Court Opinion

ID: 4250474
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:48:43.581006+00
Date Added: 2024-06-11T14:44:16.285000
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 16-1795
                            Filed January 24, 2018

ZACHARY SHORT,
    Plaintiff-Appellee,

vs.

ELLIOTT EQUIPMENT COMPANY,
     Defendant-Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Bradley McCall, Judge.

      The employer appeals from the district court’s ruling awarding a former

employee unpaid commission and attorney fees. AFFIRMED AND REMANDED.

      James W. Carney of Carney & Appleby P.L.C., Des Moines, and David L.

Brown of Hansen, McClintock & Riley, Des Moines, for appellant.

      Kristina M. Stanger and Mitchell R. Kunert of Nyemaster Goode, P.C., Des

Moines, for appellee.

      Heard by Vogel, P.J., and Vaitheswaran and Potterfield, JJ.
                                          2

POTTERFIELD, Judge.

       Zachary Short sued his former employer, Elliott Equipment Company, under

the Iowa Wage Payment Collection Law, found in Iowa Code chapter 91A (2015).

Following a bench trial, the district court awarded Short $4660.22 in unpaid

commission and $44,397.75 in attorney fees. Elliott Equipment appeals from the

district court’s decision, claiming the district court erred in its determination that

Short was entitled to commission and that it abused its discretion in awarding the

amount of attorney fees after finding they were the “usual and necessary attorney’s

fees in recovering unpaid wages and expenses.” See Iowa Code § 91A.8.

I. Background Facts and Proceedings.

       Short was an at-will employee of Elliott Equipment from April 2012 until

March 2014, when he voluntarily terminated his employment with the company.

Short was hired to sell garbage trucks—both to private entities and municipalities.

Elliott Equipment paid Short an annual base salary of $35,000 plus a $15,000 draw

against commission for the first year. According to the “Commission Policy and

Territory Agreement” he signed, the company’s policy was that “[a]ll

commissionable new equipment sales with profit levels up to 25% will be paid a

commission of 1% of the new equipment sales price not including the new chassis

portion of the sale if applicable.”

       Short was specifically assigned to Missouri as his sales territory. During his

time with the company, he pursued the City of Columbia as a target customer.

Elliott Equipment had sold the municipality one truck approximately two years

before Short began his employment, but it did not have an ongoing relationship or

contract with the city.
                                         3

       During the fall and winter of 2013, the City of Columbia purchased nine

garbage trucks from Elliott Equipment. Short was the employee who submitted

bids to the city and who ordered the trucks from the manufacturers. None of the

nine trucks had been delivered to the city by the time Short left the company’s

employment.

       In May, DaLena Elliott—the wife of the owner of the company, Gene Elliott,

and the person who was in charge of payroll at the time—sent an email to Gene

and Rick Vanwassenhove, the company’s vice president and the person in charge

of signing off on all commissions, asking, “So was the final decision to pay [Short]

for 50% commission on ALL Cit[y] of Columbia sales? Looks like they’re starting

to come through in May.” Vanwassenhove responded, “I would wait and see how

much his mistakes end up costing us after all is said and done before paying if up

to me,” and Gene responded that he agreed with Vanwassenhove.

       The salesperson who replaced Short, Patrick Wisor, delivered the trucks to

the City of Columbia as they were ready, throughout the summer of 2014. A

number of trucks had issues—either at the fault of the manufacturer or Short—and

Wisor spent a large amount of time correcting those issues so the city would

ultimately accept the trucks and issue final payment on them.

       In June, DaLena emailed Vanwassenhove asking “what [he] would like to

pay out to Patrick Wisor on the prior sales he’s assisted with that were Zac Short’s

and also what [he] would like [her] to extend to Zac for those sales prior to his

depart[ure].” Vanwassenhove responded, telling her to pay Wisor for half of the

normal commission Short would have received. He also indicated, “I am finding
                                             4

things out about [Short] since he left that are of low honor and integrity. I would

not pay him another dollar at this point.”

