Rose v. Harloe Management Corp. et al
MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 1/17/2017. (bmhs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
DOMINIC J. ROSE, SR.,
HARLOE MANAGEMENT CORP.,
Civil Action No. GLR-16-761
THIS MATTER arises out of Plaintiff Dominic Rose, Sr.’s
Management and Diana Harloe’s Partial Motion to Dismiss (ECF No.
The Motion is fully briefed and no hearing is necessary.
See Local Rule 105.6 (D.Md. 2016).
For the reasons outlined
below, the Court will grant in part and deny in part the Motion.
Defendant Diana Harloe, hired Mr. Rose as an employee of Harloe
Management, a small family-owned business.
(Compl. ¶¶ 7-8, ECF
At his initial hiring, Mr. Rose did not receive a
written employment agreement.
(Id. ¶ 9).
For the next seven years, Mr. Rose served as a “general
employee” of the corporation until he was promoted to “Director
of Operations” in 1994.
promotion, Mr. Rose
(Id. ¶ 10).
After he accepted this
and Harloe Management
did not execute a
written employment agreement outlining Mr. Rose’s compensation
Instead, Mr. Harloe promised Mr. Rose that
“if things went well,” then Mr. Rose would be transferred a
percentage of the company.
(Id. ¶ 12).
As the Director of Operations, Mr. Rose was in charge of
managing and operating all nine of Harloe Management’s Burger
Corporation required one district manager for every four stores.
(Id. ¶ 12).
Mr. Harloe acknowledged that Mr. Rose saved Harloe
Goldstein, to discuss the potential ownership transfer promised
followed up with Mr. Rose and explained that Mr. Goldstein was
uncomfortable with the transfer because Mr. Rose was not family.
Nevertheless, Mr. Harloe insisted that he would find a
way to follow through with his promise to Mr. Rose.
In the years that followed, Mr. Rose continued to work as
the Director of Operations and satisfy his duties, never taking
vacations or calling out sick.
(Id. ¶ 18-19).
time, Mr. Harloe would frequently acknowledge Mr. Rose’s work
ethic and sacrifices for Harloe Management.
(Id. ¶ 19).
Then, in 2010, Mr. Harloe, facing personal issues, stopped
coming into the office or his stores.
(Id. ¶ 20).
place, Mrs. Harloe became more involved in the business.
In August 2012, Mr. Harloe committed suicide.
(Id. ¶ 21).
night of Mr. Harloe’s death, Mr. Rose visited Mrs. Harloe and
matters after Mr. Harloe’s death.
Mrs. Harloe thanked
Mr. Rose and told him that she would not be able to run Harloe
Management without him.
accountant told Mr. Rose that all business affairs were now his
(Id. ¶ 22).
They also indicated that going
forward, Mr. Rose would need to participate in all financial
operating partner to all of the Burger King managers.
(Id. at ¶
She also promised Mr. Rose that she would formally
address the ownership transfer in the immediate future.
At that point, Mr. Rose believed that he was operating as
part owner of Harloe Management.
Goldstein, and Mrs. Harloe’s accountant to discuss his future in
During this meeting, Mrs. Harloe
repeatedly told Mr. Rose that she was in the process of making
him a franchisee and formally finalizing his ownership in Harloe
company was sold.
Mrs. Harloe also presented Mr. Rose with an
(Id. ¶ 24).
After the meeting, Mrs. Harloe
personally assured Mr. Rose that he would receive a percentage
of the company, regardless of whether Mr. Goldstein approved.
In response, Mr. Rose indicated that he was satisfied
with the offer so long as all that was presented to him came to
Over the next year and a half, Mrs. Harloe continually
Nonetheless, the ownership interest was never transferred due to
what Mrs. Harloe described as an “estate issue.”
In early 2015, Mrs. Harloe and Mr. Rose began to disagree
Mrs. Harloe fired Mr. Rose in a meeting on October 26, 2015 and
meeting, and later in a letter to the Defendants’ counsel dated
(Id. ¶ 40).
