944 N.W.2d 853
Iowa2020Background
- In 1973 John and Dessie Rottinghaus sold part of a farm to James and Sandra Kipp; the deed (recorded 1973) reserved a right of first refusal in favor of the Rottinghauses. Only James signed that deed.
- James died in 2001; Sandra later married Bennett Franken and conveyed the property via quitclaim (2005) and warranty deed (2010) such that Sandra held title alone at her death in 2014.
- Sandra’s estate (Lincoln Savings Bank, fiduciary) sold the property to a third party in May 2016 for $195,000 without notifying the Rottinghauses; the Rottinghauses discovered the sale and filed a probate claim in July 2016 seeking damages for breach of the right of first refusal.
- The executor disallowed the claim and moved for summary judgment asserting Iowa Code § 614.17A (a marketable-title statute) barred the claim; the district court granted summary judgment and the court of appeals affirmed.
- The Iowa Supreme Court granted further review, held § 614.17A does not bar a standalone damages action for breach of a right of first refusal against an estate that no longer holds record title in possession, reversed the district court, vacated the court of appeals, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Iowa Code § 614.17A bars the Rottinghauses’ action for monetary damages for breach of a right of first refusal | Rottinghauses: § 614.17A limits actions to recover or establish an interest in real estate, not standalone contract damages | Estate: § 614.17A is a marketable-title statute that extinguishes or bars enforcement of the right and thus bars damages | Court: § 614.17A applies only to actions to "recover or establish an interest in or claim to real estate" against the holder of record title in possession; it does not bar a damages claim here |
| Whether the estate waived § 614.17A by not pleading it initially | Rottinghauses: estate did not preserve the defense in its disallowance notice | Estate: defense may be raised in motion for summary judgment | Court: an affirmative defense may be raised in a MSJ if no prejudice; no prejudice here, so defense was properly before the court |
| Alternative affirmative defenses (merger, statute of frauds, failure to prove contract, general 10‑year contract limitations) | Rottinghauses: merger and statute of frauds do not bar enforcement of the deed-embedded right; the alleged 2005 breach is not the claim at issue | Estate: merger extinguished contract; statute of frauds, or § 614.1(5) limitations defeat the claim | Court: rejected merger and statute of frauds defenses (right is in deed and vendee took possession); claim concerns the 2016 sale and is within the 10-year contract limitations; other defenses not an adequate basis to affirm judgment |
Key Cases Cited
- In re Estate of Hord, 836 N.W.2d 1 (Iowa 2013) (background on § 614.17A as a marketable-title statute)
- Riley v. City of Hartley, 565 N.W.2d 344 (Iowa 1997) (explaining right of first refusal/preemption vs. option)
- Knepper v. Monticello State Bank, 450 N.W.2d 833 (Iowa 1990) (discussed in Riley on preemption)
- Lane v. Travelers Ins., 299 N.W. 553 (Iowa 1941) (statute’s plain language; courts should not extend statute beyond express terms)
- Tesdell v. Hanes, 82 N.W.2d 119 (Iowa 1957) (only holders meeting statute’s record-title/possession conditions may invoke § 614.17A)
- Phelan v. Peeters, 152 N.W.2d 601 (Iowa 1967) (merger doctrine: contracts to convey presumptively merge into deed; collateral terms may survive)
- Tamm, Inc. v. Pildis, 249 N.W.2d 823 (Iowa 1976) (collateral agreements surviving merger)
- McElroy v. State, 637 N.W.2d 488 (Iowa 2001) (affirmative defenses may be raised in summary-judgment motion if no prejudice to opponent)
- Iowa Arboretum, Inc. v. Iowa 4‑H Foundation, 886 N.W.2d 695 (Iowa 2016) (elements required to prove breach of contract)