UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 14)
First Union Real Estate Equity and Mortgage Investments
- -------------------------------------------------------------------------------
(Name of Issuer)
Shares of Beneficial Interest, $1.00 par value
- -------------------------------------------------------------------------------
(Title of Class of Securities)
337400105
--------------------------------------------------------------
(CUSIP Number)
Stephen Fraidin, P.C.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
(212) 859-8140
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
February 2, 1998
--------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1(b)(3) or (4), check
the following box |_|.
Check the following box if a fee is being paid with the statement |_|.
(A fee is not required only if the reporting person: (1) has a
previous statement on file reporting beneficial ownership of more than
five percent of the class of securities described in Item 1; and (2)
has filed no amendment subsequent thereto reporting beneficial
ownership of five percent or less of such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
SEC1746(12-91)
SCHEDULE 13D
- ------------------------------ ------------------------------------
CUSIP NO. 337400105 PAGE 2 OF 6 PAGES
--------------- ----- -----
- ------------------------------ ------------------------------------
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gotham Partners, L.P.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) |_|
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York, U.S.A.
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 2,501,951 Shares
SHARES
-----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
-----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 2,501,951 Shares
-----------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,501,951 Shares
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.89%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- -------------------------------------------------------------------------------
* SEE INSTRUCTIONS
Page 2 of 6 pages
SCHEDULE 13D
- ------------------------------ ------------------------------------
CUSIP NO. 337400105 PAGE 3 OF 6 PAGES
--------------- ----- -----
- ------------------------------ ------------------------------------
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gotham Partners II, L.P.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) |_|
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York, U.S.A.
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 30,449 Shares
SHARES
------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 30,449 Shares
------------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
30,449 Shares
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.11%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- -------------------------------------------------------------------------------
* SEE INSTRUCTIONS
Page 3 of 6 pages
This Amendment No. 14 amends and supplements the Statement on
Schedule 13D (the "Schedule 13D") relating to the shares of Beneficial
Interest, par value $1.00 per share ("Shares"), of First Union Real
Estate Equity and Mortgage Investments, an Ohio business trust (the
"Company") previously filed by Gotham Partners, L.P. ("Gotham") and
Gotham Partners II, L.P. ("Gotham II" and together with Gotham, the
"Reporting Persons"), both New York limited partnerships. Capitalized
terms used and not defined in this Amendment have the meanings set
forth in the Schedule 13D.
Except as specifically provided herein, this Amendment does not
modify any of the information previously reported on the Schedule 13D.
Item 4 is hereby amended to add the following information:
"Item 4. Purpose of the Transaction"
On January 30, 1998, counsel for the Reporting Persons filed a
Motion for Court to Accept Reassignment of Related Case in the United
States District Court for the Northern District of Ohio, Eastern
Division (the "U.S. District Court"). A copy of such Motion is
attached as Exhibit 22 hereto and incorporated herein by this
reference.
On January 30, 1998, counsel for the Reporting Persons filed a
Memorandum in Support of Defendants' Motion for Court to Accept
Reassignment of Related Case in the U.S. District Court. A copy of
such Memorandum is attached as Exhibit 23 hereto and incorporated
herein by this reference.
On January 30, 1998, counsel for the Reporting Persons filed a
Motion for Reassignment in the U.S. District Court. A copy of such
Motion is attached as Exhibit 24 hereto and incorporated herein by
this reference.
On January 30, 1998, counsel for the Reporting Persons filed a
Memorandum in Support of Plaintiffs' Motion for Reassignment in the
U.S. District Court. A copy of such Memorandum is attached as Exhibit
25 hereto and incorporated herein by this reference.
On January 30, 1998, counsel for the Reporting Persons filed a
Motion for Expedited Discovery in the U.S. District Court. A copy of
such Motion is attached as Exhibit 26 hereto and incorporated herein
by this reference.
On January 30, 1998, counsel for the Reporting Persons filed a
Memorandum in Support of Plaintiffs' Motion for Expedited Discovery in
the U.S. District Court. A copy of such Memorandum is attached as
Exhibit 27 hereto and incorporated herein by this reference.
On January 30, 1998, counsel for the Reporting Persons filed a
Complaint for Injunctive and Declaratory Relief in the U.S. District
Court. A copy of such Complaint is attached as Exhibit 28 hereto and
incorporated herein by this reference.
On January 30, 1998, counsel for the Reporting Persons filed a
Motion for Preliminary Injunction in the U.S. District Court. A copy
of such Motion is attached as Exhibit 29 hereto and incorporated
herein by this reference.
On January 30, 1998, David C. Weiner of Hahn, Loeser & Parks LLP,
co-counsel for the Reporting Persons, sent a letter to Senior Judge
Ann Aldrich and Judge Donald C. Nugent of the U.S. District Court. A
copy of such letter is attached as Exhibit 30 hereto and incorporated
herein by this reference."
Item 7 is hereby amended to add the following information:
"Item 7. Material to be Filed as Exhibits
22. Motion for Court to Accept Reassignment of Related Case filed
in the U.S. District Court by counsel for the Reporting Persons on
January 30, 1998.
23. Memorandum in Support of Defendants' Motion for Court to
Accept Reassignment of Related Case filed in the U.S. District Court
by counsel for the Reporting Persons on January 30, 1998.
24. Motion for Reassignment filed in the U.S. District Court by
counsel for the Reporting Persons on January 30, 1998.
25. Memorandum in Support of Plaintiffs' Motion for Reassignment
filed in the U.S. District Court by counsel for the Reporting Persons
on January 30, 1998.
26. Motion for Expedited Discovery filed in the U.S. District
Court by counsel for the Reporting Persons on January 30, 1998.
27. Memorandum in Support of Plaintiffs Motion for Expedited
Discovery filed in the U.S. District Court by counsel for the
Reporting Persons on January 30, 1998.
28. Complaint for Injunctive and Declaratory Relief filed in the
U.S. District Court by counsel for the Reporting Persons on January
30, 1998.
29. Motion for Preliminary Injunction filed in the U.S. District
Court by counsel for the Reporting Persons on January 30, 1998.
30. Letter sent to Senior Judge Ann Aldrich and Judge Donald C.
Nugent of the U.S. District Court by David C. Weiner of Hahn, Loeser &
Parks LLP, co-counsel for the Reporting Persons, on January 30, 1998."
After reasonable inquiry and to the best of our knowledge and
belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
February 2, 1998
GOTHAM PARTNERS, L.P.
By: Section H Partners, L.P.,
its general partner
By: Karenina Corporation,
a general partner of Section H Partners, L.P.
By: /s/William A. Ackman
---------------------------------------
William A. Ackman
President
By: DPB Corporation,
a general partner of Section H Partners, L.P.
By: /s/David P. Berkowitz
---------------------------------------
David P. Berkowitz
President
GOTHAM PARTNERS II, L.P.
By: Section H Partners, L.P.,
its general partner
By: Karenina Corporation,
a general partner of Section H Partners, L.P.
By: /s/William A. Ackman
---------------------------------------
William A. Ackman
President
By: DPB Corporation,
a general partner of Section H Partners, L.P.
By: /s/David P. Berkowitz
---------------------------------------
David P. Berkowitz
President
EXHIBIT 22
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
FIRST UNION REAL ESTATE EQUITY AND ) CASE NO. 1:98CV0105
MORTGAGE INVESTMENTS, )
) JUDGE ALDRICH
Plaintiff, )
) DEFENDANTS' MOTION FOR COURT TO
v. ) ACCEPT REASSIGNMENT OF RELATED
) CASE
GOTHAM PARTNERS, L.P., et al., ) -------------------------------
)
Defendants. )
Defendants, Gotham Partners, L.P. and Gotham Partners II, L.P.,
pursuant to Local Rule 3.1(b)(3), move this Court for an order
accepting the reassignment of a related action, styled Gotham
Partners, L.P. v. First Union Real Estate Equity and Mortgage
Investments Case No. 1:98CV0272. Considerations of judicial economy
weigh heavily in favor of reassignment, as this Court has become
familiar with the underlying allegations, and has entered a scheduling
order which addresses, among other things, both plaintiff and
defendants' motions for preliminary injunctions.
The grounds for this motion are set forth more fully in the
attached Memorandum in Support.
Date: January 30, 1998
Respectfully submitted,
OF COUNSEL:
/s/ Michael J. Garvin
----------------------------------
David C. Weiner (0013351)
Michael J. Garvin (0025394)
HAHN LOESER & PARKS LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
-and-
/s/ Alexander R. Sussman
OF COUNSEL: -----------------------------------
Alexander R. Sussman(FN1)
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON 25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
- --------
[FN]
1 Application to appear pro hac vice is pending.
</FN>
EXHIBIT 23
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
FIRST UNION REAL ESTATE EQUITY AND ) CASE NO. 1:98CV0105
MORTGAGE INVESTMENTS, )
) JUDGE ALDRICH
Plaintiff, )
) MEMORANDUM IN SUPPORT OF
v. ) DEFENDANTS' MOTION FOR COURT TO
) ACCEPT REASSIGNMENT OF RELATED
GOTHAM PARTNERS, L.P., et al., ) CASE
-------------------------------
)
Defendants. )
I. FACTS
-----
Defendants Gotham Partners, L.P. and Gotham Partners II, L.P.
(collectively the "Gotham Partnerships") have filed a related action
before this court, styled Gotham Partners, L.P. et al. v. First Union
Real Estate Equity and Mortgage Investments, Case No. 1:98CV0272. That
action has been assigned to Judge Nugent.
As set forth in detail in the Gotham Partners' motion to reassign
the case before Judge Nugent to this Court, a copy of which is
attached as Exhibit A, the Gotham Partners filed that action because
of newly-disclosed information suggesting that there is not complete
diversity between the parties to this action, which was removed from
state court. At the time Gotham removed this action from state court,
it believed that First Union was an Ohio citizen. Indeed, First Union
has asserted that it is a citizen of Ohio for diversity of citizenship
purposes in previous complaints filed with the Northern District of
Ohio. See, e.g., the Complaints in First Union Real Estate Equity and
Mortgage Investments v. Crown American Corporation, et al., Case No.
