Pinnacle Group v. Kelly , 235 Md. App. 436 ( 2018 )

Pinnacle Group, LLC, et al. v. Victoria Kelly, No. 1232, Sept. Term, 2016
Opinion by Leahy, J.
HEADNOTES
Employment Law > Maryland Wage Payment and Collection Law > Bona Fide
Dispute
In determining whether a bona fide dispute exists, a court considers “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” the withheld wages. Admiral Mort., Inc. v.
Cooper, 357 Md. 533, 543 (2000).
Employment Law > Maryland Wage Payment and Collection Law > Bona Fide
Dispute
A person or entity doing business in Maryland must be aware of the requirements affecting
a Maryland business enterprise, including whether state and federal laws apply.
Employment Law > Maryland Wage Payment and Collection Law > Bona Fide
Dispute
Appellants avail themselves of the benefits of operating their business in this jurisdiction,
and along with that benefit, comes the responsibility to proactively conform to the
governing employment law.
Employment Law > Determination of Employer > Economic Reality Test
Critical to the determination of whether an individual is an employer is whether the
individual has the right “to control and direct the employee in the performance of the
work and in the manner in which the work is to be done.”
Employment Law > Determination of Employer > Economic Reality Test
The factors are “not to be applied mechanistically, and their general purpose must be
understood as ultimately assigning responsibility under the law.”
Employment Law > Maryland Wage Payment and Collection Law > Award of
Attorney’s Fees
In MWPCL cases, the Court of Appeals has approved the lodestar method, considered in
light of the Johnson v. Georgia Highway Express factors, as the presumptively
appropriate method for determining whether to award attorneys’ fees. Courts should
liberally exercise their discretion in favor of an award “unless the circumstances of the
particular case indicate some good reason why a fee award is inappropriate in that case.”
Employment Law > Maryland Wage Payment and Collection Law > Award of
Attorney’s Fees
A trial court must clearly articulate the factors and reasoning used to calculate the overall
figure so that an appellate court can adequately discern the soundness of the trial court’s
conclusion.
Employment Law > Maryland Wage Payment and Collection Law > Award of
Attorney’s Fees
Although we review for abuse of discretion, the trial court must explain its reasoning for
its determinations so that we can ascertain the validity of its decision on review.
Contracts > Contract Interpretation
Courts should refrain from considering outside evidence of prior statements or
understandings when interpreting a contract that contains an integration clause because the
clause indicates that the contract is the complete iteration of the parties’ agreement.
Circuit Court for Wicomico County
Case No. C13-0953
REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 1232
September Term, 2016
PINNACLE GROUP, LLC, et al.
v.
VICTORIA KELLY
Meredith,
Leahy,
Salmon, James P.
(Senior Judge, Specially Assigned),
JJ.
Opinion by Leahy, J.
Filed: February 1, 2018
The underlying attorneys’ fees litigation springs from the lawsuit filed in June 2013
by Victoria Kelly (“Appellee” “Ms. Kelly”), a home-health employee, in the Circuit Court
for Wicomico County against her employer, Pinnacle Group, LLC (“Pinnacle”), and its
sole owner, Anthony D’Antonio (collectively, “Appellants”). Ms. Kelly sued to recover,
inter alia, unpaid overtime wages, treble damages, and attorneys’ fees under the Maryland
Wage Payment & Collection Law, Md. Code (2008 Repl. Vol., 2012 Supp.), Labor &
Employment Article (“LE”), §§ 3–501 et seq. (“MWPCL”) and the Maryland Wage &
Hour Law, LE §§ 3–401 et seq. (“MWHL”).1 After a series of settlement negotiations,
litigation in two state trial courts, and a decision from this Court applying a Court of
Appeals’ ruling on the scope of the MWPCL, the parties settled Ms. Kelly’s claim for
$15,500. She then petitioned the circuit court for $146,987.66 in attorneys’ fees and
$2,851.40 in costs. After the circuit court awarded $49,250.00 in fees against Appellants,
they appealed to this Court. Ms. Kelly also filed a cross-appeal, contesting the court’s
reduction of her claimed attorneys’ fees. We have rephrased and consolidated the ten
issues presented by the parties into the following six:2
1
Citation to the 2012 Supplement reflects the statutes at the time the complaint was
filed. The current statutes are codified without change in the 2016 Replacement volume,
at Maryland Code (2016 Repl. Vol.), LE, §§ 3–401 et seq. and §§ 3–501 et seq.
2
Appellants phrased their questions presented as follows:
I. “Did the trial court err in finding the settlement agreement entered into by Ms. Kelly
and Appellants did not release Appellants from any and all claims made by Ms.
Kelly, therefore precluding Ms. Kelly from seeking an award of attorney’s fees
against Appellants?”
II. “Did the trial court err in finding Ms. Kelly was not barred from seeking an award
Continued . . .
of attorney’s fees and costs as res judicata because of Ms. Kelly’s dismissal of her
suit against Appellants in the District Court for Wicomico County?”
III. “Did the trial court err, as a matter of law, in awarding Ms. Kelly attorney’s fees,
despite the trial court never having made the predicate finding that Appellants had
violated the MWPCL?”
IV. “Did the trial court err, as a matter of law, in finding Ms. Kelly was not paid
overtime wages because of a bona fide dispute?”
V. “Did the trial court err, as a matter of law, in finding that Mr. D’Antonio constituted
Ms. Kelly’s employer and, therefore, is individually liable to Ms. Kelly under the
MWPCL?”
VI. “Did the trial court err in overlooking Ms. Kelly’s failure to establish the fees were
necessary?”
VII. “Assuming arguendo the trial court did not err, as a matter of law, in awarding Ms.
Kelly attorney’s fees under the MWPCL, and further assuming Ms. Kelly
established the fees were necessary, did the trial court abuse its discretion in denying
Ms. Kelly’s request for an award of attorney’s fees and costs under the MWHL and
granting Ms. Kelly an award of attorney’s fees under the MWPCL in the amount of
$49,250.00?”
Ms. Kelly, in her cross-appeal, presented three questions for our review:
I. “Whether the circuit court correctly determined that Ms. Kelly was entitled to
reasonable attorneys’ fees following favorable rulings in this Court on her
entitlement to overtime wages under the WPCL and in the circuit court on whether
Appellants’ ignorance of the existence of Maryland law constituted a bona fide
dispute, and a favorable settlement expressly providing that Ms. Kelly would
petition for an award of attorneys’ fees?”
II. “Whether the circuit court correctly found that D’Antonio, who solely owns
Pinnacle and caused it to underpay Ms. Kelly through his total operational control
of the business, was Ms. Kelly’s employer and therefore jointly and severally liable
for attorneys’ fees?”
III. “Whether the court improperly determined the amount of fees to be awarded when
it failed to apply the governing legal standard in determining the reasonableness of
2
1. Did the Settlement Agreement preclude Ms. Kelly from seeking an award
of attorneys’ fees against Appellants?
2. Did res judicata bar Ms. Kelly’s petition for attorneys’ fees and costs
associated with her MWHL claim, given the dismissal of Ms. Kelly’s suit
on that claim in district court?
3. Did the circuit court err in awarding attorneys’ fees associated with her
MWHL claim without making the predicate finding that Appellants
violated the MWPCL?
4. Did the circuit court err in finding there was no bona fide dispute in
Appellants’ failure to pay Ms. Kelly overtime wages?
5. Did Mr. D’Antonio qualify as Ms. Kelly’s employer under the economic
reality test so that he could be held jointly and severally liable for
attorneys’ fees?
6. Using the lodestar analysis, did the circuit court correctly determine that
Ms. Kelly was entitled to attorneys’ fees and adequately calculate the fee
award?
On the first issue, we hold that the circuit court did not err in finding that the plain
language of the parties’ settlement agreement did not preclude Ms. Kelly from petitioning
for attorneys’ fees. Because the circuit court did not award any attorneys’ fees for Ms.
Kelly’s MWHL claim or the district court action, we need not decide whether res judicata
barred attorneys’ fees for those claims. In regard to the third and fourth issues on appeal,
the record reflects that the circuit court already made the predicate finding that there was
no bona fide dispute when it granted partial summary judgment on July 24, 2015, and
Continued . . .
the fees requested, instead incorrectly applying a ‘proportionality’ analysis based
on the ‘relatively modest’ amount in controversy rather than the correct ‘degree of
success’ analysis, erroneously applied a billing notice requirement, and failed to
award fees for work equally necessary to Ms. Kelly’s success and costs?”
3
determined, properly, that Appellants withheld Ms. Kelly’s earned wages without a good
faith basis for doing so. We also conclude, in regard to the fifth issue raised, that the trial
court applied the economic reality test properly in determining whether Mr. D’Antonio was
Ms. Kelly’s employer and in deciding that he is jointly and severally liable for any
judgment against Appellants. Finally, while the circuit court did not abuse its discretion in
deciding to award fees, we hold that the court erred in failing to satisfactorily articulate its
reasoning for the amount awarded. Thus, we affirm all of the trial court’s decisions that
are properly before us on appeal, except that we remand for further proceedings on the
amount of attorneys’ fees awarded for the reasons explained below.
BACKGROUND
A. Ms. Kelly’s Employment
Ms. Kelly worked as a companion care employee, a/k/a home healthcare worker,
for LifeMatters, an entity providing care for senior citizens and the disabled on Maryland’s
Eastern Shore and in Sussex County, Delaware. LifeMatters is owned by Pinnacle Group,
an umbrella company that has its principal place of business in Salisbury, Maryland. Mr.
D’Antonio wholly owns Pinnacle Group.
