The rule states that a party opposing summary judgment may not manufacture a material fact issue simply by filing an affidavit that directly contradicts prior testimony. A contradictory affidavit must be rejected, where the contradiction is unexplained and unqualified by the affiant.

In the Estate of Dedrick, the widow had previously testified in a criminal case against Dr. Baldi, the defendant in the later wrongful death suit. Excerpts of the criminal trial transcript were included in the summary judgment record to address the factual question as to whether the widow knew or should have known the causal connection between Dr. Baldi’s care and the decedent’s death.

In resisting a motion for summary judgment, the widow filed an affidavit stating that to the best of her “knowledge, recollection, understanding[,] and belief,” she did not discover Dr. Baldi might have caused or contributed to her husband’s death until less than two years before the petition was filed.

The Iowa Supreme Court concluded that the affidavit did not create a genuine issue of material fact and did not preclude summary judgment, because the affidavit contradicted her earlier sworn testimony.

The ruling included three caveats. First, the contradictory affidavit rule is not limited to affidavits characterized by fraud or malfeasance. Second, the contradictory affidavit rule is inapplicable if the affiant offers a reasonable explanation for any apparent contradiction between the affidavit and other sworn testimony. Third, to invoke the rule, “the inconsistency between a party’s deposition testimony and subsequent affidavit must be clear and unambiguous.” The widow’s affidavit clearly and unambiguously contradicted her earlier sworn testimony in the criminal case against Dr. Baldi, and, thus, could be rejected.

Most courts applying the contradictory affidavit rule do so when the plaintiff provides deposition testimony and a contradictory affidavit in the same case. The Iowa Supreme Court, however, applied the rule when the previous testimony was presented at trial in a different proceeding, as long as the two proceedings feature a common factual nucleus and the same person provides both the earlier testimony and the later conflicting affidavit.

The adoption of the “contradictory affidavit rule” should further streamline the litigation process by allowing the trial courts to more often grant motions for summary judgment.  For further questions regarding commercial litigation, contact Mollie Pawlosky.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

After a bench trial, the court determined Bachelder’s damages to be the $116,962.13 paid to build the pond, plus the $4028.33 Bachelder incurred for incidental expenses related to the pond’s construction, for a total damage award of $120,990.46. Reilly appealed.

The Court of Appeals, in Reilly Construction Co., Inc. v. Bachelder Inc., No. 15-1192 (April 27, 2016), began by recognizing that the purpose of a damage suit is compensation, and the goal is to place the injured party in as favorable position as though no wrong had occurred. The Court of Appeals identified several damages approaches, finding, “A combination of the various damage elements may be employed in certain circumstances in order to render the injured party whole.”

Reilly argued that Bachelder failed to produce evidence of the cost of repairing the pond or loss of rentals. Reilly further argued that because the evidence showed there was no diminution in the value of the property, it would be economic waste to award Bachelder damages for the cost of removing the pond structure from the property.

The Court of Appeals held, “Like the pond it built, Reilly’s argument does not hold water.”  The evidence from trial showed that the site of the pond was not suitable for a pond structure, because the underlying soils in the pond area were permeable and ineffective in holding water. As a result, the pond could not maintain a permanent pool of water without a supplemental water source. The Court found it irrelevant that the pond could not be adequately repaired without economic waste; Reilly was not relieved of its duty to compensate Bachelder. Bachelder was damaged by spending $116,962.13 for the pond’s construction, plus the $4028.33 in additional costs. The pond was of no value; although the land’s value was not diminished by the pond’s construction, the land was also not benefited. Bachelder’s position was not improved in exchange for the $120,990.46 spent. This cost, for which Bachelder received no benefit, was the amount of damages. Accordingly, the Court of Appeals affirmed the district court’s judgment.

Reilly Construction Co., Inc. v. Bachelder Inc. reminds property owners to think broadly about the underlying concepts of damages when analyzing defective construction claims.  For questions regarding Reilly Construction Co., Inc. v. Bachelder Inc. or commercial litigation, contact Mollie Pawlosky.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

Mayer’s Digging and Mark Wagner appealed, following a jury verdict in favor of Buhr regarding a claim of trespass. Mayer’s and Wagner had contracted with Jim Koenigs to clear brush and trees from a boundary line shared with Buhr.  Wagner believed that Buhr had agreed to the clearing, but Wagner later learned that Buhr had not agreed.

