Donna Canavan v. Joe W. Conlan, Michael Sauser, and Cs & R, LLC D/B/A Cornerstone Homes

IN THE COURT OF APPEALS OF IOWA
No. 14-0165
Filed July 9, 2015
DONNA CANAVAN,
Plaintiff-Appellant,
vs.
JOE W. CONLAN, MICHAEL SAUSER,
and CS & R, LLC d/b/a
CORNERSTONE HOMES,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Linn County, Ian K. Thornhill,
Judge.
A home buyer appeals from an adverse judgment following jury trial of her
breach-of-contract, negligence, and misrepresentation claims against the seller.
AFFIRMED.
Peter C. Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for appellant.
Jason J. O’Rourke and Benjamin Patterson of Lane & Waterman LLP,
Davenport, for appellees.
Heard by Danilson, C.J., and Vaitheswaran and Doyle, JJ.
2
DANILSON, C.J.
A home buyer appeals from an adverse judgment following jury trial of her
breach-of-contract, negligence, and misrepresentation claims against the seller.
Donna Canavan contends the trial court (1) erred in not granting a new trial when
the jury’s verdict was not sustained by sufficient evidence; (2) erred in failing to
grant a directed verdict in regard to the individual liability of defendants Michael
Sauser and Joe Conlan; (3) erred in submitting two special verdict questions to
the jury; and (4) erred in instructing the jury regarding mitigation. She also
contends she is entitled to a new trial because opposing counsel engaged in
misconduct. Addressing only those claims properly preserved, and viewing the
evidence in the light most favorable to the prevailing party, we conclude
substantial evidence supports the jury’s verdicts. The trial court did not abuse its
discretion in its evidentiary rulings or in denying the posttrial motions. We
therefore affirm.
I. Background Facts and Proceedings.
The jury could reasonably have found the following: Cornerstone Homes
is an Iowa limited liability company owned by Michael and Kara Sauser and Joe
and Gail Conlan. The company was formed to build houses in the Cedar Rapids
area. In 2006, Cornerstone built a house at 1704 Wolf Drive Northwest, Cedar
Rapids, and in August 2006, a certificate of occupancy was issued, which
confirmed the house had been inspected and it complied with the requirements
of the building code.
Donna Canavan visited the Wolf Drive house for the first time in August
2006 and learned that Cornerstone was the entity selling the house. Canavan
3
made an initial offer to purchase the house, which was less than the asking price,
and the offer was rejected. Canavan visited the house again on September 11,
2006. She asked her realtor, Luann Steenhoek, to prepare another offer;
Steenhoek prepared a purchase/sale contract, which was signed by Canavan as
buyer and Joe Conlan and Michael Sauser as sellers that same day. The
purchase agreement allowed Canavan to have a whole-house inspection.
Canavan had the inspection performed. On September 25, 2006, Canavan,
Steenhoek and Sauser attended a final walk-through of the house. At this time,
Canavan had her first conversation with Sauser. Canavan asked Sauser if there
were any easements on the property and if she could put a fence to the
boundary. Sauser told her there were no easements on the property. Canavan
identified three items during the final walk-through she wanted fixed, and
Cornerstone took care of the items.
Closing was held on September 26, 2006. Cornerstone provided
Canavan a one-year homeowner’s warranty in connection with the sale, which
provides in part:
We spray the foundation walls with a tar waterproofing
material. Although we make every effort to assure a dry basement,
during times of excessive moisture, you may notice some
dampness. . . .
Cornerstone Homes will correct conditions that allow actual
water to enter the basement unless the cause is improper
installation of landscaping or failure to adequately maintain
drainage.
After moving in, Canavan made arrangements to install a fence in her
backyard. In the process of doing so, she learned there was an underground
utility easement at the back of her lot. Canavan had a fence built on the
4
easement line, ten feet off the back property line. The city would have allowed
her to install the fence on the property line subject to its removal in the event the
city needed to access the utility within the easement, but Canavan chose to avoid
the potential of removing the fence.