1:92CV0204 (Lambros, J.) and First Union Real Estate Equity and
Mortgage Investments v. Crown American Associates, Case No. 1:93CV2197
(Matia, J.). However, in its reply brief in support of its motion to
expedite consideration of its motion to remand, filed on January 27,
1998, First Union suggested for the first time that it may not be an
Ohio citizen for diversity jurisdiction purposes, because the
citizenships of its Trustees are counted for purposes of diversity.
See id. at 4-5. Because of this suggestion, counsel for the Gotham
Partners counsel wrote to counsel for First Union on January 29, 1998
requesting information on First Union's citizenship for diversity
purposes. As of noon on Friday, January 30, 1998, counsel for the
Gotham Partners had not heard back from counsel for First Union.
Once, contrary to the Gotham Partners' original belief, there
arose a question as to the complete diversity of citizenship between
the parties, the Gotham Partnerships determined to file the new
against First Union asserting claims for, among other things,
violations of Section 14(a) of the '34 Act and the SEC Rules. These
claims can only be heard in this Court because they are within
exclusive federal jurisdiction. The facts alleged in support of these
claims are substantially the same as those asserted in Gotham
Partnerships' counterclaims against First Union in this action.
II. ARGUMENT
--------
Local Rule 3.1(b)(3) provides that "[a] case may be re-assigned
as related to an earlier assigned case with the concurrence of both
the transferee and the transferor District Judges, with or without a
motion by counsel." Where, as here, a case contains substantially
identical facts and claims as those of an earlier assigned case, it
should be assigned to the same judge so as to conserve judicial
resources. See, e.g., In re Dow Corning Corp., 113 F.3d 565 (6th Cir.
1997) (writ of mandamus issued ordering district court to transfer
claims against the shareholders of Dow Corning where the identical
claims, based on identical facts, against Dow Corning itself were
transferred).
Equally important, the posture of this case commends that the
case before Judge Nugent be transferred this Court. Both parties are
seeking preliminary injunctive relief in connection with a proxy
contest pertaining to First Union's annual meeting scheduled for April
14, 1998. This Court has already entered a scheduling order in
connection with the preliminary injunction motions. It makes great
sense to maintain the schedule that this Court has already put in
place to resolve highly time-sensitive disputes between the parties.
III. CONCLUSION
----------
Based on the foregoing, the Gotham Partnerships request that this
Court and Judge Nugent concur in the reassignment of the action before
Judge Nugent to this Court and issue an order so indicating.
Date: January 30, 1998
Respectfully submitted,
OF COUNSEL:
/s/ Michael J. Garvin
----------------------------------
David C. Weiner (0013351)
Michael J. Garvin (0025394)
HAHN LOESER & PARKS LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
-and-
/s/ Alexander R. Sussman
OF COUNSEL: -----------------------------------
Alexander R. Sussman(FN2)
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON 25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
- --------
[FN]
2 Application to appear pro hac vice is pending.
</FN>
CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing Plaintiffs' Motion
for Reassignment, along with the Memorandum in Support thereof, was
served by regular U.S. mail, postage prepaid, with a courtesy copy by
facsimile, upon Frances Floriano Goins, Squire, Sanders & Dempsey
L.L.P., 4900 Key Tower, 127 Public Square, Cleveland, Ohio 44114-1304,
attorneys for defendant, this 30th day of January 1998.
-----------------------------------
One of the Attorneys for Plaintiffs
<PAGE>
Exhibit A
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
GOTHAM PARTNERS, L.P., et al., ) CASE NO. ___________
)
Plaintiffs, ) JUDGE _____________
)
v. ) PLAINTIFFS' MOTION FOR
) REASSIGNMENT
FIRST UNION REAL ESTATE EQUITY AND ) ----------------------
MORTGAGE INVESTMENTS, )
)
Defendant. )
Plaintiffs, Gotham Partners, L.P. and Gotham Partners II, L.P.
(collectively "Plaintiffs"), pursuant to Local Rule 3.1(b)(3), move
this Court for an order reassigning the above-captioned action to the
Honorable Ann Aldrich. Good cause exists to grant this motion because
this action is related to an earlier assigned case, First Union Real
Estate Equity and Mortgage Investments v. Gotham Partners, L.P., et
al., Case No. 98CV0105, which was removed to this Court on January 20,
1998. As both the plaintiff and the defendants seek preliminary
injunctive relief in that case and Judge Aldrich has entered a
detailed scheduling order, considerations of judicial economy weigh
heavily in favor of reassignment of this case to Judge Aldrich.
The grounds for this motion are set forth more fully in the
attached Memorandum in Support.
Date: January 30, 1998
Respectfully submitted,
OF COUNSEL:
--------------------------------
David C. Weiner (0013351)
Michael J. Garvin (0025394)
HAHN LOESER & PARKS LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
-and-
OF COUNSEL: --------------------------------
Alexander R. Sussman(FN1)
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON 25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
- --------
[FN]
1 Application to appear pro hac vice is pending.
</FN>
<PAGE>
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
GOTHAM PARTNERS, L.P., et al., ) CASE NO. ___________
)
Plaintiffs, ) JUDGE _____________
)
v. ) MEMORANDUM IN SUPPORT OF
) PLAINTIFFS' MOTION FOR
FIRST UNION REAL ESTATE EQUITY AND ) REASSIGNMENT
MORTGAGE INVESTMENTS, ) ------------------------
)
Defendant. )
I. INTRODUCTION
------------
To conserve judicial resources and pursuant to Local Rule 3.1(b)((3),
this action should be reassigned to the Honorable Ann Aldrich as related to
an earlier assigned case, First Union Real Estate Equity and Mortgage
Investments v. Gotham Partners, L.P., et al., Case No. 98CV0105, which was
removed to this Court on January 20, 1998.
II. FACTS
-----
A. Backdrop to the litigation
--------------------------
This case involves a dispute over a proxy contest pertaining to
Defendant First Union Real Estate Equity and Mortgage Investments (First
Union"). Plaintiffs Gotham Partners, L.P. and Gotham Partners II, L.P.
(collectively the "Gotham Partnerships") are shareholders of First Union who
are dissatisfied with First Union's management and have submitted a proposal
for election of new directors, seeking a shareholder vote as to the strategic
direction of the company. First Union filed litigation against the Gotham
Partnerships - originally in state court - in an effort to prevent them from
mounting a proxy contest in connection with First Union's annual meeting
which is scheduled to take place on April 14, 1998. After removing that
action to this Court (Case No. 1:98CV0105 before Judge Aldrich), the Gotham
Partners brought counterclaims against First Union under the federal
securities laws, for which this Court has exclusive jurisdiction, and related
state law claims.
B. Relevant procedural history
---------------------------
On January 16, 1998, First Union filed a complaint for preliminary
injunction, permanent injunction and declaratory relief against the Gotham
Partnerships in the Common Pleas Court for Cuyahoga County, Case No. 347063,
before Judge McGinty. On January 20, 1998, the Gotham Partnerships removed
the action to the United States District Court for the Northern District of
Ohio, on the basis of diversity of citizenship.(FN1) The Gotham Partnerships
believed that First Union was a citizen of Ohio for diversity purposes.
Indeed, First Union has filed prior litigation in this Court in which it has
alleged that it is an Ohio citizen for diversity purposes. The removed case
was assigned to the Honorable Ann Aldrich, and bore Case No. 98CV0105. On
that same date, the Gotham Partnerships filed their answer and counterclaims
for, among other things, violations of Section 14(a) of the '34 Act and the
SEC Rules (later amended on January 26, 1998).
On January 21, 1998, First Union filed a motion to remand the
action before Judge Aldrich to state court, and a motion for expedited
consideration of that motion. In its remand motion, First Union
contended that the Gotham Partnerships had failed to meet their burden
to prove either diversity of citizenship between the parties, or that
the amount in controversy was in excess of $75,000. Significantly, in
their argument as to diversity, First Union argued only that the
Gotham Partnerships had not established their citizenship for
diversity purposes. First Union raised no issue as to its citizenship.
On January 23, 1998, the Gotham Partnerships filed a motion for
preliminary injunction in the action before Judge Aldrich, seeking
relief prohibiting First Union from continuing to engage in the
federal securities law violations alleged in the Gotham Partners'
counterclaims. The Gotham Partnerships also filed a response to First
Union's motion for expedited consideration of its motion for remand
and a cross-motion to schedule the parties' respective requests for
preliminary relief at the hearing on First Union's remand motion. In
that response, the Gotham Partners agreed to respond to First Union's
remand motion within the time set by the local rules or a time set by
the Court, and suggested that the various motions did not need to be
heard before March 10, in light of First Union's April 14, 1998 annual
meeting.
On January 28, 1998, Judge Aldrich issued an order setting forth
a briefing schedule on First Union's motion to remand and on the
parties' respective motions for preliminary injunction. In that order,
Judge Aldrich also scheduled the parties' respective motions for
preliminary injunction on March 5, 1998, before Magistrate Judge
Perelman.
On January 27, 1998, one day prior to Judge Aldrich's scheduling
order, First Union filed a reply brief in support of a motion it had
filed seeking expedited consideration of its remand motion. In that
reply brief, First Union suggested for the first time that it may not
be an Ohio citizen for diversity jurisdiction purposes, because the
citizenships of its Trustees are counted for purposes of diversity. In
response to that brief, counsel for the Gotham Partnerships wrote to
counsel for First Union on January 29, 1998, requesting information on
First Union's citizenship for diversity purposes in the action before
Judge Aldrich. As of noon on Friday, January 30, 1998, counsel for the
Gotham Partners had not heard back from counsel for First Union.
