Clash of the REO Auctioneer Titans…Again

The foreclosure auction space is hot, and with a high volume of properties to auction and profit to be made, it also seems to have grown a bit crowded, with an old complaint flaring up this week between two competing auctioneers. National Home Auction Corp. (NHA), an auctioneer of real estate-owned (REO) properties, filed a lawsuit in Orange County Superior Court against competitor Real Estate Disposition Corp. (REDC). The case alleges REDC engaged in unfair and unlawful business practices designed to intentionally drive NHA out of the distressed properties auction space. The suit, which seeks more than $132m in compensatory and punitive damages, makes substantial allegations that REDC’s marketing campaigns falsely misrepresented NHA’s business practices as illegal and under federal investigation. “The suit presents a classic case of anti-competitive trade practices, conduct that is not tolerated in this country,” said Joel Kozberg, NHA’s attorney. “Sadly, this is another example of the 800-pound gorilla snuffing out fair competition.” It also represents a repeat of two previous efforts by NHA to bring legal action against its competitor, according to statements from REDC’s lawyer. “This is NHA’s third attempt to harass REDC because REDC aggressively defended its intellectual property leading to the failure of NHA’s business,” says Daniel Callahan of Callahan & Blaine, REDC’s counsel. “REDC will request sanctions for this frivolous attempt to misuse the judicial process after NHA’s earlier complaints on the same facts were dismissed by both the Federal and State courts.” The contention stems from an injunction ordered by the Federal Court against NHA in mid-2008, Callahan says. The injunction forced NHA to cease and desist publication of portions of its Web site that were “copied almost verbatim” from REDC Web pages, according to an REDC statement. The rivalry has only heated up since then, if the new suit is an indication. NHA made similar allegations as the new suit in an earlier State complaint in 2008 which was dismissed voluntarily for lack of evidence. Then, NHA attempted the same suit in a Federal Court proceeding but Judge James Ortero threw out the case in January and NHA settled with REDC out of court, paying a “large undisclosed confidential” amount of money, according to Callahan. REDC, although aware of the new lawsuit, says it has not yet been served. “We understand that the claims made are similar to those previously brought by NHA against REDC; claims that were voluntarily dismissed by NHA and then later rejected by the court when NHA tried to reintroduce them during REDC’s suit against NHA,” REDC said in a statement. “We believe any suit by NHA against REDC to be completely without merit and we intend to defend ourselves vigorously.” Write to Diana Golobay.

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