BDO v. Crandell, Crandell Answer and Counterclaim

Case 3:24-cv-00012-DJN Document 31 Filed 04/25/24 Page 1 of 44 PageID# 231
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA
RICHMOND DIVISION
)
BDO USA, P.C., )
)
Case No.: 3:24-CV-012-DJN
Plaintiff, )
)
v. )
) JURY DEMAND
CALEB CRANDELL, )
)
Defendant. )
)
DEFENDANT’S ANSWERS AND DEFENSES TO COMPLAINT,

AND COUNTERCLAIMS AND JURY DEMAND
Defendant, Caleb Crandell (“Crandell”), by and through his undersigned counsel, hereby
submits Defendant’s Answers and Defenses to Complaint, and Counterclaims and Jury Demand.
In support thereof, Defendant states as follows:
NATURE OF THE CASE
1. This case arises out of former BDO employee Crandell’s departure to Armanino
LLP (“Armanino”)—a competitor of BDO—and subsequent raiding of BDO clients and
employees in violation of Crandell’s restrictive covenant obligations to BDO.
ANSWER: Defendant denies the allegations contained in Paragraph 1 of Plaintiff’s Complaint.
Defendant affirmatively states that he did not raid BDO clients or employees, but that the clients
and employees who left BDO did so of their own accord because of BDO’s failure to ensure that
those clients were adequately serviced and its mistreatment of its employees.
2. Those restrictive covenants state that Crandell may not, directly or indirectly, solicit
or perform accounting, auditing, tax, and/or consulting services for BDO clients for whom he
directly provided substantive services during his partnership in and later employment with BDO.
ANSWER: Defendant admits that Plaintiff seeks to impose restrictive covenants against him, the
terms of which are contained in the exhibits to its Complaint. Defendant denies the implication
that those restrictive covenants are enforceable.
3. Crandell is also bound to an employee non-solicitation clause, under which
Crandell is prohibited from soliciting BDO employees with whom he had contact during his
employment with BDO to leave BDO’s employ.
ANSWER: Defendant admits that Plaintiff seeks to impose an employee non-solicitation clause
against him, the terms of which are contained in the exhibits to its Complaint. Defendant denies
the implication that the non-solicitation clause is enforceable.
4. Crandell left BDO for Armanino in early November 2023. That very same week,
Justin Rojas (“Rojas”), one of Crandell’s direct reports, also left BDO for Armanino.
ANSWER: Defendant admits the allegations contained in Paragraph 4 of Plaintiff’s Complaint,
but affirmatively states that he offered to remain at BDO for three months to assist with the
necessary transition of his clients to other BDO employees, but that BDO refused his offer to
ensure a smooth transition.
5. Three more BDO employees that worked with and reported to Crandell, Timothy
Vacchi (“Vacchi”), Kaylin Koopmans (“Koopmans”), and Tara Dunphy (“Dunphy”), have since
departed BDO for Armanino.
ANSWER: Defendant admits that Vacchi, Koopmans, and Dunphy reported to him and that they
quit BDO and joined Armanino. Defendant denies the implication that he solicited their
departure from BDO to join Armanino.
6. Upon information and belief, Crandell either directly solicited Rojas, Vacchi,
2
Koopmans, and Dunphy or indirectly aided Armanino’s solicitation of these employees.
7. On or about December 12, 2023, three BDO clients to whom Crandell and Rojas
had directly provided substantive services informed BDO that they would no longer use BDO’s
services.
ANSWER: Defendant is without sufficient information to admit or deny the allegation of what,
if anything, three BDO clients stated to BDO on or about December 12, 2023.
8. One of these clients, Client A, specifically informed BDO on a call that it was
following Crandell and his team to Armanino. The other two clients, Client B and Client C, are
also following Crandell, Rojas, and the rest of that team to Armanino.
ANSWER: Defendant is without sufficient information to admit or deny the allegation of what
Client A stated to BDO. Defendant admits Client A, Client B, and Client C left BDO for Armanino.
9. Further, Crandell scheduled a happy hour with Client B’s Chief Financial Officer
(“CFO”) in the days leading up to his departure from BDO.
Defendant admits that he attended a happy hour with the CFO of Client B, as was commonplace
practice after certain milestones, but Defendant does not believe he scheduled it nor does he recall
when this took place.
10. Just days after that meeting, Client B’s CFO emailed Crandell, asking Crandell to
put him in contact with Armanino.
ANSWER: Defendant admits that he received an email from Client B’s CFO, but affirmatively
states that the email was approximately one week after the meeting. The contents of the email
speak for themselves. To the extent an additional response is necessary, Defendant denies the
3
allegations.
11. Crandell (as well as Rojas) directly solicited Client A, Client B, and Client C or
indirectly aided Armanino’s solicitation of these clients in direct violation of his restrictive
covenant’s prohibition on soliciting clients he served at BDO.
12. Crandell is now providing tax services to Client A, Client B, and Client C at
Armanino in direct violation of his restrictive covenant’s prohibition on servicing clients he served
at BDO.
ANSWER: Defendant admits that he is providing tax services for Client A, Client B, and Client
C at Armanino, but Defendant denies violating any restrictive covenants.
13. In fact, when given the opportunity to submit a sworn affirmation that he had not
solicited Client A, Client B, and Client C and Rojas, Vacchi, Koopmans, and Dunphy, Crandell
declined.
ANSWER: Defendant admits he declined to submit a sworn affirmation. To the extent an
additional response is necessary, Defendant denies the allegations.
14. Client A, Client B, and Client C provide, in total, nearly $1.8 million in annual fees
for BDO.
ANSWER: Defendant is without sufficient information to admit or deny the allegations in
Paragraph 14. To the extent an additional response is necessary, Defendant denies the allegations.
15. BDO further had expended resources in recruiting and training the employees
solicited by Crandell to join Armanino.
4
16. Crandell’s conduct violates the contractual obligations he owes to BDO and has
caused and will continue to cause BDO substantial financial damage.
ANSWER: Paragraph 16 of Plaintiff’s Complaint requires a legal conclusion, to which no
response is required. To the extent a response is required, Defendant denies the allegations.
17. Crandell’s conduct while still employed at BDO constitutes a breach of the duty of
loyalty he owed to BDO.
18. BDO seeks damages and equitable relief from Crandell for his breach of contract,
breach of duty of loyalty, and breach of fiduciary duties.
response is required. To the extent a response is required, Defendant admits that Plaintiff is seeking
damages.
PARTIES, JURISDICTION & VENUE
19. Plaintiff BDO is a professional corporation incorporated under the laws of the state
of Virginia with its principal place of business in Chicago, Illinois. BDO operates an office in
Denver, Colorado.
Paragraph 19. To the extent an additional response is necessary, Defendant admits the allegations.
20. Upon information and belief, Defendant Crandell is an individual domiciled in the
state of Colorado. Crandell is a former employee of BDO’s Denver, Colorado office and current
employee of Armanino’s Denver, Colorado office.
ANSWER: Defendant admits the allegations contained in Paragraph 20 of Plaintiff’s Complaint.
5
21. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §
1332 because Plaintiff and Defendant are citizens of different states and the amount in controversy
exceeds the sum or value of $75,000.
response is required. To the extent a response is required, Defendant admits that the Court has
subject matter jurisdiction over this action.
22. This Court has personal jurisdiction over Crandell, who agreed to “submit to venue
and jurisdiction solely before any state or federal court in Virginia” in the First Amendment to the
BDO Partner/Principal Employment Agreement. (Ex. 3.) BDO further is a citizen of Virginia.
response is required. To the extent a response is required, the Court has determined that it has
personal jurisdiction over Defendant.
23. Venue is proper in this Court because Crandell agreed to “submit to venue and
jurisdiction solely before any state or federal court in Virginia” in the First Amendment to the
BDO Partner/Principal Employment Agreement. (Ex. 3.) BDO further is a citizen of Virginia.
response is required. Defendant states that he filed a motion objecting to venue in this Court, but
that the Court determined that venue is proper.
FACTUAL ALLEGATIONS
A. BDO’s Business & Employment of Crandell
24. BDO is a professional services corporation that provides accounting, auditing, tax,
and consulting services to clients across the country. BDO has offices in over thirty states,
including in Denver, Colorado.
6
Paragraph 24. To the extent an additional response is necessary, Defendant admits the allegations.
25. BDO invests substantial time and financial resources in acquiring, developing, and
maintaining client relationships through its employees. Employees are granted access to BDO’s
confidential and trade secret information used in servicing clients and in further developing lasting
relationships with clients on behalf of BDO.
26. To protect BDO’s trade secrets and client relationships, BDO requires senior level
employees to enter into employment agreements containing restrictive covenants that bar
employees from soliciting BDO clients, prospective clients, and BDO employees.
ANSWER: Defendant admits that BDO requires some employees to enter into employment
agreements containing restrictive covenants that bar employees from soliciting BDO clients,
prospective clients, and BDO employees. He denies the remaining allegations contained in
Paragraph 26 of Plaintiff’s Complaint.
27. Crandell entered into an Amended and Restated Partnership Agreement (the
“Partnership Agreement,” attached hereto as Exhibit 1) with BDO’s predecessor, BDO USA, LLP
on August 1, 2020, that contains the following client and prospective client non-solicitation
covenant:
[I]f, without the specific consent of the Board of Directors, a Partner at, prior to, or
within two years after, his/her termination from the Partnership:
(a) Directly or indirectly solicits or obtains for himself/herself, or for a firm

