JOHN T. JONGMA, ALICE M. JONGMA, THE ALICE M. JONGMA REVOCABLE TRUST by and through ALICE M. JONGMA, Trustee, and THE JOHN T. JONGMA REVOCABLE TRUST by and through JOHN T. JONGMA, Trustee, Plaintiffs-Appellants, vs. GRAND PORK, INC., Defendant-Appellee.
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IN THE COURT OF APPEALS OF IOWA
No. 9-487 / 08-1640
Filed October 21, 2009
JOHN T. JONGMA, ALICE M. JONGMA,
THE ALICE M. JONGMA REVOCABLE TRUST by
and through ALICE M. JONGMA, Trustee,
and THE JOHN T. JONGMA REVOCABLE TRUST
by and through JOHN T. JONGMA, Trustee,
Plaintiffs-Appellants,
vs.
GRAND PORK, INC.,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Sioux County, Gary Wenell, Judge.
The plaintiffs appeal from the district court order granting summary
judgment in favor of the defendant. AFFIRMED.
Ron D. Danks and Carly Smith of Myers, Myers, Danks & Smith,
Pleasantville, for appellants.
Daniel E. Dekoter of Dekoter, Thole & Dawson, P.L.C., Sibley, for
appellee.
Heard by Sackett, C.J., and Eisenhauer and Doyle, JJ.
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EISENHAUER, J.
The plaintiffs appeal from the district court order granting the defendant
summary judgment. They contend the court erred in applying the statute of
frauds to the case. They also contend the court erred in holding the promissory
estoppel exception did not apply. Because we find no error, we affirm.
I. Background Facts and Proceedings. John and Alice Jongma own
property in Sioux County. In October 1997, they entered into two agreements
with Major Pork, L.L.P. (Major Pork), which granted easements to allow Major
Pork to place manure on their property. The easements were to last a maximum
of ten years. The agreements did not require Major Pork to deposit any waste on
the Jongmas‟ property, and provided the Jongmas the right to determine the
amount of waste deposited on their property.
In February 1998, the Jongmas sold ten acres to Major Pork by way of
warranty deed. Major Pork intended to construct hog confinement facilities on
the property. The deed states, “And reserving however to the [Jongmas], their
heirs, personal representatives, successors and assigns the right to the use of all
excrements and associated animal waste products on said property.”1
The warranty deed and manure easements were recorded with the Sioux
County Recorder. For the next three years, Major Pork allowed the Jongmas to
1
The language of the warranty deed reserves the right to use of all excrement and
animal waste to “the grantees,” or Major Pork. This was a scrivener‟s error and the
plaintiffs sought reformation of the contract to correct the error. In its ruling on summary
judgment, the district court found reformation to be unnecessary because of its ultimate
conclusion that the plaintiffs no longer possess any interest in the application of manure.
3
haul away manure for use in their farming operation and paid the Jongmas for its
application.
In February 2001, the parties entered into two new “Manure Application
Agreements.”
The agreements were for a term of ten years, beginning on
January 1, 2001, but would terminate prior to the scheduled termination date “if
the Operator ceases to produce livestock at the location specified.”
Each
agreement further states: “This agreement constitutes the entire agreement
between the parties; and it supersedes all negotiations and other discussions
prior to and after the execution of this agreement.”
In August 2001, the Jongmas entered into a contract to sell land around
one of Major Pork‟s hog confinement facilities to Allan Kramer. The contract
included sale of “the right to receive application of ½ of the Major Pork, L.L.P.
manure rights currently provided for by Manure Easement Agreement recorded
in 1998 File – Card No. 2516.”
In June 2002, Major Pork entered into a contract to sell their hog
confinement facilities to a group of local farmers, who later formed Grand Pork,
Inc. (Grand Pork).
The following month, the Jongmas signed a document
entitled, “Consent to Assignment of Manure Easement Agreement,” by which the
Jongmas consented to assignment of the 1998 manure easement from Major
Pork to Grand Pork. It states the Jongmas “acknowledge that the term of the
agreements is for ten years from October 29, 1997, and the agreement shall
remain in effect throughout that period.”
