Amended May 3, 2017 Tunis E. Den Hartog, Shirley Ann Schweertman, Leonard G. Lybbert, Mary Ellen Molinaro, William James Robert, and Mark D. Fisher v. City of Waterloo, Iowa ( 2017 )

IN THE SUPREME COURT OF IOWA
No. 15–1540
Filed March 10, 2017
Amended May 3, 2017
TUNIS E. DEN HARTOG, SHIRLEY ANN SCHWEERTMAN,
LEONARD G. LYBBERT, MARY ELLEN MOLINARO, WILLIAM JAMES
ROBERT, AND MARK D. FISHER,
Appellants,
vs.
CITY OF WATERLOO, IOWA,
Appellee,
SUNNYSIDE SOUTH ADDITION, LLC,
Intervenor.
Appeal from the Iowa District Court for Black Hawk County,
Andrea J. Dryer, Judge.
Taxpayers challenge the district court’s ruling finding a
municipality was not in contempt of a court order forbidding it from
selling certain property except in compliance with statutory
requirements. AFFIRMED AS MODIFIED.
Dave Nagle, Waterloo, for appellants.
David Zellhoefer, Waterloo City Attorney, and Ivan T. Webber of
Ahlers & Cooney, P.C., Des Moines, for appellee.
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CADY, Chief Justice.
In this case, we must decide if we should hold a municipality in
contempt of a court order that required it to dispose of certain property
only in compliance with Iowa Code section 306.23 (2014). The
municipality promulgated notices that gave a development company
preferential bidding on the property even though it was not a prior or
adjacent landowner, gave that same development company a bid credit
for the improvements it had already made to the property, described the
land as delineated in the plat filed for the contested development, and
used a backdated valuation. Following a hearing, the district court
found the notices did not satisfy the requirements of section 306.23, but
nevertheless held the municipality’s actions did not rise to the level of
contempt. The taxpayers appealed. On appeal, we affirm. We also
address additional arguments presented to, but not ruled on by, the
district court. We conclude the municipality violated the injunction but
agree the record does not establish beyond a reasonable doubt the
municipality acted with the requisite willfulness to establish contempt.
I. Factual Background and Proceedings.
This case is before us for the second time. The factual background
can be summarized from our earlier opinion, as follows:
The State of Iowa acquired property in Black Hawk
County for purposes of constructing a state highway in
1959. The highway had originally been planned as, and
enough land had been acquired for, a four-lane project, but
the highway was eventually constructed with just two lanes.
In 1983, the state transferred control of the highway and
attendant property to the City of Waterloo (the City), in
accordance with the terms of Iowa Code chapter 306,
entitled “Establishment, Alteration, and Vacation of
Highways.” After the transfer, the highway property became
known as San Marnan Drive in Waterloo. The City has
retained jurisdiction and control over the property in the
years since and has maintained it with grading, mowing, and
weed control.
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The City has now indicated its intention to transfer the
property to Sunnyside South Addition, LLC (Sunnyside), as
part of a development agreement. Under the terms of the
agreement, Sunnyside proposes to relocate San Marnan
Drive by reconstructing it approximately eighty feet south of
its current position and intends to retain the property on
which the current San Marnan Drive sits for purposes of
residential construction. The City proposes to transfer the
highway property to Sunnyside according to the agreement
for the sum of $1.00.
Taxpaying residents of Waterloo . . . became aware of
and objected to the proposed transfer in 2011. They filed in
the district court a petition for writ of mandamus and
temporary injunction requesting postponement of the sale on
the ground the City’s proposed transaction failed to comply
with certain appraisal, notice, right-of-first refusal, and
public bid requirements set forth in chapter 306.
Den Hartog v. City of Waterloo, 847 N.W.2d 459, 460–61 (Iowa 2014).
The dispute was submitted to the district court for a resolution.
The fighting issue was whether a statutory preference given to certain
persons when unused right-of-way land is intended to be sold apply not
only to land acquired for highway purposes but never used, but also land
used for highway purposes that were later discontinued. Following a
hearing, the district court held the statutory preference procedures did
not apply to the sale of the right-of-way land in this case and dismissed
the motion to enjoin the sale and the petition for writ of mandamus.
