Town Residential has sent Reid Price, the firm’s recently departed new development chief, a cease-and-desist letter demanding that he halt his involvement with the new development marketing division of his current firm, Douglas Elliman, according to sources close to the company. The firm also called on officials at Elliman to end the company’s relationship with Price.
Town has threatened to sue Price if he fails to respond to the requests; a potential lawsuit would focus on claims that he breached the non-compete and non-solicitation provisions of his seven-year employment contract by attempting to poach his former colleagues and by working on new development marketing for a competing firm, a source close to the brokerage said.
Price also allegedly owes the firm almost $500,000 in future profits he was permitted to take in the form of promissory notes, the firm claims, according to the source. Price, who was an employee of Town, as opposed to an independent contractor like most agents, has been ordered by the firm to pay up or face a lawsuit.
Price declined to comment on the allegations. A spokesperson for Elliman told The Real Deal that the company did not comment on litigation.
Price left Town last week for a position as Elliman’s executive vice president of development marketing, as The Real Deal reported. In his new role, Price will work with Elliman’s new development head, Susan de Franca, and managing director, Horacio LeDon, on marketing residential projects such as the 33-unit Sterling Mason at 71 Laight Street in Tribeca, the firm said.
At Town, the broker held the title of managing director and was slated to work on its latest development launch, the 29-unit Charles condominium project at 1355 First Avenue, in the next few months.
While the non-compete clause allows Price to work as a resale broker, it prohibits him from working in new development marketing, according to Town’s reading of the agreement, the source said.
Real estate attorney Terry Oved, whose firm Oved & Oved has worked on cases involving non-compete agreements but is not involved in this dispute, said such agreements are enforceable so long as they are “tailored narrowly enough to protect the employer’s legitimate business interest and broad enough to permit the employee to earn a living without running afoul of the contractual obligations to its former employer.”
New York courts are more inclined to enforce restrictive covenants against “better educated and better compensated employees, whose scope of duties are more customized and specialized,” he said.
Elliman was notified of Price’s agreements with Town in advance of a prospective lawsuit, the source close to Town said.
A spokesperson for Town declined to comment for this story.
Last week, the firm issued a statement in response to his departure: “Now that we understand Mr. Price’s motive and direction, and due to the fact that Mr. Price is under contract and has many outstanding obligations, we can no longer comment on his departure, character, skills or otherwise.”