Builders Commonwealth, Inc. v. Jason Morgan Worsfold ( 2015 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-0631
Builders Commonwealth, Inc.,
Respondent,
vs.
Jason Morgan Worsfold,
Appellant.
Filed February 2, 2015
Affirmed
Hooten, Judge
St. Louis County District Court
File No. 69DU-CV-13-787
Jeremy M. Hurd, Orman Nord & Hurd P.L.L.P., Duluth, Minnesota (for respondent)
Jason Morgan Worsfold, Duluth, Minnesota (pro se appellant)
Considered and decided by Hooten, Presiding Judge; Rodenberg, Judge; and Kirk,
Judge.
UNPUBLISHED OPINION
HOOTEN, Judge
Pro se appellant, a member of a construction workers’ cooperative, challenges the
district court’s judgment requiring him to return a portion of the payments respondent
cooperative advanced to him under the membership agreement, arguing that the payments
were wages “due or earned” under Minn. Stat. § 181.79 (2014). Because the advance
payments under the membership agreement are not wages “due or earned,” and the
membership agreement provides that respondent may recover excess advance payments
that exceed revenues from its members, we affirm.
FACTS
Respondent Builders Commonwealth, Inc. (Builders) is a construction workers’
cooperative organized under the Minnesota Cooperative Law. See Minn. Stat.
§§ 308A.001–.995 (2014). As a cooperative, Builders is governed by articles of
incorporation and bylaws. See id., .131, .165. The bylaws allow Builders to conduct
business through an executive committee, a board of directors, and its members.
In 1998, appellant Jason Morgan Worsfold became a member of Builders when he
signed a membership agreement. That agreement states in part:
5. Advances of money, or property made to me by the
association out of estimated or actual revenues . . . shall
constitute advance payments of my share of the association’s
revenues, in the nature of loans, and as a set-off against my
share of the association earnings. . . . In the event that said
advances during any fiscal year shall exceed the share of
association revenues to which I [am] entitled, I agree that I
will repay such excess to the association at the times and in
the manner as the board of directors of the association shall
determine.
Worsfold remained a member of Builders until he left the cooperative midway through
the 2011 fiscal year. During his time as a member of Builders, Worsfold, like all
members, received biweekly advance payments. Under the membership agreement, these
payments were based on Worsfold’s individual patronage contribution to the cooperative
and were premised on a projection of Builders’ anticipated profits for the year. At the
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end of each fiscal year during Worsfold’s tenure as a member of Builders, the board of
directors adjusted the advances proportionally for each member. If Builders’ actual year-
end profits were greater than the profits Builders initially projected it would earn,
Builders would allocate the excess earnings to its members based on their individual
contributions to the cooperative. If actual profits were less than anticipated, the board
determined how Builders would recover the excess payments it advanced to members in
order to balance its books.
During the 2009 and 2010 fiscal years, Builders’ actual profits were lower than
anticipated. At both the 2009 and 2010 annual members meetings, the board voted to
recover a portion of the advances made to members, and thus balance its books, by
requiring each member to pay back a portion of the member’s advances. Worsfold
attended both of these meetings. The record does not indicate that Worsfold ever
objected to Builders’ decision to allocate its losses in this manner.
In the 2011 fiscal year, actual profits were again lower than expected. At the 2011
members meeting, the board determined that members would pay back roughly one-third
of their 2011 advances. During his time as a member of Builders in the 2011 fiscal year,
Worsfold received $17,563.55 in biweekly advances. The board’s repayment scheme
required Worsfold to pay back $5,800.07, an amount representing Worsfold’s unearned
share of Builders’ overly optimistic projection of profits during the 2011 fiscal year.
Since Worsfold was no longer a member of the cooperative, Builders also determined
that Worsfold needed to pay back his outstanding pre-2011 payback total of $2,634.02,
which Builders had not previously attempted to collect. In order to recoup the $8,434.09
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in excess payments that Builders had advanced to Worsfold, Builders first reduced
Worsfold’s equity stake in the cooperative, then valued at $4,545.85, to zero. Builders
then requested that Worsfold directly pay back to Builders the remaining balance of
$3,888.24. Worsfold refused.
Builders then sued Worsfold and six other members to recoup the excess advances
made to members. On appeal from conciliation court, the district court consolidated the
cases and conducted a court trial. The district court granted judgment to Builders after it
determined that nothing in the bylaws or membership agreement prevented Builders’
attempts to recoup the excess advances. In doing so, the district court determined that the
advance payments made by Builders to Worsfold were not wages “due or earned” under
Minn. Stat. § 181.79 and that the statute did not prohibit Builders from recouping the
excess advance payments from its members. Worsfold appealed this decision without the
assistance of counsel. When Worsfold was informed that the trial transcript was not part
of the record delivered to this court, he chose not to request delivery because he had
already filed his brief.
