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IN THE COURT OF APPEALS OF IOWA No. 6-092 / 05-1051 Filed October 11, 2006

V.W. ENTERPRISES, INC., BRYAN WHIPP, and LORI VEACH, Plaintiffs-Appellants, ROBERT PHILLIPS and TERRY PHILLIPS, Intervenors-Plaintiffs, vs. CITY OF CLARINDA, an Iowa Municipal Corporation, FRANK SNYDER, US BANK, N.A., As receiver, and SCOTT TRACY, Husband and Wife, Jointly and Severally, Defendants-Appellees. ________________________________________________________________ Appeal from the Iowa District Court for Page County, Charles L. Smith, and Jeffrey L. Larson, Judges.

V.W. Enterprises, Inc., Brian Whipp, and Lori Veach appeal from the district court's grant of the City of Clarinda's first and second motions for summary judgment and the grant of U.S. Bank's motion for summary judgment. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

Theodore F. Sporer of Sporer & Ilic, P.C., Des Moines, for appellant. Robert Phillips, Maryville, Missouri, pro se.

2 Kristopher K. Madsen and Robert M. Livingston of Stuart, Tinley, Peters, Thorn, Hughes, Faust & Madsen, Council Bluffs, for appellees City of Clarinda and Frank Snyder. Randy V. Hefner and Mathew J. Hemphill, Adel, for appellee U.S. Bank, N.A.

Heard by Vaitheswaran, P.J, Eisenhauer, J. and Brown, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2005).

3 BROWN, S.J. We filed an opinion in this case on June 14, 2006. U.S. Bank filed a petition for rehearing which we granted. Our June 14, 2006 unpublished opinion has been withdrawn. The issues raised in the rehearing petition are our grant of relief to the intervener plaintiffs, Robert Phillips and Terry Phillips, and a request that we determine whether V.W. Enterprises may pursue its claims against U.S. Bank individually as well as its claims against the bank as receiver. We have now considered the arguments of the parties submitted in support of and in opposition to the issues presented in the petition for rehearing. The district court granted the first and second summary judgment motions of the defendant, City of Clarinda, and U.S. Bank's motion to dismiss as well as its summary judgment motion. The plaintiff property owners appeal those

rulings. We affirm in part, reverse in part, and remand. I. Background Facts & Proceedings. Bryan Whipp and Lori Veach are co-owners of V.W. Enterprises, Inc. 1 V.W. Enterprises owned a building located at 119 East Main Street in Clarinda, Iowa. Whipp and Veach operated a Breadeaux Pizza restaurant at this location. Scott and Robin Tracy owned the adjoining building located at 117 East Main Street, and it shared a common wall with the V.W. Enterprises' property. The Tracys purchased the building from Robert and Terri Phillips, the intervener plaintiffs. The Phillips hold a second mortgage on the building payable by the Tracys. The Tracys had abandoned this property by January 2003.

1

Unless otherwise indicated, we will refer to Whip, Veatch, and V.W. Enterprises collectively as V.W. Enterprises.

4 In mid-January, Whipp and Veach noticed that water was entering their business via the common wall shared with 117 East Main Street. On January 21, 2003, U.S. Bank filed an action to foreclose its mortgage on 117 East Main Street, and an employee of U.S. Bank was appointed receiver of 117 East Main Street. 2 In the order appointing receiver, the court found that 117 East Main Street was abandoned, was in danger of being destroyed as a result of abandonment, and the receivership was established to protect the real estate. In mid-February of 2003, Whipp contacted the city manager of Clarinda, Gray Walter, and complained about the abandoned building, informing Walter that water was coming into his building and told Walter that the smell was having harmful effects on his business. On March 4, 2003, Whipp again told Walter about the deteriorating conditions of 117 East Main Street and its harmful effects on his building. At this point, V.W. Enterprises' building was infused with a Around March 12, 2003, Whipp contacted the city

permanent moldy smell.

attorney for Clarinda and informed him about the condition of the building and requested that something be done. Again, on April 2, 2003, Whipp contacted Walter and at the end of April, Whipp complained to the mayor, Frank Snyder. Whipp and Walter inspected 117 East Main and found that the floors were bowed and water was seeping out of the front door of the building. The basement had standing water and a strong moldy smell permeated the building. Walter and Whipp heard the sound of running water and saw that water was leaking through

All parties have treated U.S. Bank as the receiver, not its employee, and we will consider U.S. Bank as the receiver in this opinion.

2

5 a cracked regulator on the water line. The water had not been shut off to the building. Whipp requested the water be shut off to the building in the first days of May of 2003. On May 15, 2003, the city health officer, Dr. Keuhn, was made aware of the conditions of the building. In a letter he drafted to the City, he requested immediate action be taken to minimize health risks. On May 19, 2003, the water was shut off to 117 East Main Street. On May 21, 2003, U.S. Bank filed an application for discharge of the receiver. In the application, the receiver indicated that an estimate for repairing the roof had been obtained and U.S. Bank was unwilling to expend the funds to fix the roof because that would result in a loss to U.S. Bank. Therefore U.S. Bank requested it be discharged as receiver. On July 14, 2003, the court

granted U.S. Bank's application for discharge and required the City of Clarinda to propose a replacement receiver. On August 1, 2003, the City began cleaning out the building by tearing out carpet and rotten interior fixtures. In early November, Veach became sick with bilateral pneumonia allegedly as a result of her exposure to the mold. Whipp and Veach officially closed Breadeaux Pizza on November 13, 2003. On August 4, 2003, V.W. Enterprises filed a petition against the City of Clarinda, U.S. Bank, and the Tracys alleging negligence, nuisance, dangerous premises, trespass, and inverse condemnation of their property at 119 East Main Street. U.S. Bank filed a motion to dismiss arguing that the petition incorrectly alleged negligence against the receiver in its individual capacity. The motion to

6 dismiss, resisted by V.W. Enterprises, was granted. V.W. Enterprises filed an amended petition asserting claims against U.S. Bank in its receivership capacity. The City filed a motion for summary judgment claiming immunity under Iowa Code section 670.4(10) (2003). V.W. Enterprises resisted the motion and filed a motion for leave to amend the petition adding intentional interference with business and violations of 42 U.S.C.

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