Chamber's inability to pay is not a valid excuse
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July 11, 2012
Ocean City, Maryland: The Maryland Court of Special Appeals recently affirmed that an inability to pay is not a valid reason in denying an award of thousands of dollars to a former executive director who accomplished suing the Greater Ocean City Chamber of Commerce.[1]
The Greater Ocean City Chamber of Commerce has stated that paying the amount of the award could put the chamber into a financial hardship, where hopes of recovery looked slim. “Any meaningful award of fees and costs in this case would jeopardize in a very real sense the existence and continuing financial viability of the chamber, which has existed as an important promoter of the business community for over 50 years,”[1] current Chamber Executive Director Melanie Pursel said in an affidavit.
Former Ocean City Chamber of Commerce Executive Director Dan Barufaldi sued the chamber for back wages in 2008, with a Worcester County jury awarding him $60,000 in back compensation. He went on to file a motion to recover the $160,000 and more he spent on attorney fees and other related costs in order to sue the chamber for the money it owed to him.[1]
Pursel also added to the affidavit that the Chamber is a nonprofit entity organized to promote tourism and commerce in Ocean City. She commented that the chamber has not earned any net profit for over a decade and had to borrow $60,000 to pay the court registry. For the chamber to go on and have to pay the award of attorney fees would likely make the chamber bankrupt.[1]
Barufuldi factually questioned this assertion of the chamber, saying that the chamber has paying members and could access these members for other obligations. He also argued that the financial condition of the chamber is an irrelevant factor as to whether or not the award of attorney fees should be considered.[1]
While Barufaldi believes the Maryland Circuit Court erred in its analysis of this case, the chamber asserted that the Circuit Court did not abuse its broad judgement in denying Barufaldi's claim for attorney's fee and costs. The chamber believed the court's “decision to do so was amply supported and explained with reference to multiple valid reasons.”[1]
However, the Maryland Court of Special Appeals disagreed, citing dozens of similar cases, and pointed out that it is not practical for an attorney to research a party’s financial situation as a final determining factor in seeking an award of attorney fees and costs.[1]
“Indeed, we agree with the argument that it would undermine the goal of the fee-shifting provision if an attorney approached to represent a claimant first had to investigate the employer’s financial condition to determine the likelihood that attorney fees would be awarded if the employee prevailed in the lawsuit. We hold that the financial situation of the defendant is not a relevant factor to consider in determining whether to award attorney fees in a WPCL case,” the Court of Special Appeals opinion read.[1]
Th opinion went on to read that, “Because the court applied an improper test in determining to deny an award of attorney fees, we reverse the judgment of the Circuit Court. On remand, in assessing whether to award fees and costs, the Circuit Court should exercise its discretion liberally.”[1]
The case, now back to the Maryland Circuit Court, is being further reviewed.[1]
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