Klinge v. Luana Sav. Bank

• Decision Date: 20 October 2010
• Docket Number: No. 0-628,No. 09-1856,0-628,09-1856
• Parties: JASON KLINGE, Plaintiff-Appellant, v. LUANA SAVINGS BANK, Defendant-Appellee.
• Court: Iowa Court of Appeals

JASON KLINGE, Plaintiff-Appellant,

v.LUANA SAVINGS BANK, Defendant-Appellee.

No. 0-628

No. 09-1856

COURT OF APPEALS OF IOWA

Filed October 20, 2010

Appeal from the Iowa District Court for Clayton County, Richard D. Stochl, Judge.

Plaintiff appeals from the district court order granting the defendant's motion for summary judgment.

REVERSED AND REMANDED.

Peter C. Riley of Tom Riley Law Firm, Cedar Rapids, for appellant.

Dale L. Putnam, Decorah, for appellee.

Considered by Sackett, C.J., and Potterfield and Tabor, JJ.

SACKETT, C.J.

Plaintiff, Jason Klinge, appeals from the district court order granting a motion for summary judgment in favor of the defendant, Luana Savings Bank. He contends the court erred in granting the bank's motion to strike Klinge's resistance to the motion for summary judgment finding it untimely. He also claims the court's summary judgment ruling is in error because there is a genuine issue of material fact as to whether the bank breached its contract with Klinge. We find summary judgment was granted in error and therefore reverse and remand for further proceedings.

I. BACKGROUND AND PROCEEDINGS. Viewing the record in a light most favorable to Klinge reveals the following facts. Klinge obtained a variable interest agricultural loan from the bank on June 30, 2000. The loan documents executed included a loan agreement stating the bank agreed to lend Klinge $250,000 and that the "interest rate to Borrowers will be 4% less than the Bank's base rate, which is currently 11.65%." There was also a promissory note where the bank stated the future rate would be equal to the announced base rate of Luana Savings Bank. In addition, the parties executed an "interest assistance agreement." The interest assistance agreement was signed by Klinge, a bank representative, and a representative from the Farm Service Administration of the United States Department of Agriculture (FSA). In it, the FSA agreed to reimburse the bank up to four percentage points of interest in exchange for the bank agreeing to pass this on to the borrower as a discount.¹ This agreement In consideration of the lender's reduction of the interest charged the borrower's account, the United States of America, acting through the Farm Service Agency of the United States Department of Agriculture (FSA) pursuant to the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) agrees that in accordance with and subject to the conditions and requirements in this agreement it will reimburse the lender for a maximum of 4 percentage points per annum of interest reduction. The full amount of interest assistance payments made by FSA to the lender will be passed on to the borrower.

For the initial period of this agreement beginning 6/30/00 and ending 6/30/01 FSA agrees to reimburse the lender for ___ percentage points per annum of the average daily principal balance. The rate of Interest Assistance in future years will be adjusted annually in accordance with the conditions of this agreement.

11. CONDITIONS OF INTEREST ASSISTANCE

a. Interest Rates

The lender may charge a fixed or variable interest rate which is specified in this agreement during the term of the interest assistance agreement. The type of rate must be the same as the type of rate in the underlying note.

The interest rate that the lender will charge will be clearly indicated in the request for interest assistance. If a variable rate is charged, it will comply with 7 C.F.R. part 762.150.also stipulated that the bank would comply with a federal regulation governing interest rates. This regulation provides that "[t]he lender may charge a fixed or variable interest rate, but not in excess of what the lender charges its average agricultural loan customer." 7 C.F.R. § 762.150(g). Reading the loan documents together, the interest rate on the loan was to begin at four percent less than 11.65%, the bank's base rate at the time, or 7.65%. Periodically, the interest rate would vary, but under the regulation it could not exceed the rate the bank charged its average agricultural loan customer. Over the course of the loan, the bank would give Klinge a four percent discount on the interest rate and the FSA program would reimburse the bank for this discount. Overall, the bank was tocharge Klinge an interest rate that was no more than its average agricultural loan rate.

Klinge filed a petition at law on March 18, 2008, alleging, among other things, Luana Savings Bank was in breach of contract by charging him a higher interest rate than was set forth in the loan documents. He claimed the bank had charged him a higher interest rate than its average agricultural loan rate in violation of 7 C.F.R. part 762.150(g). The bank filed an answer, asserted affirmative defenses, and filed a counterclaim for defamation.

