R.L. SMITH, L.T.D., Plaintiff-Appellee/ Cross-Appellant, vs. COMMUNITY NATIONAL BANK, Defendant, and GARY E. SINDELAR, INC., Defendant-Appellant/Cross-Appellee, and GARY E. SINDELAR, Individually, Defendant-Appellant/Cross-Appellee, and FNIS FLOOD SERVICE, LP d/b/a LSI FLOOD SERVICES, Defendant.
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IN THE COURT OF APPEALS OF IOWA
No. 8-1047 / 08-0821
Filed February 19, 2009
R.L. SMITH, L.T.D.,
Plaintiff-Appellee/Cross-Appellant,
vs.
COMMUNITY NATIONAL BANK,
Defendant,
and
GARY E. SINDELAR, INC.,
Defendant-Appellant/Cross-Appellee,
and
GARY E. SINDELAR, Individually,
Defendant-Appellant/Cross-Appellee,
and
FNIS FLOOD SERVICE, LP d/b/a LSI
FLOOD SERVICES,
Defendant.
________________________________________________________________
Appeal from the Iowa District Court for Black Hawk County, George L.
Stigler, Judge.
Defendant appeals from the district court’s judgment finding the defendant
in breach of contract. AFFIRMED.
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Robert W. Goodwin of Goodwin Law Office, P.C., Ames, for appellant.
John J. Rausch of Rausch Law Firm, P.C., Waterloo, for appellee.
Considered by Sackett, C.J., and Eisenhauer and Doyle, JJ.
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SACKETT, C.J.
Defendants, Gary E. Sindelar, Inc. and Gary E. Sindelar, individually,
appeal from the district court judgment finding Sindelar breached an oral contract
with the plaintiff, R.L. Smith, L.T.D. Sindelar contends the court erred in finding
(1) the parties’ orally agreed that Sindelar would conduct a flood plain search on
certain property, (2) that Sindelar breached the agreement by not adequately
searching flood records and not conveying known information about flooding
issues to Smith, and (3) Smith was not required to mitigate damages by
appealing the city’s decision rejecting the proposed development plans.
We
affirm.
I.
BACKGROUND.
Defendant, Gary Sindelar, is a civil engineer with forty years of experience
who partially owns an engineering company. In February 2005, the plaintiff, R.L.
Smith, entered into a purchase agreement to buy 5.5 acres in Raymond, Iowa,
for $175,000. Smith wanted to develop the land and have it subdivided into
residential lots. As part of the agreement, Smith was to secure funding by April
15, 2005, and closing was to take place by May 16, 2005. Another condition of
the agreement was that Smith was to obtain “full subdivision approval by April 30,
2005, including wetland clearance, flood clearance, city approvals, roadway
approvals and drainage approvals.”
Smith hired Sindelar to perform the
engineering work required to develop the land.
Sindelar orally agreed “to
prepare [the] preliminary plat, plans and specifications, construction observation,
and final plat” for the property.
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Upon first looking at the property together, Sindelar claims he asked Smith
whether there were any flood issues with the land. Smith purportedly responded
that he believed there were no flood issues. Although no specific flood issues
were known by Smith, Sindelar testified he could tell from the lay of the land that
drainage issues would need to be considered in developing the plat.
Smith
believed there were no flood issues because the bank Smith obtained financing
from to make the purchase conducted a flood analysis and determined the
existing structure on the land was not in a flood zone. Sindelar testified that he
relied on Smith’s assurance there was not a flood issue with the property.
Sindelar began the engineering work for the property and composing the
preliminary plat. As part of this process, Sindelar had surveyors analyze the
property from maps in the county office. He asked his surveyors to look at the
property on the city of Raymond flood map. The city of Raymond flood map was
from 1976 and did not show the property since it was not incorporated into the
city at that time. The surveyors did not look at a county flood map which showed
parts of the property did lie in a flood zone. Therefore, Sindelar considered
drainage issues and flood elevation calculations based on one-hundred year
flood estimates in his design of the preliminary plat, but he did not identify any of
the property as lying in a flood zone. In evaluating the preliminary plat, the city
engineer had some concern about elevation of the lots and drainage. An email
to Sindelar from the city manager on April 7, 2005, listed proposed changes to
the preliminary plat and stated,
Also, prior to the final platting we would recommend that you
investigate the potential for any of these lots to flood. If filling of
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these lots will negatively impact upstream or downstream residents
in the area alternate storage will need to be provided. Also a
minimum Finished Floor elevation may need to be established if
backwater is a concern on any of these lots.
After some revisions were made, the planning and zoning committee and the city
council approved the preliminary plat in April 2005. On April 22, 2005, Smith
purchased the property.
As Sindelar developed the final plat for the property, the city determined
from its own research of FEMA and county flood maps that parts of the property
were in a flood zone. The city engineer forwarded this information on to Sindelar
on May 24, 2005, and indicated that certain criteria must be met prior to
construction. Sindelar requested the city provide him the maps to confirm this
and asked Smith to provide the information showing the property was not in a
flood zone.
On June 3, 2005, Sindelar submitted the final plat to the city
engineer and several days later the engineer forwarded the FEMA maps to
Sindelar showing the flood zone designation.
On June 13, 2005, the city
engineer provided comments on the final plat and explained that due to the flood
zone designation, additional requirements were needed, including submitting
certain information to the department of natural resources and FEMA. Smith was
copied on this letter.
