Rifet Mujkic v. Lynx, Inc. D/B/A Lynx Transportation, Inc. ( 2015 )

IN THE COURT OF APPEALS OF IOWA
No. 14-0636
Filed March 11, 2015
RIFET MUJKIC,
Plaintiff-Appellant,
vs.
LYNX, INC. d/b/a LYNX TRANSPORTATION, INC.,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Black Hawk County, Joel A.
Dalrymple, Judge.
Rifet Mujkic appeals the district court’s ruling denying his Iowa Code
chapter 91A (2011) and promissory estoppel claims against Lynx, Inc.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH
DIRECTIONS.
Erin Patrick Lyons of Dutton, Braun, Staack & Hellman, Waterloo, for
appellant.
Kate B. Mitchell of Beecher, Field, Walker, Morris, Hoffman & Johnson,
P.C., Waterloo, for appellee.
Heard by Vogel, P.J., and Doyle and McDonald, JJ.
2
DOYLE, J.
Rifet Mujkic appeals the district court’s ruling denying his Iowa Code
chapter 91A (2011) and promissory estoppel claims against Lynx, Inc. We affirm
in part, reverse in part, and remand with directions.
I. Background Facts and Proceedings
Selvedin Babic and Rifet Mujkic were friends and neighbors in their native
country, Bosnia, and have known each other since childhood. Babic and
Mujkic’s friendship continued over the years after both moved to Waterloo.
Babic is the president and sole shareholder of Lynx, Inc., doing business
as Lynx Transportation, Inc. In February 2012, Mujkic began working for Lynx.
Mujkic and Babic signed Lynx’s standard “contract agreement” setting forth the
terms of Mujkic’s employment. Mujkic worked as a “company driver,” driving a
company truck for Lynx and earning $0.38 to $0.40 per mile. Lynx was
responsible for all operating expenses of the truck, including fuel, tolls, repairs,
insurance, and registration.
Within a few months, Mujkic expressed interest to Babic in buying a truck
so he could work as an “owner/operator” and earn compensation “per load.”
Lynx owner-operator drivers were responsible for expenses such as liability and
cargo insurance, fuel, tolls, truck repairs, truck registration, and trailer rent. Also,
Lynx charged its owner/operator drivers a ten-percent negotiation fee for
scheduling loads with the broker.
3
Lynx maintained a “T-Check”1 account to cover fuel expenses for its
drivers. Lynx provided both company and owner/operator drivers with a card to
pay for fuel. Drivers were required to enter a PIN and/or sign when purchasing
fuel with the card. Lynx did not deduct “T-Check Fuel” advances from its
company drivers’ paychecks. With pre-approval from Lynx, drivers could also
receive cash advances for personal expenses by using the T-Check system.
Lynx deducted these “T-Chek Advances” from its drivers’ paychecks.
Lynx also deducted $100 from each paycheck (up to a total of $1000) of
both company drivers and owner/operators, which was paid into an escrow
account. The escrow account was used to cover insurance deductibles for
accidents caused by Lynx drivers. At the end of the driver’s employment, if the
escrow money was not used, the driver received the money back. In other
words, Lynx used these payments into escrow as a mandatory “savings account”
for its drivers.
Mujkic and Babic reached an agreement for Mujkic to purchase from Lynx
the truck he had been driving as a company driver, a 2006 International 9200i
semi-truck. Due to Mujkic’s poor credit history and lack of driving experience,
Babic agreed to personally finance Mujkic’s truck purchase and assist with
Mujkic’s other owner-operator expenses. They agreed Mujkic would pay $32,000
for the truck. Mujkic did not have the $3000 down payment, so Babic agreed to
the first $1000 would be taken from Mujkic’s escrow account and $1000 would be
deducted from each of his next two paychecks. The $29,000 balance was to be
paid in monthly installments of $1500. The agreement did not appear to provide
1
Also referred to as “T-Chek.”
4
for the payment of any interest. The cost of insurance and registration, paid by
Lynx, was bundled in the purchase price, and Babic agreed to keep the
registration and plates in Lynx’s name. When Mujkic paid off the truck, title
would transfer to his name, and he would assume responsibility for those
expenses. Mujkic did not sign an additional contract agreement when his status
changed from company driver to owner-operator.
