Solis v. A-1 Mortg. Corp., Civil Action No. 09-1265

CourtU.S. District Court — Western District of Pennsylvania
Writing for the CourtJoy Flowers Conti
PartiesHILDA L. SOLIS, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Plaintiff, v. A-1 MORTGAGE CORPORATION, a corporation, MARIA MAKOZY, individually, and GREGORY MAKOZY, individually, Defendants.
Docket NumberCivil Action No. 09-1265
Decision Date21 March 2013

HILDA L. SOLIS, SECRETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR, Plaintiff,
v.
A-1 MORTGAGE CORPORATION, a corporation,
MARIA MAKOZY, individually,
and GREGORY MAKOZY, individually, Defendants.

Civil Action No. 09-1265

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

Date: March 21, 2013


MEMORANDUM OPINION

CONTI, District Judge.

I. Introduction

Pending before the court is a motion for summary judgment (ECF No. 88) filed by plaintiff Hilda Solis, Secretary of the United States Department of Labor (the" Secretary"), against defendant Gregory Makozy ("defendant"). This action arises from defendant's involvement with A-1 Mortgage Corporation ("A-1"), a mortgage brokerage firm. Defendant's wife, Maria Makozy ("Mrs. Makozy"), was the president of A-1.1 In this case, the Secretary alleges that defendant willfully violated the requirements of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. ("FLSA"), by failing to pay employees of A-1 the requisite minimum wage, failing to pay employees overtime compensation, and failing to maintain accurate records of employees' hours. The Secretary seeks back wages, liquidated damages, and injunctive relief.

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The Secretary argues that the affidavits of former A-1 employees, together with payroll checks issued by the company, demonstrate that no genuine issues of material fact exist with respect to whether the FLSA applies to defendant and whether he committed the alleged violations. Defendant responds that summary judgment would be improper largely because his own affidavit, coupled with Mrs. Makozy's testimony in her deposition in the present case as well as in a prior civil matter,2 contradicts the Secretary's assertions. Defendant contends that genuine issues of material fact remain about whether he is an "employer" within the meaning of the FLSA; whether he violated the FLSA's minimum wage, overtime, and recordkeeping provisions; whether he did so willfully; whether he is liable for unpaid wages and liquidated damages; and whether injunctive relief is warranted.

Because defendant failed to provide sufficient evidence relating to his denials, the court concludes that no genuine disputes exist. The Secretary's motion for summary judgment will be GRANTED.

II. Factual Background

A-1, one of the original defendants in this case, was a mortgage brokerage firm located in Cranberry Township, Pennsylvania, and licensed by the Pennsylvania State Department of Banking. (Joint Concise Statement ("JCS") (ECF No. 98) ¶¶ 1-2.) A-1 generated sales leads through radio, TV, and Internet advertisements and provided them to its loan officers. (JCS ¶ 6.) The company's telemarketer would follow up by telephone with these potential customers, including some in Maryland and Florida, asking them to refinance their loans. (Id. ¶ 7.) Throughout the period of time relevant to this action, A-1's annual dollar volume of sales exceeded $500,000. (Id. ¶ 5.)

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Mrs. Makozy was A-1's president, sole corporate officer, and sole shareholder. (Id. ¶¶ 3-4.) Defendant's degree of involvement in the management of the business is the subject of the instant motion. (See, e.g., id. ¶ 8.) While the Secretary claims that it was actually defendant who managed A-1, defendant asserts that Mrs. Makozy managed A-1's day-to-day operations and that he merely assisted "as necessary" as a "consultant." (Id. ¶¶ 4, 8.)

Mrs. Makozy described defendant as a "consultant." (Id. ¶¶ 4, 13.) When defense counsel inquired about the basis for this characterization during a 2010 deposition, Mrs. Makozy responded:

Q. Was there some other reason that Mr. Makozy was acting as a consultant instead of as an employee of A-1?
A. He was a consultant, he was never an employee of A-1.
Q. And why was that?
A. Because he was not an employee.

(Maria Makozy Dep., Def.'s Resp. to Pl.'s Statement of Material Facts, App'x ("Def.'s App'x") D (ECF No. 94-4) at 33.) In a previous civil action, Mrs. Makozy testified that defendant "assist[ed]" her in the operation of A-1. (Id. ¶¶ 8, 12.) She permitted defendant to use the title of "manager"3 and left him in charge when she was not in the office. (Id. ¶ 4.)

