Preview
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF ULSTER
__-----------------------_________--------_________________-Ç
FRANK H. REIS d/b/a, THE REIS GROUP,
Plaintiff,
-against- Index No.
EF2023-2992
DAVID LA VOIE,
Defendant.
---______________________---__________---__________---------Ç
[Motion]
Ulster County Courthouse
285 Wall Street
Kingston, New York 12401
December 19, 2023
B E F O R E: HON. DAVID GANDIN,
Justice of the Supreme Court
A P P E A R A N C E S:
COOK, NETTER CLOONAN, KURTZ & MURPHY, P.C.
Attorney for the Plaintiff
85 Main Street
Kingston, New York 12401
BY: MICHAEL T. COOK, ESQ.
LAW OFFICES OF TIMOTHY J. O'CONNOR
Attorney for the Defendant
29 Wards Lane
Albany, New York 12204
BY: TIMOTHY O'CONNOR, ESQ.
DEBRA BOGGS
Court Reporter
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024
Proceedings 2
1 Your just as a --
MR. O'CONNOR: Honor, preliminary
2 THE COURT: One second. Appearances, please.
3 MR. COOK: Good afternoon, Your Honor. Michael
4 Cook. Cook, Kurtz & Murphy for Plaintiff.
5 MR. O'CONNOR: Yes, Your Honor. Timothy O'Connor
6 for the Defendant.
7 THE did you want to --
COURT: Mr. O'Connor,
8 MR. O'CONNOR: Yeah. I had brought copies of the
9 originals stapled, an extra copy.
10 THE COURT: Okay. Thank you. If you could hand
11 those to the officer, I appreciate that.
12 We're here on the Plaintiff's motion by order to
13 show cause for provisional relief.
14 Mr. Cook, did you want to be heard?
15 MR. COOK: Yes, Your Honor. I indicated in the
16 proposed order to show cause, and also the moving papers, I
17 represent the Reis Group, its an insurance agency. It has
18 offices in Kingston but also throughout the State of
19 New York.
20 The Reis Group purchased Mr. La Voie's book of
21 business back in 2015. He was an employee with the Reis
22 Group up until October of this year. Upon his
23 termination -- as a part of the agreement he had a
24 non-compete clause in there, and non-piracy clause or
25 agreement. And upon his termination my client began
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024
Proceedings 3
1 noticing that certain of their clients, a number of which
2 were actually purchased from Mr. La Voie, began going to
3 Mr. La Voie's new business, that we believe he was operating
4 under La Voie & Company or some variation of that name,
5 which was also purchased back in 2015 by The Reis Group.
6 He was terminated on October 30th. And since that
7 until I believe he's solicited -- its
date, up yesterday,
8 our position he solicited but he's also taken on broker of
9 record 14 of Reis Group clients. And the total commission,
10 yearly commission for those 14 clients is about a $165,000.
11 So, this is not something that, you know, a group
12 of 14 left when he left the business. This is a number that
13 continues to go up on a daily basis. It's our belief that
14 he is actively soliciting Reis Group clients, some of which
15 he serviced while he was an employee there, others of which
16 were former clients of his that my client purchased in the
17 asset purchase agreement. And --
18 THE COURT: I have two questions for you.
19 MR. COOK: Sure.
20 THE COURT: Doesn't the agreement -- there is a
say
21 distinction between actively soliciting and clients that may
22 have chosen to go with him. Isn't there a provision in the
23 agreement that says if they choose to go with him there will
24 be a 50 percent of any commissions earned will go to your
25 client. Is that accurate?
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024
Proceedings 4
1 MR. COOK: That's correct. That is accurate, Your
2 Honor.
3 THE COURT: So, what knowledge do you have or your
4 client has that the Defendant is actively soliciting versus
5 people may have voluntarily gone with them?
6 MR. COOK: Well, you know, we have direct
7 communications with clients, you know, once upon learning
8 that they went to Mr. La Voie, reaching out to the client to
9 discuss it either to, you know, to renegotiate or seek a
10 discussion with them. At that point we were told,
11 Mr. La Voie contacted me, said he was no longer with the
12 Reis Group and to come, you know, to his new business, newly
13 formed business.
14 THE COURT: Understood. I interrupted you. Did
15 you have more you wanted to add?
