Opinion
FSTCV176031364S
09-13-2017
William Raveis Mortgage, LLC v. Peter Fickeison et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION PLAINTIFF'S MOTION FOR INJUNCTION #100.35
Irene P. Jacobs, J.
The plaintiff, a real estate company [hereafter, " WRM" ], brought this action against Peter Fickeison and John Derek Holte, two of its former employees, and Luxury Mortgage Corp., the company which employed them after they resigned from their employment with the plaintiff. In its March 6, 2017 verified complaint, the plaintiff alleges the defendants' breach of contract, tortious interference of contract, misappropriation of trade secrets, and computer-related offenses.
Currently before the court is the plaintiff's application for a temporary injunction [#100.35]. The plaintiff asks this court to enjoin the defendants from making use, misappropriating, and disclosing, either directly or indirectly, WRM's confidential, proprietary and trade secret information and processes, including but not limited to, broker information, customer information, customer preferences, customer lists, investor lists, market share analyses, marketing plans, price analyses, product information, proprietary mortgage processing forms, sales information, sales strategies, and other proprietary processes. It also asks this court to enjoin the defendants from soliciting the business of WRM's existing clients and, for purposes of soliciting business, calling upon or communicating with any client of WRM whom the individual defendants had contact with as WRM employees. In addition, it asks this court to enjoin the defendants from soliciting WRM employees, or employees of any affiliate of WRM, from terminating their employment with WRM or any affiliate of WRM, and managing or supervising any employees of WRM, and from making any disparaging remarks about WRM. Finally, the plaintiff asks this court to order the defendants to deliver all of WRM's confidential, proprietary and trade secret information and processes to WRM, including but not limited to, broker information, customer information, customer preferences, customer lists, investor lists, market share analyses, marketing plans, price analyses, product information, proprietary mortgage processing forms, sales information, sales strategies, and other proprietary processes.
This matter was heard by the court over three days, on May 9, May 10, and May 16, 2017. After review of the testimony, the exhibits, and the applicable law, and for the reasons set forth below, the court denies the plaintiff's application for temporary injunction.
FACTS
The court finds the following facts. The plaintiff WRM is the twelfth-largest real estate company in the country, with 120 company-owned and affiliated offices in eight states. The defendant Fickeison began working for the plaintiff in 2007. As of October 10, 2014, the plaintiff employed the defendant Fickeison as Mortgage Originator and Vice President of Sales for Massachusetts, Vermont, New Hampshire, and Rhode Island. The plaintiff and the defendant's Executive Vice President signed a Mortgage Originator and VP Agreement on October 10, 2014 [Exhibit 1]. Pursuant to the Agreement, the defendant Fickeison worked from the Westford, MA or Shelton, CT offices. As part of his job, he supervised the defendant Holte. The defendant Fickeison terminated his employment at WRM on February 1, 2017. He began working for the defendant Luxury Mortgage in its Taunton, Massachusetts shortly thereafter.
As of March 4, 2014, the plaintiff employed the defendant Holte as Mortgage Originator, working out of the Westford, MA or Shelton, CT offices. A Mortgage Originator Agreement was signed by the defendant Holte and the plaintiff's Executive Vice President on March 4, 2014. [Exhibit 6.] The defendant Holte terminated his employment at WRM on February 1, 2017. He began working for the defendant Luxury Mortgage shortly thereafter.
DISCUSSION
" The principal purpose of a temporary injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits." (Internal quotation marks omitted.) Rustici v. Malloy, 60 Conn.App. 47, 758 A.2d 424, cert. denied, 254 Conn. 952, 762 A.2d 903 (2000). " [T]he standard for granting temporary injunction is well settled. A party seeking injunctive relief must demonstrate that: (1) it has no adequate remedy at law; (2) it will suffer irreparable harm without an injunction; (3) it will likely prevail on the merits; and (4) the balance of equities tips in its favor." (Citation omitted; internal quotation marks omitted.) Aqleh v. Cadlerock Joint Venture II, L.P., 299 Conn. 84, 97, 10 A.3d 498 (2010). " Connecticut law supports a distinctly moderated level of proof required to establish the elements of irreparable harm and lack of an adequate remedy at law necessary for the issuance of a temporary injunction where the circumstances involve an alleged breach of a noncompetition agreement." Pop Radio, LP v. News America Marketing In-Store, Inc., 49 Conn.Supp. 566, 577, 898 A.2d 863 (2005).
