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Southwest Risk founder in dispute over rival set up

Southwest Risk's founder and former CEO Bryan Wilburn has been accused of conspiring with fellow executives to start a competitor company.

Wilburn was sued for allegedly poaching two producing brokers from the firm as well as soliciting clients, according to a lawsuit filed by US wholesale broker ClearView Risk Holdings and its main subsidiary Southwest Risk.

Wilburn is understood to be strongly denying the allegations.

The 21 May court filing from the Dallas County district court in Texas said Wilburn was accused of violations of fiduciary duty as a company director and breach of contract.

He allegedly collaborated with former Southwest Risk executive David Barrett to "commit these and other unlawful acts".

The counts again him include devising a "clandestine plan" to compete with the plaintiffs while still a ClearView director and "initially retaining, converting and stealing" a company laptop containing confidential information about his former employer.

"Wilburn has taken improper advantage of his knowledge and position as a director by which he was privy to Southwest's confidential information, clients and customers, and its business," the plaintiffs claimed.

Barrett, meanwhile, is accused of violating non-compete and non-solicitation agreements he had with his employer, Southwest.

As well as unspecified damages and costs, the plaintiffs are demanding the return of the property and confidential information held by the defendants. Southwest also demanded that they "specifically perform their various contractual obligations".

Wilburn stepped down as CEO last July when he was replaced by Parker Rush, the former CEO of The Republic Group.

Wilburn stayed on as a consultant and ClearView board director as the company looked to make changes at the top after GCP Capital Partners bought a controlling interest in the firm from former 100 percent owner Houston International Insurance Group.

Wilburn was CEO of the broker at the time of its dealings with Chubb, Allied World and others which have since spawned legal disputes over understated historical claims records on loss-making portfolios of US apartment complex risks.

The lawsuit states that Wilburn began negotiating with Southwest in Q1 2013 to terminate his "highly compensated" consulting agreement with the broker.

The executive "stretched out these negotiations for months" before the parties signed a separation contract on 1 April 2013.

During the negotiations Wilburn remained a ClearView director with fiduciary duties that included disclosure of material information to his principal, acting with "absolute loyalty to and in the best interests of his principal", and acting in good faith and fair dealing with respect to his principal.

However, the plaintiffs alleged that instead Wilburn had a "secret plan" to compete with his former employer "and conceal his true intentions in violation of his fiduciary duties".

It is also claimed that he induced David Barrett and his brother Daniel to leave Southwest, convincing the former to breach his employment contract with the broker that Wilburn himself had negotiated the terms of when he was CEO.

The Barretts resigned their positions as vice presidents at Southwest on 4 April 2013 - just days after Wilburn signed his separation contract.

The brokers "specifically denied" they would be working in a competing business with Wilburn, and were reminded on several occasions following their departure of their ongoing non-compete and non-solicitation obligations.

In a 17 April letter they were also notified by Southwest of a "no call list" of clients that they were prohibited from contacting.

The action said that Wilburn laid the groundwork for his plan as far back as 29 August 2012, when he authorised the formation of a new Texas entity, Risk Theory.

A second entity, Risk Transfer, was formed on 5 April, with both companies identifying Wilburn as initial manager and registered agent.

The lawsuit also alleged that Wilburn convinced the Barretts to join him at one or more of the new Texas entities - a conspiracy it said was confirmed by the former Southwest Risk CEO's legal counsel in a letter claiming that the hiring was not in violation of his agreements with ClearView.

The filing highlights the scope of non-compete and non-solicitation provisions in each of the Barretts' employment contracts with Southwest.

It also alleged that Risk Transfer - "created by Wilburn and operated jointly with at least David Barrett" - had unsuccessfully attempted to solicit at least one other Southwest employee in breach of non-solicitation provisions.

It also said that plaintiffs have learned that David Barrett, supported by Wilburn, has "aggressively" contacted Southwest clients in Texas and Louisiana to solicit their insurance business.

David Barrett has "openly wined and dined" Southwest clients, the suit claimed, including at an insurance industry event involving a crawfish boil in Lafayette, Louisiana, between 24 and 26 April 2013.

He is "actively, unlawfully, and audaciously instructing insurance agencies placing policies for Southwest's clients to alter their records in 12 months' time to remove Southwest as the broker of record," the filing claimed.

It also added that Southwest is continuing to pay the Barrett brothers severance under their termination agreements on condition they will not compete with the plaintiff parties.

Daniel Barrett is not named as a defendant in the lawsuit.

The Barretts are both casualty brokers and their business does not overlap with the apartment complex property portfolios that have led to a number of lawsuits and arbitrations in recent years.

As previously reported, Allied World settled its dispute with Southwest earlier this year - as well as a spin-off legal action involving its reinsurer Hannover Re.

Chubb is thought to remain in arbitration with Southwest, although a resolution of that process is being sought, given new ClearView CEO Rush's connections with the US insurance giant as a former senior executive.

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