with which he/she is or becomes associated, engagements to perform, or if he/she
or a firm with which he/she is associated does perform, accounting, auditing, tax
and/or consulting services, or related services, or any other services which the
Partnership then offers directly or through an affiliate, for a client of the Partnership
for whom such Partner directly provided substantive services during his/her
employment by or membership with the Partnership (other than personal clients
7
developed by such Partner only as a result of his/her independent recruitment efforts

which the Partnership neither subsidized nor otherwise financially supported as part
a program of client development) (a “Direct Client”), or a prospective client that such
Partner directly recruited or solicited during such Partner's employment by or
membership with the Partnership (a “Direct Prospective Client”), or causes a Direct
Client or any person, company, partnership or other entity who provides, has
provided or would reasonably be expected to provide referrals of clients or
prospective clients to the Partnership to terminate that relationship. . . the said
Partner shall compensate the Partnership for any loss, damage and expense suffered
by the Partnership (the “Damages”).
(Ex. 1 ¶ 14.5(a).)
ANSWER: Defendant admits that Plaintiff is quoting from the referenced document. Defendant
admits that he entered into the agreement attached as Exhibit 1.
28. The Partnership Agreement also contains the following employee non-solicitation
agreement:
[I]f, without the specific consent of the Board of Directors, a Partner at, prior to, or
within two years after, his/her termination from the Partnership. . .
(b) Lures away or causes an employee or Partner of the Partnership to leave its
employ. . . the said Partner shall compensate the Partnership for any loss, damage
and expense suffered by the Partnership (the “Damages”).
(Ex. 1 ¶ 14.5(b).)
ANSWER: Defendant admits that Plaintiff is quoting from the referenced document. To the extent
a response is required, Defendant denies the allegations.
29. The damages for a breach of either of the non-solicitation covenants are set forth in
the Partnership Agreement as follows:
(i) For any engagements lost by the Partnership under (a) above an amount
equal to one hundred fifty percent (150%) of the fees charged by the Partnership
either
(x) during the last full fiscal year during which the Direct Client was a client of the
Partnership or (y) during the twelve (12) month period prior to the last date upon
which the Partnership performed services for the Direct Client, whichever is
greater;
(ii) For Direct Prospective Clients, one hundred fifty percent (150%) of the
8
proposed fee;
(iii) Under (b) above, an amount equal to thirty percent (30%) of the annual
earnings of each employee or Partner who leaves, to cover recruiting replacements,
plus an additional ten percent (10%) for each year of service of the employee to
cover training costs.
(Ex. 1 ¶¶ 14.5(d)(i)–(iii).)
30. The Partnership Agreement further provides that it “shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors
and assigns.” (Ex. 1 ¶ 16.8.)
31. In exchange for his consent to the Partnership Agreement, Crandell was made a
Partner at BDO USA, LLP and received significant compensation, benefits, and access to
confidential and trade secret information.
32. On July 1, 2023, BDO USA, LLP converted to a Delaware professional services
corporation, changing its name from BDO USA, LLP to BDO USA, P.A. with the same federal
employer identification number. Through this conversion, BDO USA, LLP changed its legal
structure while continuing to exist and operate as the same entity. Under Delaware law, BDO’s
conversion to a professional corporation did not constitute the dissolution of the firm and the
creation of an entirely new firm; rather, it was a continuation of the existence of the firm in the
form of a professional corporation.
9
Paragraph 32. Defendant further states that portions of Paragraph 32 of Plaintiff’s Complaint
require a legal conclusion, to which no response is required. To the extent a response is required,
Defendant denies the allegations.
33. On August 30, 2023, BDO USA, P.A. transferred its jurisdiction of formation from
Delaware to Virginia, changing its name to BDO USA, P.C. with the same federal employer
identification number. As with its conversion to a professional corporation, BDO’s domestication
in Virginia constituted neither a dissolution of the company nor the formation of a new entity.
34. All assets, rights, and obligations of BDO USA, LLP are now assets, rights, and
obligations of BDO USA, P.C.
35. On June 30, 2023, Crandell’s partnership terminated.
ANSWER: Defendant denies the allegations contained in Paragraph 35 of Plaintiff’s Complaint
and affirmatively states that the partnership agreement dissolved.
36. Crandell then entered into the BDO Partner/Principal Employment Agreement (the
“Employment Agreement,” attached hereto as Exhibit 2) effective July 1, 2023.
ANSWER: Defendant admits that the BDO Partner/Principal Employment Agreement is attached
10
as Exhibit 2. Plaintiff admits that he signed the agreement. To the extent a further response is
required, Defendant denies the allegations.
37. In the Employment Agreement, Crandell re-affirmed his restrictive covenants.
ANSWER: Defendant admits that he signed the agreement attached as Exhibit 2 and denies the
remaining allegations in Paragraph 37 and affirmatively states that the restrictive covenants in
Exhibit 2 are not enforceable as a matter of law.
38. In exchange for reaffirming his restrictive covenants by signing the Employment
Agreement, Crandell received continued employment with BDO, compensation in excess of
$672,600, benefits, and continued access to BDO’s trade secrets.
39. Crandell’s Employment Agreement contains a restrictive covenant substantively
identical to the Partnership Agreement’s covenant in an incorporated Agreement Regarding
Competition and Protection of Proprietary Interests:
I agree that, so long as I am employed by [BDO] or any of its affiliates and

