Case 1:21-cv-02321-TWP-TAB Document 27 Filed 11/10/21 Page 1 of 32 PageID #: 283

UNITED STATES DISTRICT

COURT SOUTHERN DISTRICT
OF INDIANA INDIANAPOLIS
DIVISION

RE/MAX, LLC, a Delaware limited liability

company, and
Case No. 1:21-cv-02321-TWP-TAB
RE/MAX INTEGRATED REGIONS, LLC, a
Delaware limited liability company,

Plaintiffs,

v.

JAMES E. DULIN II; and

THE HAMILTON GROUP, INC., an Indiana
corporation,

Defendants.

DEFENDANTS’ ANSWER AND AFFIRMATIVE DEFENSES TO

SECOND AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL

Defendants, James E. Dulin II (“Dulin”) and The Hamilton Group, Inc. (“Hamilton

Group,” and, together with Dulin, “Defendants”), by counsel, submit the following Answer and

Affirmative Defenses in response to the Second Amended Complaint filed by Plaintiffs

RE/MAX, LLC (“RML”) and RE/MAX Integrated Regions, LLC (“RIR”).

NATURE OF THE ACTION

1. Plaintiffs and Defendants were and are parties to franchise agreements that require

Defendants to operate and promote the business of three RE/MAX® franchise real estate offices

in Indiana, each for a specified Term (the “Franchise Agreements”). During the Terms,

Defendants are prohibited from competing against Plaintiffs, or engaging in any conduct that is

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injurious to Plaintiffs, the RE/MAX brand, or other RE/MAX offices. The Franchise Agreements

also limit Defendants’ use of the RE/MAX Marks (defined below).

ANSWER: Defendants admit that Defendants and Plaintiffs were parties to some agreements, the

terms of which speak for themselves. Defendants deny the allegations remaining in Paragraph 1.

2. In clear violation of these continuing obligations, Dulin actively competed against

his RE/MAX franchises and all Indiana RE/MAX franchisees by aligning with and promoting

Plaintiffs’ competitor, eXp Realty, LLC (“eXp”) and improperly steering his RE/MAX sales

associates to eXp—effectively destroying the very franchise businesses he was required to

promote—and, thereafter, abandoning his franchises entirely. Defendants also unfairly competed

with Plaintiffs by enabling eXp agents to work out of at least two of their RE/MAX franchise

locations, which had signage prominently displaying the RE/MAX Marks, thereby creating the

likelihood of consumer confusion as to eXp’s affiliation or connection with RE/MAX in the

Indianapolis market. Plaintiffs bring this suit against Defendants to enforce Plaintiffs’ rights

under the Franchise Agreements and federal and state law, to recover economic damages flowing

from Defendants’ misconduct, and to obtain declaratory relief clarifying and enforcing the

parties’ rights and obligations under the Franchise Agreements.

ANSWER: Deny.

PARTIES

3. RML is a Delaware limited liability company whose principal place of business is

located at 5075 S. Syracuse Street, Denver, CO 80237, and whose sole Member is RMCO, LLC,

a Delaware limited liability company whose principal place of business is 5075 S. Syracuse

Street, Denver, CO 80237. RMCO, LLC’s Members are RE/MAX Holdings, Inc., a Delaware

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corporation, and RIHI, Inc., a Delaware corporation. RE/MAX Holdings, Inc. is the majority

owner and sole manager of RMCO, LLC; its principal address is 5075 S. Syracuse Street, Denver,

CO 80237. RE/MAX Holdings, Inc. is a public company with shares listed on The New York

Stock Exchange under the symbol “RMAX.” RIHI, Inc. is the minority owner of RMCO, LLC;

its principal address is 8822 S. Ridgeline Boulevard, Suite 250, Highlands Ranch, CO 80129.

RIHI, Inc. is majority owned and controlled by David L. Liniger and Gail A. Liniger, who are

residents of Colorado.

ANSWER: Defendants lack knowledge or information sufficient to form a belief as to the

allegations contained in Paragraph 3, and therefore deny the same.

4. RIR is a Delaware limited liability company whose principal place of business is

located at 5075 S. Syracuse St., Denver, CO 80237, and whose sole Member is RML, whose

corporate ownership and citizenship is discussed in Paragraph 3, above.

ANSWER: Defendants lack knowledge or information sufficient to form a belief as to the

allegations contained in Paragraph 4, and therefore deny the same.

5. Upon information and belief, Dulin is an individual who resides in Indianapolis,

Indiana.

ANSWER: Admit.

6. Upon information and belief, The Hamilton Group, Inc. is an Indiana corporation

whose principal place of business is located at 200 S. Rangeline Road, Suite 129, Carmel, IN,

46032.

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ANSWER: Admit.

JURISDICTION AND VENUE

7. The Court has subject matter jurisdiction over this action pursuant to 15 U.S.C.

□ 1121(a) and 28 U.S.C. §§ 1331 and 1338 in that this civil action arises under the Trademark

Laws of the United States, Lanham Act 15 U.S.C. § 1051 et seq. The Court has supplemental

jurisdiction over Plaintiffs’ state law claims pursuant to 28 U.S.C. § 1367. The Court also has

subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332 in that this civil action

is between citizens of different states and the amount in controversy exceeds $75,000, exclusive

of interest and costs.

