author: ANDERSON, G. BARRY, Justice. JESSEN, RICHARD T„ Acting Justice

text:
    McNEILUS TRUCK & MANUFACTURING, INC., Relator, v. COUNTY OF DODGE, Respondent.
    No. A05-121.
    Supreme Court of Minnesota.
    Nov. 10, 2005.
    Rehearing Denied Dec. 30, 2005.

      James H. Gilbert, Steven R. Hedges, James H. Gilbert Law Group, PLLC, Minnetonka, MN, Robert Hill, Robert Hill & Associations, Ltd., Minneapolis, MN, for Relator.
    Kenneth R. Moen, Moen Law Firm, Rochester, MN, for Respondent.
    Myron L. Frans, Mark D. Savin, John F. Beukema, Faegre & Benson, LLP, Minneapolis, MN, for Amici Curiae Minnesota Chamber of Commerce and National Association of Manufacturers.

       Appointed pursuant to Minn. Const, art. VI, § 2, and Minn.Stat. § 2.724, subd. 2 (2004).

   OPINION

ANDERSON, G. BARRY, Justice.

Relator McNeilus Truck & Manufacturing, Inc. (“McNeilus”) owns real estate located in Dodge County, Minnesota. McNeilus operates a large manufacturing plant in Dodge Center, and alleges that the Dodge County Assessor overvalued the McNeilus property for the tax years 2001 and 2002. Dodge County valued the property at $6,739,900 for 2001 and $6,743,900 for 2002. After trial, the Minnesota Tax Court held in favor of respondent Dodge County, concluding that McNeilus’s real estate was valued at $8,800,000 as of January 2, 2001, and $9,000,000 as of January 2, 2002. McNeilus Truck & Mfg. Inc. v. County of Dodge, Nos. C4-03-287, C5-02-241, 2004 WL 1843041, at *1 (Minn. T.C. Aug. 6, 2004). The tax court found Dodge County’s appraisal more persuasive, giving greater weight to the comparable sales utilized by respondent to arrive at its valuation. Further, the tax court, citing its own precedent, rejected the out-of-state sales comparisons offered by McNeilus, stating:

We “will not accept comparables from outside Minnesota unless the circumstances warrant * * * and unless differences in the markets and tax rates are explained.” For the reasons set forth below, we do not accept McNeilus’s use of out-of-state comparables in this case.

Id. at *7 (citations omitted). McNeilus contends that the tax court erred when it rejected the use of out-of-state comparable sales based on an unpromulgated rule of evidence, and that the valuations of the tax court were clearly erroneous. We reverse and remand.

I.

The property at issue in the appeal is a large light manufacturing facility in Dodge Center, Minnesota, 70 miles southeast of the Twin Cities and 25 miles from both Interstate 35 and Interstate 90. Buildings and improvements total approximately 645,734 square feet, and are of steel frame construction with steel siding. The facility is used to manufacture cement drums and refuse containers for use with cement and refuse trucks. The majority of the improvements are used for manufacturing, although some smaller structures are devoted to storage, research,- development and office space.

Dodge County presented evidence of value through the expert testimony of certified appraiser Dennis W. Jabs. Jabs primarily employed a sales comparison approach to valuation, selecting ten comparable sales of large industrial properties resembling the subject property from a total of nearly fifty industrial sales. Jabs selected his comparables from the market he determined included the McNeilus plant, specifically, a market for large industrial manufacturing facilities centering at the intersection of' Interstates 35 and 90, and extending across southern Minnesota, into northern Iowa and eastern South Dakota. The properties, nine in Minnesota and one in South Dakota, were of dissimilar sizes and uses. One comparable was a manufacturing facility much smaller than the subject property, four were warehouse distribution centers, and five were combination warehouse/manufacturing facilities. Two com-parables were in the Twin Cities metro area, and several were close to interstate freeways. Jabs concluded that the highest and best use of the McNeilus property was manufacturing, but also considered that buyers often use light manufacturing space interchangeably for warehousing. But because warehousers are not willing to pay full value for some of the more costly manufacturing improvements that would not be used in a warehouse, Jabs adjusted the comparables involving warehousing down by 10%. Using five of these comparables, he arrived at a value of $9,350,000. Using all of the compara-bles, Jabs performed an alternative valuation analysis, considering the value of the property if split and sold in separate, smaller parcels. Using this approach, he came to a value of $8,850,000. Jabs gave the alternative approach lesser weight, and arrived at a sales approach valuation of $9,300,000 as of January 2, 2002.

Jabs also performed a cost approach analysis, beginning with the cost of replacing the improvements and then considering depreciation. Jabs performed this analysis building by building, as each building has different uses and characteristics. He concluded that the value of the property, using a cost approach analysis, was $9,200,000 as of January 2, 2002.

Relator McNeilus offered the expert testimony of certified appraiser Steven M. DeCaster. DeCaster utilized a sales comparison and a cost approach to valuation, using seven comparable sales from a market larger than that identified by Jabs. Unlike Jabs’ comparables, all of DeCaster’s comparables were pure manufacturing facilities. Two comparables, one in Hopkins, MN, and one in Chicago Heights, IL, were in large metropolitan areas. Two of DeCaster’s comparables were in Minnesota and one was in Wisconsin. The remainder were in Illinois. All but one of De-Caster’s comparables were at least 100 miles from Chicago. All were either of steel or steel and masonry construction. DeCaster made adjustments to account for age, location, size of the buildings, and quality of construction. He did not make any adjustments for local tax rates or market conditions. Using these comparables, DeCaster arrived at a final sales valuation of $2,600,000 as of both January 2, 2001 and January 2, 2002. DeCaster also utilized an alternative cost approach to value, arriving at a value of $2,800,000 as of both dates.

II.

The tax court, in rejecting DeCaster’s out-of-state sales, stated, “we will not accept comparables from outside Minnesota unless the circumstances warrant * * * and unless differences in the markets and tax rates are explained.” McNeilus Truck & Mfg. Inc., 2004 WL 1843041, at *7. In its Order Denying Motion for Amended Findings and Conclusions of Law, the tax court cited Huisken Meat Center, Inc. v. County of Murray, Nos. C2-97-27, C8-95-271, 1998 WL 15131 (Minn. T.C. Jan. 14, 1998), among other decisions, as authority for rejecting foreign comparables. In Huisken the tax court stated that the basis for the rejection of out-of-state comparables was- that those sales , did not disclose “the market nor the effect of different tax rates to determine what adjustments, if any, should be made.” Id. at *2. The tax court in the present case also cited SPX Corp. v. County of Steele, No. C1-00-350, 2003 WL 21729580 (Minn. T.C. July 23, 2003). There, the tax court refused to consider all 12 of relator’s comparables, noting that “we will not accept comparables from outside Minnesota unless the circumstances warrant such an exception and unless differences in the markets and tax rates are explained.” Id. at *5.

It is fair to say, viewing tax court precedent, that the tax court has created a de facto rule prohibiting the use of compa-rables from outside of Minnesota. But this informal rule against the use of sales transactions from states other than Minnesota, without further explanation, violates the tax court’s obligation to use its independent judgment in evaluating all testimony and evidence before the court. See Am. Express Fin. Advisors, Inc. v. County of Carver, 573 N.W.2d 651, 658-59 (Minn.1998) (holding that the tax court’s out-of-hand rejection of certain testimony and exhibits that were part of the record was an abuse of discretion); Red Owl Stores, Inc. v. Comm’r of Taxation, 264 Minn. 1, 10, 117 N.W.2d 401, 407 (1962).

More specifically, application of a rule barring out-of-state comparables violates the tax court’s duty to assess property at market value. The tax court is required to follow Minn.Stat. § 273.11, subd. 1 (2004), which provides that “all property shall be valued at its market value.” Fair market value for property assessment purposes is the compensation which a willing purchaser not required to buy the property would pay to an owner willing but not required to sell it, taking into consideration the highest and best use of the property. Ferche Acquisitions, Inc. v. County of Benton, 550 N.W.2d 631, 634 (Minn.1996); see also Minn.Stat. § 272.03, subd. 8 (2004).

When utilizing the comparable sales approach to valuation, the appraiser must “consider and give due weight to lands which are comparable in character, quality, and location, to the end that all lands similarly located and improved will be assessed upon a uniform basis and without discrimination.” Minn.Stat. § 273.12 (2004). The appraiser must assess the actual market a hypothetical buyer of the subject property would look at, and consider comparable sales of properties in that market. The scope of the market depends on the kind of property being sold — two sales of land separated by great physical distance may nonetheless be comparable sales depending on the intended use of the property. For example, a buyer searching for a distribution center to serve a national market for the buyer’s products might consider properties located in places as far apart as Denver and St. Louis as similarly situated, whereas prospective buyers of a primary residence would likely limit their search to where the buyers presently live and work. Thus, what commentators have termed “economic proximity,” and not mere physical proximity, makes two pieces of real estate comparable. J.D. Eaton, Real Estate Valuation in Litigation 209 (2d ed. 1995). The market real buyers examine is not always limited by distance or location, nor by state lines. Indeed, state lines might be practically invisible to certain purchasers of land. Such an arbitrary and artificial limit may not reflect market principles and creates grave risk of distorting property valuation.

Courts in other states have also rejected the notion that comparable sales may be ignored purely because they occurred across a political boundary. See Bartlett & Co. Grain v. Bd. of Review of Sioux City, 253 N.W.2d 86, 94 (Iowa 1977) (holding that sales of grain terminals in other states were comparable to subject grain terminal in Iowa because the nature of the market for the property encompassed a wider area than that bounded by state lines); Great Atl. & Pac. Tea Co. v. Kiernan, 42 N.Y.2d 236, 397 N.Y.S.2d 718, 366 N.E.2d 808, 813 (1977) (holding that where evidence showed that market for large food processing plants was regional, appraisers could rely on comparable sales in other states, and noting that a rigid rule regarding political boundaries would “abandon the economic realism which should characterize valuation”).

