IN THE COURT OF APPEALS OF IOWA
No. 20-1066
Filed January 12, 2022
GREATAMERICA FINANCIAL SERVICES CORPORATION,
Plaintiff-Appellee,
vs.
RIDE NOW AUTO PARTS LLC, JOSEPHINE DOLATOWSKI, AND ROBERT
HASTIS,
Defendants-Appellants.
________________________________________________________________
Appeal from the Iowa District Court for Linn County, Christopher L. Bruns
(summary judgment) and Mary E. Chicchelly (attorney fees and final judgment),
Judges.
Defendants appeal the grant of summary judgment in favor of GreatAmerica
Financial Services Corp. AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED.
Larry J. Thorson of Ackley, Kopecky & Kingery, L.L.P., Cedar Rapids, for
appellant.
Christopher K. Loftus of Simmons Perrine Moyer Bergman PLC, Cedar
Rapids, for appellee.
Considered by Mullins, P.J., and May and Ahlers, JJ.
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AHLERS, Judge.
The question in this appeal is whether a party that accepts the benefits of a
contract and partially performs under it can escape liability by claiming the contract
was procured by misrepresentations and deceit. We find that the party cannot
escape liability under these circumstances, so we affirm the district court’s grant
of summary judgment against that party. The same cannot be said with respect to
a separate party executing a personal guaranty of the underlying contract, so we
reverse the grant of summary judgment against one of the purported guarantors.
In 2018, Ride Now Auto Parts LLC (Ride Now) executed a financing
agreement (Agreement). Ride Now’s president, Josephine Dolatowski, signed the
Agreement on Ride Now’s behalf. The Agreement called for Ride Now to make
monthly payments to GreatAmerica Financial Services Corp. (GreatAmerica) for
sixty months in order to lease several pieces of office equipment obtained from a
third-party vendor. The Agreement includes a “hell or high water” clause stating:
NET AGREEMENT. THIS AGREEMENT IS NON-CANCELABLE
FOR THE ENTIRE AGREEMENT TERM. [RIDE NOW]
UNDERSTAND[S] [GREATAMERICA IS] PAYING FOR THE
EQUIPMENT BASED ON [RIDE NOW’S] UNCONDITIONAL
ACCEPTANCE OF IT AND [RIDE NOW’S] PROMISE TO PAY
[GREATAMERICA] UNDER THE TERMS OF THIS AGREEMENT,
WITHOUT SET-OFFS FOR ANY REASON, EVEN IF THE
EQUIPMENT DOES NOT WORK OR IS DAMAGED, EVEN IF IT IS
NOT [RIDE NOW’S] FAULT.
On the same date the Agreement was signed, Dolatowski and her
grandson, Robert Hastis, signed a personal guaranty (Guaranty).1 If it is
enforceable, the Guaranty makes Dolatowski and Hastis personally responsible
1 Hastis was employed by Ride Now at the time.
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for Ride Now’s obligations to GreatAmerica under the Agreement via the following
clause:
Guarantor hereby unconditionally guarantees, as a direct and
primary obligation of Guarantor, the full and timely performance of all
payment and nonpayment obligations owed by [Ride Now] to
[GreatAmerica] under the Agreement, under any prior existing
agreements between [Ride Now] and [GreatAmerica], and under all
future agreements between [Ride Now] and [GreatAmerica] . . . .
Guarantor also agrees to pay all of [GreatAmerica’s] out-of-pocket
expenses, including attorneys’ fees, incurred by [GreatAmerica] in
connection with the enforcement of this Guaranty.
A little more than one year later, GreatAmerica filed a petition alleging Ride
Now breached the Agreement by failing to make the required payments. The
petition also sought to recover against Dolatowski and Hastis under the Guaranty.
GreatAmerica moved for summary judgment, which the district court granted. The
court entered judgment in GreatAmerica’s favor in the amount of $32,068.42 for
breach of contract and $35,166.50 for attorney fees plus costs. The judgment was
entered against Ride Now, Dolatowski, and Hastis, jointly and severally. Ride
Now, Dolatowski, and Hastis appeal.
