Raymond Vern Butler and Mary Butler v. Wells Fargo Financial, Inc.

IN THE COURT OF APPEALS OF IOWA

No. 19-0554
Filed July 22, 2020

RAYMOND VERN BUTLER and MARY BUTLER,
Plaintiffs-Appellants,

vs.

WELLS FARGO FINANCIAL, INC.,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Polk County, Samantha Gronewald,

Judge.

Plaintiffs appeal a summary judgment ruling in defendant’s favor.

AFFIRMED.

Kyle T. Reilly of Thomas J. Reilly Law Firm, P.C., Des Moines, for

appellants.

Thomas H. Walton of Nyemaster Goode, PC, Des Moines, for appellee.

Heard by Bower, C.J., and Doyle and Schumacher, JJ.
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BOWER, Chief Judge.

Raymond and Mary Butler appeal a district court summary judgment ruling

dismissing their suit against Wells Fargo Financial, Inc. We conclude Wells Fargo

Financial was not exercising possession and control over the premises at the time

of Raymond Butler’s alleged injuries and did not owe Butler a duty of care. We

affirm.

I. Background Fact & Proceedings

In 2006, Wells Fargo Financial, Inc. (WF Financial), a subsidiary of Wells

Fargo & Company, obtained title to property at 1963 Bell Avenue, Des Moines.

In 2009, Wells Fargo Bank, N.A. (WFB)—a separate and distinct subsidiary

of Wells Fargo & Company—entered into a general master services agreement

with CB Richard Ellis Group (CBRE).1 On September 7, 2011, WFB and CBRE

executed a Statement of Work for Property Management Services Administrative

Buildings effective through December 2016. The services CBRE was to provide—

asset, operations, and facilities management (including maintenance)—were to

support WFB’s corporate properties group. Among the properties covered by the

WFB-CBRE property management statement of work was 1963 Bell.2

In August 2015, Raymond Butler—a CBRE employee—notified CBRE of a

mold problem at 1963 Bell. On October 23, Iowa Occupational Safety and Health

1 The agreement permitted “affiliates” of WFB—including parent company Wells
Fargo & Company and its subsidiaries—to procure the services of CBRE through
the execution of a statement of work by the affiliate. No evidence of any agreement
between CBRE and WF Financial was offered.
2 The spreadsheet entry indicated 1963 Bell was “Owned,” not “Leased.” Ken

Kuckelman, a property portfolio manager for WFB, submitted an affidavit that 1963
Bell was under the possession and control of WFB subject to the management
services of CBRE.
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issued a notice of complaint relating to 1963 Bell.3 CBRE and WFB had a

conference call regarding the mold, and WFB approved CBRE arranging the

cleanup.

CBRE directed Butler to remove a number of ceiling tiles with mold on them

at 1963 Bell. Butler alleges he sustained injuries due to mold exposure arising

from his work.

On October 20, 2017, Butler and his wife Mary filed suit against WF

Financial alleging negligence of the property owner and loss of consortium.4 In its

answer to the Butlers’ petition, WF Financial misidentified WFB as the owner of

the property.5 In December, the Butlers filed a motion to amend their petition to

substitute WFB as defendant, which the court granted two days later. In its answer

to the amended petition, WFB erroneously admitted ownership of the property.

In August 2018, the Butlers filed another motion to amend petition, asking

to reinstate WF Financial as a defendant, stating, “No evidence supports the

assertion that Wells Fargo Bank, N.A. is the owner of the 1963 Bell Ave. property

and not Wells Fargo Financial, LLC.” The district court granted the motion to

amend, reinstating WF Financial as a defendant.

WFB filed a motion for summary judgment, and the district court granted it,

dismissing WFB as defendant because WFB was not provided notice of the claim

3 The notice was addressed to Wells Fargo Mortgage.
4 WF Financial listed 1963 Bell for sale in February 2015 and sold the property in
December 2016. Kuckelman completed a form for the Polk County Assessor’s
Office regarding conditions of the sale.
5 WF Financial and WFB were at all relevant times each subsidiaries of Wells

Fargo & Company, but were separate and distinct corporate entities. Title deeds
show WF Financial owned 1963 Bell from 2006 until the end of 2016.
4

until after the limitations period had passed. See Iowa Code § 614.1(2) (2017)

(providing a two-year statute of limitations on personal injury suits); Iowa R. Civ.

P. 1.402(5) (requiring later-added defendants receive notice of the action “within

the period provided by law for commencing the action”). In its ruling, the court

made a finding that “the record in this case demonstrates that WF Financial and

WF Bank are separate legal entities.” The Butlers did not appeal the ruling.

