Clark Hill’s Richard Scharlat Secures Anti-Suit Injunction for Insurance Client

New York Labor and Employment Member Richard Scharlat obtained an “anti-suit” injunction on Nov. 8 from the New York Supreme Court on behalf of Creative Insurance Group LLC (“Creative”) and Mordechai Kliger. Based in Lakewood, New Jersey, Creative is an insurance brokerage firm owned and operated by Kliger, a premier insurance broker who was formerly the top Associate Producer for Brooklyn, New York-based Fairmont Insurance Brokers, LLC.

“Obtaining this specialized sort of injunction is particularly satisfying because it resulted from formulating and executing a strategy that eliminated burdensome litigation costs for our clients,” Scharlat said.

Kliger worked for Fairmont for nearly two decades before he was terminated without cause in February 2023. After the sudden termination of his employment for unspecified reasons, a dispute arose between the parties under Kliger’s Associate Producer Agreement as to, among other issues, the terms of Kliger’s post-termination compensation and his ability to access critical information about, and maintain, his “book of business,” namely pre-termination clients with whom Kliger had built long-standing relationships during his tenure at Fairmont.

Kliger filed suit in New York Supreme Court, Kings County, in February 2023, and simultaneously obtained a temporary restraining order restoring Kliger’s “full and complete access to information relating to Plaintiff’s insurance clients stored electronically on the Agency Management System (AMS) maintained by Defendant.” Fairmont subsequently filed counterclaims against Kliger in April 2023. Also in April 2023, the parties entered into a Stipulation, ultimately “so-ordered” by the New York Court in July 2023, that governed the parties’ conduct in connection with pre-termination clients pendente lite.

After the parties’ respective filing of amended pleadings, engaging in significant motion practice related to access to AMS and client communications, and undertaking extensive discovery over the following year and a half, Fairmont attempted to “unwind” the Stipulation in an effort to prevent Kliger’s continued access to AMS for the purpose of servicing pre-termination clients. On Aug. 16, following Fairmont’s second failed attempt to obtain relief from the Stipulation, after the New York Court’s quashing of subpoenas to certain third-party insurance brokers, and six days before Kliger’s deposition in the New York case, Fairmont filed a complaint in the New Jersey Superior Court alleging eight causes of action against Creative, a Creative employee, and the third-party insurance brokers from whom Fairmont was denied discovery in the New York case.

Faced with the prospect of expensive and time-consuming duplicative litigation from overlapping causes of action arising out of the same facts and circumstances as the New York Action, Clark Hill filed for an anti-suit injunction, by way of an order to show cause with temporary restraints, to prevent Fairmont from litigating the New Jersey case until the resolution of the New York case. After the New York Court granted the Order to Show Cause and heard extensive oral argument on Nov. 7, the Court issued the anti-suit injunction.

The injunction enjoins Fairmont from prosecuting the lawsuit it filed in New Jersey Superior Court against Creative. Finding that the injunction was warranted under the particular facts presented, the New York Court determined that “although the defendants in the New Jersey Action differ, the dispute arises out of the same nucleus of facts as the instant New York action, namely Kliger’s conduct post-termination and the Associate Producer Agreement.” The New York Court further grounded the issuance of the injunction on “the reasons provided in his Kliger’s memorandum of law,” and specifically cited Franco & Sons v. G Studios, which provides that a court acts within its discretion to issue an anti-suit injunction “in the interest of preventing duplicative litigation that might lead to conflicting results, and to prevent the waste of judicial resources and unnecessary legal expenses….”

Scharlat was assisted on this complex application for the anti-suit injunction by co-counsel Allen Schwartz, Esq. of Schwartz Law PLLC.