Judge doesn’t buy Crye-Leike’s argument in Gibson case
The Tennessee-based brokerage tried to convince the court that it should be covered under the NAR settlement, but that request was denied.
Crye-Leike won't be getting the protection offered to smaller brokerages under the NAR settlement, a Missouri judge ruled on Mar. 11.
The Tennessee-based firm is among the many brokerages named in the Gibson commissions lawsuit and one of the few that has not yet settled. Crye-Leike was previously unsuccessful in its attempt to get the case dismissed. Its latest tactic was arguing that it is not one large firm, but rather a collection of smaller firms that each meet the settlement coverage criteria.
Making its case: Crye-Leike, which was founded in 1977 in Memphis, had filed a notice of pending settlement and a motion to stay the case on Feb. 5. In the filing, the brokerage said it is actually six independent companies, each of which had less than $2 billion in annual transaction volume — the threshold for coverage under the National Association of Realtors settlement.
Combined, the six companies had more than $7 billion in annual transaction volume.
The response: The home seller plaintiffs pushed back against Crye-Leike's argument, noting that the brokerage filed this notice and motion months after the NAR settlement, and months after failing to get the case dismissed.
In responding to the motion, the plaintiffs argued that the $418 million NAR settlement broadly defines "total transaction volume" as all of the residential home sales and purchases handled by a real estate brokerage, including its holding companies, subsidiaries, affiliates and associates.
On its website, Crye-Leike describes itself as "a privately held real estate company operating a group of affiliated brands and services," stating that it is the fourth-largest real estate services company in the nation with more than 3,200 agents across seven Southern states.
"This Court should not permit Crye-Leike to evade this litigation by relying on terms of a settlement from which it is carved out," the plaintiffs argued in a court filing.
U.S. District Judge Stephen Bough — who oversaw the landmark Sitzer/Burnett case and currently presides over the Gibson case — agreed, concluding that Crye-Leike is not a release party based on the terms of the NAR settlement agreement.
Other Gibson defendants: Meanwhile, two other defendants in the Gibson case — eXp and Weichert — are waiting to hear from a different judge. The brokerages were also named in the Hooper case in Georgia, and the parties filed a motion more than two months ago seeking preliminary approval of the settlements reached in that lawsuit. The deals negotiated by eXp, which settled for $34 million, and Weichert, which settled for $8.5 million, have come under scrutiny, which may be contributing to the delay in the judge's decision.
The attorneys for the Gibson plaintiffs argued that the settlements were too low and accused the brokerages of employing a "reverse auction" strategy to find the best deal. The Hooper attorneys clapped back, however, suggesting that the Gibson lawyers were simply trying to "line their own pockets."
Judge Bough refused to pause litigation against eXp and Weichert in Gibson as they await a decision on the preliminary approval of their settlements in Georgia.