J.A. Smith Machinery Company, Ltd. v. K.E. Builders, LLC Darin Keller and Taloyre Keller

IN THE COURT OF APPEALS OF IOWA
No. 20-1310
Filed January 27, 2022
J.A. SMITH MACHINERY COMPANY, LTD.,
Plaintiff-Appellee,
vs.
K.E. BUILDERS, LLC; DARIN KELLER; and TALOYRE KELLER,
Defendants-Appellants.
________________________________________________________________
Appeal from the Iowa District Court for Boone County, Christopher C.
Polking, Judge.
Defendants appeal the district court decision awarding damages to plaintiff
on the claim of conversion of a skid loader. AFFIRMED IN PART AND
REVERSED IN PART.
Philip S. Bubb and Brandon R. Underwood of Fredrikson & Byron, P.A., Des
Moines, for appellant.
Kirke C. Quinn and F.D. Chip Baltimore II of Law Offices of Kirke C. Quinn,
Boone, for appellees.
Considered by Vaitheswaran, P.J., and Greer and Schumacher, JJ.
2
SCHUMACHER, Judge.
K.E. Builders, L.L.C.; Darin Keller; and Taloyre Keller1 appeal the district
court’s decision awarding damages to J.A. Smith Machinery Co., Ltd. (Smith
Machinery) on its claim of conversion of a skid loader. We affirm the district court
on the grant of summary judgment on liability and the award of compensatory
damages. We reverse the court’s decision on the issue of punitive damages.
I. Background Facts & Proceedings
James Smith (Smith) owns Smith Machinery. Smith Machinery owned a
1989 Bobcat 773 skid loader. Smith’s son, Ryan Smith, sometimes used Smith
Machinery’s skid loader at his home. The Kellers lived across the street from Ryan
and saw him using the skid loader. Ryan’s home went into foreclosure and was
sold at a sheriff’s sale to the Kellers on March 19, 2019. In an affidavit filed as part
of Smith Machinery’s motion for summary judgment, Ryan stated he went to the
home on the day of the sale to retrieve the skid loader but the key was missing so
he could not remove it.
The day after the sale, Smith went to Ryan’s former home looking for the
skid loader. Smith did not know the Kellers, and they did not know him. When
Smith found out the Kellers had the skid loader, he demanded that they return it.
On April 2, through counsel, Smith formally demanded the return of the skid loader.
He did not, however, provide proof of ownership. The Kellers did not return the
skid loader. Smith bought a different skid loader for $16,000.
1 We will refer to Darin and Taloyre Keller as the Kellers. Collectively, K.E. Builders
and the Kellers will be referred to as the defendants.
3
On April 8, Smith Machinery brought an action against the defendants
seeking damages under a theory of conversion. As an affirmative defense, the
defendants pled Smith Machinery abandoned the skid loader. See Larson v. Great
W. Cas. Co., 482 N.W.2d 170, 173 (Iowa Ct. App. 1992) (noting there could be no
recovery for conversion when plaintiff abandoned the property).
Smith Machinery filed a motion for summary judgment, claiming the
defendants were liable as a matter of law. It claimed the defendants improperly
kept the skid loader after they were informed it was owned by Smith Machinery.
The defendants did not file a resistance or response to the motion for summary
judgment. The defendants did not file any affidavits in support of their affirmative
defense. The summary judgment hearing was unreported.
On December 4, the district court granted the motion for summary judgment
on the issue of liability. The court found the facts presented in Smith Machinery’s
motion for summary judgment were uncontested. The court stated,
A skid loader is not a fixture, it was not attached to the real estate,
and without any other kind of bill of sale, acknowledgment of transfer
or other positive act, the Defendants could not rightfully assume that
a sale of real estate, pursuant to an in rem judgment, could purport
to transfer an item of personal property. The Defendants exercise of
control over the skid loader was inconsistent with and in derogation
of [Smith Machinery’s] possessory rights thereto. The issue of
damages is left for trial.
The court also found the defendants failed to establish the defense of
abandonment.
A hearing on the issue of damages was held on September 3, 2020. In
Smith Machinery’s initial disclosures, the skid loader was valued at $10,000.
