Rosenberg v. Andrews

STATE OF MAINE SUPERIOR COURT
CUMBERLAND, ss. CIVIL ACTION
DOCKET NO. CV-20-0472

PETER M. ROSENBERG, )
)
PLAINTIFF, )
) ORDER
V. )
)
CUMB CLERKS GFC
ROBERT C. ANDREWS & ROBERT C. ) DEC? ,21 Ar~8:31
ANDREWS, ESQ. P.C., )
)
DEFENDANTS, )

Before the court is Plaintiff, Peter M. Rosenberg's ("Rosenberg") Motion to Dismiss

Defendant Robert C. Andrews ("Andrews") and Defendant Robert C. Andrews Esq. P.C.

("Andrews P.C.") (collectively "Defendants") two count counterclaim. For the reasons set forth

herein, the Plaintiffs Motion to Dismiss the Defendants' Counterclaim is GRANTED without

prejudice as to Defendants' rights to bring their claims in a separate action.

FACTUAL BACKGROUND

The following relevant facts are taken directly from the Plaintiffs complaint, the

Defendants' answer and counterclaim, and Rosenberg's Motion to Dismiss along with the

Defendants' response.

This action comes before the court as the result of an employment dispute between two

attorneys. In June of 2019, Rosenberg, a licensed Maine attorney,joined Andrews P.C., a small

law firm that offers legal services in a variety of practice areas. At all times relevant to the

current proceeding, Rosenberg served as an associate attorney for Andrews P.C. and was

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supervised by Plaintiff Andrews-himself an attorney-the sole owner and shareholder of

Andrews P.C.

Rosenberg agreed to join the law firm under the following employment terms: A base

salary of $30,000 with a 5% bonus to be paid once he accrued billings in an amount equivalent to

his base. For every billing accrued in excess of $30,000, Rosenberg was to receive a 25% share.

If Rosenberg's gross collected billings exceeded $75,000, then he was to receive a $10,000

bonus and 50% of any billings collected in excess of the $75,000 threshold.

In January of 2020, after approximately six months of employment, Rosenberg left

Andrews P.C. Soon after his departure, Rosenberg sent an email to Andrews claiming he had

accrued at least $35,000 in billings by the time of his departure and was therefore owed a 5%

bonus and 25% of the $5,000 he earned in excess of his base. Andrews denied Rosenberg's

request and later sent an accounting of Rosenberg's billings which, in Andrews calculation, only

totaled $28,209.32-an amount that foreclosed any further payment to Rosenberg under the

terms of his employment.

On four separate occasions, Rosenberg demanded payment from Andrews and was

denied. On the heels of Andrew's multiple refusals, Rosenberg filed a two count complaint in

Cumberland County Superior Court seeking the payment of his claimed wages. 1 Count One

alleges a "Breach of Maine's Wage Payment Law Against All Defendants," and Count Two

alleges a "Breach of Maine Overtime Law Against All Defendants." (Amend. Comp!. ,r,r 51-65).

After an Order from this court denying the Defendants' motion to dismiss the amended

complaint, the Defendants filed an answer and a two count counterclaim on September 1st, 2020.

Count one of the Defendants' counterclaim alleges that Rosenberg engaged in fraud against

' The original complaint filed on October 29th, 2020, only contained one count. The Complaint was later amended
pursuant to this court's order dated March 29th, 2021, over the objection of the Defendants.

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Andrews and Andrews P .C. resulting in damages of more than $10,000. Count two alleges

negligent misrepresentation resulting in equivalent damages.

On September 20th, 2021, Rosenberg filed the instant Motion to Dismiss the Defendants'

Counterclaim. The Defendants' timely filed their response on October 12th and Rosenberg

responded on October 25th. The Motion to Dismiss the Defendants' Counterclaim, fully briefed,

now awaits this court's decision.