Canavan started to experience water in her basement in the spring of
2007. She informed Sauser of the problem, but he did not address her concerns.
On July 16, 2007, a “pretty bad” storm hit the Cedar Rapids area—Canavan “lost
power and it rained like all get out.” She estimated three to four inches of rain fell
in an hour. After the electricity went out, water entered her basement. Canavan
called Sauser, and Sauser responded by going to Canavan’s house. Sauser
stayed until after midnight helping Canavan remove the water out of the
basement. Sauser returned to Canavan’s house the following day to help her
carry items upstairs from the basement and clean up the remaining water.
Sauser also had a contractor check Canavan’s furnace and air conditioning unit
and had another contractor help dry out her basement. Canavan was not
charged for any of this work. Additionally, Cornerstone had a landscaper visit
Canavan’s property on July 17 to look at the property, redo the window wells, re-
landscape the yard, and install drains in the backyard and tile up to the front of
the house. Canavan had a discussion with Sauser the same day about trying to
figure out what happened, and she acknowledged Sauser was willing to try and
figure it out and help her.
After the July 2007 storm, Canavan also noticed water standing in certain
areas in her backyard, which she discussed with Sauser, and he agreed to put
drain tile in the backyard to keep water from pooling in the future. On August 6,
5
2007, a contractor installed tile in Canavan’s backyard. Cornerstone paid the
contractor for the work.
About the same time in August 2007, Sauser asked Canavan to put
together a complete list of any items she wanted addressed under the warranty.
Canavan gave Sauser a list of ten items that included various items typically
seen by Sauser because the house was newly constructed. Sauser testified the
items were addressed “within days of him receiving the list” and Canavan voiced
no unhappiness about the way they were handled.
Sometime in the same month, Canavan contacted Tomlinson,1 a company
that performs basement waterproofing. Canavan received a proposal from
Tomlinson to perform repairs to prevent further water from entering her
basement. Canavan did not, however, hire Tomlinson to do the work.
Still not satisfied with Sauser’s work or representations, Canavan
contacted an attorney. On September 19, 2007, attorney James Holmes sent
Cornerstone a letter on behalf of Canavan asking for an explanation how it was
going to address the water drainage problems. Sauser called Holmes the day he
received the letter and told him he would be happy to meet with Canavan, a
contractor, and an engineer she selected to discuss the issues. On
September 25, 2007, Holmes sent Sauser a letter attempting to schedule a time
for the meeting. Sauser again called Holmes and reiterated his offer to meet with
the attorney and anyone else Canavan wanted to address her concerns. Sauser
1
The firm was named Tomlinson Cannon Cole in 2007. It later became Tomlinson
Cannon. We will simply refer to the firm as Tomlinson.
6
received no return phone call or further communications from Holmes because
Canavan would not agree.
Canavan alleged she had water in her basement again in 2008. Sauser
was in the neighborhood frequently during that time building other houses.
Canavan had Sauser’s home and cellular telephone numbers. However, she did
not contact Sauser about the 2008 water problem.
On September 25, 2008, Canavan filed the instant lawsuit, asserting
claims of breach of contract, negligence, and misrepresentation. She sought
punitive damages and the imposition of personal liability upon Conlan and
Sauser.
On August 27, 2009, Canavan informed Sauser (through their respective
attorneys) she was experiencing water in her basement. Sauser went to
Canavan’s home and took a concrete contractor, Rob McAllister of M.D.
Concrete, with him. Sauser and McAllister presented Canavan with “a plan that
could take care of the basement situation for her. She felt good about it, but
needed to converse with her attorney first before we could proceed.”
