Gabelmann v. NFO, Inc.

• Decision Date: 26 November 1997
• Docket Number: No. 96-161,96-161
• Parties: Karl GABELMANN, Appellant, v. NFO, INC., Appellee.
• Court: Iowa Supreme Court

Page 476

571 N.W.2d 476

Karl GABELMANN, Appellant, v. NFO, INC., Appellee.

No. 96-161.

Supreme Court of Iowa.

Nov. 26, 1997.

Stephen N. Greenleaf of Lynch, Greenleaf & Michael, L.L.P., Iowa City, for appellant.

Gayla R. Harrison of Johnson, Hester, Walter & Harrison, L.L.P., Ottumwa, for appellee.

Considered by HARRIS, P.J., and LARSON, CARTER, LAVORATO, and SNELL, JJ.

LAVORATO, Justice.

This lawsuit by a former employee against his former employer comes to us on further review. The employee appealed, challenging two district court rulings. In the first ruling, the district court sustained the employer's motion for directed verdict on the employee's Iowa Code chapter 91A claim for wages in the form of a monthly allowance. The court concluded the housing allowance was not wages. In the second ruling, the court granted the employer's motion for judgment notwithstanding the verdict on the employee's breach of contract claim for the housing allowance. The court did so on two grounds: There was a lack of substantial evidence to support the claim, and the claim was time-barred. The court of appeals affirmed the ruling on the motion for judgment notwithstanding the verdict, concluding the claim was time-barred.

We conclude (1) the housing allowance is "wages" for purposes of chapter 91A, (2) there was substantial evidence to support the breach of contract claim, and (3) only a portion of the housing allowance is time-barred. We therefore vacate the court of appeals decision, reverse the district court's two rulings, and remand with directions.

I. Facts.

NFO, Inc. is a nonprofit corporation based in Ames, Iowa. It is a membership organization that provides marketing services and information to its farmer members.

Karl Gabelmann was a long-time employee of NFO. He began working for NFO in 1973 out of his home in Garner, Iowa, when the organization was based in Corning, Iowa. He signed an offer of employment at the time which stated his position, salary, travel allowances, and lodging expenses. Brynolf Grahn was Gablelmann's direct supervisor. Grahn was director of field operations for NFO and worked out of the organization's headquarters in Corning.

Over time, Gabelmann's responsibilities with NFO grew and he was required to move to Spencer, Iowa. Gabelmann asked Grahn if NFO would pay for the move. Grahn told Gabelmann that the NFO would not pay for the first move, but it would pay for subsequent moves.

In May 1975 Grahn sought to bring Gabelmann to the Corning offices to work with him. Grahn obtained permission from NFO's president, Oren Lee Staley, to do so and to pay Gabelmann's moving expenses and an $80 per month housing allowance. Grahn then contacted Gabelmann on a Friday night and requested Gabelmann to move to Corning. Grahn told Gabelmann that he would receive moving expenses and an $80 per month housing allowance.

Gabelmann accepted Grahn's offer and began working in Corning the following Monday morning. Gabelmann's family remained in Spencer until his son finished high school. Gabelmann lived in a motel in Corning during the week and traveled to Spencer on weekends. Gabelmann's family moved to Corning the following May.

During this year's time, NFO paid Gabelmann his motel, food, and automobile expenses. In the fall of 1975, Grahn left NFO to return to farming in Minnesota. Roger Slottach succeeded Grahn as director of field operations. Before leaving, Grahn told Slottach of the commitment to pay Gabelmann's moving expenses and housing allowance. Grahn left it to Slottach to complete the necessary internal paperwork to carry out this commitment.

Shortly after Gabelmann's family moved to Corning, Gabelmann gave Slottach the information to prepare the requisition forms that NFO used to process requests for moving expenses and housing allowances. Slottach prepared one for the moving expense which amounted to $689.01 and one for the $80 per month housing allowance. Slottach approved both requests as did Gene Potter, the association's budget and finance director.

Such requisition requests were passed on to Staley, the president, for his approval or rejection. Staley's usual custom was to indicate approval or rejection by initialing the lower left-hand corner of the form. When Slottach submitted the requisitions to Staley, he fully expected them to be approved.