Once, contrary to the Gotham Partners' original belief, there
arose a question as to the complete diversity of citizenship between
the parties, the Gotham Partnerships determined to file this action
against First Union asserting claims for, among other things,
violations of Section 14(a) of the '34 Act and the SEC Rules. These
claims can only be heard in this Court because they are within
exclusive federal jurisdiction. The facts alleged in support of these
claims are substantially the same as those asserted in Gotham
Partnerships' counterclaims against First Union in the action before
Judge Aldrich.
III. ARGUMENT
--------
Local Rule 3.1(b)(3) provides that "[a] case may be re-assigned
as related to an earlier assigned case with the concurrence of both
the transferee and the transferor District Judges, with or without a
motion by counsel." Where, as here, a case contains substantially
identical facts and claims as those of an earlier assigned case, it
should be assigned to the same judge so as to conserve judicial
resources. See, e.g., In re Dow Corning Corp., 113 F.3d 565 (6th Cir.
1997) (writ of mandamus issued ordering district court to transfer
claims against the shareholders of Dow Corning where the identical
claims, based on identical facts, against Dow Corning itself were
transferred).
Equally important, the posture of the case before Judge Aldrich
commends that this case be transferred to her. Both parties are
seeking preliminary injunctive relief in connection with a proxy
contest pertaining to First Union's annual meeting scheduled for April
14, 1998. Judge Aldrich has already entered a scheduling order in
connection with the preliminary injunction motions. It makes great
sense to maintain the schedule that Judge Aldrich has already put in
place to resolve highly time-sensitive disputes between the parties.
IV. CONCLUSION
----------
Based on the foregoing, the Gotham Partnerships request that this
Court and Judge Aldrich concur in the reassignment of the instant
action to Judge Aldrich and issue an order so indicating.
Date: January 30, 1998
Respectfully submitted,
OF COUNSEL:
--------------------------------------
David C. Weiner (0013351)
Michael J. Garvin (0025394)
HAHN LOESER & PARKS LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
-and-
OF COUNSEL: --------------------------------------
Alexander R. Sussman(FN2)
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON 25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
- --------
[FN]
1 The Gotham Partnerships' removal notice was filed
shortly after 9:00 a.m. on January 20. Shortly afterwards,
apparently without knowledge of the removal, Judge McGinty set
a February 10, 1998 hearing on a motion for preliminary
injunction filed by First Union against the Gotham
Partnerships.
2 Application to appear pro hac vice is pending.
</FN>
CERTIFICATE OF SERVICE
----------------------
I hereby certify that a copy of the foregoing Plaintiffs' Motion
for Reassignment, along with the Memorandum in Support thereof, was
served by regular U.S. mail, postage prepaid, with a courtesy copy by
facsimile, upon Frances Floriano Goins, Squire, Sanders & Dempsey
L.L.P., 4900 Key Tower, 127 Public Square, Cleveland, Ohio 44114-1304,
attorneys for defendant, this 30th day of January 1998.
-----------------------------------
One of the Attorneys for Plaintiffs
EXHIBIT 24
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
GOTHAM PARTNERS, L.P., et al., ) CASE NO. 1:98CV 0272
)
Plaintiffs, ) JUDGE NUGENT
)
v. ) PLAINTIFFS' MOTION FOR
) REASSIGNMENT
FIRST UNION REAL ESTATE EQUITY AND ) ----------------------
MORTGAGE INVESTMENTS, )
)
Defendant. )
Plaintiffs, Gotham Partners, L.P. and Gotham Partners II, L.P.
(collectively "Plaintiffs"), pursuant to Local Rule 3.1(b)(3), move
this Court for an order reassigning the above-captioned action to the
Honorable Ann Aldrich. Good cause exists to grant this motion because
this action is related to an earlier assigned case, First Union Real
Estate Equity and Mortgage Investments v. Gotham Partners, L.P., et
al., Case No. 98CV0105, which was removed to this Court on January 20,
1998. As both the plaintiff and the defendants seek preliminary
injunctive relief in that case and Judge Aldrich has entered a
detailed scheduling order, considerations of judicial economy weigh
heavily in favor of reassignment of this case to Judge Aldrich.
The grounds for this motion are set forth more fully in the
attached Memorandum in Support. Date: January 30, 1998 Respectfully
submitted,
OF COUNSEL:
/s/ Michael J. Garvin
--------------------------------
David C. Weiner (0013351)
Michael J. Garvin (0025394)
HAHN LOESER & PARKS LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
-and-
/s/ Alexander R. Sussman
OF COUNSEL: --------------------------------
Alexander R. Sussman(FN1)
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON 25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
- --------
[FN]
1 Application to appear pro hac vice is pending.
</FN>
EXHIBIT 25
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
GOTHAM PARTNERS, L.P., et al., ) CASE NO. 1:98CV 0272
)
Plaintiffs, ) JUDGE NUGENT
)
v. ) MEMORANDUM IN SUPPORT OF
) PLAINTIFFS' MOTION FOR
FIRST UNION REAL ESTATE EQUITY AND ) REASSIGNMENT
MORTGAGE INVESTMENTS, ) ------------------------
)
Defendant. )
I. INTRODUCTION
------------
To conserve judicial resources and pursuant to Local Rule 3.1(b)((3),
this action should be reassigned to the Honorable Ann Aldrich as related to
an earlier assigned case, First Union Real Estate Equity and Mortgage
Investments v. Gotham Partners, L.P., et al., Case No. 98CV0105, which was
removed to this Court on January 20, 1998.
II. FACTS
-----
A. Backdrop to the litigation
--------------------------
This case involves a dispute over a proxy contest pertaining to
Defendant First Union Real Estate Equity and Mortgage Investments (First
Union"). Plaintiffs Gotham Partners, L.P. and Gotham Partners II, L.P.
(collectively the "Gotham Partnerships") are shareholders of First Union who
are dissatisfied with First Union's management and have submitted a proposal
for election of new directors, seeking a shareholder vote as to the strategic
direction of the company. First Union filed litigation against the Gotham
Partnerships - originally in state court - in an effort to prevent them from
mounting a proxy contest in connection with First Union's annual meeting
which is scheduled to take place on April 14, 1998. After removing that
action to this Court (Case No. 1:98CV0105 before Judge Aldrich), the Gotham
Partners brought counterclaims against First Union under the federal
securities laws, for which this Court has exclusive jurisdiction, and related
state law claims.
B. Relevant procedural history
---------------------------
On January 16, 1998, First Union filed a complaint for preliminary
injunction, permanent injunction and declaratory relief against the Gotham
Partnerships in the Common Pleas Court for Cuyahoga County, Case No. 347063,
before Judge McGinty. On January 20, 1998, the Gotham Partnerships removed
the action to the United States District Court for the Northern District of
Ohio, on the basis of diversity of citizenship.(FN1) The Gotham Partnerships
believed that First Union was a citizen of Ohio for diversity purposes.
Indeed, First Union has filed prior litigation in this Court in which it has
alleged that it is an Ohio citizen for diversity purposes. The removed case
was assigned to the Honorable Ann Aldrich, and bore Case No. 98CV0105. On
that same date, the Gotham Partnerships filed their answer and counterclaims
for, among other things, violations of Section 14(a) of the `34 Act and the
SEC Rules (later amended on January 26, 1998).
On January 21, 1998, First Union filed a motion to remand the
action before Judge Aldrich to state court, and a motion for expedited
consideration of that motion. In its remand motion, First Union
contended that the Gotham Partnerships had failed to meet their burden
to prove either diversity of citizenship between the parties, or that
the amount in controversy was in excess of $75,000. Significantly, in
their argument as to diversity, First Union argued only that the
Gotham Partnerships had not established their citizenship for
diversity purposes. First Union raised no issue as to its citizenship.
On January 23, 1998, the Gotham Partnerships filed a motion for
preliminary injunction in the action before Judge Aldrich, seeking
relief prohibiting First Union from continuing to engage in the
federal securities law violations alleged in the Gotham Partners'
counterclaims. The Gotham Partnerships also filed a response to First
Union's motion for expedited consideration of its motion for remand
and a cross-motion to schedule the parties' respective requests for
preliminary relief at the hearing on First Union's remand motion. In
that response, the Gotham Partners agreed to respond to First Union's
remand motion within the time set by the local rules or a time set by
the Court, and suggested that the various motions did not need to be
heard before March 10, in light of First Union's April 14, 1998 annual
meeting.
On January 28, 1998, Judge Aldrich issued an order setting forth
a briefing schedule on First Union's motion to remand and on the
parties' respective motions for preliminary injunction. In that order,
Judge Aldrich also scheduled the parties' respective motions for
preliminary injunction on March 5, 1998, before Magistrate Judge
Perelman.
On January 27, 1998, one day prior to Judge Aldrich's scheduling
order, First Union filed a reply brief in support of a motion it had
filed seeking expedited consideration of its remand motion. In that
reply brief, First Union suggested for the first time that it may not
be an Ohio citizen for diversity jurisdiction purposes, because the
citizenships of its Trustees are counted for purposes of diversity. In
response to that brief, counsel for the Gotham Partnerships wrote to
counsel for First Union on January 29, 1998, requesting information on
First Union's citizenship for diversity purposes in the action before
Judge Aldrich. As of noon on Friday, January 30, 1998, counsel for the
Gotham Partners had not heard back from counsel for First Union.
Once, contrary to the Gotham Partners' original belief, there
arose a question as to the complete diversity of citizenship between
the parties, the Gotham Partnerships determined to file this action
against First Union asserting claims for, among other things,
violations of Section 14(a) of the `34 Act and the SEC Rules. These
claims can only be heard in this Court because they are within
exclusive federal jurisdiction. The facts alleged in support of these
claims are substantially the same as those asserted in Gotham
Partnerships' counterclaims against First Union in the action before
Judge Aldrich.
III. ARGUMENT
--------
Local Rule 3.1(b)(3) provides that "[a] case may be re-assigned
as related to an earlier assigned case with the concurrence of both
the transferee and the transferor District Judges, with or without a
motion by counsel." Where, as here, a case contains substantially
identical facts and claims as those of an earlier assigned case, it
should be assigned to the same judge so as to conserve judicial
resources. See, e.g., In re Dow Corning Corp., 113 F.3d 565 (6th Cir.