On November 10, 2015, Mr. Goldstein
responded via letter that Mr. Rose was “discharged for cause”
October 26, 2015.
(Id. ¶ 41).
Mr. Rose alleges Defendants failed to compensate him in
several ways. First, he asserts that Defendants did not pay him
for three of the days he worked during his final pay period.
compensate him for unused vacation that he accumulated at Harloe
(Id. ¶ 30).
Third, he alleges that Defendants did
(Id. ¶ 31).
Fourth, Mr. Rose asserts that he
worked at least twenty hours a week of uncompensated overtime.
(Id. ¶ 33).
Mr. Rose commenced this action in the Circuit Court for
Baltimore County, Maryland on January 29, 2016.
(ECF No. 1).
Defendants removed the case to this Court on March 16, 2016.
Mr. Rose asserts the Defendants violated three statutes:
(1) Maryland Wage and Hour Law (“MWHL”), Md. Code Ann., Lab. &
Empl. (“Lab. & Empl.”) §§ 3-401, et. seq. (West 2017) (Count I);
the Maryland Wage Payment and Collection Law (“MWPCL”), Lab. &
Standards Act (“FLSA”), 29 U.S.C. § 201, et. seq. (Count II).
(Compl., ECF No. 2).
Mr. Rose also raises seven common law
performance (Count V); (3) unjust enrichment (Count VI), (4)
misrepresentation (Count VIII);1 (6) negligent misrepresentation
(Count IX); and (7) fraud (Count X).
On March 22, 2016, Defendants moved to dismiss Counts I,
II, and III in part, and dismiss Counts VI, VIII, and X in their
(ECF No. 10).
Mr. Rose responded in opposition (ECF
No. 13) on April 6, 2016, and Defendant replied (ECF No. 16) on
April 25, 2016.
The Complaint mistakenly labels what would be Counts Eight
and Nine, respectively, as Count Eight. The first Count Eight
(Intentional Misrepresentation) will thus be referred to as
Misrepresentation) as “Count IX.”
Standards of Review
applicability of defenses.”
Edwards v. City of Goldsboro, 178
F.3d 231, 243–44 (4th Cir. 1999) (quoting Republican Party v.
Martin, 980 F.2d 943, 952 (4th Cir. 1992)).
A complaint fails
to state a claim if it does not contain “a short and plain
statement of the claim showing that the pleader is entitled to
relief,” Fed.R.Civ.P. 8(a)(2), or does not “state a claim to
relief that is plausible on its face,” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
A claim is facially plausible “when the plaintiff pleads
factual content that allows the court to draw the reasonable
Id. (citing Twombly, 550 U.S. at 556).
recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.”
550 U.S. at 555).
Id. (citing Twombly,
Though the plaintiff is not required to
Goss v. Bank of Am., N.A., 917 F.Supp.2d 445, 449
(D.Md. 2013) (quoting Walters v. McMahen, 684 F.3d 435, 439 (4th
Cir. 2012)), aff’d sub nom. Goss v. Bank of Am., NA, 546 F.App’x
165 (4th Cir. 2013).
In considering a Rule 12(b)(6) motion, a court must examine
the complaint as a whole, consider the factual allegations in
the complaint as true, and construe the factual allegations in
the light most favorable to the plaintiff.
Albright v. Oliver,
510 U.S. 266, 268 (1994); Lambeth v. Bd. of Comm’rs of Davidson
Rhodes, 416 U.S. 232, 236 (1974)).
But, the court need not
accept unsupported or conclusory factual allegations devoid of
any reference to actual events, United Black Firefighters v.
604 F.2d 844, 847 (4th Cir. 1979), legal conclusions
“allegations that are merely conclusory, unwarranted deductions
of fact[,] or unreasonable inferences,” Veney v. Wyche, 293 F.3d
726, 730 (4th Cir. 2002).
Generally, “a court may not consider extrinsic evidence at
the 12(b)(6) stage.”
