Hope K. Farms, L.L.C. and Bret and Melissa Schilling v. David Gumm

• Court: Court of Appeals of Iowa
• Decided: June 29, 2016
• Docket: 14-1371
• Status: Published

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 14-1371 Filed June 29, 2016

HOPE K. FARMS, L.L.C. and BRET AND MELISSA SCHILLING, Plaintiffs-Appellees,

vs.

DAVID GUMM, Defendant-Appellant. ________________________________________________________________

Appeal from the Iowa District Court for Greene County, William C.

Ostlund, Judge.

Defendant appeals from the district court’s order and entry of judgment

regarding a farm lease. AFFIRMED.

Alexander E. Wonio of Hansen, McClintock & Riley, Des Moines, for

appellant.

Melissa C. Lewis of Lewis Law Office, P.C., Bayard, for appellee Hope K.

Farms.

Kyle M. Orris of Hoyt Law Firm, P.C., Jefferson, for appellees Bret and

Melissa Schilling.

Considered by Danilson, C.J., and Vogel and Potterfield, JJ. 2

POTTERFIELD, Judge.

David Gumm appeals from the district court’s order and entry of judgment

regarding a farm lease. Gumm maintains the district court erred in concluding he

materially breached the lease. Alternatively, he maintains the plaintiffs cannot

rely on his breach of contract because the plaintiffs waived their right to have the

terms of the contract complied with.

I. Background Facts and Proceedings

The farmland in question was previously owned by Gumm’s mother, and

Gumm had a lease agreement with her to farm the land. After his mother died,

the land passed to the Gumm Family Trust. Gumm was named a co-trustee

along with two others.

Due to various disagreements between Gumm and the other two co-

trustees, multiple legal actions were filed. In one, the district court ruled the other

two trustees could sell the farmland by majority action. In another ruling, the

court found that Gumm could continue farming the land under the terms of the

current lease. See Scheuermann v. Gumm, No. 12-1946, 2013 WL 3458185, at

*1 (Iowa Ct. App. July 10, 2013).

In late 2012, the farmland was sold to the plaintiffs in this action, subject to

Gumm’s lease to farm the land between March 2013 and March 2015. The lease

required Gumm to “plant such crops in a timely fashion as may be designed and

directed by” the plaintiffs. The lease also stated the plaintiffs and Gumm were

each responsible for one-half of the costs and then each would receive one-half

of the profits. Additionally, “[n]o expense shall be incurred for or on account of

the [plaintiffs] without first obtaining [plaintiff’s] written authorization.” Also, the 3

lease provided the plaintiffs the right to enter the land “at any reasonable time for

purpose of viewing or seeding and making repairs, or for other reasonable

purposes.”

On May 24, 2013, the plaintiffs filed a joint petition for declaratory

judgment, temporary injunction decree, and other relief. They asserted they had

attempted to contact Gumm several times, through various means, but he

refused to communicate with the plaintiffs regarding the lease and 2013 crop

year farm operations because he did not recognize the plaintiffs as the owners

and landlords of the farmland. At the time they filed the petition, Gumm had not

yet prepared the land for planting, but he had incurred expenses by ordering

seed and farm inputs without written (or any other form of) authorization from the

plaintiffs. Additionally, Gumm had impeded and denied entry to a surveyor the

plaintiffs hired to determine the boundary lines of the field. The plaintiffs

maintained Gumm was in material breach of the lease and asked the district

court to terminate the lease, and award them monetary damages, attorney fees,

and court costs. They also requested an injunction barring Gumm from the

property.

On June 4, 2013, the court filed a declaratory and injunctive order. The

court found Gumm still had not planted any crops—which would result in

diminished yields for the 2013 crop season—and immediate intervention by the

court was necessary. Because Gumm was unable or unwilling to plant crops, the

plaintiffs were “immediately put in possession of the Real Estate for the purposes

of conducting any and all farming operations in connection with the 2013 crop.” 4

Gumm was ordered not to engage in any farming operations on the land and not

to interfere with the farming operations of the plaintiffs.

A bench trial on the matter took place on July 30, 2014. At the beginning

of the trial, the plaintiffs’ attorney asked the court to take judicial notice of a 2012

ruling where “the Court determined [the co-trustees] were authorized to sell the

property and followed up with [the] subsequent determination of how long that

this farm lease would still be in effect on the property.” The court did so without

objection from Gumm.

Bret Schilling testified that he had attempted to work with Gumm in

accordance with the lease, but Gumm refused to communicate with him about

any of the farming activity. Additionally, Gumm had put up barriers to block

access to the farm. Schilling testified that at the time they filed for the declaratory

order and injunction, he had planted 800 of his own acres and his neighbors had

also begun planting, but Gumm had done nothing to prepare for planting the

farmland in question. Once the injunction was entered, Schilling planted the

crop, but he had to use seeds with a shorter maturity date, which ultimately

reduced the yield. At trial, he clarified the plaintiffs were asking for all of the

profits from the 2013 crop year, but that they would also assume responsibility for

all of the expenses incurred with the crop. The owner and manager of Hope K.

Farms testified similarly.

