IN THE COURT OF APPEALS OF IOWA

No. 13-1927

Filed December 10, 2014

MARK LINSER, d/b/a H&R BLOCK,

Plaintiff-Appellee,

vs.

ARDENE A. CROSS,

Defendant-Appellant,

and

ELAINE LINSER,

Third-Party Defendant-Appellee.

________________________________________________________________

Appeal from the Iowa District Court for Marshall County, Steven J. Oeth, 

Judge. 

Defendant appeals the amount of damages awarded in a breach of 

contract action. REVERSED AND REMANDED.

Joel T.S. Greer of Cartwright, Druker & Ryden, Marshalltown, for 

appellant.

Bethany J. Currie of Peglow, O’Hare & See, P.L.C., Marshalltown, for 

appellees.

Heard by Vaitheswaran, P.J., Mullins, J., and Goodhue, S.J.*

*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2013). 
2

MULLINS, J.

The defendant Ardene Cross appeals the amount of damages awarded in 

a breach-of-contract action. There could be no breach of the employment 

contract beyond the one-year term of the contract; and thus, no damages for 

future lost profits were recoverable by the plaintiff under this theory. Ardene is 

entitled to trial and appellate attorney fees for the breach of the sales contract. 

Furthermore, the district court erred in determining that Ardene was not entitled 

to additional compensation of $7302.09. The decision of the district court is 

reversed and remanded.

I. Background Facts & Proceedings

Ardene operated franchise offices of H & R Block (HRB) in Tama and 

Traer, Iowa. She had been preparing taxes since 1978, and in 2010 the HRB 

corporate office recommended she develop a five-year exit strategy. Elaine 

Linser, who had been preparing taxes since 1985, was the office manager of the 

HRB office in Marshalltown and was interested in purchasing an HRB franchise. 

Because Elaine was already working at the Marshalltown HRB office, the parties 

agreed Ardene would sell the Tama and Traer franchise offices to Elaine’s 

husband, Mark Linser, as the franchisee. Mark had experience as a 

businessman, but no experience in tax preparation.

Ardene and Mark entered into a sales contract for the tax preparation 

practices in Tama and Traer for $225,000. The purchase price was allocated as: 

Tama real estate, $25,000; equipment and furniture, $5000; and the right to 

operate under the franchise license agreement, $195,000. Mark paid $15,000 as 
3

a down payment and was to pay $26,000 annually. Mark was responsible to pay 

property taxes and insurance on the Tama building. The contract was contingent 

upon approval by the HRB corporate office, and this approval was obtained on 

January 13, 2011. After the contract was approved Elaine began working at the 

Tama office.

The parties agreed Ardene would continue working at the Tama office as 

an employee and expected this would continue over a period of five years as part 

of Ardene’s five-year exit strategy. Ardene and Mark entered into an Office 

Manager Employment Agreement, which provided Ardene would be employed at 

the HRB franchise offices in Tama and Traer from January 1 to December 31, 

2011. Her compensation until April 18, 2011, was calculated as her tax 

preparation volume times ninety-three percent times thirty percent, with $500 per 

week to be a draw against her final compensation. For the remainder of the time, 

her compensation was $500 per week. The employment agreement provided 

that for two years following the cessation of her employment Ardene could not 

engage in the business of tax preparation within ten miles of Tama or Traer. She 

was also prohibited from soliciting clients. The contract provided Ardene could 

be terminated for misconduct, disobedience, or insubordination, among other 

things.

The district court found, “Almost immediately after the sales contract was 

signed and approved by all parties, the relationship between Ardene on one side 

and Mark and Elaine on the other side began to deteriorate.” Mark conducted a 

personnel review with Ardene on March 5, 2011. They discussed Mark’s 
4

concern that Ardene started multiple tax returns, then left them open for a period 

of time. The Linsers had a policy that once a tax return was started it should be 

completed and the client billed for the work as quickly as possible. There were 

also concerns that sometimes Ardene would have two clients scheduled at the 

same time. The Linsers felt Ardene should be more open to sharing her clients 

with other tax preparers in the office. The personnel review stated, “Not 

cooperating in assisting us w/the above request can/may result in termination.” 

