KRISTIN L. ROWEDDER, as Conservator of GARY KRAL, Plaintiff-Appellant, vs. MARK HELKENN, RAYMOND HELKENN, MCCORD INSURANCE & REAL ESTATE CORP., BERNEIL PREUL, and ROGER PREUL, Defendants-Appellees.
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IN THE COURT OF APPEALS OF IOWA
No. 9-144 / 08-0117
Filed May 29, 2009
KRISTIN L. ROWEDDER, as
Conservator of GARY KRAL,
Plaintiff-Appellant,
vs.
MARK HELKENN, RAYMOND HELKENN,
MCCORD INSURANCE & REAL ESTATE CORP.,
BERNEIL PREUL, and ROGER PREUL,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Crawford County, James D. Scott,
Judge (summary judgment ruling in favor of McCord Insurance and Real Estate
Corp. and Berneil and Roger Preul) and Jeffrey A. Neary, Judge (summary
judgment ruling in favor of Mark and Raymond Helkenn).
Plaintiff appeals the district court‟s rulings granting defendants‟ motions for
summary judgment.
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED.
Marvin O. Kieckhafer and R. L. Laubenthal of Smith Peterson Law Firm,
L.L.P., Council Bluffs, for appellant.
Earl G. Greene, III, of Pansing, Hogan, Ernst & Bachman, L.L.P., Omaha,
Nebraska, for appellees Raymond Helkenn and Mark Helkenn.
2
Sean A. Minahan and Patrick G. Vipond of Lamson, Dugan & Murray,
L.L.P., Omaha, Nebraska, for appellees McCord Insurance & Real Estate Corp.,
Berneil Preul, and Roger Preul.
Heard by Sackett, C.J., and Vogel, J., and Nelson, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2009).
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SACKETT, C.J.
Gary Kral sold, in four separate transactions, farmland he owned in
Crawford County. Plaintiff Kristin Rowedder, who subsequently was appointed
Gary Kral‟s conservator, filed this action on Kral‟s behalf against a number of
defendants.1 The district court sustained the motions for summary judgments
filed by all defendants and dismissed the case. This appeal addresses plaintiff‟s
claims that the district court erred in dismissing defendants McCord Insurance
and Real Estate Corporation (McCord), Berneil and Roger Preul, and Mark and
Raymond Helkenn. We affirm in part, reverse in part, and remand.
BACKGROUND AND PROCEEDINGS. In November 2003, Gary Kral
contacted defendant Roger Preul about selling a forty-acre tract of land Kral had
inherited from his father. Kral was referred to Preul by defendant Mark Helkenn.
Kral wanted to sell the land at $2000 per acre so as to avoid capital gains taxes. 2
Preul facilitated the sale of that tract for the asking price on November 11, 2003.
On January 5, 2004, Kral discussed with Preul selling another forty-acre tract for
$2000 per acre. This tract was advertised and sold for $2000 an acre with Preul
again facilitating the sale. On or around May 10, 2004, Kral considered selling
another forty-acre tract for $2000 per acre and gave Preul the name of a
prospective buyer who ultimately purchased the property for the asking price on
May 18, 2004. On February 18, 2005, Kral and Preul discussed selling a fourth
1
Besides the parties to this appeal, the defendants included the purchasers of the first
three tracts. These suits were dismissed on summary judgment. Rowedder‟s appeal as
to these purchasers was dismissed by the Supreme Court on November 7, 2008.
2
Apparently the land had been inventoried in Kral‟s father‟s estate at $2000 per acre
which would have been his basis in the land for federal and state income tax purposes.
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forty-acre tract of land for $2000 per acre.
Mark Helkenn told his brother
Raymond about the listing. He also told Raymond that Gary Kral appeared to be
infatuated with a lady and was spending a lot of money on her. Raymond offered
to purchase the land for the asking price on February 22, 2005. At the time of
this transaction, Mark Helkenn lived on other property owned by Gary Kral. As
part of the conveyance to Raymond Helkenn, the parties made an agreement
that Mark Helkenn would have a right of first refusal should Kral want to sell the
land where Mark lived. No consideration was paid for the right of first refusal.
On August 25, 2005, an attorney, Bradley J. Nelson, met with Kral
because Kral wanted to evict Mark Helkenn.
Kral tried to explain that Mark
Helkenn was taking money from him and not paying rent. He told Nelson that
Mark Helkenn was to make repairs to the house which would be credited against
the rent and he believed Mark Helkenn was not living up to his end of the
bargain.
