This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
IN COURT OF APPEALS
The Work Connection, Inc.,
Universal Forest Products, Inc.,
a Michigan corporation,
Carver County District Court
File No. C898888
Gerald S. Duffy, Steven J. Weintraut, Siegel, Brill, Greupner, Duffy & Foster, P.A., 100 Washington Avenue South, Suite 1300, Minneapolis, MN 55401 (for appellant)
Donald Chance Mark, Jr., Shannon M. McDonough, Erik F. Hansen, Fafinski Mark & Johnson, P.A., 6600 City West Parkway, Suite 300, Eden Prairie, MN 55344 (for respondent)
Considered and decided by Halbrooks, Presiding Judge, Peterson, Judge, and Huspeni, Judge.*
An employee of appellant, a temporary labor agency, was injured while working for respondent, and appellant paid workers’ compensation benefits to the employee. Appellant then sued respondent, contending that respondent had contracted to indemnify appellant for this loss based on language on the back of a work verification form. In the alternative, appellant sought contribution. The trial court granted a directed verdict for respondent. Appellant brought a motion for a new trial, which was denied. Because the indemnification language on the back of the work verification form was not part of the parties’ original agreement and because the parties were not engaged in a common enterprise, we affirm.
Appellant The Work Connection, Inc., is a temporary employment agency that provides temporary industrial and manufacturing labor to customers for a fee. In February 1995, Doyle Olson, a sales representative for appellant, contacted Bruce Neisse, the Shakopee plant manager for respondent Universal Forest Products, Inc. The two discussed respondent’s need for temporary workers and exchanged business cards. The topic of workers’ compensation insurance coverage was discussed, as it was a concern for respondent. Olson wrote “cert of ins” on the card he received from Neisse, ostensibly as a reminder to himself to send Neisse a copy of appellant’s certificate of insurance.
Olson sent Neisse a follow-up letter that stated that appellant carried workers’ compensation insurance. Olson testified that he expected that respondent would rely on his letter stating that appellant had workers’ compensation insurance. Olson’s business card also stated that appellant’s employees were “Insured, Screened and Guaranteed.” In addition, appellant sent respondent the certificate verifying that appellant maintained workers’ compensation insurance covering its employees who were sent to job sites.
Neisse referred Olson to Ken Von Bank, respondent’s production manager and the individual with direct supervisory authority over temporary workers. Olson testified that he had no recollection of a conversation with Von Bank relating to workers’ compensation insurance. Respondent hired appellant’s employees to construct fence panels at its Shakopee plant in 1995.
Olson supplied respondent with work verification forms that were used as employee timecards. Respondent filled out and signed the forms, which contained the worker’s name, date, and hours worked. Submission of a completed, signed form was required for an employee to be paid, and appellant processed the forms through its payroll department.
The work verification forms contained the following language:
CUSTOMER AGREES TO THE TERMS AND CONDITIONS SET FORTH ON THE REVERSE SIDE HEREOF AND CERTIFIES THAT THE LISTED EMPLOYEES HAVE SATISFACTORILY PERFORMED SERVICES FOR THE HOURS SHOWN ABOVE.
The back of the verification form stated the following:
CONDITIONS OF UNDERTAKING
* * * *
2. Without the prior written consent of THE WORK CONNECTION, CUSTOMER will not require THE WORK CONNECTION employees to :
(a) Operate machinery, equipment or vehicles not covered by CUSTOMER’s liability or property damage insurance.
(b) Operate dangerous or unprotected machinery.
* * * *
3. CUSTOMER agrees to indemnify, hold harmless and defend THE WORK CONNECTION against claims, damages, or penalties under the following circumstances:
* * * *
(b) From any claims for bodily injury (including death), or loss of, and loss of use of, or damage to, property arising out of the use of or operation of CUSTOMER’S owned, non-owned, or leased vehicles, machinery or equipment by THE WORK CONNECTION employees.
Olson testified that it was not his standard practice to point out the language on the back of the form and there was no evidence that any discussion or negotiation between these parties ever occurred concerning the terms on the back of the timecard.
Von Bank signed the verification forms on behalf of respondent from March 20, 1995 through July 30, 1995, when the office manager, Yvonne Kohout, took over signing duties. At some point before appellant’s employee, Wayne DeLage, was injured, respondent ran out of original work verification forms. Olson did not tell respondent to request more forms if it ran out of originals. Kohout simply photocopied the front side of the form and, thereafter, submitted forms that were blank on the back.
