CURT DANIELS, Plaintiff-Appellant, vs. JOHN HOLTZ, WSH PROPERTIES, L.L.C., JAMES NERVIG, HUNTERS RETREAT, L.L.C., NAVAJO ASSOCIATES, LLC, BRICK, GENTRY, BOWERS, SWARTZ, STOLTZE and LEVIS, P.C., JOHN DOES and JANE ROES 1-5, Defendants-Appellees.
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IN THE COURT OF APPEALS OF IOWA
No. 9-793 / 08-1729
Filed November 25, 2009
CURT DANIELS,
Plaintiff-Appellant,
vs.
JOHN HOLTZ, WSH PROPERTIES, L.L.C.,
JAMES NERVIG, HUNTERS RETREAT, L.L.C.,
NAVAJO ASSOCIATES, LLC, BRICK,
GENTRY, BOWERS, SWARTZ, STOLTZE
and LEVIS, P.C., JOHN DOES and
JANE ROES 1-5,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Lucas County, Carla T. Schemmel,
Judge.
Curt Daniels appeals from the district court’s entry of summary judgment
in favor of defendants.
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED.
Curt Daniels, Chariton, appellant pro se.
Billy J. Mallory of Brick Gentry P.C., West Des Moines, for appellees
Holtz, WSH Properties, Hunters Retreat, and Navajo Associates.
Kermit B. Anderson of Finley, Alt, Smith, Scharnberg, Craig, Hilmes &
Gaffney, P.C., Des Moines, for appellees Nervig and Brick law firm.
David L. Wetsch, Des Moines, for Indian Creek Corporation.
Considered by Sackett, C.J., Danilson, J., and Miller, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2009).
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DANILSON, J.
This is but one of many appeals1 Curt Daniels has filed, all of which in one
way or another stem from a 2001 assessment of a $95,000 civil penalty for
violations of waste handling requirements, which resulted in a judgment against
Indian Creek Corporation, the owner of the hog confinement facility,2 and
Daniels, its only shareholder. The instant appeal is from the district court’s grant
of summary judgment in favor of all defendants in Daniels’s suit to set aside the
sheriff’s sale of the corporate stock of Indian Creek Corporation.
Daniels
contends the sale did not comply with Iowa Code section 626.93 (2005) and that
the “illegal acts of the defendants before, during and after the sheriffs sale
require that the sale be set aside.” He also challenges the court’s denial of his
motion to amend his petition. We affirm in part and reverse in part.
I. Relevant Facts.
The following facts are established by the “pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits” on
file. Iowa R. Civ. Proc. 1.981(3). On March 10, 2006, the State of Iowa assigned
the $95,000 judgment to Hunters Retreat, LLC, “includ[ing] the assignment of all
right, title and interest of [the State] in the lien of said Judgment on the property
of the Defendants.” The consideration for the assignment was a $95,000 cash
1
Related appeals decided to date of which we are aware include: WSH
Properties v. Indian Creek Corporation, No. 08-1723 (Iowa Oct. 1, 2009) (summarily
affirmed); WSH Properties, L.L.C. v. Daniels, 761 N.W.2d 45 (Iowa 2008) (affirming
replevin award); Navajo Assoc. v. Daniels, No. 09-694 (Iowa Ct. App. Oct. 21, 2009)
(affirming foreclosure); Daniels v. State, No. 07-1275 (Iowa Ct. App. Oct. 15, 2008)
(upholding the dismissal of Daniels’s lawsuit in which he claimed the civil penalty was
void). Still on file with the appellate clerk: WSH Properties v. Daniels, No. 09-0703;
Indian Creek Corporation v. Daniels, No. 08-1740.
2
The hog confinement facility was subsequently purchased by WSH Properties
at a tax sale.
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payment Hunters Retreat wired to its attorney, the Brick law firm, which in turn
issued a trust account check in the amount of $95,000 to the State of Iowa.
Curt Daniels was at that time the owner of 100% of the stock of Indian
Creek Corporation.
To commence proceedings to execute on the judgment, Hunters Retreat
filed a praecipe with the Iowa District Court for Jasper County, seeking the sale
of the “right, title, and interest of Curt Daniels individually and as owner in Indian
Creek Corporation, including but not limited to any certificated or uncertificated
stock ownership, corporate books and records regarding said Indian Creek
Corporation.” A sheriff’s sale was set for July 26, 2006.
Three appraisals were received prior to the sale date. P.A. Henrichsen,
an attorney and certified public accountant, was appointed by Hunters Retreat as
its appraiser of the corporate stock. Henrichsen’s original appraisal of the stock
was $52,000. Leland Shelton, a licensed real estate agent, was appointed by
Daniels. Shelton determined the only asset of the corporation was 1219 acres of
real estate he concluded had a net value of $769,000.
Wendy Sims, a certified public accountant, was then appointed by the
sheriff.
