Something was drastically wrong in Armonk.
In two days, six of Douglas Elliman’s top real estate agents abruptly resigned. All six went to work across Main Street at a rival firm, William Raveis Real Estate.
Branch manager Lisa Theiss was vacationing in Puerto Rico and was seemingly unconcerned about the defections.
Regional manager Gabe Pasquale went to Armonk and noticed that Theiss’ office, normally looking lived-in, was stripped of personal belongings and had become “extremely sterile,” he later recalled.
Then an Elliman agent in Armonk told Stephen Kotler, then the firm’s COO, that Theiss had urged her and three others to leave the company during a secret meeting at Theiss’ house. An office manager told him she had heard that Theiss “wanted to decimate Douglas Elliman.”
Eventually, 11 agents resigned in March 2015 and went to work for Raveis. Elliman fired Theiss and sued her and Raveis.
A state Supreme Court jury in Westchester has ruled in favor of Elliman. On June 20, after a four-week trial, Elliman was awarded $4.75 million.
A spokesman for Raveis said the verdict will be appealed.
Raveis and Elliman have been competing for market share in Westchester for several years. Raveis, founded in 1974, is based in Shelton, Connecticut. It bills itself as the number one family-owned real estate company in the Northeast, with 120 offices, 4,000 agents and $9 billion in annual sales.
Elliman is based in Manhattan. It was founded in 1911 and claims to be the region’s largest and the nation’s fourth largest real estate company.
Raveis recorded $439 million in sales last year, according to The Real Deal, and Elliman recorded $378 million.
Elliman’s Armonk office opened in 2010, when it acquired Holmes & Kennedy, where Theiss had worked since 2007. Elliman kept her as sales manager, with a base pay of $110,000.
In 2014 and 2015, according to court records, Raveis tried to recruit Elliman agents. The effort was unsuccessful.
That failure, Elliman states in court papers, made Raveis realize it needed an insider.
“In Theiss,” according to an amended complaint, “they found a willing turncoat.”
As sales manager, Theiss supervised 21 people. She knew everyone’s strengths and weaknesses and she knew which of their listings — the bread and butter of the real estate world — were about to expire and could then be listed by another firm.
Theiss met with the competitor’s general manager, Chris Raveis, and Raveis senior vice president Glenn Felson in January and February 2015. She sent Felson a list of 21 agents “she believed she could recruit to Raveis,” the complaint alleges. Afterward, she wrote to Chris Raveis, “I feel compromised there and look forward to moving on.”
Felson told her to stay with Elliman to continue recruitment, according to legal papers, and the company allegedly offered her $50,000 to recruit her colleagues.
Raveis officials met with four Elliman agents. Theiss arranged a meeting at her home on March 2, 2015, with four more agents.
The first hour was “dedicated to disparaging” Elliman and its management, the amended complaint states. She offered $10,000 bonuses and promised a $10,000 marketing budget if they signed a three-year contract with Raveis. She asked them to sign nondisclosure agreements.
One Elliman agent refused to sign the agreement and left.
Theiss also urged recruits to let their listings expire, according to the lawsuit, so that Raveis could pick up the business.
On March 11, Theiss left for an eight-day vacation in Puerto Rico. The next day, the resignations began.
On March 16, after Pasquale and Kotler concluded that Theiss had masterminded the defections, an Elliman official called her in Puerto Rico and fired her. She returned home on March 18 and went to work the next day at the Raveis offices across the street from her old workplace.
Elliman hired Kasowitz Benson Torres to sue Theiss and Raveis. A partner in the firm, Marc Kasowitz, has represented Donald Trump for several years and was recently appointed as the president’s outside lawyer in the federal investigations into possible collusion by the Trump campaign with the Russian government in its election hacking attacks.
Theiss denied any violation of law or duty to Elliman, according to court filings. She claimed that Elliman had created a hostile workplace and had refused to pay a $36,462 bonus for 2014 to which she was entitled.
She said a lesbian senior executive had made sexual advances to her and had made offensive comments to her husband. She complained to a supervisor but no remedial action was taken.
Elliman responded that she was not entitled to the bonus and that she did not avail herself of measures offered to employees who claim discrimination.
The jury found that Theiss breached a fiduciary duty, that Raveis aided and abetted the breach and that both interfered with business relations.
“We disagree with all aspects of the jury verdict,” Raymond Cashen II, general counsel for Raveis, wrote in an email, “and will vigorously appeal the decision.”