Miller v. Marshall County

Decision Date27 February 2002
Docket NumberNo. 00-0341.,00-0341.
Citation641 N.W.2d 742
PartiesGregg D. MILLER, Appellant, v. MARSHALL COUNTY and Marshall County Board of Supervisors, Appellees.
CourtIowa Supreme Court

Dennis D. Jerde of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, for appellant.

Chester C. Woodburn III of Hansen, McClintock & Riley, Des Moines, and William B. Serangeli of Smith, Schneider, Stiles, Hudson, Serangeli, Mallaney & Shindler, P.C., Des Moines, for appellees.

CADY, Justice.

Under Iowa's county home rule statute, a county is not authorized to lease real property when the lease payments are to be made payable from the general fund without first giving notice of the public's right to petition for a referendum if the principal amount of the lease exceeds certain limits based on the population of the county. See Iowa Code § 331.301(10)(e)(1), (2) (1993). This appeal requires us to decide if this statute authorizes a county to enter into a lease of real property without first following the petition procedures when the principal amount of the lease over the entire term exceeds the threshold limit under the statute but is below the limit on an annual basis. The district court held the county was not authorized to enter into the lease and that the lease was unenforceable. We affirm the district court on our review.

I. Background Facts and Proceedings.

Gregg Miller owns a building in Marshalltown, Iowa, known as the "Rude Building." He purchased the building after prolonged discussions with the Marshall County Board of Supervisors (Board). The Board wanted Miller to purchase the building and lease it to Marshall County (County) so the County could consolidate its county offices and operations located in various places throughout Marshalltown into a central location.

The Board eventually agreed to lease the Rude Building from Miller, and Miller agreed to purchase the building and make substantial renovations to accommodate the needs of the county. The Board and Miller entered into a written lease agreement on November 28, 1994. The lease covered a period of ten years, with an annual rent of $424,666.00. The lease was to commence once Miller completed the renovations, which the parties agreed would be no later than July 1, 1997. The lease also gave the County the option to renew the lease, as well as the right of first refusal in the event Miller desired to sell the building during the term of the lease. The lease also contained a termination clause in the event of a fire or other casualty. Additionally, the lease included a separability clause. This clause provided:

Landlord and Tenant intend and believe that each provision in this Lease comports with all applicable local, state and federal laws and judicial decisions. However, if any provision or provisions, or if any portion of any provision or provisions, in this Lease is found by a court of law to be in violation of any local, state or federal ordinance, statute, law, administrative decision or judicial decision, or public policy, and if such court should declare such portion, provision or provisions of this Lease to be illegal, invalid, unlawful, void, or unenforceable as written, then it is the intent of both Landlord and Tenant that such portion, provision or provisions shall be given force to the fullest possible extent that they are legal, valid, and enforceable, that the remainder of this Lease shall be construed as if such illegal, invalid, unlawful, void, or unenforceable portion, provision or provisions were not contained herein, and that the rights, obligations and interests of Landlord and Tenant under the remainder of this Lease shall continue in full force and effect.

In the summer of 1995, after Miller began renovating the building to accommodate the county's needs, the Board determined it had no authority to enter into the lease without notifying the public of its right to petition for an election. The Board then instituted proceedings to enter into a lease by giving the appropriate public notice. See id. § 331.301(10)(e)(2)(a). The notice resulted in the timely filing of a petition with a sufficient number of eligible signatures, forcing the Board to either abandon the lease or direct the county commissioner of elections to call a special election on the question whether to enter into the lease. See id. § 331.301(10)(e)(2)(b). The Board determined a referendum would not succeed and notified Miller it was abandoning the lease.

Miller filed a petition for damages against the County and the Board based on the theories of breach of contract, negligent misrepresentation, promissory estoppel, unjust enrichment, detrimental reliance, quantum meruit, breach of fiduciary duty, and negligence. The County and the Board moved to dismiss the action. The district court dismissed all the claims against the County and the Board except breach of contract and negligent misrepresentation. The County and the Board then moved for summary judgment on the two remaining claims.

