United States District Court, D. New Jersey
McNulty United States District Judge.
before me is the motion of defendant Crosscountry Mortgage,
Inc. ("Crosscountry"), (DE 35) and the motion of
defendants Matthew Reid and Andrea Manara, (DE 36), to
dismiss Counts 8, 10, 15, 18, and 19 of the Amended
Complaint. Defendants Reid and Manara rest on the arguments
of Defendants Crosscountry. (Id.), In an opinion and
order filed today, I referred the claims against the other
defendant, Justin Lieberman, to arbitration. Thus
"Defendants," as used in this opinion, excludes
Lieberman and refers only to the moving Defendants. For the
reasons set forth below, I will grant in part and deny in
part the Defendants' motions to dismiss.
loanDepot is a limited liability company in the business of
making home mortgage, home equity, and personal loans. (1AC
¶ 1). It is organized under the laws of the State of
Delaware and has its principal place of business at Foothill
Ranch, California. [Id.). All the members of
loanDepot are residents of the State of California.
(Id.). The company employs 6, 500-plus team members
across the country and operates 180-plus local loan locations
nationwide. (Id. ¶ 2).
Crosscountry is a corporation that, according to its website,
offers "a wide portfolio of home purchase, refinance,
and home equity products." (Id. ¶ 3). It
is organized under the laws of the State of Ohio and has its
principal place of business at Brecksville, Ohio.
(Id.). Crosscountry has locations in all 50 states,
including multiple locations in the State of New Jersey,
including Cranford. (Id.). Crosscountry is a direct
competitor of loanDepot. (Id.).
Reid was employed by loanDepot and its predecessors from 2010
until he resigned on June 8, 2018. (Id. ¶ 4).
While employed by loanDepot, Reid was a Branch Manager and
Mortgage Loan Originator at loanDepot's office in New
City, New York. (Id.). Reid's responsibilities
at loanDepot included originating and closing home mortgage
and home equity loans. (Id.). Reid is currently
employed by Crosscountry as a Branch Manager at its office in
Cranford, New Jersey. (Id.).
Manara was employed by loanDepot from January 10, 2017, until
she resigned on June 13, 2018. (Id. ¶ 5). While
employed by loanDepot, Manara was Reid's Sales Assistant
at loanDepot's office in New City, New York.
[Id.). Manara is currently employed as a Sales
Assistant reporting to Reid at CrossCountry's office in
Cranford, New Jersey. (Id.).
Lieberman was employed by loanDepot and its
predecessors until he resigned on February 10, 2017.
(Id. ¶ 6). While employed by loanDepot,
Lieberman was a Branch Manager at loanDepot's office in
Cranford, New Jersey. (Id.). Lieberman's
responsibilities at loanDepot included originating and
closing home mortgage and home equity loans, as well as
supervising mortgage loan officers. (Id.). Lieberman
is currently employed by CrossCountry as a Branch Manager at
its office in Cranford, New Jersey. (Id.).
has used former loanDepot employees to solicit loanDepot
employees to work for Crosscountry. (1AC ¶ 16).
Specifically, Crosscountry has targeted loanDepot's New
York, New Jersey, and Connecticut region ("NNC
Region"). (Id.). Crosscountry assists and
encourages incoming employees, while still at loanDepot, to
slow or stop the process on home mortgage and home equity
loans so the employees may bring the business with them to
Crosscountry. (Id.). To facilitate this process,
loanDepot employees transfer confidential and private
customer information outside the company. (Id.).
orchestrated the resignation of Defendants Reid and Manara
(the latter through Reid) and, upon loanDepot's
"information and belief," other unnamed loanDepot
employees, through a series of onboarding and recruiting
activities. (Id. ¶ 13). Crosscountry conducted
"pre-transition strategy sessions" to plan and
orchestrate the employees' resignations from loanDepot,
their expedited removal of confidential client information
and files, and the conversion of loanDepot customers to
Crosscountry customers. (Id. ¶ 13(a)). To
facilitate the transfer of customers, Crosscountry provided a
"referral desk" and "referral" staff.