continuing for two (2) years thereafter (regardless of the reason of my termination
of employment) (the “Restricted Period”), if:
(i) I directly or indirectly solicit or obtain for myself, or for a firm with which I am
or become associated, engagements to perform, or if I or a firm with which I am
associated does perform, accounting, auditing, tax and/or consulting services, or
related services, or any other services which [BDO] then offers directly or through
a subsidiary or an affiliate, for a client of [BDO] for whom I directly provided
substantive services, during my employment by [BDO] (or in my prior position as
a partner of BDO USA, LLP prior to its conversion to BDO USA, P.A.), (other than
personal clients developed by me only as a result of my independent recruitment
efforts which neither BDO USA, LLP nor [BDO] subsidized or otherwise
financially supported as part a program of client development) (a “Direct Client”),
or a prospective client that I directly recruited or solicited during my employment
with [BDO] (or in my prior position as a partner of BDO USA, LLP prior to its
conversion into BDO USA, P.A.) (a “Direct Prospective Client”), or cause a Direct
Client or any person, company, partnership or other entity who provides, has
provided or would reasonably be expected to provide referrals of clients or
prospective clients to [BDO] to terminate that relationship, then I shall compensate
11
[BDO] for any loss, damage, and expense suffered by [BDO] (the “Damages”).
(Ex. 2, Agreement Regarding Competition and Protection of Proprietary Interests ¶ 2(a)(i).)
ANSWER: Defendant admits that Plaintiff is quoting from Exhibit 2 and that he signed the
agreement attached as Exhibit 2. Defendant denies the remaining allegations in Paragraph 39.
40. Crandell further reaffirmed the same damages that he would owe BDO in the event
of a breach:
(1) for any Direct Client engagements lost by [BDO], an amount equal to one
hundred fifty percent (150%) of the fees charged by [BDO] either (x) during the
last full fiscal year during which the Direct Client was a client of [BDO] (or its
predecessor) or (y) during the twelve (12) month period prior to the last date upon
which [BDO] (or its predecessor) performed services for the Direct Client,
whichever is greater;
(2) for any Direct Prospective Clients, one hundred fifty percent (150%) of the
proposed fee.
(Ex. 2, Agreement Regarding Competition and Protection of Proprietary Interests ¶ 2(a)(i).)
41. Crandell also reaffirmed his agreement to a near-identical employee non-
solicitation covenant, stating that for two years following the termination of his employment, he
will not “solicit, lure away, or cause an officer, director or employee of [BDO] with whom I had
contact during my employment with [BDO] . . . to leave its employ” or else compensate BDO for
damages in “an amount equal to thirty percent (30%) of the annual earnings of each officer,
director or employee who leaves, to cover recruiting replacements, plus an additional ten percent
(10%) for each year of service of the officer, director or employee to cover training costs.” (Ex. 2,
Agreement Regarding Competition and Protection of Proprietary Interests ¶ 2(a)(ii).)
12
42. The Employment Agreement further states that Crandell will reimburse BDO for
all attorneys’ fees, costs, and expenses incurred by BDO to enforce the agreement. (Ex. 2,
Agreement Regarding Competition and Protection of Proprietary Interests ¶ 9.)
43. The restrictive covenants and the corresponding damages formulas in the
Employment Agreement are substantively similar to the covenants in the Partnership Agreement.
44. On August 14, 2023, Crandell consented to the First Amendment, which amended
all terms and conditions in his Employment Agreement and the incorporated Agreement Regarding
Competition and Protection of Proprietary Interests regarding governing law, venue, and
jurisdiction as follows:
This Agreement will be governed by the laws of the State of Virginia, irrespective
of the residence of the parties. Employee agrees to and hereby does submit to venue
and jurisdiction solely before any state or federal court in Virginia, and Employee
hereby waives any right to raise the questions of jurisdiction and venue in any
action that [BDO] may bring. Employee agrees to accept process in any such action.
Note: this paragraph shall not apply to any employee residing in California.
(Ex. 3, First Amendment.)
ANSWER: Defendant admits that Plaintiff is quoting from Exhibit 3 and that he signed the First
Amendment. Defendant denies the remaining allegations in Paragraph 44 and affirmatively states
that the First Amendment is not enforceable as a matter of law.
45. Crandell was the Tax Practice Leader at BDO’s Denver, Colorado office, where he
directly supervised the majority of the office’s tax employees.
ANSWER: Defendant admits he was the Tax Practice Leader at BDO’s Denver, Colorado office.
13
He lacks information and belief with respect to the remaining allegations contained in Paragraph
45 of Plaintiff’s Complaint and thus denies them.
46. Crandell provided direct tax advising services to many of BDO’s Colorado clients,
including Client A, Client B, and Client C.
ANSWER: Upon information and belief, Defendant admits the allegations contained in Paragraph
46 of Plaintiff’s Complaint.
B. Crandell’s Departure & Raid on BDO’s Clients & Employees
47. In early November 2023, Crandell informed BDO that he was leaving BDO for
Armanino’s Denver tax practice.
ANSWER: Defendant admits that he informed BDO that he was leaving for Armanino's Denver
tax practice and affirmatively states that he offered to remain with BDO to help transition certain
clients, including Client A, Client B, and Client C, who were then undergoing business transactions
that required his knowledge and skill
48. That same week, Rojas, one of BDO’s Tax Managing Directors and Crandell’s
direct report, informed BDO he was also leaving BDO for Armanino. Rojas also has client and
employee non-solicitation agreements with BDO.
ANSWER: Defendant admits Rojas informed BDO he was also leaving BDO for Armanino and
acknowledges that Rojas has agreements with BDO due to the fact that BDO has also sued Rojas,
but denies any implication that those agreements are enforceable.
49. Concerned by these near-simultaneous departures for Armanino, BDO sent both
Crandell and Rojas letters on November 9, 2023, reminding them of their post-employment
obligations not to solicit BDO’s clients or employees, and the corresponding contractual damages
they owed BDO in the event of a breach.
14
ANSWER: Defendant is without sufficient information to admit or deny the allegation of what
BDO allegedly felt or what it sent Rojas. Defendant admits he received a letter from BDO.
Defendant denies the remaining allegations in Paragraph 49.
50. Meanwhile, three other employees that were part of Crandell’s and Rojas’s team—
Vacchi, Koopmans, and Dunphy—informed BDO that they were leaving BDO for Armanino.
Vacchi also has restrictive covenants with BDO, while Koopmans and Dunphy have non-
disclosure agreements.
ANSWER: Defendant denies any implication that Vacchi, Koopmans, and Dunphy provided
services to clients for whom Defendant also provided services. Defendant is without sufficient
information to admit or deny the remaining allegations in Paragraph 50. To the extent an additional
response is necessary, Defendant denies the allegations.
51. Upon information and belief, Crandell directly or indirectly solicited Rojas, Vacchi,
Koopmans, and Dunphy to join him at Armanino in direct violation of his employee non-
solicitation agreement.
52. BDO took swift action, sending an additional cease and desist letter to Vacchi as
well as a cease-and-desist letter to Armanino asking for assurances that the former BDO employees
were complying with their restrictive covenant obligations.
53. BDO also provided an affirmation to Crandell to sign stating that he was in
compliance with his non-solicitation agreement.
15
54. Crandell never signed that affirmation.
55. Shortly afterward, BDO learned that three clients to whom Crandell provided direct
services during his employment at BDO were taking their business to Armanino.
56. On October 26, 2023, Crandell had a happy hour with the CFO of Client B.
ANSWER: Defendant admits that he attended a happy hour with the CFO of Client B, as was a
commonplace practice after certain milestones, but believes that the date was October 25, 2023.
57. Upon information and belief, Crandell discussed his intent to join Armanino at this
happy hour, made statements painting Armanino in a positive light compared with BDO, and
further asked Client B to move its business to Armanino.
58. On November 2, 2023, just days after the happy hour meeting, Client B’s CFO sent
Crandell the below email regarding Crandell’s departure and asked Crandell to put him in contact
with Armanino to discuss providing tax services to Client B:
Redacted
ANSWER: Defendant admits that Plaintiff is quoting from an excerpt of an email that he received
16
from Client B’s CFO, however no date has been provided in the excerpt.
59. On November 27, 2023, after Crandell and Rojas had already left BDO for
Armanino, Client B sent an email to Rojas’s Armanino email address and Crandell’s former
BDO email address asking for their advice and consulting services on a tax matter.
60. On December 12, 2023, Client B informed BDO that it was leaving BDO.
61. Client B further stated that Crandell, Rojas, and Armanino were servicing Client B.
62. Crandell had an established relationship with Client B while at BDO. Crandell
provided direct tax services to Client B on behalf of BDO.
63. Crandell—either directly or indirectly—solicited Client B to move its business
from BDO to Armanino.
64. Client B has decided to move the remainder of its tax business to Crandell and
Armanino.
Paragraph 64. Defendant admits that some business of Client B has been moved to Armanino.
65. This is in direct violation of Crandell’s restrictive covenant not to solicit or perform
17
services for BDO clients whom he served at BDO.
66. On December 6, 2023, Client C informed BDO that it had decided to move its tax
