Cole Credit Property Trust III, Inc. Class and Derivative Litigation
On March 20, 2013, Chimicles & Tikellis LLP initiated a shareholder class action and derivative action in the Circuit Court for Baltimore City, with the caption Strub v. Cole Holdings Corporation, et al. The litigation was brought on behalf of Cole Credit Property Trust III, Inc. (“CCPT III”) and a class of CCPT III shareholders against CCPT III’s board of directors, including CCPT III’s founder Christopher Cole, Cole REIT Advisors III, Cole Holdings Corporation and other affiliated Cole Holdings entities (collectively “defendants”).
Plaintiff’s direct and derivative claims arise out of a related-party Merger approved and executed by defendants which caused CCPT III, a non-listed externally advised real estate investment trust (“REIT”), to acquire Cole Holdings Corporation, which was wholly owned by CCPT III’s founder Christopher Cole. Among other things, Plaintiff alleges that the Merger improperly gave Christopher Cole and others an unjustified $150 + million payday and exit strategy, to the detriment of CCPT III’s shareholders. Plaintiff has also alleged that defendants’ conduct in hastily rejecting offers made by American Realty Capital Properties to acquire all of the outstanding shares of CCPT III, in the face of the wrongful self-dealing Merger, were in violation of their fiduciary duties to CCPT III’s shareholders. Plaintiff Strub sought to enjoin the Merger from closing but his petition for a Temporary Restraining Order was denied.
After Plaintiff Strub filed his action, two other similar lawsuits were filed by other CCPT III shareholders in the Circuit Court for Baltimore City. At the request of Plaintiff Strub and the other plaintiffs, the Court consolidated the actions, and appointed Chimicles & Tikellis LLP the Chair of the Executive Committee of Interim Lead Counsel. The consolidated action is captioned as In re Cole Credit Property Trust III, Inc. Derivative and Class Litigation, Lead Case No. 24-C-13-001563.
On May 8, 2013, Plaintiffs jointly filed a Consolidated Amended Complaint (“CAC”) which expands upon the claims asserted in their original complaints. On June 7, 2013, Defendants moved to dismiss the CAC. Briefing on the motions was completed by July 29, 2013. On August 27, 2013, the Court held oral argument on the motions. On October 22, 2013, the Court dismissed the case with prejudice. Plaintiffs intend to appeal the Court’s decision and will file their notice of appeal on or before November 21, 2013.