16 MR. COOK: Well, also just as far as the likelihood
17 of the success on the merits, just as you point out, part of
18 the agreement and part of our breach of contract claim is
19 that, you know, even if he didn't solicit the clients, he
20 hasn't made any payments nor made any arrangements to pay
21 the 50 percent to the Reis Group. So, you know, it's clear
22 that there was a breach of the agreement even if looking
23 only at that.
24 And there is he had a that -- he was
also, laptop
25 terminated on October 30th. He returned the laptop a day
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024
Proceedings 5
1 later. A tech person at The Reis Group performed a, you
2 know, a download search, so we know he downloaded certain
3 documents the day after he was terminated which consists of,
4 I believe, customer names and contact information. So, a
5 part of it is also misappropriation of our trade secrets or
6 proprietary information. And I'm not just referring to
7 customer lists. I'm referring to, you know, a number of
8 items including pricing, renewal quotes, premium
9 information, renewal dates, you know, census information for
10 the various clients. Policy information.
11 There is a number of items that he had direct
12 access to that gives him an unfair competitive advantage
13 with respect to the, you know, a quoting a client that he
14 knows that background and whereas if it was a new client he
15 was going to go after he would haven't access to that
16 information. So, it's not just customer lists. It's a
17 number of different, you know, statistical analysis and
18 other information that's contained in our proprietary
19 information which he's using. And he's using it to gain a
20 competitive advantage. So, I think from a likelihood of
21 success on the merits, it's clear that he's breached the
22 agreement in all matters.
23 And also, with respect to the irreparable harm, I
24 think I established 14 clients, there is $160,000. So, if
25 he's not -- if he's allowed to continue to solicit the
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024
Proceedings 6
1 clients, you know, the harm is irreparable, in that that
2 money is gone. There is no recovering that money. So, the
3 more clients that he takes, and I understand the Court's
4 decision between soliciting and clients that choose to come
5 to him. But from an injunctive standpoint, it shouldn't be
6 a detriment. It wouldn't be a harm to Mr. La Voie to be
7 told you're not allowed to solicit Reis Group clients. So,
8 I don't think that's a great burden on him. And it would,
9 you know, severely affect my client if he's allowed, at
10 least our position, he's allowed to solicit clients and
11 perspective clients at the time of his termination.
12 So, I think it is clear that there is a breach of
13 the agreement. So, there is a likelihood of success on the
14 merits. And the harm is clear in that if he's soliciting
15 these clients we can't recover any commissions for that, at
16 least, one year period that he takes on.
17 And he's made no effort to discuss anything with my
18 client as far as, you know, making arrangements on the
19 50 percent that they're entitled to pursuant to that
20 agreement.
21 So, I think the injunction should be put in place
22 and it will not have -- and should not have an impact on
23 Mr. La Voie with respect to soliciting clients. If other
24 clients are going to actively go towards him, I understand
25 the Court's position with respect to that. But the active
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024
Proceedings 7
1 solicitation is not a burden on Mr. La Voie if that part of
2 the injunction was in place.
3 THE COURT: Thank you, Mr. Cook.
4 Counsellor?
5 MR. O'CONNOR: Your Honor, I extensively cite three
6 third department cases in my brief memo of law. It's very
7 clear, there is a wholesale failure of any evidentiary
8 submission whatsoever here. And he even said, it's our
9 belief that he's soliciting clients. That's not enough. An
10 injunctive in context in the case its clear --
law, very
11 THE COURT: Let me interrupt you now. We're here
12 on the TRO application. This isn't a hearing, a full
13 fledged hearing on a preliminary injunction. I think those
14 cases dealt with the preliminary injunction posture. Am I
15 incorrect?
16 MR. O'CONNOR: Well, the tee them up in the context
17 of an order to show cause and TRO permanent injunction is a
18 sequence there. But in any context, whether it's a TRO,
19 Your Honor, or a preliminary injunction, there is a baseline
20 evidentiary standard. Not to come into the Court and say
21 Your Honor, we think this guy is soliciting clients. There
22 is nobody here. There is no affidavits. There is no
23 customers that said they were solicited. It's hearsay.
24 Mr. Cooks recitation on the record is hearsay. And the
25 affidavit of Mr. Casciaro is also ranked hearsay, double
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024
Proceedings 8
1 hearsay. There is no competent evidentiary submission
2 whatsoever of any active solicitation having taken place.
