Commission Rate Fixing Dates Back To 2000 At TREB. Realtysellers has $750 million lawsuit ready.
Published in 2009
Following a $100 million lawsuit that was served in September on CREA, the Toronto Real Estate Board (TREB) and a number of related association and board officers, REM has learned that a second lawsuit for $750 million has been filed – but not yet served – against TREB and a number of other individuals, including senior executives from Royal LePage and Re/Max Ontario-Atlantic Canada.
As with the $100-million lawsuit, the plaintiffs are Lawrence Dale, Stephen Moranis and their now dormant discount Toronto real estate brokerage, Realtysellers. Real estate broker Fraser Beach is also a plaintiff in the second claim.
The second Statement of Claim was filed with the Ontario Superior Court of Justice by Dale on October 16 on behalf of his fellow plaintiffs. The new claim, if served, would seek damages of $750 million, alleging breach of contract and actions contrary to the Competition Act. In order to proceed before the court, the new Statement of Claim must be served on defendants within six months of the date it was filed.
The new Statement of Claim names TREB as a defendant, along with a number of TREB’s 2007 directors and officers – including TREB CEO Don Richardson – and other real estate industry individuals including Phil Soper, president and CEO of Royal LePage Real Estate Services, and David Brown, EVP of promotions at Re/Max Ontario-Atlantic Canada.
Launched in 2001, Realtysellers suspended operations in 2006, saying it could no longer do business under CREA’s MLS rules. Realtysellers had included in its services the Flat Fee Program, which allowed home sellers to purchase only the services they wanted from the brokerage, enabling “sellers to have their homes listed on MLS for only a few hundred dollars as opposed to the thousands of dollars charged by traditional brokers,” says the $100 million Statement of Claim. It also says TREB, in consultation with CREA, “introduced new rules that required the listing broker to be involved in the offer negotiation process so as to prevent the Flat Fee Program and eliminate Realtysellers’ access to the MLS.”
Realtysellers took legal action against TREB and filed a complaint with the Competition Bureau. In December 2003, a settlement agreement was reached, the claim says, which compensated Realtysellers with $700,000. One of the conditions of the agreement was that Realtysellers withdraw their complaint to the Competition Bureau, which it did, says the claim.
In September 2009, the $100 million “Breach of Settlement Action” was served on TREB and CREA by Realtysellers, Dale and Moranis. In 2007, the $100 million claim alleges that CREA approved new offer negotiation rules that “no longer permitted Flat Fee listings on the MLS as no offer process assistance was provided” in Realtysellers’ program. This was “a flagrant breach of the settlement agreements,” the claim alleges.
CREA and TREB declined comment on the claim but have filed notices with the court of Intent to Defend. Former CREA and TREB president Tom Bosley, who was also named in the action, told REM, “I will have no comments about this pending litigation other than to tell you that I will be vigorously defending these untrue allegations about me personally.”
The potential second lawsuit deals with another venture that the Dale and Moranis tried to start in 2007. BNV, a subsidiary of Bell Canada, and real estate broker Fraser Beach launched the realestateplus.ca service. The new claim says TREB “improperly terminated Beach’s password access to the MLS system…This put Beach, BNV and Bell out of the real estate business for the time being.”
Dale and Moranis then partnered with Bell to relaunch the site, but TREB cut off their MLS access in October 2007, the new claim says.
At the time, Richardson told REM: “TREB disabled TorontoMLS access codes of Realtysellers in October as those codes were being used in a fashion contrary to the rules and user agreements which Realtysellers had entered into as a member of TREB.”
A separate lawsuit by Beach was heard in court earlier this year and a decision is expected soon.
“The plaintiffs have suffered economic loss as a result of the joint venture ceasing operations and Bell terminating its relationship with all of the plaintiffs, which was the consequence of TREB terminating the MLS system access of Moranis, Beach, Realtysellers and BNV to the MLS data…the plaintiffs suffered damages as a result of the tort of intentional interference with their economic relations that forced them out of the resale residential brokerage business,” says the new Statement of Claim.
The new claim also says that “several TREB members” and “co-conspirators” pressured TREB to cut off the MLS access of Moranis, Beach, Realtysellers and BNV. According to the new claim, “the co-conspirators further advised TREB that they would cause their related companies to stop supplying property information to the MLS system if TREB continued to supply MLS system access to Moranis, Beach, Realtysellers and BNV.”
