Movement Mortgage, LLC v. Ward et al

Filing 45

ORDER denying as moot 22 Motion to dissolve restraining order. Plaintiffs Motion for a Preliminary Injunction to enjoin Defendants Ward and Kelley from communicating with referral sources, customers and parties who have express business agreements with Movement (Doc. 4) is hereby DENIED. Signed by District Judge Robert J. Conrad, Jr on 4/4/2014. (blf)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:14-cv-23-RJC-DCK
MOVEMENT MORTGAGE, LLC,

)
)
Plaintiff,
)
)
v.
)
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JARED WARD; JUAN CARLOS KELLEY;
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JASON STEGNER; and NEW PENN
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FINANCIAL, LLC.,
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Defendants.
)
__________________________________________)

ORDER

On March 6, 2014, this Court issued an order (March 6 Order) granting in part and
denying in part Plaintiff Movement’s request for injunctive relief. (Doc. 35). As part of that
order, the Court ordered Plaintiff to produce a list of companies, referral sources, agents, and
other business entities with whom it had a business agreement implicated in the restrictive
covenants it sought to enforce against Defendants. Additionally, the Court provided Defendants
seven (7) days to file objections. On March 12, 2014, Plaintiff’s submitted to the Court, under
seal, a list of approximately two hundred and fifty (250) business entities with whom it has some
type of business arrangement. (Doc. 39-1). Since that filing, Defendants have objected, (Doc.
41), Plaintiff has responded, (Doc. 42), and Defendants have replied to the response, (Doc. 43).
Finally, Plaintiff filed a brief in opposition to Defendants’ request that it produce specific Market
Service Agreements. (Doc. 44).
I.

ANALYSIS
The March 6 order of this Court granted Plaintiff’s motion for injunctive relief against

Defendants Ward, Kelley and Stegner. Specifically, the order enjoined those Defendants from

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soliciting or inducing Movement employees to terminate their employment with the company.
These injunctions remain in full effect and the present order has no bearing upon them.
A.

Injunctive Relief for Communications with Business Entities

The March 6 Order also extended the temporary restraining order that prohibited
Defendants Ward and Kelley from communicating with referral sources, customers, and parties
having an express business agreement with Movement for the purposes of inducing them to
terminate such agreements. The present order is limited to the question of whether Plaintiff has
fully complied with the March 6 order, and whether the Court should convert the restraining
order into a preliminary injunction. Having reviewed the list submitted by Plaintiff, the Court
declines to issue injunctive relief to Plaintiff with regard to their business agreements.
The March 6 Order required Plaintiff to “furnish to the Court within seven (7) days a list
of all such referral sources and relevant agreements against whom [Defendants Ward and Kelley]
shall be enjoined from improper communications. Furthermore, where the business entity with
whom Plaintiff has an agreement contains other divisions, departments, officers or branches that
are not bound by such agreement, the entity shall be identified as to the office or entity with whom
Plaintiff has such agreement. No other division, inferior or superior shall be considered as included
in the injunction.” (Doc. 35 at 7,8). The Court warned Plaintiff that a failure to furnish such list
within seven days “will result in the expiration of the existing order and the denial of any injunctive
relief.” (Id.).
On March 12, 2014 Plaintiff submitted a list of approximately two hundred and fifty
(250) entities with whom it has a business agreement throughout the United States. (Doc. 38-1).
The list did not provide any information as to the nature of the relevant agreements between
Movement and the parties; nor did it specify whether the agreement was with the entity as a