work to another firm. Upon information and belief, that firm is Armanino.
67. Crandell had an established relationship with Client C while at BDO. Crandell
regularly provided direct tax planning services to Client C on behalf of BDO.
Paragraph 67 due to the lack of identity of Client C. To the extent an additional response is
necessary, Defendant admits he may have had a relationship with Client C.
68. On December 12, 2023, Client A informed BDO that it was moving its business to
Armanino.
69. Crandell had an established relationship with Client A while at BDO. Crandell
directly provided specialty tax services to Client A.
Paragraph 69 due to the lack of identity of Client A. To the extent an additional response is
necessary, Defendant admits he may have had a relationship with Client A.
70. Client A told BDO that Crandell and Rojas were the reason why Client A was going
to Armanino.
18
71. Upon information and belief, Crandell persuaded Client A, Client B, and Client C
to stop doing business with BDO and to move their business to Armanino.
72. Upon information and belief, Crandell is providing services to Client A, Client B,
and Client C on behalf of Armanino.
ANSWER: Defendant admits the allegations contained in Paragraph 72 of Plaintiff’s Complaint
with regard to Client B and admits that he may be providing services to Clients A and C.
73. On December 14, 2023, BDO sent a letter to Crandell demanding that he
compensate BDO for the lost clients—Client A, Client B, and Client C—in accordance with the
terms of his agreements with BDO.
ANSWER: Defendant admits that BDO sent a letter to Crandell falsely accusing him of violating
his agreements with BDO and demanding money. He denies the remaining allegations contained
in Paragraph 73 of Plaintiff’s Complaint, including the implication that he breached any agreement
with BDO and that he was the cause of any damages to BDO.
74. Specifically, the letter demanded that Crandell compensate BDO (a) $378,003.20
for the loss of Client A’s business; (b) $1,895,806.46 for the loss of Client B’s business; and (c)
$346,591.43 for the loss of Client C’s business.
ANSWER: Defendant admits that BDO’s letter demanded payment of the referenced sums. He
denies the remaining allegations, including the implication that he breached any agreement with
BDO or was the cause of any damages to BDO.
75. These amounts constitute 150 percent of the fees charged by BDO during the
twelve-month period prior to the last date upon which BDO performed services for these clients.
19
Paragraph 75. To the extent an additional response is necessary, based upon information and belief,
76. Crandell contractually agreed to compensate BDO according to this formula upon
the loss of client relationships due to a breach of his restrictive covenants. (Ex. 1 ¶ 14.5(d)(i); Ex.
2, Agreement Regarding Competition and Protection of Proprietary Interests ¶ 2(a)(i).)
response is required. To the extent a response is required, Defendant admits that he signed Exhibits
1 and 2, but denies the implication that he breached those agreements or was the cause of any
damages to BDO.
77. BDO gave Crandell until Thursday, December 21, 2023, to confirm that he would
honor his promise to BDO and compensate BDO a total of $2,620,401.08 for these lost clients.
78. BDO stated that, in the alternative, if Crandell claims he has not breached his non-
solicitation covenants, he must sign and return a declaration under penalty of perjury to that effect
by December 21, 2023.
79. As of the date of this filing, Crandell has refused to confirm that he will compensate
BDO for the lost business from Client A, Client B, and Client C as he is contractually obligated to
do.
ANSWER: Defendant denies that he is the cause of any damages to BDO, but admits that he has
refused to pay the specific amount of money that BDO has demanded.
80. As of the date of this filing, Crandell has refused to sign a sworn declaration stating
20
that he has not breached his agreements with BDO and has not solicited BDO’s clients or
employees.
81. Crandell violated his duty of loyalty to BDO by soliciting clients while still
employed at BDO.
82. Crandell is continuing to solicit BDO clients to move their business to Armanino
in violation of his restrictive covenants with BDO.
CLAIMS FOR RELIEF
COUNT I
(Breach of Contract: Partnership Agreement)
83. BDO incorporates and re-alleges all the previous paragraphs as though fully set
forth herein.
ANSWER: Defendant incorporates and realleges all the previous paragraphs as though fully set
forth herein.
84. On August 1, 2020, BDO USA, LLP and Crandell entered into a valid, enforceable,
and binding Partnership Agreement.
85. Crandell entered into his contract with BDO USA, LLP for good and valuable
consideration, including but not limited to, a position as a Partner with BDO USA, LLP;
compensation; insurance, retirement, and healthcare benefits; and access to BDO USA, LLP’s
confidential information and trade secrets.
21
86. As a Partner of BDO USA, LLP and for a period of two years after the termination
of his status as a Partner, Crandell owes BDO USA, LLP a contractual duty not to solicit clients
to whom he directly provided substantive services during his employment with BDO USA, LLP
for engagements to perform accounting, auditing, tax, and/or consulting services on behalf of
himself or another firm, or to provide accounting, auditing, tax, and/or consulting services on
behalf of himself or another firm.
87. In the event of a breach, Crandell’s contract states he must compensate BDO USA,
LLP in an amount equal to 150 percent of the fees charged by BDO USA, LLP to the lost clients
in the last full fiscal year or the prior twelve-month period, whichever is greater.
response is required. To the extent a response is required, Defendant admits the allegations.
88. As a Partner of BDO USA, LLP and for a period of two years after the termination
of his status as a Partner, Crandell owes BDO USA, LLP a contractual duty not to solicit BDO
USA, LLP employees with whom he had contact during his employment with BDO USA, LLP to
leave BDO USA, LLP’s employ.
89. In the event of a breach, Crandell’s contract states he must compensate BDO USA,
LLP in an amount equal to thirty percent of the annual earnings of each lost employee, plus an
22
additional ten percent for each year of service of the lost employee to cover training costs.
response is required. To the extent a response is required, Defendant admits the allegations.
90. Crandell’s partnership with BDO USA, LLP ended on June 30, 2023. Crandell
owes these contractual obligations to BDO USA, LLP until June 30, 2025.
91. BDO is the successor of BDO USA, LLP and entitled to enforce the terms of the
Partnership Agreement under Section 16.8 of the Partnership Agreement.
92. Crandell has violated his restrictive covenants by soliciting Client A, Client B, and
Client C—clients to whom he directly provided substantive services while at BDO—to switch
their business to his new employer, Armanino.
93. Crandell has further violated his restrictive covenants by providing tax services to
Client A, Client B, and Client C on behalf of Armanino.
94. Upon information and belief, Crandell is continuing to violate his restrictive
covenants by continuing to solicit BDO clients to whom he directly provided substantive services
while at BDO.
23
95. Crandell also violated his restrictive covenants by soliciting Rojas, Vacchi,
Koopmans, and Dunphy—BDO employees with whom he had contact while employed with
BDO—to leave BDO and work for Armanino.
96. For any clients that Crandell solicits away from BDO or for whom he performs
services, Crandell owes BDO 150 percent of the fees charged by BDO during the twelve-month
period prior to the last date upon which BDO performed services for those clients. That amount
totals (a) $378,003.20 for the loss of Client A’s business; (b) $1,895,806.46 for the loss of Client
B’s business; and (c) $346,591.43 for the loss of Client C’s business.
97. Crandell further owes BDO thirty percent of the annual earnings of each employee
he solicited away from BDO, plus an additional ten percent for each year of service of the
employee to cover training costs. That amount totals $343,400.00 for the solicitation of Rojas,
Vacchi, Koopmans, and Dunphy.
98. Crandell has refused to compensate BDO for the lost clients and employees
according to the formulas laid out in his contract.
24
response is required. To the extent a response is required, Defendant denies that he has caused
BDO any damages and admits that he has refused to pay BDO any money.
99. As a direct and proximate result of Crandell’s breach, BDO has suffered damages,
including interference in BDO’s business operations, damage to client relationships, and lost
profits.
100. BDO is entitled to judgment against Crandell in an amount in excess of
$2,963,801.09, plus any additional damages that may be determined at trial; all equitable relief
including restitution; as well as attorneys’ fees, interest, costs, and other such relief and damages
as BDO may prove at trial and this Court deems just and equitable.
COUNT II
(Breach of Contract: Employment Agreement)
forth herein.
forth herein.
102. On June 14, 2023, Crandell entered into a valid, enforceable, and binding
Employment Agreement as part of BDO’s conversion from a partnership to a professional
corporation.
25
103. Crandell entered into his contract with BDO for good and valuable consideration,
including but not limited to, continued employment with BDO; compensation in excess of
$672,600 annually; insurance, retirement, and healthcare benefits; and continued access to BDO’s
confidential information and trade secrets.
104. During his employment with BDO and for a period of two years thereafter, Crandell
owes BDO a contractual duty not to solicit clients to whom he directly provided substantive
services during his employment with BDO for engagements to perform accounting, auditing, tax,
and/or consulting services on behalf of himself or another firm, or to provide accounting, auditing,
tax, and/or consulting services on behalf of himself or another firm.
