Two more companies in the mortgage lending industry filed lawsuits last month related to poaching of staff and/or businesses, and both involve UMortgage.
On March 8, Motto Franchising LLC, a Denver-based franchiser that does business as Motto Mortgage, filed a lawsuit against Philadelphia-based UMortgage in U.S. District Court in Colorado, accusing UMortgage of “tortious interference” in a contract with a franchise in Cincinnati.
According to the lawsuit, in December 2018 Motto signed a contract with TRB Solutions LTD to operate a franchise from Jan. 21, 2019, through Dec. 1, 2025, and provided “TRB and its members with the know-how to set up a mortgage broker business, including education about compliance procedures, quality control procedures, training, resources, access to third parties and third-party resources, and other trade secret and competitive information developed and owned by Motto.”
Motto states in the lawsuit that TRB and its members operated their Motto franchise in Cincinnati under the name “Motto Mortgage Apex.”
“The Motto Mortgage Apex office was a top performing mortgage brokerage office in Ohio, and according to UMortgage, TRB member Breon Price (who was also a signatory to the Franchise Agreement) was the number-one ranked mortgage broker in Ohio in 2022,” the lawsuit states.
It continues, “at some point in the latter half of 2022, UMortgage unlawfully solicited and induced TRB controlling member Breon Price to join UMortgage in breach of the Franchise Agreement despite UMortgage’s knowledge that TRB and its members were subject to the Franchise Agreement with Motto.”
As a result of “UMortgage’s unlawful solicitation and inducement of TRB and its members,” the lawsuit states, Motto and TRB terminated their agreement on Dec. 14, 2022.
In its lawsuit, Motto claims it has suffered “reputational damages,” with UMortgage issuing a news release that implied “Motto as a whole was acquired or that franchisees are, without inducement, choosing to leave Motto and work for UMortgage.” It also claims damages “in the form of lost customers, loss of renewal of the Motto Mortgage Apex office beyond the original term of the Franchise Agreement, cost to train new franchisees, and the cost to build up a new Motto presence” in Cincinnati.
The lawsuit seeks injunctive relief to prohibit UMortgage from “unlawfully soliciting and inducing other Motto franchisees to join UMortgage,” as well as money damages, court costs and attorneys fees.
The second lawsuit, filed March 24, does not name UMortgage as a defendant, but involves two former employees of NFM Inc. who left the company to work for UMortgage.
The lawsuit was filed in U.S. District Court for the Northern District of Maryland by Linthicum, Md.-based NMF Inc. against two former NFM loan originators at the company’s Kettering, Ohio, location: Justin Bolden of Dayton, Ohio, and Stephen Levitt of Springfield, Ohio.
According to the lawsuit, both Bolden and Levitt signed agreements in 2021 and 2022 with NFM that prohibited them from “using NFM’s confidential and trade secret information to solicit customers, employees, or anyone else that has or had a business relationship with NFM for one year” following the termination of their employment.
Both Bolden and Levitt resigned from NFM on Feb. 2, 2023, and began working for UMortgage, the lawsuit states. It also claims that both former loan originators violated the terms of their noncompete agreements by providing confidential client information to UMortgage.
Specifically, Bolden is accused of taking an NFM client’s loan file and providing it to UMortgage, and the later “illicitly utilizing NFM’s computers to forward NFM’s confidential and trade secret information in the form of loan files and documents” for eight other NFM clients to his personal email address.
Similarly, NFM accuses Levitt of also “illicitly using” NFM’s computers to forward file information for six NFM clients to his personal computer “for the purpose of diverting their business to UMortgage.” NFM also accuses Levitt of soliciting Bolden and two other employees to work for UMortgage; soliciting NFM clients on behalf of UMortgage; and of using NFM’s office address as his new business address.”
NFM is seeking a restraining order against its former employees “and all others acting in concert, from working for any competing business located within a 25-milevicinity of Kettering, Ohio, for the balance of the period dictated by the agreement,” and the return of NFM’s client information, as well as compensatory and punitive damages, court costs, and attorney fees.