During the hearing, evidence was presented to show the 1989 skid loader was
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purchased in 1999 for $11,650.2 Smith Machinery presented evidence to show
newer Bobcat 773 skid loaders, built from 1998 to 2001, were selling for between
$10,400 to $19,250. Smith testified the value of his skid loader was $13,000 to
$15,000. However, he also stated he did not disagree with the value of $10,000
that was in the initial disclosures.
At the hearing on the damages issue, testimony was provided from the
Kellers that after the sale they went into the home and found several items,
including a bed, washer and dryer, and refrigerator. The skid loader was in the
garage. The Kellers took the skid loader to their home. They stated the skid loader
had a small hydraulic leak. It was not painted, had dog feces on it, and the seat
was tattered. They stated the key was in the skid loader.
At this same hearing, the Kellers testified they told Smith to contact the
sheriff’s department when confronted about the return of the skid loader. The
sheriff’s department stated it was a civil matter. The Kellers testified at the hearing
on damages that they contacted the Story County Sheriff’s Department twice, and
both times were told that all the items in the home were included in the sale.
The district court found the fair market value of the skid loader was $10,000.
The court also found “even if the plaintiff could legally claim loss of use damages
in a conversion case where they seek and have received the fair market value of
the item, the plaintiff has failed to prove any loss of use damages.” The court found
the Kellers’ conduct showed malice toward Smith, who they believed was rude and
2 This was the net cost to Smith. Smith testified the skid loader cost $27,500 and
after credit for a trade of a different skid loader, he only paid $11,650 for the skid
loader at issue.
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demanding. The court found they did not have a legal basis to keep the skid loader
and were acting with spite and ill will. The court determined the defendants should
pay punitive damages of $5000. The court declined Smith Machinery’s request for
common law attorney fees. The defendants appeal the district court decision.
II. Summary Judgment
The defendants claim the district court erred by granting Smith Machinery’s
motion for summary judgment. We review a district court’s decision granting
summary judgment for the correction of errors of law. Jones v. Univ. of Iowa, 836
N.W.2d 127, 139 (Iowa 2013). The Iowa Supreme Court has stated:
A court should grant summary judgment 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. In other words, summary judgment is
appropriate if the record reveals a conflict only concerns the legal
consequences of undisputed facts. When reviewing a court’s
decision to grant summary judgment, we examine the record in the
light most favorable to the nonmoving party and we draw all
legitimate inferences the evidence bears in order to establish the
existence of questions of fact.
Id. at 139–40 (quoting Pitts v. Farm Bureau Life Ins. Co., 818 N.W.2d 91, 96–97
(Iowa 2012)). The party seeking summary judgment has the burden to show there
are no genuine issues of material fact and the party is entitled to a judgment as a
matter of law. Morris v. Steffes Group, Inc., 924 N.W.2d 491, 496 (Iowa 2019).
Defendants claim summary judgment was not appropriate because Smith
Machinery failed to show all the elements of a claim of conversion. They also claim
the skid loader was abandoned. Defendants did not file a resistance to the motion
for summary judgment. Smith Machinery’s statement of undisputed facts was not
challenged by defendants. No record was made of the summary judgment
6
hearing, but apparently no evidence was presented at the hearing and it consisted
only of arguments by the parties.
“A party resisting a motion for summary judgment cannot rely on the mere
assertions in his pleadings but must come forward with evidence to demonstrate
that a genuine issue of fact is presented.” Stevens v. Iowa Newspapers, Inc., 728
N.W.2d 823, 827 (Iowa 2007). “If the summary judgment record shows that the
‘resisting party has no evidence to factually support an outcome determinative
element of that party’s claim, the moving party will prevail on summary judgment.’”
R.J. Meyers Co. v. Reinke Mfg. Co., 885 N.W.2d 429, 435 (Iowa Ct. App. 2016)
(quoting Wilson v. Darr, 553 N.W.2d 579, 582 (Iowa 1996)).
