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 allege that Canadian company Ritchie Bros. Auctioneers worked with former Russo and Steele operations director Mark Landolfi to undermine Russo’s contract with Salt River Fields.
Salt River Fields had hosted Russo and 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 and 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 and 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,” said 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 cancellation came as a shock to Alcazar, who said his company previously had a great relationship with Salt River Fields.
Alcazar said his company always received positive feedback from Salt River Fields staff and never violated its use agreement.
“We were sort of boy scouts,” Alcazar said. “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 and Steele argued in court filings that the circumstances behind the cancellation are more nefarious than Salt River Fields’ innocuous response.
The allegations hinge on the alleged behavior of Landolfi, who worked for Russo and Steele between 2013 and 2018.
Landolfi’s responsibilities included working with closely with Salt River Fields staff and managing the auction.
Alcazar said 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 and Steele said 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 cancelled 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 and Steele.
Alcazar said 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 said.
In a lawsuit filed on June 10 against Ritchie Bros. and its local leadership, Russo and 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.
Russo and 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 2019 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 and 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 said.
Alcazar said 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 and Steele.
Russo and 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 in order 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 and Steele alleged that Landolfi negotiated on behalf of Ritchie Bros. and encouraged Salt River Fields to cancel the remaining options on Russo and Steele’s use agreement.
In the lawsuit against Landolfi, Russo and 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 and 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 and 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 released a press release two weeks ago 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,” said Gary Bennett said in the press release.
Russo and Steele, too, will participate in Scottsdale Auction Week, though the location is to be determined.
Alcazar said 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 said.