CrossCountry to settle poaching claim with rival lender

CrossCountry Mortgage says it's reached a settlement in principle in a breach of contract and trade secrets lawsuit involving a former loan officer and rival lender. 

Attorneys for American Mortgage Network, CCM and the LO said in a filing last week they're working to dismiss the case by the end of the year. Amnet brought the complaint against its larger competitor in January 2023 and accused CCM of racketeering, claims a judge later dismissed.

Other counts, including unfair competition, were pending in the federal civil lawsuit. Terms of the settlement were not disclosed. Both lenders declined to comment Monday, while counsel for the parties didn't respond to requests for comment. 

The case is one of several complaints surrounding raiding and theft of trade secrets lodged against the Cleveland-based company, one of the industry's largest nonbank lenders. CCM settled a similar suit with Caliber Home Loans and saw another from Guild Mortgage tossed by a judge. Two lawsuits from Loandepot remain pending. 

Chula Vista, California-based Amnet initially sued CCM in Georgia and named two former employees, including a manager who was later dismissed, from the claims. The lawsuit was unlike other poaching cases in invoking claims under the Racketeer Influenced and Corrupt Organizations Act, which is more frequently applied toward organized crime. 

The suit focused on CrossCountry's purported "transition desk," where staff helped attract rival LOs to the company and divert their loans.  Amnet accused the former senior LO and branch manager, Spencer Thomas, of diverting 15 mortgages to CrossCountry worth approximately $7 million in violation of his employment agreements. 

U.S. District Judge Richard Story dismissed among other counts the four RICO claims last December, and said Amnet didn't offer supporting evidence regarding the transition desk. 

The lawsuit this year was moved to a California federal court, where Thomas had raised a counterclaim accusing Amnet of using an unlawful noncompetition ban. The ex-employee, who worked for Amnet between 2019 and 2022, also sued his ex-employer for wage claims in a California state court. Thomas has since departed CCM. 

The pending settlement comes after the two sides undertook discovery and ahead of scheduled depositions. Amnet says it had produced over 151,000 documents and nearly 1 million pages in response to CrossCountry's requests. 

Amnet this summer was also accused of not paying its former counsel, amassing bills totaling over $206,000 since 2023. A judge granted requests by two law firms to withdraw from the case. It's unclear if the lender paid its alleged debt. Last week's settlement notice was signed by the attorney Amnet retained after its former counsel departed. 

A former attorney for Amnet didn't respond to a request for comment Monday. 

Amnet has 12 sponsored LOs and eight branches in nine states, according to Nationwide Multistate Licensing System records. CrossCountry meanwhile is the nation's top retail lender by volume, according to Scotsman's Guide, and has over 4,200 sponsored LOs across 710 branches according to NMLS records.