       Based on the company’s own calculation, 1% of profits on the trucks

amounted to $8331.71. Of that commission, Wisor was paid $3576.95. No action

was taken with the remaining $4754.76.

       In July, Short emailed Vanwassenhove asking “how things were coming

with the trucks[ he] sold to Columbia.” The email also stated, “I was expecting to

have received some commission from something by now. Let me know.” Three

days later, Vanwassenhove responded to the email, stating, “We will not be paying

commission for the items which you started the sales process on but did not finish

all the way through the completion and equipment delivery stage.”

       A number of emails were exchanged between Short and various personnel

at Elliott Equipment.

       In an August 18 email, Gene informed Short he did not “think [Short was]

owed one cent from Elliott Equipment Company.” The email included several

reasons the company would not be paying Short, including that “[p]art of the sales

process is to follow through with everything that has to do with the sale” and

salesmen “are not paid a commission until all those things are done”; that he “failed

to turn in the bid [to the City of St. Louis] or turned it in late”; and that he was “trying

to sell [a private hauler] a piece of equipment that was coming from somewhere

other than Elliott Equipment Company.”

       Vanwassenhove and DeLena were also included on the email. Within a few

minutes of the email being sent to Short, Vanwassenhove responded to Gene and

DaLena with the following:
                                            5

        It is really a simple thing if anyone else ever asks if they will get
        commission for items sold while they were our salesman of
        record . . . If you sell it, it gets delivered and we get paid before the
        salesman quits then the salesman should be paid commission for it.
        Sound correct?

(Ellipsis in original.)

        DaLena responded to Vanwassenhove’s email, stating:

                Sounds good to me. Also, I think that is only fair to those
        stepping into these deals and having to help finalize or deliver them.
        If the money was that important to [Short], then he should have been
        more dedicated to EEC to finish his “relationship” with these
        customers to the final payment was made. We can’t start rewarding
        employees for leaving us and in my opinion that is what he is
        essentially asking us to do.

        Short filed his petition at law in July 2015, maintaining Elliott Equipment

owed him unpaid commissions. In response, Elliott Equipment denied Short had

earned any part of the commission and filed a counterclaim alleging Short had

breached an oral contract as part of him employment obligations by failing to timely

submit bids to the City of St. Louis, which had resulted in damages to the company

of approximately $60,000.

        Approximately one month later, the company sent each of its salespersons

an “addendum to all salesmen sales contracts and territory agreements.” The

addendum provided, for the first time, a written statement that salespersons would

only be paid commission if the person “completely performed the entire ‘sales

process’ before your employment at EEC ended.” Additionally, “sales process”

was defined in writing for the first time, stating:

                The “sales process”' includes doing all of the following tasks:
        filled out quote or bid, received the order or PO, ordered the
        equipment to the specification, coordinated with the chassis dealer
        the delivery to our manufacturer, answered any questions our
        manufacturer has, received the equipment from the manufacturer,
                                          6

       check that the equipment met all specifications, made any
       adjustments to the equipment that needed to be done, coordinated
       delivery to the customer, delivered and trained the customer, any
       trade-ins are delivered to Elliott Equipment’s location, make sure the
       trade-in is in "same condition" as traded for and payment has been
       received and paid In full.

       In March 2016, Elliott Equipment filed a separate lawsuit against Short

alleging the same breach of contract and damages.1

       Just before trial, the parties waived a jury; Short’s suit and Elliott

Equipment’s counterclaim proceeded to a bench trial July 2016. At trial, Elliott

Equipment offered a number of theories to support its contention Short had not

earned any commission in relation to the sale of the nine garbage trucks.

       The company maintained Short had not earned any commission on the nine

garbage trucks because he had not completed the “sales process.” At trial, each

employee-witness of Elliott Equipment, including the owner, Gene Elliott, testified

the company had never paid a salesperson a commission for “just taking an order,”

as the company maintained Short had done. The company offered testimony of

several employees as well as Gene’s and Vanwassenhove’s as to what was

required to earn commission. Each listed the items included in the addendum to

the sales contracts, though all admitted that document was not created until after

the lawsuit was initiated.     Additionally, Gene testified he had paid another

salesperson some partial commissions on sales he had started but not completed

before he left.