Kral showed Nelson copies of his cancelled checks.
There were
several checks to Mark Helkenn for amounts up to $5000. Nelson believed some
of the checks had been altered or written by two different people. Kral was
unable to explain to Nelson the purpose for which the checks were written.
Nelson felt Kral was low functioning mentally and did not have the mental ability
to take care of his own financial matters. In further delving into Kral‟s bank
records Nelson found checks payable to individuals that appeared out of the
ordinary and totaled over $200,000.
In talking with some of Kral‟s
acquaintances, including Roger Preul, Nelson was convinced people were taking
advantage of Kral and a number of people knew this was happening. To protect
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Kral, Nelson sought to have a conservator appointed. Kral agreed and Kristin
Rowedder was appointed as Kral‟s conservator. She then brought this action
asserting, in part, that the purchasers of the property engaged in fraud and
conspired to divest Kral of his assets by exploiting Kral‟s incompetence and
incapacity. She also contended the Preuls and McCord committed professional
malpractice in facilitating the real estate transactions.
PRESERVATION OF ERROR.
Defendants McCord and Berneil and
Roger Preul contend that we do not have jurisdiction to consider the claim
against them because Rowedder has not appealed the ruling on summary
judgment dismissing them from the case.
The district court entered summary judgment in favor of McCord and the
Preuls on August 30, 2007. The plaintiff filed a motion to reconsider and the
court overruled that motion on September 27, 2007.
The motions filed by
defendants Helkenn were considered later and the ruling on their motions came
on December 21, 2007. This ruling sustained the Helkenn‟s motion for summary
judgment as to all counts and dismissed the claims against them.
On January 18, 2008, a “Notice of Appeal” was served,3 directed to
defendants and their attorneys of record, including McCord and Berneil and
Roger Preul.
The notice advised that “Notice is hereby given that the
undersigned hereby appeals to the Supreme Court of Iowa final judgment
entered against the undersigned party in said cause on December 21, 2007, and
from each order and ruling inhering therein.” The notice was signed by Marvin O.
3
The notice was filed in the district court on January 22, 2008.
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Kieckhafer, who was attorney of record for the plaintiff. It did not include the
name of the plaintiff as the appealing party. The proof of service on the notice
indicates it was sent to the attorneys of record for defendants McCord and
Berneil and Roger Preul as well as attorneys for Raymond and Mark Helkenn.
Appeals generally must be taken within thirty days from the entry of the
judgment or thirty days after the entry of a ruling on a motion to reconsider. Iowa
R. App. P. 6.5(1).
An appeal . . . is taken and perfected by filing a notice with
the clerk of the court where the order, judgment, or decree was
entered, signed by appellant or appellant‟s attorney. It shall specify
the parties taking the appeal and the decree, judgment, order, or
part thereof appealed from.
Iowa R. App. P. 6.6(1). The court entered summary judgment in favor of Mark
and Raymond Helkenn on December 21, 2007, and the plaintiff did not file a
motion requesting the court to reconsider this ruling. The notice of appeal was
filed nearly four months after the court‟s final ruling on the claims against McCord
and the Preuls.
The plaintiff argues appeal was timely as to McCord and the Preuls
because notwithstanding the requirement to file a notice of appeal within thirty
days, Iowa Rule of Appellate Procedure 6.5(3) provides:
an order disposing of an action as to fewer than all of the parties to
the suit, . . . or finally disposing of fewer than all the issues in the
suit, . . . may be appealed within the time for an appeal from the
order, judgment, or decree finally disposing of the action as to
remaining parties or issues.
The time for filing a notice of appeal addressed to these defendants is controlled
by rule 6.5(3). See Davis v. Ottumwa Young Men’s Christian Ass’n, 438 N.W.2d
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10, 16 (Iowa 1989). Under this rule, the plaintiff‟s notice of appeal was timely
because it was filed within thirty days of the final ruling disposing of the remaining
parties in the suit. Iowa R. App. P. 6.5(3).
The next questions are whether it identified the party appealing and if it
specified the decree, judgment, order, or part thereof appealed from. Plaintiff
was not named in the notice, but it was signed by her attorney of record as the
appealing party. However, the question of whether this notice was sufficient to
preserve the appeal rights of plaintiff against McCord and the Preuls is subject to
the general rule that notices of appeal are to be given a liberal construction.
