Growth Unlimited Corp. v. K & B Tobacco and Jan Albert d/b/a K & B Tobacco ( 2020 )

IN THE COURT OF APPEALS OF IOWA
No. 19-0895
Filed June 17, 2020
GROWTH UNLIMITED CORP.,
Plaintiff-Appellant,
vs.
K & B TOBACCO and JAN ALBERT d/b/a K & B TOBACCO,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Montgomery County, James S.
Heckerman, Judge.
A company distributing gaming machines appeals the judgment in its
contract dispute with a tobacco retailer and seeks additional attorney fees.
AFFIRMED.
Brian E. Tackett, Glenwood, for appellant.
G. Rawson Stevens, Shenandoah, for appellees.
Considered by Tabor, P.J., and May and Greer, JJ.
2
TABOR, Presiding Judge.
This case involves a contract dispute. Growth Unlimited, an Iowa
corporation marketing “skill-based amusement” games, challenges the result of its
lawsuit against a Nebraska retailer that installed one of its machines. Growth
Unlimited first contests the district court’s treatment of future damages. Because
Growth Unlimited did not preserve that issue, we decline to reach it. Growth
Unlimited next challenges the attorney fee award. Finding no abuse of discretion,
we affirm the district court’s award.
I. Facts and Prior Proceedings
Growth Unlimited is an Iowa corporation in the business of leasing, selling,
and distributing gaming machines. Its principal place of business is Red Oak.
K & B Tobacco is a retail store in Beatrice, Nebraska, owned by Jan Albert. In
September 2017, Growth Unlimited entered into a contract with K & B to place a
“Nebraska Skill Game” machine in its store for a trial period from September 23
until December 23, 2017. The location agreement renewed “automatically for
consecutive 12-month periods” unless either party gave notice of their intent not to
renew in writing at least thirty days before the end of the trial period.
The contract provided:
Owner of K & B Tobacco (Location Name), agrees to the placement
of the following Amusement Machine(s) in his/her place of business,
located at 116 N 8th St, Beatrice, NE, 68310 from 09-23-17 to 12-
23-17 and shall renew thereafter automatically for consecutive 12-
month periods unless either party serves upon the other, via certified
mail in writing, at least 30 days prior to the termination date of this
Agreement or any renewal term thereof, notice of their intent not to
renew.
3
The contract outlined a fifty/fifty split of the machine’s net revenue between the
location owner and the equipment owner. The contract also identified Iowa as the
jurisdiction to bring any legal action and required K & B to pay Growth Unlimited’s
attorney fees in the event of a suit.
On December 21, two days before the expiration of the trial period, Albert
asked Growth Unlimited for an advance of $819. The gaming machine had paid
out more money than it took in, and Albert was in a cash crunch. Growth Unlimited
made that payment. A few days later, during a routine service appointment, a
Growth Unlimited collection driver misread the ticket showing K & B received
$819.50 and paid another $819.50 to the retailer. After that, K & B owed Growth
Unlimited a total of $1638.50.
In January 2018, Growth Unlimited tried several times to contact Albert
about the amount due without success. Then, on January 29, 2018, Albert
contacted Growth Unlimited, asking the company to remove the gaming machine
from the K & B store.
Growth Unlimited sued K & B, alleging its breach of contract caused thirty-
four weeks of revenue loss. Growth Unlimited claimed to have earned an average
of $138.41 per week from the start of the location agreement until K & B’s breach.
From those figures, Growth Unlimited alleged a loss of $4705.94 ($138.41 x 34).
On top of the lost revenue, Growth Unlimited requested reimbursement of the
$1638.50 advanced to K & B. The Iowa corporation also demanded K & B pay its
legal fees and costs in the amount of $4327.35.
The court set the contract dispute for trial in April 2019. Midway through
trial, at the district court’s urging, the parties settled the case. At the close the
4
proceeding, the parties agreed on the record to entry of judgment for Growth
Unlimited in the amount of $1639. The court left the issue of attorney fees open
for briefing. Growth Unlimited filed a brief seeking $4327.35 in attorney fees. In
reply, K & B argued no attorney fees should be awarded.
