Preview
FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016
NYSCEF DOC. NO. 82 RECEIVED NYSCEF: 08/15/2018
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
.................................- - - - -
x
: Index No. 609073/2016
SCOTTISH AMERICAN CAPITAL, LLC and (Hon. Stephen A. Bucaria)
SCOTTISH AMERICAN INSURANCE GENERAL :
AGENCY, INC., AFFIDAVIT IN SUPPORT
: OF MOTION FOR
Plaintiffs, PARTIAL SUMMARY
: JUDGMENT
-against-
:
ARTHUR GOLANN, NORTHEAST COVERAGES,
INC.,
Defendants.
.. - -.................. -............. - -
X
STATE OF NEW YORK )
) ss:
COUNTY OF NASSAU )
ARTHUR GOLANN, having been duly sworn, states as follows under the
penalties of perjury:
1. I am the individual defendant in the above-captioned matter, and as
such, am fully and personally familiar with the facts and circumstances set forth
herein.
defendants'
2. I submit this Affidavit in Support of motion for partial
summary judgment to dismiss the first, second and third causes of action of the
Complaint.
3. For the reasons stated herein and the Affirmation in Support of Keith
J. Singer, Esq., and in accordance with the authorities more fully discussed in the
defendants'
accompanying Memorandum of Law, it is respectfully submitted that
motion should be granted in its entirety.
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THE INSURANCE INDUSTRY IN GENERAL
4. As a threshold matter, it is important to understand the insurance
industry eco-system in order to better understand the issues at play in this
litigation.
5. In general, there are four (4) entities involved in the process of
servicing and binding a typical insurance policy. The process begins with an end
insured. The end insured is a client searching for an insurance policy. The end
insured contacts (and typically works exclusively with) an insurance broker. The
broker works to solicit quotes for policies from insurance wholesalers, otherwise
known as Managing General Agents. Both of the plaintiff and defendant corporate
entities are Managing General Agents. A Managing General Agent obtains
wholesale insurance quotes from the insurance companies themselves.
6. Each entity on the insurance industry chain works only with the entity
immediately above it and below it. As such, a Managing General Agent will only do
business with the broker and insurance company, but not directly with the end
insured.
7. The relationship between a broker and a wholesaler is fluid, depending
upon elements such as price points, markets serviced and quality of service. Brokers
routinely shop around to different wholesalers, notwithstanding personal
relationships, in order to obtain the best combination of price point, market and
service for the end insured. Indeed, that is their job!
2
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8. It is very rare, if not non-existent, to have a wholesaler exclusively
service a broker or vice versa, because the broker's job is to get the best policy for
the end insured. Almost always, that means in terms of price to the end insured. A
broker that limits his or her business to one wholesaler is not doing their job.
Indeed, I have never had that type of relationship in my almost three (3) decades in
the industry.
PERSONAL EMPLOYMENT BACKGROUND
9. I began my work in the insurance industry in 1989 as an account
executive for Simon Agency NY, Inc. in Lynbrook, New York.
10. While there, I developed relationships and gained experience until
November 2001, when I left to form my own business called Buckingham of LI, LLC
("Buckingham"), a subsidiary of Buckingham Badler Associates, Inc. ("BBA"). I
owned a twenty (20%) percent interest in Buckingham.
11. For almost a decade, I worked at Buckingham. Ultimately, on
December 31, 2009, I sold my interest in the company back to Buckingham for
$200,000.
12. As a condition of the buy-out, I agreed to become an employee of BBA,
as a production account executive. My employment with BBA began on January 1,
2010, and at that time I signed an Employment Agreement which contained a
general restrictive covenant (Exhibit "A").
13. Thereafter, I signed a second Employment Agreement with BBA on
3
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January 1, 2012, which also contained a general restrictive covenant (Exhibit "B").
14. That covenant specifically provided that "nothing ... is intended to
prohibit [t]he employee from engaging in the insurance business upon termination
BBA..."
of their employment with which I understood to mean that I would be able
to continue working in my chosen field, so long as I did not directly solicit any active
policies at SAC. See Exhibit "B".
