Printed from

Agency gets TRO against insurer over alleged client poaching

Posted On: Jul. 8, 2019 2:13 PM CST

Temporary restraining order

A temporary restraining order has been issued against an auto dealership insurer pending arbitration of its dispute with its former agent over the alleged breach of a nonsolicitation agreement.

Detroit-based Ally Risk Services Inc., formerly known as GMAC Risk Services Inc., agreed to partner with Rolling Meadows, Illinois-based Harco Insurance Co., a unit of IAT Insurance Group Co., in 2012 as its exclusive agent to offer Harco insurance products to the auto dealership industry, according to the June 27 complaint in Ally Risk Services v. Harco National Insurance Co., which was filed in U.S. District Court in Flint, Michigan.

According to the complaint, under the agency-company agreement, which terminated June 1, 2019, Harco was prohibited from soliciting auto dealership customers with which Ally had an insurance relationship that predated the agreement or were sold by Ally during the relationship.

The June 27 complaint charges Harco “has carried out a scheme to improperly solicit customers that rightfully belong to Ally under the agreement.”

It states “it appears that Harco’s agents have contacted at least dozens of Ally customers in the lead up to, and since the Agreement’s effective date. It states Ally has lost more than $2.6 million in renewal premiums based on Harco’s breach of the nonsolicitation agreement.

The complaint, which charges Harco with breach of contract, seeks a temporary restraining order and a preliminary injunction pending binding arbitration of the dispute, which it states is required by the agreement.

The court agreed to issue a temporary restraining order pending expedited consideration of a preliminary injunction, in Wednesday’s ruling.

“The court concludes that a very limited temporary restraining order is appropriate so that issues raised in Ally’s complaint and motion may be considered and resolved by an arbitration panel on an expedited basis,” the ruling states.

Both parties were instructed in the order to select an arbitrator no later than July 10. The TRO expires July 22, and the court will hold a status conference before then to discuss the status of the arbitration’s proceedings, according to the order.

Attorneys in the case could not immediately be reached for comment.

Mergers and acquisitions, a talent shortage, competition for business and anger over alleged disloyalty are fueling increased litigation in the brokerage sector as firms more frequently charge departing employees with violations of nonsolicitation and noncompete agreements.