(Id. ¶ 13(c)). In addition, CrossCoun try
prepared advertising and marketing materials based on
loanDepot's customer lists and resources. (Id.
¶ 13(f)). To assist in the transition, Crosscountry
provided a "migration team," (id. ¶ 13(b)),
and provided its licensing department to assist the
employees, while still at loanDepot, in transferring their
licenses to Crosscountry. (Id. ¶ 13(e)).
Further, Crosscountry provided the employees with
Crosscountry e-mail accounts and business cards while they
were still at loanDepot. (Id. ¶ 13(d)).
used bonus programs to encourage Defendant Reid and nonparty
former loanDepot employees Christopher Albanese
("Albanese"), Peter Costakos
("Costakos"), and Peter Lucia ("Lucia"),
who had been Loan Officers, to recruit loanDepot employees in
violation of their non-solicitation obligations.
(Id. ¶ 14). For example, Defendant Reid was
paid a $250, 0000 sign-on bonus upon formal employment with
Crosscountry. (Id. ¶ 18). Furthermore, upon
loanDepot's "information and belief,"
Crosscountry offered the former loanDepot employees
indemnification from suits by loandDepot. [Id.
February 10, 2017, Lieberman, Albanese, Costakos, and Lucia
resigned from loanDepot and immediately became employees of
Crosscountry. [Id. ¶ 18). Those defendants and
nonparties have solicited, [Id. ¶ 17), and
continue to solicit, (id. ¶19), loanDepot employees to
leave loanDepot to work for Crosscountry. Since then,
Crosscountry has successfully recruited at least 23 loanDepot
employees from the NNC Region. (Id. ¶ 18).
Reid and Manara
alleges on "information and belief that individual
defendants began working for Crosscountry before resigning
from loanDepot. (1AC ¶ 20). Specifically, loanDepot
alleges the following:
allegedly provided Reid and Manara with a Crosscountry e-mail
account while Reid was still working for and employed by
loanDepot. (Id. ¶ 22). loanDepot also alleges,
"upon information and belief," that Crosscountry
provided Reid with Crosscountry business cards while Reid was
still working for and employed by loanDepot. (Id.
the last month of Reid's employment with loanDepot,
between May and June 8, 2018, Reid began to stop originating
and processing for loanDepot. (Id. ¶ 21). In
that period, Reid began e-mailing private customer
information and loan-related documents to himself at his
private Hotmail e-mail account. (Id. ¶ 25).
1, 2018, Reid e-mailed himself at his loanDepot e-mail
address the "April Pipeline." That document
included the names of 57 customers and loan information,
representing nearly $19 million worth of business.
(Id. ¶ 26).
11, 2018, Reid sent to his Hotmail account a loan
pre-approval for $325, 000 for R&J R. (The Amended
Complaint refers to customers by their initials to keep their
privacy.) (Id. ¶ 27). That same day, Reid sent
a loan pre-approval for $650, 000 for customers JS and SS to
his Hotmail account. (Id. ¶ 28).
13, 2018, Reid sent to his Hotmail account several
confidential personal documents, including tax returns and
earning statements, of customer DH. (Id. ¶ 29).
8, 2018, Reid sent to his Hotmail account information on a
new loan customer, TS. (Id. ¶ 30). That same
day, Reid sent to his Hotmail account copies of several
executed residential sales contracts. (Id.
one of the above-described loans disappeared from
loanDepot's portfolio after Reid resigned. (Id.
14, 2018, Reid e-mailed Lieberman, then a Crosscountry
employee, a copy of Reid's Branch Manager Dashboard
Report with data current as of December 24, 2017.
(Id. ¶ 37).
6, 2018, Reid e-mailed Manara with the instructions to
"[s]tart overnighting files to clients that
closed," and asked, "can you send me a list of what
is in drawer?" (Id. ¶ 38). In response,
Manara e-mailed Reid a list of 55 customers. (Id.