105. In the event of a breach, Crandell’s contract states he must compensate BDO in an
amount equal to 150 percent of the fees charged by BDO to the lost clients in the last full fiscal
year or the prior twelve-month period, whichever is greater.
106. During his employment with BDO and for a period of two years thereafter, Crandell
owes BDO a contractual duty not to solicit BDO employees with whom he had contact during his
employment with BDO to leave BDO’s employ.
26
107. In the event of a breach, Crandell’s contract states he must compensate BDO in an
amount equal to thirty percent of the annual earnings of each lost employee, plus an additional ten
percent for each year of service of the lost employee to cover training costs.
108. Crandell’s employment with BDO ended on November 3, 2023. Crandell owes
these contractual obligations to BDO until November 3, 2025.
109. Crandell has violated his restrictive covenants by soliciting Client A, Client B, and
Client C—clients to whom he directly provided substantive services while at BDO—to switch
their business to his new employer, Armanino.
110. Crandell has further violated his restrictive covenants by providing tax services to
Client A, Client B, and Client C on behalf of Armanino.
111. Crandell is continuing to violate his restrictive covenants and continuing to solicit
BDO clients to whom he directly provided substantive services while at BDO.
112. Crandell has violated his restrictive covenants by soliciting Rojas, Vacchi,
27
Koopmans, and Dunphy—BDO employees with whom he had contact while employed with
BDO—to leave BDO and work for Armanino.
113. For any clients that Crandell solicits away from BDO or for whom he performs
services, Crandell owes BDO 150 percent of the fees charged by BDO during the twelve-month
period prior to the last date upon which BDO performed services for those clients. That amount
totals (a) $378,003.20 for the loss of Client A’s business; (b) $1,895,806.46 for the loss of Client
B’s business; and (c) $346,591.43 for the loss of Client C’s business.
114. Crandell further owes BDO thirty percent of the annual earnings of each employee
he solicited away from BDO, plus an additional ten percent for each year of service of the
employee to cover training costs. That amount totals $343,400.00 for the solicitation of Rojas,
Vacchi, Koopmans, and Dunphy.
115. Crandell has refused to compensate BDO for the lost clients and employees
according to the formulas laid out in his contract.
ANSWER: Defendant denies that he has caused BDO any damages and admits that he has refused
to pay BDO the specific amount of money BDO has demanded. The remainder of Paragraph 115
of Plaintiff’s Complaint requires a legal conclusion, to which no response is required.
116. As a direct and proximate result of Crandell’s breach, BDO has suffered damages,
28
including interference in BDO’s business operations, damage to client relationships, and lost
profits.
117. BDO is entitled to relief and judgment against Crandell in an amount in excess of
$2,963,801.09, plus any additional damages that may be determined at trial; all equitable relief
including restitution; as well as attorneys’ fees, interest, costs, and other such relief and damages
as BDO may prove at trial and this Court deems just and equitable.
COUNT III
(Breach of the Common Law Duty of Loyalty)
118. BDO incorporates and realleges all the previous paragraphs as though fully set forth
herein.
forth herein.
119. As a BDO employee, Crandell owed BDO a common law duty of loyalty.
120. Crandell breached that duty of loyalty by disparaging BDO to clients, soliciting
clients away from BDO to Armanino, and soliciting employees to join him at Armanino in direct
violation of his non-solicitation covenants.
29
121. Crandell’s scheme to solicit Client B to join Armanino while Crandell was still
employed at BDO, as evidenced by his “happy hour” with Client B and Client B’s subsequent
inquiry about Armanino, constitutes a breach of the duty of loyalty.
122. While employed by BDO, Crandell further solicited other BDO employees,
including Rojas, Vacchi, Koopmans, and Dunphy, to join him at Armanino.
123. Crandell’s breaches have caused BDO to suffer damages in the form of lost clients,
lost corporate opportunities, lost revenue, and interference in BDO’s business operations.
124. BDO is entitled to relief and judgment against Crandell and damages in an amount
to be proven at trial, all equitable relief including restitution, as well as interest, costs, and other
such relief that this Court deems just and equitable.
COUNT IV
(Breach of Fiduciary Duty)
forth herein.
forth herein.
30
126. As a former partner of BDO USA, LLP and then senior-level employee of BDO,
Crandell was entrusted with confidential business information of BDO, its clients, and its
employees.
ANSWER: Defendant admits that, at times, he received confidential business information of BDO
and its clients. The remaining allegations in Paragraph 126 of Plaintiff’s Complaint require a legal
conclusion, to which no response is required. To the extent a response is required, Defendant
denies the allegations.
127. Crandell therefore owed duties to BDO as a fiduciary, including to act solely for
the benefit of BDO in all matters connected with his employment with the firm.
128. While employed by BDO, Crandell breached his fiduciary duties to BDO by
soliciting its employees and its clients to leave BDO in favor of Armanino, including by using
confidential information about BDO, its clients, and its employees to accomplish those goals.
129. Crandell’s breaches have caused BDO to suffer damages in the form of lost clients,
lost corporate opportunities, lost revenue, and interference in BDO’s business operations.
130. BDO is entitled to relief and judgment against Crandell and damages in an amount
to be proven at trial, all equitable relief including restitution, as well as interest, costs, and other
such relief that this Court deems just and equitable.
31
PRAYER FOR RELIEF
Defendant denies that Plaintiff is entitled to any of the relief requested in its Prayer for
Relief.
GENERAL DENIAL
Except as to those matters specifically admitted, Defendant denies each and every matter
and thing contained in Plaintiff’s Complaint in any of its counts, claims, paragraphs, or at all.
DEFENSES AND AFFIRMATIVE DEFENSES
1. To the extent the Complaint, in whole or in part, fails to state a claim upon which
relief can be granted, it should be dismissed.
2. Plaintiff’s claims are barred, in whole, or in part, because any damages suffered by
Plaintiff were caused by acts or omissions of Plaintiff and/or are the result of actions of third parties
for whom Defendant is not responsible and were not caused by Defendant.
3. Plaintiff’s claims for damages may be barred, in whole or in part, by its failure to
mitigate its damages, if any.
4. Plaintiff’s claims may be barred, in whole or in part, for failure of consideration
related to the alleged agreement between Plaintiff and Defendant.
5. Plaintiff’s claims may be barred, in whole or in part, because Plaintiff enticed
Defendant to enter into the alleged agreement(s) between Plaintiff and Defendant by means of
false representations and false promises and/or material omissions.
6. Plaintiff’s claims may be barred, in whole or in part, due to Plaintiff’s fraud, deceit,
misrepresentations, and/or material omissions.
32
7. Plaintiff’s claims are barred or limited because the scope of the restrictive
covenants contained in the agreements are unreasonable, not narrowly tailored to BDO’s
protectible interests, and further violate Colo. Rev. Stat. § 8-2-113. Plaintiff is barred from relief
because enforcement of the non-compete would not serve the public interest.
8. Plaintiff has failed to state a claim for relief because Plaintiff has failed to identify
any specific legally protected trade secrets or confidential information.
9. Plaintiff’s claims are barred, in whole or part, because any conduct by Defendant
is privileged competition, and the Complaint constitutes an improper effort to restrain lawful
competition.
10. Plaintiff’s claims are barred by release of the alleged agreement between Plaintiff
and Defendant.
11. Plaintiff’s claims are barred and/or limited by the doctrines of waiver, laches,
acquiescence, ratification, consent, failure of consideration, unclean hands, and/or estoppel.
12. Plaintiff’s claims are barred and/or limited by the selective enforcement doctrine.
13. Plaintiff’s claims are barred or limited, in whole or in part, by the doctrines of offset,
set-off, and accord of satisfaction.
14. Plaintiff has not been damaged in any manner that would permit the recovery of
any damages under law.
15. Plaintiff’s damage provision(s) in the agreements are unenforceable because there
is not a reasonable estimate of the actual damages that such putative breaches would cause when
viewed at the time of the execution of the agreements.
16. The Complaint fails to state facts sufficient to support an award of attorneys’ fees
against Defendant.
33
17. Plaintiff’s claims are barred, in whole or in part, because Plaintiff’s damages, if
any, are too uncertain or speculative.
18. Plaintiff inappropriately seeks duplicative recovery on the same alleged injury or
damages.
19. Plaintiff’s tort claims are barred because of the economic loss rule.
20. Plaintiff is barred from obtaining relief because Defendant’s conduct at all times
was reasonable, proper, in good faith, and legally justified, and Defendant did not directly or
indirectly undertake any action in violation of the law.
21. Plaintiff’s claims are barred in whole or in part by express or implied agreements,
promises, or permission.
22. Plaintiff is barred from relief because it acted in bad faith.
23. Plaintiff is barred from enforcement because enforcement is unconscionable.
ADDITIONAL DEFENSES
Defendant reserves the right to assert additional defenses based on information learned or
obtained through discovery or further investigation.
COUNTERCLAIMS
Defendant brings the following counterclaims and requests a trial by jury.
FACTUAL ALLEGATIONS
1. Defendant was hired by Plaintiff’s predecessor, BDO USA LLP in August 2020 as
