Rogers v. Savings First Mortgage, LLC

Decision Date16 March 2005
Docket NumberNo. CIV.A. WMN-03-2984.,CIV.A. WMN-03-2984.
Citation362 F.Supp.2d 624
PartiesLeslie F. ROGERS et al. v. SAVINGS FIRST MORTGAGE, LLC et al.
CourtU.S. District Court — District of Maryland

Bradford W. Warbasse, Baltimore, MD, for Leslie F. Rogers et al.

David A. Seltzer, Wilson Elser Moskowitz Edelman and Dicker LLP, Washington, DC, for Savings First Mortgage, LLC et al.


NICKERSON, Senior District Judge.

Before the Court are cross motions for partial summary judgment. Paper Nos. 44 (Plaintiffs') and 46 (Defendants'). The motions are fully briefed. Upon a review of the motions and the applicable case law the Court determines that no hearing is necessary (Local Rule 105.6) and that Plaintiffs' motion will be granted and Defendants' denied.


Plaintiffs1 were formerly employed as loan officers for Defendant Savings First Mortgage, LLC (SFM). They bring this action seeking additional compensation under the federal Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201 et seq. (FLSA), and under the Maryland Wage Payment and Collection Law, Md.Code Ann., Lab. & Empl. §§ 3-501 et seq. (Wage Payment Law). In addition to SFM, Plaintiffs have named Harry Korotki as a Defendant. Mr. Korotki is the president and sole owner of SFM.2

Defendant SFM is a residential mortgage company. During the period September 1, 1999, through July 31, 2004, SFM employed more than 680 loan officers who used company-supplied leads to solicit homeowners interested in refinancing their home mortgages. Loan officers' duties include: performing mortgage surveys and evaluations; evaluating credit and developing loan proposals; presenting the proposals to the potential borrowers; preparing loan application documents and obtaining necessary pre-approvals; meeting with the borrowers to complete the application process; communicating settlement details; and arranging the loan closing. Once the application packet is completed and signed, the loan file is turned over to a separate processing department to process the loan and handle the file through closing.

Under SFM's compensation agreement, loan officers received no salary or hourly wage. The principal compensation paid to a SFM loan officer was the commissions on loans originated by that loan officer.3 Payment of those commissions was made on a bi-monthly basis, but commissions were only paid on loans that had gone to closing. Loan officers also all signed a "Restrictive Covenant and Non-Disclosure Agreement" that provided that if his or her employment was terminated, whether voluntarily or involuntarily, no commissions would be paid on loans that closed after the date of termination.

In addition to commissions, loan officers could also earn "year-end" bonuses. Year-end bonuses were calculated based upon the profit that a loan officer generated in the given calendar year. Those bonuses were not paid, however, until June 30th of the following calendar year. If the loan officer was not still employed as of that date, "for any reason whatsoever, whether termination from employment is/was voluntary or involuntary," the year end bonus would be forfeited in its entirety. See Defs.' Exh. 11, "2003 Loan Officer Bonus Program." Finally, loan officers could be eligible for a bonus for referring someone to the company who became a loan officer. These "referral bonuses" equal 5% of the gross profit of fundings that occur in the second, third, and fourth months of the new loan officer's employment.

Plaintiffs allege that very often they were required to work more than 40 hours in a given workweek. They further allege that, for each of the Plaintiffs, there was a large number of pay periods for which they did not receive any compensation at all because no loans closed during that pay period. Several Plaintiffs also complain that, pursuant to the above summarized policies, they were denied commissions on loans that closed after their termination ("terminal commissions"), as well as year-end bonuses that were not paid because they were not still employed on June 30th of the following year. In the Second Amended Complaint, Plaintiffs identify the following categories of compensation and damages to which they assert they are entitled:

— Overtime compensation at 1.5 times the employee's regular rate of pay for those hours worked over 40 per workweek, pursuant to the FLSA (Count I);

— Recovery of underpayments for workweeks where Plaintiffs' wages fell below the federal minimum wage of $5.15 per hour, again pursuant to the FLSA (Count II);

— Liquidated damages under Counts I and II in an amount equal to the backpay awards, as authorized in 29 U.S.C. § 216(b);4

— Unpaid commissions and bonuses, pursuant to § 3-501(c)(2)(ii) of the Wage Payment Law, along with treble damages and attorneys' fees and costs under § 3-507.1(b) (Count IV).

