Diodato v. Wells Fargo Ins. Servs., USA, Inc.

• Decision Date: 08 September 2014
• Docket Number: Civil Action No. 1:12–CV–2454.
• Parties: Darrell DIODATO, Plaintiff v. WELLS FARGO INSURANCE SERVICES, USA, INC., Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

44 F.Supp.3d 541

Darrell DIODATO, Plaintiff

v.WELLS FARGO INSURANCE SERVICES, USA, INC., Defendant.

Civil Action No. 1:12–CV–2454.

United States District Court, M.D. Pennsylvania.

Filed Sept. 8, 2014.

Frank P. Clark, Clark & Krevsky, LLC, Lemoyne, PA, Bruce Jeffrey Warshawsky, Cunningham & Chernicoff, P.C., Harrisburg, PA, for Plaintiff.

Michael R. Galey, James P. McLaughlin, Fisher & Phillips, LLP, Radnor, PA, for Defendant.

MEMORANDUM

CHRISTOPHER C. CONNER, Chief Judge.

Presently before the court in the above-captioned matter are the motion (Doc. 63) for summary judgment by defendant and counterclaimant Wells Fargo Insurance Services, USA, Inc. (“Wells Fargo”) and the motion (Doc. 66) for partial summary judgment by plaintiff and counterdefendant Darrell Diodato (“Diodato”), each pursuant to Federal Rule of Civil Procedure 56(a). These motions present manifold issues, several of which are nuanced and complex. For the reasons that follow, the court will grant in part and deny in part each motion.

I. Standard of Review

Through summary adjudication the court may dispose of those claims that do not present a “genuine issue as to any material fact” and for which a jury trial would be an empty and unnecessary formality. See Fed. R. Civ. P. 56(a). The burden of proof is upon the non-moving party to come forth with “affirmative evidence, beyond the allegations of the pleadings,” in support of its right to relief. Pappas v. City of Lebanon, 331 F.Supp.2d 311, 315 (M.D.Pa.2004) ; Fed. R. Civ. P. 56(e) ; also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). This evidence must be adequate, as a matter of law, to sustain a judgment in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250–57, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587–89, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; see also Fed. R. Civ. P. 56(a), (e). Only if this threshold is met may the cause of action proceed. Pappas, 331 F.Supp.2d at 315.

II. Statement of Material Facts¹

Darrell Diodato (“Diodato”) was employed by Wells Fargo Insurance Services USA, Inc. (“Wells Fargo”) and its predecessor entities for thirty-six years as an insurance producer. (Doc. 65 ¶ 3; Doc. 73 ¶ 3). In that role, Diodato serviced existing insurance business and originated new insurance business. (Doc. 65 ¶ 4; Doc. 73 ¶ 4). Wells Fargo paid Diodato an annual salary of approximately $230,000, provided benefits, and purportedly covered his overhead costs and business expenses. (Doc. 65 ¶¶ 5–8; Doc. 73 ¶¶ 5(a)). Diodato contends that he paid certain business expenses directly, without reimbursement, including: (1) contributions to support fundraising activities; (2) funds to entertain business contacts at annual meetings of the Bowling Proprietors Association of Pennsylvania (“BPAP”) and the Bowling Proprietors Association of America (“BPAA”); (3) a $12,000 annual deduction from his gross commission revenue to account for costs relating to the annual endorsement of the BPAP; and (4) various amounts paid to maintain the goodwill of the two Wells Fargo account executives (“AEs”) who supported him. (Doc. 73 ¶ 6).

Diodato specialized in brokering insurance for bowling alleys and family entertainment centers. (Doc. 65 ¶ 10; Doc. 73 ¶ 10). Diodato developed “numerous personal and business relationships with owners of family entertainment centers (including bowling centers)” and considers himself to be “the godfather” of the bowling alley insurance industry. (Doc. 65 ¶¶ 10–11; Doc. 73 ¶¶ 10–11). Diodato also developed relationships with the principals of four other entities who were insured as part of a captive insurance program: Caretti, Inc., Sun Motor Cars, Inc., United Drilling, Inc., and Meckley Limestone Products, Inc. (Doc. 73 ¶ 10). Throughout his employment, Diodato gained an encyclopedic knowledge of bowling center operators and their specific insurance needs and risk management issues. (Doc. 65 ¶ 14; Doc. 73 ¶ 14). Diodato testified that approximately seventy percent (70%) of the revenue he generated was derived from bowling center owners and operators. (Doc. 65 ¶ 15; Doc. 73 ¶ 15).