Within a few months, Mujkic had the truck serviced to repair the air-
conditioning. Lynx paid for the servicing via T-Check and the charge was
subsequently deducted from Mujkic’s paycheck. The air-conditioning needed
servicing again shortly thereafter. Mujkic told Babic that Lynx needed to pay the
bill or he would return the truck. Babic informed Mujkic that the owner/operator
was the party ultimately responsible for repair expenses. Mujkic left the truck at
the repair center and did not pay the bill. Mujkic quit working for Lynx in July
2012. Lynx subsequently sold the truck to Jasmin Bejtic for $16,000.
In October 2012, Mujkic filed this action against Lynx, alleging a violation
of the Iowa Wage Payment Collection Law under Iowa Code chapter 91A for
Lynx’s deductions of his paychecks for T-Check advances and for escrow, and
that he was entitled to equitable relief from Lynx under the doctrine of promissory
estoppel for his payments toward the truck. Lynx filed an answer and raised two
counterclaims for damages as a result of Mujkic’s failure to: (1) reimburse Lynx
for repairs made to the truck in the amount of $880.06, and (2) pay Lynx for the
balance of the purchase price owed on the truck—after deducting the amount
Mujkic paid and Lynx’s mitigation of damages—in the amount of $8500. Mujkic
filed two motions for partial summary judgment, which the district court overruled.
5
The case proceeded to a two-day bench trial in November 2013. The
court heard testimony from Mujkic, Babic, Senaid Babic (Selvedin Babic’s brother
and the manager of Lynx). The parties also introduced a number of evidentiary
exhibits, including the parties’ contract agreement, repair invoices, and Lynx
paystubs.
In January 2014, the district court entered a ruling denying Mujkic’s claims
and awarding no damages to Mujkic. Specifically, the court determined Mujkic
was an independent contractor during his tenure with Lynx, and therefore was
not protected by chapter 91A. The court further found Mujkic had failed to prove
the necessary elements of promissory estoppel. Finally, the court found Lynx’s
counterclaims moot, as they “were for the purposes of set-off exclusively.”
Mujkic filed a motion to enlarge or amend, which the court denied. Mujkic
appeals.
II. Standard of Review
We review cases tried at law for correction of errors at law. Lindsay v.
Cottingham & Butler Ins. Servs., Inc., 763 N.W.2d 568, 573 (Iowa 2009). We are
bound by the district court’s findings of fact if they are supported by substantial
evidence. Sutton v. Iowa Trenchless, L.C., 808 N.W.2d 744, 749 (Iowa Ct. App.
2011).
III. Iowa Wage Payment Collection Law, Iowa Code chapter 91A
Mujkic claims he is entitled to an award of damages from Lynx under the
Iowa Wage Payment Collection Law. At the outset, we must determine whether
chapter 91A is applicable to Mujkic’s claim.
6
The Iowa Wage Payment Collection Law, by its terms, applies only to an
“employee,” defined as “a natural person who is employed in this state for wages
by an employer.” See Iowa Code § 91A.2(3) (defining “employee”). Chapter 91A
does not apply to independent contractors. Miller v. Component Homes, Inc.,
356 N.W.2d 213, 216 (Iowa 1984) (“The act by its terms protects only
‘employees’—not independent contractors.” (discussing chapter 91A)).
During his tenure with Lynx, Mujkic worked as a company driver and as an
owner/operator. Mujkic claims he was an employee of Lynx in both these
capacities.
A. April through July 2012. We first turn to the latter portion of Mujkic’s
tenure with Lynx—April to July 2012—when he was an owner/operator. Mujkic
claims the district court erred in determining he was an independent contractor
precluded from recovery during this time period.2 For the following reasons, we
find Mujkic’s claim unpersuasive.
“In cases presenting a choice between categorizing a person as an
employee or an independent contractor, the primary focus is on the extent of
control by the employer over the details of the alleged employee’s work.” Iowa
Mut. Ins. Co. v. McCarthy, 572 N.W.2d 537, 542 (Iowa 1997). Factors relevant to
this consideration include:
(1) who had the right to control the physical conduct of the work;
(2) whether the purported employee was on the employer’s payroll;
(3) the method of payment, whether by time or by job; (4) who
provided the equipment to accomplish the work; (5) the individual’s
2
Mujkic presents an alternative claim that even as an independent contractor he should
be afforded recovery under chapter 91A. We decline Mujkic’s request to interpret the
applicability of chapter 91A as to independent contractors differently than the Iowa
Supreme Court. See Miller, 356 N.W.2d at 216.