WF Financial also filed for summary judgment, stating it was not in

possession or control of 1963 Bell in October 2015 and did not owe a duty of care

to Butler.6 The Butlers asserted a question of fact existed whether WFB was acting

as agent for WF Financial, precluding a summary judgment. In its ruling on the

new motion, the district court reasoned WF Financial’s duty of care rested “on

whether or not WF Financial was in possession of 1963 Bell in 2015.” The court

observed that although WF Financial was the owner of the property, it had “‘loaned’

its possessory rights to WFB such that WF Financial’s relationship to 1963 Bell

was the same as that of an absentee landlord and not a possessor.” Because WF

Financial was not the possessor of the property, it did not owe a duty of care to the

Butlers. The court granted WF Financial’s motion for summary judgment.

The Butlers appeal.

II. Standard of Review

We review a summary judgment ruling for correction of errors at law.

MidWestOne Bank v. Heartland Co-op, 941 N.W.2d 876, 882 (Iowa 2020).

6 In support of its summary judgment motion, WF Financial submitted an affidavit
from a WFB property manager stating WFB “possessed and controlled” the
property at 1963 Bell and included a copy of the agreement between WFB and
CBRE.
5

Summary judgment is appropriate when there is no genuine issue of material fact,

the only conflict is the legal consequences of undisputed facts, “and the moving

party is entitled to judgment as a matter of law.” Id. (citation omitted). Summary

judgment is usually not appropriate in negligence cases, as negligence or

causation questions are normally for the jury. Thompson v. Kaczinski, 774 N.W.2d

829, 832 (Iowa 2009). “The moving party bears the burden of demonstrating the

nonexistence of a material fact question.” Banwart v. 50th St. Sports, L.L.C., 910

N.W.2d 540, 545 (Iowa 2018). “However, the nonmoving party may not rest upon

the mere allegations of his [or her] pleading but must set forth specific facts

showing the existence of a genuine issue for trial.” Id. (citation omitted) (alteration

in original). “We review evidence in the light most favorable to the nonmoving

party.” MidWestOne Bank, 941 N.W.2d at 882.

III. Analysis

“Negligence is conduct that falls short of the standard of care established

by law for the protection of others against unreasonable risks of harm.” Benham

v. King, 700 N.W.2d 314, 317 (Iowa 2005). “To establish a claim for negligence,

the plaintiff must normally prove: (1) the existence of a duty owed by the defendant

to conform to a standard of care, (2) the failure to conform to the standard,

(3) proximate cause, and (4) damages.” Id.

In determining the existence of a duty, the court considers “(1) the

relationship between the parties, (2) reasonable foreseeability of harm to the

person who is injured, and (3) public policy considerations.” Thompson, 774

N.W.2d at 834 (citation omitted). “Whether a duty arises out of a given relationship

is a matter of law for the court’s determination.” Id.
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Butler asserts WF Financial failed in its duty to maintain the premises in a

reasonably safe condition by failing to remove the ceiling tiles earlier and ordering

the removal of the ceiling tiles “without ensuring the safety and health of the

workers.” WF Financial answered that although it owned the property, it was not

the possessor of the property at the time of Butler’s injury and owed him no duty

of care.

Ownership alone is not sufficient to impose liability for a premises defect.

Van Essen v. McCormick Enters. Co., 599 N.W.2d 716, 719–20 (Iowa 1999);

Wiedmeyer v. Equitable Life Assurance Soc’y of U.S., 644 N.W.2d 31, 33 (Iowa

2002) (“[T]he owner of land may in some situations loan its possession to another,

thus rendering that party the possessor and negating the owner’s status as such.”).

“As a general rule, a landlord is not liable for injuries caused by the unsafe

condition of the property arising after it is leased, provided there is no agreement

to repair.” Allison v. Page, 545 N.W.2d 281, 283 (Iowa 1996). The principle

underlying the rule and its assorted exceptions is “liability is premised upon

control.” Id.; see also Dahlin v. Archer-Daniels-Midland Co., No. 3:14-cv-00085-

SMR-HCA, 2016 WL 4435095, at *6 (S.D. Iowa Feb. 4, 2016) (“[B]oth the

governing sections of the Restatement (Third) and Iowa case law make clear that

control is a prerequisite to imposing liability on a land possessor/lessor.”). The

duty of care turns on possession, which requires occupation and control of the

premises. See Van Essen, 599 N.W.2d at 719. A “possessor” of land is defined

as:

(a) a person who is in occupation of the land with intent to
control it or
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(b) a person who has been in occupation of land with intent to
control it, if no other person has subsequently occupied it with intent
to control it, or
(c) a person who is entitled to immediate occupation of the
land, if no other person is in possession under clauses (a) and (b).

Id. (quoting Restatement (Second) of Torts § 328E) (emphasis omitted). “[L]iability

is not imposed unless the possessor ‘knows or by the exercise of reasonable care

would discover the condition, and should realize that it involves an unreasonable

risk of harm.’” Benham, 700 N.W.2d at 318 (citation omitted). “Liability is not

imposed in the absence of such actual or constructive knowledge of a dangerous

condition because this knowledge is essential to establish a breach of duty.” Id.