Ardene refused to sign the review form and walked out of the meeting, stating 

she had an appointment with a client.

The Linsers terminated Ardene on April 11, 2011, because they believed 

she was continuing to operate her bookkeeping business from the HRB office, in 

violation of corporate rules. Ardene was paid $6340.61 after she was 

discharged. Mark testified that although he was not obligated to pay her a 

bonus, he voluntarily chose to include a bonus in her payment. Following her 

discharge, Ardene obtained employment at the Marengo HRB office, which was 

about forty miles away from the Tama office. Two hundred nine former clients 

from the Tama and Traer HRB offices followed Ardene to Marengo.

The Linsers paid the amount of $26,000 due under the sales contract for 

2011, but made no further payments. They did not pay the property taxes for the 

Tama office. The Linsers moved the HRB office in Tama and were no longer 

using the building included in the sales contract with Ardene.

On January 17, 2012, Mark filed a lawsuit against Ardene, claiming she 

had breached the restrictive covenant in her employment contract. Ardene filed 
5

a counterclaim against Mark and included Elaine as a third-party defendant, 

asserting claims of unpaid wages, wrongful termination, defamation, and breach 

of the sales contract. Mark amended his petition to include claims of defamation, 

interference with a business relationship, and fraudulent misrepresentation. He 

sought damages and injunctive relief.

A bench trial on these various claims was commenced on August 27, 

2013. The district court determined Mark had breached the sales contract by not 

making annual payments after 2011. The court determined Ardene’s damages 

were $206,237, but reduced this amount by $25,000 (representing the value of 

the building, to which Ardene retained title). The court found Ardene breached 

the employment contract by being insubordinate. The court calculated Mark lost 

revenue of $17,310.65 each year for four years as a result of the breach, for a 

total of $69,242.60. The court found Mark made an error of ninety dollars in 

calculating Ardene’s wages. The court denied the claims of breach of the 

restrictive covenant, defamation, fraudulent representation, and interference with 

a business relationship. The court denied Mark’s request for an injunction. The 

parties were ordered to pay their own attorney fees. In total, Mark was ordered 

to pay a net judgment to Ardene of $112,084.51.

Both parties filed motions pursuant to Iowa Rule of Civil Procedure 

1.904(2). The court amended its decision to order Mark to pay $2188 for 

property taxes, which he had been obligated to pay under the sales contract. 

The court also decreased Ardene’s award for breach of the sales agreement to 

$205,806.52. The net judgment against Mark was amended to $113,841.92. 
6

Mark appealed the district court decision, and Ardene cross-appealed. Mark 

later voluntarily dismissed his appeal, and Ardene’s cross-appeal remains as the 

sole appeal.

II. Standard of Review

This action was tried at law and our review is for the correction of errors at 

law. See Iowa R. App. P. 6.907. “If substantial evidence in the record supports a 

district court’s finding of fact, we are bound by its finding.” Iowa Mortg. Ctr., 

L.L.C. v. Baccam, 841 N.W.2d 107, 110 (Iowa 2013). “However, a district court’s 

conclusions of law or its application of legal principles do not bind us.” Id.

III. Breach of Employment Contract

On appeal, Ardene does not dispute that she breached the employment 

contract by engaging in insubordination. Ardene claims expected future profits 

were an improper measure of damages as a matter of law. She asserts that her 

written employment contract was only for a period of one year, and states Mark 

was not entitled to lost profits for a period of four years after she was terminated.

In order to prove a breach of contract, a party must show: (1) the 

existence of a contract, (2) the terms and conditions of the contract, (3) it has 

performed all the terms and conditions required under the contract (4) the other 

party’s breach of the contract in some particular way, and (5) the complaining 

party has suffered damages as a result of the breach. Id. at 111. “The first two 

elements address the existence of a contract. The last two elements address the 

breach of the contract and the damages caused by the breach.” Id.
7

In general, “when a contract has been breached the nonbreaching party is 

generally entitled to be placed in as good a position as he or she would have 

occupied had the contract been performed.” Midland Mut. Life Ins. Co. v. Mercy 

Clinics, Inc., 579 N.W.2d 823, 831 (Iowa 1998). The Iowa Supreme Court has 

stated:

Distinct from the general rule for damages based on 

commitment of a tort, damages based on breach of a contract must 

have been foreseeable or have been contemplated by the parties 

when the parties entered into the agreement. Whether the 

damages were reasonably anticipated by the parties when the 

contract was formed may be discerned from “the language of the 

contract in light of the facts, including the nature and purpose of the 

contract and circumstances attending its execution.” Damages 

which a reasonable person would expect to follow from breach of a 

contract are direct and thus should be awarded.

