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Schneider v. Landvest Corp.

February 9, 2006

CHARLOTTE SCHNEIDER AND DEAN WYMER, PLAINTIFFS,
v.
LANDVEST CORPORATION, A KANSAS CORPORATION, AND DAVID MASON, INDIVIDUALLY, DEFENDANTS.



The opinion of the court was delivered by: Judge Wiley Y. Daniel

FINDINGS OF FACT AND CONCLUSIONS OF LAW

THIS MATTER came before the Court on a trial to the Court held September 26, 27 and 28 and October 5 and 6, 2005. The parties submitted proposed findings of facts and conclusions of law on October 26, 2005, and thereafter submitted certain supplements After considering the testimony of the witnesses, the credibility of the witnesses, the exhibits submitted, the arguments of counsel, and the parties' proposed findings of fact and conclusions of law, the Court enters the following Findings of Fact and Conclusions of Law.

I. FINDINGS OF FACT

The Parties

1. Defendant Landvest Corporation ["Landvest"] is a Kansas corporation which manages self storage space. The 50-plus facilities managed by Landvest Corporation are located in Colorado, Kansas, Louisiana, Missouri, New Mexico, Ohio and Texas. Doc. 67, Approving Final PTO; PTO: p. 5, ¶ 6.

2. At all times relevant to this action Landvest was doing business in Colorado. Id., ¶ 7.

3. Plaintiffs Charlotte Schneider ["Schneider"] and Dean Wymer ["Wymer"] are natural persons who reside in El Paso County, Colorado. Id., ¶ 1, 3.

4. Schneider and Wymer were employed by Landvest as resident managers of a storage facility located at 10601 Iliff, Aurora, Colorado from April10, 2002 until April 4, 2003. Id., ¶ 4. . Plaintiffs' Background and the Application for Employment

5. Schneider applied for employment with Landvest on or about March 27, 2002, and began working at the storage facility located at 10601 Iliff, Aurora, Colorado, on April 10, 2002, as a resident manager. Testimony of Schneider, Trial Transcript ["Tr."] at 24, lines ["ll."] 20-24.

6. Wymer applied for employment with Landvest on or about March 27, 2002, and also began working at the storage facility located at 10601 Iliff, Aurora, Colorado, on April 10, 2002, as a resident manager. Testimony of Wymer, Tr. at 267-268.

7. Plaintiffs are married to each other.

8. Prior to their employment with Landvest, Plaintiffs resided near Edgemont, South Dakota. Schneider was not working at the time she applied for employment with Landvest. She had previously worked as an accounts receivable clerk, a motel manager, and a manager of an apartment complex. She had also worked as an assistant manager in a convenience store. Exhibit ["Ex."] A14-0002.

9. Wymer had previously owned businesses, including a pawn shop and a sound business. He had worked as a musician, a motel manager, and a manager of an apartment complex. Ex. A13-0002.

10. At the time they were hired by Landvest, Plaintiffs owned their home near Edgemont, South Dakota.

11. In March, 2002, Schneider saw an on-line classified advertisement in the Denver Post for a Landvest resident manager.

12. In response to the advertisement, Plaintiffs called Landvest and spoke to John Cramer ["Cramer"], a Landvest regional manager. Cramer asked them to fax their resumes to him.

13. During Schneider's first telephone conversation with Cramer, he told her the job required two persons to work the site, that managers live on site and that managers worked 4 hours each per day. Testimony of Schneider, Tr. at 25, ll. 16-24.

14. At Cramer's request, Plaintiffs traveled to Denver two or three days after the first telephone conversation with Cramer. They met Cramer at a restaurant and spent approximately one hour with him. Testimony of Schneider, Tr. at 26, ll. 20-24. He again mentioned 4 hours a day of work per person and stated that they would earn $416.00 every two weeks. Testimony of Schneider, Tr. at 27, ll. 5-9; Testimony of Wymer, Tr. at 267, l. 19 - 268, l. 11.

15. Cramer then told them that a final decision would be made in the future concerning their employment and that he would contact them in a day or two.