7
obligation to furnish necessary tools, supplies, and materials;
(6) the existence of a contract for the performance of a certain kind
of work at a fixed price; (7) the independent nature of the
individual’s business; (8) the individual’s employment of assistants,
with the right to supervise their activities; (9) the time for which the
individual is employed; (10) whether the work is part of the regular
business of the employer; (11) the intent of the parties; and (12) the
right to control the progress of the work, except as to final results.
Fesler v. Whelen Eng’g Co., 794 F. Supp. 2d 994, 1008-09 (S.D. Iowa 2011)
aff’d, 688 F.3d 439 (8th Cir. 2012) (citing Iowa Mut. Ins. Co., 572 N.W.2d at 542-
43).
The district court thoroughly and meticulously analyzed each of these
factors in determining Mujkic’s status as an independent contractor, and we need
not regurgitate substantially the same analysis here. As an owner/operator,
Mujkic earned compensation “per load.” From the broker’s payment, Lynx
deducted a ten-percent negotiation fee for scheduling loads with the broker, T-
Check advances, cargo insurance, trailer rent, and escrow. Mujkic was paid the
balance. Mujkic supplied his own truck. He controlled the day-to-day use of, and
was responsible for every aspect of the vehicle. As an owner/operator, Mujkic
was responsible for all expenses associated with being a registered driver and
completing the jobs, such as liability insurance, fuel, tolls, truck repairs, and truck
registration. Mujkic controlled the physical conduct of his work. He decided
which loads he would take and which loads he would refuse. He decided what
hours he would work. He decided the routes he took. He decided the manner in
which he drove. Mujkic purchased a truck and took a tax deduction based on the
truck’s depreciation in value on his 2012 tax return. Mujkic represented himself
as an owner/operator and as independent business owner on his tax return.
8
In sum, with regard to the time period of April to July 2012, we find no
error in the district court’s conclusion that Mukjic was an independent contractor.
Accordingly, Mujkic cannot prevail on his chapter 91A claim for damages for April
to July 2012. We affirm on this issue.
B. February through March 2012. We next turn to the earlier portion of
Mujkic’s tenure with Lynx—February and March 2012—when he was a company
driver for Lynx. In this position, Mujkic drove a company truck and earned $0.38
to $0.40 per mile. Lynx furnished the truck. Lynx furnished the necessary
supplies and materials for Mujkic to accomplish his work. Lynx was responsible
for all Mujkic’s employment and over-the-road expenses, including expenses
such as fuel, truck repairs, insurance, and registration. Although Mujkic had
some say on his routes, hours, and manner in which to drive, he was expected to
do what he was told by Lynx. Mujkic’s work, driving trucks, was a part of the
regular business of Lynx, a trucking company.
Considering these circumstances, we conclude the district court erred in
determining Mujkic was an independent contractor during February and March
2012.3 Because Mujkic was an employee of Lynx in February and March 2012,
chapter 91A was applicable to the portion of his claim stemming from that time
period.
3
We note that Lynx’s trial counsel conceded at trial that Mujkic was an employee of Lynx
in February and March 2012. “As a general rule ‘admissions of an attorney, whether
written or oral, if relevant and material and within the scope of his employment, are
admissible against his client.’” State v. Howell, 290 N.W.2d 355, 359 (Iowa 1980)
(quoting Suntken v. Suntken, 272 N.W. 132, 137 (Iowa 1937)). Nevertheless, and
without taking the concession into consideration, we independently find Mujkic was an
employee of Lynx in February and March 2012.
9
The purpose of chapter 91A is to facilitate collection of wages by
employees. Runyon v. Kubota Tractor Corp., 653 N.W.2d 582, 585 (Iowa 2002).
“An employer must pay all wages due its employees.” Iowa Code § 91A.3;
Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198, 202 (Iowa 1997). “Wages”
is defined as compensation owed by an employer for:
a. Labor or services rendered by an employee, whether
determined on a time, task, piece, commission, or other basis of
calculation.
....
c. Any payments to the employee or to a fund for the benefit
of the employee, including but not limited to payments for medical,
health, hospital, welfare, pension, or profit-sharing, which are due
an employee under an agreement with the employer or under a
policy of the employer. The assets of an employee in a fund for the
benefit of the employee, whether such assets were originally paid
into the fund by an employer or employee, are not wages.
