                    IN THE COURT OF APPEALS OF IOWA

                                  No. 14-1272
                              Filed August 5, 2015


FIRST AMERICAN BANK,
     Plaintiff-Appellee,

vs.

URBANDALE LASER WASH, LLC,
WALNUT CREEK LASER WASH, LLC,
and STEVEN GOLDEN,
     Defendants-Appellants.
________________________________________________________________


      Appeal from the Iowa District Court for Polk County, Jeffrey Farrell, Judge.



      Defendants appeal from the district court’s ruling granting summary

judgment in favor of the plaintiff in a foreclosure action. AFFIRMED.




      Matthew E. Laughlin and Sarah E. Crane of Davis, Brown, Koehn, Shors

& Roberts, P.C., Des Moines, for appellants.

      Nicholas Cooper and William C. Scales of Whitfield & Eddy, P.L.C., Des

Moines, for appellee.



      Considered by Danilson, C.J., and Vaitheswaran and Doyle, JJ.
                                       2


DANILSON, C.J.

      First American Bank initiated a foreclosure action against Urbandale Laser

Wash, LLC, Walnut Creek Laser Wash, LLC, and Steven Golden (collectively

referred to as Golden). Golden responded and claimed as an affirmative defense

that the two parties had reached a forbearance agreement that precluded

foreclosure. Golden also filed four counterclaims: (1) First American’s breach of

the forbearance agreement was a breach of contract; (2) First American’s

freezing of Golden’s bank accounts was a breach of the bank account

agreements; (3) First American converted the funds in Golden’s bank accounts;

and (4) First American breached its duty of good faith and fair dealing. First

American filed a motion for summary judgment. Golden resisted First American’s

motion and filed a cross-motion for summary judgment.         The district court

granted First American’s motion for summary judgment in whole and dismissed

Golden’s counterclaims.

      Here, Golden maintains there is a genuine issue of material fact whether

the parties reached a forbearance agreement so First American was not entitled

to summary judgment in the foreclosure action.      Golden also maintains First

American was not entitled to summary judgment on Golden’s counterclaims.

      Because we find there was no meeting of the minds between the parties

to form a second forbearance agreement as a matter of law, the district court’s

ruling granting First American’s motion for summary judgment on the foreclosure

claim and dismissing the corresponding counterclaim was proper. Additionally,

because First American’s placement of the administrative hold on Golden’s bank

accounts and use of the funds was done pursuant to agreement between the
                                       3


parties, the district court properly dismissed Golden’s remaining counterclaims.

Thus, we affirm the district court’s ruling granting First American’s motion for

summary judgment in whole and dismissing each of Golden’s counterclaims.

I. Background Facts and Proceedings.

      This case involves two loans—totaling approximately $2,679,000—that

Steven Golden took out to purchase and operate two car washes. On April 17,

2009, he executed two promissory notes payable to First American.           The

promissory notes were secured by two mortgages on the real estate, two security

agreements, and two limited guaranties by Steven Golden individually.

      The notes were originally set to mature on April 17, 2012, but First

American and Golden executed a change in terms agreement to extend the

maturity date until July 5, 2012. The modification agreement was in writing and

signed by the parties.

      Golden defaulted on the loans in July 2012, but First American continued

to negotiate with Golden to attempt to reach a modification, which would include

a forbearance agreement.

      On April 17, 2013, Steven Phipps, a special assets officer for First

American, prepared a modification request for submission to its director loan

committee based on his understanding of the terms of the proposed loan

restructure. A separate modification request was submitted for each loan, and

both requests listed “requested change[s]” of adding Golden Enterprises, LTD as

a limited guarantor of $350,000 and Steven Golden individually as an unlimited

guarantor.
                                        4


       On April 30, 2013, Phipps sent Steven Golden an email stating, “The

requests did not get to committee this week, but will go next Tuesday. I made

the adjustment to the forbearance agreement as discussed and will change dates

to May instead of April.”

       Golden made interest payments on May 6, 2013, in the amount of

$18,415.321.1

       On May 7, 2013, First American’s director loan committee met and

approved the modification request that had been submitted on April 17.

