                   IN THE COURT OF APPEALS OF IOWA

                                   No. 13-1776
                            Filed November 26, 2014

GRANT INSURANCE AGENCY, INC.,
RICHARD A. GRANT, and ELLEN
K. GRANT,
     Plaintiffs-Appellees,

vs.

CLEM INSURANCE SERVICES, INC.,
d/b/a BROOKS-LUSSEM INSURANCE,
INC., ANTHONY S.CLEM, and ANNE M.
CLEM,
       Defendants-Appellants.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Robert B. Hanson,

Judge.



      Buyers of an insurance agency appeal the judgment entered in favor of

the sellers on several contract claims.   AFFIRMED AND REMANDED WITH

DIRECTIONS.



      Erin M. Carr of Carr & Wright, P.L.C., Des Moines, for appellants.

      Kevin Cunningham, Cunningham & Kelso, P.L.L.C., and Chip Lowe,

Urbandale, for appellees.



      Heard by Mullins, P.J., and Bower and McDonald, JJ.
                                        2



MULLINS, P.J.

      Buyers of an insurance agency appeal the judgment entered in favor of

the sellers on several contract claims. They contend the district court erred in

failing to find the sellers breached the purchase agreement, in interpreting the

contract, and in awarding the sellers liquidated damages and attorney fees. We

affirm the district court in all respects and remand for a determination of the

amount of sellers’ appellate attorney fees to be awarded.

I. BACKGROUND FACTS AND PROCEEDINGS.

      Richard Grant has been a licensed insurance agent since 1974. In the

1990s, he and his wife, Ellen, founded Grant Insurance Agency (GIA), an

independent insurance agency. During the course of business, GIA developed a

book of business customers who regularly purchased policies.

      By the end of 2006, the Grants began looking for a buyer to purchase

GIA’s book of business. Anthony Clem, an insurance agent and owner of Clem

Insurance Services, Inc. (CIS), contacted the Grants about acquiring GIA and its

book of business. After successful negotiations, the parties entered into an asset

purchase agreement on January 4, 2007. The agreement provides that CIS,

Clem, and his wife, would purchase GIA for the sum of $519,105. Of that sum,

$275,000 was to be paid in cash at the time the agreement was entered, and the

remaining $244,105 plus interest was to be paid in quarterly installments of

$13,749.53. The agreement states that the buyers were to pay to the sellers all

“profit-sharing/contingent commissions” earned on GIA’s policies purchased

under the agreement for the 2007 calendar year, up to a maximum of $30,000.
                                         3



Additionally, the buyers agreed that CIS would employ Grant as an insurance

agent for five years with an annual salary of $75,000, plus half the commissions

on all new business he generated. The buyers were also to pay the premiums

on Grant’s long-term care policy until he reached the age of sixty-five. Grant was

then prohibited from directly or indirectly engaging in any other insurance agency

business for a period of ten years and within a fifty-mile radius of the area GIA

sold insurance within the year prior to entering the purchase agreement.

       GIA employed John Benda as an insurance agent. In the late 1990s, GIA

purchased a book of business from Benda and in return Benda became a

minority stockholder of GIA, with a fifteen percent ownership interest.         The

buyers contend they had no knowledge of Benda’s ownership interest, even

though the first page of the agreement lists Benda as one of GIA’s shareholders

and he signed the agreement as a “seller.”1

       The agreement provided that CIS would employ Benda for two years, and

in addition to a base salary, Benda would receive half the commissions on any

new business he generated during that period. After the buyers purchased GIA,

Clem alleges Benda “was not keeping up with the technology part of our

business.” Benda worked for CIS until he underwent quadruple bypass surgery

in April 2007. He was on medical leave until his doctor approved him to return to

part-time work on June 1, 2007. CIS terminated Benda’s employment on the

same day.



1
  At the closing of the sale, the Grants gave Benda a check for $60,000 to compensate
him for his ownership interest in GIA. The buyers were present.
                                        4



      While it was operating, GIA also had an arrangement with insurance agent

David Hurkin. GIA allowed Hurkin to use its agent of record status to provide

insurance coverage with certain companies for three of his clients. In exchange,

Hurkin paid GIA half of his commissions on those accounts. While Clem admits

Grant mentioned such accounts existed, he testified he was unaware they

included one of GIA’s largest accounts.      Clem alleges he included the full

commission for that account in calculating a purchase price and did not become

aware that Hurkin would be receiving half the commission until April 2007. Clem

negotiated a different arrangement for 2008 and thereafter, with Hurkin receiving

thirty-eight percent of the commission and CIS receiving sixty-two percent.

