Opinion ID: 1614964
Heading Depth: 1
Heading Rank: 3

Heading: Crick's Claimed Errors.

Text: Crick first claims there was insufficient evidence as a matter of law to support the jury verdict against him for conversion of $700 from Condon Ford. He claims no conversion occurred because both parties had a good faith claim to the money offered by Alamo as an incentive to buyers. Conversion is the wrongful control or dominion over another's property contrary to that person's possessory right to the property. Ezzone v. Riccardi, 525 N.W.2d 388, 396 (Iowa 1994). The wrongful control must amount to a serious interference with the other person's right to control the property. Kendall/Hunt Publ'g Co. v. Rowe, 424 N.W.2d 235, 247 (Iowa 1988) (citing Restatement (Second) of Torts § 222A(1) (1965)). Good faith by the defendant is a factor to consider in determining whether the interference amounts to conversion. Id. (quoting Restatement (Second) of Torts § 222A(2) (1965)). Crick was employed by Condon Ford at the auctions and purchased vehicles on its behalf in the course of his employment. Moreover, a review of the incentive options offered by the sellers, cash or free financing, clearly indicated the incentives were for the dealership who ultimately purchased the car. This evidence supports a finding by the jury that the retention of the money was in contravention to the possessory interest of Condon Ford. Thus, we affirm the district court's entry of judgment in the amount of $700 against Crick on the claim of conversion.

Crick also claims there was insufficient evidence to support the jury's punitive damage award of $30,000 for the act of conversion. The evidence to support a punitive damage award must be clear, convincing, and satisfactory. See Iowa Code § 668A.1(1)(a). There must also be evidence of willful and wanton disregard for the rights of another. Wilson v. IBP, Inc., 558 N.W.2d 132, 142 (Iowa 1996), cert. denied, 522 U.S. 810, 118 S.Ct. 52, 139 L.Ed.2d 17 (1997). Punitive damages are justified when the acts of the defendant are malicious. Beeck v. Aquaslide `N' Dive Corp., 350 N.W.2d 149, 167 (Iowa 1984). The malice may be actual (expressed) ... or it may be legal (implied), as where the defendant acts illegally or improperly with reckless disregard for another's rights. Id. (quoting Freeman v. Bonnes Trucking, Inc., 337 N.W.2d 871, 879-80 (Iowa 1983)). There was evidence in the case indicating that Crick had a duty to give the buyer incentive to Condon. There is also evidence he intentionally retained the money for his own benefit. This evidence would support a finding by a preponderance of clear, convincing, and satisfactory proof that Crick retained the money given to him by Alamo with a willful and wanton disregard for his employer's rights.
Crick further claims the district court erred in failing to grant a new trial or enter a remittitur based upon the excessiveness of the award. We address each separately.
We review the denial of a motion for new trial for correction of errors at law. Iowa R.App.P. 4; Johnson v. Knoxville Community Sch. Dist., 570 N.W.2d 633, 635 (Iowa 1997). However, if the motion is based on a discretionary ground, we review for abuse of discretion. Johnson, 570 N.W.2d at 635. A ruling on a motion for new trial following a jury verdict is a matter for the trial court's discretion. Id. In ruling upon such motions for new trial the trial court has a broad, but not unlimited, discretion in determining whether the verdict effectuates substantial justice between the parties. See Iowa R.App.P. 14(f)(3). The discretion must not be exercised arbitrarily and it must have some support in the record. Wilson, 558 N.W.2d at 144; Riley v. Wilson Concrete Co., 184 N.W.2d 689, 690 (Iowa 1971). Generally, we are reluctant to interfere with a jury verdict and give considerable deference to a trial court's decision not to grant a new trial. Spaur v. Owens-Corning Fiberglas Corp., 510 N.W.2d 854, 869 (Iowa 1994). After a review of the record in this case, we find substantial evidence to support the jury's punitive damage award, and that substantial justice was served by the award. The district court did not abuse its discretion in denying Crick's motion and we affirm the punitive damage award against Crick in the amount of $30,000.
