Guild Mortgage is getting another chance to sue CrossCountry Mortgage for allegedly raiding its Seattle-area branch.

A California appellate court last month revived Guild's years-old case against the rival, after a lower court dismissed the initial claims. The lender accuses CrossCountry of working with one of its branch managers to divert customers and spark a mass exodus from a Kirkland, Washington branch in 2021.

The Mortgage Scoop first reported the appellate court ruling. 

The legal battle includes a separate dispute between Guild and three of its former employees it blamed for the scheme. Although an arbitrator determined in 2023 that those three defendants owed Guild a combined $9.8 million, the sides agreed last December to dismiss a federal lawsuit seeking to enforce the award.

It's unknown whether the ex-workers reached a settlement with Guild, and an attorney for the trio declined to comment Monday. Only CrossCountry is named as a defendant in the California-based poaching case. 

Guild sued CrossCountry in October 2021, in one of many poaching complaints against the large retail lender during the refinance boom. A judge granted CrossCountry's motion to dismiss the federal complaint in early 2023, but Guild continued the fight in its hometown San Diego Superior Court. 

CrossCountry now appears on the defense again, after wrapping up some of its older poaching and theft of trade secrets cases with competitors in recent years. A spokesperson for the lender didn't return a request for comment. 

Attorneys for Guild in the appeal lauded the judge's May 27 opinion as a precedent-setting victory, in reversing the lower court's findings. Three appellate justices ruled that Guild's trade secrets claims did not preempt its other interference claims. In weighing the alleged bad behavior, the court also ruled that the lender's employees owed fiduciary duties to the company, 

Case history

According to case filings, the subterfuge began in January 2020, as CrossCountry conspired with Guild's Kirkland branch employees to solicit colleagues and divert loan pipelines over an 18-month stretch. Guild accuses the co-conspirators of stealing information including prospective borrowers and compensation information. 

The federal complaint began to fizzle out in late 2022, as a magistrate judge recommended to grant CrossCountry's motion to dismiss. 

Guild meanwhile commenced arbitration proceedings against branch manager Christopher Flowers, loan officer Cory Flynn, and branch operations manager Lisa Joliffe for violating their various employment agreements. 

An arbitrator dismissed a counterclaim by Flowers and in September 2023 ruled in Guild's favor.  The arbitrator ruled that Guild was entitled to a $7.4 million award from the former employees for lost profits, and an additional $2.4 million in attorneys' fees. The defendants didn't pay, prompting Guild's federal suit to enforce the award that was dismissed last year. 

None of the individual employees sued returned requests for comment Monday. 

One of the nation's largest lenders, CrossCountry has been involved in numerous lawsuits, and has been particularly litigious against its own former employees. Since its 2021 complaint, the formerly publicly traded Guild went private, in a deal with servicer Bayview Asset Management.