IN THE COURT OF APPEALS OF IOWA
No. 18-0712 Filed April 3, 2019
MIKE MARION NIDAY, Petitioner-Appellant,
vs.
ROEHL TRANSPORT, INC., Respondent-Appellee. ________________________________________________________________
Appeal from the Iowa District Court for Polk County, Paul D. Scott, Judge.
An injured worker appeals the district court order finding the Iowa Workers’
Compensation Commission had no jurisdiction to award benefits. REVERSED
AND REMANDED.
Joseph S. Powell of Thomas J. Reilly Law Firm, P.C., Des Moines, for
appellant.
Lee P. Hook and Tyler S. Smith of Peddicord Wharton, LLP, West Des
Moines, for appellee.
Heard by Potterfield, P.J., and Tabor and McDonald, JJ, but Decided by
Potterfield, P.J., and Tabor and Mullins, JJ. 2
TABOR, Judge.
We must decide if a truck driver injured outside of Iowa is entitled to workers’
compensation benefits under Iowa Code section 85.71(1)(b) (2014). The key
question is whether the “contract of hire” between employer Roehl Transport, Inc.
(Roehl) and employee Mike Niday was “made in this state.” Because the parties
assented to all terms of the contract while Niday was in Iowa, his claim met the
requirement of territorial jurisdiction under the statute. Accordingly, we reverse the
district court’s judicial review decision and remand for further proceedings.
I. Facts and Prior Proceedings
In his mid-50s and looking for a career change, Niday enrolled in classes at
Indian Hills Community College to earn his commercial driver’s license (CDL). He
worked as a supply-chain manager for Liguria Foods in Humboldt and attended
weekend classes in the spring of 2013. On campus, Niday noticed posters
advertising employment opportunities with Roehl.
Roehl is a nationwide trucking company with operating authority in forty-
eight states—including Iowa. The company is headquartered in Marshfield,
Wisconsin and has nine terminals in seven states—Wisconsin, Georgia, Indiana,
Texas, California, Arizona, and Michigan. Roehl also has drop yards1 across the
country, though it has none in Iowa.
The posters sparked Niday’s interest, so he asked one of his instructors if
Roehl was a good employer. Because the instructor had positive views of the
1 A “drop yard” is “a small area of land that trucking companies own and allows for drivers to park their trucks and trailers on it.” Trucking Terminology—Truck Driver Lingo, CDL Training Today, https://cdltrainingtoday.com/cdl-training-resources/cdl-study- guide/trucking-terminology/ (last visited Mar. 26, 2019). 3
company, Niday decided to apply for a truck-driver position through Roehl’s
website after he earned his CDL in May 2013. Roehl receives applications from
all over the country and reviews them at its corporate headquarters in Wisconsin.
Shortly after applying, Niday received a written notice from Roehl recruiter
Alice Farvour-Smith congratulating him for passing Roehl’s initial screening
process. The notice advised Niday to call Farvour-Smith within two days if he was
interested in progressing to the next steps of the hiring process. Before Niday had
a chance to contact Farvour-Smith, she called to discuss employment with Roehl.
Niday was on the job at Liguria Foods in Humboldt when he received Farvour-
Smith’s phone call. Niday testified:
[They] said they had received my online application and would like to discuss me com[ing] to work for them. .... I don’t remember verbatim, but I do remember that we discussed the divisions they had, flatbed, dry van, reefer, and I chose the flatbed division. They have different subdivisions, Midwest regional, national, and of course there’s different pay packages. We discussed that. I told them I’d like to accept the Midwest regional, have a little more home time.
On May 10, Farvour-Smith followed up with a letter mailed to Niday’s
Dakota City, Iowa home. The letter began: “Congratulations! Based on the
information we’ve received so far, I’m pleased to inform you that you qualify for a
driving position with TeamRoehl.” The letter advised Niday the employment offer
was “conditional” based on (1) the continued accuracy of the information he
provided in his application, (2) successful completion of a “pre-work screening” to
ensure Niday could meet the physical demands of the job, (3) passage of a pre-
employment drug screen, and (4) successful completion of “all the requirements”
of Roehl’s “Safety and Job Skills Program.” The letter then described the two 4
phases of Roehl’s training program—phase one consisted of classroom work,
followed by a preliminary test; phase two involved over-the-road experience with
another driver, followed by a final driving test. Additionally, the letter confirmed the
specific position and associated pay Niday and Farvour-Smith discussed in their
earlier phone conversation.
