Bader v. Wells Fargo Home Mortgage Inc.

• Decision Date: 29 March 2011
• Docket Number: Nos. 09 Civ. 9410(RJH),10 Civ. 2717(RJH).,s. 09 Civ. 9410(RJH)
• Parties: Neil BADER, Plaintiff,v.WELLS FARGO HOME MORTGAGE INC., a wholly owned division of Wells Fargo Bank, N.A., Defendants.Jason Auerbach, Plaintiff,v.Wells Fargo Home Mortgage Inc., a wholly owned division of Wells Fargo Bank, N.A., Defendants.
• Court: U.S. District Court — Southern District of New York

773 F.Supp.2d 397

Neil BADER, Plaintiff,

v.WELLS FARGO HOME MORTGAGE INC., a wholly owned division of Wells Fargo Bank, N.A., Defendants.Jason Auerbach, Plaintiff,

v.Wells Fargo Home Mortgage Inc., a wholly owned division of Wells Fargo Bank, N.A., Defendants.

Nos. 09 Civ. 9410(RJH)

10 Civ. 2717(RJH).

United States District Court, S.D. New York.

March 29, 2011.

Cindy Schmitt Minniti, Michael Nicholas Dicanio, Steven Cooper, Reed Smith, New York, NY, for Defendants.

MEMORANDUM OPINION AND ORDER

RICHARD J. HOLWELL, District Judge:

Plaintiffs Neil Bader (“Bader”) and Jason Auerbach (“Auerbach”) allege that their former employer, defendant Wells Fargo Home Mortgage Inc. (“Wells Fargo”), has wrongfully withheld various forms of bonus compensation in breach of employment agreements. Both Bader and Auerbach also assert a series of claims sounding in quasi-contract as well as a claim under the New York Labor Law. Wells Fargo has moved for judgment on the pleadings with respect to Bader's complaint and has moved to dismiss substantial portions of Auerbach's complaint. For the reasons set forth below, the Court grants in part and denies in part both Wells Fargo's motion for judgment on the pleadings as to Bader's complaint and Wells Fargo's motion to dismiss Auerbach's complaint.

BACKGROUND

A. Bader

Bader joined Wells Fargo on August 1, 2003 as a branch manager. (Bader Compl. ¶ 22.) In 2004, Bader was promoted to Area Manager. ( Id. ¶ 26.) Bader appears to have been a very successful Area Manager. In 2006, Bader qualified for Wells Fargo's “Leader's Club, in recognition of his high level of success as an Area Manager at Wells Fargo” and was asked to attend the event in 2007 “in recognition of his significant contributions to his team and Wells Fargo” despite the fact that he did not formally qualify to attend. ( Id. ¶¶ 31–32.) Indeed, in 2007, at the direction of his regional manager, Bader turned the Brooklyn Wells Fargo branch—“a weak territory”—into one of the eleven most profitable Wells Fargo branches in America. ( Id. ¶¶ 27–29.) This made Bader the top-ranked Area Manager in the United States. ( Id. ¶ 30.)

Bader continued this performance in 2008. In that year, three branches in Bader's area were among the top eleven branches nationwide. ( Id. ¶ 36.) Not surprisingly, Bader's managers reported that Bader's performance was “terrific” and that he was doing a “[g]reat [j]ob” and identified Bader as one of the top thirteen Area Managers at Wells Fargo. ( Id. ¶¶ 37–40.)

As an Area Manager, Bader was eligible to receive various forms of incentive compensation. Of relevance here, from 2003 through 2008, Bader was eligible to receive and did receive three kinds of incentive compensation based on (1) the Net Operating Income of Wells Fargo's New York Metropolitan territory (the “NOI Bonus”); (2) the monthly volume of loans funded by employees reporting directly and indirectly to Bader (the “Volume Overrides”); and (3) a combination of the two (“the Volume Override True–Up”). ( Id. ¶¶ 41–42.) Subject to specific, standardized conditions, Bader was also eligible to receive each of these forms of incentive compensation in 2009 under the “Wells Fargo Home Mortgage 2009 Incentive Compensation Plan for Area Home Manager” (the “2009 Area Manager Plan”), which was effective January 1, 2009. ( See Aff. of Steven Cooper in Supp. of Def.'s Mot. for J. on the Pleadings (“Cooper Bader Aff.”) Ex. B.) That plan provided that it was “subject to change at any time during the Plan Year at [Wells Fargo's] sole discretion.” ( Id. at 1.)

Under the 2009 Area Manager Plan, Area Managers could earn an NOI Bonus equal to a percentage of the Net Operating Income (“NOI”) earned by branches under their management. ( See id. at 4.) The greater their branches' NOI, the greater the percentage Area Managers could earn. ( See id.). However, an Area Manager “must [have] be[en] employed by [Wells Fargo Home Mortgage] or an affiliate on December 31, 2009 to be considered for an Annual Net Income Bonus....” ( Id.)