Iowa Dep’t of Human Servs. ex rel. Greenhaw v. Stewart, 579 N.W.2d 321, 323
(Iowa 1998).
Notices of appeal should be liberally construed so as to
preserve the right of review, and permit, if possible, a hearing on
the merits; and only substantial compliance with the forms and
requisites of the statutes or rules of court is required, and they
should be held to have been complied with if the purpose of the
statutes or rules has been accomplished. Thus, as long as the
opposing party is not misled to his irreparable harm, a notice of
appeal which can reasonably be construed as an attempt in good
faith to appeal from an appealable decision is sufficient; and, as a
rule the notice is sufficient if it reasonably shows that an appeal is
intended and the judgment, order, or decree appealed from
substantially states the other facts required by the statute to be
shown.
Id. (citing 4 C.J.S. Appeal & Error § 371, at 421 (1993)).
It can be argued that the failure to specifically identify the plaintiff was not
in substantial compliance with our appellate rules. However one cannot say that
the defendants were misled as the notice contained the case‟s caption. See
State ex rel. Phipps v. Phipps, 503 N.W.2d 391, 392 (Iowa 1993). In State ex rel.
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Phipps v. Phipps, 503 N.W.2d at 392, the court said it was a nonfatal error where
a petition stated the action was brought on behalf of the mother instead of the
child. The failure to include the plaintiff‟s name as an appealing party is not a
fatal error.
The next question is whether the notice is sufficient to alert McCord and
the Preuls that the summary judgment dismissing the claims against them was
also appealed. Applying Iowa‟s liberal rule, we believe it was. The notice was
addressed to McCord and the Preuls. It indicated it appealed from the final
judgment of December 21, 2007, and each order and ruling inhering therein.
See Citizens First Nat. Bank of Storm Lake v. Turin, 431 N.W.2d 185, 188 (Iowa
Ct. App. 1988) (entertaining an appeal on the merits when notice stated it was an
appeal from “the final decision” and appellee had not claimed it was prejudiced or
misled).
We will therefore consider the claims against McCord and the Preuls.
STANDARD OF REVIEW. We review a ruling on a motion for summary
judgment for correction of errors at law. Rock v. Warhank, 757 N.W.2d 670, 672
(Iowa 2008); Diemer v. Hansen, 545 N.W.2d 573, 575 (Iowa Ct. App. 1996). The
motion should be granted
if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.
Iowa R. Civ. P. 1.981(3). An issue of fact is “genuine” if the evidence would allow
a reasonable jury to return a verdict for the nonmoving party. Fees v. Mutual Fire
& Auto. Ins. Co., 490 N.W.2d 55, 57 (Iowa 1992). “A fact is material if it will affect
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the outcome of the suit, given the applicable law.” Parish v. Jumpking, Inc., 719
N.W.2d 540, 543 (Iowa 2006). The court should view the evidence in a light
most favorable to the party resisting the motion for summary judgment. Murtha
v. Cahalan, 745 N.W.2d 711, 713-14 (Iowa 2008). “We also indulge in every
legitimate inference that the evidence will bear in an effort to ascertain the
existence of a fact question.” Crippen v. City of Cedar Rapids, 618 N.W.2d 562,
565 (Iowa 2000). Yet, a party moving for summary judgment may prevail by
establishing that the nonmoving party‟s proof is too limited to succeed on its
claim. Wilson v. Darr, 553 N.W.2d 579, 582 (Iowa 1996). “If those limits reveal
that the resisting party has no evidence to factually support an outcome
determinative element of that party‟s claim, the moving party will prevail on
summary judgment.” Id.
SUMMARY JUDGMENT GRANTED TO MCCORD INSURANCE AND
THE PREULS. The plaintiff contends the district court erred in determining there
were no genuine issues of material fact to preclude granting McCord and the
Preuls summary judgment on the plaintiff‟s claim of professional negligence. The
district court found summary judgment should be granted because there was no
genuine issue of material fact as to whether Roger Preul breached the duty of
care owed to Kral during the transactions. It stated that the plaintiff‟s expert
opined that a realtor that sold real estate at a price directed by the client would
not fall below professional standards if (1) the client was duly informed of all the
advantages and disadvantages of the specific price, and (2) the client had the
mental capacity to make the necessary decisions. It reasoned that breach of the
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standard of duty could not be proved because there was not clear, satisfactory,
and convincing evidence that Kral lacked the mental capacity to understand the
nature of the transaction. On appeal, the plaintiff asserts the court erred by
weighing the evidence and making its own findings of fact rather than identifying
whether there was a genuine issue of fact to proceed to trial.
