A lawsuit filed last week by a Virginia real estate company accuses Wintergreen Resort of unfair competition in selling homes and lots on its property in Nelson County.
Mountain Area Realty claims $6 million in damages resulting from a contract that gives preferential treatment to Wintergreen Resort’s real estate partner, Roy Wheeler Realty Co.
The lawsuit in federal court in Alexandria tests the extent to which resorts can control real estate sales on their property with “exclusive dealing” contracts, which give favored status to a single company.
Central Virginia’s Wintergreen Resort is a popular weekend destination for many Washington residents, who go to its mountains to ski, golf or seek outdoor adventures.
Mountain Area Realty, of Wintergreen, says homes on the 11,000-acre property might come with inflated sales commissions because of the lack of competition.
Several resorts in the Mid-Atlantic region, such as Whitetail Resort at Mercersburg, Pa., and Kingsmill Resort & Spa at Williamsburg, Va., use real estate firms to sell homes on their property.
Wintergreen Resort and Roy Wheeler Realty joined Sept. 1 to form Wintergreen Resort Premier Properties, which has the exclusive rights to advertise as the “official real estate company of Wintergreen Resort,” operate an office on resort property and distribute marketing materials there. Other real estate firms can sell property at Wintergreen Resort, but not with the preferred treatment of Wintergreen Resort Premier Properties.
The exclusive dealing contract has given Wintergreen Resort Premier Properties a “dominant position” in the home sales market at the resort, driven out at least three competitors and left Mountain Area Realty with only a portion of the sales it normally would receive, Mountain Area Realty’s attorney said.
Wintergreen Resort Premier Properties “is charging sellers 6 percent commissions,” said Allen Foster, attorney for Mountain Area Realty. “Mountain Area Realty was charging 5 to 51/2 percent. So we know consumers are being harmed.”
The lawsuit accuses Wintergreen Resort of violations under the 1890 Sherman Antitrust Act, the Virginia Antitrust Act and the Consumer Protection Act, as well as conspiracy and fraud. The $6 million in damages represents lost commissions, Mr. Foster said.
Wintergreen Resort denies gouging home buyers or violating any business laws, saying the real issue is Mountain Area Realty’s desire to make more money.
The resort sent a letter to its members last week telling them that Robert “Bo” Newell, president of Mountain Area Realty, reported to the resort’s members last year that his company “generated $90 million in real estate sales in the past 12 months.”
Wintergreen Resort describes the sales figures as “hardly a picture of a struggling real estate firm.”
Charlottesville Area Association of Realtors Multiple Listings Service data show that of the 250 properties listed for sale in Nelson County yesterday, 29 percent were placed by Mountain Area Realty and 4 percent by Wintergreen Resort Premier Properties. The rest are divided among several other real estate companies.
As much as 80 percent of the county’s home sales are at Wintergreen Resort, according to the Charlottesville Area Association of Realtors. The association has no separate listing for Wintergreen Resort.
“This action is not about supposed antitrust violations,” Wintergreen Resort said in its letter to members. “Instead, it appears to be about [Mountain Area Realty’s] continuing effort to secure market advantage over existing real estate entities and its concern about increased competition.”
Wintergreen Resort officials declined to comment beyond their press statement and letter to members.
Their attorneys are scheduled to respond to the lawsuit, filed Thursday in U.S. District Court for the Eastern District of Virginia, by mid-March.
Antitrust analysts say the Wintergreen Resort case raises an unusual question of law.
“I’ve seen antitrust cases in gated communities where the developer deals exclusively with an agent,” said Barlow Burke, professor of real estate law at American University’s Washington College of Law. “In those situations, the antitrust plaintiffs have lost. I haven’t seen developers who are dealing with new and existing homes. That would raise the antitrust bar a good deal.”
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