The taxpayers filed an appeal from the district court decision.
Around the same time, the City entered into a contract to sell the right-
of-way land to Sunnyside. It also entered into a development agreement
with Sunnyside. Under the agreement, Sunnyside was required to
develop the unused right-of-way, which ran next to a country club and
golf course, into lots for residential development. The City also gave
Sunnyside a special warranty deed to the land. During the pendency of
the appeal, the City platted the land for the development, and Sunnyside
relocated San Marnan Drive to the south. Sunnyside also graded the
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land for the housing development and installed curbs, gutters, storm
sewers, utilities, and took other action necessary to complete the
development site for home construction.
In June 2014, we reversed the decision of the district court. We
held the statutory sales preference did apply to land formerly used for
highway purposes. We remanded the case to the district court to enter
the requested injunction against the City. On July 7, 2014, the district
court entered an order enjoining the City “from selling or transferring the
property in this proceeding without first following the procedures
prescribed in Iowa Code section 306.23.”
The City subsequently moved to dissolve the injunction. It did not
assert the sale of the property to Sunnyside was complete. Instead, it
asserted that it desired to sell the land and proposed to do so by first
giving notice of the intended sale consistent with the requirements of the
preference statute. On February 20, 2015, the district court denied the
motion to dissolve the injunction.
The City then proceeded to give the notices of the intended sale
under the preference statute. The taxpayers filed an application to find
the City in contempt of court for noncompliance with the statutory
requirements of the notices. They also sought a temporary restraining
order to prevent any sale.
On June 4, 2015, the district court held the notices of sale sent by
the City failed to comply with the statutory sales preference. However, it
found the deficiencies in the notices were not willful and did not amount
to contempt. It further found a restraining order was unnecessary
because the prior injunction remained in effect.
The taxpayers appealed. On appeal, they claim the notices sent by
the City failed to comply with the governing statute in four ways and that
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the noncompliance constituted a willful and wanton disregard for the
injunction entered on July 7, 2014. The taxpayers also claim the district
court erred in failing to address each claim of noncompliance. The City
argued no contempt could occur without a final sale. It also argued that
any noncompliance with Iowa Code section 306.23 was not
contemptuous.
II. Standard of Review.
Despite the vast procedural background of this case, the
fundamental question now presented is whether the district court erred
in failing to find the City in contempt of court for sending notices that did
not comply with Iowa Code section 306.23. We permit the direct appeal
of a dismissal of an application for contempt. State v. Lipcamon, 483
N.W.2d 605, 606 (Iowa 1992).
Our cases impose a special standard of review of the facts in
contempt cases. If it is claimed that a ruling is not
supported by substantial evidence, “we examine the
evidence, not de novo, but to assure ourselves that proper
proof supports the judgment.” “The exact extent to which we
may go in deciding questions of fact from the record is
vaguely defined; it lies in a shadow land, a ‘twilight zone,’
whose boundaries do not admit of definite charting.” The
finding of contempt must be established by proof beyond a
reasonable doubt.
Id. (first quoting Palmer Coll. of Chiropractic v. Iowa Dist. Ct., 412 N.W.2d
617, 619 (Iowa 1987); then quoting Watson v. Charlton, 243 Iowa 80, 92,
50 N.W.2d 605, 612 (1951)); see also Patterson v. Keleher, 365 N.W.2d
22, 24 (Iowa 1985) (“Our review is not de novo; while we give much
weight to the trial court’s findings of fact, we are not bound by them.”).
Since proof beyond a reasonable doubt must be established
for a finding of contempt, substantial evidence to support
such a finding is “such evidence as could convince a rational
trier of fact that the alleged contemnor is guilty of contempt
beyond a reasonable doubt.”
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Reis v. Iowa Dist. Ct., 787 N.W.2d 61, 66 (Iowa 2010) (quoting In re
Marriage of Jacobo, 526 N.W.2d 859, 866 (Iowa 1995)). “We review the
district court’s conclusions of law for errors at law.” Id.; see also
Lipcamon, 483 N.W.2d at 606–07 (“We are not bound by the trial court’s
conclusions of law and may inquire into whether it applied erroneous
rules of law that materially affected its decision.”). “We are authorized
. . . to find contempt ‘notwithstanding the fact that the district judge
found that a contempt had not been committed.’ ” Orkin Exterminating
Co. v. Burnett, 160 N.W.2d 427, 430–31 (Iowa 1968) (quoting Lake v.
