Opinion
No. 4-284 / 02-0248.
August 26, 2004.
Appeal from the Iowa District Court for Audubon County, James M. Richardson, Judge.
Justin Hoffman and Franklin Trust Interests appeal from the district court's grant of summary judgment in favor of Cordelia Steffes. REVERSED AND REMANDED.
John Trewet of Rutherford, Trewet Knuth, Atlantic, for appellant Hoffman.
John Foust, Indianola, trustee for appellant Franklin Trust Interest.
Robert Kohorst of Kohorst, Early Louis, Harlan, for appellee.
Heard by Vogel, P.J., and Hecht and Vaitheswaran, JJ.
Justin Hoffman and Franklin Trust Interests (Franklin Trust) appeal from the district court's grant of summary judgment in favor of Cordellia Steffes. We reverse and remand for further proceedings consistent with this opinion.
I. Background Facts and Proceedings.
On July 6, 1998, Alden Steffes conveyed two parcels of real estate, referred to as the Audubon County property and the Carroll County property, to the M. Life Foundation Trust (M. Life) for no consideration. Alden was the trustee of M. Life. On September 1, 1998, Alden's mother, Cordellia, filed suit against Alden claiming he had been holding the properties in trust for her. The action filed as Equity No. EQCV018511 in Audubon County initially named Alden as defendant, but Cordellia's petition was subsequently amended to add M. Life as a defendant. Cordellia filed lis pendens notices in Carroll and Audubon Counties on December 7 and 10, 1998.
With the litigation pending, on March 1, 1999, M. Life transferred the Audubon County property to Franklin Trust Interests (Franklin Trust). On July 26, 1999, M. Life mortgaged the Carroll County property to Whitfield Financial Corporation (Whitfield) for $1.2 million. On March 25, 2000, M. Life transferred the Carroll County property to Justin Hoffman.
On December 5, 2000, the district court entered judgment in favor of Cordellia against Alden, ordering both properties be titled in "Alden Steffes, Trustee of the Cordellia Steffes Trust." The district court declined to render judgment against M. Life because M. Life had not been served separately with process and had not appeared in the lawsuit. No appeal was taken from this decision.
On January 16, 2001, Cordellia filed Equity No. EQCV018650 in Audubon County district court to recover the Carroll County and Audubon County properties. Alden, M. Life, Whitfield, Hoffman, and Franklin Trust were named as defendants. Cordellia alleged the transfers from Alden to M. Life and from M. Life to Hoffman and Franklin Trust were fraudulent. She obtained default judgments against Alden, M. Life, and Whitfield, and then moved for summary judgment against Hoffman and Franklin Trust. Hoffman and Franklin Trust resisted the motion, claiming to have paid valuable and adequate consideration for the properties, but the district court granted summary judgment against both defendants. Franklin Trust filed a motion for new trial, which was denied. Hoffman and Franklin Trust appeal.
II. Error Preservation.
Hoffman contends on appeal the district court erred in granting summary judgment against him for several reasons: (1) the district court did not have jurisdiction over M. Life, his grantor, in either of the two Audubon County lawsuits; (2) indispensable parties were not before the court; (3) the plaintiff's lis pendens filing was of no consequence to Hoffman's claim of title because the district court had no in personam jurisdiction over Hoffman's grantor, M. Life, in the litigation from which the lis pendens arose; and (4) the summary judgment was improperly based on parol evidence. Hoffman cites no authority to support these legal contentions. We therefore conclude he has waived them. Iowa R. App. P. 6.14(1)( c).
Franklin Trust similarly contends on appeal that the district court lacked jurisdiction over M. Life; failed to apply various statutes of limitations and mediation statutes; improperly considered parol evidence; failed to consider the statute of frauds, res judicata, and judicial estoppel; failed to require the joining of indispensable parties; and erred in its application of lis pendens principles in this case. However, Franklin Trust fails to cite, and we cannot find, any place in the record where the above-mentioned claims were addressed by the district court. Accordingly, we conclude Franklin Trust failed to preserve error on these issues. See PEB Practice Sales, Inc. v. Wright, 473 N.W.2d 624, 625 (Iowa Ct.App. 1991) (noting issues must be presented to and passed upon by the trial court before they may be raised upon appeal).
We note that the district court did make reference to lis pendens in its summary judgment ruling. However, the district court did not conclude the doctrine of lis pendens required a judgment in favor of the plaintiff. If it had done so, it may well have been error. See Noyes v. Crawford, 118 Iowa 15, 22, 91 N.W. 799, 801(Iowa 1902). Rather, the district court relied on the lis pendens notices as evidence that Hoffman and Franklin Trust were not innocent buyers, but were grantees in fraudulent conveyances.
We conclude the parties preserved only one assignment of error for our review — that the district court improperly granted Cordellia's motion for summary judgment because a genuine issue of material fact was generated on the question of whether the conveyances from M. Life to the defendants were fraudulent because consideration given by the appellants was inadequate.
III. Standard of Review.
Although this action is in equity, our review of the grant of a motion for summary judgment is for correction of errors at law. Norwest Credit, Inc. v. City of Davenport, 626 N.W.2d 153, 155 (Iowa 2001). Summary judgment is proper only if there "is no disputed issue of material fact and a moving party is entitled to judgment as a matter of law." Iowa R. Civ. P. 1.981(3). A fact issue is generated if reasonable minds can differ on how the issue should be resolved. Hynes v. Clay County Fair Ass'n., 672 N.W.2d 764, 766 (Iowa 2003). If the conflict in the record consists only of the legal consequences flowing from undisputed facts, entry of summary judgment is proper. Id. We view the record in the light most favorable to the nonmoving party. Id. IV. Discussion.
Cordellia supported her motion for summary judgment with documents tending to prove Alden transferred the Audubon County and Carroll County properties to M. Life for no consideration. She also introduced into the summary judgment record evidence that M. Life mortgaged the Carroll property to Whitfield for $1.2 million. Cordellia also offered evidence that when Hoffman purchased the Carroll property, he paid $1728.00 cash and assumed a $37,000.00 mortgage, although the property was valued at $285,760.00 at the time of the transfer. Cordellia also provided documentation indicating that although Franklin Trust paid $150,000.00 for the Audubon property, it also received $150,000.00 in CRP payments in the transaction. Thus, she claimed Hoffman gave consideration of roughly 1/10 of the value of the Carroll property and Franklin Trust effectively gave no consideration for the Audubon property. The district court found these facts were not in dispute, and concluded the conveyances were fraudulent.
Although Hoffman and Franklin Trust do not challenge the contents of the documents provided by Cordellia in support of her motion, they contend additional facts in the summary judgment record create a genuine issue of material fact regarding the adequacy of the consideration they provided for the properties. Hoffman points out that he acquired the Carroll property by quitclaim deed and there is no indication in the record that the $1.2 million mortgage to Whitfield has been satisfied. He argues a genuine issue of fact exists as to whether he took the Carroll County property subject to the Whitfield mortgage and provided more than adequate consideration. Franklin Trust provided documentation indicating that Alden and M. Life owed approximately $82,000.00 to the trustee of Franklin Trust. Franklin Trust asserts that it provided adequate consideration because these debts were to be forgiven in exchange for the property transfer.
Viewing as we must the evidence in the light most favorable to the nonmoving party, we conclude Franklin Trust and Hoffman created a genuine issue of material fact regarding the adequacy of the consideration given for the properties, and the district court improperly granted Cordellia's motion for summary judgment. Accordingly, we reverse and remand for further proceedings consistent with this opinion.