Midwest Bank, Trustee, Haywood B. Belle Family Trust v. Short's Burger & Shine, LLC, Kevin Perez and Dan Ouverson

• Court: Court of Appeals of Iowa
• Decided: June 18, 2025
• Docket: 24-0763
• Status: Published

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 24-0763 Filed June 18, 2025

MIDWESTONE BANK, trustee of the HAYWOOD B. BELLE FAMILY TRUST, Plaintiff-Appellee,

vs.

SHORT’S BURGER & SHINE, LLC, KEVIN PEREZ and DAN OUVERSON, Defendant-Appellants. ________________________________________________________________

Discretionary Review from the Iowa District Court for Johnson County,

David M. Cox, Judge.

A tenant appeals from an order and writ of removal and possession in a

commercial forcible-entry-and-detainer action. AFFIRMED.

Shawn Shearer (argued) of The Shearer Law Office, P.C., Des Moines, for

appellant.

Siobhan Briley (argued) of Pugh Hagan Prahm, PLC, Coralville, for

appellee.

Heard at oral argument by Schumacher, P.J., and Buller and Sandy, JJ. 2

BULLER, Judge.

Building tenant Short’s Burger and Shine, LLC and its two owners, Kevin

Perez and Dan Ouverson, (Short’s) appeal from an order and writ of removal and

possession in a commercial forcible-entry-and-detainer (FED) action brought by

MidWestOne Bank (MWO) as trustee of the Haywood B. Belle Family Trust (Trust).

The beef between these parties concerns the lease: Short’s challenges the effect

of a prior FED action and alleged lease violations, whether the lease was modified,

and if strict compliance was necessary or equitable. We affirm.

I. Background Facts and Proceedings

Short’s has operated an award-winning restaurant and bar in a downtown

Iowa City building (premises) since 2008; their initial occupancy was pursuant to a

sublease. On May 1, 2011, Short’s entered into a lease agreement for the

premises for an initial term of three years with the option to “renew th[e] lease for

7 additional terms of 3 years each by giving Landlord a written notice of intent to

renew at least 90 days prior to the expiration of the term that precedes each such

renewal term.” This meant Short’s had to give written notice to the owner of the

premises by January 30 in years when the lease was set to expire—2014, 2017,

2020, and 2023 to date. The lease specified abandonment as one of the events

of default: “‘Abandonment’ means the Tenant has failed to engage in its usual and

customary business activities on the premises for more than fifteen (15)

consecutive business days.” The lease also included a clause providing, “Tenant

shall make no structural alterations or improvements without the prior written

consent of the Landlord.” 3

The record is not clear on whether the 2014 notice of intent to renew was

done verbally or in writing. Haywood B. Belle passed away in 2016, after which

the Trust became the owner of the premises; MWO was the executor of Belle’s

estate and then became trustee. A trustee officer testified that the 2017 notice of

intent to renew was timely provided through email, but no such emails were

provided to the court below. The 2020 notice of intent to renew was made verbally.

Short’s temporarily closed—without the Trust’s permission—from April to

August 2022 for deep cleaning, redecorating, remodeling, and to repair a “rotting

wall inside of the kitchen.” This cost “between $45 and $60,000.” In May, MWO

issued Short’s a written notice of default because Short’s had ceased normal

business activity and MWO demanded that the default be cured—i.e., that Short’s

resume normal business activity—within ten days under the conditions of the

lease. Perez testified that Short’s could not have cured within ten days because

the natural gas supply was shut off for the renovations. But MWO did not know

about the gas being shut off until June. Short’s responded to the notice of default

by informing MWO that they would re-open in “two to four months” once

renovations were completed.

MWO then delivered notice of termination of tenancy in May 2022 to

“declare th[e] lease to be terminated” with more than a month for Short’s to vacate

the premises by June 30. Short’s continued its renovation work and did not vacate

the premises. In July, MWO issued a three-day notice to quit. 4

MWO initiated an FED action (FED#1)1 on July 15 for “[f]ailure to vacate

after termination of tenancy.” Short’s continued to remodel the space, renewed its

insurance coverage to extend beyond the lease expiration, and made rent

payments that MWO did not accept. MWO filed a second FED action (FED#2)2 in

January 2023 and petitioned to recover past-due rent. On March 9, 2023, MWO

voluntarily dismissed FED#1 with prejudice and FED#2 without prejudice.