1
 At the trial for these proceedings, Gene was asked if the second lawsuit was “the very
same breach of contract claim for which we’re here today?” and he agreed it was.
                                              7

       The company also maintained that if Short had earned any commission, it

was to be offset by the additional expenses incurred by the company after the

trucks were ordered to fix the problems with the trucks.               Various employees

testified the company incurred $13,000 in expenses, though later examination of

the claimed expenses showed approximately $1000 of those expenses were

actually paid by outside manufacturers and another approximately $2500 was the

amount “charged” by Elliott Equipment for extra trips to Columbia by their in-house

mechanics who were not reimbursed above their normal salary for the trips. The

amount of the additional expenses incurred by Elliott Equipment on the sale of the

nine garbage trucks was $9453.98.2

       Still the company maintained that even if Short had earned the full amount

of commission on the trucks, it would be more than offset by the extra fees.

However, a number of employees testified they had never heard of the company

using expenses to completely offset a commission. Instead, the company usually

subtracted the additional amount of fees from the profit and then the salesperson

received 1% of the reduced profit as their commission.3

       After a short recess following both parties’ presentation of evidence, the trial

court ruled from the bench. The court determined that Short had earned a partial

commission, noting he had “cultivated a relationship with the City of Columbia,”

“prepared the bid, he submitted the bid, and achieved the initial sale of those

2
  No one has appealed this finding by the district court, and substantial evidence supports
it.
3
  In other words, in the typical situation, if a salesperson cost the company $5000 in profit,
the salesperson would not get the commission on that $5000, so their commission would
be reduced by 1% of $5000, or $50.
                                          8

trucks.” He also “continued to do many of those tasks [outlined as the ‘sales

process’] after the bid was accepted by the City of Columbia.” The court awarded

Short $4660.22 in unpaid commission.4

       The court concluded Elliott Equipment’s counterclaim against Short failed

for a number of reasons: there was no evidence to support the assertion Short

breached any type of agreement by failing to hand deliver a bid to the City of St.

Louis; there was no evidence to establish why the bid—which had been mailed

using UPS—did not timely arrive in St. Louis; Elliott Equipment had failed to

establish that if the bid had been timely submitted, they would have won the sale

of their garbage trucks; Iowa law does not provide for a cause of action of

employers against their at-will employees for an alleged failure to perform their

duties and responsibilities; and, assuming there was a contract between Short and

Elliott Equipment for delivery of bids, the Statute of Frauds prevented enforcement

of any such oral contract. The counterclaim was dismissed.5

       Short noted the Iowa Wage Payment Collection Law provides for the

successful employee to be awarded “court costs and usual and necessary

attorney’s fees incurred in recovering the unpaid wages or expenses,” and the

court instructed him to submit an application for attorney fees.

       Short filed an application for fees requesting $50,347.00. In the application,

he noted that this was a voluntary reduction in fees from $64,299.50. Elliott

4
  The court used the amount Elliott Equipment had determined was 1% of the profit,
$8331.71, and subtracted the amount already paid to Wisor, $3576.95, and 1% of the
amount of extra expenses incurred by Elliott Equipment, $94.54, to reach the total.
5
  After the conclusion of the present suit, Elliott Equipment voluntarily dismissed the
second lawsuit, stating the “claim ha[d] been resolved in underlying litigation.”
                                          9

Equipment resisted the application, but the court ordered the award of the

requested amount.

       Elliott Equipment filed a motion to reconsider the order on fees, and a

hearing was held on the matter. Following the hearing, the court reduced the

award by $5949.25, the amount billed by two more experienced attorneys who had

been providing oversight and training to the attorney trying Short’s case. The court

ordered Elliott Equipment to pay Short $44,397.75 in attorney fees.

       Elliott Equipment appeals.

