DeJong v. City of Sioux Center

• Citation: 980 F.Supp. 1010
• Decision Date: 03 October 1997
• Docket Number: No. C 95-4027-DEO.,C 95-4027-DEO.
• Parties: James DeJONG, Sr. and James DeJong, Jr., Plaintiffs, v. CITY OF SIOUX CENTER, Defendant.
• Court: U.S. District Court — Northern District of Iowa

980 F.Supp. 1010

James DeJONG, Sr. and James DeJong, Jr., Plaintiffs, v. CITY OF SIOUX CENTER, Defendant.

No. C 95-4027-DEO.

United States District Court, N.D. Iowa, Western Division.

October 3, 1997.

COPYRIGHT MATERIAL OMITTED

Michael W. Ellwanger, Rawlings, Nieland, Probasco, Killinger, Ellwanger, Jacobs & Mohrhauser, Sioux City, IA, for Plaintiffs.

Michael R. Hellige, Leif D. Erickson, Shull, Cosgrove, Hellige, Lundberg, Sioux City, IA for Defendant.

ORDER ON POST-TRIAL MOTIONS

ZOSS, United States Magistrate Judge.

I. PROCEDURAL BACKGROUND

This dispute revolves around the lease for a space in "The Centre," a new shopping center in Sioux Center, Iowa. James DeJong, Sr. and James DeJong, Jr. ("the DeJongs"), the lessees, brought this action against defendant City of Sioux Center, Iowa ("Sioux Center" or "the city"), the lessor, by filing a complaint in this court on April 5, 1995. In their complaint, the DeJongs alleged four causes of action: negligent misrepresentation, fraudulent misrepresentation, promissory estoppel, and breach of contract. Jurisdiction was alleged under 28 U.S.C. § 1332 (diversity of citizenship). Sioux Center filed a counterclaim on December 29, 1995, seeking to recover unpaid rents allegedly due under the lease. On March 30, 1997, the Honorable Mark W. Bennett granted summary judgment to Sioux Center on the negligent misrepresentation count. On May 13, 1997, the parties consented to try the case before the undersigned United States Magistrate Judge.

This case was tried to a jury from June 9 to June 13, 1997. At the conclusion of the evidence, the court submitted plaintiffs' three remaining theories of recovery to the jury. The court also submitted defendant's counterclaim. The jury found for Sioux Center on the fraudulent misrepresentation claim, but found for the DeJongs on their promissory estoppel and breach of contract claims. The jury also found for the DeJongs on Sioux Center's counterclaim for rent. The jury awarded the DeJongs $149,000.

On June 23, 1997, Sioux Center filed a motion for judgment as a matter of law under Rule 59 of the Federal Rules of Civil Procedure (Docket No. 101). In the motion, Sioux Center asked the court to overturn the jury's verdicts on the promissory estoppel and breach of contract claims and to enter judgment in its favor, arguing that these claims cannot stand as a matter of law. Sioux Center alternatively asked for a new trial, arguing that one of the jury instructions erroneously stated the law (Instruction No. 31), that another of the instructions should not have been given (Instruction No. 27), and that the court erred in an evidentiary ruling concerning videotape evidence. Also on June 23, 1997, Sioux Center filed a motion for judgment as a matter of law on its counterclaim (Docket No. 105). The motions were all resisted by the DeJongs.

The court heard oral argument on the motions on July 29, 1997. For the reasons set out in this order, the motion for judgment as a matter of law is granted in part and denied in part, the motion for new trial is denied, and the motion for judgment as a matter of law on the counterclaim is denied.

II. PLAINTIFFS' THEORIES OF RECOVERY

A. Promissory Estoppel

The jury returned a verdict in favor of the DeJongs on their promissory estoppel theory, Count III of their complaint, in which they alleged:

¶ 37. Plaintiffs reasonably relied upon the aforesaid representations¹ of Defendant, to the detriment of the Plaintiffs.

¶ 38. The equities require that the promises of the Defendant be enforced, and that the Defendant be held liable for all damage for breach of the aforesaid promises.

¶ 39. Defendant breached the aforesaid promises....

(Compl. ¶¶ 37-39.)

The city argues that the lease contains the complete agreement of the parties, and that any prior oral representations not written into the final lease are not part of the contract. Sioux Center also points out that the lease contained a clear and unambiguous integration clause,² and argues that the written, fully integrated contract precludes the use of promissory estoppel to add any non-written terms. The court agrees.

Promissory estoppel was defined by Judge Bennett earlier in this case in his Memorandum Opinion and Order Regarding Motion for Summary Judgment (Docket No. 73) filed March 20, 1997:

