Arbitrator Keith Clause of the Commercial Arbitration Tribunal presided over American Arbitration Association Case No. 01-02-0005-5407. The Arbitrator’s Opinion and Award recited the following Findings of Fact and Conclusions of Law regarding Steve Paramksi, Michael Morgret and Mark Urbanowicz:
|MOHR PARTNERS INC.
MICHAEL MORGRET, and
1, THE UNDERSIGNED ARBITRATOR, having been designated and appointed by the American Arbitration Association ("AAA") in accordance with the parties' arbitration agreements dated December 4, 2008, August 25, 2014 and June 15, 2009, respectively, and having been duly sworn and having heard the proofs and allegations of the parties, and Claimant being represented by Kyle Pugh and Kellie McKee, of the law firm C. Kyle Pugh, P.C., and Respondent being represented by Eric Sparks and Justin Hanson of the law firm, Gould & Ratner LLP, during a Zoom hearing on May 1 8, 19 & 20, 2021, hereby enter the following AWARD:
The central issue in the case is whether Claimant, Mohr Partners, Inc. ("Mohr"), was/is entitled to receive a $600,000 brokerage commission payment in connection with a commercial lease transaction and amendment for a tenant/client renting space in El Paso, Texas that was consummated on April 30, 2020, or whether Respondents (and their new brokerage firm) were/are entitled to receive the commission payment in connection with this same transaction.
1. Mohr is a company primarily engaged in the business of representing tenants in connection with commercial real estate transactions and leases.
2. Respondents Steve Paramski ("Paramski"), Michael Morgret ("Morgret") and Mark Urbanowicz ("Urbanowicz")(collectively "Respondents") previously worked as brokers with Mohr pursuant to a written Commission and Company/Salesperson Agreement ("Salesperson Agreement"). Peter Graham ("Graham") also worked with (and continues to work with) Mohr as a broker.
3. In the fall of 2018, Graham originated and sourced Woodbridge Foam Corporation ("Woodbridge") as a new client of Mohr. At that time a subsidiary of Woodbridge ("SW Foam LLC") was renting space from a landlord located in El Paso, Texas, called El Paso Railroad 99, LLC ("Landlord") and was in need of a real estate broker to assist it in connection with an anticipated lease amendment and/or lease renewal with the Landlord ("Woodbridge Foam Lease Amendment").
4. It is undisputed that all of the Respondents formed their relationship with both Woodbridge and the Landlord while they were working with Mohr.
5. Prior to resigning from Mohr, Respondents began actively working with Woodbridge and the Landlord on the Woodbridge Foam Lease Amendment. Such work included preparing an industrial submarket report and sending the Landlord a formal written response to the Landlord's request for proposal ("RFP"), as well as sending a written Commission Agreement ("CA") signed by the Chairman and CEO of Woodbridge. Both the RFP response and CA were prepared and sent to Woodbridge and the Landlord on Mohr company letterhead.
6. On November 4, 2019, all three of the Respondents abruptly and simultaneously resigned from Woodbridge to join Vestian Global Workplace Services ("Vestian"). Vestian is a direct competitor of Mohr and is also engaged in the commercial tenant rep brokerage business.
7. On November 4, 2019, Respondents spoke to their former manager, Chris Bargowski ("Bargowski"), about each of them preparing a list of pending transactions Respondents had been working on at Mohr prior to their resignation ("List") and sending it to Mohr. The purpose of preparing the List was two-fold: (i) to identify existing client transactions that were open and pending at Mohr; and (ii) to identify existing transactions for which Respondents could be paid a post-resignation commission if the transaction closed within nine (9) months following their resignation date.
8. These purposes are further described and set forth in Section 3:03 of each Respondent's Salesperson Agreement. The Salesperson Agreement(s) clearly state that the List of transactions shall remain Mohr's property and the transactions shall be consummated at Mohr.
9. After speaking to Bargowski, each of the Respondents sent Mohr a formal resignation letter and List.
10. In his resignation letter, Urbanowicz specifically stated that, "all the deals currently underway will remain with Mohr Partners." Likewise, in his resignation letter Morgret stated:
Below is a list oftransactions that I am currently working on that will remain with Mohr Partners. I expect to be able to see these to completion with commissions earned being paid to Mohr Partners and I compensatedfrom Mohr Partners."
Paramski also sent Mohr a List titled "Mohr Partners Transactions" that included the Woodbridge Foam Lease Amendment, In short, all three Respondents expressly acknowledged and agreed the commissions related to the List of potential transactions (including the Woodbridge Foam Lease Amendment) would remain the property of Mohr and would be paid to Mohr.