I. Scope and Standard of Review
“We review a district court’s ruling on a motion for summary judgment for
correction of errors at law.”2 “The legal standard for a proper ruling on summary
judgment is when there is no genuine issue of material fact on the record, and ‘the
moving party is entitled to a judgment as a matter of law.’”3 “Where reasonable
2 GreatAmerica Fin. Servs. Corp. v. Natalya Rodionova Med. Care, P.C., 956
N.W.2d 148, 153 (Iowa 2021).
3 Id. (quoting Iowa R. Civ. P. 1.981(3)).
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minds can differ on how an issue should be resolved, a fact question has been
generated, and summary judgment should not be granted.”4
II. Analysis of the Issues
The three defendants argue summary judgment was not appropriate
because Dolatowski and Hastis were fraudulently induced into signing the
documents by, among other actions, hiding key provisions from their view. Hastis
also argues he was a mere employee of Ride Now and his signature “was obtained
by the ruse that he was just signing a ‘receipt for delivery’”; thus, he received no
consideration when signing the Guaranty and the Guaranty is not a valid contract
as to him.
A. Enforcement of the Agreement
The Agreement requires the signers to provide “unconditional acceptance”
of the equipment and to fulfill their obligations under the Agreement regardless of
whether they are later dissatisfied with the equipment. Such language is known
as a hell-or-high-water clause, which “is a contractual provision that requires the
lessee to absolutely and unconditionally fulfill its obligations under the lease in all
events (i.e., come hell or high water).”5
A hell-or-high-water clause in a leasing contract is valid and enforceable
upon acceptance of the goods.6 There is no factual dispute that Ride Now took
possession of the equipment. There is also no factual dispute that GreatAmerica
sent monthly invoices to Ride Now and Ride Now made six payments on the
4 Id. (quoting C & J Vantage Leasing Co. v. Wolfe, 795 N.W.2d 65, 73 (Iowa 2011)).
5 Wolfe, 795 N.W.2d at 76–77.
6 See id.
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equipment covering eight months of the Agreement. Dolatowski signed all six
checks, and several of the checks included notations corresponding to the invoice
numbers on the invoices sent by GreatAmerica. Such activity establishes that Ride
Now accepted the equipment.7 Dolatowski’s observation that she directed five of
the six payments to “Commodore Financial” instead of GreatAmerica does not help
Ride Now. The Agreement states that Commodore Financial is “a business unit
of GreatAmerica” and a filing with the Iowa Secretary of State shows GreatAmerica
adopted Commodore Financial as a fictitious name. As a result, the fact that some
payments were made payable to Commodore Financial and another made to
GreatAmerica is inconsequential. Because the documents contain a valid hell-or-
high-water clause and Ride Now accepted the equipment, Ride Now is barred from
raising most defenses to GreatAmerica’s breach-of-contract claim.
Although the hell-or-high-water clause bars many defenses, it does not bar
Ride Now from raising defenses related to contract formation.8 If the contract was
never formed, then the contract’s clauses, including the hell-or-high-water clause,
would not take effect. Ride Now asserts there was fraud in the execution of the
Agreement because the contents of the Agreement were hidden from its signers.
This defense is defeated by the undisputed facts that show Ride Now ratified the
Agreement. “Ratification is the affirmance of a prior act done by another, whereby
the act is given effect as if done by an agent acting with actual authority.” 9 “A
7 See Rodionova, 956 N.W.2d at 155–56 (finding a lessee that possessed the
goods for seven months and made seven monthly payments accepted those
goods).
8 See Wolfe, 795 N.W.2d at 78.
9 Rodionova, 956 N.W.2d at 154 (quoting Restatement (Third) of Agency § 4.01(1),
at 304 (Am. L. Inst. 2006)).
