891 N.W.2d 210
Iowa2017Background
- DuTrac owns a commercial lot in Waterford Place and sought to sell it to Kwik Trip; title review revealed a 1996 restrictive covenant requiring approval by an architectural control committee (ACC) "consisting of David W. Lundy and/or Dennis J. Britt."
- Lundy is deceased; Britt has executed affidavits stating he will not act (and effectively resigned), leaving the ACC without functional members and with no succession mechanism in the covenant.
- DuTrac and Kwik Trip sued for declaratory judgment asking the court to declare the covenant unenforceable under impossibility and supervening impracticability; most defendants defaulted or consented; five appealed.
- Appellants argued a factual dispute exists (Britt’s status) and urged modification under Restatement (Third) of Property by appointing lot owners as successors to the ACC rather than terminating the covenant.
- The district court granted summary judgment for plaintiffs, finding compliance objectively impossible and the appellants’ proposed modification impracticable; the Supreme Court of Iowa affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the restrictive covenant is enforceable when both named ACC members no longer serve | ACC unenforceable because ACC cannot act (Lundy dead; Britt refuses/has resigned) so compliance is impossible/impracticable | A factual dispute exists about Britt’s resignation, and covenant should be modified (appoint owners as successor ACC) rather than terminated | Covenant unenforceable: Britt’s affidavits do not create a material fact issue; ACC cannot function; covenant terminated |
| Whether impossibility or supervening impracticability excuses performance of a servitude | Covenanted approval is objectively impossible/impracticable so duty discharged | Covenant remains valid or can be saved by modification under Restatement (Third) | Court applies impossibility/impracticability doctrines and Restatement (Third) framework; purpose cannot be accomplished as written |
| Whether the covenant should be modified under Restatement (Third) §7.10 instead of terminated | N/A (plaintiffs opposed modification) | Modification practicable: replace ACC with committee of lot owners to preserve purpose | Proposed modification (committee of owners) would not effectively or practicably accomplish original developer-controlled purpose; termination appropriate |
| Whether the covenant is ambiguous or requires extrinsic evidence to interpret | Language is unambiguous; names two specific individuals and contains no succession plan | Argued intent and Britt’s affidavits create disputed interpretation | Covenant unambiguous; no succession mechanism; court interprets contract as written |
Key Cases Cited
- Fjords N., Inc. v. Hahn, 710 N.W.2d 731 (Iowa 2006) (restrictive covenants are contractual; apply contract construction rules)
- Compiano v. Kuntz, 226 N.W.2d 245 (Iowa 1975) (restrictive covenants treated as agreements/promises)
- Nora Springs Coop. Co. v. Brandau, 247 N.W.2d 744 (Iowa 1976) (recognition of impossibility of performance doctrine in Iowa contract law)
- American Soil Processing, Inc. v. Iowa Comprehensive Petroleum Underground Storage Tank Fund Bd., 586 N.W.2d 325 (Iowa 1998) (adoption and discussion of discharge by supervening impracticability)
- Gray v. Osborn, 739 N.W.2d 855 (Iowa 2007) (application of Restatement (Third) of Property principles to servitudes/easements)
- Peak v. Adams, 799 N.W.2d 535 (Iowa 2011) (contract interpretation principles: intent controls absent ambiguity)