1997) (writ of mandamus issued ordering district court to transfer
claims against the shareholders of Dow Corning where the identical
claims, based on identical facts, against Dow Corning itself were
transferred).
Equally important, the posture of the case before Judge Aldrich
commends that this case be transferred to her. Both parties are
seeking preliminary injunctive relief in connection with a proxy
contest pertaining to First Union's annual meeting scheduled for April
14, 1998. Judge Aldrich has already entered a scheduling order in
connection with the preliminary injunction motions. It makes great
sense to maintain the schedule that Judge Aldrich has already put in
place to resolve highly time-sensitive disputes between the parties.
IV. CONCLUSION
----------
Based on the foregoing, the Gotham Partnerships request that this
Court and Judge Aldrich concur in the reassignment of the instant
action to Judge Aldrich and issue an order so indicating.
Date: January 30, 1998
Respectfully submitted,
OF COUNSEL:
/s/ Michael J. Garvin
--------------------------------------
David C. Weiner (0013351)
Michael J. Garvin (0025394)
HAHN LOESER & PARKS LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
-and-
/s/ Alexander R. Sussman
OF COUNSEL: --------------------------------------
Alexander R. Sussman(FN2)
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON 25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
- --------
[FN]
1 The Gotham Partnerships' removal notice was filed
shortly after 9:00 a.m. on January 20. Shortly afterwards,
apparently without knowledge of the removal, Judge McGinty set
a February 10, 1998 hearing on a motion for preliminary
injunction filed by First Union against the Gotham
Partnerships.
2 Application to appear pro hac vice is pending.
</FN>
CERTIFICATE OF SERVICE
----------------------
I hereby certify that a copy of the foregoing Plaintiffs' Motion
for Reassignment, along with the Memorandum in Support thereof, was
served by regular U.S. mail, postage prepaid, with a courtesy copy by
facsimile, upon Frances Floriano Goins, Squire, Sanders & Dempsey
L.L.P., 4900 Key Tower, 127 Public Square, Cleveland, Ohio 44114-1304,
attorneys for defendant, this 30th day of January 1998.
/s/ Michael J. Garvin
-----------------------------------
One of the Attorneys for Plaintiffs
EXHIBIT 26
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
GOTHAM PARTNERS, L.P., et al., ) CASE NO. 1:98 CV 0272
)
Plaintiffs, ) JUDGE NUGENT
)
v. ) PLAINTIFFS' MOTION FOR
----------------------
) EXPEDITED DISCOVERY
-------------------
FIRST UNION REAL ESTATE EQUITY AND )
MORTGAGE INVESTMENTS, )
)
Defendant. )
Plaintiffs, Gotham Partners, L.P. and Gotham Partners II, L.P.
(collectively "Gotham Partnerships" or "Plaintiffs"), pursuant to
Local Rule 26.2, move this court for an order providing for both
parties to provide expedited discovery to each other, in order that
the parties can be prepared for one or more expedited hearings that
may be held in connection with the dispute underlying this case.
Specifically, Plaintiffs request that this Court order the following
expedited discovery:
1. That both parties respond to each others' outstanding
discovery requests on or before February 6, 1998;
2. That Plaintiffs are permitted to take the depositions
of Defendant's CEO, James C. Mastandrea, and one witness
to be designated by First Union from Plaintiffs' second
notice of deposition, on February 9, 1998; and
3. That Defendant is permitted to take the deposition of
two representatives of Plaintiffs, selected by Defendant,
on February 9, 1998.
The grounds for this motion are set forth more fully in the
attached Memorandum in Support.
Date: January 30, 1998
Respectfully submitted,
OF COUNSEL:
/s/ Michael J. Garvin
------------------------------------
David C. Weiner (0013351)
Michael J. Garvin (0025394)
HAHN LOESER & PARKS LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
-and-
OF COUNSEL:
/s/ Alexander R. Sussman
------------------------------------
Alexander R. Sussman(FN1)
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON 25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
- --------
[FN]
1 Application to appear pro hac vice is pending.
</FN>
EXHIBIT 27
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
GOTHAM PARTNERS, L.P., et al., ) CASE NO. 1:98CV 0272
)
Plaintiffs, ) JUDGE NUGENT
)
v. ) MEMORANDUM IN SUPPORT OF
) PLAINTIFFS' MOTION FOR
FIRST UNION REAL ESTATE EQUITY AND ) EXPEDITED DISCOVERY
MORTGAGE INVESTMENTS, ) ------------------------
)
Defendant. )
I. INTRODUCTION
------------
Both parties in this proxy dispute are seeking a preliminary
injunction against the other. Based on existing scheduling orders, the
hearings on these motions may take place in this Court on March 5,
1998 (with supporting briefs due by February 13, 1998), or, possibly
with respect to First Union's state law claims, in state court as
early as February 10, 1998. In either event, expedited discovery will
be necessary to enable the parties to prepare adequately. Both parties
have recognized this by serving discovery requests on the other.
II. FACTS
-----
A. Backdrop to the litigation
--------------------------
This case involves a dispute over a proxy contest pertaining to
Defendant First Union Real Estate Equity and Mortgage Investments
("First Union"). Plaintiffs Gotham Partners, L.P. and Gotham Partners
II, L.P. (collectively the "Gotham Partnerships") are shareholders of
First Union who are dissatisfied with First Union's management and
have submitted a proposal for election of new directors, seeking a
shareholder vote as to the strategic direction of the company. First
Union filed litigation against the Gotham Partnerships - originally in
state court - in an effort to prevent them from mounting a proxy
contest in connection with First Union's annual meeting which is
scheduled to take place on April 14, 1998. After removing that action
to this Court (Case No. 1:98CV0105 before Judge Aldrich),(FN1) the Gotham
Partners brought counterclaims against First Union under the federal
securities laws, for which this Court has exclusive jurisdiction, and
related state law claims.
B. Relevant procedural history
---------------------------
On January 16, 1998, First Union filed a complaint for
preliminary injunction, permanent injunction and declaratory relief
against Gotham Partnerships in the Common Pleas Court for Cuyahoga
County, Case No. 347063, before Judge McGinty. On January 20, 1998,
the Gotham Partnerships removed the action to the United States
District Court for the Northern District of Ohio, Case No. 98CV0105.(FN2)
The Gotham Partnerships also filed their answer and counterclaims
(later amended on January 26, 1998). The Gotham Partnerships'
counterclaims are based on First Union's violations of the federal
proxy rules and unlawful efforts to deprive the Gotham Partnerships of
their rights as shareholders to engage in a proxy contest over First
Union's strategic direction.
On January 21, 1998, First Union filed a motion to remand. On
January 23, 1998, the Gotham Partnerships filed their motion for
preliminary injunction.
As a result of the motions filed before her, Judge Aldrich
entered a scheduling order on January 28, 1998. Among the matters
addressed in that order, Judge Aldrich set a hearing on the parties'
motions for preliminary injunctions on March 5, 1998 (to be heard by
Magistrate Judge Perleman), with briefing deadlines as follows: briefs
in support of the respective motions by February 13, 1998; response
briefs by February 23, 1998; and reply briefs by February 27, 1998.
C. The parties' discovery requests
-------------------------------
Because of the imminent hearing (or hearings) on the parties'
respective motions for preliminary injunctions, each has served
discovery on the other, with all discovery requests under the caption
of the case before Judge Aldrich. On January 20, 1998, the Gotham
Partners served their first request for production of documents on
First Union, as well as a notice of deposition of First Union and its
CEO, James C. Mastandrea, pursuant to Fed. R. Civ. P. 30(b)(6). On
January 27, 1998, the Gotham Partners served their second request for
production of documents on First Union, as well as a second notice of
deposition of First Union pursuant to Fed. R. Civ. P. 30(b)(6). On
January 28, 1997, First Union served on the Gotham Partnerships its
first set of requests for admissions, interrogatories and requests for
production of documents. One day later, on January 29, 1998, First
Union served its second set of requests for production of documents on
the Gotham Partnerships. Copies of these discovery requests are
attached as Exhibits A through F.
III. ARGUMENT
--------
Based on the above, it is obvious that both parties need
expedited discovery to prepare for the briefing and the hearings on
their respective motions for preliminary injunction. For this reason,
the Gotham Partnerships submit that this Court should enter a
discovery scheduling order as follows:
1. That both parties respond to each others' outstanding
discovery requests on or before February 6, 1998;
2. That the Gotham Partnerships are permitted to take the
depositions of Defendant's CEO, James C. Mastandrea, and
one witness to be designated by First Union from the
Gotham Partnerships' second notice of deposition, on
February 9, 1998; and
3. That First Union is permitted to take the deposition of
two representatives of the Gotham Partnerships, selected
by First Union, on February 9, 1998.
Date: January 30, 1998
Respectfully submitted,
OF COUNSEL:
/s/ Michael J. Garvin
---------------------------------
David C. Weiner (0013351)
Michael J. Garvin (0025394)
HAHN LOESER & PARKS LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
-and-
/s/ Alexander R. Sussman
OF COUNSEL: ---------------------------------
Alexander R. Sussman(FN3)
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON 25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing was served by
messenger upon Frances Floriano Goins, Squire, Sanders & Dempsey
L.L.P., 4900 Key Tower, 127 Public Square, Cleveland, Ohio 44114-1304,
attorneys for defendant, this 30th day of January 1998.
/s/ Michael J. Garvin
------------------------------------
One of the Attorneys for Plaintiffs
- --------
[FN]
1 Concurrently filed with this Motion is Plaintiffs' Motion
for Reassignment of this action to the Honorable Ann Aldrich,
who is presiding over the earlier-filed action, Case No.
98CV0105.
2 The Gotham Partnerships' removal notice was filed shortly after
9:00 a.m. on January 20. Shortly afterwards, apparently without
knowledge of the removal, Judge McGinty set a February 10, 1998
hearing on a motion for preliminary injunction filed by First
Union against the Gotham Partnerships.
