United States District Court, N.D. Alabama, Southern Division
MEMORANDUM OPINION AND ORDER
ANNEMARIE CARNEY AXON, UNITED STATES DISTRICT JUDGE
case is before the court on Plaintiff McGriff, Seibels &
Williams, Inc.’s (“MSW”) request for a
preliminary injunction. (Doc. 11 at ¶¶ 81–83;
Paul Sparks, Darren Sonderman, David McMahan, John Tanner,
and J. Gregory McCollister previously worked for MSW in
MSW’s Financial Services Division. Defendants now work
for a MSW competitor. MSW alleges that Defendants have
tortiously interfered with its business relations and
breached the terms of their employment agreements with MSW by
soliciting MSW clients and employees and using MSW’s
amended verified complaint, MSW asserts state law claims
against Defendants for breach of contract, tortious
interference with business relations, breach of fiduciary
duty, and conspiracy to interfere with business relations.
(Doc. 11). MSW seeks a preliminary injunction enjoining and
restraining Defendants from soliciting MSW’s customers
and employees; misappropriating MSW’s confidential,
proprietary, and trade secret information; and intentionally
interfering with MSW’s business relationships. (Doc. 11
at 21; see also Doc. 12).
court held a hearing on MSW’s request for a preliminary
injunction. Having considered the entire record in this case,
including the evidence presented at the hearing and the
parties’ briefs, the court DENIES
MSW’s request for a preliminary injunction.
amended verified complaint sets out its version of the facts
supporting its request for the extraordinary remedy of a
preliminary injunction. To hear MSW tell the tale, two of its
former employees, Defendants Paul Sparks and Darren
Sonderman, plotted to willfully violate their employment
agreements with MSW by creating a new insurance broker
(called CAC Specialty) directly in competition with MSW.
(Doc. 11 at ¶ 38). As part of the “conspiracy,
” Messrs. Sparks and Sonderman allegedly isolated loyal
MSW employees from valuable MSW clients in order to lure
those clients away from MSW. (Id. at ¶ 39).
They- along with the other Defendants-also allegedly
solicited MSW’s best employees to leave the company and
used MSW’s confidential, proprietary, and trade secret
information to give their new company an unfair advantage and
to undercut MSW. (Id. at ¶¶ 54, 66, 81).
on these verified allegations, the court granted MSW’s
August 14, 2019 request for a temporary restraining order in
part and restrained Messrs. Sparks, Sonderman, and
McCollister from directly or indirectly soliciting a number
of identified clients or prospective clients of MSW, from
directly or indirectly inducing any MSW employee to leave
MSW, and from interfering with MSW’s business
relationships. (Doc. 21 at 6). The court also set a hearing
on MSW’s request for a preliminary injunction. (Doc.
on August 26, 2019 and continuing over the course of the
following four days, the parties presented the court with
evidence relating to MSW’s motion for a preliminary
injunction. The evidence does not bear out MSW’s
version of events. Although not directly relevant to the
issue of whether Defendants breached their employment
agreements, the court finds that the historic background of
CAC is critical to understanding the facts giving rise to the
lawsuit. For that purpose, its history is included for
context followed by the facts directly related to the
Defendants’ alleged breach of their employment
The Creation of CAC
A “Cool Opportunity”
Denson, Jr. is the President and Chief Operating Officer of
Cobbs Allen & Hall (“Cobbs Allen”), an
insurance broker that competes with MSW. (Doc. 11 at ¶
3). Over two years ago, Mr. Denson began working on the
general concept of a specialty insurance broker and started
recruiting potential employees. (Tr. at 431).
Denson spotted an opening for the specialty brokerage in
September 2018, when two insurance brokerage firms-Marsh and
JLT- merged. (Tr. at 432, 547). Mr. Denson suspected that JLT
employees might be looking for an opportunity to work
somewhere else post-merger. (Tr. at 547). Based on that
hunch, Mr. Denson began a targeted recruiting effort focused
on former JLT employees. (Tr. at 547).
Allen recruited outside of JLT as well. (Tr. at 433). Mr.
Denson soon discovered a pattern of discontent among MSW
employees. (Tr. at 436). Mr. Denson believed that this
discontent might make MSW a fertile recruiting ground for
Cobbs Allen and began communicating with MSW employees in the
fall of 2018. (Tr. at 436, 567). Although generally
discontented, none of the MSW employees seemed interested in
the idea of CAC. That began to change in February 2019, when
MSW’s parent company, BB&T, announced a merger of
equals with SunTrust Bank. (Tr. at 12).