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In August 2002, Major Pork deeded their property to Grand Pork. Major
Pork also assigned to Grand Pork “certain assets, including, but not limited to: 1.
Manure Easement Agreement dated October 29, 1997 and filed April 23, 1998, in
File – Card No. 2516, of the records of the Sioux County Recorder.”
John
Jongma met with Grand Pork and agreed to apply manure to his own field, rather
than having a third party do so. Grand Pork agreed to pay him .8 cents per
gallon of manure applied. In 2002, Jongma was paid $21,000 for the application
of manure.
On August 30, 2002, John Jongma entered into a contract with Kramer,
agreeing to sell Kramer the “remaining rights of manure” from one of the hog
confinement facilities for $17,250. Kramer later filed a breach-of-contract suit
against Jongma regarding the transaction. The matter was settled, with Jongma
forgiving Kramer‟s debt in exchange for regaining ownership of the manure
rights.
Prior to settling his dispute with Jongma, Kramer was awarded the
contract to apply manure by Grand Pork at the rate of .04 cents per gallon. After
settlement, Jongma offered to take all the manure from Grand Pork‟s facilities
and apply it at the rate of .03 cents per gallon. However, if Grand Pork did not
agree to his proposal, Jongma wished to terminate the comprehensive manure
plan.
On February 1, 2007, the Jongmas filed suit again Grand Pork. They
alleged they had an agreement with Major Pork entitling them to all of the
manure produced from the hog confinement facilities, the agreement was binding
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upon Grand Pork, and Grand Pork had breached it. The petition also alleged
Grand Pork‟s act of awarding Kramer the manure was an intentional interference
with a contractual relationship, and bad faith in denial and/or breach of contract.
Grand Pork filed a motion for summary judgment, which the plaintiffs
resisted. Following a hearing, the district court entered its order, granting the
motion. The court concluded the manure easements set forth in the 1997 and
2001 agreements ended when Major Pork sold the property. The court held the
agreements were fully integrated and therefore parol evidence of any other terms
of the agreement was inadmissible.
estoppel were not established.
It also held the elements of promissory
Because the court found the plaintiffs were
unable to prove the existence of an enforceable agreement with Grand Pork, it
dismissed their claims for breach of contract and interference with a contractual
relationship. It also found Grand Pork had not breached the implied covenant of
good faith and fair dealing.
II. Scope and Standard of Review. We review a district court‟s ruling on
summary judgment for correction of errors at law. Overturff v. Raddatz Funeral
Servs., Inc., 757 N.W.2d 241, 244 (Iowa 2008).
In reviewing the grant of summary judgment . . . the question is
whether the moving party demonstrated the absence of any
genuine issue of material fact and showed entitlement to judgment
on the merits as a matter of law. An issue of fact is „material‟ only
when the dispute is over facts that might affect the outcome of the
suit, given the applicable governing law. The requirement of a
„genuine‟ issue of fact means that the evidence is such that a
reasonable jury could return a verdict for the nonmoving party. Our
task on appeal is to determine only whether a genuine issue of
material fact exists and whether the law was correctly applied. We
examine the record in a light most favorable to the party opposing
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the motion for summary judgment to determine if movant met his or
her burden.
Bill Grunder’s Sons Constr. v. Ganzer, 686 N.W.2d 193, 196 (Iowa 2004).
Furthermore, every legitimate inference that can be reasonably deduced from the
evidence should be afforded the resisting party. Lewis v. State ex rel. Miller, 646
N.W.2d 121, 124 (Iowa Ct. App. 2002). An inference is legitimate if it is “rational,
reasonable, and otherwise permissible under the governing substantive law.” Id.
(citing Butler v. Hoover Nature Trail, Inc., 530 N.W.2d 85, 88 (Iowa Ct. App.
1994)).
An inference is not legitimate if it is based upon speculation or
conjecture. Id. If reasonable minds may differ on the resolution of an issue, a
genuine issue of material fact exists. Id.
