Admiral Mortgage, Inc. v. Cooper

• Decision Date: 07 February 2000
• Docket Number: No. 41,41
• Citation: 745 A.2d 1026,357 Md. 533
• Parties: ADMIRAL MORTGAGE, INC. v. Calvin COOPER.
• Court: Maryland Court of Appeals

745 A.2d 1026

357 Md. 533

ADMIRAL MORTGAGE, INC. v. Calvin COOPER.

No. 41, Sept. Term, 1999.

Court of Appeals of Maryland.

February 7, 2000.

Reconsideration Denied March 7, 2000.

Michael D. Fraidin, Baltumore, for Petitioner.

Samuel Blibaum (Minda F. Goldberg, on brief), Towson, for Respondent.

Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, RAKER, WILNER, CATHELL and HARRELL, JJ.

WILNER, Judge.

Respondent, Calvin Cooper, filed suit in the Circuit Court for Baltimore County to recover unpaid commissions from his erstwhile employer, Admiral Mortgage, Inc. The action was brought pursuant to Maryland Code, §§ 3-505 and 3-507.1 of the Labor and Employment Article (LE), and, in accordance with the latter section, Cooper sought not only the unpaid commissions but also treble damages, attorneys' fees, and costs. Admiral filed a counterclaim to recover, on an unjust enrichment theory, what it characterized as a gratuitous payment to Cooper of $460.93.

The court entered judgment in favor of Cooper on Admiral's counterclaim. Cooper's complaint was submitted to a jury, which (1) determined that Admiral owed Cooper $9,666.07 in unpaid commissions, (2) found that payment of the commissions was not withheld because of a bona fide dispute, and (3) awarded damages of $28,000 plus $12,709 in attorneys' fees. It is evident that, in finding unpaid commissions in the amount of $9,666.07, the jury credited Admiral with the $460.93 it had paid to Cooper, for the amount found was exactly $460.93 less than the $10,127 in commissions that Cooper's evidence, and Admiral's contingent admission, showed he was owed. The $28,000 amounted to $998 less than the treble damages permissible under the statute.

In an unreported opinion, the Court of Special Appeals affirmed the judgment, and we granted certiorari to consider, principally, whether the trial court erred in allowing the jury to determine the issue of treble damages, attorneys' fees, and costs. Admiral complains that those issues should have been resolved by the judge.¹ Other issues raised in the petition are whether (1) the court erred in allowing Cooper's attorney to testify with respect to the attorneys' fees, (2) there was sufficient evidence of a lack of bona fide dispute to submit the issue of treble damages and attorneys' fees to the jury, and (3) the court erred in vacating a default judgment that Admiral had briefly obtained on its counterclaim. We shall hold that the court erred in submitting the issue of attorneys' fees to the jury, but that none of Admiral's other complaints have merit. We shall therefore direct a remand for the judge to consider and determine the issue of attorneys' fees but otherwise affirm the judgment of the Court of Special Appeals.

BACKGROUND

Cooper worked for Admiral as a "mortgage originator" or "loan officer" from January to August, 1995. His job was to generate and pursue leads on potential mortgage loans. According to Admiral's president, Floyd Rothstein, a loan officer was to obtain a completed application and other necessary documents and then turn the file over to another employee for further processing and closing. If Admiral initially generated a lead that Cooper developed, Cooper was to receive a commission equal to 20% of the fee received by Admiral when the loan was closed. If Cooper generated the lead, his commission was to be 40%.

When Cooper quit his employment in August, 1995, there were pending eleven outstanding loan applications that he had developed but which had not yet closed. Cooper said that he offered to continue to assist Admiral in processing those applications but that Admiral declined his offer. Within a few months after he left, five of the loan applications were approved, including a large loan that closed in September, and Cooper made demand for payment of commissions on those loans. Admiral declined, taking the position that no commissions were due on any loan that had not closed by the time Cooper left.² Admiral eventually conceded that, if Cooper was entitled to commissions at the 20% and 40% rates, he would be entitled to $10,127 on the five loans.

At some point, notwithstanding its position that no commissions were due on the five loans, Admiral direct-deposited into Cooper's bank account $460.93, which it claims was a gift—a gratuitous 10% commission on two of the smaller loans that closed after Cooper departed.³ The $460.93 represented gross commissions of $516 on the two loans, less taxes and employee contributions for social security and medicare that Admiral deducted. In its counterclaim, Admiral sought to recover the entire $516 on the ground that Cooper's retention of that amount was inequitable.⁴

The issues before us arose in slightly different ways during the litigation and are best dealt with discretely.