The letter instructed Niday to await a call from a Roehl representative in the
next twenty-four hours to arrange a Department of Transportation medical
examination, after which Roehl would schedule Niday’s orientation. The letter
promised Roehl would provide transportation to the designated phase-one training
facility, as well as lodging and meals on phase-one training days. The letter
concluded: “Again, congratulations on qualifying for this conditional offer of
employment. You’ve completed the first steps toward a rewarding career at
Roehl . . . .”
Niday provided Liguria Foods two weeks’ notice of his intent to leave his job
as supply-chain manager. Roehl arranged for Niday to pick up a rental car in Des
Moines on June 1 and directed him to report to Marshfield, Wisconsin for
orientation beginning June 3. In Marshfield, Niday completed an “application
addendum” supplementing his initial application from May 8 and underwent a drug
test. The following day, Niday reported to Roehl’s Gary, Indiana terminal for
classroom training.
On June 10, Niday completed the phase-one classroom training and passed
the preliminary driving test. Roehl identifies that day as Niday’s hiring date, despite
the fact he had yet to complete the second phase of training and Farvour-Smith’s 5
May 10 letter conditioned his employment offer on completion of “all requirements
of [the] Safety and Job Skills Program.”
For the second phase, Roehl paired Niday with a trainer who observed him
drive the trainer’s truck “all over the United States.” After this on-the-road training,
Niday returned to Indiana for the final driving test. Niday testified an instructor
informed Niday he passed the test and assigned him a fleet manager. 2 Niday’s
fleet manager, Gina Sanders, directed him to pick up a truck from Roehl’s
maintenance shop in Gary. Niday retrieved the truck and returned home to Iowa,
set to begin driving solo routes for Roehl.
While working for Roehl, Niday received his load assignments through the
computer in his truck. When he accepted an assignment, Roehl sent Niday
directions to the pick-up site. Niday would drive to the vendor, load the goods into
his truck, and inform Roehl once the goods were secured so Roehl could send
2 Karen Cliver, a Roehl administrator, stated in her sworn affidavit Niday was hired “upon the successful completion of training” and assigned a fleet manager “upon being hired.” Roehl presented no additional testimony. The deputy commissioner made no findings regarding the inconsistency of Cliver’s statements with Niday’s account, but the deputy did find Niday’s testimony credible. The fact findings summarized the timeline: Claimant testified following classroom training, he took a driving test in Indiana. He then began over-the-road training with another driver. Once he began this work, claimant indicated he began to receive a regular paycheck. At the conclusion of this training, claimant completed a final driving test in Gary, Indiana. Upon successful completion, defendant’s employee Gina Sanders called him, introduced herself as his fleet manager, and advised him to proceed to the maintenance shop to pick up his keys and trailer. He then began driving solo routes for defendant. And later, the deputy’s conclusions of law provided: The May 2013 conversation and letter served essentially as an agreement to agree to enter into an employment contract upon successful completion of the conditions precedent. These conditions were likely met while claimant participated in the training process in Gary, Indiana; the conditions were most certainly not met while claimant remained in Iowa prior to presenting for training. 6
directions to the destination. In his deposition, Niday testified the pick-up locations
varied based on his location at a given time:
About every time I left my home I would have a run out of Iowa, because [Roehl] always tried minimizing your deadhead miles when you’re not carrying freight. So Monday mornings that I would leave, it was generally a run located out of Iowa. And then from there it just depended on where I dropped, and they would give me a close pickup to run from there. But most of my runs when I left home [were] out of the Iowa area.
Of the seventy-three assignments Niday completed for Roehl, twenty-five were
either picked up from or delivered to Iowa locations.