Of course, as the tax court also recognized, adjustments to price may be necessary to account for differences in local tax rates and policies amongst comparable sales across state lines. But the same kinds of adjustments may need to be made with regard to comparable sales in different counties or different cities within Minnesota. There is nothing particularly salient about the state line that justifies what amounts to a presumption of non-comparability. While, all other things being equal, a Minnesota comparable is likely superior to an out-of-state comparable, effectively excluding out-of-state comparable sales is arbitrary and distorts valuation in contravention of the tax court’s duty to assess fair market value and treat lands similarly situated on a uniform basis. Minn.Stat. §§ 273.11, 273.12. We hold that the tax court’s de facto evidentiary rule barring out-of-state comparables violates the tax court’s obligation to assess property at market value.

III.

But even where, as here, the tax court inappropriately excluded evidence, we will not reverse unless the exclusion materially prejudiced the appealing party. Marquette Bank Nat’l Ass’n v. County of Hennepin, 589 N.W.2d 301, 307 (Minn.1999). But neither will we defer to the tax court’s property valuation when the court “completely fail[s] to explain its reasoning.” Hansen v. County of Hennepin, 527 N.W.2d 89, 93 (Minn.1995). In such a situation, we may remand to the tax court with instructions to reconsider the evidence and clarify its analysis. See Renneke v. County of Brown, 255 Minn. 244, 248, 97 N.W.2d 377, 380 (1959) (remanding tax court’s property valuation with directions to make specific findings and explain reasoning).

The tax court, in the present dispute, provided some alternative reasons for rejecting DeCaster’s comparables and valuation. But many of these reasons also call into question the validity of Dodge County’s appraisal. For example, the tax court criticized DeCaster’s valuation because he did not address the differences between the out-of-state market and the market in Dodge Center, nor did he account for the impact of differing tax structures on the valuation of his out-of-state comparable sales. But the.tax court did not similarly question Dodge County’s out-of-state comparable in Brookings, South Dakota. Nor did the tax court require any account of the significantly differing local tax structures and market conditions between respondent’s in-state comparables, which were located in communities as disparate as Eagan, Owatonna, Albert Lea, and Northfield.

Moreover, the tax court considered all of Jabs’ comparables, despite the fact that all but one of those comparables were constructed using materials and methods different from the McNeilus property. Likewise, the tax court’s opinion highlights environmental problems with De-Caster’s comparables without noting that the McNeilus plant itself is subject to similar environmental issues and is designated by the Environmental Protection Agency and the Minnesota Pollution Control Agency as a high volume generator of hazardous wastes. Further, the tax court’s opinion criticizes some of DeCáster’s comparables but inexplicably fails to comment on the remainder. The tax court’s alternative reasons, therefore, are insufficient and cannot support the tax court’s property valuation analysis.

Because of the rejection of the evidence of value offered by McNeilus and the difficulties associated with the analysis given by the tax court on the remaining expert evidence, we are unable to reach a conclusion as to the appropriateness of the property valuation at issue here. Accordingly, we remand to the tax court with instructions to consider all properly offered and admitted comparable sale evidence and to apply the samé standard to comparable evidence offered by either party and to evaluate in detail the expert evidence offered by both parties. We take no position as to the eventual outcome of this property valuation dispute.

Reversed and remanded.

BLATZ, C.J., ANDERSON, PAUL H„ ANDERSON, RUSSELL A., MEYER, JJ., took no part in the consideration or decision of this case.

JESSEN, RICHARD T„ Acting Justice (concurring).

GROSS, BRUCE, Acting Justice.*

JESSEN, RICHARD T„ Acting Justice

(concurring).

I concur with the' decision of the majority. ’ However, I write to emphasize that there is no legal or economic basis to automatically exclude out-of-state compa-rables whether they are offered by either or both parties. The phrase “out-of-state” should be omitted from footnote one of the court’s opinion. There is no automatic distinction between in-state and out-of-state comparables.

The tax court’s de facto rule does not automatically exclude out-of-state compa-rables, but it sets up a presumption against their use. In SPX Corp. v. County of Steele, No. C1-00-350, 2003 WL 21729580 (Minn. T.C. July 23, 2003), the tax court recognized that there may be exceptions to its exclusionary rule if the proponent of the out-of-state comparable can show that “the circumstances warrant such an exception and * * * differences in the markets and tax rates are explained.” Id. at *5.

Here, on the one hand, the tax court cited its de facto rule to exclude McNeilus’ out-of-state comparables, and, on the other hand, again citing its de facto rule, it admitted the evidence into the record, and then, using its rule as a presumption against out-of-state comparables but not in-state comparables, found that relator had not met its burden to show that circumstances warrant an exception and to explain the differences in the markets and tax rates. Further, the tax court did not hold respondent to the same standard when it presented evidence of an out-of-state comparable.

When utilizing the comparable sales approach to valuation, all factors relevant to determining market value should be considered and weighed and appropriate adjustments should be made for the differences in the comparable sales whether instate or out-of-state. See Minn.Stat. § 273.12 (2004).

      . We note, however, that this holding does not preclude the tax court from exercising discretion in the admission of evidence and excluding, in the appropriate case, out-of-state comparable sales on relevance or other grounds.


source: Caselaw Access Project

author: WORKE, Judge.

license: Public Domain

text:
    Gregory A. KVIDERA, Respondent, v. ROTATION ENGINEERING AND MANUFACTURING CO., Appellant.
    No. A04-2493.
    Court of Appeals of Minnesota.
    Nov. 8, 2005.

      Andrew Chad McKenney, Bradley D. Hendrikson, Donohue McKenney Ltd., Minneapolis, MN, for respondent.
    Diane B. Bratvold, Shelley R. Arff, John D. Thompson, Rider Bennett, LLP, Minneapolis, MN, for appellant.
    Considered and decided by WORKE, Presiding Judge; STONEBURNER, Judge; and HUDSON, Judge.
   OPINION

WORKE, Judge.

In this appeal from posttrial motions in a claim for breach of an employment contract and violation of Minn.Stat. § 181.13 (2004), the employer argues the district court: (a) erred in construing the employment contract as terminable for just cause rather than as an at-will contract; (b) erred in applying statutory penalties under Minn.Stat. § 181.13(a), because it provides for penalties only for unpaid wages and commissions and not for an unpaid bonus; and (c) abused its discretion in awarding attorney fees for both common law and statutory claims. We affirm in part, reverse in part, and remand.

FACTS

Jámes Lorence, Sr. is the sole owner of appellant Rotation Engineering and Manufacturing Company. Appellant hired respondent Gregory A. Kvidera as its general manager in March 2001. When respondent was Hired, he did not have a written contract, but signed appellant’s employee handbook, which provided that respondent was an at-will employee.

In July 2001, Lorence promoted respondent to president of the company. On August 3, 2001, respondent and Lorence signed a document titled, “Employment Contract.” Pursuant to the document, respondent became the company’s president for a term commencing July 1, 2001, and concluding June 30, 2002. The one-page document set forth a variety of terms regarding respondent’s employment, including respondent’s title, salary and vacation plan. The document also specifically detailed the criteria used to calculate respondent’s annual bonus, including four objective goals and a fifth subjective performance evaluation by designated employees and officers.

As the 2001 employment contract term was about to expire, respondent submitted a proposal for a new contract to Lorence. Following edits by Lorence and Deborah Cooper (the company’s bookkeeper and Lorence’s daughter), a final document entitled “Employment Contract Between Rotation Engineering and Gregory A. Kvidera” was drafted. Respondent and Lorence signed the document on May 31, 2002. The document provided:

Salary start first pay check in June, 2002
Bonus below is for fiscal year 2003 (Bonus per 2002 contract to be paid as per 2002 contract)

Agreement runs through June 30, 2003. The document then set forth the terms of respondent’s employment including respondent’s title, salary, vacation time, and company credit card. As with the 2001 employment contract, the 2002 employment contract included the criteria used to calculate respondent’s annual bonus.

On September 9, 2002, appellant terminated respondent without explanation. That same day, respondent contacted appellant’s counsel to request written reasons for his termination under Minn.Stat. § 181.233 (2004). Appellant’s counsel replied by letter that respondent was terminated due to irregularities in computer equipment and false documentation of expense reimbursement submissions. Respondent believed, however, that he was terminated because Lorence’s adult children did not want him to be president.

Respondent commenced a lawsuit against appellant on November 19, 2002. The complaint alleged that appellant breached the 2002 employment contract by terminating respondent without cause and, therefore, owed respondent his bonus and lost wages according to the terms of the employment contracts as well as damages. The complaint also sought relief under MinmStat. § 181.13(a) (2004), which provides for a statutory penalty for failure to promptly pay wages. Appellant counterclaimed, alleging that respondent was not entitled to any lost compensation because respondent breached his fiduciary duty, converted company property, and made fraudulent misrepresentations.

One specific area of dispute centered on respondent’s 2001-2002 bonus earned pursuant to the 2001 employment contract. The 2001 employment contract provided for the bonus to be distributed bi-annually, and respondent received an $8,000 bonus mid-way through the 2001 contract. On July 10, 2002, respondent submitted to Lo-rence a memorandum summarizing how he had met the performance goals of the bonus plan entitling him to the second distribution. Respondent’s 2001-2002 bonus was due on August 1, 2002. According to respondent, however, he volunteered to defer the distribution of his bonus at that time to aid appellant’s cash flow. Upon termination, respondent demanded that appellant pay him the remainder of the 2001-2002 bonus immediately. Initially, appellant did not dispute that respondent was owed his bonus but did not distribute the bonus.