      Prior to the sale, Clem believed GIA’s 2007 revenue would be $305,000.

Clem later calculated the actual revenue attributable to GIA’s book of business

for 2007 was $251,000. Clem attributes the loss in expected revenue to be

attributable to accounts lost when Benda was terminated and profits counted on

the books that were split with Hurkin.       Beginning with the third or fourth

installment payment, the buyers began paying a quarter late. Although dental

insurance premiums were withheld from Grant’s salary, no such insurance

coverage was ever obtained.      Clem was displeased that the business was

performing below his expectations, so the buyers stopped paying the premiums

on the Grants’ long-term care coverage, which led to cancellation of the

coverage. The contingent commissions were not paid, and only $3256.07 in

new-business commissions were paid. The buyers never made the last of the

installment payments due under the agreement.
                                           5



       On March 23, 2012, the sellers filed an action against the buyers, alleging

the following causes of action: breach of contract, recovery of wages and

compensation, foreclosure of security agreement, and declaratory judgment.

The buyers answered on May 11, 2012, denying the sellers’ claims and asserting

a breach-of-contract counterclaim. A bench trial was held in November 2012.

       The district court entered its ruling on May 10, 2013. With regard to the

credibility of the parties, the court found:

       Mr. Clem’s testimony was frequently internally inconsistent,
       contradictory, and self-serving. The testimony of Mr. and Mrs.
       Grant was consistent, both individually and collectively. The Grants
       did not contradict themselves or each other. The court finds the
       Grants are credible and believable while Mr. Clem lacks credibility.
       To the extent the parties disagree as to the facts of this case, this
       court is inclined to trust the Grants and not Mr. Clem.

It then found in favor of the sellers on each of their claims. It awarded the sellers

the final installment payment due under the sales agreement in the amount of

$13,749.53, unpaid contingent commissions in the amount of $30,000, the cost

of replacing the Grants’ long-term care insurance in the amount of $51,105.09,

reimbursement dental care expenses in the amount of $1500, unpaid new-

business commissions in the amount of $27,151.63, liquidated damages in the

amount of $27,151.63, the declaratory relief requested, and all of the sellers’

attorney fees and costs in the amount of $21,466.51.

II. STANDARD OF REVIEW.

       A contract action is generally treated as one at law. Van Sloun v. Agans

Bros. Inc., 778 N.W.2d 174, 178 (Iowa 2010). If both legal relief and equitable

relief are demanded, the determination of how to classify the action turns on what
                                          6



appears to be its primary purpose or the controlling issue. Id. at 179. Where the

basic rights of the parties derive from the nonperformance of a contract, the

remedy is monetary, and the damages are “full and certain,” the action is

considered at law. Id.

       This is an action at law. Accordingly, we review for errors at law. Id. The

trial court’s findings carry the force of a special verdict and are binding if

supported by substantial evidence.       Id. Because the trial court has a better

opportunity to evaluate witness credibility, disputes weighing heavily are best

resolved by the trial court. Tim O’Neill Chevrolet v. Forristall, 551 N.W.2d 611,

614 (Iowa 1995). However, we are not bound by the court’s legal conclusions.

Van Sloun, 778 N.W.2d at 179.

III. DISCUSSION.

       The buyers raise four arguments on appeal. First they contend the trial

court erred in denying its claim the sellers breached the purchase agreement.

They also contend the court erred in interpreting the clause regarding the new-

business commissions Grant was to receive. The buyers contend the court erred

in awarding liquidated damages because the failure to pay the new-business

commissions was made in good faith. Finally, the buyers contend the court erred

in awarding the sellers’ attorney fees for the entire action.

       A. Breach of Contract by Sellers.

       The buyers first contend the district court erred in denying their

counterclaim for breach of contract. In order to succeed on a breach of contract

claim, a party must show:
                                         7



       (1) the existence of a contract; (2) the terms and conditions of the
       contract; (3) that it has performed all the terms and conditions
       required under the contract; (4) the defendant’s breach of the
       contract in some particular way; and (5) that plaintiff has suffered
       damages as a result of the breach.

Iowa Mortgage Center, L.L.C. v. Baccam, 841 N.W.2d 107, 110-11 (Iowa 2013).

Where a party fails to perform any promise that forms a whole or a part of the

contract, a breach of contract occurs. Molo Oil Co. v. River City Ford Truck

Sales, Inc., 578 N.W.2d 222, 224 (Iowa 1998).