Chesapeake Bay Found., Inc. v. Severstal
Sparrows Point, LLC, 794 F.Supp.2d 602, 611 (D.Md. 2011).
dismiss, ‘a court may consider it in determining whether to
Ass’n, Inc. v. Trigon Healthcare Inc., 367 F.3d 212, 234 (4th
conflict with exhibits or other properly considered documents,
“the exhibits or documents prevail.”
RaceRedi Motorsports, LLC
v. Dart Mach., Ltd., 640 F.Supp.2d 660, 664 (D.Md. 2009).
Allegations of fraud, which Mr. Rose asserts in Counts VIII
and X, are subject to the heightened pleading standard of Rule
Harrison v. Westinghouse Savannah River Co., 176 F.3d
The “circumstances constituting fraud” include
the “time, place and contents of the false representation, as
well as the identity of the person making the misrepresentation
and what was obtained thereby.”
Superior Bank, F.S.B. v. Tandem
Mental conditions, such as malice, intent, and
knowledge, may be alleged generally.
allegations that fail to comply with Rule 9(b) warrant dismissal
under Rule 12(b)(6).
Harrison, 176 F.3d at 783 n.5.
MWHL and FLSA (Counts I and II)
The Court will dismiss Counts I and II to the extent that
they seek to recover damages for unpaid overtime claims that
subject to a three-year statute of limitations.
Count I is subject to the statute-of-limitations period set
out in Labor and Employment Section 5-101, which provides that
“[a] civil action at law shall be filed within three years from
. . . .”
Properties, LLC, No. JKB-11-2515, 2012 WL 203421, at *5 (D.Md.
Jan. 23, 2012) (“[T]he statute of limitations for MWHL claims is
Similarly, Section 255(a) of the FLSA provides that a cause
of action must be commenced within three years after the cause
of action accrues if the violation was “willful.”
§ 255 (West 2017).
“Because the question of whether defendants’
limitations defense that defendants may raise,”
Mr. Rose does
violated the FLSA.
Ford v. Karpathoes, Inc., No. ELH-14-0824,
2014 WL 6621997, at *9, (D.Md. Nov. 20, 2014).
As such, the
Court will apply the FLSA’s three-year statute of limitations to
Mr. Rose’s claims.
immediately following the work period during which the services
Orellana, 2012 WL 203421, at *3 (citing Nealon
v. Stone, 958 F.2d 584, 591 (4th Cir. 1992)).
Mr. Rose argues that all of his claims for overtime wages,
including those stemming from paychecks issued prior to January
29, 2013, are not time-barred because they did not accrue until
he ultimately discovered that he would not be receiving any back
pay upon his termination in October 2015.
Defendants argue all
claims for overtime wages stemming from paychecks issued prior
to January 29, 2013 are barred by the statute of limitations.
The Court agrees with Defendants.
A new cause of action accrues each time the employer issues
a paycheck in violation of the FLSA or MWHL, rather than upon
Orellana, 2012 WL 203421, at *3.
Thus, every time
include the statutorily prescribed wages, a new cause of action
for Rose’s unpaid wages accrued.
Rose filed the Complaint on
January 29, 2016.
Hence, any claims in Counts I and II for
overtime wages from paychecks issued prior to January 29, 2013
are time-barred and will be dismissed.
MWPCL (Count III)
Mr. Rose seeks to recover compensation under the MWPCL for
(1) unpaid accumulated leave, (2) unpaid wages from his final
pay period, and (3) unpaid overtime.
Defendants argue Mr. Rose
cannot recover for unpaid overtime before January 29, 2013, and
that Count III does not sufficiently state a claim because Mr.
Rose cannot accrue leave from year-to-year by the terms of his
The Court agrees with Defendants regarding Mr.
Rose’s claims for unpaid overtime under the MWPCL, but rejects
Defendants’ argument regarding accrual.
Accumulated Leave and Unpaid Wages
To establish a claim for unpaid wages under the MWPCL, a
plaintiff is required to prove that, after termination, he was
not timely paid for wages due.
See Lab. & Empl. § 3–505.1; see
also Admiral Mortgage, Inc. v. Cooper, 745 A.2d 1026, 1029–30
The MWPCL also provides that an employer is not
required to pay accrued leave if the employer has a written
policy limiting compensation of accrued leave and notified the
employee of this policy in accordance with Section 3-504(a)(1).
