Alleged Promise to Transfer the Farm to Long-term Farm Hand Not Enforceable in Court

On July 24, 2024, the Iowa Court of Appeals affirmed the district court’s denial of a promissory estoppel claim by a long-serving farm worker. In 2020, the farmer died without a will. The worker claimed the farmer promised to transfer the farm to him at the farmer’s death in return for the worker’s effort over the years. Upon review, the court found the evidence supporting the existence of a promise was sparse and therefore the worker did not meet the burden of proof required. The court also found the worker failed to prove detrimental reliance when the worker received free housing and help with his own farming operations over the years.

Facts

Lenny Coulter worked with Richard Bellus on Richard’s farm for over thirty years. Bellus’s operation included land that he owned, along with land he rented. As Bellus aged, Coulter handled the majority of the physical labor and Bellus provided financial support. Coulter also rented and farmed additional properties himself. In 2003, Coulter moved into a house owned by Bellus and improved the home in lieu of rent. He moved off the property in 2010, rented it to a third party, and kept the rent.

In 2020, Bellus died without a will. He was not married and had no children. A few days after his death, one of Bellus’s relatives found an unsigned will. This unsigned will left Bellus’s entire estate to Coulter. The will was drafted by an attorney who worked with Coulter and had never met Bellus.

Coulter filed a petition in probate claiming he had a right of first refusal to purchase the farm, based on an oral contract. Coulter later amended this petition alleging Bellus promised to transfer the farm property to him, and he made improvements to the property in reliance on that promise. He added a claim of promissory estoppel to his petition in probate. A few months later, Coulter filed a claim in probate for the value of improvements he claimed he made to Bellus’s farm in the amount of $627,071.74. The estate denied all claims.

After trial, the district court ruled that Coulter could not have both a probate claim and a petition in probate. Since the petition was filed first, Coulter’s claim to recover the value of the improvements was barred. The court next ruled that Coulter failed to meet his burden of proof for the promissory estoppel claim. Coulter appealed on multiple grounds. First, he believed he was allowed to bring both a probate petition and a probate claim. Second, he believed the court erred by denying his promissory estoppel claim.

Opinion

The Court of Appeals first addressed whether Coulter could bring both a petition in probate and a claim in probate. Iowa Code § 633.415(2) gives a party the right to bring a separate action in probate to address a decedent’s debt or liability in “lieu of filing a claim in the estate.” The separate action is referred to as a petition in probate. Coulter argued the claim for improvements was completely distinct from his promissory estoppel claim because one was for improvements and the other was for transfer of the farm. Based on this distinction, he felt he was allowed to maintain both actions without violating § 633.415(2). The court found all claims were based on the work Coulter performed for Bellus’s farming operation over the years. As such, the law required Coulter “to assert all his claims arising from these circumstances in a single action.” The court found that the district court correctly dismissed his probate claim for improvements because it was filed after the petition in probate.  

The court then examined the substance of Coulter’s promissory estoppel claim, first explaining that oral contracts for real estate interests are not enforceable in court, unless one party can prove promissory estoppel. In Iowa, promissory estoppel is a four-part test, where each prong must have “strict proof.” First, the plaintiff must establish there was a clear promise. Second, the person making the promise must have known that the other person would not have acted without the promise. Third, the injured party must have acted to their detriment when relying on the promise. Fourth, “injustice can be avoided only by enforcement of the promise.”

The court found Coulter did not prove there was a clear promise or that he detrimentally relied on the promise. The court found the unsigned will did not establish Coulter was promised the farm because the drafting attorney never met Bellus. Additionally, Coulter’s testimony about the promise was undermined when he first claimed to have a right of first refusal. Although the failure to prove a clear promise was enough to defeat Coulter’s claim, the court also found Coulter received substantial benefits when doing work for Bellus and his farming operation. Specifically, he received housing rent-free and his own farming activities were partially funded by Bellus.