3 Application to appear pro hac vice is pending.
</FN>
EXHIBIT 28
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
GOTHAM PARTNERS, L.P. ) CIVIL ACTION NO. 1:98CV 0272
)
and ) JUDGE NUGENT
)
GOTHAM PARTNERS II, L.P. ) COMPLAINT FOR
) INJUNCTIVE AND
Plaintiffs, ) DECLARATORY RELIEF
)
v. )
)
FIRST UNION REAL ESTATE EQUITY )
AND MORTGAGE INVESTMENTS )
)
Defendant. )
For their Complaint against First Union Real Estate Equity
and Mortgage Investments ("First Union"), Plaintiffs Gotham Partners,
L.P. ("Gotham I") and Gotham Partners II, L.P. ("Gotham II") (Gotham I
and Gotham II, collectively the "Gotham Partnerships") allege upon
knowledge as to themselves and their own acts, and upon information
and belief as to all other matters as follows:
NATURE OF THE CASE
------------------
1. This complaint arises out of First Union's unlawful
efforts to stave off a proxy contest between First Union management
and the Gotham Partnerships, First Union's largest stockholders,
owning 9% of the outstanding shares. On January 28, 1998, Gotham I
filed its preliminary proxy statement with the Securities and Exchange
Commission ("SEC"), which describes Gotham I's proposal and nominees.
(A copy of the preliminary proxy statement is attached hereto as
Exhibit A.) In a series of calculated moves to deny the Gotham
Partnerships their right to wage a proxy contest, First Union has
(a) violated the federal proxy rules and federal law by
failing to make required filings with the SEC and by
issuing false and misleading press releases and other
public statements;
(b) interpreted unfairly and unreasonably its Declaration of
Trust and By-Laws to retaliate against the Gotham
Partnerships and to penalize them for exercising
their right to present proposals and nominations to
First Union shareholders; and
(c) sued the Gotham Partnerships to seek to apply First
Union's By-Laws in a discriminatory manner that would
operate as a forfeiture of the Gotham Partnerships'
voting and stockholder rights and right to dividends.
2. First Union's actions to squelch shareholder democracy
are part of a larger pattern of management's entrenchment tactics and
breaches of fiduciary duty. Consequently, the Gotham Partnerships seek
injunctive and declaratory relief that would, among other things:
(a) prohibit First Union from further solicitations unless and
until it makes all necessary filings with the SEC as
required under Section 14(a) of the Securities
Exchange Act of 1934;
(b) prohibit First Union from making false and misleading
statements in violation of the proxy rules (and require
First Union to correct prior misleading statements);
(c) enjoin First Union from continuing to interfere
with the Gotham Partnerships' rights under federal
law, the federal proxy rules, Ohio state law, and
First Union's Declaration of Trust and By-Laws to
vote, to nominate qualified nominees and to make
proposals;
(d) declare that the Gotham Partnerships are in
compliance with federal law, SEC proxy rules, Ohio
state law, and the terms of First Union's
Declaration of Trust and By-Laws;
(e) declare that Gotham I is entitled to receive First
Union's records of stockholders to enable it to
solicit proxies with respect to its nominations
and proposal; and
(f) award the Gotham Partnerships damages for harm
caused to them as a result of First Union's
wrongdoing.
PARTIES
-------
3. Gotham I and Gotham II are limited partnerships
organized pursuant to New York law whose principal place of business
is New York, New York.
4. First Union purports to be an Ohio business trust with
its principal place of business in Cleveland, Ohio. Shares of First
Union are traded on the New York Stock Exchange.
5. The Gotham Partnerships are First Union's largest
shareholders, owning 9.0% of First Union's shares.
JURISDICTION AND VENUE
----------------------
6. This Court has jurisdiction over the subject matter of
these claims pursuant to Section 27 of the Exchange Act, 15 U.S.C.
Section 78aa; 28 U.S.C Section 1331(a); 28 U.S.C. Section 1332(a), and
this Court's supplemental jurisdiction, 28 U.S.C. Section 1367.
7. Venue is properly laid in this District pursuant to
Section 27 of the Exchange Act, 15 U.S.C. Section 78aa and 28 U.S.C.
Section 1391(b).
FACTUAL BACKGROUND
------------------
8. First Union, a billion dollar enterprise, has done
business as a real estate investment trust ("REIT") since its creation
in 1961. REITs are byproducts of the Real Estate Investment Trust Act
of 1960, which amended the Internal Revenue Code (the "IRC") to offer
special tax treatment to such entities. In essence, a REIT is a trust
in which investors pool capital for investment in real estate or in
real estate mortgage loans.
9. First Union is one of only a few REITs in the United
States known to have what is called a "paired-share" structure. The
purpose of the paired-share structure is to allow the shareholders to
participate in the economic benefits from the ownership and the
operations of certain real-estate-intensive operating businesses (such
as hotels, gaming, golf, health care, etc.). Non-paired-share REITs
are prohibited from investing in operating businesses, and, as a
result, their shareholders do not enjoy the economic benefits of
operating company ownership. In 1984, Congress added a provision to
the IRC barring the further adoption by REITs of this valuable
paired-share structure, but grandfathering those paired-share REITs
already in existence.
10. In light of its public filings and press releases,
until very recently, it appears that First Union's management was not
aware of its paired-share REIT status and the value of its structure.
11. The Gotham Partnerships first purchased First Union
stock on November 13, 1996.
THE GOTHAM PARTNERSHIPS' REPEATED ATTEMPTS TO INITIATE DIALOGUE WITH FIRST
- --------------------------------------------------------------------------
UNION
-----
12. On July 14, 1997, the Gotham Partnerships sent a
letter to First Union's Trustees and the Directors of First Union
Management, Inc., indicating concern with First Union's so-called
strategic plan. In addition, the Gotham Partnerships questioned
management's ability to implement a strategy that would maximize the
value of First Union's paired-share structure, given management's
limited experience acquiring, managing and operating businesses.
13. The Gotham Partnerships' concerns arose primarily from
(1) First Union's equity offerings, which were ill-timed, poorly
executed and dilutive; (2) the price paid by First Union for various
acquisitions; and (3) the fact that First Union's chairman, president,
and chief executive officer, James Mastandrea, had told the Gotham
Partnerships that he was unwilling to enter into any transaction that
would replace existing management with a new investor group and
management team with the capital and experience to maximize the value
of First Union's structure, regardless of the potential for such a
transaction to create shareholder value.
14. In the July 14 letter, the Gotham Partnerships
requested a meeting with the Trustees and Directors to discuss their
concerns and maximization of First Union's value.
15. On July 23, 1997, the Gotham Partnerships sent another
letter to First Union expressing their concerns with management and
again requesting a meeting with First Union management.
16. On August 20, 1997, Mr. Mastandrea sent David
Berkowitz, a principal in the Gotham Partnerships, a letter which made
an unreasonable and discriminatory request for information from the
Gotham Partnerships, because it was not related to any legitimate
interest of the Trust.
17. In his August 20 letter, Mr. Mastandrea failed to
address the issues raised by the Gotham Partnerships' July 14 letter,
nor did he respond to repeated invitations to meet with the Gotham
Partnerships.
18. In an effort to comply with First Union's request --
despite the unreasonableness of such request -- the Gotham
Partnerships sent to First Union a letter on September 8, 1997, in
which they provided further responsive information, including both
information relating to their actual and constructive ownership of
First Union shares and information stating that they were structured
as limited partnerships.
19. That letter also disclosed that neither Mr. Berkowitz
nor William Ackman, the other principal of the Gotham Partnerships,
"nor any entity under [their] control, actually, constructively . . .
or beneficially own[ed] any other equity interests in First Union."
20. Despite the Gotham Partnerships' compliance with First
Union's informational requests, on October 7, 1997, Mr. Mastandrea
sent Mr. Berkowitz yet another letter that included an unreasonable
and discriminatory demand for information. Again, this letter failed
to address the substance of the Gotham Partnerships' concerns.
21. To date, First Union's Trustees have steadfastly
refused to meet with representatives from the Gotham Partnerships. A
meeting scheduled for December 29, 1997, between representatives of
the Gotham Partnerships and First Union's management was canceled by
First Union's management.
22. The Gotham Partnerships are unaware of any other
requests for information of a similar nature by First Union being made
to other First Union stockholders.
FIRST UNION'S PRESS CAMPAIGN TO PREJUDICE SHAREHOLDERS AGAINST GOTHAM I
- -----------------------------------------------------------------------
23. For several reasons, including First Union's
management's failure to maximize the value of the Company's unique tax
structure, on January 8, 1998, Gotham I submitted a proposal to First
Union involving, among other things, electing three Gotham I nominees
in place of three incumbent trustees, expanding the Board of Trustees
by adding six new positions, and electing Gotham I's nominees to the
six new positions at First Union's 1998 annual shareholder meeting
(the "Annual Meeting").
24. In making its proposal and putting forth its nominees,
Gotham I fully complied with the notice requirements contained in
First Union's Declaration of Trust and By-Laws.
25. First Union's Declaration of Trust and By-Laws permit
First Union stockholders at an Annual Meeting to expand and to elect
Trustees to fill the newly-created seats.
26. In response to Gotham I's proposal and nominations,
First Union launched a concerted campaign beginning on or before
January 9, 1998, to solicit shareholders by issuing press releases and
by making other statements to the press that attack the proposal and
the nominees, and that defend management's entrenchment tactics.
27. At the time of these press releases and statements to
the press, First Union had not (and still has not) filed any proxy
solicitation materials with the SEC.
28. In a January 9, 1998 press release, Mr. Mastandrea is
quoted as denouncing Gotham I's filings as "inaccurate, misleading and
notably silent as to their intended use of [First Union's] unique tax
structure," while at the same time praising management's performance
and the experience of the management team.