Appellant moved for summary judgment arguing that respondent was not entitled to damages because (a) respondent was terminable at will, and (b) appellant had good cause for terminating respondent because respondent breached his fiduciary duties. Appellant argued that the 2001 and 2002 employment agreements were detailed bonus plans and not contracts for a specific duration of employment. Appellant also denied that it owed respondent his 2001-2002 bonus arguing that respondent incorrectly calculated his bonus and misrepresented the bonus criteria.

In an order dated February 26, 2004, the district court denied appellant’s motion for summary judgment. Finding appellant’s assertion that the 2001 and 2002 documents were contracts only for a bonus plan “untenable,” the district court concluded that the 2001 and 2002 documents constituted employment contracts of a specific duration. The district court then set for trial the issue of whether the actual reasons for respondent’s termination were sufficient to constitute good cause for his termination. The district court also found disputed material facts as to the intended evaluative method of respondent’s unpaid 2001-2002 bonus and whether respondent earned that bonus.

Trial commenced on May 3, 2004. On May 7, 2004, the jury returned a special verdict form, finding that appellant breached its 2001 and 2002 employment contracts with respondent and dismissing appellant’s counterclaims. The jury awarded damages to respondent for appellant’s breach of contract and for appellant’s failure to pay the 2001-2002 bonus. The district court then determined that respondent was entitled to $5,480.77 in statutory penalties pursuant to Minn.Stat. § 181.13(a) and $54,545.42 in attorney fees pursuant to Minn.Stat. § 181.171, subd. 3 (2004). Including additional penalties and prejudgment interest, the district court ordered judgment in favor of respondent in the amount of $159,154.87. This appeal follows.

ISSUES

I. Did the district court err in construing the employment contract as terminable for just cause rather than as an at-will contract?
II. Did the district court err in applying statutory penalties under Minn.Stat. § 181.13(a) (2004) for an unpaid bonus?
III.Did the district court abuse its discretion by awarding attorney fees for both common- law and statutory claims under Minn.Stat. • § 181.171 (2004)?

ANALYSIS

I.

Appellant first challenges the district court’s denial of its motion for summary judgment, arguing that the district court erred in construing the 2001 and 2002 contracts as employment contracts modifying respondent’s at-will status. On appeal from summary judgment, this court considers whether there are any genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). Contract interpretation is a question of law, which this court reviews de novo. Employers Mut. Cas. Co. v. A.C.C.T., Inc., 580 N.W.2d 490, 493 (Minn.1998). “[T]he language found in a contract is to be given its plain and ordinary meaning.” Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 67 (Minn.1979).

“In the absence of an express or implied agreement to the contrary, ... Minnesota law presumes that employment for an indefinite duration is at will.” Gunderson v. Alliance of Computer Prof'ls, 628 N.W.2d 173, 181 (Minn.App.2001), appeal dismissed (Minn. Aug. 17, 2001). In an at-will employment relationship, the employer can summarily dismiss the employee for any reason or no reason, and the employee is under no obligation to remain on the job. Cederstrand v. Lutheran Bhd., 263 Minn. 520, 532, 117 N.W.2d 213, 221 (1962). The at-will rule may be rebutted, however, by the specific terms of the agreement. See Pine River State Bank v. Mettille, 333 N.W.2d 622, 628 (Minn.1983). Under a contract of specific duration, an employee may only be terminated during the period of the contract upon a showing that the employer had good cause. See id. (“[T]he general rule is that contracts for a specific duration can nonetheless be terminated during the period of the contract if the employer has good cause.”); Thomsen v. Indep. Sch. Dist. No. 91, 309 Minn. 391, 392, 244 N.W.2d 282, 284 (1976) (stating that a “fixed-term” contract is terminable only for cause).

Here, the district court determined that the 2001 and 2002 contracts were employment agreements for a specific duration, which changed respondent’s original at-will relationship into a terminable-only-for-cause relationship. Appellant argues that respondent remained an at-will employee, despite the 2001 and 2002 contracts, because both of those documents are silent as to termination and neither document contained a term explicitly modifying respondent’s at-will status. In support of its argument, appellant cites Rosenberg v. Heritage Renovations, LLC, 685 N.W.2d 320 (Minn.2004), and Harris v. Mardan Bus. Sys., Inc., 421 N.W.2d 350 (Minn.App.1988), review denied (Minn. May 18, 1988). Neither case supports appellant’s misapplication of the at-will doctrine because both cases involved employment for an indefinite duration. See Rosenberg, 685 N.W.2d at 326 (holding that employment was at will despite a reference to events in the employment listing that could be used- as a termination date); Harris, 421 N.W.2d at 354. (holding that a buy-back agreement for company stock in the event of termination did not modify at-will employment status). Contrary to appellant’s assertion, an employment agreement may supersede the at-will doctrine if it contains either termination conditions or a specified duration. See Dorso Trailer Sales, Inc. v. Am. Body & Trailer, Inc., 372 N.W.2d 412, 414 (Minn.App.1985) (stating that employment contracts are ordinarily terminable at will if they “do not contain express provisions for duration or termination”), review denied (Minn. Oct. 18, 1985). Thus, the district court correctly determined that a contract for a specific duration is sufficient to create employment terminable for cause.

Appellant next argues that the district court erred in its interpretation of the 2001 and 2002 contracts. Characterizing the 2001 and 2002 contracts as “bonus agreements” or “compensation agreements” rather than employment contracts, appellant argues that the specific references to a one-year duration refer only to the period for calculating respondent’s bonus and are, therefore, insufficient to convert an at-will employee into employment terminable for cause. See Rognlien v. Carter, 443 N.W.2d 217, 220 (Minn.App.1989) (holding that a letter outlining an employee’s salary structure was insufficient to modify at-will status), review denied (Minn. Sept. 21, 1989). We disagree.

Construing the 2001 and 2002 employment agreements as a whole, the contracts were employment agreements of a specified duration. The contracts are unambiguously titled “Employment Agreement,” and contain general terms of employment unrelated to respondent’s bonus or compensation, including respondent’s job title, vacation time, and insurance. Examining the layout of the agreements, the dates of duration are listed immediately below respondent’s title in the 2001 agreement and immediately below the document title in the 2002 agreement. The dates do not exclusively govern respondent’s bonus period. Furthermore, the documents were signed by both parties, suggesting an intent to bind both parties to an employment agreement, rather than a unilateral promise of a specific compensation. Because the unambiguous language of the 2001 and 2002 employment contracts provides for an employment agreement of a specified duration, the district court did not err in denying appellant’s motion for summary judgment.

II.

Appellant next challenges the district court’s judgment awarding respondent statutory penalties for unpaid wages pursuant to Minn.Stat. § 181.13(a) (2004), arguing that respondent’s 2001-2002 bonus was not a “wage” for purposes of the statute. The interpretation of a statute and its application to undisputed facts raise questions of law that we review de novo. Oslund v. Johnson, 578 N.W.2d 353, 356 (Minn.1998).

Minn.Stat. § 181.13(a) provides:

When any employer employing labor within this state discharges an employee, the wages or commissions actually earned and unpaid at the time of the' discharge are immediately due and payable upon demand of the employee. If the employee’s earned wages and commissions are not paid within 24 hours after demand, whether the employment was by the day, hour, week, month, or piece or by commissions, the employer is in default. . The discharged employee may charge and collect the amount of the employee’s average daily earnings at the rate agreed upon in the contract of employment, for each day up to 15 days, that the employer is in default, until full payment or other settlement, satisfactory to the discharged employee, is made.

The statute does not otherwise define “wages.” The supreme court has noted that the purpose of the statute is to “penalize employers who fail to pay their employees’ wages promptly.” ' Hansen v. Remer, 160 Minn. 453, 462, 200 N.W. 839, 843 (1924). Because the statute is penal in nature, it must be strictly construed. Chatfield v. Henderson, 252 Minn. 404, 410, 90 N.W.2d 227, 232 (1958). Here, the district court awarded respondent statutory penalties under'- Minn.Stat. § 181.13 (2004) after the jury found that appellant-breached its 2001 employment contract by failing to pay respondent’s 2001-2002 bonus. Whether an annual bonus is a “wage” for purposes of section 181.13 is a question of first impression in Minnesota.

Minnesota case law interpreting section 181.13 provides some direction. This court has upheld statutory penalties under section 181.13 for unpaid vacation time, concluding that vacation pay was a “wage” under the statute. Brown v. Tonka Corporation, 519 N.W.2d 474 (Minn.App.1994). In Brown, this court first noted that an employer’s liability for vacation time is wholly contractual and that an employer is obligated to provide vacation pay when employees have satisfied the eligibility requirements. Id. at 477. The court then rejected the argument that vacation benefits are not “earned,” reasoning that the employees had accrued the vacation time pursuant to the employer’s guidelines and had provided consideration for their vacation benefits by working the previous year. Id. Because the employer received the benefit of the employees’ work product, the employer was obligated to pay the employees for their accumulated, accrued vacation time. Id.