In November 2013, Niday picked up a load of large aluminum coils from
Logan Aluminum in Kentucky. After much heavy lifting, Niday became winded. At
first, he blamed the humidity for his difficulty breathing. But then he developed
chest pain. A warehouse employee called Logan’s on-site paramedics, and an
ambulance transported Niday to a hospital. Niday had suffered a heart attack.
On June 30, 2014, Niday filed a petition with the Iowa Workers’
Compensation Commission seeking benefits. Roehl denied Niday’s claim, arguing
the commission lacked jurisdiction because the injury occurred outside of Iowa and
none of the grounds in Iowa Code section 85.71 applied. A deputy commissioner
heard the matter and filed an arbitration decision finding the commission lacked
jurisdiction over Niday’s claim because the “contract of hire” was not made in Iowa
and Roehl did not have a “place of business” in Iowa. The deputy characterized
the May 2013 conversation and letter while Niday was in Iowa as “an agreement
to agree to enter into an employment contract upon successful completion of the
conditions precedent.” The deputy held those conditions “were likely met” in
Indiana. 7
Niday unsuccessfully appealed to the commissioner, who adopted the
deputy’s decision. Niday then sought judicial review in Iowa District Court for Polk
County. After a February 2018 hearing, the district court agreed with the
commission, concluding the contract of hire was made outside of Iowa and Roehl
had no place of business in Iowa, so the agency lacked jurisdiction to hear Niday’s
claim under Iowa Code section 85.71(1)(a) or (b). Niday appeals.
II. Scope and Standards of Review
Section 17A.19(10) (2017) of the Iowa Administrative Procedure Act
governs our review of agency decision-making. Neal v. Annett Holdings, Inc., 814
N.W.2d 512, 519 (Iowa 2012). On judicial review, the district court acts in an
appellate capacity. Id. When reviewing the district court’s decision, “we apply the
standards of [c]hapter 17A to determine whether the conclusions we reach are the
same as those of the district court. If they are the same, we affirm; otherwise, we
reverse.” Id. (quoting Mycogen Seeds v. Sands, 686 N.W.2d 457, 463 (Iowa
2004)).
When factual findings are not challenged on appeal, but instead the claimed
error is in the agency’s interpretation of law, we decide if that interpretation was
erroneous.3 Meyer, 710 N.W.2d at 219. If we conclude the agency’s interpretation
was erroneous, we substitute our interpretation of the law. Id. Finally, if
3 In Heartland Express, Inc. v. Terry, 631 N.W.2d 260, 266 (Iowa 2001), our supreme court framed the issue on appeal as “whether there was substantial evidence to support the chief deputy’s finding that the contract of hire took place in Iowa,” citing Anstey v. Iowa State Commerce Commission, 292 N.W.2d 380, 384 (Iowa 1980), for the proposition the “substantial evidence test governs review of agency action regarding jurisdictional facts.” But this statement does not mean any issue related to jurisdiction will be undisturbed on appeal if supported by substantial evidence. Instead, Anstey confirmed factual findings related to jurisdiction are treated like any other factual findings. See 292 N.W.2d at 384. 8
the claim of error lies with the ultimate conclusion reached, then the challenge is to the agency’s application of the law to the facts, and the question on review is whether the agency abused its discretion by, for example, employing wholly irrational reasoning or ignoring important and relevant evidence. See Iowa Code § 17A.19(10)(i), (j).
Id.