At trial, evidence was introduced regarding Koenigs’ agreement to satisfy any judgment entered against the defendants.  Buhr first addressed indemnification during Wagner’s direct examination.  The trial court overruled an objection to relevance, and Wagner admitted Koenigs had agreed to pay any verdict.  The same evidence was elicited by Buhr’s counsel during Koenigs’ cross-examination.  Buhr’s counsel also highlighted the indemnification evidence during his closing argument.

The Court of Appeals began with the basic question as to whether the evidence was relevant.  Buhr argued the indemnification evidence was relevant to prove Koenigs instructed Mayer’s Digging to destroy the tree and fence line intentionally, Mayer’s Digging was acting in conformity with that instruction, and Koenigs ratified Mayer’s Digging’s actions upon learning what had occurred.  The Court of Appeals, however, disagreed.  The only jury issue was the amount of Buhr’s damages.  The defendants admitted that Buhr owned the property, that the defendants intentionally went onto Buhr’s property, and that defendants did not have permission to enter the property.  The jury was instructed that those elements of the trespass claim were satisfied.  The Court held that, at most, Buhr would have reason to show that Koenigs hired the defendants, in order to show that the defendants went onto Buhr’s property, but there was no reason to show that Koenigs paid for defendants’ attorney or that Koenigs had offered to pay any damages awarded to Buhr.

The Court of Appeals then analyzed whether the indemnification evidence prejudiced the defendants.  The Court noted that raising liability insurance before a jury is generally improper, and the same reasoning applied with regard to indemnification.  The Court was concerned that such evidence could cause a jury to enter a verdict against a defendant on insufficient evidence, or to enter a larger verdict than the evidence supported.

Moreover, the trial court had refused to give the jury any limiting instruction, such as telling the jury not to consider the evidence of indemnification, to mitigate potential prejudice.  Considering the record as a whole, the Court of Appeals could not hold that the introduction of the indemnification evidence lacked prejudice.  Thus, the Court of Appeals reversed the trial court’s ruling on the defendants’ motion for a new trial, and remanded the case for a new trial.

For questions regarding Buhr v. Mayer’s Digging Co. and Mark Wagner or commercial litigation, contact Mollie Pawlosky.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

In Koether v. Elliott, No. 15-0172 (Iowa Court of Appeals, Mar. 9, 2016), the Court of Appeals began by acknowledging that proof of the elements of adverse possession must be “clear and positive,” because the doctrine of adverse possession is strictly construed.

Koether claimed that he had established adverse possession by “claim of right,” using the property “openly and notoriously, as owners of similar lands use their property, to the exclusion of the true owner.”  Koether was also required to establish good faith, that is, that he used the property without payment of rent or recognition of title in another, or disavowal of title in himself.   However, ownership cannot be acquired by claim of right by one who knows he does not have good title; thus, good faith is not established if the evidence demonstrated that Koether knew that he has neither good title or a basis for claiming good title.

The Court of Appeals held that Koether’s claim of ownership was not supported by clear and positive proof.  First, Koether occupied the land with the permission and consent of his parents, such that he could not claim that his adverse possession of the land started before his mother’s death in 2004.  Because Koether filed the petition to quiet title, asserting the claim of adverse possession in 2013, Koether had not adversely possessed the property for the requisite ten year period.  The Court of Appeals also noted that Elliott had paid the property tax for the property and insured the property, and that Elliott in 2012 had served Koether with a notice to quit and a notice of termination of farm tenancy.  Thus, the Court of Appeals reversed the ruling of the district court.

In January 2016, the Court of Appeals had reached the opposite conclusion in Nafziger v. Pender, No. 15-0327 (Jan. 13, 2016).  Nafziger addressed a boundary by acquiescence, which is somewhat similar to adverse possession, but only deals with the portion of the land that is affected by the disputed boundary.  Like adverse possession, a boundary by acquiescence must be proven by clear evidence, and the owners must acquiesce in the boundary line for at least ten consecutive years.  The main distinction between Nafziger and Koether appears to be that Nafziger’s usage of the property at issue was inconsistent with the neighbor’s ownership interest in the property, but Koether’s usage of the property, at least during his parents’ lifetime, was consistent with his parents’ ownership interest, such that Koether’s usage of the property was not sufficiently adverse.

