An Illinois lender and its father-son executive team must pay some of their former loan officers over a million dollars in damages for wage claims, a federal judge has ruled.

A jury last year found Smart Mortgage Centers owner and president Richard Birk liable for federal wage claims against five LOs, after the court had previously determined vice president Brian Birk's individual liability. The multi-layered case also includes state wage law violations, and a judge Tuesday granted summary judgment for the LOs on those state claims, for damages totaling $1,108,482 between the five plaintiffs. 

U.S. District Judge Edmond E. Chang last week also rejected the executives' motion for a new trial. Further, the defendants will face a second trial over additional state wage claims, proceedings which will involve the aforementioned plaintiffs and three more ex-SMC workers. 

The small Joliet, Illinois-based lender was founded in 1997 and shows active licenses to broker loans in Florida and Indiana. Chang however found SMC in default last March for failing to retain an attorney, according to the case docket. The Birks also represented themselves during last year's trial, but have since retained an attorney.

Their attorney declined to comment Wednesday, while counsel for plaintiffs did not return requests for comment. 

A five-year legal battle

Two LOs filed the initial lawsuit in March 2021, for state and federal wage claims including accusations that SMC took improper deductions from their earnings. Brian Birk, the company's vice president, was tasked with payroll and compliance oversight, according to case filings. 

Lengthy case proceedings led to a three-day trial last May, where a jury found the Birks had acted willfully, or with reckless disregard for the federal wage laws in question. The jury awarded the five LOs various amounts of individual compensation owed and damages, then totaling $281,762.

Those specific plaintiffs afterward filed for summary judgment on the state law version of the claims, leading to Chang's recent calculations for greater damages. 

In requesting a new trial last year, the Birks raised arguments related to arbitration proceedings, and a purportedly prejudicial question the plaintiffs' attorney raised during the trial. Chang, in rejecting the motion last week, wrote that the weight of the evidence in the case supported the jury's verdict. 

The executives now face the potential second trial, although the judge ordered the sides to re-engage in settlement negotiations, according to the docket. 

Other FLSA lawsuits

The recent order represents a sizable judgment for plaintiffs in a wage case against a mortgage lender. Some industry players in recent years have moved to reach settlements with former employees for large sums. Other lenders continue to fight their ex-workers in court over agreements. 

Equity Prime Mortgage is battling a class of ex-underwriters in a wage lawsuit, who've rejected the lender's $600,000 settlement offer. In a filing Wednesday, the plaintiffs argued the sum should be adjusted as it is based on only half of the supposed 20,000 hours of work the plaintiffs were owed for. EPM filed another opposition Wednesday as the case remains pending. 

A loan officer this week also filed a new Fair Labor Standards Act complaint against his former employer, Arizona-based Independence Home Loans The LO, who claims he worked 30 hours of overtime per week with no compensation, is seeking damages to be tripled at judgment. A summons was issued to the lender Tuesday.