Beginning on August 28, 2009, and until October 2011, Cornerstone
repeatedly offered to hire a contractor to fix the water intrusion at no cost to
Canavan. Canavan did not allow the work to be done, nor did she hire anyone
on her own. A mediation session was held in October 2011, and an agreement
reached, after which Cornerstone hired Tomlinson to do repairs on Canavan’s
home. Tomlinson worked with Randy Van Winkle, an engineer Canavan
selected, to evaluate a plan to address the water intrusion. Tomlinson proposed
installation of new foundation drains and additional sump pumps. Van Winkle
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concluded the proposed system was “the most likely and most appropriate
method to ameliorate the water intrusion in [the] basement,” and recommended
proceeding with the repair. Tomlinson completed the work in December 2011
and provided a warranty in connection with its work. Cornerstone paid
Tomlinson; Canavan was not required to pay for any of the repairs.
In October 2012, Canavan called Tomlinson back to the house to address
a water problem that purportedly occurred in September 2012. The basement
was dry when Tomlinson representative Russel Keeler arrived, which made it
difficult for Tomlinson to determine what caused the asserted September water
intrusion. Keeler informed Canavan’s attorney’s office that Tomlinson remained
“willing to work on fixing the problem if—as soon as we knew there was
something going on.” Tomlinson was not called out to the property again until
June 14, 2013. Canavan allowed Tomlinson to do additional work later in 2013.
Tomlinson continues to stand by its warranty.
Canavan’s claims of breach of contract (asserting defendants breached
the one-year home warranty by not fixing the water intrusion problems),
negligence (in the design and construction of the house), and misrepresentation
(based on Sauser’s statements that there were no easements) proceeded to a
jury trial on September 30, 2013. The defendants moved in limine for a ruling
limiting Canavan’s proposed witness testimony concerning damages, specifically
objecting to untimely disclosed expert witness testimony about diminution in
value.2 Canavan argued the proposed testimony by the listing realtor LuAnn
2
Defendants’ counsel argued the realtor “was disclosed as a witness who was going to
testify as a realtor as what she has done, as the fact that she listed, and that she had
8
Steenhoek3 was not expert testimony, and the realtor’s attempts to sell the house
were relevant to the issue of damages. Canavan also asserted the house had no
value because it could not be “fixed.” The court ruled it would allow the realtor to
testify about “what efforts that she made to sell the property and if she said she’s
not able to sell it.”
Also in their motion in limine, the defendants argued that any testimony
about the house being in foreclosure was “inadmissible because it’s not part of
the recoverable elements of damages in a construction defect claim.” The court
asked Canavan’s counsel about the relevance of foreclosure, and counsel
responded,
I think it’s relevant because she [Canavan] has a problem
with her house that is not fixable and, therefore, she ultimately
figured she could no longer live there. As a result of the fact that
she could not afford to pay rent and a mortgage and a second
mortgage payment, her house went in foreclosure and that affects
her ability to try and sell it for some discounted type of price on a
short sale. It can’t be sold.
The court ruled the fact the house was in foreclosure was irrelevant to the
defective construction or the breach of contract claim, “[s]o we won’t hear
anything about that.”
At trial, Steenhoek testified the house had been shown twenty to twenty-
five times and no offers had been made. She stated that if a person was to go
into the basement of the house today, one would see
seen water in the basement. Fine. She can testify to all that.” However, counsel
asserted, “She can’t come in now and start offering all these opinions that have never
been disclosed.”
3
By the time of trial, Canavan had moved out of the house, ceased making payments on
it, and the house was for sale.
9
the inside of the basement floor, the perimeter, has the concrete
that’s been cut out and there’s something below the concrete—I
imagine it’s tiling—all around the perimeter and down the middle of
the foundation. And there’s the original sump pump that was there
when she bought it, the pit. And now there’s two additional sump
pits with pumps in it. So there’s three pits now.
