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REAL ESTATE : Suit by Daum-Johnstown Over Flight of 50 Employees Still Being Pursued

Compiled by Michael Flagg, Times staff writer

An unusual $1-million lawsuit by one commercial brokerage against an upstart rival--for a while the talk of the local brokerage industry--is still being pushed vigorously, the company’s lawyers say.

Daum-Johnstown American accused Scher-Voit Commercial Brokerage Co. of pirating its employees and many of its listings of buildings in an attempt to “destroy” Daum-Johnstown last fall.

Fifty or so Daum-Johnstown employees defected en masse to Scher-Voit, a 2-year-old brokerage based in Irvine.

Daum-Johnstown says the defections broke up a planned leveraged buyout of the company from parent Southmark Corp.

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It is considered bad etiquette for brokerages to aggressively recruit other firm’s brokers. But etiquette scarcely covers the circumstances of platoon-size defections like this one. Scher-Voit co-owner Lawrence M. Scher says he did not know the Daum-Johnstown employees were going to jump ship and therefore couldn’t have encouraged them.

But some local brokers--constantly worried that their own top employees are looking for greener pastures--snicker at that explanation and are secretly rooting for Daum-Johnstown.

Meanwhile, Daum-Johnstown’s lawyers are burrowing through 97 boxes of documents that the Daum-Johnstown employees took with them when they left. An Orange County Superior Court judge recently ordered the boxes opened to Daum-Johnstown’s lawyers.

Some of the former employees have also given depositions, a process that is continuing as the case heads toward trial. A trial date has not yet been set.

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One effort at negotiating a settlement has already fallen through, Scher said, but lawyers for both sides are to meet informally again today.

“Our lawyers tell us that if it goes to court, we’ll prevail,” Scher said.


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