Kuehl v. Freeman Bros. Agency, Inc., 521 N.W.2d 714, 718 (Iowa 1994) 

(citations omitted). “[D]amages recoverable for a breach of contract are limited to 

losses actually suffered by reason of the breach and must relate to the nature 

and purpose of the contract.” Royal Indem. Co. v. Factory Mut. Ins. Co., 786 

N.W.2d 839, 847 (Iowa 2010).

The district court found:

The Linsers were counting on Ardene being their employee

for at least five years. This is consistent with Ardene’s testimony 

that HRB corporate wanted a five-year exit plan in place. Ardene 

also acknowledged that she wanted to continue to do returns after 

selling the franchise. . . . The evidence established that the Linsers 

lost at least 209 clients as a result of having to terminate Ardene. 

That is, 209 clients have left the Tama-Toledo franchise and have 

followed Ardene to the Marengo HRB office. It is clear the parties 

expected those returns to be done in the Tama-Toledo office. The 

lack of this revenue is clearly an element of damage suffered by the 

Linsers resulting from their justifiable termination of Ardene’s 

employment contract.
8

The threshold question is whether the parties’ expectations that Ardene 

would work in the Tama office for five years constituted an enforceable contract. 

Neither the sales contract nor the employment agreement reference five years. 

The express terms of the employment agreement limit it to one year. Even the 

restrictive covenant is only for a two-year term. There is no written document 

which memorializes any five-year obligation. Even if we were to agree that 

verbal expectations could form the basis of a contract, neither the verbal 

representations nor any other evidence establishes the terms and conditions of 

any purported contract.

Without a contract beyond the one-year term, there could be no breach 

beyond that time; and thus, no damages for future profits are recoverable by 

Mark under this theory. As the nonbreaching party, Mark is entitled to be placed 

in as good a position as he would have occupied had the contract been 

performed. See Midland Mut. Life Ins. Co., 579 N.W.2d at 831. Here, the term 

of the employment contract was specifically for a period of one year. Mark is not 

entitled to damages for lost future profits for four years into the future. We 

reverse the decision of the district court determining Mark was entitled to 

damages of $69,242.60 due to Ardene’s breach of the employment contract.

III. Attorney Fees

A. Ardene claims she is entitled to trial attorney fees because Mark 

breached the sales contract. The district court determined Mark had breached 

the sales contract and Ardene had breached the employment contract. The court 

determined Mark and Ardene were both entitled to attorney fees and these 
9

amounts offset each other, so neither party was awarded attorney fees. Ardene 

claims her breach of the employment contract should not trigger the attorney fee 

provision of the employment contract.

The employment contract contains this provision concerning remedies:

The parties agree that if any provision of Section 8 

[Confidential Information], 9 [Restrictive Covenants], or 10 

[Nonsolicitation of Employees] is violated, the Company will have 

no adequate remedy at law and will suffer irreparable loss and 

damage. . . . Further, in the event of such breach or violation, 

Associate shall pay the Company all court costs, attorneys’ fees, 

and expenses incurred by the Company in enforcing this 

Agreement.

“A written contract must contain an express provision regarding attorney 

fees and litigation expenses in order for a court to include attorney fees and 

litigation expenses in a favorable judgment.” NevadaCare, Inc. v. Iowa Dep’t of 

Human Servs., 783 N.W.2d 459, 470 (Iowa 2010). “When a contract contains a 

clear and express provision regarding attorney fees, the court’s award must be 

for reasonable attorney fees.” Id. We will reverse a court’s ruling awarding 

attorney fees only when the court abuses its discretion by resting its ruling on 

grounds that are clearly unreasonable or untenable. Id. at 469.

