Pinnacle lawsuit: Ex-employees, consultant “conspired” to start rival company in Canada

However, one ex-employee has filed his own lawsuit, accusing Pinnacle of breach of contract
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Thursday, August 25, 2011

OREM, Utah—Pinnacle Security is suing two former employees and an industry consultant, claiming they “conspired together” to create a new Canadian company, Titan Alarm, to compete against Pinnacle in Canada. Pinnacle contends the employees were working for Pinnacle at the time and that the new company was created by “unlawfully using Pinnacle resources and in violation of contractual and fiduciary duties.”

However, one of the ex-employees that Pinnacle is suing, Graham Wood, filed his own lawsuit against Pinnacle earlier this month, accusing it of breach of contract. Wood, formerly Pinnacle’s primary Canadian sales leader, claims the company didn’t pay him more than $75,000 he says he was owed in compensation and benefits, and says Pinnacle failed to offer him an equity stake in the company he claims it had promised.

Pinnacle, a summer-sales-model company based here, announced this week it was suing Wood, its former division VP of sales for Canada; Kim Wyatt, a former senior regional office coordinator; Jack Inbar, an industry consultant and former executive at APX Alarm (now Vivint); and Titan Alarm, their new Edmonton, Alberta-based, summer-model security company. The civil lawsuit was filed in federal court, alleging fraud, conspiracy and breach of contract. Damages to Pinnacle amount to $1 million or more, Pinnacle says.

Among the claims Pinnacle makes in its Aug. 23 press release is that the three individuals not only “conspired to recruit Pinnacle sales representatives,” but were “in effect, using Pinnacle facilities and resources to foot the start-up cost of their new company while attempting to paralyze Pinnacle.”

Attempts by Security Systems News to reach Wood, Wyatt and Inbar for comment for this story were not successful.

However, court records show that before Pinnacle filed its Aug. 19 complaint against the three, Wood had already filed a lawsuit against Pinnacle, accusing it of breach of contract.

In his lawsuit, filed Aug. 17 in U.S. District Court in Utah, Wood, who was hired by Pinnacle in 2009, contends that Pinnacle failed to make compensation and bonus payments to him that he said were due Feb. 28.

Also, Wood alleges in the lawsuit, Pinnacle promised him an equity interest in the company but failed to offer him a plan to acquire such an interest.

Wood also claims Pinnacle, which has sales offices throughout North America, went back on an agreement to not recruit, solicit or influence people under Wood’s management.

In its response filed two days later, Pinnacle denied Wood’s contentions and instead filed its own counterclaim against Wood, Wyatt, Inbar and Titan Alarm.

“Pinnacle believes in robust, legitimate competition," Pinnacle CEO Kelly Walker said in a prepared statement in the company’s Aug. 23 release. However, he said, “We believe Wood and others have intentionally deceived and defrauded Pinnacle, and we will take all necessary steps to protect our company against such malicious action.”

The complaint contends that “while under contract with and receiving compensation from Pinnacle for the 2011 sales season, Wood, along with Inbar and Wyatt, was conspiring to begin a new, competitive venture, Titan Alarm.”

The lawsuit claims that Wood, who the company said was a “very successful” sales leader, not only received a salary and benefits, but that Pinnacle covered the mortgage in a commercial office building owned by Wood in Alberta so that Pinnacle could have an office there. In addition to the lease payments, Pinnacle paid Wood about $1 million in compensation in 2010, the company’s lawsuit says.

Pinnacle says it “expended significant money and resources into Wood's sales region, while during the same period, Wood and others worked to build Titan Alarm.”

 Stuart Dean, VP of corporate communications for Pinnacle, told SSN that Wood worked for Pinnacle until the end of February or beginning of March of this year.

Dean said that Wood, a Canadian resident, held an important position at Pinnacle. “Graham was primarily responsible for Canadian operations,” Dean said. “He developed sales teams and resources. He was our primary Canadian sales leader.”

In fact, the lawsuit states, “because Wood insisted he have exclusive access to all of Canada for his exclusive sales territory, the success of Pinnacle’s entire Canadian operation depended completely on Wood.”

Wyatt, a Utah resident, coordinated Pinnacle’s Canadian operations with the company’s main office in Utah, Pinnacle says in the lawsuit.

Pinnacle contends that she, Wood and Inbar, listed also as a Utah resident, “conspired” to “unfairly use Titan to compete against Pinnacle.”

It’s not clear when Titan Alarm was established, but information on the Internet suggests it was earlier this year. The company’s web site describes it as “Canada’s leading alarm company” and has a map showing Titan’s coverage area to be nearly all of Canada. Pinnacle contends in the lawsuit that Wood began developing Titan in 2010.

Pinnacle alleges that Titan is trying to switch Pinnacle’s customers to Titan “by falsely claiming … that Pinnacle is either affiliated with Titan or that Pinnacle is no longer in business.”

When he worked for Pinnacle, Wood was active in that company’s philanthropic initiative called “Securing Hope,” where Pinnacle employees volunteer to do such things as build homes in Honduras and are raising money for a hospital Africa, which they also plan to help build this fall.

Titan appears to have a similar initiative. The company announced this June that “Titan Alarm is thrilled to announce its 2011 charity trip to Africa. This trip will launch the first of many trips for the Titan organization and will establish a tradition of charitable donation that defines the core values of the Titan Alarm family.”

A court date has yet to be set.

SSN continues to report on this story.