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

• Decision Date: 29 October 2010
• Docket Number: No. 815, Sept. Term, 2009.,815, Sept. Term, 2009.
• Citation: 7 A.3d 643,196 Md.App. 1
• Parties: Daniel J. BARUFALDI v. OCEAN CITY, Maryland, CHAMBER OF COMMERCE, INC.
• Court: Court of Special Appeals of Maryland

7 A.3d 643

196 Md.App. 1

Daniel J. BARUFALDI

v.OCEAN CITY, Maryland, CHAMBER OF COMMERCE, INC.

No. 815, Sept. Term, 2009.

Court of Special Appeals of Maryland.

Oct. 29, 2010.

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

William J. Hickey (Robert M. Gittins, on the brief) Rockville, MD, for appellee.

Panel: EYLER, DEBORAH S., WRIGHT, ARRIE W. DAVIS (Retired, Specially Assigned) JJ.

EYLER, DEBORAH S., J.

This appeal and cross-appeal arise from an employment contract dispute between the Ocean City Chamber of Commerce ("the Chamber"), the appellee/cross-appellant, and its former executive director, Daniel J. Barufaldi, the appellant/cross-appellee. Barufaldi resigned from the Chamber in January of 2007 and thereafter brought an action in the Circuit Court for Worcester County against the Chamber and members of its Board of Directors ("the Board"). He alleged breach of contract and violations of the Maryland Wage Payment and Collection Law ("WPCL"), Md.Code (2008 Repl.Vol., 2009 Supp.), §§ 3-501 et seq. of the Labor and Employment Article ("LE"), and, as to the individual defendants, negligent misrepresentation. All of Barufaldi's claims related to the Chamber's failure to pay incentive-based compensation under his employment contract ("the Agreement"). The Chamber counterclaimed for breach of contract premised on Barufaldi's alleged failure to perform his duties and his premature termination of the Agreement.

After several of the individual defendants were dismissed, the case was tried to a jury for three days. At the close of Barufaldi's case, the trial court granted judgment in favor of the remaining individual defendants on all counts. At the closeof all the evidence, the trial court granted judgment for Barufaldi on the Chamber's counterclaim. Barufaldi's breach of contract and WPCL claims against the Chamber went to the jury.

The jury found that the Chamber had breached the Agreement and that Barufaldi was owed $60,000 in unpaid wages. It further found that the Chamber had violated the WPCL and that its failure to pay Barufaldi was not the result of a bona fide dispute. The jury declined, however, to awardBarufaldi treble damages under the WPCL.¹

The Chamber filed post-trial motions for judgment notwithstanding the verdict ("JNOV"), for remittitur or a new trial on damages, and for a new trial. All were denied. Barufaldi filed a post-trial motion for attorneys' fees under the WPCL. His motion was denied in its entirety.

Barufaldi timely appealed from the denial of his motion for attorneys' fees. He presents one question for review, which we have rephrased:

Did the trial court err in denying his motion for attorneys' fees made pursuant to the WPCL?

The Chamber timely cross-appealed from the denial of its post-trial motions, the jury's finding that there was no bona fide dispute as to Barufaldi's entitlement to incentive pay, and the trial court's denial of certain requested jury instructions. It presents five questions for review on cross-appeal, which we have reworded and reordered:

I. Did the trial court err in dismissing the Chamber's counterclaim?

II. Did the trial court err in failing to instruct the jury on the effect of Barufaldi's alleged breach of the Agreement on his entitlement to recover?

III. Did the trial court err in failing to instruct the jury on rescission and novation?

IV. Did the trial court err in denying the Chamber's motion for judgment and JNOV motion on the issue of a bona fide dispute under the WPCL?

V. Did the admission into evidence of an unredacted letter, contrary to an order of the trial court, deprive the Chamber of a fair trial?

For the reasons to follow, we answer the Chamber's questions in the negative and therefore shall affirm the judgments. We answer Barufaldi's question in the affirmative and therefore shall remand for further proceedings on the motion for attorneys' fees.

FACTS AND PROCEEDINGS

The Chamber is an association of businesses in Ocean City. Its purpose is to increase tourism and business opportunities in the community for the benefit of its members. It is composed of a non-profit entity operating a visitor center funded primarily by membership dues and grants and a for-profit entity selling the Ocean City Guide Book ("the Guide"). Sales of the Guide and advertisements in the Guide are the Chamber's major source of revenue.

