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Agents Sue Largest Coldwell Banker Franchise Over Commission ‘Scheme’

Coldwell Banker Seacoast Benefit allegedly pocketed fee charges it instructed its brokers had been going to the franchisor. The brokerage says the allegations are “a whole fabrication.”

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4 North Carolina actual property brokers have filed a lawsuit looking for class-action standing in opposition to Coldwell Banker’s largest franchisee, alleging the brokerage pocketed fee charges it instructed its brokers had been going to the franchisor.

In a Feb. 22 grievance, attorneys for brokers Jeff Domin, Laura LeFevre, Casey Roman, and Jonathan Adcock element an “unfair and misleading scheme” by Wilmington-based Coldwell Banker Seacoast Benefit “to complement itself by surreptitiously retaining tens of millions of {dollars} in actual property commissions which can be contractually owed to its brokers — each present and former.” Seacoast has greater than 800 currently-affiliated brokers.

The grievance alleges that Seacoast’s unbiased contractor agreements say that the brokerage has to take a “6% Coldwell Banker Franchise Charge” from the whole fee the brokerage receives from a transaction, earlier than splitting the remaining fee between the brokerage and the agent. Seacoast allegedly tells its brokers the whole lot of that payment goes to its franchisor, Coldwell Banker.

Nevertheless, the grievance alleges, Coldwell Banker started reducing its franchise charges for its largest franchisees “[y]ears in the past” to “as little as three %” however Seacoast allegedly continued to take 6 %, helped itself to the distinction, and instructed the brokers it was all going to the franchisor.

“Seacoast’s failure to remit the total six % Coldwell Banker Franchise Charge to Coldwell Banker resulted in an altered fee break up that violated the events’ Settlement as a result of it materially modified the phrases of the agreed-upon Fee Schedule,” the grievance says.

“By deducting the six % Coldwell Banker Franchise Charge after which surreptitiously retaining a portion for itself, Seacoast has precipitated substantial financial hurt to Plaintiffs and different equally located actual property brokers …”

Seacoast allegedly hid what it was doing “to discourage any investigation into Seacoast’s cost practices, and to keep away from any renegotiation of the phrases of the Settlement,” the grievance added.

In an emailed assertion, Seacoast’s exterior counsel, Gary Shipman, managing accomplice at Shipman & Wright, instructed Inman the lawsuit was meritless.

“We take the allegations on this lawsuit significantly, and the notion that any present or former brokers/brokers have been ‘overcharged’ or that Sea Coast has in any manner been misleading is a whole fabrication,” Shipman stated.

“Sea Coast takes pleasure in having delivered to each considered one of their present and former brokers/brokers all the pieces that Seacoast dedicated to offer, and however the allegations on this lawsuit, Sea Coast’s actions have at all times targeted upon attempting to maximise every agent/dealer’s talents to succeed below the Coldwell Banker model, of which Sea Coast is part.

“We remorse that these former brokers/brokers who filed this motion didn’t have the courtesy to confront Sea Coast with any of their allegations both whereas they had been working with Sea Coast or afterwards, because the allegations they and their attorneys have made signify a gross misunderstanding of what Sea Coast has charged, supplied or tried to offer to them.”

Shipman added that the brokerage has acquired an “overwhelming present of assist” from its staff members, who’ve additionally stated the lawsuit is “frivolous.”

“We intend to vigorously defend this lawsuit, as we consider it to be fully with out benefit, legally and factually,” Shipman stated.

Shipman famous that “one of many fallacies” of the swimsuit is that Seacoast pays Coldwell Banker a “franchise payment.”

“Seacoast doesn’t pay a ‘franchise payment’ to Coldwell Banker; they pay a ‘royalty’ and ‘advertising and marketing payment,’” Shipman stated. “Brokers are charged a ‘franchise payment’ by Seacoast for the privilege of promoting actual property via Seacoast’s Coldwell Banker franchise, for which they’re supplied particular ‘providers’ by the Coldwell Banker Seacoast franchise.”

Requested what the royalty and advertising and marketing payment is, whether or not the franchise payment is paid on prime of the agent-broker fee break up, and what providers Seacoast affords in trade for this payment, Shipman didn’t reply.

The grievance seeks class-action standing on behalf of all brokers and brokers in North Carolina who signed an unbiased contractor settlement with Seacoast and had been paid commissions from which a 6 % Coldwell Banker Franchise Charge was deducted, which the plaintiffs estimate quantity within the “a whole bunch, if not 1000’s.”

The grievance seeks a jury trial and alleges breach of contract, violation of the North Carolina Unfair and Misleading Commerce Practices Act, and unjust enrichment.

Learn the grievance:

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E-mail Andrea V. Brambila.

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