-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HeMub4IPuu6nTXDSd/xea7Hr7THGZU+Ka6A1MRAwUsNCCZm0NiSu/BWzj6HZR8Gp oqTG7U2k1IDJ3JGSBM0jkA== 0000895345-98-000037.txt : 19980203 0000895345-98-000037.hdr.sgml : 19980203 ACCESSION NUMBER: 0000895345-98-000037 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19980202 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FIRST UNION REAL ESTATE EQUITY & MORTGAGE INVESTMENTS CENTRAL INDEX KEY: 0000037008 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 346513657 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-19676 FILM NUMBER: 98519580 BUSINESS ADDRESS: STREET 1: 55 PUBLIC SQUARE STREET 2: STE 1900 CITY: CLEVELAND STATE: OH ZIP: 44113 BUSINESS PHONE: 2167814030 MAIL ADDRESS: STREET 1: 55 PUBLIC SQUARE SUITE 1910 CITY: CLEVELAND STATE: OH ZIP: 44113 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION REALTY DATE OF NAME CHANGE: 19691012 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOTHAM PARTNERS LP /NY/ CENTRAL INDEX KEY: 0000899983 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 363593298 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 110 EAST 42ND ST 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2122860300 MAIL ADDRESS: STREET 1: 110 EAST 42 ND ST 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 SC 13D/A 1 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 EX-99.1 2 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. EX-99.2 3 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. 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 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. 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. 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 EX-99.3 4 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. EX-99.4 5 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. 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 EX-99.5 6 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. EX-99.6 7 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. EX-99.7 8 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. 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 EX-99.8 9 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. 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 EX-99.9 10 EXHIBIT 30 [Letterhead of Hahn Loeser & Parks LLP] Direct Telephone: 216/274-2255 Direct Facsimile: 216/274-2455 E-maidcweiner@hahnlaw.com 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 -----END PRIVACY-ENHANCED MESSAGE-----