Family Dental Care, P.C. v. Mousa

180 N.E.3d 383

FAMILY DENTAL CARE, P.C., Appellant-Defendant,

v.Christine MOUSA, Appellee-Plaintiff.

Court of Appeals Case No. 21A-PL-670

Court of Appeals of Indiana.

FILED December 30, 2021

Attorney for Appellant: Chad W. Nally, Merrillville, Indiana

Attorney for Appellee: Kevin E. Werner, Crown Point, Indiana

Altice, Judge.

Case Summary

[1] Family Dental Care, P.C. (Family Dental) breached its employment contract with Christine Mousa, DDS (Dr. Mousa) and, in bad faith, failed to pay her wages that were due of nearly $23,000. The parties stipulated below that, prior to Family Dental's termination of the employment contract, Dr. Mousa had earned such wages. Following a bench trial, the trial court awarded Dr. Mousa damages in the amount of $94,465.82, which included unpaid wages plus prejudgment interest, other damages related to the premature termination of the contract, and liquidated damages. The trial court, however, denied Dr. Mousa's request for attorney fees.

[2] On appeal, Family Dental challenges only the award of $45,995.24 in liquidated damages. Family Dental argues that Ind. Code § 22-2-5-2, which provides for statutory liquidated damages for an employer's bad faith failure to pay wages, was inapplicable because Dr. Mousa failed to submit her claim to the Indiana Department of Labor (the DOL) before filing suit. Dr. Mousa responds that exhaustion of administrative remedies here would have been futile because her claim for unpaid wages exceeded the $6,000 threshold for processing by the DOL. Thus, Dr. Mousa contends that the trial court properly awarded statutory liquidated damages and, on cross appeal, argues that the trial court was required to also award attorney fees under I.C. § 22-2-5-2.

[3] We affirm in part, reverse in part, and remand.

Facts & Procedural History

[4] Family Dental, through its principal Chanbo Sim, DDS (Dr. Sim), hired Dr. Mousa as an employee in March 2018. The parties executed an employment agreement, which was drafted by Dr. Sim's wife and went into effect on March 5, 2018, Dr. Mousa's first day of work. Pursuant to the agreement, Dr. Mousa was to receive thirty percent of her net collections. The agreement also included a termination provision that required a thirty-day written notice.

[5] Dr. Sim soon began to believe Dr. Mousa was being overcompensated, so he presented her, on March 28, 2018, with three options that would each reduce her future compensation. Dr. Mousa rejected any proposed change to the terms of her employment and requested a thirty-day written notice if Family Dental intended to terminate the current employment contract. When Dr. Mousa arrived at work on Monday, April 2, 2018, she discovered that her schedule had been cleared of patients. Dr. Sim handed her a check for $825.97, from which no employment taxes were withheld, and refused to provide the thirty-day notice of termination. Despite subsequent collections for dental services performed by Dr. Mousa, Family Dental did not forward any additional sums to Dr. Mousa.

[6] On May 16, 2018, Dr. Mousa filed a complaint against Family Dental and Dr. Sim for breach of contract, conversion, and violation of wage law. The parties later stipulated to the dismissal of Dr. Sim as a defendant and to the fact that, at a minimum, Family Dental owed Dr. Mousa $22,997.62 in unpaid wages.¹ Additionally, the trial court granted partial summary judgment in favor of Family Dental on the conversion claim and in favor of Dr. Mousa on Family Dental's later-filed counterclaim for an alleged breach of the employment agreement's noncompete clause.

[7] A bench trial was held on March 3, 2021, solely on the issues of damages, as Family Dental acknowledged breaching the employment agreement. The parties stipulated to the majority of the facts and exhibits. Particularly relevant to this appeal, the parties stipulated that Dr. Mousa did not file a claim with the DOL prior to initiating this action. The stipulated exhibits also included information related to the DOL's online wage claim portal, which indicated that claims over $6,000 could not be processed by the DOL and directed such a claimant to consult a private attorney.

[8] On March 18, 2021, the trial court issued its order, concluding that Family Dental acted in bad faith by its failure to pay the wages due and awarding damages as follows:

4. That Plaintiff is due and owed $22,977.62^[2] with prejudgment interest accruing at the rate of 8 percent from July 23, 2020, specifically $5,365.34.

5. That due to Defendant's breach of the contract's termination clause, Plaintiff is entitled to $20,127.62.

6. That due to Defendant's bad faith, Plaintiff is entitled to liquidated damages in the sum of $45,995.24.

7. That since the herein cause is a breach of contract case and since there was no provision in said contract for attorney fees, Plaintiff is not entitled to same.

