Realty Executives International has been granted a temporary restraining order (TRO) against ERA Brokers Consolidated, FJM Corporation (formerly known as Realty Executives of Nevada), and Charles J. Moore and Frances E. Moore, the owners of FJM Corporation.
The restraining order has been put in place to halt the contested transaction between FJM and ERA, as well as stop FJM Corporation from incorrectly using Realty Executives International (a Realty Executives franchisor) branding and trade names.
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In a press release provided to Inman News, Realty Executives International says that on June 21, ERA Brokers Consolidated (a franchise of Realogy’s ERA Franchise Systems) issued a press release and online video that announced a merger between the brokerage and Realty Executives of Nevada (now known as FJM Corporation).
The press release issued by ERA Brokers Consolidated on June 21 read:
“ERA Brokers Consolidated, one of Utah’s leading real estate companies, has merged with Realty Executives of Nevada. The newly combined entity will do business as ERA Brokers Consolidated, which is now comprised of 11 offices and 300 affiliated sales associates. Last year, the newly combined operations were responsible for nearly $1 billion in sales volume and 3,400 transactions.”
Realty Executives International says it immediately objected to the purported merger and claimed the press releases were “false and misleading,” and it began the process of judicial relief on five complaints that include “trademark infringement, false designation of origin, breach of contract (against the Moores), breach of implied duty of good faith and fair dealing (against the Moores) and tortious interference with contractual relations.”
According to Realty Executives International, the trademark infringement and false designation claims primarily stem from the June 21 press release, which it claims caused consumer confusion.
Additionally, Realty Executives International PR Manager Nantale Muwonge said those claims include “ongoing, illicit use of our trade name, signage, etc.”
Basis for the breach
The breach of contract, breach of implied duty of good faith and fair dealing claims are due to FJM Corporation selling 100 percent of its stock to ERA Brokers Consolidated, including the concurrent termination of FJM’s franchise agreement with Realty Executives and a re-branding of FJM to ERA.
Muwonge says this transaction is a breach of contract because the franchise agreement between Realty Executives International and FJM contained a right of first refusal and related notice process that FJM did not follow.
To halt the sale, Realty Executives International filed a request for a TRO, which was granted on July 8 by the United States District Judge for the U.S. District Court for the District of Nevada.
“We are pleased that the court agreed with our argument and request for the restraining order,” Realty Executives Chairman David Tedesco said in a press release. “We were shocked and dismayed by the recent actions taken by ERA Brokers Consolidated and FJM Corporation and will take additional steps to protect our business.”
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The TRO required ERA Brokers Consolidated, FJM and the Moores to stop “enumerated aspects of their damaging behavior,” and issue a corrective press release approved by Realty Executives International by a July 11 deadline, which was not met.
Response from ERA Brokers Consolidated
ERA Brokers Consolidated CEO Neil Walter says since June 21, the company has “strived to operate under the ERA Brokers Consolidated brand and image. We never had any intent to operate the business we purchased [on June 20], FJM Corp, under any other brand or image.”
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In response to the claims of “ongoing, illicit use” of Realty Executives International’s trade name, signage, etc. Walter says ERA Brokers Consolidated did not and does not have any intent to continue operating FJM Corporation using Realty Executive International’s branding or systems.
Furthermore, Walter says the company has “made every effort” to return and discontinue use of Realty Executive International’s systems or trademark materials.
In regard to the revised press release, Walter says ERA Brokers Consolidated did have a press release ready in time for the July 11 deadline, but it was not approved by Realty Executives International.
“The revised press release was due to plaintiffs for its approval on July 11th. We provided them a revised version on that date that they did not approve (The TRO required a revised press release to be approved by plaintiffs),” says Walter.
“There were multiple versions of the revised press release drafted over the intervening period until the court approved the July 22 version, which we immediately released as requested.”
Revised press release and ongoing lawsuit
The July 22 press release says:
“On June 21, 2016, ERA Brokers Consolidated issued a press release that stated ERA Brokers Consolidated had merged with Realty Executives of Nevada. To avoid confusion, ERA Brokers Consolidated clarifies that Realty Executives of Nevada did not merge with ERA Brokers Consolidated. Realty Executives of Nevada continues to offer services and operate in Southern Nevada as part of Las Vegas-based Realty Executives the Edge. ERA Brokers Consolidated entered into an agreement to acquire 100% of the stock in FJM Corporation, which previously conducted business as Realty Executives of Nevada. FJM Corporation will do business as ERA Brokers Consolidated going forward.”
Although ERA Brokers Consolidated has fulfilled the terms of the TRO by issuing a revised press release, there is an ongoing lawsuit to remedy the breach of contract and civil tort claims.
“[The lawsuit] is ongoing, with a variety of tracks running concurrently, ranging from proceedings relating to our injunctive relief, formal and informal discussions, preparations for anticipated arbitration of some issues, as well as the baseline track of our lawsuit itself,” says Muwonge.
Walter says ERA Brokers Consolidated and Realty Executives International are in agreement with discontinuing the use of REI’s trade names and intellectual property.
As far as the breach of contract and civil tort claims, Walter says: “To the extent that REI had any existing agreements with its franchisee, it was not our intent to be part of those agreements or involved in any way.”
“We hope they can come to a resolution quickly. As a result, we are focusing on supporting our agents and serving our clients across our organization.”
