might have clarified the
issues, the district court did not err in summarily concluding New Modern failed to
prove Gehrke’s defective workmanship constituted a “breach” of the contract.
Additionally, to be successful on its contract claim, New Modern had to
prove Gehrke’s excavation “caused” the damages. See Royal Indem. Co. v.
Factory Mut. Ins. Co., 786 N.W.2d 839, 846 (Iowa 2010). Foley testified it was
impossible to determine what damage to the north pit was caused by surface
water flowing into the pit and what amount of infiltration was caused by backflow
from the north pit discharge tile. We read the district court decision as rejecting 23
New Modern’s position that Gehrke’s actions caused damage to the property.
The court opined the back flow of water from the ditch was “just as likely to have
been the cause of damage” as the surface water flowing across the lot. We find
the court’s conclusion on causation specific enough to be an independent reason
for rejecting New Modern’s claim Gehrke breached the contract.
Implied Warranty. New Modern raises the same challenge to the court’s
summary resolution of its claim for breach of the implied warranty of workmanlike
construction.4 New Modern contends Gehrke “breached the implied warranty of
workmanlike construction by excavating and grading around a North Building pit
that did not stay dry throughout the remainder of the construction process.”
Gehrke counters that New Modern, as a sophisticated general contractor, is not
the kind of party that the implied warranty was intended to protect. See Rosauer
Corp. v. Sapp Dev., L.L.C., 856 N.W.2d 906, 910 (Iowa 2014) (holding “the
potential class of plaintiffs is limited to innocent homebuyers for whose benefit we
created the warranty”).
Assuming without deciding that general contractor New Modern can seek
to enforce an implied warranty of workmanlike construction against its
subcontractor, Gehrke, we find New Modern’s implied-warranty claim is defeated
by the same failure to show either fault or causation as we discussed in rejecting
the breach-of-contract claim.
4 New Modern does not substantively discuss Gehrke’s alleged breach of an “express” warranty until its reply brief. Accordingly, we decline to address that issue separately. See Sun Valley Iowa Lake Ass’n, 551 N.W.2d at 642. 24
New Modern contends the district court erred in focusing on whether
Gehrke acted reasonably in performing the excavation work, instead of
examining the “end result” of his grading. For this contention, New Modern relies
on Reilly Constr. Co. v. Bachelder, Inc., No. 14-0817, 2015 WL 1331634, at *1
(Iowa Ct. App. Mar. 25, 2015) (holding contractor’s approval of site selection for
pond that failed to hold water was a breach of implied warranty of workmanlike
construction). Contrary to New Modern’s suggestion, Bachelder does not stand
for the proposition that the implied warranty of workmanlike construction creates
an absolute guarantee or strict liability for the excavator’s work. In Bachelder, we
determined the contractor miscalculated the soil conditions before digging and
thereby failed to construct a viable pond. See id. at *6 (citing Ideal Heating Co. v.
Kramer, 102 N.W. 840, 840–41 (Iowa 1905)). Bachelder did not hold that minus
some miscalculation, the contractor would still have breached the implied
warranty. Thus, to prove Gehrke breached an implied warranty of workmanlike
construction, New Modern must show some miscalculation or faulty work by
Gehrke that resulted in the damages, not simply that the pits did not stay dry.
New Modern did not prove Gehrke miscalculated the elevations or the
optimal placement of the berms on the hog facility site as it was laid out by Foley
nor that such miscalculations resulted in the water damage to the north building.
Accordingly, the district court properly dismissed New Modern’s warranty claims.
AFFIRMED.