Lamorte Burns & Co. v. Walters

Lamorte Burns & Company, Inc. (Lamorte) (plaintiff) investigated and adjusted claims for insurers. In 1990, Lamorte hired Michael Walters (defendant) to develop work for Lamorte’s protection-and-indemnity claims division (P & I). Walter’s employment agreement prohibited him from disclosing confidential or proprietary data, including client names and cases, that was obtained in the course of his employment. In 1996, Walters approached Nancy Nixon (defendant), one of his subordinates, about starting a competing business. Walters then incorporated The Walters Nixon Group, Inc. (WNG). While continuing to work for Lamorte, the defendants compiled information on approximately 30 of Lamorte’s clients and transferred the information to Walters’s personal computer. The information included client names, client contact information, and claim details. In 1997, the defendants resigned from their employment with Lamorte. The next day, the defendants faxed solicitation letters to 33 of Lamorte’s clients, relying on the information they had compiled while working for Lamorte. Ultimately, 33 of Lamorte’s clients transferred their claim files to WNG. Lamorte sued the defendants, alleging that Walters had violated his employment agreement, that the defendants had violated their duty of loyalty, and that the defendants had misappropriated confidential and proprietary information. The trial court granted summary judgment in favor of Lamorte. The appellate division affirmed the judgment as to Walters’s breach of his employment contract, but reversed the judgment as to Lamorte’s tort claims. The Supreme Court of New Jersey granted certiorari.