Connie Kunz v. Robert Kunz
15-1711
| Iowa Ct. App. | Dec 21, 2016Background
- Brothers Robert and Richard (later Connie as Richard's successor) jointly owned Happy Homes, Inc. and 9.7 acres; after Richard’s 2007 death Connie inherited his interest.
- At mediation on April 23, 2010, parties (including attorneys) signed a "Settlement Memorandum" stating Robert would purchase Connie’s shares and real estate for $250,000, subject to "Robert Kunz being able to arrange financing for this purchase."
- Robert later told Connie he could not obtain financing; Connie sued for breach, the company assets were liquidated at auction, proceeds distributed, and Connie received partial payments totaling less than $250,000.
- At trial a jury found a binding contract existed, Robert breached it, and awarded Connie roughly $80,267.49; Robert moved for JNOV/new trial and appealed.
- District court refused Robert’s requested jury instructions on condition precedent and admitted evidence of Robert’s personal finances over his objection.
- The Court of Appeals reversed and remanded for a new trial, holding the failure to instruct on condition precedent was prejudicial but upheld admissibility of Robert’s personal financial evidence as relevant to whether he made a good-faith effort to arrange financing.
Issues
| Issue | Plaintiff's Argument (Connie) | Defendant's Argument (Robert) | Held |
|---|---|---|---|
| Whether the Settlement Memorandum was a binding contract | The memorandum and subsequent attorney actions and parties’ conduct manifested mutual assent and created a binding agreement | The memorandum was only preliminary, requiring further documents, so it was an agreement to agree, not enforceable | Court: Substantial evidence supports a binding contract; memorandum enforceable |
| Whether "arrange financing" was a condition precedent excusing performance if unmet | Condition precedent language permits inquiry into whether financing was arranged; jury can decide | The financing contingency prevented obligation unless defendant arranged financing; requested instructions should be given | Court: "Subject to... being able to arrange financing" created a condition precedent; refusal to instruct was prejudicial—new trial ordered |
| Whether defendant had duty to use personal assets or make broader efforts to obtain financing | Connie: Financing term silent as to source; evidence of Robert’s personal assets relevant to whether he made good-faith efforts | Robert: He was not required to use personal/family assets; he sought financing from lenders and was denied | Court: Whether Robert made a good-faith effort is a jury question; personal finances are relevant and admissible |
| Admissibility of Robert’s personal financial statement | Connie: Personal assets probative of ability/good faith in arranging financing | Robert: Personal finances irrelevant because contract did not require use of personal assets | Court: Admissible—probative to the question whether he could/should have used personal assets to obtain financing |
Key Cases Cited
- Schaer v. Webster Cty., 644 N.W.2d 327 (Iowa 2002) (mutual assent requirement for contract formation)
- Royal Indem. Co. v. Factory Mut. Ins. Co., 786 N.W.2d 839 (Iowa 2010) (definiteness and objective evidence of assent)
- McCarter v. Uban, 166 N.W.2d 910 (Iowa 1969) (formal writing later does not preclude binding contract when essential terms agreed)
- Khabbaz v. Swartz, 319 N.W.2d 279 (Iowa 1982) (definition of condition precedent)
- Mosebach v. Blythe, 282 N.W.2d 755 (Iowa Ct. App. 1979) (intent of parties governs whether condition precedent exists)
- Gildea v. Kapenis, 402 N.W.2d 457 (Iowa 1987) (instructions on conditions precedent)
- M.K. Metals, Inc. v. Container Recovery Corp., 645 F.2d 583 (8th Cir. 1981) (failure to instruct on condition precedent can be prejudicial error)
- Deboom v. Raining Rose, Inc., 772 N.W.2d 1 (Iowa 2009) (standards for giving requested jury instructions)
- Alcala v. Marriott Int’l Inc., 880 N.W.2d 669 (Iowa 2016) (standard of review for jury instructions)