Originally posted by Candace Carlisle, CoStar News
A Texas district judge signed a temporary injunction order that extends a ban of Mike McDonald and Jonathan Napper from conducting real estate deals as part of their nonsolicitation and noncompete agreements with their former employer Cushman & Wakefield.
The order, signed last week ahead of an expected trial, outlines prohibited activities McDonald and Napper need to stay away from, including “directly or indirectly and in any capacity engaging in services or providing assistance to any person or entity providing services” related to real estate brokerage activities in the United States.
Cushman & Wakefield filed a lawsuit in October in Dallas County District Court against McDonald and Napper, alleging the capital markets brokers violated their nonsolicitation and noncompete agreements. McDonald and Napper left Cushman & Wakefield in mid-September and joined the brokerage’s rival JLL as senior managing directors in its investment sales and advisory business based in Dallas.
When McDonald and Napper were first hired at Cushman & Wakefield in 2018, they signed five-year employment agreements with nonsolicitation and noncompete covenants to protect the firm’s “highly valuable confidential information” in exchange for an “eight-figure payment,” according to the lawsuit.
McDonald and Napper have paid back some of their Cushman & Wakefield bonuses on a pro-rated basis since leaving the brokerage, Judge Dale Tillery said in the temporary injunction order. The terms of what was paid back was not disclosed by the court.
The temporary injunction is effective until Sept. 15 or until the completion of a trial or summary hearing on the merits of the case or the rendition of a final judgment, according to the order.
McDonald and Napper have agreed to refrain from “engaging in certain activities for a period of 12 months following their termination from Cushman & Wakefield,” according to the order.
Coffee Meetings
The two brokers still meet with friends in the industry for coffee or dinner but they have voluntarily suspended their real estate licenses, so they are unable to perform any real estate activities, McDonald and Napper told the judge.
However, Carlo Barel di Sant’Albano, Cushman & Wakefield’s chief executive of global capital markets and investor services, argued that all real estate deals begin with coffee and building relationships, thus McDonald and Napper could be violating their noncompete by just grabbing a cup of Joe.
To be a successful capital markets broker, Barel di Sant’Albano told the judge that executives must work ahead of a deal — grabbing a cup of coffee or meeting for a business dinner — to ensure a “strong relationship with clients” and offer a “significant amount of information” to clients. By brokers putting in face time with clients, it helps make sure the brokers are the first call when a client is ready to make a real estate decision.
“The market changes all the time, so what is absolutely critical for a broker and more importantly a client is to know what the latest transactions are taking place and what other investors are thinking,” Barel di Sant’Albano said.
Judge Tillery ruled that McDonald and Napper can still work at their new roles at JLL — including grabbing coffee — as long as they aren’t working transactions during the restrictive period.
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Cushman & Wakefield declined to comment on the judge’s newly signed order through a company spokesman. JLL did not immediately respond to an emailed media request.
Recruitment
Cushman & Wakefield recruited McDonald and Napper in 2018 to strengthen its capital markets business nationally, especially in the Sun Belt, making a “significant investment,” including a “significant retention payment” to the brokers, Barel di Sant’Albano said.
Barel di Sant’Albano personally worked on the recruitment of the pair of high-profile brokers, he told the judge while on the witness stand in a downtown Dallas courtroom during a Jan. 20 hearing about the temporary injunction.
In being asked if McDonald or Napper took any clients or deals from Cushman & Wakefield to their new employer, Barel di Sant’Albano affirmed to the courtroom the brokerage firm had no evidence to offer of them doing so.
McDonald and Napper told the judge during the hearing they have not violated any of their restrictive covenants in their employment agreements with Cushman & Wakefield, which is what the brokers have each told CoStar News for months.
“We are very sensitive to Cushman’s rights pursuant to our employment agreements in addition to our legal position as well,” McDonald and Napper said in a joint statement to CoStar News.
McDonald and Napper are looking forward to a quick resolution of the matter and “being productive and instrumental partners of JLL.”
They have spent “countless hours and hundreds of thousands of dollars” in regard to the litigation, which has been a distraction for all parties, McDonald and Napper said.