Iowa Code § 91A.2(7). Iowa Code section 91A.5 provides:
1. An employer shall not withhold or divert any portion of an
employee’s wages unless:
a. The employer is required or permitted to do so by
state or federal law or by order of a court of competent
jurisdiction; or
b. The employer has written authorization from the
employee to so deduct for any lawful purpose accruing to the
benefit of the employee.
Iowa Code § 91A.5(1) (emphasis added).
Mujkic points to withholdings for T-Check dispersions and escrow
payments as funds that should not have withheld or diverted from his wages
while employed by Lynx. Lynx did not have “written authorization” from Mujkic
for either of these types of withholdings. See id.
Turning first to the T-Check deductions, we conclude Mujkic cannot prevail
on his claim, because the challenged deductions were not wages “owed” or “due”
10
to him. The evidence presented at trial established the T-Check advances made
to Mujkic were moneys paid by Lynx in advance of when Mujkic earned them.
Consequently, the subsequent payroll deductions were not withholdings of
Mujkic’s wages due or owed, because the money deducted was not then due
and owing to Mujkic—it had already been paid. The T-check deductions were
merely reimbursements to Lynx for advances on wages Mujkic expected to earn.
In other words, if not for the T-Check deductions, Mujkic would, in effect, be
indebted to Lynx.
We reach a different conclusion as to the escrow payments. It is clear
from the record these withholdings or diversions came from wages owed to
Mujkic. As Babic testified, “Every driver has an escrow account with Lynx, and
that is in the amount of $1000.00, and it’s withheld in first ten paychecks they
receive, $100.00 from each paycheck.” Pursuant to Iowa Code section 91A.5,
“[Lynx] shall not withhold or divert any portion of [Mukic’s] wages unless . . .
[Lynx] has written authorization from [Mujkic] to so deduct for any lawful purpose
accruing to the benefit of the employee.” See id. Lynx’s action in withholding
escrow payments from Mujkic’s wages in February and March 2012 without
written authorization from Mujkic constituted a violation of chapter 91A. Further,
the deductions were not for the benefit of the employee. The deductions were
withheld to reimburse the employer for property damage occurring to the
employer’s vehicle. Such deductions are expressly prohibited by statute. See
Iowa Code § 91A.5(2)(c) (stating the employer may not withhold from wages
“losses due to . . . damage to property”).
11
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
reimbursed, plus liquidated damages, court costs and any
attorney’s fees incurred in recovering the unpaid wages and
determined to have been usual and necessary. In other instances
the employer shall be liable only for unpaid wages or expenses,
court costs and usual and necessary attorney’s fees incurred in
recovering the unpaid wages or expenses.
Id. § 91A.8.
Accordingly, we reverse the district court’s ruling on Mujkic’s claim for
damages stemming from Lynx’s chapter 91A violation during February and
March 2012 with regard to the escrow payments withheld or diverted from
Mujkic’s wages. We remand to the district court for a determination of damages
and attorney fees and costs incurred by Mujkic, if any, and whether a penalty
should be assessed to Lynx. In reaching its conclusion, the district court may
consider Mujkic’s ultimate use of the escrow funds to his benefit in purchasing
the semi-truck from Lynx4 and any off-set to Mujkic’s damages by Lynx’s
counterclaims.5
4
The record indicates Mujkic received the escrow funds from Lynx during the course of
his employment and applied the funds toward his truck purchase. Specifically, Mujkic
and Babic agreed to apply the $700 in escrow payments accumulated by Mujkic during
February and March toward Mujkic’s $3000 down payment on the semi-truck he
purchased from Lynx.
5
Lynx raised two counterclaims for damages as a result of Mujkic’s failure to:
(1) reimburse Lynx for repairs made to the truck in the amount of $880.06, and (2) pay
Lynx for the balance of the purchase price owed on the truck—after deducting the
amount Mujkic paid and Lynx’s mitigation of damages—in the amount of $8500. The
district court found Lynx’s counterclaims moot, as they “were for the purposes of set-off
exclusively,” and the court’s ruling denied Mujkic’s claims and awarded no damages to
Mujkic.
12
IV. Promissory Estoppel
Mujkic raised an alternative claim under the doctrine of promissory
estoppel, alleging he relied on and acted to his detriment based on promises
made by Lynx with regard to his purchase of the semi-truck. In support of this
claim, Mujkic testified at trial that he relied, to his detriment, on Babic’s promise
to give him “something in writing stating that [Mujkic] had purchased this truck
and that [Mujkic] was making payments for it.”6 Mujkic explained he returned the
truck to Babic when that “didn’t happen.”
