A state judge in California ruled in DocMagic’s favor on a motion filed by Ellie Mae to dismiss a portion of the state lawsuit currently pending between the two mortgage software companies. The judge’s ruling applies to one of two lawsuits DocMagic filed against Ellie Mae in August. DocMagic claims Ellie Mae misused proprietary information to develop software to compete with DocMagic. Ellie Mae filed a “demurrer pleading,” which contests the legal sufficiency of DocMagic’s claim of unfair competition brought under California’s Business and Professions Code Section 17200. Ellie Mae argued the legislation was preempted by California’s version of the Uniform Trade Secrets Act (CUTSA). In its ruling, the court said DocMagic’s claims were sufficient to constitute a cause of action against Ellie Mae, independent of the CUTSA, DocMagic said in a release. The state lawsuit will continue, as well as a corresponding federal case. “While misappropriating others’ proprietary information is not uncommon in the technology industry, it’s not the first time Ellie Mae has been accused of such conduct, or the first time they have attempted to circumvent having to answer for their alleged conduct by legal maneuvering,” DocMagic CEO Dominic Iannitti said in a release. “We are very pleased that Ellie Mae’s attempts to block DocMagic from continued discovery and presenting all the evidence under California’s unfair competition laws was over ruled by the judge, and we look forward to having our day in court.” Ellie Mae representatives did not immediately respond to HousingWire’s request for comment. Write to Austin Kilgore.

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