finding no fiduciary relationship between parties despite a claim a resident “put her confidence in the Reserve to protect her entrance fee and supplemental amount,” when the application agreement “stated there was ‘no guarantee [the resident] will recover the entire Entrance Fee, the entire Supplemental Amount, or such other funds as may have accrued during [her] residency within the Development’”
How later courts described this case
- finding no fiduciary relationship between parties despite a claim a resident “put her confidence in the Reserve to protect her entrance fee and supplemental amount,” when the application agreement “stated there was ‘no guarantee [the resident] will recover the entire Entrance Fee, the entire Supplemental Amount, or such other funds as may have accrued during [her] residency within the Development’”
Written by the judges who cited it.
The opinion
IN THE SUPREME COURT OF IOWA
No. 18–1037
Filed June 28, 2019
CHERYL ALBAUGH,
Appellant,
vs.
THE RESERVE,
Appellee.
Appeal from the Iowa District Court for Polk County, Michael D.
Huppert, Judge.
The appellant appeals the district court’s grant of summary
judgment concluding the Iowa Uniform Residential Landlord and Tenant
Act does not apply to retirement facilities and appellant had no other
claims against the retirement facility as a matter of law. AFFIRMED.
Jason M. Craig and Emily A. Kolbe of Ahlers & Cooney, P.C., Des
Moines, for appellant.
William J. Miller of Dorsey & Whitney, LLP, Des Moines, for appellee.
2
CHRISTENSEN, Justice.
On behalf of her mother, Cheryl Albaugh challenges the district
court’s grant of summary judgment in favor of a “senior adult congregate
living facility” as defined in Iowa Code chapter 523D. Iowa Code
§ 523D.1(11) (2016). She sued the facility after it would not return her
mother’s entrance fee or supplemental amount when her mother had to
vacate the facility for health reasons. Albaugh argued the agreement
between her mother and the facility violated Iowa Code chapter 562A, the
Iowa Uniform Residential Landlord and Tenant Act (IURLTA). She also
presented several other claims, including consumer fraud, breach of
fiduciary duty, breach of the implied covenant of good faith and fair
dealing, and unconscionability. The district court granted the facility’s
motion for summary judgment, concluding the IURLTA did not apply to
the facility and the facility was entitled to judgment as a matter of law on
all other claims. We affirm the district court judgment on appeal for the
reasons discussed below.
I. Background Facts and Proceedings.
Cheryl Albaugh holds power of attorney for her mother, Shirley
Voumard, a former resident of The Reserve on Walnut Creek (Reserve) from
October 2007 to September 2014. The Reserve is a member-owned,
nonprofit senior adult congregate living facility in Urbandale, Iowa, that is
governed by a board of directors and “offers residents the opportunity to
enjoy retirement without the hassle of home ownership.” It provides
housing and supportive services to its residents with periodic charges in
consideration of an entrance fee. These supportive services include
various home healthcare services, maintenance, communal activities,
security, transportation, and dining options.
3
To become a member of the Reserve, “an individual or couple must
be 60+ years old, of sufficiently good health to live an independent life, and
must be able to meet certain minimum financial requirements.” Voumard
entered into a contract with the Reserve called an “application agreement”
(agreement) on September 27, 2007, to obtain a membership interest in
the Reserve and the right to occupy a two-bedroom apartment there.
Voumard agreed to pay certain fees to cover the Reserve’s operation
expenses. She agreed to pay a $64,975 entrance fee and a $63,557
supplemental amount upon signing the agreement. 1 She also agreed to
pay a varying monthly fee that was originally set at $1078 “in advance of
the first day of each succeeding month until such Resident’s Residential
Membership is transferred as detailed in these Covenants of Occupancy.”
In doing so, Voumard agreed to pay the monthly charges “until the earlier
of (i) the date [her] Residential Membership is transferred as provided in
Article 7, or (ii) the date [her] Residential Membership is terminated as
provided in Article 12.”
This agreement contained the following bold-faced language:
i. Upon disbursement of such Entrance Fee and such
Supplemental Amount to the uses and purposes of the
Corporation the Corporation will have no further obligation to
refund or return such Entrance Fee or such Supplemental
Amount to Applicant.
ii. Applicant’s ability to recover such Entrance Fee and
such Supplemental Amount will depend entirely on the
1The supplemental amount was paid to lower Voumard’s monthly fee. The
supplemental amount and the monthly fee, in combination, are intended to cover
Voumard’s proportional share of the costs incurred by the Reserve. The monthly fee is
set by the Reserve’s board of directors, a majority of whom are elected by the members.
Where a resident has paid a supplemental amount, the board must “fairly and equitably
account for” the supplemental amount in establishing that resident’s monthly fee. The
agreement also states that “[n]o resident shall be charged with more than his/her
proportionate share thereof as determined by the Board of Directors.”
4
Applicant’s ability to assign or transfer his Membership in the
Corporation to another person or persons.
iii. The Monthly Charge is subject to fluctuation.
iv. Upon the transfer of Applicant’s Membership in the
Corporation to another person or persons there is no
guarantee the Applicant will recover the entire Entrance Fee,
the entire Supplemental Amount, or such other funds as may
have accrued during Applicant’s residency within the
Development pursuant to Article 7 of the Covenants of
Occupancy.
v. Should Applicant default under the terms of the
Covenants of Occupancy, which default is not cured in a
manner deemed satisfactory by the Corporation, Applicant’s
Residential Membership shall be terminated and all of
Applicant’s right, title and interest in and to such Entrance
Fee, such Supplemental Amount, and such other funds as
may have accrued during Applicant’s residency within the
Development pursuant to Article 7 of the Covenants of
Occupancy shall be forfeited by Applicant and become the sole
and separate property of the Corporation, and the Corporation
shall have the right and authority to transfer Applicant’s
Apartment to an assignee or transferee. Upon such transfer,
the Corporation, in its sole discretion, shall have the right to
deduct all Monthly Charges by Applicant and other expenses
due and payable upon transfer.
(Emphasis omitted.)
Just above the signature line, the agreement stated, “This
Agreement will supersede any prior understandings and agreements and
constitutes the entire agreement between us, and no oral representations
or statements shall be considered a part hereof.” Voumard elected
Albaugh as her personal representative on the agreement. Thus, pursuant
to the agreement, Albaugh was appointed to receive copies of the
agreement, “the [Reserve’s] Articles of Incorporation, Bylaws, Covenants of
Occupancy and all other notices, disclosures, or forms required to be
delivered to [Voumard] under Chapter 523D of the Iowa Code.”
In August 2014, the Reserve began contacting Albaugh about
Voumard’s inability to care for herself. The Reserve contacted Albaugh
5
multiple times, and Voumard was subsequently diagnosed with dementia.
After Voumard’s doctor determined she could no longer live independently,
Albaugh notified the Reserve that Voumard would be vacating her unit as
of September 13, in order to move into an assisted living facility.
Albaugh has not sold or transferred Voumard’s unit either to a third
party or to the Reserve. In accordance with the agreement, the Reserve
has continued to bill Voumard pursuant to the agreement after she moved
out of the Reserve. Albaugh has requested the Reserve refund Voumard’s
entrance fee and supplemental amount. The Reserve continues to deny
this request. On February 5, 2015, the Reserve sent Albaugh a notice of
default informing her that Voumard’s rights under the agreement would
be terminated and her entrance fee and supplemental amount would be
deemed forfeited if Voumard’s unpaid charges were not paid within thirty
days. Voumard’s unpaid charges totaled $5132 at the time the Reserve
sent the notice. Albaugh disputed these charges and requested a refund
of Voumard’s entrance fee and supplemental amount as a rental deposit
pursuant to the IURLTA.
In March, the Reserve’s elected board of directors announced a
change to the Reserve’s financial structure due to the increase in “Type A”
units the Reserve owned through default or donation. Type A units came
with a higher monthly fee than Voumard’s “Type B” unit. Due to the
Reserve’s increase in Type A units, the Reserve allowed these units to be
transferred for an entrance fee of $5000. The Reserve did not change the
monthly charges for these units, and the board of directors declared,
“Please be assured that there will be no ‘steering’ of prospects away from
member-owned units up for transfer, and we’ll continue working hard on
moving all available units.”
6
The Reserve subsequently implemented a leasing program in July to
allow members to lease their units to qualified individuals and to allow the
Reserve to lease Reserve-owned units “at market-competitive lease rates.”
According to the Reserve’s marketing director, this program has increased
demand and led to a waiting list for units at the Reserve. Though Albaugh
communicated with the Reserve’s marketing director about marketing and
transferring Voumard’s membership interest, the record is unclear
concerning the extent of these marketing efforts. Since Voumard vacated
her unit at the Reserve, Albaugh has repeatedly requested a full refund of
Voumard’s entrance fee and supplemental amount. The Reserve
continues to deny these requests, and it declared Voumard in default on
March 8, 2016.
