Chadmark, LLC v. Kristin Bush

IN THE COURT OF APPEALS OF IOWA

No. 18-1475
Filed August 21, 2019

CHADMARK, LLC,
Plaintiff-Appellant,

vs.

KRISTIN BUSH,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Polk County, Michael D. Huppert,

Judge.

Trucking company appeals a district court’s calculation of damages

resulting from a motor vehicle accident. AFFIRMED IN PART, REVERSED IN

PART, AND REMANDED.

Jeffrey M. Lipman of Lipman Law Firm, P.C., West Des Moines, for

appellant.

Michael J. Moreland and Nicholas T. Maxwell of Harrison, Moreland,

Webber, Simplot & Maxwell, P.C., Ottumwa, for appellee.

Considered by Potterfield, P.J., Greer, J., and Scott, S.J.*

*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2019).
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GREER, Judge.

In a stipulated-liability motor vehicle accident case, the district court

awarded loss-of-use damages to Chadmark, LLC resulting from damage to one of

its trucks. The company appeals the court’s calculation of damages and asserts it

is also entitled to damages for out-of-pocket expenses to retrieve the replacement

truck. We agree with the district court’s calculation of loss-of-use damages but

find additional damages for out-of-pocket expenses are appropriate. For that

reason, we reverse and remand for entry of a new damage award.

I. Background Facts and Proceedings.

On July 23, 2015, Kristin Bush failed to yield at a stop sign in Polk County

and her vehicle collided with a Chadmark dump truck. Bush admitted liability for

the accident.

Chadmark is a dump truck company that hauls dirt, rock, and sand in central

Iowa. On the day of the accident, the damaged truck—identified as “Truck #10”—

was working on hauling projects as part of a team of four Chadmark trucks.

Because the truck was totaled, Chadmark could not use Truck #10 after the

accident, and it eventually purchased a replacement truck in Texas.

On October 12, Bush’s insurer issued a check to Chadmark for $29,049.68

to pay for the loss of use of Truck #10.1 Chadmark at first rejected the check as

“insufficient to address the actual loss incurred,” but it later deposited the check,

noting on the draft: “not accepted as final settlement.”

1
The insurer also paid Chadmark’s property damage claim, and Chadmark does not
challenge the amount it received for property damage.
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According to Chadmark’s records, it operated without Truck #10 from the

July 23 accident until September 24 when it began using the replacement truck.

During this time frame, the other three trucks in the team continued hauling and

generating revenue and expenses. Chad Larson, as the sole owner of Chadmark

at the time of trial, testified Truck #10 and its driver would have continued hauling

with the other three trucks had it not been involved in the accident. Larson offered

that he also operates a Chadmark truck, but between the accident and retrieval of

the replacement truck, Truck #10’s regular driver drove Larson’s truck and Larson

stopped driving. Larson continued to receive his officer’s salary from Chadmark

during this period.

In May 2017, Chadmark filed its petition claiming Bush was negligent and

seeking damages. Chadmark provided its calculations for gross revenues, fuel

costs, gross driver wages, and driver payroll expenses per day for the three

remaining team trucks from July 23 to September 24. Related to the retrieval of

the replacement truck, Chadmark also claimed it paid total out-of-pocket expenses

of $3533.14—$908.14 for airfare, $225 for lodging, and $2400 for freight—to

purchase the replacement truck in Texas and transport it to Iowa.

In August 2018, after a bench trial, the district court entered its ruling. The

court calculated loss-of-use damages by finding the average gross revenue per

truck per day; subtracting average costs per truck per day for fuel, wages, and

employment taxes; and multiplying by the number of days Truck #10 was expected

to be in use, which generated gross damages of $29,139.11. The court denied

Chadmark’s request for out-of-pocket expenses. Because Bush already paid
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$29,049.68 to Chadmark for loss-of-use damages before trial, the court entered

net judgment of $89.43 plus interest. Chadmark appeals.

II. Standard of Review.

We review the grant or denial of damages for correction of errors at law.

Brokaw v. Winfield–Mt. Union Cmty. Sch. Dist., 788 N.W.2d 386, 388 (Iowa 2010).

“Under this scope of review, the trial court's findings of fact have the force of a

special verdict and are binding on us if supported by substantial evidence.” Id.

“We view the evidence ‘in the light most favorable to the trial court’s judgment.’”

Id. (quoting Miller v. Rohling, 720 N.W.2d 562, 567 (Iowa 2006)). However, we

are not bound “by the trial court’s application of legal principles or its conclusions

of law.” Midwest Recovery Servs. v. Wolfe, 463 N.W.2d 73, 74 (Iowa 1990); see

also Gosch v. Juelfs, 701 N.W.2d 90, 91 (Iowa 2005).

III. Analysis.

Chadmark raises two issues on appeal: (1) whether the district court erred

by deducting the employee expenses for Truck #10’s driver when calculating loss-

of-use damages and (2) whether the court erred by failing to award out-of-pocket

damages for the expenses associated with retrieving the replacement truck.

A. Loss of Use. The parties agree Chadmark is entitled to loss-of-use

damages. See, e.g., Long v. McAllister, 319 N.W.2d 256, 261 (Iowa 1982) (holding

loss-of-use damages are available in motor vehicle accident cases). The parties

also generally agree on the formula for loss-of-use damages. At trial, the parties

championed the “daily average fleetwide earnings” loss-of-use damage theory,

which subtracts expenses from the gross revenue of the truck team to calculate

the average truck earnings per day for the time Truck #10 was inoperable. See,
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e.g., ConAgra, Inc. v. Inland River Towing Co., 252 F.3d 979, 985 (8th Cir. 2001)

(noting “daily average fleetwide earnings” is an appropriate methodology for

calculating loss of use from damage to those used in operating the business).