       The buyers’ breach-of-contract counterclaim stems from the purchase

agreements’ disclosure provision, which states:

               4.1.15 Full Disclosure. No representation or warranty by
       Seller in this Agreement nor in any certificate, schedule, exhibit,
       letter or other instrument furnished or to be furnished to Buyer or its
       representatives pursuant hereto, or in connection with the
       transactions contemplated hereby, contains or will contain any
       untrue statement of a material fact or omits or will omit to state a
       material fact necessary in order to make the statements contained
       therein not misleading. There is no information of a material nature
       concerning the Assets or the business, operations, customers, or
       employees of Seller which has not heretofore been disclosed to
       Buyer or its representatives in writing.

(Emphasis added.) The buyers argue the sellers breached the agreement by

failing to disclose certain business agreements in writing. Specifically, the buyers

allege the sellers failed to disclose in writing the agreement to split commissions

with David Hurkin on three accounts and David Benda’s ownership interest in

GIA.

              1. The Hurkin Agreement.

       The district court found the sellers did disclose the agreement with Hurkin

to split commissions on certain accounts. Clem admitted he had knowledge of
                                          8



GIA’s arrangement with Hurkin. Grant testified that he and Clem talked about the

arrangement “several times” during the months of negotiation. Grant testified, “I

told him going in, there were three accounts that we didn’t control. I didn’t know

how long they would stay with us and they didn’t have to stay with us. But I

explained the agreement, the oral agreement that I had with Mr. Hurkin.” We find

substantial evidence supports the district court’s finding.

       The buyers note the disclosure was not made in writing. However, the

purchase agreement only requires written disclosure of “information of a material

nature.” The buyers claim the Hurkin agreement was material to valuing the

business and determining a purchase price. Clem testified he did not understand

which of GIA’s accounts the Hurkin agreement pertained to or the size of the

commissions that would be split. Because he did not have this information, Clem

testified he could not make an “accurate assessment of [GIA’s] actual revenue,”

which was necessary when negotiating a purchase price.

       Information is material if it is “[o]f such a nature that knowledge of the

[information] would affect a person’s decision-making process.”        Black’s Law

Dictionary 991 (7th ed. 1999). Material information is “essential” or “significant.”

Black’s Law Dictionary 991 (7th ed. 1999); see also Pavone v. Kirke, 801 N.W.2d

477, 487 (Iowa 2011) (“Terms are material if they are significant to the

contract.”).

       Like the district court, we conclude the buyers failed to prove the Hurkin

agreement was material. Hurkin’s share of the commissions received under the

agreement was approximately $8000 per year—less than three percent of the
                                         9



$305,000 in revenue Clem anticipated earning from GIA’s book of business. 2

This amount is not so great as to be considered essential or significant to the

business.     Although Clem testified that knowing which accounts and

commissions were affected by the agreement would have influenced his

decision-making process, the district court found Clem was not a credible witness

because his testimony was “self-serving,” and we defer to this finding. Clem did

know of the agreement and that it affected three accounts that could “leave” the

business at any time. We further note that the buyers were not bound by the

agreement between Hurkin and GIA as is evidenced by Clem’s testimony that he

later negotiated a more favorable split of commissions with Hurkin.

              2. Benda’s Ownership Interest.

       The buyers also argue the sellers breached the purchase agreement by

failing to disclose Benda’s ownership interest in GIA in writing. However, their

argument has little to do with the fifteen percent ownership interest Benda

retained in GIA until its sale.    Rather, their argument concerns the book of

business that Benda sold to GIA in exchange for that ownership interest

approximately one decade before the purchase agreement was entered. The

buyers complain they mistakenly believed Benda was “fairly insignificant” to

GIA’s profitability, and that if they had known Benda had generated part of GIA’s

book of business, they would have “taken proactive steps to retain [his] clients.”


2
  Grant testified Hurkin received around $8000 per year in commissions from these
accounts, an amount slightly lower than the buyers claim in damages for the pertinent
years. However, the specific amount of revenue the buyers claim they lost—$9115.44 in
2007 and $8545.44 in 2008—is also less than three percent of the anticipated revenue
from GIA’s book of business.
                                        10



The district court properly characterized this argument as “unconvincing at best

and, at worst, absurd.”

      Substantial evidence supports the finding that the buyers knew of Benda’s

ownership interest in GIA from written statements, discussions, and the

surrounding circumstances. The purchase agreement lists Benda as one of the

“shareholders, officers and directors” of GIA.    Benda was at the closing and

signed the purchase agreement as a party to the agreement. At the closing, the

Grants paid Benda for his share of the GIA stock. Clem admitted he knew Benda

was a shareholder of GIA. Benda testified he discussed his ownership interest in

GIA with Clem. When asked if he ever told Clem that Benda owned fifteen

percent of GIA, Grant testified, “I certainly did.” The buyers have failed to prove

the sellers breached the purchase agreement.