In a professional negligence action, the plaintiff must prove a duty of care
is owed to him or her, breach of that duty, and that the breach caused the
plaintiff‟s damages. See Smith v. Koslow, 757 N.W.2d 677, 680 (Iowa 2008).
Generally, as Kral‟s real estate agent, Preul had a duty to use “reasonable care,
diligence, and judgment in the performance of tasks undertaken on behalf of his
principal.” Humiston Grain Co. v. Rowley InterstateTransp. Co., Inc., 512 N.W.2d
573, 574-75 (Iowa 1994). The requisite standard of care for one practicing a
trade or profession, such as a real estate agent, is to exercise “„the skill and
knowledge normally possessed by members of that profession or trade in good
standing in similar communities.‟” Id. at 575 (quoting Kastler v. Iowa Methodist
Hosp., 193 N.W.2d 98, 101 (Iowa 1971)). Unless a professional‟s lack of care is
obvious, the standard of care and breach will typically require proof in the form of
expert testimony. See Graeve v. Cherny, 580 N.W.2d 800, 801 (Iowa 1998);
Humiston Grain Co., 512 N.W.2d at 575. Since the existence of a duty is a
question of law, it can be adjudicated on a motion for summary judgment.
Hansen v. Anderson, Wilmarth, & Van Der Maaten, 630 N.W.2d 818, 823 (Iowa
2001).
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The plaintiff‟s expert, John Seuntjens, testified by deposition that each
parcel was sold below its market value. He reported that he believed Roger
Preul did not represent fully the best interest of his client, Kral, during the
transactions. He stated,
Based on my appraisals, it was obvious to me that the farms
were underpriced; therefore [Roger Preul] should have practiced a
higher level of due diligence to determine their present market
value when he exposed those farms to the market. And based on
my research with the information that I have available, it appears
that they were marketed poorly.
....
I don‟t think he practiced due diligence to determine what the
tax ramifications would be on this property. That‟s not fully his
responsibility, but he does have a fiduciary responsibility to his
client to inform them of any significant negative repercussions of
selling the farm, that specifically being capital gains tax.
....
I think he had a responsibility to call attention to the fact that
there is potential for significant capital gains on the farm and to
advise him to seek competent legal counsel to determine what that
was or competent tax advice one or the other.
When asked what a real estate agent‟s duty is when a client states he
wants the land sold for $2000 an acre, Suentjens advised,
I think they need to quiz their potential client as to why they
would sell it for less than market value. They need to go on a factfinding venture to find out why someone would want to sell their
property for less than it‟s worth.
....
I think an experienced real estate agent should have
documentation as to why that individual wanted to sell it for less
than market value. Possibly an acknowledgement would be
recommended whereby they acknowledge that they‟re selling it for
less than market value, that they have been disclosed what the
actual market value is. I think it‟s up to the real estate agent to
inform their potential client or their client in the normal due diligence
as to what the advantages and disadvantages are, all the aspects
of the listing, all the aspects of the sale. There should be a
comprehensive disclosure to their client as they enter into any
agreement of sale or listing.
12
When pressed about whether selling property below market price at the
instruction of the client would be a breach of a real estate agent‟s duty to the
client, Suentjens responded,
It would be my opinion that if an individual has the mental
capacity to make the appropriate decision and they have been
completely informed by people with whom they have entrusted their
matters, then it would seem to me to be their choice as to what they
were going to sell the farm for.
In a tort action against a real estate agent, a plaintiff must “show the
standards of conduct and practices, or bench marks, that establish the requisite
skill and knowledge of members of good standing in the defendant‟s trade or
profession.” Menzel v. Morse, 362 N.W.2d 465, 471 (Iowa 1985). This can be
proved by expert testimony or through published ethical standards and practices
of real estate agents. Id. at 472. In Menzel, we recognized that a real estate
agent‟s duty to his or her client includes advising the client to seek legal advice
when the interest of any party to the transaction requires it. Id. at 472-73. One
early Iowa case, which addresses a claim of fraud rather than professional
negligence, specifically addresses a real estate agent‟s duty to protect the
client‟s interest by obtaining the highest price possible.
