Cherry Creek Mortg. v. Jarboe
| Decision Date | 17 October 2022 |
| Docket Number | Civil Action 18-cv-00462-KLM |
| Parties | CHERRY CREEK MORTGAGE, LLC, Plaintiff and Counter Defendant, v. THOMAS R. JARBOE, Defendant and Counter Plaintiff. |
| Court | U.S. District Court — District of Colorado |
This matter is before the Court on Plaintiff/Counter Defendant Cherry Creek Mortgage Company, LLC's (“Cherry Creek”) Amended Motion for Summary Judgment on Jarboe's Counterclaims Pursuant to Fed.R.Civ.P 56 [#165] and on Defendant/Counter Plaintiff Thomas R. Jarboe's (“Jarboe”) Motion for Summary Judgment [#169] (the “Motion”). Jarboe filed a Response [#178] in opposition to Cherry Creek's Motion [#165], and Cherry Creek filed a Reply [#184]. Cherry Creek filed a Response [#177] in opposition to Jarboe's Motion [#169], and Jarboe filed a Reply [#186]. The Court has reviewed the Motions, the Responses, the Replies, the entire case file, and the applicable law, and is sufficiently advised in the premises. Based on the following Cherry Creek's Motion [#165] is GRANTED in part and DENIED in part, and Jarboe's Motion [#169] is DENIED.[1]
I. Background[2]
Cherry Creek asserts a claim against Jarboe, a former employee of Cherry Creek, for breach of contract. Compl. [#3] ¶¶ 15-24.[3] Jarboe has three remaining counterclaims against Cherry Creek which assert breach of contract conversion, and declaratory judgment. Counterclaims [#72] at 19-22 ¶¶ 60-71, 23 ¶¶ 80-85.
Prior to his employment with Cherry Creek, Jarboe worked as a regional branch manager for another mortgage company in Southern California. Depo. of Sean McCluskey (“McCluskey”) [#177-2] at 21:15-21; Decl. of Jarboe [#170] ¶ 2. After meetings between Jarboe and Cherry Creek's executives, Cherry Creek sent Jarboe an “Employment Offer Agreement” on December 11 2015. Depo. of McCluskey [#177-2] at 18:3-20:21; Decl. of Jarboe [#170] ¶¶ 2-5; Jarboe's Ex. A, Employment Offer Agreement [#174-1] (the “Employment Offer Agreement”) at 2. Jarboe signed the Employment Offer Agreement on December 18, 2015. Decl. of Jarboe [#170] ¶ 5. The Employment Offer Agreement offered Jarboe the position of “Vice President, Regional Production Manager,” with duties including oversight and management of twenty-two of Cherry Creek's branches in Southern California. Employment Offer Agreement [#174-1] at 2. The Employment Offer Agreement further provided Jarboe a minimum monthly override payment, or “Override Guarantee,” of $20,833 per month.[4] Employment Offer Agreement [#174-1] at 2. The Override Guarantee was linked to Jarboe's Responsibility Code (“RC”) roll-up, which was associated with the branches he managed. See Depo. of Jeffrey May (“May”) [#171-11]; Depo. of Michael Hogan (“Hogan”) [#177-4] at 134-35. Sometime in early 2017, the parties agreed to continue the Override Guarantee payments to Jarboe. See Cherry Creek's Ex. 25, Emails Between Jarboe and Cherry Creek [#177-3] (the “My Pay Emails”) at 2; Jarboe's Ex. 10, Internal Cherry Creek Emails [#171-10] (the “Internal Emails”) at 2.
When the parties executed the Employment Offer Agreement, they also entered into a “Regional Production Manager Agreement” (the “Regional Agreement”). See Employment Offer Agreement [#174-1] at 4-10. The Regional Agreement provided Jarboe with a salary of $100,000 in addition to overrides pursuant to each “Branch Office Agreement” adopted by the parties as each new branch was opened. Id. at 4. Throughout Jarboe's employment, Cherry Creek paid Jarboe the $20,833 monthly Override Guarantee and an additional $8,333 monthly as part of his base salary. See Decl. of Jarboe [#170] ¶¶ 9, 12. The Regional Agreement does not specifically permit Cherry Creek to recover deficits from Jarboe for losses suffered by branches under his supervision, although it does note that overrides are subject to the “terms and conditions of each Branch Office Agreement.” Employment Offer Agreement [#174-1] at 4.