3 And the law --
4 THE COURT: Does your client deny it in his
5 affidavit?
6 MR. O'CONNOR: Yes. He did not -- there has been
7 no solicitation. But the on the first part is --
showing
8 THE COURT: Where?
9 MR. O'CONNOR: Paragraph 3 -- paragraph excuse
2,
10 me -- paragraph 2.
11 THE COURT: Says there has been no proper
12 admissible and credible evidence of my having ever
13 affirmatively solicited any individual former client.
14 That's a very different statement than I have not.
15 MR. O'CONNOR: Nor can there be.
16 the --
By way
17 THE COURT: Nor can there be what?
18 MR. O'CONNOR: No -- in this Your
context, Honor,
19 we've also submitted an answer on the record submitting a
20 denial of that active solicitation, which is on your papers
21 as well, denying any solicitation took place at all.
22 But in the context of --
23 THE COURT: A verified answer or is it just a
24 general denial of that claim?
25 MR. O'CONNOR: It's a general denial. But we are
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024
Proceedings 9
1 here in the Your Honor --
context,
2 THE COURT: Mr. O'Connor, we got to take a break
3 between when I speak and you speak. You look like you have
4 been doing this a while. We have a reporter here, so wait
5 until I finish. Okay.
6 MR. O'CONNOR: Sorry.
7 THE COURT: There is a verified complaint in which
8 you issue a general denial; is that correct?
9 MR. O'CONNOR: Yes.
10 THE COURT: Sorry. Continue.
11 MR. O'CONNOR: But the burden of proof is on the
12 Plaintiff to show solicitation. And there has been no
13 showing here whatsoever. There is no showing of any
14 solicitation. It's the case law is very clear that you
15 can't proceed on hunches or hints or suspicions or you know,
16 and that's the baseline to get in the door and to proceed in
17 this context. There is no proof and no competent proof of
18 any nature. And so, that's where we are. I mean it's
19 fairly straight forward.
20 So, as far as likelihood of success on the merits
21 three step process. Likelihood
Preview
FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ULSTER __-----------------------_________--------_________________-Ç FRANK H. REIS d/b/a, THE REIS GROUP, Plaintiff, -against- Index No. EF2023-2992 DAVID LA VOIE, Defendant. ---______________________---__________---__________---------Ç [Motion] Ulster County Courthouse 285 Wall Street Kingston, New York 12401 December 19, 2023 B E F O R E: HON. DAVID GANDIN, Justice of the Supreme Court A P P E A R A N C E S: COOK, NETTER CLOONAN, KURTZ & MURPHY, P.C. Attorney for the Plaintiff 85 Main Street Kingston, New York 12401 BY: MICHAEL T. COOK, ESQ. LAW OFFICES OF TIMOTHY J. O'CONNOR Attorney for the Defendant 29 Wards Lane Albany, New York 12204 BY: TIMOTHY O'CONNOR, ESQ. DEBRA BOGGS Court Reporter FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024 Proceedings 2 1 Your just as a -- MR. O'CONNOR: Honor, preliminary 2 THE COURT: One second. Appearances, please. 3 MR. COOK: Good afternoon, Your Honor. Michael 4 Cook. Cook, Kurtz & Murphy for Plaintiff. 5 MR. O'CONNOR: Yes, Your Honor. Timothy O'Connor 6 for the Defendant. 7 THE did you want to -- COURT: Mr. O'Connor, 8 MR. O'CONNOR: Yeah. I had brought copies of the 9 originals stapled, an extra copy. 10 THE COURT: Okay. Thank you. If you could hand 11 those to the officer, I appreciate that. 12 We're here on the Plaintiff's motion by order to 13 show cause for provisional relief. 14 Mr. Cook, did you want to be heard? 15 MR. COOK: Yes, Your Honor. I indicated in the 16 proposed order to show cause, and also the moving papers, I 17 represent the Reis Group, its an insurance agency. It has 18 offices in Kingston but also throughout the State of 19 New York. 20 The Reis Group purchased Mr. La Voie's book of 21 business back in 2015. He was an employee with the Reis 22 Group up until October of this year. Upon his 23 termination -- as a part of the agreement he had a 24 non-compete clause in there, and non-piracy clause or 25 agreement. And upon his termination my client began FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024 Proceedings 3 1 noticing that certain of their clients, a number of which 2 were actually purchased from Mr. La Voie, began going to 3 Mr. La Voie's new business, that we believe he was operating 4 under La Voie & Company or some variation of that name, 5 which was also purchased back in 2015 by The Reis Group. 