II. Standard of Review.

       Where, as here, a matter was tried to the district court at law, we review for

correction of errors at law. See Condon Auto Sales & Serv., Inc. v. Crick, 604

N.W.2d 587, 593 (Iowa 1999).

       We review the district court’s award of attorney fees for an abuse of

discretion. GreatAmerica Leasing Corp. v. Cool Comfort Air Conditioning and

Refrigerations, Inc., 691 N.W.2d 730, 732 (Iowa 2005).

III. Discussion.

       A. Commission.

       Short brought his claim under Iowa Code section 91A.8, which allows an

employee to receive “liquidated damages” if the “employer has intentionally failed

to pay an employee wages.” Here, the district court determined there was “a good-

faith dispute as to the amount of commission owed to Mr. Short in connection with

the sale,” so Short “may not recover liquidated damages.” Short has not disputed

the court’s ruling. Thus, the question is whether the court erred in its determination

Short earned a partial commission for his role in the sale of the garbage trucks.
                                         10

       Elliott Equipment maintains the court erred, claiming as the employer, it was

allowed to put conditions on the commission by an employment agreement. See

Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198, 202 (Iowa 1997) (concluding

the employer was not liable to the employee for nonpayment because the

employee was on probation at the time for which the bonus or “gainsharing” was

claimed, and the employer’s handbook established that employees on probation

were not eligible for the wage); Blanton v. Robert Half Inter., Inc., No. 01-1468,

2002 WL 31425223, at *2 (Iowa Ct. App. Oct. 30, 2002) (agreeing with the district

court “that an employer can put ‘conditions’ on a bonus or commission by an

employment agreement”).        While we agree an employer is allowed to put

conditions precedent on the earning of commissions, the question here is whether

Elliott Equipment had a practice of actually doing so.

       Although Elliott Equipment maintained that it was its policy that a

salesperson complete the entire “sales process” before paying a commission, the

facts belie its assertion. Elliott Equipment did not have a written policy about when

a commission was earned or what the “sales process” entailed until after this

dispute arose. Additionally, Gene admitted he paid another salesman partial

commissions even though that salesman did not complete the entire process.

Emails between Gene, DaLena, and Vanwassenhove establish that Elliott

Equipment contemplated paying Short at least a partial commission in May 2014—

a time when it already was clear Short had left without finishing the “sales process.”

Plus, even if we were to accept Elliott Equipment’s claim that the rule about

completing the process was always in place—though less formally—that policy

does not allow for the consideration of outside facts about the employee, such as
                                         11

“integrity” or “low honor.” In an email to DaLena, Vanwassenhove clearly stated

that at least part of his reason for not approving a commission to Short was his

reliance on those outside factors.

         For all of these reasons, we cannot say the district court erred in its

determination that Short earned a partial commission for his role in selling the nine

garbage trucks. As no party has appealed how the amount of commission was

determined and the district court’s ruling on the matter is supported by substantial

evidence, we affirm the district court’s award of unpaid commissions in the amount

of $4660.22 to Short.

         B. Attorney Fees.

         Elliott Equipment challenges the amount of the award of attorney fees to

Short.    The company argues the award was excessive, claiming the amount

violates the “usual and necessary” fees standard. See Iowa Code § 91A.8. In

reviewing the company’s claims, we are guided by several general principles.

First, “[w]hen an employee prevails on a wage claim under Iowa Code chapter

91A, the district court is required to assess attorney fees and costs against the

employer.” Gabelmann v. NFO, Inc., 606 N.W.2d 339, 342 (Iowa 2000). Second,

the district court has been vested with “broad discretion” in the assessment of

attorney fees, and “the trial judge had presumed expertise” on that question. Id.

at 342, 343. And finally, the statute providing for attorney fees to a successful

employee is remedial in nature and written with the purpose of reimbursing an

employee who had to incur expenses in order to receive back wages—whether or

not the employer intentionally withheld the wages. Id. at 343.
                                             12

          In determining whether an award of attorney fees is appropriate under

section 91A.8, our supreme court has considered the following:

          the time necessarily spent, the nature and extent of the service, the
          amount involved, the difficulty of handling and importance of the
          issues, the responsibility assumed and results obtained, the standing
          and experience of the attorney in the profession, and the customary
          charges for similar services.

