UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

HCC Specialty Underwriters, Inc.

v. Civil No. 16-cv-501-LM Opinion No.

John Woodbury et al.

O R D E R

Defendant John Woodbury worked for plaintiff HCC Specialty

Underwriters, Inc. (“HCC”), a provider of specialized insurance

products for the sports and entertainment industries, until June

2016, when he resigned from HCC and immediately joined its

competitor, Buttine Underwriters Agency, LLC, d/b/a Prize and

Promotion Insurance Services (“PPI”). HCC brings this suit,

alleging that it had a non-competition agreement with Woodbury,

of which PPI is aware, and that defendants’ conduct in the face

of that agreement gives rise to several contract and tort

claims. Defendants move to dismiss the complaint, arguing that

the non-competition agreement is unenforceable and, therefore,

HCC fails to allege a plausible claim for relief. HCC objects.

Standard of Review

Under Rule 12(b)(6), the court must accept the factual

allegations in the complaint as true, construe reasonable inferences in the plaintiff’s favor, and “determine whether the

factual allegations in the plaintiff’s complaint set forth a

plausible claim upon which relief may be granted.” Foley v.

Wells Fargo Bank, N.A.,

(1st Cir. 2014)

(citation omitted). A claim is facially plausible “when the

plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal,

(2009).

Ordinarily, the court considers only the well-pleaded facts

in the complaint to decide a motion to dismiss under Rule

12(b)(6). Watterson v. Page,

(1st Cir. 1993). In

addition, however, the court may consider “facts extractable

from documentation annexed to or incorporated by reference in

the complaint and matters susceptible to judicial notice.”

Rederford v. U.S. Airways, Inc.,

(1st Cir. 2009)

(internal quotation marks omitted). The court may also consider

matters of public record and documents whose authenticity is not

disputed. Global Tower Assets, LLC v. Town of Rome,

(1st Cir. 2016).

Background

The complaint asserts the following facts. In 1996, John

Woodbury and HCC’s predecessor, American Specialty Underwriters,

2 Inc. (“American”) entered into an “Employment, Incentive

Compensation, Confidentiality and Non-Competition Agreement”

(the “Agreement”). Woodbury agreed that he would not disclose

any of his employer’s confidential information and would not use

any confidential information on behalf of any future employer.

Woodbury also agreed that during the term of his employment, and

for a period of two years following termination of his

employment, he would not divert or attempt to divert business

from his employer, would not interfere in any material respect

with his employer’s business relationships, and would not

provide services to or have any interest in a person whose

activities would violate the non-competition provisions of the

Agreement.

Woodbury worked for American or its successors, including

HCC, for the next 20 years. In June 2016, Woodbury resigned

from HCC, and shortly thereafter, joined PPI. Since his

departure, both Woodbury and PPI have engaged in activities that

violate the terms of the Agreement, including attempting to

divert business from HCC, interfering with HCC’s business

relationships, and setting up competing facilities. Woodbury

also accessed several confidential HCC documents prior to and

after his resignation.

3 Discussion

HCC brings this suit, alleging claims arising out of the

Agreement and its confidentiality and non-competition

provisions. Specifically, HCC asserts claims for (1) Specific

Performance (Count I); (2) Breach of Contract against Woodbury

(Count II); (3) Tortious Interference with a Contract against

PPI (Count III); (4) Declaratory Judgment (Count IV); and (5)

Violation of the New Hampshire Consumer Protection Act (“CPA”),

N.H. Rev. Stat. Ann. (“RSA”) Ch. 358-A (Count V). HCC also

seeks attorneys’ fees.

Defendants move to dismiss all five counts of the

complaint, asserting that the Agreement is unenforceable. They

also assert that even if the Agreement is enforceable, the CPA

claim (Count V) fails because employment disputes are private in

nature and are not, therefore, within the CPA’s scope.

I. Enforceability of the Agreement

Defendants contend that Woodbury’s Agreement was made with

American, not with HCC, and that HCC is merely an assignee of

the Agreement. Defendants assert that as an assignee, HCC

cannot enforce the non-competition and confidentiality

obligations in the Agreement.

The problem with defendants’ argument is two-fold. First,

it is far from clear that HCC is an assignee of the Agreement,

4 as opposed to merely American’s legal successor. The documents

which were attached to the parties’ filings show changes of name

in the corporate entities and a merger in 2005 but lack any

indication of an assignment of the Agreement from another entity

to HCC.1 A company that becomes the legal successor to another

company by merger is entitled to enforce employment agreements,

including non-competition obligations, that are transferred with

the merger. NetScout Sys., Inc. v. Hohenstein, 1784CV00373BLS2,

, at *2 (Mass. App. Ct. Feb. 23, 2017).