Appellant argues that bonuses are distinguishable from the vacation benefits examined in Brown, as bonuses may not be actually earned at the time of an employee’s discharge. Furthermore, appellant suggests that the Brown analysis is not applicable to bonuses because bonuses, unlike vacation pay, are not compensation for an employee’s services and are not based upon length of service and time worked. Rather, bonuses are a gratuity. Appellant mistakenly relies on broad, hypothetical declarations about the nature of bonuses generally in its analysis of Broum, and not the record evidence before this court. As noted above, respondent contracted for his 2001-2002 bonus as a part of his overall compensation package. This court is not confronted with a claim for statutory penalties involving a pro rata portion of an unvested bonus, a profit sharing plan, or a gratuitous bonus subject solely to the employer’s discretion. When an employee contracts for a bonus in exchange for his services to the. employer, and the right to that bonus vests prior to the employee’s termination, an employer’s failure to pay that unpaid bonus within 24 hours of the employee’s demand subjects the employer to a claim for statutory penalties under MinmStat. § 181.13.

Applying the reasoning in Brown to the matter at hand, we conclude that respondent’s earned bonus constituted a “wage” for purposes of section 181.13. The decision in Brown was based, in part, on the contractual nature of vacation benefits:

It is beyond dispute that an agreement to pay vacation pay to employees made to them before they performed their services, and based upon the length of service and time worked, is not a gratuity but is a form of compensation for services, and when the services are rendered, the right to secure the promised compensation is vested as much as the right to receive wages or other form of compensation.

Brown, 519 N.W.2d at 477. Respondent’s 2001-2002 bonus was an intégral and negotiated part of his compensation package for 2001. Respondent contracted with appellant in 2001 to receive a bonus based on the satisfaction of four objective, company-performance based criteria and one subjective personal evaluation. While the amount respondent would receive and the appropriate evaluation criteria remained questions of fact, respondent’s right to the undetermined amount' vested as of July 1, 2002, the day after the expiration of the 2001- contract. Therefore, respondent’s 2001-2002 bonus was owing prior to his termination. As president of the company, respondent’s services contributed to appellant’s profitability, and appellant received the benefit of respondent’s work product. The record reflects that, in this instance, respondent’s bonus was nondiscretionary and actually earned at the time of his discharge.

We note that other jurisdictions interpreting similar statutory language have reached the same conclusion. See Rohr v. Ted Neiters Motor Co., 758 P.2d 186, 188 (Colo.Ct.App.1988) (holding that a bonus calculated based. on a percentage of the company’s profits was a wage under Colorado’s wage-penalty statute because the bonus was vested and determinable as of the date of termination, was disproportionately large in comparison to the employee’s salary, and was owed as compensation for services performed by the employee); Cap Gemini Am., Inc. v. Judd, 597 N.E.2d 1272, 1284-85 (Ind.Ct.App.1992) (holding that the computation of an incentive bonus based on work done was a wage, reasoning that wages include not only periodic monetary earnings, but also “the other benefits to which he is entitled as part of his compensation”); Knutson v. Snyder Indus., Inc., 231 Neb. 374, 436 N.W.2d 496, 499 (1989) (holding that a bonus could be a wage if it was an inducement rather than a reward, i.e., if it was previously agreed to and the stipulated conditions were satisfied).

Appellant argues- that the plain statutory language compels the interpretation that bonuses are not wages. Because section 181.13 includes the language “whether the employment was by the day, hour, week, month, or piece or by commissions,” appellant contends that this language evidences the legislature’s intent to regulate only terms of employment that are by the day, hour, week, etc. According to appellant, because bonuses are not determined according to these intervals, they fall outside the purview of the statute.

Appellant’s interpretation pulls the interval language out of context and strains the plain meaning of section 181.13. The sentence containing the interval language is as follows: “If the employee’s earned wages and commissions are not paid within 24 hours after demand, whether the employment was by the day, hour, week, month, or piece or by commissions, the employer is in default.” The interval language describes the pay period rather than a required method of calculating, or rate of, pay. The plain meaning of this language is that an employer is required to pay the earned wages within 24 hours regardless of the interval at which the employee’s pay was calculated.

The district court’s interpretation of the statute is supported by the plain meaning of the statute and Minnesota case law. As such, the district court did not err in applying statutory penalties under Minn. Stat. § 181.13 for respondent’s unpaid 2001-2002 bonus.

III.

Finally, appellant challenges the district court’s award of attorney fees to respondent, arguing that the district court erred in awarding fees attributable to respondent’s common law claim as well as respondent’s claim for statutory penalties under Minn.Stat. § 181.13. A district court’s decision awarding attorney fees will not be reversed absent an abuse of discretion. State by Humphrey v. Alpine Air Prods., 490 N.W.2d 888, 896 (Minn.App.1992), aff'd, 500 N.W.2d 788 (Minn.1993).

Recovery of attorney fees must be based on either statute or contract. Schwickert, Inc. v. Winnebago Seniors, Ltd., 680 N.W.2d 79, 87 (Minn.2004). Minn.Stat. § 181.171, subd. 1 (2004), allows an injured employee to bring civil suit against an employer that violates section 181.13. If such a claim is successful, and a violation of section 181.13 is found, the district court will order the employer to pay the attorney fees and court costs of the employee. Minn.Stat. § 181.171, subd. 3 (2004). Attorney fees are not recoverable by a common-law breach-of-contract case absent “a specific contract or statute authorizing such recovery.” Barr/Nelson, Inc. v. Tonto’s, Inc., 336 N.W.2d 46, 53 (Minn.1983).

Appellant argues that the district court’s award of $51,144 in fees incurred pursuant to respondent’s claims for both breach of contract and lost wages under section 181.13 creates a statutory exception for an award of fees in a common law claim without an explicit legislative mandate. Respondent argues that the award was proper because all of his claims were effectively brought under section 181.13 as appellant denied all his claims on the same basis and refused to pay his earned bonus. We disagree.

The district court improperly awarded fees attributable to a common law breach-of-contract claim. Section 181.13 authorizes statutory penalties for lost or unpaid wages upon an employee’s demand. The first count of respondent’s complaint alleged wrongful termination without just cause, which is a claim for damages and not lost wages. Accordingly, respondent’s common law claim was not transformed into a section 181.13 claim by virtue of appellant’s answer and counterclaim. Moreover, statutory penalties permitting the award of attorney fees are designed to encourage parties with potentially modest damages to bring their claims. See Giuliani v. Stuart Corp., 512 N.W.2d 589, 596-97 (Minn.App.1994) (noting that the legislature specifically provided for an award of attorney fees in enacting the Minnesota Human Rights Act because the cases often involve modest damages and the attorneys who prevail in discrimination cases serve an important public function). Here, the district court awarded approximately $77,000 in damages for appellant’s breach of contract and approximately $16,000 in damages for failing to pay respondent’s 2001-2002 bonus. Given the disproportionate awards, permitting attorney fees in addition to damages for the breach-of-contract claim does not further the legislative purpose of encouraging claims for lost wages. Cf. O’Brien v. Phillips Motors Excelsior, Inc., 288 Minn. 183, 187, 179 N.W.2d 158, 161 (1970) (noting that “[i]t is well settled that penalties, including attorney[] fees, imposed by statute must be moderate and reasonably sufficient to accomplish a proper legislative purpose ....”) Accordingly, we reverse the district court’s award of attorney fees.

Neither the district court’s findings nor the supporting documentation clearly set out the fees incurred in pursuing the claim for respondent’s unpaid 2001-2002 bonus. Therefore, we remand this issue to the district court for a new award. Acknowledging that the fees attributable to the statutory claim may not be entirely distinct from the common law claim, we afford the district court considerable discretion is crafting the new fees award. The district court may in its discretion open the record to take additional evidence. Because we are remanding for a new award of attorney fees, we deny respondent’s request for attorney fees incurred in this appeal. Respondent may request fees by separate motion pursuant to Minn. R. Civ. App. P. 189.06.

DECISION

Because the district court did not err in interpreting the parties’ 2001 and 2002 contracts as employment contracts of a specific duration modifying respondent’s at-will status, and because the district court did not err in determining that respondent’s 2001-2002 bonus was a “wage” pursuant to Minn.Stat. § 181.13 (2004), we affirm. Because the district court improperly awarded attorney fees for both respondent’s common law and statutory claims, we reverse the fees award and remand for a new award.

Affirmed in part, reversed in part, and remanded.


author: SRSTKA, Circuit Judge & MEIER-HENRY, Justice. SRSTKA, Circuit Judge,

text:
    2005 SD 102
    Harlan KASSUBE, Claimant and Appellee, v. DAKOTA LOGGING, Employer, and Triple R Construction, Employer and Appellee, and Estes Brothers, Employer and Appellant, and Cigna Property & Casualty Company, Insurer and Appellant, and American States Insurance Company, Insurer, and The United Fire Group, Insurer and Appellee, v. Dean Kurtz Construction, Employer and Appellee, and American States Insurance Company, Insurer and Appellee.
    Nos. 23308, 23309.
    Supreme Court of South Dakota.
    Argued Feb. 16, 2005.
    Decided Oct. 12, 2005.

      Rodney C. Lefholz, Rapid City, South Dakota, Attorney for claimant and appel-lee Harlan Kassube.
    Steven J. Morgans and Nichole Nachti-gal Emerson of Lynn, Jackson, Schultz & Lebrun, Sioux Falls, South Dakota, Attorneys for employer and appellants Estes Brothers and Cigna Property Casualty Company.
    Lisa Hansen Marso and Michael S. McKnight of Boyce, Greenfield, Pashby & Welk, Sioux Falls, South Dakota, Attorneys for employer and appellees Triple R Construction and United Fire Group.
    Scott Sumner of Banks, Johnson, Col-bath & Kerr, Rapid City, South Dakota, Attorneys for appellees Dean Kurtz Construction and American States Insurance Company.
   SRSTKA, Circuit Judge & MEIER-HENRY, Justice.

[¶ 1.] Circuit Judge WILLIAM J. SRSTKA, sitting for Justice RICHARD W. SABERS, disqualified, delivers the majority opinion of the Court on Issue One, which holds that the Department of Labor had subject matter jurisdiction ovér Estes Brothers’ third party petition against Kurtz because of the substantial dispute regarding Kassube’s right to benefits.

