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 close
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 award Barufaldi treble damages under the WPCL.
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:
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:
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.
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 the
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:
(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. According to the Chamber, Barufaldi had requested a new contract because he had concluded that the Agreement's compensation provisions were unworkable. The Chamber offered him the choice to continue under the Agreement or enter into the new contract. According to Barufaldi, he wanted the Chamber to honor the terms of the Agreement and did not request a new contract. The Board, unwilling to pay him the incentive compensation to which he was entitled under the Agreement, gave him an ultimatum: "take it or leave it." He understood this to mean that the Board members had no intention of honoring his existing Agreement and that he would have no choice but to accept the new contract terms.
Under the pertinent terms of the proposed new contract, Barufaldi's base salary would increase to $65,000 annually, with no opportunity to earn incentive pay, and the Chamber would be permitted to terminate his employment without cause with 30 days' notice. Also, his wife no longer would be maintained on the Chamber health insurance policy.
According to the Chamber, Barufaldi indicated his willingness to accept the new contract. According to Barufaldi, he never agreed to the new contract. The parties agree that Barufaldi never signed the new contract, which was not drafted until after the Board meeting at which its proposed terms were presented to Barufaldi.
A little less than three months later, on January 23, 2007, Barufaldi tendered his letter of resignation, effective immediately, to Panco. Unbeknownst to the Chamber, prior to his resignation, Barufaldi had accepted
On April 3, 2008, Barufaldi filed the instant action against the Chamber, Hitchcock, and five other Board members, asserting, inter alia, breach of contract and violations of the WPCL. Both counts were premised on Barufaldi's claim that the Chamber wrongfully had withheld incentive-based compensation due and owing under the Agreement. He sought treble damages, costs, and attorneys' fees pursuant to the WPCL.
On January 30, 2009, the Chamber filed its counterclaim asserting breach of contract and anticipatory breach of contract. The Chamber alleged that Barufaldi had materially breached the Agreement by failing to perform his duties, actively seeking employment elsewhere during the term of the Agreement, and failing to complete the three-year term. The anticipatory breach count was premised on Barufaldi's application for employment with the Charles County Chamber of Commerce.
On April 15-17, 2009, the case was tried to a jury. As noted, supra, Barufaldi voluntarily dismissed three of the individual defendants from the case at the start of trial and the court granted a motion for judgment in favor of the remaining two individual defendants at the close of Barufaldi's case. Barufaldi testified and called three witnesses: John Gehrig, a Board member; Panco; and Andrew Smith, a CPA who was qualified as an expert in accounting.
At the close of Barufaldi's case, the Chamber moved for judgment on the WPCL claim, arguing that there was no competent evidence from which a reasonable juror could find the absence of a bona fide dispute as to whether Barufaldi was owed wages. The Chamber argued the absence of a bona fide dispute is an essential element of the WPCL claim.
The Chamber called five current and former Board members, including the former president of the Board, Hickman; Cindy Wood, the Chamber's bookkeeper during Barufaldi's tenure; the current executive director of the Charles County Chamber of Commerce; Tracy Lukasik, the executive director of the Ken-Tom Chamber of Commerce, who had replaced Barufaldi; and its own expert in accounting, Luis Ruebelmann. Barufaldi also testified in rebuttal and the Chamber recalled Lukasik in surrebuttal.
The major issues at trial were the meaning of the term "net revenue" under the Agreement and whether Barufaldi was entitled to receive any incentive-based pay under the express terms of the contract, i.e., whether he increased "net revenue" as the parties understood that term.
The Chamber moved for judgment on the breach of contract count and renewed its motion for judgment on the WPCL. The court denied both motions.
The remaining counts went to the jury. The jury deliberated for a little over two hours before returning a verdict in favor of Barufaldi on both counts, awarding him $60,000 in damages. As discussed, supra, it also decided in favor of Barufaldi on the bona fide dispute question, finding that there had not been a bona fide dispute as to his entitlement to incentive-based compensation.
We shall include additional facts in our discussion of the issues. Because it is logical to do so, we shall begin our analysis with the cross-appeal.
The first two issues are interrelated, so we shall consider them together. The Chamber argues that the circuit court erred in granting judgment in favor of Barufaldi on its counterclaim for breach of contract and anticipatory breach premised on Barufaldi's premature termination of the Agreement.