As an aside, we observe the record is clear Mujkic left the truck at the
repair shop after Babic declined to pay to repair its air conditioning. We further
observe Mujkic agreed it was his responsibility—not Lynx’s—to pay for repairs to
the truck. At the time he “returned” the truck, Mujkic owed $24,500 on the
purchase price of $32,000. Lynx subsequently sold the truck for “the best offer
he received”—$16,000.
A party asserting promissory estoppel must prove:
(1) a clear and definite promise; (2) the promise was made with the
promissor’s clear understanding that the promisee was seeking
assurance upon which the promisee could rely and without which
he would not act; (3) the promisee acted to his or her substantial
detriment in reasonable reliance on the promise; and (4) injustice
can be avoided only by enforcement of the promise.
Kolkman v. Roth, 656 N.W.2d 148, 156 (Iowa 2003). “[S]trict proof of all the
elements” is required. Id.
6
We have reviewed the parties’ testimony as well as the district court’s credibility
findings in favor of Babic on this claim. “The district court has a better opportunity than
the appellate court to evaluate the credibility of witnesses.” Etchen v. Holiday Rambler
Corp., 574 N.W.2d 355, 360 (Iowa Ct. App. 1997). We decline to address Mujkic’s claim
that the oral contract was merely an agreement to agree.
13
On this issue, the district court stated:
Mujkic contends that Babic, on behalf of Lynx, made a clear
and definite promise to sell a truck in exchange for $32,000.00 paid
over time. Mujkic further claims that this agreement included a
promise to draft a written contract document setting forth all the
various terms and conditions of the contract and that this was not
done. Relying upon a pending written contract, Mujkic consented
to payments for the truck being withdrawn monthly from his
payments from Lynx, and that he relied to his detriment in
reasonable reliance on the promise. Mujkic requests that in order
to avoid injustice, the Court order Lynx to return the funds he had
already paid towards the purchase price of the truck.
The Court finds that four requisite factors to establish a claim
for promissory estoppel are not present in this case. While there
certainly was a clear oral agreement between these parties to sell a
truck for $32,000.00 with payments made over time, the Court finds
that the evidence did not show that there was a simultaneous
agreement for the parties to confirm the agreement in writing,
rendering element (2) missing. The Court finds the plaintiff’s
testimony regarding the promise of a pending written contract to be
self-serving and unreliable. The Court finds that the parties
executed the agreement as they understood it. Lynx turned the
truck over to Mujkic in exchange for his down payment and
subsequent monthly payments. Mujkic received an ownership
interest in the truck and increased his compensation potential as an
owner-operator.
Further, the Court does not find that the plaintiff has proven
element (4) that injustice can only be avoided by enforcing the
promise. Mujkic is not asking the Court for equitable relief such as
specific performance to purchase the truck for the price originally
agreed to; he asks the Court for a return of moneys paid pursuant
to a contract that he breached. Mujkic enjoyed the use and
benefits of the truck for over four months, and voluntarily walked
away from the transaction after the truck’s air conditioning
malfunctioned a second time, incurring additional repairs and
expenses ultimately borne by Babic. Mujkic, on his own volition,
decided that the costs associated with ownership were too great
and chose not to follow through with the parties’ agreement.
The Court does not find on these facts that injustice can only
be avoided by enforcing the parties’ promise. Mujkic has not met
his burden to prove the necessary elements of promissory
estoppel, and thus his second claim also fails.
We find no error in the court’s well-reasoned conclusion on this issue, and
decline to disturb it on appeal. We affirm on this issue.
14
V. Conclusion
With regard to Mujkic’s Iowa Code chapter 91A claim against Lynx, we
find no error in the district court’s conclusion that Mukjic was an independent
contractor during the time period of April through July 2012, and therefore that
Mujkic cannot prevail on his chapter 91A claim for damages during that time.
However, we reverse the district court’s ruling on Mujkic’s claim for damages
stemming from Lynx’s chapter 91A violation during February and March 2012,
during which Mujkic was an employee of Lynx, with regard to escrow payments
withheld or diverted from Mujkic’s wages; we remand to the district court for a
determination of damages and attorney fees and costs incurred by Mujkic, if any,
and whether a penalty should be assessed to Lynx.
We affirm the district court’s ruling denying Mujkic’s promissory estoppel
claims against Lynx.
Costs on appeal are assessed equally to the parties.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH
DIRECTIONS.