Compeer Fin. Servs. v. Braaksma

• Decision Date: 14 April 2021
• Docket Number: No. 20-0593,20-0593
• Citation: 966 N.W.2d 297
• Parties: COMPEER FINANCIAL SERVICES, FLCA, f/k/a AgStar Financial Services, FLCA, Plaintiff-Appellee, v. Jesse D. BRAAKSMA, Dale W. Braaksma, and Danna S. Braaksma, Defendants-Appellants, and The United States of America, by and through its agent, The Internal Revenue Service, Defendant-Appellee.
• Court: Iowa Court of Appeals

966 N.W.2d 297

COMPEER FINANCIAL SERVICES, FLCA, f/k/a AgStar Financial Services, FLCA, Plaintiff-Appellee,

v.Jesse D. BRAAKSMA, Dale W. Braaksma, and Danna S. Braaksma, Defendants-Appellants,andThe United States of America, by and through its agent, The Internal Revenue Service, Defendant-Appellee.

No. 20-0593

Court of Appeals of Iowa.

Filed April 14, 2021

Richard H. Moeller of Moore, Corbett, Heffernan, Moeller & Meis, L.L.P., Sioux City, for appellants.

Rick J. Halbur and Dustan J. Cross of Gislason & Hunter, LLP, New Ulm, Minnesota, for appellee Compeer Financial Services, FLCA.

Heard by Bower, C.J., and Doyle and Mullins, JJ.

MULLINS, Judge.

Dale and Danna Braaksma, together with their son, Jesse Braaksma, appeal a grant of summary judgment and ensuing foreclosure decree entered in favor of Compeer Financial Services, FLCA (Compeer)¹ relative to two mortgages on tracts of agricultural real estate, one owned by Dale and Danna and the other owned by Jesse. They argue Compeer's notice of default and right to cure did not comply with Iowa Code sections 654.2A and 654.2B (2018) because it "improperly demanded payment of the accelerated balances" of the notes, the Braaksmas were not excepted from a right to cure based on prior defaults, and Compeer's foreclosure petition should therefore have been dismissed.

I. Background Facts and Proceedings.

On March 30, 2015, Jesse entered into notes 6700, 6701, 6900, and 6901 with Compeer.² As security for notes 6700 and 6701, Jesse granted Compeer a mortgage as to real property situated in Osceola County. As security for notes 6900 and 6901, Dale and Danna granted Compeer a mortgage as to separate real property situated in Osceola County. Jesse failed to make his payments under notes 6700 and 6701 and, on November 30, 2016, both notes were formally extended through February 1, 2017. Jesse did not meet his obligations under those notes by the end of the extension. On April 5, Compeer served each of the Braaksmas a notice of default and notice of right to cure noting said defaults and advising notes 6900 and 6901 were also in default due to cross-default provisions contained in the loan documents. The notice advised:

The above defaults may be cured by Loan No. 6700 being paid in the sum of $28,552.65 plus late charges of $21.72 per day from the date of the letter and Loan No. 6701 being paid in the sum of $5,679.05 plus late charges of $5.42 per day from the date of this letter, plus other applicable charges, any installments which have become due since the date of this letter and costs, advances, attorney's fees and other expenses hereafter charged to your loan ... within 30 days from the date this letter was mailed to you.

Failure to cure this default on or before that date may result in acceleration of the sum secured by the Mortgage and sale of the mortgaged premises.

In the event the Note is accelerated, you do have the right to reinstate after the acceleration. You also have the right to bring a court action to assert the non-existence of a default or to assert any other defense to acceleration and sale.

The notes remained in a state of default, and eventually notes 6900 and 6901 reached default status independent of the cross-default provisions in the loan documents.

On February 8, 2018, at which point Jesse had failed to make payments totaling $80,908.25, Compeer sent each of the Braaksmas a second notice of default and notice of right to cure. The notice advised the following balances as of February 8:

[T]he total indebtedness due and owing to Compeer under Note 6700 was a principal balance of $376,760.00, late charges in the amount of $4,191.95, and interest of $52,116.80, for a total of $433,068.75, exclusive of accruing and unpaid interest and late charges, attorneys’ fees, costs, and expenses .... Interest and late charges continue to accrue on Note 6700 at the rate of $75.868 per day.

....

... [T]he total indebtedness due and owing to Compeer under Note 6701 was a principal balance of $94,000.00, late charges in the amount of $1,047.40, and interest of $3,073.92, for a total of $98,121.32, exclusive of accruing and unpaid interest and late charges, attorneys’ fees, costs, and expenses .... Interest and late charges continue to accrue on Note 6701 at the rate of $23.336 per day.

....