On August 24, Albaugh filed a lawsuit in district court against the
Reserve in which she presented seven claims. First, she argued the
agreement between Voumard and the Reserve violated the IURLTA.
Second, Albaugh claimed the Reserve violated Iowa Code chapter 523D,
governing retirement facilities. Third, she alleged the Reserve engaged in
consumer fraud in violation of Iowa Code chapter 714H. Fourth, Albaugh
maintained the Reserve breached its fiduciary duties to Voumard. Fifth,
Albaugh maintained the Reserve breached the implied covenant of good
faith and fair dealing. Sixth, she argued Voumard should no longer be
held to the terms of her agreement with the Reserve due to impossibility
of performance or frustration of purpose. Finally, Albaugh challenged the
enforceability of the agreement, claiming it was unconscionable. The
Reserve brought in the Essex Corporation as a third-party defendant in its
capacity as the former manager of the Reserve to seek indemnity and
contribution.
7
Albaugh filed a motion for partial summary judgment on December
11, 2017, requesting the district court enter judgment that the agreement
between Voumard and the Reserve is subject to the IURLTA and relief
consistent with that judgment. The Reserve filed a motion for summary
judgment on December 20, arguing the agreement is not subject to the
IURLTA and challenging Albaugh’s other claims as a matter of law. The
Essex Corporation filed a motion for summary judgment in which it argued
it had no liability to the Reserve to the extent the Reserve had no liability
to Albaugh and, alternatively, the undisputed facts fail to establish a basis
for a claim of contribution or indemnity as a matter of law.
On May 26, 2018, the district court denied Albaugh’s motion for
partial summary judgment and granted the Reserve’s motion for summary
judgment. In doing so, the district court concluded that “the legislature
did not otherwise intend for [the IURLTA] to be applicable to an
arrangement governed by chapter 523D” and Albaugh’s other claims failed
to generate any genuine issue of material fact. The district court granted
Essex Corporation’s motion for summary judgment, noting there was no
“need to consider the claims against the [Essex Corporation] . . . in the
absence of a direct claim by [Albaugh] against the [Reserve].” Albaugh filed
a timely notice of appeal on June 14, and we retained the appeal.
II. Standard of Review.
Our review of a district court ruling on a motion for summary
judgment is for correction of errors at law. Jahnke v. Deere & Co., 912
N.W.2d 136, 141 (Iowa 2018). “Summary judgment is proper when the
moving party has shown ‘there is no genuine issue as to any material fact
and the moving party is entitled to judgment as a matter of law.’ ” Id.
(quoting Homan v. Branstad, 887 N.W.2d 153, 163 (Iowa 2016)). We review
8
the district court ruling on any statutory interpretation issues presented
in a motion for summary judgment for correction of errors at law. Id.
III. Analysis.
Albaugh presents several claims on appeal. First, she argues the
IURLTA applies to the Reserve and requests relief based on the Reserve’s
alleged violations of the IURLTA. Second, Albaugh claims the Reserve
committed consumer fraud. Third, she maintains the Reserve breached
its fiduciary duty to Voumard. Fourth, Albaugh proclaims the Reserve
also breached the implied covenant of good faith and fair dealing. Finally,
she asserts the Reserve’s agreement with Voumard was unconscionable.
A. The Applicability of the IURLTA to Retirement Facilities.
Albaugh contends the district court erred in granting the Reserve’s motion
for summary judgment based on its conclusion that the IURLTA is
inapplicable to the Reserve and other retirement facilities governed by Iowa
Code chapter 523D.
Iowa Code chapter 523D is entitled “Retirement Facilities” and is
applicable to a provider who executes a contract for housing and one or
more “supportive services” in a facility that “is or will be located in this
state” and where the contract “requires or permits the payment of an
entrance fee.” Iowa Code §§ 523D.1, .2. Some examples of supportive
services include activity services, housekeeping, dining options,
emergency nursing care, and transportation. Id. § 523D.1(12). As a
provider that contracts with residents to supply this sort of housing and
living services in an Iowa facility, the Reserve is considered a retirement
facility and thus governed by chapter 523D.
On the other hand, “[t]he IURLTA generally defines the legal rights
and obligations of a landlord and tenant” in a rental agreement. Lewis v.
Jaeger, 818 N.W.2d 165, 178 (Iowa 2012). A “ ‘rental agreement’ means
9
an agreement . . . embodying the terms and conditions concerning the use
and occupancy of a dwelling unit and premises.” Iowa Code § 562A.6(11).
The crux of Albaugh’s claim against the Reserve concerning the
IURLTA is that Voumard’s $64,975 entrance fee and $63,557
supplemental amount should be refunded to Voumard because they are
improper rental deposits under the IURLTA. This brings us to the
fundamental issue: whether the fees permitted by chapter 523D are rental
deposits subject to the IURLTA.
We reconcile Chapter 523D and the IURLTA by considering the rules
of statutory construction. 2 See Citizens’ Aide/Ombudsman v. Miller, 543
N.W.2d 899, 902 (Iowa 1996) (“The controversy arises only when [the
statutes] are jointly brought to bear on the facts. . . . We therefore proceed
to a consideration of the rules of statutory construction.”). Under these
rules, “ ‘[t]he primary purpose of statutory construction is to determine
legislative intent,’ gleaned from the words used by the legislature.” Simon
Seeding & Sod., Inc. v. Dubuque Human Rights Comm’n, 895 N.W.2d 446,
461 (Iowa 2017) (quoting State v. McCoy, 618 N.W.2d 324, 325 (Iowa 2000)
(en banc)). To ascertain legislative intent, we examine “the language used,
the purpose of the statute, the policies and remedies implicated, and the
consequences resulting from different interpretations.” Des Moines Flying
Serv., Inc. v. Aerial Servs., Inc., 880 N.W.2d 212, 220 (Iowa 2016) (“ ‘[A]
statute should not be interpreted to read out what is in a statute as a
matter of clear English’ and should not render terms superfluous or
2Considered separately, chapter 523D and the IURLTA are not ambiguous. When
the meaning of a statute contains no ambiguity, “the statute will be applied in accordance
with its plain meaning.” Citizens’ Aide/Ombudsman v. Miller, 543 N.W.2d 899, 902 (Iowa
1996). However, because Iowa Code § 523D.7(5) states, “[t]his chapter does not limit a
liability which may exist by virtue of any other statute or under common law if this
chapter were not in effect,” it does not preempt the application of other statutes. As a
result, any latent conflict must be resolved through the rules of statutory construction.
Miller, 543 N.W.2d at 902.
10
meaningless.” (quoting 1A Norman J. Singer & Shambie Singer, Statutes
and Statutory Construction § 21:1, at 163 (7th ed. 2009))). Further,
legislative intent is also derived from the statute’s subject matter and
object to be accomplished. See Homan, 887 N.W.2d at 166. In doing so,
“[w]e assess the entire statute and its enactment to ‘give the statute its
proper meaning in context.’ ” Aerial Servs. Inc., 880 N.W.2d at 220
(quoting Sanon v. City of Pella, 865 N.W.2d 506, 511 (Iowa 2015)). “We
will not consider what the legislature ‘should or might have said’ when it
construed a statute.” Homan, 887 N.W.2d at 153 (quoting Iowa R. App. P.
6.904(3)(m) (“In construing statutes, the court searches for the legislative
intent as shown by what the legislature said, rather than what it should
or might have said.”)).
We now turn to the relevant statutory provisions to determine
whether the fees regulated under chapter 523D are subject to the IURLTA.
Iowa Code section 523D.1 provides, in relevant part,
4. “Entrance Fee” means an initial or deferred transfer
to a provider of a sum of money or other property made or
promised to be made as full or partial consideration for
acceptance of a specified individual in a facility if the amount
exceeds either of the following:
a. Five thousand dollars.
b. The sum of the regular periodic charges for six
months of residency.
Iowa Code § 523D.1(4)(a)–(b). The provision of the IURLTA on which
Albaugh relies provides,
12. “Rental Deposit” means a deposit of money to secure
performance of a residential rental agreement, other than a
deposit which is exclusively in advance payment of rent.
Iowa Code § 562A.6(12). Chapter 562A further defines a rental deposit
and states,
11
1. A landlord shall not demand or receive as a security
deposit an amount or value in excess of two months’ rent.
....
3. a. A landlord shall, within thirty days from the date
of termination of the tenancy . . . return the rental deposit to
the tenant or furnish to the tenant a written statement
showing the specific reason for withholding of the rental
deposit or any portion thereof. . . . The landlord may withhold
from the rental deposit only such amounts as are reasonably
necessary for the following reasons:
(1) To remedy a tenant’s default in the payment of rent
or of other funds due to the landlord pursuant to the rental
agreement.