¶ 39). In reply, Reid stated, "Wow ok we need to
likely bring a lot of these with us. Oringinals [sic] keep it
overnight. If copies make sure we have them scanned and
shred." (Id. ¶ 40).
8, 2018, Reid sent an inquiry e-mail regarding an updated
loan preapproval for customer whose loan did not note close
at loanDepot, but loanDepot infers that it closed at
Crosscountry. (Id. ¶ 42).
11, 2018, Reid began working at Crosscountry. (Id.
¶ 43). loanDepot asserts, "upon information and
belief," that Reid continued to transfer loanDepot's
customers and confidential information to Crosscountry.
June 11 through June 14, 2018, Reid was not licensed by the
State of New Jersey as a mortgage officer. (Id.
¶ 44). From June 11 through June 18, 2018, Reid was not
licensed by the State of New York. (Id. ¶ 45).
18, 2018, loanDepot discovered several e-mails addressed to
Reid from customers or their agents inquiring about the
status of or providing information about loans that were in
process, but did not appear in loanDepot's records.
(Id. ¶ 46).
27, 2018, loanDepot discovered a loan for customer RH.
Closing, originally scheduled for May 27, 2018, was delayed
by Reid until July 13, 2018. (Id. ¶ 47).
28, 2018, loanDepot discovered that, on May 24, 2018, Reid
had withdrawn a pending loan application for customers TB and
LB and redirected it to Crosscountry. (Id. ¶
29, 2018, loanDepot received a title insurance commitment for
a purchase being made by customer TS, whose information Reid
had forwarded to his own Hotmail address. (Id.
¶ 49). TS's purchase did not close at loanDepot.
leaving loanDepot, Reid took with him the computer that he
used to conduct business while at the company. (Id.
¶ 51). Reid solicited Defendant Manara, as well as
nonparties Maria Noeldechen and Colleen Poison, to leave
loanDepot and join him at Crosscountry. (Id.
Manara discussed her resignation with loanDepot Vice
President Mark McGowen, she falsely told McGowen that she was
leaving the company to work for her father. (Id.
¶ 56). loanDepot alleges that Manara deliberately
intended to deceive McGowen so that she could funnel
information to Reid before her own resignation became
effective on June 13, 2018. (Id.).
to loanDepot, "upon information and belief,"
Crosscountry offered to indemnify "one or more" of
Reid, Albanese, Costakos, and Lucia for any damages or
judgments caused by their conduct in these events.
(Id. ¶ 57).
Key Employee Agreement
January 16, 2015, Reid electronically signed a Key Employee
Agreement with loanDepot (doing business as Mortgage Master),
which was effective January 1, 2015. (1AC ¶ 58).
Albanese, Costakos, and Lucia each signed a Key Employee
Agreement identical to that of Reid. (Id. ¶
63). The Key Employee Agreement included provisions related
to non-solicitation and confidentiality, discussed below. The
Key Employee Agreement stated that "Employer shall be
entitled to equitable relief from any court of competent
jurisdiction," that "monetary damages will be an
inadequate remedy for Employer," and that "Employee
shall be responsible for all losses, costs and expenses
incurred by Employer, including reasonable attorney fees,
incurred by reason of Employee violating" §7, the
employee non-solicitation provision. (Id. ¶ 62)
(Key Employee Agreement §15).
the Key Employee Agreement, Reid agreed to comply with the
two non-solicitation related provisions. First, to
"devote [his] full business time, attention, best
efforts, skill and ability exclusively to the business of
Employer," and "[t]o do his utmost to further
enhance and promote the business and welfare of
Employer." (1AC ¶ 60) (citing Key Employee
Agreement §4(a), (d)). Second, for the term of his
employment and two years thereafter, he agreed he would not
"directly or indirectly, influence or advise any person
who is, or shall be, in the service of Employer to leave the
service of Employer." (Id. ¶ 61) (citing
Key Employee Agreement §7(c)).
also agreed to certain confidentiality provisions in the ...