IberiaBank v. Broussard

• Decision Date: 25 October 2018
• Docket Number: No. 17-30662,17-30662
• Citation: 907 F.3d 826
• Parties: IBERIABANK, Plaintiff - Appellee Cross-Appellant v. Darryl R. BROUSSARD, Defendant - Appellant Cross-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

907 F.3d 826

IBERIABANK, Plaintiff - Appellee Cross-Appellant

v.Darryl R. BROUSSARD, Defendant - Appellant Cross-Appellee

No. 17-30662

United States Court of Appeals, Fifth Circuit.

FILED October 25, 2018

Francis X. Neuner, Jr., Cliff A. LaCour, NeunerPate, Lafayette, LA, Andrew Russell Lee, Trial Attorney, Jones Walker, L.L.P., New Orleans, LA, for Plaintiff-Appellee Cross-Appellant.

Steven G. Durio, Travis J. Broussard, Daniel Josef Phillips, Esq., Durio, McGoffin, Stagg & Ackermann, Lafayette, LA, for Defendant-Appellant Cross-Appellee.

Before STEWART, Chief Judge, and WIENER and HIGGINSON, Circuit Judges.

STEPHEN A. HIGGINSON, Circuit Judge:

Darryl Broussard formerly worked as a high-level officer at Teche Federal Bank, a small state-chartered bank in Louisiana. When Teche merged with the larger IberiaBank, Broussard and some of the lenders he supervised went to work at competitor JD Bank. Over the course of a six-day bench trial, talented counsel presented two starkly divergent narratives to explain this event. Broussard described IberiaBank as a greedy acquirer that threatened to deprive long-serving Teche employees of compensation they deserved, whereupon Broussard, their dedicated leader, helped arrange alternative employment. Oppositely, IberiaBank accused Broussard of orchestrating a covert "lift-out" operation that wrongfully divested the bank of valuable human resources for which it had negotiated in the merger agreement. The trial court was tasked with resolving these conflicting accounts into findings of fact, which we now review. The following statement of the case traces the narrative that the trial court adopted.

BACKGROUND

I. Factual

From 1996 to May 31, 2014, Darryl Broussard worked as Senior Vice President and Chief Lending Officer at Teche Federal Bank, a state-chartered bank in Louisiana. In 2013, unbeknownst to Broussard, the bank’s principal executives—Ross and Patrick Little—began looking for potential merger partners. When Broussard found out, in July 2013, he became upset and confronted Patrick Little.¹

In September 2013, Broussard entered into a "Change-in-Control Severance Agreement" ("CCSA") with Teche, which required the bank to pay him a bonus of 2.99 times his base salary in the event of a merger.² Broussard, in return, promised to remain loyal to Teche. He pledged that, as a senior executive, he would "not engage in any business or activity contrary to the business affairs or interests of [Teche]." The CCSA allowed Teche to withhold Broussard’s bonus if he was terminated for just cause, which was defined to include "personal dishonesty," "breach of fiduciary duty involving personal profit," and "material breach" of any provision of the contract. Additionally, the CCSA included an arbitration clause that permitted Broussard to recover his attorneys’ fees.

At trial, Broussard testified that he understood that the CCSA required him to "[r]un [Teche] as [he] ha[d] run it in the past," which meant that he would not be allowed to "take action to diminish Teche’s assets," "recruit a team of commercial lenders away from Teche to a competitor bank," or "give advice to a competitor on how to take Teche’s customers away." Eventually, the trial court found that Broussard did all of those things.

In late 2013, Broussard heard rumors that IberiaBank, another Louisiana state-chartered bank, was emerging as the probable merger partner. Broussard contacted a recruiter he knew, Kim Raney, to "put some feelers out" for him.

A month later—and after several meetings in which Broussard participated—Teche decided to merge into IberiaBank. Teche and IberiaBank executed a formal agreement in which Teche warranted to "use reasonable best efforts to maintain and preserve intact its business organization, employees, and advantageous business relationships." Broussard confirmed at trial that he received a copy of that agreement on January 10, 2014.

On January 12, 2014—one day before Teche publicly announced the merger—Broussard signed an "Employment Agreement" with IberiaBank, which took effect "as of the Merger Date." (The parties stipulated that the "Merger Date" was May 31, 2014.) That contract obligated IberiaBank to hire Broussard for the same executive role he performed at Teche. More importantly, the Employment Agreement promised Broussard a "success bonus" of $250,000, payable within 10 days of the "successful completion" of the "conversion" of Teche’s branch and operating systems. Broussard testified that he understood that the "conversion process" required him to help transfer data from Teche to IberiaBank and to "manag[e] [his] people, making sure that [they were] doing the right things."

