In an August 5, 2011 decision by Justice Bransten, the court denied the defendants’ motion to dismiss the breach of contract claim which alleged that defendant Smith, a former employee of the plaintiff insurance broker, breached a non-compete agreement by soliciting the plaintiff’s clients after he was terminated for cause. The court found that an employer’s legitimate interest in protecting its relationships and goodwill developed with its clients was a basis for enforcing a non-compete, where the employer, rather than the employee, expended effort and time building and maintaining the relationships with its client base. The court held the plaintiff need not show a misappropriation of trade secrets or confidential information in order for the non-compete to be upheld. Affording the complaint the most liberal construction, the court also sustained the breach of contract claim against defendants Smith Benefit Partners, of which Smith was a general partner, and Vanguard Benefit Solutions LLC, which Smith owned and/or controlled because the pleadings alleged that the individual defendant solicited its clients through those entities and the non-compete agreement provided that Smith would not, directly or indirectly, assist or be employed by any other party soliciting or accepting any insurance business.
Group Health Solutions, Inc. v Smith, Sup Ct NY County, August 5, 2011, Bransten, J, Index No. 650540/2010