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NovaStar Vs Allied

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NovaStar Vs AlliedAllied accused of using protected confidential info to solicit branches

October 28, 2004


What started out as a friendly business transaction has now turned into an ugly lawsuit between two net branch giants.

NovaStar Home Mortgage Inc. has filed a lawsuit in a Missouri U.S. District Court against Allied Home Mortgage Capital Corp., according to a copy of the complaint.

The Kansas City, Mo., company claims Houston, Texas-based Allied used confidential information to recruit NovaStar branch managers. Allied obtained the information from NovaStar because of a possible business transaction between the two companies, the complaint said, and Allied executed a confidentiality and nondisclosure agreement on Sept. 30, 2004.

Allied allegedly sent one e-mail last week to a NovaStar branch manager. The text of the short message said, “Looking for a New Branch Co.?…let me know…Thank You,” court records indicate. The message was sent from Paul Buske.

However, when the branch manager forwarded the message to a NovaStar executive, he noted in his e-mail message, “I have been harassed by this person on numerous occasions already.”

Another NovaStar branch manager received a message from an Allied recruiter that said, “As you may or may not be aware, Novastar is about to make major changes in the next few weeks. We would like to take this opportunity to introduce you to Allied Home Mortgage Capital Corp. We are the largest Broker / Banker in the U.S. If you are interested in hearing how we work and what we have to offer please call me.”

NovaStar claims the announcement was released without its consent.

The complaint went on to say Allied assigned four people to contact 17 NovaStar branches even though Allied had agreed not to.

Allied President Jim Hodge confirmed in an e-mail that about half of the 17 branches were contacted, according to court records, and “they have (stopped) and are not taking any calls.

“Sorry,” Hodge closed his message with.

NovaStar said Allied’s actions effectively ended the potential business transaction at that point.

A temporary restraining order has been issued against Allied, court records show.

Allied spokesman Ron Litt said the company has no comment at this time.

Sam Garcia has been in mortgage lending since 1980, and is publisher of and


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Coverage of new and existing net branch operations. Programs, payouts and other details. Profiles of brokers and net branch lawsuits.


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