16. Plaintiffs returned to South Dakota and were offered employment with Landvest shortly thereafter. After accepting their positions, they were asked to begin work on April 1, 2002.

17. Plaintiffs were later notified by Cramer that there was a problem with the apartment they were to occupy and were told to report to duty on April 10, 2002.

18. Plaintiffs physically arrived in Denver on April 9 and reported to work at 10:00 a.m. on April 10, 2002. Tr. at 28, ll. 2-8.

19. Plaintiffs were hired by Landvest to manage a self storage facility located at 10601 East Iliff, Aurora, Colorado. They worked at the Iliff facility until they terminated their employment on April 4, 2003.

20. Plaintiffs received three days of training at the Iliff site (April 10-12, 2002) from Judi French ["French"], a resident manager. Cramer was present for part, but not all, of the training. At the end of the first day of training Wymer had worked approximately 8 hours. Testimony of Wymer, Tr. at 272, l. 2 . Schneider had worked approximately 9 hours. Testimony of Schneider, Tr. at 29, l. 15. They were instructed by French to record only 4 hours each on their time sheets. Tr. at 273, ll. 9-10.

21. The following day they were again instructed to record 4 hours of work although they had each worked anywhere from "8 to 12 hours a day, depending on what was going on." When questioned by Schneider about this practice, Cramer told her that "that was just the way it was." Testimony of Schneider, Tr. at 46, ll. 2-6.

22. Plaintiffs were instructed by Cramer to only record 4 regular hours of work per day regardless of the number of hours actually worked. Cramer explained to them that their pay was based on 4 hours a day and that their time sheets had to record 4 hours a day. He told them that they were salaried. Testimony of Schneider, Tr. at 48,

l. 18 - 49, l. 17.

23. Plaintiffs' testimony was supported by the statement of Cramer to the Colorado Department of Labor, dated July 2, 2003. Ex. A 28-0001. Cramer wrote:

Dean and Charlotte were told by me that they should record 22 hours of work per person on their time record each week and that overtime would only be approved in emergencies.

Id., paragraph 1.

24. At the end of the second pay period Schneider attempted to submit a time sheet reflecting her actual hours worked. She was told that she was required to submit hours as she had been trained or that she would not be paid; she was told to create a new time sheet. Testimony of Schneider, Tr. at 47, ll. 6-12.

25. Plaintiffs' testimony was also supported by the payroll records of Landvest which showed that trainer French recorded 9 hours on April 10, 2002, 8 hours on April 11, 2002 and 8 hours on April 12, 2002 (Exhibit 35-051), the days when Schneider testified she was being trained by French. Plaintiffs' time sheets for the same days only record 4 hours each per day. Exhibits A1-003 and Exhibit A2-004.

26. Shortly after beginning work, Cramer told Plaintiffs that they were both required to be at the site and available to work, during office hours (10:00 a.m.- 6:00 p.m. Monday through Friday and 9:00 a.m. - 5:00 p.m. on Saturday), unless they were performing work-related errands. Testimony of Schneider, Tr. at 40, ll. 1-2; Testimony of Wymer, Tr. at 294, l. 8.

27. Plaintiffs' testimony was supported by Cramer's first letter to the Colorado Department of Labor where he explained:

On several occasions during the years I have worked for Landvest Corp. I had several managers complain that they were not being allowed by Landvest to record the full amount of hours they worked. This claim was based on the fact that Landvest work agreement required both managers to devote their full time and attention to the business of the employer. Their complaint was that they both had to devote 8 hours each or(sic) every day worked but they were only being allowed by Landvest to record 4 hours on every day worked.

It was explained to the Managers that they could spend time in their apartments as long as the manager was available to answer the business phone and greet customers that came in the office.

Ex. A 29-0001, final paragraph 0001- first paragraph 0002.

