Michael Morrisey v. All Iowa Homes, Inc.

IN THE COURT OF APPEALS OF IOWA

No. 24-0976
Filed July 2, 2025

MICHAEL MORRISEY,
Plaintiff-Appellant,

vs.

ALL IOWA HOMES, INC.,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Boone County, James A. McGlynn,

Judge.

Michael Morrisey appeals from the district court’s judgment and post-

judgment orders denying his request for attorney fees and requiring him to pay All

Iowa Homes, Inc.’s (AIH) costs from the date of AIH’s offer to confess judgment

through the end of the case. AFFIRMED IN PART, REVERSED IN PART,

VACATED IN PART, AND REMANDED WITH INSTRUCTIONS.

Amanda Hassid, Ames, for appellant.

Kirke C. Quinn of Law Offices of Kirke C. Quinn, Boone, and F.D. Chip

Baltimore II of Doran Anderson & Baltimore, Boone, for appellee.

Considered without oral argument by Greer, P.J., and Langholz and Sandy,

JJ.
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SANDY, Judge.

Michael Morrisey appeals from the district court’s judgment and post-

judgment orders denying his request for attorney fees and requiring him to pay All

Iowa Homes, Inc.’s (AIH) costs from the date of AIH’s offer to confess judgment

through the end of the case. Morrisey argues that the attorney-fees provisions of

the real estate purchase agreement between him and AIH did not merge with the

deed and the district court’s failure to recognize such led it to miscalculate costs.

We affirm in part, reverse in part, vacate in part, and remand to the district court

for entry of an order consistent with this opinion.

I. Background Facts and Proceedings

On March 4, 2019, Morrisey and AIH entered into a real estate purchase

agreement for Morrisey’s purchase of real property located in Boone, Iowa. That

purchase agreement provided that “SELLERS and BUYERS acknowledge that the

SELLERS of real property have a legal duty to disclose material defects of which

SELLERS have actual knowledge and which a reasonable inspection by the

BUYERS would not reveal.”

The agreement provides the following remedies:

If the SELLERS fail to fulfill this agreement, they shall pay the
BROKER the commission in full. The BUYERS shall have the right
to have all payments returned, and/or to proceed by any action at
law or in equity, and the SELLERS agree to pay costs and
reasonable attorney fees . . . .

It also includes the following survival clause: “The warranties, representations,

covenants, agreements, duties and remedies contained herein shall survive the

execution and delivery of this agreement, the closing of the transactions

contemplated herein and the recording of any contract or deed conveying title.”
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AIH also provided Morrisey a signed seller disclosure statement on the

same date. That disclosure statement indicated no existing water issues. AIH

provided Morrisey a second disclosure statement on April 1, 2019, which described

new water problems that AIH claimed to have pinpointed and remedied. After

closing the transaction and moving in, Morrisey discovered significant electrical

issues, water damage and water proofing issues in the basement.

Morrisey subsequently sued AIH, among others, but by his sixth amended

petition, narrowed the claims against AIH to violation of Iowa Code chapter 558A

(2019) disclosure laws, fraudulent misrepresentation, fraudulent nondisclosure

and concealment, and breach of contract. The other parties and claims against

those parties were dismissed with prejudice.

On May 19, 2021, AIH submitted an offer to confess judgment for $10,000

under Iowa Code chapter 677, which was inclusive of costs, attorney fees, and

interest. Morrisey did not accept the offer to confess. The action proceeded to

trial before a jury, and on April 12, 2024, the jury returned a verdict for Morrisey on

two claims: breach of contract and failure to disclose an adverse condition. The

jury awarded damages in the amount of $8500.

The district court entered judgment on that verdict on April 15 but did not

include pre-judgment interest. Morrisey filed an application for order nunc pro tunc,

requesting pre-judgment interest up to the date of judgment, as well as a motion

for pre-offer attorney fees. AIH also filed an application for order nunc pro tunc,

requesting pre-judgment interest up to the date of its offer to confess judgment.

On May 15, the district court entered an order nunc pro tunc assessing pre-

judgment interest up to the date of AIH’s offer to confess judgment and pre-offer-
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to-confess costs at $245, and required Morrisey to pay AIH’s costs beginning May

19, 2021, along with an order denying Morrisey’s motion for award of attorney fees.

The district court held that merger of the purchase agreement with the deed

prevented the purchase agreement’s attorney-fees clause from allowing an award

of attorney fees on the basis of that remedies clause. On May 20, 2024, the district

court filed an order regarding AIH’s demand per Iowa Code section 624.23, in

which it assessed pre-offer-to-confess court costs of $325.