On August 30, 1995, DeLage severed three of his fingers while operating a radial armsaw. Respondent requested another certificate of insurance, which appellant provided on August 31, 1995. DeLage received $75,207.90 in workers’ compensation benefits that appellant paid as part of its deductible with its insurer. Appellant then sought indemnification from respondent pursuant to the language on the back of the verification form. When respondent refused to pay, appellant sued respondent for breach of contract. Appellant was permitted to amend the complaint the day before trial to add a claim for contribution.
Respondent moved for a directed verdict at the close of appellant’s case, and the trial court granted the motion. Appellant brought a rule 59.01 motion for a new trial and a rule 52.02 alternative motion for amended findings. The trial court denied both motions. This appeal follows.
We review an appeal from a directed verdict as a question of law. Claflin v. Commercial State Bank of Two Harbors, 487 N.W.2d 242, 247 (Minn. App. 1992), review denied (Minn. Aug. 4, 1992). We “accept as true the evidence favorable to [appellant] and all reasonable inferences which can be drawn from that evidence.” Id. We review the record independently to determine whether a question of fact existed for the jury. Boone v. Martinez, 567 N.W.2d 508, 510 (Minn. 1997).
I. The trial court did not err when it refused to allow the jury to consider the issue of contract formation.
A. The parties did not form a contract including the indemnification language on the back of the work verification form.
Appellant argues that the agreement that the parties reached was detailed, noting that the parties agreed on the number and types of employees as well as their salaries. As a result, appellant contends that the fact that the parties did not specifically discuss the indemnification language is legally irrelevant. There is no dispute that respondent was unaware of the indemnification clause on the back of the form.
Appellant is correct that ignorance of the contents of a document is generally not a basis for excusing someone from a contract. See Gartner v. Eikill, 319 N.W.2d 397, 398 (Minn. 1982) (noting the general rule that in the absence of fraud or misrepresentation, a person who signs a contract may not avoid it because he did not read it or thought its terms to be different). But in City of Savage v. Varey, 358 N.W.2d 102, 105 (Minn. App. 1984), review denied (Minn. Feb. 27, 1985), we held that a written release that did not reflect an oral settlement was subject to reformation. We noted that
[w]here a party drafts a written contract after a verbal agreement, and presents it to the other party for signature, there is a representation that the writing conforms to the verbal agreement. * * * If this representation is false, the misrepresentation is “inequitable conduct” justifying reformation.
Id. (citations omitted).
In Bilotta v. Labor Pool of St. Paul, Inc., 321 N.W.2d 888 (Minn. 1982), an employee of a temporary agency was injured at his worksite (Safelite), and the temporary agency sought indemnification from Safelite. Id. at 889-90. The supreme court held that Safelite was not liable to the temporary agency because the temporary agency gave Safelite brochures stating that it carried workers’ compensation insurance and specifically represented to Safelite that it would be responsible for insurance. Id. at 890.
In The Work Connection v. Hustad Steel Co., No. C9-94-2338, 1995 WL 118914 (Minn. App. Mar. 21, 1995), one of appellant’s temporary workers was injured at the Hustad Steel Co. The only issue before the court was whether the indemnification provision was part of the contract. Id. at *1. Appellant sought indemnification from Hustad based on indemnification language on the back of its work verification form. Id. Hustad refused payment on the ground that the indemnification language was not part of their contract. Id. In the alternative, Hustad argued that appellant could not require indemnification for workers’ compensation costs when it represented that it had workers’ compensation insurance. Id. We held that appellant could seek indemnification from Hustad despite its representations that it carried workers’ compensation insurance. Id. at *2. We remanded on the question of whether the indemnification language was part of the contract because the parties presented differing testimony regarding contract formation. Id. Here, a record of the parties’ negotiations exists, and it is undisputed that respondent was unaware of the indemnification clause and that appellant did nothing to draw respondent’s attention to it.
Appellant cites Herron v. Green Tree Acceptance, Inc., 411 N.W.2d 192 (Minn. App. 1987), review denied (Minn. Sept. 30, 1987), for the proposition that the existence of a contract is a factual question for the jury. Herron asked whether provisions of a personnel manual applied to an employee even though the employee learned of the provisions as a supervisor rather than an employee. Id. at 194. We held that the trial court erred in granting a directed verdict because reasonable minds could differ regarding whether the employee received the manual as an employee or a supervisor. Id. at 195. The facts of Herron are distinguishable from the present case, however, as the appellant in Herron testified that he believed the policy applied to him. Id. at 196. In contrast, the testimony in this case indicates that respondent had no knowledge of the indemnification language.