Area Managers could also earn monthly Volume Overrides equal to a percentage of the loan volume funded in a given month by employees of branches in their area. ( Id. at 2.) The more employees under the Area Manager's management and the greater the year-to-date NOI earned from the branches under the Area Manager's management, the greater the percentage Area Managers could earn. ( Id. at 2.) Area Managers whose branches earned year-to-date NOI per loan less than $1,325 per loan were eligible for Volume Overrides at Column A rates; Area Managers whose branches earned year-to-date NOI per loan equal to or greater than $1,325 per loan were eligible for Volume Overrides at Column B rates. ( See id.) The 2009 Area Manager Plan specifically addressed how Volume Overrides would be paid in the event that an Area Manager was terminated: “Payment of the standard monthly volume override ... shall be based upon eligible loans that fund on or before the date of the Employee's termination. [An Area Manager] shall not receive any volume override on loans that fund after the Employee's date of termination.” ( Id. at 7.)

Finally, Area Managers could benefit from a “Volume Override True–Up” if, at the end of the year, their branches' year-to-date NOI was equal to or exceeded the $1,325 per loan threshold. In that case, any Area Managers who had earned Volume Overrides at Column A rates could earn the difference between those rates and Column B rates. ( See id. at 2.) However, if, at the end of the year, the branches' year-to-date NOI was less than $1,325, Area Managers who had earned Volume Overrides at Column B rates owed Wells Fargo the difference between those rates and Column A rates. ( See id. at 3.) In any event, under the 2009 Area Manager Plan, an Area Manager “must [have] be[en] employed by [Wells Fargo] or an affiliate on December 31 to be considered for the [Volume Override True–Up].” ( Id. at 2.)

On June 21, 2009, Wells Fargo amended the 2009 Area Manager Plan. ( See Aff. of Steven Cooper in Further Supp. of Mot. for J. on the Pleadings (“Cooper Supp. Aff.”) Ex. A.) The amendment, inter alia, increased the per loan year-to-date NOI threshold separating Column A rates from Column B rates, adjusted calculations for NOI Bonuses, reduced the compensation levels for NOI Bonuses and Overrides on profits and volume over certain levels, and recalculated some loan payments and profits. ( See id. at 2.)

On July 24, 2009, Wells Fargo terminated Bader for reasons that remain unclear.¹ (Bader Compl. ¶ 77.) Prior to that time, branches under Bader's management had generated $10,934,333 in NOI—$7,934,333 from January 1 through June 30 and $3 million from July 1 through July 23. ( Id. ¶¶ 52–53.) Bader alleges that he is entitled to an NOI Bonus equal to six percent of that NOI, less a “draw” of $48,000 he had made in April 2009, or roughly $608,060. ( Id. ¶ 54.) In addition, Bader alleges that he is entitled to an NOI Bonus equal to six percent of approximately $5 million in mortgages in the “pipeline” at the time of his termination, or roughly $300,000. ( Id. ¶ 54.) Thus Bader alleges that he is entitled to an NOI Bonus of $908,060. ( Id. ¶ 55.) Bader has not been paid any of that sum.

From January 1 to July 23, 2009, branches under Bader's management generated over $1 billion in volume, $328,188,000 of it in June. ( Id. ¶¶ 56–57.) Bader alleges that he is entitled to a Volume Override equal to two basis points, or .002%, of the June volume, or $65,637.60 but was only paid $32,818.80 due to “Wells Fargo's administrative serial failures, [and] significant and unprecedented delays in processing loans, causing them to close after Wells Fargo's unilateral change in Bader's compensation in June 2009.” ( Id. ¶ 58.) From July 1 through July 23, 2009, Bader's branches generated $320,370,195.80 in volume. Bader alleges that he was entitled to a Volume Override equal to two basis points of that volume, or $64,074 but was paid only $32,037. ( Id. ¶¶ 59–60.) Bader also alleges that, “as of the date of his termination ... there were loans in Bader's locked loan pipeline to be closed within the year totaling approximately $680 million, entitling Bader to $136,000 in Volume Override Bonus compensation.” ( Id. ¶ 61.) Thus Bader alleges that he is entitled to $200,855 in Volume Overrides—$32,818.80 of an unpaid June Volume Override, $32,037 of an unpaid July Volume Override, and $136,000 of Volume Overrides on loans waiting to be closed at the time of his termination. ( Id. ¶ 62.) Finally, Bader alleges that that he “is entitled to an Override True–Up for January 2009 equaling $21,000.” ( Id. ¶¶ 63–64.) Wells Fargo has not paid Bader any of these sums.

B. Auerbach

Auerbach joined Wells Fargo as a “private mortgage banker” on November 13, 2003. (Auerbach Compl. ¶ 23.) In 2004, Auerbach's managers reported that he had performed “significantly above all key targets” and was “proactive” and a “very valuable asset to the organization.” ( Id. ¶¶ 25–30.) In 2005, Auerbach was promoted to Sales Manager in the New York office and again received very positive reviews. ( Id. ¶ 32.) His managers reported that his skills “exceed [ed] the company average”, that he had “finished the year significantly above the company averages”; and that he had “done an outstanding job” and a “[g]reat [j]ob.” ( Id. ¶¶ 33–38.) Likewise, in 2006 and 2007, Auerbach's managers reported that he “ha[d] done an excellent job growing and managing his team”; that he was “making continuous progress in establishing himself as a respected leader in the office”; that he had become “the ultimate leader”; that he was the only person in the office to have received the highest possible underwriter authority for a mortgage originator; and that he was “one of the best” and “most accomplished underwriters in [the] office.” ( Id. ¶¶ 40–53.) And in 2008, Auerbach's managers reported that Auerbach was “a spiritual...