HCC Specialty Underwriters, Inc. v. Woodbury et al
ORDER denying 11 Motion to Dismiss for Failure to State a Claim. So Ordered by Judge Landya B. McCafferty.(gla)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
HCC Specialty Underwriters, Inc.
Civil No. 16-cv-501-LM
Opinion No. 2017 DNH 101
John Woodbury et al.
O R D E R
Defendant John Woodbury worked for plaintiff HCC Specialty
Underwriters, Inc. (“HCC”), a provider of specialized insurance
products for the sports and entertainment industries, until June
2016, when he resigned from HCC and immediately joined its
competitor, Buttine Underwriters Agency, LLC, d/b/a Prize and
Promotion Insurance Services (“PPI”).
HCC brings this suit,
alleging that it had a non-competition agreement with Woodbury,
of which PPI is aware, and that defendants’ conduct in the face
of that agreement gives rise to several contract and tort
Defendants move to dismiss the complaint, arguing that
the non-competition agreement is unenforceable and, therefore,
HCC fails to allege a plausible claim for relief.
Standard of Review
Under Rule 12(b)(6), the court must accept the factual
allegations in the complaint as true, construe reasonable
inferences in the plaintiff’s favor, and “determine whether the
factual allegations in the plaintiff’s complaint set forth a
plausible claim upon which relief may be granted.”
Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014)
A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
Ashcroft v. Iqbal, 556 U.S. 662, 678
Ordinarily, the court considers only the well-pleaded facts
in the complaint to decide a motion to dismiss under Rule
Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993).
addition, however, the court may consider “facts extractable
from documentation annexed to or incorporated by reference in
the complaint and matters susceptible to judicial notice.”
Rederford v. U.S. Airways, Inc., 589 F.3d 30, 35 (1st Cir. 2009)
(internal quotation marks omitted).
The court may also consider
matters of public record and documents whose authenticity is not
Global Tower Assets, LLC v. Town of Rome, 810 F.3d
77, 89 (1st Cir. 2016).
The complaint asserts the following facts.
In 1996, John
Woodbury and HCC’s predecessor, American Specialty Underwriters,
Inc. (“American”) entered into an “Employment, Incentive
Compensation, Confidentiality and Non-Competition Agreement”
Woodbury agreed that he would not disclose
any of his employer’s confidential information and would not use
any confidential information on behalf of any future employer.
Woodbury also agreed that during the term of his employment, and
for a period of two years following termination of his
employment, he would not divert or attempt to divert business
from his employer, would not interfere in any material respect
with his employer’s business relationships, and would not
provide services to or have any interest in a person whose
activities would violate the non-competition provisions of the
Woodbury worked for American or its successors, including
HCC, for the next 20 years.
In June 2016, Woodbury resigned
from HCC, and shortly thereafter, joined PPI.
departure, both Woodbury and PPI have engaged in activities that
violate the terms of the Agreement, including attempting to
divert business from HCC, interfering with HCC’s business
relationships, and setting up competing facilities.
also accessed several confidential HCC documents prior to and
after his resignation.
HCC brings this suit, alleging claims arising out of the
Agreement and its confidentiality and non-competition
Specifically, HCC asserts claims for (1) Specific
Performance (Count I); (2) Breach of Contract against Woodbury
(Count II); (3) Tortious Interference with a Contract against
PPI (Count III); (4) Declaratory Judgment (Count IV); and (5)
Violation of the New Hampshire Consumer Protection Act (“CPA”),
N.H. Rev. Stat. Ann. (“RSA”) Ch. 358-A (Count V).
seeks attorneys’ fees.
Defendants move to dismiss all five counts of the
complaint, asserting that the Agreement is unenforceable.
also assert that even if the Agreement is enforceable, the CPA
claim (Count V) fails because employment disputes are private in
nature and are not, therefore, within the CPA’s scope.
Enforceability of the Agreement
Defendants contend that Woodbury’s Agreement was made with
American, not with HCC, and that HCC is merely an assignee of
Defendants assert that as an assignee, HCC
cannot enforce the non-competition and confidentiality
obligations in the Agreement.
The problem with defendants’ argument is two-fold.
it is far from clear that HCC is an assignee of the Agreement,
as opposed to merely American’s legal successor.
which were attached to the parties’ filings show changes of name
in the corporate entities and a merger in 2005 but lack any
indication of an assignment of the Agreement from another entity
A company that becomes the legal successor to another
company by merger is entitled to enforce employment agreements,
including non-competition obligations, that are transferred with
NetScout Sys., Inc. v. Hohenstein, 1784CV00373BLS2,
2017 WL 1654852, at *2 (Mass. App. Ct. Feb. 23, 2017).
Second, even if defendants had shown that HCC was an
assignee of the Agreement, they have not shown that this fact
makes the Agreement unenforceable.
