Coldwell Banker Real Estate Corp. is suing a former New Orleans franchise to collect $818,500 the company claims it is owed for past dues and future fees. The former franchise cancelled its relationship with Coldwell Banker after Hurricane Katrina flooded its offices and now operates as Danette O’Neal Realtors Inc.
Danette O’Neal, a longtime New Orleans real estate broker who had signed the franchise agreements with Coldwell Banker in 2004, is fighting back with public criticism of the lawsuit.
“I understand business, but all of America knows of our plight in New Orleans. The actions that they have taken threaten not only my business, but my home, personal possessions and the future of my children,” O’Neal stated in a news announcement this month that was published at several Web sites. “I just want to rebuild my company. I am still trying to restore my company … but instead I must fight Coldwell Banker’s threat to take away my legacy to collect 10 years of potential income.”
O’Neal — a prominent African-American businesswoman who was appointed by Louisiana’s governor in January 2005 to serve as a commissioner for the Louisiana Housing Finance Agency and leads that group’s Single-Family Committee — has reached out to the National Association for the Advancement of Colored People and the National Black Chamber of Commerce, among other groups and individuals, about the lawsuit.
A spokesman for Coldwell Banker Real Estate Corp. said the lawsuit is focused on O’Neal’s misuse of the Coldwell Banker corporate trademarks after she severed ties with the corporation.
“In its simplest form the case is about misuse of Coldwell Banker marks,” said company spokesman David Siroty. “Our corporate trademarks provides assurances to franchisees and to the consumers that the professionals in every Coldwell Banker office represent and deliver the highest levels of service and commitment that has made Coldwell Banker valued by the consumer for more than 100 years, and it also involves the failure or the refusal to pay royalty fees and repay a sizable loan.”
Siroty added, “Our legal actions were taken earlier this year to protect every stakeholder in the Coldwell Banker system — from our franchisees and their customers to our executives and shareholders. We cannot allow Ms. O’Neal to align herself with Coldwell Banker after she notified us that she was terminating her franchise, as we have an obligation under trademark law to protect our marks. We respect and understand Ms. O’Neal’s entrepreneurial spirit, which we supported since entering into an agreement with her. It is our contention that Ms. O’Neal took advantage of our good nature and goodwill.”
The lawsuit charges that O’Neal advised Coldwell Banker in late 2005 “that she would no longer operate her Coldwell Banker franchises, despite her obligation to do so. But O’Neal did not tell the truth. It was not that she did not want to operate a Coldwell Banker franchise, apparently she just did not want to pay for the right to do so.” The lawsuit also alleges, “O’Neal continued to operate her real estate business; she continued to use Coldwell Banker’s business system and markets; she never paid her past due franchise fees; she never repaid her loans.”
Coldwell Banker had advanced loans to O’Neal for about $274,000 that were to be paid back annually, the lawsuit also states. In addition to this amount, the company is seeking about $475,300 “in lost future profits” related to one office and $50,300 from the other New Orleans office that O’Neal operated. Coldwell Banker is also seeking about $14,600 worth of past due advertising fees and $4,100 in past due royalties related to the two offices.
The lawsuit alleges that after O’Neal left the franchise, she was still using Coldwell Banker marks to “identify and promote” her real estate brokerage and “displayed at least two Coldwell Banker signs” at one office, while the company’s Web site still displayed the Coldwell Banker mark and business cards used by O’Neal’s agents also bore the Coldwell Banker marks.
O’Neal said, “We didn’t need the Coldwell Banker name to get any business. I had been (Danette O’Neal Realtors) for 16 years. I had only been with Coldwell Banker for 14 months.” As for the signs in front of the office, O’Neal said those were left up for the insurance adjuster to see.
There were about 52 agents affiliated with her company prior to Hurricane Katrina, and most of them were devastated by the flooding in the storm’s aftermath, she said. She moved to Atlanta and opened a real estate office there before reopening an office in New Orleans.
“I have agents who are still in trailers,” said O’Neal — thousands of hurricane victims are still living in the temporary trailers more than a year after the flooding. About 15 of her agents are back in New Orleans, she said, and about half of those are actually back in their homes. “Agents are still trying to make ends meet.”
The scope of the storm is hard to comprehend, she said, and its impact is still far-reaching. “We had 18,000 businesses that were affected by the hurricane. Approximately half of those businesses have now closed. We had the highest bankruptcy filings ever in the city of New Orleans last month.”
