A large insurance brokerage sued a former CEO after he started a competing business. He retaliated by countersuing them.
In 2000, a specialty insurance brokerage hired an individual to act as president and chief executive officer (CEO) of one of its companies. The brokerage focused on serving developers, owners, and managers of New York City real estate. The new CEO’s job was to manage the insurance operations and to add to the firm’s base of clients.
Despite the high-level nature of the position, there was not a written contract between the brokerage and its CEO. He was paid based on producer commissions and profit-sharing, as planned for in the firm’s annual budgets.
In 2018, he launched his own group of companies, also in the insurance brokerage space and targeting his employer’s clients. This dual arrangement lasted four years; the original brokerage terminated his employment in February 2022. Unsurprisingly, they sued their former CEO, accusing him of stealing clients, trade secrets, proprietary information, and approximately $75 million.
He countersued them and several individuals within the firm. He argued that he had “fully and faithfully performed his duties;” was owed compensation and commissions for his past work; and that his employer was well aware of his agency and what it was doing. Further, he claimed that it was his old agency that attempted to steal business from him by:
- Wrongfully terminating him.
- Locking him out of access to their books and records.
- Forging his name on policy documents.
- Making false statements about him to insurance carriers and clients.
In all, he made nine counterclaims against his old firm, ranging from breach of contract and unjust enrichment to fraud, forgery, and defamation. A state trial court judge heard arguments in person in April 2025. The following month, she dismissed almost all of the former CEO’s counterclaims:
- Without a written employment contract, there was no contract for them to breach.
- The unjust enrichment claim was too vague in that it did not give a specific dollar amount to which he felt he was entitled. She permitted him to refile this claim with more specificity.
- He was not completely deprived of access to the brokerage’s books and records.
- She found no evidence that his old firm libeled him or took his business. “Indeed, not a single contract or ruined business relationship is identified in the counterclaims,” she wrote. “Notably, there is also not a single allegedly defamatory statement set forth.”
- One of the claims was not valid under state law, and another failed because he claimed that the brokerage had a fiduciary duty to him that did not exist.
The only counterclaim that survived was his claim for compensation for past work, and then only if could prove that an implied contract existed, since there was no written contract.
The judge did not rule at that time on the brokerage’s claims against him. These may be the subject of settlement negotiations.
It appears that the CEO’s case was sloppy. He was angry that his former employer sued him, so he threw a bunch of counterclaims against the wall to slow down the proceedings. The fact that state law did not permit one of his claims suggests that his attorneys failed to do their homework.
When an agency employee starts a competing business while still working for the agency, it should not be surprising to anyone when the agency responds negatively. Employees are free to come and go in an “at will” employment situation. If they plan to open a competing business, they should go before beginning operations. This agency did what was necessary to protect its business.
