Home Agent Agents Sue Largest Coldwell Banker Franchise Over Commission ‘Scheme’

Agents Sue Largest Coldwell Banker Franchise Over Commission ‘Scheme’

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Coldwell Banker Seacoast Advantage allegedly pocketed commission fees it told its agents were going to the franchisor. The brokerage says the allegations are “a complete fabrication.”

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Four North Carolina real estate agents have filed a lawsuit seeking class-action status against Coldwell Banker’s largest franchisee, alleging the brokerage pocketed commission fees it told its agents were going to the franchisor.

In a Feb. 22 complaint, attorneys for agents Jeff Domin, Laura LeFevre, Casey Roman, and Jonathan Adcock detail an “unfair and deceptive scheme” by Wilmington-based Coldwell Banker Seacoast Advantage “to enrich itself by surreptitiously retaining millions of dollars in real estate commissions that are contractually owed to its agents — both current and former.” Seacoast has more than 800 currently-affiliated agents.

The complaint alleges that Seacoast’s independent contractor agreements say that the brokerage has to take a “6% Coldwell Banker Franchise Fee” from the entire commission the brokerage receives from a transaction, before splitting the remaining commission between the brokerage and the agent. Seacoast allegedly tells its agents the entirety of that fee goes to its franchisor, Coldwell Banker.

However, the complaint alleges, Coldwell Banker began lowering its franchise fees for its largest franchisees “[y]ears ago” to “as low as three percent” but Seacoast allegedly continued to take 6 percent, helped itself to the difference, and told the agents it was all going to the franchisor.

“Seacoast’s failure to remit the full six percent Coldwell Banker Franchise Fee to Coldwell Banker resulted in an altered commission split that violated the parties’ Agreement because it materially changed the terms of the agreed-upon Commission Schedule,” the complaint says.

“By deducting the six percent Coldwell Banker Franchise Fee and then surreptitiously retaining a portion for itself, Seacoast has caused substantial economic harm to Plaintiffs and other similarly situated real estate agents …”

Seacoast allegedly concealed what it was doing “to deter any investigation into Seacoast’s payment practices, and to avoid any renegotiation of the terms of the Agreement,” the complaint added.

In an emailed statement, Seacoast’s outside counsel, Gary Shipman, managing partner at Shipman & Wright, told Inman the lawsuit was meritless.

“We take the allegations in this lawsuit seriously, and the notion that any current or former agents/brokers have been ‘overcharged’ or that Sea Coast has in any way been deceptive is a complete fabrication,” Shipman said.

“Sea Coast takes pride in having delivered to each and every one of their current and former agents/brokers everything that Seacoast committed to provide, and notwithstanding the allegations in this lawsuit, Sea Coast’s actions have always focused upon trying to maximize each agent/broker’s abilities to succeed under the Coldwell Banker brand, of which Sea Coast is a part.

“We regret that these former agents/brokers who filed this action did not have the courtesy to confront Sea Coast with any of their allegations either while they were working with Sea Coast or afterwards, as the allegations they and their attorneys have made represent a gross misunderstanding of what Sea Coast has charged, provided or attempted to provide to them.”

Shipman added that the brokerage has received an “overwhelming show of support” from its team members, who have also said the lawsuit is “frivolous.”

“We intend to vigorously defend this lawsuit, as we believe it to be completely without merit, legally and factually,” Shipman said.

Shipman noted that “one of the fallacies” of the suit is that Seacoast pays Coldwell Banker a “franchise fee.”

“Seacoast doesn’t pay a ‘franchise fee’ to Coldwell Banker; they pay a ‘royalty’ and ‘marketing fee,’” Shipman said. “Brokers are charged a ‘franchise fee’ by Seacoast for the privilege of selling real estate through Seacoast’s Coldwell Banker franchise, for which they are provided specific ‘services’ by the Coldwell Banker Seacoast franchise.”

Asked what the royalty and marketing fee is, whether the franchise fee is paid on top of the agent-broker commission split, and what services Seacoast offers in exchange for this fee, Shipman did not respond.

The complaint seeks class-action status on behalf of all agents and brokers in North Carolina who signed an independent contractor agreement with Seacoast and were paid commissions from which a 6 percent Coldwell Banker Franchise Fee was deducted, which the plaintiffs estimate number in the “hundreds, if not thousands.”

The complaint seeks a jury trial and alleges breach of contract, violation of the North Carolina Unfair and Deceptive Trade Practices Act, and unjust enrichment.

Read the complaint:

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Email Andrea V. Brambila.

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