Here, the trial court found that the parties never discussed the language on the back of the work verification form. The court concluded that the parties had an oral agreement that did not include a term that required respondent to provide workers’ compensation insurance for appellant’s employees. The court further concluded that the “conditions of undertaking” on the back of the timecard were not part of the agreement because they were not discussed or bargained for. The record amply supports the trial court’s findings and conclusions.
B. Respondent’s employees lacked authority to bind respondent to the language on the back of the form.
1. Actual Authority.
Appellant claims that Von Bank and Kohout had actual authority to bind respondent to the indemnification clause. But the testimony indicated that Kohout lacked authority to bind respondent to the indemnification clause. Moreover, respondent testified that it did not hold its employees out as having authority to bind it to contracts. Indeed, it could not have done so as it had no knowledge of the language on the back of the work verification forms.
2. Apparent Authority.
Appellant also argues that Von Bank and Kohout had apparent authority to bind respondent to the indemnification clause. Apparent authority exists when the principal
held the agent out as having authority, or must have knowingly permitted the agent to act on its behalf; furthermore, the party dealing with the agent must have actual knowledge that the agent was held out by the principal as having such authority or had been permitted by the principal to act on its behalf; and the proof of the agent’s authority must be found in the conduct of the principal, not the agent.
Foley v. Allard, 427 N.W.2d 647, 652 (Minn. 1988) (quotation omitted). The requisite circumstances do not exist in this case. Appellant argues that because respondent knew that Von Bank and Kohout were signing the verification forms, it knew that they were committing it to the indemnification clause. This argument is not tenable. As stated, respondent did not knowingly allow Von Bank and Kohout to negotiate indemnification agreements because it had no knowledge of the language on the back of the form. And even if Von Bank and Kohout had actual authority to bind respondent to contracts, appellant had no knowledge that respondent held them out for that purpose. “[E]very person who undertakes to deal with an agent is put on inquiry * * * .” Id. at 653 (quotations omitted). Appellant never inquired as to whether Von Bank and Kohout had the authority to bind respondent to the contractual language on the back of the verification form. The back of the form was never even discussed. Therefore, under Foley, Von Bank and Kohout lacked apparent authority to bind respondent to that language.
Appellant cites McGee v. Breezy Point Estates, 283 Minn. 10, 166 N.W.2d 81 (1969), in support of its position. In McGee, the court held that the agent had apparent authority to act on behalf of the principal, in part because the agent’s testimony did not negate his authority, nor did any of the principals testify that the agent lacked authority to act on their behalf. Id. at 21, 166 N.W.2d at 89. In contrast, Kohout testified that she lacked authority to bind respondent to the indemnification language. Therefore, under McGee, respondent’s alleged agents lacked authority to bind respondent.
Both parties cite Rascati v. McClinch Crane, Inc., 525 A.2d 133 (Conn. App. Ct. 1987), an apparent-authority case. The issue in Rascati concerned whether timecards with indemnification language on the back were admissible as evidence of an indemnification agreement. Id. at 135. The court held that the timecards would be relevant evidence only if it was clear that the employees signing the cards had authority to negotiate indemnification agreements on behalf of the company. Id. Because there was no evidence from which to draw the inference that those signing the timecards had authority to negotiate agreements, the court ruled that the cards were inadmissible as evidence of an indemnification agreement. Id.
Appellant contends that respondent agreed to be liable for workers’ compensation costs based on a theory of ratification. Ratification occurs when a principal retains the benefits of an agent’s unauthorized act. Once the principal has received the benefit, it is estopped from disclaiming liability based on the fact that the act was unauthorized. Strader v. Haley, 216 Minn. 315, 328, 12 N.W.2d 608, 614 (1943). Appellant contends that because respondent received the benefit of the temporary worker’s labor, it also accepted the associated burden of the indemnification clause on the back of the verification form.
This argument is not viable. Ratification does not occur if the principal is ignorant of material facts surrounding the transaction:
Ratification by a party of another’s unauthorized acts occurs where the party with full knowledge of all material facts confirms, approves, or sanctions the other’s acts.
* * * *
Where a principal accepts and retains the benefits of an unauthorized act of an agent with full knowledge of all the facts, he thereby ratifies the act.
Id. at 326-28, 12 N.W.2d at 613-14 (emphasis added) (citations omitted). Here, respondent lacked knowledge of a material fact: that the original timecards that Kohout signed contained language committing respondent to indemnify appellant for a workers’ compensation claim. Given that respondent lacked full information regarding Kohout’s actions, it did not ratify her conduct.