THE COUNTERCLAIM

Cooper filed his lawsuit in April, 1996. Admiral's counterclaim, seeking recovery of $516, was filed in December, along with an answer to Cooper's complaint.⁵ Cooper initially moved to strike the counterclaim on the ground that it was untimely but later withdrew that motion. He neglected, however, to answer the counterclaim. On April, 1997—four days before trial—Admiral presented to a judge and had signed an order entering a default judgment for $516, based on the lack of an answer. The certificate of service on the motion shows that the motion and proposed order were hand-delivered to counsel for Cooper the same day they were presented to and signed by the judge.

The entry of such a judgment was clear error. Under Maryland Rule 2-613, the required procedure would have been for Admiral to seek and obtain an order of default, followed by notice to Cooper and the right of Cooper, within 30 days, to move to vacate the order. A judgment of default is permitted only if such a motion to vacate is not filed or, if filed, is denied. Cooper immediately moved to strike the default judgment, noting that it was entered without prior notice to Cooper and that trial was already scheduled. Upon consideration of the motion, the court recognized its error and struck the judgment.

At the conclusion of trial, Cooper moved for judgment on the counterclaim, which the court granted. The court noted that there were two reasons posited as to why Admiral paid the $460.93—one, offered by Admiral, was that the payment was a gift, given out of goodness because Cooper was then unemployed and needed the money, and the other, urged by Cooper, was that it constituted part of the commissions owed on two of the loans that closed after Cooper left. The court concluded that, if the money was paid as a gift, as urged by Admiral, Admiral had no right to recover it; it is not inequitable, and therefore not an unjust enrichment, for a donee to retain a gift freely given. If the jury were to conclude, on the other hand, that the money was paid as part of the commission due by Admiral, the jury could deduct it from the balance of the commissions it found due. The court offered to instruct the jury to that effect, but it does not appear that such an instruction was requested, and no objection was lodged to the court's ultimate omission to give it.

Admiral complains about both the striking of the default judgment in its favor and the ultimate entry of judgment against it on the counterclaim. Neither complaint has the slightest merit. The default judgment was properly stricken because it was improperly entered; it would have been error for the court not to have vacated that judgment. For the reasons given by the court, the ultimate judgment entered against Admiral on the counterclaim also was proper. Apart from the fact that Admiral is wrong on the merits of its complaints, the fact is that Admiral has suffered absolutely no harm from the court's actions. As noted, the jury gave full credit to Admiral for whatever it might have been entitled to under the counterclaim. The whole issue is a self-created tempest in a teapot.

BONA FIDE DISPUTE

The statutes on which Cooper sued are part of Maryland's Wage Payment and Collection Law, codified as LE §§ 3-501 through 3-509. Under that law, the term "wage" includes a commission. § 3-501(c)(2). Section 3-505, dealing with the payment of wages on termination of employment, requires an employer to pay all wages due for work that the employee performed before the termination of employment, on or before the day on which the employee would have been paid the wages if the employment had not been terminated. Under that statute, if Cooper was due a commission on the closing of a loan generated or developed by him, the commission should have been paid, at the latest, when the loan was closed.⁶ Section 3-507.1 gives an employee a civil cause of action to recover wages withheld in violation of § 3-505. It provides, in relevant part:

"(a) ... [I]f an employer fails to pay an employee in accordance with ... § 3-505 of this subtitle, after 2 weeks have elapsed from the date on which the employer is required to have paid the wages, the employee may bring an action against the employer to recover the unpaid wages.

(b) If, in an action under subsection (a) of this section, a court finds that an employer withheld the wage of an employee in violation of this subtitle and not as a result of a bona fide dispute, the court may award the employee an amount not exceeding 3 times the wage, and reasonable counsel fees and other costs."

The question of whether Admiral's withholding of the commissions was the result of a bona fide dispute has relevance only as to Cooper's entitlement, under § 3-507.1(b), to additional (up to treble) damages, attorneys' fees, and costs. The right to recover the commissions themselves, provided for in § 3-507.1(a), does not depend on whether they were withheld as the result of a bona fide dispute.

What constitutes a "bona fide dispute," of course, depends on the circumstances. The term itself has been defined in a number of ways. In determining whether...