(2) To restore the dwelling unit to its condition at the
commencement of the tenancy, ordinary wear and tear
excepted.
(3) To recover expenses incurred in acquiring
possession of the premises from a tenant who does not act in
good faith in failing to surrender and vacate the premises . . . .
Id. § 562A.12(1), (3)(a).
Affording each statute its proper context, the words used by the
legislature reflect the intent to regulate two entirely distinct living
arrangements. Chapter 523D regulates facilities that provide housing
together with supportive services. In contrast, Chapter 562A pertains to
the rights and obligations of a landlord and tenant. This distinction is
made plain by what the legislature said in each definition. An entrance
fee only qualifies as an entrance fee if the amount exceeds “five thousand
dollars” or “[t]he sum of the regular periodic charges for six months of
residency” and is used as consideration for acceptance in a facility. Id.
§ 523D.1(4)(a)–(b). A rental deposit, however, is limited to “two months’
rent” and may only be used to remedy the tenant’s default, to restore the
dwelling unit to its prior condition, and to recover expenses associated
with the recovery of the premises. Id. § 562A.12(1), (3)(a). This reasonably
demonstrates the legislature did not contemplate the use of an entrance
12
fee as a rental deposit because the statutory definition of entrance fee is
neither constrained to two months’ rent nor restricted as a landlord’s
remedial function.
We conclude the plain statutory language makes clear the
legislature did not intend the fees permitted by chapter 523D be subject
to the rental deposit provision of the IURLTA. See Ryan v. Maryann Morse
Healthcare Corp., No. 1681CV02433A, 2018 WL 6424841, at *5 (Mass.
Super. Ct. Jan. 9, 2018) (concluding the legislature did not intend assisted
living facilities be subject to the security deposit statute governing aspects
of the landlord–tenant relationship). But see Hennessy v. Brookdale Senior
Living Cmtys. Inc., No. 1784CV04215BLS2, 2018 WL 4427020, at *2
(Mass. Super. Ct. Aug. 1, 2018) (determining the assisted living resident
agreement “is in part a residential lease and is therefore, to that extent,
subject to” the rights and duties of a residential landlord and tenant
pertaining to security deposits). Accordingly, the district court did not err
in granting the Reserve’s motion for summary judgment based on the
inapplicability of the IURLTA.
B. Consumer Fraud. Albaugh maintains the district court erred in
granting the Reserve’s motion for summary judgment on her consumer
fraud claim under Iowa Code chapter 714H. Iowa Code section 714H.3(1)
provides,
A person shall not engage in a practice or act the person
knows or reasonably should know is an unfair practice,
deception, fraud, false pretense, or false promise, or the
misrepresentation, concealment, suppression, or omission of
a material fact, with the intent that others rely upon the unfair
practice, deception, fraud, false pretense, false promise,
misrepresentation, concealment, suppression, or omission in
connection with the advertisement, sale, or lease of consumer
merchandise . . . .
13
An “unfair practice” is “an act or practice which causes substantial,
unavoidable injury to consumers that is not outweighed by any consumer
or competitive benefits which the practice produces.” Id. § 714H.2(9). The
statute broadly defines “merchandise” to include “objects, wares, goods,
commodities, intangibles, securities, bonds, debentures, stocks, real
estate or services.” Id. § 714H.2(6).
Albaugh claims the Reserve committed consumer fraud in 2015 by
prioritizing the sale of the units it held for a low entrance fee and later
leasing units to residents without an entrance fee or supplemental
amount. According to Albaugh, these practices were unfair because
Voumard entered into the agreement with the understanding that the
Reserve would refund her entrance fee and supplemental amount and no
one informed Voumard that the Reserve would begin leasing or selling
units in this manner. Nevertheless, the agreement between Voumard and
the Reserve clearly states otherwise. The agreement stated,
Upon the transfer of Applicant’s Membership in the
Corporation to another person or persons there is no
guarantee the Applicant will recover the entire Entrance Fee,
the entire Supplemental Amount, or such other funds as may
have accrued during Applicant’s residency within the
Development . . . .
Further, Albaugh does not point to, nor does the record contain,
evidence that the Reserve engaged in a practice that it knew or should
have known was unfair under section 714H. Notably, Albaugh omits the
knowledge element from her brief entirely in explaining the statute. In any
event, Albaugh’s argument that a reasonable jury could find the Reserve’s
actions unfair and “rely on its own common sense” to support this
conclusion does not demonstrate that the Reserve knew or should have
known it was engaging in an unfair practice. There is no evidence that the
Reserve knew in 2007—when Voumard entered her agreement with the
14
Reserve—that it would have to lower the price on entrance fees in 2015.
Thus, the district court correctly granted the Reserve’s motion for
summary judgment on this claim.
C. Breach of Fiduciary Duty. Albaugh challenges the district
court’s decision to grant the Reserve’s motion for summary judgment on
her breach of fiduciary duty claim based on its conclusion that Albaugh
“failed to identify a factual basis upon which a fiduciary relation could
exist.” Albaugh argues the Reserve owed a fiduciary duty to Voumard
because Voumard relied on the Reserve to protect the value of her
membership. The existence of a fiduciary relationship “turns on the facts
of the case,” and “may, in some cases, be decided by the court in a
summary-judgment proceeding.” Cemen Tech, Inc. v. Three D Indus.,
L.L.C., 753 N.W.2d 1, 13 (Iowa 2008). The term “fiduciary duty” is “very
broad,” as it “embrac[es] both technical fiduciary relations and those
informal relations which exist wherever one man trusts in or relies upon
another.” Id. (quoting Kurth v. Van Horn, 380 N.W.2d 693, 695 (Iowa
1986)).
A fiduciary relationship “exists when there is a reposing of faith,
confidence and trust, and the placing of reliance by one upon the judgment
and advice of the other.” Id. (quoting Kurth, 380 N.W.2d at 695–96).
Indicative factors of a fiduciary relationship
include the acting of one person for another; the having and
the exercising of influence over one person by another; the
reposing of confidence by one person in another; the
dominance of one person by another; the inequality of the
parties; and the dependence of one person upon another.
Weltzin v. Cobank, ACB, 633 N.W.2d 290, 294 (Iowa 2001) (quoting Kurth,
380 N.W.2d at 696). In contrast, a fiduciary relationship does not exist
when the relationship exists through an “arms-length transaction,” which
15
is “[a] transaction between two unrelated and unaffiliated parties” or “[a]
transaction between two parties, however closely related they may be,
conducted as if the parties were strangers, so that no conflict of interest
arises.” Arms-length Transaction, Black’s Law Dictionary (10th ed. 2014);
see also Pirkl v. Nw. Mut. Ins., 348 N.W.2d 633, 635 (Iowa 1984) (holding
there was no clearly defined fiduciary duty in an arms-length relationship).
The district court correctly granted the Reserve’s motion for
summary judgment on this issue because Voumard and the Reserve
engaged in an arms-length transaction that did not establish a fiduciary
relationship. The record demonstrates that Voumard and the Reserve
entered into the agreement as unrelated and unaffiliated parties. The
indicative factors of a fiduciary relationship are not present here, as
Voumard and the Reserve negotiated and entered the agreement on equal
footing without the Reserve having any form of influence over Voumard.
See Weltzin, 633 N.W.2d at 294. Moreover, despite Albaugh’s claim that
Voumard put her confidence in the Reserve to protect her entrance fee and
supplemental amount, we have already noted the application agreement
between Voumard and the Reserve stated there was “no guarantee
[Voumard] will recover the entire Entrance Fee, the entire Supplemental
Amount, or such other funds as may have accrued during [her] residency
within the Development.” Overall, nothing in the record supports
Albaugh’s claim that a fiduciary relationship existed between the parties.3
The district court correctly granted the Reserve’s motion for summary
judgment on this issue.
3The Reserve was managed by a board of directors, a majority of whom were
elected by all members, including Voumard. The directors owed a fiduciary duty to act
for the benefit of the Reserve, not an individual member.
16
D. Breach of Implied Covenant of Good Faith and Fair Dealing.
Albaugh contends the district court erred in granting the Reserve’s motion
for summary judgment on her breach-of-implied-covenant-of-good-faith
claim. Albaugh claims Voumard had a justified expectation that future
residents would have to pay entrance fees like she did to become a
resident, and the Reserve breached this expectation when it reduced the
prices of the Reserve-owned units and later offered lease options to
prospective residents without an entrance fee. An implied covenant of
good faith and fair dealing is inherent in all contracts. Alta Vista
Properties, LLC v. Mauer Vision Ctr., PC, 855 N.W.2d 722, 730 (Iowa 2014).