Defendants did not come forward with evidence to demonstrate there was
a genuine issue of material fact. See Stevens, 728 N.W.2d at 827. They did not
resist Smith Machinery’s statement of undisputed facts or present any affidavits to
support their own claims. Smith Machinery was entitled to prevail on its motion for
summary judgment because defendants did not alert the court to any evidence to
support their claims, including their claim of abandonment. We conclude the
district court properly granted summary judgment to Smith Machinery.
III. Compensatory Damages
The defendants claim there is not sufficient evidence in the record to
support the district court’s award of $10,000 in compensatory damages. They
assert the evidence presented by Smith Machinery to show the value of the 1989
Bobcat 773 skid loader was overly speculative. They also assert there was no
factual basis to show the value of the skid loader was $10,000.
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We review civil conversion claims for the correction of errors at law.
Podraza v. City of Carter Lake, 524 N.W.2d 198, 202 (Iowa 1994). The district
court’s factual findings are binding if they are supported by substantial evidence.
FS Credit Corp. v. Troy Elevator, Inc., 421 N.W.2d 537, 538 (Iowa 1988).
“Evidence is substantial if a reasonable mind would accept it as adequate to
support a conclusion.” Id. We view the evidence in the light most favorable to the
district court’s findings. Id.“The measure of damages in an action for conversion ordinarily is the ‘fair
and reasonable market value at the time and place of taking.’” F.S. Credit Corp.
v. Shear Elevator, Inc., 377 N.W.2d 227, 234–35 (Iowa 1985) (citation omitted);
see also Meirick v. Dunn, No. 05-1208, 2006 WL 1896337, at *1 (Iowa Ct. App.
July 12, 2006). Fair market value means “the price a willing buyer under no
compulsion to buy would pay and a willing seller under no compulsion to sell would
accept.” Federal Land Bank v. Sleister, 444 N.W.2d 504, 505 (Iowa 1989).
A party seeking damages has the burden to show damages were incurred
and the amount of damages. Data Documents, Inc. v. Pottawattamie Cnty., 604
N.W.2d 611, 616 (Iowa 2000). “If the evidence is speculative and uncertain
whether damages have been sustained, damages are denied. However, if the
uncertainty merely lies in the amount of damages sustained, ‘recovery may be had
if there is proof of a reasonable basis from which the amount can be inferred or
approximated.’” Pavone v. Kirke, 801 N.W.2d 477, 495 (Iowa 2011) (citations
omitted). “Although proof of damages need not be shown with mathematical
certainty, plaintiff must at least present sufficient evidence to allow the factfinder
to make an approximate estimate of the loss.” Data Documents, 604 N.W.2d at
8
616–17 (citation omitted). “Iowa courts ‘take a broad view in determining the
sufficiency of evidence of damages.’” Hammes v. JCLB Props., LLC, 764 N.W.2d
552, 558 (Iowa Ct. App. 2008) (citation omitted).
Smith Machinery submitted initial disclosures pursuant to Iowa Rule of Civil
Procedure 1.500, which stated the fair market value of the skid loader was
$10,000. At the trial, Smith testified there was a bid of $13,100 for a 1999 Bobcat
773 skid loader in October 2019. He also testified about a Bobcat 773 skid loader
listed for sale at $13,800. He stated this was a fair and reasonable price.
Additionally, he testified there was a 2000 Bobcat 773 skid loader that sold for
$19,250 in November 2019. In an auction in April 2018, a Bobcat skid loader sold
for $10,400. Smith gave the opinion that his skid loader was worth $13,000 to
$15,000. Smith, however, also stated he had no reason to disagree with the value
of $10,000 given in the initial disclosures.
Smith Machinery presented sufficient evidence to allow the court to make
an approximate estimate of the value of the skid loader. See Data Documents,
604 N.W.2d at 616–17. Smith Machinery sold new and used equipment, including
skid loaders. Smith also conducted auctions as part of a separate business for
industrial, commercial, and construction businesses. Smith testified he “probably
sold a hundred some skid loaders over the years.” From his experience, Smith
could give his opinion of the value of the skid loader involved in this case. He
supported his opinion by giving examples of recent sales of other comparable skid
loaders. As noted, we “take a broad view in determining the sufficiency of evidence
of damages.” See Hammes, 764 N.W.2d at 558. We conclude there is sufficient
9
evidence in the record to support the district court’s determination the skid loader
was worth $10,000.