Here, the parties agree the claimed error stems from the agency’s
interpretation and application of contract law principles; the facts are undisputed.4
Neither party asserts the legislature vested authority in the commissioner to
interpret the statutory phrase “contract of hire” nor do we find any indication the
legislature intended to delegate such authority to the commissioner. See Neal,
Despite branding it a question of substantial evidence, the Terry court went on to correct a legal error, concluding the claimant’s job application could not, as a matter of law, constitute an offer. See 631 N.W.2d at 268–69. Our supreme court has since clarified the importance of pinpointing the question on appeal. See Meyer v. IBP, Inc., 710 N.W.2d 213, 219 (Iowa 2006) (“In sum, when an agency decision on appeal involves mixed questions of law and fact, care must be taken to articulate the proper inquiry for review instead of lumping the fact, law, and application questions together within the umbrella of a substantial-evidence issue.”). We examine an agency’s legal conclusions for soundness even when related to jurisdiction. See, e.g., Heartland Express v. Gardner, 675 N.W.2d 259, 262 (Iowa 2003) (“We typically review a district court’s decision on judicial review for correction of errors at law. This standard dovetails with our review of jurisdictional questions, which is also for correction of errors at law.” (internal citations omitted)); Annett Holdings, Inc. v. Allen, 738 N.W.2d 647, 648–49 (Iowa Ct. App. 2007) (reviewing commissioner’s interpretation of Iowa Code section 85.71 under the “erroneous” standard). 4 “The question of whether a contract of hire exists is ordinarily one of fact.” Parson v. Procter & Gamble Mfg. Co., 514 N.W.2d 891, 893–94 (Iowa 1994). This principle follows from the “general rule of contract law that ‘the determination of the intent of the parties to make a contract, as gathered from what they did and said, is normally a question of fact for the jury, particularly where the terms of the contract are unclear.’” Id. (quoting 75A Am. Jur. 2d Trial § 795, at 403 (1991)). Here, the deputy commissioner made no findings regarding the parties’ intent, but did find credible Niday’s testimony that Roehl offered and he accepted the job and corresponding terms during the early-May phone call. The agency’s conclusion the contract of hire was made outside of Iowa was based on its characterization of the communications between Niday and Roehl as merely an “agreement to agree” pending Niday’s fulfillment of the conditions. So too was the district court’s conclusion based on its belief a contract could not be formed until the fulfillment of all conditions contained in an agreement rather than a finding of lack of intent to enter into a contractual relationship. 9
814 N.W.2d at 519; see also Iowa Code § 85.71; Iowa Ins. Inst. v. Core Grp. of
Iowa Ass’n for Justice, 867 N.W.2d 58, 65 (Iowa 2015) (“In recent years, we have
repeatedly declined to give deference to the commissioner’s interpretations of
various provisions in chapter 85.”). Accordingly, we do not defer to the agency’s
interpretation. See Neal, 814 N.W.2d at 519. “We will reverse if we find the
agency’s decision was ‘[b]ased upon an erroneous interpretation of a provision of
law.’” Andover Volunteer Fire Dep’t v. Grinnell Mut. Reinsurance Co., 787 N.W.2d
75, 80 (Iowa 2010) (quoting Iowa Code § 17A.19(11)(b)).
When interpreting provisions of chapter 85, we remain cognizant of its
purpose: to benefit injured workers. Jacobson Transp. Co. v. Harris, 778 N.W.2d
192, 197 (Iowa 2010).
III. Analysis
Iowa Code section 85.71 outlines when an employee is entitled to benefits
if his or her injury occurs outside of Iowa.5 The statute lists five ways an employee
may qualify for benefits:
5 Our supreme court has interpreted section 85.71 as conferring subject matter jurisdiction to the commission over claims arising from extraterritorial injuries. See, e.g., Terry, 631 N.W.2d at 265. So, not surprisingly, the parties dub the issue on appeal as one of subject matter jurisdiction. But in 2008, the legislature amended section 85.71 to add: “This section shall be construed to confer personal jurisdiction over an employee or employer to whom this section is applicable.” 2008 Iowa Acts ch. 1091, § 2. While the distinction is not dispositive in the instant dispute, section 85.71 reads more like a test for extraterritorial jurisdiction or a long-arm statute rather than defining the commission’s subject matter jurisdiction. See Extraterritorial Jurisdiction, Black’s Law Dictionary (10th ed. 2014) (“A court’s ability to exercise power beyond its territorial limits.”); see also Jahnke v. Deere & Co., 912 N.W.2d 136, 142 (Iowa 2018) (discussing the presumption of territorial application of statutes and noting section 85.71 “affirmatively states that it applies to employees injured ‘while working outside the territorial limits of this state’ if certain circumstances are met”); Cargill, Inc. v. Conley, 620 N.W.2d 496, 501 (Iowa 2000) (“‘Subject matter jurisdiction is the authority of a court to hear and determine cases of the general class to which the proceedings belong, not merely the particular case then occupying the court’s attention.’ Bailey v. Batchelder, 576 N.W.2d 334, 337 (Iowa 1998). 10
(a) The employer has a place of business in this state and the employee regularly works at or from that place of business. (b) The employee is working under a contract of hire made in this state and the employee regularly works in this state. (c) The employee is working under a contract of hire made in this state and sustains an injury for which no remedy is available under the workers’ compensation laws of another state. (d) The employee is working under a contract of hire made in this state for employment outside the United States. (e) The employer has a place of business in Iowa, and the employee is working under a contract of hire which provides that the employee’s workers’ compensation claims be governed by Iowa law.
