Opinion
No. C8-00-1255.
Filed January 23, 2001.
Appeal from the District Court, Hennepin County, File No. CT002831.
Douglas P. Kempf, (for appellants)
John P. Farrell, (for respondent)
Considered and decided by Crippen, Presiding Judge, Randall, Judge, and Kalitowski, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
In an action alleging they were employees, not independent contractors, and that their contract was one of adhesion, appellants Dan Roger Vielbig and Heather Hammons challenge the district court's dismissal under Minn.R.Civ.P. 12.02(e) for failure to state a claim upon which relief can be granted against respondent U.S.A. Janitorial Inc. We reverse and remand.
FACTS
Respondent solicits janitorial business from third parties, then hires corporations or persons to perform the services pursuant to a written, signed agreement. Appellants, sole shareholders, officers, and principal workers of Commercial Contract Cleaners, Inc., entered into one of these agreements on October 29, 1998. The agreement required appellants to pay a fee to respondent upfront for the right to work on accounts. Respondent also retained a set percentage of the fee charged to third parties and deducted management fees before paying appellants for their services. The parties had a falling out in late 1999, which led to appellants filing a complaint for full payment of services rendered.
Count one of appellants' complaint alleges they were employees, not independent contractors, and respondent violated Minn. Stat. § 181.79 (2000) by not paying them their entire earned wages and by unlawfully deducting expenses. Count two alternatively alleges that the contract was one of adhesion, which unjustly enriched respondent. Respondent filed a motion for dismissal pursuant to Minn.R.Civ.P. 12.02(e) accompanied with an affidavit authenticating a copy of the contract. The district court granted respondent's motion.
DECISION I.
In reviewing a dismissal for failure to state a claim on which relief can be granted, the only question before this court is whether the complaint sets forth a legally sufficient claim for relief. Elzie v. Commissioner of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980) (quotation omitted). Because of the "extremely limited function" of a motion to dismiss for failure to state a claim, a pleading will be dismissed only if it appears to a certainty that no facts could be produced consistent with the complaint that would support granting the relief demanded. Northern States Power Co. v. Franklin, 265 Minn. 391, 394-95, 122 N.W.2d 26, 29 (1963). A reviewing court must take as true any factual allegations made in the complaint. D.A.B. v. Brown, 570 N.W.2d 168, 170 (Minn.App. 1997). Also, the court may consider a key document on which the complaint is premised in deciding such a motion. Brown v. State, 617 N.W.2d 421, 424 (Minn.App. 2000), review denied (Minn. Nov. 21, 2000). In this case, a copy of the contract was submitted by affidavit with respondent's motion to dismiss.
A. Independent contractors or employees
In count one of their complaint, appellants allege respondent, as their employer, violated Minn. Stat. § 181.79 (2000) by not paying them earned wages and unlawfully deducting expenses. They contend they are employees in spite of the contract labeling them as independent contractors. "The label given by the parties themselves, however, is not determinative; the relationship is determined by law." Lakeland Tool Eng'g, Inc. v. Engle, 450 N.W.2d 349, 352 (Minn.App. 1990) (citations omitted). In fact, whether a worker is an employee or independent contractor is a mixed question of law and fact. Moore Assocs. v. Commissioner of Econ. Sec., LLC, 545 N.W.2d 389, 393 (Minn.App. 1996). Once the controlling facts are determined, the question is one of law. Id. The factors applied under the law of master and servant to distinguish an employee from an independent contractor are:
(1) The right to control the means and manner of performance; (2) the mode of payment; (3) the furnishing of material or tools; (4) the control of the premises where the work is done; and (5) the right of the employer to discharge. In determining whether the status is one of employee or independent contractor, the most important factor considered in light of the nature of the work involved is the right of the employer to control the means and manner of performance.
Guhlke v. Roberts Truck Lines, 268 Minn. 141, 143, 128 N.W.2d 324, 326 (1964).
Appellants' complaint alleges, in pertinent part, that respondent regularly inspected the premises and issued checklists that detailed over ninety tasks they were required to perform and when to perform them. Respondent also reserved the right to terminate them on one day's notice and retain money owed to them after their termination from a job. They assert these allegations demonstrate the control respondent exercised thereby making it a de facto employer.
The contract references respondent's right to retain certain money, and terminate appellants one day after notice to remedy a default is given and the default is not cured. But, appellants have pled allegations that reach outside the contract. While appellants ultimately bear the burden of presenting evidence tending to show each element of the master-servant test in order to survive a motion for summary judgment, they need not present evidence to prove their allegations just to survive a rule 12.02(e) motion to dismiss. From the record, it appears the district court, based on what file it had and the oral argument, weighed the merits of respondent's defenses and, as in a summary judgment, "found" that there were no material facts in dispute, and that no reasonable person could differ on the merits of plaintiff's claim. Rule 12 is not meant for the weighing of relative merits, even though the temptation to control a calendar is present.
On a Rule 12 motion, courts must draw all inferences in favor of appellants and assume that they can prove their claim that respondent exerted enough control making it an employer. See Paradise v. City of Minneapolis, 297 N.W.2d 152, 155 (Minn. 1980) (explaining that on review of district court's decision to grant motion for dismissal, all inferences must be drawn in favor of party against whom motion was made). Assuming that they can prove respondent is an employer, then respondent is exposed to liability under Minn. Stat. § 181.79. We can only conclude that, on the pleadings alone, taking all inferences against respondent, it was not proper to dismiss this claim under rule 12.
B. Contract of adhesion and unjust enrichment
In the alternative, appellants contend the contract was a contract of adhesion by which respondent was unjustly enriched. Great disparity in bargaining power or lack of an opportunity to negotiate, coupled with a take-it- or-leave-it offer, may constitute an adhesion contract. Hauenstein Bermeister, Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886, 891 (Minn. 1982).
In their complaint, appellants allege that they did not receive anything of value in return for their payments for the right to work certain accounts. In addition, they contend respondent continued to "own" the accounts even though appellants did all of the work, respondent could terminate the contract on one day's notice, and appellants could not solicit former accounts nor receive their share of money collected for their work following their termination. The implication is that these provisions demonstrate a lack of bargaining power. Because we must draw all inferences in favor of the appellants, we conclude that these pleadings are at least sufficient to survive a rule 12.02(e) motion for dismissal. We make no comment on the merits.
Using the same analysis, the pleadings regarding unjust enrichment for retention of access fees to the accounts and money paid by customers for appellants' work are also sufficient for Rule 12 purposes. Unjust enrichment is an equitable remedy available when a party knowingly receives a benefit which, under the circumstances, would be unjust to retain. Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137, 140 (Minn.App. 1992). Such claims are appropriate when a party receives money or property of another that in "equity and good conscience" should be repaid. Klass v. Twin City Fed. Sav. Loan Ass'n., 291 Minn. 68, 71, 190 N.W.2d 493, 494-95 (1971) (quotation omitted). It is true that the existence of an express contract between the parties precludes an unjust-enrichment claim. Sterling Capital Advisors, Inc. v. Herzog, 575 N.W.2d 121, 126 (Minn.App. 1998). But, the contract of adhesion claim questions the validity of the contract. Therefore, the existence of the contract is not determinative.
Respondent is not without remedy. It can, after discovery, move for a summary judgment; it has the option of moving for a directed verdict at the close of a trial on the merits; it may seek posttrial relief; and finally, it may appeal. But for now, we must accept appellants' allegations as true (even though the burden of proof remains on appellants to prove their claims). We find it was improper for the district court to dismiss their complaint on a rule 12.02(e) motion for failure to state a claim upon which relief can be granted.
Reversed and remanded.