       On May 8, 2013, Phipps sent Steven Golden an email stating, in part,

“Both loans were approved in committee late yesterday.         I would estimate

documents would be ready either Friday or early next week (usually takes 2-3

days after they receive formal approval).”

       On May 23, 2013, Phipps sent Steven Golden an email with the updated

forbearance agreements attached “for [his] review.”

       On May 24, 2013, Steven Golden sent Phipps an email advising him that

he would not be able to keep their scheduled meeting to sign documents the next

day because his attorney had not yet reviewed and approved the agreement.

       On June 5, 2013, Golden sent his attorney, Joel Templeman, an email,

stating in part:

       I am forwarding to you the e-mail chain of discussions with First
       American Bank concerning financing of the two car washes called
       Urbandale Laser Wash and Walnut Creek Laser Wash. There are
       quite a few e-mails but they are mostly short. Am sending you this
       “stuff” so you get the flavor of negotiations. We are close to an
       agreement but there are some items I do not want to agree to

1
  Golden made interest payments periodically after the July 2012 default. He made
seven payments between July 27, 2012, and March 7, 2013.
                                          5


      without discussion with you and one item I do not want to agree to
      period. In this case I need you to be the “bad guy.” It concerns the
      personal guarantee.

      On June 25, 2013, Golden’s new attorney, Matthew Laughlin, sent an

email to First American listing thirteen issues with the proposed forbearance

agreement and associated documents. The attorney stated he had reviewed the

documents with Steven Golden and asked First American to send revised

documents with the changes if they were acceptable.       One of the proposed

changes was to remove Golden as a co-borrower and instead allow him to

continue with the previous limited guarantees.

      On June 28, 2013, First American sent Golden a notice for default and

demand for payment reflecting the amount due that day—$2,508,720.22. The

demand stated, “Please remit such payment on or before July 15, 2013 . . . .”

The same day, First American placed an administrative hold on, or “froze”

Golden’s small business accounts. At the time, the accounts totaled $38,265.06

although the amount grew to approximately $48,419 as receipts continued to be

deposited into the accounts.

      On July 13, 2013, First American filed a petition for mortgage foreclosure

and foreclosure of security agreements.

      On August 16, 2013, Golden filed an answer, affirmative defenses, and

counterclaims. As an affirmative defense, Golden maintained First American had

entered into a forbearance agreement and was in breach of that agreement.

Golden also asserted four counterclaims: (1) First American’s breach of the

forbearance agreement was a breach of contract, (2) First American’s freezing of

Golden’s bank accounts was a breach of the bank account agreements, (3) First
                                        6


American converted the funds in Golden’s bank accounts, and (4) First American

breached its duty of good faith and fair dealing. First American filed a motion for

summary judgment.

      On January 3, 2014, First American retroactively set off the “frozen” funds

in the small business accounts against the indebtedness owed by Golden

effective June 28, 2013. The funds were applied to the principal balance owed.

      On January 24, 2014, First American filed a motion for summary

judgment.

      On March 7, 2014, Golden filed a resistance to First American’s motion for

summary judgment and a cross-motion for summary judgment.

      On May 7, 2014, the district court ruled on the motions. The court found

the parties “never reached mutual asse[n]t on a forbearance agreement,” and

Golden had no affirmative defense to the foreclosure action. Regarding Golden’s

counterclaims, the district court found there was not a forbearance agreement so

First American could not have breached it. The court also found First American

was entitled to freeze the small business accounts for setoff under the terms of

the contract and at common law. The court granted First American’s motion for

summary judgment in whole.        Golden’s motion for summary judgment was

denied and the counterclaims were dismissed with prejudice.

      On June 2, 2014, Golden filed a motion to enlarge, amend, or reconsider

the district court’s ruling. First American resisted, and the district court denied

the request on July 9, 2014. The same day, the district court entered judgment

and decree of foreclosure against Golden.

      Golden appeals.
                                        7


II. Standard of Review.

      We review summary judgment rulings for correction of errors at law.

Crippen v. Cedar Rapids, 618 N.W.2d 562, 565 (Iowa 2000).                Summary

judgment is proper only if “the pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” Iowa R. Civ. P. 1.981(3). A question of fact exists

“if reasonable minds can differ on how the issue should be resolved.” Walker v.