Steenhoek testified the house was not saleable. On cross-examination,
defendants’ counsel questioned Steenhoek about having had only one open
house in trying to sell the property. At Canavan’s counsel’s behest, a discussion
was held outside the presence of the jury. Canavan’s counsel asserted that
defense counsel “knew full well the reason why she hadn’t had any open houses”
was because the house was in foreclosure, and argued, “I believe [defense
counsel] has opened the door on the fact that it is in short sale and in foreclosure
. . . but she’s prohibited from giving that explanation because of the court’s order
in limine.” The trial court ordered a recess. Upon resuming the proceedings, the
court stated:
When we broke we were discussing this issue regarding the
cross-examination of Ms. Steenhoek, and I thought about this and
I’ve pretty much been put in a position where whatever decision I
make it’s pretty much an invitation to introduce error to this trial,
something that I think could have easily been addressed before it
came up rather than after, so I’m really not very pleased about that.
But we can’t unring that bell. It’s obvious to me that, [defense
counsel], you knew that this line of questioning at least got
intertwined with an issue that was clearly part of a limine ruling, a
limine motion that you brought up, and instead of giving the court a
heads up and giving me a way to deal with this before we got this
out in front of the jury, we went down this road. And now, again, as
I said, I’m pretty much put in a position where whatever decision I
make going forward here is an invitation of error down the road.
But I’ve thought about it, and I feel that the lesser of the two
potentially negative decisions here is, [plaintiff’s counsel] Mr. Riley,
I’m going to let you ask her why she didn’t have any open houses,
but I’m not going to let her state as one of the reasons the short
sale/foreclosure. I’ve read this transcript. She indicates the
appearance of the basement, the sump pump issue that she’s
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already talked about. She indicates here in her deposition a
concern of, you know, what if it’s a rainy day, that sort of thing. You
can certainly ask her about that. But I limined out the foreclosure
issue because it is so completely irrelevant to the issues in this
case and it invites so many tangential issues and potentially invites
the jury to rely on the motion [sic] rather than facts that I’m not
going to allow the witness to state the short sale and foreclosure as
one of the reasons why she didn’t have an open house.
Canavan’s counsel made an offer of proof, wherein Steenhoek stated one of the
reasons she did not have more open houses was because “I’m in this to make
money, and Donna’s house is not as saleable as other properties as I have
because of the basement and being in a short sale/foreclosure.” Steenhoek was
cautioned not to mention the foreclosure when questioning resumed. On
redirect, Steenhoek was asked why she “did not feel that Miss Canavan’s house
was an appropriate candidate for an open house,” to which she replied:
Well, number one, it was vacant. Number two would be the
basement. I couldn’t predict if it was going to rain and if there
would be water in the basement. I wouldn’t want to have an open
house if it was a wet basement, the weather. And just being busy
with other open houses.
During trial, Thomas Hart, the Public Health Environmental Supervisor
with the Linn County Board of Health, testified that he visited Canavan’s property
in August 2007 and returned to the property in 2009. Hart concluded the water
intrusion in the basement was caused by a high “sand lens.” He explained a
sand lens is a phenomenon where soils are different; some of the soil under the
house may be restrictive and some very permeable. When more permeable soils
such as sand conduit water, they can act like a pipeline, which effect is called a
sand lens. According to Hart, a sand lens could be overlooked in the building
process because it is a random occurrence and can only be determined with
11
certainty by excavation. Hart also testified that he was very familiar with
Tomlinson and he was of the opinion that Tomlinson was competent to resolve
any water problem caused by a sand lens.
Sauser testified he estimated he had been involved in the construction of
approximately 400 homes throughout his career. He had never experienced a
sand lens before this situation and, in fact, had never even heard of them.
Sauser testified there was no indication during the construction of the home that
the sand lens was present.
Sauser also testified that at the time he told Canavan there were no
easements on the property, “I did not intend to deceive her. I was only telling her
what I knew.” Sauser stated that when Canavan later talked to him about
building a fence to the back boundary of her property, Sauser called Deanna
Thomas with the City of Cedar Rapids, who advised a fence could be built to the
boundary. Sauser assumed her comment meant there was no easement. A
utility easement does run along the back of Canavan’s property.