However, Chadmark disagrees with the court’s subtraction of employee expenses

for Truck #10’s regular driver from the gross revenue. Chadmark argues the

driver’s expenses are appropriate damages because while Truck #10 was

inoperable it “continued to pay two drivers [Truck #10’s regular driver and Larson],

only one of which could produce income by driving a truck.”

Loss-of-use damages compensate a party for “the usable value of the

destroyed property during the time reasonably required to replace it.” Mills v.

Guthrie Cty. Rural Coop. Ass’n, 454 N.W.2d 846, 850–51 (Iowa 1990). An award

of lost profits should reasonably reflect damages from the business interruption.

See id. at 851. Had Truck #10 remained in use after the accident, Chadmark would

have paid the truck expenses, including the costs of a driver. We are not

persuaded by Chadmark’s claim that the loss of Truck #10 forced it to incur

additional employee expenses it otherwise would not have. According to its 2015

profit and loss statement, Chadmark paid a significant “Officer Salary” in addition

to “Employee Expenses.” At trial, Larson explained how duties shifted without

Truck #10 and acknowledged he earned his salary based on his work as an officer

and not his driving:

Q. [Truck #10’s regular driver] was assigned to some other
duties in the company; right? A. He drove my truck during this eight-
week period.
Q. So he was producing revenue doing something else for the
company? A. I took myself out of the truck so he could keep a job.
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Q. I'm asking—you're saying—you’re saying that you still
incurred driver’s wages for a truck that wasn’t operating? A. I don’t
get driver’s wages. I get—I’m on salary.

For that reason, the driver expenses legitimately should have been

deducted to calculate the real losses that Chadmark would have experienced to

operate Truck #10. If the driver expenses were not deducted, Chadmark would be

in a better position than it would have been had the accident not occurred. We

find the court appropriately deducted the driver’s employee expenses, and

substantial evidence supports the award of loss-of-use damages.

B. Out-Of-Pocket Expenses. Chadmark also sought to recover out-of-

pocket expenses for airfare, hotel, and freight hauling to retrieve the replacement

truck. Bush argues Chadmark failed to preserve this issue for our review. See

Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002) (“It is a fundamental doctrine

of appellate review that issues must ordinarily be both raised and decided by the

district court before we will decide them on appeal.”).

Chadmark argued to the district court that its out-of-pocket expenses were

additional consequential damages flowing from the loss of the truck. In its ruling,

the district court referred to the out-of-pocket expenses in a footnote, commenting

“these expenditures are not appropriate in calculating loss of use damages.” We

agree Chadmark’s out-of-pocket expenses are not loss-of-use damages.

However, throughout this litigation Chadmark has consistently sought to recover

its out-of-pocket expenses as damages, which were not limited to loss of use. We

view the court’s comment as showing it considered and generally denied damages

for the out-of-pocket expenses. This is not a “failure to rule upon the issue” case.

See Lamasters v. State, 821 N.W.2d 856, 864 (Iowa 2012) (“If the court’s ruling
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indicates that the court considered the issue and necessarily ruled on it, even if the

court’s reasoning is ‘incomplete or sparse,’ the issue has been preserved.”

(emphasis in original) (quoting Meier, 641 N.W.2d at 540)). We conclude

Chadmark raised—and the district court ruled on, albeit only by footnote—the

question of reimbursement for these expenses. As a result, out-of-pocket

expenses are preserved for our review.

“It is axiomatic that the principle underlying allowance of damages is that of

compensation, the ultimate purpose being to place the injured party in as favorable

a position as though no wrong had been committed.” Dealers Hobby, Inc. v. Marie

Ann Realty Co., 255 N.W.2d 131, 134 (Iowa 1977). Generally, when a vehicle

cannot be repaired, “the measure of damages is the lost market value plus the

reasonable value of the use of the vehicle for the time reasonably required to obtain

a replacement.” Long, 319 N.W.2d at 261. This general rule is “subject to proof

of special items of damages.” Schiltz v. Cullen-Schiltz & Assocs., Inc., 228 N.W.2d

10, 20–21 (Iowa 1975). Recoverable special items include “integral part[s] of the

direct property damage incurred,” such as “rental equipment and cleanup

operations.” Id. at 21.

While Chadmark’s out-of-pocket expenses are not loss-of-use damages,

Chadmark offered these expenses as additional damages that arose out of the

loss of Truck #10. Chadmark provided documentation to support its claims of out-

of-pocket expenses, which entered the record without objection or question from

Bush. We find the out-of-pocket expenses are an integral part of acquiring the

replacement truck that, under these particular facts, places Chadmark in a position
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as if Truck #10 had not been damaged. Accordingly, we remand for an entry of

judgment to reflect an additional $3533.14 in out-of-pocket expenses.

IV. Disposition.

We agree with the district court’s calculation of loss-of-use damages,

including the deduction for driver employee expenses. However, we find an

additional $3533.14 in special damages for out-of-pocket expenses are

appropriate. Therefore, we reverse and remand for entry of a new judgment to

reflect the additional damages.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.