A dispute between two veteran west Alabama insurance agents has made it all the way to the state Supreme Court after three years of civil litigation, suggestions of criminal activity and claims of sexual harassment, assault and improper business practices.
The claims and counterclaims regarding Gilbertown insurance agency owner Wayne Taylor, in the insurance business for 45 years, and his former top producer, Lynne Ernest, include charges that Ernest and others slipped into the office one night and copied client files, then poached those clients out from under Taylor’s Insurance Express agency.
“That’s a heck of a way to start a business, when you steal files and get clients to sign agent-of-record letters,” Taylor said last week.
Ernest, who set up her own agency in the coastal community of Foley, Alabama, has charged that Taylor had diverted premiums and improperly used agency funds for personal expenses. He also allegedly subjected the women at his office to unwanted sexual gestures, verbal assaults and the sound of pornography “emanating from Taylor’s office computer when he was occasionally in the office,” Ernest’s counterclaim contends.
In the latest legal development, Ernest’s attorney, James Pittman, of Daphne, Alabama, feared that Taylor was pressing for criminal charges against Ernest, which would complicate the civil suit proceedings. The trial court agreed to put the civil suit on hold. But in a rare request for a writ of mandamus, Taylor’s attorneys asked the state Supreme Court to overrule the circuit court and let the civil suit proceed. The pleading essentially put Taylor in the awkward position of discounting his own, previous assertions that Ernest was about to be prosecuted.
The high court found that the criminal investigations had never materialized. The state Department of Insurance “did not identify any instances of actionable insurance fraud, or clear violations of the Alabama Insurance Code, which would provide a sufficient basis for initiating an administrative action against [Lynne Ernest],” the justices explained, quoting a letter from DOI.
“The defendants did not establish that a stay was warranted in the underlying action. Thus, the trial court exceeded its discretion in granting a stay,” Justice Greg Shaw wrote for the Supreme Court.
The civil suit and counterclaim can now move forward. More depositions are scheduled for the coming weeks.
On one level, the Alabama case is not unlike other lawsuits and investigations around the country in recent years. Poaching accusations and measures to prevent poaching, in fact, appear to be on the rise in the insurance industry. In Pennsylvania, for example, the state Supreme Court in July upheld a $2.8 million jury verdict against an agency that tried to poach a competitor’s staff and book of business. The New York attorney general this week secured $13.75 million in a settlement with a title insurer over illegal no-poach agreements.
Multiple brokers around the country this year have filed poaching lawsuits, including one this month in Virginia, by Willis Towers Watson, accusing Alliant Insurance Services of luring employees away.
The Alabama case shows that these expensive disputes can reach small towns, putting business practices and dirty laundry in a statewide spotlight. It also shows how important employment contracts and non-compete agreements can be, even for longtime producers in an agency where things seem cozy – until they’re not.
The trouble in the Insurance Express matter began brewing several years ago, the Alabama high court explained. As small towns go, Gilbertown is one of the smallest. It’s about 10 miles from the Mississippi line, with a population of just 727. But Wayne Taylor was known around the region. He has owned Insurance Express there for about 20 years and ran another agency for two decades before that, serving much of western Alabama.
Ernest joined Insurance Express in 2002, helping to rescue what her counterclaim calls “a struggling agency.”
She quickly became the agency’s top producer, greatly expanding its commercial lines clients, the court papers and her lawyer said. At the same time, Taylor became something of an absentee owner, leaving management of the agency to Ernest, she contends. He promised her a large stake in ownership, but never recorded that intent with probate court or the Secretary of State’s office.
Ernest said she warned Taylor that using agency funds for personal expenses, sometimes as a way to reduce the agency’s income tax obligation, was asking for trouble. When she told the agency’s accountant about the practices, the accountant told Taylor he could no longer claim personal items as business expenses. He allegedly fired the accountant and hired another, the counterclaim reads.
Things may have hit bottom at the agency in 2015, when Ernest began dating someone, her suit maintains. That’s when Taylor’s inappropriate behavior intensified, the counterclaim notes.
Soon after, Ernest felt she had to get out, her lawyer said, and she decided to start her own agency in the bustling city of Foley.
Taylor alleges that Ernest took her own inappropriate actions in poaching clients. One night in 2019, Ernest and another employee returned to the Gilbertown office after hours and worked until 11 p.m., making electronic copies of Insurance Express client files, renewal notices and more, then attempted to delete the original information from the agency’s computer system, Taylor’s complaint claims. Ernest also induced Insurance Express clients to sign agent-of-record letters, transferring their policies to the Lynne Ernest Insurance agency. On at least one occasion, she made the transfer without the client’s knowledge, Taylor’s suit alleges.
Before she left the agency, Ernest took another step: She intentionally sabotaged Insurance Express by failing to renew Taylor’s license, a duty she had fulfilled repeatedly during her employment at the agency, the complaint reads. Ernest also breached her fiduciary duty to Insurance Express, violated trade-secrets statutes, converted agency assets to her own benefit, and interfered with the agency’s business relationships.
After the alleged actions came to light, Taylor filed suit in 2020, asking a court to bar Ernest and her new agency from contacting past or current clients of Insurance Express, to require Ernest to return agency records, and to reward financial damages.
Ernest’s counterclaim also asks the circuit court to award damages, including punitive damages, and wants the judge to enjoin Taylor from communicating about Ernest, to determine her ownership stake in Insurance Express, and then to dissolve the Gilbertown agency and divide the assets.
Taylor said he won’t back down and intends to continue the litigation. “There’s a lot of money missing,” he said.
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