The court begins by addressing the issue of the existence of an adequate remedy at law available to the plaintiff. As to the two individual defendants Fickeison and Holte, their respective employment agreements with WRM provide for monetary damages for each instance of breach of their agreements. The verified complaint affirmatively demands monetary damages in addition to injunctive relief. If the plaintiff prevails on its claims after trial, an award of money damages would adequately compensate for any injuries it suffered.
Neither the plaintiff's memorandum of law in support of its application for a temporary injunction [#101], nor its reply to the defendants' memorandum opposing the plaintiff's motion [#109], addresses the issue of the plaintiff's lack of adequate remedy at law as it applies to the corporate defendant Luxury Mortgage. Nor did the plaintiff present evidence at the hearing on this issue. The plaintiff has not met its burden of demonstrating that it has no adequate remedy at law.
The court next turns its attention to the issue of whether the plaintiff has demonstrated that it will likely prevail on the merits. In Paragraph 65 of Count 2, the plaintiff alleges that the defendant Fickeison breached Section 6 of the Agreement " by using for his own purposes and benefit the confidential, proprietary and trade secret information and processes of WRM, and/or disclosing said information and processes to Luxury." The plaintiff's expert testified that after the individual defendants had left WRM, he performed a forensic analysis of the laptop computers assigned to the individual defendants during their employment for the plaintiff. The expert testified that the defendants accessed files and sent them to themselves on their personal e-mails in the months prior to their resignations from WRM. However, no evidence was presented that WRM prohibited its employees' use of personal email for work-related matters. Furthermore, no evidence was presented that Fickeison used or disclosed the content of any such emails after he resigned from WRM. The plaintiff has not met its burden of demonstrating that it is likely to prevail on this claim as against Fickeison.
Section 6 Confidentiality:
The Employee agrees, recognizes and acknowledges that WRM's customer and potential customer lists and information, trade secrets, and proprietary and confidential information and processes, as they may exist from time to time, are valuable, special and unique assets of WRM's business, access to and knowledge of which are essential to the performance of Employee's duties set forth in this Agreement. The Employee will not, during or after the term of this Agreement, in whole or in part, disclose such lists or information, or secrets, information or processes or the identity of any of WRM's customers, potential customers, credit classifications, records (including, without limitation, all computer records, computer data and electronic media of any kind whatsoever), statistics or other information disclosed to the Employee by the WRM to any person, firm, corporation, association or other entity of whatsoever kind for any reason or purpose whatsoever, nor shall the Employee make use of any such lists, information, identity, secrets or property for its own purposes or for the benefit of any person, firm, corporation or other entity of whatsoever kind (except for WRM) under any circumstances during or after the term of this Agreement. The Employee further agrees to hold as WRM's property, all customer lists and information, memoranda, books, papers, letters, brochures, records (including, without limitation, all computer records, computer data and electronic media of any kind whatsoever) and other data, files, correspondence and records of any kind which at any time shall come in the Employee's possession or control, and all copies thereof and there from, in any way relating to WRM's business and affairs, whether made by it or otherwise coming into its possession, and on termination of this Agreement, or on demand of WRM, at any time, agrees to deliver the same to WRM. The parties agree that damages for each breach of this Section 6 may be difficult to ascertain and therefore agree that the breaching party of this Section herein shalt pay to the non-breaching party the sum of $25,000 for each instance of breach of the confidentiality described herein.
Paragraph 76 of Count Three of the verified complaint contains the identical allegations as against the defendant Holte. The allegations are closely related to the allegations contained in Paragraph 78 of Count Three, and will be discussed together. In addition to the allegations in Paragraph 76 of Count Three, the plaintiff alleges that the defendant Holte " breached Section 9 of the Employment Agreement by calling upon or contacting WRM's existing clients, accounts or customers, for purposes of soliciting their business." The defendant Holte testified that he developed lists of contacts over a period of fifteen years and six jobs, both before and during his approximately three-year employment at WRM. He testified that the lists consisted of family, friends, former and potential clients, and acquaintances. He testified that at the beginning of each job, including at his employment with the plaintiff, he submitted his lists to his new employer for marketing use. He testified that he currently does not have access to the lists he submitted to Luxury Mortgage; the reason, he has learned, is that the lists are inaccessible pending the current litigation. The defendant's testimony was credible. No evidence was presented that any individual on the defendant Holte's contact lists who was an existing WRM client was contacted or called upon by the defendant Holte for the purpose of soliciting business. No evidence was presented that the defendant Holte has used the contact lists since he resigned from WRM. The plaintiff has not met its burden of demonstrating that it is likely to prevail on the claims alleged in Count Three, Paragraphs 76 and 78.