Iowa Code § 85.71(1).
Niday relies on subsection (b), which requires proof of two elements: (1) at
the time of the injury, he was working under a “contract of hire” made in Iowa; and
(2) he regularly worked in Iowa.6 Neither party disputes Niday regularly worked in
Iowa. The fighting issue is whether the “contract of hire” was “made in this state.”
We determine the place of contracting based on the parties’ intention to
form a binding contract. Terry, 631 N.W.2d at 266–67 (quoting Burch Mfg. Co. v.
McKee, 2 N.W.2d 98, 101 (Iowa 1942)).
As a rule [the place of contracting] is considered to be the place where the offer is accepted, or where the last act necessary to a meeting of the minds, or to complete the making of the contract, is performed. . . . [T]he place of contract is the place where the acceptance is made, as, if a resident of one state places a letter in the mail making an offer to one who resides in another state, the contract would be completed where the acceptance is mailed.
Id. (quoting McKee, 2 N.W.2d at 101).
. . . The problem with Cargill’s argument is that the industrial commissioner did have subject matter jurisdiction of the claim presented to her—a claim for workers’ compensation benefits.”). 6 Alternatively, Niday argues he meets the criteria in subsection (a). Niday asserts, because he received assignments while in Iowa and began and ended every run from his home, his Iowa residence was his “home terminal,” constituting Roehl’s “place of business” under the statute. See Iowa Code § 85.71(1)(a). Because Niday meets the criteria in subsection (b), we need not reach this issue. 11
To be bound by a contract, the parties “must manifest a mutual assent to
the terms of the contract, and this assent is usually given through the offer and
acceptance.” Kristerin Dev. Co. v. Granson, Inc., 394 N.W.2d 325, 331 (Iowa
1986). Here, Niday and Roehl agreed to the terms of Niday’s employment during
Farvour-Smith’s May phone call to Niday, answered by Niday while in Iowa.
Farvour-Smith confirmed the terms the parties discussed on the phone in a letter
sent to Niday’s Iowa residence. So the crux of the dispute is whether the
requirements listed in the May 10 letter constituted conditions precedent7 to
performance of the contract or conditions precedent to formation of the contract.8
Roehl contends they were conditions precedent to formation, so the contract was
not made until Niday fulfilled the training requirements in Gary, Indiana. Roehl
argues the conditional nature of its offer meant the exchange in Iowa was merely
an “agreement to enter into an agreement,” citing Khabbaz v. Swartz for the
7 The Second Restatement of Contracts abandons the terms condition precedent and condition subsequent—instead employing the term “condition” in place of condition precedent, and replacing condition subsequent with “an event terminating a duty.” Restatement (Second) of Contracts § 224 reporters note cmts. c, e (Am. Law Inst. 1981). 8 In its appellate brief, Roehl quotes the following passage from Magnussen Agency v. Public Entity National Co.-Midwest, 560 N.W.2d 20, 26 (Iowa 1997): “An offer that invites an acceptance by performance is deemed accepted by such performance unless there is a manifestation of intention to the contrary.” Although that language from Magnussen describes a unilateral contract, Roehl does not use the term “unilateral contract” in its brief. In fact, Roehl fails to further develop an argument that its contract was unilateral. Roehl does not point to facts or case law supporting a contention the contract was unilateral. See Daeges v. Beh, 224 N.W. 80, 81 (Iowa 1929) (“It is presumed that an offer invited the formation of a bilateral contract by an acceptance amounting, in effect, to a promise by the offeree to perform what the other requests.”); Restatement (First) of Contracts § 31 (Am. Law Inst. 1932) (“In case of doubt it is presumed that an offer invites the formation of a bilateral contract by an acceptance amounting in effect to a promise by the offeree to perform . . . , rather than the formation of one or more unilateral contracts by actual performance on the part of the offeree.”). Without a more fully-formed argument, we decline to address the possibility the contract was unilateral. See Hyler v. Garner, 548 N.W.2d 864, 876 (Iowa 1996) (“[W]e will not speculate on the arguments [the parties] might have made and then search for legal authority and comb the record for facts to support such arguments.”). 12
proposition “[n]onperformance of a condition precedent vitiates a contract or a
proposed contract.” 319 N.W.2d 279, 284 (Iowa 1982). Roehl asserts its
communications with Niday “could certainly have been considered a proposed
contract with conditions precedent.”