STANDARD OF REVIEW

"A motion to dismiss pursuant to M.R. Civ. P. 12(b)(6) tests the legal sufficiency of the

[counterclaim]." Seacoast Hangar Condo. II Ass'n v. Martel, 2001 ME 112, ,r 16, 775 A.2d 1166

(quoting New Orleans Tanker Corp, v. Dep't o/Transp., 1999 ME 67, ,r 3, 728 A.2d 673). When

the court reviews a motion to dismiss, "the [counterclaim] is examined 'in the light most

favorable to the [counterclaim] plaintiff to determine whether it sets forth elements of a cause of

action or alleges facts that would entitle the [counterclaim] plaintiff to relief pursuant to some

legal theory.'" Lalonde v. Cent. Me. Med Ctr., 2017 ME 22, ,r 11, 155 A.3d 426. Allegations in

the counterclaim are deemed true for the purposes of deciding a motion to dismiss. Id. "A

dismissal should only occur when it appears beyond doubt that a [counterclaim] plaintiff is

entitled to no relief under any set of facts that he might prove in support of his claim." Moody v.

State Liquor & Lottery Comm'n, 2004 ME 20, ,r 7, 843 A.2d 43 (quoting McAfee v. Cole, 637

A.2d 463,465 (Me. 1994)) (internal quotations omitted).

DISCUSSION

Rosenberg advances two arguments in support of his Motion to Dismiss. First, Rosenberg

claims that the Defendants' counterclaim, pursuant to M.R. Civ. P. 12(b)(6), fails to state a claim

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upon which relief may be granted and second, he alleges that the Defendants' counterclaim is

barred by 26 M.R.S. § 626. Both of Rosenberg's arguments are addressed in turn.

I. Failure to State a Claim

A. Count I: Fraud

Rosenberg's argument for dismissing Count One of the Defendants' counterclaim is that

it fails to state a claim upon which relief may be granted. Specifically, Rosenberg claims that the

Defendants' failed to plead the particularity required by M.R. Civ. P. 9(b).

"In all allegations sounding in fraud or mistake, the circumstances constituting fraud or

mistake shall be stated with particularity." Bean v. Cummings, 2008 ME 18 ,i 8, 939 A.2d 676;

M.R. Civ. P. 9(b). Malice, intent, knowledge, and other condition of mind of a person may be

averred generally. M.R. Civ. P. 9(b).

To establish a claim of fraud, a counterclaim plaintiff must allege that the:(!)

counterclaim defendant made a false representation, (2) of a material fact, (3) with knowledge of

its falsity or in reckless disregard of whether it was true or false, (4) for the purpose of inducing

the counterclaim plaintiff to act in reliance upon it, and (5) the counterclaim plaintiff justifiably

relied upon the representation as true and acted upon it to the plaintiff's damage. Barr v. Dyke,

2012 ME 108, iJ 16, 49 A.3d 1280.

In Count One of their counterclaim, the Defendants allege that "with fore knowledge of

his statement's falsity," Rosenberg "did claim that he had gross collected fees," that "such claim

was a material fact," that Rosenberg "knew he did not actual[ly] provide" services justifying

these fees, that others had, in fact, "been responsible for the fees collected," or that Rosenberg

"fabricated" the fees, all for the purpose of acquiring money or property of Robert Andrews, Esq.

P .C., "with the knowledge that Andrews would rely on the statements to his detriment." (Defs.'

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Countercl. 1 15.) They also allege that Rosenberg's statements "were made with actual malice in

that he said them intentionally for the purpose of causing Andrews P.C. damages" and that they

"caused Andrews P.C. to incur damages of more than $10,000." (Def.s' Countercl. 1116-17).

Count One of the Defendants' counterclaim does plead with the particularity required by

M.R. Civ. P. 9(b). In their Counterclaim, the Defendants establish conduct by Rosenberg which,

viewed in a light most favorable to the Defendants, could constitute fraud. Accordingly, Count

One of the Defendants' counterclaim is not dismissed because of a failure to state a claim upon

which relief may be granted.

B. Count II: Negligent Misrepresentation

Rosenberg next seeks dismissal of Count Two of the Defendants' Counterclaim because

he alleges it also fails to state a claim upon which relief may be granted. With no heightened

pleading requirement for this claim, the court reviews the pleading instrument to determine

whether the counterclaim plaintiff is "entitled to no relief under any set of facts that he might

prove in support of his claim." Moody, 2004 ME 20, 17, 843 A.2d 43; see, e.g., Ramsey v.

