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HouseCanary, a tech startup whose analytics arm is based in San Antonio, won $706.2 million after a Quicken Loans affiliate misappropriated its trade secrets and breached a contract with the firm, a San Antonio jury decided Wednesday.
The title and appraisal company affiliated with Quicken Loans – which was then known as Title Source but rebranded as Amrock last month – sued HouseCanary in a Bexar County court in 2016 claiming the startup defrauded Amrock by misrepresenting its product, according to court records.
HouseCanary then countersued claiming the company sued as a way to get out of paying contract fees for using its real-estate data, analytics, and valuation technology, according to a news release.
The seven-week trial concluded Wednesday with a jury ruling in favor of the defendant, HouseCanary, and ordering the startup be paid $235.4 million in damages for misappropriation of the trade secrets and fraud claims. The jury also awarded an additional $471.4 million in punitive damages.
Calling the verdict a “travesty of justice,” CEO Jeff Eisenshtadt said Amrock plans to appeal the decision.
“The facts in this case are clear — HouseCanary made several unkept promises leading Amrock to file a contract claim,” Eisenshtadt said in a statement. “However, when we asked the court to intervene, a local attorney and professional plaintiff law firm spun a distorted and twisted counterclaim narrative leading a San Antonio jury to an unconscionable result.”
HouseCanary develops analytics software that automates the home appraisal process.
Amrock claimed in its petition that HouseCanary was desperate for venture capital funding and entered into a contract with Amrock based on products that did not exist after persuading the company it would provide a “one-stop-shop for property appraisal software, data, and analytic tools,” according to the petition.
According to online startup database Crunchbase, HouseCanary is an early-stage venture founded in 2014. The startup has raised about $64 million in four funding rounds, according to the site.
Amrock claimed HouseCanary used the momentum from its service contract to secure millions of dollars in venture capital from such investors as former NBA player Kobe Bryant, former Google CEO Eric Schmidt, and original director of Skype, Mark Dyne.
Amrock never received working software from HouseCanary, Eisenshtadt said.
In its countersuit, HouseCanary’s attorneys discovered Amrock misappropriated the startup’s trade secrets, a violation of multiple non-disclosure agreements. Amrock and its family of companies aimed to use HouseCanary’s technology and data to develop its own competing product, the countersuit claimed.
Amrock stole the data, violated the parties’ agreements, and defrauded HouseCanary by stating it was not developing its own competing product, the jury found in its Tuesday verdict.