For approximately eighteen months preceding Ms. Kelly’s suit, her work schedule
consistently pendulated between 97 hours of work one week and 88 hours the following
week. For those weekly hours worked in excess of 40 hours during this period, Appellants
did not pay Ms. Kelly an overtime rate of “time and a half” but instead paid only her
standard hourly wage.
On at least two occasions, Ms. Kelly inquired about overtime pay and was informed
4
that Pinnacle’s policy was that it did not pay overtime. Mr. D’Antonio later claimed in his
deposition that he believed Ms. Kelly was exempt from overtime regulations given the
application of federal law exempting home companion workers,3 and he did not consider
that Ms. Kelly may be entitled to overtime wages under Maryland law because of his belief
that federal law superseded Maryland’s law.
B. Ms. Kelly Sues to Recover Wages
After learning that she was, in fact, entitled to overtime wages under Maryland law,
Ms. Kelly commenced the underlying suit in the Circuit Court for Wicomico County on
June 10, 2013, claiming violations of the MWHL and the MWPCL “stemming from
[Appellants’] willful failure to pay her all earned wages, including overtime wages[.]”4
Ms. Kelly sought return of the wages and overtime owed, plus treble damages. She also
asserted a claim of quantum meruit, seeking restitution or appropriate disgorgement of
Pinnacle’s profits. Finally, she requested an award of attorneys’ fees and costs.
After receiving notice of Ms. Kelly’s suit, Mr. D’Antonio contacted counsel who
informed him that federal law did not preempt Ms. Kelly, and other companion care
3
See Fair Labor Standards Act, 29 U.S.C. §§ 201–219 (2012). The Act requires
that, for each hour worked in excess of 40 hours per week, employees are paid at least one
and one-half times their regular rate; however, § 213(a)(15) exempts from “any employee
employed in domestic service employment to provide companionship services for
individuals who (because of age or infirmity) are unable to care for themselves[.]”
4
At the time that Ms. Kelly filed her suit, this Court had held that the MWPCL only
provided a right of action to an employee whose employer failed to pay on a set schedule
or failed to pay in advance when payday was on a non-workday. Marshall v. Safeway,
Inc., 210 Md. App. 545, 568-69 (2013). The Court of Appeals rejected that interpretation
in 2014, ruling that employees have a cause of action when the employer does not pay
wages lawfully due. Marshall v. Safeway, Inc., 437 Md. 542, 561-62 (2014).
5
workers employed by his companies, from Maryland’s overtime wage requirements.
Nevertheless, Appellants filed their joint Answer on August 9, 2013, in which they asserted
a general denial to all of Ms. Kelly’s allegations along with the affirmative defenses of
payment and statute of limitations.
Roughly six weeks later, on September 26, 2013, the parties met in Baltimore for a
settlement conference. At the meeting, Appellants agreed to furnish certain documents,
including Pinnacle’s financial statements and tax returns. Ms. Kelly’s counsel sent a letter
to Appellants on October 9, informing them that Ms. Kelly had not yet received the
documents (which were also responsive to Ms. Kelly’s discovery requests) and informing
Appellants that Ms. Kelly’s counsel now represented Rhonda Russell, another LifeMatters
employee who also did not receive overtime compensation.
On October 16, 2013, Appellants’ counsel unilaterally tendered two checks,
enclosed in a letter to counsel for Ms. Kelly and Ms. Russell. The letter stated, “I also
enclose a check from Mr. D’Antonio to Ms. Kelly, in the amount of $15,067.21, which is
the amount of overtime Mr. D’Antonio has determined to have been uncompensated.” The
letter also contained the explanation that “[t]he gross amount of overtime compensation
due . . . would be . . . $21,413.25 in the case of Ms. Kelly. I have enclosed a statement
detailing the withholdings taken from both checks.” Included along with the checks was a
draft stipulation to dismiss the claims with prejudice. Ms. Russell accepted the check, but
counsel returned Ms. Kelly’s check, asserting that payment did not make her whole and
that damages and attorneys’ fees remained viable claims. On November 7, 2013, after
receiving verification from Appellants’ counsel that accepting the check would not release
6
her claims, Ms. Kelly accepted her check. Appellants then filed an Amended Answer on
the same day, in which they added the affirmative defense of accord and satisfaction.
C. Attorneys’ Fees
Still not in receipt of the requested financial documents, on November 8, Ms.
Kelly’s counsel sent another letter, stating that “[i]t is necessary to know the health and
profitability of our clients’ employers, in order to assure that damages are awarded in [sic]
amount that actually would have some deterrent effect.” On the same day, Appellants filed
discovery requests that included an interrogatory seeking information regarding the fee
agreement between Ms. Kelly and her counsel. Ms. Kelly’s counsel objected because “it
seeks information that is irrelevant . . . at this stage[.]”
On December 17, 2013, Ms. Kelly’s attorneys were set to begin depositions when
they transmitted a “time-limited settlement demand” on her behalf because they were at a
tipping point of putting “significant attorney time” into the litigation and noted that a “trial
will increase the amount of fees exponentially.” After not receiving a response, Ms. Kelly
amended her complaint to include Ms. Russell’s claims. Subsequently, Ms. Kelly’s
attorneys deposed several parties, including Mr. D’Antonio’s accountant, Sherry Sadler,
who testified that while learning payroll, she was informed by an outside accountant that
home healthcare workers were exempt from overtime requirements.
On January 2, 2014, Appellants’ counsel requested the hourly rates, total hours, and
total billings of Ms. Kelly’s attorneys with whom they had been dealing in exchange for
not filing a motion compelling production of those documents. One of Ms. Kelly’s
attorneys responded that her rate is $240 an hour, that she had spent roughly 69.25 hours,
7
and that she had yet to bill; further, she responded that the other attorney’s rate was $250
an hour, but she could only approximate his hours because he was out of the country.
D. Prior Appeal and State District Court Action
On January 16, 2014, Appellants moved for summary judgment in the circuit court,
arguing that the MWPCL did not concern the amount of wages payable, but rather, the duty
to pay wages due on a regular basis. They claimed that Ms. Kelly failed to state a claim
upon which relief could be granted because the MWPCL did not provide for the recovery
of unpaid overtime wages. Appellants further argued that Ms. Kelly could not recover
damages under LE § 3–507.2(b), infra, which allows for the recovery of up to three times
the wages owed if the wages were not withheld as a result of a bona fide dispute. They
claimed that such a dispute did exist since they had a good faith basis for withholding Ms.
Kelly’s overtime wages—their belief that federal law, which exempted home healthcare
workers from overtime pay requirements, preempted Maryland law, which did not exempt
those workers. Mr. D’Antonio “honestly never looked into” whether that belief was
correct; instead, he simply relied on that interpretation from “someone else”. Finally,
Appellants claimed that Ms. Kelly’s MWHL claim was satisfied since they paid her in full
for all unpaid overtime wages.
Ms. Kelly filed her motion for partial summary judgment the next day, arguing that
Appellants’ ignorance of the law did not create a bona fide dispute. She claimed that
judicial recognition of “willful ignorance” as constituting a bona fide dispute would
“incentivize employers to wear blinders rather than comply with their legal obligations.”
On February 26, 2014, the circuit court granted summary judgment to Appellants
8
on the MWPCL claim. The circuit court found that, under the Court of Appeals’ holding
in Friolo v. Frankel, 373 Md. 501, 513 (2003), Ms. Kelly’s claim was not viable because
the MWPCL only “concerns the duty to pay whatever wages are due on a regular basis and
to pay all that is due following termination of the employment.” As a result of the dismissal
of her MWPCL claim, the circuit court dismissed her MWHL claim because it was “at
most, $4,000.00 at issue[]” and thus did not satisfy the amount in controversy required for
the circuit court’s jurisdiction.5 The court then denied Ms. Kelly’s motion for partial
summary judgment.
On February 28, 2014, Ms. Kelly filed suit in the District Court of Maryland for
Wicomico County on the MWHL claim that was dismissed by the circuit court. (Civil
Action No. 020300015252014). Ms. Kelly alleged that the check she received in October
2013 did not fully compensate her for her unpaid regular and overtime wages and that
Appellants still owed her $2,500.00 in unpaid wages and $1,700.00 in interest plus
attorneys’ fees and costs. Ms. Kelly contended that these unpaid wages included “pre and
post scheduled shift work and compensable travel time.” In addition, Ms. Kelly alleged
that Appellants breached their employment contract, resulting in economic injury, and
again alleged quantum meruit.
On the same day that she filed suit in district court, Ms. Kelly challenged the circuit
5
In Peters v. Early Healthcare Giver, Inc., 439 Md. 646 (2014), the Court of
Appeals clarified the difference between—and interrelatedness of—the MWPCL and
MWHL: “The [M]WHL aims to protect Maryland workers by providing a minimum wage
standard. The [M]WPCL requires an employer to pay its employees regularly while
employed, and in full at the termination of employment. Read together, these statutes allow
employees to recover unlawfully withheld wages[.]” Id. at 653.
9
court’s decision on the MWPCL in an appeal to this Court.6 The same MWPCL issues
were pending in the Court of Appeals, which then decided Peters v. Early Healthcare
Giver, Inc., 439 Md. 646 (2014) and Marshall v. Safeway Inc., 437 Md. 542 (2014). In
Marshall, the Court of Appeals held that the MWPCL provides a cause of action for
wrongfully withheld wages, including overtime, 437 Md. at 560, and subsequently, in
Peters, the Court reiterated, “Without a doubt, [Plaintiff] has a right to bring a private cause
of action under the WPCL to recover any unlawfully withheld overtime wages.” 439 Md.
at 654-55. Consistent with those decisions, we held in Kelly v. Pinnacle Group, LLC, No.