Crick also claims the district court erred in failing to enter a remittitur on the jury's punitive damage award. Crick maintains the ratio between compensatory and punitive damage was excessive. We apply the following standard in considering remittitur: We will reduce or set aside a jury award only if it (1) is flagrantly excessive or inadequate; or (2) is so out of reason as to shock the conscience or sense of justice; or (3) raises a presumption it is a result of passion, prejudice or other ulterior motive; or (4) is lacking in evidentiary support. The most important of the above enumerated tests is support in the evidence. If the verdict has support in the evidence the others will hardly arise, if it lacks support they all may arise. Tullis v. Merrill, 584 N.W.2d 236, 241 (Iowa 1998) (quoting Rees v. O'Malley, 461 N.W.2d 833, 839 (Iowa 1990)). If a verdict meets this standard or fails to do substantial justice between the parties, we must either grant a new trial or enter a remittitur. Spaur, 510 N.W.2d at 869. We have already found sufficient evidence supported the jury's punitive damage award, and that the district court's denial of Crick's motion for new trial was not an abuse of its discretion. The decision to deny remittitur was similarly within the discretion of the trial court. See Burkis v. Contemporary Indus. Midwest Inc., 435 N.W.2d 397, 400 (Iowa App.1988). In BMW of North America, Inc. v. Gore , the Supreme Court refused to establish a mathematical formula, or a bright line test, to determine the constitutionality of a punitive damage award. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 585, 116 S.Ct. 1589, 1604, 134 L.Ed.2d 809, 833 (1996). Instead, the decision is made by considering factors such as 1) the reprehensibility of the conduct, 2) the profitability for the company in the conduct, 3) the impact of the judgment on the financial position of the party, 4) the expense of the litigation, 5) the lack of criminal charges filed against the party, and 6) the award bore a reasonable relationship to the harm that was likely to occur from [BMW's] conduct as well as ... the harm that actually occurred. BMW, 517 U.S. at 566-67, 116 S.Ct. at 1594-95, 134 L.Ed.2d at 821 (quoting Green Oil Co. v. Hornsby, 539 So.2d 218, 223-24 (Ala. 1989)). These factors were previously approved of in Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 21-22, 111 S.Ct. 1032, 1045-46, 113 L.Ed.2d 1, 22 (1991). The Court adopted a grossly excessive standard, and found [i]n most cases, the ratio will be within a constitutionally acceptable range, and remittitur will not be justified on this basis ... [but that a ratio of 500 to 1] must surely `raise a suspicious judicial eyebrow.' Id. at 583, 116 S.Ct. at 1603, 134 L.Ed.2d at 831 (quoting TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 481, 113 S.Ct. 2711, 2732, 125 L.Ed.2d 366, 394 (1993)). We find that the ratio of actual damages to punitive damages in this case, nearly 43 to 1, falls within a constitutionally acceptable range based upon the reprehensibility of the act of converting money belonging to an employer, as well as the other relevant factors. As in the Haslip and BMW cases, we similarly refuse to draw concrete limits on the amount of punitive damage other than to emphasize that the punitive damage award in this case was not grossly excessive. We conclude the district court did not abuse its discretion in refusing to grant a remittitur. We affirm the district court's denial of Crick's motion for remittitur.
The wage claim by Crick is based in two parts. Crick claims Condon Ford withheld his final two paychecks totalling $5525. Additionally, he claims Condon failed to pay him a two percent bonus. Crick asserts he established both wage claims as a matter of law, and the trial court erred by instructing the jury he was required to prove Condon intentionally withheld the wages as a predicate to recovery. We consider the wage claim involving the final two paychecks first. Condon responds that the jury properly rejected the wage claim because Condon Leasing actually employed Crick and it had a valid wage dispute with Crick which allowed it to withhold Crick's wages at Condon Ford to offset the excessive draw he received while employed at Condon Auto. Furthermore, Condon argues any error in the jury instructions was harmless because the jury necessarily found it properly withheld the wages when it found in its favor on the separate breach of contract claim for nonpayment of the excessive draws.