      Furthermore, there is also ample evidence that the buyers knew or should

have known of Benda’s value to the business. Clem agreed that Benda’s two-

year employment agreement was included in the purchase agreement so that the

clients with whom he had developed relationships with over the years would stay

with the business and continue to generate commissions.          It is a matter of

common sense that a salesperson who has been with a company for some

period of time would have developed relationships with the clients with whom the

salesperson interacted and that those relationships give the salesperson a

business advantage. Still, the buyers took no action to retain Benda’s clients

while he was on leave from work due to his health. CIS then terminated his

employment on his first day back to work. It is disingenuous to claim the sellers’
                                       11



failure to state the obvious caused the buyers’ damage rather than the buyers’

own bad business decisions.

      B. Contract Interpretation.

      The buyers also contend the district court erred in interpreting the contract

provision relating to new-business commissions. That particular provision states

that Grant “will receive a commission split of fifty percent (50%) on all new

business generated by him during said five (5) year period.” The buyers argue

the term “new business” excludes new policies generated by existing customers

and only includes commercial business.

      The district court interpreted the phrase “new business” to mean new

policies generated by new and existing customers, regardless of whether they

are commercial or noncommercial.       Although this definition does not include

policy renewals, the court noted it could think of “no reasonable basis for

excluding business supplying new revenues simply because it involves an

existing customer.” The court also noted the only evidence in the record to

suggest the commissions were only intended for commercial business was

Clem’s testimony; given the court’s concerns with his credibility, this evidence

was discounted.

      In interpreting a contract, we determine the meaning of the contract words.

Rick v. Sprague, 706 N.W.2d 717, 723 (Iowa 2005). We are bound by what the

contract says except in cases of ambiguity. RPC Liquidation v. Iowa Dep’t of

Transp., 717 N.W.2d 317, 321 (Iowa 2006). The test for ambiguity is whether the

language is susceptible to two interpretations. Oberbillig v. West Grand Towers
                                         12



Condo. Ass’n, 807 N.W.2d 143, 150 (Iowa 2011).            When a contract is not

ambiguous, it is “a fundamental and well-settled rule” that we must simply

interpret it as written. Smidt v. Porter, 695 N.W.2d 9, 21 (Iowa 2005).

       The term “new business” is not ambiguous.           The word “business” is

defined as “a usual commercial or mercantile activity engaged in as a means of

livelihood,” “a commercial or sometimes an industrial enterprise,” or “dealings or

transactions especially of an economic nature.” Merriam–Webster’s Collegiate

Dictionary 167 (11th ed. 2006). Here, the business is the sale of insurance

policies.   The word “new” means “having recently come into existence.”

Merriam–Webster’s Collegiate Dictionary 834 (11th ed. 2006). Therefore, the

term “new business” would be those insurance policies that have recently come

into existence, rather than those that have been in existence and were simply

renewed.

       The contract does not provide any limitation on the type of new business

for which Grant is eligible to receive commissions. Rather, the use of the word

“all” in “all new business” indicates the contrary is true.3 Therefore, the contract,

as written, provides that Grant would receive commissions on all new policies

sold, regardless of whether the customer is new or existing, or whether the policy

is commercial or noncommercial. We find no error in the court’s interpretation.




3
 “All” in this context means “the whole number, quantity, or amount.”      Merriam–
Webster’s Collegiate Dictionary 31 (11th ed. 2006).
                                          13



      C. Liquidated Damages.

      The buyers next contend the court erred in awarding the sellers liquidated

damages under Iowa Code chapter 91A (2011) for the buyers’ failure to pay new-

business commissions. Section 91A.8 states:

      When it has been shown that an employer has intentionally failed to
      pay an employee wages or reimburse expenses pursuant to section
      91A.3, whether as the result of a wage dispute or otherwise, the
      employer shall be liable to the employee for any wages or
      expenses that are so intentionally failed to be paid or reimbursed,
      plus liquidated damages, court costs and any attorney’s fees
      incurred in recovering the unpaid wages and determined to have
      been usual and necessary.

The buyers argue their failure to pay the new-business commissions was not

intentional and was done in good faith.

      Chapter 91A distinguishes between intentional and unintentional failure to

pay wages, only allowing liquidated damages for intentional failure to pay wages.

Condon Auto Sales & Serv., Inc. v. Crick, 604 N.W.2d 587, 597 (Iowa 1999).