2641, September Term 2013, slip op. at 10-12 (filed Jan. 26, 2015) (unreported), that Ms.
Kelly had a cause of action under the MWPCL and reversed the circuit court’s grant of
summary judgment to Appellants.
We did not decide, however, whether a bona fide dispute existed for Appellants’
failure to pay Ms. Kelly overtime wages. The circuit court had dismissed Ms. Kelly’s
motion for partial summary judgment as moot, and therefore, did not make any factual
findings. Because we could not review the issue of whether a bona fide dispute existed,
we allowed Ms. Kelly’s claim to proceed, giving instructions to the circuit court that the
determination of whether a dispute existed “may require specific factual findings” and that
if the factfinder found there was no dispute, the parties could proceed to damages.
6
Kelly v. Pinnacle Group, LLC, No. 2641, September Term 2013 (filed Jan. 26,
2015) (unreported). Ms. Kelly later moved to stay the district court suit because of her
pending appeal, which the district court granted.
10
E. Partial Summary Judgment, Settlement, and Petition for Fees and Costs
On remand in the circuit court, Ms. Kelly renewed her motion for partial summary
judgment, in which she alleged that Appellants’ failure to pay her overtime wages was not
the result of a bona fide dispute. On June 4, 2015, the court heard arguments as to whether
there was a bona fide dispute and held the matter sub curia. In a written opinion dated July
24, 2015, the circuit court found that, in light of Peters, Appellants did not have a “good
faith basis” for refusing to compensate Ms. Kelly for overtime wages. Instead, the circuit
court found that Appellants did not exercise due diligence as they failed to consult counsel
or research whether Maryland law would still apply in light of conflicting federal law. The
court stated the following:
This is not a case where [Appellants] exercised due diligence to ascertain the
obligations imposed by Maryland law. To the contrary, [Appellants] neither
researched, nor sought legal advice, as to Maryland law governing overtime wages
for [Ms. Kelly] or her co-workers. Nor did [Appellants] research, or seek legal
advice, as to the relationship between State and Federal law on the issue of payment
of overtime wages to home healthcare workers. Rather, [Appellants], without
making any reasonable effort to know and abide by Maryland law, simply denied
the wage claim of [Ms. Kelly]. . . . [Appellants] chose deliberate ignorance over due
diligence. Given those facts, this Court cannot find a good faith basis for denying
the claim for overtime wages.
The court also noted Mr. D’Antonio’s deposition testimony, in which he stated that
he “honestly never looked into it.” As a result, the court concluded, deliberate ignorance
of Maryland law could not constitute a bona fide dispute and granted Ms. Kelly’s motion
for partial summary judgment.
The circuit court’s ruling appears to have been the impetus for renewed settlement
negotiations. The parties informed the court on November 19, 2015 that they settled Ms.
11
Kelly’s claims, and on November 23, 2015, the court removed the pre-trial conference and
trial dates. In the preamble of the Settlement Agreement, the parties noted that Ms. Kelly’s
suit in the circuit court sought unpaid wages and damages resulting from violations of the
MWPCL and MWHL and that they agreed to settle that suit. Ms. Kelly received $15,500,
in addition to the $15,067.21 paid in October 2013. Out of the $15,500, $2,200 was for
wages while $13,300 was for non-wage damages. The parties noted several times
throughout the Agreement that Ms. Kelly maintained her right to petition the court for
attorneys’ fees and costs. Ms. Kelly exercised that right two months later, on January 22,
2016, by filing her Petition for Fees and Costs. Her petition, inclusive of both her MWPCL
and MWHL claims, requested attorneys’ fees for $146,987.66, representing a deduction
from fees incurred in the amount of $194,142.85, and also sought costs of $2,851.40. This
request included the fees and costs for her protective action in the district court as well as
her appeal on the scope of the MWPCL. The circuit court issued its decision on July 21,
2016. Since the parties settled prior to the court’s consideration of whether Appellants
violated the MWHL, the court found that it could only award attorneys’ fees pursuant to
the MWPCL. As a result, the court found that Ms. Kelly was entitled to $49,250.00 in
attorneys’ fees under the MWPCL and also found that Mr. D’Antonio was Ms. Kelly’s
employer for individual liability purposes.
Appellants filed a timely appeal to this Court on August 19, 2016. One week later,
Ms. Kelly noted her cross-appeal.
12
DISCUSSION
I.
THE SETTLEMENT AGREEMENT
Appellants’ first contention on appeal is that the Settlement Agreement prohibited
Ms. Kelly from seeking attorneys’ fees. Appellants acknowledge that Section 2.1 of the
Agreement allows Ms. Kelly to petition the court for attorneys’ fees and costs but argue
that Section 4 releases them “from those claims arising out of, or in any way relating or
pertaining to, wages claimed to be or actually owed for work performed.” They claim that
Ms. Kelly cannot get attorneys’ fees because LE § 3-507.2(b) first requires a finding by
the court that an employer withheld wages in violation of the statute and that cannot occur
because the terms of the Agreement denied all liability.
Ms. Kelly responds that no such waiver occurred because the Agreement’s language
in Sections 2.1, 2.4, and 2.5 is clear and unambiguous in preserving her right to petition for
attorneys’ fees, and thus, we must presume the parties meant what they expressed. Ms.
Kelly maintains that Section 4 is a general waiver that does not limit her ability to seek
attorneys’ fees and notes that Appellants further assented to her right to petition when they
submitted a letter to the court agreeing to submit the question of attorneys’ fees and costs
to the court.
Settlement agreements are subject to the same general rules of construction that
apply to other contracts. O’Brien & Gere Eng’rs, Inc. v. City of Salisbury, 447 Md. 394,
421 (2016). The basic precept of contract interpretation is to contemplate and effectuate
the parties’ intentions. Id. (citation omitted). We will not displace an objective reading of
13
the contract with one party’s subjective understanding. Auction & Estate Representatives,
Inc. v. Ashton, 354 Md. 333, 341 (1999) (citations omitted). We construe the contract in
its entirety, Maslow v. Vanguri, 168 Md. App. 298, 318 (2006) (citation omitted), but when
a general provision seemingly conflicts with a specific provision, we will give effect to the
specific provision. Heist v. Eastern Sav. Bank, FSB, 165 Md. App. 144, 151 (2005)
(citation omitted).
The Agreement contains three provisions, all located in Section 2, that specifically
address Ms. Kelly’s ability to petition the Court for attorneys’ fees:
2.1 In consideration for the mutual promises contained in this Agreement,
Defendants agree to pay Plaintiff a total of $15,500.00 to settle all claims
alleged in the Lawsuit, except Plaintiff’s claims for attorneys’ fees and costs.
***
2.4 The Parties have agreed that Plaintiff will petition the Court for an
award of attorneys’ fees and costs[.]
2.5 Plaintiff accepts the Settlement Payments made and to be made
hereunder and the right to petition the court for fees and costs, provided
herein, as consideration in full and complete satisfaction and release of
claims alleged in the Lawsuit and/or covered in this Agreement.
(Emphasis added).
The parties also stipulated to one provision that provides a general waiver of liability
and a release of claims. That section, Section 4.1, states the following:
Plaintiff . . . fully, finally, and forever, settles, waives, releases, and
discharges Defendants . . . from those claims arising out of, or in any way
relating or pertaining to, wages claimed to be or actually owed for work
performed for Defendants that Plaintiff had, now has, or may have from the
beginning of time up through the effective date of this Agreement, including,
but not limited to, claims under the Federal Fair Labor Standards Act, 29
U.S.C. § 201 et seq. (“FLSA”), the MWHL, and the MWPCL.
14
Based on a plain reading of the Agreement, the only interpretation that effects the
parties’ intent without rendering the specific provisions surplusage is that the parties agreed
Ms. Kelly would retain the right to petition for attorneys’ fees and costs. Such a
construction was not only contemplated by the parties, as evidenced by the multiple
sections, but also aligns with the principle of ejusdem generis. That canon provides that,
where specific words are followed by a general term, the general term will be read narrowly
because of the specific items enumerated. See Ejusdem Generis, Black’s Law Dictionary
(10th ed. 2014). Here, the provisions in Section 2 of the Agreement state unambiguously
that the right of Ms. Kelly to petition for costs and fees is not waived, and those sections
therefore have priority over the general language found in Section 4.1. See Heist, 165 Md.
App. at 151.
We conclude that Ms. Kelly did not waive her right to petition for costs and fees,
and the general waiver in Section 4.1 must be read subordinate to those preceding sections
that permitted her to do so. Section 4.1 neither states expressly nor contemplates implicitly
a subversion of the objective reading of the Agreement that allows Ms. Kelly to seek
attorneys’ fees and costs. A contrary interpretation would render superfluous the specific
sections and would clearly contravene the parties’ intent. We presume that the parties
meant what they agreed to and will enforce the Agreement as such. See Ashton, 354 Md.
at 340-41.
15
II.
RES JUDICATA
Appellants next argue that the doctrine of res judicata precludes Ms. Kelly from
receiving attorneys’ fees for her MWHL claim in district court because she voluntarily
dismissed, with prejudice, that suit three days before the hearing in circuit court on her
Petition for Attorneys’ Fees. Appellants assert that this dismissal constituted a final
judgment on Ms. Kelly’s claim in the district court and therefore, precluded her from re-
litigating any claim that was or could have been asserted in the district court proceeding—
including her claim for attorneys’ fees in that suit.