The Iowa Wage Payment Collection Law requires employers to pay all wages due its employees, less any lawful deduction on designated regular intervals of time. Iowa Code § 91A.3(1) (1997). Additionally, when an employee is terminated, the employer is required to pay all wages earned less any lawful deductions within a specific period of time following the termination. Id. § 91A.4. Employers are permitted to make deductions from wages under two circumstances. The first pertains to deductions required or permitted to be deducted by state or federal law, or by a court order. Id. § 91A.5(1)(a). The second involves deductions pursuant to a written authorization from the employee. Id. § 91A.5(1)(b). In the event a dispute arises between an employer and employee over the amount of wages due, the employer is permitted to limit payment to wages conceded to be due less any authorized deduction. Id. § 91A.7. An employer who fails to pay wages to an employee as required under the law is liable to the employee for the unpaid wages, court costs, and attorney fees incurred in the recovery of the unpaid wages. Id. § 91A.8. Additionally, an employer who intentionally fails to pay wages is liable for statutorily defined liquidated damages. Id.; see Audus v. Sabre Communications Corp., 554 N.W.2d 868, 874-75 (Iowa 1996) (attorney fees recoverable); Jackson v. City of Ottumwa, 396 N.W.2d 794, 796 (Iowa App.1986) (liquidated damage award). Liquidated damages are recoverable in an action for wages even if the intentional failure to pay wages resulted from a wage dispute. Iowa Code § 91A.8. Notwithstanding, an employer incurs no liability for withholding wages if the employer withholds the correct amount of wages. See id. The statute imposes liability only when the employer fails to pay the amount of wages actually due to the employee. Id. It was undisputed in this case that Crick was not paid all his wages following his termination from employment at Condon Ford. The wages were withheld and applied to Crick's excessive draw. We therefore must first consider whether Condon's actions were permissible under the statute.
Condon argues it cannot be liable for damages for failing to pay wages to Crick because it had a legitimate dispute over the amount of wages due under section 91A.7. It claimed the dispute meant it was not required to pay any wages because it did not concede Crick was owed any wages. Moreover, Condon asserted it properly withheld the wages as confirmed by the jury verdict in its favor on the breach of contract claim against Crick for nonpayment of the excessive draw. We acknowledge the jury found Crick was liable for the excessive draw. However, Condon's breach of contract claim for excessive draws did not constitute a dispute ... concerning the amount of wages ... due under section 91A.7. The purpose of the Wage Payment Collection Law is to facilitate collection of wages by employees. Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198, 201 (Iowa 1997). Conversely, it does not exist to assist in the collection of claims by the employer. See Iowa Code § 91A.5. The Act requires an employer to pay wages at regular intervals, and the amount of wages owed Crick for the last two pay periods was not disputed. Instead, the dispute in this case was over the excessive draws Crick owed Condon. The purpose of the Act would be seriously undermined if an employer could generate a wage dispute under section 91A.7 and withhold an employee's undisputed wages by asserting a claim separate from its obligation to pay wages. Although Crick may have been responsible to Condon for the excessive draw, there was no evidence Crick was contractually bound to pay Condon for the excessive draw from his wages. In fact, Condon repeatedly requested Crick to allow a portion of the excessive draw to be deducted from his wages, but Crick refused. See Halverson v. Lincoln Commodities, Inc., 297 N.W.2d 518, 521 (Iowa 1980) (evidence that employee admitted responsibility for the bad debt). Thus, there was no wage dispute which authorized Condon to hold back the wages. [2]
