A federal judge has ruled against Wells Fargo Bank, N.A., in a lawsuit filed by a former loan originator who seeks to collect unpaid commissions.
Seven Abelman was employed as a private mortgage banker by the banking subsidiary of Wells Fargo & Co. from Sept. 2010 until April 2012, according to court documents.
He was paid commissions based on the Wells Fargo Home Mortgage 2011 incentive compensation plan for private mortgage bankers.
The plan called for him to be credited for all commission up until the last day of the month in which each of his loans funded. Commissions were paid on the last day of the following month.
Abelman claims that he had 37 loans in the pipeline when he stopped working for Wells Fargo. He alleges that he had performed virtually all of his required tasks on the loans, which all closed after he left.
When the bank failed to pay him, he filed a lawsuit in the Circuit Court for Montgomery County in Maryland on Jan. 17 of this year.
Wells Fargo removed the action to U.S. District Court for the District of Maryland on March 4 based on diversity jurisdiction.
The lender said it wasn’t obligated to pay commissions under the commission plan because Abelman terminated prior to the loan closings and he could not have completed all of his obligations with respect to the loans.
Wells Fargo filed a motion to dismiss the lawsuit on March 7.
But U.S. District Judge Mark A. Barnett denied the motion.
“In light of the evidence in the record, the court cannot conclude that defendants’ bright line rule denying all plaintiffs their terminal commissions is reasonable,” the Sept. 30 decision stated. “It may well be that there were some loans, like the loans in McLaughlin, where another loan officer had to take over after a plaintiff left [the employer], had to do substantial work, and was paid the commission for that work. Defendants have not provided examples, however, of such a situation.”
A spokeswoman for Wells Fargo didn’t respond to a request for comment.