29. In the same press release, Mr. Mastandrea states that
"Gotham has never met with First Union management," failing to
disclose that Gotham I had repeatedly requested such a meeting and
that First Union itself had canceled a meeting scheduled for December
29, 1997.
30. Further, in an article, dated January 9, 1998, First
Union accuses Gotham of "never express[ing] an interest in
understanding the company's strategic plan" and of "operating under a
different and undisclosed agenda."
31. Through a press release issued January 16, 1998, the
Gotham Partnerships learned that First Union that same day had
commenced a lawsuit against them in state court (discussed below). The
press release quotes Mr. Mastandrea as stating that First Union "filed
this lawsuit to protect the integrity of [its] Declaration of Trust
and [to] minimize any potential damage which may have been created."
32. In yet another article dated January 17, 1998, which
appeared in the Cleveland Plain Dealer, one of First Union's
attorneys, Mary Ann Jorgenson of Squire, Sanders & Dempsey, stated
that "[Gotham] had not given us ownership information that had been
requested of them in the fall. So one of the questions is whether
[Gotham was] a qualified owner eligible to make a proposal in the
first place."
33. On January 29, 1998, First Union issued a press
release trumpeting its "experienced management team," "solid real
estate portfolio," "full pipeline of acquisitions," and "strategic
plan to maximize shareholder value."
FIRST UNION PREMATURELY FILED ITS STATE LAWSUIT ON JANUARY 16, 1998
- -------------------------------------------------------------------
34. The Gotham Partnerships have sought in good faith to
create a dialogue with First Union's Board of Trustees and management
about the future direction of the Company and the maximization of
shareholder value. It was in this cooperative spirit that the Gotham
Partnerships repeatedly requested to meet with First Union.
35. On January 16, 1998, First Union filed suit against
the Gotham Partnerships in the Court of Common Pleas, Cuyahoga County,
Ohio, and, immediately thereafter, issued a press release announcing
the lawsuit. In its state court complaint, First Union sought, among
other things, to declare as Excess Securities under Article VI,
Sections 6(b) and (c) of the By-Laws the Gotham Partnerships' shares
in First Union, thereby attempting to impose a forfeiture of the
Gotham Partnerships' entire investment valued at approximately $30
million, their stockholder and voting rights, their right to present
proposals and nominations to the shareholders, and their right to
dividends.
36. Article VI, Section 6(c) of the By-Laws purports to
require that "Ownership of securities is conditional upon the owner or
prospective owner having provided to the Trust definitive written
information respecting his ownership of Securities. Failure to provide
such information, UPON REASONABLE REQUEST SHALL RESULT IN THE
SECURITIES SO OWNED BEING TREATED AS EXCESS SECURITIES PURSUANT TO
PARAGRAPH B) FOR SO LONG AS SUCH FAILURE CONTINUES."
37. While First Union had made a general, overbroad
request to the Gotham Partnerships for information regarding the
ownership of their shares, First Union had not requested specific
information that was required nor provided fair notice that it found
the Gotham Partnerships to have failed to provide required
information, and would therefore treat their shares as Excess
Securities.
38. Without making a reasonable request with an
opportunity to respond, First Union filed its state court complaint
seeking to confiscate the Gotham Partnerships' voting and stockholder
rights and right to dividends.
39. In addition, in its state court complaint, First Union
sought to declare as void, under Article I, Section 7 of the By-Laws,
Gotham I's proposal and nominations, thereby depriving Gotham I of its
right to present proposals and nominations to the shareholders.
40. Article I, Section 7 of the By-Laws provides, among
other things, that a proposal or nomination must include certain
information. The Gotham Partnerships provided all the required
information.
41. Moreover, although the By-Laws expressly provide that
any deficiency may be cured within five days upon receipt of a
deficiency notice, First Union initiated the state court action before
the expiration of this cure period. In fact, First Union initiated the
state court action on the very same day that it faxed to Gotham I a
purported deficiency notice.
42. First Union's alleged deficiency notice itself
contained several material deficiencies, not the least of which was
that the notice merely paraphrased the By-Laws without offering
specific instances of noncompliance as required by the By-Laws.
43. During the five-day cure period, Gotham I provided
additional information concerning its proposal and nominees and
requested that First Union notify Gotham I if First Union still
contended that Gotham I's notice of proposal was somehow deficient.
44. First Union has failed to respond to Gotham I's
request and has not advised Gotham I either that there is any
outstanding deficiency in the information Gotham I provided or that
the Gotham Partnerships' shares are Excess Securities.
FIRST UNION'S PRIOR LITIGATION AND ENTRENCHMENT TACTICS
- -------------------------------------------------------
45. In 1995, First Union sued another large shareholder,
Richard Osborne, out of fear that Osborne would seek to oust
management.
46. After wasting $1.6 million of First Union's money on
needless litigation, First Union entered into a "settlement
agreement," i.e., greenmail, whereby First Union sold to Osborne or an
entity controlled by him two office buildings totaling 400,000 square
feet and a 475-space parking garage for $8.8 million; provided seller
financing for 80% of the purchase price at 8% interest per annum; and
repurchased for over $7 million shares Osborne had accumulated in
First Union. The sale of property to Osborne resulted in a loss of
$5.6 million to First Union.
47. Furthermore, in an attempt to dilute its stock, First
Union has engaged in ill-conceived equity offerings and has repeatedly
revised its By-Laws to make it increasingly difficult for shareholders
to exercise their rights under the Declaration of Trust.
48. For example, in or about March, 1997, First Union
amended its By-Laws to hinder shareholders from making proposals and
from calling special meetings.
49. In order to protect First Union shareholders, the
investing public, and the Gotham Partnerships, First Union must be
enjoined preliminarily and permanently from continuing to interfere
with Gotham I's right to submit their proposal to First Union
shareholders for a vote and to proffer a slate of highly qualified
nominees.
COUNT I
(Violations of Section 14(a) of the '34 Act and the SEC Rules promulgated
thereunder)
50. The Gotham Partnerships repeat and reallege the
allegations contained in each of the preceding paragraphs as if fully
set forth herein.
51. The SEC's rules regarding proxy solicitations (the
"Proxy Rules"), including in particular SEC Rules 14a-3, 14a-6, 14a-11
and 14a-12, require First Union to file proxy solicitation materials
in advance of any solicitation, to receive certain required SEC
clearances with respect to such materials, and to make certain filings
containing detailed disclosures about each participant in First
Union's solicitation efforts.
52. First Union and/or its agents' press releases and
statements to the press, including the above-referenced press releases
and statements to the press, constitute solicitations under Regulation
14A, 17 C.F.R. Sections 240.14a-1 et seq.
53. First Union has not filed a proxy statement, received
the required SEC clearances, or filed any solicitation materials in
connection with the solicitation of proxies for First Union shares as
required by Section 14(a) of the '34 Act and the Proxy Rules. First
Union has solicited more than ten persons in the course of their
solicitation of proxies.
54. First Union has engaged in and is continuing to engage
in the active solicitation of proxies for First Union shares in
violation of Section 14(a) of the '34 Act and the Proxy Rules.
55. First Union's public statements following Gotham I's
notice of nominations and proposal were materially misleading and
omissive in violation of Section 14(a) of the '34 Act and the Proxy
Rules.
56. First Union's unlawful solicitations have caused and
will continue to cause immediate and irreparable harm to the Gotham
Partnerships and First Union's shareholders, for which the Gotham
Partnerships have no adequate remedy at law.
COUNT II
(Issuance of False and Misleading Statements in violation of
Section 14(a) of the
'34 Act and the SEC Rules promulgated thereunder)
57. The Gotham Partnerships repeat and reallege the
allegations contained in each of the preceding paragraphs as if fully
set forth herein.
58. One of the objectives of the 1934 Act and the aim of
Rule 14a-9, in particular, is to prevent management from using false
and/or deceptive means to promote its corporate agenda.
59. First Union has disseminated materially false and/or
misleading information by its press releases dated January 9 and
January 16 and its several incendiary comments to the press, including
statements made by First Union's attorneys as recently as January 21,
1998.
60. The press releases and statements to the press are
false and misleading because, among other things:
(a) Gotham I had complied fully with the By-Laws and,
therefore, was a shareholder in good standing
entitled to make nominations and proposals;
(b) at the time of its first press release on January 9,
1998, First Union had not notified Gotham I of the
alleged deficiency in Gotham I's notice nor given
Gotham I time to cure any alleged deficiency, as
required by the By-Laws;
(c) First Union accused Gotham I of operating under an
"undisclosed agenda," while, in fact, Gotham I had
fully disclosed any plans it had for the Company;
(d) First Union accused Gotham I of never meeting with First
Union, while, in fact, Gotham I had repeatedly
requested a meeting between its representatives and
that of First Union and a meeting scheduled for
December 29 between the two sides was canceled by
First Union's management; and
(e) Mr. Mastandrea asserted that there is "potential damage"
to the Trust from the proposal by the Gotham
Partnerships while, in fact, there is no damage.
61. In a series of calculated moves to deny the Gotham
Partnerships their rights under federal law and federal proxy rules,
First Union has waged a concerted campaign to prejudice shareholders
against Gotham I by issuing false and misleading press releases. By
its actions in this regard, First Union is conditioning its
shareholders to disregard the Gotham Partnerships, their proposal and
their nominees.
62. First Union's public misstatements and omissions
following Gotham I's notice of nominations and proposal are materially
misleading in violation of Section 14(a) of the '34 Act and the Proxy
Rules because they are substantially likely to affect the vote of
First Union shareholders at the Annual Meeting.
63. First Union's material misstatements and omissions
have caused and will continue to cause immediate and irreparable harm
to the Gotham Partnerships and First Union's shareholders, for which
the Gotham Partnerships have no adequate remedy at law.
COUNT III
(Interference with security holder rights to present nominations and
proposals, in violation of Section 14(a) of the '34 Act and the SEC Rules
promulgated thereunder and Ohio law).
64. The Gotham Partnerships repeat and reallege the
allegations contained in each of the preceding paragraphs as if fully
set forth herein.