The district court granted summary judgment. It found Miller had no claim for breach of contract because the lease was void. It held the Board had no authority to enter into the lease at the time it was executed, and did not subsequently acquire authority pursuant to the governing statutes. The district court found the separability clause did not make the obligation to pay rent under the lease enforceable up to the amount of the statutory spending limit. The district court also dismissed the negligent misrepresentation claim.

Miller appeals from that portion of the summary judgment decision that dismissed his claim for breach of contract. He claims the Board had authority to enter into the lease because the statutory spending limits only applied to the principal amount of the annual rent payments and the district court erred by interpreting the statute to mean the spending limits applied to the aggregate of all payments under the term of a lease. Miller also claims the district court erred when it refused to enforce the lease for one year under the separability clause.

II. Standard of Review.

We review the decision to grant summary judgment for errors at law. First State Bank v. Clark, 635 N.W.2d 29, 30 (Iowa 2001); Harvey v. Care Initiatives, Inc., 634 N.W.2d 681, 683 (Iowa 2001). Likewise, we review issues of statutory interpretation for errors. State v. Iowa Dist. Ct., 616 N.W.2d 575, 578 (Iowa 2000); State v. Schultz, 604 N.W.2d 60, 62 (Iowa 1999). When the facts underlying a summary judgment ruling are not disputed, as in this case, our task is to determine whether the district court correctly applied the law to the undisputed facts. First State Bank, 635 N.W.2d at 30; Nicodemus v. Milwaukee Mut. Ins. Co., 612 N.W.2d 785, 787 (Iowa 2000).

III. Section 331.301(10)(e).

Section 331.301 frames the general scope of a county's power, and sets explicit limits on the county's authority to act. Goodell v. Humboldt County, 575 N.W.2d 486, 492 (Iowa 1998). In particular, section 331.301(10) limits the authority of a county to enter into lease and lease-purchase contracts. See Madrid Lumber Co. v. Boone County, 255 Iowa 380, 383, 121 N.W.2d 523, 525 (1963)

. Before a county may enter into a lease of real or personal property, it is required to follow the terms and procedures set forth in section 331.301(10). See Lytle v. Ames, 225 Iowa 199, 205, 279 N.W. 453, 456 (1938).

One statutory term requires the county to follow a special procedure to enter into a lease or a lease-purchase contract for real property payable from the general fund when "the principal amount of the lease or lease-purchase contract exceeds" certain enumerated limits. Iowa Code § 331.301(10)(e)(2). This term is one of two general requirements set forth in section 331.301(10)(e), which provides, in relevant part:

The board may authorize a lease or lease-purchase contract which is payable from the general fund and which would not cause the total of lease and lease-purchase payments of the county due from the general fund of the county in any future year for lease or lease-purchase contracts in force on the date of the authorization, excluding payments to exercise purchase options or to pay the expenses of operation or ownership of the property, to exceed ten percent of the last certified general fund budget amount in accordance with the following procedures....

The statute then describes the procedures that must be followed by a county to acquire authorization to enter into a lease or a lease-purchase agreement for personal property payable from the general fund, as well as lease agreements for real property payable from the general fund. See id. For leases involving personal property, the board must follow the same procedures applicable to the county for the issuance of essential county purpose bonds. Id. § 331.301(10)(e)(1); see id. § 331.443(2) (board must first provide notice of proposed action and receive objections from residents or property owners of the county). When the lease agreement involves real property, however, the same procedure applies only "if the principal amount of the lease-purchase contract does not exceed the following limits:"

(a) Four hundred thousand dollars in a county having a population of twenty-five thousand or less.
(b) Five hundred thousand dollars in a county having a population of more than twenty-five thousand but not more than fifty thousand.
(c) Six hundred thousand dollars in a county having a population of more than fifty thousand but not more than one hundred thousand.
(d) Eight hundred thousand dollars in a county having a population of more than one hundred thousand but not more than two hundred thousand.
(e) One million dollars in a county having a population of more than two hundred thousand.

Id. § 331.301(10)(e)(1).

A different procedure, however, applies "to authorize a lease or lease-purchase contract for real property which is payable from the general fund if the principal...

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