Barufaldi v. Ocean City, Md. Chamber of Commerce, Inc.

Decision Date29 June 2012
Docket NumberSept. Term, 2011.,No. 270,270
Citation206 Md.App. 282,47 A.3d 1097
PartiesDaniel J. BARUFALDI v. OCEAN CITY, MARYLAND CHAMBER OF COMMERCE, INC. et al.
CourtCourt of Special Appeals of Maryland

OPINION TEXT STARTS HERE

Philip B. Zipin, Silver Spring, MD (Julie Martin–Korb, Rockville, MD, on the brief), for appellant.

Bruce F. Bright (Ayres, Jenkins, Gordy & Almand, PA, on the brief), Ocean City, MD, for appellee.

Panel: MEREDITH, GRAEFF and HOTTEN, JJ.

GRAEFF, J.

This is the second appeal arising from an employment contract dispute between the Ocean City Chamber of Commerce (the “Chamber”), appellee, and Daniel Barufaldi, appellant, the Chamber's former executive director. In April 2008, after a dispute arose regarding the Chamber's payment of his bonus compensation, Mr. Barufaldi filed suit against the Chamber in the Circuit Court for Worcester County. He alleged, among other claims, violations of the Maryland Wage Payment and Collection Law (“WPCL”), Md.Code (2008 Repl.Vol., 2011 Supp.) §§ 3–501 et seq. of the Labor and Employment Article (“L.E.”).1 The jury rendered a verdict in favor of Mr. Barufaldi, finding that the Chamber violated the WPCL.

Mr. Barufaldi then filed a motion for attorneys' fees pursuant to the WPCL's fee-shifting provision. The circuit court denied the motion, and Mr. Barufaldi appealed. In the first appeal, this Court affirmed the jury's verdict on all counts, but we vacated the circuit court's order denying the motion for attorneys' fees and remanded for further proceedings. Barufaldi v. Ocean City Chamber of Commerce, Inc., 196 Md.App. 1, 6–7, 36–37, 7 A.3d 643 (2010) ( “Barufaldi I ”). On remand, the circuit court again denied Mr. Barufaldi's request for attorneys' fees.

In this second appeal, Mr. Barufaldi presents three questions for our review, 2 which we have rephrased and consolidated as follows:

Did the circuit court err when it denied Mr. Barufaldi's request for an award of attorneys' fees and costs?

For the reasons set forth below, we shall reverse the judgment of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

We presented a detailed factual background of this case in Barufaldi I, 196 Md.App. at 8–13, 7 A.3d 643. Accordingly, in this case, we provide only a brief discussion of the facts leading up to the prior appeal, for context, and then we will discuss the circumstances leading to this appeal.

The Chamber, an association of businesses designed “to increase tourism and business opportunities” in Ocean City, hired Mr. Barufaldi in 2005 to be its executive director. Id. at 8, 7 A.3d 643. Mr. Barufaldi's employment contract provided that he would receive a base salary of $52,000 per year and incentive-based compensation that would be calculated, within 60 days, according to a “base line net revenue figure, based upon historical financial documentation, for each quarter.” Id. at 9, 7 A.3d 643. Mr. Barufaldi asserted that the Chamber refused to determine the base line net revenue figure, preventing him from calculating and obtaining his incentive-based compensation. Id. at 10, 7 A.3d 643. After negotiations failed, Mr. Barufaldi eventually tendered his letter of resignation. Id. at 11, 7 A.3d 643.

On April 3, 2008, Mr. Barufaldi filed suit against, among others, the Chamber, alleging breach of contract and violations of the WPCL. Id. at 11–12, 7 A.3d 643. He asserted that the Chamber “wrongfully ... withheld incentive-based compensation due and owing under” his employment contract, and he sought treble damages, costs, and attorneys' fees pursuant to the WPCL. Id. at 12, 7 A.3d 643. After a three-day jury trial, the jury found in favor of Mr. Barufaldi, finding that: (1) the Chamber breached its employment contract with Mr. Barufaldi; (2) Mr. Barufaldi was damaged as a result of the contract breach in the amount of $60,000; (3) the Chamber violated the WPCL; (4) the Chamber's failure to pay wages to Mr. Barufaldi was not the result of a bona fide dispute; and (5) Mr. Barufaldi was not entitled to damages under the WPCL above the $60,000 in contract damages awarded. Id. at 28, 7 A.3d 643. Mr. Barufaldi then filed a motion, pursuant to the WPCL, requesting $160,275.97 in attorneys' fees and costs. Id. at 34, 7 A.3d 643. The circuit court denied the motion. Id.