In support of their argument
that an assignee lacks authority to enforce confidentiality and
non-compete provisions in an employment agreement, defendants
rely on a decision of the Massachusetts Superior Court that
denied a motion for a preliminary injunction to enforce a non-
Both parties rely on documents extrinsic to the complaint
to show HCC’s corporate history. Those documents may be
considered here without converting the motion to one for summary
judgment because the documents are apparently in the public
record, none of the parties objects to the evidence provided by
the other, and both had the opportunity to support their
presentation of corporate structure. If, however, the issue of
enforceability of the Agreement, based on corporate history,
were to persist beyond this order, it must be addressed in the
evidentiary context of summary judgment.
Securitas Security Servs. USA, Inc. v.
Jenkins, No. 032950BLS, 2003 WL 21781385 (Mass. App. Ct. July
The Securitas court noted “some considerable
confusion in the record before the Court regarding the corporate
interplay” between defendant’s original employer and the entity
seeking to enforce the non-competition obligation.
Id. at *1.
The court concluded that plaintiff had not carried its burden of
showing a likelihood of success on the merits because defendant
contracted with his original employer and that employer could
not assign the employment agreement to a subsequent entity that
was “a stranger to the original undertaking.”
Id. at *5.
The Supreme Judicial Court of Massachusetts has not
addressed the question of whether non-competition obligations in
employment contracts may be assigned to and enforced by a
Defendants cite Securitas as standing for
the principal that under Massachusetts law, non-competition
obligations in employment contracts are unassignable.
principal exists under Massachusetts law.
Indeed, one year
after the Securitas decision, a different Massachusetts Superior
Court denied an employer’s request for a preliminary injunction
because of the lack of governing authority on this precise
The parties apparently agree that Massachusetts law
applies to the Agreement.
See Chiswick, Inc. v. Constas, No. 200400311, 2004 WL
1895044, at *2 (Mass. App. Ct. June 17, 2004).
The court in
Chiswick also noted the split of authority on the issue in other
Therefore, even if HCC were the assignee,
defendants have not shown that relevant provisions in the
Agreement are legally unenforceable.
Accordingly, for the purposes of the motion to dismiss,
defendants have not shown that the non-competition and
confidentiality provisions of the Agreement are unenforceable
against Woodbury by HCC.
Therefore, defendants are not entitled
to dismissal of the complaint on that basis.
New Hampshire Consumer Protection Act Claim
Defendants also argue that the CPA claim fails because the
CPA does not cover private transactions or disputes between
employers and employees and because their actions were “nothing
more than normal competition.”
To determine whether a
transaction is personal and therefore not part of trade or
commerce covered by the CPA, the court must “‘analyze the
activity involved, the nature of the transaction, and the
Rowe v. Condodemetraky, No. 2016-0292, 2017 WL
1367208, at *2 (N.H. Feb. 15, 2017) (quoting Ellis v. Candia
Trailers & Snow Equip., 164 N.H. 457, 465 (2012)).
Hampshire Supreme Court has not decided whether the Consumer
Protection Act applies to employment disputes” although
allegations of a mere breach of a contract do not state a claim
under the CPA.
Campbell v. CGM, LLC, No. 15-cv-088-JD, 2017 WL
78474, at *12 (D.N.H. Jan. 9, 2017) (citing Romano v. Site
Acquisitions, Inc., No. 15-cv-384-AJ, 2016 WL 50471, at *3
(D.N.H. Jan. 4, 2016)).
To the extent the factual circumstances
indicate that Woodbury never intended to honor the noncompetition provisions in the Agreement or made
misrepresentations “in an ongoing effort to avoid performing
under the” Agreement, HCC’s CPA claim against Woodbury may be
Therefore, the court cannot determine at this
early stage whether the employment relationship between HCC and
Woodbury would come within the scope of the CPA and whether
Woodbury’s conduct amounts to something more than a mere breach
of the Agreement.
PPI, of course, did not have an employment relationship
Instead, PPI is a competitor of HCC.
that PPI and Woodbury violated the CPA by “improperly targeting
HCC Specialty clients, improperly interfering with HCC
Specialty’s business relationships, and improperly interfering
with HCC Specialty’s good will with its clients and industry
Depending on the nature of those actions and the
“rascality” involved, the allegations with inferences taken in
favor of HCC, are enough to avoid dismissal at this early stage
of the litigation.
See Barrows v. Boles, 141 N.H. 382, 390
For the foregoing reasons, defendants’ motion to dismiss
(document no. 11) is denied.
United States District Judge
June 1, 2017
Nicholas F. Casolaro, Esq.
Thomas E. Ganucheau, Esq.
Russell F. Hilliard, Esq.
Susan Aileen Lowry, Esq.
Jennifer L. Parent, Esq.
Joel T. Towner, Esq.
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