15. BBA was an insurance wholesaler that specialized in selling policies to
insurance brokers (as opposed to end insureds).
16. On December 27, 2012, BBA was sold to Scottish American Capital,
LLC ("SAC"). Pursuant to the terms of the Employment Agreement, I was now
employed by SAC.
17. I eventually resigned on September 11, 2015 due to a multitude of
reasons - the constant source of harassment I faced from peers
namely my
regarding my religion1, and SAC's failure to pay me a $20,000.00 bonus they had
promised me. Contrary to SAC's allegations, I did not take or delete any of the files
of my accounts before, during or after my resignation.
18. In order to continue to support myself and my family, I formally began
working for Northeast Coverages, Inc. ("Northeast Coverages") on September 16,
I defen±nts'
My constriictivc discharge from SAC forms the basis of counterclaims. That claim however, is not the
subject of this motion.
4
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in the same position.2 After I resigned, clients continued to reach out to
2015, my
me on my cell phone, which was a service I provided to clients at the direction of my
superiors at SAC.
19. It is important to note that, prior to my employment at Northeast
Coverages, the latter entity had relationships and conducted business with many of
the same brokers as SAC. Indeed, as discussed previously, that is the very nature of
the insurance business.
NO EXTRAORDINARY OR UNIQUE SKILLS REQUIRED
20. I am good at my job, but I would certainly stop short of characterizing
my abilities as unique or extraordinary. Indeed, my greatest asset, or skill set as it
were, is my ability to build and sustain relationships.
21. Most of my clients are brokers that I have worked with for many years.
Our families are friends and we have personal relationships outside of business.
22. Certainly, all the other wholesale insurance account executives in my
industry are armed with the same ability to market themselves and their product.
23. Thus, although SAC has gone to great lengths during the course of this
information3 "prOprietary"
litigation to embellish and mischaracterize their client as
2
Quite significandy, SAC did not sue me until I had been at Northeast Coverages for fourteen (14) months, and they
did not seek to enforce their restrictive covenani until after sixteen (16) months (of the 18 month covenant) had
elapsed. If my services were so valuable and unique, one would think that SAC would not have waited until the
restrictive covenant had virtually lapsed pursuant to its terms, before seeking to enforce same.
3 SAC creates a mess of the insurance eco-system and conflates concepts. SAC's clients
In its Complaint, industry
list"
are the insurance brokers, not the end insureds. Thus, its "client is the same client list shared by every single
Managing General Agent in the entire pool of Managing General Agents. Moreover, the inferiñatioñ that SAC
client"
claims it obtained from "the (they really mean to say the end insured), can be obtained by anyone via a
5
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(e.g. a trade secret), it is my knowledge of the business and my relationships
however, that are the assets SAC tried to bar me from using.
24. My relationships with employees of different insurance brokerages
allowed me to submit quotes for policies. The broker would choose the best policy for
the end insured, whether that was my quoted policy or not. All of this is only to say
that my relationships were worthless if the company I was working for could not
come up with a competitive policy.
25. I am flattered that SAC claims that my resignation was the reason it
lost as much as 90% revenue on certain relationships. Of course, if I was that
valuable an asset, SAC would not have quibbled with me over the bonus they had
promised me (and which I had properly earned), which was relatively minor
compared to the purported amount of business claim I am responsible for.4
they
26. In point of fact though, the loss of business can be attributed to SAC's
poor marks as it relates to customer service. As evidence of that, some of my former
clients did not follow me to Northeast Coverages but still chose to leave SAC,
"C"
complaining about SAC's poor service (see Exhibits and "D", respectively).
RESTRICTING MY ABILITY TO WORK
27. By enforcement of an overly broad restrictive covenant, SAC is seeking
simple search on the internet or a phone call to the insurance broker. The insurance broker will also shop quotes
around to the various Mâñagiñg General Agents until he or she comes up with the lowest quote for the end insured.
4
Rather interestingly, in a YouTube video publicly posted by Paul Thomson, an executive at SAC, on September
"happy"
15, 2015 (4 days after I resigned), he discussed my dcparture, stating that SAC was that I had left the
company, and that in stark contrast to their damages claims in this action, I was "producing less than $20[000]
month"
dollars a in business. See https://www.voutube.com/embed/lrwoi5trpl (at the 5:00 mark).
