Realogy has sued a former manager of one of its Sotheby’s International Realty franchises for defecting to competitor Compass, allegedly in violation of a noncompete clause.
Seita Jongebloed was employed as a sales manager from 2014-2016 and then promoted to vice president of sales, a position she held until her 2019 resignation at Martha Turner Sotheby’s International Realty (MTSIR) in Houston.
Jongebloed jumped from Sotheby’s to Compass to serve as a brokerage manager in February 2019 after tendering her resignation, but Realogy claims in the complaint that the agent had previously signed a restrictive covenant agreement (RCA), which included a one-year noncompete clause.
“We believe this suit speaks for itself,” a spokesperson for Realogy told Inman. “We are seeking to enforce our rights under the employee agreement. Given the pending litigation, we cannot comment further.”
Realogy argues in the lawsuit filed in the United States District Court For The Southern District Of Texas Houston Division that, by signing the RCA, Jongebloed agreed to a one-year noncompete clause, where she would not work for a competitor for one year after her employment with Realogy terminates. The noncompete specifically included a geographic limitation of a 15-mile radius of any brand where she worked.
The Compass office where Jongebloed works now — in what the suit called a “substantially similar role” — is 3.2 miles from a Martha Turner Sotheby’s branch.
The suit claims Jongebloed’s employment shift could disrupt business relationships and jeopardize confidential information she obtained while at Realogy.
Jongebloed signed the RCA in August 2018, as it was offered as part of a long-term incentive plan that included a restricted stock notice. Long-term incentive plans are used to award executives or managers for performance, often in stock bonuses with a company-matching component.
Realogy sent a cease and desist letter and Jongebloed and Compass agreed to abide by the provisions of the RCA by moving Jongebloed to either a non-working leave of absence or Compass projects and/or initiatives outside of the Houston metropolitan area, according to the complaint.
Compass’s counsel advised Realogy that any service to Compass that Jongebloed is providing was taking place outside the Houston area, the complaint says. Realogy, however, alleges in the complaint that despite that communication, it has been informed that Jongebloed refuses to abide by the RCA.
Realogy is seeking relief prohibiting Jongebloed from violating the RCA, an unspecified award for damages and other relief as appropriate, according to the complaint.
Compass has drawn the ire of many in the industry for its recruitment tactics, some of whom have felt compelled to take legal action.
In the legal filing, Realogy says Compass has adopted a deliberate strategy of fostering rapid expansion and growth by engaging in unfair and unlawful conduct. The filing cites settled lawsuits against Compass from Realogy properties Corcoran and CitiHabitats, in which the brokerages accused Compass of violating noncompete clauses and attempting to access the company’s proprietary databases.
Agent movement between Compass and Realogy is hardly new, especially as Compass expands through recruitment and acquisition. The key difference in this case, however, is that Jongebloed was an employee with both companies, not an independent contractor, like most agents.
A Realogy source told Inman that employee contracts differ based on numerous factors and not all employees agree to the same contract terms.
Compass is not named as a defendant in the suit, but a spokesperson for the company sent the following statement to Inman.
“We believe people should be able to work where they want to work,” the statement reads. “For us, it’s important for employees to find their place at Compass because they want to work here, not because they can’t work anywhere else.”
Scott Fiddler, the lawyer representing Jongebloed told Inman that they look forward to having the case heard in court and declined to comment further.