On March 20, Orange County Superior Court granted Yates & Associates Insurance Services a temporary restraining order (TRO) against R.E. Chaix & Associates. The order prohibits employees of Chaix from initiating business with any of the roughly 400 agents who have done business with Yates’ professional liability division in the past 12 months. This applies to all classes of professional liability, D&O, E&O, employment practices liability and tenant discrimination.
The TRO came after George “Michael” Ravelo and Colleen Hippard resigned from Yates in Santa Ana and relocated to R.E. Chaix in Newport Beach. Ravelo was hired as underwriter/broker, while Hippard was hired to head the professional liability division.
With Hippard’s expertise in professional liability, Roger Chaix, president of Chaix & Associates, saw a good opportunity to consolidate some of the business. “And with Mike [Ravelo], I turned most of my book over to him,” he said. Chaix said he sees a growing market for professional liability, especially with the number of tech companies coming on the scene. “It’s now the growing end of our business.”
“We all leave companies, and in fact, that’s how businesses are formed…and that’s all fair. That’s what makes the country great,” said attorney Paul Alvarez of Kearney Alvarez. “But there’s a right way and there’s a wrong way to do things…this is pretty outrageous conduct we’ve seen, and we believe it is inappropriate and unlawful.”
Alvarez filed what he called a “fairly fact-specific” lawsuit on behalf of Yates & Associates and James Yates against R.E. Chaix, Hippard and Ravelo. Although he’s been involved in numerous business disputes and TROs, Alvarez stressed the point that every case is unique. “I’ve never really seen facts like this, which I consider, based on the evidence I’ve seen, to be very egregious,” he said.
The unlawful business practices allegedly performed by the two former Yates’ employees includeÐbut are not limited toÐaccessing Yates’ voice mail system and changing the message to direct business to R.E. Chaix; physically removing applications from Yates; and accessing and deleting information on Yates’ proprietary and confidential computer system.
“Whether it be an employee or employer, you don’t do these things,” said Jim Yates, president of Yates & Associates. “You can’t curtail anyone’s rights to make a living, but that’s not the issue here.”
While it may be typical to expect certain customers to follow employees as they move from one company to another, the courts have been careful to protect employees and assure that they are able to continue to make a living.
Chaix feels that this is all “a miscommunication problem.” He said he has no knowledge of anybody in the office using Yates’ expiration lists.
“We have no problem complying with the restraining order,” he said. “We feel there shouldn’t be any unfair business going on in the industry, and I think that people who know me know I do things above board and I expect my employees to do the same.”
Yet the information and extensive documentation presented to the court assisted Alvarez in obtaining the TRO. “There are things in there which are relatively simple, such as Mr. Ravelo owes money that he was lent, to a little more intriguing stuff, like a claim of unauthorized use of credit cards, to the real guts of what we’re talking about here,” Alvarez said.
Yates feels that Hippard and Ravelo went “way, way beyond the boundaries.” He just hopes that this situation will establish some type of precedent, or at least clarify right from wrong. “All we’re trying to do is to establish what is ethically, morally and legally right to do,” he said. “In our business…it relies so much on people. You should never burn a bridge, because you never know who your boss will be tomorrow.”
As competition increases and employees move on to new ventures, having had the training, experience and access to confidential information of a soon-to-be-former company, there are many ways to “cheat,” according to Alvarez. “People are willing to take their chances with the hope of getting away with it,” he said. “But you should always leave on good relations or try to leave on the best of terms.”
When Chaix hired Hippard and Ravelo, he was looking to give two new employees a good opportunity. “They’re both 30ish people and it’s had a good effect on everybody [in the office],” Chaix said. “Everybody seems to be working a little bit harder.” Now, Chaix just hopes that the temporary restraining order won’t affect business. “Some companies have called and I’ve had to explain to them what’s going on,” he said.
Yates has also been busy fielding phone calls from friendly competitors. “A couple of them called to let me know that they were aware of what was going on,” he said. “Whether you’re an MGA or wholesaler like us, or you’re even a retail agent, the question is, how far do you go before you cross the line?”
The temporary restraining order remains in place until May 3. “At that time, the court…will be in a position to determine whether to keep the TRO in effect or modify it,” Alvarez said. “So far, we believe that we have demonstrated our position, and to some extent the court has agreed.”
Alvarez feels that this is something that impacts not only the insurance industry, but also the employer-employee relationship. “You could analogize this to any business, whether it’s computers or cars, you have a manufacturing process,” he said. “Look at how closely guarded the secret to Coca Cola is.”
Was this article valuable?
Here are more articles you may enjoy.