- William Raveis Real Estate and a former Douglas Elliman branch manager have been ordered to pay millions in damages for recruiting Elliman agents while the branch manager was still employed by Elliman.
Competition for agents, especially top producers, is par for the course among real estate brokerages. But a jury has found that one prominent firm crossed the line — and is making the firm pay dearly for it.
After a four-week trial and a two-year legal battle, a jury has awarded Douglas Elliman Real Estate $4.75 million, finding that, in early 2015, competitor William Raveis Real Estate and former Elliman branch manager Lisa Theiss “schemed” to “unlawfully” move 11 agents, including four top producers, to Raveis’s then-newly opened branch office in Armonk, New York, according to an announcement from Elliman last week.
Armonk is a wealthy community in Westchester County with about 4,500 inhabitants. It is home to IBM and houses there close for a median of nearly $1 million. The brokerage rivals have offices across the street from each other on the hamlet’s Main Street.
According to the complaint, Theiss, while still employed as Elliman’s branch manager, secretly recruited Elliman agents to Raveis with the aid and encouragement of top executives at Raveis. The agents included four who together represented about half of the office’s closed sales production in 2014.
As branch manager, Theiss had the fiduciary duty to Elliman of recruiting, developing and maintaining its relationships with the agents at the New York-based firm’s Armonk branch, according to the complaint.
“Rather than properly and faithfully discharging her fiduciary responsibilities, Theiss told a fellow agent that she intended to ‘decimate’ Douglas Elliman’s Armonk branch, and then, all while a salaried Douglas Elliman manager, hatched and implemented a scheme whereby she and 10 agents, including the most productive agents, in the branch would resign and join Raveis,” the complaint read.
“Raveis helped plan and aided and abetted this unlawful scheme, directing Theiss during the recruiting process and directing her to remain in her position as manager at Douglas Elliman until as many Douglas Elliman brokers as possible had moved from Elliman to Raveis.”
Theiss also directed the Elliman agents not to sign new listings or renew expired listings so that they could be transferred to Raveis after they left Elliman, the complaint added, noting that Raveis and Theiss’s actions resulted in “severe economic harm” to Elliman.
Raveis allegedly paid Theiss more than $50,000 in recruiting bonuses just weeks after poaching the Elliman agents. She is now Raveis’s vice president of business development for Westchester County.
In reply to the complaint, Raveis and Theiss denied the allegations. Theiss also said that she had been passed up for promotions and had not received a raise from her base salary in her four years as an Elliman employee.
Howard M. Lorber, chairman of Douglas Elliman Realty, LLC, said in a statement: “I am extremely pleased that the jury saw fit to rectify the egregious and outrageous actions of William Raveis Real Estate.
“Such deception does not serve our industry and it is my hope that today’s verdict will help deter others from similar practices.”
The jury’s verdict ordered Theiss to pay $675,000 for breach of fiduciary duty and ordered Raveis to pay $450,000 for aiding and abetting breach of fiduciary duty. Together, Raveis and Theiss are also required to pay another $1.125 million for tortious interference with business relations, adding up to $2.25 million in compensatory damages.
The jury also made Raveis responsible for $2.5 million in punitive damages. Punitive damages are generally intended to deter the defendant and others from similar wrongdoing.
“This verdict confirms what Elliman had claimed from the outset, that Raveis and Theiss had unlawfully schemed together in an attempt to harm Elliman in Westchester. We are pleased that the jury agreed that their acts were illegal and improper,” said Mark W. Lerner, Elliman’s outside counsel and head of Kasowitz Benson Torres LLP’s Employment Litigation Group, in a statement.
Shelton, Connecticut-based William Raveis Real Estate did not respond to repeated requests for comment for this story. Founder and CEO Bill Raveis told The Real Deal that he disagreed “with all aspects of the jury’s decision,” and added that his firm would “vigorously be pursuing [an] appeal.”
Bill Raveis had previously told The Real Deal, on or about April 6, 2015 — just after Elliman’s Armonk agents joined Raveis — that “I have great admiration for everyone at Douglas Elliman. They’ll eventually be out of Westchester County.”