Under Iowa law, the elements of promissory estoppel are: (1) a clear and definite agreement; (2) proof that the party seeking to enforce the agreement reasonably relied upon it to the party's detriment; and (3) a finding that the equities support enforcement of the agreement. In re Marriage of Harvey, 523 N.W.2d 755, 756 (Iowa 1994) (citing Merrifield v. Troutner, 269 N.W.2d 136, 137 (Iowa 1978)); Farmers State Bank v. United Cent. Bank of Des Moines, 463 N.W.2d 69, 71 (Iowa 1990); accord National Bank of Waterloo v. Moeller, 434 N.W.2d 887, 889 (Iowa 1989) (finding insufficient evidence of promissory estoppel where bank asserted a production credit association promised it a superior lien on a piece of property); City of Cedar Rapids v. McConnell-Stevely-Anderson Architects & Planners, P.C., 423 N.W.2d 17, 19 (Iowa 1988) (applying promissory estoppel against a party asserting the invalidity of an ordinance); see also Simmons Poultry Farms, Inc. v. Dayton Rd. Dev. Co., 82 F.3d 217, 220 (8th Cir. 1996) (applying elements of promissory estoppel under Iowa law) (citing Uhl v. City of Sioux City, 490 N.W.2d 69, 73 (Iowa.Ct. App.1992)); Uhl v. City of Sioux City, 490 N.W.2d 69, 73 (Iowa.Ct.App.1992); Chipokas v. Hugg, 477 N.W.2d 688, 690 (Iowa. Ct.App.1991) (citing National Bank of Waterloo, 434 N.W.2d at 889); Bradshaw v. Wakonda Club, 476 N.W.2d 743, 748 (Iowa. Ct.App.1991); In the Matter of Scheib Trust, 457 N.W.2d 4, 9 (Iowa.Ct.App.1990).

(Mem.Op. & Order Regarding Mot. for Summ.J. (Docket No. 73).) The effect of the doctrine of promissory estoppel is to imply a contract in law where none exists in fact. Friedman v. BRW, Inc., 40 F.3d 293, 297 (8th Cir.1994) (citing Grouse v. Group Health Plan, 306 N.W.2d 114, 116 (Minn.1981)); Tuomala v. Regent University, 252 Va. 368, 477 S.E.2d 501, 506 (1996); Dickens v. Quincy College Corp., 245 Ill.App.3d 1055, 185 Ill.Dec. 822, 827, 615 N.E.2d 381, 386 (1993).

The question presented in this case is whether promissory estoppel can be used to alter or add terms to a contract that already exists. While no Iowa decision has addressed this precise issue, a large body of law supports the proposition that a claim for promissory estoppel cannot be used to enforce an oral promise where the parties have executed a valid, fully integrated document subsequent to the alleged oral representations. Tuomala, 477 S.E.2d at 506 (holding that "the doctrine [of promissory estoppel] would not apply here because the parties made an enforceable contract"); Frey v. Ramsey County Community Human Serv., 517 N.W.2d 591, 602 (Minn.App.1994) (holding that "[i]n this case, there was a contract, and the doctrine of promissory estoppel is inapplicable"); Great Lakes Aircraft Co., Inc. v. City of Claremont, 135 N.H. 270, 608 A.2d 840, 853 (1992) (stating that "in all instances, application of promissory estoppel is appropriate only in the absence of an express agreement"); see NCC Sunday Inserts, Inc. v. World Color Press, Inc., 759 F.Supp. 1004, 1011 (S.D.N.Y.1991) (applying Illinois law); International Bus. Mach. Corp. v. Medlantic Healthcare Group, 708 F.Supp. 417, 424-25 (D.D.C.1989); Durkee v. Goodyear Tire & Rubber Co., 676 F.Supp. 189, 192 (W.D.Wis. 1987); Resource Tech. Corp. v. Fisher Scientific Co., 924 P.2d 972, 977 (Wyo.1996) (applying Pennsylvania law); Prentice v. UDC Advisory Serv., Inc., 271 Ill.App.3d 505, 207 Ill.Dec. 690, 696, 648 N.E.2d 146, 152-53 (1995); see also Rolscreen Co. v. Pella Products of St. Louis, Inc., 64 F.3d 1202, 1208 (8th Cir.1995) (applying Missouri law); In re Gulf Oil/Cities Serv. Tender Offer Litg., 725 F.Supp. 712, 735 (S.D.N.Y.1989).

Iowa law establishes that parol evidence cannot be used to contradict or modify the terms of a fully integrated contract. See Young v. Cedar County Work Activity Ctr., Inc., 418 N.W.2d 844, 848 (Iowa 1987); Freese Leasing v. Union Trust & Sav. Bank, 253 N.W.2d 921, 924 (Iowa 1977). When an agreement is fully integrated, the parol evidence rule prevents the introduction of any extrinsic evidence to contradict (or even supplement) the terms of the written agreement. Whalen v. Connelly, 545 N.W.2d 284, 290 (Iowa 1996). As the Iowa Court of Appeals stated in Levien Leasing Co. v. Dickey Co., 380 N.W.2d 748 (Iowa App.1985):

A contract with an integration clause typically represents the complete agreement of the parties and any extrinsic evidence which varies, adds, or subtracts from its terms is barred by the parol evidence rule. See Kroblin v. RDR Motels, 347 N.W.2d 430, 433 (Iowa 1984).

Levien Leasing, 380 N.W.2d at 750 (footnote omitted).

The court finds that promissory estoppel cannot be used in this case to enforce prior oral agreements between the parties that are not part of the lease because the parties executed a fully integrated written contract. Sioux Center's motion for judgment as a matter of law on Count III is granted.

B. Breach of Contract

The jury returned a verdict in favor of the DeJongs on their breach of contract theory, Count IV of their complaint, in which they alleged that Sioux Center

contractually obligated itself to comply with certain representations and promises that were made as an inducement to cause Plaintiffs to quit their jobs and enter into a lease with the Defendant....

(Compl. ¶ 41.)

The city argues that the jury's verdict in favor of the DeJongs on this claim should be set aside because the city did not breach any of the terms of the lease. The DeJongs, on the other hand, argue that there is an ambiguity in the lease that should be resolved against the city, and that the city breached the terms of the lease as it is interpreted by...