Contrary to Roehl’s assertion, the agreement reached in the May telephone
call and confirmed by letter was more than a “proposed contract.” Iowa case law
uses the term “proposed contract” when “no mutuality of assent [exists] between
the parties.” See Bruggemeyer v. Bruggemeyer, 258 N.W.2d 364, 365–66 (Iowa
1977) (finding no mutual assent to proposed contract for purchase of real estate
where defendants’ counsel notified plaintiffs’ counsel that client would not sign
contract until disputed pasture rent had been paid and rent was never paid). By
contrast, all the terms of Niday’s employment were settled in the phone call and
reiterated in the May 10 written confirmation. Roehl does not contend that any
terms of Niday’s employment were left up in the air. Instead, the company argues,
Niday’s receipt of the terms of the May 10, 2013, letter did not create a legally binding employment relationship until the conditions listed therein were satisfied. These were conditions which, until completed, did not create a binding obligation on the part of Roehl Transport to employ Niday as a driver.
Roehl’s argument blurs the line between the formation of a contract and the
fulfillment of conditions within an existing contract. See Restatement (Second) of
Contracts § 224 cmt. c (Am. Law Inst. 1981) (“In order for an event to be a
condition, it must qualify a duty under an existing contract.”).9 Our supreme court
9 As further clarification, the American Law Institute reporter noted: When an event that is not normally part of the process of formation of contract is made an event upon which the performance of the contract is dependent, courts often describe it as a condition that must be performed 13
has defined conditions precedent as “those facts and events, occurring
subsequently to the making of a valid contract that must exist or occur before there
is a right to immediate performance, before there is a breach of contract duty,
before the usual judicial remedies are available.” Nat’l Farmers Org., Inc. v. Lias,
271 N.W.2d 751, 754 (Iowa 1978) (emphasis added); accord Yost v. City of
Council Bluffs, 471 N.W.2d 836, 838 (Iowa 1991) (“The City initially attempts to
dismiss the allegations raised by Yost in this appeal by contending that no valid
and enforceable contract ever existed between the parties. In support of its
contention, the City argues that because Yost failed to complete all of the
conditions precedent to form the contract, the proposed contract was a nullity. We
. . . find this argument to be meritless and conclude that a valid and enforceable
contract was in full force at the time of the fire.”); see also State ex rel. Career
Aviation Sales, Inc. v. Cohen, 952 S.W.2d 324, 326–27 (Mo. Ct. App. 1997) (“A
condition precedent presupposes the existence of a contract and not the converse
. . . . A condition precedent is a condition which must be fulfilled before the duty
to perform an existing contract arises. Thus, a condition precedent denotes an
event which qualifies a duty under an already enforceable contract. A contract
condition which qualifies a duty of performance by a party does not make the
existence or validity of the contract hinge on the condition.” (internal citations
omitted)).