ANSWER: In response to paragraph 7, Defendants admit that this Court has subject-matter

jurisdiction. Defendants deny any implication that Plaintiffs are entitled to any relief under any

of their claims

8. This Court has personal jurisdiction over Defendants because they reside in

Indiana. Venue is proper in this District, including pursuant to 28 U.S.C. § 1391(b), because

Defendants reside in this District and a substantial part of the events or omissions giving rise to

Plaintiffs’ claims occurred in this District. Moreover, Defendants have submitted to personal

jurisdiction and have consented to venue in this Court under the Franchise Agreements.

ANSWER: In response to paragraph 8, Defendants admit that this Court has personal

jurisdiction. Defendants deny any implication that Plaintiffs are entitled to any relief under any of

their claims

FACTUAL ALLEGATIONS

I. RML’S FRANCHISE NETWORK AND THE RE/MAX MARKS

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9. Operating throughout the United States, the RE/MAX franchise network (the

“RE/MAX Network”) is a real estate system of independently owned and operated franchised

offices and their affiliated independent contractor/sales associates who are authorized to use the

RE/MAX trademarks in connection with providing real estate brokerage services.

ANSWER: Admit.

10. Those affiliated with the RE/MAX Network have provided real estate brokerage

services in interstate commerce in the United States using the RE/MAX and REMAX word marks,

including a stylized form distinguished by “RE/MAX” in all capital letters in red or blue, accented

with a contrasting red or blue diagonal slash, examples of which are set forth below:

ANSWER: Defendants lack knowledge or information sufficient to form a belief as to the

allegations contained in Paragraph10 regarding what others may have done, and therefore deny

the same. Defendants admit that Dulin has provided real estate brokerage services in Indiana using

the word marks described in Paragraph 10.

11. Those affiliated with the RE/MAX Network have also provided real estate

brokerage services in interstate commerce in the United States using a service mark consisting of

a hot air balloon design, examples of which are set forth below:

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ANSWER: Defendants lack knowledge or information sufficient to form a belief as to the

allegations contained in Paragraph11 regarding what others may have done, and therefore deny

the same. Defendants admit that Dulin has provided real estate brokerage services in Indiana using

the marks described in Paragraph 11.

12. Those affiliated with the RE/MAX Network have also provided real estate

brokerage services in interstate commerce in the United States using the RE/MAX “for sale” sign

design, examples of which are set forth below:

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ANSWER: Defendants lack knowledge or information sufficient to form a belief as to the

allegations contained in Paragraph12 regarding what others may have done, and therefore deny

the same. Defendants admit that Dulin has provided real estate brokerage services in Indiana using

the signs similar to those described in Paragraph 12.

13. RML owns numerous U.S. Trademark Registrations for a family of marks that

includes those set forth above, including, but not limited to, U.S. Trademark Registration Nos.

1,139,014; 1,702,048; 1,900,865; 1,902,982; 2,106,387; 2,119,607; 2,403,626; 2,850,985;

3,296,461; 3,338,086; 4,716,534; 4,986,346, 5,524,499, 5,504,643, 5,524,502, 5,504,642,

5,524,493, 5,411,423, 5,453,086, and 5,453,087. Copies of the registration certificates for these

marks are attached as Exhibit A.

ANSWER: Defendants lack knowledge or information sufficient to form a belief as to the

allegations contained in Paragraph 13, and therefore deny the same.

14. U.S. Trademark Registrations 1,139,014; 1,173,586; 1,691,854;

1,702,048;1,720,592; 1,900,865; 1,902,982; 2,106,387; 2,119,607; 2,403,626; 2,850,985;

3,296,461;,3,338,086 have achieved incontestability status under 15 U.S.C. § 1065.

ANSWER: Defendants lack knowledge or information sufficient to form a belief as to the

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allegations contained in Paragraph 14, and therefore deny the same.

15. All other U.S. Trademark Registrations listed above are valid and subsisting and

therefore constitute prima facie evidence of the validity of the marks set forth in these registrations

and RML’s exclusive right to use these marks in connection with the services set forth in these

registrations.

ANSWER: Defendants lack knowledge or information sufficient to form a belief as to the

allegations contained in Paragraph 15, and therefore deny the same.

16. The federal registration and common law rights of RML in the marks described

above are collectively referred to herein as the “RE/MAX Marks.”

ANSWER: Defendants deny that rhetorical statement contained in Paragraph 16 contains any

allegations that require a response.

II. THE FRANCHISE AGREEMENTS

17. RIR was founded in July 2021, and, upon RML’s July 21, 2021 acquisition of

RE/MAX of Indiana Limited Partnership d/b/a RE/MAX INTEGRA, Midwest (“INTEGRA”),

RIR became the regional subfranchisor of the RE/MAX system in Indiana.

ANSWER: Defendants lack sufficient knowledge or information sufficient to form a belief as to

the allegations contained in Paragraph 17, and therefore denies.

18. RIR and Defendants were parties to four franchise agreements granting

Defendants the right to own and requiring them to operate RE/MAX franchised real estate offices

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in West Clay, Carmel, Lafayette, and Lebanon, Indiana, respectively (the “Franchise

Agreements”), each for its specified Term.1 The offices were approved to operate under the d/b/a

RE/MAX Ability Plus. The Terms of the Franchise Agreements for the West Clay and Carmel

locations expired on August 27, 2021 and September 25, 2021, respectively. The Terms of the

Franchise Agreements for the Lafayette and Lebanon locations continue for several more years

and expire on August 31, 2023 and November 19, 2024, respectively.

