loanDepot last week filed yet another poaching lawsuit, this time accusing Movement Mortgage of illegally luring away 25 employees over a three-month period in 2021.
In the lawsuit, filed June 22 in federal court in Delaware, loanDepot states that Movement targeted “recruiting and hiring” its employees, “effectively crippling certain of [loanDepot’s] now-depleted branches and substantially damaging their business.”
According to the 27-page complaint, loanDepot states that it believes “Movement’s targeted recruiting and hiring of company employees has gone beyond mere market coincidence ….”
It states that the poaching was designed to:
- Take loanDepot’s trade secrets and confidential information;
- Induce former loanDepot employees to violate their employment contracts by breaching restrictive covenants prohibiting them from soliciting loanDepot employees to leave; and
- Induce loanDepot employees to breach their fiduciary duties and "duties of loyalty" to loanDepot.
“Movement’s choreographed misconduct has broken the law,” the complaint states.
While Movement Mortgage is the only defendant named in the case, the complaint cites six specific former loan officers who violated their loanDepot employment contracts, including four in Pennsylvania — John DePaul, Joseph Kunzig, Kevin Luchko, and Anthony Rizzello — as well as Clay Higgins in Florida and Sean Johnson in Virginia.
The lawsuit states that these six former employees signed agreements with loanDepot that “include certain narrow covenants which governed their conduct during, and governed or govern their conduct after, their employment.” The covenants included a provision restricting the use and disclosure of loanDepot confidential information and an employee non-solicitation provision, the suit states.
“Movement knew of these contractual restrictions, but willfully induced these employees to flout them,” the complaint states, adding that “Movement has also engaged in numerous acts of unfair competition designed to decimate numerous loanDepot branches.”
As an example, the lawsuit states that, over a three-day period in late October 2021, Movement and Johnson “orchestrated a six-employee resignation” from loanDepot’s Fairfax, Va., branch. loanDepot claims Movement worked with Johnson for weeks preceding the resignations to “facilitate the departure, including by encouraging Johnson and others to solicit their colleagues in breach of their contractual commitments to loanDepot. This included an all-expense paid recruiting trip facilitated by Movement and Johnson.”
Subsequently, on Nov. 1, 2021, loanDepot employees DePaul, Kunzig, and Rizzello and “three colleagues resigned in rapid succession” over the course of an hour from loanDepot’s Plymouth Meeting, Pa., branch,” the complaint states, adding that, “This, too, was premeditated and coordinated with Movement.”
The lawsuit then states that, in the following weeks, Movement coordinated another group departure with Higgins in Florida, “including inviting loanDepot employees to attend an all-expenses-paid trip to Movement’s headquarters in South Carolina. Their efforts succeeded.”
The lawsuit adds that in succeeding weeks, additional employees in Florida; Maryland; Washington, D.C.; and Delaware “all similarly resigned from loanDepot and joined Movement.”
“To date, several loanDepot branches have been effectively gutted and loanDepot has lost at least 25 employees at the hand of Movement’s predatory raiding,” the complaint states.
The lawsuit adds that loanDepot later learned that, “in the weeks leading to their departures, the former employees accessed and misappropriated confidential and trade secret documents about loanDepot’s business, its employees, and its clients; information that, in the hands of Movement, was used to convert customers to Movement and away from loanDepot.”
According to the lawsuit loanDepot is seeking damages and permanent injunctive relief against Movement for “its misappropriation of loanDepot’s trade secrets; aiding and abetting breaches of fiduciary duty; unfair competition; unjust enrichment; unfair trade practices; and tortious interference with loanDepot’s contracts and prospective economic advantage.”
Officials with Movement Mortgage did not immediately respond to a request for comment.
This lawsuit follows a similar one loanDepot filed in July 2022 in federal court in New York against CrossCountry Mortgage. In that case, loanDepot claimed that between Feb. 23 and July 13, 2022, CrossCountry improperly poached “no fewer than 32 loanDepot employees from loanDepot branches in Manhattan, Brooklyn, and Fishkill, New York by interfering with loanDepot’s contractual and other legal rights.”
Last week, the judge in that case issued a preliminary injunction against CrossCountry and its employees from using confidential business information from loanDepot.
