956 N.W.2d 148
Iowa2021Background:
- Plaintiff GreatAmerica leased two Kyocera copiers and a Grandstream phone system to defendant Natalya Rodionova Medical Care (NRMC) under a finance agreement containing a "hell or high water" clause; the agreement bore a signature NRMC later alleged was forged.
- Equipment was delivered Oct. 23, 2017; a GreatAmerica record shows an NRMC employee responded "Yes" when asked if the equipment was installed and working.
- GreatAmerica sent monthly invoices identifying the agreement and equipment; NRMC paid seven installments over ~seven months (first by check, others by ACH), with two later payments personally authorized by Rodionova.
- Rodionova emailed May 17, 2018 attempting to cancel and return equipment, blaming the third-party seller (NYDP); NRMC stopped further payments thereafter.
- District court granted GreatAmerica summary judgment holding NRMC ratified the contract and was bound by the hell-or-high-water clause; the court of appeals reversed on factual dispute grounds; the Iowa Supreme Court vacated the court of appeals and affirmed the district court.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ratification of the finance agreement despite alleged forgery | Payments, possession, and verification by NRMC amount to ratification | Rodionova never signed, was unaware of the contract, payments were for the vendor's responsibility | NRMC ratified the contract as a matter of law based on possession and seven installment payments |
| Acceptance and timely rejection of the goods | Employee confirmation and continued possession/payments show acceptance | Goods not properly installed/used; employee unauthorized; rejection was timely after discovery | Acceptance occurred (possession + payments); rejection after seven months was untimely and ineffective |
| Enforceability of the "hell or high water" clause | Clause is enforceable upon acceptance; does not bar claims against vendor | Clause unenforceable because contract was fraudulently procured and NRMC lacked actual notice | Clause enforceable because NRMC ratified the agreement and had constructive notice through invoices/payments |
| Summary judgment appropriateness | Undisputed facts entitle GreatAmerica to judgment as a matter of law | Disputed material facts (acceptance, ratification, authority) require factfinder | Summary judgment affirmed; no genuine issue of material fact on ratification and acceptance |
Key Cases Cited
- Life Invs. Ins. Co. of Am. v. Estate of Corrado, 838 N.W.2d 640 (Iowa 2013) (adopts Restatement definition of ratification)
- GreatAm. Leasing Corp. v. Star Photo Lab, Inc., 672 N.W.2d 502 (Iowa Ct. App. 2003) (hell-or-high-water clauses enforceable upon acceptance)
- C & J Vantage Leasing Co. v. Wolfe, 795 N.W.2d 65 (Iowa 2011) (summary judgment standard)
- In re Rafter Seven Ranches L.P., 546 F.3d 1194 (10th Cir. 2008) (rejection unreasonable after a short delay)
- Advance Elevator Co. v. Four State Supply Co., 572 N.W.2d 186 (Iowa Ct. App. 1997) (party charged with notice of contract terms when opportunity to inspect exists)
- Peak v. Adams, 799 N.W.2d 535 (Iowa 2011) (failure to read contract does not avoid its terms)