... [T]he total indebtedness due and owing to Compeer under Note 6900 was a principal balance of $171,301.03, late charges in the amount of $1,851.17, and interest of $12,675.60, for a total of $185,827.80, exclusive of accruing and unpaid interest and late charges, attorneys’ fees, costs, and expenses .... Interest and late charges continue to accrue on Note 6900 at the rate of $50.429 per day.

....

... [T]he total indebtedness due and owing to Compeer under Note 6901 was a principal balance of $42,540.35, late charges in the amount of $458.75, and interest of $2,178.51, for a total of $45,177.61, exclusive of accruing and unpaid interest and late charges, attorneys’ fees, costs, and expenses .... Interest and late charges continue to accrue on Note 6901 at the rate of $10.572 per day.

....

Jesse Braaksma has the right to cure the defaults under the Notes identified herein. To cure these defaults, Jesse Braaksma must pay Compeer a total of $762,195.48 as of February 8, 2018, ... together with any other amounts coming due prior to the time Jesse Braaksma's defaults are cured. If Jesse fails to pay ... then the Mortgages may be foreclosed upon to collect entire Indebtedness set forth above, along with accruing and unpaid interest and late charges, and attorneys’ fees, costs, and expenses.

Dale and Danna Braaksma have the right to cure the applicable defaults under the Notes identified herein. To cure these defaults, Dale and Danna Braaksma must pay Compeer a total of $231,005.41 as of February 8, 2018, ... together with any other amounts coming due prior to the time Jesse Braaksma's defaults are cured. This $231,005.41 constitutes the secured amount due and owing under the Dale and Danna Braaksma Mortgage as of February 8, 2018 due to Jesse Braaksma's defaults under Note 6900 and Note 6901. If Dale and Danna fail to pay ... then the Dale and Danna Braaksma Mortgage may be foreclosed upon to collect the Note 6900 Indebtedness and the Note 6901 Indebtedness as set forth above, along with accruing and unpaid interest and late charges, and attorneys’ fees, costs, and expenses.

The notice set the deadline for payment at March 25 and also stated, "Failure to cure the defaults by the date and time set forth above may result in acceleration of the sums secured by the Mortgages, and Compeer shall be entitled to proceed with initiating a foreclosure action, which may result in the sale of the property secured by the Mortgages."

The payments were not made and, on April 6, Compeer sent each of the Braaksmas a notice of acceleration and demand for payment. The notice advised that, by that point, the accelerated balances were $434,116.34 under note 6700, $99,542.05 under note 6701, $188,702.25 under note 6900, and $45,820.51 under note 6901, "exclusive of accruing and unpaid interest and late charges, and attorneys’ fees, protective advances, costs, and expenses." The notice advised Compeer was accelerating the amounts due under the notes and demanded payment within fourteen days. No payments were made, and Compeer filed its foreclosure petition on May 11. In their joint answer, the Braaksmas admitted to being in default and asserted no affirmative defenses.

In October 2018, Compeer filed a motion for summary judgment. Prior to hearing, the Braaksmas moved for additional time to file an untimely resistance to summary judgment. In the motion, the Braaksmas argued the court lacked jurisdiction to foreclose because Compeer failed to comply with Iowa Code sections 654.2A and 654.2B. The Braaksmas contemporaneously filed their resistance. In the resistance, the Braaksmas acknowledged the facts were undisputed, but they argued Compeer was not entitled to judgment as a matter of law because compliance with sections 654.2A and 654.2B is a mandatory prerequisite to instituting a foreclosure action as to property suitable for agricultural use. Specifically, they claimed the February 2018 notice did "not accurately or meaningfully state the nature of the default"; "the nature of the right to cure the default"; or "the total payment, including an itemization of any delinquency or deferral charges, or other performance necessary to cure the default, and the exact date by which the amount must be paid or performance tendered"; but only "states that the Braaksmas must pay the entire balance ... after acceleration." The general claim was that Compeer was required to advise of the amount of delinquent unpaid installments, without acceleration. Compeer responded the amounts due under the notes were not accelerated in February, as explained in the notice, and stating the Braaksmas could cure by tendering the total indebtedness is permissible pursuant to Iowa Code section 654.2A(4)(b). Alternatively, Compeer argued any failure to comply with section 654.2B did not "substantially prejudice" the Braaksmas so any such failure could not be used as a defense. Compeer also argued, because the April 2017 notices complied with the applicable sections, the Braaksmas were not entitled to a notice of right to cure because they received "a proper notice of right to cure with respect to two prior defaults." See Iowa Code § 654.2A(3). The matter proceeded to hearing, at which the parties largely echoed their previous arguments. Compeer also added that the Braaksmas were not entitled to a notice of right to cure because they were given "a proper notice of right to cure with respect to a prior default within twelve months prior to the alleged default." See id .

In its ensuing ruling, the court granted Compeer summary judgment. The court found Compeer provided the Braaksmas with a right to cure before acceleration, properly provided them forty-five...