Gribble, 689 N.W.2d 104, 108 (Iowa 2004).        In reviewing the district court’s

ruling, the evidence presented must be viewed in the “light most favorable to the

party opposing the motion for summary judgment.” Kelly v. Iowa Mut. Ins. Co.,

620 N.W.2d 637, 641 (Iowa 2000); Gen. Car & Truck Leasing Sys., Inc. v. Lane

& Waterman, 557 N.W.2d 274, 276 (Iowa 1996). However, the opposing party

“may not rest upon the mere allegations of his pleading but must set forth specific

facts showing the existence of a genuine issue for trial.” Hlubek v. Pelecky, 701

N.W.2d 93, 95 (Iowa 2005); see also Iowa R. Civ. P. 1.981(5). Speculation is

insufficient to create a genuine issue of material fact. Hlubek, 701 N.W.2d at 96.

III. Discussion.

      A. Forbearance Agreement.

      The district court concluded the parties had not reached a forbearance

agreement. Golden maintains there is at least a genuine issue of material fact

whether a forbearance agreement was reached, so summary judgment was not
                                            8


proper.2 Also, Golden maintains the district court wrongly made determinations

of witness credibility, as well as inferences and findings of fact in the moving

parties’ favor in determining the parties had not reached a forbearance

agreement.

       Iowa Code section 535.17(2) (2013) provides, in part:

       Unless otherwise expressly agreed in writing, a modification of a
       credit agreement which occurs after the person asserting the
       modification has been notified in writing that oral or implied
       modifications to the credit agreement are unenforceable and should
       not be relied upon, is not enforceable in contract law by way of
       action or defense by any party unless a writing exists containing the
       material terms of the modification and is signed by the party against
       whom enforcement is sought. . . . When a modification is required
       by this section to be in writing and signed, such requirement cannot
       be modified except by clear and explicit language in a writing
       signed by the person against whom the modification is to be
       enforced.3

Section 535.17(2) places an extra burden on the parties entering into a

contract—the essential elements of a contract must still exist. See Iowa Code

§ 535.17(7) (“This section entirely displaces principles of common law and equity

that would make or recognize exceptions to or other limit or dilute the force and

effect of its provisions concerning the enforcement in contract law of credit

agreements or modifications of credit agreements. However, this section does

not displace any additional or other requirements of contract law, which shall

continue to apply, with respect to the making of enforceable contracts . . . .”

(emphasis added)).
2
  Although Golden now maintains summary judgment was not appropriate because there
is a genuine issue of material fact whether the parties reached a forbearance
agreement, in its cross-motion for summary judgment, Golden asserted, “Pursuant to the
undisputed facts, there is no genuine issue of material fact regarding whether the parties
entered into a valid forbearance agreement preventing foreclosure . . . .”
3
  It is undisputed that First American provided Golden notification that only written
modifications are enforceable.
                                          9


         In order to be bound by it, “contract parties must manifest a mutual assent

to the terms of the contract.” Rick v. Sprague, 706 N.W.2d 717, 724 (Iowa 2005).

“This assent usually is given through the offer and acceptance.” Id. The party

who makes the offer is the master of the offer. Blackford v. Prairie Meadows

Racetrack & Casino, Inc., 778 N.W.2d 184, 191 (Iowa 2010). “A binding contract

requires an acceptance of an offer.”          Heartland Express, Inc. v. Terry, 631

N.W.2d 260, 270 (Iowa 2001). “[T]he acceptance must conform strictly to the

offer in all its conditions, without any deviation or condition whatever. Otherwise

there is no mutual assent and therefore no contract.” Rick, 706 N.W.2d at 724.

Acceptance must be communicated or delivered. Heartland, 631 N.W.2d at 270–

71. A private, uncommunicated assent does not make a contract. Id.

         Golden claims there is at least a genuine issue of material fact whether

First American agreed to only one $350,000 guarantee but later changed the

terms.    Golden’s mere assertion is not enough to make summary judgment

improper. See Hlubek, 701 N.W.2d at 95 (“[T]he nonmoving party may not rest

upon the mere allegations of his pleading but must set forth specific facts

showing the existence of a genuine issue for trial.”); see also Iowa R. Civ. P.

