STEVEN A. STENDER; INFINITY CLARK STREET OPERATING, LLC, on behalf of themselves and all others similarly situated, Plaintiffs - Appellants,
ARCHSTONE-SMITH OPERATING TRUST; ARCHSTONE-SMITH TRUST; ERNEST A. GERARDI, JR.; RUTH ANN M. GILLIS; NED S. HOLMES; ROBERT P. KOGOD; JAMES H. POLK, III; JOHN C. SCHWEITZER; R. SCOT SELLERS; ROBERT H. SMITH; STEPHEN R. DEMERITT; CHARLES MUELLER, JR.; CAROLINE BROWER; MARK SCHUMACHER; ALFRED G. NEELY; LEHMAN BROTHERS HOLDINGS, INC.; TISHMAN SPEYER DEVELOPMENT CORPORATION; RIVER HOLDING, LP; RIVER TRUST ACQUISITION (MD), LLC; RIVER ACQUISITION (MD), LP; ARCHSTONE-SMITH MULTIFAMILY SERIES I TRUST; ARCHSTONE, INC.; AVALONBAY COMMUNITIES, INC.; ARCHSTONE ENTERPRISE, LP; ERP OPERATING LIMITED PARTNERSHIP; EQUITY RESIDENTIAL, Defendants - Appellees. and HAROLD SILVER, Plaintiff,
from the United States District Court(D.C. No.
1:07-CV-02503-WJM-MJW) for the District of Colorado
Matthew W.H. Wessler, Gupta Wessler PLLC, Washington, D.C.
(Daniel Townsend, Gupta Wessler PLLC, Washington, D.C.,
Kenneth A. Wexler and Kara A. Elgersma, Wexler Wallace LLP,
Chicago, Illinois, and Lee Squitieri, Squitieri & Fearon,
LLP, New York, New York, with him on the briefs), for the
Jonathan D. Polkes, Weil, Gotshal & Manges LLP, New York,
New York (Caroline Hickey Zalka, Adam B. Banks, and Justin D.
D'Aloia, Weil, Gotshal & Manges LLP, New York, New
York, Frederick J, Baumann and Alex C. Myers, Lewis Roca
Rothgerber Christie LLP, Denver, Colorado, and Leslie A.
Eaton, Gregory P. Szewczyk, and J. Matthew Thornton, Ballard
Spahr, LLP, Denver, Colorado, with him on the brief), for the
BRISCOE, BACHARACH, and CARSON, Circuit Judges.
BACHARACH, CIRCUIT JUDGE.
appeal grew out of a battle between the majority and minority
owners of units in an investment vehicle. The majority
unitholder wanted to merge, but this would require the
minority to sell their units or convert them to shares in a
newly created entity. The minority unitholders balked because
they wanted to retain their original units, but the majority
unitholder approved the merger, terminating the
minority's units in the process. The termination of these
units led the minority to sue.
of this suit largely turns on a classic issue of contract
interpretation: Did the contract, consisting of a declaration
of trust, empower the majority unitholder to approve a merger
that eliminated and replaced the minority unitholders'
units without providing an opportunity for a class vote? The
district court answered "yes" and granted the
defendants' motions for summary judgment. We agree with
the district court.
The parties create an investment vehicle for interests in
parties created an investment vehicle that comprised an
operating trust to buy and sell interests in real estate.
This type of investment vehicle is called a "real estate
investment trust." To form the trust, investors
contributed property in exchange for units (called "A-1
units") in an operating trust. These units carried
certain rights like steady distributions and a right of
redemption for cash or common stock in the operating trust.
operating trust was organized as an entity known as an
"umbrella partnership real estate investment
trust." The umbrella partnership, in turn, was owned by
a "parent trust" called the "Archstone-Smith
Trust." The parent trust contributed cash to the
operating trust (the Archstone-Smith Operating Trust) in
exchange for general partnership units.
The majority unitholder (Archstone-Smith Trust) pursues a
the 2008 market crash, the Archstone-Smith Trust negotiated a
sale to a partnership between Lehman Brothers and Tishman
Speyer Development Corporation. Under the terms of the sale,
the Lehman-Tishman partnership would create a new entity to
merge into the operating trust. The merger would eliminate
the A-1 units, and owners of these units could either sell
the units or exchange them for shares in the new entity.
with this choice, the A-1 unitholders sued the
Archstone-Smith Trust and others for breaches of contract and
fiduciary duties. These claims turn primarily on whether the
declaration of trust unambiguously allowed the operating
trust to merge, which would terminate the A-1 units without a
class vote of A-1 unitholders. The district court concluded
that the operating trust could merge and terminate the A-1
units in the process, so the court granted summary judgment
to the defendants. We agree with the district court's
conclusion and the grant of summary judgment.
We engage in de novo review, applying Maryland's
decide the appeal, we must construe the declaration of trust.
Because the district court's construction of the
declaration of trust resulted in a grant of summary judgment,
we engage in de novo review, viewing the evidence in the
light most favorable to the A-1 unitholders. Reid v.
Geico Gen. Ins. Co., 499 F.3d 1163, 1167 (10th Cir.
parties agree that Maryland law governs construction of the
declaration of trust. Applying Maryland law to matters of
construction, the district court could grant summary judgment
to the defendants only if the declaration of trust had
unambiguously allowed termination of the A-1 units through a
merger without a class vote of A-1 unitholders. See
Higby Crane Serv., LLC v. Nat. Helium, LLC, 751
F.3d 1157, 1160 (10th Cir. 2014) ("Summary judgment on a
contract dispute should be granted if the contractual
language is unambiguous.").
The A-1 unitholders' contract claim
fails as a matter of law because the declaration of
trust unambiguously allowed the operating trust to merge with
another entity and terminate the A-1 units in the
law provides that
. a real estate investment trust can merge
with another entity unless the declaration of trust prohibits
. a merger can result in the termination of
the trust's units in the existing entity.
Md. Code Ann., Corps. & Ass'ns §§
8-501.1(b), 8-501.1(o)(3). The resulting issue is whether the
declaration of trust prohibited the Archstone- Smith Trust
from terminating the A-1 units in the merger without a class
vote of A-1 unitholders.
defendants point to §§ 5.3(B) and 9.2(B) of the
declaration of trust; the A-1 unitholders rely on
§§ 5.3(A), 12.3, and 12.4. The threshold procedural
question is whether the A-1 unitholders preserved their
reliance on § 5.3(A). We answer "no."
avoid forfeiture, the A-1 unitholders had to fairly present
the district court with the substance of their current
argument involving § 5.3(A). See FDIC v. Kan.
Bankers Surety Co., 840 F.3d 1167, 1169-70 (10th Cir.
2016) (holding that an argument about contractual language
was forfeited because it had not been fairly presented in
response to the motion for summary judgment). This section
provides: "The Trustee [the Archstone-Smith Trust] may
not take any action in contravention of any express
prohibition or limitation of this [declaration of trust]
without an amendment of such provision adopted in accordance
with Article 12 hereof and [Title 8 of the Annotated Code of
Maryland, Corporations and Associations Article]."
Appellants' Rec. Excerpts at 558.
appeal, the A-1 unitholders present two contentions:
1. Section 5.3(A) prohibited the operating trust from
undermining the attributes of A-1 units without amending ...