Conspiracy?

Conspiracy?

Russo & Steele loses its longtime home

By Wayne Schutsky

As its 20th anniversary approaches, Russo & Steele is searching for a new home for its Scottsdale classic car auction following allegations that a competitor used underhanded tactics to swipe its old digs at Salt River Fields.

In a Superior Court lawsuit, the Scottsdale company alleged that Canadian company Ritchie Bros. Auctioneers worked with former Russo & Steele operations director Mark Landolfi to undermine Russo’s contract with Salt River Fields.

Ritchie Bros. denied the allegations, according to court filings.

“(Russo & Steele) lost the Salt River Fields venue to a competitor, not due to any wrongful acts of Ritchie Bros. or third parties, but because Salt River Fields sought the business of, and eventually preferred to contract with, Ritchie Bros…” according to an answer filed by the company’s attorney in Maricopa County Superior Court.

Salt River Fields had hosted Russo & Steele’s annual January Scottsdale auction since 2016 under a three-year use agreement that included additional one-year options that could have extended the contract through 2022.

However, Salt River Fields notified Russo & Steele in October 2018 that it was canceling the contract following the company’s auction in January 2019.

Leake Auctions, purchased by Ritchie Bros. in January 2018, has since announced it would hold its inaugural Scottsdale auction at Salt River Fields in 2020.

That left Russo & Steele looking for a new host ahead of its 2020 auction, which will also mark the company’s 20th anniversary.

“This is our 20th anniversary coming up,” says Drew Alcazar, who founded Russo and Steel with his wife, Josephine Alcazar. “We’ve got that in front of us, and it’s very important. It’s a tremendous milestone for any company.”

The cancelation came as a shock to Alcazar, who says his company previously had a great relationship with Salt River Fields.

Alcazar says his company always received positive feedback from Salt River Fields staff and never violated its use agreement.

“We were sort of Boy Scouts,” Alcazar says. “We left the campsite cleaner when we left than when we arrived—that kind of a thing.”

So, what caused Salt River Fields’ change of heart?

An official statement provided by Salt River Fields, which is owned by the Salt River Pima–Maricopa Indian Community, provided little explanation.

However, Russo & Steele argued in court filings that the circumstances behind the cancelation are more nefarious than Salt River Fields’ innocuous response.

The allegations hinge on the alleged behavior of Landolfi, who worked for Russo & Steele between 2013 and 2018.

Landolfi’s responsibilities included working closely with Salt River Fields staff and managing the auction.

Alcazar says the company began receiving complaints about Landolfi from vendors and made the decision to cut ties with him in fall 2018.

A lawsuit filed against Landolfi individually by Russo & Steele says the company became concerned about his competence due to his personal financial issues — he has since filed for bankruptcy — and an allegation that he brought sex workers to a company event.

The company canceled Landolfi’s contract after he repeatedly refused to sign confidentiality agreements, according to the lawsuit.

Just four days later, Salt River Fields General Manager Dave Dunne wrote the termination letter to Russo & Steele.

Alcazar says he has made repeated attempts to get an explanation but has received no response from Salt River Fields.

“So, to have something like this transpire in a very short period of time is clearly indicative that there were efforts and skullduggery afoot long before and it broke the water line at the very end of October,” Alcazar says.

In a lawsuit filed on June 10 against Ritchie Bros. and its local leadership, Russo & Steele’s attorney argued that the Canadian auctioneer conspired with Landolfi while he was still working for Russo and Steele to cancel that use agreement.

Ritchie Bros. denied the allegations in court filings.

Russo & Steele filed a separate lawsuit in January against Landolfi, levying many of the same allegations. That lawsuit was stayed by the court until at least December pending the outcome of a Landolfi’s Chapter 7 bankruptcy filing.

According to the June lawsuit, securing a top-tier venue that can accommodate a large-scale auction is a difficult proposition, making the use agreement with Salt River Fields a valuable commodity in the competitive auction industry—especially for a company like Ritchie Bros. that was looking to break into the market.

In January 2018, Ritchie Bros. acquired Leake Auction Company, an Oklahoma-based collector car auctioneer. The company simultaneously hired Muffy Bennett, a former employee of Scottsdale’s Barrett-Jackson Auction Company.

Muffy Bennett and her husband Gary Bennett are also named as defendants in the June 2019 lawsuit.

After firing Landolfi, Russo & Steele took a “deep dive” into communications he engaged in using company resources, Alcazar said.

“We’ve got some very compelling evidence regarding the activity that he’d engaged in,” Alcazar says.

Alcazar says there is evidence that Landolfi was in communication with Ritchie Bros. for a little under a year while still working under a contract with Russo & Steele.

Russo & Steele alleged that the former contractor used his intimate personal knowledge of the company and relationships with Salt River Fields staff to steer the venue away from Russo and Steele and towards Ritchie Bros.

The lawsuit alleged that Ritchie Bros., through the Bennetts, contacted Landolfi to “secure a use agreement to use the fields in January 2020,” in exchange for promises of future payments and other benefits to Landolfi.

Russo & Steele alleged that Landolfi negotiated on behalf of Ritchie Bros. and encouraged Salt River Fields to cancel the remaining options on Russo & Steele’s use agreement.

In the lawsuit against Landolfi, Russo & Steele also alleged that “Landolfi  demanded and/or received undisclosed side payments from (Salt River Fields) personnel in charge of the SRF/R&S relationship in exchange for Landolfi ‘bringing to the table’ the new competitor to take over R&S’ valuable, exclusive lease position with SRF.”

The lawsuit against Ritchie Bros., its subsidiaries and the Bennetts claims the group committed a number of offenses, including illegally interfering with Russo & Steele’s contract with Salt River Fields.

A Ritchie Bros. spokesperson declined to comment, stating the company does not comment on pending litigation. 

This is not the first time Ritchie Bros. has been accused of interfering with an existing contract to undermine a competitor.

In 2013, an Iowa jury found in favor of online auctioneer IronPlanet after the company sued Ritchie Bros. and Scheckel Construction for breach of contract and tortuous interference with an existing contract—a similar charge to that levied by Russo & Steele in its June 2019 suit.

In the Iowa case, the court found that Ritchie Bros. conducted an auction on behalf of Scheckel Construction after that company had already signed a listing agreement with IronPlanet.

The Court of Appeals of Iowa upheld the decision in 2014 and ordered Ritchie Bros. to pay $900,000 in punitive damages.

Ritchie Bros. acquired IronPlanet in 2017.

The pending lawsuit has not appeared to put a damper on Ritchie Bros.’ plans.

The company recently released a press release announcing it would take part in Scottsdale Auction Week in January 2020—at Salt River Fields.

“Scottsdale Auction Week is a bellwether event for the collector car industry and we are so excited to be participating,” Gary Bennett says in the press release.

Russo & Steele, too, will participate in Scottsdale Auction Week, though the location is to be determined.

Alcazar says he has his eyes on a few promising sites, but it is too early to announce anything officially.

“We’ve been through a lot of adversity and for something like this to think that it was going to damage us, it’s just not our style to roll over and just go quietly into the night,” Alcazar says. ν