Background
Smart Mortgage Centers, Inc. employed Brian Noe as a mortgage loan officer from 2013 through December 2019 and Eileen Pruitt as a loan officer from 2019 through February 2020. Noe signed retention agreements that barred him for one year after leaving SMC from doing business with any SMC customer, including customers he had generated, and required him to report customer-initiated contacts and obtain SMC’s written consent before taking further action. The agreements also barred him from soliciting, hiring, or inducing any SMC employee or consultant to leave.
After Noe joined competitor Nexa Mortgage, he sent a message announcing his move and inviting former customers to contact him. He later closed loans for 37 people appearing in SMC materials. Pruitt also joined Nexa after contacting Noe about the company. SMC sued Noe, Pruitt, Nexa, and an affiliated processor, alleging breaches of the restrictive covenants and tortious interference. On cross-motions for summary judgment, the Will County circuit court entered judgment for defendants.
The Court’s Holding
The appellate court affirmed. The customer-contact restriction was broader than necessary because it prohibited Noe from doing business with every SMC customer, including people he had never served, and even prohibited passive acceptance of customer-initiated business. SMC showed that Noe had developed customer relationships, but did not provide sufficient evidence to justify a restraint covering all company customers or its treatment of unsolicited contacts.
The employee-contact restriction was likewise unreasonable. It indefinitely barred Noe from recruiting any SMC employee or consultant, without limiting the restriction to competitors, similarly situated employees, or personnel connected to SMC’s competitive interests. The court declined to narrow either provision to cover only the conduct SMC alleged in the lawsuit. Because the covenants were unenforceable, SMC could not establish a valid and enforceable contract for its tortious-interference claim against Nexa.
Key Takeaways
- An employer must justify the full scope of a postemployment restraint, particularly one covering all customers or customer-initiated business.
- An indefinite ban on recruiting any employee or consultant is unenforceable absent support showing that breadth is necessary.
- Courts will not rewrite patently overbroad restrictive covenants into narrower agreements the employer could have drafted.
Why It Matters
The decision underscores that Illinois employers seeking to protect customer relationships and workforce stability must draft restrictions narrowly and support their scope with evidence. A legitimate interest in particular customers or employees does not validate a covenant extending beyond those interests.
This Rule 23 order is nonprecedential except in the limited circumstances allowed by Illinois Supreme Court Rule 23(e)(1), but it illustrates the evidentiary burden employers face when enforcing expansive non-solicitation provisions.