“The underlying principle is that there is an implied covenant that neither
party will do anything which will have the effect of destroying or injuring
the right of the other party to receive the fruits of the contract.” Id. (quoting
Am. Tower, L.P. v. Local TV Iowa, L.L.C., 809 N.W.2d 546, 550 (Iowa Ct.
App. 2011)). This implied covenant “does not give rise to new substantive
terms that do not otherwise exist in the contract.” Id. at 731 (quoting
Bagelmann v. First Nat’l Bank, 823 N.W.2d 18, 34 (Iowa 2012)).
Here, no terms exist in the agreement to support Albaugh’s
argument that the Reserve breached an implied covenant of good faith and
fair dealing. Nothing in the agreement suggested the Reserve would enable
Voumard to recover her entrance fee or supplemental amount. Rather,
the agreement explicitly stated that Voumard’s ability to recover these fees
“will depend entirely on [Voumard]’s ability to assign or transfer [her]
Membership in the Corporation to another person or persons.”
Consequently, “any allegation of bad faith here lacks a contract term to
which it can be attached.” Bagelmann, 823 N.W.2d at 34 (declining to find
a breach of the implied covenant of good faith and fair dealing when a
mortgagee did not promptly provide mortgagors with updated and more
17
accurate flood zone information determinations because nothing in the
mortgage contained a promise to provide this information). We affirm the
grant of summary judgment to the Reserve on this issue.
E. Unconscionability. Albaugh proclaims the district court erred
in granting the Reserve’s motion for summary judgment on her
unconscionability claim. She points to a number of provisions in the
agreement that she believes are unconscionable. Some of these claims
rely on the application of the IURLTA, and we need not examine them
further given our holding that the IURLTA does not apply to the Reserve.
“A contract is unconscionable where no person in his or her right
senses would make it on the one hand, and no honest and fair person
would accept it on the other hand.” C & J Vantage Leasing Co. v. Wolfe,
795 N.W.2d 65, 80 (Iowa 2011). “Whether an agreement is unconscionable
must be determined at the time it was made.” Bartlett Grain Co., LP v.
Sheeder, 829 N.W.2d 18, 27 (Iowa 2013). “[W]e examine factors of ‘assent,
unfair surprise, notice, disparity of bargaining power, and substantive
unfairness’ ” to determine whether a contract is unconscionable. Id.
(quoting C & J Vantage, 795 N.W.2d at 80). Nevertheless, “the doctrine of
unconscionability does not exist to rescue parties from bad bargains.” Id.
(quoting C & J Vantage, 795 N.W.2d at 80).
We generally recognize procedural and substantive
unconscionability. Id. Procedural unconscionability “includes the
existence of factors such as ‘sharp practices[,] the use of fine print and
convoluted language, as well as a lack of understanding and an inequality
of bargaining power.’ ” Id. (alteration in original) (quoting In re Marriage of
Shanks, 758 N.W.2d 506, 515 (Iowa 2008)). Substantive
unconscionability “includes ‘harsh, oppressive, and one-sided terms.’ ” Id.
(quoting In re Marriage of Shanks, 758 N.W.2d at 515).
18
Albaugh maintains the agreement between Voumard and the
Reserve was substantively unconscionable, yet she presents no evidence
to demonstrate the agreement was unconscionable at the time Voumard
and the Reserve entered into it. The agreement did not contain any
elements of unfair surprise, as it clearly informed Voumard of her payment
obligations regardless of whether she was still occupying her unit. See id.
It provided her with explicit notice that her ability to recover the entrance
fee and supplemental amount depended entirely on her ability to assign or
transfer her membership interest to someone else, and Voumard assented
to the terms of the agreement. See id. Nothing in the record suggests
Voumard was unable to understand what she was assenting to.
Further, as we have already noted, Voumard and the Reserve
entered into the agreement on equal footing, so there was not a disparity
of bargaining power. See id. Despite Albaugh’s claim that the agreement
is so “harsh, oppressive, and one-sided” that “no man in his senses and
not under delusion would make” it, there was a waiting list for certain
types of units at the Reserve when Voumard joined. In re Marriage of
Shanks, 758 N.W.2d at 514–15 (first quoting Rite Color Chem. Co. v. Velvet
Textile Co., 411 S.E.2d 645, 648 (N.C. Ct. App. 1992); and then quoting
Casey v. Lupkes, 286 N.W.2d 204, 207 (Iowa 1979)). In fact, a motivating
factor in Voumard’s decision to enter her agreement with the Reserve was
that Albaugh’s mother-in-law was already a member there. Finally, we
note Iowa Code chapter 523D expressly allows the entrance fee and
supplemental amount outlined in the Reserve’s agreement. See Iowa Code
§§ 523D.2, .3, .6. Considering these factors, we affirm the district court’s
decision to grant summary judgment in favor of the Reserve.
IV. Conclusion.
For these reasons, we affirm the judgment of the district court.
19
AFFIRMED.
All justices concur except Appel and Wiggins, JJ., who dissent, and
Cady, C.J., who takes no part.
20
#18–1037, Albaugh v. The Reserve
APPEL, Justice (dissenting).
I. Introduction.
I respectfully dissent. In my view, the majority errs in its resolution
of Cheryl Albaugh’s claim under the Iowa Uniform Residential Landlord
and Tenant Act, Iowa Code chapter 562A (IURLTA).
Iowa Code chapter 523D (retirement facilities statute) and the
IURLTA address, at least in part, the same subject matter. This is a
common occurrence in Iowa law. The legislature, as well as our own
caselaw, direct that when statutes govern the same subject matter, we
should strive to reconcile potential conflicts through harmonizing the
statutes. Iowa Code § 4.7 (2016); In re Estate of Kirk, 591 N.W.2d 630,
633 (Iowa 1999).
The harmonizing of statutes “constrain[s] judicial discretion in the
interpretation of laws.” Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501
U.S. 104, 109, 111 S. Ct. 2166, 2170 (1991). We do not interpret statutes
to generate conflict. With a firm hand and a determined eye, we
deliberately and conscientiously seek to avoid conflict in such situations.
Further, aside from our efforts to avoid the shoals of conflict, we do
not find that statutes conflict unless they meet the extraordinary standard
of “positive repugnancy.” State v. Perry, 440 N.W.2d 389, 391 (Iowa 1989)
(quoting United States v. Batchelder, 442 U.S. 114, 122, 99 S. Ct. 2198,
2203 (1979)). Not simply overlapping, or related, or dealing with the same
subject matter. They must be positively (not by implication or
construction) repugnant (completely conflicting).
But the statutes here are easily harmonized through a modest effort
at reconciliation. Simply put, a facility can impose an entrance fee under
Iowa Code section 523D.1(4) as long as that entrance fee is not used as an
21
illegal rental deposit under Iowa Code section 562A.6(12) and .12(1). The
majority through an expansive interpretation concludes that the
retirement facilities statute allows an entrance fee in an amount and with
a purpose that would be prohibited by the IURLTA. This approach is
hardly avoiding the shoals of conflict. Are the statutes positively
repugnant after our best efforts to reconcile them through statutory
interpretation designed to further the ends of both statutes? No. Under
the statutes, a retirement facility can charge an entrance of any amount
over $5000 so long as the purpose is not to secure performance of the
rental agreement.
The legislature is presumed to know the contents of prior law.
Mulhern v. Catholic Health Initiatives, 799 N.W.2d 104, 118–19 (Iowa
2011). Thus, the legislature was presumably aware of the provisions of
the IURLTA. Yet it chose not to expressly override the IURLTA. There is
no positive repugnancy.
But there is more. Even if the statutes were irreconcilable and
positively repugnant notwithstanding a conscientious effort to interpret
them in harmony, the broadly worded savings clause in Iowa Code section
523D.7(5) provides a legislative directive that liabilities under “any other
statute” remain in effect as if the retirement facilities statute “were not in
effect.” The legislature has thus expressly stated what happens if the
provisions of the retirement facilities statute are found, after determined
harmonization efforts, to be irreconcilable with another statute. In cases
of irreconcilable conflict, the legislature has declared that liabilities in
other sections of the Code survive, period.
Rather than apply the savings clause in a straightforward manner,
the majority twists the statute by inferring exclusivity in the definition of
an entrance fee. On what basis? There is no provision of exclusivity in
22
the statute, and as recognized by the majority, the retirement facilities
statute does not preempt the IURLTA. Well, the majority points out, the
IURLTA would otherwise limit the scope of allowable entrance fees. But
that does not imply exclusivity. Does the retirement facilities statute also
trump the statutory prohibitions on discrimination in rental agreements,
since antidiscrimination provisions would otherwise limit the scope of
allowable entrance fees? Of course not. Taken to its logical conclusion,
the majority’s rationale suggests that any statutory prohibition potentially
conflicting with the retirement facilities statute must be obliterated. Of
course, that comes at the expense of the legislative directions to harmonize
statutes and to choose statutory liability under other statutes where
harmonization is not possible.
