Chip Gaines' former real-estate partners sue him for over $1 million
Chip Gaines, who hosts Fixer Upper along with wife Joanna, is being accused of conspiring to cheat his ex-partners — and now ex-friends — in his Texas real-estate company by buying out their stakes for peanuts two days before announcing the show that would go on to become a lucrative hit for HGTV.
John L. Lewis and Richard L. Clark are demanding either more than $1 million and their ownership stakes back, or compensation for what their stakes in Magnolia Realty would be worth had they known about the potential financial boon of Fixer Upper.
The show, which features the Gaines helping clients to buy and remodel homes, has been such a success they're planning a spinoff series next year, Behind the Design, which will showcase how Joanna comes up with the creations seen on Fixer Upper.
The lawsuit, filed Wednesday in Waco, Texas, names Fixer Upper production company High Noon Entertainment, along with Scripps Networks and Scripps Networks Interactive, which operate HGTV.
Lewis and Clark's lawsuit asserts that Gaines persuaded each to sell their one-third ownership stakes in Magnolia for $2,500 apiece in May 2013 while withholding "insider information" about how the value of those stakes would likely skyrocket as a result of the Fixer Upper success and its association with Magnolia.
"At a time when only the Defendants knew that Fixer Upper had been fast-tracked for a one-hour premiere on HGTV and was on the verge of radically changing their lives and business enterprises, Chip Gaines conspired to eliminate his business partners — notwithstanding their longstanding friendship — in order to ensure that he alone would profit from Magnolia Realty's association with Fixer Upper," the lawsuit states.
It goes on to say that Gaines described Magnolia as "less than worthless" and Gaines allegedly threatened Clark when he was reluctant to sell.
"You better tell Rick to be careful," Gaines allegedly texted Lewis. "I don't come from the nerdy prep school he's from. And when people talk to me that way, they get their (expletives) kicked. And if he's not ready to do that, he better shut his mouth. I'm not the toughest guy there is, but I can assure you that would not end well for Rick."
The lawsuit describes how Gaines and Lewis, an attorney, met in 1999 and became close friends. They lived in the same neighborhood, ate lunch and hunted together and even exchanged professional services free of charge. Lewis invited Clark, a real-estate broker, to join the partnership when Magnolia was launched in 2006.
Waco lawyer Jordan Mayfield, who represents Gaines, dismissed the lawsuit in a statement to USA TODAY.
"We are confident that these claims will be found to be meritless, and it is disappointing to see people try to take advantage of the hard work and success of Chip and Joanna Gaines," he said.
Meanwhile, Gaines, who is well-known for his Christian faith, tweeted a verse from the Bible on Friday: John 1:5, which reads, “The light shines in the darkness, and the darkness has not overcome it.”
Contributing: KCEN in Waco, Texas