Baxter Title Co., 2012 ME 113, 16, 54 A.3d 710 (reciting as settled law that a complaint is only

dismissed when it is "beyond doubt that a plaintiff is entitled to no relief under any set of facts"

that might be proven, with no reference to the heightened pleading standards adopted by federal

courts).'

The tort of negligent misrepresentation is committed when, one who, in the course of her

business, profession or employment, or in any other transaction in which she has a pecuniary

interest, supplies false information for the guidance of others in their business transactions, is

subject to liability for pecuniary loss caused to them by their justifiable reliance upon the

2 The Law Court has held that a "negligent misrepresentation claim does not require proof of intentional or reckless
fault and thus does not sound in fraud." Bridgam v. Nadeau, 2016 ME 131,, 33, 147 A.3d 824. Therefore, no
heightened pleading requirement is imposed on the Defendants regarding Count two.

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information, if she fails to exercise reasonable care or competence in obtaining or

communicating the information. Rand v. Bath Iron Works Corp., 2003 ME 122, ,r 13,832 A.2d

771. Liability for negligent misrepresentation only attaches if, when communicating the

information, the defendant fails to exercise the care or competence of a reasonable person under

like circumstances. Id.

Count Two of the Defendants' counterclaim alleges that "In the Course of Andrew P.C.'s

business and Peter Rosenberg's employment, Rosenberg did supply false information without

taking reasonable care or competency in obtaining or communicating that information for the

purpose of providing Robert C. Andrews, Esq. P.C. guidance on Mr. Rosenberg's claims of

having gross collected fees in excess of$30,000." (Def.s' Countercl. ,r 19.) The Defendants also

allege that Rosenberg's misrepresentation caused "damages of more than $10,000." (Def.s'

Countercl. ,r 20.) These allegations, taken in the light most favorable to the Defendants, do state a

claim for negligent misrepresentation upon which relief may be granted.

II. 26 M.R.S. § 626

Rosenberg next argues that Defendants' counterclaim is statutorily barred. This issue is a

question oflaw appropriate for a decision pursuant to M.R. Civ. P. 12(b)(6). Specifically,

Rosenberg argues that the third paragraph of26 M.R.S. § 626 bars any counterclaims brought in

an action seeking unpaid wages. The Defendants refute Rosenberg's position and argue that

section 626's language is ambiguous and, in the event that it does bar counterclaims, violates the

separation of powers doctrine. See U.S. Const. art. 1, § 1-3; Me. Const. art. 3, § 1.

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When a court is interpreting a statute, the statute shall be read in its entirety and the

words are to be given their plain and natural meaning. Goodine v. State, 468 A.2d 1002, 1004

(Me. 1983). "In interpreting a statute, [the court's] single goal is to give effect to the

Legislature's intent in enacting the statute." Dickau v. Vt. Mut. Ins. Co., 2014 ME 158, 119, 107

A.3d 621. The court construes the whole statutory scheme of which the section at issue forms a

patt so that a harmonious result, presumably the intent of the Legislature, may be achieved.

Liberty Ins. Underwriters, Inc. v. Estate ofFaulkner, 2008 ME 149115, 957 A.2d 94 (quotation

marks omitted.) When a statute is atnbiguous, a court may look to legislative history or other

extraneous aids in its interpretation. Cent. Me. Pm11er Co. v. Devereux Marine Inc., 2013 ME 37,

18, 68 A.3d 1262 (quotation marks omitted).

26 M.R.S. § 626 states, in relevant pmt:

In any action for unpaid wages brought under this subchapter, the employer may not
deduct as a ... counterclaim any money allegedly due the employer as compensation for
damages caused to the employer's property by the employee, or any money allegedly
owed to the employer by the employee, notwithstanding any procedural rules regarding
counteractions ....[N]othing in this section may be construed to limit or restrict in any
way any rights that the employer has to recover, by a separate legal action, any money
owed the employer by the employee.

There is no Law Court authority addressing these provisions. In Bernier v. Merrill Air

Eng'rs, 2001 ME 17, 770 A.2d 97 and Glynn v. Atlantic Seaboard Corp., 1999 ME 53, 728 A.2d

117, the Court reached the merits of those defendants' counterclaims in a Section 626 action. In

neither case, however, did the court discuss Section 626's apparent jurisdictional limitations.

