Both Sides Cry Foul in Brokers’ Commission Suit : Real estate: Jury hears wildly different versions of who deserves multimillion-dollar cut and who was cheating who in one of county’s largest deals.
An Orange County Superior Court jury Tuesday heard two wildly divergent versions of one of Orange County’s largest real estate deals as opening arguments were delivered in a civil lawsuit over a disputed brokers commission.
The case, which is being closely watched in the local real estate industry, pits commercial real estate broker Lee & Associates against Irvine-based Fluor Corp. and Dallas developer Trammell Crow Co. Inc.
In the suit originally filed five years ago, Lee says Fluor permitted Trammell Crow executives to cheat the brokerage out of a $9-million commission when they bought Fluor’s Irvine headquarters building in 1985.
Instead, claims Lee, the Trammell Crow executives kept millions of dollars for themselves on the $310-million deal. Lee is seeking $64 million, including at least $55 million in damages, from Trammell Crow and Fluor.
Dallas-based Trammell Crow, the nation’s largest developer, has countersued Lee & Associates, a local, medium-sized brokerage. Trammell Crow says Lee brokers sold Fluor out by disclosing confidential information to the developer without telling Fluor they were stirring up a deal to sell the headquarters building.
The Lee brokers, says Trammell Crow and Fluor, are seeking a multimillion-dollar windfall for what amounts to “a few minutes’ ” worth of meetings.
The case has drawn attention not only because of the defendants’ blue-chip corporate status but because the trial may provide legal guidance on who’s entitled to a commission in big, complicated real estate deals.
The trial, which is being presided over by Judge Marvin G. Weeks, is expected to last at least several weeks. The 12-member jury will hear evidence on both Lee’s original suit and Trammell Crow’s countersuit.
The case, said Richard L. Fahrney II, a lawyer for Lee, “involves some very simple things--promises made, promises broken; agreements made, agreements broken.”
According to Fahrney, in the summer of 1984 Fluor executives decided to sell the company’s headquarters after the engineering and construction firm made some unwise investments and found itself in need of cash. Lee says it had an agreement with a Fluor executive--who has since died in an auto crash--that the broker would get a $9-million commission from any buyer who’d pay $300 million for Fluor’s huge, futuristic headquarters building near John Wayne Airport.
Lee approached Trammell Crow executive William Lane Jr. and got a written agreement from Lane to “protect Lee’s interests” in the deal, which Lee says meant the $9-million commission. The brokerage says Lane then asked it to step aside while he negotiated directly with Fluor.
Instead, says Lee, Trammell Crow shuffled Lee out of the deal so Lane and other executives could pay themselves millions of dollars in commissions, Lee alleges.
But that’s all “half-truths” and “unsupported innuendoes,” said Girard E. Boudreau Jr., one of the lawyers for Trammell Crow. The case is really about “a couple of brokers (who) tried to play both ends against the middle, got caught and ended up with nothing.”
Lee brokers John C. Earnhart and Douglas A. Himes got in to see Lane by misrepresenting their purpose, said Boudreau, and sprung the Fluor deal. Boudreau said Fluor knew nothing about the meeting and in fact wasn’t even in the market to sell its building. Fluor’s lawyers back up this contention.
The brokerage then conned Lane into believing it represented Fluor in the sale, said Boudreau, and gave Lane confidential information such as Fluor’s own estimate of the building’s market value.
The Lee brokers were “sneaks, S-N-E-A-K-S,” said Boudreau, who were “secretly selling their client down the river in pursuit of their own selfish interests.”
Fluor didn’t find out until the following year that Lee was even involved in the deal, said Boudreau and Fluor’s lawyers. At that point Fluor told Trammell Crow it disavowed any client relationship with Lee in the headquarters deal.
A surprised Trammell Crow, which had been offering Lee a $2.5-million commission, then pulled back its offer.