Barufaldi counters that the circuit court correctly determined that the Chamber did not prove that any damages flowed from his alleged breach of the Agreement and thus properly granted judgment in his favor on the counterclaim. Moreover, he maintains that, even if the Chamber did prove damages, it could not recover because, after the Chamber breached its obligation to pay incentive pay, Barufaldi no longer was obligated to perform under the Agreement. As to the proposed jury instruction on material breach, Barufaldi argues that the instructions actually given fully covered the relevant legal authority.
As noted above, at the close of all of the evidence, counsel for Barufaldi moved for judgment on the counterclaim, arguing that the Chamber had not proven that it had sustained any damages as a result of his alleged breach of the Agreement. The Chamber countered that there was testimony from Panco that she "donated" her time to the Chamber in the almost six months between Barufaldi's resignation in
We review the decision to grant the motion for judgment on the counterclaim under the following standard:
Schreiber v. Cherry Hill Constr. Co., Inc., 105 Md.App. 462, 494-95, 660 A.2d 970 (1995). Thus, we must determine whether the Chamber introduced any competent evidence that it incurred damages as a result of Barufaldi's resignation. If it did, the motion for judgment should not have been granted on that basis.
Evidence about the Chamber's damages was adduced during the testimony of Panco and Todd Ferrante, respectively president and vice-president of the Board at the time of Barufaldi's resignation. Panco testified that she was completely surprised when Barufaldi resigned and that she immediately had to step in to keep the Chamber running. To do so, she had to divert time away from her real estate business, spending four or five hours a day working on Chamber business instead. She valued the "[d]onat[ion of her] life and services and time to the Chamber" at more than $50,000.
In addition, Panco testified that the Chamber hired a replacement for its administrative assistant,
Todd Ferrante testified consistent with Panco concerning the replacement of Sharp. He also testified that Barufaldi's resignation "took a toll on the Chamber as far as its financial capabilities." He was unable to testify to an "exact figure[]," however. Similarly, he testified that Chamber revenues declined in the interim between Barufaldi's resignation and the hiring of his replacement, but was unable to offer even a "ballpark figure" as to how much the revenues had declined.
Our inquiry is not over, however, because, for the Chamber to have been prejudiced by the court's ruling, there also must have been evidence of liability on Barufaldi's part. Barufaldi maintains that the Chamber's breach of the incentive pay provisions of the Agreement was material and thus ended his obligation to continue performing under the Agreement so that, as a matter of law, his resignation was not a breach of the Agreement. The Chamber counters that, even if it breached the Agreement by not paying incentive pay, its breach was not material and Barufaldi's subsequent termination of the Agreement was a breach that caused it to sustain damages. It further asserts that Barufaldi's material breach deprived him of any right to recover under the Agreement. The latter argument is the subject of the Chamber's claim of error with respect to the jury instructions.
The trial court instructed the jury as follows with respect to Barufaldi's breach of contract claim:
At the conclusion of the instructions, counsel for the Chamber objected as follows:
We will not reverse a judgment for a court's refusal to give a requested instruction "so long as the law is fairly covered" by the instructions as given. Farley v. Allstate Ins. Co., 355 Md. 34, 46, 733 A.2d 1014 (1999); see also Md. Rule 2-520(c) ("The court need not grant a requested instruction if the matter is fairly covered by instructions actually given."). Our inquiry on appeal is, thus, "`whether the requested instruction was a correct exposition of the law, whether that law was applicable in light of the evidence before the jury, and finally whether the substance of the requested instruction was fairly covered by the instruction actually given.'" Farley, supra, 355 Md. at 47, 733 A.2d 1014 (quoting Wegad v. Howard St. Jewelers, 326 Md. 409, 414, 605 A.2d 123 (1992)).
It is undisputed that Barufaldi contracted for employment with the Chamber for a term of three years and that the Agreement permitted the Chamber to terminate him for cause, but included no corresponding right for Barufaldi to terminate the Agreement prior to the conclusion of its term. Thus, absent a material breach by the Chamber excusing further performance on his part, Barufaldi's resignation a little more than a year into the Agreement would establish liability on his part.