As a "material condition" of the Employment Agreement, Broussard pledged his loyalty and honesty. Specifically, he promised to "devote his full professional and business time and attention to the business of the Bank, to use his best efforts to advance the interests, business, and welfare of the Bank, and to render his services under [the Employment Agreement] fully, faithfully, diligently, loyally, competently, and to the best of his ability." Broussard also agreed to "act solely in the best interest of the Bank in performing his duties."

Like the CCSA, the Employment Agreement appended an arbitration clause. Unlike the CCSA, however, the arbitration provision in the Employment Agreement did not provide for recovery of attorneys’ fees.

In March 2014, Broussard met with Boyd Boudreaux, the CEO of JD Bank. JD Bank directly competes with IberiaBank. Broussard explained to Boudreaux that his team "wanted to stay together" but "didn’t want to work for IberiaBank because of the merger." Boudreaux asked Broussard to prepare a "business plan" estimating revenues, salary, and other expenses that JD Bank should expect to accrue by hiring Broussard and his team.

On April 11, to help Broussard create the business plan, a Teche lender named Michael Comeaux emailed Broussard a confidential list of Teche clients whom Comeaux expected to follow him to JD Bank. The list included the clients’ operating lines of credit, vehicle loans, requests for credit line increases, and similar information. The trial court found that Comeaux titled the list "birthday.doc" to hide it from Teche and IberiaBank.³ That same day, another lender, Kevin Caswell, sent Broussard an email listing ten clients that Caswell "believed would stay loyal to [Caswell] and go with [him] wherever [he] may go." The email’s subject line was "items" and Caswell conceded at trial that its content consisted of "confidential" information. Like Comeaux, Caswell hoped this information could be used to "help [JD Bank] determine what our compensation could be."

Three days later, Broussard emailed his business plan to Boudreaux. In that email, Broussard explained that he and his team had met with three banks so far but that "all of my guys feel the most comfortable with ... JD Bank." In the attached business plan, Broussard proposed that JD Bank hire Broussard, three Teche lending officers (including Comeaux and Caswell), two Teche assistants, and a Teche credit analyst. Broussard also proposed giving "fee waivers to move customers immediately." The next day, Broussard emailed Boudreaux a "Loan Officer Report" that Teche had used to calculate lenders’ incentive payments.⁴ Boudreaux testified that this type of information would be helpful in competing for "human resources."

While these communications with Boudreaux were ongoing, Broussard was helping Teche determine "pay-to-stay" bonuses for the same lenders he was helping JD Bank recruit.

On April 15, JD Bank offered to hire Broussard and his team. Broussard responded with a request for higher salaries and, after some negotiation, JD Bank consented.

Boudreaux emailed formal offer sheets for each lender to Broussard, "relying on [Broussard] to get [all of the] offer sheets signed and returned." Broussard forwarded the offers individually to each lender’s private email address. Broussard then collected the signed acceptances and, on May 1, forwarded them to JD Bank. Broussard and Boudreaux had arranged to put Broussard’s team of lenders on the payroll by June 2, immediately after the Teche-IberiaBank merger date of May 31. Of note, Broussard did not date his own JD Bank acceptance letter because, as he explained to Boudreaux, "While my non-complete [sic] with [IberiaBank] doesn’t begin until May 30th, I want to confer with my attorney to make sure I establish the appropriate paper trail with regards to the date." Broussard testified at trial to his understanding that if either Teche or IberiaBank had "found out about the decisions to accept positions with JD Bank, that could [have] jeopardize[d] the merger agreement." Ross Little testified that if he had known Broussard and his team of lenders "had accepted employment at another competing institution," he would not have "allowed them to remain employed with Teche."

A few days after the "paper trail" email, Broussard forwarded "proprietary" program sheets to Boudreaux about loans that Teche had executed. Broussard invited Boudreaux to share that information with JD Bank’s "[r]etail folks," despite acknowledging that the data would still be confidential for weeks.

Broussard also helped JD Bank find a branch location for his team to occupy. He even suggested that JD Bank purchase one of Teche’s branch sites, as Broussard had learned from a Teche facilities manager that Teche planned to sell that location. Concerned that openly shopping for the branch would alert Teche and IberiaBank to JD Bank’s plans to "mov[e] into that market," Boudreaux suggested to Broussard that perhaps they "[s]hould ... look at a ghost buyer so they know it isn’t JD Bank." Broussard responded, "Let me know if you need me to do anything on my end," and then took the initiative to speak with the Teche facilities manager about that potential location. Broussard reported back to Boudreaux about his conversation with the...