IV. Punitive Damages
Defendants claim the record does not support an award of punitive
damages. The court found the Kellers’ conduct showed malice toward Smith
Machinery, and they were acting with spite and ill will. The court determined the
defendants should pay punitive damages of $5000.
Punitive damages must be supported by clear, convincing, and satisfactory
evidence. Iowa Code § 668A.1(1)(a) (2019); accord Condon Auto Sales & Serv.,
Inc. v. Crick, 604 N.W.2d 587, 594 (Iowa 1999). The Iowa Court of Appeals has
stated:
An award of punitive damages is appropriate only when a party acts
with actual or legal malice. Actual malice is shown by such things as
personal spite, hatred, or ill will. Legal malice is established by
showing wrongful conduct committed with a willful or reckless
disregard for the rights of another. A jury to award punitive damages
must find that “the conduct . . . from which the claim arose constituted
willful and wanton disregard for the rights or safety of another.” Iowa
Code § 668A.1(1)(a).
Larson, 482 N.W.2d at 174 (some citations omitted).
The district court relied on Taloyre Keller’s statement, “I could go on, and I
could tell you that this possibly could have ended completely different if there
wasn’t the amount of shit left in that home,” referring to the amount of dog feces in
the home purchased in the foreclosure sale. She quickly retracted that statement,
however, and testified:
I don’t know if it would have been differently rectified, but I
want to say if Mr. Smith wouldn’t have come at us in such a negative
way demanding we return the skidloader that I don’t even know that
it’s his that was left on the property after the sheriff’s sale.
10
Taloyre, who was the manager of K.E. Builders, testified she did not want
to have a confrontation with Smith about the skid loader and asked him to work it
out through the sheriff’s department because defendants believed they purchased
everything in the home, including the skid loader, at the time of the sheriff’s sale.
Defendants did not have an independent relationship with Smith or Smith
Machinery. They purchased a home formerly owned by Ryan. Thus, the condition
of the home after the foreclosure sale reflected on Ryan, not Smith Machinery.
There is a lack of evidence as to the Kellers’ personal spite, hatred, or ill will toward
Smith Machinery based on dog feces in Ryan’s home. Also, while Taylore’s
statement shows she considered that Smith acted in a negative and demanding
manner, she also testified she was not irritated by his conduct. She testified she
did not have any malice or ill will toward Smith or Smith Machinery.
We find there is not clear, convincing, and satisfactory evidence to show
defendants had actual malice toward Smith Machinery. The evidence does not
show defendants were acting out of “personal spite, hatred, or ill-will.” See
Cawthorn v. Catholic Health Initiatives Iowa Corp., 743 N.W.2d 525, 529 (Iowa
2007). Punitive damages are not awarded for conduct that is merely objectionable.
Larson, 482 N.W.2d at 175. “Punitive damages are justified when the acts of the
defendant are malicious.” Condon Auto Sales & Serv., 604 N.W.2d at 594.
We turn to the issue of legal malice. The Kellers assert that they had a good
faith belief that they owned the skid loader as a result of the foreclosure sale. They
point out that they asked the sheriff’s department two times if they owned the
personal property in the home. The Kellers state that they were assured they
owned everything in the home. Based on this advice, the Kellers assumed they
11
owned the skid loader. The Kellers state that they also had good faith doubts about
who owned the skid loader before the sale—Ryan, Smith, or Smith Machinery.
The Kellers state that Smith Machinery did not provide them with any evidence of
its ownership until Smith Machinery filed proposed trial exhibits in December 2019.
They state that they were not obliged to turn over the skid loader based on Smith’s
unverified assertions of ownership.
We conclude there is not clear, convincing, and satisfactory evidence to
show the Kellers engaged in “wrongful conduct committed with a willful or reckless
disregard of the rights of another.” See Van Sickle Constr. Co. v. Wachovia
Commercial Mortg., Inc., 783 N.W.2d 684, 690 (Iowa 2010). “To receive punitive
damages, plaintiff must offer evidence of defendant’s persistent course of conduct
to show that the defendant acted with no care and with disregard to the
consequences of those acts.” Cawthorn, 743 N.W.2d at 529 (quoting Wolf v. Wolf,
690 N.W.2d 887, 893 (Iowa 2005)). We determine the evidence does not support
a finding that the defendants acted with legal malice.
