Teachers Insurance & Annuity Association of America v. Simons

Background

Teachers Insurance & Annuity Association of America (TIAA) brought a breach-of-contract action against former employee Melanie Simons under the court’s diversity jurisdiction. Simons had been a Wealth Management Director at TIAA. In 2015, she signed a confidentiality and non-solicitation agreement. When she left TIAA in November 2020, she signed a Voluntary Separation and Release Agreement and received $500,000. That agreement also included confidentiality and non-solicitation covenants lasting 24 months after her departure.

After leaving TIAA, Simons created Reframe Wealth. Three TIAA wealth managers—Mitchell Falter, Jessie Doll, and Thomas Massie—gave notice of their resignations on February 26, 2021, and began working for Reframe Wealth after their resignations became effective. TIAA alleged that Simons may have been involved in their departures, based partly on communications between Simons and two of the former wealth managers shortly after Simons signed the separation agreement. TIAA sought information and documents about those communications under the agreements’ provisions concerning discovery of an actual or threatened breach. Simons’s attorney questioned the request and did not provide the requested information.

Motion to Dismiss

Simons moved to dismiss under Rule 12(b)(6), which tests whether a complaint alleges enough facts to make a legal claim plausible. She argued that TIAA had not sufficiently pleaded a breach of contract and that the non-solicitation covenants were unenforceable because her termination was involuntary.

Under New York law, a breach-of-contract claim requires allegations of an agreement, the plaintiff’s performance, the defendant’s breach, and resulting damages. The court concluded that TIAA’s allegations were plausible: Simons communicated with the former wealth managers only days after signing the separation agreement, and less than two months later they resigned and joined her newly created firm. At the motion-to-dismiss stage, those allegations were sufficient even though they did not yet establish the claim as a matter of fact.

The court also considered the employee-choice doctrine. Under that doctrine, New York courts may enforce a restrictive covenant without assessing its reasonableness when an employee could choose between refraining from competition and preserving benefits or competing and risking forfeiture. Simons argued that her employment had been involuntarily terminated because her position was eliminated. TIAA argued that she had been offered the opportunity to apply for other open positions but instead chose to sign the separation agreement. The court held that whether Simons’s departure was involuntary was a factual issue inappropriate for resolution at this stage. TIAA’s allegations concerning the voluntary nature of the termination were sufficient to defeat the motion.

Ruling and Case Status

The court denied Simons’s motion to dismiss. The Clerk was directed to terminate ECF No. 34, and the action was referred to a designated magistrate judge for general pretrial supervision. The opinion resolved only the pleading challenge; it did not determine whether Simons ultimately breached the agreements or whether TIAA would prevail on the claim.