Real estate appraisal tech startup HouseCanary won $706 million in a lawsuit with Quicken Loans affiliate Amrock, formerly known as Title Source. A Texas federal jury decided in HouseCanary’s favor Wednesday.
On Wednesday real estate valuation tech startup HouseCanary turned a breach of contract lawsuit against the company on its head and won $706.2 million from a Quicken Loans affiliate over misappropriation of trade secrets and breach of contract.
A federal jury in Bexar County, Texas, unanimously decided in HouseCanary’s favor against Amrock, an affiliate of Quicken Loans formerly known as Title Source that provides home valuations, title insurance and closing services. HouseCanary is based in San Francisco, but operates its data analytics subsidiary out of San Antonio.
The jury agreed with HouseCanary that Title Source, as the Quicken Loans affiliate was referred to in the case, failed to honor a software licensing contract and then used HouseCanary’s technology and trade secrets to try to construct its own version. Title Source had initially sued HouseCanary, alleging fraud and breach of contract over the software, but HouseCanary countered and won the huge sum.
“We are pleased the jury recognized the value of our cutting-edge real estate analytics,” HouseCanary CEO Jeremy Sicklick said in a statement.
After licensing HouseCanary’s appraisal software in 2015, Title Source allegedly failed to pay much of a $5 million annual contract over HouseCanary’s data, according to HouseCanary’s counter-complaint in the case. Title Source allegedly tried to avoid payment by failing to provide the software for use for its staffers in an agreement that involved payment per appraisal.
Title Source, however, claimed that the company never received working software from HouseCanary and was only given “wireframes and half-developed apps,” Amrock CEO Jeff Eisenshtadt said. Title Source only started developing its own software because the software from HouseCanary was unusable, the company claimed.
HouseCanary put it differently in its counter-claim:
“TSI then engaged in a charade to avoid paying for HouseCanary’s products. Even though TSI used HouseCanary’s products daily, and understood that with each report or other use HouseCanary incurred out of pocket cost to its data vendors and otherwise, TSI failed to pay for these products and falsely claimed they did not work properly,” HouseCanary’s lawyers said in court documents.
“The full truth behind TSI’s scheme is sinister: notwithstanding TSI’s explicit promises to HouseCanary to the contrary, TSI was attempting to reverse engineer, recreate, and mimic HouseCanary’s software, models … analytics, value reports, and algorithms — using HouseCanary’s software, data, modeling techniques, data formats, reports and forms in violation of the plain language of the software license and nondisclosure agreements between the parties,” the documents read.
The jury decided that HouseCanary did not commit fraud against Title Source but that Title Source did commit fraud against HouseCanary. Over half of the $706 million judgment was awarded for misappropriation of trade secrets, and the rest was split between damages for fraud and breach of contract.
Amrock intends to appeal, Eisenshtadt told Inman.
“The facts in this case are clear: HouseCanary made several unkept promises leading Amrock to file a contract claim. However, when we asked the court to intervene, a local attorney and professional plaintiff law firm spun a distorted and twisted counterclaim narrative leading a San Antonio jury to an unconscionable result,” Eisenshtadt said.
Correction: An earlier version of this story referred to Title Source/Amrock as a Quicken Loans offshoot/division. Rather it is an affiliate, as Quicken Loans and Amrock are both owned by Rock Holdings. We regret the error.