Lewis v. Howard L. Allen Invs., Inc.

• Decision Date: 19 March 2021
• Docket Number: No. 19-1640,19-1640
• Citation: 956 N.W.2d 489
• Parties: Kristina LEWIS, Appellant, v. HOWARD L. ALLEN INVESTMENTS, INC., Howard L. Allen, Metro Investments and Yogurt & More, Inc., Appellees.
• Court: Iowa Supreme Court

956 N.W.2d 489

Kristina LEWIS, Appellant,

v.HOWARD L. ALLEN INVESTMENTS, INC., Howard L. Allen, Metro Investments and Yogurt & More, Inc., Appellees.

No. 19-1640

Supreme Court of Iowa.

Submitted February 16, 2021

Filed March 19, 2021

Eashaan Vajpeyi (argued) and H. Daniel Holm Jr. of Ball, Kirk & Holm PC, Waterloo, for appellant.

Henry J. Bevel III (argued) of Swisher & Cohrt, P.L.C., Waterloo, for appellees Howard L. Allen Investments, Inc., and Howard L. Allen.

Thomas C. Verhulst (argued) of Beecher, Field, Walker, Morris, Hoffman & Johnson, P.C., Waterloo, for appellees Metro Investments and Yogurt & More, Inc.

McDermott, J., delivered the opinion of the court, in which all justices joined.

McDERMOTT, Justice.

Howard L. Allen Investments, Inc. ("Allen Investments") sold a house under a contract of sale. The contract required the buyers to make monthly payments to Allen Investments for ten years, at which time the contract would be paid in full. Allen Investments would remain on the deed until payment in full but would have no right to possess or enter the property during the payment period.

About five years into the payment period, the buyers leased the house to a tenant named Kristina Lewis and her fiancé. Several months later the house caught fire, and Lewis suffered serious injuries. Lewis, seeking damages for negligence, sued both the buyers who leased her the house and Allen Investments. The district court granted summary judgment in Allen Investments’ favor, holding that the entity as contract seller owed no duty to Lewis. In an appeal that requires us to interpret for the first time several interrelated definitions in Iowa's Uniform Residential Landlord and Tenant Act, Iowa Code chapter 562A, we must answer whether a seller of a property under a contract of sale owes a duty to a contract buyer's tenant.

Lewis sued not only the buyers and Allen Investments but also Allen Investments’ president and (under an alter ego theory) its shareholders Metro Investments, LLC, and Yogurt & More, Inc. As to the buyers of the property under the contract of sale, Lewis claimed they were liable "[b]y virtue of their position as lessors" of the property. As to Allen Investments and its related codefendants (for simplicity, "Allen Investments"), Lewis claimed they were liable "[b]y virtue of their position as deed holders" of the property. Lewis alleged all the defendants had a duty to exercise reasonable care to maintain the house in a safe condition for the tenants, including particularly a duty to provide functioning fire safety equipment such as smoke detectors and fire extinguishers. The petition included an allegation that the defendants failed to provide fit premises in violation of Iowa Code chapter 562A. She sought damages for negligence that included past and future medical expenses, past and future loss of full mind and body, past and future mental and physical pain and suffering, loss of earnings and earning capacity, and punitive damages.

To maintain a claim for negligence, Lewis must prove that Allen Investments owed a duty to protect her from the harm she suffered. See Thompson v. Kaczinski , 774 N.W.2d 829, 834 (Iowa 2009). Whether a defendant owes a duty of care under particular circumstances is a question of law for the court to decide. Hoyt v. Gutterz Bowl & Lounge, L.L.C. , 829 N.W.2d 772, 775 (Iowa 2013). The district court in granting summary judgment held that Allen Investments owed Lewis no duty of care and thus dismissed the negligence claim. We review the district court's ruling for correction of legal error.

Van Fossen v. MidAm. Energy Co. , 777 N.W.2d 689, 692 (Iowa 2009).

In Junkin v. McClain , decided in 1936, we described a "contract of sale" as a "contract for sale of real estate with the legal title of record retained by the seller, pending payment of the purchase price, and upon completion of payment of such purchase price the instrument transferring the legal title to be delivered to purchaser." 221 Iowa 1084, 1089, 265 N.W. 362, 365 (1936). We held in Junkin that the seller under a contract of sale holds legal title simply as security for the contract buyer's payment of the remaining debt. Id.

In Hollingsworth v. Schminkey , we analyzed whether a seller under a contract of sale could be held liable for a rutted driveway on the property that damaged a car's muffler and put into motion a series of injuries after carbon monoxide leaked into the passenger compartment. 553 N.W.2d 591, 599 (Iowa 1996). We found that the contract sellers had no right to possess the property and thus owed no duty under a negligence theory to keep or maintain the driveway in a safe condition. Id.

But Lewis argues that Hollingsworth doesn't control the outcome of the duty analysis in this case because Hollingsworth didn't involve a tenant–landlord relationship. Lewis points us instead to a statute—chapter 562A—that she contends explicitly defines Allen Investments’ role as a "landlord" that owes duties to her as tenant. Section 562A.15 imposes a duty on the landlord to maintain fit premises, including complying with the requirements of "housing codes materially affecting health and safety" and doing "whatever is necessary to put and keep the premises in a fit and habitable condition." Iowa Code § 562A.15(1)(a )(1), (2) (2019).

Lewis argues the definition of "landlord" in section 562A.6(5) imposes liability on not only the buyers—with whom Lewis had a written lease agreement and to whom she paid rent—but also Allen Investments as the seller that remained on the deed while the buyers paid off the house under the contract of sale. As relevant here, that subsection defines "landlord" as "the owner, lessor, or sublessor of the dwelling unit or the building of which it is a part." Id. § 562A.6(5). Lewis argues Allen Investments’ name on the deed makes it an "owner" under this definition.

The word "owner" is separately defined in the statute as "one or more persons, jointly or severally, in whom is vested ... [a]ll or part of the legal title to property; or ... [a]ll or part of the beneficial ownership and a right to present use and enjoyment of the premises," including a mortgagee in possession. Id. § 562A.6(6)(a )–(b ). Under Lewis's reading of the statute, the buyers (as "lessor") and Allen Investments (as "owner" because its name remained on the deed during the contract-of-sale purchase period) each owed her a duty of care to maintain the...