III. Breach of Contract. In order to succeed on a breach of contract
claim, a plaintiff must prove:
(1) the existence of a contract; (2) the terms and conditions of the
contract; (3) that [he or she] has performed all the terms and
conditions required under the contract; (4) the defendant‟s breach
of the contract in some particular way; and (5) that plaintiff has
suffered damages as a result of the breach.
Kern v. Palmer College of Chiropractic, 757 N.W.2d 651, 657-58 (Iowa 2008).
The district court found the plaintiffs had failed to show a genuine issue of
material fact as to whether a contract exists between the parties.
The court
found Grand Pork had not breached any contract that granted the plaintiffs a right
to all manure produced in the hog facilities.
The plaintiffs cite to the language of the 1998 deed as the basis for their
manure rights.
The deed does reserve to the plaintiffs “the right to use all
excrements and associated animal waste products” produced from the hog
7
confinement facilities. However, the deed is only signed by the plaintiffs. No
representative of Major Pork executed the deed. We then turn to the agreements
signed by the plaintiffs and Major Pork, which were later recorded as easements.
The first agreement between the parties signed in 1997 and recorded in
1998 states the Jongmas had easement rights in the manure for a period of ten
years from October 29, 1997, or until Major Pork repaid its loans to the lender. It
further provides that Major Pork, its successors and assigns, have full right to
determine the amount of manure to be deposited on the Jongmas‟ property.
In 2001, Major Pork signed new agreements with the Jongmas for a term
of nine years beginning on January 1, 2001.
The agreement states, “The
agreement shall terminate prior to the scheduled termination date only if either
party assigns its interest to another party without the consent of the other party,
or if the Operator ceases to produce livestock at the location specified.”
(Emphasis added.) The agreement also states, “This agreement constitutes the
entire agreement between the parties; and it supersedes all negotiations and
other discussion prior to and after the execution of this agreement.”
Citing the language of the 2001 agreements, the district court concluded
that once Major Pork sold the property to Grand Pork and ceased to operate the
hog confinement facilities, any interest the plaintiffs had in the manure
terminated. Because the easement was terminated, it could not be assigned to
Grand Pork and no contract existed between the parties. However, Major Pork
assigned the 1998 easements to Grand Pork at the same time it deeded Grand
Pork the property.
8
Assuming arguendo that the 1998 easements were not superseded by the
2001 agreement, we conclude the undisputed facts show Grand Pork has not
breached a contract with the plaintiffs. The terms of the 1998 easements state
Major Pork is not obligated to deposit any waste, and its successors and assigns
“shall have the full right to determine the amount of waste to be deposited on
said property.” Grand Pork‟s decision not to deposit manure on the Jongmas‟
property comports with this provision and does not breach the parties‟
agreement.
The plaintiffs argue the district court erred in refusing to look at the
subsequent conduct of the parties in determining the terms of the contract. In
particular, they cite Grand Pork‟s act of paying John Jongma for pumping and
applying manure to another farmer‟s field in December 2002. The plaintiffs argue
this evidence shows Grand Pork acted in conformity with Jongma‟s belief he had
a right to the manure produced from Grand Pork‟s facilities and that Grand Pork
was responsible for paying the pumping and application costs. The district court
found this evidence is barred by the parol evidence rule.
The parol evidence rule is not a rule of evidence, but a rule of substantive
law. Montgomery Props. Corp. v. Economy Forms Corp., 305 N.W.2d 470, 475
(Iowa 1981). Although extrinsic evidence may be admissible to explain the real
meaning of the parties by the language used in a contract, the parol evidence
rule forbids the use of extrinsic evidence to vary, add to, or subtract from a
written agreement. Id. at 475-76. The reason for the rule is that
when the parties have discussed and agreed upon their obligations
to each other and reduced those terms to writing, the writing, if
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clear and unambiguous, furnishes better and more definite
evidence of what was undertaken by each party than the memory
of man . . . . The rule rests upon a rational foundation of
experience and policy and is essential to the certainty and stability
of written obligations. It is designed to permit a party to a written
contract to protect himself against perjury, infirmity of memory, or
the death of witnesses.
