BGC Partners has filed suit alleging that Avison Young, a Toronto-based commercial real estate brokerage, has “illegally looted” business from its recently acquired Grubb & Ellis subsidiary. Avison Young, led by former Grubb & Ellis president Mark Rose, allegedly poached 16 brokers in New York, Chicago, Atlanta and Pittsburgh, according to the complaint, after Grubb & Ellis filed for bankruptcy in February, the suit claims.
Filed Aug. 1 in New York State Supreme Court, the suit alleges that Avison Young poached the South Carolina and Nevada affiliate brokerages from Grubb & Ellis after the BGC acquisition was completed in April. Avison Young has rewarded these brokers, “with full knowledge and recklessness to the consequences-for concealing or stealing business opportunities that belonged to Grubb & Ellis,” the suit states.
BGC Is Asking The Court for an injunction forcing Avison Young to stop recruiting Grubb & Ellis brokers.
As The Real Deal previously reported, BGC Partners, led by chief executive Howard Lutnick, acquired Grubb & Ellis in April after the latter nearly collapsed under the weight of the global recession and commercial real estate slump. Grubb & Ellis has been hemorrhaging brokers for several years.
BGC merged Grubb & Ellis with Newmark Knight Frank, which it originally acquired in October 2011, creating a combined brokerage called Newmark Grubb Knight Frank.
Avison Young, which hired Rose in 2008, has gone on an aggressive bid to expand its U.S. business in recent years. One of the largest real estate firms in Canada, Avison has tripled in North American business to more than 30 offices in three years, and hired former Cushman & Wakefield CEO Arthur Mirante to head up its New York City office in April.
The suit claims that Avison Young never officially tried to bid on Grubb & Ellis when the company was going into bankruptcy, but actively tried to recruit brokers and various affiliates to jump ship after an automatic stay was in effect, blocking the sale of any assets from the Grubb & Ellis estate.
John Pinjuv, president of Grubb & Ellis’s Nevada brokerage, for example, gave notice on March 1 that it would cease its operations on March 5, despite being under contract to stay with the group until April 2013, according to the suit. The suit alleges that affiliates leaving before the end of a contract must provide 150 days notice. On March 5, Avison Young announced that it would open a new office at that address with Pinjuv in charge.
The suit claims that on April 10, the Grubb & Ellis South Carolina affiliate, WRS Real Estate, gave notice that it would leave Grubb & Ellis on May 15, 2012, without the requisite 150-day notice. Avison Young announced on May 14 that it was opening a new South Carolina office with Christopher Fraser, the head of the former Grubb & Ellis office, in charge.
In a statement to The Real Deal, Avison Young said, “We believe the claim is meritless and will be defending the lawsuit vigorously.”
A spokesman for BGC said the company “does not comment on litigation matters as a matter of policy.”