Munger, Tolles & Olson secured a $1.6 million settlement along with a public apology and certain ongoing restrictions on behalf of online real estate marketplace Ten-X, LLC in its lawsuit against Commercial Real Estate Exchange, Inc. (CREXi) and Michael DeGiorgio, CREXi’s founder and CEO, alleging breach of contract, breach of fiduciary duty, and misappropriation of trade secrets. The May 5, 2017 settlement follows a preliminary injunction obtained by Ten-X on Jan. 26, 2017.
Mr. DeGiorgio is a former Ten-X executive who founded CREXi along with other former Ten-X executives. In April 2016, Ten-X filed a lawsuit in Superior Court of California, County of Los Angeles alleging breach of Mr. DeGiorgio’s Invention Assignment Agreement, misappropriation of trade secrets, breach of the duty of loyalty, and breach of Mr. DeGiorgio’s confidentiality agreement. CREXi and Mr. DeGiorgio were accused of using Ten-X customer lists to send email blasts that launched the new rival company, which was initially developed by Mr. DeGiorgio while he was still working for Ten-X.
After a period of expedited discovery, the court issued a preliminary injunction that barred CREXi from operating an online commercial real estate marketplace that facilitated the transaction process and contained one of a number of features such as the ability to create or close real estate contracts online. The preliminary injunction also barred CREXi from using one of a number of Ten-X documents, and in particular customer lists, that Mr. DeGiorgio kept from his time working at Ten-X and then used to launch his new company. With the settlement, the injunction will dissolve, but CREXi will continue to abide by certain restrictions such as a prohibition against the use of Ten-X documents and information.
In a company statement, Ten-X’s CEO Tim Morse stated: “We are pleased that this litigation has been brought to a successful resolution by our legal team. Ten-X is proud of its history of bringing innovation to the commercial real estate marketplace and of our employees who expend tremendous effort developing products and services for our clients. We hope that the outcome of this matter – both the injunction we obtained in the Fall and the ultimate settlement of the case – sends a message that Ten-X will vigorously protect its rights when necessary.”
Mr. DeGiorgio stated: “We apologize to Ten-X for the actions which led to this lawsuit. I regret my conduct at the time I departed Ten-X and believe that the settlement is a fair resolution. With the litigation now settled, CREXi looks forward to competing in the commercial real estate marketplace on a level playing field.”
The company’s full statement can be viewed here.
The Munger Tolles team representing Ten-X includes Carolyn Hoecker Luedtke, Laura D. Smolowe, Stephen M. Perry, Jordan D. Segall and Jennifer L. Bryant.