VEBS, Inc. v. Leon Simoneau

Summary

The United States District Court for the Southern District of California amended its December 4, 2025 memorandum opinion and order in an action concerning alleged misreporting of insurance commission splits and unpaid post-termination commissions. The court held that the perpetual post-termination commission provision was unenforceable under California Business and Professions Code section 16600, while allowing the breach-of-contract claim based on alleged commission misreporting during the agency relationship to proceed at the pleading stage.

Holdings

1. The clause in the Marketing Agreement requiring Defendant to continue to pay Override Commissions to Plaintiff after the termination of the agreement (Paragraph 5(d)) is unenforceable because it functions as a non-solicitation clause and a financial penalty for competition prohibited by § 16600.
2. Plaintiff has alleged sufficient facts to assert a plausible breach of contract cause of action for Defendant's alleged breach of the Fee Agreement during his agency by misreporting the commission split.
3. Plaintiff's breach of contract claim as to Defendant's misstatement of the commission split is not time-barred on its face.
4. Plaintiff's fraudulent concealment claim is dismissed without prejudice because Plaintiff failed to adequately allege reliance (the fourth element) and failed to plead facts with the particularity required by Rule 9(b).
5. Plaintiff's accounting claim is not time-barred on its face because it is ancillary to the breach of contract claim, which is not time-barred on its face.

Questions Presented

1. Whether the Marketing Agreement's requirement for Defendant to pay post-termination Override Commissions in perpetuity is enforceable under California Business & Professions Code § 16600.
2. Whether Plaintiff adequately pled a breach of contract claim for Defendant's alleged misstatement of the commission split during his agency.
3. Whether Plaintiff's breach of contract claims are time-barred.
4. Whether Plaintiff adequately pled a claim for fraudulent concealment.
5. Whether Plaintiff's accounting claim is time-barred.

Disposition

reversed_and_remanded