Stockton Mortgage Corporation is suing Ixonia Bancshares (dba Novus Home Mortgage), along with 18 former employees – including manager Logan Hoffman and loan officers – alleging they “defected en masse” and breached their contractual obligations of non-solicitation and confidentiality.
The lawsuit was filed on Oct. 22 in the U.S. District Court for the Northern District of Alabama, where the former employees were based. Spokespeople for Stockton and Ixonia did not immediately respond to HousingWire’s requests for comment.
Kentucky-based Stockton, which had 222 sponsored LOs across 76 active branches as of Tuesday, claims that former employees diverted clients to Novus while still employed by the company. The lender said it is aware of at least four borrowers who have transferred their accounts to Novus.
According to the lender, Wisconsin-based Novus, which had 417 LOs across 10 branches, was “complicit in this scheme” and “actively aided and encouraged” the former employees to breach their duties.
Stockton said it maintains proprietary data related to borrowers and confidential mortgage loan pricing and programs. It claims it takes steps to protect records through password protection and prohibitions against removing or copying files without express approval.
The first red flag for Stockton
The first red flag was a reduction in credit pulls — a primary indicator of origination activity.
“In July and August, Hoffman’s branches had 166 and 145 unique credit pulls, respectively. However, those numbers dropped to 119 and 43 in September and October, suggesting that employees were not soliciting new loans and/or were diverting loans to a competitor,” the lawsuit states.
Following an internal investigation, Stockton found that employees allegedly shared information such as pay stubs, W-2s and loan estimates. Hoffman, specifically, is accused of exporting confidential and proprietary datasets from DOMO — Stockton’s information management SaaS application — to his personal computer multiple times in 2025.
The employees, who began joining Stockton in 2023 when manager Hoffman came on board, allegedly left for Novus in 2025. However, according to the lawsuit, rather than immediately resigning, they exchanged “countless emails” and other communications with Novus to divert borrowers between August and October.
On Oct. 16, the company said it sent a letter to Hoffman instructing him to bring the computer he used for work to his branch the following morning. The lender claims he did not return the computer and announced that he and other team members would not return to the branches.
Stockton said it had to close four branches between September and October, and that two leases were canceled by landlords “despite SMC fulfilling all obligations under the leases, suggesting that Novus and/or the individual defendants may be interfering with the leases.”
Temporary restraining order granted
A temporary restraining order was granted on Oct. 24. The order bars the defendants from soliciting Stockton’s clients or employees and requires them to return all company materials within five days. They may, however, continue serving clients who contact them on their own. The restrictions will remain in place for two weeks unless extended by the court.
Stockton is suing for breach of contract, breach of fiduciary duty, violation of the Defend Trade Secrets Act, conversion and tortious interference with business relationships, among others. It seeks compensatory damages exceeding $75,000.
