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Loandepot.Com, LLC v. Crosscountry Mortgage, Inc.

United States District Court, D. New Jersey

June 24, 2019

LOANDEPOT.COM, Plaintiff,
v.
CROSSCOUNTRY MORTGAGE, INC. et al. Defendants.

          OPINION

          Kevin McNulty United States District Judge.

         Now 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.

         I. Summary[1]

         a. Facts[2]

         i. Parties

         Plaintiff 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).

         Defendant 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.).

         Defendant 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.).

         Defendant 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.).

         Defendant Lieberman[3] 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.).

         ii. CrossCountry's scheme

         Crosscountry 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.).

         Crosscountry 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)).

         Crosscountry 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. ¶ 15).

         On 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).

         iii. Reid and Manara

         loanDepot alleges on "information and belief that individual defendants began working for Crosscountry before resigning from loanDepot. (1AC ¶ 20). Specifically, loanDepot alleges the following:

         Crosscountry 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. ¶ 23).

         During 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).

         On May 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).

         On May 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).

         On May 13, 2018, Reid sent to his Hotmail account several confidential personal documents, including tax returns and earning statements, of customer DH. (Id. ¶ 29).

         On June 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. ¶¶ 31-34).

         All but one of the above-described loans disappeared from loanDepot's portfolio after Reid resigned. (Id. ¶ 35).

         On May 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).

         On June 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).

         On June 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).

         On June 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. (Id.).

         From 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).

         On June 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).

         On June 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).

         On June 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. ¶ 48).

         On June 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. (Id.).

         Upon 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. ¶¶ 53-55).

         When 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.).

         According 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).

         iv. Key Employee Agreement

         On 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).

         1. Non-solicitation provisions

         Under 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)).

         2. Confidentiality provisions

         Reid also agreed to certain confidentiality provisions in the ...


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