1.981(5). Golden’s only support of its assertion is an affidavit from Jeff Harder,

the vice president of VisionBank, which provided services to Golden Enterprises

and had to approve any guaranty made by Golden Enterprises. Harder’s affidavit

states on or about April 16, 2013, he had a phone conversation with Steve

Phipps and another First American employee in which Harder approved one

$350,000 guaranty and “it was understood by all parties in the call that

VisionBank would support only one $350,000 guaranty.” However, Phipps did
                                         10


not have the independent authority to approve Golden’s loan modifications.

Harder’s statement about what the parties understood is contrary to the April 17

modification request Phipps submitted to the director loan committee as it added

Golden Enterprise as a limited guarantor for $350,000 to each loan. On May 7,

2013, the director loan committee approved the modification request as

submitted. As the party making the offer, First American was the master of the

offer. See Blackford, 778 N.W.2d at 191.

       There is no genuine issue of material fact supporting Golden’s claim that

First American’s offer was accepted. Phipps sent Steve Golden the proposed

forbearance agreement for review on May 23, 2013. On June 5, 2013, Steve

Golden sent his attorney an email in which he stated, in part, “We are close to an

agreement but there are some items I do not want to agree to without discussion

with you and one item I do not want to agree to period.” The “one item” was the

personal guaranty required by the proposed forbearance agreement and not the

$350,000 limited guaranty by Golden Enterprises on each loan. Almost three

weeks later—on June 25, 2013—Golden’s attorney sent First American an email

listing thirteen issues Golden had with the proposed agreement and requesting

changes. First American sent the notice of default three days later.

       On appeal, Golden maintains the record establishes the parties entered

into an agreement because Phipps sent an email to Steve Golden that listed

terms and “many of those terms were then agreed to between” the parties. As

stated above, “[A]cceptance must conform strictly to the offer in all its conditions,

without any deviation or condition whatever. Otherwise there is no mutual assent

and therefore no contract.” Rick, 706 N.W.2d at 724. As a matter of law, there
                                         11


was no meeting of the minds to form a forbearance agreement, and the district

court’s ruling granting First American’s motion for summary judgment on the

foreclosure claim was proper.4 Because First American chose to negotiate with

Golden but had no duty to and did not enter a new agreement, Golden’s asserted

affirmative defense that First American breached the covenant of good faith and

fair dealing was properly dismissed. See Engstrom v. State, 461 N.W.2d 309,

314 (Iowa 1990) (concluding, “Plaintiffs have cited no case decided by this court

that provides a contract remedy for breaching an implied duty of good faith in

entering a contract. . . .    We believe the Restatement position is sound in

implying a duty of good faith only in the performance and enforcement of a

contract.”). Additionally, the district court did not err in granting First American’s

motion to dismiss Golden’s counterclaim that First American’s action of filing a

petition for foreclosure constituted a breach of contract.


4
  Golden makes several arguments regarding whether a forbearance agreement had to
be in writing to be enforceable, whether the emails between the parties constitute
writings, and whether partial performance defeats the writing requirement. However, we
find no agreement existed between the parties, under any of these circumstances. At
best, the parties had a nonbinding agreement to agree. A writing that clearly
contemplates the subsequent execution of a formal agreement raises the inference that
the parties to the writing did not intend to be bound until the subsequent formal
agreement is finalized. See, e.g., Kopple v. Schick Farms, Ltd., 447 F. Supp. 2d 965,
976 (N.D. Iowa 2006); Air Host Cedar Rapids, Inc. v. Cedar Rapids Airport Comm’n, 464
N.W.2d 450, 453 (Iowa 1991); Crowe–Thomas Consulting Group, Inc. v. Fresh Pak
Candy Co., 494 N.W.2d 442, 444–45 (Iowa Ct. App.1992). Furthermore, an agreement
that is absent essential details and terms (or leaves such details and terms open for
subsequent negotiation) is not usually recognized as a binding contract between the
parties. See Kopple, 447 F. Supp2d at 977–78; see also Air Host, 464 N.W.2d at 453.
Thus an email that contemplates the subsequent execution of a written formal
agreement would not be binding. See Iowa Code § 554D.106(2) (“This chapter only
applies to transactions between parties each of which has agreed to conduct
transactions by electronic means.”) Here, Phipps’ email sent May 8, 2013, to Golden
stated in the subject line “Loans-Approved,” but the contents of the email provided in
part, “Both loans were approved in committee late yesterday, I would estimate
documents would be ready either Friday or early next week.” Clearly the bank’s email
expresses its intent that a subsequent written loan agreement would be necessary.
                                         12