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an award of close to $1 million ($1,000,000.00) dollars in damages.
28. The restrictive covenant contained in Employment Agreement #2
purported to restrain me from doing business with any broker who I was in contact
with while at SAC, on an indefinite geographic scale, for a year and a half,
regardless of whether or not they are the ones who contacted me or they had
already been doing business with Northeast Coverages.
29. Notably, this provision would preclude me from contacting brokers
that did not even buy policies from me while I was at SAC. It would be enough if
SAC had any contact with them at all while I was at SAC to prevent me from doing
business with them after my resignation.
30. This restriction is unreasonable because, inter alia, most, if not all of
the Managing General Agents in my industry are in contact with all of the same
brokers. If the restrictive covenant was applied, I would have been at a significant
disadvantage compared to the other wholesale insurance account executives who
are at all times free to use whichever broker they choose.
31. Accordingly, pursuant to this restriction, my ability to earn a living
would be severely hampered no matter which Managing General Agent I chose
following my resignation. Such a precedent threatens the ability for individuals
such as myself, to earn a living and support their families.
32. It is based upon this overly broad restrictive covenant, that SAC claims
to have suffered damages of close to one million ($1,000,000.00) dollars.
7
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33. For these reasons, and for the reasons discussed in the Affirmation in
support of my counsel and in accordance with the authorities set forth in the
defendants'
accompanying Memorandum of Law, it is respectfully submitted that
motion should be granted in its entirety.
WHEREFORE, it is respectfully requested that the relief sought by defendants
be granted in its entirety, and that defendants be granted such other and further
relief as the Court may deem just, proper and equitable.
Arthur Golann
Sworn to before me this
lf-day of Aug t, 201
ANGELA YATAURO
York
Notary Public. State of New
No. 01YA6075605
O ry P c oualified in suffolk county
Commission Svnir«
8
8 of 8
Preview
FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 82 RECEIVED NYSCEF: 08/15/2018 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU .................................- - - - - x : Index No. 609073/2016 SCOTTISH AMERICAN CAPITAL, LLC and (Hon. Stephen A. Bucaria) SCOTTISH AMERICAN INSURANCE GENERAL : AGENCY, INC., AFFIDAVIT IN SUPPORT : OF MOTION FOR Plaintiffs, PARTIAL SUMMARY : JUDGMENT -against- : ARTHUR GOLANN, NORTHEAST COVERAGES, INC., Defendants. .. - -.................. -............. - - X STATE OF NEW YORK ) ) ss: COUNTY OF NASSAU ) ARTHUR GOLANN, having been duly sworn, states as follows under the penalties of perjury: 1. I am the individual defendant in the above-captioned matter, and as such, am fully and personally familiar with the facts and circumstances set forth herein. defendants' 2. I submit this Affidavit in Support of motion for partial summary judgment to dismiss the first, second and third causes of action of the Complaint. 3. For the reasons stated herein and the Affirmation in Support of Keith J. Singer, Esq., and in accordance with the authorities more fully discussed in the defendants' accompanying Memorandum of Law, it is respectfully submitted that motion should be granted in its entirety. 1 of 8 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 82 RECEIVED NYSCEF: 08/15/2018 THE INSURANCE INDUSTRY IN GENERAL 4. As a threshold matter, it is important to understand the insurance industry eco-system in order to better understand the issues at play in this litigation. 5. In general, there are four (4) entities involved in the process of servicing and binding a typical insurance policy. The process begins with an end insured. The end insured is a client searching for an insurance policy. The end insured contacts (and typically works exclusively with) an insurance broker. The broker works to solicit quotes for policies from insurance wholesalers, otherwise known as Managing General Agents. Both of the plaintiff and defendant corporate entities are Managing General Agents. A Managing General Agent obtains wholesale insurance quotes from the insurance companies themselves. 6. Each entity on the insurance industry chain works only with the entity immediately above it and below it. As such, a Managing General Agent will only do business with the broker and insurance company, but not directly with the end insured. 