Appellant makes the related argument that respondent attempted to modify the alleged indemnification contract by signing copies of the verification forms that lacked the indemnification clause. The record does not provide support for this argument. Kohout testified that she had no knowledge that she was to alert appellant that she was signing copies that lacked the indemnification clause. Respondent cannot be said to have attempted modification of a contract that included a term it was unaware of.
II. The trial court did not err when it refused to allow the jury to decide the contribution claim.
A. Common Enterprise.
Appellant asserts that the parties are jointly liable because they were engaged in a common enterprise. An employer may recover workers’ compensation costs from third parties
[i]f the employee * * * elects[s] to receive benefits from the employer, * * * the employer * * * has a right of indemnity or is subrogated to the right of the employee * * * to recover damages against the other party.
Minn. Stat. § 176.061, subd. 3 (2000). This subdivision applies
if the employer liable for benefits and the other party legally liable for damages are insured or self-insured and engaged, in the due course of business in, (a) furtherance of a common enterprise, or (b), in the accomplishment of the same or related purposes in operations on the premises where the injury was received at the time of the injury.
Minn. Stat. § 176.061, subd. 4 (2000).
McCourtie v. U. S. Steel Corp., 253 Minn. 501, 506, 93 N.W.2d 552, 556 (1958), establishes a three-part test for determining the existence of a common enterprise. Under McCourtie, a common enterprise exists under the following circumstances:
(1) The employers must be engaged on the same project;
(2) The employees must be working together (common activity); and
(3) In such fashion that they are subject to the same or similar hazards.
Id. (emphasis in original). Appellant stresses prongs two and three, arguing that the parties’ employees worked together making fence panels and were, therefore, exposed to the same hazards. But appellant’s analysis ignores prong one of this test, requiring that the employers also work on the same project. Minnesota courts have adopted a narrow definition of common enterprise:
Not every contact between an employer and a third party in the course of conducting their separate businesses constitutes engagement by them on the same project. The endless variety of possible fact situations that may arise prevents us from attempting an all-inclusive definition of the term “project.”
Urbanski v. Merchants Motor Freight, 239 Minn. 63, 71, 57 N.W.2d 686, 690-91 (Minn. 1953). For example, in Ritter v. M.A. Mortenson Co., 352 N.W.2d 110, 113 (Minn. App. 1984), we concluded that the employers of steel workers and crane operators constructing a bus garage were engaged on the same project. In Urbanski, the supreme court held that mere delivery and joint unloading of merchandise did not constitute a common enterprise. 239 Minn. at 71, 57 N.W.2d at 691. The connection in this case is even more remote. Respondent makes fence panels. Appellant supplies temporary workers for industrial and manufacturing work. This connection is not close enough for a finding that appellant and respondent were “engaged on the same project.”
The same analysis applies to the “same purposes” question. Appellant’s purpose was supplying respondent with temporary workers. Respondent’s purpose was making fence panels. Therefore, the parties did not have the same purpose for entering the business relationship.
B. Loaned Servant Doctrine.
Appellant asserts that respondent is jointly liable because DeLage was an employee of both the temporary agency and respondent. Minnesota statutes establish a contribution formula for recovery from multiple employers:
When compensation is payable under this chapter for the injury or death of an employee employed and paid jointly by two or more employers at the time of the injury or death these employers shall contribute to the payment of the compensation in the proportion of their wage liabilities to the employee. If any such employer is excluded from the provisions of this chapter and is not liable for compensation, the liability of those employers who are liable for compensation is the proportion of the entire compensation which their wage liability bears to the employee’s entire wages. As between themselves such employers may arrange for a different distribution of payment of the compensation for which they are liable.
Minn. Stat. § 176.071 (2000). But this statute does not apply, because the record indicates that DeLage was solely appellant’s employee. When DeLage accepted employment with appellant, appellant presented him with a form that had the following language:
When assigned to a company through the Work Connection, you are an employee of the Work Connection, not the company where you are working. Any employment verifications or other documents need to be sent to the Work Connection. Rates will never be discussed with anyone but a Work Connection representative.
Further, the back of the timecard, to which appellant directs our focus, contains the following language: “The persons provided to CUSTOMER by THE WORK CONNECTION are employees of THE WORK CONNECTION.” Appellant admitted at trial that its workers were solely its employees.
C. Contribution Share.
Finally, appellant argues that the jury should have determined each party’s contribution share and claims that respondent should pay all costs because its negligence caused the accident. Because respondent is not liable as an employer under Minn. Stat. § 176.071, it is not necessary to reach the issue of percentage contributions.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.