Chase Claims Dime Rustled Talent from Mortgage Unit

As complaints about employee raids sweep financial services, Chase Manhattan Corp. is claiming that Dime Bancorp illegally recruited about 50 mortgage bankers to its staff.

In a lawsuit filed with a state court in Tampa, Chase alleged that Dime knowingly violated a nonsolicitation agreement that a former chief executive officer of Chase Manhattan Mortgage signed before joining Dime in December.

Chase asked the court to block Dime from continuing to solicit its employees and sought unspecified monetary damages.

The lawsuit, filed last Friday, names as defendants the former CEO, Richard A. Mirro; Thomas Glenn, another former Chase employee; and Dime itself. Mr. Mirro is chief operating officer of Dime Mortgage, and Mr. Glenn is head of national production.

"It appears that Dime sat down and said, 'We can increase mortgage banking activities by targeting and soliciting current Chase employees and talent,'" said a Chase executive familiar with the lawsuit.

Such allegations have become more commonplace in the financial services industry as firms vie to dominate business niches. Putnam Investments this year filed a suit against three mutual fund executives who left to join Liberty Financial. A Putnam spokeswoman said this case is still in litigation.

Check-printing giant Deluxe Corp. sued Visa U.S.A. Inc. in January, alleging that Visa hired seven Deluxe employees to develop processing software comparable to Deluxe software that Visa had licensed. A Wisconsin court ruled against Deluxe.

Chase accuses Dime and the former Chase employees of some very unusual and aggressive recruiting tactics.

According to Chase, Mr. Mirro-who had signed an agreement not to solicit employees of Chase for a year following his departure from the bank last June-recruited former colleagues nationwide, mainly from its wholesale and correspondent production units. (Mr. Mirro worked briefly at Fleet Mortgage Group before joining Dime.)

The bank claims that an associate of Mr. Glenn-who reports to Mr. Mirro- approached two employees in the company's Atlanta mortgage office and persuaded them to organize a dinner for seven other Chase employees.

These two led their colleagues to believe that the dinner was being held in order to celebrate the employees' good work, Chase asserts. But Mr. Glenn's associate showed up at the dinner, made disparaging comments about Chase, and handed out "offer packages" to the Chase employees, the suit alleges.

Chase claims the two employees that set up the dinner and four of the other seven employees at the dinner left Chase for Dime. The lawsuit alleges that Mr. Mirro was aware of this dinner.

Stephen M. Spencer, vice president of Management Recruiters of Charlotte, N.C., said it will be difficult to prove that Mr. Mirro was directly involved in soliciting employees. If Mr. Mirro was involved, the recruiter said, Chase has a reasonable expectation of winning in court.

"If you make a deal with your employer and then circumstances change, you've got to honor the deal," he said.

A Dime spokesman said the thrift company has been hiring Chase employees mainly from the Tampa area. He also said the company was aware of the nonsolicitation agreement when Mr. Mirro was hired, and it denied the allegations.

Last month, Chase sought a temporary restraining order from a federal judge in Florida to force Dime to stop recruiting Chase employees. The judge denied the request. At that point, Chase felt it had no choice but to file the suit.

"We regret that we had to come to this. Efforts to reach a mutually satisfactory settlement were not successful," Chase vice chairman Donald Boudreau said through a spokesman.

Both companies said the discussions took place at the highest levels.

Dime began reorganizing its mortgage banking unit late last year. Fred Koons, another former head of Chase's mortgage unit, was lured out of retirement to head Dime Mortgage. The mortgage headquarters were moved from Uniondale, N.Y., to Tampa.

In an interview with American Banker in January, Dime Bancorp CEO Lawrence Toal said Dime hoped to double loan originations by 1998. The company originated $3 billion last year and serviced $18 billion of loans.

The Dime spokesman said the suit will not change Dime Mortgage's plans. "We attend to compete vigorously in the mortgage business, and we will not be intimidated by a giant like Chase," he said.

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