TPI Cloud Hosting alleges Keller Williams agreed to pay $1.8 million to develop a consumer-facing app, but never paid, then used the technology to build its app in-house.

Puerto Rico-based tech vendor TPI Cloud Hosting is suing Keller Williams, claiming the franchisor hired TPI Cloud Hosting to build its consumer-facing app, never paid, then copied the company’s prototype for its own proprietary app development.

In the lawsuit, TPI claims Keller Williams contracted it in 2015 to develop software for Keller Williams’ exclusive use. All of the data from the software — which was to be a public-facing app where consumers could access all of Keller Williams’ services — would be owned by Keller Williams.

The two parties entered into an agreement in July 2015, whereby Keller Williams would pay TPI $1.8 million, payable in six monthly installments of $300,000, beginning in August 2015 for the creation and development of the app, according to the complaint.

“TPI began to create and develop the software for the App, pursuant to the agreed upon specifications,” the complaint reads. “KW instructed TPI to work quickly because KW wanted the first release to be ready for Family Reunion in February 2016, an annual training event that KW provides to thousands of its associates, agents, and other industry leaders. KW instructed TPI to work quickly in part because of competitors moving quickly in developing competitive technology.”

TPI says it submitted its first invoice on August 18 without objection from Keller Williams and with acknowledgment from the company that this was to be the first invoice. The company says it submitted wireframes and a functioning prototype to Keller Williams on September 15 and its second invoice on September 18.

Keller Williams allegedly ended the agreement and did not pay TPI for its work, according to the complaint.

“[Keller Williams] did not identify any problems with TPI’s work and certainly nothing that justified [Keller Williams’] material breach,” the complaint says. “TPI fully performed its obligations under the Agreement until KW instructed TPI to stop work.”

The complaint further alleges that at one point the parties discussed expanding the scope of work or entering into an additional agreement, until, “it became clear that Keller Williams had used the initial work under the agreement and the discussions about expanding the agreement or entering into a new agreement to obtain enough information from TPI to pursue development of the new technology in-house,” the complaint says.

“[Keller Williams] implemented its ‘steal or copy what you have’ strategy against TPI, as it has similarly done against other technology companies,” the complaint continues.

TPI is seeking the full $1.8 million payment, as well as other damages to be determined.

Keller Williams filed a notice of removal, to take the lawsuit out of District Court of Travis County, Texas, to the United States District Court for the Western District of Texas, Austin Division on August 14.

In a statement, Darryl Frost, a spokesperson for Keller Williams, told Inman, “We will not be commenting on any pending litigation and have nothing further to add.”

Keller Williams has publicly boasted about its in-house technology development, with CEO Gary Keller proclaiming that the company had won the platform race. President Josh Team just recently said that Keller has said he would spend up to $1 billion to develop the technology.

Keller Williams’ consumer-facing platform is still forthcoming but will include a proprietary app and new website design that’s synced to its in-house customer relationship management tool, Command.

See the full complaint below, included as exhibit 1 in Keller Williams’ notice of removal:

 

Email Patrick Kearns

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