In an unusual legal move, Carolwood Estates — the independent luxury residential brokerage — put aside its disagreements in a trademark dispute with the commercial investment firm Carolwood LP, and the two companies will develop joint ventures in real estate, The Real Deal has learned.
The former adversaries will unveil the new venture Carolwood Commercial on Nov. 10, said Nick Segal, managing broker at Carolwood Estates. The boutique commercial brokerage will handle retail, restaurant, office and industrial. Its offices will be located on the third floor of the building where Carolwood Estates is headquartered at 9440 South Santa Monica Boulevard in Beverly Hills.
Segal said about five agents will work at the new commercial brokerage. Candidate agents are currently being interviewed, he added.
Carolwood Estates and Carolwood LP will remain separate companies. However, Carolwood LP received an undisclosed number of shares in Carolwood Estates. The principals of the two companies declined to break down the ownership of Carolwood Commercial and whether any money was exchanged as part of the deal.
The two Carolwoods recently settled a lawsuit that was filed by Carolwood LP. The trademark dispute over the name was filed December 2022 in U.S. District Court shortly after Carolwood Estates made its debut. The residential brokerage made waves in fall 2022 when Carolwood Estates CEO Drew Fenton exited his former firm Hilton & Hyland and took many of that firm’s agents with him.
Carolwood Estates counts star agents such as Fenton and Linda May on its roster. It has a “for sale” listing inventory of $2 billion, according to the company.
Carolwood LP holds a portfolio of restaurants and retail. In May, it acquired the retail center Beverly Hills Plaza for $20.1 million. Its group of restaurants such as Croft Alley, Cha Cha Matcha, Pop’s Bagels Bravo Toast and Impasta were forecast to make $30 million in 2023, said Adam Rubin, president of Carolwood LP.
Segal said the idea of joining forces was broached during settlement talks in June. He and Fenton said they often had been approached with commercial projects, but they did not have a commercial division to work on the deals. Likewise, commercial clients often asked Rubin and his business partner Andrew Shanfeld for guidance on residential projects, and Rubin and Shanfeld referred the business out.
“I wasn’t looking for money,” Rubin said, referring to the trademark dispute. “But the name is important to us. Andrew and I worked relentlessly over the last 10 years to build our various businesses. However, Carolwood Estates had a great value proposition and an amazing team. We were once fighting over a name. Now we are partners. We definitely did not expect this outcome. Andrew and I wouldn’t have agreed to the settlement if it was someone other than Nick and Drew. They’re the best in the business as far as we’re concerned. We’re really looking forward to furthering a great business with them.”
In a written statement, Carolwood Estates’ Segal noted: “We are excited to work together to grow a high-level boutique commercial brokerage. With our collective experience, it will be a new model for the industry.”
Settlement scenarios where litigants join forces are not common, but are not unheard of, said Doug Lipstone, a trademark attorney with Weinberg Gonser.
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“I’ve seen it happen, I’ve never understood It,” Lipstone said of adversaries partnering. “Nothing is more powerful in destroying a working relationship than a lack of trust. There’s nothing like a lawsuit to evince a lack of trust.”
Lipstone, who was not involved in the Carolwood case, said trademarked names are crucial to a company’s success. If a company is forced to change its name, it can lose goodwill from clients, and is similar to restarting a business from the proverbial square one.