The defendants moved for directed verdict on claims of negligence,
punitive damages, and misrepresentation. With respect to the negligence claim,
the defendants asserted it was barred by the economic loss doctrine. They also
asserted Sauser and Conlan were not personally liable because Cornerstone
was a disclosed principal.
For her part, Canavan moved for a directed verdict “on the issue of
[personal liability of] Joe W. Conlan and Michael Sauser on the obligations under
the September 11, 2006, [purchase/sale] contract.” Counsel argued that
12
because the two had signed the sales contract without noting they were signing
for Cornerstone, they were individually liable. The court reserved ruling.
Canavan made no objections to the district court’s proposed instructions.
Canavan’s counsel stated:
Our objections go to issues of submissibility.
We object to Questions Number[s] 1 and 2[4] for the reasons
set forth in our motion for directed verdict on the issue of personal
liability. We do not believe that the contract is unambiguous and,
therefore, we do not believe that there’s a jury issue on capacity.
We object to the submission of Question Number 5 on the
questions of whether the property can be or has been repaired on
the basis that there is no evidence in the record other than that the
property has not been repaired and there is no evidence of any
possible repair which could work.
And so those would be the Plaintiff’s objections to the
instructions, Your Honor.
Those objections were overruled.
The jury was instructed that to prove her claim of breach of contract,5
Canavan was required to prove all of the following propositions:
1. The existence of a contract.
2. The terms of the contract.
3. The plaintiff has done what the contract requires.
4. The defendant has breached the contract.
5. The amount of damage defendant has caused.
If the plaintiff has failed to prove any of these propositions,
the plaintiff is not entitled to damages. If the plaintiff has proved all
of these propositions, then you will consider the defense of failure
to mitigate as explained in Instruction No. 13.
On Canavan’s negligence claim, the jury was instructed:6
The Plaintiff claims the defendants were at fault in one or
more of the following particular(s):
Design and construction of Plaintiff’s home.
This ground of fault has been explained to you in other instructions.
4
The jury questions are set forth in full below.
5
Instruction No. 9 contained the breach-of-contract elements.
6
Instruction No. 15 was the negligence claim.
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The plaintiff must prove all of the following propositions:
1. The defendant was at fault. In order to prove fault, the
plaintiff must prove Defendants were negligent in the construction
of the Plaintiff’s home.
2. The defendant’s fault was a cause of the plaintiff’s
damage.
3. The amount of damage.
If the plaintiff has failed to prove any of these propositions,
the plaintiff is not entitled to damages. If the plaintiff has proved all
of these propositions, then you will consider the defense of
comparative fault as explained in Instruction No. 29.
And, concerning Canavan’s misrepresentation claim, the jury was
instructed7:
The plaintiff must prove the following propositions by a
preponderance of clear, satisfactory and convincing evidence to
establish her fraudulent misrepresentation claim:
1. Michael Sauser made a representation to plaintiff that
plaintiff could erect a fence to the property line and there were no
easements on the property.
2. The representation was false.
3. The representation was material.
4. Michael Sauser knew the representation was false.
5. Michael Sauser intended to deceive plaintiff.
6. The plaintiff acted in reliance on the truth of the
representation and was justified in relying on the representation.
7. The representation was a cause of the plaintiff’s damage.
8. The amount of the damage.
If the plaintiff has failed to prove any of these propositions,
the plaintiff is not entitled to damages. If the plaintiff has proved all
of these propositions, the plaintiff is entitled to recover damages
against Michael Sauser and against Michael Sauser’s employer,
CS&R, LLC, if done within the scope of Michael Sauser’s
employment, in some amount.
