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Lyons Insurance Agency, Inc. v. Kirtley

Superior Court of Delaware

March 18, 2019


          Submitted Date: December 6, 2018

         On Defendant's Motion to Dismiss Counts III, IV, and V, and Plaintiff's Partial Motion for Judgment on the Pleadings. DENIED.

          Michael P. Kelly, Esquire, Andrew S. Dupre, Esquire, and Janine L. Faben, Esquire, McCarter & English, LLP, 405 North King Street, 8th Floor, Wilmington, Delaware, 19801. Attorneys for Plaintiff Lyons Insurance Agency, Inc.

          Oderah C. Nwaeze, Esquire, and Mackenzie M. Wrobel, Esquire, Duane Morris LLP, 222 Delaware Avenue, Suite 1600, Wilmington, Delaware, 19801. Attorneys for Defendants Roger Kirtley and The Safegard Group, Inc.

          Calvin L. Scott, Jr. Judge.


         This case presents a familiar trope often heard in Delaware Courts; that of the former employee moving onto greener pastures, taking part of the business with him. Defendant Roger Kirtley was employed as an insurance producer and risk advisor by Plaintiff, Lyons Insurance Agency, Inc. (Lyons), from 2004 until 2018. The nature of Kirtley's work was as a sales agent for the Agency. In 2018, Kirtley left Lyons for a different insurance broker, The Safegard Group, Inc. (Safegard).

         While employed at Lyons, Kirtley signed an Employment Agreement. Pertinent to this action are the Agreement's provisions concerning confidential information, post termination obligations, and the incorporation of the company's Employee Manual.

         The confidential information provision seeks to prevent employees from sharing Lyons's confidential information from disclosure and/or unauthorized use. The post termination provision contains a buy-out option in the event an employee decides to continue working in the insurance industry. The provision states:

"following termination of employment from [Lyons] for any reason whatsoever, and for a period of two years thereafter, should Employee accept employment with another broker . . . and that act of employment . . . results in the movement of an account, that was generated by Employee, from Company to another broker, then Employee shall pay to Company an amount equal to Ninety Percent (90%) of the current "Book of Business Value."

         Sometime after Kirtley's departure from Lyons, a number of Lyons's insurance clients ended their brokerage relationship with Lyons, and moved to Safegard. The circumstances surrounding these "moved clients" are the basis for Counts I through IV of Lyons's Complaint.

         Parties Assertions

         Defendants Kirtley and Safegard filed a Motion to Dismiss Counts III through V of the Complaint. These claims are Count III: Unjust Enrichment against Kirtley and Safegard, Count IV: Tortious Interference against Safegard, and Count V: Breach of Contract as to Advances against Kirtley.

         With respect to Count III, Kirtley takes the position that Unjust Enrichment cannot be pleaded in the alternative to breach of contract where a contract controls the relationship of the parties. Kirtley argues the Employment Agreement addresses the harm alleged in the Complaint, therefore a claim for unjust enrichment cannot be sustained against him. Defendants also take the position that the unjust enrichment claim against Safegard is an impermissible attempt to recover contract damages from a non-party to the contract.

         Lyons argues Count III is correctly pleaded as an alternative theory of recovery to the Breach of Contract claim against Kirtley in Count I. Lyons alleges Defendants misused Lyons's confidential information in courting the moved clients in addition to the claim Kirtley breached the Employment Agreement by failing to pay the 90% buy-out fee.

         With regard to Count IV, Safegard argues Lyons has failed to meet the pleading requirement to sustain a claim for tortious interference. Safegard states Plaintiff has not provided factual support for the claim that Safegard's conduct was improper or wrongful, and therefore the claim must be dismissed. Lyons contends the pleading standard suggested by Safegard applies to claims for fraud and negligence, and is therefore inapplicable to this case.

         Counts V and VI relate to advances paid to Kirtley while still employed by Lyons. Lyons alleges that under an implied and/or oral contract it paid Kirtley advances against anticipated future commissions and revenues. Lyons claims Kirtley has failed to repay these advances, in breach of the parties' contract, or in the alternative, Kirtley has been unjustly enriched by failing to repay these advances. Defendants argue there is no express contractual agreement concerning the repayment of advances, and absent such language Lyons cannot sustain a breach of contract claim for their repayment.

         Standard of Review

         The test for sufficiency of a complaint challenged by a Rule 12(b)(6) motion to dismiss is whether a plaintiff may recover under any reasonably conceivable set of circumstances susceptible of proof under the complaint.[1] In making its determination, the Court must accept all well-pleaded allegations in the complaint as true and draw all reasonable factual inferences in favor of the non-moving party.[2]The complaint must be without merit as a matter of fact or ...

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