Builders Commonwealth, Inc. v. Jason Morgan Worsfold

This opinion will be unpublished and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UNPUBLISHED OPINION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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