Marc Steffes, Mercedes Steffes, Lance Freed, and Jill Freed v. Terrace Park Dock and Property Owners Association, Terrace Park Dock and Property Owners Association Officers, Terrace Park Dock and Property Owners Association Members, and Colonel F. Krage

IN THE COURT OF APPEALS OF IOWA
No. 18-0348
Filed May 15, 2019
MARC STEFFES, MERCEDES STEFFES, LANCE FREED, and JILL FREED,
Plaintiffs-Appellants,
vs.
TERRACE PARK DOCK AND PROPERTY OWNERS ASSOCIATION,
TERRACE PARK DOCK AND PROPERTY OWNERS ASSOCIATION
OFFICERS, TERRACE PARK DOCK AND PROPERTY OWNERS
ASSOCIATION MEMBERS, and COLONEL F. KRAGE,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Dickinson County, Carl J. Petersen,
Judge.
Property owners appeal the district court order dismissing their action to
enforce their right to membership in the Terrance Park Dock and Property Owners
Association. REVERSED.
Barry Shaw Sackett and Frances Schiro of Sackett Law Firm, PC, Spencer,
for appellants.
Steven R. Postolka and Stephen F. Avery of Cornwall, Avery, Bjornsatd and
Scott, Spencer, for appellees.
Heard by Doyle, P.J., and Mullins and McDonald, JJ. Decided by Doyle,
P.J., and Tabor and Mullins, JJ.
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DOYLE, Presiding Judge.
Marc and Mercedes Steffes and Lance and Jill Freed (Appellants) own
property in the Terrace Park subdivision of West Okoboji. Appellants applied for
membership in the Terrace Park Dock and Property Owners Association
(Association). The Association denied Appellants’ applications claiming that,
under its bylaws, membership is limited to persons who own a parcel of land that
was platted in either the original 1905 plat of Terrace Park or the 1908 Terrace
Park replat. Specifically, the applicable bylaw states: “Only those
persons . . . owning a parcel or parcels of land in the following described properties
shall be eligible as members of the Association: All parcels of land in the original
plat of Terrace Park and the Replat of Terrace Park, Dickinson County, Iowa.”
Appellants’ property boundaries do not match up with any of the lots shown in
either plat. Appellants brought suit, seeking judgment to allow them to join the
Association “pursuant to their vested property right.” Among other things,
Appellants argued that “they should be granted membership because their Parcels
fall within the Plat and/or Replat and other parcels similarly situated have in the
past and should in the future be granted membership to the Defendant
Association.” The Association countered that since Appellants’ “tracts were not
delineated in the Original or amended Plats of Terrace Park, the [Appellants] are
not entitled to membership in the Association.” The district court found the bylaws
unambiguously excluded Appellants from membership in the Association.
Appellants appealed the district court’s ruling. We reverse.
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I. Background Facts and Proceedings
Terrace Park is a subdivision in West Okoboji that abuts Green’s Beach on
West Lake Okoboji. Terrace Park was first platted in 1905. The original plat
included numerous blocks consisting of some 247 lots.1 Terrace Park was
replatted in 1908. The replatting combined about 173 original lots into four large
lots—seven lots became Lot A, about 61 lots became Lot B, about 79 lots became
Lot C, and 26 lots became Lot D. About 74 of the originally platted lots remained
untouched by the 1908 replatting.2
The property relevant to this appeal is located within a triangular parcel that
was originally named Block 7 in the Terrace Park 1905 plat and consisted of seven
lots.
1905 Original Plat, Block 7, Terrace Park
1
We approximate the number of lots as copies of the old plat maps in our electronic record
are so poor they are virtually illegible.
2
The remaining original lots left untouched by the replatting are not depicted on the replat,
i.e., Lots A, B, C, and D are depicted, but the remaining area of the plat map is blank.
4
In the 1908 replatting, the seven lots of Block 7 were combined into one lot, which
was renamed Lot A.
