Baltimore Harbor Charters, Ltd. v. Ayd

ADKINS, Judge. In this employment dispute case, Baltimore Harbor Charters, Ltd. (“BHC”), appellant, contends that the Circuit Court for Baltimore City erred in denying its motion for judgment notwithstanding the jury’s verdict in favor of its former employee, Frank Joseph Ayd, III, appellee. BHC also contends that the court erred by failing to credit certain monies. Ayd cross appeals, alleging that the trial court erred in ordering a remittitur, in excluding certain evidence, and in not allowing the jury to consider whether BHC violated the Maryland Wage Payment and Collection Law.

FACTS AND LEGAL PROCEEDINGS Ayd started a charter boat company. In 1989, when Suzanne Edwards joined the business as an officer, general manager, and sales agent, they incorporated BHC. A year later, Ayd married, and his wife became the third BHC stockholder. These three resolved to pay Ayd $200 per month to perform management and consulting services.

In late 1993, ¹⁹⁴ Ayd and his wife began divorce proceedings. In November 1993, Edwards decided she wanted to retire. Ayd and Edwards began looking for a buyer for BHC. In February 1994, Robert Berman bought the BHC stock and became BHC’s sole shareholder.

Berman became vice president of BHC, Ayd became president, and Ayd’s sister, Rita O’Brennan, became the corporate secretary. Ayd continued his employment with BHC and his management of the company’s day-to-day operations. In March 1994, BHC purchased a vessel named The Royal Blue. Ayd directed and managed extensive modifications to The Royal Blue over a period of five months.

After the Coast Guard certified the vessel some months later, Ayd captained it. BHC contends that from the time BHC employed Ayd until Ayd resigned on September 9, 1996, Ayd was to be paid $200 per month for administrative services and $200 to captain. Ayd, however, contends that he was to receive $30,000 annually to manage and act as a sales representative for BHC, plus a percentage of the tips for each charter he captained. He based his contention in part on a written document purporting to be an “Informal Action” of the BHC directors establishing Ayd’s weekly salary as $576.92.

Ayd also testified that at the time this salary was set, the parties did not contemplate the volume of work Ayd performed on The Royal Blue, and that he had performed extensive labor on the vessel in anticipation that he would be able to re-purchase controlling interest in the company. Ayd testified that Berman promised that after he had been repaid the money he invested in the company, he would sell Ayd a controlling interest. There was also evidence that The Royal Blue increased in value as a result of the improvements that Ayd made or directed. The vessel was purchased for $365,-000, and BHC invested $57,000 in repair and restoration.

Anthony Fotos testified that after the vessel was restored and certified, Berman offered The Royal Blue to him for $500,000, and that he would have paid that amount for the vessel. ¹⁹⁵ Berman testified that despite these improvements, the company lost money. In an effort to establish why, Berman resolved to take over responsibility for the company’s finances. In the spring of 1996, Berman asked Ayd to turn over the books, but felt that Ayd “stalled” him by asserting that he was too busy to do so. In August, Berman discovered that the accounts and signature cards on the company bank accounts had never been changed to reflect his ownership.

Berman closed the account and opened a new company account. When he confronted Ayd about the bank records, Berman did not believe Ayd’s response that he knew nothing about the situation. Shortly thereafter, Ayd resigned, effective September 9, 1996. On July 9, 1997, Ayd filed a complaint against BHC alleging breach of contract, quantum meruit, unjust enrichment, and a violation of Maryland’s Wage Payment and Collection Law.

Ayd alleged, inter alia, that he was to be paid $576.92 weekly salary plus a $40 tip for each charter trip. He had only been paid, he complained, $9,861.55 during the period of February 1994 to September 1996. The alleged unpaid compensation totaled $91,048.83. BHC counterclaimed, alleging breach of fiduciary duty, conversion, and trespass to chattel.

The case was tried before a jury. At the end of Ayd’s casein-chief, both parties made motions for judgment. Both motions were denied. After BHC presented its defense, Ayd presented rebuttal evidence.

After Ayd’s rebuttal case, although Ayd renewed his motion for judgment, BHC did not renew its motion. The jury awarded Ayd $76,099.33 on his breach of contract claim, and made an identical award on his unjust enrichment claim. On BHC’s counterclaim for breach of Ayd’s fiduciary duty, the jury awarded BHC $4,000 in compensatory damages. BHC filed a motion for new trial, judgment notwithstanding the verdict, and remittitur.

