Instanet Sues REIS and Florida REALTORS

by Victor Lund on December 16, 2011

Instanet LogoInstanet, a leading provider of Forms used in real estate transactions, was the provider of Forms Solutions to real estate agents and brokers in Florida for seven years, concluding in 2008. REIS, a wholly owned, for-profit subsidiary of the Florida Association of REALTORS® was an Instanet reseller until their contract expired/was cancelled –  and REIS launched a competing product, Forms Simplicity.

With two products in the marketplace, many Associations and MLSs were conflicted about which service to use. Some chose the new service from REIS, others entered into agreements with Instanet directly. REIS filed suit against Instanet and a legal battle began.

In response to the REIS complaint, Instanet has filed a counter claim with some pretty serious accusations. The accusations of two counts of Breach of Contract, and Breach of the Implied Covenant of Good Faith are commonplace in these disputes – but this may be the first suit in which a State Association of REALTORS® has been accused of Piercing the Corporate Veil. The wholly owned, for-profit company must operate separately from the Association of REALTORS®. Hence, Florida REALTORS® is also brought into the suit on accusations of Fradulent Misrepresentation, Negligent Misrepresentation and Tortious Interference.

In reading some of the filing documents, Instanet has also filed to extend the date to amend the pleadings in the case. Many of the documents provided to Instanet’s counsel were not delivered until after the time frame to amend the claim expired. Unless the Florida Federal Court extends the filing time, the current filings may not be amended. Among the documents was a business plan to develop a competing product to Instanet dated in 2008 – documents that Instanet claims were purposefully and fraudulently not provided before the deadline. Instanet learned of the involvement of Florida REALTORS® role and involvement in the actions by REIS upon discovery, which led to Instanet’s efforts to include them as a co-defendant to REIS. I reviewed the Instanet motion to amend the suit. It provides Instanet’s detailed description of the events leading up to the lawsuit (from Instanet’s perspective).

Instanet and REIS worked together to serve real estate professionals in Florida for many years, with great success. I am sure that neither party relishes this Federal Court battle – it is expensive and disruptive. This will be an interesting case to follow.

About Instanet

Instanet Solutions began delivering residential real estate technology in 1992. Today Instanet is a leading provider of real estate technology with over 300,000 licensed, paid user accounts of their various real estate focused products including Instanet Fax, Forms, Document Management, TransactionDesk and AuthentiSign.

Instanet was one of the very first companies to bring real estate forms online. A unique feature about Instanet is the fact that they can offer an end-to-end solution for customers across the entire spectrum of transaction management products from efax to digital signature. Instanet is the only Transaction Management product provider that offers full Transaction Management capabilities with their own forms and contracts product all under the same user interface.

Instanet offers their Transaction Management services in a modular fashion so clients can start with products like efax, contracts and forms and then add additional modules like document managment and transaction management later. The advantage, they point out, is that users do not have to learn a new interface as these are all Instanet integrated products.

Disclosure: WAV Group has performed research for Instanet, but is not currently engaged with them as a client and has no involvement with this lawsuit.

From REIS

“Federal litigation is a serious matter and should never be entered into lightly.  REIS declines to engage in a public debate about legal matters that are best left for the Court to decide.  Anyone interested in reviewing the complete public record, rather than just selected documents, may contact our attorney, Joel Rothman of Arnstein & Lehr LLP for further information at 561.833.9800 or jrothman@arnstein.com

{ 2 comments… read them below or add one }

Joe Ballarino, Real Estate IS December 20, 2011 at 8:10 am

Victor:
Feel free to contact Real Estate IS if you need information from our perspective since it’s not been taken into consideration herein.
Thank you,
Joe Ballarino
Real Estate IS
President & COO

Reply

Victor Lund December 20, 2011 at 11:22 am

I would love to get some information from you on the issues of the lawsuit – I apologize for not contacting you sooner. If you have a statement that you want to craft – I would be happy to publish it. If you want me to write something, you can send over some bullet points or we can talk on the phone.

I tried to very carefully indicate that this was only one side of the story. I was not able to find any information about the FR or REIS position on this matter.

Reply

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