1908 Replat, Lot A, Terrace Park
5
In 1999, Lot A, was replatted into four lots: Lots 1, 2, and 3 (renamed Terrace Park
Curve), and Partial Lot A of replat of Terrace Park. The replatting also included a
small outlot dedicated to the City of West Okoboji for Lake Street right-of-way.
1999 Replat, Lot A, Terrace Park
6
In 2012, the Steffes purchased Lots 1, 2, and 3 of Terrace Park Curve. In 2013
they sold Lot 1 and Parcel B of Lot 2 to Lance and Jill Freed. The land the Steffes
and Freeds own is located within the original Block 7 of the Terrace Park Plat and
within Lot A of the Replat of Terrace Park, but the boundaries of their respective
lots do not coincide with boundaries any lot as originally platted or as replatted in
1908.
1999 replat of Lot A, Terrace Park
Land owned by Marc and Mercedes Steffes
Land owned by Lance and Jill Freed
At some point, the Iowa State Conservation Commission began to refuse
issuing dock permits to Terrace Park residents on an individual basis. The
Commission indicated it would only issue five dock permits in 1976 to property
owners in Terrace Park, and suggested that the property owners organize. The
Terrace Park and Dock Association was formed in 1975. One of the primary
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purposes for the Association’s existence is to secure dock permits and to maintain
five docks on Green’s Beach on Lake Okoboji. Members of the Association are
able to use the Association’s docks as space allows. At the time material hereto,
more members had requested to use the docks than space allowed. As a result,
members were placed on a waitlist.
Appellants applied for membership in the Association. The Association
denied the applications, asserting its bylaws did not permit admitting the Appellants
as members. Under the bylaws applicable to this lawsuit—the Association’s
amended by-laws filed in 1989—membership in the Association is limited as
follows: “Only those persons or corporations owning a parcel or parcels of land in
the following described properties shall be eligible as members of the Association:
All parcels of land in the original plat of Terrace Park and the Replat of Terrace
Park, Dickinson County, Iowa.” The Association interpreted the bylaws to limit
membership to owners of lots of record platted prior to adoption of the 1989 bylaw
amendment. The Association claimed it denied Appellants’ applications because
the lots they own are not pre-1989 lots of record.
In 2016, Appellants brought suit against the Association to enforce their
right to membership. The matter was tried to the court on stipulated facts and the
parties’ briefs. The court issued a ruling concluding:
The 1989 MQP [membership qualification provision] is an
unambiguous qualification for membership in Association. The 1989
MQP unambiguously limits membership in Association to those who
own a parcel in Plat or Replat. Notably, a reasonable person could
not construe the 1989 MQP to limit membership to those who own
land once within a parcel in Plat or Replat. Steffes and Freed
currently own land once within a parcel in Plat or Replat (i.e. land
once within Lot A of Replat) but do not own a parcel in Plat or Replat.
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If Lot A of Replat had not been subdivided into the six divisions that
are there today, it would qualify pursuant to the 1989 MQP.
(Emphasis in original.) The court ordered that:
Defendant Association’s unambiguous membership
qualification provision of 1989 bars Plaintiffs Steffes and Freeds from
joining Association because each does not own a parcel of the plat
or replat of Terrace Park; instead, both own land that once made up
only part of Lot A of the replat of Terrace Park and which is now part
of the Terrace Park Curve. No equitable doctrines prevent the
application of the Association’s membership qualification provision of
1989 in this case.
The Appellants appealed.
II. Analysis
The parties agree that this is an action in equity, therefore the court reviews
the district court’s decision de novo. See Iowa R. App. P. 6.907; Hyler v. Garner,
548 N.W.2d 864, 870 (Iowa 1996). The court gives weight to the district court’s
findings of fact, however, it is not bound by them. See Wieskamp v. Kelley, No.
14-1255, 2015 WL 1331715, at *1 (Iowa Ct. App. Mar. 25, 2015). However, the
district court decided the meaning of the bylaw at issue without resort to extrinsic
evidence. Accordingly, the construction and interpretation of the bylaw is a matter
of law for the court, and we are not bound by the interpretation and ruling of the
district court. See Oberbillig v. West Grand Towers Condominium Ass’n, 807
N.W.2d 143, 149 (Iowa 2011).
