Insurance Broker Defeats Preliminary Injunction; May Be Entitled To Money Damages

A Kentucky insurance broker prevailed in the United States District Court for the Southern District of Ohio against a subsequent purchaser of an insurance company that sought a preliminary injunction to enforce a non-solicitation covenant. As a result, the insurance broker was allowed to solicit business from and contract with his former clients.

The Strause Law Group, PLLC represented the insurance broker and successfully argued that the purchaser of the insurance company could not satisfy the legal standard for entry of a preliminary injunction against the former employee of the insurance company. The Court was persuaded by counsel’s arguments that the purchase documents did not validly assign (transfer) the insurance broker’s purported non-solicitation covenants from the insurance company to the new purchaser. Accordingly, the purchaser lacked standing to enforce the non-solicitation covenant against the insurance broker. When examining the enforceability of non-solicitation covenants in employment agreements, Courts look to the plain language of the agreement as the actual intent of the party who drafted it.

The insurance broker entered into an agreed temporary restraining order with the purchaser to maintain the status quo pending the Court’s ruling on the purchaser’s motion for preliminary injunction. As part of the agreed temporary restraining order, the purchaser posted a $50,000 bond with the Court in the event the Court determined the insurance broker was wrongfully restrained. The insurance broker may be entitled to the $50,000 bond based upon the Court’s denial of the purchaser’s motion for a preliminary injunction. The insurance company and the purchaser filed appeals of the denial of the preliminary injunction against the insurance broker in the United States Sixth Circuit Court of Appeals.

The prevailing party insurance broker was represented by Strause Law Group, PLLC. Defendant, Fifth Third Bank, N.A. and Fifth Third Insurance Company, Inc., the selling insurance company were represented by Dinsmore and Shohl, LLP. The purchasing company, Foundation Risk Partners Corp., was represented by Littler Mendelson, P.C.

United States District Court Southern District of Ohio Western Division Case No. 1:21-cv-76