65. The Proxy Rules and Ohio law are designed to permit
public securityholders to vote on properly noticed shareholder
nominations and proposals at duly noticed meetings of stockholders.
66. First Union has initiated litigation and is taking
other action through which it seeks nullification of Gotham I's
shareholder nominations and proposal on grounds antithetical to the
purposes of the Proxy Rules and Ohio law.
67. First Union's efforts to prevent Gotham I from
submitting for a stockholder vote its duly noticed nominations and
proposal are causing and will continue to cause immediate and
irreparable harm to the Gotham Partnerships and First Union's other
shareholders, for which the Gotham Partnerships has no adequate remedy
at law.
COUNT IV
(Interference with Suffrage Right of Shareholders in violation
of Section 14(a) of the '34 Act and the SEC Rules
promulgated thereunder and Ohio law)
68. The Gotham Partnerships repeat and reallege the
allegations contained in each of the preceding paragraphs as if fully
set forth herein.
69. Section 14(a) of the '34 Act and Ohio law prohibit
First Union from impermissibly burdening the absolute right of
shareholders to vote their shares.
70. First Union has initiated litigation and engaged in
other tactics through which it seeks to strip the Gotham Partnerships
of their voting rights, and to prohibit them from being considered
"for quorum or voting purposes."
71. Such effort by First Union to deny the Gotham
Partnerships of their lawful voting rights as shareholders violates
Section 14(a) of the '34 Act and Ohio law.
72. First Union's effort to deny the Gotham Partnerships
suffrage has caused and will continue to cause immediate and
irreparable harm to the Gotham Partnerships and First Union
shareholders, for which the Gotham Partnerships have no adequate
remedy at law.
COUNT V
(Violation of Declaration of Trust)
73. The Gotham Partnerships repeat and reallege the
allegations contained in each of the preceding paragraphs as if fully
set forth herein.
74. Section 7.5 of the Declaration of Trust provides that
First Union Beneficiaries of record shall be entitled to vote at any
meeting of the Beneficiaries.
75. First Union has initiated litigation and engaged in
other tactics through which it seeks to strip the Gotham Partnerships'
shares of their voting rights, and to prohibit them from being
considered "for quorum or voting purposes."
76. Such effort by First Union to deny the Gotham
Partnerships their voting rights as shareholders violates the
Declaration of Trust.
77. First Union's effort to deny the Gotham Partnerships
suffrage has caused and will continue to cause immediate and irreparable harm
to the Gotham Partnerships and First Union shareholders, for which the Gotham
Partnerships have no adequate remedy at law.
COUNT VI
(For Breach of Fiduciary Duty Directly Affecting the Gotham Partnerships'
Individual Rights as Beneficiaries and Stockholders)
78. The Gotham Partnerships repeat and reallege the
allegations contained in each of the preceding paragraphs as if fully
set forth herein.
79. First Union's management and Trustees have a fiduciary
obligation to preserve its assets and to act prudently in taking
action on First Union's behalf.
80. First Union has violated this duty by wasting assets
and seeking to entrench the position of First Union's current officers
and management in the following respects, among others:
a) attacking Gotham I's nominations and proposal through
unlawful proxy solicitations and through a baseless
notice of deficiency in response to Gotham I's
nominations and proposal;
b) authorizing litigation against the Gotham Partnerships
aimed at prohibiting a shareholder vote on Gotham I's
proposal at the upcoming annual meeting;
c) pursuing ill-timed, poorly executed and dilutive equity
offerings;
d) paying an excessive amount for Imperial Parking Company
and other acquisitions;
e) refusing to enter into any transaction -- despite the
potential for such a transaction to maximize the
company's value -- which would replace existing
management with a new investor group and management
team with the capital and experience to maximize the
value of the Company's structure;
f) authorizing the Osborne lawsuit on the basis of trumped-up
charges;
g) spending at least $1.6 million of the shareholders' money
in pursuing the claim and proxy fight against
Osborne; and
h) entering into a "settlement agreement," i.e., greenmail,
whereby First Union repurchased for over $7 million
950,000 shares held by Osborne and sold to Osborne or
an entity controlled by him two office buildings
totaling 400,000 square feet and a 475 space parking
garage for $8.8 million, resulting in a loss of $5.6
million to First Union; and provided seller financing
for 80% of the purchase price at 8% interest per
annum.
81. As a proximate result of this gross malfeasance and
entrenchment, First Union's assets have been wasted and First Union
management and Trustees are violating the Gotham Partnerships' rights
as Beneficiaries, causing immediate and irreparable harm for which
they have no adequate remedy at law.
COUNT VII
(Declaratory Judgment)
82. The Gotham Partnerships repeat and reallege the
allegations contained in each of the preceding paragraphs as if fully set
forth herein.
83. A real and substantial controversy exists between the
Gotham Partnerships and First Union concerning the right of the Gotham
Partnerships to make nominations and proposals at the Annual Meeting and to
vote as Beneficiaries of the Declaration of Trust.
84. The Gotham Partnerships are entitled to a declaration of
this Court that they have complied with First Union's informational requests
and Declaration of Trust and By-Law requirements; that Gotham I is entitled
to make its nominations and proposal at the Annual Meeting; that the Gotham
Partnerships are entitled to vote thereon; and that Gotham I is entitled to
receive, upon request, First Union's records of stockholders to enable it to
solicit proxies.
85. Alternatively, the Gotham Partnerships are entitled to
a declaration of this Court that certain requirements of the
Declaration of Trust and By-Laws are invalid on their face or as
applied under Ohio and federal law and that certain other requirements
of the By-Laws are in conflict with the Declaration of Trust.
86. The Gotham Partnerships are entitled to a declaration
of this Court that First Union is required to inform Gotham I
sufficiently in advance of the Annual Meeting of any requirements that
Gotham I must fulfill to make its nominations and proposal, so that it
has adequate time to comply and that First Union's stockholders have
adequate time to consider and vote upon Gotham I's nominations and
proposal.
87. The Gotham Partnerships are also entitled to a
declaration of this Court that First Union's attempt to apply the
Declaration of Trust and By-Law requirements in such a way as to
effect a forfeiture of the Gotham Partnerships' multi-million dollar
investment, in derogation of federal law, federal proxy rules, Ohio
law and in violation of First Union's fiduciary obligations, is
invalid and of no force or effect.
PRAYER FOR RELIEF
-----------------
WHEREFORE , Plaintiff prays that this Court enter an order:
(a) preliminarily and permanently enjoining First Union, its
directors, Trustees, officers, employees, agents,
affiliates, partners, participants and all other
persons acting in concert with them, directly or
indirectly, from any solicitation of First Union
shareholders within the meaning of SEC Rule 14a-1(i)
with respect to First Union until First Union has
made the proper, complete and requisite filings
required by Section 14(a) of the Securities Exchange
Act of 1934, 15 U.S.C. Section 78n(a) and the SEC
Rules promulgated thereunder, received all SEC
clearances with respect to such filings, and for ten
days thereafter;
(b) ordering that First Union make appropriate disclosures to
correct all of the false and misleading statements it
has heretofore made in its unlawful proxy
solicitations, and that thereafter First Union be
prohibited from soliciting any proxies for First
Union shares for an appropriate period to allow full
dissemination of these disclosures to First Union
shareholders;
(c) preliminarily and permanently enjoining First Union from
making future false and misleading statements in the
course of soliciting proxies for First Union shares;
(d) enjoining First Union, its directors, officers, Trustees,
successors, agents, servants, subsidiaries, employees
and attorneys, and all persons acting in concert or
participating with them, from taking any steps to
impede or frustrate the ability of First Union's
stockholders to consider and make their own
determination on Gotham I's nominations and proposal
or taking any other action to thwart or interfere
with the proxy contest, including withholding its
records of stockholders;
(e) enjoining First Union, its directors, officers,
successors, Trustees, agents, servants, subsidiaries,
employees and attorneys, and all persons acting in
concert or participating with them, from taking any
actions that would dilute or interfere with the
Gotham Partnerships' voting, nomination, and proposal
rights or in any other way discriminate against the
Gotham Partnerships in the exercise of its rights
with respect to its First Union shares;
(f) declaring and adjudging: (i) that the Gotham Partnerships
have complied with First Union's informational
requests and Declaration of Trust and By-Law
requirements; that Gotham I is entitled to make its
nominations and proposal at the Annual Meeting; and
that the Gotham Partnerships are entitled to vote
thereon; (ii) alternatively declaring and adjudging
that First Union is required to inform Gotham I
sufficiently in advance of the Annual Meeting of the
requirements that Gotham I must fulfill to make its
nominations and proposal, so that it has adequate
time to comply and that First Union's stockholders
have adequate time to consider and vote upon Gotham
I's nominations and proposal; or (iii) declaring and
adjudging that any unmet requirements of the
Declaration of Trust and By-Laws are waived or
invalid on their face or as applied under Ohio and
federal law;
(g) declaring and adjudging that First Union's attempt to
apply Declaration of Trust and By-Law requirements in
an unreasonable way, in derogation of the Gotham
Partnerships' federal rights under the proxy rules,
and in violation of First Union's fiduciary
obligations, is invalid and of no force or effect;
(h) declaring and adjudging that Gotham I's nominations and
proposal may be presented at the Annual Meeting for a
vote;
(i) declaring and adjudging that, upon request, Gotham I is
entitled to receive First Union's records of
stockholders to enable it to solicit proxies with
respect to its nominations and proposal;
(j) awarding the Gotham Partnerships their costs and
disbursements in this action, including reasonable
attorneys' fees; and
(k) granting such other and further relief as the Court deems
just and proper.