Smith then provided Sindelar with the bank’s flood
evaluation and noted that it may not be helpful since it only determined an
existing structure on the land was not in a flood zone and did not analyze the
entire property.
Sindelar began working with the department of natural resources, FEMA,
and the city to meet the necessary requirements to proceed with the
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development. Meanwhile, some neighboring landowners submitted a letter to the
mayor, city council, and planning and zoning committee requesting the city
address, among other things, flood issues prior to taking further action on the
development. Sindelar submitted an updated final plat in January of 2006. The
city engineer made additional comments and planned to recommend approval of
the plat to the city council once the remaining issues were resolved. It appears
Smith and Sindelar were willing to address these remaining concerns.
At a
planning and zoning committee meeting on February 7, 2006, the final plat was
considered. The city engineer noted the final plat met requirements set by the
DNR and the city’s flood ordinance. Some residents attended and voiced their
concerns. The committee then unanimously denied recommending approval of
the final plat to the city council.
The city council rejected the final plat on
February 20, 2006. Though attempts were made to revive the project and submit
a new preliminary plat, apparently those efforts failed.
Smith filed a petition at law asserting in part, that Sindelar’s failure to
identify the property as being in a flood zone and disclose it to Smith prior to
Smith’s purchase of the property was a breach of their oral contract and caused
damage to Smith. Following a bench trial, the district court found the parties did
have a contract that Smith breached by not adequately searching the flood maps
prior to Smith’s purchase of the property, and by not informing Smith that there
was a possibility of flood plain issues given the lay of the land.
It awarded
damages to Smith in the amount of $211,261.98. Sindelar appeals, contending
there was no “meeting of the minds” between the parties to create a contract
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term requiring Sindelar to conduct a flood plain search on the property. He also
argues there is not substantial evidence to support a finding that he breached the
contract.
Last, he contends the district court should have required Smith to
mitigate his damages by appealing the city’s rejection of the final plat.
II.
SCOPE OF REVIEW.
A breach of contract action tried at law is reviewed for correction of errors
of law. Iowa R. App. P. 6.4; Land O’ Lakes, Inc. v. Hanig, 610 N.W.2d 518, 522
(Iowa 2000). The findings of fact below have the effect of a special verdict and
are binding if supported by substantial evidence. Iowa R. App. P. 6.4; Van Oort
Constr. Co., Inc. v. Nuckoll’s Concrete Serv., 599 N.W.2d 684, 689 (Iowa 1999).
Substantial evidence exists if a reasonable person would find it adequate to
reach a conclusion. Land O’ Lakes, 610 N.W.2d at 522. We view the evidence
in a light most favorable to the court’s ruling and construe its findings broadly and
liberally in favor of the judgment.
Equity Control Assocs., Ltd. v. Root, 638
N.W.2d 664, 670 (Iowa 2001).
III.
ANALYSIS.
Sindelar contends there was not substantial evidence to support the
court’s finding that there was a contract between the parties and that Sindelar
breached the contract. The court determined the parties did have a contract
where Sindelar agreed “to do what was necessary to gain approval of the platting
of a subdivision.” It found Sindelar breached the contract by not making an
adequate search of the existing records which would have established that the
property was in a flood zone prior to development of the preliminary plat. It also
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determined Sindelar breached the contract by not advising Smith that he
believed there was a possibility of flood plain issues due to the lay of the land.
“For a contract to be valid, the parties must express mutual assent to the
terms of the contract.” Schaer v. Webster County, 644 N.W.2d 327, 338 (Iowa
2002) (citations omitted). We determine whether there is mutual assent and a
meeting of the minds from objective evidence, not from the hidden intent of the
parties. Id. The terms must be sufficiently definite for a court to determine the
duty of each party and the conditions of performance. Seastrom v. Farm Bureau
Life Ins. Co., 601 N.W.2d 339, 346 (Iowa 1999). “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.” Molo Oil Co. v. River City Ford Truck Sales, Inc., 578
N.W.2d 222, 224 (Iowa 1998).
Viewing the evidence in a light most favorable to the court’s ruling, there is
substantial evidence to support the court’s finding there was a meeting of the
minds between the parties and a contract was formed. There is also substantial
evidence to support the court’s determination that Sindelar breached the
contract. Sindelar’s own actions indicate that research of flood issues was part
of the agreement. He admitted that he had surveyors look for the property on
flood maps and admitted the surveyors looked at incorrect maps.
He also
testified that upon first seeing the land, he immediately believed drainage and
flooding would be issues to consider in his work.
research the flood maps was a breach of the contract.
His failure to adequately
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Sindelar also contends the district court erred in not requiring Smith to
appeal the city council’s rejection of the final plat to mitigate damages. Under
Iowa Code section 354.10 (2007), a developer can appeal to the district court
when a governing body improperly fails to approve a final plat. The district court
determined that Smith was not required to appeal because it would have been
unsuccessful given that the city council had legitimate grounds to reject the final
plat.
We agree with the district court.
The record shows that the city had
appropriate reasons for denying approval of the plat.
IV.
CONCLUSION.
We affirm the district court.
Substantial evidence supports the court’s
findings that the parties had an oral contract and that Sindelar breached the
agreement. The district court did not err in finding Smith was not required to
appeal the city council’s rejection of the final plat in order to mitigate damages.
In light of this conclusion, we need not consider Smith’s cross-appeal.
AFFIRMED.
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