[¶ 2.] Judge SRSTKA delivers the majority opinion of the Court on Issue Two, which holds that Kassube has a permanent total disability under the odd-lot doctrine.

[¶ 3.] Justice JUDITH K. MEIERHEN-RY delivers the majority opinion on Issue Three, which holds that the last injurious exposure rule should be applied in this case because Kassube was not disabled and drawing compensation at the time of his final injury.

[¶ 4.] Judge SRSTKA dissents on Issue Three.

[¶ 5.] Justice MEIERHENRY delivers the majority opinion on Issue Four, which holds that Estes Brothers is responsible for Kassube’s medical expenses relating to his upper back, neck and shoulder from 1990 to the date of any subsequent compensable injury and that subsequent liability must be determined under the last injurious exposure rule.

[¶ 6.] Judge SRSTKA dissents on Issue Four.

[¶ 7.] SRSTKA, Circuit Judge, writing the majority opinion on Issue One.

FACTS AND PROCEDURE

[¶ 8.] As a result of six injuries suffered during employment by four different employers over a course of time, Harlan Kassube (Kassube) commenced a workers’ compensation proceeding against these employers and their insurers before the South Dakota Department of Labor (Department). The four employers, in the claim were Dakota Logging and its insurer American States Insurance Company (Dakota Logging); Estes Brothers and its insurer Cigna Property & Casualty Company (Estes Brothers); Dean Kurtz Construction and its insurer American States (Kurtz); and Triple R Construction and its insurer United Fire Group (Triple R).

[¶ 9.] Kassube spent his working career in heavy logging and construction labor. The first injury occurred in 1986 while he was employed at Dakota Logging. A piece of timber fell on his head and he sustained neck and head injuries.

[¶ 10.] In November 1990 Kassube fell on a roof while working for Estes Brothers and sustained a cervical and lumbar sprain/strain. This was his second injury. Kassube initially treated with Dr. Gruba, his chiropractor, and received approximately fifteen treatments from the time of injury until May 1991. He received treatments in the fall of 1991 for complaints of low and mid-back pain. Dr. Gruba treated him once in 1992. He received additional treatments from February to July 1993.

[¶ 11.] In July 1993 Kassube felt as though a rib popped out of place and experienced shortness of breath and stabbing pains in his back. This was his third injury. At that time he was employed by Kurtz. He returned to Dr. Gruba for treatment until August 1993. From September 1993 to January 1994 he continued to receive treatment for mid-back pain and rib pain.

[¶ 12.] In January 1994, while still employed at Kurtz, Kassube reportedly fell in the snow and experienced pain in his shoulder. This was his fourth injury. Dr. Gruba treated him five times from the date of injury until April 1994. In March 1996 he had a left C5-C6 decompression with arthrodesis done. Because of continued shoulder pain, he later underwent an arthroscopic subacromial decompression and shoulder repair.

[¶ 13.] In September 1998 Kassube sustained a fifth injury while working at Triple R. That injury was to the low back and occurred while he was pounding a stake into the ground with an eight pound sledgehammer. He missed one week of work after that injury.

[¶ 14.] The final and sixth injury occurred in November 1998 when he again sustained a low back injury while picking up a sheet of plywood. He was employed by Triple R during this injury. He treated with Dr. Gruba for neck pain and Dr. Teuber, a neurosurgeon, for continued low back pain. He continues to receive treatment for neck and back pain since that injury. Kassube has not been able to return to work since November 22, 1998.

[¶ 15.] Kassube’s initial claim sought benefits from Dakota Logging and Estes Brothers for the first and second injuries sustained in 1986 and 1990.

[¶ 16.] Estes Brothers filed a third-party claim in the proceeding against Kurtz since Kassube suffered the third and fourth injuries while working for Kurtz after Kassube’s employment with Estes Brothers. In the meantime Kassube filed an amended petition in the proceeding adding Triple R for the fifth and sixth injuries.

[¶ 17.] After two hearings Department determined that Kassube was entitled to permanent total disability benefits and assigned liability between employers Estes Brothers and Triple R pursuant to SDCL 62-4-29. Department apportioned the liability of permanent total disability benefits making Estes Brothers responsible for two-thirds and Triple R for one-third of benefits. Department further determined that Triple R was responsible for medical expenses for treatment for the low back and Estes Brothers for the upper back, neck, shoulder and headaches.

[¶ 18.] Estes Brothers and Triple R appealed Department’s determination to the circuit court. During the proceeding before Department Kurtz moved to dismiss the Estes Brothers’ claim for lack of jurisdiction. Department never ruled on this motion and Kurtz did not appeal to the circuit court. Department had previously granted Dakota Logging’s motion for summary judgment. No party appealed the Dakota Logging summary judgment.

[¶ 19.] In the appeal to the circuit court Estes Brothers and Triple R raised essentially the same issues presented to us on this appeal. The court denied requested findings and orders from Estes Brothers and Triple R. Kurtz requested no findings or orders from the court. After a hearing, the court entered a judgment affirming Department’s decision.

[¶ 20.] Estes Brothers appealed to this Court. Triple R filed a notice of review. Kurtz was still in the lawsuit and participated throughout the appellate process including oral argument.

[¶ 21.] Estes Brothers raises two issues:

Whether Department erred in determining that Estes Brothers is responsible for any permanent total disability benefits awarded to Kassube.
Whether Department erred in determining that Estes Brothers is responsible for all treatment provided to Kassube for his upper back, neck and shoulder from 1990 and forward.

[¶ 22.] Triple R seeks review of two issues:

Whether Department erred in determining Kassube is entitled to permanent total disability benefits under the odd-lot test.
Whether Department erred in apportioning to Triple R one-third of the liability for permanent total disability benefits.

[¶ 23.] Kurtz raises the issue:

Whether Department had subject matter jurisdiction over the claim asserted by Estes Brothers against Kurtz.

ISSUES

[¶ 24.] Although the four volume record is bulky and the proceeding protracted and procedurally involved, four issues present themselves for review and determination.

Issue One: Should Kurtz be dismissed from the proceeding for lack of jurisdiction?
Issue Two: Is Kassube totally disabled under the odd lot doctrine?
Issue Three: Which theory applies for the assigning of the liability for payment of the total disability benefits — the apportionment statute or the last injurious exposure rule?
Issue Pour: Is Estes Brothers liable for all treatment provided to Kassube for his upper back, neck and shoulder?

STANDARD OF REVIEW

[¶ 25.] In workers’ compensation cases, the standard of review is controlled by SDCL 1-26-37. Lagge v. Corsica Coop., 2004 SD 32, ¶ 14, 677 N.W.2d 569, 573. “Under SDCL 1-26-37 when the issue is a question of fact then the clearly erroneous standard is applied to the agency’s findings; however, when the issue is a question of law, the actions of the agency are fully reviewable.” Wagaman v. Sioux Falls Const., 1998 SD 27, ¶ 12, 576 N.W.2d 237, 240. “ ‘Mixed questions of law and fact are also fully reviewable.’ ” Kermmoade v. Quality Inn, 2000 SD 81, ¶ 10, 612 N.W.2d 583, 586 (quoting Zoss v. United Bldg. Centers, 1997 SD 93, ¶6, 566 N.W.2d 840, 843). When a circuit court has reviewed an administrative agency’s decision, we review the agency’s decision “ ‘unaided by any presumption that the circuit court’s decision was correct.’ ” Zoss, 1997 SD 93 at ¶6, 566 N.W.2d at 843.

ANALYSIS AND DECISION

ISSUE ONE

[¶ 26.] Should Kurtz be dismissed from the proceeding for lack of jurisdiction?

[¶ 27.] Kassube brought no claim against Kurtz. Estes Brothers impleaded Kurtz by a third party petition. Kurtz contends pursuant to SDCL 62-7-12 Department did not have subject matter jurisdiction over claims arising solely between employers and insurers. SDCL 62-7-12 states:

If the employer and injured employee ... fail to reach an agreement in regard to compensation under this title, either party may notify the Department of Labor and request a hearing according to rules promulgated pursuant to chapter 1-26 by the secretary of labor. The department shall fix a time and place for the hearing and shall notify the parties.

[¶ 28.] Although Kurtz raised this issue before the Department and circuit court, neither ruled on it. We are troubled that SDCL 1-26-30.1, 1-26-31, and 15-26A-6 were not followed since there was no notice of appeal filed to the circuit court or this Court. SDCL 1-26-30.1 provides a statutory remedy when an agency fails to rule.

The failure of any agency to make and file a decision within a pei'iod of thirty days after any matter has been finally submitted to it, entitles a person authorized to appeal from the record then existing as if the decision had been made adversely to him in whole or in part, unless within such time the agency shall make and serve upon all the parties to the record, an order extending such time for an additional period of not to exceed sixty days, which order shall state the grounds or reasons why such extension is necessary. At the expiration of the thirty days or the time to which extended by such order, such person may present to the agency a proposed decision, and if the same is not adopted within five days after presentation for filing, such person may appeal the same as if such proposed decision had been denied. This section does not apply to contested cases determined by the Public Utilities Commission.

SDCL 1-26-30.1. Kurtz moved to dismiss. The agency did not rule on the motion. Kurtz had the right to appeal Department’s failure to rule on the motion to dismiss directly to the circuit court. The circuit court would then have the matter brought directly to its attention and not inferentially as happened in this case. Such notice of appeal would be the approved procedure since the statute so provides. Even though no notice of appeal brought the matter directly to the circuit court’s attention, at the circuit court level, the better procedure would have been for Kurtz to present an order to the court requesting dismissal from the case. Assuming an adverse ruling by the circuit court, the notice of appeal from the denial would bring the matter squarely before us. All parties could then have directly addressed the issue.