Id. (citation omitted).

          Here, the district court was provided an itemized accounting of the

requested attorney fees.          According to Short’s attorneys, the original fee

calculation was $64,299.50 and was “voluntarily reduced” to $50,347. The district

court further reduced the fees by $5949.25, which was the amount billed for the

time of attorneys who were providing oversight to the young attorney trying the

case, ultimately awarding Short $44,397.75 in fees.

          Elliott Equipment does not complain about the hourly rate charged by the

plaintiff’s attorneys in this case, nor does it identify any entries claimed to be

duplicative or excessive. It does complain about the number of hours spent on the

case by Short’s attorneys,6 arguing the motion practice was overly extensive.

Elliott Equipment was the party who filed the motion attempting to move the cases

to small claims court while seeking an award of $60,000 in its counterclaim; it was

not successful. Conversely, Short was largely successful in the motions he filed;

the court granted his motion to proceed under expedited rules (a motion resisted

by Elliott Equipment) and his motion to strike the company’s late designated

expert.     Short also filed a number of motions in limine—which the company

6
    The record reflects fees for Elliott Equipment’s three attorneys were more than $35,000.
                                         13

resisted—that ultimately became moot when the parties agreed to a bench trial.

Short was unsuccessful in his motion for summary judgment, but according to

Short’s attorneys’ original fee affidavit, the fees incurred preparing for and

attending that hearing were voluntarily removed from the calculation of fees.

       Elliott Equipment attempts to minimize its role in the protracted litigation by

pointing out the fact that it offered to settle the claim; the company offered Short

$1000 for a release from the lawsuit but never adjusted its offer or negotiated

further. Elliott Equipment also maintains the fee award is excessive based on its

size relative to the size of the unpaid wage. “But a court which places undue

emphasis on the size of the judgment, to the exclusion of all other pertinent factors,

thereby disregards the public interest underlying this remedial statute.” Id. at 344.

Although Elliott Equipment implies the case did not demand the hours spent by

Short’s attorney based on the size of the award at issue, the company

characterizes this case as “a bona fide dispute over whether the employee fulfilled

the job duties required to earn the commission, and whether a commission was

earned at all.”

       While Elliott Equipment appears to take umbrage with the vigorous manner

this case was tried, as our supreme court has stated, “The risk of stonewalling an

employee’s claim for unpaid wages fairly rests on the party best equipped to

financially bear it—the employer.” Id. Having reviewed the record and finding no

abuse of the district court’s “broad discretion” in determining the amount of “usual

and necessary” fees, we affirm the district court’s award of fees to Short.

       C. Appellate Attorney Fees.
                                          14

       Because section 91A.8 allows for the employee’s recovery of “any

attorney’s fees incurred in recovering the unpaid wages and determined to have

been usual and necessary,” Short is entitled to a further award of the “usual and

necessary” attorney fees and costs expended in defending this appeal.” See

Runyon v. Kubota Tractor Corp., 653 N.W.2d 582, 588 (Iowa 2002); Salter v.

Freight Sales Co., 357 N.W.2d 38, 43 (Iowa Ct. App. 1984); see also Gabelman,

606 N.W.2d at 342 (stating the court is required to assess attorney fees under

chapter 91A when the employee prevails).

       Because we have no record of those fees before us, we remand the case

to the trial court for the limited purpose of determining the “usual and necessary”

fees incurred in this appeal. See Salter, 357 N.W.2d at 43.

IV. Conclusion.

       Having found no error in the district court’s determination that Short earned

a partial commission for his role in the sale of the garbage trucks and finding no

abuse of discretion in the award of attorney fees, we affirm the district court’s award

of the commission and trial attorney fees. We remand the case for the limited

purpose of determining the “usual and necessary” fees incurred in defending this

appeal.

       AFFIRMED AND REMANDED.