a. Non-Compete 9. Non Solicitation/Non-Compete Employee agrees and covenants that for a two (2) year period commencing on the date of his termination or resignation of employment from the Company (the " No Solicitation Period"), that Employee will not, directly or indirectly, either for himself or for any other business entity (A) solicit any Protected Individual to terminate his or her employment or affiliation with the Company or employ or hire as an independent contractor or employee any Protected Individual, or (B) take any action that may cause injury to the relationships between the Company or any of its employees and any lessor, lessee, vendor, supplier, customer, distributor, employee, consultant or other business associate of the Company as such relationship relates to the Company's conduct of its business, or call upon or contact any existing client, account or customer of the Company for purpose of soliciting business from such client, account, or customer (with the exception of Mark Hand, Scott Johnson, Samantha Jason, Peter Guiney, Michael Dorian, and Sum Berger who are permitted exceptions for solicitation of business only) or (C) manage or supervise any Protected Individual in any employment, consulting, or independent contractor capacity or relationship. For the purposes of this Agreement, " Protected Individual" means any employee, independent contractor or consultant employed by or affiliated with the Company or any of its affiliates including William Raveis--New York, LLC, William Raveis--New York City, LLC, Kelsey Company, William Raveis Insurance Agency, Kelsey-New York, LLC, William Raveis Affiliates, or any affiliate of the companies named herein in existence at any time during the No Solicitation Period. It shall also include any customer of the Company or its affiliates including any potential Customer the Employee worked with while employed by the Company. The parties agree that damages for each breach of this Section 4 may be difficult to ascertain and therefore agree that the breaching party of this Section herein shall pay to the non-breaching party a minimum of $50,000 for each instance of breach of the non-solicitation described herein in addition to any damages sustained beyond that sum.
Employee agrees and covenants at least until the third (3rd) anniversary of execution of this Agreement, Employee shall not engage in or carry on, directly or indirectly, Company within a fifteen (15) mile radius of any WRM, WRRE, or William Raveis Massachusetts, LLC office or any affiliate or subsidiary of the aforementioned entities, business which shall be in effect similar to or competing with any business or products carried on by Company now or at any time during Employee's affiliation with the Company. Company and Employee agree that damages for breach of the covenant contained in this Paragraph will be inadequate and that Company shall be entitled to injunctive relief in any action or proceeding brought to enforce the same. Company and Employee intend that the covenants contained in this paragraph shall be deemed to be a series of separate covenants, one for each mile, one for each town and one for each applicable county, city, town, or state.
In Paragraph 67 of Count Two of the Verified Complaint, the plaintiff alleges that the defendant Fickeison violated Section 9a(A) of the Agreement by soliciting the employment of the defendant Holte to terminate his employment at WRM and to come to work at Luxury Mortgage. The defendant Holte credibly testified that he was recruited to work for Luxury Mortgage by a Luxury Mortgage consultant, not by the defendant Fickeison and that he was not even aware at the time that the defendant Fickeison had also moved to Luxury Mortgage. The plaintiff has not met its burden of demonstrating that it is likely to prevail on this claim.
In Paragraph 68 of Count Two of the Verified Complaint, the plaintiff alleges that the defendant Fickeison violated Section 9a(B) of the Agreement by " calling upon" or " contacting" WRM's " existing" clients or customers for the purposes of soliciting their business. As evidence of " calling upon" or " contacting, " the plaintiff submitted a series of Luxury Mortgage posts from a social media website, advertisements which featured the defendant Fickeison and included his address in the defendant Luxury Mortgage's Taunton, MA office [exhibit 14]. The Agreement is silent as to the use of social media, or, for that matter, any media advertising, after termination of employment with WRM. " . . . [T]he use of social media, whether it is Facebook, Linkedin, Twitter, or some other forum, has become embedded in our social fabric. Absent an explicit provision in an employment contract which governs, restricts or addresses an ex-employee's use of such media, the court would be hard pressed to read the types of restrictions urged here, under these circumstances, into the agreement. Indeed, such an expansive interpretation of the employment contract would likely render it unenforceable as overly broad." BTS, USA, Inc. v. Executive Perspectives, LLC et al., Docket No. X10CV116010685, Superior Court, J. D. of Waterbury. (10/16/14, Dooley, J.), affirmed, 166 Conn.App. 474, 142 A.3d 342 (2016).