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whole, a department within the overall company, or specific agents or groups within the
company. In short, the list provided by the Defendants contained scant information to inform
either Defendants or the Court of the specific activities or conduct which might be prohibited by
such injunction.
The purpose in ordering Plaintiff to provide a narrowly tailored list of entities with whom
it had business arrangements was twofold: to provide Defendants (and the Court) with clear
notice of the specific persons and entities who might be covered under the restrictive covenants
as having a business relationship with Plaintiff, and to narrow the scope of the injunction so that
Defendants could conduct legitimate business without fear of violating the injunction or the
restrictive covenants it attempted to preserve.
Having reviewed the list of companies, the Court finds that injunctive relief is
inappropriate in this case as Plaintiffs have not complied with the March 6 order to provide
sufficiently specific information regarding the identity of entities with whom it has such
agreements. Rule 65(d)(1)(C) of the Federal Rules of Civil Procedure requires a court to
describe in reasonable detail the acts restrained in an injunction. Here, the specific identities of
the various parties bound by the agreements is not clear to the Court; nor is the nature of the
specific agreements between the parties evident from the material submitted – whether they
reflect ongoing ventures or one time agreements that have been largely performed and for which
termination of a business relationship is not a great risk. It follows that, without knowing who is
bound by such agreements, the Court cannot describe in reasonable detail the type of activity
enjoined.
Instead of injunctive relief targeted to prevent a specific and immanent harm, an
injunction of the type sought here amounts to a blanket prohibition, with few limiting factors,

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against business activity of a competitor that can be read as broadly as Plaintiff’s interpretation
of the restrictive covenants deems appropriate. In prior orders, the Court has not been reticent to
express its concern about the potential for overreach in the issuance of preliminary relief.
Specifically, the Court noted its unwillingness to extend any prohibition that might infringe upon
the legitimate business activities of Defendants, noting that:
The balance of equities presents the most pressing inquiry in this matter,
especially in light of the effect that a restraining order could have on New Penn’s
business operations. “In each case, courts ‘must balance the competing claims of
injury and must consider the effect on each party of the granting or withholding
of the requested relief.’” Winter, 555 U.S. at 24 (quoting Amoco Production, 480
U.S. at 542).
(Doc. 13 at 4, (citing Winter v. Natural Resources Defense Counsel, Inc., 555 U.S 7, 24
(2008) (quoting Amoco Production Co. v. Village of Gambell, AK, 480 U.S. 531, 542
(1987).
Here, in order to mitigate the prospect of harm to Defendants, the Court
requires the specific identity of currently existing agreements that it seeks to protect
from interference. Any injunctive relief set out by this order extends no further than
to protect existing service agreements and is not intended to act prospectively to
foreclose legitimate business activity not affecting such agreements.
(Doc. 35 at 5).
Accordingly, the Court finds that it cannot offer injunctive relief to the business
agreements submitted by Plaintiff as such relief risks being over-inclusive and too general to
provide notice to Defendants as to the type of specific activities enjoined. Rather than protect
Plaintiff from a specifically identified and imminent harm, such injunction would potentially
foreclose valid communications with parties affiliated with a business entity with whom Plaintiff
has an agreement, no matter how attenuated such affiliation might be.
Unwilling to issue such blanket coverage, the Court finds equitable relief to be ill-suited.
“The essence of equity jurisdiction has been the power of the Chancellor to do equity and to
mold each decree to the necessities of the particular case. Flexibility rather than rigidity has
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distinguished it.” Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944). Ultimate discretion to grant
injunctive relief lies with the district court. Christopher Phelps & Assocs., LLC v. Galloway,
492 F.3d 532, 545 (4th Cir. 2007).
Finding that Plaintiff did not comply with the March 6 order by providing sufficient
information as to the entities with whom it has business arrangements, the Court, in its
discretion, denies Plaintiff’s request for a preliminary injunction to enjoin Defendants Ward and
Kelley from improper communications with parties with whom it has a business arrangement.
This ruling is limited to the discrete issues of communications with business entities and has no
effect on other injunctive relief granted or denied in the March 6 order. Nor does this order
preclude or restrict Plaintiff from seeking a remedy at law for alleged violations of such
restrictive covenants.

II.

CONCLUSION
1. Plaintiff’s Motion for a Preliminary Injunction to enjoin Defendants Ward and Kelley
from communicating with referral sources, customers and parties who have express
business agreements with Movement (Doc. 4) is hereby DENIED.
2. The Temporary Restraining Order issued on February 5, 2014 and continued on February
19 and March 6 has expired and is not renewed by the Court. Defendants’ motion to
dissolve the restraining order (Doc. 22) is denied as moot.
Signed: April 4, 2014

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