Lack of investor money is making the dotcoms starve, and the wolves are starting to turn against each other. Within the last month, VistaInfo, Inc. has announced the availability of Cyberhomes for sale; lender iOWN is restructuring with the fate of HomeScout still in doubt; and Realestate.com is rumored to have recently laid off 20 employees, another sign of retreat. With Homestore and HomeAdvisor the only contenders operating with plenty of cash, other competitors, with their dreams of IPOs or other funding dashed, are starting to cannibalize each other in a frenzy to show revenue gains in case the Silicon Valley and Wall Street demi-gods decide to open up their purses again.

HomeSeekers has filed a law suit and a restraining order against its chief competitor, Homes.com. In the complaint, case number CV 00-04513, Dept. Number 6, filed in Washoe County, Nevada, HomeSeekers accuses Homes.com and its telemarketers of violating its Terms of Use by scraping its REALTOR® customers (systematically and illegally contacting customers from HomeSeekers' and their own Web sites) and then telling them that HomeSeekers is about to go out of business with the purpose of getting the agents to lose confidence in HomeSeekers and give Homes.com their Web site business instead. This practice has resulted in tortious interference with contractual relations and damages in excess of $10,000, alleges the complaint.

According to the complaint, HomeSeekers says it has lost 45 Web site customers due to the actions of Homes.com. Although the value of these accounts is not mentioned in the complaint, the lost sites could represent minimum revenues of $22,500, according to HomeSeekers current prices for Web sites, or higher, not including planned annual renewals. Homes.com actions may have also had a negative effect on HomeSeekers stock, but that is not alleged in the complaint. HomeSeekers is asking for general damages in excess of $10,000, punitive damages, attorney's fees, interest and costs of the suit, and other legal or equitable relief.

What bones are the wolves fighting over? Both HomeSeekers and Homes.com produce basic Web sites, upgraded Web sites and lead generation tools for REALTORS®. With similar pricing and services and a limited pool of online Realtors, some overlap of customer solicitation is to be expected, but not the way Homes.com goes about it, according to HomeSeekers. According to the signed affidavits of two REALTORS®, a Homes.com telemarketer made unsolicited calls to the agents and left her message on their voice mails. She told them both that she knew they were customers of HomeSeekers, told them that HomeSeekers stock had dropped from $35 to $2 per share since August 25th, 2000, and that the company was going out of business. The telemarketer then went on to say that the HomeSeekers clients could talk to her manager who could confirm that HomeSeekers is going out of business.

In his affidavit, HomeSeekers' executive vice president Doug Swanson alleges that he spoke with Jay Westmark, executive vice president of business development and expressed his "outrage at the untruthful telemarketing tactics of Homes.com in representing to known HomeSeekers' Web site clients that HomeSeekers is going out of business. Citing Westmark's email reply, Westmark apologized for the conduct of Homes.com's "tele-sales reps." The email also included a copy of an internal Homes.com email sent 8:55 a.m. on August 30, 2000 to its telemarketing managers stating "STOP THIS PRACTICE NOW!"

Swanson and Westmark had a second conversation during which Westmark stated that he had sent the email, but that "Homes.com has approximately 200 telemarketers and he cannot control what his telemarketers say." Swanson responded that the company is responsible for the actions of its telemarketers. Six hours after the STOP email went out, a HomeSeekers customer received a telephone call from a Homes.com marketer and was told that HomeSeekers was going out of business and that if he called HomeSeekers, that the company would say that it wasn't true. The telemarketer again referred the client to her manager to confirm.

When it appeared that Homes.com would not cease its practices, HomeSeekers decided to file suit the following day, including an affidavit from the man who was called on August 30th after the STOP email went out.

According to the affidavits, HomeSeekers has Homes.com cold as the telemarketers left their messages on the agents' voice mails when they couldn't get in direct touch.

Neither HomeSeekers nor Homes.com officials were available for comment, but Mr. Westmark forwarded the following statement: "On August 31, 2000, Homes.com was sued in the Washoe County, Nevada district court. Homes.com intends to vigorously defend itself against this action, which it believes has no merit. On August 31, 2000, a limited temporary restraining order was issued, which Homes.com believes is unnecessary and in any event has complied with fully."

A spokesperson with HomeSeekers refused to answer questions about the evidence against Homes.com, including the voice mails mentioned in the affidavits, and whether or not tapes exist of those voicemails, commenting only, "We have more proof than we need to confirm the legal infringements."

Published: September 12, 2000

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