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‘knowing acceptance of the benefit of a transaction ratifies the act of entering into
the transaction.’”10 A lessee may ratify a contract even when signed under fraud,
forgery, misunderstanding, or mistake because the lessee “should not be able to
accept the benefits of a contract even if the signer’s acts are unauthorized, but
deny his or her obligations under the contract because the signer’s acts are
unauthorized.”11 As explained above, there is no dispute that Ride Now took
possession of the equipment and made monthly payments on the equipment.
Such activity establishes that Ride Now knowingly accepted the benefits of the
Agreement and thus ratified it despite any defects in its formation.12 There is no
genuine issue of material fact that Ride Now ratified the Agreement. As a result,
we affirm the grant of summary judgment in favor of GreatAmerica against Ride
Now.
B. Enforcement of the Guaranty
Both Dolatowski and Hastis challenge entry of judgment against them under
the Guaranty, claiming there was fraud perpetrated in the execution of it.
1. Dolatowski’s Personal Liability
We start our analysis of Dolatowski’s fraud-in-the-execution defense with
some general contract principles. One established principle is that a party’s failure
to read a contract before signing it does not invalidate the contract. 13 However,
there is a countervailing principle. If the party is “prevented, by some artifice,
10 Id. (quoting Restatement (Third) of Agency § 4.01(1) cmt. d).
11 Id. at 154–55 (quoting Life Invs. Ins. Co. of Am. v. Est. of Corrado, 838 N.W.2d
640, 647 (Iowa 2013)).
12 See id. at 155.
13 Peak v. Adams, 799 N.W.2d 535, 543 (Iowa 2011).
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deception, or fraud of the opposite party, from reading or ascertaining the contents
and effect of the writing,” then the rule that the party is bound by the documents
even though the party did not read them would not apply.14
Dolatowski presented evidence that the body of the documents she signed
were covered up when she signed the documents. This suggests artifice and
deception that may relieve her of her obligations under the contracts. But other
undisputed evidence undermines this suggestion. Dolatowski was the president
and only owner of Ride Now when the three documents were signed.15 She knew
she was signing multiple documents as part of the plan to obtain the equipment for
her business, suggesting more than one obligation was being undertaken. Even
accepting as true Dolatowski’s assertion that the bodies of the documents she
signed were covered up, she admits that she knew she was signing contracts. She
also admits the body of each document was on the clipboard upon which she was
signing, establishing she had the opportunity to read the documents. She
presented no evidence that she requested or tried to view the contracts but was
prevented from doing so. These undisputed facts show that, even though artifice
and deception may have been attempted, they did not prevent her from reading or
ascertaining the contents of the documents. As a result, Dolatowski is bound by
the terms of those documents, which included the Guaranty.16 Pursuant to the
14 Midland Mortg. Co. v. Rice, 198 N.W. 24, 26 (Iowa 1924).
15 The three documents were the Agreement, the equipment list attached to the
Agreement, and the Guaranty.
16 See Peak, 799 N.W.2d at 543 (declaring it to be “well-settled that failure to read
a contract before signing it will not invalidate the contract” (quoting Huber v. Hovey,
501 N.W.2d 53, 55 (Iowa 1993)).
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terms of the Guaranty, the district court correctly entered summary judgment
against Dolatowski for all amounts owed by Ride Now under the Agreement.
2. Hastis’s Personal Liability
Hastis’s fraud-in-the-execution defense yields a different result. Like
Dolatowski, Hastis presented evidence that the body of the single document he
signed (i.e., the Guaranty) was covered when he signed it. Unlike Dolatowski, who
admitted she knew she was signing contracts, Hastis presented evidence that he
was told the document he was asked to sign was “a receipt for delivery of the
computer.” In other words, Dolatowski knew she was taking on a legal obligation
by signing. In contrast, Hastis has generated a genuine issue of material fact
whether he knew he was taking on a legal obligation. This distinction is important.