The jury answered the submitted questions, in pertinent part:
Question No. 1: Do you find Defendant Joe W. Conlan was acting
in his individual capacity when he signed the contract to sell the
property located at 1703 Wolf Dr. N.W., Cedar Rapids, Linn
County, Iowa?
Answer “Yes” or “No.”
7
The misrepresentation claim elements were stated in Instruction No. 19.
14
ANSWER: NO
Question No. 2: Do you find Defendant Michael Sauser was acting
in his individual capacity when he signed the contract to sell the
property located at 1703 Wolf Dr. N.W., Cedar Rapids, Linn
County, Iowa?
Answer “Yes” or “No.”
ANSWER: NO
Question No. 3: Do you find that Donna Canavan has proven her
breach of contract claim?
Answer “Yes” or “No.”
ANSWER: NO
Question No. 4: Do you find that Donna Canavan has proven her
negligence claim?
Answer “Yes” or “No.”
ANSWER: NO
(If you answered “No” to both Question No. 3 and Question No. 4
do not answer Question Nos. 5 through 9, and go to Question No.
10. . . .
....
Question No. 10: Has Donna Canavan established her claim for
fraudulent misrepresentation?
Answer “Yes” or “No.”
ANSWER: NO
(If you answered “No,” do not answer any further questions. If you
answered “Yes,” answer Question No. 11.)
Canavan’s motions for new trial and judgment notwithstanding the verdict
were denied. The court concluded that “[v]iewing the evidence in the light most
favorable to defendants,” the jury’s verdict “in all regards” was “supported by
15
substantial evidence and effectuates justice.” Concerning her claim that Conlan
and Sauser acted in their individual capacities and were thus individually liable,
the court ruled, “The question of whether Conlan and Sauser signed the contract
as individuals rather than representatives of Defendant Cornerstone Homes was
a question of fact properly put to the jury.” In addition, the court ruled substantial
evidence supported the jury’s findings that neither was acting in an individual
capacity when dealing with Canavan.
On appeal, Canavan raises the five issues previously identified.
II. Scope and Standards of Review.
Our review of a district court’s ruling on a motion for new trial depends
upon the grounds raised in the motion. Channon v. United Parcel Serv., Inc.,
629 N.W.2d 835, 859 (Iowa 2001). “If the motion for a new trial was based on a
discretionary ground, we review it for an abuse of discretion. If the ruling
granting a new trial was prompted by a motion based on a legal question, . . . our
review is for errors at law.” Olson v. Sumpter, 728 N.W.2d 844, 848 (Iowa 2007)
(citations and internal quotation marks omitted).
We review a district court’s ruling on a motion for directed verdict for
correction of errors at law. Pavone v. Kirke, 801 N.W.2d 477, 486 (Iowa 2011).
“‘We review alleged errors in jury instructions for correction of errors at
law.’” Deboom v. Raining Rose, Inc., 772 N.W.2d 1, 5 (Iowa 2009) (citation
omitted). “Any error in the instructions given does not merit reversal unless it
results in prejudice.” Id. (citation omitted).
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III. Discussion.
A. Motion for new trial. Canavan moved for a new trial, asserting there
was insufficient evidence to sustain the verdicts, and opposing counsel’s
misconduct denied her of a fair trial.
1. Sufficiency of the evidence to support jury’s findings. “If a jury verdict is
not supported by sufficient evidence and fails to effectuate substantial justice, a
new trial may be ordered.” Olson, 728 N.W.2d at 850. Canavan’s claim on
appeal is that there is “not a scintilla of evidence” to support the jury’s rejection of
her claims. But this assertion is premised upon her contention that the testimony
of Conlan and Sauser was “incredible based upon numerous false statements
and perjured testimony.” The jury apparently disagreed.
Issues of credibility are particularly in the purview of the jury. Becker v.
D & E Distrib. Co., 247 N.W.2d 727, 730 (Iowa 1976) (“The weight and credibility
of testimony are matters for the jury,” and “[t]his rule applies even though there
are contradictions or inconsistencies in the testimony of a particular witness.”).