Condon further claims it could not be liable for damages because it was legally permitted to withhold the wages under section 91A.5(1) as a setoff against its claim for the excessive draw. The Act clearly allows the employer to deduct wages only when permitted by law, court order, or authorized by the employee. Iowa Code § 91A .5(1). Condon claims the law recognizes setoff as a mechanism to resolve competing disputes. There is no state or federal law which permits an employer to set off its claims against employees' wages. Moreover, the doctrine of setoff is an incident of a judicial proceeding, and is generally accomplished only by court action. See 20 Am.Jur.2d Counterclaim, Recoupment, Etc. § 6, at 233 (1995); Iowa R.Civ.P. 225. It is not a unilateral procedure legally employed by a party to a dispute. See Cameron v. Neon Sky, Inc., 41 Wash.App. 219, 703 P.2d 315, 317 (1985); see also National Med. Care, Inc. v. Zigelbaum, 18 Mass.App.Ct. 570, 468 N.E.2d 868, 874 (1984) (employer has no right to unilateral setoff); P & L Group, Inc. v. Garfinkel, 150 A.D.2d 663, 541 N.Y.S.2d 535, 537 (1989) (employer not entitled to self-help remedy of withholding money owed by employee). Furthermore, the restrictions on the deductions under section 91A.5 clearly illustrate an employer may not use wages as a basis for any self-help remedies in collecting an indebtedness. Section 91A.5(1) makes it unlawful to withhold any portion of the wages of an employee except under the two statutorily-described circumstances. See Cameron, 703 P.2d at 317 (interpreting wage payment collection statute similar to Iowa statute). None of the circumstances under the statute apply to the facts of this case, and Condon had no right to withhold the wages. We conclude Condon violated the Wage Payment Collection Act by withholding Crick's wages at Condon Ford. Thus, Condon was liable as a matter of law to Crick for the unpaid wages, court costs, and attorney fees. The question turns to whether Condon was also liable as a matter of law for liquidated damages.
The Wage Payment Collection Act distinguishes between the intentional and unintentional failure to pay wages for the purpose of an award of liquidated damages. Iowa Code § 91A.8. Under the statute the intentional failure to pay wages, even if the result of a wage dispute, gives rise to liquidated damages. Id. We have not previously defined the type of intent to support liquidated damages, but have indicated liquidated damages are directed at employers who fail to pay wages knowing the wages are due. Halverson, 297 N.W.2d at 523. Conversely, liquidated damages are not available if an employer maintains a good faith dispute over the amount of wages. Id. Similarly, the intentional failure to pay wages excludes the inadvertent failure to pay. Miller, 356 N.W.2d at 216. In this case Condon had no dispute with Crick over any portion of the wages due from the last two pay periods. It acknowledged the amount of these wages was $5525. Condon knew the wages were due and failed to pay them. Moreover, Condon cannot maintain or claim good faith. The dispute by Condon involved a separate claim for the excessive draw, but there was no dispute over the amount Condon owed. This constitutes the intentional failure to pay under the statute. We find the trial court erred in failing to enter judgment for Crick on this portion of his wage claim. We therefore reverse that portion of the judgment and remand the case for entry of judgment for Crick for reasonable attorney fees attributable to his collection of wages owed, liquidated damages as defined by section 91A.2(6), and court costs. The amount of unpaid wages of $5525 were set off against Condon's judgment for the excessive draw, and must be excluded from the judgment for unpaid wages to avoid a duplication of damages.
The second wage claim by Crick was based upon the failure to pay a bonus of two percent. Condon maintained the bonus was only payable after Crick was employed for one year. Unlike the first wage count claim, this claim involved a factual dispute. The jury found in favor of Condon. Normally, this would exonerate an employer from liability. However, the instructions submitted by the district court to the jury required Crick to prove Condon intentionally failed to pay the compensation. We have already indicated intent is only necessary to support the liquidated damage portion of the wage claim. Thus, the trial court erred by failing to distinguish between intentional and unintentional conduct. Moreover, based upon the instructions, we are unable to discern whether the jury found no bonus was due, or Condon did not intentionally fail to pay the bonus. Accordingly, we are required to reverse that portion of the judgment and remand the claim for a new trial on this issue.
Crick asserts the verdict in the amount of $9344.64 for Condon based upon his breach of contract in failing to pay the excessive draw to Condon was not supported by substantial evidence. He argues the monthly draw should not have been deducted as an expense in determining the net profit. He further argues the draw was actually a salary and there was no agreement between the parties which required any repayment. We find substantial evidence in the record to support the verdict. Although Crick presented evidence to support his argument, Condon also presented evidence to support the verdict.