The shareholder Realtor groups that filed a lawsuit to block the merger of two Chicago-area multiple listing services have blocked — at least temporarily — a final vote on the deal.

The shareholder Realtor groups that filed a lawsuit to block the merger of two Chicago-area multiple listing services have blocked — at least temporarily — a final vote on the deal.

Five local Realtor associations that represent half of the shareholders for the Multiple Listing Service of Northern Illinois, a large Chicago-area MLS, filed a lawsuit last year that challenged the legitimacy of a board vote approving the consolidation of MLSNI with rival broker-owned MAP MLS. Five shareholder representatives who were present at that meeting voted 3-1 in favor of the MLSNI-MAP deal, with one representative abstaining.

The dissenting shareholders charged that the vote was not official because they did not attend the meeting and there was not a sufficient number of shareholders in attendance to constitute a quorum. Members of opposing shareholder groups have questioned the economic benefits of the proposed MLS merger, as MLSNI already has substantial market share in the region and the vast majority of MAP members are already members of MLSNI.

A national trend has emerged in brokers pushing MLSs toward regional consolidations, data-sharing and joint membership agreements to promote greater efficiencies and cost savings for members, though MLS and Realtor board politics and economics can complicate the transactions.

Cook County Circuit Court Judge Martin S. Agran ruled on May 9 that that vote, held Nov. 15, is “void for a lack of a quorum,” and he ordered that another annual shareholder meeting be held and that all of the parties to the lawsuit attend that meeting. A shareholder who does not attend that meeting, the judge ruled, “will be deemed to be present for the purposes of a quorum.”

While the MLSNI board includes 10 shareholder representatives, the judge noted that the dissenting shareholders represent about 9 percent of the entire voting power of the MLSNI board.

The opposing shareholders filed an appeal to stop that vote with the trial court, which denied the motion. But the shareholders appealed to the First District Illinois Appellate Court, which did grant a delay pending appeal. The vote was scheduled to take place during a May 31 meeting.

The group that filed the lawsuit includes the Aurora Tri-County Association of Realtors, Realtors Association of the Fox Valley, Oak Park Board of Realtors, West Towns Board of Realtors and McHenry County Association of Realtors.

The lawsuit was filed against MLSNI, which has about 49,500 participants, and several individuals associated with that MLS; the Chicago Association of Realtors; North Shore-Barrington Board of Realtors; Realtors Association of Northwest Chicagoland; Realtor Association of West/South Suburban Chicagoland; and Three Rivers Association of Realtors.

Herbert Steinmetz, a lawyer who represents the five shareholder Realtor groups that filed the lawsuit, said the appellate court “has stayed the proceedings pending further order of the court. We asked for a stay pending appeal of all the proceedings, and that was granted.”

Jim Nelson Jr., MLSNI president and a broker at RE/MAX Suburban, said that MLSNI has since responded to the appeal, and the court “is reviewing all material and deciding whether to lift the stay or not.”

The MLSNI board meeting did take place on Thursday, as planned, Nelson said, though representatives for the five shareholder groups that filed the lawsuit were again not present at the meeting.

In its court filing requesting the court-ordered stop to the merger vote, the opposing shareholders charged that the deal could lead to “irreparable damage” for their Realtor boards, as it would eliminate the shareholders’ individual board representatives, “the assets of MLSNI will be transferred to a new entity for virtually no consideration,” “the new entity will be operated in a way not to generate any profits,” and “the (new) entity will become a broker-controlled entity instead of association-controlled as it is currently.”

In a response to that court filing, MLSNI and supporting groups charged that the dissenting group of shareholders have “sought to force a state of deadlock (in MLSNI) by boycotting the annual meeting of shareholders, by threatening to continue that boycott in perpetuity, and by seeking … the court’s endorsement of their inequitable conduct.” The court filing requests that the appellate court allow a final vote to proceed on the merger deal.

Continuing to delay that vote should only occur “if it is clear that the trial court has erred,” charge lawyers for MLSNI.

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