The provision concerning attorney fees in the employment contract applies 

only if an employee divulges confidential information, breaches the restrictive 

covenants by preparing tax returns within ten miles for a period of two years1or 

solicits clients, or solicits HRB employees to work for a competitor within a oneyear period. There are no findings in this case that Ardene engaged in any of 

 

1

 There is an exception to the two-year, ten-mile restrictive covenant for the preparation 

of tax returns at another HRB office.
10

these activities. Therefore, the attorney fee provision of the employment contract 

is not applicable in this case. The district court erred by finding Ardene was 

responsible for pay Mark’s attorney fees associated with his claim of breach of 

the employment contract.

We remand to the district court for a determination of the attorney fees 

Mark should be required to pay Ardene based on his breach of the sales 

contract. The sales contract provides, “If buyer fails to timely perform this 

contract, seller may elect to declare the entire balance immediately due and 

payable after such notice and seller shall be entitled to any and all remedies, or 

action at law, including foreclosure, and the party at fault shall pay costs and 

attorney fees.”

B. Ardene also seeks attorney fees and costs for this appeal. Under 

the sales contract, Ardene is entitled to receive reasonable appellate attorney 

fees. See Foxley Cattle Co. v. Midwest Soya Int’l, Inc., 585 N.W.2d 231, 233 

(Iowa 1998) (finding a contract provision permitting attorney fees includes 

appellate attorney fees). From the record on appeal, however, we are unable to 

determine a reasonable amount for appellate attorney fees. The issue is 

remanded to the district court for a determination of reasonable appellate

attorney fees and costs. See Soults Farms, Inc. v. Schafer, 797 N.W.2d 92, 111 

(Iowa 2011).

V. Unpaid Wages

A. Ardene claims she is entitled to unpaid wages under the Iowa 

Wage Act, Iowa Code chapter 91A (2011). She contends she was never paid for 
11

work she performed between March 31 and April 11, 2011. She states she 

continued to work during this period of time and under the formula in her 

employment contract she should have been paid $6954.39. She also claims she 

is entitled to liquidated damages of five percent. See Iowa Code § 91A.2(6).

The employment contract provided, “If Associate’s employment is 

terminated pursuant to Section 6, Associate’s compensation shall automatically 

cease.” Ardene was terminated under section 6 and the district court determined 

she was not entitled to any further compensation, including a bonus, after she 

was terminated. The court concluded Mark had voluntarily paid Ardene a bonus 

when he paid her $6340.61, although he was not obligated to do so. The court 

found that because two numbers were transposed, “Mark owes Ardene $90.00 in 

order to accurately reflect the bonus Mark voluntarily chose to pay her.”

When an employee is terminated, the employer must pay the employee all 

wages earned, less lawful deductions. Iowa Code § 91A.4. An employee’s 

wages may be based upon time, task, piece, commission, or other basis of 

calculation. Id. § 91A.2(7)(a). A bonus may be included in the statutory 

definition of wages. Runyon v. Kubota Tractor Corp., 653 N.W.2d 582, 585 (Iowa

2002).

The terminology used by the parties in this case is somewhat confusing 

because what they are referring to as a “bonus,” is actually Ardene’s 

compensation under the terms of the employment contract. A handwritten 

notation, initialed by Elaine and Ardene, stated Ardene’s “compensation is 

calculated as follows: tax volume x 93% x 30% with $500 weekly pay to be a 
12

draw against final compensation which ends 4/18/11 and will be paid on or 

before 5/16/11.” A bonus paid to an employee may be considered wages, if the 

employer is contractually bound to pay it. Dallenbach v. MAPCO Gas Prod., Inc., 

459 N.W.2d 483, 488 (Iowa 1990). Under the terms of the employment contract 

Mark was contractually obligated to pay Ardene under the formula found in the 

contract.

Ardene presented an exhibit showing she had completed 509 tax returns. 