before the contract comes into existence. Similarly, inartistically drafted contracts may contain language such as: “this contract shall not come into existence until Event A occurs.” . . . [I]t is better to view a contract as already in existence, but with the parties’ respective performances subject to the specified event, which is a condition to their respective performances. Restatement (Second) of Contracts § 224 reporter’s note cmt. c (citations omitted). 14
A contract is made where the last act necessary to form a binding contract
occurs. Terry, 631 N.W.2d at 266–67. We are persuaded by out-of-state authority
that the “last act necessary” means acceptance of an offer rather than fulfillment
of conditions.10 For example, the New Mexico Court of Appeals thoroughly
examined the issue before us—“whether [a drug and safety testing requirement
contained in employment offer] was a prerequisite to the formation of the
underlying contract, or whether the condition was a prerequisite to a future
obligation to perform under the contract.” Potter v. Patterson UTI Drilling Co., 234
P.3d 104, 109 (N.M. Ct. App. 2010). The New Mexico court concluded the
condition “did not affect the formation of the underlying contract”—instead, the
testing was a prerequisite to continued performance under the contract—i.e.,
beginning work. Id. at 110.
Likewise, in General Electric Co. v. Folsom, the Oklahoma Supreme Court
rejected an employer’s argument the contract was formed in a different state
because the offer of employment was contingent on the claimant passing a driving
test and a number of physical exams. 332 P.2d 950, 951–52 (Okla. 1958). The
Oklahoma court focused on the undisputed evidence—mailed correspondence
from the employer extending an offer of employment and claimant accepting,
despite the contingencies contained in the offer. See id. The court concluded,
[W]e think there can be no question that, as a matter of fact and law, it was the intention of both Folsom and his employer that his contract 10 Several jurisdictions have concluded, at least under particular circumstances, that a contract is not formed until the conditions are fulfilled. See, e.g., Dhermy v. Illinois Workers’ Comp. Comm’n, No. 4-13-0011WC, 2013 WL 5972176, at *4–5 (Ill. Ct. App. Nov. 8, 2013); Graham v. TSL, Ltd., 350 S.W.3d 430, 432–33 (Ky. 2011); Taylor v. Howard Transp., Inc., 771 S.E.2d 835, 839 (N.C. Ct. App. 2015); Pro Football Inc. v. Paul, 569 S.E.2d 66, 71 (Va. Ct. App. 2002). But we find the decisions from those courts that distinguish formation from enforceability to be more convincing. 15
of employment come into being in Oklahoma, and that is the state where it was entered into. . . . When he thereafter met those requirements, even though he did not take, and pass, the company’s physical examination until after his arrival in Indiana, the location of his first job assignment, the effective date of his employment related back to, and was coincident with, his acceptance in Oklahoma of said company’s offer.
Id.; see also Alexander v. Transp. Distribution Co., 954 P.2d 1247, 1250–51 (Okla.
Ct. App. 1997) (“[I]t is not the ‘final assent’ of the employer that establishes the
‘place where the contract is made . . .’ but the ‘final assent’ of an Oklahoma resident
to an offer of employment.” (citation omitted)).
And in Bowen v. Workers’ Compensation Appeals Board, 86 Cal. Rptr. 2d
95, 103–04 (Ct. App. 1999), the California Court of Appeals concluded a contract
of hire was formed when the Florida Marlins farm team drafted a baseball player,
communicating the terms of the employment over the phone. Id. The team mailed
the player a contract so he could sign it, then forwarded it to the commissioner; the
contract noted it would not become valid until the commissioner signed it. Id. at
97. The California court concluded subsequent formalities did not “abrogate the
contract of hire.” Id. at 100. It continued: “[s]uch things as filling out formal papers
regarding the specific terms of employment or obtaining a security clearance from
the federal government” did not “prevent the contract from initially coming into
existence.” Id.
Similarly, the Kansas Court of Appeals concluded the “last act necessary”
to form a contract of hire was the claimant’s acceptance of a company’s offer over
the phone, despite the requirement the claimant “submit to a pre-employment drug
screening and background check” in a different state, as noted in a letter sent by
the employer. Shahane v. Station Casino, 3 P.3d 551, 554–55 (Kan. Ct. App. 16
2000). More jurisdictions take the same stance. See, e.g., Brown v. Travelers Ins.
