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holding that an imputed interest payment sought by a former employee was a “wage” within the meaning of the Wage Act, because “[plaintiff's] entitlement to the Imputed Interest payment was conditioned solely upon his performance.”
Summary of this case from Horlick v. Capital Women's Care, LLCOpinion
Civil No. WDQ-05-00630.
August 23, 2005
Haig Vahan Kalbian, Claire Angela Wood, Mary M. Baker, Kalbian Hagerty LLP, Washington, DC, for Plaintiff.
Andrew D. Levy, Brown Goldstein and Levy LLP, Baltimore, MD, for Defendant.
MEMORANDUM OPINION AND ORDER
In this diversity action, David J. McCarthy countersued Provident Bank of Maryland T/A Provident Bank ("Provident") for unpaid compensation in violation of the Maryland Wage Payment and Collection Act (the "MWPCA"). Pending is Provident's motion to dismiss for failure to state a claim. For the following reasons, Provident's motion to dismiss will be denied.
MD. CODE ANN., LAB. EMPL. § 3-501, et seq. (2005).
BACKGROUND
On April 6, 1998, McCarthy entered into an employment agreement with Provident (the "Agreement"). See Counterclaim at ¶ 7. Pursuant to the Agreement, McCarthy served as the President and Chief Executive Officer of a leasing company owned by Provident. See id. at ¶ 8. The Agreement stated the parties' rights and obligations upon termination. See Complaint, Exh. A at § 6. If Provident terminated McCarthy without cause, he was entitled to receive an Imputed Interest payment of $4,846,050. See id. at §§ 5.2, 61; See also Counterclaim at ¶ 17.
On March 4, 2005, Provident filed a complaint seeking a declaratory judgment that McCarthy was terminated for cause.
The Agreement defines "cause" as the employee's willful, intentional and continued failure to substantially perform stated duties, personal dishonesty, or the willful violation of any law, rule, regulation or final cease and desist order. See Complaint, Exh. A at § 6.3. An employee acts "wilfully" when he performs or fails to perform an act, in bad faith and without reasonable belief that the action or omission was in the best interest of the company. See id.
McCarthy contends that on January 21, 2005 he was terminated without cause. See Counterclaim at ¶ 15. Provident, however, refused his demand for the Imputed Interest payment. See id. at ¶ 19. McCarthy argues that Provident's refusal to pay is in violation of the MWPCA. On April 22, 2005, McCarthy filed this counterclaim.
LEGAL DISCUSSION
A. Motion to Dismiss1. Standard of Review
A Fed.R.Civ.P. 12 (b)(6) motion to dismiss should be granted "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002), (citing Hishon v. King Spalding, 467 U.S. 69, 73 (1984)); Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). All allegations are treated as true, and the complaint is viewed in the light most favorable to the plaintiff. Mylan Laboratories, Inc. v. Raj Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). If any possible basis for relief has been pled, the Court must deny the motion to dismiss. Garland v. St. Louis, 596 F.2d 784 (8th Cir. 1979), cert. denied, 444 U.S. 899 (1979); Swierkiewicz, 534 U.S. at 514.
In deciding a Rule 12(b)(6) motion, the Court will consider the facts stated in the complaint and any attached documents. Biospherics, Inc., v. Forbes, Inc., 989 F.Supp. 748, 749 (D. Md. 1997), aff'd, 151 F.3d 180 (4th Cir. 1998)). The Court may also consider documents referred to in the complaint and relied upon by plaintiff in bringing the action. Id.
2. Maryland Wage Payment and Collection Act
Provident contends that McCarthy's counterclaim should be dismissed because the MWPCA is inapplicable.
The MWPCA requires employers, upon the termination of an employee's employment, to pay that employee "all wages due for work that the employee performed before the date of termination of employment." See MD. CODE ANN. LAB. EMPL. § 3-505. The MWPCA defines "wage" as all compensation that is due to an employee for employment. See § 3-501(c). Wage includes a bonus, commission, fringe benefit or any other remuneration promised for service. See id. It is the exchange of remuneration for the employee's work that is crucial to the determination that compensation constitutes a wage. The Whiting-Turner Contracting Company v. Fitzpatrick, 366 Md. 295, 303(2001).
Here, Provident promised McCarthy the Imputed Interest payment as inducement for his employment. See Mot. Dism. at p. 6. Once a bonus, commission or fringe benefit has been promised as part of compensation for service, the employee is entitled to enforce the payment as wages. See Whiting-Turner at 304-05.
Provident argues that the Imputed Interest payment is not a wage, because McCarthy is not entitled to the payment if he breaches the Agreement's noncompete provision. If termination payments are dependent upon conditions other than the employee's efforts, the MWPCA is inapplicable. See id. at 303.
In support, Provident relies upon Stevenson v. Branch Banking and Trust Corporation, 159 Md. App. 620, 646 (2004). In Stevenson, the Maryland Court of Special Appeals found the MWPCA inapplicable because the employee's termination compensation was payment for her agreement not to compete, rather than for work performed. See id. at 645-46. The agreement expressly provided that the employee forfeited the termination compensation for violation of the noncompete provision. See id.
In this case, the Agreement does not condition McCarthy's entitlement to the Imputed Interest on his adherence to the noncompete provision. Unlike Stevenson, the Agreement here contains no cross references between the termination compensation and noncompete provisions. Moreover, Provident's sole remedy for McCarthy's breach of the noncompete provision is to seek an injunction, not forfeiture of the Imputed Interest payment. See Complaint, Exh. A § 7.3.
McCarthy's entitlement to the Imputed Interest payment was conditioned solely upon his performance. See id. at § 6.1. McCarthy alleges that "at all times during his employment, he acted in good faith and with the reasonable belief that all his actions were taken in the best interest of Provident and the leasing company." See Counterclaim at ¶ 14. An employee's right to compensation vests when the employee does everything required to earn the wages. See Medex v. McCabe, 372 Md. 28, 41 (2002).
As McCarthy sufficiently pled a MWPCA claim, Provident's motion to dismiss will be denied.
CONCLUSION
For the reasons discussed above, Provident's motion to dismiss will be denied.
ORDER
For the reasons discussed in the accompanying Memorandum Opinion, it is this 23rd day of August 2005, ordered that:1. the Plaintiff's motion to dismiss BE, and HEREBY IS, DENIED; and
2. the Clerk of the Court shall send copies of this Memorandum Opinion and Order to counsel for the parties.