Archstone Litigation -- Stender v. Archstone Smith Operating Trust, et al.
Court: United States District Court for the District of Colorado
Case No.: 1:07-CV-02503-REB-MJW
On November 30, 2007, Wexler Wallace instituted litigation on behalf of a class of investors who had negotiated for securities with certain essential characteristics, only to see those characteristics stripped away through a merger transaction in which the investors had no say. The complaint alleges, among other things, breaches of fiduciary duty, breach of contract and civil conspiracy.
Specifically, as alleged in the complaint, Plaintiffs and the class consist of former property owners who contributed their properties to an umbrella partnership real estate investment trust, or “UPREIT”, in exchange for A-1 units having specific, negotiated characteristics. Those characteristics, which were essential to the A-1 unit holders making their contributions, included specific estate-planning tax advantages, liquidity and dividend rights. The tax benefits and liquidity attributes were specified in the contribution agreements; the dividends were required by law.
The merger involved taking the public Archstone REIT/UPREIT private by various Tishman Speyer and Lehman Brothers related entities (“Tishman-Lehman”). When negotiating the price at which they would buy out A-1 unit holders, Tishman-Lehman lowered their offer after realizing the enormous potential liability the tax protections posed. After paying the lower offering price, Tishman-Lehman then proceeded to ignore entirely their responsibility to provide the tax protections to the investors, even though the transaction caused massive taxable events for which the agreements required indemnification. The offering price for the A-1 Units was considerably lower than what they were worth. Because of this and Tishman-Lehman’s brazen refusal to comply with its contractual and fiduciary obligations, Plaintiffs filed this class action to recover the damages inflicted by the Defendants.
To learn more about the case and view the amended Complaint, click here.