For the second time this year, Prospect Mortgage LLC has lost a lawsuit it filed alleging that former employees violated non-solicitation agreements.
The first case was filed against Stearns Lending Inc. alleging that Stearns committed an act of unfair competition and economic interference when it recruited 17 Prospect Mortgage employees.
Following a five-week trial, the jury in that case reached a verdict in favor of Santa Ana, Calif.–based Stearns Lending.
On Wednesday, a news release indicated that Prospect had dropped its lawsuit against American Financial Network Inc.
In addition to Chino Hills, Calif.-based American Financial, former Prospect employees David Shumard, John Telesco, Jerry Shumard and Michelle Belmonte were named as defendants.
Prospect had been seeking $20 million in damages.
According to the statement from American Financial, Prospect dismissed the lawsuit because it “simply had no credible evidence to support its claims.”
At issue was the solicitation of former Prospect employees by the defendants.
A jury instruction in the Stearns case stated, “Under California law, a person can always legally receive and consider job applications and inquiries from his former coworkers, regardless of any contract or circumstance restricting him or her from recruiting or soliciting his former coworkers.”
Cross complaints were also dismissed by the defendants.
“It’s disappointing when any company initiates needless litigation, especially when the company is within our LendersOne community,” American Financial Network President John Sherman said in the news release. “Responsible leaders should always attempt to reach an amicable resolution outside of court.”