Id. at 476 (quoting 30 Am. Jur. 2d Evidence § 1016, at 151-52 (1967)).
The terms of the 1998 easements are clear and unambiguous on their
face. They specifically state:
Major Pork hereby [grants] unto [the Jongmas] . . . an
easement for a period of ten (10) years . . . for the purpose of
depositing all animal waste products from livestock operations
conducted on the dominant estate, Parcel A . . . including the right
to bring and maintain all equipment necessary to deposit and
disseminate said animal waste, on, over, across and through the
subservient estate now owned by [the Jongmas] which is described
as Parcel B.
. . . Said easement shall be further limited by the amount of
waste to be deposited upon said real estate. The amount shall be
mutually agreed upon by the parties hereto . . . . [Major Pork] shall
have the right, but not the obligation, to apply animal waste
products to Parcel B at a rate not to exceed the nutrient uptake
requirement of the crop. . . .
....
The fact that this agreement has been granted to [Major
Pork] in no way obligates [Major Pork] or commits [Major Pork] to
deposit any waste, whatsoever, upon Parcel B. Subject to the
limitations on the maximum amount of waste, [Major Pork], its
successors and assigns, shall have the full right to determine the
amount of waste to be deposited on said property.
Under the express terms of the easements, Major Pork was not obligated to
deposit any manure on the Jongmas‟ property. Nor is there any mention of the
Jongmas having rights to the manure. Major Pork, and now Grand Pork, was left
with the right to determine how much manure it would provide to the Jongmas.
Because the easement is clear and unambiguous, parol evidence is not
10
admissible. See Dunn v. Dunn, 219 Iowa 349, 355, 258 N.W. 695, 698 (1935)
(stating “the general and settled rule is that parol evidence is not competent to
change a written instrument which is clear and unambiguous . . . .”).
Although it was not pleaded specifically in their petition, the plaintiffs
argued the doctrine of promissory estoppel circumvents the statute of frauds.
The statute of frauds precludes evidence of a contract for the creation or transfer
of interest in land or those not to be performed within a year of making unless
written and signed by the parties. See Iowa Code § 622.32(3)-(4) (2007).
The doctrine of promissory estoppel can be applied to circumvent the
statute of frauds when necessary to prevent an injustice. Kolkman v. Roth, 656
N.W.2d 148, 156 (Iowa 2003). It requires the party asserting it as a means to
avoid the statute of frauds to prove:
(1) a clear and definite promise; (2) the promise was made with the
promissor‟s clear understanding that the promisee was seeking
assurance upon which the promisee could rely and without which
he would not act; (3) the promisee acted to his or her substantial
detriment in reasonable reliance on the promise; and (4) injustice
can be avoided only by enforcement of the promise.
Id. We require strict proof of all the elements. Id.
In rejecting the plaintiffs‟ claim, the district court found that even if the
plaintiffs had proved the necessary elements with respect to Major Pork, there is
insufficient evidence to support a promissory estoppel claim against Grand Pork.
The court held there is no case law to support the plaintiffs‟ conclusion that
Grand Pork‟s constructive or actual knowledge of an agreement between
themselves and Major Pork establishes a promissory estoppel claim. We find no
error in the court‟s ruling.
11
Having considered the plaintiffs‟ arguments in the light most favorable to
them, we find they have not shown the existence of a contract that bound Grand
Pork to allow them to use all the manure produced at the hog confinement
facilities. Accordingly, we affirm the district court‟s grant of summary judgment in
favor of Grand Pork on the plaintiffs‟ breach of contract claim.
IV. Remaining Claims. As the plaintiffs‟ remaining claims are dependent
upon a reversal of the district court‟s grant of summary judgment on the breach
of contract claim, we need not address them.
We affirm the district court ruling granting summary judgment in favor of
Grand Pork.
AFFIRMED.
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