VIRGINIA LITIGATION OVER NON-COMPETE

VIRGINIA LITIGATION OVER NON-COMPETE

VIRGINIA LITIGATION OVER NON-COMPETE 150 150 Lauren Ellerman

We have heard from our friends in the Beach / Tidewater area of Virginia, about an on-going legal action regarding non-compete agreement that was allegedly breached.

Read all about it here & here. So what is going on?

Mike Schwartz of Inside Business reported June 18th, that the “dispute between Resource and Monarch banks over the exodus of more than 70 employees.”

“Resource Bank filed a lawsuit June 11 against 14 of its former employees and their new employer, Monarch Bank, claiming that two top former executives of Resource Mortgage planned the mass resignations of the employees. Ted Grell, president and CEO of Virginia Beach-based Resource, said a group of about 70 employees carried out “an orchestrated wholesale defection of almost the entire staff,” including all but two of the company’s loan officers from the Chesapeake and Virginia Beach offices. Court documents claim the employees removed hundreds of customer and mortgage files and that all of it took place in a matter of days. William “Tree” Rountree, CEO of the Chesapeake-based, $400 million Monarch, said at all times the bank has acted “properly and above board with respect to our new hires.” Robert McFarland, a McGuire Woods attorney in Norfolk representing Monarch, said the 14 new hires and ex-Resource employees acted loyally, merely following their former leaders to a new, smaller company. And now, Rountree said, they are being retaliated against by the larger Resource and its multi-billion dollar parent company, Pennsylvania-based Fulton Financial. “This is a classic case of David versus Goliath, with $15 billion Fulton Financial coming after a small local community bank without any justification,” Rountree said.

So what has happened in 10 days?

An “emotional” injunction hearing in Virginia Beach Circuit Court late on June 15 was reported on by Mr. Schwartz, who attended. Counsel for the plaintiff company played a video tape, stating “Under the cover of darkness,” “these employees came in and removed what Resource believes were documents that could cause the company harm. Only a day later they all resigned.”

…”Then came the testimony of Crystal Breeden, an accounts coordinator from Resource. With the first question she was asked, before she even began to answer, her eyes filled with tears and her voice was choked with emotion. “I was asked by my manager, Clayton Hicks, if I could stay late and asked if I would copy some documents,” Breeden said. Hicks, a defendant, is a former Resource employee and is now employed at Monarch. But it kept coming back to showing the irreparable harm. “If you don’t get to something that has to do with irreparable harm pretty soon, I’m going to end this hearing,” the judge said. Kevin Martingayle, an attorney with Stallings & Bischoff, put the nail in the coffin as far as Resource’s injunction was concerned when he cross examined Shelly Armitrout, a compliance officer at Resource. “You don’t know if any ongoing harm is occurring to Resource do you?” Martingayle asked Armitrout. Her answer was no. In a last minute attempt to prove irreparable harm, Grell was called back to the stand. Grell said he personally viewed the contents of the 10 boxes that were returned to Resource from Monarch and some did contain customers’ personal information. “When word gets out on the street that we let all these files get out,” Grell said, “that’s irreparable harm to our reputation.”

“After nearly two and half hours, Shadrick had heard enough. He said he understood the importance of the cases for all involved. He said he recognized what a difficult position Resource was in after losing so many employees and fiduciary responsibilities Resource has regarding its customers information. “Evidence here today indicates some files were taken and returned,” Shadrick said. “I understand the reason for Resource asking for an injunction.” Resource lost its request for the injunction but did persuade the judge to order any previous employees who have in their possession any property belonging to Resource Bank to return that property as it could be argued as grand larceny or embezzlement.

“Return it immediately or face the repercussions,” Shadrick ordered.

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About the author

Lauren Ellerman

In 2011, Lauren Ellerman was named "Young Lawyer of the Year" by the Roanoke Bar Association for her work in the community. To speak with Lauren about your personal injury case, contact her at lellerman@frithlawfirm.com.

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