The Chamber contends that any breach on its part of the incentive pay provisions of the Agreement was immaterial. It relies on the doctrine of substantial performance, arguing that because it compensated Barufaldi at his base rate for the 14 months it employed him, it substantially complied with the Agreement. It further contends that language in the Agreement stating 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," makes plain that the incentive pay provisions were not central to the purpose of the Agreement. Thus, according to the Chamber, even if it committed a partial breach by failing to set a "base line net revenue figure" and not paying incentive compensation, Barufaldi remained obligated to perform. Accordingly, Barufaldi's subsequent breach of the Agreement deprived him of a right to recover.
The flaw in this argument is that Barufaldi's right to compensation earned prior to his resignation did not depend upon any future performance on his part. "[A]n employee who has performed services required
The Chamber's reliance upon the substantial compliance doctrine also is misplaced. The Court of Appeals explained this doctrine as follows in Speed v. Bailey, 153 Md. 655, 660-61, 139 A. 534 (1927):
(Quoting 6 R.C.L. 926-927.) (Emphasis added.)
In the instant case, the Agreement was not rescinded,
The Chamber's right to recover on the counterclaim, however, is dependent upon whether its breach was material. If the Chamber materially breached the Agreement, Barufaldi was excused from further performance and, accordingly, could not have breached the Agreement when he resigned in January of 2007. Barufaldi maintains that the jury verdict as returned in his favor is decisive on this point. We disagree. The jurors were not instructed on material breach. They were instructed merely that Barufaldi "may recover those damages which naturally arise from the breaking of the contract." Their verdict may not fairly be understood to pass on the issue of materiality.
A breach is material when it "is such that further performance of the contract would be `different in substance from that which was contracted for'." Dialist, supra, 42 Md.App. at 178, 399 A.2d 1374 (1979) (quoting Traylor v. Grafton, 273 Md. 649, 687, 332 A.2d 651 (1975), in turn quoting Speed, supra, 153 Md. at 661, 139 A. 534).
We conclude that the evidence adduced at trial in this case was such that no reasonable juror could have found that the Chamber's breach of the incentive pay provisions was immaterial.
The Chamber's argument that its breach was immaterial is premised in large part on the language of the Agreement itself to the effect that increasing net revenues was not to be given priority over Barufaldi's other job responsibilities.
"The right to receive compensation for services is basic to the employment relationship[.]" 19 Williston on Contracts, supra, at § 54:35. The Agreement explicitly provides, under a section entitled "Compensation of Employee," that Barufaldi is entitled to two types of compensation: 1) his annual "base salary of [] $52,000[]" and 2) "additional compensation" in the form of "incentive-based compensation for each quarter[.]" A detailed formula for calculating the incentive based compensation appears in the Agreement. The language cited by the Chamber was designed to ensure that Barufaldi could not achieve net revenue increases to inflate his incentive compensation at the expense of the long term financial stability of the Chamber. This language cannot, however, be read to diminish the importance of Barufaldi's entitlement to properly earned incentive based compensation. Rather, the plain language of the Agreement suggests that Barufaldi's base salary and his incentive based compensation were equal components of a two-tiered compensation scheme.
The Chamber also points to evidence adduced at trial that Barufaldi was, at one point, willing to accept just $18,000 in satisfaction of the incentive pay provision for the first year of his employment
We disagree that this evidence supports the Chamber's position. There was no evidence adduced at trial that Barufaldi ever disclaimed his right to incentive pay. Evidence that he may have been willing to accept less incentive compensation than he later claimed has no bearing on whether his entitlement to this compensation was central to his employment contract.
The uncontroverted evidence at trial was that Barufaldi never was paid any incentive compensation. The jury found that Barufaldi had earned $60,000 in incentive compensation. The plain language of the Agreement coupled with the undisputed facts makes clear as a matter of law that the Chamber's breach transformed the Agreement into something "different in substance from that which was contracted for." Dialist, supra, 42 Md.App. at 178, 399 A.2d 1374. As such, Barufaldi could not be liable for breach based on his subsequent termination of the contract.