Second, even if defendants had shown that HCC was an

assignee of the Agreement, they have not shown that this fact

makes the Agreement unenforceable. In support of their argument

that an assignee lacks authority to enforce confidentiality and

non-compete provisions in an employment agreement, defendants

rely on a decision of the Massachusetts Superior Court that

denied a motion for a preliminary injunction to enforce a non-

1 Both parties rely on documents extrinsic to the complaint to show HCC’s corporate history. Those documents may be considered here without converting the motion to one for summary judgment because the documents are apparently in the public record, none of the parties objects to the evidence provided by the other, and both had the opportunity to support their presentation of corporate structure. If, however, the issue of enforceability of the Agreement, based on corporate history, were to persist beyond this order, it must be addressed in the evidentiary context of summary judgment.

5 competition agreement.2 Securitas Security Servs. USA, Inc. v.

Jenkins, No. 032950BLS,

(Mass. App. Ct. July

18, 2003). The Securitas court noted “some considerable

confusion in the record before the Court regarding the corporate

interplay” between defendant’s original employer and the entity

seeking to enforce the non-competition obligation. Id. at *1.

The court concluded that plaintiff had not carried its burden of

showing a likelihood of success on the merits because defendant

contracted with his original employer and that employer could

not assign the employment agreement to a subsequent entity that

was “a stranger to the original undertaking.” Id. at *5.

The Supreme Judicial Court of Massachusetts has not

addressed the question of whether non-competition obligations in

employment contracts may be assigned to and enforced by a

subsequent employer. Defendants cite Securitas as standing for

the principal that under Massachusetts law, non-competition

obligations in employment contracts are unassignable. No such

principal exists under Massachusetts law. Indeed, one year

after the Securitas decision, a different Massachusetts Superior

Court denied an employer’s request for a preliminary injunction

because of the lack of governing authority on this precise

2 The parties apparently agree that Massachusetts law applies to the Agreement.

6 issue. See Chiswick, Inc. v. Constas, No. 200400311,

, at *2 (Mass. App. Ct. June 17, 2004). The court in

Chiswick also noted the split of authority on the issue in other

courts.

Therefore, even if HCC were the assignee,

defendants have not shown that relevant provisions in the

Agreement are legally unenforceable.

Accordingly, for the purposes of the motion to dismiss,

defendants have not shown that the non-competition and

confidentiality provisions of the Agreement are unenforceable

against Woodbury by HCC. Therefore, defendants are not entitled

to dismissal of the complaint on that basis.

II. New Hampshire Consumer Protection Act Claim

Defendants also argue that the CPA claim fails because the

CPA does not cover private transactions or disputes between

employers and employees and because their actions were “nothing

more than normal competition.” To determine whether a

transaction is personal and therefore not part of trade or

commerce covered by the CPA, the court must “‘analyze the

activity involved, the nature of the transaction, and the

parties.’” Rowe v. Condodemetraky, No. 2016-0292,

, at *2 (N.H. Feb. 15, 2017) (quoting Ellis v. Candia

Trailers & Snow Equip.,

(2012)). “The New

Hampshire Supreme Court has not decided whether the Consumer

7 Protection Act applies to employment disputes” although

allegations of a mere breach of a contract do not state a claim

under the CPA. Campbell v. CGM, LLC, No. 15-cv-088-JD,

, at *12 (D.N.H. Jan. 9, 2017) (citing Romano v. Site

Acquisitions, Inc., No. 15-cv-384-AJ,

, at *3

(D.N.H. Jan. 4, 2016)). To the extent the factual circumstances

indicate that Woodbury never intended to honor the non-

competition provisions in the Agreement or made

misrepresentations “in an ongoing effort to avoid performing

under the” Agreement, HCC’s CPA claim against Woodbury may be

viable.

Therefore, the court cannot determine at this

early stage whether the employment relationship between HCC and

Woodbury would come within the scope of the CPA and whether

Woodbury’s conduct amounts to something more than a mere breach

of the Agreement.

PPI, of course, did not have an employment relationship

with HCC. Instead, PPI is a competitor of HCC. HCC alleges

that PPI and Woodbury violated the CPA by “improperly targeting

HCC Specialty clients, improperly interfering with HCC

Specialty’s business relationships, and improperly interfering

with HCC Specialty’s good will with its clients and industry

partners.” Depending on the nature of those actions and the

“rascality” involved, the allegations with inferences taken in

8 favor of HCC, are enough to avoid dismissal at this early stage

of the litigation. See Barrows v. Boles,

(1996).

Conclusion

For the foregoing reasons, defendants’ motion to dismiss

(document no. 11) is denied.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

June 1, 2017

cc: Nicholas F. Casolaro, Esq. Thomas E. Ganucheau, Esq. Russell F. Hilliard, Esq. Susan Aileen Lowry, Esq. Jennifer L. Parent, Esq. Joel T. Towner, Esq.

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