11. Consistent with the written terms of the CA and their verbal discussions and agreements with Bargowski, for a period of time after they resigned each of the Respondents continued to work on transactions identified on their respective Lists and were paid commissions on some List transactions that "closed" after Respondents resigned on November 4, 2019. They also continued to speak and communicate with Graham regarding the Woodbridge Foam Lease Amendment. In other words, for a period of time after Respondents resigned the parties operated in a manner that was wholly consistent with the terms of the Salesperson Agreement, as well as with industry practice and custom, and in a manner that benefitted Mohr, Respondents, and Mohr's clients.
12. On or about February 1 1, 2020, Woodbridge advised Respondents (and Graham) that it was prepared to proceed with a lease extension as outlined in the letter of intent ("LOI") dated January 31, 2020. Importantly, the LOI "accepted' by Woodbridge identified Mohr as the exclusive broker and stated that Mohr shall be paid a $600,000 commission by Landlord. Paramski forwarded Woodbridge's "prepared to proceed" email to the Landlord but intentionally and deceptively removed Graham from the email.
13. On or about February 21, 2020, the Landlord sent Paramski a draft lease amendment which, in Section 13 of the amendment, still identified Mohr as the "Tenant's Broker" in connection with Woodbridge Foam Lease Amendment. Notably, Graham was not included or copied on the Landlord's email since he had been removed from the February I I th email communication. Consequently, nobody from Mohr knew the Woodbridge Foam Lease Amendment was progressing.
14. After getting the draft lease amendment from the Landlord, Respondents conspired with one another to intentionally and deceptively alter the draft lease amendment to substitute Vestian as the "Tenant's Broker" (instead of Mohr) before sending it to Woodbridge to review and sign. Respondents also conspired and agreed to send the Landlord a new CA which identified Vestian (instead of Mohr) as the new broker of record of Woodbridge and the party to whom the $600,000 commission related to the Woodbridge Foam Lease Amendment should be paid.
15. Paramski's testimony and explanation for why or how the CA and Woodbridge Foam Lease Amendment were changed to identify Vestian as the new tenant broker for Woodbridge (instead of Mohr) was not credible or believable.
16. Respondents intentionally kept Mohr in the dark and deliberately concealed the fact they were steering and directing the entire $600,000 commission be paid to Vestian instead of Mohr. They did so for purely personal reasons - because Mohr never agreed or authorized the commission to be paid to Vestian.
17. On or about May 26, 2020, Graham call Paramski to ask about the status of the Woodbridge Foam Lease Amendment. Despite the fact the Amendment had already been signed, Paramski intentionally lied to Graham and told him the signing of Woodbridge Foam Lease Amendment had been delayed. Paramski made this false and misleading statement to Graham in hopes that Vestian would receive the $600,000 commission payment before Mohr discovered the transaction had closed and the commission had been paid.
18. On or about May 28, 2020, Graham contacted Woodbridge and learned the Woodbridge Foam Lease Amendment was signed on April 30, 2020 and that Respondents were attempting to hi-jack the $600,000 commission associated with the El Paso lease transaction.
19. After Mohr learned about the Respondents' deceptive misconduct, its CEO contacted Respondents and Vestian to try and resolve the commission dispute. Respondents and Vestian refused to respond to Mohr's settlement outreach and instead continued to represent to the Landlord that, "Mohr Partners has no right to the commission that is due and owing to Vestian for this lease." Respondents' statement and representation to the Landlord were false.
20. On or about June 1, 2020, counsel for Mohr advised the Landlord that Mohr was entitled to be paid the commission and threatened to sue the Landlord if it paid the commission to Vestian or Respondents. To date, the Landlord has not paid the $600,000 commission to anyone in connection with the Woodbridge Foam Lease Amendment.
21. The Woodbridge Foam Lease Amendment was not the only instance of unlawful and improper conduct by Respondents. On or about June 9, 2020, Morgret intentionally directed a $25,000 commission payment that was otherwise due and owing to Mohr by its client, Carolina Restaurant Group, be paid to Vestian instead of to Mohr.
22. On or about June 10, 2020, Mohr filed an arbitration demand with the American Arbitration Association ("AAA") against Respondents.
Each Respondent entered into a valid and enforceable Salesperson Agreement with Mohr. Pursuant to the respective Salesperson Agreement(s):
Mohr performed its obligations under Respondents' Salesperson Agreement(s). Respondents, however, intentionally breached and/or were in default of the material terms of their Salesperson Agreement(s) with Mohr, including the terms and provisions noted above. Such default and/or breaches occurred on multiple occasions beginning November 4, 2019 and continued through May/June 2020 and caused Mohr damages.
As a result of such default and/or material breaches, Mohr was excused from performing its obligations to Respondents after the date of such default and/or breaches occurred, including being excused from any obligation to pay Respondents commissions after Respondents had breached or were in default of their Salesperson Agreement(s).
As a result of such default and/or material breaches, Mohr was directly and actually damaged by Respondents. Such actual damages include the $600,000 in commission that was due and owing to be paid to Mohr by the Landlord in connection with the Woodbridge Foam Lease Amendment but was never paid.
