A national real-estate company has ended its eight-month relationship with struggling Cavalear Realty of Sylvania and its beleaguered owner, Edwin Bergsmark.
Coldwell Banker Real Estate Corp. also filed suit against Cavalear, a residential real-estate firm; Zyndorf-Serchuk, Inc., a Toledo commercial real-estate company, and Mr. Bergsmark, chairman and chief executive officer of Cavista, the parent company of Cavalear and Zyndorf-Serchuk.
Officials at Coldwell Banker of Parsippany, N.J., allege that Mr. Bergsmark, Cavalear, and Zyndorf-Serchuk provided bogus information on their finances to gain franchise agreements with Coldwell Banker.
“[The company] will vigorously pursue its rights in this action and intends to seek all remedies available to it by law,” Coldwell Banker officials said in a statement.
Mr. Bergsmark, 60, under investigation by the Lucas County prosecutor's office on an unrelated matter, has repeatedly declined to comment on his business affairs in recent months.
In April, Coldwell Banker paid Cavista an undisclosed sum to become Cavalear's and Zyndorf Serchuk's franchisee and gain a percentage of every sales commission.
At the time, Cavalear was the area's largest residential real-estate firm. Coldwell Banker is one of the country's top real-estate franchisees.
One local real-estate executive, who asked not to be named, questioned the wisdom of the move, noting that such affiliations usually are made with companies considerably smaller than Cavalear.
Cavalear, the executive said, already had a prestigious name, a talented and experienced sales staff, and outstanding training programs.
Mr. Bergsmark, the executive speculated, made the deal for the fee paid by Coldwell Banker.
At the time of the agreement, a number of projects under Mr. Bergsmark's watch, among them Stone Ridge in Bowling Green and the Stone Oak Country Club in Springfield Township, were struggling.
Soon after, Mr. Bergsmark became saddled by one problem after another.
In September, Toledo police began investigating his role and that of a former city housing commissioner in the apartments-to-condominiums conversion project at Beacon Place.
The county prosecutor's office assumed the case in November and has expanded the investigation to other Bergsmark ventures.
Earlier this month, three of the area's leading banks sued Mr. Bergsmark for defaulting on more than $11 million in loans.
On Monday, Mr. Bergsmark, a leading civic figure, resigned as chairman of the Toledo Mud Hens.
On Thursday morning, Cavalear officials met with a Coldwell Banker regional vice president, Steve Bright, to discuss some of the troubling issues confronting the two companies, Cavalear President Bill Conklin said.
Thursday evening, Coldwell Banker announced it had ended the relationship and had filed a lawsuit in U.S. District Court in Toledo.
Mr. Bright declined to comment.
Mr. Conklin said he does not blame Coldwell Banker for its decision.
“They need to do that to protect their interests,” he said.
Mr. Conklin, who is part of a group attempting to buy Cavalear, did not rule out a future relationship with Coldwell Banker.
“They're the top franchisee in the country. But it's hard to say what will happen. It will be a business decision, and there are more players than myself involved,” he said.