7. The relationship between a broker and a wholesaler is fluid, depending upon elements such as price points, markets serviced and quality of service. Brokers routinely shop around to different wholesalers, notwithstanding personal relationships, in order to obtain the best combination of price point, market and service for the end insured. Indeed, that is their job! 2 2 of 8 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 82 RECEIVED NYSCEF: 08/15/2018 8. It is very rare, if not non-existent, to have a wholesaler exclusively service a broker or vice versa, because the broker's job is to get the best policy for the end insured. Almost always, that means in terms of price to the end insured. A broker that limits his or her business to one wholesaler is not doing their job. Indeed, I have never had that type of relationship in my almost three (3) decades in the industry. PERSONAL EMPLOYMENT BACKGROUND 9. I began my work in the insurance industry in 1989 as an account executive for Simon Agency NY, Inc. in Lynbrook, New York. 10. While there, I developed relationships and gained experience until November 2001, when I left to form my own business called Buckingham of LI, LLC ("Buckingham"), a subsidiary of Buckingham Badler Associates, Inc. ("BBA"). I owned a twenty (20%) percent interest in Buckingham. 11. For almost a decade, I worked at Buckingham. Ultimately, on December 31, 2009, I sold my interest in the company back to Buckingham for $200,000. 12. As a condition of the buy-out, I agreed to become an employee of BBA, as a production account executive. My employment with BBA began on January 1, 2010, and at that time I signed an Employment Agreement which contained a general restrictive covenant (Exhibit "A"). 13. Thereafter, I signed a second Employment Agreement with BBA on 3 3 of 8 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 82 RECEIVED NYSCEF: 08/15/2018 January 1, 2012, which also contained a general restrictive covenant (Exhibit "B"). 14. That covenant specifically provided that "nothing ... is intended to prohibit [t]he employee from engaging in the insurance business upon termination BBA..." of their employment with which I understood to mean that I would be able to continue working in my chosen field, so long as I did not directly solicit any active policies at SAC. See Exhibit "B". 15. BBA was an insurance wholesaler that specialized in selling policies to insurance brokers (as opposed to end insureds). 16. On December 27, 2012, BBA was sold to Scottish American Capital, LLC ("SAC"). Pursuant to the terms of the Employment Agreement, I was now employed by SAC. 17. I eventually resigned on September 11, 2015 due to a multitude of reasons - the constant source of harassment I faced from peers namely my regarding my religion1, and SAC's failure to pay me a $20,000.00 bonus they had promised me. Contrary to SAC's allegations, I did not take or delete any of the files of my accounts before, during or after my resignation. 18. In order to continue to support myself and my family, I formally began working for Northeast Coverages, Inc. ("Northeast Coverages") on September 16, I defen±nts' My constriictivc discharge from SAC forms the basis of counterclaims. That claim however, is not the subject of this motion. 4 4 of 8 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 82 RECEIVED NYSCEF: 08/15/2018 in the same position.2 After I resigned, clients continued to reach out to 2015, my me on my cell phone, which was a service I provided to clients at the direction of my superiors at SAC. 19. It is important to note that, prior to my employment at Northeast Coverages, the latter entity had relationships and conducted business with many of the same brokers as SAC. Indeed, as discussed previously, that is the very nature of the insurance business. NO EXTRAORDINARY OR UNIQUE SKILLS REQUIRED 20. I am good at my job, but I would certainly stop short of characterizing my abilities as unique or extraordinary. Indeed, my greatest asset, or skill set as it were, is my ability to build and sustain relationships. 21. Most of my clients are brokers that I have worked with for many years. Our families are friends and we have personal relationships outside of business. 22. Certainly, all the other wholesale insurance account executives in my industry are armed with the same ability to market themselves and their product. 