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Skinner v. Gateway Mortgage Group, LLC

United States District Court, D. South Carolina, Columbia Division

October 23, 2017

WILLIAM MICHAEL SKINNER, JR., MITCH ROWELL, and LAURENCE H. FLANEGAN, Plaintiffs,
v.
GATEWAY MORTGAGE GROUP, LLC, J. KEVIN STITT, and DANE BASHAM, Defendants.

          MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT

          MARY GEIGER LEWIS UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Plaintiffs William Michael Skinner, Jr. (Skinner), Mitch Rowell (Rowell), and Laurence H. Flanegan (Flanegan) (collectively, Plaintiffs) filed this lawsuit alleging claims for (1) violation of the South Carolina Payment of Wages Act (SCPWA), SC Code Ann. § 41-10-10; (2) breach of contract; (3) breach of contract accompanied by fraudulent act; (4) violation of the South Carolina Unfair Trade Practices Act (SCUTPA), SC Code Ann. § 39-5-10; and (5) breach of the implied covenant of good faith and fair dealing. As an alternative to their SCPWA cause of action, Plaintiffs seek relief under the South Carolina Payment of Post-Termination Claims to Sales Representatives Act (Sales Representative Act), SC Code Ann. § 39-65-10. Plaintiffs request treble and punitive damages in addition to compensatory damages and costs.

         The Court has jurisdiction over the matter under 28 U.S.C. § 1332. Pending before the Court is Defendants Gateway Mortgage Group, LLC (Gateway), J. Kevin Stitt (Stitt), and Dane Basham's (Basham) (collectively, Defendants) motion for partial summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Having carefully considered the motion, response, reply, oral argument, the record, and the applicable law, it is the judgment of the Court Defendants' motion for partial summary judgment will be granted in part and denied in part.

         II. FACTUAL AND PROCEDURAL HISTORY

         Gateway is a home-mortgage lender with operations in South Carolina. Plaintiffs were all previously employed by Gateway in South Carolina as licensed loan originators. Upon their hiring, each Plaintiff executed an employment and compensation agreement with Gateway setting forth job duties, terms and conditions for payment of compensation, and certain grounds for termination.

         In addition to serving as a licensed loan originator, Skinner managed Gateway Branch 670. His initial agreement-executed some time prior to April 2011-contained specific language providing he would receive compensation based on the profitability of Branch 670. Under that agreement, Skinner had great discretion over the profits generated by the Branch, which were deposited in a Branch Manager Liability Account (BMLA), and which Skinner could then use to pay operating expenses, or to increase compensation for himself or other loan officers.

         In April 2011, Gateway held a conference call with its branch managers, including Skinner, and informed them their compensation would be governed by new agreements in supposed compliance with the Dodd-Frank Act and its interpreting regulations regarding loan officer compensation. Shortly thereafter, Skinner entered in to a new Branch Manager Agreement in purported compliance with the Dodd-Frank requirements. Skinner's April 2011 compensation plan defined his compensation as a $3, 500.00 monthly base salary, commissions based on the total monthly volume of loans closed at Branch 670, and an annual production bonus. Skinner's April 2011 agreement expressly stated, “Branch Manager will NOT be allowed to participate in bottom line profitability.” ECF No. 73-3 at 59.

         At about the same time, the Branch's profits earned up to April 1, 2011 were moved into the BMLA from which Skinner could request payment at his discretion until the funds were exhausted. As of April 30, 2011, the account had a balance of $40, 034.58. After the Dodd-Frank Act changes, no additional funds were added to the account. In an email on May 15, 2012, Skinner acknowledged the money in his liability account was “about tapped out.” See Id. at 65. By May 31, 2012, records indicate the BMLA had a zero balance. Id. at 71-72.

         In April 2012, Skinner signed a third compensation plan, under which his monthly base salary increased to $8, 500.00, and he continued to receive commissions based on the total monthly volume of loans closed at Branch 670. From this point forward, Skinner would meet with Basham, then Regional Vice President responsible for Branch 670, and/or then Chief Operating Officer Steve Peters (Peters) every ninety days to reevaluate his compensation plan. Skinner testified the salary and commission components of his compensation structure were either increased or decreased depending on branch performance. Defendants state Skinner's compensation plan would be adjusted to increase his salary and/or commissions to be paid prospectively or, in other words, in the future ninety days.

         Skinner entered into a fourth compensation plan in July 2012, which increased his base monthly salary to $20, 000.00, and added to the commissions he could receive based on the volume of loans closed at Branch 670. This plan, like his second one, notably provided Skinner would be unable to participate in the “bottom line profitability” of the branch. See Id. at 61.

         Skinner then entered into a fifth compensation plan on October 1, 2012. This plan continued to furnish Skinner with a base monthly salary and commissions based on the total volume of loans closed at Branch 670, and it further entitled him to commissions for loans he personally originated. This plan also stated Skinner would “NOT be allowed to participate in bottom line profitability.” Id. at 62. Skinner remained under this compensation plan until his termination on October 17, 2012.

         In October 2012, Gateway decided to close Branch 670 among concerns Skinner had allegedly engaged in a number of questionable business practices. Purportedly for those same reasons, Gateway terminated Skinner's employment on October 17, 2012. Gateway insists at no point did Basham or anyone else associated with Gateway promise Skinner it would pay him an amount equivalent to the profits remaining after his termination or upon the closing of Branch 670. Instead, Skinner would purportedly be entitled to be paid only in accordance with the terms of his compensation plans. Further, Gateway argues it overpaid Skinner by $12, 786.90 in 2011 and by $6, 327.23 in 2012.

         Because Gateway anticipated closing Branch 670, it also terminated Rowell on October 17, 2012. Gateway continued to employ Flanegan, though, to work with the administrative processors at Branch 670 to process and close any outstanding loans that were in the pipeline and to assist with winding down the operations of Branch 670. At the time of Skinner's and Rowell's terminations, Gateway indicated it intended to pay Plaintiffs ...


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