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IN THE SUPREME COURT OF IOWA No. 135 / 04-0525 Filed May 5, 2006 HALLETT CONSTRUCTION COMPANY, Appellee, vs. FRANCIS A. MEISTER, IRENE M. MEISTER, MICHAEL F. MEISTER, AND THOMAS J. MEISTER, Appellants.

On review from the Iowa Court of Appeals. Appeal from the Iowa District Court for Sac County, Gary L. McMinimee, Judge.

Mining company holding sand and gravel rights in property seeks further review of court of appeals decision reversing district court's summary judgment ruling holding property owners' claims were time barred. DECISION OF COURT OF APPEALS VACATED. DISTRICT

COURT JUDGMENT AFFIRMED IN PART AND REVERSED IN PART. CASE REMANDED.

Thaddeus Cosgrove of Cosgrove Law Firm, Holstein, and Joseph J. Heidenreich of Dresselhuis & Heidenreich, Odebolt, for appellants.

David P. Jennett, Storm Lake, for appellee.

2 TERNUS, Justice. This case involves a dispute over the sand and gravel rights in real property owned by the appellants, Francis Meister, Irene Meister, Michael Meister, and Thomas Meister. The Meisters sought to evict the appellee, Hallett Construction Company, from the property and also claimed damages for holding over, breach of contract, and fraud. The district court granted Hallett's summary judgment motion, ruling the Meisters' claims were barred by the applicable statutes of limitation. The Meisters' appeal was transferred to the Iowa Court of Appeals. That court reversed the district court, holding there was a factual dispute as to when the Meisters' claims accrued. This court granted Hallett's request for further review. Upon consideration of the record and the arguments of the parties, we think the district court correctly dismissed the Meisters' fraud claim on statute-of-limitations grounds, but incorrectly ruled the remaining claims were time barred. Accordingly, we vacate the court of appeals decision, affirm in part and reverse in part the judgment of the district court, and remand this case for further proceedings consistent with this opinion. I. Background Facts and Proceedings. Because this case comes before us on a summary judgment ruling, we view the facts in a light most favorable to the Meisters, the parties opposing summary judgment. See Crippen v. City of Cedar Rapids, 618 N.W.2d 562, 565 (Iowa 2000). Michael and Thomas Meister are the sons of Francis and Irene Meister. Together they own ninety acres of real estate in Sac County. In 1987, the Meisters and Hallett negotiated a lease for the sand and gravel rights to this property. A proposed ten-year lease was presented to the Meisters at a meeting in Hallett's offices on July 7, 1987. The Meisters

3 objected to paragraph 11 in this pre-printed form that would allow Hallett to renew the lease "for an additional period of 10 years from the date of its termination." Hallett agreed to remove this provision, and it did so by striking the number "10" with x's and typing "0" in its place. After this change, the Meisters signed two copies of the lease. They were given one copy, which Irene placed in a file at her home. The Hallett representatives took the other copy to be signed by company officers. On August 4, 1987, a Hallett representative visited the Meisters' farm with a copy of the lease that had been signed by Hallett's officers. The representative said it was necessary for the Meisters to initial each page; so the Meisters and the Hallett representative initialed each page, with the exception of the signature page. Unknown to the Meisters, this copy of the lease contained the original provision giving Hallett an option to renew. Without any notice from Hallett that the lease again contained an option to renew, the Meisters assumed they were signing the lease as it had been modified on July 7. Irene was given a copy of the initialed lease [lease 2], and she placed it in a separate file in her home. In 1996, the Meisters, who believed Hallett was not paying them for sand it had taken off the property, contacted an attorney about this issue and also about the termination of the lease at the conclusion of the ten-year term. After reviewing lease 2, the lawyer informed Michael Meister that the lease contained a ten-year option to renew. Although the Meisters believed they had not agreed to an option to renew, they concluded their recollection was mistaken, and so they continued to perform under the lease. On May 15, 1998, pursuant to paragraph 11 of lease 2, Hallett exercised its option to renew the lease until July 7, 2008. Sometime in 2001, the Meisters came across the original lease signed on July 7, 1987, and realized their recollection that the renewal provision

4 had been eliminated was correct. Meanwhile, disagreements over payment for materials being removed by Hallett continued, and on December 18, 2002, the Meisters served Hallett with a termination of tenancy pursuant to Iowa Code section 562.4 (2001).1 The Meisters asserted Hallett had failed to pay for materials removed from their land and demanded that Hallett vacate the premises. Hallett then filed this action on March 18, 2003, seeking a declaratory judgment establishing its rights in the property pursuant to lease 2. In addition, Hallett sought damages based on interference with contractual relationships, oral and written defamation, and breach of implied and express covenants of the lease. The Meisters filed a counterclaim in four counts on April 3, 2003. In count I, they claimed there was no valid written contract and an at-will tenancy existed; they sought to recover the real property. In count II, the Meisters sought damages based on Hallett's alleged intentional and unlawful holding over. In count III, the Meisters claimed Hallett had failed to pay the agreed-upon rents and royalties. And in count IV, they asked for damages based on Hallett's alleged fraud in altering the lease. Hallett moved for summary judgment on the Meisters' counterclaims, arguing they were barred by the five-year statute of limitations for fraud and unwritten contracts. See Iowa Code

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