Liquidated damages are not available if an employer maintains a good faith

dispute over the amount of wages owed.         Id. at 598.   The question here is

whether the buyers’ failure to pay the commissions due was a result of a good

faith dispute over the amount of wages owed.

      The district court found the buyers’ failure to pay new-business

commissions was “[u]nquestionably” willful and intentional. We find the record

supports this determination. Clem admits he stopped paying the Grants’ long-

term care policy because he was unhappy with the business’s performance. The

buyers failed to pay $24,439.43 of the contingent commissions they admitted

they owed Grant under the purchase agreement. They also failed to make the
                                           14



final installment payment under the contract. While the buyers initially paid Grant

the new-business commissions, they failed to pay more than $3256.07 of the

$30,000.00 owed. When Grant approached Clem about the money the buyers

still owed under the contract at the end of 2011, Clem stated he was not going to

pay those amounts because he “lost money on” Benda and “he was going to take

that from what he owed [the sellers].” Grant testified that he asked Clem if he felt

the sellers had given him false information, falsified any records, or were

dishonest, and Clem answered, “No. . . . I made a bad deal.” In light of the

evidence and the court’s credibility determination, the buyers’ failure to pay Grant

the new-business commissions owed can be fairly viewed as willful and

intentional.

       D. Attorney Fees.

       Finally, the buyers contend the court erred in awarding the sellers’

attorney fees. They argue that attorney fees are only available under section

91A.8, not for pursuit of all the sellers’ claims.

       The district court initially awarded the sellers’ attorney fees “incurred in

recovering . . . unpaid commissions on new business generated” and ordered the

sellers to make a written application for those fees. The sellers did not request

the court revisit its ruling in a post-trial motion, but submitted an application for

attorney fees for the total amount incurred in pursuit of all of the claims brought

against buyers in the amount of $21,466.51. In its ruling on the attorney fee

application, the court sua sponte revisited its ruling and determined it was

permitted to award sellers’ attorney fees on all claims.
                                         15



         The purchase agreement states in pertinent part:

                   7.2 INDEMNIFICATION BY BUYER. Buyer shall defend,
         indemnify and hold Seller harmless from and against any and all
         liabilities, losses, damages, claims and expenses, including
         reasonable attorneys’ fees, arising in connection with or resulting
         from any breach of warranty, misrepresentation or non-fulfillment of
         any agreement on the part of Buyer under this Agreement.

Based on this provision of the purchase agreement, we find the sellers were

entitled to an award of attorney fees related to all claims arising from the

purchase agreement. Accordingly, we affirm.

         E. Appellate Attorney Fees.

         The sellers seek an award of their appellate attorney fees under both

section 91A.8 and paragraph 7.2 of the purchase agreement.

         “When judgment is recovered upon a written contract containing an

agreement to pay an attorney’s fee, the court shall allow and tax as a part of the

costs a reasonable attorney’s fee to be determined by the court.” Iowa Code

§ 625.22. The sellers have the burden of proving the services were reasonably

necessary and that the charges were in a reasonable amount.            See Ales v.

Anderson, Gabelmann, Lower & Whitlow, P.C., 728 N.W.2d 832, 842 (Iowa

2007).     In making this determination, the court must consider “the time

necessarily spent, the nature and extent of the service, the amount involved, the

difficulty of handling and importance of the issues, the responsibility assumed

and results obtained, the standing and experience of the attorney in the

profession, and the customary charges for similar service.” Id.

         The same rationale that justifies awarding attorney fees under section

625.22 below justifies awarding attorney fees in this appeal. See Bankers Trust
                                        16



Co. v. Woltz, 326 N.W.2d 274, 278 (Iowa 1982) (holding an award of appellate

attorney fees was appropriate under section 625.22 “where the written

agreement provided for attorney fees and in no way limited them to costs in the

trial court”). Because the appellate courts prefer the district court to determine

the reasonable amount of attorney fees to be awarded on appeal, we remand the

case to the district court for the limited purpose of an evidentiary hearing on and

the fixing of appellate attorney fees. See id. (citing numerous cases where this

method of calculating appellate attorney fees has been employed); see also

Schaffer v. Frank Moyer Const., Inc., 628 N.W.2d 11, 24 (Iowa 2001) (noting the

district court “is an expert on the issue of reasonable attorney fees” and, having

had the benefit of observing the trial and post-trial proceedings, is in an ideal

position to judge the necessity of time and effort spent by counsel and the

rationality of the relationship between the services rendered, the causes of

actions, and other matters involved in the case).

      AFFIRMED AND REMANDED WITH DIRECTIONS.