This appraisal noted the corporation owned 1225 acres of farmland,
assumed the real estate had a reasonable value of $1300 per acre, listed the
known liabilities of the company, and concluded the company had a net value of
$821,018.05. This value was then adjusted for unknown liabilities (because the
company had not produced its books or records) and the potential capital gains
tax liability of $586,250 upon any sale of the farmland. Sims opined that the “just
appraisal” value of 100% of the common stock of Indian Creek as of July 26,
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2006, was $29,500.
Both Henrichsen and Shelton indicated in writing their
agreement with this value.
A sheriff’s sale of the shares of Indian Creek Corporation was held on
July 26, 2006. Hunters Retreat, represented by John Holtz, was the successful
bidder, purchasing 100% of the shares of Indian Creek Corporation for $110,000.
The unsuccessful bidder, Monroe Branstad, asked for a recess following Hunter
Retreat’s $110,000 bid. After the recess, he informed the sheriff he would not bid
further.
Daniels filed a 300-plus-paragraph petition alleging eighteen “causes of
action,” including, but not limited to, conspiracy, denial of equal treatment, unjust
enrichment, intimidation, slander, and abuse of process. Daniels asked that the
court declare the sheriff’s sale void, enjoin the defendants from interfering with
his leasehold interest in the property, and award him actual and punitive
damages.
All defendants moved for summary judgment.
Daniels moved to
amend his petition to add an additional nine causes of action, asserting deceit or
collusion by the parties and their attorneys in violation of Iowa Code section
602.10113 and attorney disciplinary rules.
The district court granted the
defendants’ motions for summary judgment and denied the motion to amend.
The district court essentially concluded that Daniels had not substantiated any of
his claims, or should have addressed them in other litigation. Daniels appeals.
II. Scope and Standard of Review.
We review a district court’s ruling on a motion for summary judgment for
correction of errors of law. Lobberecht v. Chendrasekhar, 744 N.W.2d 104, 106
(Iowa 2008); Rodda v. Vermeer Mfg., 734 N.W.2d 480, 482 (Iowa 2007).
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Summary judgment is appropriate when the moving party shows no genuine
issues of material fact exists and it is entitled to judgment as a matter of law.
Iowa R. Civ. Proc. 6.981(3). Our task on appeal is to determine only whether a
genuine issue of material fact exists and whether the law was correctly applied.
Lindaman v. Bode, 478 N.W.2d 312, 317 (Iowa Ct. App. 1991).
III. Discussion.
Although all defendants filed a motion for summary judgment raising just
two issues, the trial court, in rendering its ruling, dismissed all claims against all
defendants. The defendants’ motion for partial summary judgment sought the
dismissal of Daniels’s petition as it related to his claims that (1) the $95,000
assignment by the State of Iowa to Hunters Retreat was invalid and (2) the
sheriff’s sale was illegal and invalid.
For the reasons recited by the trial court, we agree that Daniels’s claims
alleging the invalidity of the assignment are meritless. We affirm the district
court’s grant of summary judgment as it related to this ground. See Iowa R. App.
P. 6.24(1), (4).
As to the second ground raised for summary judgment, we conclude there
are genuine issues of material fact regarding the validity and legality of the
sheriff’s sale, and we reverse the dismissal of any claims related to that ground.
A sheriff’s sale may be set aside by a court in equity “where the price
obtained at sheriff’s sale is so grossly inadequate as to amount to unfairness or
oppression.” Buter v. Slattery, 212 Iowa 677, 680, 237 N.W. 232, 233 (1931);
accord Francis v. Todd & Kraft Co., 219 Iowa 672, 676, 259 N.W. 249, 252
(1935); see, e.g., Willis v. Farmers State Bank, 261 Iowa 689, 695, 155 N.W.2d
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407, 411 (1968) (finding price was not grossly inadequate); Federal Land Bank of
Omaha v. Reinhardt, 428 N.W.2d 672, 673 (Iowa Ct. App. 1988) (finding a sale
price of $500 for property valued at $50,000 was grossly inadequate).
Iowa Code section 626.93 provides some guidance as to what is to be
considered “grossly inadequate.”
Personal property . . . must be appraised before sale by two
disinterested householders of the neighborhood, one of whom shall
be chosen by the execution debtor and the other by the plaintiff . . .
who shall forthwith return to said officer a just appraisement, under
oath, of said property if they can agree; if they cannot, they shall
choose another disinterested householder, and with the
householder’s assistance shall complete such appraisement, and
the property shall not, upon the first offer, be sold for less than twothirds of said valuation; but if offered at the same place and hour of
the day as advertised upon three successive days, and no bid is
received equal to two-thirds of the appraised value thereof, then it
may be sold for one-half of said valuation.
(Emphasis added.) Statutorily, a sale price of less than two-thirds (or after three
days, less than one-half) of a “just appraisement” is inadequate.
