MBC Says MortgageBrokers.com is Suing 41 of its Agents

lawsuitMortgage Brokers City (MBC), an Ottawa-based mortgage brokerage, says MortgageBrokers.com (MB.com) is suing 41 of its mortgage agents for $200,000 each.

Here are the apparent public court documents, as provided to us.

According to MBC’s press release from Friday March 23:

“MortgageBrokers.com claims that it owns the mortgage agents’ lists of customers and phone numbers pursuant to their agent agreements with MortgageBrokers.com.”

“MortgageBrokers.com also alleges in the lawsuit, among other things, that the mortgage agents are in breach of their agreements for allegedly competing with MortgageBrokers.com and allegedly soliciting ‘their’ clients within the year after their resignation.”

This latest action, which goes before the court May 8, is part of the $18 million that MBC says MB.com is suing it for.

Apparently, MB.com also claims that MBC has:

  • not made good on two $150,000 promissory notes advanced to it
  • violated MB.com’s trademarks and copyrights
  • conspired to injure MB.com
  • breached contracts
  • and the list goes on…

Lawsuit-Mortgage-BrokersMBC is not just a defendant, however. It is counter-suing MB.com. (Here, apparently, is the public information on that claim.)

MB.com is headed by Alex Haditaghi, who is now Founder and Executive Vice Chairman of Pacific Mortgage Group (PMG). (PMG owns Mortgage Architects and the lender Radius Financial.)

MBC principal Michael Hapke says his company is seeking $370,000 plus legal costs. Hapke claims this represents commissions that MB.com wrongly withheld from his group after it left MB.com in January 2010.

“This has gone too far,” says Hapke, who notes that MBC has had to spend more than $500,000 in legal fees to defend itself.

“Some of our agents being sued for $200,000 are merely staff who hold agent licences for administrative purposes,” he says.

“Some are people who have done only $269,000, $1.7 million, or $172,000 in volume last year, most of which are personal deals (for friends or family)” and which are incidental to their jobs as admin staff, says Hapke.

We requested comment from Haditaghi, but he had not provided a statement on this matter by press time.

If ever there were an example where two litigants need to settle, this is probably it. Both have burned through hundreds of thousands in legal costs and the negative publicity is not helping either party.

********

Note: The claims above are all alleged at this point. None of this has been proven in court, as far as we know.


Side Note: As a broker, this story underlines the importance of being comfortable with the language in your contract. There are multiple brokerage firms that word their agreements to make a claim against your client lists, phone numbers, and/or agents, if you leave. Depending on how they’re phrased, these contractual handcuffs can be enforced (regardless of what recruiters say when they’re courting you to sign up). The bottom line for brokers: unless a firm is providing you tremendous value up front, negotiate these silly clauses out…or find another brokerage.


Rob McLister—CMT

  1. Well, this doesn’t bode well for anybody involved.
    “silly” clauses is putting it way too nicely. I suggest “scurrilous”.

  2. Thanks for putting this in the public eye Rob. Your point is excellent: every broker and agent needs to read the brokerage contract they’re signing even if it is the size of the phone book, their lawyer needs to read it and their lawyer’s lawyer needs to read it. Think hard, it could cost you years of income. I am absolutely not saying their was any lack of diligence on the brokerage’s part in this case, I am just saying it can be a minefield.
    I won’t comment on the litigation except to say the Mike and his partners and agents have superb reputations in the Ottawa area and leave it at that.
    It does offer a study in contrasts however; when my eldest son left M.I. to form his own brokerage; the transition was so friendly to him and his clients, so fair to everyone and M.I. was so co-operative, my appreciation for that company went up several notches.
    As a general principal I think it is fair to say that if the superbroker or network offers very short, simple and uncomplicated terms for leave taking; it speaks to the nature of the relationship you as a broker or agent can expect with that company.

  3. This is not good for anyone. Brokers will think twice about joining mortgagebrokers.com or Hapke’s team. Bad all around.

  4. Rob, your point about reading all the “standard” clauses and negotiating the silly ones out is bang on. Knowing the impact of these types of clauses we have always had each and every client sign a “Client Consent” form acknowledging that each Mortgage Agent had the right to retain a copy of the file and contact information for future dealings. This form has always been a requirement for a complaint file with our office.
    More importantly this is a story about partnering with the right people and organizations. I will however, leave that discussion for someone else.
    Mike
    [Edited by CMT]

  5. Rich laywer – not sure why you deduce that brokers and agents would think twice about joining this team … this is an excellent company and team to work with and the Managing Partners took money from their own pockets to ensure the agents weren’t suffering a loss. Thanks for your comment, Ron, we take our reputation very seriously and value each and every client we work with.  This whole thing is just wrong.  As in any business, the agents of this company made a choice as to where to work and who to align themselves with – why should we be penalized for that?
    [Edited. Their may be legal or other implications with some of your statements. Please refrain from any direct or implied accusations until proven. Thank you. CMT.]

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