ANSWER: Defendants admit that RIR and Defendants were parties to franchise agreements

granting the Defendants the right to own and requiring them to operate RE/MAX franchised real

estate offices in West Clay, Carmel, and Lafayette, Indiana and that the West Clay, Carmel, and

Lafayett offices were approved to operate under the d/b/a RE/MAX Ability Plus. Defendants

admit that the Terms of the Franchise Agreements for the West Clay and Carmel locations expired

on August 27, 2021 and September 25, 2021, respectively. Defendants deny the remaining

allegations in Paragraph 18.

19. Dulin executed a Guaranty and Assumption of Obligations for each of the

Franchise Agreements, whereby he personally and unconditionally guaranteed to RIR and RML

the full performance of each and every undertaking set forth in the Agreements (the “Guarantees”).

ANSWER: Admit.

20. RML is a third-party beneficiary of every section of the Franchise

Agreements that involves the use of the RE/MAX Marks and/or the RE/MAX System. (§

1
INTEGRA, an Indiana limited partnership, was originally party to the Franchise Agreements. However, on July 21,
2021, RIR acquired INTEGRA and RIR succeeded to INTEGRA’s rightsunder the Franchise Agreements and
related Guarantees. The Franchise Agreements expressly authorize such a transfer. (§ 12.A.)

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4.B(11).)

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any allegation or

implication related to the Franchise Agreements contained in Paragraph 20.

21. The Franchise Agreements contain various provisions intended to protect the

RE/MAX Network, including, without limitation, the RE/MAX Marks.

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any allegation or

implication related to the Franchise Agreements contained in Paragraph 21.

22. Throughout the respective Terms of the Franchise Agreements, Defendants must

operate their franchise and promote and enhance the business of their franchised offices and refrain

from any business practice that is injurious to Plaintiffs or the goodwill associated with the

RE/MAX brand:

a. “You specifically agree to operate the Office in accordance with the provisions of

this Agreement, perform the obligations of this Agreement, and continuously exert

your best efforts to promote and enhance the business of the Office for the Term

................ ” (§ 2.B.)

b. “You further agree that you will operate the Office continuously during the Term,

and that you will not voluntarily abandon or fail to actively operate the Office for

a period in excess of five (5) consecutive business days ” (§ 3.)

c. “You acknowledge and agree that the development and operation of the Office in

accordance with the System, this Agreement and the Operations Materials is

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essential to preserve the reputation and high standards of quality and service of

RE/MAX offices and the goodwill associated with the RE/MAX Marks.” (§ 8.B.)

d. “You agree to refrain, and to ensure that your Sales Associates and any other

persons affiliated with your Office refrain, from any business or advertising

practice which may be injurious to our or RE/MAX, LLC’s business and the

goodwill associated with the RE/MAX Marks and other RE/MAX offices.” (§

8.C.)

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any allegation or

implication related to the Franchise Agreements contained in Paragraph 22.

23. To protect the RE/MAX Network, including, without limitation, the RE/MAX

Marks, the Franchise Agreements prohibit Defendants from competing with Plaintiffs during the

respective Terms:

a. “The Office may be used only to operate a RE/MAX real estate service business,

and may not be used to conduct another business or to generate revenue from

any other activities ” (§ 2.A.)

b. “You further agree not to conduct, or permit anyone affiliated with the Office

to conduct, any business or activity at the Premises other than the real estate

service business authorized by this Agreement.” (§ 2.C.)

c. “[Y]ou agree that without our prior written consent, which we have the unfettered

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right to withhold, none of you, or if you are an entity, your Owners, or your Sales

Associates (including, but not limited to, your manager or designated or

managing broker of record), or the immediate family members (as defined

below), of any of you or them will, during the Term, directly or indirectly, as an

officer, director, shareholder, partner, manager, employee, agent, consultant,

independent contractor or otherwise, operate, manage, own, have an interest in

or become affiliated with in any other way (1) any non RE/MAX real estate

service business; or (2) any other business or enterprise offering products or

services that directly or indirectly compete with the products and services offered

by RE/MAX offices, RE/MAX Regional or RE/MAX, LLC, or any of our or

RE/MAX, LLC’s affiliates.” (Id., § 5.F.)

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any allegation or

implication related to the Franchise Agreements contained in Paragraph 23.

24. The Franchise Agreements also grant Defendants a limited, non-exclusive

license to use the RE/MAX Marks during the respective Terms. Defendants’ license is limited

to the use of RE/MAX Marks “only in connection with the operation of the Office and the

Permitted Real Estate Service Activities specified” in the Franchise Agreements (§ 4.A) and in

conformity with detailed requirements and limitations set forth in the Agreements and in the

RE/MAX Brand Identity manual (§ 4.B). Defendants also agreed not to use “the RE/MAX Marks

(a) in any

manner that may mislead or deceive consumers in any way...; or (b) other than for the

promotion of the Permitted Real Estate Service Activities provided by [their] Office[s].”

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(§ 4.B(1).) Consistent with the Franchise Agreements, the RE/MAX Brand Identity manual

states the following:

RE/MAX Affiliates are permitted to use the various RE/MAX marks only in

connection with promoting RE/MAX real estate services authorized under the

franchise agreement. Any other business or activity must be operated as a

separate company at a different address, website, telephone number, etc., and

under a name that contains no reference or similarity to the RE/MAX marks.

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any

allegation or implication related to the Franchise Agreements contained in Paragraph 24.