The price obtained at the sheriff’s sale for the Indian Creek Corporation
stock was $110,000, where the appraisal of the stock was $29,500. The
defendants contend that since the sale price exceeded the appraised price we
must affirm. For the reasons that follow, we disagree.
There is no dispute that the stock constituted personal property and was
required to be appraised as provided by section 626.93. There is also no dispute
that the appraisers agreed to discount the value of the stock by a potential capital
gains tax liability in the amount of $586,250, which would occur only upon the
sale of the stock’s underlying assets, the farmland. The difficulty with applying
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the discount for capital gains liability is that there was no evidence that such a
sale of the underlying assets of the corporation was contemplated.
Appraisals required by section 626.93 must be a “just appraisement.”
Although our supreme court has not been called upon to interpret this language,
it has determined in a different context that the term “just” carried the ordinary
dictionary definition of “reasonable, correct, true, due.”
Wisdom v. Bd. of
Supervisors, 236 Iowa 669, 677, 19 N.W.2d 602, 606 (1945); see Iowa Land Title
Ass’n v. Iowa Fin. Auth., 771 N.W.2d 399, 402 (Iowa 2009) (“Absent a statutory
definition or an established meaning in the law, we give words their ordinary and
common meaning by considering the context in which the word was used.”).
There can be little dispute that a just appraisement must begin with the fair
market value of the assets. See Willis, 261 Iowa at 695, 155 N.W.2d at 411
(noting estimates of value of land). This sum must then be discounted by all
reasonably identifiable and viable encumbrances, id., as well as the risks
involved in buying property at a sheriff’s sale. See generally 30 Am. Jur. 2d
Executions § 462, at 389 (2005) (noting test of inadequacy of price is “the price
received in comparison with what the property would bring at a fair sheriff’s sale,
taking into account liens, encumbrances, and other identifiable risks”). As one
Missouri court noted in Yokely v. Wian, 877 S.W.2d 179, 182-83 (Mo. Ct. App.
1994), there are many risk factors that may cause further discount in the property
value where real estate is involved:
Potential risks that could be considered may include, inter
alia: unknown or recorded encumbrances, liens, or assessments;
unidentified title or possessory claims of others; uncertain quality or
condition of any existing structures; latent environment hazards; the
potential for legal disputes and legal fees potentially required to
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obtain or remain in possession or to defend the sheriff’s deed; and
potential expense required to effectuate needed repairs, cleaning or
removal of non-conforming edifices on the property.
It also noted that the price may be affected by the inability to view the property to
determine the conditions and soundness of buildings. Id.
In the context of a marital property division, our supreme court has
determined that it is unreasonable to discount the value of an asset for tax
considerations where there is no evidence that the sale of the asset is pending or
even contemplated. In re Marriage of Friedman, 466 N.W.2d 689, 691 (Iowa
1991).
We find the principles espoused in Friedman equally applicable in
determining if there has been a just or reasonable appraisement of the stock for
purposes section 626.93.
Although the facts in this case are unique in that the stock sold for well in
excess of its appraised value, the appraisers inappropriately discounted the
value of the stock where the only sale contemplated was the sale of the stock
itself. There is no evidence that sale of the corporation’s underlying principal
asset, the land, was contemplated or imminent. Further whether a buyer at the
sheriff’s sale would choose to liquidate the corporate assets is mere speculation.
We conclude it was improper to deduct for a potential capital gains liability that
was speculative and neither pending nor imminent.
We acknowledge, as did the court in Yokely, that the property sold at a
sheriff’s sale will not typically sell near its fair market value due to these risks.
However, this sale lacked a just appraisement. Inasmuch as we find that there
was no just appraisement, we cannot ascertain whether the price paid at the
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sheriff’s sale was “grossly inadequate.”
We reverse and remand for further
proceedings consistent with this opinion.
Daniels also argues that the appraisers Sims and Henrichsen did not meet
the statutory requirement that they be “disinterested householders of the
neighborhood,” see Iowa Code § 626.93, and thus there was not substantial
compliance with the statute. After consideration of this argument, we find that it
is without merit for the reasons adequately stated by the trial court.
Similarly, for the reasons recited by the trial court, we also find no merit in
Daniels’s contentions challenging the district court’s grant of summary judgment
to attorney defendants Nervig and the Brick law firm. The trial court’s ruling upon
these two grounds is affirmed.
IV. Conclusion.
For the reasons recited by the trial court, we agree that Daniels’s claims
alleging the invalidity of the $95,000 assignment are meritless. We affirm the
district court’s grant of summary judgment as it related to this ground. We also
affirm the trial court’s ruling on the motion to amend and the motion for summary
judgment filed by the attorney defendants Nervig and the Brick law firm. As to
the second ground raised for summary judgment, we conclude there are genuine
issues of material fact, and we reverse the dismissal of claims related to the
validity and legality of the sheriff’s sale based upon whether there has been a just
appraisement of the stock.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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