HomeServices of America Loses Supreme Court Bid to Toss Sitzer/Burnett Ruling Due to Arbitration Agreement

HomeServices of America, the parent company of Allie Beth Allman & Associates, Ebby Halliday Realtors, Dave Perry-Miller Real Estate, and Williams Trew Real Estate, deserves a helluva lot of credit. Huge accolades. Though almost all other defendants (most major U.S. real estate brokerages) have settled the landmark Sitzer/Burnett Commissions verdict, agreeing to dole out millions of dollars, HomeServices threw a Hail Mary pass and petitioned the Supreme Court court to reject the verdict because of arbitration agreements they say the plaintiffs all signed.

The petition was denied by the U.S. Supreme Court on April 15. No comment from the court.

At HSA, the verdict was disappointing but not unexpected, according to Chris Kelly, former Ebby Halliday Companies CEO.

“While we firmly believed the arbitration issue we raised through our petition to the Supreme Court was an important matter, given the conflicting interpretation of the Federal Arbitration Act at the circuit court level, we certainly understood the odds and the very limited number of cases the Supreme Court selects each session,” Kelly, now executive vice president at HomeServices, told RealEstateNews.com. “It was just one of many paths we believed were important to pursue.”

Notice a flurry of class-action lawsuit claim forms in your mailbox?

I’m drowning and seriously need a day to research/complete. Of course, class action attorneys know that. On my desk: the Visa-Mastercard $5.5 billion settlement, Zayo Group Holdings, Patterson v. DPP (a class-action on my husband’s C-PAP machine), and now a new one: Sitzer/Burnett.  

How much do plaintiffs collect in most class-action lawsuits? It depends on several factors, including the specific case details, the class size, and the court presiding over the case. Most plaintiff settlements range from a few dollars to several thousand. The largest amount of money an individual has won in a class action lawsuit is $5 billion, which was awarded to the victims of the Exxon Valdez oil spill in 1994.

Home Sellers Signed Arbitration Agreements, Agreed to Settle Out of Court

HomeServices had asked the nation’s high court to reject the Sitzer/Burnett trial and its $1.8 million verdict, arguing that the home sellers involved originally agreed to arbitrate the dispute out of court, prior to the trial:

“That trial should never have occurred because the plaintiffs are required to arbitrate their claims — and their arguments opposing arbitration must be resolved by the arbitrator, not a court.”

But the Eighth U.S. Circuit of Appeals ruled the case should still be heard before a judge, noting that HomeServices “waived its right to arbitrate by actively litigating the case for about a year before filing its motion.”

Kelly says that in addition to getting the Sitzer/Burnett case thrown out, HomeServices hoped to test the uniform application of the Federal Arbitration Act nationwide, which doesn’t seem so uniform:

“Our appeal is rooted in the principles of the Federal Arbitration Act, which clearly mandates that arbitration agreements be honored as they are written, including clauses that delegate interpretative authority to arbitrators,” Kelly said. “This appeal highlights a substantial inconsistency among circuit courts regarding the interpretation of arbitration agreements and delegation clauses.”

HomeServices’ goal in arguing its case before the Supreme Court, said Kelly, is “not only to seek a resolution for this specific case but also to ensure the uniform application of the Federal Arbitration Act nationwide.”

One wonders if this ruling loss over arbitration agreement inconsistencies could have significance in future litigation. In any case, HSA still has options. Since post-verdict motions and final responses are soon due, there could be a whole new trial and judgment, which has been requested.

A Small Win For HomeServices of America

But HomeServices snagged a small win yesterday: the judge overseeing the Sitzer/Burnett commission lawsuit, Stephen Bough, will not issue a final ruling on the defendants’ damages just yet. Also Monday, Judge Stephen Bough denied the plaintiffs’ motion for entry of judgment without prejudice.

In mid-March, the plaintiffs asked the court to order HomeServices to pay $4.7 billion in damages by this fall. By tripling the $1.78 billion in damages awarded by a jury late last year, and then subtracting the $626.5 million from the settlement agreements reached by Anywhere, RE/MAX, Keller Williams and the National Association of Realtors (NAR), plaintiffs arrived at this amount.

HomeServices argued it was too soon to pay out — the plaintiffs’ attorneys claim their clients and “the Class” is being deprived of the millions of dollars and interest, which they are now due. But Judge Bough saw no immediate hardship or danger.

This is no Valdez oil spill.

“There are several outstanding issues yet to be resolved, including our post-trial motion for a judgment as a matter of law and our motion for a new trial,” Kelly told Housingwire. “Additionally, the court acknowledged that the pending settlements have not received final approval, and objections to these settlements must still be addressed. These factors significantly influence any final judgment, and it is essential that they are resolved.“

HomeServices of America, part of Warren Buffett’s Berkshire Hathaway empire with a net value of $881 billion, is now the only major defendant left in Sitzer/Burnett.  Anywhere, RE/MAX, Keller Williams, and NAR reached settlement agreements totaling $626.5 million.