February 2019, Cobbs Allen contacted Defendant Paul Sparks on
the recommendation of one of Mr. Sparks’ friends and
colleagues. (Tr. at 187). At the time, Mr. Sparks was the
Senior Executive Vice President of MSW responsible for the
overall leadership of MSW’s Financial Services
Department. (Doc 11. at ¶ 13). Mr. Sparks, at Cobbs
Allen’s invitation, went to dinner with Mr. Denson to
discuss a “cool opportunity” that Cobbs Allen was
trying to put together. (Tr. at 193). Mr. Sparks invited
MSW’s claims counsel, Defendant John Tanner, to join
them for dinner. (Tr. at 194).
dinner, Mr. Denson pitched the idea of a specialty brokerage.
During the conversation, Mr. Sparks echoed the concerns Mr.
Denson had heard about MSW from other MSW employees. (Tr. at
195). But, Mr. Sparks left the dinner unconvinced that Cobbs
Allen’s proposed venture would ever work and wished Mr.
Denson good luck. (Tr. at 194, 197). Undeterred by Mr.
Sparks’ lack of enthusiasm, Mr. Denson continued to
recruit Mr. Sparks throughout the spring.(Tr. at 213).
Sparks was not the only MSW employee who met with Mr. Denson
in the spring of 2019. Mr. Denson independently reached out
to a significant number of MSW employees, including all of
the other defendants. (See e.g., Tr. at 440, 445,
447, 457-58, 499, 501, 504, 523). Unfortunately for Mr.
Denson, they like Mr. Sparks, expressed skepticism about the
proposed venture. Regardless, Mr. Denson persisted with all
of his MSW recruits all the while fine tuning the business
model for CAC.
is no secret formula for recruiting. According to Mr. Sparks,
if you are looking for the top producers in a particular
insurance line, you call companies to see who represents them
and underwriters to ask them to identify the big producers at
a specific firm. (Tr. at 119, 212) Or, if you have experience
in that specific field, you know the top people in the
industry based on their reputation. (Tr. at 211). Armed with
general information about the top producers in the industry,
Mr. Denson went after them.
Denson selected the people he was interested in recruiting
and reached out to most of them through LinkedIn (tr. at 496,
523), a professional networking website. If the recruit
responded to his connection request, Mr. Denson would meet
the individual and pitch the concept-and the opportunities
for ownership- to them. (Tr. at 527-28). In these meetings,
people would either offer information about their current
salary or Mr. Denson would ask. (Tr. at 510, 528). They might
also speak generally about the clients they served and the
amount of new business they brought in annually. (Tr. at
396-97). None of these individuals provided a list of their
clients. (Tr. at 466).
and relentlessly, Mr. Denson recruited the top producers from
two larger insurance brokers at a time when those brokers
were left vulnerable by a merger. All told, and over the span
of two years, Mr. Denson reached out to hundreds of people
within the insurance industry in an attempt to recruit them
to the new venture. (Tr. at 503). At least 40 of those people
were MSW employees. (Tr. at 524).
Sparks became intrigued with Cobbs Allen’s idea and met
with Mr. Denson and Jack Leventhal, Mr. Denson’s
banking partner, several times between March and July. (Tr.
at 200). The purpose of the meetings was to flesh out a
general, workable concept of the new business. (Tr. at 200,
434). The men collaborated on how to structure the company,
how to recruit JLT employees and other industry talent, and
how to capitalize on being a “really unique specialty
broker.” (Tr. at 200). Finally, the specialty brokerage
came to fruition as CAC Specialty, an affiliate of Cobbs
Allen. (Tr. at 427).
Sparks left MSW in July (tr. 205) and was the first person to
sign on to work for CAC (tr. at 560). Having someone with Mr.
Sparks’ ability and stature in the insurance industry
sign on to CAC was a game changer. (Tr. at 560). According to
Mr. Denson, Mr. Sparks’ decision to join CAC was
“absolutely” important to CAC’s ability to
close the deal with JLT employees. (Tr. at 561). It also
naturally had an impact on MSW employees’ decision on
whether to join CAC. (Tr. at 603). Once Mr. Sparks signed on,
Mr. Denson wasn’t just calling people; people were
calling him. (Tr. at 561). According to Mr. Denson, the
number of potential recruits reaching out to him after
hearing Mr. Sparks joined CAC “has gone through the
two weeks of Mr. Sparks’ departure from MSW, a number
of JLT employees signed on to join Mr. Sparks at CAC. So too
did Messrs. Sonderman, McCollister, Tanner, and McMahan. (Tr.
at 153, 261, 306, 411). In addition to Defendants, eight
other MSW employees left for CAC within a month of Mr.
