KIMBERLY PINSKY ET AL.
PIKESVILLE RECREATION COUNCIL ET AL.
Zarnoch, Kehoe, Eyler, James R. (Retired, Specially Assigned), JJ.
One perceptive legal observer has noted that A[n]onprofit associations take many shapes and sizes, and the law that applies to them has traditionally consisted of a vague combination of statutes and common-law principles that create a number of problems for nonprofit associations." Elizabeth S. Miller, Doctoring the Law of Nonprofit Associations with a Band-aid or a Body Cast: A Look at the 1996 and 2008 Uniform Unincorporated Nonprofit Association Acts, 38 Wm. Mitchell L. Rev. 852, 855 (2012). This case is a prime example of those problems.
In 2008, Pikesville Recreation Council (APRC") hired appellants Kimberly Pinsky and Elizabeth Ann Burman to work in one of its pre-schools for the 2008-2009 school year. At the end of the school year, but before the end of their respective contract terms, PRC terminated Pinsky and Burman and stopped paying them. They sued PRC and the individual officers of PRC in the Circuit Court for Baltimore County to recover the payments still owed to them, plus treble damages, attorney's fees, and costs. After a three-day bench trial, the circuit court entered judgment for Pinsky and Burman against PRC, but rejected the claims against the individual defendants. The court also declined to grant appellants' motions for sanctions and for attorney's fees and costs. They now appeal the adverse judgment with respect to the individual defendants and the court's rulings on sanctions, attorney s fees, and costs.
FACTS AND LEGAL PROCEEDINGS
PRC was an unincorporated nonprofit association that, until 2009, oversaw recreation programs in the Pikesville area. It was governed by an elected Board of Directors (“Board”) and operated under a Constitution, Bylaws, and a Policy Manual. PRC conducted various sports and education programs and received most of its funds from registration fees for the programs. Some programs had their own checkbooks, while others used the general PRC bank account. PRC had as many as fifteen checking accounts and took in gross revenues of “$750[, 000] to close to a million dollars” a year from the mid-1990s to 2008.
Among its many programs, PRC operated a number of pre-schools. In July 2008, PRC hired Pinsky and Burman as a teacher and an assistant teacher, respectively, for its pre-school at the Fort Garrison Elementary School for the 2008-2009 school year. The contracts specified that Pinsky and Burman would be employed from August 18, 2008 to June 22, 2009. Pinsky would receive a gross salary of $24, 993.50, while Burman would receive $16, 887.75. Payments would be made “at regular payroll periods through out [sic] the twelve month period beginning August 18th, 2008 and terminating on August 17th, 2009.” Both contracts could be terminated by PRC for “just cause” and with written notice. The signature line on both contracts states “Pikesville Recreation Council.” Michel Snitzer, then the president of PRC, signed Burman's contract, while his wife, Sandy Snitzer, signed Pinsky's contract.
Around the time Pinsky and Burman were hired, PRC was facing financial and organizational difficulties. In fact, the Baltimore County Department of Recreation and Parks was considering decertifying PRC in 2008. PRC continued to operate its programs throughout 2008, but in January 2009, a successor entity called the Greater Pikesville Recreation Council (“GPRC”) was certified by the County and took over the recreation activities for the Pikesville area. Certification was described at trial as a process that “gave . . . the Greater Pikesville Rec Council [the right to] access to all fields, all schools, everything that [Baltimore] County runs programs on.” Once decertified, PRC was “no longer allowed to run any programs on any field or within any school.” All program registration fees that came in after January 2009 went to GPRC rather than PRC, as did all of PRC's equipment and records. As a result, by the spring of 2009, PRC did not have “enough cash flow in to write checks to cover all the programs [and] expenses for the preschool.”
Pinsky and Burman received identical letters, dated May 22, 2009, from PRC informing them that they would be terminated effective June 12, 2009. The letters were written on PRC letterhead and were signed by Steven Engorn, PRC's treasurer. The stated reason for the termination was that the “Department of Recreation and Parks of Baltimore County has informed [PRC that it] will no longer be able to run any of [its] day care centers after the end of the current school year as they have turned the operation of these centers over to another organization.” In a follow-up letter to Burman dated May 29, Engorn wrote that “[a]s a result of this employment termination, your income from our organization will cease as of that date . . . . [W]ith this employment termination, your income will be $3, 518.27 less than you were expecting to earn from 9/1/2008 thru [sic] 8/31/2009.” Both Pinsky and Burman received their last paychecks from PRC at the end of May 2009. They continued working through the end of the school year, until June 12, 2009.
Pinsky and Burman filed a complaint against PRC and nine individual Board members on November 25, 2009. They alleged that PRC and the officers breached their employment contracts and sought unpaid wages, as well as treble damages, reasonable counsel fees, and costs under the Maryland Wage Payment and Collection Act, Md. Code (1991, 2008 Repl. Vol.), Labor & Employment Article (“LE”), ' 3-507.1. Pinsky and Burman thus sought $16, 745.97, plus interest, and $11, 985.33, plus interest, respectively, in addition to counsel fees of $9, 577.10 and costs.
The litigation proceeded to discovery, albeit with some difficulty. The deposition of Engorn, PRC's former treasurer, did not take place as scheduled in October 2010 because Engorn's counsel allegedly failed to inform his client of the deposition. Appellants moved for sanctions, but the circuit court never ruled on the motion. In another instance, counsel for the defendants failed to appear for a court-ordered settlement conference. Appellants again moved for sanctions, and that motion was denied.
A bench trial began on May 31, 2011 and continued on November 7 and November 14. Appellants' theory of the case focused on allegations of financial mismanagement by various PRC Board members. Pinsky and Burman testified about their employment with PRC and the amount of their legal fees. The seven individual defendants testified about their own involvement in PRC, and, to the extent that they were knowledgeable, PRC's operations and finances. Overall, the court heard from:
• Michael Snitzer, an officer of PRC for about fifteen years and its president until October 2, 2008. He was a volunteer. Snitzer stated that he had no involvement with PRC after October 2, 2008.
• Steven Engorn, PRC's treasurer in 2008 and 2009. He was a volunteer. He testified that he believed that Pinsky and Burman were terminated with Ajust cause" because PRC was being ...