[¶ 29.] Kurtz asserts that since Kassube has not brought a claim against it, it should not be subject to the jurisdiction of Department because SDCL 62-7-12 involves disputes between employers and injured employees only. Kurtz relies on Medley v. Salvation Army, Rapid City Corps, 267 N.W.2d 201 (S.D.1978) to show that Department does not have jurisdiction in this matter. In Medley, there was no dispute of liability to the claimant under the workers’ compensation laws. Rather the sole dispute was between two insurers on whether one insurer was solely liable or if the two insurers were equally liable. Medley, 267 N.W.2d at 202. The court ruled that Department was without jurisdiction to hear and determine the petition filed by the insurer. Id. at 203.

The general rule appears to be that, when it is ancillary to the determination of the employee’s right, the compensation commission has authority to pass upon a question relating to the insurance policy,.... This is, of course, in harmony -with the conception of compensation insurance as being something more than an independent contractual matter between insurer and insured. On the other hand, when the rights of the employee in a pending claim are not at stake, many commissions disavow jurisdiction and send the parties to the courts for relief This may occur when the question is purely one between two insurers, one of whom alleges that it has been made to pay an undue share of an award to a claimant, and the award itself is not being under attack.

Id. at 203 (quoting 4 Larson, Workmen’s Compensation Law § 92.40). See also Kermmoade, 2000 SD 81 at ¶ 25, 612 N.W.2d at 591; Truck Ins. Exchange v. Kubal, 1997 SD 37, ¶ 12, 561 N.W.2d 674, 676.

[¶ 30.] This case is distinguished from Medley and other cases where we have applied the general rule. Here, there is a substantial dispute regarding Kassube’s right to disability and medical benefits, and therefore, Kassube’s rights are at stake. This is not a dispute purely between insurers like it was in Medley, Truck Ins. Exch and Kermmoade.

[¶ 31.] GILBERTSON, Chief Justice, and ZINTER and MEIERHENRY, Justices, and MILLER, Retired Justice, concur.

[¶ 32.] SRSTKA, Circuit Judge, writing for the majority on Issue Two.

ISSUE TWO

[¶ 33.] Is Kassube totally disabled under the odd-lot doctrine?

[¶ 34.] “Whether a claimant is entitled to odd-lot disability benefits is a question of fact subject to review under the clearly erroneous standard.” Enger v. FMC, 1997 SD 70, ¶ 22, 565 N.W.2d 79, 85. SDCL 62-4-53 describes the criteria for obtaining permanent total disability benefits under the odd lot doctrine:

An employee is permanently totally disabled if the employee’s physical condition, in combination with the employee’s age, training and experience and the type of work available in the employee’s community, cause the employee to be unable to secure anything more than sporadic employment resulting in an insubstantial income.

SDCL 62-4-53. See also McClaflin v. John Morrell & Co., 2001 SD 86, ¶ 7, 631 N.W.2d 180, 183; Enger, 1997 SD 70, ¶21, 565 N.W.2d at 85. This Court has previously recognized two avenues to make the required prima facie showing for inclusion in the odd-lot category. Petersen v. Hinky Dinky, 515 N.W.2d 226, 231 (S.D.1994). “First, if the claimant is ‘obviously unemployable,’ then the burden of production shifts to the employer to show that some suitable employment is actually available in claimant’s community for persons with claimant’s limitations.” Id. (citations omitted)(emphasis in original). Obvious unemployability may be shown by:

(1) showing that “his physical condition, coupled with his education, training and age make it obvious that he is in the odd-lot total disability category,” or (2) persuading the trier of fact that he is in fact in the kind of continuous, severe and debilitating pain which he claims. Id. (citation omitted). Second, “if ‘the claimant’s medical impairment is so limited or specialized in nature that he is not obviously unemployable or relegated to the odd-lot category’ then the burden remains with the claimant to demonstrate the unavailability of suitable employment by showing that he has unsuccessfully made ‘reasonable efforts’ to find work.”

Id. at 232 (quoting Shepherd v. Moorman Mfg., 467 N.W.2d 916, 919 (S.D.1991)) (emphasis added). Under this test, if the claimant is “obviously unemployable,” he will not bear the burden of proving “that he made reasonable efforts to find employment in the competitive market.” Id. Likewise, it is only when the claimant produces substantial evidence that he is not employable in the competitive market that the burden shifts to the employer. Id.

[¶ 35.] We look to the facts of the case to determine if there is sufficient evidence to support Department’s findings that Kassube has a permanent total disability under the odd-lot doctrine. The suffering of continuous, severe and debilitating pain is sufficient in itself to establish that a claimant is obviously unemployable when pain is the basis of a claim for inclusion in the odd-lot doctrine. Petersen, 515 N.W.2d at 232.

[¶ 36.] At the time of the first hearing, Kassube was forty-two years old. He completed the tenth grade and obtained his GED in 1999. His entire working career involved heavy labor in the construction industry. Kassube testified that his pain flares up on a regular basis, approximately three times per week. On those days he is totally unable to function because he has to spend approximately eight to nine hours lying down. He has severe headaches accompanied by nausea, vomiting and blurry vision. He has low back pain that can occur suddenly and force him to spend hours in bed. He requires prescription and non-prescription pain medication and also uses ice packs and a TENS unit to attempt to control his pain. Physical activity aggravates and increases the back pain. Kassube took an examination for his GED in January 1999. This is approximately a five hour test. Because he could not tolerate the length of the exam in one sitting he was required to return the next day to complete the exam. He and his wife both testified that he is no longer able to participate in activities with his children, household chores and recreational activities. Kassube’s wife testified that approximately once a month her husband has to spend three or four days in bed in a dark room. She further testified that her husband is like an eighty-year-old man who hardly moves, is “crimped up, all the time,” stiff, and shuffles as he walks with “tremendous difficulty.”

[¶ 37.] Dr. Lawlor, one of Kassube’s treating physicians, testified that Kassube was incapable of working as a result of the low back injury and neck injury. William Peniston, a vocational expert, completed an evaluation and concluded in his report that Kassube is unable to return to any of the occupations that he has held in the past. Furthermore, Peniston stated that because of Kassube’s constant and severe debilitating pain he does not have sufficient transferable work skills to allow him to be employed in alternative occupations. Pe-niston concluded that Kassube is obviously unemployable because of his physical limitations as a result of his chronic debilitating pain. The employers/insurers offered the testimony of James Carroll, a vocational rehabilitation specialist, who had been asked to evaluate Kassube’s ability to work based on his low back disability only. Carroll did not conduct a labor market search. The employers/insurers offered no other evidence of the availability of work for Kassube thus failing to meet their burden of showing that some suitable employment is actually available in Kassube’s community for persons with his limitations.

[¶ 38.] Although the employers/insurers presented depositions, affidavits and written reports from other physicians stating that Kassube is able to work in a light duty or sedentary job, Department, as the trier of fact, was able to observe and evaluate live testimony from Kassube, Kassube’s wife and two vocational rehabilitation specialists. Department found Kassube to be a credible witness. Kas-sube persuaded Department that he is experiencing continuous, severe and debilitating pain. He made a prima facie showing that he is in the odd-lot category. See generally Shepherd, 467 N.W.2d at 919. Furthermore, his physical condition as a result of his severe debilitating pain combined with this age, training and experience make him obviously unemployable. We affirm Department’s decision that Kassube has a permanent total disability under the odd-lot doctrine.

[¶ 39.] GILBERTSON, Chief Justice, and ZINTER and MEIERHENRY, Justices, and MILLER-, Retired Justice, concur.

[¶ 40.] MEIERHENRY, Justice, writing for the majority on Issue Three.

ISSUE THREE

[¶ 41.] Which theory applies for the assigning of the liability for payments of the total disability benefits — the apportionment statute or the last injurious exposure rule?

[f 42.] Department applied the apportionment statute found at SDCL 62-4-29 and determined that Estes Brothers should be responsible for two-thirds of Kassube’s permanent total disability benefits and Triple R for one-third. SDCL 62-4-29 provides:

As to an employee who before the accident for which he claims compensation was disabled and drawing compensation under the terms of this title, the compensation for each subsequent injury shall be apportioned according to the proportion of incapacity and disability caused by the respective injuries which he may have suffered.

Estes Brothers contends that because Kassube was not receiving compensation at the time of his subsequent injury with Triple R, the apportionment statute is inapplicable and, therefore, the last injurious exposure rule should govern the matter. We find merit in this contention.

[¶ 43.] This Court has previously adopted the last injurious exposure rule. “Under that rule, [w]hen a disability develops gradually, or when it comes as the result of a succession of accidents, the insurance carrier covering the risk at the time of the most recent injury or exposure bearing a causal relation to the disability is usually liable for the entire compensation.” Enger, 1997 SD 70 at ¶ 12, 565 N.W.2d at 83. In 1999 that rule was codified at SDCL 62-1-18. The statute provides:

If an employee who has previously sustained an injury, or suffers from a preexisting condition, receives a subsequent compensable injury, the current employer shall pay all medical and hospital expenses and compensation provided by this title.

The statute requires that there be a subsequent “compensable” injury in order for liability for expenses and compensation to transfer to a subsequent employer. Whether a subsequent injury is compensa-ble is determined by SDCL 62-l-l(7). We have interpreted the last injurious exposure rule to exclude a mere “recurrence” of a previous injury but to include an “aggravation” of a previous injury. See Titus v. Sioux Valley Hosp., 2003 SD 22, ¶ 13, 658 N.W.2d 388, 390-91.

