131 F. Supp. 3d 443
D. Maryland2015Background
- Joshua Hausfeld, a Maryland resident, worked as an at-will loan originator for Love Funding Corp. (LFC) based in D.C.; he marketed, originated loans, and frequently worked from his Maryland home and at Maryland events.
- Compensation: $100,000 salary plus production commissions under an LFC Compensation Plan that pays commissions quarterly "after the fees are earned and received" and contains a deferred 5% commission paid only if employee remains for three years; Plan also stated post-termination commissions are discretionary.
- Hausfeld and colleague Artin Anvar had a documented 50/50 commission-split (A7 Marketing Campaign) approved by LFC for certain Maryland-originated deals.
- LFC terminated Hausfeld (May 2013) after he directed an outside trader to solicit bids on certain Ginnie Mae securities, causing investor confusion and delayed sales; LFC then withheld various commissions (deferred and on 11 loans).
- Procedural posture: Hausfeld sued in Maryland state court asserting MWPCL violation, breach of contract, and declaratory relief; case removed to federal court. Cross-motions for summary judgment filed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of MWPCL | MWPCL applies because Hausfeld worked and solicited business in Maryland and LFC allowed him to work from Maryland | D.C. law controls under lex loci contractus; employment centered in D.C. | MWPCL applies; Maryland public-policy exception to lex loci applies (Cunningham); LFC is a Maryland "employer" for MWPCL purposes |
| Right to deferred commission (vested but unpaid) | Deferred 5% was already earned and cannot be withheld because MWPCL bars conditioning wages on continued employment | LFC relied on Compensation Plan discretion and vesting schedule to withhold payment | Hausfeld entitled to deferred commission as a matter of law under MWPCL (Medex controls); partial summary judgment for Hausfeld |
| Right to commissions on loans that closed before termination (Forest Cove) | Earned under the 50/50 split approved by LFC; closed pre-termination so wages vested | LFC disputes extent of Hausfeld’s work; argues termination justifies nonpayment per policy | Forest Cove commission awarded to Hausfeld as a matter of law; summary judgment in his favor |
| Commissions on loans that closed after termination (other loans) | Many loans were covered by the 50/50 split or required little post-originator work; genuine disputes about whether Hausfeld did everything required to earn commissions | LFC says others (closers/management) performed necessary post-originator work and were effectively paid; thus Hausfeld did not earn commissions | Genuine factual disputes exist (Rogers factors); summary judgment denied to both parties on most remaining commission claims |
| Set-off/Recoupment for alleged trading losses | (Hausfeld) Estep did not complete any sale and LFC has not shown quantifiable, admissible reputational loss | (LFC) Hausfeld directed unauthorized bidding causing investor confusion and price declines; seeks set-off/recoupment of quantified losses | Denied Hausfeld’s motion: LFC presented admissible evidence creating a genuine dispute about quantifiable losses and entitlement to set-off/recoupment |
| Treble damages / attorneys’ fees under MWPCL | Hausfeld seeks damages and fees; LFC claims a bona fide dispute existed so trebling/fees inappropriate | LFC argues withholding based on good-faith contract interpretation/dispute | Whether bona fide dispute existed is fact issue for jury; summary judgment denied on treble/fees issue |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment evidence view favoring nonmovant)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (federal courts apply forum state choice-of-law rules)
- Cunningham v. Feinberg, 107 A.3d 1194 (Md. 2015) (MWPCL may apply despite out-of-state employment; strong Maryland public-policy exception to lex loci)
- Medex v. McCabe, 811 A.2d 297 (Md. 2002) (earned incentive pay cannot be conditioned on continued employment; MWPCL vests earned wages)
- Rogers v. Savings First Mortgage, LLC, 362 F.Supp.2d 624 (D.Md. 2005) (fact-intensive MWPCL commission analysis; factors for post-termination commissions)
- Himes Assocs., Ltd. v. Anderson, 943 A.2d 30 (Md. Ct. Spec. App. 2008) (MWPCL applies where employer allows employee to work in Maryland)
- McLaughlin v. Murphy, 372 F.Supp.2d 465 (D.Md. 2004) (distinguishable: contract explicitly conditioned commissions on settlement before termination)