Ms. Kelly refutes Appellants’ res judicata argument, contending that the doctrine
does not apply to bar her claim for attorneys’ fees from her district court suit because she
filed that suit to protect her MWHL claim in the event that her appeal on the MWPCL
claim failed. Ms. Kelly further notes that she only dismissed that district court action after
she succeeded on her appeal, obtained summary judgment on the bona fide dispute issue,
and settled the merits of her case, “explicitly reserv[ing] the issues of attorneys’ fees.”
Appellants’ argument is cut short—full stop—by the fact that the circuit court did
not award any attorneys’ fees for the MWHL claim or the district court action. In the
court’s July 21, 2016 opinion and order, from which Appellants filed the instant appeal,
the court explained as follows:
As discussed above, this Court has made a finding that Defendants withheld
the wages of Plaintiff in violation of the [MWPCL], which triggers the
granting of an award in favor of Plaintiff under the [MWPCL, LE § 3-
507.2(b)]. However, the Wages and Hour Law provides that, ‘if a court
determines that an employee is entitled to recovery, under the statute, the
16
court shall award to the employee reasonable counsel fees and other costs.’
[MWHL, LE § 3-427(d)(1)(iii)]. This case is unique in that it settled
before the Court had an opportunity to make a finding that Plaintiff was
entitled to recovery under the [MWHL]. Therefore, the Court has made
the requisite finding required under the [MWPCL], which gives the
Court discretion in determining whether counsel fees are to be awarded.
However, the Court has not made the requisite finding to grant relief
sought under the [MWHL].
(Emphasis added). Apparently recognizing, among other things, that the action filed by
Ms. Kelly in the district court in 2014 concerned only her MWHL claim, the court below
did not include attorneys’ fees for that action in its award.
After careful consideration of all of the facts and evidence provided, the
Court finds that Plaintiff’s counsel shall be compensated for all fees incurred
by all attorneys during the period of February 22, 2013 through October
25, 2013, during which time, the initial client intake interview was completed
and the first settlement check was tendered by the Defendants. This totaled
52.3 hours. . . . The Court further finds that the Plaintiff shall also be
compensated for additional settlement efforts, which totaled 33.4 hours
and appellate services provided, which totaled 111.3 hours.
(Emphasis added). Appellants’ res judicata argument is a non sequitur to the foregoing
fee award. Indeed, the fees ultimately awarded included attorney hours incurred before
filing either complaint, as well as time spent on appellate services and settlement efforts
related to the circuit court action, which, as the court explained, decided only the MWPCL
claim. Accordingly, because the circuit court determined that it would not award counsel
fees under the MWHL and because it did not award any attorneys’ fees for the district court
action, we need not examine whether Ms. Kelly’s dismissal of the district court action
barred the attorneys’ fees awarded in this case.
17
III.
PREDICATE FINDING
Appellants next contend that the circuit court was required to make the “predicate
finding” that they had violated the MWPCL. Appellants continue that, because the circuit
court failed to make the requisite finding that Ms. Kelly was entitled to recovery under the
MWPCL, the trial court erred in awarding attorneys’ fees to Ms. Kelly under the MWPCL.
The decision on the merits of Ms. Kelly’s MWPCL claim was made on July 23,
2015. In its written opinion of that date, the circuit court found that “the undisputed
material facts establish that (1) [Ms. Kelly] was entitled to overtime wages, (2) [Appellants]
deliberately failed to pay those wages, (3) [Appellants] lacked a good faith basis for
denying the wage claims of [Ms. Kelly], and (4) there was no bona fide dispute between
the parties as to whether the overtime wages were due and owing.” The court made the
requisite finding under LE § 3-507.2 for purposes of a violation of LE § 3-502 or LE § 3-
505,7 and concluded that “there was no bona fide dispute between the parties, and [Ms.
Kelly] is entitled to partial summary judgment as a matter of law.”
In the circuit court’s July 21, 2016 opinion and order on the Petition for Attorneys’
fees, the court reiterated that the only issue it was deciding was the award of attorneys’ fees
7
In Peters, the Court of Appeals said, “The [M]WPCL requires an employer to pay
its employees regularly while employed[,]” and that the MWPCL’s “principal purpose was
to provide a vehicle for employees to collect, and an incentive for employers to pay, back
wages.” 439 Md. at 653 (citing Battaglia v. Clinical Perfusionists, Inc., 338 Md. 352, 364
(1995)). The Court explained that employees can use the MWPCL to recover overtime
wages. Id. at 653-54. See also Marshall, 437 Md. at 559-62 (providing an historical
overview of the MWPCL’s development to provide a private cause of action).
18
under the MWPCL based on the fact that “the Court has made the requisite finding required
under the [MWPCL], which gives the Court discretion in determining whether counsel fees
are to be awarded.” We conclude that Appellants’ contention that the circuit court failed
to make the predicate finding to support the award of attorneys’ fees under the MWPCL is
without merit.
IV.
BONA FIDE DISPUTE
After asserting that the circuit court failed to make the predicate finding that there
was no bona fide dispute under LE § 3-507.2(b), Appellants, alternatively, cite to the circuit
court’s July 23, 2015 decision and contend that the court ignored evidence and
misinterpreted case law in determining that the failure to pay overtime wages did not result
from a bona fide dispute. Ms. Kelly maintains, however, that the issue is precluded because
it was resolved when Appellants “‘agreed to settle the Lawsuit on the terms and conditions
set forth in’” the Agreement. The parties accepted the circuit court’s ruling by stating in
the Agreement that negotiations were based on “‘the Court’s prior rulings[.]’” Ms. Kelly
argues that, notwithstanding preclusion of this issue, Appellants’ argument would still fail
because the circuit court found that Appellants acted in deliberate ignorance of the law
without a genuine basis for doing so, and such a basis is required to constitute a bona fide
dispute. Ms. Kelly concludes that upon making this finding, the circuit court appropriately
exercised its discretion that Ms. Kelly is entitled to attorneys’ fees.
A. Incorporation into the Settlement Agreement
We first address Ms. Kelly’s argument that the terms of the Settlement Agreement
19
prevent Appellants from challenging the circuit court’s grant of partial summary judgment.
Appellants, in their reply, declare that the Agreement merely highlights that the parties
relied on all of the prior proceedings when negotiating, and therefore, they are not
precluded from challenging the circuit court’s decision.
To determine whether the court’s decision is part of the Agreement, we must
determine whether the Agreement incorporated that decision by reference. As explained
in Section I, supra, our goal in interpreting a contract is to understand and effectuate the
intention of the parties. Kasten Constr. Co. v. Rod Enterprises, Inc., 268 Md. 318, 328
(1973). One way to accomplish this is to interpret the contract’s language as a reasonable
person would have interpreted the contract at the time of its effectuation. General Motors
Acceptance Corp. v. Daniels, 303 Md. 254, 261 (1985).
Maryland courts generally recognize the doctrine of integration. Hovnanian Land
Inv. Grp., LLC v. Annapolis Towne Ctr. at Parole, LLC, 421 Md. 94, 126 (2011). Courts
should refrain from considering outside evidence of prior statements or understandings
when interpreting a contract that contains an integration clause because the clause indicates
that the contract is the complete iteration of the parties’ agreement. See id. (citations
omitted). Under the integration doctrine, then, when an agreement purports to be the final
agreement between the parties, only those terms control and preclude consideration of
extrinsic evidence.
Incorporation by reference is a method of contract drafting such that where a
subsequent document references a previous document, it incorporates that previous
document into the subsequent. “[I]t simply means that the earlier document is made a part
20
of the second document, as if the earlier document were fully set forth therein.” Hartford
Acc. & Indem. Co. v. Scarlett Harbor Assoc. Ltd. P’ship, 109 Md. App. 217, 292 (1996)
(citations omitted). “‘It is settled that where a writing refers to another document that other
document, or so much of it as is referred to, is to be interpreted as part of the writing.’”
Wells v. Chevy Chase Bank, F.S.B., 377 Md. 197, 229 (2003) (quoting Ray v. William G.
Eurice & Bros., Inc., 201 Md. 115, 128 (1952)).
Section 5.3 of the Agreement states, “Entire Understanding. This Agreement
constitutes the entire understanding and agreement between the Parties and all prior and
contemporaneous negotiations and understandings between the Parties shall be
deemed merged into this Agreement.” (Emphasis added). This is an integration clause
that precludes a factfinder from considering provisions not in the Agreement. We therefore
consider only what the language of the document says.
The issue, then, is whether the Agreement incorporated the circuit court’s grant of
Ms. Kelly’s motion for partial summary judgment that a bona fide dispute did not exist.
To support her contention that the decision is incorporated, Ms. Kelly points to Section 1.2
of the Agreement, which states in part, “Relying on their fact investigations, discovery
responses, legal analyses, and the Court’s prior rulings, the Parties have engaged in
significant arm’s length settlement negotiations.” Although this sentence hints at the
circuit court’s finding that there was no bona fide dispute, it simply informs us that the
parties may have considered it when formulating strategy for negotiations. Such language
is insufficient to incorporate that finding into the Agreement, especially since “all prior and
contemporaneous negotiations and understandings between the Parties” were “merged into
21
this Agreement.”
In light of this clause, a reasonable person would not read such indirect and broad
language as incorporating the circuit court’s specific ruling into the Agreement. See
Hartford, 109 Md. App. at 291-92. Section 5.3 of the Agreement clearly indicates an intent
to integrate all previous negotiations. Ms. Kelly’s interpretation of Section 1.2 would
effectively interpret the Agreement “in a manner in which a meaningful part of the
[A]greement is disregarded.” See id. at 293. We cannot contravene the “clear and
unambiguous language” so as to interpret the Agreement based simply on what Ms. Kelly
may have “thought the [A]greement meant or intended it to mean.” See id. at 291 (quoting
Bd. of Trs. of State Colls. v. Sherman, 280 Md. 373, 380 (1977)). Therefore, as the circuit
court’s judgment was not incorporated into the Agreement, we hold that the Agreement’s
integration clause does not preclude Appellants from challenging that judgment on appeal.