For questions regarding Koether v. Elliott or other real estate disputes, contact Mollie Pawlosky.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

In general, Deeds of Trust and Mortgages serve the same function – they secure the repayment of a loan made by a lender, against specified real property. In a purchase situation, the real property the loan was used to acquire will serve as the secured collateral. The Deed of Trust, or Mortgage, is executed and recorded in the county in which the property is located. Any future purchaser of that property will need to pay off the loan, and receive a release of the Deed of Trust, or they will take title to the property subject to such Deed of Trust. A mortgage operates in the same way, both here in Iowa, and in Arizona, where mortgages are rarely used.

One small difference is the parties to each document. Normally a Mortgage has only two parties – the borrower and the lender. Under a Deed of Trust, there are generally three parties – the borrower, the lender and the Trustee, who holds title to the lien for the benefit of the lender and whose sole function is to initiate and complete the foreclosure process at the request of the lender. Statute specifies who can serve as a Trustee under a Deed of Trust, and it is generally a title company, escrow company or attorney.

The biggest difference between the Deed of Trust and the Mortgage is what happens after a default. Under Arizona law, a Mortgage can only be foreclosed judicially. This means the only way to foreclose a mortgage is to file a law suit, obtain a judgment approving the foreclosure, wait for the sheriff’s sale to sell the property, wait out any redemption period the owner may have. Needless to say, it can be a fairly long and expensive process.

Deeds of Trust, on the other hand, can be foreclosed either judicially, using the same process as mortgages, or non-judicially, in accordance with Arizona law, and the power of sale in the Deed of Trust. Basically, following a default under the Deed of Trust, the lender can initiate the foreclosure by recording a Notice of Trustee’s Sale, waiting the statutorily required period (at least 90 days) and then proceed to sell the property at a Trustee’s sale. This is a broad simplification, and the lender must follow the statutory scheme in order to validly sell the property, but it is much simpler than a judicial foreclosure. Also, unlike following a judicial foreclosure, there is no right of redemption. There is, however, a right of reinstatement prior to the Trustee’s sale to bring the loan current and reinstate the Deed of Trust. This process is much shorter and less expensive that a judicial foreclosure, which explains why the Deed of Trust is the predominant security device in Arizona.

Attorney Jeff Baxter is licensed to practice in Iowa and Arizona.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

It is this Doctrine of Merger that was applied by the Iowa Court of Appeals to deny a claim for attorney fees in an Iowa Code Chapter 558A action. In the unpublished decision of Payton v DiGiacomo, 2015 WL 5285740 (IA Ct. App. Sept. 10, 2015), the Iowa Court of Appeals was confronted with an issue as to whether or not the Sellers, who successfully defended themselves in an action brought by the Buyer for defects in the home, could recover attorney fees under the boiler plate remedy section of the real estate purchase agreement that allowed for the recovery of attorney fees for breach of the agreement.

Payton’s petition was styled in separate counts for negligent misrepresentation, fraudulent misrepresentation, violation of Chapter 558A and breach of contract.  At trial Payton specifically alleged “[t]he written Purchase Agreement entered into between the Plaintiff and the Defendants…required those Defendants to make the disclosures provided under Iowa Code Chapter 558A, and therefore disclosure is incorporated into the purchase agreement.” Payton further alleged that the Defendants breached the purchase agreement by violating the provisions of Chapter 558A, causing damage to the Plaintiff and that the purchase agreement provides the prevailing party is entitled to recovery.

Prior unpublished decisions of the Iowa Court of Appeals had supported Payton’s contention. See: Bramwell v Tisue, 2002 Westlaw 53225 (IA Ct. App. March 27, 2002) and Johnson v. Braum, 2010 WL 2757192 (Iowa Ct. App. July 14, 2010). In Johnson that panel of the Iowa Court of Appeals held:

“Because we agree with the district court that the purchase agreement incorporated the disclosure requirements of chapter 558A, the sellers failed to fulfill the terms of the agreement. The district court did not err in awarding attorney fees.”

In Payton, The Honorable George L. Stigler, Judge for the Iowa District Court for Black Hawk County denied the application for attorney fees stating:

“The Defendant DiGiacomos’ application for attorney fees is misplaced. The clause of the real estate contract cited does not stand for the proposition that in an instance like this attorney fees are accessible. The clause, properly interpreted, stands for the proposition that had Mr. Payton failed to carry through on the sale of the property and the defendants sued and won based on that failure to convey title, the defendants DiGiacomo would then be entitled to attorney fees. The sale carried through without fault. The dispute arose after the sale and did not concern an attempt by the Paytons to back out of the purchase.”