Having concluded there is not clear, convincing or satisfactory evidence to
show defendants acted with actual or legal malice, we determine the award of
punitive damages is not supported by the record. We reverse the award of punitive
damages.
We affirm the district court on the grant of summary judgment on liability
and compensatory damages. We reverse the court’s decision on the issue of
punitive damages.
AFFIRMED IN PART AND REVERSED IN PART.
Vaitheswaran, P.J., concurs; Greer, J., partially dissents.
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GREER, Judge (concurring in part and dissenting in part).
I concur with the majority opinion with one exception—I would affirm the
district court’s award of punitive damages to J.A. Smith Machinery Company, Ltd.
(Smith Machinery). The actions of Darin and Taloyre Keller (Kellers) of not
returning a skid loader to its owner amounted to willful and wanton conduct under
these facts. An award of punitive damages is “appropriate when a tort is committed
with ‘either actual or legal malice.’” Wolf v. Wolf, 690 N.W.2d 887, 893 (Iowa 2005)
(citation omitted). “[L]egal malice may be shown by wrongful conduct committed
with a willful or reckless disregard for the rights of another.” Id. (citation omitted).
I agree that Smith Machinery did not prove actual malice but find that the Kellers
engaged in a “persistent course of conduct” that showed they “acted with no care
and with disregard to the consequences of [their] acts.” Hockenberg Equip. Co. v.
Hockenberg’s Equip. & Supply Co., 510 N.W.2d 153, 156 (Iowa 1993) (citation
omitted). Smith Machinery showed “by a preponderance of clear, convincing, and
satisfactory evidence” that the Kellers’ conduct “amounted to a willful and wanton
disregard” for Smith Machinery’s right to its equipment. Id.This is why I would affirm. Granted, K.E. Builders3 purchased Ryan Smith’s
home at a March 19 foreclosure sale and Ryan left a Smith Machinery skid loader
at the property until the day of the sale. But on the day following the sheriff’s sale,
after learning that the key had been removed from the skid loader,4 the owner of
Smith Machinery, Jim Smith (Smith), went to the property and approached a
3 Darin Keller testified he was the president of the company, and Taloyre described
herself as the owner of K.E. Builders.
4 The undisputed evidence at trial was that Ryan tried to retrieve the skid loader
the day of the foreclosure sale and the key was missing.
13
person cleaning the site. Learning she was not the new owner, he asked for the
owner’s contact information. She called and reported to Smith, “[T]hey don’t want
to talk to you.” After Smith’s urging, she called them again and told Smith once
more, “they don’t want to talk to you.” Smith obtained the cell phone number of
the owners and sent a text message stating he wanted his skid loader back. Even
so, Taloyre testified she did not respond until the third text message from Smith
when she sent a text responding that the Kellers owned all of the contents on the
property. Back and forth texting occurred with no resolution. At trial, Taloyre
acknowledged that Smith was a third party asking for his property but felt she
should be dealing with Ryan as the previous owner. Even with notice that
someone else might own the skid loader, Taloyre expressed her attitude about the
situation:
But when I got to the house and I opened the door and the skid loader
was there and I called the sheriff again, they then confirmed again
that all the contents of the house were mine, just like the dog shit,
just like the bed, just like the cabinets, just like the washer and dryer,
the refrigerator, the pergola and I think—that’s it.
I could go on, and I could tell you that this possibly could have
ended completely different if there wasn’t the amount of shit left in
that home.
Q. So you were upset by the quantity of dog feces left in the
home? A. Well, it was kind of disturbing, sir.
....
I don’t know if it would have been differently rectified, but I
want to say if Mr. Smith wouldn’t have come at us in such a negative
way demanding we return the skid loader that I don’t even know that
it’s his that was left on the property after the sheriff’s sale.