B. The Grant of Partial Summary Judgment
Turning to the merits of Appellants’ fourth issue, Appellants suggest that the onus
was on Ms. Kelly to persuade her employer on the requirements of the overtime wage laws
because “[i]f [she] sought to tax her employer with penalties and costs for having resisted
her legitimate claims in a manner that is not ‘bona fide,’ then she should have informed
Appellants of those claims sufficiently to expose to a reasoning mind, actuated by good
will, the fallacy of resistance.” Thus, “because Ms. Kelly never gave Appellants the chance
to correct what she had learned was a mistake, she should not be awarded attorney’s fees
and costs on the theory Appellants had willfully adhered to a position they knew to be
wrong.” Appellants point to dicta in Peters that “[a]n incorrect legal belief, such as federal
22
preemption, may form the basis of a legitimate bona fide dispute.” 439 Md. at 659 n.12.
Ms. Kelly focuses on the circuit court’s reasoning for granting her partial summary
judgment. Ms. Kelly reiterates that Appellants conducted an “ostrich-like approach” to the
performance of their legal obligations and presses that the circuit court’s decision was
correct as a matter of law because “deliberate ignorance over due diligence” cannot
constitute a bona fide dispute.
A court must grant a motion for summary judgment in favor of the moving party
when there is no genuine issue of material fact and the court determines that the party is
entitled to judgment as a matter of law. Md. Rule 2-501(f). “In determining whether a fact
is material,” the Court of Appeals “ha[s] said that ‘a dispute as to facts relating to grounds
upon which the decision is not rested is not a dispute with respect to a material fact and
such dispute does not prevent the entry of summary judgment.’” Barclay v. Briscoe, 427
Md. 270, 281 (2012) (quoting O’Connor v. Balt. Cty., 382 Md. 102, 111 (2004); emphasis
in original). Whether summary judgment was proper is a question of law, which we review
de novo. Poole v. Coakley & Williams Const., Inc., 423 Md. 91, 108 (2011) (citation
omitted). In doing so, we construe the record in a light most favorable to the non-moving
party and thereby interpret any inferences drawn from the record against the moving party.
Jurgensen v. New Phoenix Atl. Condo. Council of Unit Owners, 380 Md. 106, 114 (2004).
If “a court finds that an employer withheld the wage of an employee in violation of
[the MWPCL] and not as a result of a bona fide dispute,” it may order an award “not
exceeding 3 times the wage, and reasonable counsel fees and costs.” LE § 3-507.2(b). The
Court of Appeals in Peters reiterated its definition of a bona fide dispute: “‘a legitimate
23
dispute over the validity of the claim or the amount that is owing []’ where the employer
has a good faith basis for refusing an employee’s claim for unpaid wages.” 439 Md. 646,
657 (2014) (citing Admiral Mort., Inc. v. Cooper, 357 Md. 533, 543 (2000)). In
determining whether a bona fide dispute exists, a court considers “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” the withheld wages. Admiral Mort., 357 Md.
at 543.
The court’s inquiry therefore focuses on “the employer’s ‘actual, subjective belief
that the party’s position is objectively and reasonably justified.’” Peters, 439 Md. at 657
(quoting Barufaldi v. Ocean City, Md. Chamber of Commerce, Inc., 206 Md. App. 282,
293 (2012) (“Barufaldi II”)). As such, the employer has the initial burden to produce
evidence of a subjective belief purporting to create a bona fide dispute. Id. at 658-59. The
burden then shifts to the employee to refute the employer’s evidence. Id. Ultimately, we
must decide whether Appellants’ mistaken belief that federal law preempted state law,
making Ms. Kelly exempt from overtime requirements, constituted a bona fide dispute
under the MWPCL. We note that the parties do not contend that the fact that Appellants’
had a mistaken belief of the law was a material fact genuinely in dispute.
In their memorandum opposing Ms. Kelly’s motion for partial summary judgment,
Appellants argued that they acted solely in good faith arising from their “reasonable belief”
that federal law preempted Maryland law. For support, Appellants noted that they
continued to use the previous owner’s Employee Handbook and forms that stated workers
were exempt under federal law and were advised by Mr. D’Antonio’s accountant, who was
24
informed by an outside accountant while learning payroll that companion care workers
were exempt. Appellants stated that they had no reason to question their understanding
because, prior to Ms. Kelly, no one had complained of not receiving overtime pay.
In support of her motion for partial summary judgment, Ms. Kelly first noted that
ignorance of the law cannot create a bona fide dispute. She claimed that Appellants
essentially remained deliberately ignorant by never looking into whether Maryland had an
applicable law or whether such a law would apply despite contrary federal law. Further,
Mr. D’Antonio admitted that he never investigated whether the Employee Handbook
would conform to such a state law. Ms. Kelly then relied on a Supreme Court decision
regarding the Fair Debt Collection Practices Act that “an act may be ‘intentional’ for
purposes of civil liability, even if the actor lacked actual knowledge that [the] conduct
violated the law.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S.
573, 582-83 (2010).
We find Roy v. County of Lexington, South Carolina, 141 F.3d 533 (4th Cir. 1998),
the decision cited in the dicta of Peters, helpful in our analysis. In that case, a county’s top
officials convened a meeting where the county’s labor attorney informed them that they
could pay EMS workers under a certain subsection of the FLSA, that they could increase
the number of hours required before overtime pay applied, and that they could dock certain
hours for meals and sleep from compensable hours. Id. at 537. The county then
implemented these suggestions into the overtime policy. Id. The workers filed suit, and
on appeal, the Fourth Circuit considered whether the district court erred in failing to award
the EMS workers liquidated damages under the FLSA. Id. at 548. The two reasons upon
25
which the Court upheld the district court’s finding of good faith on the part of the county
were that it relied on its attorney’s counsel, even though that counsel was incorrect, and
that it made “ongoing modification of its compensation structure to accommodate changes
in the Act.” Id. at 549.
Returning to the present case, we find that Appellants’ reliance on an outside
accountant’s incorrect advice is easily distinguishable from the county’s reliance on its
attorney in Roy. In that case, the county proactively sought to comply with the FLSA by
consulting its labor attorney on changes in employment laws. Roy, 141 F.3d at 549. Here,
however, Appellants took no action to ensure their policies were legally correct. They did
not seek the advice of their counsel—even after Ms. Kelly put her employer on notice by
her questions. According to the complaint, on at least two occasions before she filed suit,
Ms. Kelly called the office and inquired about overtime and was informed that Pinnacle
did not pay overtime. Appellants made no attempt to learn whether Maryland law still
applied in light of contrary federal law or if it imposed any duties regarding overtime
wages. Instead, Appellants passively accepted an off-the-cuff answer by an outside
accountant providing training to a new hire and perpetuated incorrect legal statements by
adopting a previous owner’s employment policies. At least twice, Ms. Kelly asked
Appellants about overtime, yet Appellants said she was exempt even though they “honestly
never looked into it.” (Emphasis added).
Roy is also distinguishable because the county in that case actively sought to update
its policies to accommodate legal changes; whereas here, Appellants wholly failed to make
any effort to determine if Maryland law could affect its business. A person or entity doing
26
business in Maryland must be aware of the requirements affecting a Maryland business
enterprise, including whether state and federal laws apply. Furthermore, it is the
employer’s obligation to remain informed, and an employer cannot rely on aggrieved
employees to inform them of the employer’s legal responsibilities. Appellants avail
themselves of the benefits of operating their business in this jurisdiction, and along with
that benefit, comes the responsibility to proactively conform to the governing employment
law. See McFeeley v. Jackson St. Entm’t, LLC, 825 F.3d 235, 245 (4th Cir. 2016)
(describing that, if an employer’s mere assumption could constitute good faith, then no
employer would actively try to comply with employment standards); see also CSR, Ltd. v.
Taylor, 411 Md. 457, 464 (2009) (stating that an entity is subject to Maryland law when it
sufficiently takes advantage of the benefits and protections of Maryland law).
Accordingly, we discern no error in the circuit court’s decision that there was no
bona fide dispute and that Appellants withheld Ms. Kelly’s earned wages without a good
faith basis for doing so. As the circuit court aptly noted, to decide otherwise would be
tantamount to encouraging an employer to “choose ignorance, and forever escape the
provisions of the statute designed to foster compliance.” We affirm the court’s grant of
partial summary judgment.
V.
MR. D’ANTONIO AS EMPLOYER
Appellants believe that the circuit court erred in deciding that Mr. D’Antonio was
Ms. Kelly’s employer. As a threshold matter, they argue that the circuit court only made
that determination after the Agreement, which purported to release Appellants from all
27
liability relating to Ms. Kelly’s unpaid wages claims. Appellants claim the circuit court
never made an independent determination that Mr. D’Antonio could be liable under the
MWPCL. Further, they contend that the circuit court did not have a sufficient record to
find Mr. D’Antonio as Ms. Kelly’s employer under Maryland’s economic reality test.
Ms. Kelly also claims that the issue is not ripe; her argument, however, is that the
denial of an employment relationship is an affirmative defense and is waived if not disputed
in the initial answer. Notwithstanding, Ms. Kelly further maintains that the circuit court’s
application of the economic reality test should be upheld on appeal.
