Veteran mortgage executive James Seely has sued Guild Mortgage for allegedly failing to pay $750,000 in compensation after terminating his employment for cause by “manufacturing out of whole cloth spurious claims of Mr. Seely not working full time,” according to a recently filed lawsuit.
“While we do not comment on pending litigation, Guild’s long-standing reputation for doing what’s right is built from our core values of integrity and respect, and we are committed to those values with every employee, client, and partner,” Guild said in a statement.
Seely’s attorneys did not immediately respond to requests for comments.
Seely joined Guild in 2021 when the California-based lender paid $196.7 million to acquire Residential Mortgage Services Holdings (RMS), a Maine-headquartered retail lender of which Seely was president and CEO.
The deal gave Guild a substantial foothold in the Northeast and a bevy of purchase businesses. RMS had 70 offices in 14 states, 850 employees, and 250 loan officers. In 2020, it originated $8.5 billion in mortgage loans.
Following the M&A transaction, Seely signed a five-year employment agreement with Guild in May 2021. He was tasked with the duty of managing the acquired RMS branches.
If the employment agreement was terminated without cause, the lawsuit states that Guild would pay him one year’s base salary, which was $500,000. However, if the contract was terminated with cause – which includes cases of fraud or breach of fiduciary duty, among others – he would not receive the severance compensation. He claims he was also entitled to a performance bonus of $250,000.
“Guild’s motives in refusing to pay Mr. Seely’s owed compensation is obvious – Guild acquired RMS at the height of the residential mortgage business boom and is now, by any means necessary, attempting to (unlawfully) cut costs,” attorneys for the plaintiff wrote in the lawsuit.
The complaint was filed on Feb. 2 in a U.S. district court in Maine.
The plaintiff claims that as the market began to cool, Guild began terminating some employees.
In October 2023, he learned the company offered his job position to a protégé and, during a virtual meeting, Guild’s leadership pressured Seely to resign from his role as division vice president, which would result in him not receiving his compensation.
Seely refused to resign. On Oct. 20, he received a letter claiming cause for termination.
It included, among the reasons, that the Northeast Region was not profitable and performing worse than other regions; he was “not engaged full-time;” and he breached fiduciary duty seven months earlier by sharing a text from CEO Terry Schmidt with another employee.
The letter, attached to the lawsuit and signed by Schmidt, states, “For the three years prior to the merger with Guild, RMS was consistently 20 to 23% of Guild’s retail volume. However, since the close, because of your neglect of duties as exhibited by your unacceptable time commitment, the Northeast Divisions has consistently underperformed and lost market share.”
The letter states Seely committed to a recruitment budget of approximately $360 million by the third quarter of 2023 but reached $71 million. The company claimed his commitment to better margin management of roughly 20 basis points has not materialized.
“Although expenses in dollars have declined, expenses are approximately 50 basis points greater than budget due to the lack of volume.”
The company gave Seely 30 days to cure the issues.
In his defense, Seely claims there were no profitability or efficiency metrics in his employment agreement and there was no basis to the claims that he did not work full-time for the company. Regarding the text message, he mentioned it was not marked as confidential or private and was shared while assisting Guild in its separation negotiations with an executive.
In addition, after receiving the notice in October, Seely alleges the company prevented him from attending meetings.
On Nov. 10, Guild sent a written notice of the employment agreement, saying he failed to cure the breaches and because of that, the company terminated his contract.
In the lawsuit, Seely alleges breach of contract and breach of implied covenant of good faith and fair dealing against Guild.