To summarize, the court erred in granting Barufaldi's motion for judgment on the Chamber's counterclaim for want of evidence of damages. The erroneous ruling did not prejudice the Chamber, however, because, based on the evidence adduced at trial, the jury could not reasonably have found that the Chamber's breach of the Agreement was not material. Because the Chamber committed a material breach of the Agreement, Barufaldi was excused from performance and therefore could not be liable for breaching the Agreement by terminating his employment before completion of the three-year term. The materiality of the Chamber's breach was not relevant to the issue of Barufaldi's claim for damages flowing from that breach, however. Thus, the trial court did not err in declining to give the Chamber's proposed jury instruction to that effect. Accordingly, we shall affirm the judgment in favor of Barufaldi on the Chamber's counterclaim and affirm the judgment in favor of Barufaldi for breach of contract.
The Chamber next contends the trial court erred by failing to instruct the jury on the issues of novation and rescission. This argument is premised on the Chamber's assertion that Barufaldi orally accepted the terms of the new contract offered to him at the October 31, 2006 Board meeting and rescinded the prior Agreement. We need not reach the substance of this issue, however, because this claim of error is waived. The Chamber did not request an instruction on novation
The Chamber asserts that the trial court erred by denying its motion for judgment on the WPCL claim because "Barufaldi's own evidence showed unequivocally a bona fide dispute existed not only to entitlement of any incentive pay, but as to the amount as well." Barufaldi counters that the resolution of the bona fide dispute question "turned on the jury's credibility findings."
We begin with the pertinent law. The WPCL governs the manner in which employers pay their employees and provides remedies for an employer's failure to pay an employee all wages owed to him. As relevant to the instant case, the statute provides, in a subtitle entitled "Payment of wage," that an employer shall pay its employees "at least once in every two weeks or twice in each month." LE § 3-502(a)(1)(ii). "Wage" is defined as "all compensation that is due to an employee for employment" and includes bonuses, commissions, fringe benefits, and "any other remuneration promised for service." Id. at § 3-501(c).
An employee may bring suit to recover unpaid wages "after 2 weeks have elapsed from the date on which the employer is required to have paid the wages." Id. at § 3-507.1(a). As noted above, in such an action, if the court finds that the employer "withheld the wage of an employee in violation of this subtitle and not as a result of a bona fide dispute, the court may award the employee an amount not exceeding 3 times the wage, and reasonable counsel fees and other costs." Id. at § 3-507.1(b) (emphasis added). Thus, a finding that an employer did withhold wages as the result of a "bona fide dispute" as to whether the wages were owed precludes an award of treble damages, attorneys' fees, and costs under the WPCL.
The parties agree on appeal that any incentive pay earned by Barufaldi qualified as a "wage" under the WPCL. The Chamber contends, however, that the evidence at trial was such that no reasonable jury could have found there was not a bona fide dispute as to Barufaldi's entitlement to these wages. This is so, the Chamber argues, because the evidence showed that the parties never agreed on a "base line net revenue figure" and that they disagreed about the meaning of the phrase "net revenue" as used in the Agreement.
As discussed, supra, at the close of Barufaldi's case, the Chamber moved for judgment in its favor on the WPCL count arguing that Barufaldi had failed to prove the absence of a bona fide dispute. The Chamber pressed the same argument in its post-trial motions. To the extent the Chamber continues to argue that the existence of a bona fide dispute precludes any recovery under the WPCL, this is an incorrect statement of the law. In a suit under the WPCL, the existence of a bona fide dispute regarding the entitlement to or the amount of wages due and owing is relevant only to whether the plaintiff may recover treble damages, attorneys' fees, and costs. It is not relevant to whether the plaintiff may recover unpaid wages.
In the instant case, the jurors made the following relevant findings by special verdict: 1) the Chamber breached the Agreement and owed Barufaldi $60,000 in unpaid incentive pay; 2) the Chamber violated the WPCL; 3) "the failure to pay wages" was not as a result of a bona fide dispute; and 4) Barufaldi was not entitled to any additional
The issue of Barufaldi's entitlement vel non to attorneys' fees and costs was for the court to decide and is the subject of Barufaldi's appeal. Therefore, even though the jury declined to award treble damages under the WPCL, we still must determine whether the issue of a bona fide dispute should have been resolved in the Chamber's favor as a matter of law.