In deciding whether the signer of a purported contract has been given reasonable
opportunity to know the character or essential terms of the contract, “less care will
ordinarily be expected of him if he did not intend to assume a legal obligation at all
than if he intended to assume a legal obligation, although one of a different
nature.”17 The evidence that Hastis claims he was duped into signing something
that would not create a legal obligation raises a genuine issue of material fact as
to whether artifice and deception was employed with respect to Hastis’s signing of
the Guaranty. Furthermore, Hastis asserts he had little-to-no involvement with the
underlying Agreement after it was signed and the ensuing payments, which
precludes us from finding he ratified the Guaranty as a matter of law. 18 As there
17Restatement (Second) of Contracts § 163 cmt. b (October 2021 update).
18See Frontier Leasing Corp. v. Barisal, Inc., No. 03-1256, 2004 WL 1396261, at
*1 (Iowa Ct. App. June 23, 2004) (discussing the evidence required to prove a
party ratified a personal guaranty).
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is a factual dispute whether Hastis was the victim of fraud in the execution of the
Guaranty, summary judgment should not have been entered against him. We set
aside such judgment against Hastis and remand for additional proceedings.
Because of this outcome, we do not address Hastis’s claims that the Guaranty
lacked consideration. That issue can be addressed via the additional proceedings
following remand if necessary.
C. Attorney Fees
This appeal challenges the district court’s award of attorney fees to
GreatAmerica. Attorney fees are generally not recoverable unless provided for by
statute or contract.19 Here, both the Agreement and the Guaranty allow
GreatAmerica to recover attorney fees. Because we have reversed the judgment
against Hastis, only Ride Now and Dolatowski potentially remain liable for an
attorney fee judgment at this time.
“We review the court’s award of attorney fees for an abuse of discretion.
Reversal is warranted only when the court rests its discretionary ruling on grounds
that are clearly unreasonable or untenable.”20 Ride Now and Dolatowski argue
that the amount of attorney fees, which exceed the amount of damages on the
contract claim, are excessive for an ordinary breach-of-financing-contract claim
that “did not present any special challenges.” However, the district court noted
that, in addition to the breach-of-contract claim, GreatAmerica was required to
address the pro se filings and a fraud counterclaim, which Dolatowski pursued
19Thornton v. Am. Interstate Ins. Co., 897 N.W.2d 445, 474 (Iowa 2017).
20NCJC, Inc. v. WMG, L.C., 960 N.W.2d 58, 61 (Iowa 2021) (quoting Boyle v.
Alum-Line, Inc., 773 N.W.2d 829, 832 (Iowa 2009)).
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through summary judgment.21 The amount of attorney fees awarded corresponds
to the detailed time and expense schedule GreatAmerica provided with its request
for attorney fees. We find no abuse of discretion in the court’s attorney-fee award.
III. Conclusion
The undisputed facts in the record show that Ride Now took possession of
the office equipment and made monthly payments consistent with the terms of the
Agreement. As a result, Ride Now ratified the Agreement and is liable for its
breach. We affirm the grant of summary judgment in favor of GreatAmerica
against Ride Now.
The undisputed facts show that Dolatowski knew she was signing contracts
and had them available to read before doing so. She is bound by the terms of the
Guaranty, which makes her liable for the amounts owed by Ride Now. We affirm
the grant of summary judgment in favor of GreatAmerica against Dolatowski.
Genuine issues of material fact remain as to whether fraud was perpetrated
upon Hastis in the execution of the Guaranty. As a result, we vacate the entry of
judgment against Hastis, including the judgment for attorney fees, and remand for
additional proceedings.
We find no abuse of discretion in the amount of attorney fees awarded
against Ride Now and Dolatowski. Costs on appeal are assessed two-thirds to
Ride Now and Dolatowski, jointly and severally, and one-third to GreatAmerica.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
21 See Lynch v. City of Des Moines, 464 N.W.2d 236, 239 (Iowa 1990) (stating
courts “cannot place undue emphasis on the size of the judgment, but must look
at the whole picture” when awarding attorney fees).