“The function of the jury is to weigh the evidence and place credibility where it
belongs.” State v. Shanahan, 712 N.W.2d 121, 135 (Iowa 2006). Here,
Canavan contends Sauser misrepresented facts and gave inconsistent
statements. However, the jurors were free to accept or reject any part of each
witness’s testimony and to give the testimony the weight they thought it should
receive. See id. We will not interfere. See Trapalis v. Gershun, 145 N.W.2d
591, 596 (Iowa 1966) (“The jury’s verdict was within the evidence. It is not for us
to pass on the weight and credit of the testimony. That is what juries are for.”).
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We also note the jury could have concluded it was not negligent to build a
house on a sand lens because such an event occurs only randomly and can only
be ascertained by excavation. Sauser testified he had built over 400 homes and
never before heard of, or experienced, a sand lens. No expert testimony was
presented to establish Cornerstone was negligent for building the house on this
site. The jury also could have concluded that Cornerstone, through Sauser’s
actions, acted reasonably to satisfy Canavan’s warranty claim and by the time of
trial the water problem had been resolved through the efforts of Tomlinson.
2. Misconduct. Canavan also asserts her motion for new trial should have
been granted based upon defendants’ counsel’s questioning the realtor about her
lack of holding open houses, knowing one reason she had not held additional
open houses was because the property was in foreclosure.
Denial of a motion for new trial “based on a discretionary ground such as
misconduct” is reviewed for an abuse of discretion. Loehr v. Mettille, 806 N.W.2d
270, 277 (Iowa 2011). “‘A court abuses its discretion when its ruling is based on
grounds that are unreasonable or untenable.’” Giza v. BNSF Ry. Co., 843
N.W.2d 713, 718 (Iowa 2014) (quoting In re Trust No. T–1 of Trimble, 826
N.W.2d 474, 482 (Iowa 2013)).
In her motion for new trial, Canavan asserted defendants’ counsel
engaged in misconduct “by knowingly eliciting testimony which could not be fully
explained without violating the court’s order in limine,” which justified a new trial.
The trial court, however, “reaffirm[ed] its trial rulings.” The trial court wisely
allowed Steenhoek to explain why she did not have more open houses,
excluding one of several reasons—that the house was in foreclosure. Those
18
reasons included the appearance of the basement, the sump pump issue, the
uncertainty of the weather, the fact she did not believe Canavan’s house was
saleable. The district court found the fact the house was in foreclosure “invites
so many tangential issues” and could lead the jury to decide on an improper
basis. These are not unreasonable or untenable grounds—we find no abuse of
discretion.
B. Directed Verdict. Canavan also asserts the district court erred in
failing to grant her motion for directed verdict of individual liability for Conlan and
Sauser, pointing out each signed the purchase agreement without designating
they were signing on behalf of Cornerstone Homes.
A directed verdict is required only if there was no substantial
evidence to support the elements of the plaintiff’s claim. Evidence
is substantial when reasonable minds would accept the evidence
as adequate to reach the same findings. Where reasonable minds
could differ on an issue, directed verdict is improper and the case
must go to the jury. Thus, our role is to determine whether the trial
court correctly determined if there was substantial evidence to
submit the issue to the jury. In doing so, we must view the
evidence in the light most favorable to the nonmoving party and
take into consideration all reasonable inferences that could be fairly
made by the jury.
Pavone, 801 N.W.2d at 486-87 (alterations, citations, and internal quotation
marks omitted).
We agree with the district court that Canavan was not entitled to a directed
verdict on the issue of Conlan’s and Sauser’s individual liablity. Canavan
concedes she knew Cornerstone was involved in the real estate she purchased.
