Bass, Berry & Sims attorney Chris Lazarini outlined a court’s decision to uphold a permanent injunction against a broker finding the appellate rules do not allow for an appeal as a matter of right. In this case, a bank sought preliminary and permanent injunctive relief against a former employee (a broker) who solicited bank customers to move their business to him in violation of restrictive covenants in the former employee’s employment agreement.

Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SOLA, please visit the SOLA website to sign up for the newsletter.

DuSablon vs. Jackson County Bank, No. 18A-MI-2259 (Ind. App., 9/23/19)

*Broker’s efforts to appeal a permanent injunction holding him to certain restrictive covenants rejected where the appellate rules do not allow for an interlocutory appeal as a matter of right.

**Broker’s efforts to appeal the prior preliminary injunction, a contempt order, and a judgment awarding attorneys’ fees to the plaintiff also denied.

In February 2018, Jackson County Bank (“JCB”) sued DuSablon seeking preliminary and permanent injunctive relief. According to JCB, DuSablon was a former employee charged with developing investment relationships and selling insurance and financial products to bank customers through JCB’s partnership with INVEST Financial Corporation (through which DuSablon was registered with FINRA). JCB alleged that, when the bank determined to change its investment partner from INVEST to Raymond James, DuSablon resigned, became an associated person of LPL, hired his assistant (also a bank employee), opened a nearby office, and solicited bank customers to move their investment business to him, all in violation of restrictive covenants in his employment agreement. After the trial court denied his motion to dismiss, DuSablon answered and filed counterclaims.

The trial court granted JCB’s request for a preliminary injunction and its motion for expedited discovery. When DuSablon objected and refused to produce documents, the court granted JCB’s motion to compel and, finding DuSablon’s conduct in violation of “the spirit, letter, and requirements of the Indiana Trial Rules,” the court also granted JCB’s motion for attorneys’ fees. The court instructed JCB to file a fee affidavit and gave DuSablon thirty days to contest. DuSablon filed a notice of interlocutory appeal, but did not request a stay of the trial court proceedings. A few months later, the trial court found DuSablon in contempt for having violated the preliminary injunction and converted it into a permanent, one-year injunction. The Court reserved sanctioning DuSablon for a future hearing. Because DuSablon had not contested JCB’s fee affidavit, the court also entered a $5,700 judgment against DuSablon. DuSablon then filed a second notice of appeal, and the trial court stayed further proceedings pending the appeal.

Consolidating the appeals, the Indiana Court of Appeals first considers whether it has jurisdiction. There is no final judgment for appeal because DuSablon’s counterclaims remain pending in the trial court. Jurisdiction is not entirely lacking, however, as the Court notes, under appellate rules, certain interlocutory orders may be appealed as a matter of right. Turning to the issues raised by DuSablon, the Court rejects his attempt to appeal the preliminary injunction; that injunction no longer exists, having been replaced by the permanent injunction.

The Court similarly rejects DuSablon’s attempt to appeal the permanent injunction and contempt order, because the appellate rules do not allow for an appeal as a matter of right from such orders. The Court recognizes DuSablon’s right to appeal the $5,700 judgment, but denies the appeal finding no actual challenge to the merits of the judgment. Instead, it finds DuSablon’s “appeal” is an improper attempt to attack the entirety of the trial court proceedings without regard to the judgment for fees. Finding it has nothing to review, the Court dismisses the appeal.

In the midst of his other delaying and arguably contemptuous conduct before the trial court, DuSablon also mounted an unsuccessful effort to remove the case to federal court. He took the issue to the Seventh Circuit, which affirmed both the district court’s conclusion that no “objectively reasonable” basis for removal existed and its award of sanctions against DuSablon. See SOLA Ref. No. 2019-14-03.