Coldwell Banker Won’t Appeal, Pays $400,000 to Broker

Coldwell Banker, the big commercial real estate broker, on Thursday paid $400,000 to a smaller rival which accused Coldwell of taking all of a $600,000 commission the two brokerages should have split.

A Superior Court judge in Los Angeles ruled in August that Coldwell Banker should have split the commission with the smaller broker, Lee & Associates of Irvine. Coldwell Banker appeared then to favor appealing the ruling, saying it was wrong and ambiguous.

The company declined comment Thursday on its decision not to appeal. Lee & Associates President Bill Lee said Coldwell paid his firm the $400,000 ordered by the judge: half the commission plus $100,000 interest.

The suit has been watched closely by local brokers seeking guidelines on whether industry practices are permissible. The suit had dragged on for five years.

It began in 1982 when Hughes Aircraft Co. signed a 10-year, $15-million lease for 365,000 square feet of research space at Canyon Corporate Center in Anaheim.

According to the suit, Coldwell represented the owner of the office complex, Macklin Co. of Newport Beach. As is customary in the industry, Coldwell sent out descriptions of the buildings to other local brokers after it was hired to find a tenant.

At a casual meeting several weeks later, Lee & Associates broker Thomas Casey mentioned to a Coldwell broker that Hughes might be interested in the property. Casey helped Coldwell set up a negotiating session with Hughes that later led to a deal, the judge found.

After Coldwell refused to give up half the commission, Lee & Associates sued in 1984.

In similar instances in Orange County the brokers usually split the commission equally, Judge Lester E. Olson ruled. Coldwell instead offered Lee & Associates a finder’s fee, then last year offered a $30,000 settlement.

“This validates the fundamental principle of the brokerage industry,” said Lee & Associates President Lee, “the spirit of cooperation.”

Coldwell is Orange County’s largest commercial real estate broker, followed by Grubb & Ellis. Lee & Associates is in a second tier occupied by several smaller brokers who have flourished at least until recently in the county’s busy market for office space.

Lee & Associates, a loose aggregation of individually run brokers’ offices around the county, has also sued Fluor Corp.--the big international contractor--and Texas developer Trammell Crow Co. in a separate case for $64 million in damages.

That case arose over the 1985 sale for $340 million of Fluor’s Irvine headquarters to the Texas developer, a deal in which Lee & Associates alleges it was also shut out of a commission.

A settlement conference in the Fluor case is scheduled for Nov. 3.