On July 27, 2009, the bank filed a motion for summary judgment. It contended there was no genuine issue of material fact because the bank charged Klinge interest at the agreed rate and he received the proper discount throughout the term of the loan. Klinge filed a response the next day. He contended the bank inadequately responded to discovery requests and asked the court to order the bank to fully respond to requests for production and interrogatories. It also asked for an extension of time to respond to the motion for summary judgment.

The court ordered that the request for an extension of time to resist the motion for summary judgment, along with Klinge's request to compel discovery and other matters, should be set for hearing. On September 15, 2009, following the hearing, the court entered an order addressing a number of matters but made no mention of Klinge's request for an extension. There is no transcript of this hearing in the record to determine whether it was discussed during the hearing.

On October 30, 2009, four days before the scheduled hearing on the motion for summary judgment, Klinge filed a resistance to the bank's motion for summary judgment. On November 3, 2009, immediately before the hearing, the bank filed a motion to strike Klinge's resistance. It argued the resistance was untimely because Iowa Rule of Civil Procedure 1.981(3) requires a resistance to a motion to be filed within fifteen days after the motion for summary judgment is filed unless a court orders otherwise. The court took the matter under advisement and proceeded with the hearing on the merits of the summary judgment motion.

The court issued its ruling on November 4, 2009. It concluded Klinge's resistance was not timely filed and Klinge never obtained an extension from the court even though he had the opportunity to do so. It granted the bank's motion to strike Klinge's resistance. It also determined that even if it did not strike the resistance and considered it in its decision, the bank was still entitled to summary judgment. Klinge appeals, contending the court abused its discretion in striking the resistance and erred in granting the bank's motion for summary judgment.

II. ERROR PRESERVATION. The bank first argues Klinge has failed to preserve error on his claims. It claims Klinge filed a notice of appeal before obtaining a ruling on a motion to enlarge, thereby abandoning the claims raised in the motion to enlarge. Klinge responds by explaining that he filed both a motion to enlarge and an application for determination of final judgment or forinterlocutory appeal to protect his right to appeal in a timely fashion.² We have reviewed the filings and arguments and conclude error was preserved on Klinge's claims.

III. RULING ON RESISTANCE. We review for an abuse of discretion a court's ruling on a motion to strike a pleading because it was filed too late. Theis v. James, 184 N.W.2d 708, 710 (Iowa 1971). An abuse of discretion occurs when the district court's decision rests "'on grounds or for reasons clearly untenable or to an extent clearly unreasonable.'" Kulish v. Ellsworth, 566 N.W.2d 885, 889 (Iowa 1997) (quoting Vaughan v. Must, Inc., 542 N.W.2d 533, 543 (Iowa 1996)).

Our rules require a party to file a resistance within fifteen days after being served a copy of the motion for summary judgment, unless the court orders otherwise. Iowa R. Civ. P. 1.981(3). The bank filed its motion for summary judgment on July 27, 2009. The next day Klinge filed a motion requesting, among other things, an extension to resist the motion for summary judgment. The court set the matters for hearing, which was continued at the request of the parties. The hearing was held on September 15, 2009. Thereafter the court entered an order setting a hearing date of November 3, 2009, for the motion for summary judgment and resolving discovery matters. Its order made no mention of Klinge's request for an extension. Klinge filed a resistance on October 30, four days before the summary judgment hearing.

At the hearing on the motion for summary judgment the bank argued Klinge did not obtain an extension of time to file the resistance from the court. From our review of the record, Klinge never officially received an extension and never demanded the court rule on his request. The district court found no reason for the late filing, and Klinge does not advance one in the brief before us. We find no abuse of discretion in the court's ruling and will not consider Klinge's resistance in evaluating whether the court erred in granting the bank's motion for summary judgment.

IV. SUMMARY JUDGMENT. We review an appeal from a summary judgment ruling for the correction of errors at law. Fennelly v. A-1 Mach. & Tool Co., 728 N.W.2d 181, 185 (Iowa 2007). The motion should be granted only if

the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Iowa R. Civ. P. 1.981(3); Rucker v. Humboldt Cmty. Sch. Dist., 737 N.W.2d 292, 293 (Iowa 2007). There is a "genuine"...