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Can You Leave a Company and Take Employees With You?

“Can you leave a company, and take employees with you?”

In InsureOne, the Illinois Appellate Court for the First District upheld the trial court’s award of $7,670,210 in damages for alleged violations of non-compete and non-solicitation agreements.

Plaintiffs InsureOne Independent Insurance Agency, American Agencies General Agency, Inc., and Affirmative Insurance Holdings, Inc. purchased the assets of several insurance companies owned or controlled by James P. Hallberg, who covenanted not to compete with the Plaintiffs or to solicit any of their employees or customers for a period of time to be determined based on the circumstances of his termination. Hallberg was to run the company as its president, subject to the non-compete and non-solicitation covenants. The Plaintiffs retained several of Hallberg’s former employees, including his nephew, who also signed a covenant not to compete with, or solicit employees of the company for twelve months following termination.

Hallberg eventually left the company and created Hallberg Insurance Agency. Plaintiffs filed suit in December, 2005 against Hallberg, his nephew, and two gift trusts, and alleged breach of the non-compete and non-solicitation covenants. In part, Plaintiffs alleged that Hallberg Insurance Agency and other related entities began to directly compete with Plaintiffs after Hallberg left the company, and that Hallberg had used two gift trusts he controlled to establish these competing businesses. The Plaintiffs also alleged that Hallberg had attempted to shroud his involvement in the competing businesses in order to avoid obvious violations of the non-compete and non-solicitation agreements.

In the initial action, the trial court entered judgment in favor of the Plaintiffs on their claims that Hallberg, his nephew, and two gift trusts had violated the noncompetition and nonsolicitation agreements, and awarded Plaintiffs $7,670,210 in damages. The trial court found that Hallberg, his nephew William, and the gift trusts had engaged in a deliberate “pattern of conduct” designed to “recapture from the plaintiffs the very business [Hallberg] sold to them” in violation of these agreements.

The trial court also entered judgment in favor of Hallberg on his counterclaim, in which Hallberg alleged that the Plaintiffs had not paid the full amount due on one component of the purchase price, and awarded Hallberg $130,168 in damages plus prejudgment interest, and conditional costs and attorney fees.

The Plaintiffs then appealed from the trial court’s decision awarding Hallberg damages on his counterclaim and conditional attorney fees, and contended that they should have been awarded prejudgment interest on their judgment against the Defendants for allegedly breaching the restrictive covenants.

On the issue whether the denial of Plaintiffs request for prejudgment interest was proper, the First District Appellate Court of Illinois reversed the circuit court’s decision and remanded the case back to the circuit court to decide the issue of prejudgment interest on Plaintiffs’ award. In all other respects, the Appellate Court affirmed the judgment of the circuit court, and stated:

[W]e conclude that there was ample evidentiary support for the trial court’s finding that defendants breached the covenants prohibiting solicitation of plaintiffs’ employees, and, therefore, the court’s ruling was not against the manifest weight of the evidence.

InsureOne Indep. Ins. Agency, LLC v. Hallberg, 2012 IL App (1st) 092385 reh’g denied (Oct. 10, 2012), appeal pending (Jan. 2013), appeal denied, 982  N.E.2d 769 (Ill. 2013).

You can view the full opinion here.

The business trial lawyers at DiTommaso Lubin Austermuehle near Chicago and Oak Brook represent business owners and professionals regarding non-competition agreements, covenants not to compete, restrictive covenants, trade secret theft and other claims throughout the Chicagoland area, including Cook, DuPage, Lake, Kane, McHenry and Will Counties; and in the Mid-West region, including Indiana, Wisconsin and Iowa. You can contact us by calling our toll free number (877) 990-4990 for a consultation or contact us online by filling out the form at the side of this blog.  We have prosecuted or defended a number of lawsuits similar to the InsureOne case.

Super Lawyers named Chicago and Oak Brook business trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso Lubin Austermuehle’s Oak Brook and Chicago business trial lawyers have over a quarter of century of experience in litigating complex class action, consumer rights and business and commercial litigation disputes. We handle emergency business law suits involving injunctions, and TROS, defamation, libel and covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee and partner breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud or defamatory attacks on their business and reputations.

DiTommaso Lubin Austermuehle’s Naperville and Hinsdale defamation and slander lawyers have more than two and half decades of experience helping business clients unravel the complexities of Illinois and out-of-state business laws. Our Chicago non-compete agreement and covenant not to compete attorneys represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Oak Brook and Chicago, near Naperville and Lake Forest, we serve clients throughout Illinois and the Midwest.

If you are the victim of a defamatory attack on your business or a consumer who has been sued to stop you from posting criticism of a business on line at Yelp or anywhere else, contact one of our Oak Brook and Chicago defamation lawyers for a free consultation at (877) 990-4990 or by filling out our contact us form at the side of this blog.