6 He was terminated on October 30th. And since that 7 until I believe he's solicited -- its date, up yesterday, 8 our position he solicited but he's also taken on broker of 9 record 14 of Reis Group clients. And the total commission, 10 yearly commission for those 14 clients is about a $165,000. 11 So, this is not something that, you know, a group 12 of 14 left when he left the business. This is a number that 13 continues to go up on a daily basis. It's our belief that 14 he is actively soliciting Reis Group clients, some of which 15 he serviced while he was an employee there, others of which 16 were former clients of his that my client purchased in the 17 asset purchase agreement. And -- 18 THE COURT: I have two questions for you. 19 MR. COOK: Sure. 20 THE COURT: Doesn't the agreement -- there is a say 21 distinction between actively soliciting and clients that may 22 have chosen to go with him. Isn't there a provision in the 23 agreement that says if they choose to go with him there will 24 be a 50 percent of any commissions earned will go to your 25 client. Is that accurate? FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024 Proceedings 4 1 MR. COOK: That's correct. That is accurate, Your 2 Honor. 3 THE COURT: So, what knowledge do you have or your 4 client has that the Defendant is actively soliciting versus 5 people may have voluntarily gone with them? 6 MR. COOK: Well, you know, we have direct 7 communications with clients, you know, once upon learning 8 that they went to Mr. La Voie, reaching out to the client to 9 discuss it either to, you know, to renegotiate or seek a 10 discussion with them. At that point we were told, 11 Mr. La Voie contacted me, said he was no longer with the 12 Reis Group and to come, you know, to his new business, newly 13 formed business. 14 THE COURT: Understood. I interrupted you. Did 15 you have more you wanted to add? 16 MR. COOK: Well, also just as far as the likelihood 17 of the success on the merits, just as you point out, part of 18 the agreement and part of our breach of contract claim is 19 that, you know, even if he didn't solicit the clients, he 20 hasn't made any payments nor made any arrangements to pay 21 the 50 percent to the Reis Group. So, you know, it's clear 22 that there was a breach of the agreement even if looking 23 only at that. 24 And there is he had a that -- he was also, laptop 25 terminated on October 30th. He returned the laptop a day FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024 Proceedings 5 1 later. A tech person at The Reis Group performed a, you 2 know, a download search, so we know he downloaded certain 3 documents the day after he was terminated which consists of, 4 I believe, customer names and contact information. So, a 5 part of it is also misappropriation of our trade secrets or 6 proprietary information. And I'm not just referring to 7 customer lists. I'm referring to, you know, a number of 8 items including pricing, renewal quotes, premium 9 information, renewal dates, you know, census information for 10 the various clients. Policy information. 11 There is a number of items that he had direct 12 access to that gives him an unfair competitive advantage 13 with respect to the, you know, a quoting a client that he 14 knows that background and whereas if it was a new client he 15 was going to go after he would haven't access to that 16 information. So, it's not just customer lists. It's a 17 number of different, you know, statistical analysis and 18 other information that's contained in our proprietary 19 information which he's using. And he's using it to gain a 20 competitive advantage. So, I think from a likelihood of 21 success on the merits, it's clear that he's breached the 22 agreement in all matters. 23 And also, with respect to the irreparable harm, I 24 think I established 14 clients, there is $160,000. So, if 25 he's not -- if he's allowed to continue to solicit the FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024 Proceedings 6 1 clients, you know, the harm is irreparable, in that that 2 money is gone. There is no recovering that money. So, the 3 more clients that he takes, and I understand the Court's 4 decision between soliciting and clients that choose to come 5 to him. But from an injunctive standpoint, it shouldn't be 6 a detriment. It wouldn't be a harm to Mr. La Voie to be 7 told you're not allowed to solicit Reis Group clients. So, 8 I don't think that's a great burden on him. And it would, 9 you know, severely affect my client if he's allowed, at 10 least our position, he's allowed to solicit clients and 11 perspective clients at the time of his termination. 