Wolfe, 108 Iowa 184, 186, 78 N.W. 811, 811 (1899)).
III. Contempt of Court.
“Illegal resistance to any order” of the court is a contemptuous act.
Iowa Code § 665.2(3). However, “[r]esistance to or violation of an order
cannot be considered contempt of court unless it is willful.” Reis, 787
N.W.2d at 68. Thus, “[c]ontempt actions are adjudicated to determine
whether the alleged contemner acted in willful disobedience of a court
order beyond a reasonable doubt.” City of Dubuque v. Iowa Dist. Ct., 725
N.W.2d 449, 452 (Iowa 2006).
The party alleging contempt bears the initial burden of proving “a
duty to obey a court order” and a “willful[] fail[ure] to perform that duty.”
Ary v. Iowa Dist. Ct., 735 N.W.2d 621, 624 (Iowa 2007). If the party
makes this showing, “the burden shifts to the alleged contemner to
produce evidence suggesting the violation was not willful.” Id.
Disobedience is willful when it is
conduct that is intentional and deliberate with a bad or evil
purpose, or wanton and in disregard of the rights of others,
or contrary to a known duty, or unauthorized, coupled with
an unconcern whether the contemner had the right or not.
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Reis, 787 N.W.2d at 68 (quoting Amro v. Iowa Dist. Ct., 429 N.W.2d 135,
140 (Iowa 1988)). However, “[a] failure to follow a court order is not
willful if a contemner shows the order was indefinite or that the
contemner was unable to comply with the order.” Ary, 735 N.W.2d at
624. The interpretation of an order’s language is a question of law. See
Zimmermann v. Iowa Dist. Ct., 480 N.W.2d 70, 74 (Iowa 1992).
In construing [an] injunction, effect should be given to every
word, if possible, to give the injunction as a whole a
consistent and reasonable meaning. Effect should also “be
given to that which is clearly implied as well as that which is
expressed.”
Bear v. Iowa Dist. Ct., 540 N.W.2d 439, 441 (Iowa 1995) (citation omitted)
(quoting In re Marriage of Lawson, 409 N.W.2d 181, 182 (Iowa 1987)).
Our review is of “the spirit as well as the letter of the injunction to
determine if its intent has been honestly and fairly obeyed.” Id. (quoting
Burnett, 160 N.W.2d at 431); see also Matlock v. Weets, 531 N.W.2d 118,
124 (Iowa 1995).
A. Court Order. The district court order prohibits the City “from
selling or transferring the property . . . without first following the
procedures prescribed in Iowa Code Section 306.23.” The City asserts
the order only prohibits the City from completing a sale in violation of the
statute, not from attempting to sell the property in violation of the
statute. However, the phrase “from selling or transferring” is written in
the present tense. Thus, the statutory requirements are part of the
process that must be performed in “selling or transferring” the land.
Accordingly, the injunction encompasses efforts to sell the land in
compliance with the statute, not merely the completed sale. We proceed
to consider the statutory requirements that must be followed by the City
in selling the land.
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B. Statutory Requirements. Under Iowa law, the governmental
agency in control of land that is an unused right-of-way may sell it for
cash. 1 Iowa Code § 306.22. We have held this statute applies both to
land acquired for highway purposes, but never used, and to land
acquired and used for highway purposes that are discontinued.
Den Hartog, 847 N.W.2d at 465–66. The law, however, gives a sales
preference to two classes of persons. It gives a preference to the person
who is the “present owner of adjacent land from which the tract, parcel,
piece of land, or part thereof, was originally purchased or condemned for
highway purposes.” Iowa Code § 306.23(1). It also gives a preference to
the person who owned the land at the time it was acquired. Id. The
agency must give these persons an opportunity to purchase the land
before proceeding with the sale. Id. § 306.23(2).