The Association is a corporation. When interpreting a corporation’s bylaws,
the court applies general contract law. See id. at 150. The court considers the
bylaws as a whole, rather than individually. Rice v. Providence Pointe, L.C., No.
13-0433, 2014 WL 1234157, at *5 (Iowa Ct. App. Mar. 26, 2014).
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When the district court interprets the words of a contract, it
determines the meaning of words in the contract. When the court
construes a contract, it decides the legal effect of such words. We
review the district court’s interpretation as a legal issue unless the
court used extrinsic evidence to interpret the words of the contract.
We always review the district court’s construction of a contract as a
legal issue. When we are reviewing the district court’s construction
of a contract, we must keep in mind the cardinal rule that the intent
of the parties controls. Except in cases of ambiguity, we determine
such intent from what the contract says. Thus, if the parties’ intent is
clear and unambiguous from the words of the contract, we enforce
the contract as written.
American Soil Processing, Inc. v. Iowa Comprehensive Petroleum Underground
Storage Tank Fund Bd., 586 N.W.2d 325, 329 (Iowa 1998) (internal citations
omitted). “The test for ambiguity is an objective one: Is the language fairly
susceptible to two interpretations?” Oberbillig, 807 N.W.2d at 150-51 (quoting
Nationwide Agri-Bus. Ins. Co. v. Goodwin, 782 N.W.2d 465, 470 (Iowa 2010)).
The particular language in question is found in Article III section 3 of the
1989 bylaws. That section states: “Only those persons or corporations owning a
parcel or parcels of land in the following described properties shall be eligible as
members of the Association: All parcels of land in the original plat of Terrace Park
and the Replat of Terrace Park, Dickinson County, Iowa.” The Association argues
that Article III section 3 unambiguously limits membership to owners who possess
lots as platted in either the original plat or 1908 replat of Terrace Park. Although
the Appellants’ lots do not match up with the originally platted lots or the replatted
1908 lots, Appellants argue the bylaw unambiguously permits membership to
owners of any parcels located within the boundaries of the original plat or 1908
replat.
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We look to the words used by the drafters of the bylaw: “Only those persons
or corporations owning a parcel or parcels of land in the following described
properties shall be eligible as members of the Association: All parcels of land in
the original plat of Terrace Park and the Replat of Terrace Park, Dickinson County,
Iowa.” “Parcel” has been defined as
“a part; portion; piece; as a certain piece of land is part and parcel of
another piece.” The Century Dictionary defines it as “a part, either
taken separately or belonging to a whole.” So that “parcel” may quite
as well be applied to a part or subdivision of a lot as to some portion
of a block or tract of other description.
Kneebs v. Sioux City, 137 N.W. 944, 946 (Iowa 1912); see also Webster’s New
Collegiate Dictionary, p. 826 (1973) (defining parcel as “a tract or plot of land”).
“Lot,” on the other hand,
when applied to real estate, is indefinite in its dimensions, but is a
portion of land that has been set off or allotted, whether great or
small. There is no definite and fixed meaning to the word which is
applicable to all cases alike. What would be deemed a “lot” of land
in the country would not be so considered in a city or town. Its
ordinarily accepted meaning, when applied to property within an
incorporated city or town, is evidently not to be understood as
synonymous with the word “tract” or “parcel,” but in the sense of a
city lot, as bounded and described on the recorded plats of the city,
or as subdivided and bounded by conveyances of the owners
thereof, or by other acts done by themselves, or the city authorities
in exercising the right of eminent domain in opening and establishing
streets. It must be property so situated and subdivided, with
reference to streets, as to have impressed upon it the character of
urban, as contradistinguished from rural, use.
Pilz v. Killingsworth, 26 P. 305, 306 (Or. 1891); see also Webster’s New Collegiate
Dictionary, p. 675 (1973) (defining lot as “a measured parcel of land having fixed
boundaries and designated on a plot or survey”). Although Iowa Code chapter 354
(2016), Iowa’s Platting – Division and Subdivision of Land statute, post-dates the
adoption of the 1989 bylaw amendment, as it was enacted in 1990, we find it
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helpful to our analysis. It defines “lot” as “a tract of land represented and identified
by number or letter designation on an official plat.” Iowa Code § 354.2(10).