25. In the event of any breach by Defendants, the Franchise Agreements

require Defendants to reimburse RIR for the attorney fees and costs RIR incurs as a result

thereof. (§ 15.H.)

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any

allegation or implication related to the Franchise Agreements contained in Paragraph 25.

26. The Franchise Agreements are governed by Indiana law. (§ 15.K.)

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any allegation or

implication related to the Franchise Agreements contained in Paragraph 26.

27. In exchange for the substantial benefits of being affiliated with the RE/MAX

Network, Defendants are required to pay RIR the following fees and dues: a Monthly

Management Fee, a Promotion Fee, a Transaction Fee, and Annual Dues. (§ 6.) These payments

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are a function of the number of sales associates whom Defendants contract with to perform real

estate services at their franchises. In other words, under the Franchise Agreements, the more sales

associates working for Defendants, the more Defendants pay RIR in the above fees and dues.

Defendants are also required to pay RML a Regional Development Fund Fee and a Hot Air

Balloon Fund Fee for each franchised office that they operate, regardless of sales associate count.

ANSWER: The Franchise Agreements speak for themselves. Defendants admit that the

Defendants had to pay RIR a Monthly Management Fee, a Promotion Fee, a Transaction Fee,

Annual Dues, a Regional Development Fund Fee, and a Hot Air Balloon Fund Fee. Defendants

deny the allegations remaining in Paragraph 27.

III. DEFENDANTS VIOLATED THE FRANCHISE AGREEMENTS AND

UNFAIRLY COMPETED AGAINST PLAINTIFFS

28. Dulin has been a franchisee within the RE/MAX Network for a decade.

Throughout this time, Plaintiffs have supported Dulin through various business and personal

challenges. INTEGRA assisted the Defendants in the restructuring of their RE/MAX business,

including right-sizing their office operations and permitting the early termination of four

RE/MAX franchise agreements, with the requirement that the then-remaining terms of those

terminated franchise agreements be added to the terms of the Carmel and Lafayette franchise

agreements. In the course of this and prior restructuring agreements, INTEGRA waived over

$450,000 in past due Management Fees, Promotion Fees, and Transaction Fees. In addition,

when Dulin’s top-producing sales associate threatened to leave because Dulin failed to pay her

a six-figure balance of owed commissions that had accrued over an extended period, INTEGRA

intervened and brokered a resolution.

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ANSWER: Deny.

29. Despite Plaintiffs’ consistent efforts to help him, and even though the Lafayette

and Lebanon Franchise Agreements extend for several more years, Dulin engaged in a course of

conduct that, by his own design, undermined his franchises and harmed the RE/MAX Marks and

the associated goodwill, as well as the RE/MAX Network. Having succeeded in hollowing out

his franchises, and in further breach of the Franchise Agreements, Dulin has abandoned his

Lafayette and Lebanon franchise locations altogether.

ANSWER: Deny.

30. INTEGRA’s records reflect that between December 15, 2020 and March 2,

2021, fourteen of Defendants’ sales associates left Defendants’ Carmel and Lebanon locations

and joined eXp.

ANSWER: Defendants lack sufficient knowledge or information sufficient to form a belief

as to what Integra’s records reflect, and therefore deny the allegations contained in Paragraph

30.

31. Shortly thereafter, Dulin asked INTEGRA for consent to close his office in

Lebanon and move his sales associates to the Carmel office. INTEGRA responded that it would

agree to close the Lebanon office so long as Dulin agreed that the remaining Term of the

Lebanon Franchise Agreement be added to the Carmel Franchise Agreement, as had been

required in the earlier restructuring. RML prepared an agreement to that effect, but Dulin rejected

RML’s terms. Ultimately, the discussions between Dulin and INTEGRA did not result in an

agreement signed by both parties, as required to modify the Franchise Agreements. As such, the

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Lebanon Franchise Agreement remains effective, and Defendants’ obligations thereunder extend

to November 2024. Notwithstanding those obligations, Defendants have not been operating their

Lebanon franchise location since approximately March 10, 2021, which is a breach of the

Lebanon Franchise Agreement.

ANSWER: Defendants admit that they asked for consent to close the Lebanon office.

Defendants deny all allegations remaining in Paragraph 31.

32. On March 3 and 11, and on April 21, 2021, Dulin and members of his staff met

with INTEGRA Business Growth team representatives. During those meetings, with respect to

the renewal of the Carmel Franchise Agreement, Dulin said he was “exploring his options.” Dulin

requested additional meetings with INTEGRA to be “resold” on RE/MAX; those meetings with

Dulin and his management team were conducted on May 12 and June 2, 2021.

ANSWER: Admit.

33. On information and belief, in late April, Dulin and members of his

management team at RE/MAX Ability Plus held their annual company retreat. In years past,

the retreat was held locally in the Indianapolis area. However, this year, the retreat was held in

Arizona. On information and belief, the following individuals from Dulin’s management team

attended the retreat: Tamara Dulin (Dulin’s wife), Kevin Elson, Tammy Kelly, Denise Wilson,

Jason Hofman, Jim Morgan, and Brooke Stines-Broady.

ANSWER: Deny.

34. During the retreat, Dulin and his team attended a meeting at the home of

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Chuck and Angela Fazio, who are eXp agents. On information and belief, additional eXp

agents also attended the meeting.

ANSWER: Defendants admit that Mr. Dulin attended a meeting at the home of Chuck and

Angela Fazio. Defendants deny all allegations remaining in Paragraph 34.

