Opinion
No. 4-221 / 03-1394.
June 9, 2004.
Appeal from the Iowa District Court for Scott County, Bobbi M. Alpers, Judge.
GNI Development Co., Inc. appeals the district court's judgment ordering it to pay money to Russell Thomas pursuant to an oral contract. AFFIRMED.
Joseph Polaschek of Schalk Law Office, Davenport, for appellant.
Paul Bieber of Gomez, May, Cartee Schutte, Davenport, for appellees.
Heard by Vogel, P.J., and Hecht and Vaitheswaran, JJ.
GNI Development Co., Inc. appeals a district court judgment on an oral contract, contending a contract was never formed. We affirm.
I. Background Facts and Proceedings
Michael and Mary Ann Puente were the owners of a lot in Davenport. For more than twenty years, the Puentes owned and operated a Mexican-American restaurant on this site. In 1998, the Puentes began negotiations for the sale of their property to GNI Development Co., Inc., (GNI) which was attempting to acquire several properties on behalf of the Walgreen's pharmacy chain.
The Puentes eventually signed an agreement with GNI. The agreement authorized GNI to delay the closing date for up to two sixty-day periods, to satisfy conditions precedent such as purchasing the other properties and obtaining zoning authority and building permits. GNI exercised both of the sixty-day extensions. The parties then amended the original contract to provide for two additional thirty-day extensions of the closing date.
Meanwhile, the Puentes began their search for a new restaurant site. Mary Patricia Lord, a commercial realtor who had no part in negotiating the Puentes-GNI agreement, located a restaurant and bar owned and operated by Russell Thomas. Thomas agreed to sell the property to the Puentes contingent on the sale of the Puentes' property by a date certain. The parties scheduled a closing date in May 1999.
Lord testified her client was Thomas "as well as the Puentes in that transaction."
The Puente-Thomas closing did not take place on the planned date because the Puente-GNI transaction had yet to close. Thomas told Lord that the delay in closing was jeopardizing his business, and that he would require $10,000 per month "from whoever is buying Puentes' building," to cover his mortgage payment and lost revenue.
Lord contacted Steven Murphy, president of GNI, regarding the delay in the closing of the Puente-GNI transaction. Lord was told by Murphy that he envisioned a closing date in August 1999. Lord testified that she "told [Murphy] that it would take ten thousand dollars a month until closing. . . ." to satisfy Thomas's concerns. She further testified that there "absolutely" was an agreement that "ten thousand dollars a month would be paid." Based on this agreement, Thomas agreed to extend his closing date with the Puentes.
The Puente-GNI transaction closed on February 25, 2000 rather than August 1999. GNI refused to pay anything to Thomas to compensate him for the delayed closing.
Thomas and the Puentes sued GNI to recover $10,000 per month from August 1, 1999 through February 2000. Following trial, the district court ruled in favor of the plaintiffs. The court found that
[t]he plaintiffs have met their burden of proof by a preponderance of the evidence that there was an unwritten contract between Russell Thomas and GNI Development Co., Inc., and that it had express terms contained within it. There was consideration provided for this unwritten agreement in that the Puentes proceeded to the delayed closing on their property located at Five Points and Mr. Thomas held his property to sell to the Puentes. The Court finds credible evidence there was a meeting of the minds concerning the terms of the agreement between Mr. Thomas and GNI Development Co., Inc., the plaintiff's have done what was required, and that the plaintiffs are entitled to recover the $70,000 which accrued as the amount due under the specific terms of the unwritten contract between Mr. Thomas and GNI Development Co.
On appeal, GNI contends there was no meeting of the minds, no consideration and, therefore, no oral contract with Thomas. "The existence of an oral contract, as well as its terms and whether or not it was breached, are ordinarily questions for the trier of fact." Gallagher, Langlas Gallagher v. Burco, 587 N.W.2d 615, 617 (Iowa Ct.App. 1998). The district court's findings of fact bind us if supported by substantial evidence. Horsfield Const., Inc. v. Dubuque Co., 653 N.W.2d 563, 568 (Iowa 2002). We may not substitute our "own findings of fact for those of the district court simply because the evidence supports different inferences." Walsh v. Nelson, 622 N.W.2d 499, 502 (Iowa 2001).
II. Meeting of the Minds
A valid contract requires the parties' mutual assent to its terms. Schaer v. Webster Co., 644 N.W.2d 327, 338 (Iowa 2002).
Mutual assent is based on objective evidence, not the hidden intent of the parties. Id.
We find substantial objective evidence of mutual assent. Lord testified,
Mr. Murphy and I had an agreement that he would pay Russell Thomas ten thousand dollars per month because he was going to have to close his restaurant/bar, instead of keeping it open, and he would lose ten thousand dollars a month between his profits and his mortgage payment, and he had no incentive to do that without an agreement from Mr. Murphy to pay him.
