A fraud lawsuit filed by Davis against Keller, Keller Williams and Josh Team will continue separately from a sexual misconduct suit filed by Inga Dow against Davis, Keller, and KW.

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A sexual misconduct lawsuit and a fraud lawsuit filed against real estate franchisor Keller Williams and its co-founder Gary Keller will continue as two separate cases after a federal court refused Keller’s request to merge them last week.

John Davis

In the fall, former Keller Williams CEO John Davis filed a lawsuit against Keller and Keller Williams in what Davis said is an effort to restore his reputation after sexual misconduct allegations against him surfaced earlier in 2022 and to recover $300 million in damages.

The Oct. 27 complaint also names former KW President Josh Team and Inga Dow, the CEO of multiple Keller Williams offices who lodged the allegations against Davis, as defendants.

In the suit, Davis alleges he resigned from KW because of a disagreement with Keller over a business strategy that he believed would bring in less income to Keller Williams offices, and that Keller and Team responded by smearing him and withholding Dow’s accusations from him when he was negotiating the sale of his KW market center regions after his resignation, resulting in tens of millions in financial losses.

Inga Dow

In a March amended complaint against KW, Keller and Davis, Dow alleged she had endured years of sexual misconduct, harassment and abuse at Davis’ hands and that Austin-based Keller Williams Realty Inc. (KWRI) did nothing to address the alleged behavior and continued to retaliate against her for reporting it.

Earlier this month, Dow and Keller Williams — with Team and Keller joining the latter — filed separate motions to consolidate Davis’s suit and Dow’s suit, arguing that the two cases involve “common questions of law and fact” and merging them “will conserve resources of the parties and the court.”

But on Jan. 25, Judge Reed O’Connor of Fort Worth’s district court denied the motions, noting that the Dow case is temporarily suspended pending the results of arbitration regarding the claims against KW and Keller, but not the claims against Davis. Davis has had a motion to dismiss the Dow suit pending since Jan, 6, 2022, O’Connor noted, and that has prevented him from filing an answer to the complaint or a counterclaim in that case.

“Plaintiff John Davis has not been afforded relief in the Dow Case, nor will he be afforded relief any time soon,” O’Connor wrote in his order.

“[B]ased on the most recent arbitration status update in the Dow Case from December 1, 2022, it seems that a final arbitration hearing has not yet been set, thus making any resolution months— if not years — away,” O’Connor added.

O’Connor also said the court was prepared to resolve “several key factual issues” in both cases “in an expedited manner” in order to “conserve judicial resources by eliminating the need for duplicative proceedings that have already stretched on for years.”

He ordered Keller, Team, and Keller Williams to file their answers or otherwise respond to Davis’s suit by Feb. 8.

In a phone interview, John Davis spokesperson Paul Omodt told Inman the judge’s order is “a canary in the coal mine moment.”

“As this case has dragged on, more people have contacted us with similar experiences” regarding issues buying and selling their Keller Williams franchises or their regions and the deals not being done at arms’ length, according to Omodt.

“People find that [an independent appraisal of] value is not respected and people higher up in Keller Williams … are trying to put their thumb on the scale [to] inflate the price or deflate the price to get a better deal for themselves,” Omodt said. “They [Keller Williams] clearly aren’t living their values.”

Omodt also alleged that Dow had been using “obvious delay tactics” in the litigation, including the lack of progress on arbitration, and that the judge had had enough. In December, the court found that Dow had been “intentionally evading service” of Davis’s suit, meaning she had resisted attempts to receive a formal notice of the suit.

“I think [the judge is] saying people who are innocent don’t evade service like Inga Dow has done,” Omodt said.

“I think he’s seen enough and wants to move things forward. John sits in limbo while they do nothing.”

Omodt expects that after each side responds to interrogatories in the case — written questions parties have to answer under oath — “the judge will have a fuller picture and set a trial date.”

“We look forward to that,” Omodt said. “We’re more confident in our case every day and I think the judge sees that too.”

Keller Williams and Team declined to comment for this story. Dow did not respond to a request for comment.

Email Andrea V. Brambila.

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