On appeal the DiGiacomos contended the District Court erred its interpretation of the purchase agreement language and that they were entitled to an award of attorney fees.  One of the surprising aspects about this decision is that Payton did not submit an appellate brief.

In rejecting the DiGiacomo’s claim for attorney fees, the Iowa Court of Appeals held:

“Chapter 558A requires certain disclosures as required by the statute and in rules adopted by the Commission but has no requirement that a Purchase Agreement contain such disclosures or that a purchase agreement require disclosures.  The requirements of disclosure are solely statutory. By way of enforcement, Section 558A.6 provides for liability for a violation of Chapter 558A.  Section 558A.7 provides that the chapter does not limit or bridge any contract between the parties. Thus the parties agree to make certain disclosures, but they are not required to do so.”

In rejecting the theory that the Seller’s Disclosure was incorporated into the purchase agreement, the Iowa Court of Appeals held:

“We conclude the purchase agreement in this case did not contain any term relating to the requirements of 558A. We further conclude that the DiGiacomos did not carry their burden to prove that any collateral agreements or conditions survived the merger of the purchase agreement with the deed upon its delivery and acceptance.”

The Court’s conclusion was “[w]e find the purchase agreement merged with the deed. Thus, the DiGiacomos may not invoke the remedies clause of the purchase agreement in support of their claim for attorney fees.”

Practice pointers: based upon the Payton v DiGiacomo decision, the purchase agreement should always contain language that the Seller’s Disclosure Statement provided for by Chapter 558A is incorporated into the purchase agreement. Additionally, any deed given at the time of closing must also incorporate and preserve the incorporation of the Seller’s Disclosure and the remedies provided by the purchase agreement.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

First, Arizona is one of nine community property states, along with California, Washington, Nevada, New Mexico, Idaho, Louisiana, Idaho, Texas and Wisconsin, which have a statutory system in place that establishes a community property ownership structure. For spouses there are two types of property – community property or separate property. Community property will be owned equally by the spouses. Separate property will be the property of only one spouse.

Under Arizona law, all property (both real and personal) that this acquired by either the husband or the wife during the marriage is community property, except for property that is (i) acquired by gift (even from the other spouse), devise (through a will or trust) or descent (through the probate of a person who died without a will). Vacation home owners who purchase property will need to consider community property, as Arizona law provides that property which is purchased in Arizona during marriage by persons married outside Arizona, who move into Arizona later, will be controlled by Arizona law. You may unwittingly have ownership rights in property they never intended to have. Spouses may disclaim a community property interest in property through the execution and recording of a Disclaimer Deed.

All property that the spouses owned before marriage will remain separate property after they are married (this also includes the increase, rents, issues and profits of the separate property), unless that property is comingled or converted to community property. This can be accomplished in numerous ways – adding separate property cash to a community bank account; transferring title of a separate property piece of real estate to both spouses, etc.

In addition to a community property interest in property, there is also a community property interest in debts. Either spouse may bind the community property interest, except that both spouses must both agree to purchase real property, lease real property for a year or longer, or provide a guaranty or indemnity. Separate property of a non-debtor spouse will not be liable for the separate debts of the debtor spouse. Community property of the debtor spouse will be liable for the separate debts of the debtor spouse, but only to the extent of the debtor spouse’s one-half interest in the community property. For vacation home owners, the community property is liable for a spouse’s debts incurred outside Arizona, during the marriage which would have been community debts if incurred in Arizona.

If you have questions about community property, a potential move to Arizona, or the purchase of Arizona real property, you may reach Jeffrey G. Baxter, licensed in Iowa and Arizona, by email at jbaxter@dickinsonlaw.com.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

A boundary by acquiescence must be proven by clear evidence, and the owners must acquiesce in the boundary line for at least ten consecutive years.

The district court found that the Smiths’ fence, which existed from at least 1992 (and possibly as early as 1982), is the boundary line between the property owned by Nafzigers to the south and the parcel owned by Smiths to the north. The court held that the Nafzigers’ predecessors accepted the location of the fence as the boundary line and “submitted tacitly to the fence as the dividing line to Smiths’ land to the north, and their land to the south. The inaction of Nafzigers’ predecessors in title to claim or exercise control over the land to the north of the fence establishes their acquiescence.”

