Matthew N. Hoffman v. Gary L. Kounkel, Richard L. Kounkel, Ronald E. Kounkel, and Thomas G. Kounkel, as Co-Executors of the Estate of Edna E. Kounkel, 15-1363

Background

In 1997 Elden and Edna Kounkel sold 85.65 acres to the Iowa Agricultural Development Authority (IADA) with payments amortized over 30 years at 5.5%; the IADA later assigned the contract to Matthew Hoffman.
Early drafts called for a 15-year balloon due September 1, 2012, and a clause forbidding prepayment “prior to September 1, 2012” without seller consent; Hoffman later requested removal of the balloon and extension to 30 years.
The final contract removed the balloon at Hoffman’s request and added paragraph 32 (at sellers’ request) giving the Kounkels the option to demand full prepayment on specified dates (March 1, 2013; 2018; 2023); paragraph 20 still forbade prepayment “prior to September 1, 2012.”
Hoffman tendered full payment after September 1, 2012 (2014) but was refused by Edna and later by her estate; Hoffman sued for specific performance and both parties moved for summary judgment.
The district court denied Hoffman’s motion, granted the Kounkels’ summary judgment (holding paragraph 20 barred Hoffman from unilateral prepayment even after September 1, 2012), and denied as moot the Kounkels’ reformation counterclaim.
The Court of Appeals reversed: it held paragraph 20, read in context, permits Hoffman to prepay after September 1, 2012 (the temporal qualifier is meaningful), and remanded for further proceedings including consideration of the reformation counterclaim.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether paragraph 20 permits unilateral prepayment after Sept. 1, 2012	"Prior to Sept. 1, 2012" only bars prepayment before that date; prepayment is allowed after	The clause bars prepayment at any time; extrinsic evidence shows parties never intended post-2012 prepayment	Court held paragraph 20 can be read to allow prepayment after Sept. 1, 2012 and reversed summary judgment for defendants
Whether extrinsic evidence may be used to alter the contract meaning	Contract language is clear; extrinsic evidence cannot vary an integrated agreement	Extrinsic evidence of negotiations needed to show parties’ intent and support defendants’ reading	Court relied on integrated-contract principles and negotiation history to interpret clauses but rejected defendants’ use of extrinsic evidence to overwrite plain meaning
Whether the parol-evidence rule or integration prevents Hoffman’s interpretation	Agreement is at least partially integrated; extrinsic evidence cannot contradict written terms	Contract negotiators’ course of dealings shows different intent, so extrinsic evidence supports defendants	Court found the contract was integrated but that reading the contract as a whole supports Hoffman’s interpretation; parol evidence could not be used to rewrite the plain terms
Whether defendants are entitled to reformation based on mistake/misunderstanding	N/A (plaintiff seeks specific performance)	The drafter (defendants) contends the clause resulted from an expression mistake and seeks reformation	Court remanded the reformation request to district court for consideration (denial was not final due to reversal)

Key Cases Cited

Jones v. Univ. of Iowa, 836 N.W.2d 127 (Iowa 2013) (summary judgment standard and appellate review of legal error)
Pillsbury Co. v. Wells Dairy, Inc., 752 N.W.2d 430 (Iowa 2008) (contract interpretation focuses on parties’ intent and may use extrinsic evidence when needed)
Peak v. Adams, 799 N.W.2d 535 (Iowa 2011) (the words of the contract are primary; extrinsic evidence may explain but not contradict)
Lett v. Grummer, 300 N.W.2d 147 (Iowa 1981) (common-law presumption that a seller cannot be compelled to accept prepayment absent agreement)
Great Plains Real Estate Dev., L.L.C. v. Union Cent. Life Ins. Co., 536 F.3d 939 (8th Cir. 2008) (discussing the common-law ‘perfect tender in time’ rule barring prepayment absent contract provision)
Alta Vista Props., LLC v. Mauer Vision Ctr., PC, 855 N.W.2d 722 (Iowa 2014) (courts may imply contractual terms when necessary to effect parties’ intent)
Fashion Fabrics of Iowa, Inc. v. Retail Investors Corp., 266 N.W.2d 22 (Iowa 1978) (contractual obligations may arise by implication from the writing)