RE/MAX Sues Its Own Broker For Allegedly Recruiting 41 Agents To EXp
Real estate franchisor RE/MAX is suing one of its own franchisees, alleging the broker recruited 41 agents to eXp Realty while still under contract with RE/MAX.
In a complaint filed Tuesday, RE/MAX accused James E. Dulin II and his Carmel, Indiana-based company, The Hamilton Group, of violating the terms of four franchise agreements for RE/MAX offices in Indiana operating under the name RE/MAX Ability Plus.
“In clear violation of these continuing obligations, Dulin is actively competing against his RE/MAX franchises and all Indiana RE/MAX franchisees by aligning with and promoting plaintiffs’ competitor, eXp Realty LLC and improperly steering his RE/MAX sales associates to eXp — effectively destroying the very franchise businesses he is required to promote,” attorneys for RE/MAX wrote.
“Dulin is also infringing upon [RE/MAX’s] trademarks and unfairly competing with plaintiffs by enabling eXp agents to work out of at least one of his RE/MAX franchise locations, thereby creating substantial consumer confusion in the Indianapolis market regarding the (non-existent) affiliation between the RE/MAX brand and eXp.”
According to the complaint, Dulin and seven members of the management team at RE/MAX Ability Plus attended their annual company retreat in Arizona in late April. There, Dulin and his team allegedly attended a meeting at the home of eXp agents Chuck and Angela Fazio and Dulin allegedly asked his team to commit to joining eXp.
If Dulin named one of the Fazios as his eXp sponsor and Dulin’s sales associates then joined and named Dulin as their sponsor, then both the Fazios and Dulin would be compensated under eXp’s revenue share plan, according to the complaint.
Citing the sworn testimony of Dave Conord, eXp’s head of U.S. growth, the complaint alleged Dulin told eXp that he was interested in joining eXp with his team, but eXp told Dulin that he could not because he remained under contract with RE/MAX.
According to the complaint, Dulin’s agreement with RE/MAX for the West Clay, Indiana, office expires on Friday, while the agreement for the Carmel office expires Sept. 25. The other two agreements, for the Lafayette and Lebanon offices, don’t expire until August 2023 and November 2024, respectively.
“Mr. Dulin was in a bind (of his own making),” the complaint said. “He had already begun encouraging his RE/MAX Ability Plus sales associates to convert to eXp. But if he could not join eXp, his sales associates could not name him as their eXp sponsor, and he would not receive Revenue Share Plan compensation for converting them.
“Mr. Dulin then tried to do indirectly what he could not do directly.”
Dulin allegedly had his wife, Tammy Dulin, who was also on his management team, try to join eXp to benefit from his agents joining eXp through her. But eXp declined her request because of Dulin’s franchise agreements with RE/MAX, according to the complaint.
Dulin then allegedly made a deal to have Brooke Stines-Broady, RE/MAX Ability Plus’s operations manager, join eXp while naming one of the Fazios as her sponsor and then having RE/MAX Ability Plus’s sales associates join eXp naming Stines-Broady as their sponsor. Stines-Broady would then allegedly transfer compensation she received under eXp’s revenue share plan to Dulin.
At meetings on July 30 and Aug. 2, Dulin allegedly told his agents that he would not be renewing his Carmel franchise agreement with RE/MAX and that he planned to join eXp when the Lafayette agreement expired in 2023.
“Dulin’s plan ignores defendants’ obligations under the Lebanon franchise agreement, which runs until November 2024,” the complaint said.
“Dulin is also obligated to promote the business of his Lafayette and Lebanon offices throughout their respective terms. This obligation includes recruiting and retaining sales associates, who are the primary source of revenue for those offices.
“But at the August 2 meeting, Dulin did not encourage his sales associates to stay with him at his RE/MAX offices in Lafayette or Lebanon. Instead, he disparaged RE/MAX and encouraged them to join eXp.”
The complaint alleges that Dulin also facilitated an eXp presentation from the Fazios to his agents and is currently allowing his former agents to do business for eXp out of his RE/MAX office in Carmel, “in violation of his non-compete and office promotion obligations under the franchise agreements.”
The complaint alleged that about 19 RE/MAX Ability Plus agents joined eXp on the day of the Aug. 2 meeting and another 22 joined eXp in the subsequent three weeks.
“These 41 former RE/MAX Ability Plus sales associates represent a loss of roughly 50 percent of Dulin’s sales associate head count at each of his Carmel, Lafayette, and Lebanon offices,” the complaint said. “On information and belief, more sales associates are expected to follow suit.”
Dulin also allegedly stopped paying the franchise fees owned under his franchise agreements with RE/MAX and owes $16,267 in fees for June and July, according to the complaint.
The complaint alleges breach of contract, federal trademark infringement and unfair competition. RE/MAX is also seeking declaratory relief — an order from the court saying the Lebanon franchise agreement is still in effect and obligating Dulin to abide by it. The franchisor is suing for damages, disgorgement of ill-gotten profits, attorney’s fees and costs and permanent injunctive relief enforcing the terms of the franchise agreements.
Dulin did not respond to an emailed request for comment. Neither eXp nor any of its agents are defendants in the suit.
RE/MAX and eXp recently settled a lawsuit over agent recruiting. In that particular suit, RE/MAX accused eXp of targeting RE/MAX franchise owners to abandon their franchises, arguing that eXp was trying to recruit people who could not legally be recruited. Asked for comment on the Dulin suit and whether the conduct alleged was an example of the conduct the eXp suit was referring to, a RE/MAX spokesperson declined to comment.
“We feel the complaint speaks for itself,” the spokesperson said.