She further stated, "[The $10,000] was to be paid to Mr. Russell Thomas. The Puentes didn't have anything to do with that." This evidence alone would, in our view, be sufficient to establish mutual assent. Here, we have more.
Murphy conceded that he spoke to Lord about the expiration of Thomas's liquor license and additional costs that Thomas would incur if the Puente-GNI closing was delayed beyond August 1999. To accommodate these concerns, Murphy admittedly offered to increase the amount GNI would pay the Puentes by $10,000 if the closing took place in August rather than July and another $10,000 if it was extended to September 1999. He sent a document containing this proposal to the Puentes's attorney. When asked if "this document was sent to the Puentes to accommodate or — with the intent to accommodate the ten thousand dollars additional moneys based on the Puentes' contract with Russell Thomas", Murphy answered, "[y]es." In short, Murphy conceded GNI was willing to pay a sum of money to accommodate Thomas, essentially corroborating Lord's testimony.
GNI acknowledges this testimony but points to additional testimony from Murphy that the $10,000 payments were to go to the Puentes and not to Thomas. In its view, therefore, GNI's intent was to amend its contract with the Puentes rather than to create a separate contract with Thomas. A reasonable fact-finder could have found otherwise. Murphy's testimony concerning the avenue of payment again corroborates Lord's recollection of events. Lord stated that "Mr. Thomas was not a party to [the Puente purchase agreement] and the Puentes weren't a party to the agreement between Mr. Murphy and Mr. Thomas to pay him ten thousand per month until closing." Lord did not agree that her conversations with Murphy "would have resulted in amendments to the Puente/Thomas contract." With respect to the method of payment, she testified as follows:
I called Mr. Murphy many times. In one of his conversations with me, he said, I would like to roll this into my loan, and in order to do that I need to pay the Puentes. And I said, Well, the deal is with Mr. Thomas. He said, This is the way I have to do it, I have to pay the Puentes to roll it into my loan. I said, "That's fine, we'll have an agreement signed between the Puentes and Mr. Thomas.
This testimony suggests that Murphy was aware the contract for the payment of additional $10,000 increments was with Thomas rather than the Puentes.
GNI also points out that Murphy only agreed to pay an extra $10,000 per month for up to two months. However, the district court, as fact finder, was free to credit Lord's unequivocal testimony that the agreement was not limited to two months of delays. See Seastrom v. Farm Bureau Life Ins. Co., 601 N.W.2d 339, 346 (Iowa 1999) (stating when evidence is in conflict, "we entrust the weighing of testimony and decisions about the credibility of witnesses to the jury").
Finally, GNI suggests that we should examine documentary evidence to establish the parties' intent. Specifically, GNI introduced a written offer to the Puentes to pay $10,000 per month for no more than two months, as well as a written counter-offer from the Puentes to pay $10,000 per month until closing. Both offers were rejected by the parties. While this evidence could support a conclusion that there was no meeting of the minds, the district court was free to give less credit to this evidence than to Lord's testimony. We find substantial evidence of a meeting of the minds.
III. Consideration
Consideration is broadly defined as "a benefit to the promisor or a loss or detriment to the promisee." Federal Land Bank of Omaha v. Woods, 480 N.W.2d 61, 65 (Iowa 1992). GNI argues that it received no consideration for entering into the oral contract because "[i]n the event Puente did not close under the terms of the Puente Agreement, the result would have been the same for GNI in that it would have been able to enforce the terms of the agreement and force Puente to comply and close." The district court found otherwise, noting that, in exchange for the $10,000 monthly payments, "the Puentes proceeded to the delayed closing on their property located at Five Points and Mr. Thomas held his property to sell to the Puentes." Substantial evidence supports this finding.
Thomas initially did not intend to sell his property. When he did agree to the sale, he anticipated a closing date in May 1999. The closing was delayed and Thomas expressed his concern to Lord who, in turn, informed Murphy. Murphy conceded that it was his intent to accommodate Thomas. He stated, "it was ten thousand to pay for a liquor license that had to be paid." He also acknowledged that it would "cause big trouble for all of us if this [Puente] closing didn't happen." The district court reasonably could have found that, to avoid this "big trouble," Murphy had an incentive to offer Thomas $10,000 to keep his property on the market.
GNI's consideration for agreeing to give Thomas $10,000 per month until the Puente closing was the luxury of avoiding additional delays and the possibility that the Puentes would not follow through with their agreement to sell. We find substantial evidence of consideration.
IV. Merger
GNI argues, in the alternative, that any oral contract merged into the deed under the Puente purchase agreement. The issue of merger was neither raised nor decided by the district court. It is a "fundamental doctrine of appellate review" that this court will refuse to decide an issue under these circumstances. Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002).
We affirm the district court judgment in favor of the plaintiffs.