Thursday, May 19, 2022

Former In House Counsel Enjoined

The Arkansas Court of Appeals Division II upheld injunctive relief against two departed employees who had joined a competing business after signing non-competition agreements.

One was former in house counsel

In April 2015, [plaintiff] Elite hired appellant Combs to serve as in-house legal counsel after he had graduated from law school. After failing the bar exam, Elite trained Combs in the title department and helped him obtain his title-agent license. A year later, Combs passed the bar exam and became Elite’s in-house counsel in addition to being a title agent. As part of his employment, Combs entered into a confidentiality and noncompetition agreement with Elite. Combs had no prior experience working in the title business. Elite provided Combs all his training, including how to work for a title company, performing closings, and drafting deeds. [co-Appellant] Long was Combs’s immediate supervisor.

The court noted

Long testified that he began discussions with Apex about going to work for the company in the late summer of 2020. After appellants resigned from Elite, significant Elite business was being transferred to Apex Title. Elite also discovered that on October 1, 2020, Combs had created a separate 1031 exchange company called 1031 Intermediary Services, LLC––while he was still employed by Elite as its general counsel. Also while still employed as general counsel, Combs used the new company for at least three transactions instead of using Like-Kind. Elite alleges that through these 1031 transactions, Combs stole approximately $2,500 in fees that were the property of Elite while still employed as its general counsel. Combs also used Elite’s proprietary forms in processing these transactions through the new company while still employed as Elite’s general counsel.

The court rejected the claims that the injunction was overly broad or was unreasonable in geographic scope. (Mike Frisch)

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