Coldwell Banker sues Stucky

A civil suit has been filed against former Newton real estate agency Stucky and Associates Realtors and its owner Frank Stucky for more than $600,000 in fees and loan payments. But the owner said he disputes the allegations and intends to file a counter-suit.

Coldwell Banker Real Estate Company has filed a suit in Harvey County District Court against Stucky and Associates, formerly doing business as Coldwell Banker Stucky and Associates Realtors, and against owner Frank Stucky as an individual.

According to the terms of the residential franchise agreements Stucky and Associates made with Coldwell Banker in the early 1990s for locations in Newton, Wichita and El Dorado, Stucky and Associates was obligated to pay to CBREC various fees, including royalty fees of 6 percent of gross revenue it earned in connection with its real estate brokerage business and a national advertising fee of 2 percent of its gross revenue, both subject to monthly minimum and maximum amount, commonly called franchise fees. According to court documents, Stucky owed $39,423 in franchise fees as of July 2008.

The suit is seeking past franchise fees as well as defaulted loan payments, with a total of $644,228. The defaulted loan payments come from a loan in February 2001 for $384,000 and one in November 2005 for $50,000. In 2007, CBREC alleged Stucky and Associates was in breach of those loans, but the parties reached an agreement on a payment schedule for $601,704.

As part of the agreement, the defendants agreed they owed $669,501 and agreed to permit CBREC to enter a judgment against them in that amount, less any amounts paid, if they defaulted. Stucky and Associates paid more than $200,000 of that loan.

But the complaint alleges troubles continued between the two parties concerning the loans and allegedly unpaid franchise fees, and in June 2008, CBREC again notified Stucky and Associates their residential franchise agreement would be terminated based upon failure to pay franchise fees. In April of this year, CBREC provided a final extension, requiring payment by April 30, according to court documents.

According to the complaint, the defendants did not pay these defaults and continued to not pay franchise fees. The franchise agreements were terminated effective June 15. That also put the 2001 and 2005 notes and settlement note in default.

As of July 31, the total outstanding balance owed by defendants was $1,110,729, according to the complaint.

CBREC, with headquarters in New Jersey, previously had filed a suit against Stucky and Associates in New Jersey Superior Court, and in July, a judge signed an order of judgment in favor of CBREC for $466,401. That order permitted Coldwell Banker to seek remaining judgments against Stucky in Kansas court. Coldwell Banker is seeking the remaining portion in Harvey County District Court, which is $644,228.

Stucky, however, said he intends to fight the allegations.

“Apparently, the Coldwell Banker people get pretty upset when they lose a 24-year franchisee like we are. We certainly intend to dispute the allegations and to file a counter suit to appeal their mistreatment of their franchisees,” Stucky said in a phone message.

Stucky has 20 days to respond to the complaint from when it was served, which was Aug. 10. No hearing dates have been set.

“In about a week, we’ll have the rest of the story, because right now, all we have is their $640,000 side of the story, and there’s obviously another side of the story, and we intend to expose that when we answer their lawsuit,” Stucky said.

Also in the complaint, Coldwell Banker alleges Stucky and Associates failed to allow access to financial documents for an audit as required by franchise agreements, as well as provide associates’ phone numbers upon the termination of the franchise. Coldwell alleges that audit may reveal additional unpaid franchise fees.

J.P. Weigand and Sons Inc. took over the operations of the Newton Stucky and Associates branch in late July after a bid by Prudential for the agency fell through.