CBRE brokers, Newmark at impasse over what they can do for work

8.18D Broker

From left, Terrance Hunt, Shane Ozment and Chris Cowan. A judge ruled that the three multifamily brokers can’t offer their services in Colorado for a year. (BusinessDen file)

Two months after being told they can’t work as brokers in Colorado for one year, three Denver real estate professionals are still trying to figure out what exactly they can do for their new employer.

And in court, the men’s attorneys have said their previous firm is seeking to make legal proceedings “as expensive as possible” for them.

Terrance Hunt, Shane Ozment and Chris Cowan, who for years have brokered some of the Denver-area’s largest real estate transactions, left Newmark for rival CBRE in May.

Newmark subsequently sued the men in New York, saying they were violating non-compete agreements. The men filed their own lawsuit in Denver, saying the referenced agreement was superseded by a later one, and the original agreement was unenforceable anyway.

The bulk of the court action since then has taken place in New York, where in July state Supreme Court Justice Barry Ostrager issued an injunction prohibiting Hunt, Ozment and Cowan from the following for one year:

1) “Providing any brokerage services in the State of Colorado or any brokerage services that have any nexus with the State of Colorado”

2)  “Directly or indirectly competing” with Newmark in Colorado

3) “Acquiring any interest in or providing any services to any brokerage firm in Colorado” that competes with Newmark

4) Disparaging Newmark

Hunt, Ozment and Cowan have appealed the injunction; in New York, the Supreme Court is not the highest state court. But a decision on that appeal is not likely for months, court records indicate.

In August, when attorneys for the brokers indicated they had questions about what the men could do while complying with the injunction — could they go to industry conferences, for example? — Ostrager said he felt “the decision is clear.”

“Counsel shall confer and agree upon any additional details that are necessary,” he said in a mid-August filing.

But by the end of August, the two sides wrote Ostrager again, saying they had done so but still not come to an agreement.

Attorneys for the men said in an Aug. 31 letter to the judge that they had identified possible roles that don’t require a brokerage license at three CBRE subsidiaries: Trammell Crow Co., CBRE Global Investors and CBRE Capital Advisors.

“Defendants … wish to remain employed and earn a living during this time,” the attorneys wrote.

The men’s attorneys wrote that it appears Newmark “never intended to engage in meaningful discussions” regarding the limits of the injunction.

“For example, Plaintiffs inquired as to the specific industry conferences Defendants would attend, but ultimately took the position that Defendants cannot attend any conferences because ‘business’ can be conducted at those meetings,” attorneys for the three wrote. “Defendants assured Plaintiffs that they would not solicit business at these conferences and a primary purpose of these conferences is continuing education.”

Attorneys for Newmark, however, said the discussions were done “in good faith,” and directly responded to the conference example.

“After receiving a non-exhaustive list of potential conferences and discussing those conferences with defense counsel, it is Plaintiffs’ position that this is an attempt to circumvent the Court’s Order by finding ways to continue to solicit clients,” the Newmark attorneys wrote. “Attending conferences with market participants and clients where the primary goal is marketing and business development would constitute indirect brokerage activities and otherwise compete with Newmark in violation of the Injunction.”

And Newmark’s attorneys wrote that roles at the CBRE subsidiaries wouldn’t be appropriate.

Regarding Trammel Crow: “Our understanding is that Trammell Crow Company shares its office in Denver, Colorado with CBRE’s multi-family brokerage team, and it uses the same computer server and systems. Defendants’ proposal that they sit next to or down the hall from the brokers working in Denver under the thin veil of working for an affiliate is precisely the kind of end run around prohibited under the Injunction.”

Regarding CBRE Capital Advisors: “Defendants asserted that raising capital for CBRE Capital Advisors would be proper, but this ignores the fact that raising capital is a regular business activity conducted by Newmark and therefore their proposed activity would violate the Injunction by directly competing with Newmark.”

Regarding CBRE Global Investors: “Defendants also proposed that they would identify and analyze real estate investment opportunities for CBRE Global Investors. However, that would constitute marketing and business development. For example, counsel asserted that Defendants identifying properties for purchase would not compete. That is wrong: doing so would keep them relevant to clients. Moreover, it is doubly wrong because buyers become sellers.”

Elsewhere in the case, the three men have asked Ostrager to stay further discovery until a decision is made on the appeal of the injunction, arguing the ruling “potentially will have a significant impact on discovery.”

Newmark objected to that request. In response, the attorneys for the men said it was “only the latest example of Plaintiffs’ efforts to make this case as expensive as possible for Defendants.”

Newmark, meanwhile, is arguing that pausing discovery will only make the case take longer.

“There is no basis to find that extending the duration of this litigation will somehow result in cost savings for the Defendants,” an attorney for the firm wrote in a Sep. 8 filing.

A hearing on the motion to stay discovery is currently scheduled for Sept. 30.

8.18D Broker

From left, Terrance Hunt, Shane Ozment and Chris Cowan. A judge ruled that the three multifamily brokers can’t offer their services in Colorado for a year. (BusinessDen file)

A judge ruled that Terrance Hunt, Shane Ozment and Chris Cowan can’t act as brokers in Colorado for one year.

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