Lawsuit Against CBRE Over Dual Representation Dismissed By Judge
CBRE has prevailed in the lawsuit a D.C. landlord filed against it last year, with the judge ruling it can keep its $11.6M commission on a huge private school lease.
New York Judge Jennifer Schecter issued an order Thursday dismissing the lawsuit that an affiliate of The 601W Cos. filed against CBRE in June over a 600K SF sublease it signed in 2018 with the Whittle School & Studios at 4000 Connecticut Ave. NW.
"We maintained from the outset that there was no basis for this lawsuit and we are pleased that the Court has agreed," a CBRE spokesperson said in an emailed statement to Bisnow.
The 601W Cos. didn't immediately respond to a request for comment on the ruling.
New York-based 601W Cos., which ground leases the former Intelsat campus on Connecticut Avenue from the federal government, argued in the suit that CBRE should have to return the $11.6M partial commission it received for the deal because it failed to properly disclose it was representing both sides of the transaction.
It filed the suit just two months after a separate ruling from a D.C. judge in April declared that a landlord didn't have to pay JLL its commission because it didn't meet the District's strict dual representation disclosure requirements. That JLL case, which has been appealed and has yet to be decided in the U.S. Court of Appeals, has larger legal implications because the dispute centers around the interpretation of the D.C. law that hadn't previously been ruled on.
In the CBRE case, however, the basic facts themselves were in dispute. CBRE asked the judge to dismiss the suit in August, claiming it didn't actually represent both sides of the deal.
CBRE's response said that while it represented Whittle, the landlord was represented by Cushman & Wakefield. CBRE was separately working with the landlord as a property manager and project manager, but it said those roles didn't mean it represented 601W Cos. in the transaction.
The judge agreed with CBRE, declaring Thursday that the firm wasn't a dual representative of the Whittle School in the deal. Schecter further stated that the brokerage agreement between the parties remains enforceable, and CBRE doesn't need to return its commission.
The legal dispute arose after the Whittle School stopped paying its rent in 2020, according to court filings, and it announced last summer it is shutting down permanently. The closure left 40 employees without jobs, dozens of students without a school and a 650K SF D.C. building without a tenant.
In a separate lawsuit between the landlord and the private school, a D.C. judge in October ordered that 601W Cos. could repossess the building and that Whittle would be forced to pay $35M in overdue rent and taxes, the Washington Business Journal reported.