Execution of the Employment Agreement

28. On April 10, 2002, Cramer presented Plaintiffs with a Managers Employment Agreement. Ex. A0004 [hereafter "MEA"]. Plaintiffs read and signed the MEA. A second MEA, identical to the first in all material respects, was signed by Plaintiffs at the request of Landvest on July 23, 2002. Ex. A0005.

29. Before they signed, Cramer reviewed the MEA (Ex. A0004) with Plaintiffs. During that conversation Schneider did not perceive anything in the MEA to be inconsistent with Cramer's earlier representations. When they had gone over the contract, Cramer told Plaintiffs as to compensation that "anything over the 22 hours [worked per week] is compensated." Testimony of Schneider, Tr. at 33, ll. 5-14.

30. Cramer could not be located at the time of trial and was not available to testify. The parties stipulated to the admission of three statements by Cramer: Exhibit A 29 -- a hand written letter dated May 21, 2003 addressed to Joseph Herrera at the Colorado Department of Labor; Exhibit A 28 -- a hand written letter dated July 2, 2003 addressed to Joseph Herrera at the Colorado Department of Labor; and Exhibit 26 -- a letter on Landvest stationary written by Landvest's attorneys for Cramer's signature. Exhibit 26 was a document which Cramer admitted at his deposition he did not spend very much time reading. Deposition of Cramer, p. 60, l. 24 - p. 61, l. 1. Cramer's deposition was also admitted into evidence at trial.

31. Cramer's written statements and deposition support Plaintiffs' testimony that they understood that they were hired to work 4 hours a day or 22 hours a week. Cramer's statements all refer to a job duty of 4 hours a day or 22 hours a week. While he quotes the contract language that prohibits more than a combined total of 70 hours a week, his statements and deposition never mentioned a 35 hour work week. Even the statement written by Landvest's attorneys dated June 5, 2002 (Ex. A-026) makes no mention of an agreement to work 35 hours a week.

32. The July 2, 2003 letter (Ex. A-028) is specific about the expectation of the parties that resident managers work 4 hours a day. Cramer wrote:

The Iliff site is a busy site, it has a lot of turnover in renters and the property itself collects a lot of trash. During the time I supervised this couple they began stating concerns about the number of hours it was taking them to keep the property clean and complete the paperwork relating to the renters. They believed that no one could do the work expected by the company if they both only worked 4 hours a day . . . .

I had worked that same site as a manager when it first opened in 1995 and I know from [first] hand experience that 4 hours per day per person is not always enough time to do the job as expected . . . .

Ex. A28-001,002.

33. The form of the MEA used on April 10, 2002 by Landvest (Ex. A4) had undergone at least four revisions since it was first used by Landvest in 1993. See Ex.

68. The contract was written by Landvest attorneys, Husch & Eppenberger, LLC. Testimony of David Mason ["Mason"], Tr. at 492, l. 11.

34. Paragraph 5 of the MEA titled "Hours and Days of Work" states in part: In performance of the duties described herein, Employees shall not work more than a combined total of 70 hours per week. Employees shall work approximately 44 hours per week but may be called upon to work additional hours as needed.

Ex. A4-0001.

35. The contract does not specifically state whether: (1) 44, 22, 35 or some other number of hours was expected of each employee; and (2) how hours over 22, including overtime hours, would be compensated. Further, the reference to 44 hours per week does not differentiate whether 44 hours is a combined total of hours for two employees or a job duty of each employee.

36. The contract contains a prohibition at ¶ 5 against two employees working more than "a combined total of 70 hours" per week but does not prohibit an individual employee from working more than 40 hours a week. ¶ 7 only limits employees to working within scheduled hours. There were 44 scheduled hours a week. Ex. A4-0007.

37. The contract did not require that the employees split the "combined total of 70 hours" evenly. Testimony of Mason, Tr. at 488, ll. 4-18 - 489, l. 1; 490, l. 11. Managers could, for example, split hours 50/20. Id. at 490, l. 11. The payroll records of Landvest demonstrate uneven splits in hours. See Ex. 29-188-200, time sheets of Neil and Kathy Murray.

