First Am. Title Ins. Co. v. Nw. Title Ins. Agency, LLC
| Decision Date | 18 October 2016 |
| Docket Number | Case No. 2:15-cv-00229-DN |
| Parties | FIRST AMERICAN TITLE INSURANCE COMPANY and FIRST AMERICAN TITLE COMPANY, LLC, Plaintiff, v. NORTHWEST TITLE INSURANCE AGENCY, LLC, MICHAEL SMITH, JEFF WILLIAMS, and KRISTI CARRELL, Defendant. |
| Court | U.S. District Court — District of Utah |
Plaintiffs First American Title Insurance Company and First American Title Company, LLC (collectively "First American") brought suit against Northwest Title Insurance Agency, LLC (Northwest) and Michael Smith, Jeff Williams, and Kristi Carrell (collectively "Individual Defendants").1 The first three causes of action are only against the Individual Defendants: Count I, Michael Smith breach of contract; Count II, Jeff Williams breach of contract; Count III, Kristi Carrell breach of contract.
In this motion,2 First American seeks partial summary judgment on three narrow issues related only to those first three causes of action: (1) "that all rights to enforce the Individual Defendants' employment agreements transferred to First American by operation of law as part ofthe merger" between Equity Title and First American;3 (2) "that the Individual Defendants violated the non-competition provisions in their contracts";4 and (3) that "Smith and Williams violated non-solicitation provisions in their contracts."5 Defendants opposed this motion.6 First American replied to their Opposition.7
This order grants the motion except that it finds that Smith did not violate a non-competition obligation.
Conclusion .................................................................................................................................... 28
UNDISPUTED MATERIAL FACTS8
1. Michael Smith signed an Employment Agreement (Smith Agreement) with Equity Title Insurance Agency, Inc. (Equity) on August 15, 2004.9
2. Smith is an attorney.10
3. Smith negotiated the terms of the Smith Agreement, read it before signing it, and agreed to its terms.11
4. Section 7 of the Smith Agreement is titled "Noncompetition."12
5. Section 7 of the Smith Agreement provides:
During his employment with Equity, and for a period of one (1) year thereafter, if terminated for "Cause" (as defined in Section 10 below), Smith shall not, directly, or indirectly, either as an employee, employer, consultant, director, or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of Equity, covering an area in all directions 100 miles from any of the offices of Equity. If Smith is terminated without Cause, the period for which he shall not compete with Equity as described above shall be reduced to six (6) months from the date of his termination. Notwithstanding the foregoing, nothing herein shall restrict Smith's right to practice law subsequent to termination of his employment with Equity; provided, however, that Smith shall not be employed by any person or entity engaged in the title insurance business.13
6. Section 8 of the Smith Agreement is titled "Non-solicitation."14
7. Section 8 of the Smith Agreement provides:
During his employment with Equity, and for a period of one (1) year thereafter, Smith, on behalf of himself or any other person or entity, shall not hire, attempt to hire, recommend for hire, or employ, directly or indirectly, any employee of Equity. During this one-year period of time, Smith shall not encourage or induce any employee of Equity to resign from Equity or assist any other employer in recruiting or hiring any employee away from Equity.
8. Under Section 12(b) of the Smith Agreement, Smith agreed that "[t]he terms, conditions, and obligations of this Agreement shall inure to the benefit of, and be binding upon the parties hereto and the respective heirs, executors, administrators, successors and assigns thereof."15
9. Jeff Williams signed an Employment Agreement (Williams Agreement) with Equity on May 16, 2006.16
10. Williams read the Williams Agreement before signing it and agreed to its terms.17
11. Section 7 of the Williams Agreement is titled "Noncompetition."18
12. Section 7 of the Williams Agreement provides:
During his employment with Equity, and for a period of one (1) year thereafter, if terminated for cause, Williams shall not, directly, or indirectly, either as an employee, employer, consultant, director, or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of Equity, covering an area in all directions 100 miles from any of the offices of Equity. If Williams is terminated without cause, this non-competition provision shall not apply after such termination.19
13. Section 8 of the Williams Agreement is titled "Non-solicitation."20
14. Section 8 of the Williams Agreement provides:
During his employment with Equity, and for a period of one (1) year thereafter, Williams, on behalf of himself or any other person or entity, shall not hire, attempt to hire, recommend for hire, or employ, directly or indirectly, any employee of Equity. During this one-year period of time, Williams shall not encourage or induce any employee of Equity to resign from Equity or assist any other employer in recruiting or hiring any employee away from Equity. If Williams is terminated without cause, this non-solicitation provision shall not apply after such termination.21
15. Section 12 of the Williams Agreement provides:
Williams may terminate his employment with Equity at any time upon 30 days' prior written notice to Equity. Upon such termination, the one-year period of non-competition and non-solicitation described in Section 7 and Section 8 above shall apply.22
16. Under Section 13(b) of the Williams Agreement, Williams agreed that "[t]he terms, conditions, and obligations of this Agreement shall inure to the benefit of, and be binding upon the parties hereto and the respective heirs, executors, administrators, successors and assigns thereof."23
17. Kristi Carrell signed a letter agreement with Equity (Carrell Agreement) regarding "Terms of Employment" on August 1, 2003.24
18. Carrell read the Carrell Agreement before signing it and did not inform anyone that she did not agree to its terms.25
19. Section 7 of the Carrell Agreement is titled "Non-Competition."26
20. Section 7 of the Carrell Agreement provides:
During your employment with Equity Title and for a period of one year thereafter, you may not participate in any competing title insurance or escrow business within a 40-mile radius of any of Equity Title's offices.27
21. In September 2003, First American acquired a 25% ownership interest in Equity.28
22. First American acquired an additional 25% ownership interest in Equity in March 2005, making it a 50% owner.29
23. In October 2008, First American purchased an additional 45% ownership interest in Equity through a Stock Purchase Agreement, making it the majority owner.30
24. The Stock Purchase Agreement (SPA) is dated October 15, 2008. It was executed by First American Title Insurance Company as the Buyer, Orange Coast Title Company as the Seller, and Equity Title Insurance Agency, Inc., as the Company.31
25. Under Section 2.9(b) and as reflected in Schedule 2.9(a) of the SPA, the Smith Agreement and the Williams Agreement were defined as "Material Contracts" that remained in "full force and effect."32
26. Equity was not dissolved as a consequence of the SPA. It remained a separate legal entity and a division of First American until it merged with First American in 2012.33 27. First American acquired the remaining 5% ownership interest in Equity in February 2009, making it the sole owner.34
28. The Individual Defendants worked for the Equity-First American entity until Equity and First American merged in 2012.35
29. In 2012, First American Title Company, LLC, and Equity Title Insurance Agency, LLC, filed Articles of Merger and an Agreement and Plan of...
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