For some reason, the original requisitions for the moving expenses and housing allowance never turned up, only copies remain. Staley's initials do not appear on the copies. Thus there is no record evidence that Staley ever rejected or approved the requests on the original requisition forms. Notwithstanding the requisition procedure, Grahn gave the following testimony at trial on how he usually obtained Staley's approval:

Q. What was your practice, if you had one, in terms of making requests for changes in personnel assignment, salaries, reimbursements? Did you have a regular way of handling those issues within the organization? A. Yes. My method was always to go with figures and reasons and arguments to Mr. Staley on why [a salary] should be raised or why I wanted a certain individual. And if he says okay, go ahead, make out a requisition and send it to me, that's what I would do, but I always went to Mr. Staley first and got his consensus on it and then I would go ahead and complete the requisition if the person agreed with me that I would make a requisition with, of course.

Q. So if I understand correctly, the paper followed the decision and not the other way around? A. Absolutely, right.

Grahn further testified he followed this procedure in obtaining Staley's approval to offer Gabelmann moving expenses and a housing allowance. Grahn did not immediately follow up with requisition requests for these items because Gabelmann's family was not yet ready to move to Corning and had not done so by the time Grahn left the association in the fall of 1975.

Several times, Gabelmann asked Slottach about the status of the two requisitions. Slottach said he would inquire, but never gave Gabelmann an answer. Meanwhile, Grahn returned to NFO later in 1976, and Gabelmann asked him about the payments. Grahn said he would look into it, but, like Slottach, never gave Gabelmann an answer.

Thereafter NFO experienced financial problems that persisted through most of Gabelmann's remaining employment. At times Gabelmann would have to borrow money because the association could not afford to pay his salary.

By 1982, Devon Woodlund had replaced Staley as president. Grahn, who had again left NFO, returned as director of budget and finance. At this time, Gabelmann wrote Grahn a note asking again about his moving expenses and housing allowance. Grahn told Gabelmann he could not authorize payment at that time because NFO was financially strapped; the organization had resorted to four-day work weeks and a salary freeze. Valuing his job more than the funds he felt he was owed, Gabelmann did not press the matter.

By May of 1986, Grahn had left NFO again. Rene Niese succeeded Grahn as director of budget and financing. At about this time, Gabelmann filed a requisition form, asking for $689.01 moving expenses and $10,640 accrued housing allowance. NFO took no action.

In June 1993, NFO dismissed Gabelmann, telling him that they had to cut back and he was old enough to retire anyway. Shortly after, Gabelmann made a written demand on NFO for the moving expenses and housing allowance. The total demand, including 8.5% interest, amounted to $40,339.69. When NFO refused to pay, Gabelmann sued.

II. Proceedings.

Gabelmann filed this action on March 21, 1994 for breach of contract and for wages under Iowa Code chapter 91A. He asked for the moving expenses and accrued housing allowance. NFO filed a denial and an affirmative defense based on the statute of limitations.

At trial the jury heard testimony from, among others, Gabelmann, Grahn, Slottach, and Staley's administrative assistant, Gene Potter. The jury also saw examples of completed requisition forms and heard testimony about the requisition process.

NFO moved for directed verdict at the conclusion of Gabelmann's case, arguing that there had been no "meeting of the minds," principally because the requisition process showed no approval by Staley. NFO also argued that Gabelmann had failed to establish a chapter 91A claim and that in any event the statute of limitations barred Gabelmann's claims. The district court granted the motion on the chapter 91A claim but denied it on the contract and statute of limitations issues.

NFO renewed its directed verdict motion at the close of all the evidence. The court again overruled the motion on the contract and statute of limitations issues and submitted the case to the jury on the contract claim. The court gave the jury no instructions on the statute of limitations issues. The jury awarded Gabelmann $22,000.

Thereafter, NFO moved for a new trial, for judgment notwithstanding the verdict, and remittitur.

The district court granted NFO's motion for judgment notwithstanding the verdict. The court determined Staley was the only NFO employee with authority to (1) approve and make payment for moving expenses and housing allowances and (2) enter into any contract. Because no record evidence established that Staley had approved any request by Gabelmann for such payment, the court concluded there was no meeting of the minds between Gabelmann and NFO and therefore no basis for an unwritten contract. The court also concluded that the five-year statute of limitations for unwritten contracts had run well "after NFO had the ability to pay."

Gabelmann appealed.

His appeal raises three issues: (1) whether substantial evidence supported the jury's finding of a contract between Gabelmann and NFO that required NFO to pay Gabelmann a housing allowance as part of his compensation; (2) whether the statute of limitations barred Gabelmann's contract claim; and (3) whether Gabelmann is...