loanDepot registered a partial win against CrossCountry in a trade secret and employment-separation dispute.
The California-based mortgage lender sued its rival in April 2022 claiming that six former employees — Steve Schneider, Cindy Smolin, Samantha Siegel, Fernanda Baske, Bob Bowman, and John Noyes — left the company to join CrossCountry after accessing, downloading and taking confidential client information and breaching their employment agreements and fiduciary duties.
The court quickly imposed a temporary restraining order to the case, which prohibited the former employees from using documents and mandated the return of the filings containing customer information that loanDepot claims they improperly took to CrossCountry. The order also prevented the former employees from inducing current loanDepot’s staff to terminate their employment at the company to join CrossCountry.
After several extensions, the order expired on December 15. However, on Tuesday, Judge Edmond Chang, from the United States District Court for the Northern District of Illinois, granted loanDepot a preliminary injunction, maintaining the protection of the documents and poaching practices.
A representative for CrossCountry told HousingWire, “As a matter of practice, we do not comment on legal matters.”
loanDepot president and CEO, Frank Martell, said in a statement that the company was “extremely pleased” with the ruling and noted that “loanDepot will continue to vigorously protect its interests.”
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loanDepot celebrated that the court’s ruling underscores the likelihood of success of the claim.
“Given the record evidence at this stage, loanDepot is likely to succeed in showing that the Defendants misappropriated trade secrets,” judge Chang wrote. “Finally, CrossCountry is likely to be found liable for aiding and abetting the Individual Defendants’ contractual and fiduciary violations, as well as being responsible for tortious interference with contract.”
However, the judge denied a loanDepot’s request to include in the restraining order a nationwide ban prohibiting CrossCountry from enticing, encouraging or rewarding any current or former employee of loanDepot to violate their contractual or fiduciary obligations.
“In short, loanDepot’s proposed nationwide no-solicitation bar is improper as vague, overboard, and detached from the localized claims made in this case,” the judge wrote.
CrossCountry and loanDepot have engaged in several skirmishes over recruiting across the country.
After an origination team departed loanDepot in April 2021, the lender slammed the seven ex-employees and their new employer, CrossCountry, with a lawsuit alleging they “hatched and implemented a scheme to loot loanDepot’s business.” In July 2022, loanDepot sued the rival again for allegedly poaching high-performing loan officers from its New York branches.
Guild Mortgage and Caliber Home Loans have both sued CrossCountry on similar grounds. Caliber, now a part of New Rez, said CrossCountry had snagged 80 top-producing LOs who collectively originated $2.3 billion in business. In October 2021, Guild Mortgage sued CrossCountry for allegedly engaging in similar practices.