35. Agent recruitment is central to eXp’s business model. To that end, eXp automatically

enrolls its agents in a Revenue Share Plan that compensates them a percentage of commissions

earned by new agents they recruit to eXp who name them as a “Sponsor,” a percentage of

commissions earned by agents whom the new agents recruit to eXp, and so forth, down seven tiers

of succession. In the specific context of Chuck and Angelo Fazio, if Dulin joined eXp as an agent

and named one of them as his eXp Sponsor, the Fazios would be compensated under eXp’s

Revenue Share Plan a percentage of commissions earned by Dulin. If Dulin brought all or part of

his team of RE/MAX Ability Plus sales associates with him to eXp and they named Dulin as a

Sponsor, Dulin’s sales associates would be in Tier 2 of the Fazios’ Revenue Share Plan line, and

they would be in Tier 1 of Dulin’s Revenue Share Plan line.

ANSWER: Deny.

36. On information and belief, during the Fazio meeting in Arizona, Dulin asked

his RE/MAX Ability Plus team to commit to joining eXp.

ANSWER: Deny.

37. Sometime in the spring of 2021, Dulin contacted eXp. According to the sworn

testimony of Dave Conord, eXp’s head of U.S. Growth, Dulin told eXp that he was interested

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in joining eXp with his team at RE/MAX Ability Plus. Mr. Conord further testified that eXp

told Dulin that he could not join eXp because he remained under contract with Plaintiffs for

several additional years.

ANSWER: Defendants admit that sometime in the spring of 2021. Mr. Dulin contacted eXp.

Defendants lack sufficient knowledge or information sufficient to form a belief as to what Dave

Conord testified, and therefore deny the allegations remaining in Paragraph 37.

38. Dulin was in a bind (of his own making). He had already begun encouraging

his RE/MAX Ability Plus sales associates to convert to eXp. But if he could not join eXp, his

sales associates could not name him as their eXp Sponsor, and he would not receive Revenue

Share Plan compensation for converting them.

ANSWER: Deny.

39. Dulin then tried to do indirectly what he could not do directly. On information

and belief, his wife, Tamara, attempted to join eXp. On information and belief, the plan was for

her to join eXp first so Dulin’s sales associates could name her as their eXp Sponsor and she

(and, by extension, Mr. Dulin) could receive eXp Revenue Share plan compensation. But again,

eXp refused Ms. Dulin’s request because of Mr. Dulin’s franchise agreements with Plaintiffs.

ANSWER: Deny.

40. With those two options foreclosed, Dulin took a different tack. On information

and belief, he entered into an agreement with one or more of Chuck Fazio, Angela Fazio, and/or

Brooke Stines-Broady, an operations manager at his RE/MAX Ability Plus office since 2015.

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Under this agreement, Brooke Stines-Broady would leave RE/MAX Ability Plus and join eXp,

naming either Chuck or Angela Fazio as her eXp Sponsor. Then, Dulin’s sales associates at

RE/MAX Ability Plus would join eXp and name Stines-Broady as their eXp Sponsor. As a result,

the Fazios would get Revenue Share Plan compensation for Dulin’s RE/MAX Ability Plus team

through Stines-Broady, and Stines-Broady would also get Revenue Share Plan compensation for

Dulin’s RE/MAX Ability Plus team. But unlike the Fazios, Stines-Broady would not keep the

Revenue Share Plan compensation she received; instead, she would transfer that compensation to

Dulin, either directly or indirectly, whether through one of Dulin’s family members or friends or

a separate entity he owns and controls, or otherwise.

ANSWER: Deny.

41. On information and belief, Brooke Stines-Broady left RE/MAX Ability Plus as

of July 31, 2021 and joined eXp.

ANSWER: Admit.

42. On July 30, 2021, Dulin held a meeting at his Lafayette office and informed his

sales associates that he would not be renewing his Carmel Franchise Agreement when the

Carmel Franchise Agreement expired in September 2021. He also informed his Lafayette sales

associates that he planned to move his broker’s license to Lafayette when Carmel expires, and

that he planned to join eXp when the Lafayette Franchise Agreement expires in 2023.

ANSWER: Defendants admit that on July 30, 2021, Dulin held a meeting at his Lafayette office

and informed his sales associates that he would not be renewing his Carmel Franchise Agreement

when the Carmel Franchise Agreement expired in September 2021. Defendants deny the

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allegations remaining in Paragraph 42.

43. On August 2, 2021, Dulin held a meeting at the Carmel Design Center, where

his RE/MAX Carmel office is located. A “RE/MAX Ability Plus” sign is prominently displayed

outside of the building.

ANSWER: Defendants admit that on August 2, 2021, Dulin held a meeting at the Carmel Design

Center, where his RE/MAX Carmel office was located. Defendants deny the allegations

remaining in Paragraph 43.

44. The August 2, 2021 meeting was attended by sales associates from all of Dulin’s

RE/MAX Ability Plus locations, along with Tamara Dulin, Brooke Stines-Broady, and Chuck

and Angela Fazio. At the meeting, Mr. Dulin reiterated his intention not to renew his Carmel

Franchise Agreement in September, and to operate his RE/MAX franchise in Lafayette until the

Lafayette Franchise Agreement expires in 2023, then join eXp. Dulin’s plan ignored Defendants’

obligations under the Lebanon Franchise Agreement, which runs until November 2024.

