Salem Court Finds that Landmark Professional Mortgage Company's Pre-Litigation Conduct was Reckless, Willful, and in Bad Faith, and that Co-Owner David Hafner Committed Fraud on the Court and on a Former Employee
On April 23, 2025, Marion County Judge Sean Armstrong increased the total award to Katy Canales, a former employee of Landmark Professional Mortgage Company (LPMC), to over $600,000, by adding over $300,000 in attorney fees. The new award includes an attorney fee "multiplier" of 1.25 times the amount of legal fees incurred by Ms. Canales. The multiplier was added after the Court found that LPMC's pre-litigation conduct was "reckless, willful, and in bad faith," and that LPMC's agent and part-owner, David Hafner, had perpetuated a fraud upon the Court and upon Ms. Canales.
Between 1998 and 2021, Ms. Canales worked as a loan originator for LPMC and its predecessor, consistently ranking as the company's highest producing loan originator. In October 2017, LPMC created a bonus program for Ms. Canales based on the volume of loans she closed. Over the next four years, she consistently exceeded the thresholds described in the bonus agreement, generating significant annual bonuses that Mr. Hafner tracked on a spreadsheet and added to her bonus account.
In July 2021, Ms. Canales resigned from LPMC and asked for a final payout of her bonus account. In response, LPMC and Mr. Hafner claimed the account was merely an "expense ledger," despite the plain language of the bonus agreement, which described Ms. Canales' "bonus" and never once mentioned "expenses." At trial, Mr. Hafner admitted that he had altered the spreadsheet tracking the bonus balance owed to Ms. Canales after receiving a September 2021 demand letter from her attorney, Anne Foster of Smith Foster King LLC. The Court found that in a July 2024 declaration, Mr. Hafner did not disclose the existence of the bonus spreadsheets, nor did he disclose that he had modified them before litigation began.
"Only told part of the story—the part that serves defendant—while concealing from plaintiff and the Court the existence of evidence that he was aware of, that directly impugns the credibility of the representations he made in opposition to summary judgment, and that would have been useful to plaintiff."
Marion County Judge Sean Armstrong, Opinion and Order
In December 2024, almost three and a half years after Ms. Canales resigned, the Court held that LPMC must pay her the full balance of the bonus account along with statutory penalty wages. The Court then received briefing and argument on the payment of Ms. Canales' attorney fees and litigation costs. In its April 2025 Opinion and Order explaining the 1.25 multiplier, the Court wrote that employers who falsify evidence, deny its existence, disclose it at the last minute, and then blame a former employee or that employee's counsel for their own transgressions should understand that courts are not a venue where the rules apply casually, and that the integrity of the judicial system depends on every party studiously following them.
LPMC is co-owned by David Hafner and Cindy Crowley, both residents of Salem, Oregon. The company is headquartered in Salem and has offices in Albany, Bend, Eugene, Hermiston, and Lincoln City, Oregon, as well as Vancouver and Richland, Washington. LPMC has filed an appeal of the Court's December ruling.
About Smith Foster King LLC
Smith Foster King is a plaintiff's law firm representing individuals and businesses in complex civil litigation in state and federal courts. The firm's collaborative approach draws on decades of courtroom, litigation, and business experience to help clients navigate their most challenging legal disputes.
Smith Foster King handles a broad range of claims, including employment-related matters such as discrimination, retaliation, and workplace disputes, as well as cases involving sexual assault, elder abuse, and business conflicts. Sam Smith, Anne Foster, and Jaimee King leverage their extensive courtroom and boardroom experience to deliver effective, personalized representation and help clients navigate complex legal challenges. For more information, visit smithfosterking.com or call 503.567.7100.