About an hour after MWO filed the dismissals, Short’s received a letter

directing that the premises needed to be vacated by April 30 (the end of the lease

term) because the window for renewal had expired. Short’s responded with an

affirmation of renewal on March 10 that it “ha[d] previously indicated . . . in writing

and verbally that it was exercising its option to renew” the lease and paid nine

months rent for the months the FED#1 litigation was pending because “MWO was

refusing to accept rent” during that time. But MWO claimed the March response

was the first time Short’s had expressed interest in renewing.3 On March 15, MWO

1 Our supreme court ordered submitted with this appeal an issue relating to MWO’s

request to take judicial notice of the proceedings in FED#1. See Iowa R. Evid. 5.201(d). We decline to take judicial notice and limit the record to the “[o]riginal documents and exhibits filed in the district court case from which the appeal is taken.” See Iowa R. App. P. 6.801. Short’s doesn’t explicitly agree to or request judicial notice of FED#1. See Leuchtenmacher v. Farm Bureau Mut. Ins., 460 N.W.2d 858, 861 (Iowa 1990) (noting we generally don’t take judicial notice “without an agreement of the parties”). Relevant portions of FED#1 were submitted as exhibits below. And MWO, like Short’s, could have offered other parts of the FED#1 record if it believed they were pertinent. In any event, declining to take notice of the entire FED#1 record does not affect the outcome here. 2 The parties agree FED#2 is not relevant to the legal analysis in this appeal.

3 Perez testified to verbal conversations with an MWO trust officer that occurred in

May, June, and July 2022 regarding Short’s exercising its option to renew and its intent to stay “for a long time.” But the trust officer testified the conversations didn’t happen and that Perez never said anything that made it clear “Short’s was going to stay in the space past the expiration of the current lease term.” 5

issued a thirty-day notice of termination of the tenancy and demand for possession,

which would “expire and terminate at midnight on April 30, 2023, and will not be

renewed.” In late March 2023, Short’s and MWO executed an annual

sidewalk-easement agreement with the city to operate their outdoor patio to run

nine months beyond the lease term.

Short’s did not vacate the premises by April 30. MWO served another

three-day notice to quit and filed a third FED action (FED#3)—the subject of this

appeal. The court held evidentiary hearings, and the parties filed post-trial briefs.

Short’s argued that renewal was done verbally in the past, that the lease was

modified to eliminate the “in writing” requirement for renewal, and that Short’s

renewed prior to January 30. It also argued the June 2022 termination of the lease

revoked MWO’s option to renew until MWO dismissed FED#1 in March 2023, at

which point MWO retracted its repudiation of the lease and the option resumed.

Short’s claimed the March affirmation of renewal after FED#1 was dismissed

related back to before January 30 and was therefore timely because it could not

renew while FED#1 was pending and renewed at the first opportunity after

dismissal.

A magistrate entered judgment and issued an order of possession in favor

of MWO, finding Short’s failed to provide MWO a notice to renew the lease prior to

ninety days before the lease terminated and that Short’s was not excused from

providing a notice by MWO’s alleged repudiation of the contract by the June 30,

2022 lease termination. Short’s appealed to the district court. See Iowa Code

§ 631.13 (2024). The district court affirmed the magistrate’s ruling. Short’s then

filed an application for discretionary review and motion to stay issuance of the writ 6

of possession with the supreme court. The supreme court stayed the writ of

possession, granted the application, and transferred the case to us for resolution.

II. Standard of Review

“Forcible entry and detainer actions are equitable actions, and therefore our

scope of review is de novo.” Porter v. Harden, 891 N.W.2d 420, 423–24

(Iowa 2017); see also Iowa R. App. P. 6.907.

III. Discussion

Short’s challenges the effects of FED#1 and compliance with the lease,

whether the lease was modified, and if strict compliance was necessary or

equitable. We address each argument in turn.

A. Pending FED#1 Litigation

Short’s asserts the renewal option was not open, that MWO repudiated, and

it retroactively cured the untimely exercise of renewal as a result of the pending

FED#1 litigation and lease violations. Concerning the renewal option, this

argument fails because the Trust sent the notice of termination and three-day

notice to quit pursuant to the lease when Short’s abandoned the premises and

failed to cure. Nothing in the record suggests Short’s was unable to provide written

notice before the FED#1 litigation commenced on July 15, 2022, or even afterward.

And as the magistrate noted: “While Kevin Perez did not testify that he simply

forgot to provide written notice, that does not seem that far off from what

happened. . . . Shorts could have easily spent a few minutes to send a written

notice, even if Shorts believed that doing so would have been futile” during the

FED#1 proceedings. 7

Short’s also claims MWO allegedly repudiated the lease by declaring the

lease terminated in June 2022 and subsequently filing FED#1, denying Short’s the

benefits of possession of the premises and serving as notice of forfeiture. And it

says that, because MWO’s alleged repudiation was retracted when it dismissed

FED#1, Short’s has a right to retroactive cure that relates its untimely affirmation

of renewal on March 10 back to before January 30—during the alleged repudiation

period—such that it would arguably be timely.

“A repudiation is accomplished by words or acts before the time of

performance evidencing an intention to refuse to perform in the future.” Pavone v.