[¶ 44.] Our prior cases considering an aggravation, however, did not involve a situation where the injured employee had already been drawing disability compensation at the time of the subsequent injury. See generally Titus, 2003 SD 22 at ¶¶ 2-8, 658 N.W.2d at 389-390; Paulson v. Black Hills Packing Co., 1996 SD 118, ¶¶2-5, 554 N.W.2d 194, 195. Therefore, we have never considered and applied the apportionment statute in a subsequent injury case. In fact, a review of our past cases reveals only one successive injury case where the apportionment statute has been made an issue. See Truck Ins. Exchange, 1997 SD 37, 561 N.W.2d 674. In that case, the employee’s injury was found to be a single continuing injury without any “subsequent” injury having ever occurred. This Court then rejected apportionment because a “continuing” injury to the employee’s hands did not qualify as a “subsequent” injury under the apportionment statute. Id. at ¶ 16, 561 N.W.2d at 677 (quotations and citation omitted). We also noted that according to the plain language of the apportionment statute, it. applies only in cases where the employee is ‘‘drawing compensation before the subsequent injury.” Id.

[¶ 45.] As acknowledged in Truck Ins. Exchange, SDCL 62-4-29 provides specific criteria for when apportionment in subsequent injury cases should occur. It requires that the injured employee must be disabled and drawing benefits before the subsequent accident in order for apportionment to apply. We interpret the statute to mean that an employee must be drawing disability benefits before the subsequent injury occurs. This interpretation is natural, and supports the logical purpose of the statute’s express prerequisites to apportionment. By requiring the worker to be drawing disability benefits prior to the subsequent injury, the prior percentage of disability will have been determined. Because the prior percentage of disability has already been determined, apportioning liability is a relatively simple task and would not require further litigation over the issue. Any increase to the prior disability is apportioned to the subsequent employer.

[¶ 46.] Therefore, based on the language of the apportionment statute itself, in addition to our prior treatment of subsequent injury cases, we hold that apportionment only applies in situations where there is a subsequent injury, as opposed to .a continuing or recurring injury, and the subsequent injury must have occurred while disability benefits were being drawn. In effect, the apportionment statute is an exception to the last injurious exposure rule that is codified at SDCL 62-1-18, and apportionment should only apply if the injured employee was already drawing disability benefits at the time of the subsequent accident.

[¶ 47.] In the present case, Kassube incurred two separate and distinct injuries, each occurring while Kassube was working for different employers with different insurers. In order to determine if apportionment should occur under the circumstances of this subsequent injury, we must determine whether the requirements of SDCL 62-4-29 have been met. The determinative question in this case thus becomes: Was Kassube disabled and drawing compensation before the last accident; i.e. was he drawing disability benefits? A review of the record reveals the answer is no.

[¶ 48.] Kassube had never been deemed disabled at any time prior to the final accident. Likewise, he had never drawn disability compensation at any time prior to the date of the last accident. At the proceedings which occurred after the last accident, Kassube was awarded back medical expenses, but was not awarded disability compensation for any periods prior to the last accident. Thus, Kassube was riot actually drawing benefits or adjudicated disabled at the time of the last accident. Further, he has never been adjudicated disabled or awarded disability benefits for any periods prior to the last accident. Although Kassube had filed a petition for hearing to receive payments and benefits for disability from Estes Brothers before the final accident, he was never awarded any disability compensation for any time prior to that final injury.

[¶ 49.] For this same reason, the Iowa case cited to by Triple R is distinguishable. See Excel Corp. v. Smithart, 654 N.W.2d 891 (Iowa 2002). In that case, it was determined that the employee was entitled to disability benefits for the period of time after the first injury but before the second injury. Id. at 895. The court found that even though this determination was made after the second injury had occurred, and thus the employee was not technically drawing benefits at the time of the second injury, the benefits would be applied retroactively; therefore, the court would apply the apportionment statute in the same retroactive manner. Id. at 899. There was not a similar application or award of disability benefits in this case. Since there was no disability compensation awarded retroactively to the time prior to the final injury, the retroactivity principle espoused in Excel is inapplicable.

[¶ 50.] Because Kassube was not disabled and drawing compensation at the time of his final injury, the last injurious exposure rule codified in SDCL 62-1-18 should have been applied in this case. Apportionment is only appropriate where the employee is drawing disability compensation before the time of the subsequent injury. Thus, Department’s application of apportionment was an error of law. In this case, Department should have applied the last injurious exposure rule. Department, however, did not even consider the last injurious exposure rule. Therefore, we cannot construe its findings so as to determine how that rule applies under the facts of this case. We reverse the trial court on this issue and remand for an application of the last injurious exposure rule.

[¶ 51.] GILBERTSON, Chief Justice, and ZINTER, Justice, and MILLER, Retired Justice, concur.

[¶ 52.] SRSTKA, Circuit Judge dissenting on Issue Three, infra at ¶ 63.

[¶ 53.] MEIERHENRY, Justice, writing for the majority on Issue Pour.

ISSUE FOUR

[¶ 54.] Is Estes Brothers liable for all treatment provided to Kassube for his upper back, neck and shoulder?

[¶ 55.] Estes Brothers contends that it should not be responsible for unpaid medical expenses because Kassube failed to meet his burden of proving that the expenses arose out of his course of employment with Estes Brothers. In addition, Estes Brothers contends that the later injury sustained at Kurtz Construction in July 1993 independently contributed to the need for treatment thereafter. However, there are no work records showing that Kassube sustained a shoulder injury during his employment at Kurtz Construction. Instead, the majority of the medical records and depositions of treating physicians indicate that his neck and shoulder problems resulted from the injuries he sustained while working for Estes Brothers in 1990. We review such documentary evidence de novo. Haynes v. Ford, 2004 SD 99, ¶ 14, 686 N.W.2d 657, 661.

[¶ 56.] Kassube sought treatment from Dr. Gruba after the 1990 Estes Brothers injury. Dr. Gruba treated claimant on an ongoing basis, primarily for cervical and thoracic treatments. Dr. Gruba’s records reveal at least two complaints concerning Kassube’s neck during the course of these treatments. Then in January 1995 Dr. Gruba’s records reflect that Kassube had a significant amount of left shoulder pain that could have been associated with a disc. Dr. Caughfield’s April 1995 records reflect that Kassube had a long standing history of neck problems. Throughout that year and into 1996 Kassube continued to treat with Dr. Caughfield for neck pain and headaches. Dr. Finley’s notes similarly reflect that in March 1995 Kassube complained of neck pain radiating to the left upper extremity and shoulder.

[¶ 57.] Kassube underwent a C5-C6 cervical compression and arthrodesis in March 1996 for cervical disc disease. He then underwent a suprascapular nerve decompression and subacrominal decompression of the left shoulder in September 1996 by Dr. Fromm. There is no mention of causation in Dr. Fromm’s records except for a cryptic note stating “these injuries could easily have been caused by his originally [sic] working condition.” Dr. Law-lor’s consultation report of October 1999 reflects that Kassube sustained a work-related injury in 1990 when he slipped and landed on his left shoulder, suffering an injury to his left shoulder and neck. It further provides that after the neck surgery Kassube had continued pain in his neck that radiated into his shoulder.

[¶ 58.] Dr. Bert examined Kassube for an independent medical examination in June 1996. As a result of that examination, he gave an opinion that the injury Kassube suffered while employed at Estes Brothers is the injury that caused his shoulder pain. There is sufficient evidence in the record to support Department’s findings that Estes Brothers is responsible for upper back, neck and shoulder treatments after 1990.

[¶ 59.] A subsequent compensable injury, however, would limit that liability. The law as stated in SDCL 62-1-18 shifts the risk and responsibility of payment to the employer responsible for the subsequent compensable injury. The plain meaning of the statute requires that “the current employer shall pay all medical and hospital expenses and compensation provided.by this title” in cases where “an employee who has previously sustained an injury, or suffers from a preexisting condition, receives a subsequent compensable injury.” SDCL 62-1-18 (emphasis added). Department, however, did not apply this rule. See supra Issue Three. Therefore, we remand for a determination of liability under the last injurious exposure rule.

CONCLUSION

[¶ 60.] Consequently, we remand this case to the circuit court for the application of, and determination of, liability under the last injurious exposure rule.

[¶ 61.] GILBERTSON, Chief Justice, and ZINTER, Justice, and MILLER, Retired Justice, concur.

[¶ 62.] SRSTKA, Circuit Judge, dissents.

SRSTKA, Circuit Judge,

dissenting on Issue Three and Four.

[¶ 63.] I must dissent to the majority’s decision on Issue Three and Four. The issue here is which of two statutes applies. The majority uses the last injurious exposure rule found in SDCL 62-1-18 and Department applied the apportionment statute found in SDCL 62-4-29. I think that the rationale for using the apportionment statute is well founded in fact and law and should determine these issues.

[¶ 64.] SDCL 62-4-29 states:

As to an employee who before the accident for which he claims compensation was disabled and drawing compensation under the terms of this title, the compensation for each subsequent injury shall be apportioned according to the proportion of incapacity and disability caused by the respective injuries which he may have suffered.

[¶ 65.] The key to the majority’s decision is its assertion that Kassube fails to meet the two prong test of the apportionment statute in that he was not disabled and drawing compensation; therefore, the apportionment statute does not apply and the entire case must be sent back for a further adjudication. Let us examine the foundation of that assertion.

