Broker sues former Halstead Holmes Team partners in commission dispute

By Candace Taylor | July 26, 2010 06:00PM

From left: William Vilkelis, Catherine Holmes, Tom Holmes and Jeff Goodman

In
a case that highlights the challenges of forming — and dissolving —
groups within brokerages, a spat involving well-known Halstead brokers
has ended up in court.

In December 2009, Barak Realty Vice President William Vilkelis
filed a lawsuit in New York State Supreme Court claiming that he is
owed some $1 million in unpaid commissions and other damages by his
former partners at Halstead Property’s Holmes Team.

Vilkelis, who was a member of the Holmes Team before leaving
Halstead last year, claims in the suit that his former team members —
Catherine Holmes, a senior vice president at Halstead, her husband
Thomas Holmes and agent Jeff Goodman — conspired to steal his clients
and assets before forcing him to leave the team.

The Holmeses are well-known real estate agents who once listed William F. Buckley’s maisonette at 778 Park Avenue for $24.5 million.
Longtime agent Catherine Holmes was the director of residential sales
at Barak Realty before leaving for Halstead; her husband Tom joined her
in the business in 2007.

The Holmeses and Goodman “decided they were going to take my business and walk away with it,” Vilkelis told The Real Deal.

The law firm representing the Holmes Team, Phillips Nizer, has moved to dismiss the complaint.

“We think that the complaint has no basis,” said Phillips Nizer
attorney Lonica Smith, who declined to comment further because the
litigation is pending. Catherine Holmes referred all questions about
the case to Phillips Nizer.

The team members had agreed to split commission proceeds four ways, Vilkelis said, but had no written agreement.

In today’s uncertain real estate climate, it’s become more common for
brokers to form partnerships or teams (and for those partnerships to eventually disintegrate.)
The Vilkelis case underscores the importance for brokers to execute
written contracts when forming these alliances, said attorney Debra
Guzov, a partner at law firm Guzov Ofsink.

“The thing that people should take away from this is, always have it in
writing,” said Guzov, who is not involved in the Vilkelis case but has
seen a number of similar disagreements in recent years.

The Holmes Team was formed in the fall of 2008, according to Vilkelis’
lawsuit. At the time, all four members were working at Barak Realty.
The Holmeses, both of whom Vilkelis had known for years, invited him to
form a team with them, along with Goodman.

The four decided to name the group “the Holmes Team,” and agreed to
split all profits equally, according to the suit. In February of last
year, they all moved together to Halstead and began working out of the
firm’s 408 Columbus Avenue office.

Though the group produced documents about their projected revenue and
projection goals, “there was nothing in writing,” about how commissions
would be split, Vilkelis told The Real Deal. “It was an oversight. But substantial evidence shows that we shared profits and expenses on an equal basis.”

Real estate is somewhat unique from other industries in that agents are
independent contractors rather than employees of the companies they
work for. As a result, they’re often left up to their own devices when
it comes to forming teams or partnerships.

“They’re independent contractors, and they’re generally smart business
people,” said Barak Dunayer, the president of Barak Realty. “Our policy
in general is to let them figure out how they want to run their
business.”

It’s a kind of freedom that “wouldn’t work in any other kind of industry,” he noted.

Brokers are required by law to have a written contract — usually an
exclusive sales agreement — to be paid a commission for a sale, Guzov
said. But once that’s in place, brokers sometimes “get sloppy,”
splitting profits with each other without written agreements, she said.

With more partnerships forming in recent years, this is becoming more of an issue, she added.

Dunayer said he recommends that agents put these agreements in writing,
and file a copy with the brokerage in order to avoid disputes. But the
Holmes Team was only in the beginning stages of forming when they moved
to Halstead, he said, so he is not familiar with the details of the
agreement.

Halstead declined to comment.

According to the lawsuit, Vilkelis’ duties included producing a monthly
newsletter, developing the Holmes Team’s website, and creating a logo
and marketing materials for them, while the other members focused on
holding open houses and “bringing buyers and sellers of real estate,”
though Vilkelis said he also worked on real estate transactions.

In 2009, the team did some $10 million worth of business, the suit
says. But relations within the group soured, and Vilkelis was asked to
leave the team in December 2009 “without compensation for the
plaintiff’s interest therein,” he charges in the suit.

Vilkelis’ suit says he is owed more than $500,000 in commissions, and
$500,000 for other work he did for the group. Believing that he would
receive 25 percent of all commission income from the Holmes Team, the
suit says, Vilkelis worked for the group “without fee or charge,” and
didn’t attempt to make a living elsewhere.

The suit claims that the Holmeses and Goodman held a meeting in
December, without Vilkelis’ knowledge, in which they decided to ask him
to leave the team. After the meeting, but before informing him of their
decision, they “seized… all books, records, files inventories,
equipment, client lists, active deals under contract and the property
of the Holmes team as well as the property of [Vilkelis,]” the suit
says.

The suit also claims that members of the team “effectively sabotaged
[Vilkelis’] performance, in an effort to deprive him of his 25 percent
partnership interest in the Holmes Team,” and “have induced… customers
of [Vilkelis] to cease dealing with [Vilkelis] and transact business
with the defendants instead.”

They did that by informing Vilkelis’ customers that he “lacks the capabilities which the customers need,” the suit states.

Vilkelis returned to Barak Realty after leaving the Holmes Team.

The case is still pending.

Guzov, the attorney, said that in situations where there is no written
contract, the court may look at the group’s history, or “prior course
of dealing,” in determining how commissions should be split up.

If the team had consistently split commissions four ways, “that would
be compelling to a court,” she said. “You can’t change the rules at the
last minute.”

Still, she noted, the best solution for brokers is to have a written contract.

“Certainly, having it in writing serves everyone’s purpose,” she said.

Have a tip? Write to Candace Taylor at ct@therealdeal.com