A. Affirmative Defense
Ms. Kelly argues that Mr. D’Antonio is precluded from denying his status as Ms.
Kelly’s employer because such denial is an affirmative defense. Mr. D’Antonio filed a
general denial under Rule 2-323(d) and did not deny this employment relationship until the
Second Amended Answer. Therefore, Ms. Kelly argues, Mr. D’Antonio waived this
defense and it is not preserved on appeal. We disagree.
Maryland Rule 2-323(a) states, in part: “Every defense of law or fact to a claim for
relief in a complaint, counterclaim, cross-claim, or third-party claim shall be asserted in an
answer, except as provided by Rule 2-322.” Section (g) enumerates 20 affirmative
defenses:
[A] party shall set forth by separate defenses: (1) accord and satisfaction, (2)
merger of a claim by arbitration into an award, (3) assumption of risk, (4)
collateral estoppel as a defense to a claim, (5) contributory negligence, (6)
duress, (7) estoppel, (8) fraud, (9) illegality, (10) laches, (11) payment, (12)
release, (13) res judicata, (14) statute of frauds, (15) statute of limitations,
(16) ultra vires, (17) usury, (18) waiver, (19) privilege, and (20) total or
partial charitable immunity.
28
In addition, a party may include by separate defense any other matter
constituting an avoidance or affirmative defense on legal or equitable
grounds.
In accordance with a plain reading of this Rule, the Court of Appeals has ruled that
this list of affirmative defenses is exhaustive. Ben Lewis Plumbing, Heating & Air
Conditioning, Inc. v. Liberty Mut. Ins. Co., 354 Md. 452, 463-65 (1999). In Lewis, Liberty
sued for payment on the balance due for premiums on an insurance policy. Id. at 453.
Lewis did not assert negligent misrepresentation in its Answer, but instead asserted it later
and succeeded on it at trial. Id. at 460-62. On appeal of the issue whether Lewis had to
plead negligent misrepresentation as an affirmative defense, the Court determined that
Section (g) of Rule 2-323 allows for—but does not require—a separate pleading for
defenses not specifically enumerated. Id. at 464-65. The Court noted that Section (g)’s
permissive language contradicts Section (a)’s requirements;8 however, because the breach
of contract claim was for money damages only, the Court found that Section (d) governed
the action.9 Id. at 466-67. That section allows for general denial pleas in certain actions if
the party is not asserting one of the defenses in Section (g). Id. The Court therefore
reasoned that, because negligent misrepresentation is not enumerated in Section (g), Lewis
8
Section (a) reads, in part, “(a) Content. A claim for relief is brought to issue by
filing an answer. Every defense of law or fact to a claim for relief in a complaint,
counterclaim, cross-claim, or third-party claim shall be asserted in an answer, except as
provided by Rule 2-322.” Md. Rule 2-323(a).
9
Section (d) states, “(d) General Denials in Specified Causes. When the action in
any count is for breach of contract, debt, or tort and the claim for relief is for money only,
a party may answer that count by a general denial of liability.” Md. Rule 2-323(d).
29
had not waived that defense by failing to plead it in its Answer. Id. at 467.
The same result is warranted here. Ms. Kelly’s first two claims are under the
MWHL and the MWPCL for failing to pay overtime wages calculated from her hourly rate
and pay periods. Courts have struggled to determine whether a MWPCL claim sounds in
tort or in contract. See Cunningham v. Feinberg, 441 Md. 310, 324-25 (2015) (explaining
that federal district courts, in trying to apply the correct choice of law doctrines, had
difficulty in determining the underlying nature of a MWPCL claim). As both breach of
contract and torts claims are included in the provisions of Section (d), we do not resolve
that issue here. Ms. Kelly’s third claim, quantum meruit, asserts a breach of contract
claim—that Appellants had a contractual obligation to pay her regular and overtime wages
and failed to do so. The only relief sought, absent a general catch-all provision, is for
money. Hence, as in Lewis, we are operating within the purview of Section (d). See Lewis,
354 Md. at 466.
Applying Lewis, we hold that Mr. D’Antonio waived only those defenses
enumerated in Section (g) that he did not assert in his answer. Denial of an employer-
employee relationship is not one of the affirmative defenses enumerated in Section (g). See
Md. Rule 2-323(g).10 By including a general denial of liability, Mr. D’Antonio preserved
10
More fundamentally, affirmative defenses involve the concept of confession and
avoidance—whereby a defendant assumes that the allegations in the complaint entitle the
plaintiff to relief, but asserts a superseding legal basis to avoid liability, such as a discharge
in bankruptcy. See Armstrong v. Johnson Motor Lines, Inc., 12 Md. App. 492, 500-01
(1971) (in rejecting the argument that defendant’s claimed existence of a sudden
emergency was an affirmative defense, this Court instructed, “An affirmative defense is
one which directly or implicitly concedes the basic position of the opposing party, but
which asserts that notwithstanding that concession the opponent is not entitled to prevail
30
all other defenses, including the ability to deny an employment relationship. He could
have—but was not required to—plead that defense separately.
B. Economic Reality Test
Appellants next contend that the circuit court erred in finding Mr. D’Antonio
personally liable for Ms. Kelly’s attorneys’ fees because it only found that he could be
liable after the parties settled. Appellants then challenge the circuit court’s factual findings
that supported its legal conclusion that Mr. D’Antonio was an “employer” under the
MWPCL.
On appeal of a non-jury action, we review the trial court’s legal conclusions de novo
and its evidentiary findings for clear error. Md. Rule 8-131(c); Cunningham, 441 Md. at
322. The determination of whether a defendant qualifies as an employer presents a mixed
question of law and fact. Although the ultimate conclusion is a question of law on which
we grant the circuit court no deference, the analysis includes several factual determinations
on which we must defer to the circuit court’s findings unless clearly erroneous.
LE § 3-507.2(b) states, “If . . . a court finds that an employer withheld the wage of
an employee in violation of this subtitle and not as the 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.” The question of whether a defendant is an ‘employer’ under
LE § 3-507.2(b) is, therefore, “a condition precedent to an action for treble damages,
because he is precluded for some other reason.”). Here, Mr. D’Antonio is not asserting
that he has some defense pursuant to which he may avoid liability even if Ms. Kelly is
otherwise entitled to prevail.
31
attorney’s fees, and litigation costs under the statute, we must first consider whether the
[defendant] could be subjected to such liability.” Pinsky v. Pikesville Recreation Council,
214 Md. App. 550, 588 (2013). Thus, the court was correct in analyzing whether Mr.
D’Antonio was indeed an employer of Ms. Kelly before granting an award of attorneys’
fees.
The MWPCL defines “employer” broadly to encompass “any person who employs
an individual in the State or a successor of the person.” See LE § 3-501(b); Campusano v.
Lusitano Const. LLC, 208 Md. App. 29, 38 (2012). While not defining employee, the
MWPCL does define “employ” as “to engage an individual to work,” which includes
“allowing an individual to work” and “instructing an individual to be present at a work
site.” LE § 3-101(c). Critical to the determination of whether an individual is an employer
is whether the individual has the right “to control and direct the employee in the
performance of the work and in the manner in which the work is to be done.” Auto. Trade
Ass’n v. Harold Folk Enters, Inc., 301 Md. 642, 660 (1984).
In Campusano, we extended the economic reality test applied to employer
determinations under the MWHL to the employer determinations under the MWPCL
because of the similarities between the Acts’ definitions. 208 Md. App. at 37-39. That test
uses four factors to determine an individual’s level of “control” over an employee. 11 The
factors are “not to be applied mechanistically, and their general purpose must be
11
As in Newell v. Runnels, we do not apply another test that includes six factors and
is only applicable where “the alleged employer receives the fruits of the employees’ labor
in a borrowed servant context.” See 407 Md. 578, 653 n.39 (2009). There is no claim of
such employment in this case.
32
understood as ultimately assigning responsibility under the law.” Id. at 40 (emphasis in
original). The determination of “control” thus considers “whether the alleged employer
(1) had the power to hire and fire the employees; (2) supervised and controlled employee
work schedules or conditions of employment; (3) determined the rate and method of
payment; and (4) maintained employment records.” Id. at 39-40 (quoting Newell v.
Runnels, 407 Md. 578, 651 (2009)) (additional citation omitted).
In Campusano, four individuals claimed that a construction company, its owner, and
a supervisor violated the MWPCL and the Fair Labor Standards Act of 1938 (“FLSA”).
Id. at 32-35. After a bench trial, the court found the owner and company liable as
“employers” for unpaid wages but determined that the supervisor was not an “employer”.
Id. at 35. We considered the economic reality of the supervisor’s situation on appeal and
upheld the trial court’s determination. Id. at 40-41. The supervisor’s tasks—like
controlling work schedules and working conditions and maintaining work logs—were not
sufficient to garner personal liability, “particularly where he had no ownership control, or
investment in the LLC that was appellants’ formal employer.” Id. at 40.
Mr. D’Antonio is correct that his position as sole owner of Pinnacle does not alone
subject him to personal liability under the MWPCL. His further argument that whether
“an individual corporate officer in fact exercised the powers which influenced the decision”
controls the determination of whether he is an employer, however, is misplaced. Other
indicators include the individual’s operational control and the individual’s ownership
interest. Id. (citing Baystate Alternative Staffing v. Herman, 163 F.3d 668, 678 (1st Cir.
1998)). Indeed, “‘it is the totality of the circumstances, and not any one factor, which
33
determines whether a worker is the employee of a particular alleged employer.’” Id.(quoting Baystate, 163 F.3d at 676).