[¶ 66.] The workers’ compensation statutes do not define the term “disabled” alone but do define temporary disability and total disability. Total or partial temporary disability is defined as “the time beginning on the date of injury, subject to the limitations set forth in 62-4-2, and continuing until the employee attains complete recovery or until a specific loss becomes ascertainable, whichever comes first.” SDCL 62-1-1(8). An “ascertainable loss ... becomes ascertainable when it becomes apparent that permanent disability and the extent thereof has resulted from an injury and that the injured area will get no better or no worse because of the injury[.]” SDCL 62-1-1(2). Permanent total disability, as described in SDCL 62-4-53, is discussed in Issue Two, supra. We agreed with Department’s determination that Kassube met the criteria for permanent total disability. However, that determination was not made until after this proceeding commenced. Kassube filed his petition for hearing on March 2, 1998 and that was prior to the injuries sustained while employed at Triple R.

[¶ 67.] Dr. Bert gave his opinion that Kassube had a ten percent permanent partial disability in 1996. Dr. Wayne Anderson conducted an independent medical evaluation in February 2000 and also noted that Kassube had an impairment of his neck consistent with Dr. Bert’s opinion. There is sufficient evidence in the record to show that Kassube was disabled to some extent prior to the time of the September 1998 injury. The first prong of the test is met because Kassube was disabled.

[¶ 68.] Let us examine the compensation prong of the test. The workers’ compensation statutes do not define the term “compensation” alone but they do describe the computation for benefits based on the extent of disability. See, e.g., SDCL 62-4-2 (describing the waiting period for temporary disability benefits); SDCL 62-4-3 (describing amount of temporary total disability compensation); SDCL 62-4-5 (describing compensation for partial disability); SDCL 62^1-7 (describing compensation for permanent total disability). Also in the chapter for compensation of injury or death related to workers’ compensation is a provision for necessary medical and hospital expenses to be borne by the employer. See SDCL 62-4-1.

[¶ 69.] Compensation of work related injuries is also discussed in the chapter entitled “Workers’ Compensation Insurance.” See SDCL ch 58-20. Am employer may have liability for indemnity compensation or medical losses which includes “payment made to or on behalf of the injured worker for medical costs, loss of wages or injuries resulting in ... [a disability] as defined in §§ 62-1-1, 62-4-1, and 62-4-6.” See SDCL 58-20-22 and 58-20-23. Construing the statutes of SDCL ch 58-20 and ch 62-4, we find that an injured worker is receiving compensation when medical expenses are being paid by an employer for the - benefit of the injured worker. We must conclude that Kassube was drawing compensation for his ongoing medical treatments at the time of his September 1998 injury, and the second prong of the test is met.

[¶ 70.] The majority distinguishes Iowa precedent that is clearly on point. The Iowa Supreme Court considered a statute similar to SDCL 62-4-29. See generally Excel, 654 N.W.2d at 899. The employee in that case had filed a claim in 1997 for a 1995 injury and then filed a claim in 1999 for a 1997 injury. A consolidated hearing was held, and therefore the determination of compensation on the first injury had not been made at the time a claim was made for the later injury. Id. at 894-95. Even though the employee was not receiving compensation at the time of the second injury, the court recognized that “compensation awards are made retroactive to the date of injury and we apply the statute in the same manner.” Id. at 899. The Iowa Supreme Court has stated that “the statute applies even though the employee is not receiving but is entitled to receive such benefits at the time of the secondary injury ... because benefits are retroactive to the date they are due.” Mycogen Seeds v. Sands, 686 N.W.2d 457, 466 (Iowa 2004) (citing Excel, 654 N.W.2d at 899).

[¶ 71.] The majority’s reliance is also misplaced on the precedent that it follows. After reviewing the cases in which the last injurious exposure rule has been applied, I observe that those cases have involved recurrent injuries or an aggravation of a preexisting injury or condition. This rule has not been applied where there are injuries to two distinct body parts such as in this case. In addition, the apportionment of compensation is a factor generally making the statute somewhat difficult to apply. In this case, however, there is evidence of a ten percent whole person impairment rating for the neck and five percent for the back injury. I agree with Department that the last injurious rule easily applies to successive injuries to the same area of the body but, in this case, where there are two separate and distinct conditions, apportionment is the proper application of the law. In order for injuries to be apportioned, “an impairment must have been independently producing some degree of disability before the accident, and must be continuing to operate as a source of disability after the accident.” 5 Larson’s Workers’ Compensation Law § 90.04[3] (2000). Here there is clearly a neck injury that existed prior to the back injury producing some degree of disability before the accident and continuing to operate as a source of disability after the accident.

[¶ 72.] Evidently a problem is that we find a paucity of authority for the use of the apportionment statute in South Dakota, even though it was enacted in 1917. Regardless I am convinced that its use in this case based on the facts as developed in these proceedings is correct. We must give effect to legislative enactments to the fullest extent possible, and the content of the workers’ compensation statutes lies within the province of the legislature.

[¶ 73.] Additionally on this matter, the record clearly shows that the facts determine which statute should apply. The administrative agency has determined that the apportionment statute applies. This Court has often ruled that it must not substitute its judgment for that of the fact-finder unless clearly erroneous. Mettler v. Sibco, Inc., 2001 SD 64, ¶ 7, 628 N.W.2d 722, 723; Lends His Horse v. Myrl & Roy’s Paving, 2000 SD 146, ¶ 9, 619 N.W.2d 516, 519; Johnson v. Albertson’s, 2000 SD 47, ¶ 22, 610 N.W.2d 449, 453; Abild v. Gateway 2000, Inc., 1996 SD 50, ¶ 11, 547 N.W.2d 556, 559. The majority fails to show where the agency was clearly erroneous. The majority desires to use the last injurious exposure rule and substitutes its judgment and interpretation of the facts over the fact finder.

[¶ 74.] Finally, the result of this decision is to remand the case back for further adjudication. The great volume of this record is due for further augmentation, and no end is in sight. Workers’ compensation cases are becoming endurance contests. Incrementally the rules of the game constantly change. The last injurious exposure rule, for instance, is a court made rule; however, the legislature enacted it into law and now we face it here. Where is the speedy determination of an injured worker’s claims that was the great impetus for the adoption of the workers’ compensation scheme? It is lost in the smoke of the modern legal battlefields fought over by the competing insurance companies. To affirm the circuit court would end the battle.

[¶ 75.] I would affirm the circuit court in all respects. The undecided matter of Kurtz in Issue One should be dismissed as moot.

[¶ 76.] SRSTKA, Circuit Judge, for SABERS, Justice, disqualified.

[¶ 77.] MILLER, Retired Justice, for KONENKAMP, Justice, disqualified.

      . C5-C6 decompression with arthrodesis involves removal of disk or disks in the cervical spine to relieve pressure on the spinal nerves with a spinal fusion to fuse adjacent vertebrae.

      . A subacromial decompression was a surgical procedure for impingement syndrome or rotator cuff tears to increase the size of suba-cromial area in the shoulder and decrease pressure on the muscle.

      . This was a dispute between Aetna Life & Casualty Company and Western Insurance Company as to who is to reimburse the widow of G. William Medley. No question was raised by the widow of the employee, who had been receiving the full amount of her entitlement, and no question is raised by the employer, Salvation Army. The employer did not dispute its liability to the claimant under the workers’ compensation laws. The dispute was between the two insurers. Medley, 267 N.W.2d at 202.

      . One insurer had previously paid undisputed benefits and that insurer was only seeking contribution or reimbursement from another employer. This Court noted:
      that the pleadings failed to "indicate that Employer or any insurer disputed [claimant’s] entitlement to benefits.” Furthermore, there was no allegation that [claimant] received inadequate benefits. In fact, Department determined that the sole issue to address concerned the dispute between the insurers as to payment of the benefits. Truck Ins. Exch., 1997 SD 37 at ¶ 11, 561
      N.W.2d at 676.

      .The first employer voluntarily entered into an agreement to pay workers' compensation and later brought a claim against another insurer for contribution or indemnity. This Court noted that:
      by voluntarily entering into the 1989 Agreement [to pay the benefits,] [the first employer and insurer] undertook that responsibility to [Kermmoade]. Resolution of any remaining dispute between those two insurers is not properly within the jurisdiction of the Department of Labor.

        Kermmoade, 2000 SD 81 at ¶ 22, 612 N.W.2d at 590.

      . TENS unit is a transcutaneous electrical nerve stimulator used to decrease pain by delivering small electrical pulses to the body through electrodes placed on the skin.

      . (7) "Injury” or "personal injury,” only injury arising out of and in the course of the employment, and does not include a disease in any form except as it results from the injury. An injury is compensable only if it is established by medical evidence, subject to the following conditions:
      (a) No injury is compensable unless the employment or employment related activities are a major contributing cause of the condition complained of; or
      (b) If the injury combines with a preexisting disease or condition to cause or prolong disability, impairment, or need for treatment, the condition complained of is com-pensable if the employment or employment related injury is and remains a major contributing cause of the disability, impairment, or need for treatment;
      (c)If the injury combines with a preexisting work related compensable injury, disability, or impairment, the subsequent injury is compensable if the subsequent employment or subsequent employment related activities contributed independently to the disability, impairment, or need for treatment.
      The term does not include a mental injury arising from emotional, mental, or nonphysical stress or stimuli. A mental injury is com-pensable only if a compensable physical injury is and remains a major contributing cause of the mental injury, as shown by clear and convincing evidence. A mental injury is any psychological, psychiatric, or emotional condition for which compensation is sought;

      . One of Dr. Gruba’s medical records has a notation saying that Kassube had fallen at Kurtz and hurt his shoulder.

      . The liability for the medical expenses associated with this surgery is among the disputed liabilities.

      . There is no indication of the original working condition to which Dr. Fromm was referring.

      . Department found Kassube to be permanently and totally disabled from and after the November 2, 1998 back injury.