       B. Golden’s Remaining Counterclaims.

       Golden maintained First American’s action of freezing Golden’s bank

accounts constituted a breach of the bank account contracts, a breach of the

duty of good faith and fair dealing, and conversion. The district court granted

First American’s motion to dismiss Golden’s counterclaims. Golden maintains

the district court made an error of law by failing to enforce the language of the

bank account contracts and the district court’s dismissal of the claims should be

reversed.

       Golden does not dispute that the bank account agreements at issue allow

First American to set-off funds against a due and payable debt.             Golden’s

argument appears to be two-fold: (1) the debt was not “due and payable” on

June 28, 2013, when the administrative hold was placed, because First

American’s letter sent on the same date set forth a demand date of July 15,

2013, and (2) First American’s action in placing an administrative hold on the

funds without actually using them to set-off the debt was in breach of the

contract.

       The terms and conditions of the small business accounts agreements in

question explicitly give First American the following rights:

       SETOFF—We may (without prior notice and when permitted by
       law) set off the funds in this account against any due and payable
       debt you owe us now or in the future, by any of you having the right
       of withdrawal, to the extent of such persons’ or legal entity’s right to
       withdraw. . . . We will not be liable for the dishonor of any check
       when the dishonor occurs because we set off a debt against this
       account. You agree to hold us harmless against any claim arising
       as a result of our exercise of our right to setoff.

Additionally, the provisions of the promissory notes provide:
                                         13


              SECURITY: To secure the payment and performance of
       obligations incurred under this Note, Borrower grants Lender a
       security interest in all of Borrower’s right, title, and interest in all
       monies, instruments, savings, checking share and other accounts
       of Borrower . . . that are now or in the future in Lender’s custody or
       control.
       ....
              RIGHTS OF LENDER ON EVENT OF DEFAULT. If there is
       an Event of Default under this Note, Lender will be entitled to
       exercise one or more of the following remedies without notice or
       demand (except as required by law):
              ....
              (d) to take possession of any collateral in any manner
       permitted by law;
              (e) to employ a managing agent of the Property and let the
       same, in the name of the Lender or in the name of the Mortgagor,
       and receive the rents, incomes, issues and profits of the Property
       and apply the same, after the payment of all necessary charges
       and expenses, on account of the Obligations;
              ....
              (g) to set-off Borrower’s obligations against any amounts due
       to Borrower including, but not limited to, monies, instrument, and
       deposit accounts maintained with Lender; and
              (h) to exercise all other rights available to Lender any other
       written agreement or applicable law.

Pursuant to the signed promissory notes, First American had the right to take

possession of the monies in the bank accounts and set-off against the amount

owed without notice or demand. Here, Golden was in default in July 2012 and

owed First American approximately $2.5 million. First American did not have to

wait until June 28, 2013, to take action, and it was not required to send a demand

letter or provide Golden with notice. Moreover, Golden has cited no authority to

support its position that First American’s decision to voluntarily provide a demand

letter binds the bank in any way. Thus, the set-off could have been exercised

any time after that date and there is no requirement that it coincide with the date

fixed in the demand letter.

       As the district court stated:
                                          14


       While [Golden] may have been surprised by [First American’s]
       action to freeze and offset the accounts, an offset action is
       necessarily one of surprise. It would be impractical for the bank to
       give notice and warning of its intent due to concern that the account
       holder would transfer or otherwise spend the funds.

Despite the demand letter with a date of July 15, 2013, Golden’s debt remained

due and payable on the date of the set-off, June 28, 2013, and First American

was entitled to use the monies in Golden’s accounts to set-off the debt.