ANSWER: Defendants admit that the August 2, 2021 meeting was attended by sales associates

from all of Dulin’s RE/MAX Ability Plus locations, along with Tamara Dulin, Brooke Stines-

Broady, and Chuck and Angela Fazio. Defendants deny the allegations remaining in Paragraph

44.

45. Dulin is also obligated to promote the business of his Lafayette and Lebanon

offices throughout their respective Terms. This obligation includes recruiting and retaining sales

associates, who are the primary source of revenue for those offices. But at the August 2 meeting,

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Dulin did not encourage his sales associates to stay with him at his RE/MAX offices in Lafayette

or Lebanon. Instead, he disparaged RE/MAX and encouraged them to join eXp.

ANSWER: Deny.

46. Upon concluding his remarks, Dulin, his wife, and Stines-Broady left the room

(in a futile attempt to create plausible deniability). Then, Chuck and Angela Fazio gave a

presentation about eXp to the sales associates. Yard signs and business cards were made for the

sales associates affiliating them with the DOMI Agency, which is brokered by eXp. Dulin’s sales

associates also received a spreadsheet comparing the fees and expenses they are required to pay

with RE/MAX Ability Plus compared to the fees and expenses they would be required to pay if

they joined eXp. On information and belief, Dulin facilitated the Fazios’ eXp presentation, in

violation of his non-compete and office promotion obligations under the Franchise Agreements.

ANSWER: Deny.

47. In addition, on information and belief, the RE/MAX Ability Plus form

independent contractor agreement, which all sales associates sign, requires a sales associate who

leaves the franchise with less than 30 days’ notice to pay an additional month of fees to

Defendants. Dulin waived those fees for sales associates who left his franchises and joined eXp,

but charged those fees to sales associates who left his franchises and joined another RE/MAX

office. On information and belief, Dulin also allowed RE/MAX Ability Plus associates who

joined eXp to take their active real estate listings with them, but he retained active listings

belonging to those sales associates who joined another RE/MAX office. In effect, Dulin actively

incentivized his sales associates to abandon the RE/MAX Network and join eXp, in violation of

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his non-compete and office promotion obligations under the Franchise Agreements.

ANSWER: Deny.

48. As a result of Dulin’s conduct, approximately 19 RE/MAX Ability Plus sales

associates joined eXp on the day of his August 2 meeting, and another 32 joined eXp in the

weeks following. These 51 former RE/MAX Ability Plus sales associates represent a loss of

more than 60% of Dulin’s sales associate head count across his franchise locations. Moreover,

since Dulin’s August 2 meeting, an additional 23 sales associates have left for other companies.

The cumulative departure of 74 sales associates from Defendants’ franchises in a month-and-a-

half represented a loss of more than 90% of RE/MAX Ability Plus sales associates. No sales

associates remain affiliated with the now-expired Carmel office. Only two sales associates

remain affiliated in Lafayette – one of which is Dulin himself. Dulin has succeeded in hollowing

out his franchises, in violation of his non-compete and office promotion obligations under the

Franchise Agreements.

ANSWER: Deny.

49. On information and belief, a number of RE/MAX Ability Plus sales associates

whom Dulin assisted in converting to eXp conducted real estate services business out of Dulin’s

RE/MAX Carmel and Lafayette office locations with Dulin’s knowledge and encouragement.

For example, Brooke Stines-Broady sent an email attempting to recruit agents to eXp, with the

address of Dulin’s RE/MAX Carmel location identified as eXp’s office address. Moreover, Tyce

Carlson was one of the sales associates who transferred from RE/MAX Ability Plus in Carmel to

eXp on August 2, 2021. Mr. Carlson’s eXp business card listed Dulin’s RE/MAX Carmel

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location as his (Carlson’s) address. In early August, several days after Dulin’s meeting,

individuals were seen leaving Dulin’s Carmel office carrying yard signs—the signs were for eXp,

not RE/MAX. And a RE/MAX franchisee who visited Dulin’s Lafayette office location in late

August personally observed eXp agents working there. In effect, Dulin facilitated the conduct of

real estate business on eXp’s behalf out of his RE/MAX Ability Plus offices, which is a clear

violation of Dulin’s non-compete and office promotion obligations under the Franchise

Agreements.

ANSWER: Deny.

50. Further, Dulin’s Carmel and Lafayette office locations each had signs

prominently displaying the RE/MAX Marks. With eXp agents working out of these locations,

consumers were likely led to the false and/or misleading impression that eXp is either endorsed

by or affiliated with RE/MAX, or that RE/MAX and eXp are related parties when they are not.

This false and/or misleading impression caused substantial harm to Plaintiffs.

ANSWER: Deny.

51. This false and/or misleading impression is also exacerbated by the fact that

certain former RE/MAX Ability Plus sales associates who joined eXp continue to use the

RE/MAX Marks on social media websites such as LinkedIn, Facebook, Twitter, Yelp, and

Instagram; and on real estate websites such as Zillow, realtor.com, houzz.com, and Redfin.

Pursuant to the Franchise Agreements, Defendants are responsible for, and agree to supervise,

their sales associates in order to ensure the proper use of the RE/MAX Marks, including the

requirement that the RE/MAX Marks only be used in connection with the operation of

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Defendants’ RE/MAX offices, and the prohibition on using the RE/MAX Marks in any manner

that may mislead or deceive consumers in any way. (§§ 4.A, 4.A(4), 4.B(10).) Defendants’ failure

to ensure their departed sales associates de-identify from RE/MAX Ability Plus and immediately

stop using the RE/MAX Marks is causing additional harm to Plaintiffs.