O’Neal also said she wasn’t sure whether she would be able to reopen an office in New Orleans after the storm hit and she had pursued a possible job with NRT Inc., which is a part of the company that operates the Coldwell Banker franchise.
According to court documents filed on behalf of O’Neal, her company’s two New Orleans offices “sustained substantial flooding,” and those offices were “gutted and cleaned” in November 2005. All of the contents of the offices, including “furnishings, office supplies, equipment, files and decorations, were discarded when the offices were gutted.” Since then, O’Neal and her company “have not had in their possession, custody or control any item bearing the Coldwell Banker marks,” the documents state.
Also, in response to a court-ordered injunction, O’Neal confirmed in court documents that a Web site listing an association with Coldwell Banker had been changed.
Energy, insurance and other costs have complicated the business climate in New Orleans, O’Neal said, and the lawsuit hasn’t helped. “I’m trying to rebuild,” she said.
Hurricane Katrina struck Louisiana in late August 2005, and flooding devastated New Orleans and other Gulf Coast communities. Cendant Corp., the former Coldwell Banker franchisor, announced in September that it would provide assistance to employees who were impacted by the storm.
“Our top priority today is to locate approximately 500 employees who we have not yet been able to reach, and to provide whatever assistance we can,” said Henry R. Silverman, Cendant chairman and CEO, in a Sept. 2, 2005, statement. “We have also begun to move forward with plans to assist in the rebuilding effort within the region.”
On Sept. 19 the Cendant Real Estate Services Division announced that it had begun to deliver modular office units to real estate franchisees in Louisiana and Mississippi. “These units will be used to replace offices that were destroyed or rendered unusable by the storm.”
But O’Neal said there was a cost associated with operating those modular units.
Chris Inman, president of Coldwell Banker TEC, Realtors, the largest Coldwell Banker franchise in the New Orleans area, said Cendant had offered trailers following the storm. “Our problem here wasn’t having a trailer — it was, ‘How do I hook up electricity to it and how do we run water and sewer to it?’ We couldn’t take advantage of what they offered.” Coldwell Banker TEC was not affiliated with O’Neal’s Coldwell Banker franchise offices.
Inman also said that the franchisor waived advertising fees for damaged offices and also lifted the franchise agreement for one of his offices that was wrecked in the flooding. The company “let us out of the franchise agreement on that office,” he said, which was drowned in 10 feet of water. The company now operates nine offices in the New Orleans metro area.
If you haven’t seen the damage from the flooding, “you can’t totally appreciate the level of devastation,” Inman added. (Chris Inman is not affiliated with Inman News.)
Arthur Sterbcow, president of Latter & Blum Cos., a New Orleans real estate brokerage company that temporarily closed 24 of its 28 offices after Hurricane Katrina, said the lawsuit is unfortunate. “This lawsuit is aimed at a company in New Orleans that is struggling as many of us are with the aftermath and fury of Hurricane Katrina. Danette … has been a very well respected competitor in our marketplace and a fine person who has done a great deal for her community. This seems to have been easily resolved in a less public and adversarial way. Many national franchises and relocation networks bent over backwards to facilitate their franchises and companies to get back on their feet. They offered money, housing, computers, equipment, portable offices, forgiveness of franchise fees, etc.”
He added, “Danette’s office was in the heart of the flooded area of New Orleans. This specific market area she was based in post-Katrina is virtually non-existent. People left this market area and overwhelmingly have not returned. There are always two sides to a story but so far Coldwell Banker’s side appears to be publicly a mess.”
Coldwell Banker Real Estate Corp. is very aware of publicity surrounding the lawsuit. In a Dec. 19 court filing, lawyers for the franchise company charged that “Danette O’Neal has always engaged in widespread publicity campaigns relating to her business and there is the real danger that she will publicize facts that she learns in this litigation. … O’Neal has apparently hired a public relations firm and sponsored press releases during the course of this litigation. Moreover, the comments she has publicized contain derogatory, and potentially defamatory, statements about Coldwell Banker.”
The court filing also states that there appears to be a “risk that the content of Coldwell Banker’s internal communications will make its way into the public domain,” and the company seeks to protect “against unwarranted and improper disclosures.”
O’Neal was unapologetic for bringing attention to the lawsuit, and said she has contacted major media outlets. “I have gotten support from all across the United States,” she said.