The Court of Appeals has explained that a "bona fide dispute" exists when an employer has "a good faith basis" for withholding wages or when "there is a legitimate dispute over the validity of the claim [for unpaid wages] or the amount that is owing." Admiral Mortgage, Inc. v. Cooper, 357 Md. 533, 543, 745 A.2d 1026 (2000). Thus, the appropriate inquiry is whether there was "sufficient evidence adduced to permit a trier of fact to determine that [the employer] did not act in good faith when it refused to pay" wages to an employee. Id.
In the instant case, the Chamber argued that Barufaldi was not entitled to collect any incentive-based compensation because he did not increase the Chamber's net revenues, as it defined that term. It points to the testimony of its accounting witness that "net revenue" has a definite meaning in that field that is inconsistent with any compensation being owed to Barufaldi; that Barufaldi's accounting witness acknowledged the existence of a "dispute" over the meaning of the term "net revenue" in the Agreement; and that witness at one point seemed to suggest that Barufaldi only was entitled to $1,950 in total incentive pay.
There was evidence adduced, however, that the definition of "net revenue" used by the Chamber, while perhaps definite in the accounting field, was not the meaning contemplated by the parties, who did not bring technical expertise to the bargaining table. Barufaldi argued, instead, that the parties intended the term to mean "net profit" or "net income" and that the Chamber's trial theory was a "post hoc rationalization" for its failure to pay him as promised. There was further evidence that, in the first ten months after Barufaldi was hired, the then Board president refused to work with him to set a "base line net revenue figure" as the Agreement required; that the Board contemplated firing Barufaldi if he did not accept the new contract offered to him in October of 2006; that Panco viewed the Agreement as being advantageous to Barufaldi
The jury was free to accept or reject any or all of this evidence in determining whether the Chamber acted in good faith when it failed to pay Barufaldi any incentive-based compensation during his fourteen month tenure. There was ample evidence which, if credited by the jury, supported Barufaldi's argument that the Chamber acted in bad faith in refusing to
The last issue raised by the Chamber on cross-appeal is that it was deprived of a fair trial because an exhibit ordered to be redacted by the trial court was given to the jury in its unredacted form. The exhibit in question was a copy of Barufaldi's resignation letter, which read as follows:
(Emphasis added.)
Barufaldi was questioned about his letter of resignation on direct examination. After he identified the letter and summarized the first paragraph, counsel for the Chamber asked to approach. Counsel for the Chamber argued at the bench that the second paragraph of the letter contained accusations that were not relevant to Barufaldi's causes of action and were prejudicial to the Chamber. The trial judge responded: "All right. Well, I would suggest that we excise out part of that second paragraph. Any objection to that coming in then?"
Counsel for Barufaldi argued that the second paragraph was relevant to his negligent misrepresentation claim and whether there was a bona fide dispute under the WPCL. The trial court responded:
After some discussion, it was agreed that Barufaldi's lawyer would ask him what he meant by "flagrant and continuing breaches" of the Agreement and by "bad faith actions and unfair dealings," but would not otherwise read from the letter or question Barufaldi about the other accusations in paragraph two. The letter, which had been marked for identification as Plaintiff's Exhibit 17, was not introduced into evidence at that time.
The following day, at the close of Barufaldi's case, he offered all of his marked and identified exhibits into evidence and they were admitted without objection. No further mention of the redaction of the letter appeared in the record of the trial.
According to the Chamber, counsel for the parties discussed redactions to the letter in off-the-record conversations and agreed that Barufaldi's lawyer would make the necessary changes. No redactions ever were made, however, and the letter was accepted into evidence in its unredacted form.
We conclude that the introduction into evidence of the unredacted resignation letter does not warrant a new trial. First, despite the Chamber's characterizations of the trial court's ruling, a review of the transcript reveals that, aside from expressing some reservations about the relevance of portions of the second paragraph, the trial court never explicitly directed counsel for Barufaldi to redact portions of the second paragraph. The court suggested redaction as a solution, but observed that it would be difficult to determine the relevance of portions of the letter until after Barufaldi had finished testifying. As the objecting party, it was the Chamber's obligation to follow up with the court or with opposing counsel to determine what redactions, if any, had been made before the letter was introduced into evidence the following day and to preserve any objections to the content. It failed to do so and, accordingly, this claim of error has been waived.