At the request of his supervisor, James Voltz (“Voltz”), Diodato executed the Wells Fargo Agreement Regarding Trade Secrets, Confidential Information, NonSolicitation, and Assignment of Inventions (the “TSA”) subject to this litigation on December 17, 2009. (See Doc. 65 ¶ 18; Doc. 73 ¶ 18; see also Doc. 65–3, Diodato Dep. Ex. A at 1–3, July 3, 2013 (“Diodato Dep.”). Diodato simultaneously executed the Wells Fargo Producer Plan (“Producer Plan”). (See Doc. 65 ¶ 19; see also Diodato Dep. Ex. E)). According to Diodato, Voltz forced him to sign the TSA and Producer Plan without an opportunity to review them and verbally represented that: (1) all producers were required to sign the TSA; (2) that Diodato would be terminated if he did not sign the TSA; and (3) that Diodato would receive one percent (1%) additional compensation for his entire book of business. (Doc. 73 ¶ 18(a)). Ostensibly, at least one producer, John Ford, was not required to execute a TSA. (See Doc. 73 ¶ 45(a)).

The TSA identifies the consideration supporting the agreement as follows: “continued employment by a Wells Fargo company ..., the ability to participate in a new compensation plan containing new and additional benefits which include, but are not limited to, a guaranteed draw and an increased commission percentage for new and net new revenue generated in 2010.” (Diodato Dep. Ex. A at 1). The TSA also contains a confidentiality and non-disclosure provision. This provision expressly identifies the following information as falling within the ambit of protected trade secrets: “the names, address, and contact information for any of the Company's customers and prospective customers, as well as other personal or financial information relating to any customer or prospect.” (Id. ) The TSA further contains a non-solicitation provision, which provides, in pertinent part:

I agree that for a period of two (2) years immediately following termination of my employment for any reason, I will not do any of the following, directly or indirectly or through associates, agents, or employees:

* * *

b. solicit, participate in or promote the solicitation of any of the Company's clients, customers, or prospective customers with whom I had Material Contact and/or regarding whom I received Confidential Information, for the purpose of providing products or services that are in competition with the Company's products or services (“Competitive Products/Services”). “Material Contact” means interaction between me and the customer, client or prospective customer within one (1) year prior to my last day as a team member which takes place to manage, service or further the business relationship; or

c. Accept insurance business from or provide Competitive Products/Services to customers or clients of the Company:

i. with whom I had Material Contact, and/or

ii. were clients or customers of the Company within six (6) months prior to my termination of employment.

This two-year limitation is not intended to limit the Company's right to prevent misappropriation of its Confidential Information beyond the two-year period.

(Id. at 2). The TSA contains an integration clause acknowledging that the document constitutes the entire agreement between the parties and is a final expression of their collective intent. (Id. at 3). It explicitly states that Diodato's employment with Wells Fargo is “at will,” and that the TSA does not alter or modify his employment status. (Id. at 3). The companion Producer Plan identifies the “TSA Consideration” as follows: “For the 2010 Plan year only (January 1, 2010, through December 31, 2010), Participant will receive the following consideration for signing the new TSA for [Wells Fargo]: Additional 1% on New Revenue and Additional 1% on Net New Revenue.” (Id. Ex. E at 1). The Plan defines “Net New Revenue” as “new revenue recorded in 2010 less lost business.” (Id. )

On April 27, 2011, Wells Fargo placed Diodato on administrative leave with pay, and on May 16, 2011, terminated his employment. (See Doc. 65 ¶¶ 37, 41; Doc. 73 ¶¶ 37(a), 41). Unsurprisingly, the parties offer drastically different accounts as to the reasons for Diodato's discipline and ultimate termination. Diodato alleges that the TSA and Producer Plan were never a condition of producer employment with Wells Fargo. He contends that these agreements were part of an elaborate scheme by Wells Fargo to end his employment and eliminate Diodato's access to his book of business. (Doc. 73 ¶ 18). According to Diodato, Voltz's end game was to increase profitability by shedding Diodato's salary while retaining revenues from his original book of business. (Id. ¶ 18(c)). The court notes that the only evidence supporting this version of events is Diodato's declaration. (See id. (citing Doc. 73–1, Diodato Dec. ¶ ¶ 18–24 (“Diodato Dec. II”))).

Contrarily, Wells Fargo asserts that Diodato brokered business without a properly executed brokerage agreement, solicited insurance business without a license, bound insurance coverage without the proper documentation, attempted to issue “dummy invoices”, and instructed staff to disregard rules, all in violation of Wells Fargo's company policy. (Doc. 65 ¶ 27; Doc. 65–6, Voltz Dep. Ex. 40 July 12, 2013 (“Voltz Dep.”) (formal disciplinary notice identifying concerns)). In a formal warning letter to Diodato, Voltz also asserts that Diodato disrupted sales meetings “with abrasive and angry comments.” (Id. )

Wells Fargo identifies an April 2011 incident as the final trigger for its decision to terminate Diodato. (Doc. 65 ¶ 29). According to Wells Fargo, Diodato forged the signature of Sun Motor Cars' (“Sun”) chief financial officer on a warranty form appended to Sun's insurance application, warranting that vehicles valued over $75,000 would be garaged...