We discern no error in the circuit court’s application of the four-factor economic
reality test in this case, and uphold the court’s determination that Mr. D’Antonio is Ms.
Kelly’s employer. Starting with the first factor—that the individual has the power to hire
and to fire—the circuit court observed that Mr. D’Antonio stated in his answers to Ms.
Kelly’s interrogatories that he “is the only person at the Pinnacle Group, LLC with the
authority to ‘officially hire’ or ‘officially fire’ its employees.” We considered a nearly
identical finding in Campusano. See 208 Md. App. at 40-41 (“First, the trial court found
that [the owner], not [the supervisor] had the power to hire and fire employees[.]”). Mr.
D’Antonio’s argument that he has two full-time office employees who largely deal with
the “hiring and firing of companion care employees for Life Matters (i.e. Pinnacle)” is
unpersuasive. The first factor focuses on who has the capacity to hire or fire someone.
Here, Mr. D’Antonio admits to having two employees who essentially run LifeMatters,
ostensibly to point out that he did not actually exercise that power. That distinction is
inapplicable here.
Moving on to the second factor—supervision and control of schedules and working
conditions—Mr. D’Antonio’s own admissions, again, support a finding against him. In his
interrogatory answers, he responded that he “‘has the final say regarding employees’ work
schedules;’” “‘supervised [Ms. Kelly]’ in his capacity as ‘Owner of the Company’;” and
“‘has final authority to oversee the daily operations’ of the business.” The circuit court
further noted that Mr. D’Antonio would personally call individuals if he needed someone
34
to cover a shift. Again, Mr. D’Antonio’s reliance on having two employees “who are
responsible for bookkeeping, payroll, scheduling employees, and administering other
personnel related duties” does not preclude him from having overall authority and liability.
As in Campusano, where the supervisor controlled work schedules and working
conditions, Mr. D’Antonio’s delegation of such supervisory tasks is insufficient to shed his
legal liability. See id. at 40. We reiterate here that granting supervisory authority to others
does not absolve Appellant of the benefits and drawbacks of his position.
Mr. D’Antonio does not raise any arguments to counter the circuit court’s finding
of the third and fourth factors—method and rate of payment, and the maintenance of
employment records—and we determine that these factors also support the conclusion that
he was Ms. Kelly’s employer. In regard to determining employees’ rate and method of
payment, Mr. D’Antonio stated in his deposition that he must approve a summary of each
employee’s hours “before each payroll process is finalized[.]” The circuit court found that
the evidence demonstrated that he has “total control” over the rate and method of payment;
he is “‘responsible for authorizing and directing compensation to all employees;’
[approves] ‘[a]ll salary and pay raises[;]’” and “‘is the only person with authority to
determine employees’ rates of pay, pay dates, etc.’” As for the final factor—maintenance
of employment records— Mr. D’Antonio responded in his answers to interrogatories that
he “‘has final authority to oversee the daily operations’” of the business. We agree with
the circuit court that this would include the authority to maintain employment records.
Given the strength of the findings on the first three factors, and that this factor also tends
to show that Mr. D’Antonio was Ms. Kelly’s employer, application of the economic reality
35
test leads us to the inevitable conclusion that, based on “‘the totality of the circumstances,
and not any one factor,’” Ms. Kelly was the employee of Mr. D’Antonio. See Campusano,
208 Md. App. at 40 (citation omitted). Mr. D’Antonio is therefore jointly and severally
liable for any judgment against Appellants.
VI.
AWARD OF ATTORNEYS’ FEES
A. Decision to Award
Appellants next assert that Ms. Kelly failed to establish that her attorneys’ fees were
necessary to satisfy her claims. As a result, they believe an award of such fees would act
only as a penalty and would contravene Ocean City, Md., Chamber of Commerce, Inc. v.
Barufaldi, 434 Md. 381, 398 (2013) (“Barufaldi III”), in which, they contend, the Court of
Appeals instructed courts that “the focus is not on whether the defendant is penalized by
the award, but whether the harm to the plaintiff is remedied.” Id. (emphasis in original).
Ms. Kelly also relies on Barufaldi III. She does so for the proposition that the
MWPCL encourages employees to have competent counsel in what is likely a small claim.
Id. at 393. Further, Ms. Kelly asserts that the MWPCL authorizes a trial court to “exercise
[its] discretion liberally in favor of awarding a reasonable fee,” unless there is misconduct
sufficient to contravene the statutory purpose. Id. at 385.
We review a trial court’s decision to award attorneys’ fees and costs for abuse of
discretion. Barufaldi I, 196 Md. App. at 35-36. A trial court abuses that discretion when
it disregards established principles or adopts a position that no reasonable person would
accept. Letke Sec. Contractors, Inc. v. U.S. Sur. Co., 191 Md. App. 462, 474 (2010).
36
“Maryland generally adheres to the common law, or American rule, that each party
to a case is responsible for the fees of its own attorneys, regardless of the outcome.” Friolo
v. Frankel, 403 Md. 443, 456 (2008) (“Friolo III”). An exception to this rule exists when
the legislature has included a fee-shifting provision that may obligate a party to pay the
opponent’s attorneys’ fees. Id. Maryland Rule 2-703(f) directs circuit courts to consider
twelve factors (“the Johnson factors”) when a law permits them to award attorneys’ fees:
(A) the time and labor required;
(B) the novelty and difficulty of the questions;
(C) the skill required to perform the legal service properly;
(D) whether acceptance of the case precluded other employment by the attorney;
(E) the customary fee for similar legal services;
(F) whether the fee is fixed or contingent;
(G) any time limitations imposed by the client or the circumstances;
(H) the amount involved and the results obtained;
(I) the experience, reputation, and ability of the attorneys;
(J) the undesirability of the case;
(K) the nature and length of the professional relationship with the client; and
(L) awards in similar cases.
Md. Rule 2-703(f)(2)-(3); see also Md. Rule 3-741(e)(2)(A) (directing the district court to
consider the same factors when determining an award of attorneys’ fees); Johnson v.
Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974) (iterating these
factors). The Court of Appeals has approved the use of these factors in cases where the
lodestar method is generally appropriate.12 See Monmouth Meadows Homeowners Ass’n,
Inc. v. Hamilton, 416 Md. 325, 333-34 (2010); Committee Note to Maryland Rule 2-
703(f)(3).
12
The lodestar method, adopted from the federal court system, calculates attorneys’
fees as the product of reasonable hours times a reasonable rate. Friolo I, 373 Md. at 519,
529.
37
The MWPCL’s primary aim is to provide “a vehicle for employees to collect, and
an incentive for employers to pay, back wages.” Medex v. McCabe, 372 Md. 28, 39 (2002).
To effectuate that purpose, the legislature included a fee-shifting provision so private
attorneys would have an incentive to represent parties with small claims. Barufaldi III,
434 Md. at 392. In MWPCL cases, the Court of Appeals has approved the lodestar method,
considered in light of the Johnson factors, as the presumptively appropriate method for
determining whether to award attorneys’ fees. Friolo v. Frankel, 373 Md. 501, 529 (2003)
(“Friolo I”). Courts should liberally exercise their discretion in favor of an award “unless
the circumstances of the particular case indicate some good reason why a fee award is
inappropriate in that case.” Id. at 518.
Here, the circuit court conducted a full examination of the relevant factors in its
lodestar analysis, finding that this case required a great deal of work, research, and writing
in a range of courts in our judicial system and that the issue of a bona fide dispute was a
“novel and difficult question” of first impression requiring significant research and
discovery. The court then considered the adroitness of Ms. Kelly’s attorneys, noting their
success in their arguments and overall victory for their client, and that as attorneys who
work for The Public Justice Center and the Maryland Legal Aid Bureau, they have limited
resources and, in pursuing this extensive litigation, they were forced to deny representation
to others.
The court, in its analysis, then compared Ms. Kelly’s alleged fees to customary rates
for attorneys on our Lower Eastern Shore, agreeing with Appellants to adopt the rate for
that region as opposed to Ms. Kelly’s request based on statewide customary rates, and
38
found the fact that such fees were expected to be paid by a fee petition had only neutral
effect. It subsequently performed an extensive look at the amount in controversy and
results obtained, concluding that it “weigh[ed] most heavily in favor of” Ms. Kelly. The
court also noted that as Ms. Kelly’s attorneys “have extensive experience, are highly
reputable in the legal community and have tremendous legal ability[,]” that factor also
favored Ms. Kelly. Likewise, in support of Ms. Kelly, the court determined that many
attorneys would consider this an undesirable case, especially as, at the time of filing, the
MWPCL allegedly did not contain an action for unpaid overtime wages. Finally, because
Ms. Kelly had failed to provide any evidence of awards from similar cases on the Lower
Eastern Shore, the last factor disfavored Ms. Kelly.
Given the circuit court’s in-depth application of the twelve Johnson factors in its
lodestar analysis and in light of the MWPCL’s purpose to incentivize attorneys, we cannot
hold that it abused its discretion in awarding attorneys’ fees to Ms. Kelly. In our view, the
circuit court considered the relevant factors as required, weighed them appropriately, and
made a decision. We do not believe the result is such that no reasonable person would be
able to adopt this view, and therefore, we will not disturb the circuit court’s finding that
attorneys’ fees were warranted.
B. Calculation of Attorneys’ Fees
In her cross-appeal, Ms. Kelly challenges the circuit court’s determination of the
amount of attorneys’ fees it awarded. She contends that the court incorrectly applied a
“proportionality” analysis based on the size of the damages award rather than a “degree of
success” analysis. Ms. Kelly explains that the court should have applied the Johnson
39
factors when determining the award amount. She also argues that the court impermissibly
created and applied a requirement to notify opposing counsel of fee rates. As a result, Ms.
