FRONTIER LEASING CORPORATION, Plaintiff - Appellee, vs. DANIEL GARFIELD MEIKLE , an individual d/b/a MANAGEMENT RECRUITERS OF CHICAGO WEST LOOP and DANIEL G. MEIKLE and MARY K. MEIKLE, Individually, Meikles - Appellants.
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IN THE COURT OF APPEALS OF IOWA
No. 8-465 / 07-1705
Filed December 17, 2008
FRONTIER LEASING CORPORATION,
Plaintiff-Appellee,
vs.
DANIEL GARFIELD MEIKLE, an individual
d/b/a MANAGEMENT RECRUITERS OF
CHICAGO WEST LOOP and
DANIEL G. MEIKLE and
MARY K. MEIKLE, Individually,
Meikles-Appellants.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Artis I. Reis, Judge.
The Meikles appeal from the district court’s order granting summary
judgment in favor of Frontier Leasing Corporation.
REVERSED AND
REMANDED.
Billy J. Mallory and Thomas J. Levis of Brick Gentry, P.C., West Des
Moines, for appellants.
Edward N. McConnell of Edward N. McConnell, P.L.C., West Des Moines,
for appellee.
Heard by Vogel, P.J., Miller, J., and Zimmer, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2007).
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ZIMMER, S.J.
Daniel Garfield Meikle, an individual d/b/a Management Recruiters of
Chicago West Loop, and Daniel and Mary Meikle, individually, (collectively
“Meikles”) appeal from the district court’s order granting summary judgment in
favor of Frontier Leasing Corporation (“Frontier”). We reverse and remand for
further proceedings.
I. Background Facts and Proceedings.
In early 2001 Daniel Meikle was approached by Management Recruiters
International, Inc. (“MRI”) to purchase a franchise to operate in Chicago, Illinois.
MRI is one of the world’s largest search and recruitment organizations with more
than 1100 offices in over thirty-five countries and system-wide billings of nearly
$500 million. Meikles allege that MRI representatives informed them at that time
that MRI had an exclusive financing arrangement with Frontier. Frontier is a
finance company that provides financing for commercial-equipment needs to
customers across the United States with its principal place of business in Polk
County, Iowa.
Meikles allege they were informed that: (1) the purchase price for the
franchise was $70,000, the purchase price for the equipment was $7,000, and
the monthly payment for the purchase price for the franchise would be $2,400
plus tax; (2) Frontier would provide the financing for the purchase of the
franchise, the payment of the franchise fee, and the equipment; and (3) Frontier
would find another buyer to take over or assume the remaining debt owed to
Frontier on the franchise if the franchise failed. Meikles agreed to purchase the
franchise that became MRI-Chicago West Loop and executed a lease and
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personal guaranty. Frontier was the assignee of the lease and guaranty from its
assignor, Total Lease Concepts. The lease and guaranty contained a “hell and
high
water”
clause,
unconditionally.
obligating
Meikles—as
lessee
and
guarantor—
The lease also contained a waiver of defenses clause,
protecting the assignee, Frontier, from any claims Meikles asserted against Total
Lease Concepts.
In June 2005 Frontier filed a petition at law asserting breach of contract
and requesting the return of the equipment and compensation for Frontier’s
losses. Frontier contended that Meikles had failed to make payments under the
lease and personal guaranty. Frontier filed a motion for summary judgment in
January 2007, claiming Meikles were in default on the lease and personal
guaranty in the amount of $84,775.13 and that it should be awarded attorney
fees and court costs. In April 2007 Meikles filed an amended answer and a
counterclaim, asserting various affirmative defenses and counterclaims including,
among other things, that the lease and personal guaranty were void, voidable, or
otherwise unenforceable; the lease was not a finance lease; and the interest rate
Frontier was charging was usurious.
Meikles also filed their resistance to
Frontier’s motion for summary judgment.