Gumm testified that he was prepared to farm the land with inputs he had

purchased before the land was sold. However, he also testified that the farm

cooperative where he purchased the inputs refused to release them to him, so he

was unable to conduct any farming. He stated he had intended to plant both 5

corn and soybeans; he agreed he did not receive written authorization from the

plaintiffs that was the crop they wanted him to plant. He admitted he had

received the written demands from the plaintiffs leading up to injunction but

claimed his former attorney advised him to ignore them. Gumm also testified that

he believed the question of who owned the land was still in dispute.

In August 2014, the court filed an order and entry of judgment. The court

found Gumm had materially breached the lease by refusing to communicate with

the plaintiffs regarding the farm operation; ignoring written and spoken directives

regarding preparation of the real estate for planting, type of seed to be planted,

and application of anhydrous, liquid nitrogen, and fertilizer; failing to seek

authorization from the plaintiffs regarding expenses; failing to prepare the land

and plant crops in a timely fashion; and impeding the plaintiffs’ right of entry and

inspection. The court found that Gumm had no right, interest, or ownership of

the crops harvested in the 2013 or 2014 crop year due to his material breach and

his failure to cure the breach in spite of multiple opportunities to do so. The court

terminated his lease and ordered Gumm to pay court costs and $1000 in attorney

fees to both the Schillings and Hope K. Farms.

Gumm appeals.

II. Standard of Review

Gumm maintains this was an equitable action, and as such, our review is

de novo.1 See Iowa R. App. P. 6.907. However, we believe the action was at

law, so we review for corrections of errors at law. See Iowa Mortgage Center

L.L.C. v. Baccam, 841 N.W.2d 107, 110 (Iowa 2013) (“The standard of review for

1 The appellees did not file a final brief in this appeal. 6

a breach of contract action is for correction of errors at law.”); see also Ernst v.

Johnson Cty., 522 N.W.2d 599, 602 (Iowa 1994) (“Where there is uncertainty

about the nature of a case, a litmus test we use in making this determination is

whether the trial court ruled on evidentiary objections.”).

III. Discussion

A. Judicial Notice

Gumm maintains the district court abused its discretion when it took

judicial notice of a previous court order regarding the ownership of the land and

the terms of the farm lease in question. However, Gumm did not object to the

court doing so at the time of trial, and as such, any alleged error is not preserved

for our review. Schmitt v. Koehring Cranes, Inc., 798 N.W.2d 491, 500 (Iowa Ct.

App. 2011) (“To preserve error for appellate review, a party must alert the district

court to the issue at a time when the district court can take corrective action.”).

B. Material Breach of Contract and Waiver

Gumm maintains the district court erred when it concluded he materially

breached the lease. Alternatively, he maintains the plaintiffs waived their right to

have the terms of the complied with.

In an action for breach of contract, the complaining party must prove:

(1) the existence of a contract; (2) the terms and conditions of the contract; (3) that it has performed all the terms and conditions required under the contract; (4) the defendant’s breach of the contract in some particular way; and (5) that plaintiff has suffered damages as a result of the breach. 7

Molo Oil Co. v. River City Ford Truck Sales, Inc., 578 N.W.2d 222, 224 (Iowa

1998). A party breaches a contract when, without legal excuse, it fails to perform

any promise which forms a whole or a part of the contract. Id.

The district court found several breaches by Gumm, including failure to

communicate with the plaintiffs about the farm operations, failure to obtain written

authorization before incurring expenses, and failure to plant the crop in a timely

matter. On appeal, Gumm does not challenge the district court’s application of

law but rather encourages us to review the record de novo and find the facts

anew. As explained above, we do not review the proceeding de novo. However,

even if we did, we would consider the district court’s credibility determinations.

See e.g., State v. Lane, 726 N.W.2d 371, 377 (Iowa 2007) (“In [reviewing de

novo], we give deference to the factual findings of the district court due to its

opportunity to evaluate the credibility of the witnesses, are not bound by such

findings.”). Here, the district court noted that the credibility of the witnesses was

“an important element,” and in finding against Gumm, the court implicitly found

his testimony to be less credible. Moreover, even without such a finding, Gumm

admitted at trial that at the time the court had entered the injunctive order, he did

not have the inputs necessary to plant the crop and he had not communicated

with the plaintiffs to learn how or what they wanted him to plant. As a result of

Gumm’s inaction, the plaintiffs were required to plant the field themselves and

they received a reduced a yield because of the later planting. This is sufficient to

establish that Gumm breached the contract.

In the alternative, Gumm maintains that the terms of the lease the court

found he breached had been waived by the Gumm Family Trust and that the 8

plaintiffs, who stepped into the shoes of the trust when they bought the land,

could not reassert the rights. Gumm admits that the issue of “waiver” was never

raised at trial, but he argues it was preserved because the issue was litigated

insofar as “trial was a contest over whether the parties could do what they do

relative to a contract.”

However, waiver is an affirmative defense. New Hampshire Ins. Co. v.

Christy, 200 N.W.2d 834, 837 (Iowa 1972). Failure to plead an affirmative

defense normally results in waiver of the defense. Dutcher v. Randall Foods,

546 N.W.2d 889, 893 (Iowa 1996). Even if the affirmative defense was not

waived, Gumm would have the burden of proving the defense by a

preponderance of the evidence. See Hillview Assocs. v. Bloomquist, 440 N.W.2d

867, 869 (Iowa 1989). In our review of the record, we found no reference to

waiver specifically or prior practices of the Gumm Family Trust that could

constitute waiver.

We affirm the district court’s order and entry of judgment.

AFFIRMED.