Dated: January 30, 1998
Cleveland, Ohio
OF COUNSEL: /s/ Michael J. Garvin
-------------------------------------
David C. Weiner (0013351)
HAHN LOESER & PARKS LLP Michael J. Garvin (0025394)
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
- and -
OF COUNSEL: /s/Alexander R. Sussman
-------------------------------------
FRIED, FRANK, HARRIS, SHRIVER Alexander R. Sussman(FN1)
& JACOBSON
25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
- ---------
[FN]
1 Application to appear pro hac vice is pending.
</FN>
CERTIFICATE OF SERVICE
----------------------
A copy of the foregoing Complaint was sent by messenger to
Frances Floriano Goins, Squire, Sanders & Dempsey L.L.P., 4900 Key
Tower, 127 Public Square, Cleveland, Ohio 44114-1304, attorneys for
Defendant, this 30th day of January, 1998.
/s/ Michael J. Garvin
-----------------------------------
One of the attorneys for Plaintiffs
EXHIBIT 29
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
GOTHAM PARTNERS, L.P. ) CIVIL ACTION NO. 1:98CV 0272
)
and ) JUDGE NUGENT
)
GOTHAM PARTNERS II, L.P. ) PLAINTIFFS'
) MOTION FOR
Plaintiffs, ) PRELIMINARY INJUNCTION
)
v. )
)
FIRST UNION REAL ESTATE EQUITY )
AND MORTGAGE INVESTMENTS )
)
Defendant. )
PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION
Plaintiffs Gotham Partners, L.P. and Gotham Partners II, L.P.
(collectively, "Gotham"), move this Court, pursuant to Rule 65 of the
Federal Rules of Civil Procedure, for an order preliminarily enjoining
defendant First Union Real Estate Equity and Mortgage Investments
("First Union"), its directors, officers, Trustees, successors,
agents, servants, subsidiaries, employees and attorneys, and all
persons acting in concert or participating with them, from:
1. making any further solicitation of First Union shareholders in
connection with First Union's Annual Meeting scheduled for April 14,
1998 ("Annual Meeting") unless and until First Union has made the
required filings under Section 14(a) of the Securities Exchange Act of
1934 ("the 1934 Act"), 15 U.S.C. Section 78n(a), and the SEC Rules
promulgated thereunder;
2. making material misrepresentations and false and misleading
statements in the course of soliciting proxies for First Union shares;
3. taking any actions that would dilute or interfere with
Gotham's voting, nomination, and proposal rights or in any other way
discriminate against Gotham in the exercise of its rights with respect
to its First Union shares;
4. from taking any steps to impede or frustrate the ability of
First Union's stockholders to consider and make their own
determination on Gotham's nominations and proposal being submitted at
the Annual Meeting or taking any other action to thwart or interfere
with the proxy contest for the Annual Meeting;
5. from taking actions to deprive Gotham of its right to receive
dividends, interest, or other distributions on the alleged ground that
Gotham's shares are Excess Securities under Article VI, Section 6 of
First Union's By-Laws (the "By-Laws");
6. from obstructing Gotham's proposal to increase the size of
First Union's Board of Trustees ("the Board") and Gotham's nomination
of candidates to sit on the Board on the alleged ground that the
proposal and nomination are in violation of First Union's Declaration
of Trust (the "Declaration of Trust");
7. from obstructing or preventing Gotham's solicitation of
proxies on behalf of its proposal and its nominees on the alleged
ground that such solicitation would violate the terms and/or
conditions of the Declaration of Trust and By-Laws.
The bases for Gotham's Motion will be set forth more fully in
Gotham's forthcoming Memorandum in Support of Gotham's Motion for
Preliminary Injunction with supporting affidavits, to be served and
filed in accordance with Judge Ann Aldrich's January 28, 1998
scheduling order in Case No. 98CV0105.
Dated January 30, 1998
Cleveland, Ohio
OF COUNSEL: /s/ Michael J. Garvin
--------------------------------
David C. Weiner (0013351)
HAHN LOESER & PARKS LLP Michael J. Garvin (0025394)
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
(216) 621-0150
- and -
OF COUNSEL
FRIED, FRANK, HARRIS, SHRIVER /s/ Alexander R. Sussman
--------------------------------
& JACOBSON Alexander R. Sussman(FN1)
25th Floor
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attorneys for Plaintiffs
TO: Frances Floriano Goins
SQUIRE, SANDERS & DEMPSEY L.L.P.
Attorneys for Plaintiff
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114-1304
- --------
[FN]
1 Application to appear pro hac vice being submitted.
</FN>
CERTIFICATE OF SERVICE
----------------------
A copy of the foregoing Plaintiffs' Motion for Preliminary
Injunction was sent by messenger to Frances Floriano Goins, Squire,
Sanders & Dempsey L.L.P., 4900 Key Tower, 127 Public Square,
Cleveland, Ohio 44114-1304, attorneys for Defendant, this 30th day of
January, 1998.
/s/ Michael J. Garvin
-----------------------------------
One of the attorneys for Plaintiffs
EXHIBIT 30
[Letterhead of Hahn Loeser & Parks LLP]
Direct Telephone: 216/274-2255
Direct Facsimile: 216/274-2455
[email protected]
David C. Weiner
January 30, 1998
VIA MESSENGER
- -------------
Honorable Ann Aldrich
Senior Judge
c/o Deputy Clerk Barbara Sper
U.S. District Court
Key Tower, Ste 3204
127 Public Square
Cleveland, Ohio 44114
The Honorable Donald C. Nugent
U.S. District Court
U.S. Courthouse
201 Superior Avenue, NE, Room 400
Cleveland, Ohio 44114
RE: FIRST UNION REAL ESTATE AND MORTGAGE INVESTMENTS V.
GOTHAM PARTNERS, L.P., ET AL, CASE NO. 1:98CV0105
AND
GOTHAM PARTNERS, L.P., ET AL V. FIRST UNION REAL ESTATE
EQUITY AND MORTGAGE INVESTMENTS, CASE NO. 1:98CV0272
Dear Judges Aldrich and Nugent:
We are co-counsel to Gotham Partners, L.P. and Gotham Partners
II, L.P. (collectively, the "Gotham Partnerships"). The Gotham
Partnerships are defendants in Case No. 1:98CV0105 before Judge
Aldrich, and plaintiffs in Case No. 1:98CV0272, before Judge Nugent.
It is of vital importance to both parties for the disputes underlying
these related cases to be resolved expeditiously. Therefore, we have
moved to have the later-filed action reassigned to Judge Aldrich, who
is presiding over the first action.
Brief Procedural History.
-------------------------
This litigation began when First Union Real Estate Equity and
Mortgage Investments ("First Union") filed a complaint against the
Gotham Partnerships in the Cuyahoga County, Ohio Court of Common
Pleas, Case No. 347063 (McGinty, J.), on January 16, 1998. The
complaint seeks to restrain the Gotham Partnerships from mounting a
proxy contest in connection with First Union's April 14, 1998 Annual
Meeting. On January 20, 1998, the Gotham Partnerships removed that
action to this Court, which is the case pending before Judge Aldrich.
At the time the Gotham Partnerships removed the case, they believed
that there was complete diversity between the parties. The Gotham
Partnerships' removal notice was filed shortly after 9:00 a.m. on
January 20. Shortly afterwards, apparently without knowledge of the
removal, Judge McGinty set a February 10, 1998 hearing on a motion for
preliminary injunction filed by First Union against the Gotham
Partnerships.
The Gotham Partnerships also filed their answer and counterclaims
on January 20, asserting that First Union's conduct in connection with
the proxy contest is in violation of various federal securities laws
as to which this Court has exclusive jurisdiction.
On January 21, 1998, First Union filed a motion to remand the
action before Judge Aldrich back to the Court of Common Pleas. On
January 28, 1998, Judge Aldrich entered a scheduling order pertaining
to the various motions in the action before her Honor. That scheduling
order set a briefing schedule on First Union's first remand motion, a
briefing schedule on the parties' respective motions for preliminary
injunction, and a March 5, 1998 hearing on those motions.
On January 27, 1998, one day prior to Judge Aldrich's scheduling
order, First Union filed a reply brief in support of a motion it had
filed seeking expedited consideration of its remand motion. In that
reply brief, First Union suggested for the first time that it may not
be an Ohio citizen for diversity jurisdiction purposes, because the
citizenships of its Trustees are counted for purposes of diversity.
Because, contrary to the Gotham Partnerships' original belief,
there may not be complete diversity of citizenship in the case before
Judge Aldrich, in order to bring its claims under the federal
securities laws and related state law claims, the Gotham Partnerships
today filed the new complaint, which has been assigned to Judge
Nugent.
The Gotham Partnerships' Filings in Connection with the New Complaint
---------------------------------------------------------------------
Because of the Gotham Partnerships' and First Union's mutual
needs for an expedited resolution of the disputes underlying this
litigation, the Gotham Partnerships have today filed the following
pleadings in addition to the new complaint:
Concurrent motions to reassign the case before Judge Nugent
to Judge Aldrich. The Gotham Partnerships have filed these
motions, before both judges, because Judge Aldrich has a
head start on this litigation, having been assigned the
removed case and entering a scheduling order on the various
motions filed in that case.
Motion for expedited discovery. While there are procedural
issues that need to be resolved, both parties plainly need
discovery in order to be prepared for the hearings on their
respective motions for preliminary injunctions. Both parties
obviously recognize this, because each has served the other
with at least two sets of discovery. Therefore, the Gotham
Partnerships filed their motion for expedited discovery,
requesting the Court to order both parties to provide
discovery to the other on an expedited basis.
We are enclosing copies of the referenced pleadings for your
convenience.
------------------------------------
We hope this summary has provided your Honors with an overall
picture of the status of these cases, and we appreciate your
consideration of these matters.
Respectfully yours,
/s/ David C. Weiner
David C. Weiner
cal
Enclosures
cc: Alexander R. Sussman, Esq.
Fried, Frank, Harris, Shriver & Jacobson
Co-Counsel for Gotham Partners, L.P.
and Gotham Partners II, L.P.
Frances Floriano Goins, Esq. (w/o encl.)(by messenger)
Squire, Sanders & Dempsey, L.L.P.
Counsel for First Union Real Estate Equity
and Mortgage Investments