After a hearing, the court ruled that unless Ayd agreed to accept a remittitur, it would grant a new trial. When Ayd accepted the remittitur, the court reduced the jury’s award by $76,099.33 (the amount of the ¹⁹⁶ unjust enrichment award), plus $9,861.55 for wages Ayd conceded that BHC had paid him. Thus, the judgment became $66,237.78. Both parties now appeal.

DISCUSSION I. JNOY BHC first contends that the trial court erroneously denied its motion for judgment notwithstanding the verdict (“JNOV”). Ayd responds that BHC lost the right to move for JNOV because it failed to make a motion for judgment at the close of all the evidence, as required by Maryland Rule 2-532. In its reply brief, BHC concedes that it failed to renew the motion at the close of all the evidence, but contends that its motion at the end of Ayd’s case-in-chief was sufficient to preserve its right to make a motion for JNOV. BHC further argues that when Ayd moved for judgment, the judge denied the motion and “[tjhis denial also extended to BHC’s own renewed motion, as indicated by the Court.” Neither the record nor the law support BHC’s contentions.

Rule 2-519 governs motions for judgment, and states in pertinent part: (a) Generally. A party may move for judgment on any or all of the issues in any action at the close of the evidence offered by an opposing party, and in a jury trial at the close of all the evidence. The moving party shall state with particularity all reasons why the motion should be granted. No objection to the motion for judgment shall be necessary.

A party does not waive the right to make the motion by introducing evidence during the presentation of an opposing party’s case. * * * (c) Effect of Denial. A party who moves for judgment at the close of the evidence offered by an opposing party may offer evidence in the event the motion is not granted, ¹⁹⁷ without having reserved the right to do so and to the same extent as if the motion had not been made. In so doing, the party withdraws the motion. Rule 2-532, relating to motions for JNOV, states in pertinent part: - (a) When permitted.

In a jury trial, a party may move for [JNOV] only if that party made a motion for judgment at the close of all the evidence.... (b) Time for filing.... If the court reserves ruling on a motion for judgment made at the close of all the evidence, that motion becomes a motion for [JNOV] if the verdict is against the moving party.... In interpreting the Rules of Procedure, we apply the same rules of construction that we use to interpret statutes.

See Kerpelman v. Smith, Somerville & Case, L.L.C., 115 Md.App. 353, 357 , 693 A.2d 357 , cert. denied, 346 Md. 241 , 695 A.2d 1229 (1997). The most basic rule of statutory construction is that courts should endeavor to “ascertain and effectuate legislative intent.” Jones v. State, 336 Md. 255, 260 , 647 A.2d 1204 (1994). Here, we are required to “ascertain and effectuate” the intent of the Court of Appeals in adopting the language in both 2-519 and 2-532 requiring that all the evidence be completed before a party may move for judgment or JNOV in a jury trial. A plain reading of both rules shows that these motions must be made at the close of all evidence.

In this case, BHC made its motion for judgment at the close of Ayd’s case-in-chief. That motion was denied. At the close of BHC’s defense case, Ayd also moved for judgment. When Ayd’s motion was denied, BHC requested that the case be reopened to introduce “some pieces of evidence,” and Ayd objected.

The court reopened the case, stating: “I’m going to allow you to reopen your case and the Motion for Judgment would have [to] come after.” After additional documents were moved into evidence, Ayd renewed his motion for judgment on the counterclaim. Ayd then took the stand to offer rebuttal testimony. After the close of Ayd’s rebuttal case, Ayd re ¹⁹⁸ newed his motion for judgment on the counterclaim, and again, it was denied. BHC did not renew its motion.

Under Rule 2-532(a), a motion for JNOV can be made “only if that party made a motion for judgment at the close of all of the evidence.... ” Here, the record is clear that BHC did not move for judgment at the close of all of the evidence. We find no merit in BHC’s argument that the denial of Ayd’s renewed motion for judgment should be construed also as a denial of BHC’s earlier motion, which had already been denied, and which was not renewed. When BHC made its motion at the end of Ayd’s case-in-chief, the court clearly denied that motion. After Ayd presented his rebuttal testimony, and closed, his rebuttal case, the following dialogue occurred: [Counsél for Ayd]: I believe I have to make a Motion again at this time to incorporate the grounds upon which I stated before for the record.

Your Honor, I can renumerate them or I believe you can allow me to just reincorporate it. The Court: That’s fine. [Counsel for Ayd]: As I’ve previously stated. The Court: And, I’m going to deny your Motion at this time and let the case go to the jury as we discussed previously. Anything else? [Counsel for BHC]: No, your Honor.