Co., 232 S.E.2d 609, 609 (Ga. Ct. App. 1977); Mattel v. Pittman Constr. Co., 180
So. 2d 696, 698 (La. 1965) (finding contract of hire made in Louisiana where union
officer told claimant where to report for work and claimant understood terms of
work regarding time and wages, despite fact employer could have rejected
claimant upon arrival at out-of-state job site); O’Briant v. Daniel Constr. Co., 305
S.E.2d 241, 243 (S.C. 1983) (“The existence of a contract, not the commencement
of work, establishes the employer-employee relationship which is the jurisdictional
foundation upon which an award is made. . . . The final act which rendered a
binding contract in the present case was O’Briant’s verbal acceptance over the
telephone.”); see also Matthews v. St. Paul Prop. & Liab. Ins., 845 S.W.2d 737,
739 (Tenn. 1992) (“[Employer] offered [claimant] a job during the telephone
conversation and . . . he accepted that offer. The fact that a written contract was
later executed in Missouri memorializing the details of the agreement between the
trucking company and its new driver does not affect this finding.”).
Roehl overlooks the distinction between formation of a contract and
enforceability of a contract. See H.L. Munn Lumber Co. v. City of Ames, 176
N.W.2d 813, 816 (Iowa 1970) (“The insertion of a condition precedent in a contract
does not render the same void but only delays the enforceability of the contract
until the condition precedent has taken place.” (quoting Locke v. Bort, 103 N.W.2d
555, 558 (Wis. 1960))). Roehl does not argue it was not bound by its promise to
employ Niday provided he fulfilled the enumerated conditions. Nor does it dispute
Niday’s assertion Farvour-Smith offered him a job during their May 10 phone
conversation or that Niday accepted the offer during the same conversation. And 17
Roehl did not present any evidence demonstrating offer or acceptance occurred
at a different time or place.
Applying the law to these facts, we conclude Niday and Farvour-Smith
struck a bargain in their telephone call. Employment contracts are often oral and
informal. See Parson v. Proctor & Gamble Mfg. Co., 514 N.W.2d 891, 893 (Iowa
1994) (noting the frequent lack of formality in contracts for hire). Here, no terms
remained to be negotiated following the May 10 letter, which documented Niday’s
conditions of employment in detail. After Niday accepted Roehl’s offer, he
informed his current employer of his intent to leave, and Roehl scheduled and
funded travel arrangements for his training in Indiana. It would be unusual for
Roehl to fund Niday’s trip to Indiana and invest in his training absent affirmation
from Niday confirming his intent to work for Roehl provided he could meet all
requirements. The contract of hire was formed before Niday left Iowa.
Roehl’s offer, accepted by Niday, is distinguishable from an agreement to
enter into an agreement. See, e.g., Air Host Cedar Rapids, Inc. v. Cedar Rapids
Airport Comm’n, 464 N.W.2d 450, 452–53 (Iowa 1990) (finding no enforceable
contract where terms were indefinite, stating: “It is axiomatic that understandable
or ascertainable terms are necessary ingredients for an enforceable contract. A
contract generally is not found to exist where the parties agree to a contract on the
basis to be settled in the future”). The record shows Roehl intended to be bound
by Farvour-Smith’s offer to Niday. And Niday “sp[oke] his . . . acceptance” in Iowa.
See Terry, 631 N.W.2d at 270.
Because the last act necessary to a meeting of the minds—Niday’s
acceptance of Roehl’s offer—occurred in Iowa, he was working under a contract 18
of hire made in this state. See id. at 266–67 (citing 99 C.J.S. Workers’
Compensation § 72, at 144–45 (2000) (“Where the worker’s acceptance of an offer
of employment is given by telephone, the place of contracting is where the
acceptor speaks his or her acceptance.”); Restatement (Second) of Contracts §
64 cmt. c (“To the extent the issue [of where an acceptance takes effect] is referred
to the rule governing private contract disputes, . . . the contract is created at the
place where the acceptor speaks or otherwise completes his manifestation of
assent.”)); see also Iowa Code § 85.71(1)(b). Because the contract of hire was
made in Iowa, and Roehl concedes Niday regularly worked in Iowa, Niday’s claim
meets the jurisdictional requirements in section 85.71(1)(b). We reverse and
remand for further proceedings consistent with this opinion.
REVERSED AND REMANDED.