Md. Code Ann., Lab. & Empl. § 3-505 (West 2017).
part, Section 3-504(a)(1) provides: “An employer shall give to
each employee . . . at the time of hiring, notice of . . . leave
benefits” (emphasis added).
subsequent promotion, he never received any employment documents
outlining his compensation and leave benefits.
(Compl. ¶ 9).2
receive compensation for this accumulated unused leave and for
the final three days of his employment.
(Compl. ¶¶ 29, 39).
sufficient to state a claim under the MWPCL.
See Amenyah v.
3546219, at *6–7 (D.Md. Jun. 23, 2016) (holding allegations that
employers were liable for failing to compensate employees who
accrued sick and vacation leave, and that plaintiffs failed to
receive or understand employee handbook precluding payment for
accrued leave, sufficiently stated a claim under the MWPCL).
The Defendants attach copies of the leave policies to
their Memorandum in Support of their Partial Motion to Dismiss.
(Defs.’ Partial Mot. Dismiss Ex. A, ECF No. 10-2). Because Mr.
Rose alleges that he did not receive any written policies, the
Court will not consider them at this stage.
Chiropractic Ass’n, Inc. v. Trigon Healthcare Inc., 367 F.3d
212, 234 (4th Cir. 2004) (requiring documents attached to a
motion to dismiss to be “integral to and explicitly relied on in
the complaint” for the court to consider them at the 12(b)(6)
Under the MWPCL, the statute of limitations for an unpaid
overtime claim begins to run two weeks after the employee’s
Mortgage, 745 A.2d at 1029–30; see also Higgins v. Food Lion,
Inc., 197 F.Supp.2d 364, 367-68 (D.Md. 2002) (“Because Plaintiff
limited to paychecks that should have been or were issued on
July 7, 1997 or later.”).
worked from the start of his employment with Harloe Management
until his termination.
He has further argued that all of his
claims for overtime are timely because they did not accrue until
he discovered he would not be paid for this overtime upon his
As explained, however, a claim for overtime pay
accrues two weeks after the date the employer should have paid
Admiral Mortgage, 745 A.2d at 1029–30.
Thus, to the
extent that Mr. Rose is seeking to recover unpaid overtime which
should have been paid prior to January 15, 2013, Count III is
Unjust Enrichment (Count VI)
Defendants argue Mr. Rose’s unjust enrichment claim should
be dismissed because it does not identify the benefit conferred.
The Court disagrees.
Unjust enrichment claims have three elements: that (1) a
benefit was conferred upon the defendants; (2) the defendants
inequitable for them to retain the benefit without the payment
of its value.
Hill v. Cross Country Settlements, LLC, 936 A.2d
343, 351 (Md. 2007).
In Quickley v. University of Maryland Medical System Corp.,
plaintiff’s pay for a meal break, even though
regularly worked during that period.
No. CCB–12–321, 2012 WL
4069757 at *6 (D.Md. Sept. 12, 2014).
The employer, allegedly
aware of employees working during their meal break, did not
sufficiently stated a claim for unjust enrichment.
Here, like the plaintiff in Quickley, Mr. Rose alleges that
he worked overtime to fulfill the duties of his position and
that the Defendants did not
further alleges that the Defendants received a benefit because
he performed the work of what should have been three salaried
employees, so he ultimately saved them from paying two other
While -- unlike the plaintiff in Quickley -- Mr.
Rose alleges he was able to seek compensation for his labor
through contract negotiations with Defendants, the fact remains
that like the plaintiff in Quickley, Mr. Rose never successfully
The Court, therefore, concludes that the
Complaint sufficiently states a claim for unjust enrichment.
Intentional Misrepresentation by Concealment
IX) and Constructive Fraud (Count X)
The Court concludes Mr. Rose sufficiently states a claim
for intentional misrepresentation by concealment (Count IX) and
constructive fraud (Count X).
sufficiently allege that: “(1) the defendant owed a duty to the
plaintiff to disclose a material fact; (2) the defendant failed
to disclose that fact; (3) the defendant intended to defraud or
justifiable reliance on the concealment; and (5) the plaintiff
suffered damages as a result of the defendant’s concealment.”
