Ryan Companies US, Inc. v. FDP WTC, LLC

• Court: Court of Appeals of Iowa
• Decided: January 21, 2021
• Docket: 19-1698
• Status: Published

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 19-1698 Filed January 21, 2021

RYAN COMPANIES US, INC., Plaintiff-Appellee,

vs.

FDP WTC, LLC, Defendant-Appellant. ________________________________________________________________

Appeal from the Iowa District Court for Black Hawk County, George L.

Stigler, Judge.

A defendant appeals following an adverse ruling on a motion for partial

summary judgment in favor of a plaintiff. AFFIRMED.

Philip S. Bubb and Brandon R. Underwood of Fredrikson & Byron, P.A., Des

Moines, for appellant.

Stephen D. Marson of Whitfield & Eddy, P.L.C., Des Moines, and Bradley

D. Fisher and Brian D. Steffes of Fisher Bren & Sheridan, LLP, Minneapolis,

Minnesota, for appellee.

Considered by Doyle, P.J., and Mullins and Greer, JJ. 2

MULLINS, Judge.

In September 2018, Ryan Companies US, Inc. (Ryan) filed a petition to

foreclose mechanic’s liens against FDP WTC, LLC (FDP). Ryan’s amended

petition and attachments alleged the following. In January 2016, the parties

entered into the Courtyard Contract, pursuant to which Ryan agreed to furnish

labor and materials relating to building improvements, and FDP agreed to pay for

the same. Allegedly, Ryan provided services, but FDP failed to pay. The parties

entered the Sitework Contract in November 2016, under which Ryan again agreed

to provide labor and materials relating to building improvements, and FDP agreed

to pay for the same. Ryan allegedly met its obligations under the contract, but

FDP did not compensate Ryan in accordance with the contract. In March 2018,

the parties entered the John Deere Contract, under which Ryan agreed to provide

materials and labor in return for compensation from FDP. Again, Ryan allegedly

provided the agreed-to services, but FDP failed to pay.

Ryan’s November 2018 amended petition forwarded thirteen claims against

FDP, including a claim for foreclosure of a mechanic’s lien relating to the John

Deere Contract in the amount of $340,238.16. In its amended answer, FDP

alleged Ryan failed to fully perform its obligations under the three contracts

because, among other things, labor and materials provided by Ryan were defective

or otherwise of poor quality. FDP counterclaimed for breach of each of the three

contracts.

In May 2019, Ryan moved for summary judgment on its claim for

foreclosure of a mechanic’s lien relating to the John Deere Contract. FDP resisted,

claiming, among other things, “Even if the material facts establishing liability on the 3

John Deere Contract are undisputed,” given the various contracts, claims, and

counterclaims, FDP should be allowed to set off of damages because “the parties

agreed by contract to allow setoff of claims and counterclaims.” Ryan responded

it never contractually agreed to allow set off of damages. The matter proceeded

to hearing, at which FDP agreed it was liable for the amount requested under the

John Deere Contract but essentially argued it expected to succeed on its

counterclaims and it should be entitled to set off damages when the claims under

the other two contracts were adjudicated.

Ultimately, the court granted the motion for summary judgment, relying on

Iowa Rule of Civil Procedure 1.957, which provides: “A claim and counterclaim

shall not be set off against each other, except by agreement of both parties or

unless required by statute.” The court entered judgment in favor of Ryan in the

amount of $340,238.16. FDP appeals.

On appeal, FDP argues “the district court erred in ruling that the parties did

not agree to setoffs under Iowa Rule of Civil Procedure 1.957.” FDP notes, “Like

the other two contracts between the parties,” the John Deere Contract “allowed

FDP to withhold payment because of . . . ‘defective Work not remedied,’ ‘damage

to the Owner,’ or ‘repeated failure to carry out the Work in accordance with the

Contract Documents.’” FDP also notes the “John Deere Contract defined ‘the

Work’ to include ‘the construction and services required by the Contract

Documents’ and ‘all other labor, materials, equipment and services provided or to

be provided by the Contractor to fulfill the Contractor’s obligations.’” FDP claims

the “contract’s text and the construction’s context compel the conclusion that the 4

residual phrase captures Ryan’s obligations to FDP under the other two contracts”

and “Ryan and FDP thus agreed to setoff claims and counterclaims.”

We find the answer to this appeal by a simple reading of the John Deere

Contract. The very first provision states, “The Contract represents the entire and

integrated agreement between the parties hereto.” And “the Work” is limited to

“the construction and services required by the Contract Documents” making up the

John Deere Contract, not the other two contracts. “The Work [] constitue[s] the

whole or part of the Project.” “The Project is . . . the Work performed under the

Contract Documents” of the John Deere Contract, not the other two. Thus, we

interpret “all other labor, materials, equipment and services,” to be limited to that

performed and provided under the John Deere Contract, not the other contracts.

Upon our plain reading of the contract, we find no contractual agreement to

setting off of claims and counterclaims across the three contracts. As such, set off

is prohibited by Iowa Rule of Civil Procedure 1.957. We affirm entry of judgment

in favor of Ryan.

AFFIRMED.