DECISION
Worsfold argues that the district court erred in concluding that Minn. Stat.
§ 181.79 does not preclude Builders from recovering the excess advances. He further
argues that even if that statute does not bar recovery, Builders’ own bylaws prevent the
board from demanding direct repayment of the advances.
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I.
Before considering Worsfold’s two claims of error, we analyze whether he
supplied this court with an adequate record to review the appeal as he never requested
that the trial transcript be delivered to this court.
Appellants have the burden to provide this court with an adequate record.
Mesenbourg v. Mesenbourg, 538 N.W.2d 489, 494 (Minn. App. 1995). The record is
adequate if it is “sufficient to show the alleged errors and all matters necessary for
consideration of the questions presented.” Truesdale v. Friedman, 267 Minn. 402, 404,
127 N.W.2d 277, 279 (1964). The record on appeal consists of all “documents filed in
the trial court, the exhibits, and the transcript of the proceedings, if any.” Minn. R. Civ.
App. P. 110.01. It is appellant’s responsibility to order a transcript “of those parts of the
proceedings not already part of the record which are deemed necessary for inclusion in
the record.” Minn. R. Civ. App. P. 110.02, subd. 1(a). When an appellant fails to
provide a transcript, appellate review is “limited to whether the trial court’s conclusions
of law are supported by the findings.” Mesenbourg, 538 N.W.2d at 494 (citing Duluth
Herald & News Tribune v. Plymouth Optical Co., 286 Minn. 495, 498, 176 N.W.2d 552,
555 (1970)). If the issues on appeal are legal, and the record is not so inadequate as to
preclude a determination of the arguments made before the district court, dismissal is not
necessary. Id.We believe dismissal is not necessary here. The record sufficiently lays out the
legal issues on appeal; namely, whether section 181.79 or Builders’ own bylaws preclude
the cooperative from recovering the excess advance payments. But Worsfold’s failure to
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deliver the transcript for our review means he cannot challenge any of the district court’s
factual findings, and we may only analyze whether the district court’s factual findings
support its legal conclusions. See id.II.
Worsfold argues that the district court erred in concluding that section 181.79 does
not prevent Builders’ recovery. Appellate courts interpret the meaning of statutes de
novo. Swenson v. Nickaboine, 793 N.W.2d 738, 741 (Minn. 2011). “The object of all
interpretation and construction of laws is to ascertain and effectuate the intention of the
legislature.” Minn. Stat. § 645.16 (2014).
Section 181.79, entitled “Wages deductions for faulty workmanship, loss, theft, or
damage,” states in part:
No employer shall make any deduction, directly or indirectly,
from the wages due or earned by any employee, who is not an
independent contractor, for lost or stolen property, damage to
property, or to recover any other claimed indebtedness
running from employee to employer, unless the employee,
after the loss has occurred or the claimed indebtedness has
arisen, voluntarily authorizes the employer in writing to make
the deduction or unless the employee is held liable in a court
of competent jurisdiction for the loss or indebtedness.
Minn. Stat. § 181.79, subd. 1(a). In Brekke v. THM Biomedical, Inc., the supreme court
noted that this section does not define “wages.” 683 N.W.2d 771, 774 (Minn. 2004). To
effectuate the intent of the legislature, the court imported the definition of “wages”
supplied by the legislature elsewhere in chapter 181 and defined “wages” as “all
compensation for performance of services by an employee for an employer.” Id. at 775(quotation omitted). This judicially-constructed definition is as valid as a definition
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written in the statute. Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 836
(Minn. 2012). While the supreme court noted that, under this section, wages must be
earned or due, it did not provide a rubric to analyze the earned-or-due requirement. See
Brekke, 683 N.W.2d at 775.
Worsfold does not believe that this case turns on whether his payments were “due
or earned.” Instead, he relies on an unemployment case, Builders Commonwealth, Inc. v.
Department of Employment and Economic Development, in which we affirmed an
unemployment-law judge’s determination that (1) Builders’ members are employees, (2)
the advance payments Builders makes to its members are wages, and (3) Builders is
required to pay unemployment-insurance taxes. 814 N.W.2d 49, 57–58, 60 (Minn. App.
2012).