I find the $600,000 commission owed by the Landlord in connection with the negotiations and execution of the Woodbridge Foam Lease Amendment was and is lawfully and rightfully the sole and exclusive property of Mohr and should have been, and should be, paid directly to Mohr by the Landlord or its affiliates.
Accordingly, I find that Mohr's claim for breach of contract against Respondents is hereby GRANTED and hereby award Mohr $600,000 in actual damages from Respondents jointly and severally.
After Respondents resigned on November 4, 2019, (i) Respondents made material representations to Mohr that were false, (ii) Respondents knew such representations were false, (iii) such representations were intended to induce Mohr to act upon such representation, and (iv) Mohr actually and justifiably relied upon the representation and suffered injury.
Respondents' misrepresentations were also intended to reach Woodbridge and the Landlord and Woodbridge and influence them to direct and pay the $600,000 commission to Vestian instead of Mohr.
Accordingly, I find that Mohr's claim for fraud against Respondents is hereby GRANTED and award Mohr $600,000 in actual damages against Respondents.
Respondents combined and conspired with one another to commit an unlawful purpose. In this case, the unlawful purpose was to commit fraud against Mohr.
Accordingly, I find that Mohr's claim for civil conspiracy against Respondents is hereby GRANTED and award Mohr $600,000 in actual damages against Respondents.
After they resigned on November 4, 2019, it is unclear what specific fiduciary duties, if any, were owed by Respondents to Mohr.
Accordingly, I find that Mohr's claim for breach of fiduciary duty against Respondents is hereby DENIED.
After he resigned, Respondent Morgret intentionally breached his Salesperson Agreement by diverting a $25,000 commission payment from Mohr's client, Carolina Restaurant Group, to Vestian.
Such breach caused Mohr actual damages in the amount of$25,000.
Accordingly, I find that Mohr's separate and additional claim for breach of contract against Morgret is hereby GRANTED and award Mohr $25,000 in actual damages against Morgret in connection with this claim.
Mohr prevailed on its claims for breach of contract, fraud and civil conspiracy against all three (3) Respondents. Mohr also prevailed on a separate breach of contract claim against Morgret. Mohr also prevailed on its defense of all of Respondents' counterclaims. In short, pursuant to Section 6.16 of the Salesperson Agreement(s) Mohr was the prevailing party.
I find that pursuant to Texas law and the Salesperson Agreement(s) Mohr was/is the prevailing party and is therefore entitled to recover its reasonable attorneys' fees and cost incurred in connection with this arbitration and enforcing its rights under the Salesperson Agreement(s).
Accordingly, I find that Mohr's request for attorneys' fees is hereby GRANTED and award Mohr $215,260.10 in attorneys' fees.
Accordingly, I also find that Mohr's request for cost is hereby GRANTED and award Mohr $34,950.00 in costs.
While they were working with Mohr each Respondent was properly and fully paid commissions that were due or owing to them by Mohr pursuant to the terms of their Salesperson Agreement(s). Moreover, Mohr was entitled to deduct expenses and splits prior to paying commission to Respondents.
In addition, after Respondents resigned from Mohr they repeatedly breached and/or were in default of the material terms of their Salesperson Agreement(s). As a result, after such default and breaches occurred Mohr was legally excused from any obligation to pay Respondents commission under Respondents' Salesperson Agreement( s).
Accordingly, I find that each Respondent's counterclaim against Mohr for breach of contract is hereby DENIED.
Respondents did NOT prevail on their counterclaims for breach of contract against Mohr.
Accordingly, I find that Respondents' counterclaims against Mohr for attorneys' fees and costs are hereby DENIED.
Mohr did not make any false or misleading statements or representations to Respondents in connection with any client transactions, leases or commissions that were intended to induce, or did induce, Respondents to act upon such representations.
Respondents were not damaged or injured based on any statements or representations made to them by Mohr before or after they resigned on November 4, 2019.
Accordingly, I find that Respondents' counterclaims for fraud against Mohr are hereby DENIED.
Based on the foregoing Findings of Fact and Conclusion of Law, and in order to avoid duplicate recovery, I find that Mohr should be awarded the following:
The above amounts, plus prejudgment interest at the maximum rate allowed under Texas law, shall be paid within thirty (30) days from the date of this Award.
To the extent the above award amounts are not timely paid by Respondents within thirty (30) days of the date ofthis Award, all such awarded amounts shall bear and accrue post-judgment interest at the maximum rate allowed under Texas law.
I further find that Respondents should take nothing and be awarded zero ($0) in damages, costs and/or attorneys' fees against Mohr.
The administrative fees and expenses of the American Arbitration Association totaling $2,950.00 shall be borne as incurred, and the final compensation and expenses of the arbitrator totaling $29,405.25 shall be borne as incurred.
This Award is in full resolution of any and all claims and counterclaims filed or submitted by the parties in connection with this arbitration. All claims and relief not expressly granted herein are hereby DENIED.