The Butlers claim WF Financial retained a degree of control over the

premises and should be responsible for dangerous conditions there. Retained

control is a recognized exception to the rule of nonliability of an owner/lessor. Van

Essen, 599 N.W.2d at 720. In those portions of a property where the owner has

retained control—alone or jointly with tenants—the owner may be liable. Fouts ex

rel. Jensen v. Mason, 592 N.W.2d 33, 38 (Iowa 1999); see also Stupka v. Scheidel,

56 N.W.2d 874, 877–78 (Iowa 1953).

Rather than introduce evidence WF Financial exercised possession or

control, the Butlers attack the credibility of Kuckelman’s affidavit statement that

WFB possessed and controlled 1963 Bell subject to CBRE management.

Credibility determinations are not appropriate on summary judgment—they are the

responsibility of the fact finder. Frontier Leasing Corp. v. Links Eng’g, LLC, 781

N.W.2d 772, 776 (Iowa 2010). Yet, we must construe the record in favor of the

Butlers and, therefore, we do not rely on the affidavit as an undisputed fact. While

the Butlers contest the affidavit, they do not contest the veracity of the WFB-CBRE
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contract, included as an attachment to the affidavit, and we do consider it in our

evaluation.

The Butlers suggest WFB was merely a licensee with no interest in the

property. To support their claims, the Butlers introduced a copy of a license

agreement dated September 30, 2016, between WF Financial and a new tenant

for the property at 1963 Bell. The district court considered the agreement to be

the Butlers’ strongest evidence but noted even this agreement licensed the

premises “as is” and provided “WF Financial retained no responsibility for the care

and/or maintenance of the ‘vacant retail bank facility.’” The agreement specifically

provided WF Financial was not responsible for any repair or maintenance and

indemnified WF Financial from any claims of injury arising from or related to the

use and occupancy of the property. Contrary to the Butlers’ assertion, this

agreement does not support their theory WF Financial exerted possession and

control over 1963 Bell in a manner giving rise to a duty to those on the premises.

Rather, it indicates the party occupying the premises had possession and control

for purposes of liability.

The evidence presented does not include any documentation of a formal

lease between WF Financial and WFB, or any evidence of WFB paying rent to WF

Financial. However, neither does any evidence indicate WFB was authorized to

act as an agent for WF Financial and enter into long-term contracts relating to WF

Financial property. No documents or asserted facts indicate WF Financial made

any decisions regarding the upkeep of 1963 Bell around time of Butler’s injury or

executed a separate statement of work with CBRE under the umbrella of the WFB-

CBRE agreement.
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Instead, the WFB-CBRE contract shows WFB exercised control over the

1963 Bell location for at least four years before the alleged mold exposure; the

property was included among the properties for which WFB contracted directly with

CBRE for full property management services. It was CBRE that first discovered

the mold problem, CBRE consulted with WFB regarding the mold issue, and WFB

directed CBRE and its employee Butler to fix the mold problem. There is no

evidence WF Financial had any input in the actions leading to Butler’s alleged

injury.

The Butlers also contend because WF Financial entered into a contract to

list and sell the property in February 2015, this shows WF Financial retained

control over the property and should be liable. While the rights to possess, use,

and dispose are all part of the group of rights known as property, the owner has

the right to exercise these rights separately. See United States v. Gen Motors

Corp., 323 U.S. 373, 378 (1945) (noting the term property may “denote the group

of rights inhering in the citizen’s relation to the physical thing, as the right to

possess, use and dispose of it.”); Bormann v. Bd. of Supervisors, 584 N.W.2d 309,

315 (Iowa 1998). The exercise of one right does not necessarily mean exercising

the other rights. For example, property owners often lease the right to use and

possess the property while retaining their right to sell the property. See

Restatement (Second) of Property §§ 1.2, 15.1 (noting a landlord-tenant

relationship exists when “the landlord transfers the rights of possession” and that

the interests of each “are freely transferable”). Unless the lease provides

otherwise, the owner may still sell the property while the lessee retains possession

and control of the property. See Alta Vista Props., LLC v. Mauer Vision Ctr., PC,
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855 N.W.2d 722, 729–31 (Iowa 2014) (examining a landlord’s right to exhibit a

leased premises to prospective or actual buyers based on the lease and statutory

language).

Thus, WF Financial’s exercise of its retained right to sell does not mean it

was exercising the right to possess and control alone or jointly with WFB. The

Butlers have offered no evidence of WF Financial exercising the right of

possession and control at the time of Butler’s alleged injury.

From our review of the pleadings, affidavits, and documents presented, we

determine WF Financial was not a possessor of 1963 Bell in October 2015.

Because WF Financial was not the possessor of the property, it did not owe a duty

of care to Butler, and we affirm the district court’s ruling.

AFFIRMED.