North America Real Estate - Regulatory and Legal Developments
Coventry files $500M suit against Developers Diversified
November 04, 2009 6:48 PM ET
By Moira Dickinson
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Coventry Real Estate Advisors said Nov. 4 that it filed a $500 million lawsuit in the Supreme Court of the State of New York against Developers Diversified Realty Corp., Reuters reported. Coventry, which is asking the court for consequential and punitive damages, cited fraud, malfeasance, mismanagement, violation of fiduciary and contractual obligations, and self-dealing in 12 retail real estate projects across the country where Developers Diversified provided management, leasing and development services and was a co-investor with Coventry. Coventry said it terminated Developers Diversified as the leasing and management agent across the portfolio of assets as a result of the company's alleged breach of contract and fiduciary duties owed to Coventry. Coventry claimed Developers Diversified "significantly impaired" the values of Coventry's investments, while enhancing the value of Developers Diversified's stock price, placing itself in a position to acquire at distressed prices some of the same properties Developers Diversified recommended Coventry acquire and that it promised to manage, lease and develop for Coventry, according to the report. Developers Diversified on Nov. 4 responded to the announcement by saying in a news release that is has not been served with the lawsuit or seen the complaint. However, it "vehemently" denied the allegations set forth in the news release and said it will vigorously defend itself against such allegations in any legal proceeding. It also said it has not received notice of termination of any agreement with Coventry and denies it has breached any such agreements. Crain's Detroit Business reported Nov. 1 that Craig Schubiner, owner of Harbor Cos., filed a lawsuit against Developers Diversified and Coventry in April. The two companies acquired Schubiner's interest in the Bloomfield Park development in Bloomfield Township, Mich., in 2006. He agreed to be paid upon completion of the project, on which construction was ceased in November 2008. He claims the two companies did not take proper care to ensure the project's success. | 
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