eXp loses bid to get fraud claims tossed in sexual misconduct case 

A California district court has given the plaintiffs in a three-year-long sexual assault case involving eXp Realty a small win.

In an April 7 order, the U.S. District Court for the Central District of California denied eXp Realty, parent company eXp World Holdings, founder Glenn Sanford and other defendants their motion to dismiss a pivotal count in the plaintiffs' third amended complaint in the case. 

How we got here: The sexual assault lawsuit involving eXp Realty and its parent company was initially filed in early 2023. The plaintiffs added a fraudulent misrepresentation claim to the case last October.

Within that amended complaint, count XIII alleged that eXp and its fellow defendants engaged in fraudulent misrepresentation by claiming to have investigated sexual assault accusations made by Fabiola Acevedo and other plaintiffs — even though evidence surfaced during the case's discovery phase has indicated otherwise.

Notes from a call between eXp Realty SVP of Agent Compliance Cory Haggard and Michael Bjorkman, a former agent accused of sexual assault, say the firm was "not investigating" the claims, according to last fall's amended complaint. In depositions, Haggard and Jim Nuth, another eXp executive involved in the call, both affirmed that the lack of investigation was discussed.

eXp has said that the plaintiffs' claims did not meet the legal standard of fraud. In its own filing, eXp asserted that the plaintiffs had agreed the company took statements from the alleged victims. eXp has also pointed to the removal of Bjorkman and David Golden, another former eXp agent who was accused of sexual assault, as an example of how the firm says it took action.

Court rejects eXp's motion to dismiss: In its order denying eXp's motion to dismiss count XIII, the court ruled that the plaintiffs had met the standard to claim fraudulent misrepresentation.

The court agreed with the plaintiffs' claims that misrepresentation was shown through timelines that did not add up — and while the plaintiffs were told that an attempt was made to investigate, leadership members at the firm had already agreed an investigation would not occur. The court also reaffirmed that the plaintiffs were told Bjorkman's employment was terminated before he had been let go.

Additionally, the plaintiffs sufficiently showed that these misrepresentations were knowingly made, and that fraudulent statements were made with an "intent to induce reliance" on such statements, the ruling said. 

Real Estate News has reached out to eXp World Holdings for comment.

What happens next: eXp previously requested more time for discovery in the event that the motion to dismiss the fraud claims was denied.

The court granted this request in its April 7 order, with fact discovery permitted to continue for 60 additional days. The court also ordered the plaintiffs and defendants to submit a joint proposed schedule for all other deadlines within 14 days.