       We acknowledge it is undisputed that First American froze Golden’s

account on or about June 28, 2013, and subsequently retroactively set-off

$43,235.77 of the monies by action taken on January 3, 2014.5 But we are

unable to conclude this action or inaction constituted a breach of any agreement,

reflected a lack of fair dealing or good faith, or constituted conversion.6

       Golden maintains that this delay in using the monies for set-off constituted

a breach of contract. However, Golden has cited no case law or provision of the

parties’ agreements that requires First American to set-off the debts within a

certain time period. Even if First American was required to take such action

within a reasonable amount of time and did not, Golden cannot claim any

damages because the monies were retroactively set-off.              Moreover, as the

district court recognized:

              While the bank did not immediately “set-off” the funds in the
       bank accounts by applying them to the loans, the administrative
       hold served essentially the same purpose—it prevented defendants
5
  These monies were from the small business accounts.
6
  Both Golden and the district court state the sum of $48,419 was the largest balance in
the accounts after the administrative hold was placed on them. They cite to affidavits
stating the same information. However, accountings from the bank show $43,235.77
was used to set-off against the outstanding principal and $6278.27 was used to make a
“protective advance” to pay utilities and water, which totals $49,514.04. Because the
total amount of money in the accounts was less than the amount owed to First
American, we are not concerned by the difference.
                                        15


      from accessing the funds and protected the funds to apply to the
      delinquency owed to the bank.
             [Golden’s] argument amounts to a technicality without a
      meaningful distinction. In fact, the bank’s action was arguably more
      favorable to defendants. If the bank had set off the funds at the
      time, the action was essentially final. In theory, the bank’s action to
      freeze the accounts allowed flexibility if the parties had reached a
      voluntary resolution because the bank could have lifted the
      administrative hold.

      First American used the balance of the monies in the frozen small

business accounts to pay water and other utility bills for the two mortgaged

properties.   Golden maintains, in the alternative, that even if First American

properly used the funds in the frozen accounts to set-off the debt owed, the use

of funds for other purposes was improper and a breach of agreement.             We

disagree.

      The promissory notes specifically provide First American with the right to

“receive the rents, incomes, issues and profits of the Property and apply the

same” to “the payment of all necessary charges and expenses.” Golden does

not contend the water and other utility bills were not “necessary charges and

expenses.” In fact, as part of its argument that First American breached the duty

of good faith and fair dealing, Golden maintains that placing an administrative

freeze on the bank accounts “jeopardized its ability to pay municipal water bills,

electricity, state sales tax, insurance premiums, and other ordinary business

expenses.” Thus, neither First American’s action of placing the administrative

hold nor First American’s use of the funds as a protective advance was in breach

of the bank account contracts.

      Because First American’s actions were taken pursuant to contracts

between the parties, Golden’s remaining counterclaims regarding breach of duty
                                             16

of good faith and fair dealing and conversion also fail.7 See Alta Vista Props.,

LLC v. Mauer Vision Ctr., PC, 855 N.W.2d 722, 732 (Iowa 2014) (“The implied

covenant of good faith and fair dealing . . . does not give rise to new substantive

terms that do not otherwise exist in the contract.” (internal quotation marks

omitted)).       Thus, the district court properly dismissed each of Golden’s

counterclaims.

IV. Conclusion.

       We conclude there was no meeting of the minds between the parties to

form a second forbearance agreement as a matter of law, and the district court’s

ruling granting First American’s motion for summary judgment on the foreclosure

claim and dismissing the corresponding counterclaim was proper. Additionally,

because First American’s placement of the administrative hold on Golden’s bank

accounts and use of the funds was done pursuant to the agreements between

the   parties,    the   district   court   properly   dismissed   Golden’s   remaining

counterclaims. Thus, we affirm the district court’s ruling granting First American’s

motion for summary judgment in whole and dismissing each of Golden’s

counterclaims.

       AFFIRMED.




7
 Because we find the district court properly dismissed Golden’s counterclaims, we do
not consider whether Golden would have been entitled to a jury trial on them.
