Core employment contract question remains open despite grinding legal warfare
A former insurance broker's wages were garnisheed in early 2025 over a legal battle that began in 2012, yet the central employment law question remains unresolved: can an employer claim ownership of clients who choose to follow an employee to a competitor?
In a Feb. 4, 2026 decision, Justice Douglas Mah of the Alberta Court of King's Bench set aside a default judgment against Kevin Lougheed but overturned the dismissal of the underlying lawsuit, meaning the employment dispute continues despite spanning nearly a decade and a half.
The case began when 2114223 Alberta Ltd. and McDonald & Bychowski Ltd., operating as CMB Insurance Brokers, sued Lougheed after he left their brokerage for a competitor. The Statement of Claim alleged that Lougheed "misappropriated confidential information and stole clients from 211, thus causing 211 loss and damage," according to court documents.
Lougheed filed a defense arguing "there is no 'ownership' of insurance clients and those who followed him to the new brokerage did so as a matter of right."
Unresolved employment contract question
Lougheed was a key employee at the insurance brokerage. When he switched to a competing brokerage, clients followed. The lawsuit alleged breach of employment contract and breach of fiduciary duty.
The core of Lougheed's defense centred on a fundamental principle: that customers do not belong to any particular service provider and are free to choose whatever service provider they wish. He maintained he had further defenses in the form of a long delay argument and a quantum argument.
For nine years, the defense stood and was actively litigated. Lougheed was questioned for discovery in 2015 and responded to undertakings the following year. No application for summary judgment was ever made against any part of the defense during that time.
When procedural battles override substantive issues
The case took a sharp turn in 2020 when the plaintiffs attempted to question Lougheed again. After he failed to appear at a questioning, the plaintiffs brought an application seeking contempt and an order striking his defense.
A justice struck out Lougheed's Statement of Defence on March 1, 2021. Justice Mah noted that "Something unusual happened to Mr. Lougheed when he was subjected to a contempt remedy without a corresponding finding of contempt."
More than three years passed before the plaintiffs applied for default judgment on Oct. 3, 2024. Lougheed learned of the judgment only when "his current employer was served with a garnishee summons" on Feb. 20, 2025.
Employment law implications remain unaddressed
Justice Mah noted a critical gap in the litigation process: even when noted in default or when a defense is struck, a defendant "continues to be entitled to contest damages in the case of an unliquidated claim," citing Court of Appeal precedent. However, because the default judgment application required no notice to Lougheed, he had no opportunity to defend on quantum or raise his delay arguments.
The court set aside the default judgment, finding Lougheed met the test and that fairness required it. But the March 2021 order striking his defense remains in effect. Lougheed now has 45 days to attempt setting aside that order. If unsuccessful, the plaintiffs can seek default judgment again, though Lougheed would be "entitled to defend as to the quantification of the damages."
After 14 years, the question of whether an employer can claim legal ownership of clients who choose to follow a departing employee to a competitor remains unanswered.