a partner.
2. Defendant was hired to work in the Denver office of BDO. At all times during his
partnership with BDO USA LLP and subsequent employment at BDO USA, PAC, Defendant lived
in Colorado. He also performed the majority of his work in Colorado.
34
3. In the summer of 2023, the Board of Directors and majority partners of BDO USA
LLP convinced the partners to vote to approve the conversion of the partnership to a professional
corporation by making false statements and materially misleading omissions, including that the
conversion would benefit all partners, including the minority partners and, further, that there was
no private equity transaction on the table.
4. In early June 2023, Wayne Berson, CEO, provided false information on an all-
partner call stating that the conversion was intended to simplify tax filings and specifically stated
that there were no discussions with private equity and there were no private equity transactions in
the works.
5. Upon information and belief, BDO reactivated retired partners right before the
ESOP transaction and delayed the retirement of several partners to obtain additional votes to obtain
enough votes to secure the ESOP transaction.
6. However, a few weeks after the conversion, the majority partners were told that
Plaintiff had been in conversations with private equity investors for months. In order to sweeten
the deal for the private equity investors and some (but not all) of the partners, Plaintiff began to
pressure Defendant to overinflate revenues. Defendant refused.
7. On or about June 10, 2023, Plaintiff presented Defendant with the BDO
Partner/Principal Employment Agreement, Exhibit 2 to the Complaint, setting forth the terms and
conditions of his employment with BDO USA, LLP. BDO only gave Defendant 10 days to sign
the agreement in violation of Colorado law.
8. In early August 2023, the firm held an all-partner meeting in Orlando, Florida and
at this meeting a representative from State Street, investment bank, and Apollo, private equity
lender, thanked Mr. Berson for partnering with them over the last 15 months to complete the
35
transaction. Clearly this statement represented that BDO had misrepresented to their partnership
the purpose of the ESOP transaction and corporate conversion.
9. As a condition of his employment, Defendant was required to execute the
Agreement Regarding Competition and Protection of Proprietary Restrictions, attached as Exhibit
A to the BDO Partner/Principal Employment Agreement (the “Restrictive Covenants").
10. Because Defendant is a resident of Colorado who worked primarily in Colorado,
Colorado law applies to him.
11. Nonetheless, despite well-publicized Colorado law requiring (among other things),
that Plaintiff provide Defendant a separate notice of the restrictive covenant and 14 days to
consider the covenant, Plaintiff failed to provide him with the legally-required notice.
12. Partially as a consequence of the substantial debt Plaintiff incurred in connection
with the conversion and adoption of the (ESOP), Plaintiff began to hemorrhage money. It
undertook substantial cost-cutting measures, including not providing employees with raises and
previously promised bonuses.
13. On October 23, 2023, Scott Grimm, Tax Market Leader, drafted an email to BDO
leadership Matthew Becker, Hoon Lee and Brent Hagerman explaining that both Tim V and Justin
Rojas can double their salaries by leaving. He further explained that if BDO cannot get them close
to $400K some of BDO’s largest relationships will be at risk. He goes on to state that if BDO
cannot secure Rojas he does not think that the PE work will stay at BDO.
36
37
14. As the email reveals, Scott Grimm advises BDO leadership that BDO will lose its
key people based on how they had been treated by BDO, in that BDO had failed to support them,
recognize their tireless work and compensate them according to market demand.
15. Because Plaintiff misrepresented the corporate conversion, lacked operational
transparency, and pressured Defendant to inflate revenues leading up to the ESOP, Defendant
decided to resign from BDO.
16. On or about October 23, 2023, Defendant provided advance notice to BDO that he
was resigning. He offered to remain with BDO for three months to assist BDO with transitioning
his work to other employees and thus ensure a smooth transition that protected not only BDO, but
also the clients for whom Defendant was providing services.
17. A smooth transition was particularly necessary for Clients A, B, and C, as those
clients were in the middle of important and complicated transactions.
18. BDO rejected Defendant’s offer to assist his clients with the transition and, instead,
cut off his access to his computer and all BDO related documents and removed him from the
premises on or about November 4, 2023.
19. BDO’s decision to reject Defendant’s offer to assist with client transition negatively
affected its clients. For instance, the following email was sent to Scott Grimm by one of the clients
referenced herein:
Hey Scott, please give me a call. We have a transaction closing next week and
need the tax analysis that Justin was working on ASAP.
I spoke with Tim yesterday and he let me know about Caleb and Justin being let
go over the weekend. He said that you guys were getting into their accounts and
would not miss a step, but I showed up for our weekly BDO tax call at 9am this
morning with nobody on the line. We have $50M dividend recap transaction on
our most complicated investment that is closing next week. I’m in shock that we
can have a transaction like this going on and its being lost in the shuffle. How can
38
you cut off my team from communication without a plan to transition the
immediate work that is due? Let me know when you can speak.
20. Defendant had a long-standing relationship with Clients A, B, and C. Upon
information and belief, those clients were happy with his services.
21. Clients A, B, and C were unhappy with BDO’s services after Defendant’s departure
and particularly BDO’s failure to provide for a smooth transition because it could have resulted in
significant financial ramifications to the clients. As a result, BDO’s own actions jeopardized its
relationship with its clients.
Plaintiff’s Refusal to Pay Amounts Owed Defendant.
22. Plaintiff has refused to pay the $151,112.52 it admits it owes Defendant in
connection with two promissory notes representing his share of the profits and losses of the former
BDO USA, LLP (a Cash Capital Promissory Note and an Undistributed Earnings Promissory
Note) and his share of the amounts owed him related to the operation and sale of BDO Wealth
Advisors, LLC BDO Wealth Advisors to Choreo Advisors following BDO USA, LLP’s
conversion to a professional corporation.
23. Plaintiff owes Defendant $151,112.52 allocated as follows: $49,769.00 for the sale
of BDO Wealth Advisors; $56,302.52 for his portion of the BDO Capital Account on the date of
the conversion of the partnership to a corporation; and $45,041.00 for his portion of the
undistributed earnings account of BDO USA, LLP as of the date of the partnership’s conversion
to BDO USA, P.A.
24. The proceeds from the BDO Wealth Advisors sale were distributed at the end of
January 2024. Defendant learned about the distribution because it has been identified as taxable
income in his tax documents, however BDO has withheld the distribution from Defendant.
25. Plaintiff provided defendant with certain tax records and other documents admitting
39
it owed him $151,112.52. Those records contain personal financial information and are not
attached to this Answer and Counterclaim.
26. In an email dated January 28, 2024, Defendant requested the amounts owed him,
but Plaintiff refused to pay him.
27. Defendant’s counsel then sent a demand letter to Plaintiff on February 5,
2024, requesting that Defendant be paid the amounts Plaintiff admitted that it owed him.
28. On February 12, 2024, Plaintiff responded to the demand letter. Plaintiff did not
deny that it owed Defendant the $151,112.52 , but it informed him that it was unilaterally refusing
to pay him the money because it claimed he violated the unenforceable restrictive covenants in the
BDO USA, LLP Amended and Restated Partnership Agreement and the BDO/Partner/Principal
Employment Agreement and that it had the right to “withhold or defer payment of proceeds from
the sale of BDO Wealth Advisors and the two promissory notes to Mr. Crandell.”
CLAIMS FOR RELIEF
COUNT I
(Breach of Contract)
29. Defendant hereby incorporates the allegations in each of the foregoing paragraphs
as though fully set forth herein.
30. Pursuant to Sections 5.1, 6.1, and 12.1 of the Amended and Restated Partnership
Agreement between Plaintiff’s predecessor BDO USA LLP and Defendant, Plaintiff has the
obligation to pay Defendant his share of the profits and losses of the company and capital upon
certain triggering events.
31. Plaintiff executed two promissory notes to Defendant, a Cash Capital Promissory
Note and an Undistributed Earnings Promissory Note.
32. Plaintiff has admitted that the notes are due and owing Defendant.
40
33. Plaintiff also admitted that Defendant is owed his share of the sales proceeds of
BDO Wealth Advisors, LLC.
34. Plaintiff has refused to pay Defendant the amount owed under the notes and
pursuant to the sale, totaling $151,112.52.
35. Plaintiff’s failure to pay the amounts owing under the BDO USA, LLP Amended
and Restated Partnership Agreement, the Promissory Notes, and the BDO WA Holdco, LLC
Limited Liability Agreement constitutes breaches of contract.
36. Defendant is entitled to interest from the date the amounts became due and owing.
COUNT II
(Breach of Colorado Revised Statute § 8-2-113)
37. Plaintiff presented Defendant with Exhibit A to the BDO Partnership/Principal
Employment Agreement and First Amendment, both of which violate Colo. Rev. Stat. § 8-2-113,
effective as of August 10, 2022, because:
a. Plaintiff failed to provide the separate, fourteen-day advance notice required under
Colo. Rev. Stat. § 8-2-113(4)(a) and (b);
b. Exhibit A purports to be governed by Delaware law, contrary to Colo. Rev. Stat. §