38. The ambiguities contained in the Landvest contract were created, in part, by the decision of Landvest to use one contract for two employees. For example, the language referring to 44 hours a week was taken from an earlier form of contract used for a single employee. See Ex. 68-013, 014. Thus, when originally written the reference to 44 hours a week was intended by Landvest to refer to the duties of a single employee. No explanation was given by Defendants at trial for the reference in the contract to "approximately 44 hours per week" rather than a "combined total of 44 hours per week" or "22 hours per week."

39. Mason admitted in a memorandum to employees dated April 15, 2003 that the contract was confusing. Ex. A9-0001, ¶¶ 2, 3. Mason admitted at trial that the language of the contract was ambiguous. Testimony of Mason, Tr. at 494, l. 4.

40. The form contract signed by employees does not unambiguously identify how many hours each employee was to work for the biweekly salary of $415.39.

41. The contract could have used words to state and disclose that each employee was "agreeing to work between 22 and 35 hours a week for a fixed salary of $10,800.00", if that had been the intention of Landvest.

42. The ambiguous paragraph 5 (Ex. A4) served the business purposes of Landvest by making the agreed pay of $21,600.00 for two employees appear more generous and by allowing potential employees to believe that they would earn $9.44/hour. Mason admitted he never told any resident manager that they would be paid $5.93 or $5.94/hour. Testimony of Mason, Tr. at 492, l. 3.

43. The MEA was interpreted by the law firm of Husch & Eppenberger, LLC , Landvest's attorney, for the Colorado Department of Labor in May of 2003. Ex. 1. The interpretation of the contract language made by the Landvest attorneys who wrote the employment agreement was that it required 22 hours of work a week. Ex. 001-004 (second full paragraph - "She was to work 22 hours per week; accordingly, her base rate of pay was $9.44 per hour; her overtime rate was $14.16 per hour"). The lawyers who wrote the contract did not discern the interpretation of the MEA advanced at trial by Defendants.

44. Circumstances surrounding the execution of the MEA which are relevant to its interpretation are:

a. Cramer's representation to Plaintiffs that they would work 22 hours a week; and

b. Cramer's representation that additional work beyond that discussed (22 hours a week) might be required and that the work would be compensated.

45. Plaintiffs reasonably interpreted the MEA to be an agreement to work 22 hours per week each for a salary of $10,800.00 each.

Record Keeping at Landvest

46. Plaintiffs were instructed that they could only record and submit 4 regular hours per day and that they could not submit overtime hours for routine work. Testimony of Schneider, Tr. at 51, ll. 11, 12. Her testimony was supported by the written statement of Cramer, wherein he wrote ". . . overtime would only be approved in emergencies." Ex A28-0001, ll. 13,14. An example of when overtime work would be approved given to Schneider by Cramer was a circumstance where no relief manager was available. Testimony of Schneider, Tr. at 51, l. 25 - Tr. at 52, l. 9. All recorded overtime had to be approved by a regional manager before being submitted to Landvest for payment. Testimony of Jeff Etter ["Etter"], Tr. at 669, l. 14.

47. Schneider did not attempt to submit more than 4 regular hours of time per work day after being instructed not to do so. However, Schneider repeatedly attempted, with her regional manager's approval, to submit additional hours for payment which were worked outside of scheduled hours. She testified, and the business records of Landvest confirmed, that she was repeatedly denied payment for recorded hours which were worked outside of scheduled business hours and which were worked in excess of forty hours per week. Testimony of Schneider, Tr. at 58-72; Exs. A17, A18, A23, A27, A28, A29.

48. Thereafter and throughout their employment Plaintiffs recorded 22 regular hours of work per week although they regularly worked many more hours "off the clock." At times, and when approved by their supervisor, they recorded additional hours as "overtime hours".