After a hearing, the district court issued a ruling in May 2007 granting
summary judgment in favor of Frontier, and dismissing Meikles’ affirmative
defenses and counterclaim. The district court found the written lease agreement,
which stated it was a finance lease, contained an integration clause and
therefore the matter was governed by the terms of the written agreement; no
extrinsic evidence could be considered to vary, add or subtract from its terms.
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Based on the terms of the written agreement, judgment was entered in favor of
Frontier in the amount of $84,775.13 and ordered the return of the equipment.
Meikles filed a motion to enlarge the findings of fact and conclusions of
law, which was denied. Meikles now appeal.
II. Standard of Review.
We review a district court’s ruling on a motion for summary judgment for
correction of errors at law. Iowa R. App. P. 6.4; Wallace v. Des Moines Indep.
Sch. Dist. Bd. of Dirs., 754 N.W.2d 854, 857 (Iowa 2008). Summary judgment is
available only when there is no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. Buechel v. Five Star Quality
Care, Inc., 745 N.W.2d 732, 735 (Iowa 2008); Rodda v. Vermeer Mfg., 734
N.W.2d 480, 483 (Iowa 2007). An issue of material fact occurs when the dispute
involves facts which might affect the outcome of the suit under the applicable
law. Wallace, 754 N.W.2d at 857. An issue is “genuine” when the evidence
allows a reasonable jury to return a verdict for the non-moving party. Id. The
burden of showing the nonexistence of a material fact is on the moving party, and
every legitimate inference that reasonably can be deduced from the evidence
should be afforded the nonmoving party. Id.; Rodda, 734 N.W.2d at 483.
III. Integration Clause.
Meikles argue the court erred in ruling that the lease was integrated.
Specifically, Meikles allege the court erred in relying on the existence of an
integration clause in the lease agreement (1) to find that the lease was a finance
lease and (2) to disregard Meikles’ assertions of fact based on the parol evidence
rule. Meikles contend the lease was not the final and complete expression of the
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agreement between the parties and a material fact exists as to whether the lease
is a finance lease.
The general rule is that extrinsic evidence cannot be used to contradict or
modify the terms of a fully integrated contract. See Garland v. Branstad, 648
N.W.2d 65, 69 (Iowa 2002).
An agreement is fully integrated when the parties involved
adopt a writing or writings as the final and complete expression of
the agreement. Montgomery Properties Corp. v. Economy Forms
Corp., 305 N.W.2d 470, 476 (Iowa 1981). Whether or not a written
agreement is integrated is a question of fact to be determined by
the totality of the evidence.
See Restatement (Second) of
Contracts § 209, cmt. c (1981). When an agreement is deemed
fully integrated, the parol evidence rule prevents the receipt of any
extrinsic evidence to contradict (or even supplement) the terms of
the written agreement. Restatement (Second) of Contracts § 213
(1981).
Whalen v. Connelly, 54 N.W.2d 284, 290-91 (Iowa 1996).
Here, the district court concluded the agreement presented by Frontier
was a fully integrated agreement. However, Frontier’s own affidavit in support of
its motion for summary judgment belies this finding: Ms. Suzanne Schoofs, an
accounts manager for Frontier, in her affidavit speaks of a purchase option that is
not included in the written agreement presented to the court. Moreover, Frontier
admitted before the district court that a franchise fee was part of the transaction
at issue in this case and that the monthly payment included a franchise fee
payment.
By definition, an agreement cannot be fully integrated—a “final and
complete expression of the agreement”—if there are terms separate and apart
from that agreement. Id. Consequently, the parol evidence rule does not bar
consideration of extrinsic evidence to determine the agreement of the parties.
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See Levien Leasing Co. v. Dickey Co., 380 N.W.2d 748, 750-51 (Iowa Ct. App.
1985) (finding that even though an integration clause existed in the lease, it was
not intended as complete expression of agreement; there was a separate
purchase option and the parol evidence rule would not bar extrinsic evidence).
IV. Conclusion.
We conclude summary judgment was improper where the content and
extent of the parties’ agreement remain issues of fact. We reverse the grant of
summary judgment and remand for further proceedings.
REVERSED AND REMANDED.
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