Texas-based PrimeLending is suing its direct competitor, First Community Mortgage, Inc. (FCM), for raiding its talent pool.
According to a lawsuit filed on December 20 in a district court in Tennessee, First Community Mortgage, Inc. (FCM) orchestrated a mass departure of PrimeLending’s Mid-America employees — who allegedly left on the same date without notice.
The employee departures allegedly caused damages of over $30 million in annual revenues and about $150,000 in vacant office rents and fees for breaking leases in cities like Cincinnati and Indianapolis.
Keith Canter, FCM’s CEO, wrote in an email to HousingWire that the company has no comment regarding active litigation. A spokesperson for PrimeLending said the lender does not have any comment at this time. National Mortgage News first reported on the lawsuit.
PrimeLending claims in the lawsuit that its competitor approached its personnel through Gary Sindall from CAVU Partners, who was its recruiter for over 11 years. HousingWire sent a request for comment, but Sindall has not responded.
The lender and the recruiter had a formal agreement until June 12, 2020, with a non-solicitation clause prohibiting CAVU from hiring or attempting to hire its employees away from the company. The lender said that despite not formally renewing the contract, CAVU continued to provide the services as of September 2022.
According to the lawsuit, about 100 employees – including a regional manager, four branch managers and a regional operations manager – submitted resignations on September 1, 2022 and left for employment with FCM without notice. That equates to a loss of about 10% of PrimeLending’s workforce.
The employees’ PrimeLending contracts had non-solicitation, non-interference and confidentiality clauses, according to the lawsuit. The lender said FCM admitted to knowledge of these obligations in a letter sent by its counsel on September 1, 2022.
“In that letter, FCM notified PrimeLending for the first time that it intended to poach up to 100 or more employees of PrimeLending. FCM also claimed that it has not accepted or requested the assistance of any current PrimeLending employee or any former PrimeLending employee subject to a non-solicit agreement,” the lawsuit claims.
The lender claims its former employees took to the new employer its trade secrets, including customer information, loan records, pipeline reports, loan estimates, and contracts from PrimeLending’s system.
PrimeLending, a subsidiary of PlainsCapital Company, originated $12 billion in the last 12 months, according to the mortgage tech platform Modex. It has 994 active loan officers, 38 branches and licenses to operate in 23 states.
Meanwhile, its rival FCM is ten times smaller, producing $1.15 billion in mortgage loans in the last 12 months through 150 active loan officers located in two branches, Modex data shows. The company has licenses in 18 states.