John G. Ullman & Associates, Inc. v. BCK Partners, Inc., Index No. 2015-0746 CV, 11/6/2015 (Rosenbaum, J.)

Tortious interference with contractual relations; tortious interference with business relations; unfair competition; unjust enrichment.

By Jessica Rottkamp | Staff Writer

Defendants worked as account executives for plaintiff, a financial management company. Plaintiff alleged that defendants created their own business to compete with plaintiff. Plaintiff claims that each defendant knowingly disregarded their respective employment contract with plaintiff, and schemed to create a business in direct competition with plaintiff by utilizing plaintiff’s confidential information. Plaintiff moved for a Preliminary Injunction against the defendants based upon an employment contract, and asserted claims for tortious interference and unfair competition. Defendants cross-moved to dismiss the complaint pursuant to CPLR §3211(a)(7).

For a claim of tortious interference with business relations to be successful, the complaint must allege that the defendant was motivated by malice, beyond mere self-interest. Plaintiff alleges that defendants have unfairly and unlawfully utilized plaintiff’s confidential and proprietary information. Plaintiff had several safeguards in place to protect the information, including a database that could only be accessed with certain login information, and plaintiff requires all employees with access to the confidential information to execute an employment agreement with confidentiality provisions and post-employment restrictive covenants.

Defendants argue that the tortious interference claim should be dismissed because the Restrictive Covenants are unenforceable, or in the alternative, the factual allegations are insufficient to show inducement to breach contract with plaintiff. The court did not find that the Restrictive Covenants were unenforceable. Motion to dismiss denied.

Plaintiff’s next claim alleges unfair competition. Plaintiff alleges that defendants acted in concert in misappropriating what belonged to plaintiff, which resulted in plaintiff’s loss of business and clients. To succeed on an unfair competition claim, plaintiff must show that defendants misappropriated plaintiffs labor, skills, and information, and did so with some element of bad faith. The court held that the allegations were sufficient to state a claim for unfair competition. Consequently, the court denied the motion to dismiss.

Lastly, plaintiff brought a claim for unjust enrichment. The court found that plaintiff’s unjust enrichment claim failed because it is speculative as to whether or not defendants will be enriched by retaining the client, charging, and receiving the fee. The court granted the motion to dismiss.

John G. Ullman & Associates, Inc. v. BCK Partners, Inc., Index No. 2015-0746 CV, 11/6/2015 (Rosenbaum, J.).

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