In the course of his duties at A-1, defendant interviewed prospective employees and made recommendations to Mrs. Makozy about whom to hire and fire.4 (Id. ¶ 9, 14-15.) Mrs. Makozy testified in a deposition that defendant met with A-1's accountants and advertising vendors; apprised the employees about A-1's dress code, their work hours, start times, and the duration of the work day; called in employees' hours to ADP for payroll purposes; handled vacation requests; and trained employees in the use of the company's mortgage origination software. (JCS ¶ 8.) Mrs. Makozy acknowledged that defendant had the ability to write checks and, even if he did not personally sign

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them, he had at least theoretical authority to do so because he was listed as an authorized signer on A-1's bank account. (JCS ¶¶ 8, 35; Makozy Dep., Def.'s App'x D at 45, 50-51.)

A-1's employees approached defendant with questions and work-related issues, which he attempted to resolve. (JCS ¶ 11.) Although defendant claims that Mrs. Makozy managed A-1's daily operations, several of the company's former employees reported that he set their work hours and the loan officers' commission rates and quotas. (Id. ¶ 10.) According to Mrs. Makozy, she set the terms of their compensation, while defendant discussed them with the employees. (Makozy Dep., Def.'s App'x D at 56-57.) The employees maintain, and defendant denies, that they only conferred with Mrs. Makozy if they needed her help with a title issue. (JCS ¶ 16.)

Between December 2, 2001 and November 23, 2003, the Pittsburgh District Office of the Wage and Hour Division ("Wage Hour") of the United States Department of Labor ("DOL"), investigated A-1's compliance with the FLSA. (Id. ¶ 19.) As a result, Wage Hour determined that A-1 failed to pay its twenty-three loan officers, who worked purely on commission, a minimum wage and time and one-half for any overtime hours. (Id. ¶ 20.) Wage Hour concluded that A-1 did not accurately record the hours its employees actually worked and did not observe regular pay dates. (Id. ¶ 21.) On April 10, 2004, Mrs. Makozy and defendant, who was then A-1's general manager, entered into a stipulation with the Secretary's representative in which A-1 agreed to pay all back wages and to comply with the FLSA in the future. (Id. ¶¶ 19, 22.)

Wage Hour investigated A-1 again between November 30, 2003 and July 11, 2004. (Id. ¶ 23.) This investigation revealed that A-1 paid employees for their work weeks after they performed it via backdated checks and failed to record accurately the employees' hours and the commission payments they earned. (Id. ¶¶ 25-26.) Wage Hour concluded that A-1 failed to comply with the FLSA's requirements after the first investigation and subsequently failed to pay its employees at

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least minimum wage for all the hours they worked. (Id. ¶ 24.) On December 22, 2004, a consent judgment was entered, imposing civil penalties on the Makozys and enjoining them from further violating the FLSA and withholding back wages. (Id. ¶ 27.) Mrs. Makozy signed the consent agreement as an authorized officer of the corporation, and defendant signed as a "consultant." (Id. ¶ 28.)

Wage Hour's third investigation of A-1's compliance with the FLSA's minimum wage, overtime, and recordkeeping provisions, conducted between October 1, 2005 and May 30, 2008, gave rise to the present action. (Id. ¶ 29.) Wage Hour's investigator, Polly Lupean ("Lupean"), concluded that A-1 failed to pay twenty-one of its employees the minimum wage for all the hours they worked each week. (Id. ¶ 30.) Lupean also found that twenty loan officers were paid strictly on commission and were not guaranteed a minimum wage. (Id. ¶ 31.) Loan officers Don Noland ("Noland") and Jeremy Wells ("Wells") stated in their declarations that they never received ADP payroll checks at all. (JCS ¶ 39; see also (Noland Decl., Pl.'s Br. in Supp. of Mot. for Summ. J., App'x ("Pl.'s App'x") P (ECF No. 89-3) ¶ 25; Wells Decl., Pl.'s App'x R (ECF No. 89-3) ¶ 22.) Secretary Jessica Hollenberger ("Hollenberger") was not paid at all for the eight hours she worked on her last day at A-1. (JCS ¶ 31-32.)

Defendant denies that these employees were not paid for all the hours they worked. Id. ¶¶ 30-32.) With the exception of Hollenberger, for which defendant cites his own affidavit, he bases these denials on Lupean "disregarding" the A-1 time sheets indicating that the employees had, in fact, worked forty hours per week. (Id.) Lupean, however, determined based upon her interviews with A-1's employees that those time sheets had been falsified. (Id. ¶¶ 31-32.)

Lupean found that, while A-1's employees were issued biweekly payroll checks, defendant withheld payroll checks owed to some loan officers, including Jennifer Stuber ("Stuber") and

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Deborah Stadelmyer ("Stadelmyer"), without changing the checks' issue dates, until the officers closed a loan. (JCS ¶¶ 33-34; see also Stuber Decl., Pl.'s App'x Q (ECF No. 89-3) ¶ 26; Stadelmyer Decl., Pl.'s Reply Br., Supp. App'x ("Pl.'s Supp. App'x") T (ECF No. 96-1) ¶¶ 29-30.) Lupean concluded that these...

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