Newmark is suing three of its former brokers and their new employer, CBRE, alleging that the former violated non-compete agreements in their employment contracts, and the latter was responsible for that breach of contract.
But the brokers named in the case — Terrance Hunt, Christopher Cowan and Shane Ozment — have countersued Newmark and its affiliated entities, arguing that their non-compete pact was unreasonable and voided by a subsequent 2018 agreement made with their employer.
The dispute stems from a contract signed in 2014 when BGC Holdings, Newmark’s parent company at that time, acquired Apartment Realty Advisors of Colorado, one of the most prominent multifamily investment brokerages in Denver. BGC later spun off Newmark.
When ARA was acquired, Hunt, Cowan and Ozment — who each owned a small share of ARA — signed an agreement stating they would not work for Newmark’s competitors for two years if they left before October 2021. If they left after that time, the non-compete period would be reduced to one year, according to the lawsuit.
In exchange, Hunt, Cowan and Ozment collectively received more than $1.5 million when the acquisition was completed, according to the lawsuit. In subsequent years, they received between 50 to 60 percent of their sales as commission, and their prominence rose as Newmark marketed them nationally.
But on May 17 of this year, the three brokers, along with six colleagues in the Denver office, resigned from Newmark, noting in their letters of resignation that they would “soon be joining CBRE Inc.”
The next day, CBRE sent out an internal email to its employees to welcome the multifamily investment team to its Colorado office, the lawsuit said. Local media outlets also reported on the migration.
In a statement, a CBRE spokesperson said the firm’s recruitment process was proper.
“The members of the team have brought a suit against their former employer in Colorado to permit them to continue pursuing their livelihoods,” the statement reads. “We look forward to a swift resolution of this matter through the legal process.”
The brokers and their attorney did not immediately respond to requests for comment.
But in their countersuit, which was filed in Denver, the brokers state they were unable to negotiate in the 2014 deal, which they believe was unreasonable. They also allege that in October 2018, each one signed a separate agreement with ARA that “expressly superseded any previous or contemporaneous agreements and represented the entire agreement between the parties regarding the terms of Plaintiffs’ services to ARA.” Under the 2018 agreement, their services were legally required through the end of 2019.
They also argue that the non-compete agreement is “void and unenforceable as against the public policy of Colorado.” Non-competes are hard to enforce in that state unless they meet specific conditions.
Newmark is seeking $15 million in damages, and has asked for “injunctive relief” from the court – i.e. stopping the brokers from working for CBRE.
On Friday, New York State Supreme Court Justice Barry Ostrager issued a temporary restraining order on behalf of Newmark ordering the defendants to refrain from disparaging the firm “in any manner via any medium or means.”
At the same time, Ostrager did not grant the brokerage’s request to temporarily stop the brokers from working for CBRE. The court will hear the case on June 17.