Southern Trust Mortgage is suing one of its former loan officers and her current employer, Movement Mortgage, for pocketing customers and a massive amount of data prior to leaving.
Southern Trust accuses Grace White, currently an LO at Movement, of flouting her noncompete agreement and stealing company trade secrets. Movement, also included as a defendant in the suit, is being accused of aiding and abetting the breach of White's fiduciary duty for its own benefit.
Per the complaint, White, who worked at Southern Trust from 2022 to 2024, copied 5,109 files containing confidential documents, including customer leads, onto a thumb drive before leaving for Movement Mortgage on Oct. 16, 2024. In addition to the USB drive, Southern Trust's investigation found that White encouraged her borrowers to switch to Movement before her departure.
"White actively solicited at least seven Southern Trust prospects and/or customers to apply for loans at her new employer, Movement, while she was still employed by, and accepting a salary from, Southern Trust," litigation said. "Brazenly, White sent these emails from her Southern Trust email address while she was still working at Southern Trust."
Neither company responded to a request for comment at the time of publication Tuesday.
Southern Trust, a Virginia-based lender, outlines in its complaint that when White began her employment in 2022, she was trained through the company's mentoring program, which contributed to her success. From her start date to her last day, she closed 76 loans totaling $13.2 million in volume.
In exchange for the mentorship, White signed a non-compete agreement with Southern Trust, which prohibited her from working for a competitor within a 25-mile radius of the company's offices for one year if she resigned.
As fate would have it, White went to work at a Movement office less than five miles away from her previous employer, thereby breaching the agreement, the suit says.
Additionally, White allegedly took thousands of documents with her, including confidential documents on loan programs, training materials, marketing materials, loan product offerings, appraisals, custom forms, Southern Trust's income calculator for self-employed borrowers, and the LO's customer leads.
"White's misconduct has injured Southern Trust. Having already lost business as a result of defendants' actions and faced with greater injuries, Southern Trust is now forced to seek appropriate monetary damages against her," the company wrote in its complaint.
Movement Mortgage itself is facing heat from Southern Trust because it "aided and abetted White's breach of fiduciary duty by participating in the diversion of Southern Trust's customers for the use and benefit of Movement," litigation said. An email attached to the complaint shows White urging her customers to work with Reggie Register, a branch manager at Movement, prior to her departure.
Southern Trust is seeking compensatory damages in an amount to be determined at trial, it said in its complaint filed in Virginia federal court Nov. 4.
The mortgage lender is licensed to originate in 11 states and the District of Columbia. It has a little less than 100 sponsored loan officers, according to the Nationwide Multistate Licensing System.
Noncompete agreements, though not as common as non-solicitation agreements, are used by mortgage lenders as a way to "protect an investment" especially if the originator received a sign-on bonus,
Earlier this year, the Federal Trade Commission tried to ban noncompete agreements, which are said to impact around 30 million of the nation's workforce. However, a federal judge in Texas halted the FTCs
Legal experts say that while the
"For now, the FTC noncompete ban remains blocked, but the battle is far from over," wrote Troy Garris, co-managing partner at law firm Garris Horn, in a blog in October. "With the Fifth Circuit set to weigh in, and the potential for this issue to reach the Supreme Court, employers should stay vigilant."