The term " existing" customer or client is not defined in the Agreement. The president of WRM testified that the company considered any individual who had purchased a mortgage from WRM to be an existing customer, even as far back as twenty years. This definition, the witness testified, was based in part on the frequency with which prior customers returned to WRM for subsequent financial matters. However, the witness also testified that WRM only held on to mortgages for sixty days before they were sold to another institution. The court finds that the definition of " existing customer or client" as used in the Agreement refers to an individual who was actively engaged in purchasing a mortgage from WRM, from the commencement of the process of purchasing a particular mortgage until the date on which that particular mortgage was sold by WRM to another institution.
In Count Five of the Verified Complaint, the plaintiff alleges that the defendants " misappropriated" its " trade secrets" as defined in General Statutes § 35-51(b). As to a claim of trade secrets, " the party claiming trade secret protection must prove that the information . . . was the subject of reasonable efforts to maintain its secrecy." Elm City Cheese Co. v. Federico, 251 Conn. 59, 752 A.2d 1037 (1999). WRM President Raveis testified that the plaintiff had developed a system of customer tracking which contained confidential customer information and which the plaintiff considered to be unique and proprietary, and, as alleged, a trade secret. The plaintiff did not demonstrate to the court that it exerted reasonable efforts to maintain the secrecy of its customer tracking system. As such, the court does not conclude that the WRM customer tracking system constitutes a trade secret. Furthermore, the credible evidence did not demonstrate that either individual defendant disclosed the tracking system to Luxury.
Under said statute, " misappropriation" is defined as acquisition by improper means. The credible evidence showed that the defendant Holte compiled and added to his contact lists over the course of many years. No credible evidence was presented to suggest that the lists, to the extent that they may have contained names of existing WRM customers, were acquired by the defendant Holte by improper means. Nor was credible evidence presented that the contact lists submitted to Luxury by Holte were acquired by improper means. Finally, the credible evidence did not demonstrate that any WRM customer names on the defendant Holte's contact lists constitute trade secrets. The court concludes that the plaintiff has not met its burden of demonstrating that it is likely to prevail on its claim of misappropriation of trade secrets by any of the defendants.
In Paragraph 69 of Count Two, the plaintiff alleges that the defendant Fickeison breached 9aC of the employment contract by managing or supervising Holte at Luxury. No evidence was presented that the defendant Fickeison supervises or manages the defendant Holte at Luxury. The court concludes that the plaintiff is unlikely to prevail on this claim.
In Paragraph 6 of the verified complaint, the plaintiff alleges that Luxury continues to employ Fickeison and Holte, and to make use of WRM's confidential, proprietary and trade secret information and processes. The plaintiff alleges that Luxury has tortuously interfered with WRM's employment agreements and has knowingly misappropriated WRM's confidential, proprietary and trade secret information and processes. As to trade secrets, this court has already found that the plaintiff did not present evidence sufficient to support its claim of trade secrets. The plaintiff has not presented evidence sufficient to support its claim that Luxury has misappropriated confidential or proprietary information and processes. To the extent that the contact lists provided by Holte to Luxury contain the names of WRM customers, the plaintiff has not presented evidence sufficient to support its claim that the defendant Luxury has used or continues to make use of the names on the lists. The court concludes that the plaintiff is unlikely to prevail on this claim.
The plaintiff argues that it will suffer irreparable harm in the loss of goodwill and Customers if a temporary injunction is not ordered by the court. The credible evidence, through the testimony of the defendant Holte and the affidavit of Luxury Mortgage employee Jennifer Tatta [Exhibit O] demonstrates that access to the contact lists provided to Luxury Mortgage by the defendant Holte has been disabled. The plaintiff has provided no example of even one WRM customer who was " lost" as a result of the defendants' conduct. " [I]t would be counterintuitive to allow a plaintiff to obtain the extraordinary remedy of a preliminary injunction without showing any harm." Integrated Corp. Relations, Inc. v. Bidz, Inc., Superior Court, J.D. of Fairfield, Docket No. CV-09-4028269-S (8/14/2009. Hiller, J.) [48 Conn. L. Rptr. 413, ]. The plaintiff has not demonstrated that it will suffer irreparable harm without an injunction.
Relying on its claim of the irreparable harm it would suffer without an injunction, the plaintiff argues that the balance of equities tips in its favor. It argues that the defendants would " merely be deprived access to WRM's existing customers and confidential information--access they currently enjoy by virtue of their unlawful conduct." Consistent with its conclusion that the plaintiff has not demonstrated that it will suffer irreparable harm without an injunction, the court concludes that the plaintiff has failed to demonstrate that the balance of equities tips in its favor.
CONCLUSION
For the foregoing reasons, the court denies the plaintiff's application for a temporary injunction.