The district court correctly concluded that our decision in the unemployment case
is inapplicable here. In that case, the issue was whether the compensation received by
Builders’ members met the unemployment-insurance statutes’ definition of wages. Id. at
58. But when we discussed the meaning of “wages,” we specifically explained that
wages do not include loans or return on invested capital. Id. We did not discuss what
constitutes wages under section 181.79 or what makes wages “due or earned” under that
section. See id. Worsfold’s argument relies upon section 181.79; he is confined to that
section’s requirement that wages must be “due or earned” to be shielded from an
employer’s attempts to recover them. See Karl v. Uptown Drink, LLC, 835 N.W.2d 14,
18, n.4 (Minn. 2013) (holding that Brekke’s definition of “wages” controls when a claim
implicates section 181.79).
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In determining whether wages are “due or earned,” the district court relied
primarily upon Meyer v. Mason Publ’g Co., 372 N.W.2d 403 (Minn. App. 1985). In that
case, Meyer’s compensation included commissions on book sales. Id. at 404. After
customers returned their purchases and received a refund, Meyer was no longer entitled
to his previously-awarded commissions on the cancelled sales. Id. To recover the
payments, Mason deducted 20% from Meyer’s future commissions. Id. We determined
that section 181.79 did not preclude Mason’s deductions because Meyer was only entitled
to commissions on actual sales. Id. at 405. Since Meyer was paid commissions on since-
cancelled sales, we reasoned that section 181.79 did not preclude Mason’s deductions.
Id. Those commissions were neither “earned” nor “due” to him. See id. Meyer can be
read to state that Mason’s recoupment efforts were not deductions from earned pay; they
were merely adjustments necessary to determine the actual compensation Meyer earned.
The district court’s factual findings about Builders’ compensation scheme
supports its legal conclusion that section 181.79 does not bar recovery of Worsfold’s
unearned advances. The district court found that the advance payments are “subject to
adjustment at the end of the fiscal year” based on the amount of business that members
conducted with Builders and the “share of the association revenues.” Because the
cooperative’s actual revenues and profits are not known until the end of the fiscal year,
this necessarily implies that the advances will be adjusted, unless Builders realizes the
exact profit level it projects. When Builders’ actual profits are lower than projected, the
members will have received excess advances throughout the year to which they were
never entitled. The district court found that payments to members were adjusted based
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on profits, implicitly finding the payments were not “earned” until profits were realized,
justifying the level of each biweekly payment. Since Builders’ year-end adjustment
scheme is similar to Mason’s adjustments to Meyer’s unearned commissions, the district
court’s factual findings sufficiently support its sound legal determination that section
181.79 does not bar recovery of advance payments to employees, when those payments
are not earned.
III.
Worsfold also raises a number of arguments that are premised on his belief that
Builders operated outside the scope of the bylaws and membership agreement he signed.
The existence of a contract and its provisions are factual determinations, Morrisette v.
Harrison Int’l Corp., 486 N.W.2d 424, 427 (Minn. 1992), but we interpret the meaning
of those provisions de novo, Roemhildt v. Kristall Dev., Inc., 798 N.W.2d 371, 373
(Minn. App. 2011), review denied (Minn. July 19, 2011). When multiple instruments are
part of the same transaction, we construe the agreements as one contract. Id. Courts
should attempt to construe and “harmonize” all of the provisions of a contract when
possible. Telex Corp. v. Data Prods. Corp., 271 Minn. 288, 293, 135 N.W.2d 681, 685
(1965).
The district court determined that the parties entered into a valid contract
consisting of both the membership agreement and bylaws. The bylaws state that Builders
may allocate losses through its executive committee. The membership agreement states
that Builders’ board may seek repayment of excess advances. The district court found
that, while the minutes for Builders’ members meeting for the 2011 fiscal year were not
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entirely clear, the board did seek repayment of the excess payments it advanced to
members because actual profits were lower than anticipated. We agree with the district
court’s determination that the board was plainly authorized to act in the manner in which
it did.
Worsfold argues that, according to Builders’ bylaws, only the executive
committee, not the board, is allowed to allocate losses. But this case is not about
Builders’ executive committee allocating losses; it is about the board seeking to recover
excess payments made to members under the authorization provided by the membership
agreement. As the district court noted, neither the membership agreement, nor the
bylaws, limited the power of the board to determine the time and manner in which
members were obligated to pay back excess advances. Worsfold’s interpretation would
render the repayment provision of the membership agreement meaningless, violating the
rule that courts should attempt to “harmonize” and unite all provisions of a contract. Id.Worsfold next challenges the board’s actual repayment calculations. He claims
that his early withdrawal means that he should not have to pay back the full one-third of
his advance payments as other members who did not leave were required to do. His early
withdrawal is not relevant. The district court noted that the board’s repayment formula
was based on the amount of money advanced to members, not the duration a member
belonged to the cooperative.
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Based upon these findings, we agree with the district court’s well-reasoned legal
conclusion that Builders was entitled to recoup the excess advance payments made to
Worsfold under its membership agreement.
Affirmed.
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