We have repeatedly declared, with blaring legal bugles, that it is not
our province to rewrite statutes. See State v. Doe, 927 N.W.2d 656, 665
(Iowa 2019) (“We cannot rewrite the statute . . . .”); State v. Walden, 870
N.W.2d 842, 843 (Iowa 2015) (“We decline the State’s invitation to apply
the absurd-results doctrine to effectively rewrite the statute.”); In re A.M.,
856 N.W.2d 365, 378 (Iowa 2014) (“We are not free to rewrite a statute in
the guise of interpretation.”). If the principle so proudly proclaimed in
these cases has any real meaning, it must be applied consistently to the
unambiguous savings clause in Iowa Code section 523D.7(5). Likewise,
we are not at liberty to choose which statutory provisions apply absent
irreconcilability. We must honor legislative choices, not rewrite them.
In the end, the majority inexorably bulldozes to its result by
declining to interpret the statutes to avoid conflict and by remodeling the
statutory savings clause. What gives? The result today chooses a
disclosure approach over the substantive regulation of security deposits in
the IURLTA. But in doing so, the majority avoids our caselaw and the
23
choices actually made by the legislature through a novel mechanism of
judicial override that departs from our traditional approach.
II. Discussion.
A. The Statutes Are Easily Harmonized.
1. Potentially conflicting statutes are harmonized unless
irreconcilable. The legislature has instructed us to harmonize potentially
conflicting statutes. “If a general provision conflicts with a special or local
provision, they shall be construed, if possible, so that effect is given to
both.” Id. § 4.7; accord In re Estate of Kirk, 591 N.W.2d at 633. We have
said, “If a court can reasonably harmonize two statutes dealing with the
same subject, it must give concurrent effect to both, even though one is
specific, or special, and the other general.” State v. Lutgen, 606 N.W.2d
312, 314 (Iowa 2000) (quoting 82 C.J.S. Statutes § 355, at 474–75 (1999)).
“[R]elated statutes . . . should be construed together as though they
constituted one law, that is, they must be construed as one system.” State
v. Peters, 525 N.W.2d 854, 857 (Iowa 1994) (quoting 82 C.J.S. Statutes
§ 366, at 801–08 (1953)). If two statutory provisions can be harmonized,
it is unnecessary to consider which provision is more specific. Citizens’
Aide/Ombudsman v. Miller, 543 N.W.2d 899, 903–04 (Iowa 1996).
The demanding standards are a result of the presumption that the
legislature is aware of existing law when it enacts new statutes. See
Mulhern, 799 N.W.2d at 118–19; Slager v. HWA Corp., 435 N.W.2d 349,
353–54 (Iowa 1989) (en banc). The lack of positive repugnancy thus
indicates a legislative intent to harmonize the statutes.
Harmonizing two apparently conflicting statutes “constrain[s]
judicial discretion in the interpretation of the laws.” Astoria Fed. Sav. &
Loan Ass’n, 501 U.S. at 109, 111 S. Ct. at 2170; see Good v. Crouch, 397
N.W.2d 757, 760 (Iowa 1986) (“A finding of implied repeal in the absence
24
of such a clear showing of legislative intent ‘would constitute a usurpation
of legislative authority.’ ” (quoting State v. Rauhauser, 272 N.W.2d 432,
435 (Iowa 1978)). We do not interpret statutes to generate conflicts; we
assiduously interpret statutes to avoid conflict.
It is only when the very high bar of irreconcilability is met that a
specific statutory provision will prevail over a general provision. To
demonstrate irreconcilability, “[i]t is not enough to show that the two
statutes produce differing results when applied to the same factual
situation. The legislative intent to repeal must be manifest in the ‘positive
repugnancy between the provisions.’ ” Perry, 440 N.W.2d at 391 (quoting
Batchelder, 442 U.S. at 122, 99 S. Ct. at 2203); see Freeman v. Grain
Processing Corp., 848 N.W.2d 58, 88 (Iowa 2014) (explaining that an
implied repeal occurs “only where the statutes ‘cover the same subject
matter,’ are ‘irreconcilably repugnant,’ and implied repeal is ‘absolutely
necessary’ ” (quoting Rauhauser, 272 N.W.2d at 434)).
This “demanding” standard exists because “[t]he legislature is
presumed to know the existing state of the law when the new statute is
enacted,” and “[i]n the absence of any express repeal, the new provision is
presumed to accord with the legislative policy embodied in prior statutes.”
Freeman, 848 N.W.2d at 88. We have found that statutory provisions may
be reconciled when they require different statutory elements to show a
violation or when one provision supplements another. Peters, 525 N.W.2d
at 858. We have also found that statutory provisions may be reconciled
where “the wording of the statutes does not suggest they may not coexist”
and “the provisions of the more specific one are not included in the general
one.” Lutgen, 606 N.W.2d at 314.
2. The retirement facilities statute and the IURLTA can be easily
harmonized. The retirement facilities statute “applies to a provider who
25
executes a contract to provide continuing care or senior adult congregate
living services in a facility . . . if the contract requires or permits the
payment of an entrance fee to a person.” Iowa Code § 523D.2.
“ ‘Continuing care’ means housing together with supportive services,
nursing services, medical services, or other health related services,
furnished to a resident . . . in consideration of an entrance fee.” Id.
§ 523D.1(2). Similarly, “ ‘[s]enior adult congregate living services’ means
housing and one or more supportive services furnished to a resident . . .
in consideration of an entrance fee.” Id. § 523D.1(11). An entrance fee is
a transfer of money or property “made as full or partial consideration for
acceptance of a specified individual in a facility if the amount exceeds
either . . . [f]ive thousand dollars [or] [t]he sum of the regular periodic
charges for six months of residency.” Id. § 523D.1(4).
The IURLTA allows certain rental deposits and prohibits others. A
rental deposit is “a deposit of money to secure performance of a residential
rental agreement, other than a deposit which is exclusively in advance
payment of rent.” Id. § 562A.6(12). But a rental deposit cannot be “an
amount or value in excess of two months’ rent.” Id. § 562A.12(1).
Is there an irreconcilable conflict here? No. The fact that the
retirement facilities statute allows entrance fees for housing and
acceptance into the facility does not create “positive repugnancy between
the provisions” in the retirement facilities statute and the IURLTA. Perry,
440 N.W.2d at 391 (quoting Batchelder, 442 U.S. at 122, 99 S. Ct. at 2203).
We are not at liberty to infer from the ambiguous terms “housing” and
“acceptance . . . in a facility” that the retirement facilities statute permits
entrance fees to secure performance of a residential rental agreement,
manufacture a conflict with the IURLTA, and unleash “judicial discretion
in the interpretation of the laws.” Astoria Fed. Sav. & Loan Ass’n, 501 U.S.
26
at 109, 111 S. Ct. at 2170. As the United States Supreme Court recently
explained,
When confronted with two Acts of Congress allegedly touching
on the same topic, this Court is not at “liberty to pick and
choose among congressional enactments” and must instead
strive “to give effect to both.” A party seeking to suggest that
two statutes cannot be harmonized, and that one displaces
the other, bears the heavy burden of showing “a clearly
expressed congressional intention” that such a result should
follow. The intention must be “clear and manifest.” And in
approaching a claimed conflict, we come armed with the
“stron[g] presum[ption]” that repeals by implication are
“disfavored” and that “Congress will specifically address”
preexisting law when it wishes to suspend its normal
operations in a later statute.
These rules exist for good reasons. Respect for
Congress as drafter counsels against too easily finding
irreconcilable conflicts in its work. More than that, respect
for the separation of powers counsels restraint. Allowing
judges to pick and choose between statutes risks transforming
them from expounders of what the law is into policymakers
choosing what the law should be. Our rules aiming for
harmony over conflict in statutory interpretation grow from an
appreciation that it’s the job of Congress by legislation, not
this Court by supposition, both to write the laws and to repeal
them.
Epic Sys. Corp. v. Lewis, 584 U.S. ___, ___, 138 S. Ct. 1612, 1624 (2018)
(alterations in original) (first quoting Morton v. Mancari, 417 U.S. 535, 551,
94 S. Ct. 2474, 2483 (1974); then quoting Vimar Seguros y Reaseguros,
S.A. v. M/V Sky Reefer, 515 U.S. 528, 533, 115 S. Ct. 2322, 2326 (1995);
then quoting Morton, 417 U.S. at 551, 94 S. Ct. at 2483; and then quoting
United States v. Fausto, 484 U.S. 439, 452–53, 108 S. Ct. 668, 676 (1988)).
