Coldwell Banker Residential Brokerage companies and parent Realogy Services Group LLC have filed lawsuits against a hazard disclosure report company this month charging that the company sent unsolicited reports and sought payment from agents and has withheld at least $600,000 that the company was supposed to pay through a business agreement.

The latest lawsuit, filed Sept. 7 in U.S. District Court in California, seeks damages of more than $3 million from Property I.D. related to claims that Property I.D. failed to fulfill its obligations under a business arrangement. According to that lawsuit, the U.S. Dept. of Housing and Urban Development and U.S. Federal Trade Commission last year had initiated an investigation of a business entity formed through an agreement by Property I.D. and Cendant, the corporation that Realogy was formerly a part of before becoming an independent company.

The other lawsuit, filed Sept. 1 in Sacramento County Superior Court in California, charges unfair competition and seeks a permanent injunction barring Property I.D. from sending unsolicited reports or services, damages related to purported invoices sent by Property I.D., and a judgment that recipients of the unsolicited reports “are under no obligation to pay for them, even if they are used in any way.”

Sergio J. Siderman, president and chief operating officer for Property I.D., based in Los Angeles, said the Sept. 1 lawsuit lacks merit. “We will file a cross complaint in that case for trade libel and intentional interference with our business relationships,” Siderman said. Several agents statewide are participants in a “Platinum” program offered by Property I.D., he said, and those members are eligible to receive disclosure reports through “an expedited delivery system,” adding that the reports were not unsolicited.

“It makes no sense for us to send reports that someone hasn’t asked us for. It would be a complete waste. The case is absolutely frivolous and we expect to dismiss it very quickly and have success in our cross-claim.” Siderman said Property I.D. offers reports in about 35 states and is one of the largest hazard disclosure report providers in the country.

Mark Panus, a spokesman for Realogy Corp., had no comment about the lawsuits. Realogy operates major company-owned and franchise brands, including Century 21, Coldwell Banker, ERA and Sotheby’s International Realty, among others. Roughly one-quarter of all Realtors in the U.S. are affiliated with the company’s brands.

The Sept. 1 lawsuit states that Property I.D. “has delivered unsolicited reports to … (affiliated) agents together with a communication stating: ‘Congratulations on your new listing! We would like to thank you for choosing Property I.D. to meet your disclosure needs. To avoid future collection issues regarding the payment of the enclosed reports, please be sure that the attached invoice of the report is forwarded to escrow.’ Property I.D. knew that these agents had not, in fact, chosen Property I.D. to ‘meet their disclosure needs,’ and moreover knew that there was no obligation to pay for the unsolicited reports, despite the purported ‘invoices.'”

Also, the lawsuit charges that affiliated agents had received e-mail messages stating, “‘Dear customer, Thank You for ordering Property I.D.’s Electronic Report.’ … Property I.D. knew that agents receiving these communications had not ordered an electronic report; rather, the reports were wholly unsolicited.”

According to the Sept. 7 lawsuit, Property I.D. had entered into an agreement with Realogy predecessors to form a company, ultimately named Property I.D. Associates LLC, to prepare and sell hazard reports. “In general the role of Property I.D. was to cause (Property I.D. Associates) to prepare, distribute and explain marketing materials, to cause Associates to prepare and deliver hazard reports, to handle billing and collections, and to manage and run the day to day operations of Associates.”

Meanwhile, the general roles of Cendant and Coldwell Banker Residential Brokerage Corp., “were to promote Associates and recommend hazard reports prepared by Associates to their salespersons and agents,” the lawsuit states.

A lawsuit filed Aug. 12, 2005, against Cendant-affiliated companies charged that Cendant affiliates illegally received a portion of fees paid by home buyers to Property I.D. That lawsuit, filed by a home buyer, alleged that Cendant affiliates “have entered into joint ventures or similar arrangements with Property I.D. to create sham entities in an effort to evade the anti-kickback and anti-fee-splitting provisions” of federal real estate law, namely the Real Estate Settlement Procedures Act, commonly known as RESPA. Cendant had commented at the time that it was “not the managing partner of that joint venture” with Property I.D.

Siderman said that the Aug. 12 lawsuit has not yet been resolved.

On Aug. 18, 2005, HUD and FTC officials notified Cendant and Coldwell Banker Residential Brokerage Corp. that it had begun an investigation to determine whether the activities of Property I.D. Associates violated RESPA.

Brian Sullivan, a HUD spokesman, said this week he could not comment on ongoing investigations. Siderman said he does not believe that Property I.D. “even falls into the category of settlement services … RESPA doesn’t even apply to hazard disclosure.”

The Sept. 7 lawsuit by Realogy and Coldwell Banker Real Estate Corp. states that the HUD and FTC investigation raised issues similar to the Aug. 12, 2005, lawsuit: “namely, whether Associates was a bona fide provider of settlement services exempt from the fee splitting provisions of RESPA.”

Cendant and Coldwell Banker Residential Corp., “vigorously deny the allegations of the HUD and the FTC,” and legal defenses related to the Aug. 12, 2005, lawsuit and the HUD and FTC investigations have cost Cendant and Coldwell Banker Residential Brokerage Corp. more than $350,000, according to a statement in the Sept. 7 lawsuit.

That lawsuit alleges that Property I.D. breached a contract with Realogy and Coldwell Banker Residential Brokerage Corp. and that those breaches led to the early termination of an agreement with Property I.D. The lawsuit alleges that Property I.D. “failed and refused to make quarterly distributions of cash,” “failed to permit access to the books and records of Associates,” and “failed to provide independently reviewed financial statements for associates.”

And “based on earnings prior to the dissolution of Associates, Cendant and (Coldwell Banker Residential Brokerage Corp.) estimate that they have suffered damages totaling at least $2 million by reason of the early termination of the agreement,” the lawsuit states.

The agreement with Property I.D. was reportedly terminated in June but was scheduled to run through May 31, 2008.

Siderman said he was not yet able to comment on the Sept. 7 lawsuit.

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