The judge also found the non-compete and non-solicitation provisions enforceable but trimmed their geographic and temporal scope. He limited the non-compete to 16 counties in Pennsylvania -specifically those within 75 miles of Harrisburg, where Mr. Fratelli had originated loans – rejecting Union Home’s attempt to apply the restriction to parts of Florida. Similarly, the non-solicitation clause was narrowed to apply only to actual Union Home customers, not prospective clients.
While Judge Fleming acknowledged that Mr. Fratelli had played a role in facilitating his assistant’s move to EMM, he declined to issue an injunction related to the non-solicitation of employees, citing a lack of evidence of ongoing or imminent harm.
The court extended the duration of the restrictions by one year, citing Mr. Fratelli’s violations, but required Union Home to post a $100,000 bond to offset potential financial harm to Mr. Fratelli.
The ruling highlights the increasing reliance of financial firms on restrictive covenants to protect client relationships and proprietary data amid intensifying competition. But it also reflects courts’ growing tendency to scrutinize such agreements for fairness and proportionality.
Union Home’s partial victory comes as the mortgage lender, headquartered in Strongsville, Ohio, faces broader challenges in retaining talent in a competitive market. It is also suing nine East-coast ex-employees who joined American Pacific Mortgage.
