Acciona Windpower North America, LLC v. City of West Branch
847 F.3d 963
| 8th Cir. | 2017Background
- In 2008 West Branch, Iowa and Acciona entered a tax increment financing (TIF) development agreement: the city would consider rebating a portion of Acciona’s incremental property taxes for eight years, with all rebates "subject to annual appropriation of the City Council."
- The agreement required the city to certify amounts "obligated for appropriation" by December 1 each year and provided that if a rebate was obligated for appropriation it must be paid to Acciona within 30 days of the city’s receipt of the incremental taxes.
- West Branch paid rebates for fiscal years 2010–2012. For fiscal years 2013 and 2014 the city council initially obligated rebate amounts and included them in its budgets, but later removed the rebates during subsequent budget amendments and the city did not pay Acciona after Acciona paid its taxes.
- West Branch cancelled the TIF agreement in May 2013, asserting Acciona had breached its obligations; Acciona filed suit for breach of contract in March 2014.
- After cross-motions and a bench trial, the district court held the city breached the contract by cancelling without cause and awarded Acciona $494,924.28 for unpaid rebates obligated for appropriation but not paid in FY2013–2014; it also ordered specific performance for future years.
- West Branch appealed, arguing (1) the city’s obligations were only to "consider" annual appropriations (so no enforceable payment obligation until actual payment), (2) the agreement impermissibly limited the city’s legislative appropriation power, and (3) Acciona improperly changed its damages theory before trial.
Issues
| Issue | Plaintiff's Argument (Acciona) | Defendant's Argument (West Branch) | Held |
|---|---|---|---|
| Whether the city breached by failing to pay rebates that had been "obligated for appropriation" but later removed from the budget after Acciona paid taxes | The contract creates a binding payment obligation once the city has obligated a rebate for appropriation and Acciona pays its taxes (rebate must be paid within 30 days) | The phrase "subject to annual appropriation" means the city retained the power to decline payment up until actual payment; obligations to pay never ripened | Court adopts Acciona's view: once Acciona paid taxes, the city's obligation to pay obligated rebates was enforceable; city breached by not paying FY2013–2014 rebates |
| Whether the contract unlawfully delegated the city’s legislative appropriation power and is thus unenforceable | Agreement is a permissible TIF contract under Iowa law and the timing/payment provision is a narrow procedural constraint, not an unlawful delegation | The timing provision contracts away the council’s annual appropriation discretion and is therefore void | Court: Agreement is authorized by Iowa TIF law and the narrow timing requirement does not impermissibly limit legislative power; enforceable |
| Whether Acciona’s pretrial damages disclosures justified sanctions or exclusion of damages evidence | Acciona consistently sought compensatory damages for unpaid rebates and clarified pretrial which fiscal years were claimed; damages were based on materials in the city’s control | Acciona changed and increased damages theory on the eve of trial, warranting sanctions or exclusion | Court: No abuse of discretion in denying sanctions; disclosures were not prejudicial and damages theory was consistent with pleadings |
| Whether Acciona’s earlier summary-judgment-stage statements constituted an admission that rebates were not appropriated | Acciona’s prior wording was imprecise but not a deliberate judicial admission; it consistently contended rebates were obligated for appropriation but not paid | City argued the earlier statement was a clear admission that rebates were never appropriated | Court: The statements were careless wording, not a binding judicial admission; do not defeat Acciona’s claim |
Key Cases Cited
- Fults v. City of Coralville, 666 N.W.2d 548 (Iowa 2003) (discusses TIF agreements and municipal authority for economic development)
- Hartig Drug Co. v. Hartig, 602 N.W.2d 794 (Iowa 1999) (contract construction reviewed as a matter of law)
- DeJong v. Sioux Ctr., Iowa, 168 F.3d 1115 (8th Cir. 1999) (prefer interpretation giving effect to all contract terms)
- Fashion Fabrics of Iowa, Inc. v. Retail Inv’rs Corp., 266 N.W.2d 22 (Iowa 1978) (interpretation that gives reasonable effect to all provisions preferred)
- Pillsbury Co. v. Wells Dairy, Inc., 752 N.W.2d 430 (Iowa 2008) (extrinsic evidence secondary to contract words)
- Grandoe Corp. v. Gander Mountain Co., 761 F.3d 876 (8th Cir. 2014) (judicial-admission standard: must be deliberate, clear, unambiguous)
- Urban Hotel Dev. Co. v. President Dev. Group, L.C., 535 F.3d 874 (8th Cir. 2008) (bench-trial standard: legal conclusions de novo; factual findings for clear error)
- Marco Dev. Corp. v. City of Cedar Falls, 473 N.W.2d 41 (Iowa 1991) (contract as impermissible delegation of legislative function)
- Carmody v. Kansas City Bd. of Police Comm’rs, 713 F.3d 401 (8th Cir. 2013) (review standard for Rule 37(c) sanctions)
- Nick v. Morgan’s Foods, Inc., 270 F.3d 590 (8th Cir. 2001) (review standard for Rule 16(f) sanctions)