By: AgencyEquity.com
An independent insurance agency sued one of its former producers after he jumped to a competitor and lured away several employees and clients.
The producer had worked in the agency’s Macon, Georgia office since 2004. In 2010, he signed a contract with the agency that included restrictive provisions. The terms prohibited him from soliciting the agency’s employees and clients for two years following the end of his employment and required him to keep agency information confidential for three years.
The agency rebranded under a new name in 2018. A successful producer, he brought $1.3 million in revenue to the agency in 2021. By 2022, he had been promoted to vice-president, though he remained a producer.
In February 2022, another agency that competed with his offered him a producer’s position. He began planning and preparing for his move to the other agency. He resigned on Halloween and started at the new agency the next day. It was not long before he was contacting some of his former colleagues about joining him at his new firm. The court’s opinion stated that there was “strong documentary evidence” that he recruited at least six employees and suggested to his new employer that they contact others.
The day he started at the new agency, he sent “multiple, unsigned Broker of Record … letters to potential clients, including clients he had at” his former agency. Many of those clients signed the letters and switched to the new agency.
In March 2023 his old agency, which was headquartered in North Carolina, sued him in that state. They filed several claims including breach of contract, breach of the duty of loyalty, misappropriation of trade secrets, and unfair and deceptive practices. Both sides asked the court for summary judgment, a ruling in their favor based on the law where the facts are undisputed. They argued their cases in court in the summer of 2024.
The producer argued that he had signed a contract with the agency under its former name and was not obligated to honor the agreements with the rebranded agency. He also argued that he did not violate the non-solicitation of employees agreement because he was not the person who dealt with them about their job changes.
His former agency produced text messages he sent to clients before he left in which he solicited them for his new employer. There was also a list of customers he hoped to take with him. He offered little to refute this evidence.
The agency further submitted evidence that he sent the new agency information about his clients while he was still working for them. He denied sharing any of the agency’s confidential information.
The judge did not buy his arguments. In January 2025, she awarded summary judgment to the agency on most of its claims. “The evidence shows that (the producer) actively persuaded, encouraged, supported and solicited employees of (the agency,)” she wrote. Similarly, she wrote, “On this record, no reasonable jury could find that (the producer) did not ‘directly or indirectly solicit, contact, divert, or call upon’ current (agency) customers ‘with the intent of doing business with’ (them) ‘on behalf of (a competitor.)”
The only question to be resolved at trial was the amount of damages he would owe. It seems likely that the sides will negotiate a settlement.
This case shows the importance of well-written producer contracts for agencies. This producer flouted the restrictions in his contract. The agency held him to account, and they had a contract backing them up that withstood legal scrutiny. An agency might lose a dispute over excessively broad restrictive agreements. In this case, the judge found the agreements to be reasonable. As a result, the agency was able to protect its business.