8-2-113(6);
c. The First Amendment purports to be governed by Virginia law, contrary to Colo.

Rev. Stat. § 8-2-113(6);
d. The restrictive covenants contained in those documents are not for the protection of
trade secrets and, in any event, are broader than is reasonably necessary to protect
any legitimate interest in protecting trade secrets;
e. The restrictive covenants are overbroad as to geography, time, and scope and thus
violate Colorado common law;
f. The restrictive covenants impose a hardship on Defendant.
38. Plaintiff presented Defendant with the Amended and Restated Partnership
41
Agreement, Exhibit 1 to the Complaint, which violates Colo. Rev. Stat. § 8-2-113 (2020)
because:
a. The restrictive covenants do not come within any of the four exceptions that void
such covenants under the law;
b. The restrictive covenants contained in that document are overbroad as to geography,

time, and scope and thus violate Colorado common law;
c. The restrictive covenants impose a hardship on Defendant and thus violate

Colorado common law.
39. Plaintiff violated C.R.S. 8-2-113(8) by presenting Defendant with, and seeking
to enforce, a covenant not to compete that is void under the statute.
40. Plaintiff did not act in good faith, nor did it have reasonable grounds to believe
its conduct comported with Colorado law.
41. Defendant suffered actual damages as a result of Plaintiff’s unlawful conduct,
including interruption to his current employment, as well as attorneys’ fees and costs.
DEFENDANT’S PRAYER FOR RELIEF
WHEREFORE, Defendant prays for judgment in his favor and against BDO as follows:
1. That judgment enter against BDO and for Defendant on all of BDO’s claims;
2. That judgment enter in favor of Defendant and against BDO and order the following
relief as allowed by law on his counterclaim:
a. actual economic damages;
b. Compensatory damages included, but not limited to, those for past and
future pecuniary and non-pecuniary losses, emotional distress, pain,
inconvenience, mental anguish, and loss of enjoyment of life;
42
c. Pre-judgment and post-judgment interest at the highest lawful rate; and
d. Such further relief as the Court deems just and proper.
3. An award for Defendant for his reasonable attorneys’ fees under Colo. Rev. Stat. §
8-2-113(8)(b);
4. An award to Defendant of his costs in defending and prosecuting this action;
5. The granting of any further relief the court considers just and proper.
DEMAND FOR JURY TRIAL
In accordance with Fed. R. Civ. P. 38(b), Defendant demands a trial by jury on all issues
so triable.
DATED: April 25, 2024.
Respectfully submitted,
By: /s/ Tiffany Joseph Goodson

