A former top executive at Summit Funding has sued the lender, claiming he was wrongfully terminated after confronting the company’s leadership about allegedly illegal business practices involving its founder and president, Todd Scrima.
Ex-chief growth officer Brian Mitchell accuses Summit and Scrima of gaining illegal access to confidential information from its competitor Movement Mortgage to poach their employees and take their businesses, according to the lawsuit filed on Feb. 7 in the Superior Court of California in the County of Sacramento.
A representative at Summit did not immediately respond to a request for comments.
In an emailed response to HousingWire, Mitchell said he was terminated after telling Scrima and other executives that recruiting from Movement and using certain proprietary and confidential information from the competitor was “illegal from a civil litigation standpoint.”
“When I first learned of this illegal activity and notified Summit of the same, I asked Summit for us to consider separating and providing me a severance. Instead, Summit terminated me,” Mitchell added.
The lawsuit follows a legal battle that started after three of Movement’s veteran sales executives—Deran Pennington, Matt Schoolfield, and Chris Shelton — left for Summit in July 2023.
In November, Movement sued Summit and its former sales executives for poaching, claiming about 50 employees followed Pennington, Schoolfield and Shelton. In December, the lender sued Scrima for corporate espionage – In this lawsuit, Movement had Mitchell’s collaboration as he provided details about the alleged poaching scheme.
Mitchell began working for Summit in December 2022 as chief growth officer and, after negotiating some details, signed an employment offer letter in March 2023. The document established his relationship with the lender, which included recruiting personnel and responding directly to Scrima.
However, Mitchell claims in the lawsuit that Summit and Scrima “illicitly motivated” him to recruit its competitor’s employees at Movement.
In an email to HousingWire, Mitchell said that Movement was the focus because Summit had the collaboration of the competitor’s former employees who transitioned to the company, despite knowing that they had covenants in their employment agreements that prohibited them from soliciting Movement personnel.
“I told Scrima and other Summit executives that this practice was wrong and would result in the company being sued,” Mitchell added.
In the lawsuit, Mitchell claims that he emailed Summit’s in-house legal counsel, Scott Bruggemann, on June 2, listing potential allegations Movement would have against the company. But his concerns were disregarded, he said.
On one occasion, Mitchell alleges that Scrima received a spreadsheet containing all of Movement’s strategies, operation procedures, and customers, thus instructing him via email on June 7 to “dissect” all the information to replicate. According to Mitchell, Summit’s goal was to capture Movement’s business or the entire company.
According to the lawsuit, the spreadsheet contained information regarding 4,500 employees and 9,000 borrowers.
The document states, “At all times, Plaintiff failed and refused to ‘dissect’ the illegally acquired confidential and proprietary data belonging to Movement Mortgage.”
In November, following the lawsuit filed by Movement, Mitchell claims he emailed Summit and Scrima stating that “he would no longer be able to continue working” for the company and “requested that the parties discuss a severance package upon his departure.”
Per the lawsuit, Scrima responded that the company and himself were legally compliant and rejected his proposal to discuss a three-month severance.
Mitchel claims he was “locked out of his email without notice and terminated” on November 20 because he “failed to perform the illegal activity requested” and “reported the illegal activity that was demanded of him.”
The lawsuit brings 11 counts, including retaliation, hostile work environment, wrongful termination, and unlawful business practices. It follows a right-to-sue letter from California’s Department of Fair Employment and Housing in December.
According to Mitchell, he faced a similar situation at his prior employer, Sun West Mortgage, where “he was instructed to illegally misappropriate a competitor’s wrongly acquired confidential information and trade secrets, resulting in litigation and significant emotional and mental toll on him,” according to the lawsuit.
A representative at Sun West did not immediately respond to a request for comments.
The Sun West lawsuit is in the discovery phase. A trial is set for October 2024.