Kelly claims that the circuit court abused its discretion by arbitrarily failing to award fees
for over 400 hours of work out of the 598.7 sought and did not address the issue of costs,
which were $2,851.40.
Appellants respond that the court did not abuse its discretion by denying Ms. Kelly’s
request for attorneys’ fees and costs under the MWHL. They continue that the circuit court
“took care in applying the lodestar methodology[,]” rejecting Ms. Kelly’s requested fees
because it would constitute a windfall and because Ms. Kelly’s attorneys did not adequately
disclose the amount of work being done on the case.
In addition to their discretion in deciding whether to award attorneys’ fees, trial
courts have discretion in determining how much to award in attorneys’ fees for an MWPCL
claim. Frankel v. Friolo, 170 Md. App. 441, 448 (2006) (“Friolo II”). That discretion “is
to be exercised liberally in favor of allowing a fee” because the “provisions for counsel
fees in [LE § 3-427(d) and LE § 3-507.1(b)]13 are remedial in nature[.]” Friolo I, 373 Md.
at 512, 517. In conformance with the predominant rule throughout the country, the Friolo
I Court ruled that “the lodestar approach, with its adjustments, is the presumptively
appropriate methodology to be used under the [MWPCL].” Friolo I, 373 Md. at 529. The
13
In 1993, after the legislature’s amendments, the Governor signed House Bill
1006, which permitted direct action by an employee against an employer for unpaid wages
under the MWPCL. 1993 Md. Laws, ch. 578; see also Friolo I, 373 Md. at 516-17. What
was formerly LE § 3-507.1 became LE § 3-507.2 in 2010. 2010 Md. Laws ch. 151 § 1.
40
Court further noted that “the adjustments, up or down, may well produce a result that, in
the end, has little relationship to the actual time spent on the case” and that adjustments14
are “largely case-specific[.]” Id. at 529. The Court later observed that, when, apart from
money, “the plaintiff achieves other form of significant relief—or even voluntary behavior
modification on the part of the defendant as a result of the lawsuit—the court must look
beyond just the correlation between time spent on the case as a whole and any monetary
relief.” Friolo v. Frankel, 438 Md. 304, 322-23 (“Friolo IV”).
Given the need for specificity, “it is necessarily incumbent upon the trial judge to
give a clear explanation of the factors he or she employed in arriving at the end result.”
Friolo II, 170 Md. App. at 449 (citing Friolo I, 373 Md. at 505; emphasis in Friolo II).
Therefore, a trial court must clearly articulate the factors and reasoning used to calculate
the overall figure so that an appellate court can adequately discern the soundness of the
trial court’s conclusion. Id. at 450-51 (citing Friolo I, 373 Md. at 529). When the trial
court’s decision “‘does not support a conclusion that [it] actually used that approach, there
would be an error of law.’” Id. at 448 (quoting Friolo I, 373 Md. at 512; emphasis in Friolo
II). Upon finding an error of law, we will remand for further proceedings to detail the
calculation of attorneys’ fees. Friolo I, 373 Md. at 512.
14
The Court instructed that “[i]n focusing on the lodestar approach, or indeed any
other, we must be mindful of Rule 1.5 of the Maryland Rules of Professional Conduct,
which also requires that a lawyer’s fee be reasonable and which sets out factors to be
considered in determining the reasonableness of a fee. Most of them are identical or similar
to the factors enumerated in Johnson v. Georgia Highway Express, supra, 488 F.2d 714,
which the Hensley [v. Eckerhart, 461 U.S. 424 (1983)] Court indicated were relevant even
in a lodestar analysis.” Friolo I, 373 Md. at 527.
41
The culmination of the lengthy Friolo litigation—“the judicial equivalent of the
perfect storm”—guides our review. Friolo IV, 438 Md. at 319. At the outset, the issue
before the Court of Appeals in Friolo I was whether, after entering judgment for the
employee on her MWHL and MWPCL claims, the lower court was required to use the
lodestar approach in calculating “reasonable counsel fees[.]” Friolo I, 373 Md. at 505(quoting LE § 3-427(d)(1), § 3-507.1(b)). The Court of Appeals held that the trial court
did not give a clear explanation of the factors that it “employed in arriving at the end
result[,]” and following detailed instructions on how to employ the lodestar factors and any
applicable adjustments, the Court remanded the case for “a further proceeding and a better
explanation.” Id. at 505, 529-530. Unfortunately, remand did not quell the storm. After
several appeals, remands, and a reconsideration on exceptions, the trial court ultimately
awarded $5,000 out of nearly $400,000 claimed in attorneys’ fees—and that $5,000 award
did not include appellate fees. Friolo IV, 438 Md. at 310-17. Although the Court of
Appeals in Friolo IV held that the circuit court abused its discretion in failing to award any
attorneys’ fees for appellate work, it articulated several reasons for upholding the amount
of attorneys’ fees the trial court awarded for trial and immediate post-trial work:
1) [Trial court]’s conclusion that the $6,841 part of the $11,778 judgment for
non-payment of bonuses was not subject to fee-shifting was correct, and,
although that does not necessarily require a 58 percent pro rata reduction in
the fee request, the pro rata reduction does not constitute an abuse of
discretion. The claim for bonuses was not allied to the $4,937 claim for
overtime, which was under a different statute and rested on different
evidence.
(2) [Trial court]’s use of the hourly rates provided for in the retainer
agreement between the parties, rather than the hourly rates stipulated by the
parties, was not an abuse of discretion. It is for the court to determine what
42
hourly rates are reasonable, and, although [it] could have accepted the rates
agreed to by the parties, [it] was not required to do so.
(3) [Trial court]’s determination as to the reasonable number of hours
necessary to complete the trial and immediate post-trial stage does not
amount to an abuse of his discretion. [It] explained in great detail why [it]
believed various blocks of hours spent on various tasks were unnecessary or
excessive. Accordingly, [its] allowance of $5,000 for trial and immediate
post-trial work was not an abuse of discretion. It is consistent with the $4,711
awarded . . . in the first go-round, which we noted was not unreasonable in
amount.
(4) [Trial court]’s direction that the master’s fees be split equally between
the parties was not an abuse of discretion.
(5) [Trial court]’s allowance of nothing for any of the appellate work does
amount to an abuse of discretion, for the following reasons:
(a) With respect to the first appeal, [employee] did, in fact,
prevail. [Counsel] convinced this Court that the modified
lodestar approach was the proper one to apply and that [trial
court] apparently failed to apply that approach. The judgment
as to fees was vacated and the case was remanded for the trial
court to apply the proper test, with costs of the appeal to be
paid by [employer]. Although [employer] asserts that
[employee]’s real objective was to get an increase in the fees
and not really to establish a new principle of law, the facts are
that (i) through [counsel]’s efforts an important precedent was
set, and (ii) on remand, he was awarded a fee of $65,348—
considerably more than the $4,711 he had been awarded
initially. The problem was that it was unclear whether that fee
included any appellate time.
Id. at 327-28 (footnote omitted).
Returning to the case on appeal, the circuit court explained, in great detail, several
reasons why it determined that Ms. Kelly’s request for $146,987.66 in attorneys’ fees was
not reasonable. The circuit court looked at Ms. Kelly’s success, including her “relatively
modest” award and that the Appellants’ course of conduct changed early in the litigation,
43
deciding that a lesser amount would thus provide a reasonable deterrent to future conduct.
It also looked at the lack of disclosure for fee rates for nine of the eleven attorneys who
worked on Ms. Kelly’s case until late in the litigation and chose to award the higher rate
of the two initially disclosed. As in Friolo IV, this is within the trial court’s purview
because “it is for the court to determine what hourly rates are reasonable,” 438 Md. at 327,
and we will not disturb its decision.
In contrast with the Court of Appeals’ review in Friolo IV, however, we cannot find
that the circuit court “explained in great detail” its findings on why certain “blocks of hours
. . . were unnecessary or excessive.” See id. Here, the circuit court only indicated the 197
hours for which it would be awarding fees, but it did not address why it did not award fees
for the roughly 400 other hours for which Ms. Kelly sought compensation. Although, as
stated supra, the court did explain that it was not awarding attorneys’ fees for the MWHL
claim and the district court action, it is not clear from the record how many hours were
subtracted from the approximately 400 remaining hours in the fee petition for this. The
court also did not explain why other blocks of time were excluded: for example, why it did
not award attorneys’ fees for the significant amount of time incurred preparing for and
taking depositions. As Ms. Kelly points out, it was through this discovery that she was
able to establish that Mr. D’Antonio “honestly never looked into” his obligation to pay
overtime. Although we review for abuse of discretion, the trial court must explain its
reasoning for its determinations so that we can ascertain the validity of its decision on
review. See 438 Md. at 327-28. We hold that the circuit court abused its discretion only
insofar as it did not articulate the reasoning behind why it chose to not award attorneys’
44
fees for approximately 400 hours. See Friolo IV, 438 Md. at 327 (noting that the trial court
properly “explained in great detail why he believed various blocks of hours spent on
various tasks were unnecessary or excessive.”).
JUDGMENTS OF THE CIRCUIT COURT FOR
WICOMICO COUNTY AFFIRMED, EXCEPT WITH
RESPECT TO THE AMOUNT OF ATTORNEYS’ FEES
AWARD; CASE REMANDED FOR FURTHER
PROCEEDINGS IN CONFORMANCE WITH THIS
OPINION. COSTS TO BE PAID BY APPELLANTS.
45