Even if we were to conclude that the court ordered portions of paragraph two redacted and therefore this issue was preserved for review, we nonetheless would conclude that any error was not prejudicial. The objected to portions of the second paragraph concern character attacks upon Barufaldi's wife and other "disrespectful treatment" of Barufaldi. It became clear during the Chamber's case that several Board members believed that Barufaldi's wife was spending too much time in the Chamber offices and was using Barufaldi's computer during work hours. It also was abundantly clear that Barufaldi had a contentious relationship with numerous members of the Board and Chamber staff. The generalized accusations of maltreatment appearing in the resignation letter were cumulative of evidence introduced
We now turn to the only issue raised by Barufaldi on appeal: whether the trial court erred in denying his motion for attorneys' fees and costs. As discussed, supra, Barufaldi prevailed on his WPCL claim and the jury found in his favor on the related question whether the Chamber withheld incentive compensation on the basis of a bona fide dispute. The latter finding triggered a potential award of reasonable attorneys' fees under the statute.
On April 30, 2009, Barufaldi filed his motion, seeking $160,275.97 in fees and costs. Attached to his motion were billing records and affidavits from counsel and support staff. The Chamber opposed the motion, arguing that the jury's decision not to award treble damages effectively nullified its finding that wages were withheld in the absence of a bona fide dispute, and therefore Barufaldi was not entitled to recover any attorneys' fees. The Chamber also argued that the fees requested were unreasonable for a variety of reasons.
On May 26, 2009, the circuit court entered an order denying the motion for fees. The Order stated in its entirety:
Barufaldi timely appealed this order.
The WPCL is a fee-shifting statute. See Friolo v. Frankel, 403 Md. 443, 456-57, 942 A.2d 1242 (2008) ("Friolo II"). It provides, in pertinent part, that if "a court finds that an employer withheld the wage of an employee in violation of this subtitle and not as a result of a bona fide dispute, the court may award ... reasonable counsel fees and other costs." LE § 3-507.1. The Court of Appeals has explained that the discretion to award fees under the WPCL should be exercised liberally, opining:
In a decision issued after the ruling on attorneys' fees in this case, the Court of Appeals clarified that, while the decision to award fees in a WPCL case is reserved to the court, the predicate for such an award—the absence of a bona fide dispute—is a jury question and may not be second guessed by the court in determining the entitlement to fees.
Failure to exercise discretion is itself an abuse of discretion. See, e.g., Thompson v. State, 167 Md.App. 513, 526, 893 A.2d 1169 (2006). In the instant case, we cannot tell whether the court exercised discretion in making its ruling or, if it did, how it did. The court denied the fee request outright without any explanation of its reasoning beyond a reference to relying on the Chamber's opposition. 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. See Friolo II, supra, 403 Md. at 454-55, 942 A.2d 1242 (noting the importance of the trial court explaining how it reaches its fee determination). For this reason, we must vacate the order denying Barufaldi's motion for attorneys' fees and remand for further proceedings on this issue.
The Chamber's accounting expert opined that the term "net revenue" required that the accounting be performed on an accrual basis (as opposed to a cash basis). He did not explicitly define the term "net revenue," but opined that it had a set meaning as an accounting term and disagreed that it meant "net income."
With respect to anticipatory breach, the Chamber continues to suggest that Barufaldi anticipatorily breached the contract by seeking outside employment during the term of the Agreement. This claim is not viable as a matter of law as the Chamber presented no evidence that, prior to his resignation, Barufaldi "manifested an intention not to perform," or that its breach was a response to any such manifestation. See Maryland Civil Pattern Jury Instructions ("MPJI") 9:26 ("A party who clearly indicates that he or she will not perform the contract may be responsible for damages, and this indication of intention not to perform may excuse the other party from performing.").
An additional exception exists for compensation earned during a period in which the employee breached a duty of loyalty. Id. at 523-24. No such breach was alleged in the instant case.
Unlike in Dialist, however, in the instant case, we are not being asked to affirm a finding of materiality, but to hold as a matter of law that the facts permit no other inference but that the breach was material.