It is elementary that an agent must be loyal in transacting the
business of his principal. An agent is under the legal duty to fairly
and fully disclose all facts within his knowledge, germane to the
subject-matter of the agency, and in the strictest good faith impart
to his principal all information that would control, or have a
tendency to influence, the conduct of the principal. It is his duty to
secure the highest price possible. It is his duty to inform his
principal as to the true value of the land and to communicate any
offers made therefor. He occupies a position of confidence, and
must bear true allegiance to his principal. The principal has a right
to rely on the statements of the agent in relation to the subject-
13
matter of the agency. The agent must make a full, fair, and prompt
disclosure of all the circumstances affecting the principal‟s right or
interests.
Githens v. Johnson, 195 Iowa 646, 649, 192 N.W. 270, 272 (Iowa 1923).
Plaintiff‟s expert‟s opinion was that Preul had a duty to fully investigate and
disclose the present market value of the farms and to advise Kral to obtain tax
advice on any capital gains issues.
Preul testified that he did evaluate the
market value by comparing the tracts to other lots sold in the area, but no
documentation verifying the comparables appears in the record. He also testified
that he did not advise Kral to discuss capital gains tax issues with an attorney or
accountant.
Roger Preul was concerned about Kral‟s ability to handle his
finances around the time of the transactions. A memo in the record detailing a
conversation between Kristin Rowedder, the plaintiff and conservator in this
action, and Preul, states that Preul admitted that “[o]ne person is robbing [Kral]
blind.”
The plaintiff has shown there is a genuine issue of material fact as to
whether Preul breached his duty to Kral. We reverse the district court‟s dismissal
of the claim for negligence against defendants McCord Insurance, Berneil Preul,
and Roger Preul, and remand to the district court for further proceedings not
inconsistent with this opinion.
SUMMARY JUDGMENT GRANTED TO THE HELKENNS. The plaintiff
next contends summary judgment should not have been granted to the Helkenns
because there is a genuine issue of material fact as to whether the Helkenns
were involved in a civil conspiracy to wrongfully purchase land from Kral. The
14
district court granted the motion finding the record was devoid of any evidence of
a wrongful act to support a claim for civil conspiracy.
“Under Iowa law, „[a] conspiracy is a combination of two or more persons
by concerted action to accomplish an unlawful purpose, or to accomplish by
unlawful means some purpose not in itself unlawful.‟” Wright v. Brooke Group,
Ltd., 652 N.W.2d 159, 171 (Iowa 2002) (quoting Basic Chems., Inc. v. Benson,
251 N.W.2d 220, 232 (Iowa 1977)). It is the underlying wrongful acts that give
rise to the claim, not the conspiracy itself. Basic Chems., 251 N.W.2d at 233.
Civil conspiracy is merely a method to impose vicarious liability on a party for the
wrongful conduct of another with whom the party has acted in concert. Wright,
652 N.W.2d at 172. The wrongful conduct taken by a co-conspirator need not be
an intentional tort, but the conduct itself must be actionable in the absence of a
conspiracy. Id. at 174.
According to the plaintiff‟s brief, the wrongful conduct that supports their
claim is that:
Mark Helkenn knew at the time that Gary Kral could be
easily influenced to make unwise financial decisions.
Mark
Helkenn, despite his “concerns,” saw to it that his brother,
Raymond Helkenn, was first in line to buy 40 acres of farm ground
at the $2,000.00 per acre price, a price which Plaintiff contends was
too low and damages her ward, Gary Kral. . . . Further, as part of
the transaction, Mark Helkenn–and others (Defendant Roger
Preul)–influenced Gary Kral to provide Mark Helkenn a “right of first
refusal” on the property where Mark Helkenn was living at the time
for no consideration.
We agree with the district court that these actions do not amount to an actionable
tort on which to base a claim of civil conspiracy. The district court held this action
did not meet the required elements of fraud and plaintiff has not appealed this
15
finding.
The plaintiff points us to no case law identifying similar conduct as
actionable. To survive a motion for summary judgment, the non-moving party
cannot rely on mere allegations but must set forth specific facts to support a
prima facie claim. Humphries v. Trustees of the Methodist Episcopal Church of
Cresco, Iowa, 566 N.W.2d 869, 872-73 (Iowa 1997). The district court did not err
in granting the Helkenn‟s motion for summary judgment.
CONCLUSION.
The district court did err in granting the motion for
summary judgment in favor of the Preuls and McCord Insurance. The district
court did not err in granting the Helkenns‟ motion for summary judgment. Since
the plaintiff‟s claim of civil conspiracy is not based on actionable conduct, this
claim fails as a matter of law.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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