Cherry Creek and Jarboe later entered into two successive “Non-Producing Branch Manager Agreements” (the “NPBM Agreements”). See Jarboe's Ex. B, February Agreements [#174-2]; Jarboe's Ex. C, April Agreements [#174-3]. Each NPBM Agreement included a “Compensation Agreement” (“Comp. Agreement”). February Agreements [#174-2] at 15; April Agreements [#174-3] at 14. The two pairs of NPBM and Comp. Agreements were executed in February 2016 (the “February Agreements”) and April 2016 (the “April Agreements”). See generally February Agreements [#174-2]; April Agreements [#174-3]. Both NPBM Agreements stated that neither execution nor performance of the contracts would, to Cherry Creek's knowledge, violate any state or federal law or regulation. February Agreements [#174-2] at 9; April Agreements [#173-3] at 9. The February Agreements provided a guaranteed minimum salary to Jarboe of $2,000 per month, and the April Agreements provided a guaranteed minimum salary of $5,000 per month. February Agreements [#174-2] at 17; April Agreements [#174-3] at 16. Furthermore, both NPBM Agreements contained an “Originator Net Loss Accommodations” provision, stating that:
In the event the [branch managed by Jarboe] experiences a Net Loss on a cumulative basis, [Cherry Creek] shall consider such loss as a draw against future earnings and a personal liability of [Jarboe]. [Cherry Creek] reserves the rights to either deduct the draw amounts from future earned Overrides or make demand on [Jarboe] to cover such draw. If demand is made, [Jarboe] agrees that he/she will refund to [Cherry Creek], within 5 business days, any such draw balance.
See February Agreements [#174-2] at 18; April Agreements [#174-3] at 17. A branch's “Net Income or Loss” is calculated as “Gross Revenue less Direct Expenses, Indirect Expenses, and Other Expenses.” February Agreements [#174-2] at 17; April Agreements [174-3] at 16. “Other Expenses” include “distributions paid to [Jarboe].” February Agreements [#174-2] at 17; April Agreements [174-3] at 16.
Jarboe's employment with Cherry Creek ultimately lasted from February 2016 to the end of June 2017. See Cherry Creek's Ex. 27, Jarboe Resignation Email [#177-5] (the “Resignation Email”) at 2. Jarboe notified Cherry Creek of his resignation on June 16, 2017, citing the fact that he had “struggled” while working for Cherry Creek. Resignation Email [#177-5] at 2. On June 20, Cherry Creek's Senior Vice President informed Jarboe that his “current accrued liability stood at $704,735 through May [2017].” See Jarboe's Ex. 9, McCluskey Email [#171-9] at 3. This deficit was based on the operating deficits of the branches under Jarboe's oversight, including override payments received by Jarboe. See id.; Depo. of May [#171-3] at 3:4-19; February Agreements [#174-2] at 18. Cherry Creek now contends that Jarboe owes it a total amount of $1,079,423.21. See Jarboe's Ex. 14, Cherry Creek's Objections and Responses to Jarboe's Second Set of Interrogatories [#171-14] (the “Cherry Creek Objections”) at 13.
Cherry Creek brings a claim for breach of contract against Jarboe for failing to pay the “amount of any net loss to branch offices under [his] management” as purportedly required by the Net Loss Accommodations provisions of the February and April Agreements. See Compl. [#3] ¶ 17; February Agreements [#174-2] at 18; April Agreements [#174-3] at 17. Jarboe seeks entry of summary judgment in his favor on this sole claim asserted by Cherry Creek. Motion [#169] at 2.
Jarboe brings a counterclaim for breach of contract against Cherry Creek for failing to pay him guaranteed compensation, for violating Department of Housing and Urban Development (“HUD”) rules and regulations by collecting expenses from an employee, and for violating state laws prohibiting employers from clawing back an employee's salary and forcing an employee to pay for the employer's operating expenses. Counterclaims [#72] at 21-22 ¶¶ 66-71; Response [#178] at 12. He also brings a counterclaim against Cherry Creek for conversion of office equipment and telephone numbers. Counterclaims [#72] at 23 ¶¶ 80-85; Response [#178] at 18-19. Finally, he brings a counterclaim for declaratory judgment against Cherry Creek. Counterclaims [#72] at 19-21 ¶¶ 60-65.
II. Standard of Review
Summary judgment is appropriate if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial burden of showing an absence of evidence to support the nonmoving party's case. Celotex, 477 U.S. at 325. “Once the moving party meets this burden, the burden shifts to the nonmoving party to demonstrate a genuine issue for trial on a material matter.” Concrete Works, Inc. v. City & Cnty. of Denver, 36 F.3d 1513, 1518 (10th Cir. 1994) (citing Celotex, 477 U.S. at 325). The nonmoving party may not rest solely on the allegations in the pleadings, but instead, must designate “specific facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324; see also Fed.R.Civ.P. 56(c).
“A ‘judge's function' at summary judgment is not ‘to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'” Tolan v. Cotton, 572 U.S. 650 656 (2014) (quoting Anderson v. Liberty Lobby, 477 U.S. 242, 249 (1986)). Whether there is a genuine dispute as to a material fact depends on “whether the evidence presents a sufficient disagreement to require submission to a jury,” or conversely, whether the evidence “is so one-sided that one party must prevail as a matter of law.” Carey v. U.S. Postal Serv., 812 F.2d 621, 623 (quoting Anderson, 477 U.S. at 251-52). A disputed fact is “material” if ...
To continue reading
Request your trial