Wells Fargo sues former owner of Dover insurance unit

Wells Fargo Special Risks Inc. says it paid more than $6 million to John G. Gray for his insurance business, employed him and his son Jeffrey for four years, gave him over a year in severance, and then found he violated a number of non-compete clauses by helping his son’s firm go after the very business it thought it had purchased.
And on June 12, the affiliate of Chicago-based Wells Fargo Insurance Services USA Inc. — the fifth-largest insurance brokerage in the world, with $15.5 billion in premiums, 200 offices and 7,000 insurance professionals — filed suit against both Grays as well as Jeffrey Gray’s Dover-based G&A Insurance in U.S. District Court in Concord to enforce its agreement.The complaint alleges the following:John Gray and various related entities sold Richardson-G&A Inc. to the Wells Fargo affiliate in December 2007 for $6.25 million. The agency and brokerage provided insurance and consulting services to large venues, such as ski resorts and ice rinks. A “key component” of the deal was John Gray not to join other ventures and to pay him an unspecified salary and benefits. John Gray managed the Dover office under a three-year contract, but declined afterwards to work at will, instead hammering out a leave agreement through which he would finish up in April 2011 and then go “on leave” with a salary until May 7, 2012.Jeffrey, who also worked for Wells Fargo shortly after the sale, left on Aug. 1 to set up G&A, which was formed to pursue certain commercial and personal insurance accounts, but not specialty accounts, the complaint says.But, Wells Fargo says, it since learned that the Grays have gone after the specialty business, targeted Wells Fargo customers and used confidential information. John Gray even told Wells Fargo that he was entitled to act as a consultant to Wells Fargo customers, according to the complaint.”In doing so, John Gray is encouraging these clients to shop their business with other insurance companies and to negotiate down WFSRI’s commissions,” Wells Fargo claims.According to the complaint, Mark Seiger, Gray’s attorney, took the position that Gray can consult on specialty programs, such as ski areas and ice rinks, as long as the consulting does not concern “loss control services,” according to the complaint.But Seiger, who would not comment on the complaint, released the following statement:”Wells Fargo’s complaint is meritless and shows a complete abuse of the legal system. If Wells Fargo disagrees with our interpretation of a restrictive covenant, they should have picked up the telephone and discussed the situation rather than waste everyone’s time and money.” – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

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