First Appeal

Both parties appealed to this Court. Id. at 7, 7 A.3d 643. In Barufaldi I, as indicated, this Court affirmed the circuit court's judgment in favor of Mr. Barufaldi, but we vacated the order denying Mr. Barufaldi's request for attorneys' fees. Id. at 36–37, 7 A.3d 643.

With respect to the request for attorneys' fees, Judge Deborah Eyler, writing for this Court, stated that [t]he WPCL is a fee-shifting statute,” which provides that, if an employer withholds wages not as a result of a bona fide dispute, a court may award reasonable attorneys' fees, noting that courts should exercise their discretion liberally in favor of awarding a reasonable fee, unless the circumstances of the particular case indicate some good reason why a fee award is inappropriate in that case.” Id. at 35, 7 A.3d 643 (quoting Friolo v. Frankel, 373 Md. 501, 518, 819 A.2d 354 (2003) ( “Friolo I ”)) (emphasis omitted). We noted that the circuit court gave no explanation regarding its reason for denying the motion for attorneys' fees, and thus, we could not “tell whether the court exercised discretion in making its ruling or, if it did, how it did.” Id. at 36, 7 A.3d 643. We stated: “Given that the jury made the predicate finding of willfulness on the part of the Chamber, and given the remedial purposes of the WPCL, it was incumbent upon the trial court to set forth particular circumstances militating against any award of fees in this case.” Id. We remanded for further proceedings, noting that where a jury finds no bona fide dispute, the court may choose not to award fees for many reasons, but not on the basis that the wages in fact were withheld as a result of a bona fide dispute.” Id. at 36, 7 A.3d 643.

Proceedings on Remand

On November 10, 2010, Mr. Barufaldi filed a supplemental motion for an award of attorneys' fees and costs, requesting additional attorneys' fees in the amount of $41,770.50 and costs in the amount of $11,125.86. The supplemental fees and costs were for legal services Mr. Barufaldi's counsel rendered in connection with the successful appeal.

In its written response, the Chamber argued that the circuit court should deny any request for fees or costs. It asserted that, in deciding whether to award fees, the court should adopt the factors, discussed infra, that federal courts use in determining whether to apply the fee-shifting provision of the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (ERISA). The Chamber asserted that application of the ERISA factors weighed against an award of fees.

With respect to one of the ERISA factors, the ability to pay, the Chamber attached the affidavit of Melanie Pursel, its Executive Director. In the affidavit, Ms. Pursel stated that [a]ny meaningful award of fees and costs in this case would jeopardize in a very real sense the existence and continuing financial viability of the Chamber, which has existed as an important promoter of the business community for over fifty years.” She stated that the Chamber, a private, non-profit entity organized to promote tourism and commerce in Ocean City, had not earned any net profit for over a decade, and that, to secure a stay of enforcement of the money judgment, the Chamber had to borrow $60,000 from a financial institution.

On December 20, 2010, Mr. Barufaldi filed a reply in support of his motion for attorneys' fees objecting to the Chamber's proposed application of the ERISA factors. He argued that the Court of Appeals had never adopted this test, and that the proposed five-factor test ran afoul of the existing case law on the WPCL's fee-shifting provision. With respect to the affidavit submitted by the Executive Director of the Chamber, relating to the inability to pay, Mr. Barufaldi stated that this assertion was “factually questionable,” arguing that the Chamber is a membership organization that received dues from its members, and it could assess the members for other obligations. In any event, Mr. Barufaldi argued, the financial condition of the Chamber was irrelevant as a factor in considering an award of attorneys' fees.

On March 25, 2011, the circuit court denied the motion. In its written opinion, the court noted that “Maryland [c]ourts have not set forth factors to be considered in making the determination of whether or not to impose attorneys' fees.” The court, therefore, looked to factors considered by federal courts in awarding fees pursuant to ERISA's fee-shifting provision. These factors, as set forth by the circuit court, are as follows:

(1) the degree of opposing parties' culpability or bad faith; (2) the ability of opposing parties to satisfy an award of attorneys' fees; (3) whether an award of attorneys' fees against the opposing parties would deter other persons acting under similar circumstances; (4) whether the parties requesting attorneys' fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself[;] and (5) the relative merits of the parties' positions.”

(Quoting Quesinberry v. Life Ins. Co., 987 F.2d 1017, 1029 (4th Cir.1993)).

In applying these factors, the circuit court made the following findings, before concluding that the circumstances weighed against awarding attorneys' fees:

[T]he Court finds that there is an absence of bad faith on behalf of the defendants. The inartful language of the contract caused the meaning of “net revenue” to be sufficiently ambiguous that even the testimony of the experts differed as to the actual meaning and effect of that language as included in the contract.

Concerning factor number two the ability to pay, the affidavit of Melanie Pursel is uncontradicted.3 Melanie Pursel, as executive director...

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