Lawsuit: Broker used ‘burner phone’ to violate injunction in non-compete case

This story first appeared on BusinessDen.com, a BizWest news partner.

Newmark says that one of the three Denver brokers who left the firm for a rival last year has violated a court order prohibiting him from competing with Newmark for 12 months.

In a court filing in the company’s home state of New York last week, Newmark asked a judge to hold Chris Cowan in contempt of court, saying he has been using a ‘burner phone’ to violate the injunction that was issued last July.

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That injunction was issued for Cowan and colleagues Terrance Hunt and Shane Ozment, who jumped from Newmark to CBRE last May. The three men were subsequently sued by Newmark, which alleged they were violating a non-compete clause they signed with Newmark as part of the company’s 2014 acquisition of a firm the three men each owned a small stake in.

The injunction prohibits the trio from “providing any brokerage services” in Colorado and from “directly or indirectly competing” with Newmark in the state. Attorneys for the men previously argued the injunction is vague, but the judge in the case declined to delve into the specifics of what is and isn’t allowed.

Newmark, citing records produced during the lawsuit’s discovery phase, alleges in the latest filing that Cowan reached out to two Newmark clients in August 2021, shortly after the injunction was issued.

“Cowan here new burner phone,” one text read.

“Chris Cowan #burner! Have a great weekend,” read the second.

In the coming months, Newmark alleges, Cowan used the phone to collaborate with other CBRE employees on brokerage transactions, specifically citing deals regarding land in Littleton and a master-planned community in Thornton.

“As recently as March 15, 2022, CBRE personnel were looking for Cowan for ‘sign off’ on a transaction in Aurora, Colorado,” Newmark said in an April 11 filing. “For some of this competitive work, Cowan used proprietary Newmark documents and information that he took with him to CBRE. All of this commercial real estate brokerage work is plainly prohibited by the injunction.”

Newmark alleges that, while Cowan produced text messages from the phone as part of the discovery process, he has not provided a log of calls made using the device.

An attorney for Cowan disputed Newmark’s characterization of the texts.

“Mr. Cowan denies Newmark’s accusations, which even Newmark admits are nothing but speculation based on a handful of documents that Mr. Cowan voluntarily produced in the case,” Gibson Dunn attorney Ryan Stewart said. “Mr. Cowan looks forward to presenting the facts in Court, and we are confident that Mr. Cowan will be vindicated.”

Newmark has not accused Hunt or Ozment of violating the injunction, although court records show that the company’s attorneys asked Ozment to admit to using a burner phone between May and December 2021.

Ozment’s attorneys said in response that “he used a prepaid phone purchased by his wife only to communicate with his wife for personal family matters when Defendant was without his primary phone.” The attorneys also objected to the question, saying “the term ‘burner phone’ is argumentative and attempts to imply or connote malicious intent or wrongdoing,” court records show.

Newmark argues that Cowan’s phone usage means the company should be entitled to more records.

“From the onset of this case, Plaintiffs have sought discovery concerning Defendants’ post-Injunction activity,” Newmark says. “CBRE has steadfast refused, as have Defendants with very limited exceptions, taking the position that Newmark has no choice but to trust … Defendants are no longer entitled to that trust.”

The situation also threatens to bring CBRE back into the case. The company was included in Newmark’s original lawsuit against the men, but a judge dismissed CBRE as a defendant within weeks. Earlier this month, Newmark submitted a motion asking court permission to renew its opposition to CBRE’s request to be dismissed from the case, citing records produced during discovery.

“This information was not available to Newmark during the original briefing of CBRE’s motion to dismiss last May and June and contradicts certain representations made by CBRE to the Court at that time,” a Newmark attorney wrote in an affidavit.

CBRE and Newmark didn’t respond to requests for comment last week. A hearing on the matter is scheduled for May 4.

Cowan, Hunt and Ozment previously lost their appeal of the one-year injunction. They were also dealt a blow late last month when a judge denied their request to counter-sue Newmark for aiding and abetting a breach of fiduciary duty.