Appellant's Appendix Vol. 2 at 18-19.

[9] Family Dental now appeals the liquidated damages award, and Dr. Mousa appeals the denial of attorney fees. Additional information will be provided below as needed.

Discussion & Decision

[10] Although the trial court's order does not reference any statute, it is apparent, and the parties agree, that the liquidated damages were awarded under I.C. § 22-2-5-2. This statute, commonly referred to as the Wage Payment Statute and part of the Wage Payment Act (WPA), provides:

Every such person, firm, corporation, limited liability company, or association who shall fail to make payment of wages to any such employee as provided in section 1 of this chapter shall be liable to the employee for the amount of unpaid wages, and the amount may be recovered in any court having jurisdiction of a suit to recover the amount due to the employee. The court shall order as costs in the case a reasonable fee for the plaintiff's attorney and court costs. In addition, if the court in any such suit determines that the person, firm, corporation, limited liability company, or association that failed to pay the employee as provided in section 1 of this chapter was not acting in good faith, the court shall order, as liquidated damages for the failure to pay wages, that the employee be paid an amount equal to two (2) times the amount of wages due the employee.

Id. (emphasis supplied).

[11] There are two ways to arrive at application of the Wage Payment Statute, and the appropriate method is determined by the claimant's status at the time of filing his or her claim. See Hollis v. Def. Sec. Co. , 941 N.E.2d 536, 540 (Ind. Ct. App. 2011) (holding that an employee's status at the time the claim is filed is the relevant inquiry in determining which statutory procedural framework applies), trans. denied. The WPA, I.C. Chap. 22-2-5, applies to wage claims asserted by "current employees [or] those who have voluntarily left employment, either permanently or temporarily." St. Vincent Hosp. & Health Care Ctr., Inc. v. Steele , 766 N.E.2d 699, 705 (Ind. 2002). By contrast, the Wage Claims Act (WCA), I.C. Chap. 22-2-9, pertains to wage disputes involving "employees who have been separated from work by their employer and employees whose work has been suspended as a result of an industrial dispute." Steele , 766 N.E.2d at 705. The distinction is relevant because a claimant under the WPA may file directly with the trial court, while involuntarily separated employees proceeding under the WCA must first seek administrative relief by filing a wage claim with the DOL. See id. ; Reel v. Clarian Health Partners, Inc. , 917 N.E.2d 714, 715 (Ind. Ct. App. 2009), trans. denied.

[12] Because Dr. Mousa was terminated by Family Dental, her wage claim, filed after her involuntary separation, clearly fell under the WCA, and her suggestion to the contrary is without merit. See Hollis , 941 N.E.2d at 540. Further, Dr. Mousa stipulated below that she failed to file a claim with the DOL prior to filing her complaint with the trial court.³ Dr. Mousa argues, however, that her claim would have been automatically denied by the DOL because it exceeded $6,000 and, thus, "exhausting her administrative remedies was not only futile, but administrative remedies were unavailable." Appellant's Brief at 5. Accordingly, Dr. Mousa claims that she was entitled to take her wage claim straight to court and seek attorney fees and liquidated damages under the Wage Payment Statute. We cannot agree.

[13] I.C. § 22-2-9-4 governs the DOL's responsibilities regarding wage claims filed under the WCA and provides:

(a) It shall be the duty of the commissioner of labor to enforce and to insure compliance with the provisions of this chapter, to investigate any violations of any of the provisions of this chapter, and to institute or cause to be instituted actions for penalties and forfeitures provided under this chapter. The commissioner of labor may hold hearings to satisfy himself as to the justice of any claim, and he shall cooperate with any employee in the enforcement of any claim against his employer in any case whenever, in his opinion, the claim is just and valid.

(b) The commissioner of labor may refer claims for wages under this chapter to the attorney general, and the attorney general may initiate civil actions on behalf of the claimant or may refer the claim to any attorney admitted to the practice of law in Indiana. The provisions of [the Wage Payment Statute] apply to civil actions initiated under this subsection by the attorney general or his designee.

Subsection (b) above is the path for WCA claimants, like Dr. Mousa, to obtain liquidated damages and attorney fees under the Wage Payment Statute. We have explained, "the plain language of [this subsection] states that only ‘the attorney general or his designee’ may seek those damages. To become the ‘designee’ of the attorney general, a claimant – or more specifically his or her attorney – must obtain a letter of referral." Reel , 917 N.E.2d at 719 ; Lemon v. Wishard Health Servs. , 902 N.E.2d 297, 300 (Ind. Ct. App. 2009), ...