Contrary to BHC’s contention, the transcript clearly reveals that BHC did not suggest that its motion be renewed or reincorporated, and the court did not suggest that its denial of •Ayd’s motion was also a denial of a motion by BHC. Accordingly, because BHC failed to follow the dictates of Rule 2-582(a) that a motion for judgment must be made at the close of all the evidence in order to preserve the right to move for a JNOV, we hold that the trial court did not err in denying BHC’s motion for JNOV.

II

Remittitur In his cross-appeal, Ayd argues that the court erred in its remittitur in two respects: (1) it should not have ordered a ¹⁹⁹ remittitur of the jury’s verdict for unjust enrichment; and (2) the remittitur should not have given BHC a credit for any of the wages Ayd admits that he was paid. In its appeal, BHC contends that the trial court erred in crediting only the $9,861.55 in wages that Ayd admitted in his complaint, rather than the amount of the wages reflected in the W-2 forms that were submitted into evidence. We affirm the trial court in its decision regarding remittitur, in all respects, and explain. A trial court has the power to order a remittitur if it determines that the verdict awarded by the jury is “ ‘grossly excessive,’ or ‘shocks the conscience of the court,’ or is ‘inordinate’ or ‘outrageously excessive,’ or even simply ‘excessive.’ ” Banegura v. Taylor, 312 Md. 609, 624 , 541 A.2d 969 (1988).

Technically speaking, in ordering a remittitur, a trial court does not reduce the verdict; rather, the court orders a new trial unless the winning party will agree to accept a lesser sum fixed by the court, instead of the jury verdict. See id. Further, a trial court has broad discretion in granting a remittitur and the decision is reviewable, on an abuse of discretion standard, only under extraordinary circumstances. See Franklin v. Gupta, 81 Md.App. 345, 362 , 567 A.2d 524 , cert. denied, 319 Md. 303 , 572 A.2d 182 (1990).

A. Ayd’s Challenge To The Remittitur After the jury verdict, BHC filed a motion for a new trial, JNOY, and remittitur, contending that the award for unjust enrichment duplicated the award for breach of contract, and that BHC was entitled to a set-off for the wages already paid. The trial court agreed, and fully addressed these issues at the motion hearing. [I have] to consider the case as a whole. Now, it is clear to this [c]ourt that there was sufficient evidence in the record . for the jury to find unjust — unjust enrichment, but not under the theory that [appellee’s] counsel promotes, that is that it was services rendered during the time of what the jury found to be an employment contract. Therefore, hav ²⁰⁰ ing looked at the evidence as a whole, my judicial conscience is shocked because of the excessive amount, and therefore, unless [Ayd] agrees to accept a remittitur of reducing the judgment ...

I will grant a new trial.... [L]et me explain my numbers since its not a number that either party has suggested. The [c]ourt agrees with [BHC] that the number the jury found, $76,099.33 ... was a duplicative award. It was awarded twice. It — it’s just too specific and unusual a number for it to be a number pulled out of the air.

And therefore, the [c]ourt feels that the jury misunderstood unjust enrichment and in fact awarded [Ayd] the judgment for breach of contract twice. But the [c]ourt does not feel that the W-2 forms accurately reflect the income that was received pursuant to that contract. And in fact, a W-2 form can reflect income from all kinds of sources that have nothing to do with your major employment. In the Complaint, however, [Ayd] says that he was paid $9,861.55 and therefore, the [c]ourt feels that it is appropriate for that amount to be deducted from the amount that was given as a judgment in the breach of contract count....

The [c]ourt is going to reduce that as it was upon considering the case as a whole, shocked by the fact that they gave — they clearly misunderstood the quantum meruit versus unjust enrichment as described by defense counsel in her pleadings and therefore, I’m going to reduce it.... [B]ecause [appellee] concedes that he was paid $9,861.55 under the contract, I will further reduce the judgment to $66,237.78. * * * [G]iven all the facts in this case, and the fact that I do think that the jury got confused because of the odd number that they picked for both [breach of contract and unjust enrichment claims] and because in the [cjourt’s mind, unjust enrichment in [Ayd’s] favor would have resulted in a much smaller number. I don’t know what the number would have been but it wouldn’t have been $76,099.33 that’s why I’m granting — conditionally granting the motion for a new trial. ²⁰¹ Thus, the hearing transcript clearly shows that trial court recognized the peculiarity in the jury awarding precisely the same amount of dollars and cents for both the breach of contract and the unjust enrichment claims, and concluded that the jury became confused about how to deal with the unjust enrichment claim. Ayd proffers a different rationale for why the two awards were identical in amount. He posits that the unjust enrichment award represents the increased value of The Royal Blue that resulted from his efforts.