Tiffany Joseph Goodson (VSB No. 81687)
HKM Employment Attorneys LLP
3033 Wilson Boulevard, Suite 763
Arlington, VA 22201
Phone: (202) 919-5952
Fax: (202) 919-5952
[email protected]
Jacqueline Guesno (admitted pro hac vice)

HKM Employment Attorneys, LLP
518 17th Street, Suite 1100
Denver, Colorado 80202
(720) 439-6701
[email protected]
Meredith Munro (admitted pro hac vice)

Munro Law, LLC
216 S Milwaukee Street
Denver, CO 80209
(303) 524-2557
[email protected]
Attorneys for Defendant, Caleb Crandell
43
CERTIFICATE OF SERVICE
I hereby certify that on this day, April 25, 2024, I served the foregoing Defendant’s
Answers and Defenses to Complaint, and Counterclaims and Jury Demand, via electronic mail and
via the Court’s CM/ECF system to:
Julie McConnell
McDermott Will & Emery LLP
500 North Capitol Street, NW
Washington, DC 20001
[email protected]
(202) 756-8000
Michael Sheehan
Brian Mead
Barrick Bollman
444 West Lake Street
Suite 4000
Chicago, IL 60606
[email protected]
[email protected]
[email protected]
(312) 372-2000
Mark Meredith
One Vanderbilt Avenue
New York, New York 10017-3852
[email protected]
(212) 547-5400
Attorneys for Plaintiff, BDO USA, P.C.
/s/ Tiffany Joseph Goodson

Tiffany Joseph Goodson
44

BDO v. Crandell, Crandell Answer and Counterclaim

Uploaded by

Copyright:

Available Formats

BDO v. Crandell, Crandell Answer and Counterclaim

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BDO v. Crandell, Crandell Answer and Counterclaim

Uploaded by

Copyright:

Available Formats

Case 3:24-cv-00012-DJN Document 31 Filed 04/25/24 Page 1 of 44 PageID# 231

IN THE UNITED STATES DISTRICT COURT

DEFENDANT’S ANSWERS AND DEFENSES TO COMPLAINT,

In support thereof, Defendant states as follows:

NATURE OF THE CASE

LLP (“Armanino”)—a competitor of BDO—and subsequent raiding of BDO clients and

employees in violation of Crandell’s restrictive covenant obligations to BDO.

ANSWER: Defendant denies the allegations contained in Paragraph 1 of Plaintiff’s Complaint.

that those restrictive covenants are enforceable.

3. Crandell is also bound to an employee non-solicitation clause, under which

employment with BDO to leave BDO’s employ.

the implication that the non-solicitation clause is enforceable.

ANSWER: Defendant admits the allegations contained in Paragraph 4 of Plaintiff’s Complaint,

ensure a smooth transition.

departed BDO for Armanino.

departure from BDO to join Armanino.

Koopmans, and Dunphy or indirectly aided Armanino’s solicitation of these employees.

ANSWER: Defendant denies the allegations contained in Paragraph 6 of Plaintiff’s Complaint.

(“CFO”) in the days leading up to his departure from BDO.

ANSWER: Defendant denies the allegations contained in Paragraph 9 of Plaintiff’s Complaint.

when this took place.

put him in contact with Armanino.

covenant’s prohibition on soliciting clients he served at BDO.

ANSWER: Defendant denies the allegations contained in Paragraph 11 of Plaintiff’s Complaint.

C at Armanino, but Defendant denies violating any restrictive covenants.

ANSWER: Defendant admits he declined to submit a sworn affirmation. To the extent an

additional response is necessary, Defendant denies the allegations.

ANSWER: Defendant is without sufficient information to admit or deny the allegations in

solicited by Crandell to join Armanino.

ANSWER: Defendant is without sufficient information to admit or deny the allegations in

caused and will continue to cause BDO substantial financial damage.

ANSWER: Paragraph 16 of Plaintiff’s Complaint requires a legal conclusion, to which no

loyalty he owed to BDO.

ANSWER: Paragraph 17 of Plaintiff’s Complaint requires a legal conclusion, to which no

breach of duty of loyalty, and breach of fiduciary duties.

ANSWER: Paragraph 18 of Plaintiff’s Complaint requires a legal conclusion, to which no

PARTIES, JURISDICTION & VENUE

ANSWER: Defendant is without sufficient information to admit or deny the allegations in

employee of Armanino’s Denver, Colorado office.

ANSWER: Defendant admits the allegations contained in Paragraph 20 of Plaintiff’s Complaint.

exceeds the sum or value of $75,000.

ANSWER: Paragraph 21 of Plaintiff’s Complaint requires a legal conclusion, to which no

subject matter jurisdiction over this action.

ANSWER: Paragraph 22 of Plaintiff’s Complaint requires a legal conclusion, to which no

personal jurisdiction over Defendant.

ANSWER: Paragraph 23 of Plaintiff’s Complaint requires a legal conclusion, to which no

that the Court determined that venue is proper.

A. BDO’s Business & Employment of Crandell

including in Denver, Colorado.

ANSWER: Defendant is without sufficient information to admit or deny the allegations in

relationships with clients on behalf of BDO.

ANSWER: Defendant denies the allegations contained in Paragraph 25 of Plaintiff’s Complaint.

Paragraph 26 of Plaintiff’s Complaint.

(a) Directly or indirectly solicits or obtains for himself/herself, or for a firm

developed by such Partner only as a result of his/her independent recruitment efforts

admits that he entered into the agreement attached as Exhibit 1.

a response is required, Defendant denies the allegations.

the Partnership Agreement as follows:

a response is required, Defendant denies the allegations.

and assigns.” (Ex. 1 ¶ 16.8.)