‘Civil conspiracy’

Jury rules in favor of Northwest Insurance Services

Times Observer photo by Brian Ferry The 315 Second Avenue location of Northwest Insurance Services.

Northwest Insurance Services was awarded millions of dollars at the conclusion of a two-week trial in Warren County court this month.

In the complaint, originally filed in June 2017 and amended in December, Northwest Insurance Services alleged contractual violations regarding non-solicitation and non-disclosure agreements by former employees who moved en masse to First National Insurance Agency. According to the complaint, officials at their new employer referred to the effort of taking those employees and their clients as Project NW and Project Green Goblin.

The suit named four individuals: Matthew Turk, John Collins IV, Jamie Heynes, and David McDonnell; and the entities First National Insurance Agency LLC, First National Bank, and F.N.B. Corp.

All four of the individual defendants worked for Northwest Insurance before resigning on May 12, 2017, to take positions with First National Insurance.

Of the individuals, only Turk — who was allegedly guaranteed an annual salary of $300,000 — was found to be in breach of his contract.

The jury ruled against Turk and the First National entities, assigning both damages and punitive damages.

Northwest Insurance Services, also known as the Bert Company, is a wholly-owned subsidiary of Northwest Bank.

Turk started at the Bert Company in 2005 and stayed on when Northwest acquired the company in 2013, according to the complaint. He had been senior vice-president of property and casualty at Northwest Insurance. The other individual defendants reported directly to Turk, according to the complaint.

The jury found that Turk had breached his contract resulting in damages in the amount of $164,943 and that he had breached his duty of loyalty resulting in damages of $90,000.

In his contract with Northwest, according to the complaint, Turk was prohibited from “providing or offering to provide services to any Northwest customer with whom they had contact within one year prior to termination.”

Another clause said he would not hire any of Northwest’s employees for at least one year.

“Since May 22, 2017, shortly after the individual defendants departed from Northwest…” approximately 44 clients “moved some or all of their insurance business from NWIS to FNIA,” according to the complaint. “For example, prior to the date he gave notice of his intent to join FNIA, Turk spoke to three clients that moved insurance work to FNIA. Just hours after the termination of his employment with NWIS, Turk initiated a telephone call to… a client that moved its business to FNIA.”

There were other examples listed in the complaint — “Turk continued to solicit NWIS clients until the issuance of the preliminary injunction.”

Additionally, once a preliminary injunction was filed to prevent the individuals from providing insurance services to those clients, FNIA continued to provide services to them and “has benefited from the commission payments from these clients,” according to the complaint.

Turk and the other individuals, according to the complaint also approached other Northwest employees to encourage them to join FNIA.

In the days after he tendered his resignation but stayed on with Northwest, Turk conveyed an offer to NWIS leadership that “First National would pay 1.75 times the annual revenue value of business for some or all of the NWIS’s business,” according to the complaint.

Turk made that offer after communicating with FNIA President Martin Muchnok, according to the complaint, and that Muchnok had reported those negotiations with F.N.B. Corp and First National Bank leadership.

The jury found that Turk “participated in a civil conspiracy with” all of “the First National defendants… designed to harm Northwest Insurance Services” resulting in the damages of $164,943.

The same group of defendants was found to have “competed unfairly” with Northwest resulting in another $250,000 in damages.

The jury also awarded Northwest punitive damages $2.8 million in the case. Turk will have to pay $300,000. First National Insurance is responsible for $1.5 million. Both First National Bank and F.N.B. Corp owe $500,000.

According to the complaint, FNIA agreed to “pay for a legal defense and to indemnify (Turk) from any judgments in the event NWIS sued the individual defendants.”

“FNB does not agree with the entirety of the jury verdict and we believe that we have strong arguments for an aggressive appeal,” Senior Vice President and Director of Corporate Communications Jennifer Reel said. “As we consider this to be active litigation, we have no further comment at this time.”

Northwest Savings EVP and Chief Marketing Officer Shawn Walker had this to say about the trial’s outcome:

“We applaud the jury’s verdict, reflecting the strength of our case. As shown by our pursuit of this issue, for nearly the past two years, Northwest believes that healthy competition requires a fair playing field, and the court agreed. With this matter resolved, we look forward to continuing to serve our business and personal banking, investment, benefits and insurance customers across Pennsylvania, New York and Ohio.”