Barufaldi v. Ocean City
196 Md. App. 1
| Md. Ct. Spec. App. | 2010Background
- Chamber hired Barufaldi as executive director Nov 2005 at $52,000 base; Agreement backdated to Nov 1, 2005, for 3 years with automatic renewal unless terminated; Agreement provided base salary plus quarterly incentive-based compensation tied to a baseline net revenue figure; no baseline net revenue was ever established; October 31, 2006 Board offered a new contract eliminating incentive pay, Barufaldi did not sign it and resigned Jan 23, 2007; Barufaldi later joined Charles County Chamber; at trial the jury found Chamber breached and owed Barufaldi $60,000 in incentive pay and WPCL violations; Barufaldi sought WPCL attorneys’ fees, which were denied, and Chamber cross-appealed on several issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Bona fide dispute and WPCL damages | Barufaldi entitlement to unpaid incentive pay was proven; no bona fide dispute. | There was a bona fide dispute as to entitlement/amount of incentive pay. | The absence of a bona fide dispute was supported; but the jury found unpaid wages and WPCL violation; court affirmed but remanded on fees. |
| Counterclaim: material breach | Barufaldi’s resignation did not breach the Agreement due to Chamber’s material breach by withholding incentive pay. | Barufaldi’s resignation breached the Agreement; nonpayment was not material. | Chamber’s breach was material; Barufaldi excused from performance; judgment for Barufaldi on counterclaim affirmed. |
| Novation/rescission instruction | Novation or rescission should have been instructioned due to alleged oral acceptance of new terms. | No trial objections to instruction; issue waived. | Waived; no reversal on this point. |
| Instructions on material breach | Would have allowed jury to consider materiality of Chamber’s breach when evaluating damages. | The given instructions fairly covered law; no error. | No reversible error; material breach properly analyzed; Barufaldi entitled to damages despite alleged materiality. |
| Unredacted resignation letter at trial | Letter contained relevant admissions; redaction should have occurred. | Redaction not clearly decided; any error not prejudicial. | Waived; even if preserved, not prejudicial; no new trial. |
| Attorney’s fees under WPCL | As prevailing on WPCL/wages and no bona fide dispute, fees should be awarded. | Jury found bona fide dispute; no fee entitlement. | Court vacated denial of fees; remanded for consideration of amount and discretion consistent with Programmers’ Consortium and Friolo principles. |
Key Cases Cited
- Dialist Co. v. Pulford, 42 Md.App. 173 (Md. App. 1979) (material breach standard: partial breaches may be damages-based unless material to contract)
- Speed v. Bailey, 153 Md. 655 (Md. 1925) (material breach requires substantial breach to justify rescission)
- Admiral Mortgage, Inc. v. Cooper, 357 Md. 533 (Md. 2000) (bona fide dispute inquiry governs treble damages under WPCL)
- Friolo v. Frankel, 373 Md. 501 (Md. 2003) (WPCL fees discretion; absence of bona fide dispute as predicate for fees; liberal fee award when willfulness shown)
- Programmers' Consortium, Inc. v. Clark, 409 Md. 548 (Md. 2009) (jury predicate finding on bona fide dispute controls court’s authority to award fees under WPCL)