In the fall of 2005, the Chamber interviewed and hired Barufaldi as its new executive director, at a base salary of $52,000 per year. He began work on November 1, 2005. Immediately prior to accepting theChamber's offer of employment, Barufaldi was working as executive director of the Ken-Tom Chamber of Commerce in upstate New York.

A little over two months after beginning his employment, Barufaldi and the Chamber executed the Agreement. It was backdated to November 1, 2005. In its introductory paragraph, the Agreement defines "Employer" to mean the Board, the executive committee of the Board, and officers of the Chamber. Paragraphs 1 and 2 set forth Barufaldi's job responsibilities by reference to an attached job description and a list of duties. They obligate Barufaldi to perform these duties diligently and in good faith.

Paragraph 3 states that the Agreement is for a three-year term-from November 1, 2005, until October 31, 2008-and provides for automatic renewal absent written notice by either party to the Agreement.

Paragraph 4, titled "COMPENSATION OF EMPLOYEE," reads as follows:

a) As compensation for the services provided and duties performed by Employee under this Agreement, Employer shall pay Employee an annual base salary of fifty-two thousand dollars ($52,000.00) for each of the three (3) years covered by this Agreement. Such annual base salary shall be paid to Employee in bi-monthly installments.

b) As additional compensation, Employee shall be entitled to incentive-based compensation for each quarter in accordance with the terms of this subparagraph. Employer and Employee shall, within sixty (60) days after the effective date of this Agreement, agree upon a base line net revenue figure, based upon historical financial documentation, for each quarter. Employee's incentive compensation for the first quarter of each year shall be equal to actual net revenue for the first quarter minus the base line net revenue figure established for the first quarter, multiplied times .25. Employee's incentive compensation for the second quarter of each year shall be equal to [ (actual year-to-date net revenue) minus (year-to-date base line net revenue) / 2] multiplied by 25%. Employee's incentive compensation for the third quarter of each year shall be equal to [ (actual year-to-date net revenue) minus (year-to-date base line net revenue) / 3] multiplied by 25%. Employee's incentive compensation for the fourth quarter of each year shall be equal to [ (actual year-to-date net revenue) minus (year-to-date base line net revenue) / 4] multiplied by 25%. This incentive compensation shall be paid to Employee on a quarterly basis within a reasonable period of time after the close of each quarter. Such incentive compensation shall be in lieu of any increases in the annual base salary and performance bonuses. Employee shall not be entitled to any compensation other than the annual base salary set forth in paragraph 4(a) and the incentive compensation set forth in this subparagraph. For purposes of this provision, "net revenue" shall mean revenue net of operating expenses and other deductions from gross revenue that are customarily made from an accounting standpoint to reach a net revenue figure. Major capital investment expenditures of anon-recurring nature shall not be included for purposes of determining net revenue hereunder (i.e., shall not be deducted from gross revenue to arrive at net revenue). In addition, increases in dues rates shall not be included in gross revenue for purposes of determining Employee's incentive compensation hereunder. From the effective date of this Agreement through August 31, 2006, Guide and Chamberdues shall not be included as income or revenue for purposes of determining "net revenue" and calculating incentive-based compensation hereunder. Employee acknowledges and understands that achieving increases in net revenue is an objective which shall not be given priority by Employee over the duties and services which Employee agrees to diligently provide pursuant to paragraphs 1 and 2 above. Employee's activities shall not be disproportionately geared toward increasing quarterly net revenues in a way that is detrimental to Employee's diligent and full performance of the duties and services listed in Exhibit A.

(Emphasis added.) Subparagraphs "c" and "d" further state that any incentive-based compensation ceases immediately if the Agreement is terminated for cause, that Barufaldi may participate in the Chamber IRA plan, and that Barufaldi and his wife would receive health insurance coverage through the Chamber. The language of the Agreement allowed it to be terminated by the Chamber for cause only. There was no such corresponding termination right for Barufaldi.

Barufaldi asserts that he repeatedly asked then-Board president Neil Hitchcock to meet with him to determine the "base line net revenue figure" required under the Agreement, but Hitchcock refused to do so. In September of 2006, Kathy Panco replaced Hitchcock as president of the Board. Barufaldi then attempted to reach an agreement about this figure with her. While Panco initially seemed willing to work with Barufaldi to determine the "base line net revenue figure," no agreement was reached. There is no dispute that a "base line net revenue figure" never was established during Barufaldi's employment by the Chamber.

On October 31, 2006, Barufaldi met with the members of the Board and they presented him with the proposed terms of a new contract. The parties hotly dispute the genesis of this meeting and what occurred there....