We appreciate that the district court viewed the demeanor and inflection of each
witness and concluded that other inappropriate factors influenced the Kellers’
behavior. See Tim O’Neill Chevrolet, Inc. v. Forristall, 551 N.W.2d 611, 614 (Iowa
14
1996) (“The district court has a better opportunity than we do to evaluate the
credibility of witnesses.”). In the summary of facts, the district court stated:
Although Taloyre understood that [Smith] did not own the real
estate they had purchased, she testified that the result with the skid
loader could have been different if there was “not so much dog shit”
at the house, and if [Smith] had not come at them so negative and
demanding. She testified that if the skid loader meant so much to
him, it should not have been left at the home.
The majority believes Taloyre walked back this attitude, but I would give the court
credit for the first-hand view of her demeanor. With that in mind, finding an award
of punitive damages was warranted, the district court noted:
[D]efendants own stated reasons for their intransigence on the issue
were:
(1) The amount of “dog shit” left in the house they purchased
(2) Their perception that Jim Smith was negative and
demanding, and had been rude to their employees.
The first reason willfully and wantonly disregards that it was
not Jim Smith’s house they had purchased at foreclosure, and that
he had no legal obligation for the condition of the house. The second
reason has no legal basis, and instead evidences malice towards Jim
Smith. While defendants at times in their testimony tried to walk
these reasonings back, they repeatedly made statements during the
testimony about these factors. The factors had no valid legal basis,
but clearly informed the motivations of the defendants.
Jim Smith did not own the property, he owned the skid loader. The Kellers
projected their animus onto a third party, who happened to be a relative.
Unable to convince the Kellers otherwise, on April 2, counsel for Smith
Machinery wrote a detailed letter to Taloyre. That letter set forth the legal position
of Smith Machinery as to its ownership of the skid loader and what K.E. Builders
actually purchased at the sheriff’s sale, and it demanded immediate return of the
machinery to its owner. Counsel correctly clarified that K. E. Builders bought only
the real estate and that a skid loader was not included in the sale. Keller was
15
asked to contact counsel by April 4 or legal action would be initiated. The deadline
passed with no response and no return of the skid loader. In fact, the skid loader
was never returned to Smith.
Even in this appeal, K.E. Builders and the Kellers assert a position that they
had a good faith belief the skid loader was abandoned. Under the best argument,
abandonment can only apply if the skid loader belonged to Ryan. It is difficult to
understand how the Kellers can maintain that an abandonment claim protects them
from a punitive damage award when the day after the sheriff’s sale, Smith texted
Taloyre that he wanted the skid loader back. Advocating this losing position to
retain ownership of an asset of another shows a heedless disregard for Smith
Machinery’s right to its property. See Miranda v. Said, 836 N.W.2d 8, 34 (Iowa
2013) (noting the “acts must manifest a heedless disregard for or indifference to
the rights of others” and a showing of “a persistent course of conduct to show no
care with disregard of consequences” (quoting Vipond v. Jergensen, 148 N.W.2d
598, 600–01 (Iowa 1967))). K.E. Builders and the Kellers were on that course and
had many chances to leave that path with numerous opportunities to make the
situation right. The district court compared this case to Becker v. Longinaker, No.
09-0833, 2010 WL 1578400, at *10–11 (Iowa Ct. App. Apr. 21, 2010). There, we
agreed with the district court when it upheld the jury’s award of punitive damages:
The bank made no effort to identify or segregate the horses or take
any other precautions to avoid the unfortunate event that actually
occurred. The evidence supports [the jury’s] conclusion that the
defendants’ actions were in total disregard of the rights of Kim
Becker, who they knew to have had horses on the property. In
support of their disregard of her rights, the [b]ank was unwilling to
immediately proceed to return the horses of Kim Becker upon
discovering their mistake and error but rather held them for additional
collateral of Pamela Morgan.
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Id. at *11 (first alteration in original). The same can be said of the actions of these
defendants here. Concluding the Kellers operated with a willful and reckless
disregard of the rights of Smith Machinery as to the skid loader, the district court
awarded a reasonable award of punitive damages. I would find the Kellers
operated with legal malice and the award was proper.