We might show the same respect to the Iowa legislature.
At most, the ambiguous nature of “housing” and “acceptance . . . in
a facility” requires us to harmonize those provisions with the limitations
on rental deposits in the IURLTA. See Iowa Code § 4.7. An entrance fee
is permitted if it is consideration for acceptance into the facility or for
27
continuing care services, but it is not permitted to secure performance of
a residential rental agreement in an amount greater than two months’
rent.
Another approach is to carefully observe the limitations of the
retirement facilities statute. An entrance fee is defined as a payment for
“acceptance of a specified individual in a facility” that exceeds certain
amounts. Id. § 523D.1(4) (emphasis added). The words are clear: It is a
fee for acceptance into a facility. It gets you in the door. It is a ticket of
admission for entrance on day one. But the authorizing of an entrance fee
for purposes of “acceptance of a specified individual in a facility” is not
contrary to the security deposit provisions of the IURLTA. The
authorization of an entry fee “for acceptance” is neither positively
repugnant with the IURLTA nor an implied permit to evade the provisions
of the IURLTA. If the provisions of the retirement facilities statute
preempted other statutes and regulations, entrance fees could be used in
discriminatory fashion without violating civil rights law, transportation
services could be provided by unlicensed chauffeurs who violate rules of
the road, and nursing services could be provided in a fashion contrary to
medical practices.
Some concrete examples illustrate the ease with which the
provisions are harmonized. An entrance fee can be charged for certain
“housing together with supportive services, nursing services, medical
services, or other health related services,” id. § 523D.1(2), without running
afoul of the prohibition in the IURLTA so long as the fee for those services
is not both greater than two months’ rent and designed to secure
performance of the rental agreement, id. §§ 562A.6(12), .12(1); see also
Paul A. Gordon, Am. Seniors Housing Ass’n, The Impact of Landlord Tenant
Laws on Community Fees 1 (2007) (contrasting real estate related fees,
28
which might be subject to landlord–tenant law, with other types of fees
linked to provision of services). Further, a nonrefundable entrance fee is
generally not a security deposit under the IURLTA. See De Stefano v. Apts.
Downtown, Inc., 879 N.W.2d 155, 185–86 (Iowa 2016); see also M & I First
Nat’l Bank v. Episcopal Homes Mgmt., Inc., 536 N.W.2d 175, 186 (Wis. Ct.
App. 1995) (noting that nonrefundable fee could be a payment to secure
execution of the lease and not a security deposit to ensure performance of
obligations under a rental agreement).
3. Application. In this case, the entrance fee was designed to secure
the position of The Reserve (Reserve) in the event of a default, not as
consideration for acceptance into the facility or for continuing care
services. Specifically, the rental agreement provided,
Should Applicant default under the terms of the Covenants of
Occupancy, which default is not cured in a manner deemed
satisfactory by the Corporation, Applicant’s Residential
Membership shall be terminated and all of Applicant’s right,
title and interest in and to such Entrance Fee, [and] such
Supplemental Amount . . . shall be forfeited by Applicant and
become the sole and separate property of the Corporation . . . .
In short, the Reserve used the entrance fee and supplemental amount in
the manner of a rental deposit, namely, to secure performance of the rental
agreement. See Iowa Code § 562A.6(12). And the entrance fee and
supplemental amount were each far in excess of two months’ rent, the
maximum allowable amount for a rental deposit. See id. § 562A.12(1).
Therefore, the entrance fee and supplemental amount charged by the
Reserve were illegal rental deposits prohibited by the IURLTA.
The problem here, as Albaugh points out, is not irreconcilability of
statutory provisions. Rather, the problem only arises because the Reserve
structured its entrance fee and supplemental amount as rental deposits.
The Reserve can charge $120,000 or more as an entrance fee and
29
supplemental amount; it just cannot charge that amount as a rental
deposit.
Consequently, Albaugh was entitled to summary judgment on the
IURLTA claim.
B. Exclusivity. The provisions in the retirement facilities statute
concerning entrance fees do not constitute the exclusive statutory
regulation of monies collected and labeled as an entrance fee.
Can a provider regulated under the retirement facilities statute
discriminate in charging entrance fees by, for example, charging a woman
twice the fee as a man? The Iowa Civil Rights Act, of course, says no. See
Iowa Code § 216.8(1)(b). The majority’s approach to this case might allow
such discrimination, so long as both entrance fees are greater than $5000,
because the regulation of entrance fees in the retirement facilities statute
is considered sui generis. But there is no reason to believe the legislature
intended to allow such discrimination. Meanwhile, if the requirements of
the Iowa Civil Rights Act still apply to entrance fees, why wouldn’t the
security deposit requirements in the IURLTA also apply? 4
4Additionally, even as the majority believes that regulation of entrance fees in the
retirement facilities statutes is sui generis, it offers no principle limiting the sui generis
in the retirement facilities statute to entrance fees. Perhaps none of the IURLTA applies
to facilities regulated under the retirement facilities statute. For instance, the retirement
facilities statute states that a “[p]rovider” is “a person undertaking through a lease” to
provide care in a facility. Iowa Code § 523D.1(8). So, the retirement facilities statute
expects a provider to use a lease. Is that lease also immune from the IURLTA? Likewise,
the retirement facilities statute contemplates that facilities will offer lodging. Id.
§ 523D.1(2). Since lodging is authorized under the retirement facilities statute, need the
facility comply with requirements in the IURLTA to keep the lodging “in a fit and habitable
condition” and “[s]upply running water and reasonable amounts of hot water at all times
and reasonable heat”? Id. § 562A.15(2), (6).
Indeed, under the majority’s reasoning, perhaps any action contemplated in the
retirement facilities statute is unregulated by any other provision of the Iowa Code. The
retirement facilities statute recognizes that facilities may offer nursing care, id.
§ 523D.1(2), (11), (12), so can facilities offer uncertified nursing care?
30
Further, there is no exclusivity provision in the retirement facilities
statute. By contrast, numerous other parts of the Code contain exclusivity
provisions. See, e.g., Iowa Code § 17A.23(1) (Iowa Administrative
Procedure Act); id. § 85.20 (workers’ compensation); id. § 216.16(1) (Iowa
Civil Rights Act); id. § 600A.3(1) (termination of parental rights). “The
general assembly can express its intent by omission, and we cannot
‘enlarge or otherwise change the terms of a statute as the legislature
adopted it.’ ” Homan v. Branstad, 887 N.W.2d 153, 172 (Iowa 2016)
(quoting Marcus v. Young, 538 N.W.2d 285, 289 (Iowa 1995)). If the
legislature intended the provision to be exclusive, it could have said so.
George v. D.W. Zinser Co., 762 N.W.2d 865, 872 (Iowa 2009).
At the same time, the legislature has included a broad savings
clause in the retirement facilities statute. See Iowa Code § 523D.7(5). It
says, “This chapter does not limit a liability which may exist by virtue of
any other statute or under common law if this chapter were not in effect.”
Id. It is hard to imagine a savings clause whose plain meaning is more
antiexclusive. A belief that the entrance fee provisions in the retirement
facilities statute are exclusive would rewrite the statute by blue penciling
the savings clause. But we do not rewrite statutes. Doe, 927 N.W.2d at
665; Walden, 870 N.W.2d at 843; In re A.M., 856 N.W.2d at 378.
Finally, there are a number of cases supporting the view that the
retirement facilities statute does not exclusively regulate monies collected
and labeled an entrance fee. Two decisions from Massachusetts hold
statutory provisions regulating security deposits in the state landlord–
tenant law apply to “community fees” collected by a senior living facility.
Hennessy v. Brookdale Senior Living Cmtys., Inc., No. 1784CV04215BLS2,
2018 WL 4427020, at *1–4 (Mass. Super. Ct. Aug. 1, 2018); Gowen v.
Benchmark Senior Living, LLC, No. 1684CV03972BLS2, 2017 WL
31
3251585, at *1–3 (Mass. Super. Ct. May 8, 2017). Similar to the savings
clause in Iowa Code section 523D.7(5), the Massachusetts law regulating
senior living facilities provides that the facilities “shall meet the
requirements of all applicable federal and state laws and regulations.”
Mass. Gen. Laws Ann. ch. 19D, § 16 (West, Westlaw current through ch.
12 of 2019 1st Sess.). The Massachusetts savings clause, according to the
Gowen court,
makes clear that [the state statute regulating senior living
facilities] is not intended to be an exhaustive regulatory
scheme that governs all aspects of assisted living operations.
And it also makes clear that [the senior living facility] must
comply with all laws that govern residential tenancies to the
extent they apply to its facility.