49. The testimony of other witnesses supported Schneider's testimony that she was only allowed to record 4 regular hours a day. Shirley Noe ["Noe"], a former resident manager at the Iliff site, testified that she was instructed by Mason to only record a total of 8 hours per couple per day. Testimony of Noe, Tr. at 252, ll. 11- 12. Louise Adolphson, the resident manager of the Buckley site, testified she was trained to record 4 hours per day. Testimony of Louise Adolphson, Tr. at 166, l. 18. Earl Adolphson testified that he was told to "put down" 4 hours a day. Testimony of Earl Adolphson, Tr. at 337, l. 7.

50. As the regional manager for Colorado and Plaintiffs' direct supervisor, Cramer was authorized by Landvest to train Plaintiffs in the record keeping practices of Landvest, to represent the pay plan to them, and to instruct them on how to fill out time sheets. He was also authorized to approve and deny requests for overtime pay. Testimony of Mason, Tr. at 438, l. 8 - Tr. at 439, l. 4; Deposition of Cramer, p. 33, l. 11-14.

51. At trial, there was substantial evidence of a corporate policy of requiring employees to only record 4 hours of work per day, which extended beyond the regional manager, John Cramer. The first complaint of the practice was from a regional manager, Don Wooldridge, who worked in Texas in 1998. Ex. 71-004. Cramer testified at his deposition that he was following a company policy -- "that's basically what was put out by the company. . ." Deposition of Cramer, p. 22, ll. 2-3. Noe testified that she was instructed by Mason to record 8 hours for two employees. Testimony of Noe, Tr. at 252, ll. 11-12. The volume of uniform time sheets filled out by employees prior to September of 2003 which uniformly record exactly 4 hours a day is substantial evidence of the corporate policy. See Ex. 25 (time sheets of B.F. and Esla Cosper); Ex. 29 (time sheets of Kathleen and Neil Murray); Ex. 31 (time sheets of Leo and Betty Caire, who complained to John Cramer that they were being required to only record 4 hours of work) (Deposition of Cramer, p. 31, l. 11- p. 32, l. 4); Ex. 35 (time sheets of Judi and Stan French); Ex. 39 (time sheets of Van Kirk); Ex. 43 (time sheets of Barbara and Ross Davis); Ex. 45 (time sheets of Linda and Bill Shooley); Ex. 47 (time sheets of Glenda and Bill Andrews); Ex. 55 (time sheets of David Rix, Leslie Schump). When employees recorded more than 22 regular hours a week, there is evidence that time sheets were changed to show 22 hours a week. See Ex. 29, 35, 55.

52. Plaintiffs proved by a preponderance of the evidence that throughout their employment they prepared time sheets according to instructions provided by their trainer, Judi French, and according to instructions provided by their supervisor John Cramer, and recorded only 22 regular hours a week.

53. At all times relevant to their employment, Cramer knew or should have known that the time sheets were not an accurate representation of Plaintiffs' actual hours worked. He admitted as much in a written statement to the Colorado Department of Labor dated May 22, 2003. Ex. A0029.

54. Mason knew or should have known that Plaintiffs' time sheets did not record actual hours worked. Notations on time sheets indicate that Mason was personally involved in granting or denying requests for overtime compensation which included review of resident manager's time sheets. See Ex. A1-0080; Ex 25-081.

Ex. 39-028. He personally authorized payment of, or denial of, individual resident manager's requests for overtime compensation. The uniformity of the time sheets submitted by all resident managers in the Colorado and New Mexico region prior to June, 2003 should have provided notice to anyone reviewing the time sheets that they did not reflect actual hours worked. Additionally, it is not plausible that employees working under different regional managers would consistently record exactly 4 hours per day of work or 22 regular hours unless they were instructed to do so by supervisors. It also is not plausible that a uniform company wide practice of recording only 4 hours per day of work would exist unless regional managers had been told by management to instruct resident managers to record their time in this manner.

55. Landvest never recorded in any payroll record a regular hourly rate or an overtime rate for any resident managers during the time that Plaintiffs were employed by Landvest. Landvest never disclosed in writing a regular hourly rate to resident managers during the time that Plaintiffs were employed by Landvest. Landvest never disclosed to resident managers the number of regular hours they were being compensated for, the number of ...


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