ANSWER: Deny.

52. On information and belief, since the Term of his Franchise Agreement for the

Carmel location expired, Dulin has been operating that location as an eXp “clubhouse.” One of

his former RE/MAX Ability Plus sales associates, Andrew Neal, who joined eXp in August,

recruited other agents to join eXp on Instagram using Dulin’s Carmel office location as a primary

selling point. In effect, Dulin is maintaining a brick and mortar presence in Carmel that will be

used to conduct real estate services business on eXp’s behalf in competition with Plaintiffs, in

violation of his obligations under the Lafayette and Lebanon Franchise Agreements.

ANSWER: Deny.

53. Defendants have also stopped paying RIR the fees they owe under their

Franchise Agreements. Pursuant to Section 6 of the Agreements, Defendants are required to

pay all fees for the previous month no later than the fifth day of the subsequent month. In

violation of that obligation, Defendants failed to report the gross monthly real estate

commissions generated by their offices for the months of July and August, which prevented

Plaintiffs from calculating the 1% Transaction Fee Defendants must pay pursuant to Section

6.D of the Franchise Agreements (in addition to preventing their RE/MAX Ability Plus sales

associates from receiving credit toward RML’s national and regional annual performance

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designations and awards). Even when Defendants submitted late reports of the gross monthly

real estate commissions generated by their offices, they failed to pay the 1% Transaction Fees

due to Plaintiffs on those reported commissions.

ANSWER: Deny.

54. Having spent the majority of 2021 hollowing out his franchises from the inside,

in violation of the Franchise Agreements, Dulin recently abandoned his Lafayette franchise

altogether. On information belief, Dulin held an auction at his Lafayette office location in early

October 2021 to sell office furniture and related items. Thereafter, he immediately closed the

office, in violation of his obligation to operate the Lafayette franchise office location through

2023.

ANSWER: Deny.

CLAIMS FOR RELIEF

FIRST CLAIM FOR RELIEF
(RML & RIR Against Defendants - Breach of Contract)

55. Plaintiffs incorporate all of the foregoing paragraphs by reference as if fully

set forth herein.

ANSWER: Rhetorical Paragraph 55 makes no allegation that requires a response.

Defendants incorporate their responses to Paragraphs 1-54 as if fully restated herein.

56. RIR and Defendants are parties to the Franchise Agreements, which grant third

party beneficiary status to RML. The Franchise Agreements between RIR and Hamilton Group

are also binding on Dulin pursuant to the Guarantees, wherein Dulin guaranteed full performance

under the Franchise Agreements to RML.

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ANSWER: The Franchise Agreements speak for themselves. Defendants deny any allegation

contained in Paragraph 56 that is inconsistent with the agreements.

57. The Franchise Agreements are valid and binding and constitute fully-

enforceable contracts between Plaintiffs and Defendants.

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any allegation

contained in Paragraph 57 that is inconsistent with the agreements.

58. Plaintiffs fully performed their obligations under the Franchise Agreements.

ANSWER: Deny.

59. Defendants breached the Franchise Agreements by, at minimum:

a. Improperly steering their RE/MAX Ability Plus sales associates to eXp, in

violation of their obligations to promote the business of their offices and not

compete with Plaintiffs or the RE/MAX system in Indiana during the respective

Terms of the Franchise Agreements;

b. Aligning with eXp through their agreement with the Fazios and Brooke Stines-

Broady to obtain eXp Revenue Share Plan compensation, and through Dulin’s

agreement to allow eXp agents to work out of his Carmel office as a “clubhouse,”

in violation of their obligation not to compete with Plaintiffs or the RE/MAX

system in Indiana during the respective Terms of the Franchise Agreements;

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c. Allowing converted eXp agents to conduct business at the Carmel and Lafayette

office locations, which prominently displayed the RE/MAX Marks on signage, in

violation of the limited license to use the RE/MAX Marks given them by the

Franchise Agreements;

d. Failing to supervise their sales associates in their use of the RE/MAX Marks upon

departing from RE/MAX Ability Plus, in violation of the limited license to use the

RE/MAX Marks given them by the Franchise Agreements;

e. Failing to timely report gross monthly real estate commissions for the calculation

of Transaction Fees owed;

f. Abandoning their Lebanon and Lafayette franchise locations, in violation of their

obligation to operate their office through the respective Terms of the Lebanon and

Lafayette Franchise Agreements; and

g. In such other ways as may be revealed through discovery or proven at trial.

ANSWER: Deny.

60. As a direct and proximate result of these breaches, Plaintiffs have suffered and

continue to suffer damages.

ANSWER: Deny.

61. Plaintiffs are entitled to an award of actual damages resulting from these

breaches in an amount to be proven at trial, as well as disgorgement of any profit or benefit Dulin

has gained and/or will gain as a result of his breaches.

ANSWER: Deny.

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SECOND CLAIM FOR RELIEF

(RML & RIR Against Defendants - Unfair Competition Under 15 U.S.C. §

1125(a) and Indiana Law)

62. Plaintiffs incorporate all of the foregoing paragraphs by reference as if fully

set forth herein.

ANSWER: Rhetorical Paragraph 62 makes no allegation that requires a response.

Defendants incorporate their responses to Paragraphs 1-61 as if fully restated herein.

