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Anderson v. Anderson Tooling, Inc.

Court of Appeals of Iowa

February 7, 2018

JEFFREY ANDERSON, Plaintiff-Appellant,
v.
ANDERSON TOOLING, INC., DEAN E. ANDERSON, and CAROL A. ANDERSON, Defendants-Appellees. ANDERSON TOOLING, INC., Plaintiff-Appellee,
v.
LORI J. ANDERSON and FABRICATION AND CONSTRUCTION SERVICES, INC., Defendants-Appellants.

         Appeal from the Iowa District Court for Jefferson County, Myron L. Gookin, Judge.

         Appellants appeal from adverse parts of the jury's verdicts and the district court's denial of their motion for a new trial in this civil action.

          Steven Gardner of Denefe, Gardner & Zingg, P.C., Ottumwa, for appellants.

          Steven E. Ballard and Abigail L. Brown of Leff Law Firm, L.L.P., Iowa City, for appellees.

          Doyle, P.J., and Tabor and McDonald, JJ.

          DOYLE, Judge.

         Appellants Jeffrey Anderson, his wife Lori Anderson, and their business Fabrication and Construction Services, Inc. appeal adverse parts of the jury's verdicts found in favor of Anderson Tooling, Inc. and its owners, Dean and Carol Anderson. Appellants challenge several aspects of the jury's verdicts and the court's denial of their motion for a new trial, among other things. We affirm in part, reverse in part, and remand.

         I. Background Facts and Proceedings.

         Dean Anderson and Jeff Anderson are brothers. Dean is married to Carol and Jeff to Lori. In or about 1996, Dean and Carol started their business, Anderson Tooling, Inc., also called ATI for short. ATI has many facets, but its primary focus is "rigging"-moving large and heavy manufacturing machines around the country. The company does more than just move machinery, it also provides turnkey machine installation. ATI also operates what is essentially a salvage yard for big, unwanted manufacturing machinery and parts. Unlike many of its competitors, if a client needs a big machine removed and no longer wants it, ATI may accept the machinery as a portion of its compensation for the machine's removal.

         In 2005, Dean asked Jeff to come work for ATI. ATI was in need of organization-particularly with respect to its bookkeeping-and Jeff, who had a master's degree in business administration, had experience managing manufacturing facilities. Jeff had also performed some consulting work for ATI in the past. Dean, Carol, Jeff, and Lori met at Jeff and Lori's home to talk about details of Jeff's employment. Jeff took notes of the conversation in a note book.

         Jeffs and Dean's initials appear on the first page of the notes.[1] The notes indicate a base salary of $52, 000 and provide:

         (Image Omitted)

         The notes do not define profit or otherwise explain the use of the word.

         Jeff began working for ATI. Lori also began working for ATI as a bookkeeper. Jeff worked for ATI until Dean fired him in 2011.

         Jeff subsequently sued ATI, Dean, and Carol, asserting four claims: violation of Iowa Wage Payment Collection Law, breach of contract, tortious discharge, and interference with contractual relations. ATI, Dean, and Carol answered, asserted affirmative defenses, and made counterclaims against Jeff for conversion, intentional interference with contracts, interference with a prospective business advantage, breach of fiduciary duty, and misappropriation of trade secrets. ATI then sued Jeff's wife Lori and Jeff's business Fabrication & Construction Services, Inc., also called "FabCon, " asserting claims of breach of fiduciary duty by Lori, conversion, intentional interference with contracts, interference with prospective business advantage, and conspiracy. The lawsuits were consolidated for trial.

         A jury trial commenced May 13, 2015. Differing accounts of events leading to Jeff's firing were given by Jeff and Dean, among others. Jeff claimed ATI, by way of Dean and Carol, concealed profits to keep from having to pay Jeff a percentage of that profit. Jeff asserted that when he called Dean and Carol out on this, they fired him rather than paid him, in breach of his contract and Iowa law. Conversely, Dean and Carol claimed Jeff was fired for mismanaging ATI and taking money from ATI he was not due. They also asserted he gave ATI's customer list and rate information to FabCon, Jeff's business, which FabCon, Jeff, and Lori used to compete with ATI and later sold to another competitor. After hearing almost two weeks of testimony and receiving over one hundred and sixty exhibits, the matter was submitted to the jury on June 3, 2015. The jury was given two verdict forms with some sixty-eight special interrogatories, along with the court's instructions. The first verdict form concerned Jeff's claims against ATI, Dean, and Carol. With respect to Jeff's claim that ATI violated the Iowa Wage Payment Collection Law, the jury found ATI did not owe Jeff for unpaid profit-sharing or for accrued vacation. On Jeff's breach-of-contract and intentional-interference-with-a-contract claims, the jury found Jeff did not have a contract with ATI with which to breach or interfere. However, the jury did find Jeff was an employee of ATI and was discharged by ATI for pursuing unpaid wages, causing Jeff damages. On the line for "lost earnings from discharge to present, " the foreperson wrote, "$52, 000 37, 387.01 = 89, 387." The jury also awarded Jeff $5000 for past emotional-distress damages on the claim. The jury found ATI owed Jeff money, but that neither Dean nor Carol abused the corporate privilege. Finally, the jury awarded Jeff $52, 000 in punitive damages against ATI, Dean, and Carol.

         The second verdict form concerned ATI's claims against Jeff, Lori, and FabCon. The jury found no conversion of ATI's property by Jeff, Lori, or FabCon. However, the jury found ATI had prospective business relationships with which Jeff intentionally and improperly interfered to ATI's detriment and caused ATI damages of $336, 072.54. Though the jury found that both Lori and FabCon knew of ATI's prospective relationships, the jury found only FabCon intentionally and improperly interfered with the potential relationships, but that the interference did not cause ATI not to enter into any of the prospective relationships. Additionally, the jury found no breach of fiduciary duty by Lori, but it found Jeff breached his fiduciary duty to ATI and caused ATI damages of $436, 225.18. The jury also found Jeff misappropriated ATI's trade secrets, but the misappropriation did not cause ATI damages. On ATI's conspiracy claim, the jury answered as follows:

         X. Conspiracy

         Question No. 38: Did Jeffery Anderson commit any of the wrongs of conversion, interference with a prospective business advantage, breach of fiduciary duty, or misappropriation of trade secrets?

         Answer "yes" or "no." ...


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