Sparks’ departure from MSW. (Tr. at 494).
The MSW Employment Agreements
Defendants executed restrictive covenants
(“Agreements”) with MSW. (Pl. Exs. 1–5).
Messrs. Sonderman, Sparks, Tanner, and McCollister executed a
Nonpiracy and Covenant Not to Compete restricting them from
contacting, soliciting, making sales to, or attempting to
procure business from any MSW clients or prospective clients
located in nine states: Georgia, Florida, Alabama,
Mississippi, Texas, Tennessee, Louisiana, South Carolina, and
North Carolina (the “Southeast”). (Pl. Exs. 1, 2,
McMahan’s executed an Employment Agreement restricting
him from soliciting, diverting, or taking away or attempting
to solicit, divert, or take away clients or prospective
clients with which he or MSW had had contact for some period
of time prior to his departure from MSW. (Pl. Ex. 3).
Defendants agreed not to solicit-directly or indirectly-MSW
employees to leave MSW or use or disclose MSW’s
confidential information in subsequent employment. (Pl. Exs.
contends that Defendants breached their Agreements and
interfered with MSW’s business relationships. The court
examines the evidence (or lack thereof) in support of those
Defendants’ Contact with MSW Clients in the
alleges that Defendants contacted various MSW clients in the
Southeast in violation of their Agreements and in tortious
interference with its business relationships. The court
addresses each Defendant in turn.
Sonderman contacted four MSW clients located in the
Southeast. The first is Synovus. According to Mr. Sonderman,
he and Mr. Sparks jointly managed the Synovus account. The
week before Mr. Sparks left MSW, Messrs. Sonderman and Sparks
had gone through the preliminary stages of renewing
Synovus’s insurance. After Mr. Sparks resigned and Mr.
Sonderman had decided to leave MSW-but before he actually
left-he reached out to Synovus to inform it that Mr. Sparks
had retired. (Tr. at 124).
Sonderman denies that he solicited Synovus after he left MSW,
but MSW alleges Mr. Sonderman solicited Synovus by contacting
Synovus twice after his resignation. MSW’s only support
for this allegation is two statements made through three
levels of hearsay. First, Dusten Cahill, a current MSW
employee, testified that Ryan Harrison (another MSW employee)
stated that a Synovus contact had stated that Mr. Sonderman
was “pushing hard for a meeting.” (Tr. at 51).
Second, Mr. Cahill testified that Mr. Harrison also told him
that another Synovus contact said that Mr. Sonderman had left
several voice messages and sent a text message indicating
that he wanted to discuss “banking relationships”
with CAC. (Id.).
Sonderman also contacted First U.S. Bancshares, McWane, Inc.,
and Regions Financial Corporation, all of which are based in
Alabama. Mr. Sonderman testified that since his resignation,
he has had limited contact with each of them. Mr. Sonderman
told First U.S. Bancshares that he had left MSW, but he
testified that he did not solicit its business and did not
express frustrations with MSW. (Tr. at 126). When Mr.
Sonderman called McWane, he learned that MSW had already
contacted McWane to inform it that Mr. Sonderman left, and
MSW intended to re-staff the account. (Tr. at 127). However,
McWane informed MSW that it was “probably going to
follow [Mr. Sonderman] wherever he goes next.” (Tr. at
127). Finally, Mr. Sonderman called Regions to apologize for
leaving MSW two days before Regions’ renewal meetings
with MSW. (Tr. at 128). MSW did not present any testimony to
refute Mr. Sonderman’s account of his conversations
with those clients.
his retirement from MSW, Mr. Sparks had discussions with two
MSW clients in the Southeast. Those clients are Synovus Bank
and Southern Company. (Tr. at 218, 225).
Sparks called his contact at Synovus Bank to apologize for
not telling her when he last saw her that he would be leaving
MSW the next day. (Tr. at 218). During that call, Mr. Sparks
assured Synovus that it had “a great team of
people” at MSW. (Id.). Mr. Sparks believes he
told his client contact about the general structure of
CAC’s business model, but he did not tell Synovus that
he could offer better services through CAC. (Tr. at 228).