Kirke, 807 N.W.2d 828, 833 (Iowa 2011). This typically “consists of a statement

that the repudiating party cannot or will not perform.” Conrad Bros. v. John Deere

Ins., 640 N.W.2d 231, 241 (Iowa 2001) (citation omitted). And “[t]he language of

the statement must be sufficiently positive to be reasonably interpreted to mean

that the party will not or cannot perform.” Homeland Energy Sols., LLC v.

Retterath, 938 N.W.2d 664, 698 (Iowa 2020) (cleaned up).

The record does not support the notion that MWO repudiated. Short’s

breached the terms of the lease by closing for longer than permitted under the

lease’s terms and remodeling the premises without MWO’s written permission.

MWO then properly followed the termination process outlined in the lease

agreement for abandonment (an explicit event of default in the lease). Short’s

didn’t cure the default, so MWO didn’t repudiate the agreement when it followed

the process outlined in the lease. Similarly, we recognize the rejection of rent by

MWO after the lease was terminated and when Short’s refused to vacate the

premises is not a “sufficiently positive” statement of repudiation of the lease and 8

option. Cf. id. (noting one party’s nonperformance “may be excused” if the other

party repudiated the agreement first). And because there was no repudiation,

there is no retroactive cure to make the untimely affirmation of renewal relate back

to before January 30, 2023.

B. Lease Modification

Short’s asserts the lease was modified, eliminating the written requirement

for renewal to permit verbal renewals. Leases are contracts to which ordinary

contract principles apply, and this contract was fully integrated. See Walsh v.

Nelson, 622 N.W.2d 499, 503 (Iowa 2001). A modification occurs when the parties

agree to “incur different duties and obligations from those in their original contract.”

Quigley v. Wilson, 474 N.W.2d 277, 280 (Iowa Ct. App. 1991), aff’d 474 N.W.2d

277 (Iowa 1991) (per curiam). A written contract can be verbally modified if the

parties consent and act upon it. Gordon v. Witthauer, 138 N.W.2d 918, 921

(Iowa 1966). The parties’ consent “may be either express or implied from acts and

conduct.” Davenport Osteopathic Hosp. Ass’n v. Hosp. Serv., Inc., 154 N.W.2d

153, 157 (Iowa 1967). “And whether a contract has been modified by the parties

thereto is ordinarily a question of fact.” Id.

The fact-finder in this case, the magistrate, concluded the “plain and

unambiguous” renewal language in the lease controlled, determined there was

insufficient evidence to establish a modification, and did not find any “previous

verbal renewals of the lease to be controlling or persuasive in such a way that the

terms of the lease were remade.” On appeal, the district court agreed there is no

“persuasive proof that there was a modification, verbal or written, to the clear terms 9

of the lease” to excuse Short’s from its untimely notice of renewal. And on our de

novo review of the record, we agree.

Written notice was not provided until March 10, so Short’s didn’t satisfy the

condition precedent to exercise the renewal option at least ninety days prior to

expiration of the lease term. We are also not persuaded by (and the record does

not support) Short’s argument that it gave MWO definitive notice of intent to

renew—verbally or otherwise—by conducting renovations, continuing operations,

defending the FED actions, executing the annual sidewalk easement agreement,

purchasing insurance, or by any potential discussions involving renewal before

January 30, 2023. We find that MWO never consented to a modification and that

no option existed for Short’s to verbally renew the lease.

C. Equitable Considerations

Last, Short’s reiterates on appeal its request for equitable relief that excuses

strict compliance with the lease due to equitable estoppel and unclean hands.

Here, we reproduce the magistrate’s analysis—which the district court also agreed

with—and adopt it as our own in declining to award Short’s equitable relief:

Shorts argued that it was excused from the need to provide timely written notice because providing that notice would have been a futile act. The Court has already disposed of this argument by finding that Shorts was required to abide by the terms of the contract as written and provide a written notice of intent to renew. However, even if this misconception falls within the definition of a mistake[,] . . . Shorts could have easily spent a few minutes to send a written notice, even if Shorts believed that doing so would have been futile. When Shorts could have so easily provided written notice prior to the deadline but failed to do so, the equities do not favor granting Shorts an extension. Ultimately, Shorts’ argument that . . . a court of equity would be justified in relieving it of the consequences of its failure to provide written notice during the time required fails and the Court declines to find that Shorts properly exercised its option to renew. 10

As our supreme court has explained, “The consequences of a lessee’s failure to

exercise an option, however uncomfortable they may be, are self-inflicted. We will

not use equitable principles to save a party from the circumstances it created.”

SDG Macerich Props., L.P. v. Stanek, Inc., 648 N.W.2d 581, 587 (Iowa 2002)

(cleaned up). Short’s is owed no legal or equitable relief.

IV. Disposition

We affirm the magistrate and district court’s rulings. The temporary stay

entered at the time discretionary review was granted is hereby vacated when

procedendo issues, and the district court is directed to take any action necessary

to issue or enforce the writ, consistent with this opinion.

AFFIRMED.