Of the 509 returns, 483 had been paid for, generating revenue of $69,598. Using 

the formula in the employment contract, Ardene’s compensation for these 483 

returns should be $19,417.84.2 Ardene also calculated there were twenty-six 

returns for which HRB had not yet been compensated. She determined the 

average charge per return was $144.10.3 She estimated the revenue from the 

twenty-six returns would be $3746.60. Ardene’s compensation for these unpaid 

returns would be $1045.30.4 Ardene’s total compensation would then be 

$20,463 ($19,418 + $1045 = $20,463). During her time of employment Ardene 

was paid a total of $13,508.61. The amount she had not yet been paid was 

$6954.39. Mark did not object to Ardene’s exhibit setting out these calculations.

We conclude the district court erred in finding Ardene was not entitled to 

any additional wages. We conclude that under the specific terms of the parties’ 

employment contract Mark is obligated to pay Ardene an additional $6954.39.

 

2

$69,598 x 93% = $64,726.14; $64,726.14 x 30% = $19,417.84.

3

 Ardene divided the revenue for the paid returns, $69,598, by 483, to arrive at $144.10 

per return.

4

 $3746.60 x 93% = $3484.34; $3484 x 30% = $1045.30.
13

B. Ardene asserts she is entitled to liquidated damages of $347.70, 

which is five percent of $6954.39. Section 91A.8 provides:

When it has been shown that an employer has intentionally 

failed to pay an employee wages or reimburse expenses pursuant 

to section 91A.3, whether as the result of a wage dispute or 

otherwise, the employer shall be liable to the employee for any 

wages or expenses that are so intentionally failed to be paid or 

reimburse, plus liquidated damages, court costs and any attorney’s 

fees incurred in recovering the unpaid wages and determined to 

have been usual and necessary.

The liquidated damages provision in section 91A.8 applies to the 

intentional withholding of regular paychecks and commissions. Runyon, 653 

N.W.2d at 588. It does not apply to a dispute over the calculation of a 

discretionary bonus. Id. Furthermore, it does not apply to an employer’s 

inadvertent failure to pay an employee’s full wages. Condon Auto Sales & Serv., 

Inc. v. Crick, 604 N.W.2d 587, 598 (Iowa 1999). Liquidated damages are 

calculated pursuant to section 91A.2(6).5 Id.

The evidence shows the Linsers intentionally failed to pay Ardene the 

wages she was entitled to receive under the terms of the employment contract. 

They arbitrarily decided not to pay her for any work after March 31, 2011, 

although she continued to work until she was terminated on April 11, 2011. We 

conclude Ardene is entitled to liquidated damages of $347.70. The total amount 

 

5

 In section 91A.2(6), five percent is multiplied by the amount of unpaid wages and that 

sum is then multiplied by the number days the wages were unpaid, “excluding Sundays, 

legal holidays, and the first seven days after the regular payday on which wages were 

not paid.” The amount of liquidated damages, however, cannot exceed the amount of 

unpaid wages. Iowa Code § 91A.2(6); Jackson v. City of Ottumwa, 396 N.W.2d 794, 

796 (Iowa Ct. App. 1986). In Ardene’s appellate brief she requests liquidated damages 

of $347.70, and we conclude the amount of liquidated damages she receives cannot 

exceed that amount. See Schaefer v. Schaefer, 795 N.W.2d 494, 502 n.2 (Iowa 2011) 

(finding issue that was not argued on appeal was waived).
14

Ardene should receive in unpaid wages and liquidated damages is $7302.09 

($6954.39 + $347.70 = $7302.09).

VI. Disposition

There could be no breach of the employment contract beyond the oneyear term of the contract; and thus, no damages for future lost profits were 

recoverable by the plaintiff under this theory. Ardene is entitled to trial and 

appellate attorney fees for breach of the sales contract. Furthermore, the district 

court erred in determining Ardene was not entitled to additional compensation of 

$7302.09. Thus, we rule the net judgment against Mark in favor of Ardene is in 

the amount of $121,144.01 ($113,841.92 + $7302.09). We remand to the district 

court for a determination of reasonable trial and appellate attorney fees and costs 

as provided by the terms of the sales contract.

REVERSED AND REMANDED.