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IN THE COURT OF APPEALS OF IOWA No. 6-806 / 04-1854 Filed December 28, 2006 RACCOON VALLEY STATE BANK, Plaintiff-Appellee, vs. DOUGLAS E. GRATIAS, VAL GRATIAS, and SUNCOAST INVESTMENTS, L.L.C., Defendants-Appellants. ________________________________________________________________ Appeal from the Iowa District Court for Dallas County, Darrell J. Goodhue, Judge.

Defendants appeal the district court's order granting plaintiffs motion for summary judgment in its action to foreclose on certain real estate. AFFIRMED.

William E. Robak of Robak Law Firm, P.C., Des Moines, for appellant. Jeffrey N. Bump of Bump & Bump, Panora, for appellee.

Heard by Sackett, C.J., and Zimmer and Eisenhauer, JJ.

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EISENHAUER, J. Defendants Douglas and Val Gratias and Suncoast Investments, L.L.C. appeal the district court's order granting Plaintiff Raccoon Valley State Bank's (the Bank) motion for summary judgment in its action to foreclose on certain real estate. They separately appeal from the denial of their motion to have the

sheriff's sale of the property set aside. The defendants contend the promissory note was an illusory contract, the Bank's notice to cure was defective, and the sheriff's sale should have been set aside based on procedural irregularities and an inadequate sale price. The Bank cross-appeals, contending the district court erred in denying its motion for sanctions. The Bank also requests an award of its appellate attorney fees. We affirm. I. Background Facts and Proceedings. On January 28, 2000, Douglas and Val Gratias executed a promissory note in the amount of $388,021.85. The note was secured by mortgages on two residential rental properties. The note contained both installment terms and a demand feature, and accrued interest on the outstanding principal balance at the rate of 8.25% per annum. Monthly

installments in the amount of $3018.00 were to be paid by the twentieth of each month beginning on March 20, 2000. The full balance of principal and interest was due on February 20, 2015. The promissory note contained the following language: IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THESE TERMS IN WRITING ARE ENFORCABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

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The note further provided that if the Gratiases were in default on the note, the Bank had the right to demand immediate payment of the outstanding principal, accrued unpaid interest, and other accrued charges. The mortgage securing the note stated the Gratiases would be in default if they failed to make a payment on the secured debt when due. On February 23, 2001, the Gratiases transferred title of the rental properties at issue to Suncoast Investments, L.L.C., which they own. In 2003, the defendants entered into an agreement to sell one of the residential rental properties, which was encumbered by a mortgage of $95,251.86. On May 21, 2003, the Bank requested a $111,053.01 payoff to release the property. The defendants objected to the amount of the payoff. The real estate agents carrying out the sale attempted to resolve the dispute with the Bank. The Bank agreed that upon receipt of the $111,053.01 payoff and the defendants' updated financial statements, it would make adjustments to the loan terms. The defendants tendered payment but failed to submit the requisite

financial information the Bank requested. Following the payoff, the defendants unilaterally reduced their monthly payment to $2012.00. On July 18, 2003, after receiving two reduced payments, the Bank sent the defendants written notification of their default under the terms of the promissory note. The notification informed the defendants that if they failed to cure the default by July 31, 2003, the Bank would declare the entire balance of the note immediately due and would foreclose the mortgage. The defendants failed to cure the default by July 31, 2003, and on August 1, 2003, the Bank accelerated the balance due and implemented the eighteen

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percent default interest rate provided in the note. On November 6, 2003, the Bank filed a petition to foreclosure the mortgage. The district court granted

summary judgment in favor of the Bank on September 15, 2004. Following an Iowa Rule of Civil Procedure 1.904(2) motion, the court entered judgment in favor of the Bank on October 15, 2004. The defendants appealed on November 15, 2004. On January 18, 2005, the real estate at issue was sold on special execution at a sheriff's sale. The Bank purchased the property for $264,000.00 and a sheriff's deed was issued. The defendants did not attend the sale. On January 25, 2005, the defendants filed a motion to set aside the sheriff's sale, accusing the Bank of fraud for failing to provide notice of the sheriff's sale to the them or their attorney, by failing to provide an abstract of title to the property to facilitate a sale of the property prior to the sheriff's sale, by disclosing to the deputy sheriff conducting the sale what it expected to bid, and by not bidding the full market value of the property. The Bank resisted the

motion and filed a motion for sanctions against the defendants pursuant to Iowa Rule of Civil Procedure 1.413(1). Both motions were denied following a February 9, 2005 hearing. The defendants appealed and the Bank cross-appealed. The appeals arising from the foreclosure and the sheriff's sale were consolidated by order of the supreme court. II. Summary Judgment. Although equity cases are generally reviewed de novo, review of a case in equity resulting in summary judgment is for correction of errors at law. Iowa R. App. P. 6.4; Keokuk Junction Ry. Co. v. IES Indus., Inc., 618 N.W.2d 352, 355 (Iowa 2000).

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Summary judgment is properly granted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3). A factual issue is material only if the dispute is over facts that might affect the outcome of the suit, given the applicable law. Lewis v. State ex rel. Miler, 646 N.W.2d 121, 124 (Iowa Ct. App. 2002). The party moving for summary judgment has the burden of proving the facts are undisputed. Id. In ruling on a motion for summary judgment, the court must view the facts in the light most favorable to the resisting party. Id. Furthermore, every

legitimate inference that can be reasonably deduced from the evidence should be afforded the resisting party. Id. An inference is legitimate if it is "rational, reasonable, and otherwise permissible under the governing substantive law." Id. (citing Butler v. Hoover Nature Trail, Inc., 530 N.W.2d 85, 88 (Iowa Ct. App. 1994)). An inference is not legitimate if it is based upon speculation or

conjecture. Id. If reasonable minds may differ on the resolution of an issue, a genuine issue of material fact exists. Id. The defendants first contend the court erred in granting the Bank summary judgment because the promissory note provides for payments both in installments and on demand. consideration and illusory. The American Jurisprudence states: A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances, unless: (a) each of the alternative performances would have been consideration if it alone had been bargained for; or (b) one of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his or They assert the note is a partial failure of

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her choice events may eliminate the alternatives that would not have been consideration. A promise is illusory when it fails to bind the promisor, who retains the option of discontinuing performance. Words of promise that by their terms make performance entirely optional with the "promisor" do not constitute a promise. In such cases there might theoretically be a bargain to pay for the utterance of the words, but in practice it is performance that is bargained for. Where the apparent assurance of performance is illusory, it is not consideration for a return promise. However, an obligation under a contract is not illusory if the obligated party's discretion must be exercised with reasonableness or good faith. Also, the illusory nature of alternative promises disappears if the contract is executed and the alternative actually performed is not illusory. A promise in the alternative may be made because each of the alternative performances is the object of desire to the promisee. Or the promisee may desire one performance only, but the promisor may reserve an alternative that he or she deems advantageous. In either type of case the promise is consideration if it cannot be kept without some action or forbearance that would be consideration if it alone were bargained for. However, if the promisor has an unfettered choice of alternatives, and one alternative would not have been consideration if separately bargained for, the promise in the alternative is not consideration. 17A Am. Jur. 2d Contracts

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