23. Thus, although SAC has gone to great lengths during the course of this information3 "prOprietary" litigation to embellish and mischaracterize their client as 2 Quite significandy, SAC did not sue me until I had been at Northeast Coverages for fourteen (14) months, and they did not seek to enforce their restrictive covenani until after sixteen (16) months (of the 18 month covenant) had elapsed. If my services were so valuable and unique, one would think that SAC would not have waited until the restrictive covenant had virtually lapsed pursuant to its terms, before seeking to enforce same. 3 SAC creates a mess of the insurance eco-system and conflates concepts. SAC's clients In its Complaint, industry list" are the insurance brokers, not the end insureds. Thus, its "client is the same client list shared by every single Managing General Agent in the entire pool of Managing General Agents. Moreover, the inferiñatioñ that SAC client" claims it obtained from "the (they really mean to say the end insured), can be obtained by anyone via a 5 5 of 8 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 82 RECEIVED NYSCEF: 08/15/2018 (e.g. a trade secret), it is my knowledge of the business and my relationships however, that are the assets SAC tried to bar me from using. 24. My relationships with employees of different insurance brokerages allowed me to submit quotes for policies. The broker would choose the best policy for the end insured, whether that was my quoted policy or not. All of this is only to say that my relationships were worthless if the company I was working for could not come up with a competitive policy. 25. I am flattered that SAC claims that my resignation was the reason it lost as much as 90% revenue on certain relationships. Of course, if I was that valuable an asset, SAC would not have quibbled with me over the bonus they had promised me (and which I had properly earned), which was relatively minor compared to the purported amount of business claim I am responsible for.4 they 26. In point of fact though, the loss of business can be attributed to SAC's poor marks as it relates to customer service. As evidence of that, some of my former clients did not follow me to Northeast Coverages but still chose to leave SAC, "C" complaining about SAC's poor service (see Exhibits and "D", respectively). RESTRICTING MY ABILITY TO WORK 27. By enforcement of an overly broad restrictive covenant, SAC is seeking simple search on the internet or a phone call to the insurance broker. The insurance broker will also shop quotes around to the various Mâñagiñg General Agents until he or she comes up with the lowest quote for the end insured. 4 Rather interestingly, in a YouTube video publicly posted by Paul Thomson, an executive at SAC, on September "happy" 15, 2015 (4 days after I resigned), he discussed my dcparture, stating that SAC was that I had left the company, and that in stark contrast to their damages claims in this action, I was "producing less than $20[000] month" dollars a in business. See https://www.voutube.com/embed/lrwoi5trpl (at the 5:00 mark). 6 of 8 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 82 RECEIVED NYSCEF: 08/15/2018 an award of close to $1 million ($1,000,000.00) dollars in damages. 28. The restrictive covenant contained in Employment Agreement #2 purported to restrain me from doing business with any broker who I was in contact with while at SAC, on an indefinite geographic scale, for a year and a half, regardless of whether or not they are the ones who contacted me or they had already been doing business with Northeast Coverages. 29. Notably, this provision would preclude me from contacting brokers that did not even buy policies from me while I was at SAC. It would be enough if SAC had any contact with them at all while I was at SAC to prevent me from doing business with them after my resignation. 30. This restriction is unreasonable because, inter alia, most, if not all of the Managing General Agents in my industry are in contact with all of the same brokers. If the restrictive covenant was applied, I would have been at a significant disadvantage compared to the other wholesale insurance account executives who are at all times free to use whichever broker they choose. 31. Accordingly, pursuant to this restriction, my ability to earn a living would be severely hampered no matter which Managing General Agent I chose following my resignation. Such a precedent threatens the ability for individuals such as myself, to earn a living and support their families. 32. It is based upon this overly broad restrictive covenant, that SAC claims to have suffered damages of close to one million ($1,000,000.00) dollars. 7 7 of 8 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 82 RECEIVED NYSCEF: 08/15/2018 33. For these reasons, and for the reasons discussed in the Affirmation in support of my counsel and in accordance with the authorities set forth in the defendants' accompanying Memorandum of Law, it is respectfully submitted that motion should be granted in its entirety. WHEREFORE, it is respectfully requested that the relief sought by defendants be granted in its entirety, and that defendants be granted such other and further relief as the Court may deem just, proper and equitable. Arthur Golann Sworn to before me this lf-day of Aug t, 201 ANGELA YATAURO York Notary Public. State of New No. 01YA6075605 O ry P c oualified in suffolk county Commission Svnir« 8 8 of 8