Assisted living facilities can easily comply with both
statutory schemes, providing supportive services in accord
with [the state statute regulating senior living facilities] to a
resident whose tenancy is also governed by [the landlord–
tenant law]. Courts must therefore construe and apply these
two statutes in a manner that gives “meaning and purpose to
both. . . . ‘so that the policies underlying both may be
honored.’ ”
2017 WL 3251585, at *2 (quoting Alliance to Protect Nantucket Sound, Inc.
v. Energy Facilities Siting Bd., 932 N.E.2d 787, 796 (Mass. 2010)); accord
Hennessy, 2018 WL 4427020, at *2. Further, the Gowen court explained,
the senior living facility may charge a community fee for “services that are
beyond the scope of a typical residential tenancy.” Id.
Another Massachusetts decision disagrees with the result reached
in Gowen and Hennessy. See Ryan v. Maryann Morse Healthcare Corp.,
No. 1681CV02433A, 2018 WL 6424841, at *5 (Mass. Super. Ct. Jan. 9,
2018). But the rationale in Ryan supports Albaugh’s position in this
litigation. “First,” the Ryan court noted, “[the state statute regulating
senior living facilities] does not use the terms ‘lease,’ ‘lessor’ or ‘tenant’
employed in [the landlord–tenant law].” Id. By contrast, Iowa Code section
32
523D.1(8) anticipates that providers will utilize leases. Next, the Ryan
court said that the community fee in the case before it was unlike fees that
are “closely related to the leased property.” Ryan, 2018 WL 6424841, at
*5. But in our case, the entrance fee could hardly be more closely related
to the leased property, as it was used to secure performance of the lease
obligations. “More to the point,” the Ryan court continued, the
Massachusetts statute regulating senior living facilities actually mentions
the landlord–tenant law in one provision but not with respect to the fee at
issue. Id. at *6. Of course, in Iowa, there is no such reference to the
IURLTA in the retirement facilities statute (except, of course, in the savings
clause which plainly provides for applicability of the IURLTA). Finally, the
Ryan court said its conclusion
is bolstered by the fact that [the state statute regulating senior
living facilities] provides a comprehensive set of protections to
residents in [the facilities]. [The state statute regulating senior
living facilities] does not displace landlord–tenant law and
leave residents to fend for themselves. It provides a
comprehensive list of resident rights which, generally
speaking, demand fairness in the [facility]–resident
relationship. These rights include privacy rights, use of
personal property in the living area and eviction protections—
concerns otherwise within the scope of landlord–tenant law.
Id. at *7. But the Iowa retirement facilities statute has no such
protections. We cannot rely on the Ryan court’s evaluation of a completely
different statutory environment.
Similarly, in Jackim v. CC–Lake, Inc., 842 N.E.2d 1113, 1120 (Ill.
App. Ct. 2005), an Illinois appellate court reviewed a different statutory
and factual environment. There is no indication that the Illinois statute
regulating senior living facilities contains a savings clause like that in Iowa
Code section 523D.7(5). Indeed, the Jackim court found the absence of
such a statement in the Illinois statute important, stating, “If the Illinois
legislature intended for entrance fees paid by residents to providers in
33
connection with life care contracts to be subject to the Security Deposit
Interest Act, it could have said so . . . .” Id. Well, the Iowa legislature did
say so in the savings clause in section 523D.7(5). There is good reason to
think that the Jackim court would have come to a different conclusion had
it before it the Iowa statutory scheme. Further, the Jackim court placed
great weight on the fact that the plaintiffs’ contract with the facility allowed
the plaintiffs to move around to different apartments during their lives. Id.
at 1119. According to the Jackim court, that fact precluded finding a
landlord–tenant relationship which, in turn, prevented application of the
security deposit regulations. Id. at 1119–20. But here, the contract
between the Reserve and Shirley Voumard only gave her access to one
apartment. With key factual and legal bases for Jackim being irrelevant to
the situation before us, there is little persuasive value to Jackim.
C. The Savings Clause in the Retirement Facilities Statute
Precludes that Statute from Preempting the IURLTA. Further, in the
alternative, any irreconcilability between the retirement facilities statute
and another statute must be resolved in favor of the other statute. Iowa
Code section 523D.7(5) states, “This chapter does not limit a liability which
may exist by virtue of any other statute or under common law if this
chapter were not in effect.”
In considering whether there is liability under another statute—like
the IURLTA—the legislature has directed not to limit “any other statute”
as if the retirement facilities statute “were not in effect.” This is sweeping,
unqualified language. To me, the language of the savings clause means
that statutory liability arising outside of the retirement facilities statute
remains in place and cannot be ousted by language in the retirement
facilities statute.
34
We often struggle with how two statutory regimes scattered
throughout the Code fit together. But here, the legislature has given us
an answer to the question. If there is statutory liability in another
provision of the Code, the retirement facilities statute cannot trump or
supersede it.
In fact, Iowa Code section 523D.7(5) trumps our ordinary approach
to interpreting conflicting statutes. Ordinarily, as noted, an irreconcilable
conflict between a general and specific statute is resolved in favor of the
specific statute. Oyens Feed & Supply, Inc. v. Primebank, 808 N.W.2d 186,
194 (Iowa 2011). But that approach has no warrant in conflicts between
the retirement facilities statute and another statute. In such instances,
because of the savings clause, the other statute must prevail over the
retirement facilities statute no matter the level of generality.
We cannot amend the unequivocal general savings statute through
judicial legislation based on speculation that the legislature would have
written the statute differently had it thought more deeply about the
application of the IURLTA to the retirement facilities statute. We presume
the legislature is aware of existing law. State v. Adams, 810 N.W.2d 365,
370 (Iowa 2012). The question is what the statute means, not what the
legislature meant. Richardson v. City of Jefferson, 257 Iowa 709, 714, 134
N.W.2d 528, 531 (1965).
I break no new ground by following the statute. In Advest, Inc. v.
Kirschner, No. 92–6656, 1994 WL 18592, at *2 (E.D. Pa. Jan. 21, 1994),
the court employed similar reasoning. In Advest, the court first
determined that securities transactions were covered by Pennsylvania’s
consumer protection law. Id. Then, the court turned to an argument that
liability under the consumer protection law was displaced by the
Pennsylvania Securities Act. Id. The court explained,
35
[Plaintiff] . . . argues that since the sale of securities is already
regulated by the Pennsylvania Securities Act of 1972, the
[consumer protection law] was not intended to apply to
securities transactions. It is true that as a rule the particular
statute overrides the general, but . . . for [that rule] to apply,
the statutes must be irreconcilable. Here, not only may they
be reconciled, the securities act expressly states: “[n]othing in
this act shall limit any liability which might exist by virtue of
any other statute or under common law if this act were not in
effect.” Thus for me to nullify liability under the [consumer
protection law], because of the more specific securities
statute, would be for me to construe the above language to the
precise converse of plain meaning—the antithesis of apt
statutory construction.
Id. (fourth alteration in original) (citations omitted) (quoting 70 Pa. Cons.
Stat. § 1-506). That is the same situation we have here—the statutes may
be reconciled, and even if they could not, the legislature has directed us to
avoid the ordinary rule of favoring the more specific statute.
In another case, a federal district court faced the question of
“whether the General Assembly ‘intended the [Securities Act] and the
[consumer protection law] to coexist as independent statutory
mechanisms or whether the [Securities Act] is intended to provide the sole
and exclusive statutory penalty for alleged’ securities violations.” Denison
v. Kelly, 759 F. Supp. 199, 204 (M.D. Pa. 1991) (first and third alterations
in original) (quoting Pekular v. Eich, 513 A.2d 427, 433 (Pa. Super. Ct.
1986)). The court found that the two statutes could coexist because there
was no irreconcilable conflict and because
the Securities Act nowhere indicates that it is intended as the
exclusive statutory remedy for securities violations. In fact,
as pointed out by the plaintiffs, it specifically preserves other
remedies. [The Securities Act] provides, in pertinent part,
that: “Nothing in this act shall limit any liability which might
exist by virtue of any other statute or under common law if
this act were not in effect.” “Any other statute” must
encompass the [consumer protection law].
Id. (quoting 70 Pa. Cons. Stat. § 1-506).
36
Until 2005, Iowa’s Uniform Securities Act contained a provision
practically identical to the savings clause in section 523D.7(5).
Specifically, Iowa Code section 502.505 (2003) stated, “Nothing in this
chapter shall limit any liability which might exist by virtue of any other
statute or under common law if this chapter were not in effect.” The only
Iowa court to interpret the provision appears to be a district court. See
Cheyenne Camping Ctr. Co. v. Frazer, No. LA99770, 2004 WL 5238947
(Iowa Dist. Ct. Jan. 1, 2004). The district court noted that courts in other
jurisdictions faced with almost identical statutory schemes “have found
that the underlying protective purpose of the statute is inconsistent with
cutting off additional common law remedies.” Id. The district court also
noted the common practice of joining claims under the securities act with
other civil tort claims. Id. (citing Kramersmeier v. R.G. Dickinson & Co.,
440 N.W.2d 873, 878 (Iowa 1989)). On that authority, the district court
found the plaintiff “is not precluded from asserting its common law causes
of action while pursuing a remedy through [the securities act].” Id.