Nonetheless, citing Kuehl v. Freeman Bros. Agency, Inc., 521 N.W.2d 714, 721
19
(Iowa 1994),8 Canavan argues that when a corporate officer signs a document
without making clear that they are signing on behalf of the corporation, the officer
is personally liable for the document signed. The defendants counter by citing
the legal principle that an agent acting within the scope of the agent’s authority
on behalf of a disclosed principal is not personally liable. See Cryder Well Co. v.
Stangl, 136 N.W.2d 519, 521 (Iowa 1965) (stating “[n]o novel propositions of law
are involved . . . [a]n agent acting within the scope of authority for a fully
disclosed principal is not personally liable to a contracting third party”). The trial
court correctly ruled a factual issue existed, which was properly submitted to the
jury. See id. (“This is primarily a question of fact.”).
Here, Conlan and Sauser both testified they did not intend to be bound
personally, but signed the purchase agreement that Canavan’s realtor drafted
and provided on behalf of Cornerstone. They did not personally own the house
or the real estate. Canavan testified she was aware the house was being offered
for sale by Cornerstone. The warranty names Cornerstone. We agree a factual
issue was raised and was properly submitted to the jury. The jury’s decision was
supported by substantial evidence.9 Finding no error, we affirm on this issue.
C. Jury Questions. Canavan asserts on appeal that the trial court
improperly submitted Question Nos. 5 and 13 to the jury.
Question No. 5 asked, “If you answered ‘Yes’ to either Question No. 3 [did
plaintiff prove breach of contract], Question No. 4 [did plaintiff prove negligence],
8
In Kuehl, the court found the president and sole owner of an insurance agency
intended to be personally bound by his signature on an agreement to sell the agency.
See 521 N.W.2d at 720.
9
Canavan also contends the “mere presentation” of Question Nos. 1 and 2 may have
had an adverse effect on the jury’s verdict. We find this claim speculative at best.
20
or both, do you find the defect(s) in the property located at 1703 Wolf Drive N.W.,
Cedar Rapids, Linn County, Iowa, can be, or has been, repaired? Answer ‘Yes’
or ‘No.’”
Question No. 13 asked: “Do you find by a preponderance of clear,
convincing and satisfactory evidence Michael Sauser was acting within the scope
of his position as an officer of CS&R, LLC when making his fraudulent
misrepresentation to Donna Canavan? Answer ‘yes’ or ‘no.’”
We address only Question No. 5 because Canavan did not object to
Question No. 13 or to the other jury instructions—including the affirmative
defense of mitigation—in the district court. See Meier v. Senecaut, 641 N.W.2d
532, 537 (Iowa 2002) (“It is a fundamental doctrine of appellate review that
issues must ordinarily be both raised and decided by the district court before we
will decide them on appeal.”).
On appeal, Canavan asserts the court erred in submitting Question No. 5
to the jury because “there was no evidence other than the fact the water problem
hasn’t been fixed, to support whether the problem could actually be fixed.” She
argues that the terms of the warranty guaranteed the defendants would correct
any problem that caused water to enter the basement and they failed to do so.
The defendants assert the issue is irrelevant on appeal because the jury
did not reach the question, and Canavan has suffered no prejudice. We agree.
“We review a claim that the district court gave an instruction not supported
by the evidence for correction of errors at law.” Asher v. OB-Gyn Specialists,
P.C., 846 N.W.2d 492, 496 (Iowa 2014). Here, however, even if we assume
there was not sufficient evidence to support the instruction, errors in instructions
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do not “warrant reversal unless the instruction prejudiced the complaining party.”
Anderson v. Webster City Cmty. Sch. Dist., 520 N.W.2d 263, 267 (Iowa 2000).
Because the jury did not reach the question, Canavan has suffered no prejudice.
Viewing the evidence in the light most favorable to the prevailing party,
substantial evidence supports the jury’s verdicts. The trial court did not abuse its
discretion in its evidentiary rulings or in denying the posttrial motions. We
therefore affirm.
AFFIRMED.