The Nafzigers disputed the trial court’s findings on appeal, arguing their predecessors did not believe the fence was the property line. The Nafzigers’ brief on appeal included a chronology stating instances: where a former property owner had asked the Smiths to move the fence; where a prior landowner had removed portions of the fence and told the Smiths that he did not believe that the fence was the boundary; where the same prior owner had an argument with Smiths regarding the fence; and where another prior owner demanded that the Smiths remove the fence.

Nevertheless, the Court of Appeals in its opinion summarized the Nafzigers as arguing simply that their “predecessors did not believe the fence was the property line.” The appellate court then concluded, “Acquiescence may be inferred by the silence or inaction of one party who knows of the boundary line claimed by the other and fails to dispute it for a ten-year period.” The Court of Appeals then affirmed the trial court.

Considering the chronology set forth in the appellants’ brief, landowners involved in boundary line disputes may be advised to file suit to establish a boundary, if the landowner wants to dispel the notion of a boundary by acquiescence. Although not specifically stating a rationale, it seems as though both the trial court and the Court of Appeals did not find the prior landowners’ actions to be enough to avoid a conclusion of “tacit submission.” To make a property owner’s intentions extremely clear, rather than simply verbally disputing the boundary, the property owner should consider filing suit to make its position clear.

For questions regarding Nafziger v. Pender, or regarding other real estate disputes, contact Mollie Pawlosky.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

If you have owned property in Iowa, you may not be familiar with title insurance. Iowa is the only state that prohibits the sale of title insurance by its companies. Instead, you are likely more familiar with the update of your Abstract by an Abstractor and the issuance of a title opinion by your local attorney.

For the vast majority of transactions in Arizona, a policy of title insurance (or two if you are buying the property with financing) takes the place of the Abstract/title opinion with which you are familiar. Basically, a policy of title insurance protects you against potential problems affecting the title to your property. There are two types of title insurance— Owner’s Policies, and Loan Policies. A Loan Policy protects the lender for the amount of the loan, while the Owner’s Policy protects the homeowner generally for the purchase price of the property. In both cases, the title process covers a search of public records to make certain the title to the subject property is clear, and covers against future loss against claims for items that are not listed as exceptions to the policy. Customarily, the Owner’s Policy of title insurance is paid by the seller and the Lender’s policy is paid for by the Buyer.

Like the title opinion you have received in the past from your Iowa attorney, a commitment for title insurance will identify those outstanding issues which affect the title to your property. If those items are issues, they need to be released prior to your closing on the property, or you will take subject to those items, and they will be exceptions to your policy, and you will have no protections against them. The most common items that show up on a title commitment are outstanding mortgages, liens, covenants and property restrictions, and easements.

If you are considering purchasing a vacation or winter home in Arizona, and have questions about title insurance, or any other issue, please feel free to contact us to discuss those issues.

Attorney Jeff Baxter is licensed to practice in Iowa and Arizona.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

If you are married, and both you and your spouse own the property together, most likely your Iowa home is titled in your names as “Joint Tenants with Rights of Survivorship.” What this means is that both spouses own equal shares of the property and upon the death of one spouse, title will vest solely in the surviving spouse, by operation of law, and without the need to probate that piece of property. In addition, the surviving spouse will receive a step-up in basis of the deceased spouse’s ½ interest in the property.

The alternative is that the property is titled as “Tenants in Common.” This means that you own separate shares (equal or unequal) of the real property, and upon the death of one of the owners, the deceased person’s share of the property becomes a part of their estate and must be probated to transfer the interest. The person receiving the share of the property will receive a step-up in basis for that deceased person’s share.

In Arizona, a third alternative for holding title is available to spouses: Community Property with Rights of Survivorship (spouses can take title as only Community Property, and not have rights of survivorship, but it is generally not recommended, except in certain circumstances). This type of ownership is only available to a married couple, and in order to have the rights of survivorship, the words must be clearly stated in the vesting deed to the real property. The benefits to holding title to property as Community Property with Rights of Survivorship are numerous.

Once benefit is the right of survivorship. Similarly to Joint Tenancy with Rights of Survivorship, upon the death of one spouse, the deceased spouses ½ interest in the property will pass immediately upon that spouse’s death to the surviving spouse, by operation of law, and without the need to probate the estate. A second benefit is that upon the death of the first spouse, the surviving spouse receives a full step-up in basis of the entire property.

If you are considering purchasing a vacation or winter home in Arizona, and have questions about how to take title, or any other issue, please feel free to contact us to discuss those issues.

Attorney Jeff Baxter is licensed to practice in Iowa and Arizona.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.