The statutory sales preference makes it possible for land taken for
highway purposes to be returned to the particular tract of land or to the
particular owner from which it was acquired. Thus, the “present owner
of adjacent land from which” the unused tract or unused part of a tract
controlled by the agency “was originally purchased or condemned” refers
to present owners of land that lies adjacent to the unused right-of-way
because the right-of-way was acquired from that land. The “person who
owned the land” at the time it was acquired would also be the “present
1It appears only the Iowa Department of Transportation (DOT) may sell the land
on an installment contract. Section 306.22(2) authorizes “[t]he department” to
“contract for the sale of any tract of land.” The statute is clear that “[t]he department”
refers to the DOT. See Iowa Code § 306.2(3). Any “agency,” on the other hand, may sell
the land for cash. See id. § 306.22(1). An “agency” is “any governmental body which
exercises jurisdiction over any road.” Id. § 306.2(1). “When the legislature has defined
words in a statute—that is, when the legislature has opted to ‘act as its own
lexicographer’—those definitions bind us.” In re J.C., 857 N.W.2d 495, 500 (Iowa 2014)
(quoting State v. Fischer, 785 N.W.2d 697, 702 (Iowa 2010)).
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owner of adjacent land” if the person who owned the land at the time it
was acquired still owned the tract of land from which the right-of-way
was acquired. See Op. Iowa Att’y Gen. No. 97–11–1 (Nov. 4, 1997), 1997
WL 816849, at *2 (finding the Act required the DOT to offer a last
previous owner the opportunity to buy back just that particular piece of
land it acquired from that owner); see also Office of Right of Way, Iowa
Dep’t of Transp., Property Management Manual 29 (March 2016) (defining
“adjacent owner” for purposes of Iowa Code section 306.23).
The purpose of this statute is consistent with the purpose of Iowa
Code section 6B.56, which created a right of first refusal for condemnees
and was enacted at the same time section 306.23 was amended to add
the original-owner preference. See 1997 Iowa Acts ch. 149, §§ 1, 2
(codified at Iowa Code § 6B.56 and § 306.23 (1999)). The original
statutory preference for adjacent landowners was enacted in 1934. See
1934 Iowa Acts ch. 8, § 2 (codified at Iowa Code § 4755-f2 (1935)). The
statute prefers restoration of unused rights-of-way to either the original
tract or original owner from which it was acquired before selling it to
another person. See Iowa Code § 306.23(1)–(2) (2014).
The sales preference operates by requiring the agency to send
notice of the agency’s intent to sell the land to the two classes of persons
entitled to preference. See Iowa Code § 306.23(1). The notice must
identify the name and address of any other person to whom the notice
was sent and state “the fair market value of the land based on an
appraisal by an independent appraiser.” Id.
The notice gives the two classes of persons an opportunity “to be
heard and to make offers within sixty days” of the time the notice is given
for the tract, parcel, or piece of land to be sold. Id. § 306.23(2). An offer
that equals or exceeds the amount of any other offer received and equals
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or exceeds the fair market value is given preference by the agency. Id. If
the agency receives no offers within the sixty-day period or if the offers
do not equal or exceed the fair market value of the land, the agency is
permitted to proceed with its intended sale for cash.
C. Compliance with the Statutory Requirements. The
taxpayers claim the notices sent by the City were deficient in four ways.
The district court did not expressly rule on each of these alleged failings.
However, the taxpayers preserved error for our review by filing a motion
to amend or enlarge. See Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa
2002).
First, the taxpayers claim the notices were deficient because,
among others entitled to notice, the City included Sunnyside as a
preferential buyer within the “present owner of adjacent land” category.
Without this status, Sunnyside does not qualify for notice since it was
clearly not an owner of the right-of-way at the time it was acquired. See
Iowa Code § 306.23(1) (noting the only two ownership interests entitled
to notice). However, the City makes no claim on appeal that Sunnyside
is a present owner of land adjacent to the right-of-way from which the
right-of-way was acquired. Any claim of ownership by Sunnyside derived
from a sale of the right-of-way land from the City did not make
Sunnyside the present owner of land adjacent to the right-of-way. Thus,
the City should not have sent notices to Sunnyside.
