Ernie Carswell Sues Douglas Elliman Over Commissions Dispute

Luxury agent Ernie Carswell sued Douglas Elliman for allegedly taking his earned commissions on his and his team’s way out the door from the firm last year.

The 11-page lawsuit, filed in Los Angeles County Superior Court late last month, said Carswell and his 15-person team’s decision to leave Elliman for Sotheby’s International Realty was due to the “toxic corporate culture” at the brokerage that “threatened his professional reputation.” On top of that, attorneys for Carswell accused Elliman of taking a little over $300,000 in commissions earned across seven deals the team had in contract at the time of its departure on account of what the lawsuit called an “unconscionable, non-negotiated provision buried within a policy manual.”

That provision references the “Departing Agents” section of Elliman’s manual and specifies once agents decide to leave the firm, they agree to a commission split reduction to 50 percent on all deals in contract at the time of their departure.

“This policy is hidden within a voluminous policy manual where agents are unlikely to discover it, and it is imposed unilaterally — on a take-it-or-leave-it basis — without meaningful negotiation,” the lawsuit said.

Carswell’s lawsuit indicated that his split on those seven deals was 95 percent, which would have earned him and his team $620,397.50. They instead received $316,126.50 based on the “Departing Agents” policy, according to the complaint.

Attorneys for Carswell are accusing Elliman of not only unpaid commissions, but also breach of contract.

Carswell, reached Monday, declined comment on the lawsuit.

“This bad faith lawsuit never should have been filed — a fact plaintiff’s lawyer acknowledged by agreeing to stay his own case immediately after [Elliman] exposed its impropriety,” an Elliman spokesperson said in a comment to The Real Deal. “Routine post-departure commission adjustments are standard across the brokerage industry, with arbitration as the sole forum. Despite that, Mr. Carswell and his counsel filed a public complaint filled with false commentary unrelated to any legitimate claim. The matter will now proceed where it always belonged, in arbitration.”

“Untenable” situation

The “false commentary” alleged by the Elliman spokesperson are specifics around what fueled Carswell’s decision to leave the brokerage last year, which Carswell made mention of in an interview with TRD last year. At that time, Carswell said his decision was not “made in a vacuum” and it was instead the result of an aggregate of events.

That included 2024’s National Association of Realtors settlement related to a Missouri class action alleging inflated commissions, rumors of an Anywhere Real Estate buyout of Elliman and federal sex trafficking charges against former Elliman agents and brothers Tal and Oren Alexander, in addition to a third brother, Alon Alexander. After five weeks of testimony in U.S. District Court for the Southern District of New York, deliberations began last week in the trial.

Carswell accused Elliman leadership of “callous indifference” to the Alexanders charges, which placed other agents’ reputations on the line, given the brokerage had “elevated such individuals to positions of prominence.”

Last week, former Elliman agent Tracy Tutor, who joined Compass last January, accused Oren in a lawsuit of sexual assault at a 2014 Elliman event.

Carswell’s lawsuit described the firm’s alleged “descent into toxicity” in more recent years, which created an “unstable and hostile” environment for top performers.

“This cultural decay emanated from the top of the organization and infected every level of the company,” the lawsuit said.

The complaint cited a TRD interview published in January with Elliman CEO and President Michael Liebowitz in which he was quoted as saying, “You know what? I don’t give a fuck anymore. I don’t care what’s in The Real Deal. I’m going to run this business from a profitability standpoint.”

The lawsuit cast the comment as “crude and profane” and was cited as a “stunning admission” of the firm’s “true priorities: profits over people, money over ethics and corporate greed over professional integrity.”

Liebowitz took the helm of the firm after the sudden exit of Howard Lorber in a leadership change Carswell’s lawsuit described as “chaotic.”

Court records show a case management conference has been scheduled for Aug. 31.