He explains that The Royal Blue increased in value by $78,000 after repairs and restoration, and that the increase exceeds the amount that BHC paid out-of-pocket for those repairs. 1 He argues that his labor on the vessel was not covered by his employment agreement because BHC had not yet purchased the boat at the time he commenced work and agreed upon his compensation. Although Ayd’s rationale might explain how the jury could have arrived at a sum of $78,000, it does not explain how the jury could have arrived at the exact sum the jury awarded for breach of contract — $76,099.38. The trial court considered the verdict excessive because the duplicated amount suggested that the jury did not rest the unjust enrichment award on an increase in value of the vessel, but rather on the same damages represented by the breach of contract. This interpretation is a reasonable one.

It is not necessary that the trial court’s view of the verdict be the only rational view. An abuse of discretion occurs only “it is ‘well removed from any center mark imagined by the reviewing court and beyond the fringe of what that court deems minimally acceptable.’ ” Rolley v. Sanford, 126 Md.App. 124, 131 , 727 A.2d 444 (1999)(quoting North v. North, 102 Md.App. 1, 14 , 648 A.2d 1025 (1994)). In this case, the trial court’s decision represented a fair and reasonable assessment of the verdict — as a verdict that was excessive because ²⁰² the jury got confused and duplicated the award for breach of contract damages as an award for unjust enrichment. We cannot say that the trial court abused its discretion in granting a remittitur for the unjust enrichment award.

Nor do we agree with Ayd’s contention that the trial court abused its discretion in crediting to BHC, as part of the remittitur, the wages that Ayd admitted he had received from BHC. As BHC argued in his motion for new trial, JNOV, and remittitur, the award of $76,099.33 was “99.9% of what was due under the contract found in Plaintiffs Exhibit No. 3.” Ayd worked for BHC from February 25, 1994 until September 9, 1996, a period of 132 weeks, at the alleged salary of $576.92 per week. Using that salary, his total wages for that period would be $76,153.44. The judgment on the breach of contract count was $76,099.33.

In his complaint, Ayd acknowledged that BHC had paid him $9,861.55. The jury verdict on Ayd’s breach of contract claim obviously did not take into account any amounts paid to Ayd — it represented almost 100% of the salary that Ayd claimed he had earned during his employment. Thus, it was reasonable for the trial court to conclude that the jury verdict on the contract count was excessive. Ayd argues that the figure of $9,861.55 did not coincide with any amount introduced into evidence, and for that reason, was not the proper basis for remittitur.

The W-2 forms introduced into evidence showed $38,861.55 in employee compensation, none of which was credited to BHC by the jury. The trial court, in granting the remittitur, did not credit this whole amount. It may have chosen the lesser figure because it considered that some of the compensation was attributable to administrative fees, minister fees (for performing weddings), or captain’s fees. During the trial, Ayd introduced W-2 forms he received from BHC showing the following income from “[w]ages, tips [and] other compensation”: in 1994 — $3,461.55; 1995 — $23,-000; 1996 — $12,400.

Ayd also introduced a 1996 Form 1099 from BHC showing “[n]onemployee compensation” in the amount of $2,888.33. When questioned regarding the 1994 ²⁰³ W-2, Ayd testified that the 1994 income “would have been captain’s fees [and] some minister’s fees, ... [a]nd it would have also included from earlier in the year some of the salary that was paid, the administrative salary.” In response to the same question regarding the 1995 income, he stated: “That would have been the captain’s fees, minister’s fees, administrative fees. I don’t believe there w[ere] any other things encompassed within that.... [W]e started to have a positive cash flow and I started to catch up on a lot of the administrative fees and crew fees that I hadn’t been paid.” The greatest amount that could have been administrative fees, however, was $6,000 — representing a fee of $200 per month for 30 months from February, 1994 to September, 1996. This would leave a balance of $32,861.55 for salary, captain’s fees, and minister fees.

Ayd admitted in his complaint that he was paid a total of “$9,861.55 in salary and administrative fees” during the period that was the subject of the suit. This amount was not only admitted by Ayd, but was obviously included among the W-2 forms introduced into evidence. Thus, the court chose the lesser amount because the jury was free to believe that a portion of the compensation showed on the W-2 forms was attributable to minister’s fees, or captain’s fees or for some other reason did not accurately represent salary and administrative fees paid to Ayd. Given Ayd’s admission in his complaint, however, there was no question that $9,861.55 had been paid, and that it should have been credited against the total amount of salary allegedly due under the contract.