The notion of broad savings clauses preserving preexisting statutes
is commonplace in securities and franchise laws, where many states have
savings clauses virtually identical to that in the retirement facilities
statute. In Andersen v. Griswold International, LLC, No. 14-CV-02560-
EDL, 2014 WL 12694138, at *5 (N.D. Cal. Dec. 16, 2014), the court said,
“The plain language of the statute preserves preexisting common law and
statutes enacted before the [California Franchise Investment Law] that
would apply if it had not been enacted.” In Tractor & Farm Supply, Inc. v.
Ford New Holland, Inc., 898 F. Supp. 1198, 1204 (W.D. Ky. 1995) (quoting
Mich. Comp. Laws § 445.1434), the court declared, “[T]he Franchise Law’s
remedies are cumulative; the Law clearly states ‘[n]othing in this act shall
limit a liability which may exist by virtue of any other statute or common
37
law if this act were not in effect.’ ” In Victory Lane Quick Oil Change, Inc.
v. Hoss, No. 07-14463, 2009 WL 2461183, at *3 (E.D. Mich. Aug. 10,
2009), the court noted, “[T]he [Michigan Franchise Investment Law] does
not limit the availability of causes of action created by other statute or
common law.” In Ugarte v. Atlas Securities, Inc., No. C043720, 2004 WL
670857, at *6 (Cal. Ct. App. Apr. 1, 2004), the court explained, “[T]he
Corporations Code does not interfere with existing common law causes of
action.” In Toyz, Inc. v. Wireless Toyz, Inc., 799 F. Supp. 2d 737, 745 (E.D.
Mich. 2011), the court stated, “The plain language of the statute does not
limit any other cause of action brought under common law.” In Fantastic
Enterprises, Inc. v. S.M.R. Enterprises, Inc., 540 N.Y.S.2d 131, 135 (Sup.
Ct. 1988), the court denied a motion to dismiss claims of common law
fraud and breach of contract on the basis of a statute of limitations in the
General Business Law because the business law “explicitly states that it
does not limit any liabilities which exist under common law.” In H.R.R.
Zimmerman Co. v. Tecumseh Products Co., No. 99 C 5437, 2001 WL
289867, at *4 (N.D. Ill. Mar. 15, 2001), the court declared, “The language
[the plaintiff] relies upon is . . . unambiguous in that it does not preclude
any causes of action available outside of this Act.” In Brennan v. Reed,
Smith, Shaw & McClay, 450 A.2d 740, 747 (Pa. Super. Ct. 1982), the court
explained, “The act . . . does not interfere with any independent rights of
action that might exist at common law such as a suit for legal malpractice.”
In L.A. Insurance Agency Franchising, LLC v. Elia, No. 18-13523, 2019 WL
1515412, at *4 (E.D. Mich. Apr. 8, 2019), the court said, “[T]he Michigan
Franchise Investment Law specifically protects a party’s other common law
contract rights . . . .” In Southern Illinois Beverage, Inc. v. Hansen
Beverage Co., No. 07-CV-391-DRH, 2007 WL 3046273, at *4 (S.D. Ill. Oct.
15, 2007), the court explained, “It is proper to plead [Illinois Franchise
38
Disclosure Act] claims with common-law claims because, as the statute
expressly provides, it does not preempt remedies under the common law
and other statutes.” In Tyszka v. Make & Take Holding, LLC, 900 N.Y.S.2d
211, 212–13 (App. Div. 2010) (alterations in original), the court noted,
We agree with the determination of the court in its written
decision that “[t]he final sentence of the provision preserves
[preexisting] common law claims which would exist under the
common law if the Act were not in effect, [but that], here, the
only violation alleged as against [defendant] is aiding and
abetting a violation of the Act itself, not a free-standing
common law violation. For claims arising out of statutory
violations of the Act, the Act itself provides the plaintiffs with
their exclusive remedy.
Commentators agree with those interpretations. In Illinois, because
of the savings clause, “the Franchise Act does not preempt common law
and other statutory remedies.” James K. Genden, A Guide to the Illinois
Franchise Disclosure Act, 20 Franchise L.J. 59, 60 (2000). The savings
clause in Pennsylvania’s securities law “specifically directs that the
remedies provided by the [securities law] are not exclusive” and that the
law “was not intended to displace or supersede existing common law
remedies for fraud.” Kurt M. Saunders, Comment, Proof of Fault in Actions
for Securities Fraud: A Cloud in Pennsylvania’s Blue Sky, 46 U. Pitt. L. Rev.
1083, 1091 & n.57 (1985). “In fact, all Blue Sky [Securities] Laws are
“additive”—i.e., intended to supplement other remedies available to
defrauded investors.” Jesse Stewart, False Conflicts: A 50-State Survey of
Blue Sky Laws, 25 PIABA B.J. 383, 383 (2018).
I have found two cases taking a somewhat different approach with
respect to common law claims. These cases generally conclude that
California statutes were intended to displace the common law concerning
particular matters. See Samica Enters., LLC v. Mail Boxes Etc. USA, Inc.,
39
637 F. Supp. 2d 712, 721–22 (C.D. Cal. 2008); Mirkin v. Wasserman, 858
P.2d 568, 582 (Cal. 1993).
For one thing, it is not even clear that Samica and Mirkin would
support the Reserve in this case. Both of those cases decided that common
law claims did not survive, Samica, 637 F. Supp. 2d at 721–22; Mirkin,
858 P.2d at 582, whereas Albaugh’s claim is statutorily based. It is
perfectly conceivable that the California legislature intended to override
the common law to a greater extent than its own statutes. Further, those
cases held that the common law claims did not survive because the
California legislature had provided an analogous remedy. Samica, 637
F. Supp. 2d at 721–22; Mirkin, 858 P.2d at 582. But here, the retirement
facilities statute provides no remedy where a landlord collects an illegal
rental deposit. That is addressed in the IURLTA.
In any case, Samica and Mirkin were wrongly decided. Aside from
being against the great weight of authority on the matter, as recounted
above, the reasoning in those opinions has been specifically rejected in
other judicial opinions. Toyz, 799 F. Supp. 2d at 745 (rejecting reasoning
in Samica); Mirkin, 858 P.2d at 594–95 (Kennard, J., concurring and
dissenting) (rejecting Mirkin majority); see also Christopher Boffey, Note,
Mirkin v. Wasserman: The Supreme Court of California Rejects the Fraud-
on-the-Market Theory in State Law Deceit Actions, 49 Bus. Law. 715, 736
(1994) [hereinafter Boffey] (same). The Samica and Mirkin courts forgot
that the purpose of the purportedly preemptive statute was to protect
consumers through disclosure and other requirements—just like the
retirement facilities statute—by adding remedies rather than replacing
them. Mirkin, 858 P.2d at 594–95; Boffey, 49 Bus. Law. at 736–37.
Indeed, the Samica and Mirkin courts ignored the plain meaning of the
savings clauses which sought to ensure that such purpose would be
40
achieved. Toyz, 799 F. Supp. 2d at 745; Mirkin, 858 P.2d at 594–95; see
Boffey, 49 Bus. Law. at 736 (“[I]t seems likely the [Mirkin] court overlooked
that federal and state securities laws were not intended to provide
exclusive remedies for securities transactions involving deceit. Both the
California Corporations Code, and the Securities Exchange Act of 1934
include sections that make it clear the remedies created by them were
intended to supplement (and not replace) remedies available under
common and other statutory laws.” (Footnotes omitted.)). Justice Kennard
put it well:
To speak, as the majority does, of a “conflict” between
securities law remedies and the traditional action for fraud is
to ignore the decisions of our state Legislature and Congress
to make securities laws nonexclusive and cumulative to
traditional tort remedies.
Mirkin, 858 P.2d at 595. Justice Kennard’s reasoning applies with full
force to the question before us concerning the relationship between the
retirement facilities statute and the IURLTA.
In my view, Voumard’s daughter, acting as her substitute, was
entitled to partial summary judgment on the IURLTA claim. The Reserve
was not entitled to summary judgment on the IURLTA claim. I would so
hold, reverse, and remand the case to the district court.
III. Conclusion.
For the reasons discussed above, I would reverse the district court
judgment on the IURLTA claim, grant summary judgment to Albaugh on
the IURLTA claim, and remand to the district court for further proceedings.
Wiggins, J., joins this dissent.