By Al Barbarino
BGC Partners, the global brokerage company that acquired Grubb & Ellis in April, is accusing upstart Canadian company Avison Young of stealing brokers and business opportunities from the firm.
BGC acquired Grubb & Ellis after the firm filed for chapter 11, merging the operation with Newmark Knight Frank, the national brokerage BGC acquired in October 2011.
But in court papers filed by BGC Partners and its subsidiary G&E Acquisition Company last week (Wednesday) with the New York State Supreme Court, the company alleges Avison Young has “tortuously and illegally looted Grubb & Ellis’s commissions, personnel, offices, business, and business opportunities.”
With the help of former Grubb & Ellis CEO Mark Rose, who joined Avison Young in June 2008 and was “intimately familiar with the operations and offices” at the firm, Avison Young “set out on a scheme to expand aggressively in the U.S. by stealing the operations and offices of his former company,” the court documents state.
Avison Young lured at least 16 brokers from Grubb & Ellis offices around the country, inducing them to terminate contracts with Grubb & Ellis, and in some cases leading them to conceal business opportunities and commissions that originated at Grubb & Ellis, the documents state.
This led to Avison Young’s “unjust enrichment,” and the “scheme” constitutes a felony under federal law, according to the court documents.
BGC also claims that Avison Young “conspired” with at least two Grubb & Ellis brokerage affiliates — Nevada Commercial Group and WRS Real Estate — to terminate their contracts with Grubb & Ellis and that the brokerages illegally severed their ties with Grubb & Ellis before their contracts were up.
Shortly thereafter, Avison Young announced new offices at the former addresses of the Nevada Commercial Group and WRS Real Estate; and the firms’ presidents, John Punjiv and Christopher B. Fraser, respectively, were named managing director and principal of South Carolina operations at Avison Young. The basis for the claims is that Avison Young allegedly acted in defiance of the “automatic stay” provided by bankruptcy law [Section 362(a)(3)], which prohibits acts to obtain property from a bankruptcy estate.
BGC is seeking damages, “to be proven at trial,” in excess of $1 million; as well as other damages and interest related to the loss of business and business opportunities resulting from Avison Young’s actions.
Avison Young’s lawyers have 20 days to respond to the summons, but a spokesman said, “We believe this lawsuit to be without merit and we will vigorously defend the lawsuit. In light of the number of professionals who have recently left Grubb & Ellis to join other competing real estate services firms, we are surprised to be singled out by BGC as the subject of this litigation.
“Avison Young is committed to building the platform of choice for clients and top performers with our unique Principal-driven structure.”