“Parcel” is defined as “a part of a tract of land.” Id. § 354.2(13). Clearly, the word
“parcel” has a broader meaning than “lot.” The Association could have limited
membership to lot owners owning a “lot” or a “lot of record” as depicted in the
original 1905 and 1908 amended plats of Terrace Park. But it did not. Thus, we
conclude that the use of the word “parcel” in the bylaw does not restrict
membership eligibility to only those owners of lots as depicted in the original plat
or the replat of Terrace Park.
Also, the drafters’ use of multiple prepositional phrases beginning with the
preposition “in” supports the idea that a person need only own property within
Terrace Park to become a member. This is evident after omitting extraneous
language and focusing on the prepositional phrases: Membership is open to “those
persons . . . owning a parcel . . . of land in . . . [the] parcels of land in the original
plat of Terrace Park and the Replat of Terrace Park.” Simply put, a plain reading
of the bylaw leads the reader to believe that, in order to be eligible for membership,
an individual need only own a parcel or lot within the original plat or replat.
Furthermore, evidence outside of the language of the contract supports
Appellants’ interpretation. The supreme court has held the court “can look to the
conduct of the parties as placing a practical construction on the meaning of a term.”
Oberbillig, 807 N.W.2d at 152 (considering prior voting practices of a condominium
association board when interpreting the bylaws regarding voting). Additionally,
extrinsic evidence is admissible as an aid to interpretation. Fashion Fabrics of
Iowa, Inc. v. Retail Investors Corp., 266 N.W.2d 22, 25 (Iowa 1978). The
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Association previously granted membership to owners of lots that were not
delineated in the original plat or 1908 replat. These lot owners include James
O’Brien, Glen and Marcia Petersen, Tye Steffen and Lisa Bodenhamer, and Robert
and Beverly Post. Although not dispositive to its ruling, the district court was highly
critical of the Association’s conduct:
In sum, Association allowed Post, Petersen, O’Brien, and
Bodenhamer to become members in violation of the MQP
[membership qualification provision] applicable at the time each
sought membership. As a result, the court concludes that
Association applies its MQPs capriciously. The present case
represents the height of that caprice: Association allowed Post to
become an Association member though he failed to satisfy the
MQP’s requirement that he own all of Replat’s Lot A but will not allow
Post’s neighbor Freed to become an Association member on
grounds that he does not satisfy the MQP’s requirement that he own
all of Replat’s Lot A.
The Association’s historical conduct supports Appellants’ position.
The Association exists for the primary purpose of allocating dock and hoist
space along the Terrace Park lakefront. The Association points out that because
the lakefront and dock space are finite, only a limited number of persons will be
able to use the docks and maintain boat hoists in a given year. It argues the
Appellants’
interpretation of the By-Laws, however, would require the
Association to take in additional members any time a landowner
subdivides a tract in Terrace Park, as when Steffes and Freeds’ lots
were created in 1999. It is for this reason that the Association limited
membership to the owners of tracts that were originally platted in
Terrace Park, and not to the owners of lots in any and all future
replats. A contrary interpretation of the By-Laws would defeat the
object of the Association itself.
(Footnotes omitted.) The association’s conduct in admitting Post, Petersen,
O’Brien, and Bodenhamer as members belies that argument. Furthermore, if Lot
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A had been replatted back to its original seven lots, the seven owners of those lots
would be eligible for membership, a number greater than the current three owners
of the former Lot A (one of which was granted membership). Under the
circumstances presented, the Association’s argument rings hollow.
III. Conclusion
We find the language of the Association’s bylaws unambiguous. The 1989
amendment does not restrict membership in the Association to owners of lots of
record as delineated in the 1905 Plat or the 1908 Replat. In view of our holding,
we need not address the Appellants’ other arguments.
We reverse the district court’s decision that the Appellants were not eligible
for membership in the Association.
REVERSED.