12 So, I think it is clear that there is a breach of 13 the agreement. So, there is a likelihood of success on the 14 merits. And the harm is clear in that if he's soliciting 15 these clients we can't recover any commissions for that, at 16 least, one year period that he takes on. 17 And he's made no effort to discuss anything with my 18 client as far as, you know, making arrangements on the 19 50 percent that they're entitled to pursuant to that 20 agreement. 21 So, I think the injunction should be put in place 22 and it will not have -- and should not have an impact on 23 Mr. La Voie with respect to soliciting clients. If other 24 clients are going to actively go towards him, I understand 25 the Court's position with respect to that. But the active FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024 Proceedings 7 1 solicitation is not a burden on Mr. La Voie if that part of 2 the injunction was in place. 3 THE COURT: Thank you, Mr. Cook. 4 Counsellor? 5 MR. O'CONNOR: Your Honor, I extensively cite three 6 third department cases in my brief memo of law. It's very 7 clear, there is a wholesale failure of any evidentiary 8 submission whatsoever here. And he even said, it's our 9 belief that he's soliciting clients. That's not enough. An 10 injunctive in context in the case its clear -- law, very 11 THE COURT: Let me interrupt you now. We're here 12 on the TRO application. This isn't a hearing, a full 13 fledged hearing on a preliminary injunction. I think those 14 cases dealt with the preliminary injunction posture. Am I 15 incorrect? 16 MR. O'CONNOR: Well, the tee them up in the context 17 of an order to show cause and TRO permanent injunction is a 18 sequence there. But in any context, whether it's a TRO, 19 Your Honor, or a preliminary injunction, there is a baseline 20 evidentiary standard. Not to come into the Court and say 21 Your Honor, we think this guy is soliciting clients. There 22 is nobody here. There is no affidavits. There is no 23 customers that said they were solicited. It's hearsay. 24 Mr. Cooks recitation on the record is hearsay. And the 25 affidavit of Mr. Casciaro is also ranked hearsay, double FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024 Proceedings 8 1 hearsay. There is no competent evidentiary submission 2 whatsoever of any active solicitation having taken place. 3 And the law -- 4 THE COURT: Does your client deny it in his 5 affidavit? 6 MR. O'CONNOR: Yes. He did not -- there has been 7 no solicitation. But the on the first part is -- showing 8 THE COURT: Where? 9 MR. O'CONNOR: Paragraph 3 -- paragraph excuse 2, 10 me -- paragraph 2. 11 THE COURT: Says there has been no proper 12 admissible and credible evidence of my having ever 13 affirmatively solicited any individual former client. 14 That's a very different statement than I have not. 15 MR. O'CONNOR: Nor can there be. 16 the -- By way 17 THE COURT: Nor can there be what? 18 MR. O'CONNOR: No -- in this Your context, Honor, 19 we've also submitted an answer on the record submitting a 20 denial of that active solicitation, which is on your papers 21 as well, denying any solicitation took place at all. 22 But in the context of -- 23 THE COURT: A verified answer or is it just a 24 general denial of that claim? 25 MR. O'CONNOR: It's a general denial. But we are FILED: ULSTER COUNTY CLERK 01/24/2024 11:49 AM INDEX NO. EF2023-2992 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 01/24/2024 Proceedings 9 1 here in the Your Honor -- context, 2 THE COURT: Mr. O'Connor, we got to take a break 3 between when I speak and you speak. You look like you have 4 been doing this a while. We have a reporter here, so wait 5 until I finish. Okay. 6 MR. O'CONNOR: Sorry. 7 THE COURT: There is a verified complaint in which 8 you issue a general denial; is that correct? 9 MR. O'CONNOR: Yes. 10 THE COURT: Sorry. Continue. 11 MR. O'CONNOR: But the burden of proof is on the 12 Plaintiff to show solicitation. And there has been no 13 showing here whatsoever. There is no showing of any 14 solicitation. It's the case law is very clear that you 15 can't proceed on hunches or hints or suspicions or you know, 16 and that's the baseline to get in the door and to proceed in 17 this context. There is no proof and no competent proof of 18 any nature. And so, that's where we are. I mean it's 19 fairly straight forward. 20 So, as far as likelihood of success on the merits 21 three step process. Likelihood