Morrisey filed a motion to reconsider, which was denied, with the district

court holding that costs were properly calculated and further denying Morrisey

attorney fees.

Morrisey now appeals.

II. Standard of Review

We review a district court’s decision on whether to grant attorney fees for

an abuse of discretion. NevadaCare, Inc. v. Dep’t of Hum. Servs., 783 N.W.2d

459, 469 (Iowa 2010). We will reverse the district court’s award of attorney fees if

it is made “on grounds that are clearly unreasonable or untenable,” and “will correct

erroneous applications of the law.” Id.

We review the district court’s statutory interpretation for correction of errors

at law, Harris v. Olson, 558 N.W.2d 408, 409 (Iowa 1997), as well as its

“interpretation and construction of a contract,” Pitz v. United States Cellular

Operating Co. of Dubuque, 989 N.W.2d 636, 640 (Iowa 2023).
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III. Discussion

Morrisey argues that the attorney-fees provisions of the real estate

purchase agreement between him and AIH did not merge with the deed and the

district court’s failure to recognize such led it to miscalculate costs.

A. Merger of Purchase Agreement and Deed

A real estate purchase agreement “presumptively becomes merged in the

subsequent deed,” and the “parties thereafter look only to the deed for conditions

of the transfer.” In re Est. of Franken, 944 N.W.2d 853, 861 (Iowa 2020) (citations

omitted). There are “many qualifications,” including that conditions not

incorporated by or inconsistent with the deed survive merger. Id. (citation omitted).

Any party challenging merger holds the burden to “show the parties did not intend”

for merger. Payton v. DiGiacomo, 874 N.W.2d 673, 676 (Iowa Ct. App. 2015).

In Payton—a published case—the buyers appealed a district court order

denying their request for attorney fees based on the remedies clause of the real

estate purchase agreement. See id. at 674–75. That remedies clause stated the

following:

REMEDIES OF THE PARTIES. If buyer or seller fails to timely fulfill
the terms of this agreement, then the other party shall be entitled to
utilize any and all remedies or actions at law or in equity which may
be available to them (including but not limited to forfeiture,
foreclosure, termination, recision, or specific performance), and the
prevailing party shall further be entitled to obtain judgment for costs
and attorney fees.

Id. at 675.
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We held that attorney-fees provision, as applied to a violation of

chapter 558A1 in a breach-of-contract claim, would not survive merger when “the

purchase agreement . . . did not contain any term relating to the requirements of

chapter 558A.” Id. at 678. In sum, the purchase agreement must expressly state

that it protects the buyer from a chapter 558A violation by the seller for the buyer

to invoke the agreement’s attorney-fees provision in response to any such

violation. See id. Thus, we found the attorney-fees claim for a breach of those

statutory obligations in Payton did not survive the merger. Id.

Morrisey offers one primary argument2 in support of his claim that the

purchase agreement did not merge with the deed. Morrisey contends that O’Malia

v. Regency Builders, Inc. is controlling on the merger question. See 668 N.W.2d

568 (Iowa 2003). There, the O’Malias had purchased a newly constructed home

from a builder. Id. at 569. The purchase agreement had provided that the new

construction would “have the warranties implied by law, specifically made by

suppliers of materials/appliances, or specifically tendered by the contractor.” Id.

1 Iowa Code section 558A.4(1)(a) requires all real property transferors to provide

the transferee with a disclosure “relating to the condition and important
characteristics of the property.” Chapter 558A creates no statutory right to attorney
fees as a remedy.
2 Morrisey offers one confounding ancillary argument to support this first issue: he

argued before both the trial court and now our court that Payton is not “controlling
legal authority” because it is not a published case. Payton is a published case.
See 874 N.W.2d at 673–78. AIH’s counsel and the district court have both
extensively explained that the case is published, with the district court even
clarifying that “the Court is looking at the hardcover volume 874 of the North
Western Reporter, Second Series, and the Court assures counsel that between
pages 673 and 678 the Payton case appears in full, black-and-white published
form.” (Cleaned up). We are unsure of how to further convince Morrisey’s counsel
on this point other than to confirm the accuracy of the district court’s statements
on the opinion’s history within its order in response to Morrisey’s motion to
reconsider.
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After closing, the O’Malias discovered defects in the construction. Id. The builder

partially paid to repair those defects, and the O’Malias invoked the purchase

agreement’s attorney-fee clause for the attorney fees associated with enforcing

the purchase agreement’s terms. Id. The supreme court enforced the attorney-

fees provision. Id. at 570.

