(For more retail coverage, click GlobeSt.com/RETAIL.)
PHILADELPHIA-The Court of Common Pleas of Philadelphia County has entered a judgment in favor of Port Washington, NY-based Cedar Shopping Centers. It has awarded the REIT a verdict of $1.7 million in connection with its October 2001 acquisition of three shopping centers from Mount Kisco, NY-based Bryant Asset Management. Cedar's suit claimed it relied on "fraudulent misrepresentations" that over-valued the portfolio.
In addition, the court ruled, "plaintiffs are entitled to attorney's fees under the contract because defendants breached the assumption and assignment of leases and contracts provision." The amount of the fees will be determined at a hearing yet to be scheduled. However, the court denied Cedar's additional claims of breach of contract, civil conspiracy and unjust enrichment.
Andrew Hascoe, president, CEO and founder of Bryant, tells GlobeSt.com, "we plan to appeal, there's no doubt about it. We're filing a brief on Monday and plan to appeal to a higher court. We believe this is a wrong decision and we'll take every course available to have this ruling reversed and are confident we will win. We have built a stellar reputation for integrity over the past 16 years, and my books and records are open to anybody that wants to look at them."
The portfolio consists of Academy Plaza and Port Richmond Village here and Washington Center Shoppes in Sewell, NJ. Cedar charged that the seller misrepresented rent rolls and other information necessary to properly value the portfolio. Specifically, Cedar argued that "if a tenant that is in default is listed on the rent roll, the rent roll is inaccurate," and that "evaluation of the purchase of a property is based on a revenue stream based on rent rolls."
It charged that three tenants in the portfolio were in arrears. Furthermore, following the agreement to acquire the portfolio, according to the court document, Leo Ullman, Cedar's president, chairman and CEO, found out through the "rumor mill," that one tenant, a charter school, planned to exercise an early termination option. During subsequent conversations between representatives of Cedar and Bryant, according to the ruling by the judge, Ullman testified that Cedar was promised a price reduction, which it did not obtain.
The court found Ullman to be "credible" in this claim. It concluded, "plaintiffs were fraudulently induced to enter into the agreement of sale," and are thus entitled to the $1.7-million judgment, "which amount represents the damages."
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