In a May 8 order, the district court explained that it had advised the parties
during trial that because their disagreement remained unresolved at the expiration
of the initial contract period, the court did not believe the automatic extension went
into effect. Based on that reasoning, the court expected to reject Growth
Unlimited’s claim for $4705.94 in lost revenue. In response, the parties agreed the
court could enter judgment for Growth Unlimited in the amount of $1639, which it
did. As for legal fees, the district court ordered K & B to pay $400. Growth
Unlimited now appeals.
II. Scope and Standards of Review
We review breach-of-contract claims for the correction of legal error. See
NevadaCare, Inc. v. Dept. of Human Services, 783 N.W.2d 459, 465 (Iowa 2010).
As for the attorney fee award, we review for an abuse of discretion. Gabelmann
v. NFO, Inc., 606 N.W.2d 339, 342 (Iowa 2000). “Reversal is warranted only when
the court rests its discretionary ruling on grounds that are clearly unreasonable or
untenable.” Id.III. Analysis
A. Contract Interpretation and Error Preservation
Growth Unlimited claims the district court erred in precluding future losses
as damages under the contract. K & B counters that “[b]y agreeing to settle the
damage portion of this case for $1639.00” Growth Unlimited did not preserve the
5
issue of future damages. K & B asserts: “No offer of proof was made to the record
and no motions were filed following the trial to expand the finding of facts or
conclusions of law.”
In its appellant’s brief, Growth Unlimited claims to have preserved error on
the future-damage claim “through its resistance to the court’s finding contained in
the order entered on May 8, 2019.” But Growth Unlimited does not cite to any
place in the record it presented that resistance. Our rules require appellants’ briefs
to contain “[a] statement addressing how the issue was preserved for appellate
review, with references to the places in the record where the issue was raised and
decided.” Iowa R. App. P. 6.903(2)(g)(1). Because this omission hinders our
review, we must enforce our appellate rules by finding Growth Unlimited waived
this claim. See Inghram v. Dairyland Mut. Ins. Co., 215 N.W.2d 239, 240 (Iowa
1974). We give the issue of future damages no further consideration. See Runyon
v. Kubota Tractor Corp., 653 N.W.2d 582, 584 (Iowa 2002).
B. Attorney Fees
Next, Growth Unlimited claims the district court abused its discretion in
awarding only $400 in attorney fees. In its post-trial filing, the corporation alleged
that it incurred costs and attorney fees totaling $4327.35—that included $200
hourly-rate fees for attorney Brian Tackett in the amount of $2234.90, as well as
fees charged by former attorney Drew Swanson.
“When judgment is recovered upon a written contract containing an
agreement to pay an attorney fee, the court shall allow and tax as a part of the
costs a reasonable attorney fee to be determined by the court.” Iowa Code
§ 625.22 (2019). The party seeking fees must show the services were “reasonably
6
necessary” and the amount of the charges were fair. See GreatAmerica Leasing
Corp. v. Cool Comfort Air Conditioning and Refrigeration, Inc., 691 N.W.2d 730,
733 (Iowa 2005). In awarding attorney fees, the district court must assess the
whole picture and, “using independent judgment with the benefit of hindsight,
decide on a total fee appropriate for handling the complete case.” Id. (citing
Schaffer v. Frank Moyer Constr., Inc., 628 N.W.2d 11, 23 (Iowa 2001)). We
encourage district courts to consider the so-called Schaffer factors, including the
time required by the matter, the nature and extent of the service, the amount of
money involved, the difficulty and importance of the issues, the responsibility
assumed and results obtained, the attorney’s standing and experience in the
profession, and the customary charges for similar services. 628 N.W.2d at 24.
Here, the district court awarded attorney fees of $400. The court did not
provide any rationale for its exercise of discretion. Growth Unlimited complains
that $400 amounts to two hours of attorney time, “which was less than the trial
lasted.” K & B defends the reasonableness of the attorney fee award. The retailer
argues the district court provided fees for those services that were “reasonably
necessary” to enforce the contract.
Granted, it would have been more helpful for the district court to show its
work. Nonetheless we find no abuse of discretion. The legal issues here were not
complex, not much money was at stake, and the $1639 settlement was not a
resounding success for Growth Unlimited. Concentrating on those factors, we
decline to find an abuse of discretion in the attorney fee award.
AFFIRMED.