Each of these categories of damages is the subject of the summary judgment motion filed by Plaintiffs or Defendants, or as to some categories, both.


Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to summary judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). For purposes of summary judgment, a dispute about a fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party," and a fact is material if, when applied to the substantive law, it affects the outcome of litigation. Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

A party seeking summary judgment bears the initial responsibility of informing the court of the basis of its motion and identifying the portions of the opposing party's case which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When considering the motion, the court assumes that all of the non-moving party's evidence is worthy of belief and justifiable inferences are drawn in favor of the non-moving party. Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). If the movant demonstrates that there is no genuine issue of material fact and that she is entitled to summary judgment as a matter of law, the non-moving party must, in order to withstand the motion for summary judgment, produce sufficient evidence in the form of depositions, affidavits or other documentation that demonstrates that a triable issue of fact exists for trial. Celotex, 477 U.S. at 324, 106 S.Ct. 2548. The existence of only a "scintilla of evidence" is not enough to defeat a motion for summary judgment. Instead, the evidentiary materials must show facts from which the finder of fact could reasonably find for the non-moving party. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. At the summary judgment phase, it is not appropriate for the court to make credibility determinations, weigh the evidence, or draw inferences from the facts which are adverse to the nonmoving party; these are jury functions. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

A. Fair Labor Standards Act Claims

Congress's goal in enacting the FLSA was "to protect all covered workers from substandard wages and oppressive working hours, `labor conditions [that are] detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers.'" Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) (quoting 29 U.S.C. § 202(a)). Section 206 provides that covered employees shall be paid not less than $5.15 per hour. 29 U.S.C. § 206(a)(1). Section 207 provides that covered employees who work more than 40 hours in a workweek shall be paid at least one and one-half times their regular pay rate for those hours worked above 40 hours. 29 U.S.C. § 207(a)(1). In interpreting the FLSA, the Supreme Court has frequently emphasized the nonwaivable nature of an individual employee's right to a minimum wage and to overtime pay under the Act. "FLSA rights cannot be abridged by contract or otherwise waived because this would `nullify the purposes' of the statute and thwart the legislative policies it was designed to effectuate." Id. at 740, 101 S.Ct. 1437 (citing Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 707, 65 S.Ct. 895, 89 L.Ed. 1296 (1945)).

1. Minimum Wage Claims

Twenty-nine Plaintiffs have moved for summary judgment on their minimum wage claims seeking entry of judgment in the aggregate amount of $97,430.60. The two remaining Plaintiffs, Leslie Rogers and Andrea Mack, while acknowledging that a dispute as to the number of hours that they worked prevents entry of judgment on their minimum wage claims at this time, nonetheless seek a declaration that they were entitled to have been paid at the minimum wage. Plaintiffs concede that the amount of underpayment as to Rogers and Mack would need to be determined at trial.

The FLSA's minimum wage obligations extend to employers who employ workers in an "enterprise engaged in [interstate] commerce or in the production of goods for commerce ... whose annual gross volume of sales made or business done is not less than $500,000." 29 U.S.C. § 203(s)(1)(A)(ii). The term "employer" includes "any person acting directly or indirectly in the interest of an employer in relation to an employee." Id. at 203(d). SFM admits that it engages in interstate commerce and has a business volume exceeding $500,000. For the purposes of this lawsuit, Defendants have stipulated that Korotki, as the sole owner of SFM and with operational control of the company as its sole corporate officer is an "employer" within the meaning of the FLSA. Furthermore, the parties have been able to agree by stipulation or...

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