Second, the taxpayers claim the notices did not comply with the
statute because they gave Sunnyside a bid credit. We need not address
this claim because the record in this case does not support a finding that
Sunnyside qualified as a preferential bidder under the statute.
Third, the taxpayers claim the notices were deficient because right-
of-way properties intended to be sold by the City were described in the
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notices by using the platted descriptions recorded during the pendency
of the first appeal. The preference statute does not specifically require
the selling agency to describe the land intended to be sold, but a
description would be implicit in the requirement to give notice of the sale.
A description would be sufficient if it reasonably notified those entitled to
notice of the land intended to be sold. Normally, land that has been
platted provides a reasonable description. See City of Clinton v. Owners
of Prop. Situated Within Certain Described Boundaries, 191 N.W.2d 671,
674–75 (Iowa 1971) (noting a description may be sufficient if it
reasonably identifies the land). Thus, the descriptions here were
sufficient.
Finally, the taxpayers claim the notices were deficient because the
City identified the fair market value of the right-of-way land in the
notices prior to the time the land was improved by Sunnyside. Again,
the statute does not specifically identify the time for the valuation to take
place. However, the statutory-notice process implies the fair market
value would be the value at or near the time the notice of impending sale
is given. Accordingly, the fair market value in this case would include
the value of the improvements made to the land by Sunnyside prior to
the notices. See Den Hartog, 847 N.W.2d at 465 (noting one of the
“purposes underlying the chapter 306 framework” is to protect the City
and its taxpayers by attaining the best price for the land). Thus, the
notices must state the present fair market value of the land to be sold.
Any preferential offer would need to equal or exceed the fair market value
of the land as improved by Sunnyside. If no such offers are received, the
City may then proceed to confirm its prior sale to Sunnyside.
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D. Willful Violations. The final question is the City’s culpability.
To reiterate, we ask whether the City acted with willful disobedience. See
Reis, 787 N.W.2d at 68. Disobedience is willful when it is
conduct that is intentional and deliberate with a bad or evil
purpose, or wanton and in disregard of the rights of others,
or contrary to a known duty, or unauthorized, coupled with
an unconcern whether the contemner had the right or not.
Id. (quoting Amro, 429 N.W.2d at 140).
The taxpayers rely on testimony establishing the City’s actions
were far out of the norm for the typical disposal of right-of-way. They
point to the obvious nature of some of the violations and assert that is
sufficient evidence of the requisite mental state. The City attributed any
failings to the complicated circumstances. The district court found the
taxpayers failed to prove willful disobedience beyond a reasonable doubt.
In responding to this appeal, the City expands on its earlier arguments,
arguing there is a lack of evidence of intent and that even if its acts were
contemptuous, it should be given the opportunity to purge itself of
contempt.
We agree with the district court. Based on this record, the
taxpayers have not met their high burden of proving the City acted
contemptuously beyond a reasonable doubt. While some aspects of the
notices are particularly troubling, we recognize the limited interpretive
guidance available on this seldom-cited statute. However, now that we
have ruled on each of the faults of the notices identified by the taxpayers,
we expect future notices will be in compliance with Iowa Code section
306.23.
It cannot go unnoticed that the sale of the right-of-way land and
compliance with the statutory preference has been complicated by the
prior sale of the land to Sunnyside and the subsequent development of
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the land by Sunnyside into residential lots during the pendency of the
first appeal. Yet, the sole issue presented in this appeal involves the
actions of the City in attempting to comply with the statute under these
complex circumstances. Under the course of litigation pursued in this
case, any such issues of Sunnyside’s legal or equitable rights in the land
would not likely be ripe until such time as a prior or adjacent owner
utilized its sale preference established under the statute. See Taft v.
Iowa Dist. Ct., 879 N.W.2d 634, 638 (Iowa 2016) (noting we generally do
not resolve hypothetical controversies).
IV. Conclusion.
We conclude substantial evidence supports the finding of the
district court that the City has not acted contemptuously in failing to
comply with the preference requirements of Iowa Code section 306.23 at
this point in the proceedings. We affirm the decision of the district court
with the additional guidance laid out above.
AFFIRMED AS MODIFIED.
All justices concur except Zager, J., who takes no part.