In Payton, our court distinguished the facts from O’Malia by noting that the

O’Malia purchase agreement expressly provided that the agreement covered

express warranties as well as those implied by law. See 874 N.W.2d at 678 n.8.

But in Payton, the purchase agreement “did not contain any term relating to the

requirements of chapter 558A” outside of a checkmark in a box indicating the seller

disclosure was attached to the purchase agreement. Id. at 678.

Here, unlike in Payton, the purchase agreement between Morrisey and AIH

contains an express clause relating to disclosure requirements. Paragraph 7(B)

of the purchase agreement states: “SELLERS and BUYERS acknowledge that the

SELLERS of real property have a legal duty to disclose material defects of which

SELLERS have actual knowledge and which a reasonable inspection by the

BUYERS would not reveal.” In Payton, the checkbox created no contractual duty

by the seller. See id. at 677 (finding the checkbox “appear[ed] to be simply an

acknowledgment by the parties of some effort to show an intention to comply with

the requirements of chapter 558A”) Conversely, the clause in the agreement

between Morrisey and AIH expands AIH’s disclosure duties from mere statutory

obligations to both statutory and contractual obligations, hence the jury’s finding of

both a breach of contract and a violation of chapter 558A. Because AIH’s failure

to disclose a material defect was a breach of the purchase agreement, the
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attorney-fees provision does not merge with the deed, and reasonable attorney

fees shall be assessed.

B. Calculation of Costs

Morrisey next argues that, if we vacate the district court’s order denying

attorney fees, we must recalculate Morrisey’s recovery to determine if his recovery

exceeds the $10,000 offered by AIH in its May 19, 2021 offer to confess judgment.

Under Iowa Code section 677.4, a defendant “may offer in court to confess

judgment for part of the amount claimed, or part of the causes involved in the

action.” If the plaintiff does not timely accept the offer, “the offer shall be treated

as withdrawn.” Iowa Code § 679.9. Iowa Code section 677.10 provides that “[i]f

the plaintiff fails to obtain judgment for more than was offered by the defendant,

the plaintiff cannot recover costs, but shall pay the defendant’s costs from the time

of the offer.”

Under NCJC, Inc. v. WMG, L.C., “costs” include attorney fees when the

“prevailing party is contractually entitled to recover its reasonable attorney fees”

from the defendant. 960 N.W.2d 58, 65 (Iowa 2021); see also Iowa Code

§ 625.22(1) (providing that when a written contract allows for attorney fees, those

reasonable fees are taxed as “costs”). Thus, reasonable pre-offer-to-confess

attorney fees may be included comparing the amount of recovery with the amount

of the offer to confess.

And the parties both agree that, if there was no merger, Morrisey’s pre-offer

attorney fees may be considered when comparing Morrisey’s recovery amount

with the offer-to-confess amount. The jury returned a verdict assessing damages

at $8500. Pre-judgment interest from the date of the petition’s filing to the date of
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the offer to confess was assessed at $644.52. The district court assessed costs

before the offer to confess at $325.

We have reviewed the motion for award of pre-offer to confess attorney fees

submitted by Morrisey’s counsel and find the billed hours and hourly rate to be

reasonable. See Iowa Code § 625.24 (requiring an attorney affidavit to be filed

prior to any attorney fees being taxed). Because the purchase agreement

unambiguously provides that the parties agreed that AIH shall pay costs and

reasonable attorney fees for “any action at law or equity,” we award Morrisey his

requested $18,953 in attorney fees until May 19, 2021. Morrisey also submitted

an affidavit attesting to various costs associated with filing fees, service, and expert

reports. Our award of reasonable attorney fees should be sufficient to cover those

various costs. The total amount of Morrisey’s recovery is $28,422.52, which

exceeds the amount of AIH’s offer to confess, and as the prevailing party, Morrisey

is not responsible for AIH’s costs following May 19, 2021.

IV. Conclusion

In sum, we affirm in part and reverse in part the district court’s order for

judgment on jury verdict, affirming only the portions ratifying the jury verdict. We

vacate the district court’s May 15, 2024 order nunc pro tunc, May 15, 2024 order

denying motion for pre-offer attorney fees, and May 23, 2024 order denying motion

to reconsider. We award Morrisey $18,953 in attorney fees and find his total

recovery to be $28,422.52. We remand to the district court for entry of an order of

judgment consistent with this opinion.

AFFIRMED IN PART, REVERSED IN PART, VACATED IN PART, AND

REMANDED WITH INSTRUCTIONS.