In support of his request for dismissal, Rosenberg cites two trial court decisions in which

counterclaims brought by defendants in actions originating under 26 M.R.S. § 626, were

dismissed directly as a result of Section 626's language. See Barton v. Village Mortgage Co., No.

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2:19-cv-00318-GZS 2020 U.S. Dist. LEXIS 19544 (D. Me. Feb. 3, 2020); McIntosh v. Taggert

Constr., Inc., No. CV-02-301, 2002 Me. Super. LEXIS 189, (Oct. 2, 2002).

Barton and McIntosh were both decided by the Federal District and Maine Superior

Courts after the Law Court's decisions in Bernier and Glynn. Both Barton and McIntosh

dismissed the idea that the Law Court implicitly endorsed counterclaims in a Section 626 action,

and noted that the procedural posture of each included no challenge to the propriety of

counterclaims.

In both Barton and McIntosh, the couiis considering this particular language found that

the plain language of the statute itself bmTed counterclaims from being brought by defendant­

employers in a Section 626 action. To reach this conclusion, the Barton court characterized the

crux of Section 626 as follows: "The statute clearly states that, in any action brought under

Section 626, employers 'may not deduct as a ... counterclaim any money allegedly ... owed to

the employer by the employee.'" Barton, No. 2:19-cv-00318-GZS 2020 U.S. Dist. LEXIS 19544

at *6. This recitation was supported by McIntosh's conclusion--eighteen years earlier-that

Section 626 "prohibits an employer from making a counterclaim for any losses or money owed

when a Plaintiff has commenced an action for wages under this subchapter." McIntosh, No. CV­

02-301, 2002 Me. Super. LEXIS 189 at *2. Such an interpretation is bolstered by Section 626's

language which preserves an "employer's right to recover in a subsequent independent action."

Id.

This court finds the reasoning of both Barton and McIntosh persuasive. The language of

Section 626, in a literal sense, prohibits the deduction of money owed from an employee to an

employer-in the form of a "counterclaim"-from a final wage amount owed to the employee.

26 M.R.S. § 626. Here, Rosenberg has brought an action for unpaid wages requesting

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approximately $2,750 in outstanding fees. The Defendants' counterclaim directly challenges

Rosenberg's assertions and counters that Rosenberg actually owes Andrews P.C. money. One

purpose of the Defendants' two count counterclaim is to reduce or potentially nullify the amount

Rosenberg seeks in damages. In plain terms, the Defendants are seeking a deduction from

whatever amount they potentially owe to Rosenberg in the form of a counterclaim. This is

exactly the situation that Section 626's language sought to prevent.

Moreover, the language of Section 626's third paragraph makes clear that the

Legislature's intent was that the employer's claims be brought in a separate action, and not as

part of the wage claim. The limitation on a defendant-employer's right to bring a counterclaim

exists "notwithstanding any procedural rules regarding counteractions." 26 M.R.S. § 626. The

statute also goes on to state that "[N]othing in this section may be construed to limit or restrict in

any way any rights that the employer has to recover, by a separate legal action, any money owed

the employer by the employee." Id.

This additional language sufficiently exempts the employer's counterclaim from Rule

13(a), and makes clear that the Legislature intended for such claims to be brought in a separate

action. Although the result is procedurally awkward, it is the clear intent of the Legislature in an

effort to p1ioritize claims for unpaid wages.

The entry is: Plaintiffs Motion to Dismiss Defendants' counterclaim is GRANTED. The

Defendants' two count counterclaim is dismissed without prejudice. 3 The Clerk is directed to

incorporate this Order into the docket by reference pursuant to Maine Rule of Civil Procedure

79(a).

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The court notes that the effect of this decision is that the Defendant's two count counterclaim is dismissed without
prejudice. This dismissal does not preclude the Defendant from bringing the allegations in a separate claim. The
dismissal also does not limit relevant admissible evidence in defense of the Complaint.

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Dated: / I
Thomas R. McKean
Justice, Maine Superior Court

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