Gary Keller sued by former KW CEO for $300 million

John Davis is suing Keller and the firm he co-founded in a bid to “restore his reputation”

Former Keller Williams CEO John Davis has filed a lawsuit against real estate firm Keller Williams and some of the firm’s executives, including co-founder Gary Keller and president Josh Team. The lawsuit was prompted by Davis’ desire to “restore his reputation and clear his good name” after sexual misconduct allegations against him surfaced this past spring.

Davis is looking to recover $300 million in damages via the lawsuit for what he claims is a loss of career opportunities after leaving Keller Williams and the loss from selling his businesses at allegedly reduced prices. The lawsuit was filed on October 27 in the U.S. District Court in Fort Worth, Texas.

According to Paul Omodt, a spokesperson for Davis, his client had to wait until this fall to file the suit due to a non-disparagement clause in his contract with Keller Williams, which expired in early November.

“This is the way we have to have his voice heard,” Omodt said regarding the lawsuit.

In the filing, Davis states that he resigned from his position at Keller Williams due to a disagreement with Gary Keller over a business strategy that he felt would hurt the income generated by Keller Williams offices.

In response to his resignation, Davis alleges that Keller and Team smeared him and withheld Inga Dow’s accusations of sexual misconduct from him as he was negotiating the sale of his KW market center regions following his resignation. This resulted in tens of millions in financial losses, according to Davis.

Dow, who was the CEO of multiple Keller Williams offices, is also named as a defendant in the suit, along with KW, Team and Keller.

“This case arises out of the perverted use of the judicial process by Dow, a Keller Williams franchise owner who mismanaged her businesses and then sought to sell them for more than their true value,” the complaint reads.

According to the complaint, after stepping down as CEO in January of 2019, Davis was set to sell his “highly profitable” Keller Williams market center regions to Smokey Garret. However, the deal was rejected by Keller Williams though Keller and Team.

The lawsuit alleges that Dow disclosed her “malicious and false allegations against Davis” to Keller Williams, Keller and Team while Davis was negotiating the sale of his own businesses to Keller Williams and related entities, but that the three “fraudulently omitted” those allegations from Davis, forcing him to sell the businesses “for tens of millions of dollars less than the previously negotiated sale, and well below their actual value,” while also harming Davis’ reputation.

Attorneys for Davis allege that after Dow’s allegations surfaced, Keller Williams, Keller and Team “falsely insinuat[ed]” that Davis was fired from the company because of Dow’s allegations.

In the complaint, Davis remains adamant that the sexual misconduct allegations are false. Omodt added that they have recorded proof that Dow lied about the allegations.

“During the discovery process, we have her tape with her words saying that she made this up, accusing Davis of rape and sexual misconduct, and her lawyers went along with it, and Keller Williams didn’t correct it and they were the ones that had the tapes,” Omodt said.

Instead of being fired due to Dow’s allegations, the complaint states that Davis resigned due to a disagreement with Keller about establishing an across-the-board market cap, which is the amount an agent pays to be part of the Keller Williams franchise and to work out of a particular office or “market center.” Davis felt the market cap was “likely to significantly damage profitability for franchise owners and agents.”

According to Davis, this is exactly what happened to Dow’s businesses, drastically bringing down the overall value of her offices.

According to the complaint, Dow implemented Keller’s market cap strategy and “tried to sell her market centers shortly thereafter, but because of the decrease in cash flow, her businesses were not worth the price that she was asking.”

The complaint states that while lowering the market cap has the potential to attract more agents to a market center, it can also reduce a center’s income.

“To simplify, if a market center owner decides to reduce their cap by half, they have just reduced their income by half,” the complaint reads.

“Gary’s strategy had repercussions for Keller Williams executives such as Inga Dow because it devalued the value of her market center,” Omodt said. “That led to Inga being unable to get the price she wanted for her business, and to come up with a lie to take down those that she thought kept her from being successful, including John Davis.”

In addition, the complaint also alleges abuse of process and tortious interference with prospective relations against Dow; fraud by omission, breach of contract, civil conspiracy, tortious interference with contract, breach of fiduciary duty, and breach of good faith and fair dealing against Keller; fraud by omission and breach of contract against Keller Williams; and fraud by omission, civil conspiracy and tortious interference with contract against Team.

Darryl Frost, a spokesperson for Keller Williams, responded by email to the allegations in the lawsuit, stating: “We are aware of the lawsuit. Mr. Davis’ attempt to involve Keller Williams in his quest to clear his name is unfortunate. As this is ongoing litigation, we do not intend to comment any further at this time.”

Jacob Kring, an attorney for Team, refused to comment on the lawsuit. Lawyers for Dow had not responded to a request for comment at the time of the story’s publication.

The suit demands a trial by jury.

”We look forward to getting more discovery, and we look forward to all the things that will come out in a court of law,” Omodt said.