Accordingly, we do not think it was an abuse of the trial court’s discretion to credit this amount against what BHC owed for salary in granting the remittitur. B. BHC’s Challenges To The Remittitur BHC contends that the full $38,861.55 shown on the W-2 forms should have been credited against the jury’s award for breach of contract, and that the trial court erred in not doing so as part of the remittitur. Again, we cannot say that ²⁰⁴ the trial court abused its discretion in refusing to credit the entire amount shown on the W-2 forms produced by BHC because the W-2 forms, according to Ayd’s testimony, included income from captaining and from minister fees, as well as salary and administrative fees. The exact amount of the minister’s fees and captain’s fees was not proven.

Ayd testified that after The Royal Blue was certified, he was paid a “captain’s fee”, for serving as captain when the vessel went on a charter trip. This fee was separate and apart from his salary and administrative fee. For captaining, he was to be paid $200 per charter, plus 20% of the tip paid by the customer. Generally, the tip was 15% of the charter fee.

Ayd testified that he had not been paid his tip money because “[he] wanted to get money to Mr. Berman to get him paid off and so I just didn’t pay myself that money and took care of other obligations and improvements to the vessel____” There was no testimony about the amount of the minister fees. The jury had sufficient evidence from which it could conclude that the $38,861.55 amount shown as compensation on the W-2 forms included compensation other than the salary that was the subject of the complaint, or the $200 per month administrative fees. In light of the evidence, the trial court’s decision to include only that amount of salary and administrative fee that Ayd admitted that he had received was logical and reasonable. We find no error in the trial court’s decision regarding the remittitur.

III

Maryland Wage Payment & Collection Law In his cross-appeal, Ayd argues that the trial court erred in dismissing his claim for treble damages under the Maryland Wage Payment and Collection Law (“the Act”), Md.Code (1991, 1999 Repl.Vol.), §§ 3-501-3-509 of the Labor and Employment Article (“LE”). The principal purpose of the private remedy provided under the Act was “to provide a vehicle for employees to collect, and an incentive for employers to pay, ²⁰⁵ back wages.” Battaglia v. Clinical Perfusionists, Inc., 338 Md. 352, 364 , 658 A.2d 680 (1995). The Act defines “wage” as “all compensation that is due to an employee for employment,” and specifically includes any bonus, commission, fringe benefit or “any other remuneration promised for service.” LE § 3-501(c). Section 3-502 of the Act is a “regular pay” provision generally requiring employers to pay employees “at least once every two weeks or twice in each month.” LE § 3-502(a)(l)(ii).

But there is a specific exception permitting “an employer [to] pay an administrative, executive, or professional employee less frequently....” LE § 3-502(a)(2). The Act also requires prompt payment of wages after termination, by specifying when an employer must pay wages due for work performed before termination of employment. Section 3-505 provides that “[e]ach employer shall pay an employee ... all wages due for work that the employee performed before the termination of employment, on or before the day on which the employee would have been paid the wages if the employment had not been terminated.” LE § 3-505 (emphasis added). To enforce both of these provisions, the Act creates a remedy if “an employer fails to pay an employee in accordance with” either the “regular pay” requirements of section 3-502 or the “prompt pay after termination” requirements of section 3-505.

See Battaglia, 338 Md. at 363 , 658 A.2d 680 . Section 3-507.1 provides: (a) In general. — [I]f an employer fails to pay an employee in accordance with § 3-502 or § 3-505 of this subtitle, after 2 weeks have elapsed from the date on which the employer is required to have paid the wages, the employee may bring an action against the employer to recover the unpaid wages. (b) Award and costs. — If, in an action under subsection (a) of this section, a court finds that an employer withheld the wage of an employee in violation of this subtitle and not as a result of a bona fide dispute, the court may award the employee an amount not exceeding 3 times the wage.... ²⁰⁶ Thus, employers risk liability for treble damages if they (1) fail to pay wages owed to a terminated employee within two weeks after the date he would been paid if his employment had continued, and (2) have no bona fide reason for withholding those wages. See Admiral Mortgage v. Cooper, 357 Md. 533, 540-41 , 745 A.2d 1026 (2000).

At trial, Ayd claimed that because BHC failed to timely pay his wages, and had no “bona fide” reason for doing so, he was