MSW’s only evidence to the contrary is, again, buried
under three levels of hearsay. Mr. Cahill testified that Mr.
Harrison said that Mr. Sparks had told his Synovus contact
that (1) everyone at MSW was miserable and (2) Mr. Sparks
would not be surprised if the entire team was gone by the
time Synovus renewed for the following year, and he was going
to CAC which could provide all the same products that MSW
provides. (Tr. at 58).
Sparks also had breakfast with Southern Company’s Risk
Manager, who is a personal friend of Mr. Sparks. (Tr. at
226). Mr. McCollister attended the breakfast as well.
Southern Company is a Georgia-based account. (Pl. Ex. 45).
During this meeting, Mr. Sparks testified that the client
asked about CAC, and Mr. Sparks gave her information about
the new company. (Tr. at 226). Mr. Sparks told the client
that he had a non-solicitation covenant in his MSW Agreement,
and he intended to honor it. (Id.). According to Mr.
Sparks, he did not discuss moving Southern Company’s
business to CAC or provide details on how Southern Company
could do so. (Tr. at 227). MSW has not presented any evidence
to refute Mr. Sparks’ account of that conversation.
is no evidence that Mr. Tanner communicated in any way with
MSW clients in the Southeast after his resignation.
he resigned, Mr. McCollister communicated with one MSW client
in the Southeast: Southern Company. (Tr. at 407). As
previously stated, Mr. McCollister attended Mr. Sparks’
breakfast meeting with the Southern Company’s Risk
Manager. (Tr. at 412). Prior to that meeting, however, Mr.
McCollister called the Risk Manager to tell her that he left
MSW, but he had a non-solicitation agreement that applied to
her. (Id.). According to Mr. McCollister, the Risk
Manager simply wished him luck in his new endeavor. (Tr. at
McMahan communicated with three of his MSW clients before and
after his resignation. First, on the day before he resigned,
Mr. McMahan conducted a prescheduled call with his contact at
Ocwen. (Tr. at 365). The Ocwen representative gave Mr.
McMahan some information on how Ocwen was going to pursue its
renewal. (Id.). Mr. McMahan then informed him that
he was leaving MSW but would be sure to connect him with
someone else at MSW to “ensure that he had a successful
renewal process.” (Id.).
his resignation from MSW, Mr. McMahan has contacted two of
his MSW accounts: Rayonier and Mohawk. (Tr. at 354). Mr.
McMahan informed both Rayonier and Mohawk that he had left
MSW, that he had a nonsolicitation agreement, and that he
could not solicit their business. (Tr. at 360–361). In
the case of Mohawk, Mr. McMahan reached out to Mohawk only
after a charitable donation he made on MSW’s behalf was
returned, which necessitated Mr. McMahan’s call to
explain he was no longer at MSW. (Tr. at 361).
addition to these few direct contacts, Mr. McMahan sent a
“blast email” to a number of individuals
explaining that Mr. McMahan had joined CAC Specialty. (Tr. at
357). The email outlined the new firm and contained a link to
CAC’s website but did not discuss in detail what
services CAC could offer. (Id.). Based on the
evidence presented, Rayonier is the only MSW client who
received the email. (Tr. at 356-58).
Defendants’ Contact with MSW Clients Outside the
addition to contact with MSW clients in the Southeast, MSW
contends that Defendants’ have contacted other MSW
clients, all resulting in tortious interference with its
business relationships. The court addresses each Defendant
separately below and then reviews what other evidence MSW
presented in support of its tortious interference claim.
he resigned, Mr. Sonderman called Hawaiian Electric to
explain that he was no longer at MSW. (Tr. at 129). Mr.
Sonderman did not discuss CAC services with Hawaiian Electric
but told the client that he hoped when the time was right,
they could continue to work together. (Id.).
Sonderman also met with Major League Baseball and Alvarez
& Marsal in New York to discuss CAC services. (Tr.
clients contacted Mr. Sparks after MSW announced he had left
the company. All six of the clients are located outside the
Southeastern region. Those clients include: Major League
Baseball, Alvarez & Marsal, Magellan, Williams Companies,
Dominion Energy, and AEP Corporation. (Tr. at 219). During
his conversations with these clients, Mr. Sparks told them
that he was leaving to work for a new specialty broker and
that he hoped to have an opportunity to connect with those
clients to “chat” about the new business one day.
(See Tr. at 220–21). Mr. ...