63. Defendants unfairly competed against Plaintiffs by, among other things,

allowing eXp agents to conduct business on eXp’s behalf at Defendants’ RE/MAX Carmel and

Lafayette offices, which prominently displayed the RE/MAX Marks on signage, likely caused

confusion, mistake, or deception as to origin, sponsorship, or approval, in violation of Section

43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and in violation of Plaintiffs’ rights under Indiana

law.

ANSWER: Deny.

64. Defendants’ conduct constituted an attempt to misuse and misappropriate

the goodwill that RML has developed in the RE/MAX Marks, all to the damage of RML.

ANSWER: Deny.

65. Moreover, Defendants unfairly competed against Plaintiffs by improperly

steering RE/MAX Ability Plus sales associates to eXp and affiliating with eXp for their own

gain, and at Plaintiffs’ expense.

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ANSWER: Deny.

66. Defendants’ unfair competition was willful, knowing, malicious,

and/or intentional.

ANSWER: Deny.

67. As a direct and proximate result of the Defendants’ acts of unfair

competition, Plaintiffs suffered monetary damages in an amount to be determined at trial.

ANSWER: Deny.

THIRD CLAIM FOR RELIEF

(RML & RIR against Defendants - Declaratory Relief (28 U.S.C. § 2201))

68. Plaintiffs incorporate all of the foregoing paragraphs by reference as if fully set

forth herein.

ANSWER: Rhetorical Paragraph 68 makes no allegation that requires a response. Defendants

incorporate their responses to Paragraphs 1-67 as if fully restated herein.

69. Plaintiffs and Defendants are parties to the Franchise Agreement for the Lafayette,

Indiana location. The Lafayette Franchise agreement contains a specified Term that expires on

August 31, 2023.

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any allegation

contained in Paragraph 69 that is inconsistent with the agreements.

70. Plaintiffs and Defendants are parties to the Franchise Agreement for the

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Lebanon, Indiana location. The Lebanon Franchise Agreement contains a specified Term that

expires on November 19, 2024.

ANSWER: The Franchise Agreements speak for themselves. Defendants deny any allegation

contained in Paragraph 70 that is inconsistent with the agreements.

71. There is an existing controversy between Plaintiffs, on one hand, and

Defendants, on the other, concerning whether the Lafayette and Lebanon Franchise Agreements

authorize Defendants to abandon those franchised locations.

ANSWER: Deny.

72. Therefore, pursuant to 28 U.S.C. § 2201, Plaintiffs ask the Court to declare as

follows:

a. The Lafayette and Lebanon Franchise Agreements do not authorize Defendants

to unilaterally abandon the franchises;

b. Defendants’ purported abandonment of the Lafayette and Lebanon franchises is

a material breach of the Franchise Agreements; and

c. The specified expiration dates of each Franchise Agreement remain in effect.

ANSWER: Deny.

73. A declaratory judgment by the Court, if rendered or entered on these issues, would

end the uncertainty and controversy with respect to the rights, status, or other legal relations

between the parties.

ANSWER: Deny.

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PRAYER FOR RELIEF

Defendants deny that Plaintiffs are entitled to any relief whatsoever.

AFFIRMATIVE DEFENSES

Defendants assert the following affirmative defenses to the Complaint filed by

Plaintiffs and reserves the right to supplement as discovery is ongoing:

1. Plaintiffs’ claims are barred to the extent that they have failed to take reasonable

steps to mitigate their alleged damages, if any.

2. Plaintiffs’ claims are barred to the extent that their alleged damages, if any, were

caused by their own acts and/or omissions.

3. Plaintiffs’ claims are barred, in whole or in part, by the equitable doctrines of

estoppel, waiver, laches, and/or unclean hands.

4. Plaintiffs’ Complaint fails to state a claim upon which relief can be granted.

5. Plaintiffs’ claims are barred, in whole or in part, due to Plaintiffs’ initial material

breach of the agreements, which has not been excused by Defendants, and/or Plaintiffs’

constructive termination of the agreements.

6. Plaintiffs’ claims may be barred, in whole or in part, to the extent that Defendants’

performance of any obligations in the agreements that are referenced in the Complaint were

excused by the Plaintiffs’ prior material breach or where Plaintiff prevented or frustrated

Defendants’ performance.

7. Plaintiffs’ claims are barred, in whole or in part, due to any failure to perform a

condition precedent.

8. Plaintiffs’ claims may be barred by an accord and satisfaction.

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9. Plaintiffs’ claim for declaratory relief is not appropriate given the availability of

adequate remedies under the law for any of Plaintiffs’ alleged damages.

10. Plaintiffs’ claims may be barred to the extent that they are determined to be

frivolous and without merit, which may entitle Defendants to collection from Plaintiffs their costs,

including reasonable attorneys’ fees, incurred in defending against the Complaint.

11. Defendants reserve the right to amend these Affirmative Defenses to the extent that

additional facts become known to them with respect to Plaintiffs’ Complaint.

JURY TRIAL DEMAND

Defendants demand a trial by jury of all issues so triable pursuant to Rule 38 of the Federal Rules

of Civil Procedure.

Dated: November 10, 2021 Respectfully submitted,

/s/ Joshua R. Lowry

___________________________________
Joshua R. Lowry (IN 32676-29)
F. Anthony Paganelli (IN 18425-53)
PAGANELLI LAW GROUP
10401 N. Meridian St., Suite 450
Indianapolis, IN 46290
Tel: 317.550.1855
Fax: 317.569.6016
E-Mail: josh@paganelligroup.com

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