Green v. H & R Block, Inc., 735 A.2d 1039, 1059 (Md. 1999).
stated supra, allegations of fraud are subject to the heightened
pleading standard of Rule 9(b).
Harrison, 176 F.3d at 783–784.
To establish a claim for constructive fraud, Mr. Rose must
sufficiently show that he suffered damages due to a “breach of a
legal or equitable duty which, irrespective of the moral guilt
of the fraud feasor, the law declares fraudulent because of its
confidence, or to injure public interests.” Canaj, Inc. v. Baker
and Division Phase III, LLC, 893 A.2d 1067, 1095 (Md. 2006)
(internal quotation marks omitted).
For both intentional misrepresentation by concealment and
Defendants argue that as employers, Defendants owed no duty to
Mr. Rose, an employee. The Court disagrees.3
Although “[t]here is no precise formula for determining the
existence of a duty of care between two parties,” a plaintiff
In their Reply Brief, Defendants also argue that the
Complaint does not state a claim for constructive fraud because
it is based on Defendants’ alleged promises of future action.
(Reply Mem. Supp. Defs.’ Partial Mot. Dismiss at 7). By failing
to raise and argue this point in their initial Motion,
Defendants waived it. See Sher v. Luxury Mortg. Corp., No. ELH11-3656, 2012 WL 5869303, at *9 n.11 (D.Md. Nov. 19, 2012)
(concluding defendant's argument was waived because defendant
did not raise it until reply brief); see also Marshall v. James
B. Nutter & Co., 816 F.Supp.2d 259, 264 (D.Md. 2011) (“This
Court has previously held that ‘the ordinary rule in federal
courts is that an argument raised for the first time in a reply
brief or memorandum will not be considered.’” (quoting Clawson
v. FedEx Ground Package Sys., Inc., 451 F.Supp.2d 731, 735
who claims economic loss from misrepresentation must show an
“intimate nexus” between the two parties.
Griesi v. Atl. Gen.
Hosp. Corp., 756 A.2d 548, 554 (Md. 2000).
Maryland courts have
found an intimate nexus between parties who have contemplated a
See id. (holding that facts alleging
that an intimate nexus was formed); Weisman v. Connors, 540 A.2d
783, 793–94 (Md. 1988) (concluding that two executives engaged
sufficiently established an intimate nexus).
Courts have also considered whether the party making the
alleged misrepresentation “had exclusive control over material
information necessary for [the other party] to understand the
Odyssey Travel Ctr., Inc. v. RO Cruises, Inc., 262
F.Supp.2d 618, 628 (D.Md. 2003); see also Griesi, 756 A.2d at
556 (weighing heavily the fact that the prospective employer
maintained exclusive control over vital job information in its
determination that an intimate nexus existed).
Mr. Rose alleges that he worked for and with the Defendants
for nearly twenty-nine years, and that on numerous occasions,
the parties discussed the potential of Mr. Rose becoming a part
meetings, he avers that the Harloes referred to and held him out
as a business partner.
In addition, Mr. Rose alleges that he
Harloe, citing various conversations at Mr. Harloe’s funeral and
other personal conversations with Mrs. Harloe after Mr. Harloe’s
See 756 A.2d at 556.
Mr. Rose has sufficiently
alleged that an intimate nexus existed between the two parties
such that a legal duty was owed.
Thus, the Court concludes Mr.
fraud (Count X).
For the foregoing reasons, the Court will GRANT in part and
DENY in part Defendants’ Partial Motion to Dismiss (ECF No. 10).
The Court will DISMISS Counts I and II to the extent Mr. Rose
seeks overtime wages from paychecks issued prior to January 29,
The Court will DISMISS Count III insofar as Mr. Rose
seeks overtime wages that should have been paid prior to January
A separate order follows.
Entered this 17th day of January, 2017.
George L. Russell, III
United States District Judge
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