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Argonaut granted temporary order barring ex-official from recruiting

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SAN ANTONIO—Argonaut Group Inc. has won a temporary restraining order against Kevin P. Brooks, the former head of one of its surplus lines units who left last month to join competitor First Mercury Financial Corp. of Southfield, Mich.

In a lawsuit filed in San Antonio federal court, Argonaut charges that Mr. Brooks induced another Argonaut executive to leave with him and that he was in contact with another Argonaut official about making a similar move.

A restraining order issued by U.S. District Judge Fred Biery bars Mr. Brooks from recruiting former Argonaut co-workers pending a hearing on the dispute scheduled for today.

Ronald B. Given, Argonaut's general counsel, declined to comment on the litigation.

Mr. Brooks and other officials of First Mercury could not be reached.

A surplus lines industry veteran, Mr. Brooks was president of Argonaut Specialty, a managing general underwriting unit that Argonaut formed in 2005 to write larger risks than its other excess and surplus lines unit, Colony Group. Before joining Argonaut, he had been president of General Reinsurance Corp.'s General Star Indemnity Co.

Mr. Brooks left Argonaut on July 10, and the insurer discovered afterward that he had been negotiating a new job with First Mercury since the beginning of the year, Argonaut court filings say.

The filings include a copy of a July 19 e-mail from Mr. Brooks to Mark Richards, an Argonaut co-worker, discussing their employment negotiations with Richard Smith, president and chief executive officer of First Mercury.

Mr. Brooks noted in the e-mail that "we have been discussing this deal with Richard since January," and outlined elements of the First Mercury offer, including a bonus plan, stock options and indemnity agreements. Mr. Brooks expressed frustration with what he described as last-minute demands Mr. Richards had made of First Mercury, and told him in the message that "it is time to make a decision."

Comparing Argonaut with First Mercury, Mr. Brooks' e-mail also criticized what it called Argonaut's "centralized management" and said there would be "no stupid meetings" and "no home office harassment" in their new positions.

Mr. Richards, however, remains a sales executive at Argonaut. Another co-worker, Robert Gilbert, resigned as senior vp last month and has joined Mr. Brooks at First Mercury, according to Argonaut's lawsuit.

Mr. Brooks' actions, including his efforts to recruit Messrs. Richards and Gilbert, violated terms of several restricted stock and stock option agreements he signed with Argonaut, the lawsuit alleges.

In addition to breach of contract and fiduciary duty charges, the suit seeks a permanent injunction barring Mr. Brooks from hiring away Argonaut employees.