Denver-based brokerage franchise Motto Mortgage, owned by RE/MAX, has accused broker shop UMortgage of “tortious interference” in its contract with a former franchisee called TRB Solutions, whose controlling member was Breon Price, the top-producing loan officer.
According to a lawsuit filed in March in a U.S district court in Colorado, UMortgage “unlawfully solicited” and “induced” Price and his team to join the company in the latter half of 2022, despite knowing the franchisee was subject to an agreement with Motto Mortgage.
The franchise agreement was not set to expire until December 1, 2025, and Motto claims Price expressed a desire in late 2022 to renew it for a new five-year term. But the team transitioned to UMortgage on December 14, 2022, and UMortgage tried to solicit other franchisees, such as one in Atlanta, per the lawsuit.
Price was one of the four original members of Motto’s advisory council, contributing to forward-planning strategies. He was set to hold the role until 2024, the lawsuit says.
TRB Solutions, which operated as Motto Mortgage Apex in Cincinnati, received Motto’s support, such as know-how, training, access to third-party resources and other trade secrets, according to the document.
But the franchise agreement prohibited franchisees from becoming officers, directors, shareholders, members, licensees, partners or managers in other mortgage companies.
Motto claims UMortgage knew about the franchise agreement, which is allegedly proven by a company check used to pay the sum of $172,800 related to the TRB termination agreement.
A spokesperson for Motto said the company is pursuing legal action against UMortgage after the company intentionally sought to impede on Motto’s franchisee contracts.
“Motto Mortgage will not allow a competitor to misrepresent the nature of their business acquisitions and induce Motto Mortgage franchisees to violate/terminate their franchise contracts,” the spokesperson wrote in an email.
Anthony Casa, UMortgage’s president and CEO, said in a statement that Price and his team joined UMortgage because of its platform.
“If having the best value proposition for loan originators is interfering with Motto Mortgage’s business model, then they are in BIG trouble,” Casa added.
That’s not the only lawsuit on hiring practices that involves UMortgage and its loan officers.
In late March, Maryland-based lender NFM, Inc. sued two former loan officers, Justin Bolden and Stephen Levitt, for violating its non-compete agreements when they left the company the month prior to join UMortgage.
According to the lawsuit filed in a district court in Maryland, the LOs agreed to sign a Code of Conduct Agreement in which the company mentioned the employees could not “compete with NFM for a period of one year after the termination of employment and not to solicit customers, employees, or anyone else that has a business relationship with NFM.”
However, according to the lawsuit, both employees serve in a “substantially similar role” at UMortgage compared to their roles at NFM and utilize “confidential, proprietary and trade secret information” to compete with the lender.
HousingWire reached out to NFM lending, Bolden and Stephen, but they did not reply to requests for comments.
Casa, who said “non-compete agreements don’t hold up in court,” mentioned mortgage companies pursue litigation to “intimidate their existing loan originators.”
“This is a bully tactic, which we will expose, and then we will take all of their loan originators.”